FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

i 

Table of Contents 

Message from the Secretary ....................................................................................................................ii

About this Report ................................................................................................................................. iv 

1. Management’s Discussion and Analysis........................................................................................... 1

An Overview of the Department of Agriculture....................................................................................................1

Resources .....................................................................................................................................................................5

Performance Goals, Objectives, and Results..........................................................................................................7

Management Challenges...........................................................................................................................................9

Future Demands, Risks, Uncertainties, Events, Conditions, and Trends.......................................................17

USDA’s Results Agenda—Implementing Federal Management Initiatives...................................................18

Federal Managers’ Financial Integrity Act Report on Management Control.........................................35

Federal Financial Management Improvement Act Report on Financial Management Systems.........39

Inspector General Act Amendments of 1988: Management’s Report on Audit Follow-Up ...............40

FY 2008 Results ...............................................................................................................................................41

Management’s Report on Audit Follow-Up................................................................................................44

2. Annual Performance Report ......................................................................................................... 49

Strategic Goal 1: Enhance International Competitiveness of American Agriculture ....................................49

Strategic Goal 2: Enhance the Competitiveness and Sustainability of Rural and Farm Economies..........60

Strategic Goal 3: Support Increased Economic Opportunities and Improved Quality of Life In Rural 

America ......................................................................................................................................................................72

Strategic Goal 4: Enhance Protection and Safety of the Nation’s Agriculture and Food Supply...............80

Strategic Goal 5: Improve the Nation’s Nutrition and Health.........................................................................88

Strategic Goal 6: Protect and Enhance the Nation’s Natural Resource Base and Environment ................96

Program Assessment Rating Tool (PART) Evaluations..................................................................................106

Program Evaluations of Performance Information ...........................................................................................109
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

ii 

Message from the Secretary 

In fulfillment of our responsibilities to the President, Congress, and the people of the 

United States, I am pleased to share the 2008 Performance and Accountability Report 

of the U.S. Department of Agriculture (USDA).

Upon its creation in 1862, President Abraham Lincoln called USDA “the people’s 

department,” because it affects so many people’s lives in so many different ways, and 

earlier, President Thomas Jefferson, a farmer, noted that “cultivators of the earth are the 

most valuable citizens.” USDA works hard to keep these sentiments alive as it pursues 

its mission to provide leadership on food, agriculture, natural resources, and related 

issues based on sound public policy, the best available science, and efficient 

management.

In fiscal year (FY) 2008, to support this mission, USDA’s diverse workforce of more than 100,000 employees 

served as stewards of more than $96.5 billion in taxpayer dollars to: 

 Meet the needs of farmers and ranchers, promoting use of state-of-the-art agricultural research and technology 

and ensuring that the domestic agricultural sector continues to grow and remain competitive; 

 Expand economic opportunities in international markets for farmers, ranchers, and rural communities—

realizing a record $114.06 billion in U.S. agricultural exports in FY 2008; 

 Use the best available science and technology to protect the safety of the Nation’s food supply; 

 Facilitate access to a healthy diet for needy Americans, providing $34.0 billion in food stamp benefits;

 Prevent and fight devastating wildfires as well as restore fire-ravaged land; 

 Introduce the Fight Hunger Initiative for individuals and organizations wishing to help USDA fight hunger in 

communities across America; 

 Expand the availability of fruits and vegetables in School Lunch and nutrition programs; 

 Modernize the nutrition guidance USDA provides the Nation to reflect the latest scientific information and 

combat our country’s obesity epidemic; 

 Develop renewable energy and demonstrate how biofuels help keep gas prices down, reduce America’s 

dependence on oil, and reduce greenhouse gas emissions; 

 Eradicate and control invasive pests and prevent pest infestations; 

 Prevent introduction and fight animal diseases such as avian influenza; 

 Implement mandatory country-of-origin labeling; 

 Implement a national animal tracking system to help prevent disease spread;

 Continue to improve and expand soil, water, and other natural resource conservation programs;

 Work closely with the Federal Emergency Management Agency to assist in clean-up efforts following a 

devastating hurricane season; and 

 Invest in infrastructure that will bring new economic opportunities and jobs to rural areas. 

In response to the Government Accountability Office’s placement of USDA’s Food Safety and Inspection Service 

(FSIS) on its high-risk list in 2007, FSIS is working to reduce illness caused by contamination of the food supply 

by: 

 Implementing the Salmonella Initiative Program to provide incentives for meat and poultry plants whose 

processes control foodborne pathogens; 

 Enhancing FSIS’ ability to comprehensively evaluate food safety systems and take action as appropriate; 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

iii 

 Building a quality public health infrastructure with data that are readily accessible to key decision-makers and 

front-line personnel; and 

 Conducting real-time surveillance of high-risk shipments of meat, poultry, and egg products coming into the 

United States as well as vulnerability assessments focused on imports with the Food and Drug Administration, 

and the Department of Homeland Security’s U.S. Customs and Border Protection. 

The Department’s Senior Management Control Council continues to oversee USDA’s assessment of internal 

control over its programs, operations, financial systems, and financial reporting. The Department’s work is 

consistent with the provisions of the Federal Managers’ Financial Integrity Act (FMFIA) and the Federal Financial 

Management Improvement Act (FFMIA). Through the work of the Council, valuable information on the state of 

our systems allows us to provide a reasonable assurance that the content of this report is based on sound, accurate 

data. 

Nevertheless, continued improvement is needed to remediate existing material weaknesses and financial system 

noncompliances. To accomplish this goal, USDA management is continuing to monitor corrective action plan 

activities. Therefore, I provide qualified assurance that, except for the areas in need of improvement as described in 

the Management Assurances section of this report, USDA’s internal control over operations, financial systems, and 

financial reporting meet the objectives of FMFIA and FFMIA. The financial and performance information 

presented herein is complete and accurate and is in accordance with the law and with Office of Management and 

Budget guidance. 

Agriculture holds answers to some of the most pressing problems faced by our Nation and world—from meeting 

needs for renewable energy, and increasing crop yields to fight hunger, protecting the food supply to improving our 

environment and optimizing international trade. I hope that this report will provide you with an enhanced 

appreciation of USDA’s role in this dynamic industry as well as a deeper understanding of agriculture’s critically 

important role throughout America and around the world. 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

iv 

About this Report 

The Government Performance and Results Act of 1993 requires all Federal agencies to engage in a strategic 

planning process that directly aligns resources with results and enhances the accountability of all government 

endeavors to the American taxpayers who finance them. 

This results-oriented process includes the development and implementation of a five-year strategic plan; annual 

reporting that sets specific, measurable targets for performance at the beginning of each fiscal year; and a concrete, 

data-based assessment at year-end of the success of these endeavors. 

This Fiscal Year 2008 Performance and Accountability Report is the year-end progress report of the Department of 

Agriculture (USDA). It reviews the strategic goals and objectives the Department set for itself at the beginning of 

the fiscal year and compares initial targets to actual performance. The data used by USDA to measure actual 

performance are collected using standardized methodology that has been vetted by Federally employed scientists 

and policymakers and, ultimately, by the undersecretaries of the respective mission areas, all of whom attest to the 

completeness, reliability, and quality of the data. 

In addition to promoting accountability and enhancing the management of USDA programs, this report also helps 

illuminate the strategic allocation of resources in the future by directly linking program performance to budgetary 

decisions. 

This report assists policymakers to make informed decisions. It also strives to provide transparency to all Americans 

interested in the workings of their government and USDA’s ability to “manage for results” in performing its many 

vital public functions. 
MANAGEMENT’S DISCUSSION AND ANALYSIS 

1 

Management’s 

Discussion and 

Analysis 

An Overview of the Department of Agriculture 

The Department of Agriculture (USDA) is a diverse and complex organization with 

programs that touch the lives of all Americans every day. More than 100,000 employees 

deliver more than $96.5 billion in public services through USDA’s more than 300 

programs worldwide, leveraging an extensive network of Federal, State, and local 

cooperators. 

