United States General Accounting Office

GAO Report to the Subcommittee on Interior

and Related Agencies, Committee on

Appropriations, House of

Representatives

December 1998 FOREST SERVICE

MANAGEMENT

Little Has Changed as a

Result of the Fiscal

Year 1995 Budget

Reforms

GAO/RCED-99-2

GAO United States

General Accounting Office

Washington, D.C. 20548

Resources, Community, and

Economic Development Division

B-280861 

December 2, 1998

The Honorable Ralph Regula

Chairman

The Honorable Sidney R. Yates

Ranking Minority Member

Subcommittee on Interior

 and Related Agencies

Committee on Appropriations

House of Representatives

As agreed with your offices, this report discusses (1) the Forest Service’s implementation of

fiscal year 1995 budget reforms and (2) the progress that the agency has made toward becoming

more accountable for its results. The report contains recommendations to the Secretary of

Agriculture that are designed to improve the agency’s performance accountability. Our review

was limited primarily to the funds that were appropriated to manage the National Forest

System.

As requested, unless you publicly announce its contents earlier, we plan no further distribution

of this report until 10 days after the date of this letter. At that time, we will send copies to the

appropriate congressional committees, the Secretary of Agriculture, and the Chief of the Forest

Service. We will also make copies available to others upon request.

Please call me at (202) 512-3841 if you or your staff have any questions about this report. Major

contributors to this report are listed in appendix II.

Barry T. Hill

Associate Director, Energy,

 Resources, and Science Issues
Executive Summary

Purpose In fiscal year 1992, the U.S. Department of Agriculture’s Forest Service

was cited by the National Performance Review—a White House-led study

of ways to improve the efficiency of federal programs—as an example of

an agency whose budget structure impeded the productive management

and the efficient use of taxpayer dollars. As the Forest Service moved from

managing individual resources, such as wildlife, recreation, timber,

rangeland, and water, to a more broad-scale, more comprehensive

approach to land management (ecosystem management), the agency

proposed significant changes in its budget structure for fiscal year 1995 to

help implement this management approach and improve efficiency.

Subsequently, the Forest Service asked its Appropriations Committees to

restructure its budget to increase the agency’s flexibility to carry out its

mission and to improve its ability to use funds where they are most

needed. In acting on the Forest Service’s appropriations for fiscal year

1995, the House and Senate Committees on Appropriations

(1) consolidated line items in the agency’s budget for which specific

amounts of funds are allocated, thereby providing larger pools of funds

and, thus, greater discretion to field and program managers in deciding

where to spend the funds; (2) expanded the agency’s authority to move

funds between line items without the Committees’ approval; and

(3) restructured the agency’s budget so that all the funding to carry out a

project—including the funding for services provided by others—is

consolidated in the program that will benefit most from the project (called

the “benefiting function” concept). In return for this increased budget

flexibility, the Appropriations Committees expected the Forest Service to

improve its performance measures and accountability for its expenditures

and results.

The Chairman and Ranking Minority Member of the Subcommittee on

Interior and Related Agencies, House Committee on Appropriations, asked

GAO to review the Forest Service’s implementation of the fiscal year 1995

budget reforms. As agreed with their offices, this report discusses (1) the

Forest Service’s implementation of the fiscal year 1995 budget reforms and

(2) the progress that the agency has made toward becoming more

accountable for its results. GAO’s review was limited primarily to funds

appropriated to manage the 155 forests, 20 national grasslands, and 17

national recreation areas that make up the National Forest System. The

National Forest System’s appropriation represented about $1.3 billion or

about 47 percent of the Forest Service’s discretionary appropriations and

about 37 percent of its total appropriations for fiscal year 1997.

Page 2 GAO/RCED-99-2 The Forest Service’s Fiscal Year 1995 Budget Reforms
Executive Summary

Results in Brief The Forest Service’s management of the National Forest System has not

appreciably changed as a result of the increased flexibility offered by the

fiscal year 1995 budget reforms. Specifically, consolidating the line items

was intended to provide field managers with greater discretion in deciding

where to spend funds to better achieve the agency’s goals and objectives.

However, (1) some field offices have continued to distribute and track

funds as if the consolidation had not occurred, and (2) the budget is still

structured primarily by individual resource-specific programs, such as

those for timber sales and wildlife habitat management, although the

agency’s strategic goals and objectives increasingly require that these and

other programs be integrated to achieve broader stewardship objectives,

such as restoring or protecting the health of a forest. The reforms also

expanded the Forest Service’s authority to move funds between line items

without the Appropriations Committees’ approval. However, the agency

has seldom requested such approval either before or after the reforms.

According to information provided by the Forest Service, the agency

submitted one or two requests a year for the Appropriations Committees’

approval to move funds among line items for the National Forest System in

fiscal years 1994 through 1997. Therefore, the reforms have not had a

noticeable impact on the number of times that the Forest Service has

made such requests of the Committees. Finally, the reforms restructured

the agency’s budget so that all the funding for a project is consolidated in

the program that will benefit most from that project. However, for a

variety of reasons, including underestimating a project’s costs, a benefiting

program may not have the funds needed to implement a project. In these

instances, it may require other programs that are providing support

services to absorb the costs of those services. This practice circumvents

the requirements established by the Appropriations Committees and the

agency to move funds between line items and understates a project’s

costs.

The Forest Service has not provided the Congress with the improved

accountability that the Appropriations Committees requested when they

gave the agency increased flexibility over its budget. GAO found that (1) the

agencywide criteria developed by the Forest Service to allocate

appropriated funds to its regions and forests are often not linked to its

strategic goals and objectives; (2) in many instances, the agency’s

performance measures do not adequately reflect its accomplishments or

progress toward achieving the goals and objectives; and (3) the

management cost and performance reporting system that the agency has

been developing for over 10 years uses the inadequate performance

measures as input. As a result, the Forest Service, the Congress, and other

Page 3 GAO/RCED-99-2 The Forest Service’s Fiscal Year 1995 Budget Reforms
Executive Summary

interested parties do not have an adequate measure of the agency’s

funding needs or its progress toward achieving its goals and objectives.

Principal Findings

The Budget Reforms

Have Resulted in

Little Change in

Managing the National

Forests

The Forest Service’s management of the National Forest System has not

appreciably changed as a result of the fiscal year 1995 budget reforms

primarily because of two underlying causes—one relatively new and the

other as old as the agency itself. New is the inability of the agency’s budget

structure to keep pace with the Forest Service’s ongoing transition from

an agency emphasizing consumption (primarily producing timber) to one

emphasizing conservation (primarily sustaining wildlife and fish) and from

one managing specific resources to one managing forested and other

natural systems. As old as the agency itself is the Forest Service’s highly

decentralized organizational structure and the considerable autonomy and

discretion that field and program managers have in interpreting and

applying the agency’s policies and directions. As in the past,

(1) implementation of the fiscal year 1995 reforms within the Forest

Service’s hierarchical organization has been left to the discretion of

regional, forest, and district offices with uneven and mixed results, and

(2) there has been no consequence associated with making a certain

decision and no responsibility fixed for attaining a particular result.

The Forest Service’s

Budget Structure Is Not

Consistent With the

Agency’s Strategic Goals

and Objectives

Notwithstanding the fiscal year 1995 budget reforms, there is currently no

clear link between the Forest Service’s integrated approach to natural

resources management, which emphasizes restoring and protecting the

health of forested, rangeland, and aquatic systems, and the agency’s

budget structure, which remains highly fragmented along the lines of

resource-specific programs and activities, such as managing timber sales,

livestock grazing, wildlife habitat, and wildfires.

For example, the Forest Service cites the goal of restoring and protecting

forested systems as its highest mission and funding priority. However,

rather than having a larger pool of funds available to achieve this goal and

greater discretion to spend the funds, a forest or district office may have to

use up to 24 different funding sources to implement a plan to restore or

protect a forested system. These funding sources include four National

Forest System line items over which the forests have the most control. Of

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Executive Summary

the remaining 20 funding sources, 7 are from the state and private forestry

appropriation, 2 are from the wildland fire management appropriation, 1 is

from the land acquisition appropriation, and the other 10 are from various

permanent appropriations and trust funds for such activities as brush

removal, timber salvage sales, and reforestation. According to some Forest

Service officials, this fragmented approach can result in inefficiently

implementing a plan to restore or protect a forest.

The inability of the Forest Service’s budget structure to keep pace with the

agency’s movement away from goals and objectives that clearly benefit

one resource-specific program toward using multiple programs to

accomplish broader stewardship objectives has also caused some

confusion within the agency in identifying the program that will benefit

most from a project so that costs can be consistently charged to that

program. Timber as a commodity program versus timber as a tool to

achieve a stewardship objective, such as restoring an unhealthy forest, is

an example. Although timber sales are increasingly being used as a tool to

maintain or restore the health of forests rather than solely to provide

timber as a commodity, the costs to prepare and administer the timber

sales are still being charged to timber sales management.

Some Forest Service Field

Offices Continue to

Distribute and Track Funds

as If the Consolidation of

Line Items Had Not

Occurred

The considerable autonomy and discretion that the Forest Service has

given its field and program managers has resulted in, among other things,

some forest and district offices continuing to distribute and track funds as

if the consolidation of the line items had not occurred, thus undermining

the full potential of the budget reforms to simplify the management of

funds. To illustrate, the fiscal year 1995 budget reforms reduced the

number of timber-related line items from seven to two, thus providing field

and program managers with larger pools of funds and more flexibility and

discretion in deciding where to spend the funds. However, according to

the official responsible for the natural resources budget and finance in the

Pacific Northwest (Region 6) office, some forests and districts in the

region continue to distribute funds and track expenditures for as many as

14 different activities under the two line items, including several activities

for the line items that were eliminated.

Although field and program managers have some flexibility to move funds

among activities, district office staff tend to see the distributions as rigid

limits to planning and accounting for work. Rather than move funds

among activities during a fiscal year, field and program staff may

redistribute work charged to activities after the fact in order to achieve or

Page 5 GAO/RCED-99-2 The Forest Service’s Fiscal Year 1995 Budget Reforms
Executive Summary

maintain specific levels of funding for activities (called “retroactive

redistribution”).