Founded by President Abraham Lincoln in 1862, when more than half of the Nation’s 

population lived and worked on farms, USDA’s role has evolved with the economy. Today, 

USDA improves the Nation’s economy and quality of life by: 

 Enhancing economic opportunities for U.S. farmers and ranchers; 

 Ensuring a safe, affordable, nutritious, and accessible food supply; 

 Caring for public lands and helping people care for private lands; 

 Supporting the sound, sustainable development of rural communities; 

 Expanding global markets for agricultural and forest products and services; and 

 Working to reduce hunger and improve America’s health through good nutrition. 

Addressing these timeless concerns in the modern era presents its share of challenges. 

America’s food and fiber producers operate in a global, technologically advanced, rapidly 

diversifying, and highly competitive business environment driven by sophisticated 

consumers. 

This report provides information on USDA’s core performance measures as described in its 

Strategic Plan for FY 2005-2010. They are: 

 To enhance international competitiveness of American agriculture; 

 To enhance the competitiveness and sustainability of rural and farm economies; 

 To support increased economic opportunities and improved quality of life in rural 

America; 

 To enhance protection and safety of the Nation’s agriculture and food supply; 

 To improve the Nation’s nutrition and health; and 

 To protect and enhance the Nation’s natural resource base and environment.
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

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These six goals mirror USDA’s commitment to provide first-class service, state-of-the-art science, and consistent 

management excellence across the Department. USDA uses the Program Assessment Rating Tool (PART) to 

assess and improve program performance so that the Department can achieve better results. The PART identifies 

how well and efficiently a program is working and what specific actions can be taken to improve its performance. 

PART ratings and analysis for all Federal Government programs can be found on the internet at ExpectMore.gov. 

Other internal and external program evaluations related to the goals and conducted during fiscal year (FY) 2008 are 

included in this document. 

Although change has been a constant in the evolution of the United States farm and food sector, the current 

marketplace emphasizes the growing importance to consumer preferences and the reach of global markets. USDA’s 

objectives reflect this. Through these objectives, USDA will strive to: 

 Expand international trade for agricultural products and support international economic development; 

 Expand domestic marketing opportunities for agricultural products and strengthen risk management, the use of 

financial tools, and the provision of sound information to help farmers and ranchers in their decision-making 

process; 

 Further develop alternative markets for agriculture products and activities; 

 Provide financing needed to help expand job opportunities and improve housing, utilities, and infrastructure in 

rural America; 

 Enhance food safety by taking steps to reduce the prevalence of foodborne hazards from farm to table and 

safeguard agriculture from natural and intentional threats;

 Improve nutrition by providing food assistance and nutrition education and promotion; and 

 Manage and protect America’s public and private lands working cooperatively with other levels of Government 

and the private sector. 

Exhibit 1: Headquarters Organization 

Agricultural Research 

Service

Cooperative State 

Research, Education, 

and Extension 

Service

National Agricultural 

Statistics Service

National Agricultural 

Library

Economic Research 

Service

Agricultural Marketing 

Service

Animal and Plant 

Health Inspection 

Service

Grain Inspection, 

Packers and 

Stockyards 

Administration

Under Secretary for 

Marketing and 

Regulatory Programs

Food Safety and 

Inspection 

Service

Under Secretary for 

Food Safety

Forest Service

Natural Resources 

Conservation 

Service

Under Secretary for 

Natural Resources

and Environment

Food and Nutrition 

Service

Center for Nutrition 

Policy and Promotion

Under Secretary for 

Food, Nutrition and 

Consumer Services

Farm Service 

Agency

Foreign Agricultural 

Service

Risk Management 

Agency

Under Secretary for 

Farm and Foreign 

Agricultural Services

Rural Utilities 

Service

Rural Housing 

Service

Rural BusinessCooperative Service

Under Secretary

for Rural

Development

Chief Information

Officer

Chief Financial

Officer

Inspector

General

Executive 

Operations

Director of

Communications

General

Counsel

Deputy Secretary

SECRETARY

Assistant Secretary for 

Congressional Relations

Under Secretary for 

Research, Education 

and Economics

Assistant Secretary for 

Administration

Assistant Secretary for 

Civil Rights

Agricultural Research 

Service

Cooperative State 

Research, Education, 

and Extension 

Service

National Agricultural 

Statistics Service

National Agricultural 

Library

Economic Research 

Service

Agricultural Marketing 

Service

Animal and Plant 

Health Inspection 

Service

Grain Inspection, 

Packers and 

Stockyards 

Administration

Agricultural Marketing 

Service

Animal and Plant 

Health Inspection 

Service

Grain Inspection, 

Packers and 

Stockyards 

Administration

Under Secretary for 

Marketing and 

Regulatory Programs

Food Safety and 

Inspection 

Service

Under Secretary for 

Food Safety

Forest Service

Natural Resources 

Conservation 

Service

Under Secretary for 

Natural Resources

and Environment

Food and Nutrition 

Service

Center for Nutrition 

Policy and Promotion

Under Secretary for 

Food, Nutrition and 

Consumer Services

Food and Nutrition 

Service

Center for Nutrition 

Policy and Promotion

Under Secretary for 

Food, Nutrition and 

Consumer Services

Farm Service 

Agency

Foreign Agricultural 

Service

Risk Management 

Agency

Under Secretary for 

Farm and Foreign 

Agricultural Services

Rural Utilities 

Service

Rural Housing 

Service

Rural BusinessCooperative Service

Under Secretary

for Rural

Development

Chief Information

Officer

Chief Financial

Officer

Inspector

General

Executive 

Operations

Director of

Communications

General

Counsel

Chief Information

Officer

Chief Financial

Officer

Inspector

General

Executive 

Operations

Director of

Communications

General

Counsel

Deputy Secretary

SECRETARY

Assistant Secretary for 

Congressional Relations

Under Secretary for 

Research, Education 

and Economics

Assistant Secretary for 

Administration

Assistant Secretary for 

Civil Rights
MANAGEMENT’S DISCUSSION AND ANALYSIS 

3 

USDA’s FY 2008 key milestones include: 

 Preserving over $7 billion in foreign trade through 

resolution of trade barriers; 

 Providing over 15,000 loans to beginning, minority, and 

women farmers; 

 Offering over $88 billion in Federal crop insurance 

protection; 

 Creating or saving over 70,000 jobs in rural America; 

 Maintaining loans to help 2.5 million rural families with 

housing loans including 64,000 new loans;

 Eradicating the Asian Longhorned Beetle, an invasive pest, from Illinois; 

 Providing Food Stamp assistance to more than 28 million people on average each month;

 Distributing more than 3 billion pieces of nutrition guidance materials via the Web and print; 

 Improving over 30 million acres of land using conservation measures;

 Treating almost 2.9 million acres with hazardous fuel reduction programs and conserving over 128,000 acres of 

wetland habitats; and

 Funding 22,500 years of graduate student forestry studies. 

MISSION AREAS 

To ensure that USDA’s efforts focus squarely on meeting its real world objectives, the Department’s work is 

organized by mission areas, which are a collection of agencies that work together to achieve USDA’s 

aforementioned strategic goals. A description of USDA’s seven mission areas follows. 

Natural Resources and Environment 

The Natural Resources and Environment (NRE) mission area ensures the health of the land through sustainable 

management. Its agencies work to prevent damage to natural resources and the environment, restore the resource 

base, and promote good land management. NRE consists of the Forest Service (FS) and the Natural Resources 

Conservation Service (NRCS). FS manages public lands in national forests and grasslands, which encompass 193 

million acres. NRCS provides leadership in a partnership effort to help America's private land owners and 

managers conserve their soil, water, and other natural resources. Both Agencies work in partnership with Tribal, 

State, and local Governments; communities; related groups; and other Federal agencies to protect the Nation’s 

soils, watersheds, and ecosystems. 

Farm and Foreign Agricultural Services 

The Farm and Foreign Agricultural Services (FFAS) mission area helps keep America's farmers and ranchers in 

business as they face the uncertainties of weather and markets. FFAS delivers commodity, credit, conservation, 

disaster, and emergency assistance programs that help improve the stability and strength of the agricultural 

economy. The mission area is comprised of the Farm Service Agency (FSA), the Foreign Agricultural Service 

(FAS), and the Risk Management Agency (RMA). FSA administers and manages farm commodity, credit, 

conservation, disaster, and loan programs as laid out by Congress through a network of Federal, State, and county 

offices. FAS works to improve international market access for U.S. products, build new markets, improve the 

competitive position of domestic agriculture in the global marketplace, and provide food aid and technical 

assistance to other countries. RMA helps producers manage their business risks through effective, market-based 

risk management solutions. 

Mission Statement 

The Department of Agriculture provides 

leadership on food, agriculture, natural 

resources, quality of life in rural America and 

related issues based on sound public policy, the 

best-available science and efficient 

management. 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

4 

This mission area also includes two Government-owned corporations. The Commodity Credit Corporation (CCC) 

works to stabilize farm income to help ensure an adequate, affordable supply of food and fiber. This corporation is a 

financial mechanism by which agricultural commodity, credit, export, conservation, disaster, and emergency 

assistance is provided. The Federal Crop Insurance Corporation (FCIC) improves the economic stability of 

agriculture through a sound system of crop insurance. 

Rural Development 

The Rural Development (RD) mission area focuses on helping improve the economy and quality of life in all of 

rural America. RD provides financial programs to support such essential public facilities and services as water and 

sewer systems, housing, health clinics, emergency service facilities, and electric and telephone service. It promotes 

economic development by providing loans to businesses through banks and community-managed lending pools, 

while also assisting communities to participate in community empowerment programs. RD provides grants, loans, 

and loan guarantees to farmers, ranchers, and rural small businesses to assist in developing renewable energy 

systems and make energy efficient improvements. 

Food, Nutrition and Consumer Services 

The Food, Nutrition and Consumer Services (FNCS) mission area works to harness the Nation's agricultural 

abundance to reduce hunger and improve health in the United States. Its agencies administer Federal domestic 

nutrition assistance programs. FNCS is comprised of the Food and Nutrition Service (FNS) and the Center for 

Nutrition Policy and Promotion (CNPP). FNS administers USDA’s 15 Federal nutrition assistance programs. 

CNPP works to improve the health and well-being of Americans by developing and promoting dietary guidance 

that links scientific research to the nutrition needs of consumers. 

Food Safety 

The Food Safety and Inspection Service (FSIS) is the public health agency responsible for ensuring that the 

Nation’s commercial supply of meat, poultry, and egg products is safe, wholesome, and labeled and packaged 

correctly. 

Research, Education and Economics 

The Research, Education and Economics (REE) mission area is dedicated to the creation of a safe, sustainable, 

competitive U.S. food and fiber system, as well as the development of strong communities, families, and youth 

through integrated research, analysis, and education. REE is comprised of the Agricultural Research Service 

(ARS); the Cooperative State Research, Education and Extension Service; the Economic Research Service; the 

National Agricultural Statistics Service (NASS); and the National Agricultural Library. 

Marketing and Regulatory Programs 

The Marketing and Regulatory Programs mission area facilitates the domestic and international marketing of U.S. 

agricultural products and ensures the health and care of animals and plants. MRP is made up of the Agricultural 

Marketing Service (AMS); the Animal and Plant Health Inspection Service (APHIS); and the Grain Inspection, 

Packers, and Stockyards Administration (GIPSA). AMS administers programs that facilitate the efficient, fair 

marketing of U.S. agricultural products, including food, fiber, and specialty crops. APHIS provides leadership in 

ensuring the health and care of animals and plants. GIPSA facilitates the marketing of livestock, poultry, meat, 

cereals, oilseeds, and related agricultural products.

DEPARTMENTAL OFFICES 

Department-level offices provide centralized leadership, coordination, and support for USDA’s policy and 

administrative functions. Their efforts maximize the energy and resources agencies devote to the delivery of services 

to USDA customers and stakeholders. 
MANAGEMENT’S DISCUSSION AND ANALYSIS 

5 

Resources 

Congressional appropriations are the primary funding source for USDA operations. FY 2008 program obligations 

totaled $137.7 billion, an increase of $9.8 billion compared to FY 2007. These are current year obligations from 

unexpired funds. They do not include prior year upward or downward obligation adjustments. 

Exhibit 2: FY 2008 and 2007 USDA Program Obligations Dedicated to Strategic Goals 

USDA Program Obligations Dedicated to Strategic Goals 

FY 2008 Actual Program Obligations 

Goal 1 — Enhance 

International Competitiveness 

of American Agriculture—4%

Goal 2 — Enhance the Competitiveness 

and Sustainability of Rural and Farm 

Economies—25%

Goal 4 — Goal 4-Enhance Protection and 

Safety of the Nation's Agriculture and Food

Goal 5 — Improve the Nation's Supply—2%

Nutrition and Health—46%

Goal 6 — Protect and Enhance 

the Nation's Natural Resource 

Base and Environment—9%

Goal 3 — Support Increased Economic 

Opportunities and Improved Quality of 

Life in Rural America—14%

FY 2007 Actual Program Obligations 

Goal 1 — Enhance 

International Competitiveness 

of American Agriculture — 4%

Goal 2 — Enhance the Competitiveness 

and Sustainability of Rural and Farm 

Economies— 29%

Goal 5 — Improve the Nation's 

Nutrition and Health— 45%

Goal 6 — Protect and 

Enhance the Nation's Natural 

Resource Base and 

Environment —9%

Goal 4 — Goal 4-Enhance Protection and 

Safety of the Nation's Agriculture and Food

Supply —2%

Goal 3 — Support Increased Economic 

Opportunities and Improved Quality of 

Life in Rural America— 12%
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

6 

Exhibit 3: FY 2008 and 2007 USDA Staff Years Dedicated to Strategic Goals 

USDA Staff Dedicated to Strategic Goals 

FY 2008 Actual Staff Years 

Goal 1 — Enhance 

International Competitiveness 

of American Agriculture — 2%

Goal 2 — Enhance the Competitiveness 

and Sustainability of Rural and Farm 

Economies— 20%

Goal 3 — Support Increased Economic 

Opportunities and Improved Quality of 

Life in Rural America— 6%

Goal 4 — Enhance Protection and Safety of the

Nation's Agriculture and Food Supply — 21%

Goal 5 — Improve the Nation's 

Nutrition and Health— 2%

Goal 6 — Protect and 

Enhance the Nation's Natural 

Resource Base and 

Environment —49%

FY 2007 Actual Staff Years 

Goal 1 — Enhance 

International Competitiveness 

of American Agriculture — 2%

Goal 2 — Enhance the Competitiveness 

and Sustainability of Rural and Farm 

Economies— 22%

Goal 3 — Support Increased Economic 

Opportunities and Improved Quality of 

Life in Rural America— 6%

Goal 4 — Support Increased Economic 

Opportunities and Improved Quality of Life 

in Rural America— 18%

Goal 5 — Improve the Nation's 

Nutrition and Health— 2%

Goal 6 — Protect and 

Enhance the Nation's Natural 

Resource Base and 

Environment — 50%

Goal 1 — Enhance 

International Competitiveness 

of American Agriculture — 2%

Goal 2 — Enhance the Competitiveness 

and Sustainability of Rural and Farm 

Economies— 22%

Goal 3 — Support Increased Economic 

Opportunities and Improved Quality of 

Life in Rural America— 6%

Goal 4 — Support Increased Economic 

Opportunities and Improved Quality of Life 

in Rural America— 18%

Goal 5 — Improve the Nation's 

Nutrition and Health— 2%

Goal 6 — Protect and 

Enhance the Nation's Natural 

Resource Base and 

Environment — 50%
MANAGEMENT’S DISCUSSION AND ANALYSIS 

7 

Performance Goals, Objectives, and Results 

Of the 33 performance goals contained in USDA’s FY 2009 and Revised FY 2008 Budget Summary and Annual 

Performance Plan, 28 were met or exceeded, 4 were unmet, and 1 was deferred. The following Performance 

Scorecard table, organized by USDA’s strategic goals and objectives, provides a summary of the Department’s 

performance results. Measure 3.2.5 consolidates two separate measures from the Budget Summary. Additional 

analyses of these results can be found in the Performance Section of this report. 