Finally, under the benefiting function concept embodied in the Forest

Service’s budget reforms, programs are expected to pay the costs of

support services provided by other programs. However, individual

programs that underestimate the costs of a project or otherwise do not

have the funds needed to pay for a project’s support services may require

other programs to absorb the costs of the services. For example, on the

basis of an internal survey of the National Forest System that was

conducted in July 1998 at GAO’s request, a program official at the

Washington Office estimated that since fiscal year 1995, on average, about

49 percent of the funds allocated to the Lands program to survey, locate,

mark and post, and maintain previously marked property lines between

lands in the National Forest System and lands in other ownership has been

used to support other programs, but charged to the Lands program.

Agency officials informed GAO that “charging as budgeted” and not “as

worked” was sometimes a more acceptable option than not doing the

project or seeking to meet their needs by moving funds between line

items, which, depending on the amount, may require the approval of either

the Chief of the Forest Service or the Appropriations Committees. This

practice not only circumvents the requirements established by the

Appropriations Committees and the agency to move funds between line

items and understates a project’s costs, it also precludes the Forest

Service from providing the Congress and other interested parties with

meaningful, useful, and reliable information on the costs and the

accomplishments of the National Forest System’s programs.

Accountability Is

Hampered by

Inadequate

Performance

Measures and a Focus

on Resource-Specific

Outputs

In exchange for the greater flexibility granted to the Forest Service by the

fiscal year 1995 budget reforms, the Appropriations Committees expected

the agency to, among other things, improve its performance measures and

increase its accountability for results. However, the Forest Service has not

provided the Congress with improved accountability.

Currently, there is no clear link between the Forest Service’s strategic

goals and objectives and its budget allocation criteria and performance

measures. Rather than develop new criteria and measures and improve

existing ones to better align them with its mission and funding priorities,

the agency is trying to use old resource-specific allocation criteria and

performance measures with its new integrated-resource goals and

Page 6 GAO/RCED-99-2 The Forest Service’s Fiscal Year 1995 Budget Reforms
Executive Summary

objectives. For example, the Forest Service cites the goal of restoring and

protecting forested systems as its highest mission and funding priority and

repeatedly emphasizes that timber sales are increasingly being used as a

tool to maintain or restore the health of forests rather than solely to

provide commercial timber. However, the criteria that the Forest Service

used to allocate fiscal year 1998 funds to its field offices to manage timber

sales are based solely on managing timber as a commodity rather than on

using it as a tool to achieve a stewardship objective. Similarly, the primary

objective of the agency’s timber-related performance measures used to

indicate progress toward restoring or protecting forested systems is to

provide a continuous supply of timber from the national forests, rather

than to maintain or restore the health of the forests.

In addition, the Forest Service’s performance measures often do not

adequately reflect the agency’s accomplishments or progress toward

achieving its goals and objectives. For instance, the agency counts

facilities that are not being maintained “to standard” and miles of Forest

Service-managed roads that are “less than fully maintained” as

accomplishments toward its strategic objective of improving the level of

customer satisfaction provided by recreational opportunities in national

forests.

The “disconnect” between the Forest Service’s strategic goals and

objectives and its performance measures and the inadequacy of those

measures become even more critical because the management cost and

performance reporting system, which the agency has been developing

since 1988, uses the performance measures to display the relationship

between expenditures and results. Inadequate and unreliable performance

measures that are also not linked to the agency’s strategic goals and

objectives will be used to report accomplishments in achieving the goals

and objectives. As a result, the Forest Service, the Congress, and other

interested parties will not have an adequate measure of the agency’s

funding needs or its progress toward achieving its goals and objectives.

While additional changes to the Forest Service’s budget structure seem to

be warranted to facilitate management of the 155 national forests, GAO

believes that any future revisions should coincide with, rather than

precede, actions required to correct known accounting and financial

reporting deficiencies as well as problems with performance-related data,

measurement, and reporting. However, the Forest Service has not

established a schedule to achieve accountability for its performance and is

uncertain when its management cost and performance reporting system

Page 7 GAO/RCED-99-2 The Forest Service’s Fiscal Year 1995 Budget Reforms
Executive Summary

will be fully implemented. A firm schedule is needed so the agency can

demonstrate progress toward becoming more accountable for its

performance and results.

Developing and implementing a firm schedule to correct identified

management deficiencies and to achieve performance accountability will

require strong leadership within the agency and sustained oversight by the

Congress to make clear the demarcation between the discretion that

regional, forest, and district offices have in managing their lands and

resources and the need to strictly adhere to the agency’s policies and

requirements relating to financial and performance accountability. In

April 1998, the Forest Service placed responsibility for fiscal and business

management under a Chief Operating Officer, who reports directly to the

Chief of the Forest Service. This restructuring is intended to improve the

agency’s accounting and business practices and may provide the needed

leadership.

Recommendations To improve the Forest Service’s accountability for results, GAO

recommends that the Secretary of Agriculture direct the Chief of the

Forest Service to (1) revise the agency’s budget structure, budget

allocation criteria, and performance measures to better link them to the

Forest Service’s strategic goals and objectives and (2) incorporate the new

performance measures into the management cost and performance

reporting system that the agency is developing. Moreover, to help ensure

that the budget allocation criteria and performance measures are revised

and the management cost and performance reporting system is

implemented in a timely manner, GAO recommends that the Secretary

direct the Chief to establish a firm schedule to achieve performance

accountability.

Agency Comments GAO provided copies of a draft of this report to the Forest Service for its

review and comment. The agency generally agreed with the report’s

findings and recommendations. However, it believed that improvements to

its budget structure should be made concurrently with, rather than after,

improvements to its budget allocation criteria, performance measures, and

reporting systems, as suggested in the draft report. GAO agrees with the

Forest Service that a piecemeal approach to correcting known accounting

and financial reporting deficiencies and performance-related problems will

not work and has revised the report accordingly.

Page 8 GAO/RCED-99-2 The Forest Service’s Fiscal Year 1995 Budget Reforms
Executive Summary

The Forest Service was also concerned that the draft report implied that

its Washington and regional offices have not been budgeting and allocating

funds in a manner consistent with the fiscal year 1995 budget reforms. GAO

revised the report to clarify that (1) since fiscal year 1995, the funds have

generally been budgeted and allocated at the agency’s Washington and

regional offices in a manner consistent with the budget reforms, (2) the

implementation of the reforms at the forest and district offices has been

left to the discretion of field and program managers, and (3) some forest

and district offices continue to distribute and track funds as if the reforms

had not occurred. The agency’s comments, together with GAO’s responses

to them, appear in appendix I.

Page 9 GAO/RCED-99-2 The Forest Service’s Fiscal Year 1995 Budget Reforms
Contents

Executive Summary 2

Chapter 1 

Introduction

12

How the Forest Service Is Organized 12

How the Forest Service’s Budget Cycle Works 13

Why the Forest Service Requested More Flexibility in Its Budget

Structure

16

Objectives, Scope, and Methodology 16

Chapter 2 

The Budget Reforms

Have Resulted in

Little Change in

Managing the National

Forests

19

The Benefits of Consolidating Line Items Have Not Been Fully

Realized

20

Expanding the Forest Service’s Reprogramming Authority Has

Not Had a Noticeable Effect on the Number of Reprogramming

Requests

26

Funding to Carry Out a Project Is Not Always Consolidated in

One Program

29

Chapter 3 

Accountability Is

Hampered by

Inadequate

Performance

Measures and a Focus

on Resource-Specific

Outputs

33

The Forest Service’s Budget Allocation Criteria Often Are Not

Linked to Its Strategic Goals and Objectives

33

The Forest Service’s System for Measuring Performance Is

Inadequate

35

The Forest Service’s Management Cost and Performance

Reporting System Will Not Provide Adequate Performance

Information

39

Chapter 4 

Conclusions and

Recommendations

41

Recommendations 43

Agency Comments 43

Appendixes Appendix I: Comments From Forest Service 44

Appendix II: Major Contributors to This Report 48

Tables

Page 10 GAO/RCED-99-2 The Forest Service’s Fiscal Year 1995 Budget Reforms
Contents

Table 1.1: The National Forest System’s Budget and Extended

Budget Line Items Used to Fund the National Forest System’s

Programs

15

Table 2.1: Comparison of the National Forest System’s Budget

and Extended Budget Line Items, Fiscal Years 1994 and 1995

20

 Table 3.1: Fiscal Year 1998 Budget Allocation Criteria Related to

Using Timber Sales as a Tool to Restore or Protect Forested

Ecosystems

34

Table 3.2: Fiscal Year 1998 National Forest System-Related MAR

Indicators Used to Measure Progress Toward Restoring or

Protecting Forested Ecosystems

36

Table 3.3: Fiscal Year 1998 National Forest System-Related MAR

Indicators Used to Measure Progress Toward Providing Quality

Recreational Experiences

38

Figure Figure 2.1: Timber-Related Extended Budget Line Items in the

National Forest System’s Appropriation for Fiscal Years 1994 and

1995 and Activities Tracked at the Pacific Northwest Regional

Office

23

Abbreviations

GAO General Accounting Office

GPRA Government Performance and Results Act

MAR Management Attainment Report

Page 11 GAO/RCED-99-2 The Forest Service’s Fiscal Year 1995 Budget Reforms
Chapter 1 

Introduction

The Department of Agriculture’s Forest Service manages about 192 million

acres of land—nearly 9 percent of the nation’s total surface area and

30 percent of all federal lands. Laws guiding the management of the 155

forests, 20 national grasslands, and 17 national recreation areas within the

National Forest System require the agency to manage its lands to provide

high levels of six renewable surface uses—outdoor recreation, rangeland,

timber, watersheds and waterflows, wilderness, and wildlife and fish—to

current users while sustaining undiminished the lands’ ability to produce

these uses for future generations. In addition, the Forest Service’s

guidance and regulations require the agency to consider the production of

nonrenewable subsurface resources, such as oil, gas, and hardrock

minerals, in its planning.1

To carry out the Forest Service’s mission, each year the President’s budget

proposes and the Congress appropriates funds to, among other things,

(1) manage the National Forest System, (2) conduct or sponsor forest and

rangeland research, and (3) enhance the health and sustainable

management of the nation’s state and private forests. In committee

reports, the House and Senate Committees on Appropriations allocate

funds to one or more line items within each of these appropriations. The

agency then allocates these funds to its headquarters (Washington Office)

and field offices.