PERFORMANCE SCORECARD FOR FY 2008 

Objectives Annual Performance Goals Result 

Strategic Goal 1: Enhance International Competitiveness of American Agriculture 

1.1 Expand and Maintain International 

Export Opportunities 

1.1.1 Dollar value of agricultural trade expanded through trade agreement 

negotiation, monitoring, and enforcement (Non-Sanitary and Phytosanitary) 

Unmet 

1.2 Support International Economic 

Development and Trade Capacity 

Building 

1.2.1 Number of countries in which substantive improvements have been made in 

national trade policy and regulatory frameworks that increase market access 

Exceeded 

1.2.2 Food Aid Targeting Effectiveness Ratio Exceeded 

1.3 Improved Sanitary and Phytosanitary 

(SPS) System to Facilitate Agricultural 

Trade 

1.3.1 Value of trade preserved annually through USDA staff interventions leading to 

resolutions of barriers created by SPS or Technical Barrier to Trade (TBT) 

measures 

Exceeded 

Strategic Goal 2: Enhance the Competitiveness and Sustainability of Rural and Farm Economies 

2.1 Expand Domestic Market Opportunities 2.1.1 Number of items designated as biobased for Federal procurement Exceeded 

2.2 Increase the Efficiency of Domestic 

Agricultural Production and Marketing 

Systems 

2.2.1 Timeliness – Percent of time official reports are released on the date and time 

pre-specified to data users 

Unmet 

2.2.2 Percent of market-identified quality attributes for which USDA has provided 

standardization 

Exceeded 

2.3 2.3.1 Increase the normalized value of risk protection provided to agriculture 

producers through FCIC-sponsored insurance ($ Billion) 

Met 

2.3.2 Increase percentage of eligible crops with Noninsured Crop Disaster 

Assistance Payments (NAP) coverage. 

Unmet 

Provide Risk Management and Financial 

Tools to Farmers and Ranchers 

2.3.3. Increase percentage of beginning farmers, racial and ethnic minority farmers, 

and women farmers financed by USDA. 

Met 

Strategic Goal 3: Support Increased Economic Opportunities and Improved Quality of Life in Rural America 

3.1 Expand Economic Opportunities by 

Using USDA Financial Resources to 

Leverage Private Sector Resources and 

Create Opportunities for Growth 

3.1.1 Jobs Created or Saved Met 

3.2 3.2.1 Number of borrowers/subscribers receiving new and/or improved electric 

facilities 

Exceeded 

3.2.2 Number of borrowers/subscribers receiving new or improved 

telecommunication services (Broadband) 

Exceeded 

3.2.3 Number of borrowers/subscribers receiving new or improved service from 

agency funded water facility 

Exceeded 

Improve the Quality of Life Through 

USDA Financing of Quality Housing, 

Modern Utilities, and Needed 

Community Facilities 

3.2.4 Homeownership opportunities provided Exceeded 

3.2.5 Percentage of customers who are provided access to new and/or improved 

essential community facilities –

• Health facilities

• Safety facilities 

Met 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

8 

PERFORMANCE SCORECARD FOR FY 2008 

Objectives Annual Performance Goals Result 

Strategic Goal 4: Enhance Protection and Safety of the Nation’s Agriculture and Food Supply 

4.1.1 Reduce overall public exposure to generic Salmonella from broiler carcasses 

using existing scientific standards 

Met 

4.1.2 Reduce the overall public exposure to Listeria monocytogenes in ready-to-eat 

products 

Met 

4.1 Reduce the Incidence of Foodborne 

Illnesses Related to Meat, Poultry, and 

Egg Products in the U.S. 

4.1.3 Reduce the prevalence of E. coli O157:H7 on ground beef Unmet 

4.2.1 Number of significant introductions of foreign animal diseases or pests that 

spread beyond the original area of introduction and cause severe economic or 

environmental damage, or damage to the health of animals or humans 

4.2 Reduce the Number and Severity of Met 

Agricultural Pest and Disease Outbreaks 

4.2.2 Improve the capabilities of animal and plant diagnostic laboratories Met 

• Specific plant diseases labs are prepared to detect 

• Specific animal diseases labs are prepared to detect 

Strategic Goal 5: Improve the Nation’s Nutrition and Health 

5.1 Ensure Access to Nutritious Food 5.1.1 Participation levels for the major Federal nutrition assistance programs (millions 

per month): 

Met 

• Food Stamp Program (FSP) 

• National School Lunch Program (NSLP) 

• School Breakfast Program (SBP) 

• Special Supplemental Nutrition Program for Women, Infants, and Children 

(WIC) 

5.2 Promote Healthier Eating Habits and 

Lifestyles 

5.2.1 Application and usage level of nutrition guidance tools (pieces of nutrition 

guidance distributed) 

Exceeded 

5.3 Improve Nutrition Assistance Program 

Management and Customer Service 

5.3.1 Increase Food Stamp payment accuracy rate Deferred 

Strategic Goal 6: Protect and Enhance the Nation’s Natural Resource Base and Environment 

6.1.1 Comprehensive nutrient management plans applied (number of plans) Met 

• Conservation Technical Assistance 

6.1 Protect Watershed Health to Ensure 

Clean and Abundant Water 

• Environmental Quality Incentives Program 

6.1.2 Increase Conservation Reserve Program (CRP) acres of riparian and grass 

buffers 

Exceeded 

6.2.1 Cropland with conservation applied to improve soil quality (millions of acres) Met 

• Conservation Technical Assistance Program 

• Environmental Quality Incentives Program 

6.2 Enhance Soil Quality to Maintain 

Productive Cropland Base 

• Conservation Security Program 

6.3 6.3.1 Number of acres of hazardous fuel treated that are in the wildland urban 

interface 

Met 

6.3.2 Number of acres of hazardous fuel treated that are in condition classes 2 or 3 in 

Fire Regimes I, II, or III outside the wildland-urban interface 

Met 

Protect Forests and Grasslands 

6.3.3 Number of acres in condition classes 2 or 3 in Fire Regimes I, II, or III treated 

by all land management activities that improve condition class 

Met 

6.3.4 Grazing and forest land with conservation applied to protect and improve the 

resource base (millions of acres) 

Exceeded 

• Conservation Technical Assistance 

• Environmental Quality Incentives Program 
MANAGEMENT’S DISCUSSION AND ANALYSIS 

9 

PERFORMANCE SCORECARD FOR FY 2008 

Objectives Annual Performance Goals Result 

Strategic Goal 6: Protect and Enhance the Nation’s Natural Resource Base and Environment (cont’d) 

6.4 Protect and Enhance Wildlife Habitat to 

Benefit Desired, At-Risk, and Declining 

Species 

6.4.1 Wetlands created, restored, or enhanced (acres) Exceeded 

• Conservation Technical Assistance 

• Wetlands Reserve Program 

• Conservation Reserve Program 

ACTIONS ON UNMET AND DEFERRED GOALS 

USDA continuously works to improve its performance across all of its strategic goals and objectives. Sometimes 

circumstances arise that result in the Department falling short of its goals. At other times, the Department 

consciously alters its approach in ways that enhance its service to the public, but that make a specific performance 

goal a less effective indicator of real progress. The Annual Performance Report section of this report offers further 

discussion of the Department’s actions on its goals. 

Management Challenges 

In August, USDA’s Office of Inspector General (OIG) prepared a report on the most significant management 

challenges within the Department (Appendix A). These challenges have been identified as potential issues that 

could hamper the delivery of its programs and services. To mitigate these challenges, USDA management provides 

accomplishments for the current fiscal year and/or planned actions for the upcoming one. The Department is 

reporting on nine management challenges for FY 2008. Although one challenge from FY 2007 was removed, a new 

challenge was added for the current year. This addition leaves the total count of management challenges unchanged 

from the previous fiscal year. The following table summarizes those challenges that changed from FY 2007 to 

FY 2008. 

 FY 2007 Management Challenges FY 2008 Changes 

(Challenge #1) 

Interagency Communication, Coordination, and Program Integration 

Need Improvement 

(Challenge #1) 

New Issue Added—Increase communication and coordination on issues related 

to agricultural inspection policies and procedures

(Challenge #2) 

Issue—Strengthen quality control, publish sanction procedures and 

perform required reconciliation in the Federal Crop Insurance 

Program

Issue Revised

Strengthen quality control and perform required reconciliation of producer/policy 

holder data in the Federal Crop Insurance Program

(Challenge #3) 

Issue—Improve Forest Service internal controls and management 

accountability to effectively manage its resources, measure its 

progress towards goals and objectives, and accurately reports its 

accomplishments

Issue Revised (added NRCS) 

Improve FS and NRCS internal controls and management accountability to 

effectively manage its resources, measure its progress towards goals and 

objectives, and accurately report its accomplishments

(Challenge #4) 

Issue—Implementation of Improper Payments Information Act 

Requirements Needs Improvement

(Challenge Removed by the Office of the Inspector General)

(Challenge #5) 

Issue—Continue vulnerability risk assessments to determine the 

adequacy of food safety and security over agricultural commodities 

that the Department manages, handles, transports, stores, and 

distributes

(Now Challenge #4) Issue Revised 

Implement commodity inventory systems that provide critical homeland security 

features and complete security clearances for employees involved in commodity 

inventory management activities and in risk assessments
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

10 

 FY 2007 Management Challenges FY 2008 Changes 

Challenge #5 

Issue—Work with States in preparing for and handling avian 

influenza occurrences in live bird markets or other “off-farm” 

environments

(Now Challenge #4) Issue Revised 

Continue to strengthen ability to respond to avian influenza outbreaks and 

strengthen controls over live animal imports

Challenge #5

Issue—Ensure animal disease surveillance testing protocols are 

based on emerging science

(Now Challenge #4) Issue Removed by the Office of the Inspector General 

Challenge #5

Issue—Continue to work with other USDA agencies to ensure 

effective coordination and implementation of Homeland Security 

Presidential Directive-9; e.g., develop animal and plant diagnostic 

and tracking networks

(Now Challenge #4) Issue Removed by the Office of the Inspector General

The following table includes FY 2008 accomplishments and/or FY 2009 planned actions as well as ongoing 

activities to address the Department’s challenges. 

USDA’s Management Challenges 

1) Interagency Communications, Coordination, and Program Integration Need Improvement. 

• Integrate the information management systems used to implement the crop insurance, conservation, and farm programs; 

• Increase organizational communication and understanding among the agencies that administer the farm, crop insurance, and conservation 

programs; and 

• Increase communication and coordination on issues related to agricultural inspection policies and procedures.

Fiscal Year 2008 Accomplishments 

− Published the Routine Uses for System of Records in the Federal Register to allow producer and member information to be disclosed to RMA 

and, subsequently, approve insurance providers, their agents, and loss adjusters under contract with RMA; 

− Established future common reporting requirements for producer, State, and county offices based on recommendations from RMA/FSA 

working group; 

− RMA and FSA Production Workgroup analyzed current agency production data to determine incorporation into the Comprehensive 

Information Management System (CIMS); 

− Finalized crop categorization table; 

− RMA and NRCS met to further pursue the collection, sharing, and definitions of common data;

− Initiated common reporting requirements for prevented planting acreage; and 

− Developed a Transportation and Export database for monitoring and reconciling shipments. 

Planned Actions for Fiscal Year 2009 

− Incorporate RMA and FSA production and Common Land Unit data into the CIMS database; 

− Develop a single acreage reporting process for insured producers to reduce duplicate reporting requirements for producers for common 

elements and eliminate the need for reconciliation; 

− Continue to develop reports and procedures for accessing and utilizing CIMS Projects; 

− Begin incorporating FSA member entity data and production data into CIMS; 

− Provide access to CIMS applications using eAuth for current CIMS’ users including State Offices; 

− Continue developing the Lean Six Sigma Grants Process to better integrate the management of grants and financial assistance programs. 

This process will include cost share, easements, stewardship, emergency landscapes, and traditional grants; 

− Enhance NRCS Easement Business Tool to data mine and data share between USDA agencies; 

− Pilot the National Easement Programs Management System in four states; 

− Develop the National Grant Programs Management System, which will facilitate the consistent management of traditional grants across the 

Department; 

− Develop the National Emergency Watershed Protection Programs Management System, which will facilitate the consistent management of all 

watershed programs across the Department;

− Meet weekly to coordinate issues and opportunities common to the conservation agencies and related to program financial assistance 

eligibility, Section 1614 reporting, CIMS and the Federal Financial Accountability and Transparency Act; 

− Perform risk assessments for several rail cargo pathways; and 

− Develop guidance on the use of Transportation and Exportation permits. 
MANAGEMENT’S DISCUSSION AND ANALYSIS 

11 

2) Implementation of Strong, Integrated Internal Control Systems Still Needed. 

• Develop Rural Housing Service controls over administering disaster housing assistance programs to ensure aid is provided to the needy and avoid 

benefits duplication. 

Planned Actions for Fiscal Year 2009 

− Establish procedures to compare Federal Emergency Management Agency (FEMA) numbers for duplication after a disaster and upgrade the 

Multi-Family Information System to reject duplicate FEMA numbers; and 

− Develop procedures to monitor owners and management agents immediately following a disaster. 

• Strengthen quality control and perform required reconciliation of producer/policy holder data in the Federal Crop Insurance Program. 

Fiscal Year 2008 Accomplishments 

− Reviewed selected RMA Approved Insurance Providers operations to determine their compliance with the quality control guidelines listed in the 

Standard Reinsurance Agreement and associated Appendix IV. 

Planned Actions for Fiscal Year 2009 

− Continue reviews of selected Approved Insurance Providers operations to determine compliance with quality control guidelines listed in the 

Standard Reinsurance Agreement and associated Appendix IV; 

− RD will coordinate with other Departments and Agencies to compare disaster assistance and procedures related to housing; and

− RD will establish procedures to monitor assistance in response to a disaster. 

• Improve FS and NRCS internal controls and management accountability to effectively manage resources, measure progress towards goals and 

objectives and accurately report accomplishments. 

Fiscal Year 2008 Accomplishments 

− Completed corrective actions to successfully implement the Government Performance and Results Act; 

− Performed an annual systems assessment of all FS financial/mixed financial systems; 

− Conducted oversight reviews on performance accountability within various regions; and 

− Continued to implement corrective actions identified through the Office of Management and Budget (OMB) Circular A-123, “Management’s 

Responsibility for Internal Control,” Appendix A, OIG/Government Accountability Office (GAO) audits. 

Planned Actions for Fiscal Year 2009 

− Continue to improve oversight within FS of national firefighting contract crews by implementing corrective actions in response to OIG audit 

reports; 

− Complete an annual systems assessment of all FS financial/mixed financial systems; 

− FS will conduct oversight reviews on performance accountability within various regions; 

− FS will continue to implement corrective actions identified through the OMB Circular A-123, Appendix A process and OIG/ GAO audits; 

− NRCS will hire two more staff members to write financial policy to strengthen management controls; and 

− NRCS will Increase monitoring to ensure effective resource management. 

• Capitalize on FSA compliance activities to improve program integrity. 

Fiscal Year 2008 Accomplishments 

− Monitored the National Compliance Review database for compliance; and 

− Initiated the assessment of results from compliance reviews and took the necessary actions to correct identified internal control weaknesses. 

Planned Actions for Fiscal Year 2009 

− Analyze results from compliance reviews to identify any program weaknesses and revise procedures to address those weaknesses. 

3) Continuing Improvements Needed in Information Technology (IT) Security. 

• Emphasize security program planning and management oversight and monitoring. 

Fiscal Year 2008 Accomplishments 

− Enhanced Cyber Security Scorecard reporting requirements to reflect security components of the Privacy Act, OMB Circular A-123, Appendix A, 

and the President’s Management Agenda; 

− Continued to use the Federal Informantion Security Management Act of 2002 (FISMA) Cyber Security Scorecard and issue monthly to Senior IT 

leadership and executive management within the Department; 

− Converted data from a legacy system to Cyber Security Assessment and Management (CSAM) reporting tool on schedule; 

− Converted the General Support System information for the Office of the Chief Information Officer (OCIO) and Service Center Agencies to 

CSAM; 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

12 

− Completed and verified system categorizations in CSAM; and 

− Utilized the monthly FISMA Cyber Security scorecard to track agency compliance with key security program elements. The scorecard is used by 

Departmental executives to maintain open dialog with agency heads and program administrators on the health of USDA’s IT risk management 

initiatives and vulnerability mitigation actions. 