In the mid-1990s, the Forest Service asked the House and Senate

Appropriations Committees to restructure its budget to increase the

agency’s flexibility to carry out its mission and to improve its ability to use

funds where they are most needed. The Committees incorporated many of

these requested budget reforms in approving the Forest Service’s fiscal

year 1995 appropriations.

How the Forest

Service Is Organized

The Forest Service, created in 1905, is a hierarchical organization whose

management is highly decentralized and whose managers have

considerable autonomy and discretion for interpreting and applying the

agency’s policies and directions. The Chief of the Forest Service heads the

agency and, through Agriculture’s Under Secretary for Natural Resources

and Environment, reports to the Secretary of Agriculture.

In April 1998, the Chief of the Forest Service restructured the agency’s

management team to facilitate needed efficiencies regarding the Forest

Service’s accountability and business practices. As a result of the

1

Hardrock minerals include gold, silver, lead, iron, and copper.

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Chapter 1 

Introduction

restructuring, a Chief Operating Officer is responsible for fiscal and

business management and an Associate Chief for Natural Resources has

direct oversight for natural resources programs. Both report directly to the

Chief of the Forest Service.

Among other things, the Forest Service’s Washington Office establishes

policy and provides technical direction to the National Forest System’s

three levels of field management: 9 regional offices, 123 forest offices, and

about 600 district offices. At the Washington Office, the National Forest

System has separate program directors for nine programs: Engineering;

Lands; Recreation, Heritage, and Wilderness Resources; Minerals and

Geology; Range Management; Forest Management; Watershed and Air

Management; Wildlife, Fish, and Rare Plants; and Ecosystem

Management.2

 Similar lines of program management exist at the regional,

forest, and district office levels. However, because of budgetary

constraints, the management of some of these programs may be combined.

How the Forest

Service’s Budget

Cycle Works

The Forest Service starts to develop a budget for a given fiscal year about

2 years before the fiscal year begins. The agency constructs a budget for

the National Forest System and other appropriations—including forest

and rangeland research and state and private forestry—that indicates how

funds will be allocated among line items. The agency submits its proposed

budget to the Department of Agriculture for review and any changes about

15 months before the fiscal year begins. Agriculture, in turn, submits the

Forest Service’s budget to the Office of Management and Budget for

review and any changes about a year before the beginning of the fiscal

year in which the funds will be spent.

The President’s budget is submitted to the Congress no later than the first

Monday in February for the fiscal year beginning the coming October 1st.

Shortly afterwards, the Forest Service submits its explanatory notes to the

House and Senate Committees on Appropriations. Once the Committees

review, amend, and approve the agency’s budget, the Congress

appropriates funds for the National Forest System and for other Forest

Service appropriations as part of the appropriations act for the

Department of the Interior and related agencies. The Committees’ reports

or the appropriations act may also specify restrictions on certain types of

spending and may earmark funds for special activities or projects.

2

One definition of an ecosystem is a distinct ecological unit that is formed when interdependent

communities of plants and animals, which can include humans, interact with their physical

environment (i.e., soil, water, and air).

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Chapter 1 

Introduction

Once funds are received by the Forest Service, the agency removes funds

needed to operate the Washington Office and specifies funding that will be

used for national commitments and for special projects. The Washington

Office then allocates the remaining funds by line item to its regional

offices.

The appropriation for the National Forest System includes 21 budget and

extended budget line items that are generally used to fund the system’s

nine programs. A National Forest System program may be funded from

one or more line items under the appropriation for the National Forest

System. When a program, such as Minerals and Geology, is funded from

only one line item—in this instance, Minerals and Geology

Management—the line item is referred to as a “budget line item.” Other

programs are funded from two or more line items. For example, the Forest

Management program is funded from the Timber Sales Management and

the Forestland Vegetation Management line items. These line items are

referred to as “extended budget line items” and are aggregated into a

budget line item for Forestland Management. (See table 1.1.)

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Chapter 1 

Introduction

Table 1.1: The National Forest System’s Budget and Extended Budget Line Items Used to Fund the National Forest

System’s Programs

Fiscal year 1995 National Forest System budget and extended

budget line items National Forest System programs

Ecosystem Planning, Inventory, and Monitoringa Ecosystem Management

Recreation Management

Wilderness Management

Heritage Resources

Recreation, Heritage, and Wilderness Resources

Wildlife Habitat Management

Inland Fish Habitat Management

Anadromous Fish Habitat Management

Threatened, Endangered, and Sensitive Species Habitat Management

Wildlife, Fish, and Rare Plants

Grazing Management

Rangeland Vegetation Management

Range Management

Timber Sales Management

Forestland Vegetation Management

Forest Management

Soil, Water, and Air Operations

Watershed Improvements

Watershed and Air Management

Minerals and Geology Management Minerals and Geology

Real Estate Management

Landline Location

Lands

Road Maintenance

Facility Maintenance

Engineering

Law Enforcement Operationsb b

General Administrationc c

aThis line item is currently called Land Management Planning, Inventory, and Monitoring.

bThis line item is under the Director, Law Enforcement and Investigations, who reports to the Chief

of the Forest Service.

cThis line item funds general line management, administrative support, and common services

within the National Forest System.

Source: Forest Service.

Funds are usually allocated to the agency’s nine regional offices on the

basis of budget allocation criteria developed by the Forest Service. For

example, the criteria for allocating funds from the Wildlife Habitat

Management extended budget line item to each region include, among

other things, the number of acres, the opportunities for habitat restoration

and enhancement, and the number of big game species. Regions then

distribute the funds by line item to the 155 national forests on the basis of

regional budget allocation criteria or on a program-by-program assessment

of needs.

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Chapter 1 

Introduction

Finally, each national forest office allocates funds to its districts by line

item and by the type of activity that will be performed. For example, a

national forest office might allocate some funds within the Grazing

Management extended budget line item to a district to be used specifically

to construct improvements for livestock grazing. District personnel not

only receive funding slated for specific activities within each line item,

they also track and charge their work accordingly.

Why the Forest

Service Requested

More Flexibility in Its

Budget Structure

In fiscal year 1992, the Forest Service was cited by the National

Performance Review—a White House-led study of ways to improve the

efficiency of federal programs—as an example of an agency whose budget

structure impeded the productive management and the efficient use of

taxpayer dollars. As the Forest Service moved from managing individual

resources, such as wildlife, recreation, timber, rangeland, and water, to a

more broad-scale, more comprehensive approach to land management

(ecosystem management), the agency proposed significant changes in its

budget structure for fiscal year 1995 to help implement this management

approach and improve efficiency.

In acting on the Forest Service appropriations for fiscal year 1995, the

House and Senate Appropriations Committees (1) consolidated line items

in the agency’s budget for which specific amounts of funds are allocated,

(2) expanded the agency’s authority to reprogram funds without

requesting the Committees’ approval,3

 and (3) restructured the agency’s

budget so that all funding to carry out a project—including the funding for

services provided by others—is consolidated in the program that will

benefit most from the project. In return for this increased budget

flexibility, the Appropriations Committees expected the Forest Service to

improve its performance measures and accountability for expenditures

and results.

Objectives, Scope,

and Methodology

The Chairman and Ranking Minority Member of the Subcommittee on

Interior and Related Agencies, House Committee on Appropriations, asked

us to review the Forest Service’s implementation of the fiscal year 1995

budget reforms. As agreed with their offices, this report discusses (1) the

3

Congressional reprogramming guidelines for the Forest Service define reprogramming as the

reallocation of funds from one budget line item to another within the same appropriation. Under these

guidelines, when a report by either the House or Senate Committee on Appropriations displays an

allocation of an appropriation below a budget line item, such as an extended budget line item, then the

extended budget line item, rather than the budget line item, becomes the basis for reprogramming.

Table 1.1 displays the budget line items and extended budget line items for which funds are allocated

under the appropriation for the National Forest System.

Page 16 GAO/RCED-99-2 The Forest Service’s Fiscal Year 1995 Budget Reforms
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Introduction

Forest Service’s implementation of the fiscal year 1995 reforms and (2) the

progress that the agency has made toward becoming more accountable for

its results. Our review was limited primarily to funds appropriated to

manage the National Forest System. The appropriation for the National

Forest System represented about $1.3 billion or about 47 percent of the

Forest Service’s discretionary appropriations and about 37 percent of its

total appropriations for fiscal year 1997.

We conducted our work at the Forest Service’s Washington Office; three of

the agency’s nine regional offices—the Pacific Northwest (Region 6), the

Southern (Region 8), and the Eastern (Region 9); and five national

forests—the Deschutes and Willamette (in Oregon and Region 6), the

Daniel Boone (in Kentucky and Region 8), and the Superior and Chippewa

(in Minnesota and Region 9).

To obtain information on both objectives, we interviewed Forest Service

budget officials, field managers, and officials responsible for managing

various programs within the National Forest System at all of the agency’s

locations that we visited. We also obtained and reviewed relevant reports,

records, correspondence, budget data, budget allocation criteria, and data

on performance indicators at these offices.

In addition, to obtain information on the Forest Service’s implementation

of the budget reforms, we reviewed applicable laws and legislative

histories relating to the reforms, the agency’s directives and guidance in

implementing the reforms, and the agency’s budget justification

explanatory notes. To obtain information on the Forest Service’s progress

toward becoming more accountable for its results, we reviewed relevant

reports by the Department of Agriculture’s Office of Inspector General,

relevant studies by a consulting firm and an environmental group, and

prior GAO reports and testimonies.

We performed our work from September 1997 through September 1998 in

accordance with generally accepted government auditing standards. In

conducting our work, we did not independently verify the reliability of the

financial data provided by the Forest Service nor did we trace the data to

the systems from which they came. These systems were, in some cases,

subject to audit procedures by the Department of Agriculture’s Office of

Inspector General in connection with the agency’s financial statement

audits.

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For fiscal years 1995, 1996, and 1997 and previous years, Agriculture’s

Office of Inspector General reported that because of significant internal

control weaknesses in various accounting subsystems, the Forest Service’s

accounting data were not reliable. Despite these weaknesses, we used the

data because they were the only data available and are the data that the

agency uses to manage its programs.

We obtained comments on a draft of this report from the Forest Service.

The agency’s comments and our evaluation are presented in appendix I.