Planned Actions for Fiscal Year 2009 

− Leverage the CSAM tool to manage IT Security Program Compliance and Oversight; 

− Evaluate performance metrics through analysis of the Cyber Security Score Card, CSAM, and Cyber Security Communications Center;

− Implement redefined performance metrics and develop strategic plan;

− Monitor and assist agency progress using the Cyber Security Score Card, CSAM, and Cyber Security Communications Center; and 

− Develop tactical plans, as needed. 

• Establish an internal control program throughout the systems’ life cycle. 

Fiscal Year 2008 Accomplishments 

− Integrated OMB Circular A-123, Appendix A, and FISMA program elements into a system’s life cycle; 

− Updated policy and procedures, and implemented new scorecard reporting elements; 

− Completed revisions to the security awareness training policy, the disaster recovery planning guidelines, scanning and patching requirements, 

and the incident response policy and procedures to align with current National Institutes of Standards and Technology (NIST) and OMB 

guidance; 

− Reviewed a wireless local area network in the Washington, D.C., Headquarters complex to validate and verify security program compliance; 

− Reviewed incident handling procedures compliance and improved reporting oversight to ensure that all policy and procedures are followed 

timely and completely; and 

− Developed Standard Operating Procedures to document internal business processes–Incident Handling, Privacy Act Assessments/System of 

Records Notice reviews, System Boundary, and System Categorization Verification. 

Planned Actions for Fiscal Year 2009 

− Continue to integrate OMB Circular A-123, Appendix A, and FISMA program elements into the system’s life cycle; 

− Continue with policy and procedure updates; 

− Implement new scorecard reporting elements, as needed; 

− Continue to work with agencies to monitor and improve IT controls; and 

− Utilize CSAM to eliminate duplicate OMB Circular A-123, Appendix A, and FISMA testing. 

• Identify, test and mitigate IT security vulnerabilities (risk assessments). 

Fiscal Year 2008 Accomplishments 

− Identified and published critical IT security controls; 

− Reviewed Plans of Action and Milestones (POA&Ms) closures; 

− Ensured ongoing oversight of program compliance and risk mitigation activities; 

− Reviewed the wireless access points in the Washington, D.C., Headquarters complex and USDA agencies’ adherence to proper incident 

handling procedures; 

− Formalized internal procedures for monitoring the Department’s compliance with incident handling procedures; 

− Issued updated standards on Password Complexity and Wireless Network Security; and 

− Drafted revised IT Contingency and Disaster Planning policy. 

Planned Actions for Fiscal Year 2009 

− Ensure that risk ratings are properly assigned, system self-assessments are performed, POA&Ms are generated, and tasks and milestones are 

managed appropriately; 

− Review risk ratings (systems categorizations) early in the certification and accreditation process to ensure security testing and evaluations are 

performed for the appropriate level; 

− Review POA&M closure documentation and control testing, and monitor progress using scorecard and CSAM; 

− Initiate policy gap analysis and revise the Access Control and Configuration Management policies and procedures; 

− Publish revised policy and procedures for Access Control;

− Continue compliance monitoring efforts; and 

− Publish revised policy and procedures on Continuity Planning. 

• Improve access controls. 

Fiscal Year 2008 Accomplishments 

− Addressed access control issued in IT and the service center agencies. Significant progress has been made to reduce the number of 

unnecessary accounts on the Information Technology Services network; 
MANAGEMENT’S DISCUSSION AND ANALYSIS 

13 

− Issued operating system specific hardening guides. These guides help users to secure theirUSDA computers; 

− Published security configuration guides for Windows 2000 Server, Win Mobile, Solaris 10, UNIX, AS/4090, Personal Electronic Devices, Web 

Farm, and Oracle on Win server 2003; and 

− Drafted and issued Operating System Technical Configuration Standards for Access Controls. 

Planned Actions for Fiscal Year 2009 

− Ensure that technical, operational, and management controls for IT access are documented and monitored; and 

− Review and revise USDA Security Policies to ensure comprehensive and consistent guidance for the management of user access controls. 

• Implement appropriate application and system software change control. 

Fiscal Year 2008 Accomplishments 

− Organized a team of USDA personnel to discuss the testing and implementation of the Federal Desktop Core Configuration (FDCC); 

− Reviewed Configuration Management Plans for NIST compliance during the concurrency reviews of Certification and Accreditation 

documentation; 

− Monitored USDA agencies’ compliance with FDCC; and

− Reviewed and validated selected USDA agency network/system patching reports. 

Planned Actions for Fiscal Year 2009 

− Update regulations to meet the NIST and other Federal requirements relating to change control processes; and 

− Review configuration management guidance and update, as needed. 

• Develop disaster contingency (service continuity) plans. 

Fiscal Year 2008 Accomplishments 

− Reviewed USDA agency contingency plans for completeness and compliance with NIST guidelines; and 

− Updated and issued guidance on the preparation of Disaster Recovery plans. 

Planned Actions for Fiscal Year 2009 

− Successfully test all USDA agencies’ continuity of operations plans; 

− Ensure that disaster recovery plans are in the Enterprise Contingency Planning Program System and all systems are accounted for through a 

comprehensive inventory process; and 

− Monitor USDA agencies’ compliance with disaster recovery plan testing through the Cyber Security Scorecard, Certification, and Accreditation 

concurrency process, and CSAM. 

• Determine overall risks, prioritize those risks, and develop and implement a time-phased plan to systematically mitigate identified risks. 

Planned Actions for Fiscal Year 2009 

− Develop agency and Departmental level Security Program Security plans and identify common/critical security risks; and 

− Develop preliminary time-phased plan to mitigate common/critical security risks. 

4) Departmental Efforts and Initiatives in Homeland Security Need to be Maintained. 

• Implement commodity inventory systems that provide critical homeland security features and complete security clearances for employees involved in 

commodity inventory management activities and risk assessments. 

Fiscal Year 2008 Accomplishments 

− Initiated the development of a Web-Based Supply Chain Management system to include the business processes, applications, data, security 

and controls, technical infrastructure, and training and change management solutions for a commodity inventory system that will provide critical 

homeland security features; and 

− Granted clearance for current FSA employees involved in the risk assessment process and the inventory management activities. 

Planned Actions for Fiscal Year 2009 

− Continue implementation of the Web-Based Supply Chain Management system; and 

− Ensure that future FSA employees will have the appropriate security clearances, as needed. 

• Continue to strengthen controls over select agents and toxins. 

Fiscal Year 2008 Accomplishments 

− Developed Standard Operating Procedures for performing inspections; and 

− Conducted select agent security training for inspectors. 

Planned Actions for Fiscal Year 2009 

− Implement an annual Compliance Inspection Program for all agriculture registered entities. 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

14 

• Continue efforts to coordinate with the Department of Homeland Security in implementing effective control systems to ensure the safety and security 

of agricultural products entering the country. 

Fiscal Year 2008 Accomplishments 

− Initiated the development of guidance for the electronic reporting of refused-entry data. A dedicated mailbox was created specifically for this 

purpose. APHIS’s Veterinary Services (VS), reviewed the data weekly for trends and contacted Mexico’s animal health agency officials as 

needed for corrective actions. Shipments are rejected routinely at the southern United States border if import requirements are not met. 

Planned Actions for Fiscal Year 2009 

− Implement guidance for the electronic reporting of refused-entry data. 

• Continue to strengthen ability to respond to avian influenza outbreaks.

Fiscal Year 2008 Accomplishments 

− Prepared APHIS strategic plan to include detailed goals, objectives, and activities for addressing avian influenza during FY 2009 through 

FY 2012; and 

− Revised APHIS guidance related to internal (State-Federal) communication of foreign animal disease outbreaks and indicated the specific 

responsibilities of the state animal health official, the Federal area veterinarian in charge, the foreign animal disease diagnostician, diagnostic 

laboratories, and Federal regional offices and headquarters. 