Page 18 GAO/RCED-99-2 The Forest Service’s Fiscal Year 1995 Budget Reforms
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The Forest Service’s management of the National Forest System has not

appreciably changed as a result of the increased flexibility offered by the

fiscal year 1995 budget reforms. Specifically, although consolidating the

budget line items and extended budget line items was intended to provide

field managers with larger pools of funds and, thus, greater discretion in

deciding where to spend the funds, some forest and district offices have

continued to distribute and track funds as if the consolidation had not

occurred. In addition, the budget is still structured primarily by individual

resource-specific programs, such as timber sales and wildlife habitat

management, although the agency’s strategic goals and objectives

increasingly require that these and other programs be integrated to

achieve broader stewardship objectives, such as restoring or protecting

forested ecosystems.

The fiscal year 1995 budget reforms also expanded the Forest Service’s

ability to move funds between line items without the Appropriations

Committees’ approval. However, the agency has seldom requested such

approval either before or after the reforms. On the basis of information

provided by the Forest Service, the agency submitted one or two requests

a year for the Appropriations Committees’ approval to reprogram funds

among line items for the National Forest System in fiscal years 1994

through 1997. Thus, the reforms have not had a noticeable impact on the

number of reprogrammings requested from the Appropriations

Committees.

Finally, the fiscal year 1995 budget reforms restructured the Forest

Service’s budget so that all the funding for a project is consolidated in the

program that will benefit most from that project. However, for a variety of

reasons, including underestimating a project’s costs, a benefiting program

may not have the funds needed to implement a project. In these instances,

it may require other programs that are providing support services to

absorb the costs of the services instead of seeking to meet its needs by

moving funds between line items or requesting that funds be

reprogrammed. This practice circumvents the requirements established by

the Appropriations Committees and the agency to move funds between

line items and understates a project’s costs. It also precludes the Forest

Service from providing the Congress and other interested parties with

meaningful, useful, and reliable information on the costs and the

accomplishments of the National Forest System’s programs.

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The Benefits of

Consolidating Line

Items Have Not Been

Fully Realized

The fiscal year 1995 budget reforms reduced the number of budget line

items and extended budget line items in the Forest Service’s budget from

72 to 48, primarily by combining many of them. Within the appropriation

for the National Forest System, the budget line items and extended budget

line items were reduced from 37 to 28. Line items for which a specific

amount of funds are allocated to support the National Forest System were

reduced from 31 to 21, or by almost one-third. (See table 2.1.)

Table 2.1: Comparison of the National Forest System’s Budget and Extended Budget Line Items, Fiscal Years 1994 and

1995

Line items before budget reforms

(fiscal year 1994)

Line items after budget reforms

(fiscal year 1995) Explanation of changes

— Ecosystem Planning, Inventory, and

Monitoring

New budget line item was established by

shifting funds from other line items.

Recreation Use

—Recreation Management

—Wilderness Management

—Cultural Resources Management

Recreation Use

—Recreation Management

—Wilderness Management

—Heritage Resources

Line items remained virtually unchanged.

Forest Trail Maintenance — Seventy percent of this budget line item’s

funds shifted to Recreation Management

and 30 percent shifted to Wilderness

Management in fiscal year 1995.

Wildlife and Fish Habitat Management

—Wildlife Management

—Inland Fish Management

—Anadromous Fish Management

—Threatened, Endangered, and Sensitive

Species Management

Wildlife and Fisheries Habitat Management

—Wildlife Habitat Management

—Inland Fish Habitat Management

—Anadromous Fish Habitat Management

—Threatened, Endangered, and Sensitive

Species Habitat Management

Line items remained virtually unchanged.

Range Management

—Range Vegetation Management

—Rangeland Improvements

—Wild Horses and Burros

—Noxious Weed Control

Rangeland Management

—Grazing Management

—Rangeland Vegetation Management

Four extended budget line items were

consolidated into two.

Timber Sales Administration and Management

—Timber Resource Inventory Planning

—Silvicultural Examination

—Sales Preparation 

—Harvest Administration

Forestland Management

—Timber Sales Management

—Forestland Vegetation Management

Two budget line items were consolidated

into one, and seven extended budget line

items were consolidated into two.

Reforestation and Timber Stand Improvement

—Reforestation

—Timber Stand Improvement

—Nursery and Tree Improvement Operations

Soil, Water, and Air Management

—Soil, Water, and Air Operations

—Soil and Water Resource Improvements

—Soil Inventory

Soil, Water, and Air Management

—Soil, Water, and Air Operations

—Watershed Improvements

Soil Inventory was moved to new

Ecosystem Planning, Inventory, and

Monitoring budget line item.

Minerals and Geology Management Minerals and Geology Management Line item was not changed.

(continued)

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Line items before budget reforms

(fiscal year 1994)

Line items after budget reforms

(fiscal year 1995) Explanation of changes

Real Estate Management

Landline Location

Land Ownership Management

—Real Estate Management

—Landline Location

Two budget line items became extended

budget line items under a new budget line

item called Land Ownership Management.

Forest Road Maintenance

Facility Maintenance

Infrastructure Management

—Road Maintenance

—Facility Maintenance

Two budget line items became extended

budget line items under a new budget line

item called Infrastructure Management.

Cooperative Law Enforcement

Drug Enforcement

National Forest System Law Enforcement

Law Enforcement Operations Three budget line items were consolidated

into one budget line item.

General Administration General Administration Budget line item was not changed.

Source: Forest Service.

The intent of this consolidation was to simplify the management of funds.

By combining funds into larger pools, field and program managers would

have increased flexibility and greater discretion in deciding where to

spend the funds.

The Forest Service officials we interviewed generally support

consolidating line items in the budget and, in many instances, favor

additional consolidation. However, some forest and district offices

continue to distribute and track funds by line items that were combined

under the fiscal year 1995 reforms, thus counteracting the increased

flexibility and discretion provided by the consolidation. In addition, there

is no clear link between the Forest Service’s integrated-resource approach

to natural resources management, which emphasizes maintaining and

restoring the health of forested, rangeland, and aquatic ecosystems, and

the resource-specific line items in the agency’s budget.

Some Forest Service Field

Offices Continue to

Distribute and Track Funds

as If the Consolidation of

Line Items Had Not

Occurred

Since the fiscal year 1995 budget reforms, funds have generally been

budgeted and allocated at the Forest Service’s Washington and regional

offices consistent with the consolidated budget line items and extended

budget line items. However, the implementation of the reforms at the

forest and district offices has been left to the discretion of field and

program managers. As a result, some forest and district offices continue to

distribute and track funds as if the consolidation had not occurred, thus

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undermining the full potential of the budget reforms to simplify the

management of funds.

For example, in acting on the fiscal year 1995 appropriations for the Forest

Service, the House and Senate Appropriations Committees reiterated to

the agency the importance of clearly presenting in its budget justification

the same level of detailed information that had been provided under the

old budget structure. According to the Forest Service, for most programs,

this meant keeping the same, or possibly expanding, the number of

activities used to track expenditures. For example, to account for funds

allocated to the National Forest System’s 21 line items, the Pacific

Northwest office (Region 6) tracks funds for as many as 217 different

activities, including many for line items that were eliminated through

consolidation. To illustrate, although the fiscal year 1995 budget reforms

reduced the number of timber-related extended budget line items in the

National Forest System’s appropriation from seven to two, that office still

tracks funds for as many as 14 different activities under the two line items,

including several activities for the line items that had been eliminated.

(See fig. 2.1.)

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Figure 2.1: Timber-Related Extended Budget Line Items in the National Forest System’s Appropriation for Fiscal Years 1994

and 1995 and Activities Tracked at the Pacific Northwest Regional Office

Fiscal Year 1994 Line Items Fiscal Year 1995 Line Items Timber-Related Activities

Appeals and Litigation - Program (Costs of 

processing appeals, litigation, and contract 

claims)

Appeals and Litigation - Sales (Costs of 

reworking sale plans that are changed as a 

result of appeals and litigation)

Silvicultural Examination and Prescriptions

Timber Sale Planning for Current and Future 

Sales

Timber Sale Preparation for Current and 

Future Sales

Silvicultural 

Examination

Sales Preparation

Harvest 

Administration

Timber Sales 

Management

Silvicultural Examination and Prescriptions

Reforestation

Timber Stand Improvement

Nursery Activities

Genetic Tree Activities

Timber Stand 

Improvement 

Nursery and Tree 

Improvement Operations

Reforestation 

Forestland 

Vegetation 

Management

Timber Resource 

Inventory Planning

Timber Sale Preparation for Future Sales 

Only

Timber Harvest Administration for Forest 

Stewardship

Timber Harvest Administration for Personal 

Use

Timber Harvest Administration for Timber 

Program

Timber Sale Planning for Future Sales Only

(Figure notes on next page)

Page 23 GAO/RCED-99-2 The Forest Service’s Fiscal Year 1995 Budget Reforms
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Source: Forest Service.

According to the official at the Pacific Northwest office who is responsible

for natural resources budget and finance, in addition to tracking

expenditures by activity, some forest and district offices have also chosen

to distribute funds by activity rather than by line item. Although field and

program managers have some flexibility to move funds among activities,

district office staff tend to see the distributions as rigid limits to planning

and accounting for work. For example, instead of moving funds among

activities during a fiscal year, field and program staff may redistribute

work charged to activities after the fact to achieve or maintain specific

levels of funding within activities (called “retroactive redistribution”). In

1998, this practice was noted in a review of the Forest Service’s financial

systems by a private consulting firm4

 as well as a report by the Department

of Agriculture’s Office of Inspector General.5

The Forest Service’s

Budget Structure Is Not

Consistent With the

Agency’s Strategic Goals

and Objectives

The Forest Service is an agency in transition. Over the past decade, the

agency has shifted its emphasis from consumption (primarily producing

timber) to conservation (primarily sustaining wildlife and fish) and has

moved from managing specific resources to a broader, more

comprehensive ecosystem-based approach to land management. However,

notwithstanding the fiscal year 1995 budget reforms, the Forest Service’s

budget structure has not kept pace with the agency’s transformation and,

as a result, there is no clear link between the agency’s ecosystem-based

strategic goals and objectives and the National Forest System’s

resource-specific line items.