Planned Actions for Fiscal Year 2009 

− Issue manual which will detail the live bird marketing system to include specific biosecurity measures that should be implemented to prevent or 

mitigate the spread of high consequence diseases; respond to highly contagious diseases, including cleaning and disinfection protocols; and 

develop a continuity of business planning for an outbreak; 

− Revise the outbreak surveillance response for Highly Pathogenic avian influenza (HPAI) including surveillance in the live bird market system and 

other off-farm surveillance; 

− Develop an APHIS animal disease incident planning system to provide a framework for existing documents, such as emergency management 

guidelines and disease-specific response plans (HPAI and foot-and-mouth disease); and 

− Prepare proactive risk assessments for the movement of eggs and egg products to facilitate business continuity. 

• Strengthen controls over live animal imports. 

Fiscal Year 2008 Accomplishments 

− Developed a protocol for the importation of camelids from Canada into the United States; 

− Updated health certificate requirements for horses imported from Canada; 

− Developed a protocol for the transiting of Canadian cattle to Mexico; and 

− Developed an alert on “Inspection Procedures for Bovines from Canada at Canadian Land Border Ports of Entry.” 

Planned Actions for Fiscal Year 2009 

− Collect monthly data on Canadian cattle import discrepancies and implement resolution, as needed; 

− Develop a VS Process Streamlining Live Animal Import Module to contain records of all live animal entries and refusals. The module will provide 

data quality and management reports, and fully implement internal automated controls enforcing strict business rules and data standards. This 

process will lessen the opportunity for database errors; 

− Initiate efforts for APHIS to develop the ability to exchange electronic data, acquired and validated with secure, electronic signatures, for 

inclusion into VS specific animal health and surveillance management systems. The project will be piloted with Canadian officials in supporting 

the ability to exchange secure, electronic data, both for import and export U.S. trade; and

− Develop protocols with the Canadian Food Inspection Agency for evaluating zoning policies and procedures for Foreign Animal Diseases (FAD) 

and mutual recognition of zoning decisions following detection of an FAD in either country. 

5) Material Weaknesses Continue to Persist in Civil Rights Control Structure and Environment. 

• Develop a plan to process complaints timely and effectively. 

Fiscal Year 2008 Accomplishments 

− Developed automated intake report for pending complaints; 

− Established formal procedures for prompt resolution of complaints not processed timely; 

− Developed automated adjudication reports for pending complaints; 

− Reassessed performance standards for specialists in the Employment Complaints Division to include the timely completion of assigned cases; 

and 

− Required contract agreements for investigations to include a standard provision for timely and quality services. 
MANAGEMENT’S DISCUSSION AND ANALYSIS 

15 

Planned Actions for Fiscal Year 2009 

− Request the Equal Employment Opportunity Commission to conduct training and provide technical assistance with investigations and 

processing of complaints. 

• Ensure integrity of complaint data in the system. 

Fiscal Year 2008 Accomplishments 

− Finalized formal plan for business rules; 

− Created audit procedures for reviewing sample cases for data integrity; 

− Created automated quality control tool; and 

− Conducted audit of sample cases. 

• Develop procedures to control and monitor case file documentation and organization. 

Fiscal Year 2008 Accomplishments 

− Posted vacancy announcement for records management. 

Planned Actions for Fiscal Year 2009 

− Develop comprehensive records management procedures for Equal Employment Opportunity (EEO) case files; 

− Implement procedures for transferring and safeguarding documents part of an EEO complaint file; and

− Obtain the services of an external contractor to inventory and review EEO case files and establish record retention procedures.

6) USDA Needs To Develop a Proactive, Integrated Strategy To Assist American Producers To Meet the Global Trade Challenge. 

• Continue to strengthen genetically engineered organism field testing controls to prevent inadvertent genetic mixing with agricultural crops for export. 

Fiscal Year 2008 Accomplishments 

− Signed a Memorandum of Understanding between APHIS, AMS, and GIPSA, clarifying each agency’s roles when responding to incidents of 

low-level presence of regulated, genetically engineered material in commerce. 

Planned Actions for Fiscal Year 2009 

− Revise regulations for the importation, interstate movement, and environmental release of genetically engineered organisms; and

− Develop standards and guidelines for the APHIS Biotechnology Quality Management System. 

• Develop a global market strategy.

Planned Actions for Fiscal Year 2009 

− Expand outreach activities to key countries; 

− Incorporate the Country Strategy Statements (CSS) into the FAS Mission Strategic Planning process; and 

− Redefine the CSS development process to incorporate regional and global perspective encompassing USDA interests in individual countries 

and regions. 

• Strengthen trade promotion operations. 

Planned Actions for Fiscal Year 2009 

− Analyze and reassess market development programs by coordinating industry trade partners’ program initiatives with USDA functional area 

efforts; 

− Continue developing new program management software and ongoing efforts to streamline program administration; 

− Further develop evaluation criteria and processes to demonstrate the effectiveness of market development program administration and funding 

allocations; and 

− Conduct annual review/reassessment of FAS outreach effort. 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

16 

7) Better Forest Service Management and Community Action Needed to Improve the Health of the National Forests and Reduce the Cost of 

Fighting Fires. 

• Develop methods to improve forest health; and 

• Establish criteria to reduce the threat of wildland fires. 

Fiscal Year 2008 Accomplishments 

− Developed national guidance for the regions to use in assessing the risks from wildfires; 

− Monitored the effectiveness of hazardous fuel treatments and restoration projects; 

− Developed partnerships with States and counties to develop and deliver fire prevention ordinances for use in planning and zoning in wildland 

urban interface areas; and 

− Conducted large fire cost reviews. 

Planned Actions for Fiscal Year 2009 

− Continue to conduct large fire cost reviews and implement corrective actions, as applicable; 

− Monitor the effectiveness of hazardous fuel treatments and restoration projects; 

− Obtain clarification from the Office of the General Counsel (OGC) on both FS and States’ protection responsibilities in the wildland urban 

interface and other private properties threatened by wildfires; and 

− Develop partnerships with States and counties to develop and deliver fire prevention ordinances for use in planning and zoning in wildland urban 

interface areas. 

8) Improved Controls Needed for Food Safety Inspection Systems. 

• Develop a time-phased plan to complete assessments of establishment food safety systems control plans and production processes, including a 

review program that includes periodic reassessment; 

• Develop a process to accumulate, review, and analyze all data available to assess the adequacy of food safety system; and 

• Improve the accuracy of data available in the systems. 

Fiscal Year 2008 Accomplishments 

− Conducted a number of analyses to determine the temporal relationships among the factors that may be used for assessing an establishment’s 

ability to control risk; 

− Developed a project management plan to use certified agency project managers to assert appropriate control using American National Scientific 

Institute (ANSI)-earned value management standards to measure and control costs and schedule; 

− Issued FSIS Directive 5100.1, Revision 2, “Enforcement, Investigations, and Analysis Officer Comprehensive Food Safety Assessment 

Methodology;” 

− Developed a risk-based approach to prioritize food safety assessments; 

− Met monthly to prioritize analytical and reporting needs. Business requirements were developed, including recommendations on reports that 

district analysts should be generating; 

− Programmed tracking system for monitoring the completion of In-Plant Performance System (IPPS) assessments. These assessments allow 

users to generate reports displaying lists of individuals who have outstanding IPPS reviews; 

− Updated the AssuranceNet Users Guide to provide additional guidance to supervisors reviewing IPPS assessments. The new guidance

instructed them to specifically focus on the extent to which applicable elements and sub-elements are completed over the course of the year. It 

also ensured their oversight reviews include a determination of whether there is a match between the narrative comments and what is in the 

follow-up boxes; and 

− Maintained data and information systems infrastructure adequate to support inspection activities. 