As the Forest Service has made clear in several documents during the past

year, its overriding mission and funding priority, consistent with its

existing legislative framework, is to maintain or restore the health of the

lands entrusted to its care. These documents include the agency’s

September 30, 1997, strategic plan prepared under the Government

Performance and Results Act of 1993 (the Results Act),6

 its fiscal year 1999

4

Modernizing Financial Management at the Forest Service: Financial Management & Organizational

Analysis, Coopers & Lybrand Consulting (Mar. 18, 1998).

5

Review of Forest Service’s Retroactive Redistribution (Evaluation Report No. 08801-4-Hq., Aug. 1998).

6

USDA Strategic Plan 1997-2002: A Healthy and Productive Nation in Harmony With the Land, Forest

Service Strategic Plan, U.S. Department of Agriculture, Office of the Secretary (Sept. 30, 1997).

Page 24 GAO/RCED-99-2 The Forest Service’s Fiscal Year 1995 Budget Reforms
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budget explanatory notes,7 its first annual performance plan developed

under the Results Act,8

 and the Chief’s March 1998 natural resource

agenda for the twenty-first century.9

 The agency intends to limit goods and

services on national forests—including recreational experiences,

commercial sawtimber and other forest products, and livestock and

wildlife forage—to the types, levels, and mixes that the lands are capable

of sustaining. The documents also make clear that the agency intends to

fulfill this responsibility primarily by using an ecosystem-based approach

to land management that emphasizes integrating resource-specific

programs and activities to maintain and restore the health of forested,

aquatic, and rangeland ecosystems.

The fiscal year 1995 budget reforms created a new line item—ecosystem

planning, inventory, and monitoring—to allow the Forest Service to plan

more along the boundaries of natural systems. However, the Forest

Service’s budget structure remains highly fragmented along the lines of

individual resource-specific programs and activities, such as managing

timber sales, livestock grazing, wildlife habitat, and wildfires. This

fragmentation works against an integrated approach to land management.

For example, the Forest Service’s fiscal year 1997 annual report cites the

goal of restoring and protecting forested ecosystems as the agency’s

highest priority.10 However, rather than having one large pool of funds

available to achieve this goal and greater discretion to spend funds, a

forest or district office may have to use up to 24 different funding sources

to implement a plan to restore or protect a forested ecosystem. These

funding sources include four National Forest System line items over which

the forest and district offices have the most control. Of the remaining 20

funding sources, 7 are from the state and private forestry appropriation, 2

are from the wildland fire management appropriation, 1 is from the land

acquisition appropriation, and the other 10 are from various permanent

appropriations and trust funds for such activities as brush removal, timber

salvage sales, and reforestation. According to some Forest Service officials

we talked to, this fragmented approach can result in inefficiently

implementing an ecosystem-based management plan.

7

FY 1999 Budget Explanatory Notes for the Committee on Appropriations, U.S. Department of

Agriculture, Forest Service (Feb. 1998).

8

FY 1999 USDA Forest Service Annual GPRA Performance Plan, U.S. Department of Agriculture,

Forest Service (Feb. 4, 1998).

9

A Gradual Unfolding of a National Purpose: A Natural Resource Agenda for the 21st Century, Speech

Before Forest Service Employees, Chief of the Forest Service (Mar. 2, 1998).

10Report of the Forest Service, Fiscal Year 1997, U.S. Department of Agriculture (May 1998).

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Expanding the Forest

Service’s

Reprogramming

Authority Has Not

Had a Noticeable

Effect on the Number

of Reprogramming

Requests

Since fiscal year 1995, the House and Senate Committees on

Appropriations have expanded the Forest Service’s ability to move funds

between line items without the Committees’ approval and then taken some

of this increased flexibility away. Similarly, the Forest Service has

loosened, then tightened, its requirements relating to obtaining the

approval of the Chief before a region can move funds among extended

budget line items. However, increasing or reducing the funding threshold

for obtaining the Committees’ approval to reprogram funds and loosening

or tightening the agency’s requirements seem to have little effect on the

number of reprogrammings that the Forest Service requests from the

Appropriations Committees.

The House and Senate

Appropriations

Committees Have

Increased, Then Reduced,

the Funding Threshold for

Obtaining Their Approval

to Reprogram Funds

Before fiscal year 1995, the Forest Service was required to obtain the

Appropriations Committees’ approval to reprogram more than $250,000, or

10 percent of the funds, whichever was less on an annual basis, between

budget line items and extended budget line items. As part of the fiscal year

1995 budget reforms, the House and Senate Appropriations Committees

expanded the agency’s reprogramming authority by allowing it to move,

without requesting the Committees’ approval, (1) up to $3 million between

budget line items, or 10 percent of the funds for a budget line item,

whichever was less on an annual basis, and (2) funds among the extended

budget line items within a budget line item. The agency, in turn, delegated

the authority to move funds among the extended budget line items within

a budget line item to its regional offices.

However, concerned that the reforms had provided the Forest Service

with too much latitude to make changes without sufficiently involving the

Congress, the Appropriations Committees reduced the agency’s

reprogramming authority in fiscal year 1998 by requiring the Forest

Service to obtain their approval to reprogram more than $500,000, or

10 percent of the funds, whichever was less on an annual basis, between

both budget line items and extended budget line items. The Forest Service,

in turn, tightened its reprogramming guidelines to require its regional

offices to obtain the approval of the Chief before reprogramming funds

between the National Forest System’s budget line items or among its

extended budget line items, up to $500,000.

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The Forest Service Has

Been Able to Meet Most of

Its Needs by Moving

Funds, Dollar-for-Dollar,

Between Line Items

The Forest Service’s district, forest, and regional offices have always been

able to move funds between line items, regardless of the funding threshold

for obtaining the Appropriations Committees’ approval through a process

called “brokering.” Under this process, the Forest Service tries to meet its

needs by moving funds between line items at the lowest possible

organizational level without ever exceeding the amounts allocated in the

Committees’ reports.

Districts within a national forest advise their forest office of any need to

move funds from one line item to another. The forest office then offsets or

brokers the requests of one district against the requests of other districts

within the forest, thus keeping the total funds for each line item within the

amount allocated to that forest office and avoiding the need to request a

reprogramming. Requests that cannot be brokered at the level of the forest

office are submitted to the regional office, which offsets the requests of

one forest office against the requests from others within the region, thus

keeping the total funds for each line item within the amount allocated to

the regional office and again avoiding the need to request a

reprogramming. Finally, requests that cannot be brokered at the regional

level are submitted to the Washington Office, which offsets the requests of

one region against the requests of other regions while still keeping the

total funds for each line item within the amount allocated to the agency

and avoiding the need to request a reprogramming.

For example, during a fiscal year, one district office may need more funds

for wildlife habitat management and less funds for recreation management

than it was allocated while another district office within the same forest

may need more funds for recreation management and less funds for

wildlife habitat management. Under the Forest Service’s brokering

process, the districts would simply trade or offset funds allocated for

wildlife habitat management for funds allocated for recreation

management. Trades that cannot be made at the level of the forest office

are elevated to the regional level and ultimately to the Washington Office.

Because the total funds for both line items remain within the amounts

allocated to the agency, reprogramming is not required.

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Obtaining the

Appropriations

Committees’ Approval to

Reprogram Funds Has

Always Been the

Alternative of Last Resort

Needs that cannot be met by brokering must be met by reprogramming.

Although the Forest Service could not document the benefits resulting

from expanding the agency’s authority to reprogram funds without the

Appropriations Committees’ approval, increasing the funding threshold

and allowing regional offices more flexibility to move funds to meet

changed conditions may reduce the administrative burden at the

Washington Office and at other organizational levels within the agency.

Conversely, reducing the funding threshold and the regional offices’

flexibility to move funds may increase the administrative burden at these

organizational levels. However, neither increasing or reducing the funding

threshold nor loosening or tightening the regional offices’ flexibility to

move funds seems to affect the number of reprogrammings that the Forest

Service requests from the Committees.

According to Forest Service officials, the agency rarely seeks

reprogramming approval because it is the agency’s responsibility to stay as

close as possible to the amounts allocated in the Committees’ reports. In

addition, the process to request and obtain the Committees’ approval to

reprogram funds can take several months. The process of determining

reprogramming needs generally begins during a midyear review at which

regional needs that cannot be met by brokering are identified. The agency

then attempts to meet those needs that cannot be offset dollar-for-dollar

by reprogramming funds within its authority to do so. Only if it cannot

meet its reprogramming needs within its funding threshold will the Forest

Service request the Appropriations Committees’ approval to reprogram

funds, and only after the request has been (1) routed to several offices

within the Department of Agriculture for sequential review and approval,

(2) subsequently submitted to the Office of Management and Budget for its

review and approval, and (3) forwarded to the Secretary of Agriculture for

submittal to the Committees.

As a result, the Forest Service has seldom requested such approval either

before or after the fiscal year 1995 budget reforms. On the basis of

information provided by the Forest Service, the agency submitted one or

two requests a year for the Appropriations Committees’ approval to

reprogram funds among line items for the National Forest System in fiscal

years 1994 through 1997. The amounts totaled about $29.1 million in fiscal

year 1994, $35.5 million in fiscal year 1995, $9.5 million in fiscal year 1996,

and $13.7 million in fiscal year 1997.

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Funding to Carry Out

a Project Is Not

Always Consolidated

in One Program

The fiscal year 1995 budget reforms restructured the Forest Service’s

budget so that all funding to carry out a project is consolidated in the

program that will benefit the most from that project. Under this

concept—called “benefiting function”—a program, such as Forest

Management, that requires support services from other programs,

including the Wildlife, Fish, and Rare Plants, to assist in conducting

environmental analyses and preparing environmental documents relating

to a planned timber sale, should pay the costs of those services, rather

than the programs that provide the support. However, programs that

underestimate the costs of a project or otherwise do not have the funds

needed to pay for a project’s support services may require other programs

that are providing support services to absorb the costs of the services.

Agency officials informed us that “charging as budgeted” and not “as

worked” was sometimes a more acceptable option than either not doing

the project or requesting a time-consuming and possibly uncertain

brokering or reprogramming of funds. However, this practice not only

circumvents the requirements established by the Appropriations

Committees and the agency to move funds between line items and

understates a project’s cost, it also precludes the Forest Service from

providing the Congress and other interested parties with meaningful,

useful, and reliable information on the costs and the accomplishments of

the National Forest System’s programs.

Although quantifying the extent to which staff providing support services

do not charge their work to the benefiting program is not possible without

firsthand knowledge of each project, the practice of a benefiting program

requiring other programs to absorb the costs of providing support services

appears to be widespread throughout the Forest Service. For example, at

our request, an official in the Lands program at the Washington Office

conducted an internal survey of the National Forest System in July 1998.

On the basis of that systemwide survey, he estimated that since fiscal year

1995, on average, about 49 percent of the funds allocated to the Lands

program to survey, locate, mark and post, and maintain previously marked

property lines between lands in the National Forest System and lands in

other ownership (landline location) have been used to support other

programs, but charged to the Lands program. Funds allocated to the Lands

program for landline location activities average about $14 million a year.

Other studies have reached similar conclusions. For instance, a

March 1998 report by a private consulting firm that examined the Forest

Service’s financial systems states that “the capability to work around

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’charged as worked’ initiatives is the most serious criticism of the agency’s

current accounting and budget infrastructure. This capability is often cited

as the primary reason for the Forest Service’s lack of financial

credibility.”11

Moreover, “charging as budgeted” and not “as worked” appears to be

occurring at all three levels of National Forest System field management.

For example, a March 1998 report by the Department of Agriculture’s

Office of Inspector General states that 8 out of 10 biological evaluations

conducted in one district office were paid for by the Wildlife, Fish, and

Rare Plants program instead of the benefiting program (e.g., timber and

recreation).12 Similarly, Wildlife, Fish, and Rare Plants program officials in

the Pacific Northwest (Region 6) office observed that the recreation,

minerals, and range programs were not providing adequate funds for

biological support services to prepare environmental documents, so funds

were being taken inappropriately from the wildlife program. And, a

briefing paper prepared in 1996 by the Washington Office’s director of the

Wildlife, Fish, and Rare Plants program noted that no attempt had been

made to fund salary costs within the Washington Office consistent with

the concept of benefiting function.

According to several Forest Service officials we spoke to and agency

documents that we reviewed, in some instances, staff from programs

providing support services may not always charge their costs to the

benefiting program because the program primarily benefiting from the

work has not been clearly identified, defined, or understood. For example,

work mischarged to fisheries activities in the Wildlife, Fish, and Rare

Plants program in the Eastern Region (Region 9) dropped from an average

of 60 percent to 12 percent after the region circulated guidance on

identifying the benefiting program and the importance of charging work to

it. Other regional offices and forest offices have issued similar guidance to

clarify specific benefiting programs and activities.

Some of the confusion in identifying the benefiting program may be

because the Forest Service’s budget structure has not kept pace with the

agency’s movement away from goals and objectives that clearly benefit

one resource-specific program toward using multiple programs to

accomplish broader ecosystem-based goals and objectives. Timber as a

11Modernizing Financial Management at the Forest Service: Financial Management & Organizational

Analysis, Coopers & Lybrand Consulting (Mar. 18, 1998).

12Forest Service Wildlife and Fisheries Habitat Management, Fiscal Year 1996 (Audit Report No.

08601-4-At, Mar. 1998).

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commodity program versus timber as a tool to achieve a stewardship

objective, such as maintaining or restoring a forested ecosystem, is an

example. The agency’s Forest Management Program Report for fiscal year

1997 notes that the proportion of total harvest volume removed solely for

timber commodity purposes had fallen from 71 percent in fiscal year 1993

to 52 percent in fiscal year 1997.13 During that time, the proportion

removed for forest stewardship purposes—mostly to accomplish a forest

ecosystem health-related objective—had grown from 23 to 40 percent.

This trend is expected to continue and, by fiscal year 1999, the Forest

Service estimates that the proportion of total harvest volume removed

solely for timber commodity purposes will have fallen to 46 percent while

the proportion removed for forest stewardship purposes will have grown

to 54 percent. Although timber sales will increasingly be used as a tool to

maintain or restore forested ecosystems, timber sales management under

the Forest Management program is still identified as the benefiting

function.

We found instances where field and program managers justified charging

the programs providing support services because many programs

benefited from the project, so they decided that the program with

available funding should pay. For example, a snowmobile club using the

Superior National Forest in Minnesota asked permission from the Forest

Service to build a snowmobile trail. However, because of the requirements

of the Wilderness Act, the trail could not be constructed on lands

designated as wilderness. To locate the boundary of the wilderness, the

Lands program was required to survey the area of the forest where the

trail was to be built and mark and post the boundaries of the wilderness.

Officials at the Forest Service’s Washington Office agree that the

Recreation, Heritage, and Wilderness Resources program was the

benefiting program because it is responsible for both recreation and

wilderness management. However, the costs to survey, locate, and mark

and post the boundaries of the wilderness area were absorbed by the

Lands program.

The forest office’s budget and finance officer justified charging the costs

to the Lands program by pointing out that the boundaries of the

wilderness area would eventually have to be established anyway.

However, the manager of the Lands program in the forest office stated that

locating the boundaries of wilderness to build a snowmobile trail was a

relatively low priority within that program. Moreover, the funds allocated

13National Summary: Forest Management Program Report for Fiscal Year 1997, U.S. Department of

Agriculture, Forest Service, FS-627 (July 1998).

Page 31 GAO/RCED-99-2 The Forest Service’s Fiscal Year 1995 Budget Reforms
Chapter 2 

The Budget Reforms Have Resulted in Little

Change in Managing the National Forests

to that program were needed to meet the Forest Service’s priority of

reducing the risks, such as timber theft, soil and water degradation, and

encroachments and trespass, to the National Forest System’s resources

that are caused by the rapid population growth along the boundaries of the

national forests—an area termed the “wildland/urban interface.”

In an April 1997 report,14 we stated that the Forest Service had not given

adequate attention to improving its accountability for expenditures and

performance and that improvements are often left to the discretion of

regional offices and forests with uneven or mixed results. The failure of

certain regions, forests, and districts to consistently charge the costs of

support services to the benefiting programs is another example of an

organizational culture of indifference toward accountability. In the April

1997 report, as well as in March 1998 testimony,15 we observed that strong

leadership within the Forest Service would be required to ensure

corrective action.

14Forest Service Decision-Making: A Framework for Improving Performance (GAO/RCED-97-71, Apr.

29, 1997).

15Forest Service: Lack of Financial and Performance Accountability Has Resulted in Inefficiency and

Waste (GAO/T-RCED/AIMD-98-135, Mar. 26, 1998).

Page 32 GAO/RCED-99-2 The Forest Service’s Fiscal Year 1995 Budget Reforms
Chapter 3 

Accountability Is Hampered by Inadequate

Performance Measures and a Focus on

Resource-Specific Outputs

In exchange for the greater flexibility granted to the Forest Service by the

fiscal year 1995 budget reforms, the Appropriations Committees expected

the agency to, among other things, improve its performance measures and

increase its accountability for results. Actions to be taken by the Forest

Service included improving its existing performance measure system and

implementing a management cost and performance reporting system that

it was developing. In addition, the Forest Service has developed

agencywide criteria to allocate appropriated funds to its regions and

forests. However, (1) the Forest Service’s budget allocation criteria are

often not linked to the agency’s strategic goals and objectives; (2) its

performance measures do not, in many instances, adequately reflect its

accomplishments or progress toward achieving its goals and objectives;

and (3) the management cost and performance reporting system that the

agency was, and is still, developing uses the performance measures as

input. As a result, the Forest Service, the Congress, and other interested

parties do not have an adequate measure of the agency’s funding needs or

its progress toward achieving its goals and objectives.

The Forest Service’s

Budget Allocation

Criteria Often Are Not

Linked to Its Strategic

Goals and Objectives

Since fiscal year 1996, the Forest Service has used criteria developed at

the Washington Office to allocate funds by extended budget line items to

its field offices. However, these allocation criteria often are not linked to

the agency’s strategic goals and objectives.

For instance, the Forest Service’s fiscal year 1997 annual report cites the

goal of restoring and protecting forested ecosystems as the agency’s

highest priority.16 Similarly, the agency’s September 30, 1997, 5-year

strategic plan makes clear that, consistent with its existing legislative

framework, the Forest Service’s overriding mission and funding priority is

to maintain or restore the health of the lands entrusted to its care and that

it intends to fulfill this responsibility primarily by maintaining and

restoring the health of forested, aquatic, and rangeland ecosystems.17 The

agency’s July 1998 Forest Management Program Report for fiscal year 1997

continues this theme, noting that the proportion of total harvest volume

removed to accomplish forest ecosystem health-related objectives and

other forest stewardship purposes had grown to 40 percent and that by

fiscal year 1999 this proportion is expected to increase to 54 percent.18

16Report of the Forest Service, Fiscal Year 1997, U.S. Department of Agriculture (May 1998).

17USDA Strategic Plan 1997-2002: A Healthy and Productive Nation in Harmony With the Land, Forest

Service Strategic Plan, U.S. Department of Agriculture, Office of the Secretary (Sept. 30, 1997).

18National Summary: Forest Management Program Report for Fiscal Year 1997, U.S. Department of

Agriculture, Forest Service, FS-627 (July 1998).

Page 33 GAO/RCED-99-2 The Forest Service’s Fiscal Year 1995 Budget Reforms
Chapter 3 

Accountability Is Hampered by Inadequate

Performance Measures and a Focus on

Resource-Specific Outputs

However, the criteria that the Forest Service used to allocate fiscal year

1998 funds to its field offices to manage timber sales were based solely on

managing timber as a commodity rather than on using it as a tool to

accomplish a stewardship objective.

In its first annual performance plan developed under the Government

Performance and Results Act of 1993 (the Results Act),19 dated February 4,

1998, the Forest Service identified three extended budget line items within

the National Forest System appropriation that are available to forest and

district offices to restore or protect forested ecosystems, including one for

Timber Sales Management. However, all three of the budget allocation

criteria for this funding source relate to providing a continuous supply of

timber from the national forests, not to restoring or protecting the forested

ecosystems. While the agency’s Forest Management Program Report for

fiscal year 1997 stresses the fact that the timber being removed from the

national forests today includes proportionately more (1) dead and dying

trees, as opposed to green timber, and (2) nonsawtimber, as opposed to

sawtimber,20 the criteria for allocating funds appropriated for Timber Sales

Management for fiscal year 1998 relate solely to the volume of green

timber produced or offered. (See table 3.1.)

Table 3.1: Fiscal Year 1998 Budget

Allocation Criteria Related to Using

Timber Sales as a Tool to Restore or

Protect Forested Ecosystems

Strategic objective

National Forest System

funding source

Budget allocation criteria

for fiscal year 1998

Restore or protect the

ecological integrity of

forested ecosystems to

maintain their biological and

physical components,

functions, and

interrelationships and the

capability for self-renewal.

Timber Sales Management Amount of green volume

that could be produced at

current service level (50%)

Amount of green timber that

could be produced with

unlimited funding (25%)

3-year average of green

timber offered (25%)

Source: Forest Service.

19FY 1999 USDA Forest Service Annual GPRA Performance Plan, U.S. Department of Agriculture,

Forest Service (Feb. 4, 1998).

20Sawtimber is defined as trees of such size and quality that they contain logs suitable for processing

into lumber.

Page 34 GAO/RCED-99-2 The Forest Service’s Fiscal Year 1995 Budget Reforms
Chapter 3 

Accountability Is Hampered by Inadequate

Performance Measures and a Focus on

Resource-Specific Outputs

The Forest Service’s

System for Measuring

Performance Is

Inadequate

Soon after the fiscal year 1995 budget reforms were enacted, the Forest

Service sent a memorandum to its managers outlining the reforms and

how it intended to fulfill its commitment to the Congress to improve

accountability. Among other things, the Forest Service planned to develop

new measures of performance and improve existing indicators in the

primary system it has been using to measure performance—the

Management Attainment Report or MAR report. The indicators in the MAR

report are intended to measure how well the Forest Service’s field offices

are, and the agency as a whole is, performing. However, with few

exceptions, the agency officials we interviewed considered the MAR report

to be, at best, an imperfect measure of the agency’s performance and, at

worst, misleading.

In total, the MAR report has more than 100 indicators for the National

Forest System’s nine programs. These indicators include the number of

forest plan revisions completed or underway, the number of miles of

wilderness trails, the number of heritage sites evaluated or protected, and

the number of acres of noxious weeds treated. The indicators are intended

to measure how well field offices are performing. Information from the

MAR report is also used to report the Forest Service’s performance to the

Congress and the public.

Prior to the beginning of a fiscal year, Forest Service program managers in

the Washington Office negotiate performance targets for a handful of MAR

indicators for their individual programs. These targets are then allocated

by program to the regional, forest, and district offices. At the end of the

fiscal year, program staff in the district offices report their

accomplishments by indicator to their forest office. The forest offices

combine the districts’ accomplishments and forward them to their regional

office, which in turn combines the forests’ accomplishments and forwards

them to the Washington Office where they are combined and reported to

the Congress and the public.

Performance Measures

Often Do Not Adequately

Reflect Accomplishments

or Progress Toward

Achieving Strategic Goals

and Objectives

The MAR indicators often do not adequately reflect the Forest Service’s

progress toward achieving its strategic goals and objectives. For instance,

restoring and protecting forested ecosystems is the Forest Service’s

highest priority. However, more often than not, the MAR indicators do not

provide any indication of the agency’s progress toward achieving this

objective.

Page 35 GAO/RCED-99-2 The Forest Service’s Fiscal Year 1995 Budget Reforms
Chapter 3 

Accountability Is Hampered by Inadequate

Performance Measures and a Focus on

Resource-Specific Outputs

For example, in its first annual performance plan developed under the

Results Act, the Forest Service identifies three MAR indicators related to

the three extended budget line items within the National Forest System

appropriation that are available to forest and district offices to restore or

protect forested ecosystems. (See table 3.2.) However, none of these MAR

indicators provides a good measure of the agency’s progress toward

achieving this objective.

Table 3.2: Fiscal Year 1998 National

Forest System-Related MAR Indicators

Used to Measure Progress Toward

Restoring or Protecting Forested

Ecosystems

Strategic objective

National Forest System

funding sources

MAR indicators for fiscal

year 1998

Restore or protect the

ecological integrity of

forested ecosystems to

maintain their biological and

physical components,

functions, and

interrelationships and the

capability for self-renewal.

Timber Sales Management

Forestland Vegetation

Management

Wildlife Habitat Management

None

Forestlands maintained or

enhanced by timber stand

improvement

Acres restored by

reforestation

Acres of terrestrial wildlife

habitat restored or

enhanced

Source: Forest Service.

The primary objective of the activities relating to two of the three MAR

indicators is to provide for a continuous supply of timber from the

national forests, rather than to maintain or restore the health of the lands.

For instance, timber stand improvement is defined by the Forest Service

as “noncommercial cutting and other treatments made to increase the

growth and improve the quality of trees for timber uses” and reforestation

is defined as “treatments or activities that help to reestablish stands of

trees after harvest.”

The remaining MAR indicator is intended to measure a biological

component of a forested ecosystem; that is, its wildlife. However, this

indicator measures only the number of acres of terrestrial wildlife habitat

restored or enhanced and not the agency’s progress toward accomplishing

its stated objective of maintaining well-distributed viable populations of

wildlife (the viability or viable populations requirement). Moreover,

because the indicator is limited to wildlife, it does not measure the

agency’s progress toward maintaining the diversity of other biological

components of ecosystems, such as plant communities.

Page 36 GAO/RCED-99-2 The Forest Service’s Fiscal Year 1995 Budget Reforms
Chapter 3 

Accountability Is Hampered by Inadequate

Performance Measures and a Focus on

Resource-Specific Outputs

The Forest Service’s September 30, 1997, 5-year strategic plan also

identifies goals and objectives for goods and services on national forests,

including providing quality recreational experiences. In addition, the

Chief’s March 1998 natural resource agenda for the twenty-first century

emphasizes recreation as one of only four key areas on which the Forest

Service intends to focus its resources.21 However, of the six potential

funding sources within the National Forest System’s appropriation that are

available to forest and district offices to provide quality recreation, four

did not have any MAR indicators relating specifically to recreation for fiscal

year 1998. In addition, none of the fiscal year 1998 MAR indicators for the

remaining two funding sources—recreation management and road

maintenance—measures the agency’s progress toward providing quality

recreational experiences. Rather than quality and outcomes, the MAR

indicators measure quantity or such outputs as seasonal capacity available

at developed facilities; the number of miles of roads and recreational

trails; the number of permits “in existence” for private recreational cabins,

special group events, and other noncommercial special uses; and the

number of visitors to the forests. (See table 3.3.) Moreover, (1) the

seasonal capacity available at developed facilities includes capacity that is

not being maintained “to standard,” (2) the number of special use permits

includes those not administered to standard but “on the books,” and

(3) the total miles of Forest Service-managed roads includes those “less

than fully maintained.” Thus, a substandard facility or an unmaintained

road is counted as an accomplishment toward improving the level of

customer satisfaction provided by recreational opportunities on national

forests.

21A Gradual Unfolding of a National Purpose: A Natural Resource Agenda for the 21st Century, Speech

Before Forest Service Employees, Chief of the Forest Service (Mar. 2, 1998).

Page 37 GAO/RCED-99-2 The Forest Service’s Fiscal Year 1995 Budget Reforms
Chapter 3 

Accountability Is Hampered by Inadequate

Performance Measures and a Focus on

Resource-Specific Outputs

Table 3.3: Fiscal Year 1998 National

Forest System-Related MAR Indicators

Used to Measure Progress Toward

Providing Quality Recreational

Experiences

Strategic objective

National Forest System

funding sources

MAR indicators for fiscal

year 1998

Provide quality recreation

experiences with minimal

impacts to ecosystem

stability and condition.

Wildlife Habitat Management

Inland Fisheries Habitat

Management

Anadromous Fisheries

Habitat Management

Threatened, Endangered,

and Sensitive Species

Habitat Management

Recreation Management

Road Maintenance

None

None

None

None

Seasonal developed facility

capacity available

(standard and substandard)

Total miles of recreation

trails

Total number of special-use

permits (standard and

substandard)

Number of visitors

Roads maintained

(standard and substandard)

Source: Forest Service.

In its fiscal year 1999 annual performance plan developed under the

Results Act, the Forest Service stated that it is developing a new

process—called “Meaningful Measures”—that will, among other things,

(1) identify measurable components of the recreation program;

(2) establish standards of quality for each component; and (3) monitor,

measure, and report actual management attainment of the quality

standards. The plan states that the process should be available in fiscal

year 1999 for use in preparing the fiscal year 2000 performance plan.

However, as noted by the Department of Agriculture’s Office of Inspector

General in 1998,22 the process, which has been under development since at

least 1994, (1) is still evolving, (2) has not been implemented, and (3) has

not been integrated in the automated real property inventory and

management system that the agency has been developing since 1993.

22Forest Service Maintenance Backlog, U.S. Department of Agriculture, Office of Inspector General

(Feb. 4, 1998).

Page 38 GAO/RCED-99-2 The Forest Service’s Fiscal Year 1995 Budget Reforms
Chapter 3 

Accountability Is Hampered by Inadequate

Performance Measures and a Focus on

Resource-Specific Outputs

Not only do the MAR indicators often measure quantity and outputs when

they should be measuring quality and outcomes, they do not measure

outputs consistently. A frequent complaint by officials we interviewed was

that many of the MAR indicators are so broadly defined that two field units

reporting identical accomplishments may have expended very different

levels of effort and accomplished very different objectives. For example,

for fiscal year 1998, one of the MAR indicators for both the Wildlife Habitat

Management and the Threatened, Endangered, and Sensitive Species

Habitat Management extended budget line items was the “total number of

structures constructed.” However, according to agency officials, a

structure can be as inexpensive as a wooden box for nesting ducks or as

resource-intensive as a fish ladder to increase the number of adult fish

migrating upstream. A field unit with few resources, yet eager to meet its

performance targets, has an incentive to focus on less resource-intensive

activities even though by focusing its efforts on one large project it might

actually provide greater wildlife benefits.

Finally, many Forest Service officials stated that MAR data are not reliable.

They told us that they do not expend much effort to ensure the accuracy

of the information they report. Moreover, no unit of the National Forest

System that we visited systematically reviewed and audited the accuracy

of the accomplishments reported by field and program staff, and some

have developed so-called “cuff” records and reports that are unique to the

units and cannot be combined and reported to the Congress and the

public.

The Forest Service’s

Management Cost and

Performance

Reporting System Will

Not Provide Adequate

Performance

Information

In exchange for the greater flexibility granted to the Forest Service by the

fiscal year 1995 budget reforms, the agency also agreed to implement a

management cost and performance reporting system called All Resources

Reporting that it has been developing since fiscal year 1988.23 The agency

is uncertain when this system will be fully implemented. The system is

intended to provide meaningful, useful, and reliable information on the

National Forest System’s costs, revenues, accomplishments, and economic

benefits to help meet the agency’s responsibilities for financial

management and accomplishment reporting. To provide such information,

the reporting system depends on both reliable financial data and adequate

performance measures, neither of which the Forest Service currently has.

All Resources Reporting is intended to be an integrated financial and

accomplishment reporting system. It was designed to clearly display the

23Forest Service: Status of the All-Resource Cost Reporting Project (GAO/AFMD-89-65, Apr. 14, 1989).

Page 39 GAO/RCED-99-2 The Forest Service’s Fiscal Year 1995 Budget Reforms
Chapter 3 

Accountability Is Hampered by Inadequate

Performance Measures and a Focus on

Resource-Specific Outputs

relationship between expenditures associated with a program or activity in

a national forest and the revenues collected or other outcomes or outputs

resulting from that program or activity. In addition, it is to include

socioeconomic information to help assess the annual social and economic

benefits derived from a national forest. The system is comprised of a

family of year-end financial statements and other reports intended to

capture the benefits and costs of program management. However, the

system and its statements and reports depend on accurate and complete

financial and performance data, which the agency cannot provide.

We have previously reported on shortcomings in the Forest Service’s

information systems and accounting and financial data—such as the lack

of reliable account balances for lands, buildings, and roads and the lack of

detailed records to substantiate amounts that the agency either owes or is

owed by others. These shortcomings preclude the Forest Service from

presenting accurate and complete financial information. Because of the

severity of the problems identified, we are monitoring and periodically

reporting on the Forest Service’s effort to correct its accounting and

financial reporting deficiencies.24 On the basis of our work, we believe that

the earliest that the Congress may have assurance that the agency’s

financial statements are reliable is when the Department of Agriculture’s

Inspector General reports on the Forest Service’s fiscal year 2000

statements sometime in fiscal year 2001.25

To clearly display the relationship between expenditures and results, the

All Resources Reporting system must also have adequate and complete

performance data. However, to measure performance, the reporting

system relies on the MAR indicators, which may be inadequate measures of

the Forest Service’s accomplishments or progress toward achieving its

goals and objectives. Moreover, while the agency has identified the actions

required to correct known accounting and financial reporting deficiencies

and has established a schedule to attain financial accountability within the

next few years, it has not identified the actions required to correct the

problems with its performance measures or established a schedule to

achieve accountability for its performance by a certain date.

24Forest Service: Status of Progress Toward Financial Accountability (GAO/AIMD-98-84, Feb. 27, 1998).

25Forest Service: Lack of Financial and Performance Accountability Has Resulted in Inefficiency and

Waste (GAO/T-RCED/AIMD-98-135, Mar. 26, 1998).

Page 40 GAO/RCED-99-2 The Forest Service’s Fiscal Year 1995 Budget Reforms
Chapter 4 

Conclusions and Recommendations

The Forest Service’s management of the National Forest System has not

appreciably changed as a result of the fiscal year 1995 budget reforms

primarily because of two underlying causes—one relatively new and the

other as old as the agency itself. New is the inability of the agency’s budget

structure to keep pace with the Forest Service’s ongoing transition from

an agency emphasizing consumption (primarily producing timber) to one

emphasizing conservation (primarily sustaining wildlife and fish) and from

an agency managing specific resources to one managing forested and

other ecosystems. As a result, there is (1) currently no clear link between

the agency’s ecosystem-based strategic goals and objectives and the

resource-specific National Forest System line items in its budget and

(2) some confusion within the agency in identifying the program that will

benefit most from a project so that costs can be consistently charged to

that program.

As old as the Forest Service itself is the agency’s highly decentralized

organizational structure and the considerable autonomy and discretion

that field and program managers have in interpreting and applying the

agency’s policies and directions. As in the past, (1) implementation of the

fiscal year 1995 reforms within the Forest Service’s hierarchical

organization has been left to the discretion of regional, forest, and district

offices with uneven and mixed results and (2) there has been no

consequences associated with making a certain decision and no

responsibility fixed for attaining a particular result.

The broad discretion that the Forest Service has given its field and

program managers has resulted in, among other things, (1) some forest

and district offices continuing to distribute and track funds as if the

reforms had not occurred, (2) some field managers redistributing work

charged to other activities after the fact in order to achieve or maintain

specific levels of funding within activities, and (3) programs without the

funds needed to pay for a project’s support services requiring other

programs that are providing the support to absorb the costs of the services

rather than seeking to meet their needs by moving funds between line

items or by requesting a reprogramming of funds by the Chief of the Forest

Service or the House and Senate Appropriations Committees.

Moreover, the Forest Service has not fulfilled its part of the “quid pro quo”

with the Congress that resulted from the fiscal year 1995 budget reforms.

Although the Appropriations Committees gave the agency increased

flexibility over its budget, the Forest Service has not provided the

Committees with the improved accountability that they requested.

Page 41 GAO/RCED-99-2 The Forest Service’s Fiscal Year 1995 Budget Reforms
Chapter 4 

Conclusions and Recommendations

Currently, there is no clear link between the Forest Service’s strategic

goals and objectives and its budget allocation criteria and performance

measures. Rather than develop new criteria and measures and improve

existing ones to better align them with its mission and funding priorities,

the agency is trying to use old resource-specific allocation criteria and

performance measures with its new integrated-resource goals and

objectives.

The disconnect between the Forest Service’s strategic goals and objectives

and its performance measures and the inadequacy of the measures

themselves become even more critical because the management cost and

performance reporting system, which the agency has been developing

since 1988, uses the performance measures to display the relationship

between expenditures and results. Inadequate and unreliable performance

measures that are also not linked to the agency’s strategic goals and

objectives will be used to report accomplishments in achieving those goals

and objectives. As a result, the Forest Service, the Congress, and other

interested parties do not have an adequate measure of the agency’s

funding needs or its progress toward achieving its goals and objectives.

While further changes to the Forest Service’s budget structure seem to be

warranted to facilitate management of the 155 national forests, we believe

that any future revisions should coincide with, rather than precede,

actions required to correct known accounting and financial reporting

deficiencies as well as problems with performance-related data,

measurement, and reporting. However, the Forest Service has not

established a schedule to achieve accountability for its performance and is

uncertain when its management cost and performance reporting system

will be fully implemented. A firm schedule is needed so that the agency

can demonstrate progress toward becoming more accountable for its

performance and results.

Developing and implementing a firm schedule to correct identified

management deficiencies and to achieve performance accountability will

require strong leadership within the agency and sustained oversight by the

Congress to make clear the demarcation between the discretion that

regional, forest, and district offices have in managing their lands and

resources and the need to strictly adhere to the agency’s policies and

requirements relating to financial and performance accountability. The

April 1998 restructuring of the Forest Service’s management team that

placed responsibility for fiscal and business management under a Chief

Page 42 GAO/RCED-99-2 The Forest Service’s Fiscal Year 1995 Budget Reforms
Chapter 4 

Conclusions and Recommendations

Operating Officer who reports directly to the Chief of the Forest Service

may provide the needed leadership.

Recommendations To improve the Forest Service’s accountability for results, we recommend

that the Secretary of Agriculture direct the Chief of the Forest Service to

(1) revise the agency’s budget structure, budget allocation criteria, and

performance measures to better link them to the Forest Service’s strategic

goals and objectives and (2) incorporate the new performance measures

into the management cost and performance reporting system that the

agency is developing. Moreover, to help ensure that the budget allocation

criteria and performance measures are revised and the management cost

and performance reporting system is implemented in a timely manner, we

recommend that the Secretary direct the Chief to establish a firm schedule

to achieve performance accountability.

Agency Comments We provided copies of a draft of this report to the Forest Service for its

review and comment. The agency’s comments, together with our

responses to them appear in appendix I.

The Forest Service generally agreed with the report’s findings and

recommendations. However, it believed that improvements to its budget

structure should be made concurrent with, rather than after,

improvements to its budget allocation criteria, performance measures, and

reporting systems as suggested in the draft report. We agree with the

Forest Service that a piecemeal approach to correcting known accounting

and financial reporting deficiencies and performance-related problems will

not work and have revised the report accordingly. The Forest Service also

provided comments on the factual content of the report, and changes were

made as appropriate.

Page 43 GAO/RCED-99-2 The Forest Service’s Fiscal Year 1995 Budget Reforms
Appendix I 

Comments From Forest Service

Note: GAO comments

supplementing those in the

report text appear at the

end of this appendix.

Page 44 GAO/RCED-99-2 The Forest Service’s Fiscal Year 1995 Budget Reforms
Appendix I 

Comments From Forest Service

See comment 1.

Page 45 GAO/RCED-99-2 The Forest Service’s Fiscal Year 1995 Budget Reforms
Appendix I 

Comments From Forest Service

See comment 2.

Page 46 GAO/RCED-99-2 The Forest Service’s Fiscal Year 1995 Budget Reforms
Appendix I 

Comments From Forest Service

The following are GAO’s comments on the Forest Service’s October 23,

1998, letter.

GAO Comments 1. We have revised the report to clarify that (1) since fiscal year 1995,

funds have generally been budgeted and allocated at the agency’s

Washington and regional offices consistent with the budget reforms,

(2) implementation of the reforms at the forest and district offices has

been left to the discretion of field and program managers, and (3) some

forest and district offices continue to distribute and track funds as if the

reforms had not occurred.

2. We agree with the Forest Service that a piecemeal approach to

correcting known accounting and financial reporting deficiencies and

performance-related problems will not work and have revised the report

to state that improvements to the agency’s budget structure should be

made concurrent with, rather than after, improvements to its budget

allocation criteria, performance measures, and reporting systems.

Page 47 GAO/RCED-99-2 The Forest Service’s Fiscal Year 1995 Budget Reforms
Appendix II 

Major Contributors to This Report

Jean Brady

Marcus R. Clark, Jr.

Charles S. Cotton

Doreen S. Feldman

Angela M. Sanders

(141072) Page 48 GAO/RCED-99-2 The Forest Service’s Fiscal Year 1995 Budget Reforms
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