Planned Actions for Fiscal Year 2009 

− Test the electronic food safety assessments. As data are collected, they will be evaluated and analyzed. FSIS will examine relevant time 

windows prior to establishing its exact use in estimating risk; 

− Implement a modernization effort to continue to improve the security, quality, and sustainability of the system infrastructure (ongoing); 

− Continue to utilize the Enterprise Architecture Blueprint to provide the foundation for documenting, assessing, and improving the lines of agency 

business processes, and ensuring they are properly aligned to the system’s capabilities and needs. The blueprint also provides the mechanism 

to align and improve system data capture and automation capabilities further (ongoing); and 

− Continue to utilize the Public Health Information Consolidation Projects (PHICP) and the Public Health Data Communication Infrastructure 

Systems (PHDCIS) to plan, track, and report on IT operational and development activities better. PHICP tracks and reports the development of 

information systems for FSIS. PHDCIS contains the operational, maintenance, and infrastructure hardware and activities (ongoing). 
MANAGEMENT’S DISCUSSION AND ANALYSIS 

17 

• Complete corrective actions on prior recommendations. 

Fiscal Year 2008 Accomplishments 

− Implemented a tracking system for audit recommendations that notifies FSIS program managers monthly about their obligations to respond to 

and take final action on OIG recommendations. The system is used to track results and produce a variety of reports. 

• Continue to develop and implement a strategy for hiring and training inspectors. 

Fiscal Year 2008 Accomplishments 

− Trained public health veterinarians to conduct food safety assessments. 

Planned Actions for Fiscal Year 2009 

− Conduct a review of the effectiveness of its training programs; 

− Conduct surveys of inspection program personnel and their supervisors following training to verify that inspectors are performing key job duties 

as instructed; and 

− Develop refresher training to reinforce inspection duties. 

9) Implementation of Renewable Energy Programs at USDA 

• Develop and implement a viable and comprehensive renewable energy strategy for USDA agencies and programs; and 

• Establish internal controls to ensure that renewable energy research is not duplicated and meets the needs of the current marketplace. 

Planned Actions for Fiscal Year 2009 

− Establish an inter-agency working group to review and make recommendations to the USDA Energy Council. The group will address strategic 

planning goals and results measurements, and develop Department-wide guidance to eliminate duplicate funding for renewable energy projects;

− Develop Department-wide policies and procedures that require agencies to check for duplicate funding within USDA; and

− Develop a database to check for duplicate funding with other Federal agencies. 

Future Demands, Risks, Uncertainties, Events, Conditions, and Trends 

USDA is influenced by many of the same forces that shape the American economy—globalization of markets, 

scientific advances, and fundamental changes in the Nation’s family structure and workforce. Farmers and food 

companies operate in highly competitive markets with constantly changing demand for high quality food with a 

variety of characteristics, including convenience, taste, and nutrition. 

Additionally, homeland security is a significant, ongoing priority for USDA. The Department is working with the 

Department of Homeland Security to help protect agriculture from intentional and accidental acts that might affect 

America’s food supply or natural resources. 

External factors that challenge USDA’s ability to achieve its desired outcomes include: 

 Weather-related hardships and other uncontrollable events at home and abroad; 

 Domestic and foreign macroeconomic factors, including consumer purchasing power, the strength of the U.S. 

dollar, and political changes abroad that can impact domestic and global markets greatly at any time; 

 The availability of funds for financial assistance provided by Congress and the local and national economies; 

 Sharp fluctuations in farm prices, interest rates, and unemployment also impact the ability of farmers, other rural 

residents, communities, and businesses to qualify for credit and manage their debts; 

 The impact of future economic conditions and actions by a variety of Federal, State, and local Governments that 

will influence the sustainability of rural infrastructure; 

 The increased movement of people and goods, which provides the opportunity for crop and animal pests and 

diseases, such as avian influenza and bovine spongiform encephalopathy, to move quickly across national and 

foreign boundaries; 

 Potential exposure to hazardous substances, which may threaten human health and the environment and the 

ability of the public and private sectors to collaborate effectively on food safety, security, and related emergency 

preparedness efforts; 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

18 

 The risk of catastrophic fire is dependent on weather, drought conditions, and the expanding number of 

communities in the wildland-urban interface; and 

 Efforts to reduce hunger and improve dietary behaviors depend on strong coordination between USDA and a 

wide array of Federal, State, and local partners. 

USDA’s Results Agenda—Implementing Federal Management Initiatives 

USDA works to strengthen its focus on results through vigorous execution of the President’s Management Agenda 

(PMA). This agenda focuses on management improvements that help USDA consistently deliver more efficient 

and effective programs to its stakeholders. This process is designed to improve customer service and provide more 

effective stewardship of taxpayer funds. As discussed in the Department’s Strategic Plan for FY 2005-2010, USDA 

plans to: 

 Ensure an efficient, high-performing, diverse workforce, aligned with mission priorities and working 

cooperatively with partners and the private sector; 

 Enhance internal controls, data integrity, management information, and program and policy improvements as 

reflected by an unqualified audit opinion; 

 Reduce spending and burden on citizens, partners, and employees by simplifying access to the Department’s 

information. This enhancement is added by implementing business processes and information technology 

needed to make its services available electronically; 

 Link budget decisions and program priorities more closely with program performance and consider the full cost 

of programs and activities; 

 Reduce improper payments by developing targets and implementing corrective action plans; 

 Efficiently and effectively manage its real property; 

 Transform Information Technology (IT) enterprise infrastructure to be cost effective and consistent across all 

agencies and geographic regions; 

 Improve its research and development investments by using objective criteria; and 

 Support the essential work of faith-based and community organizations. 

USDA employees are charged with executing these management initiatives, which they do with an emphasis on 

customer service. The PMA calls for the Office of Management and Budget (OMB) to score departments on each 

initiative. Green indicates success, yellow indicates mixed results, and red indicates an unsatisfactory score. There 

are two scores awarded. “Status” indicates that a department is meeting the standards established for success. 

“Progress” indicates that it is progressing adequately in meeting established deliverables and timelines. The arrows 

next to the scores indicate whether the score has improved (↑), declined (↓), or remained the same (↔) compared 

to FY 2007. 

The PMA challenges Federal Government leaders to think 

boldly and strategically to improve the management and 

performance of Government. Nowhere is this challenge more 

important than in the strategic management of human capital. 

USDA continues to build upon its success in completing the human capital initiatives and objectives set forth in its 

December 2006 Strategic Human Capital Plan. To that end, USDA has established a team of agency Human Capital 

representatives to review and update the 2006 Plan to meet the criteria in 5 CFR 250 and to align with USDA’s 

strategic plan, including mission, goals, objectives, and budget that include an implementation plan with targets, 

milestones, and measures. USDA’s Strategic Human Capital Plan focuses on five strategic goals that drive USDA’s 

human capital initiatives: 

 Human capital management strategies are aligned with the Department’s mission, goals, and organizational 

objectives and integrated into strategic plans, performance plans, and budgets; 

Status Progress 

↔

HUMAN CAPITAL 

↔
MANAGEMENT’S DISCUSSION AND ANALYSIS 

19 

 Leaders and managers effectively manage people, ensure continuity of leadership, and sustain a learning 

environment that drives continuous improvements; 

 Skills, knowledge, and competency gaps/deficiencies in mission-critical occupations have been closed and 

meaningful progress toward closing skills, knowledge, and competency gaps/deficiencies in all agency 

occupations has been made; 

 The workforce is diverse, results-oriented, and high-performing, and the performance management system 

differentiates between high and low levels of performance and links individual/team/unit performance to 

organizational goals and desired results effectively; and 

 Human capital management decisions are guided by a data-driven, results-oriented planning and accountability 

system. 

To attract a diverse, highly skilled workforce, USDA markets itself as the “Employer of Choice” in the Federal 

Government. Through the use of targeted recruitment efforts and automated hiring systems, USDA has achieved 

some of the best hiring timelines Government wide. For its General Schedule (GS) positions, employment offers 

are made within 25 days, on average. Offers for Senior Executives average 28 days. The GS timeframe is less than 

the 45-day metric established by the Office of Personnel Management and the Senior Executive timeframe is 

consistently the best in government. 

USDA continues to use Career Pattern (CP) initiatives by designing vacancy announcements that market USDA as 

an employer of choice. By identifying appropriate applicant pools and their attractors, building environments 

suitable for those attractors and designing vacancy announcements highlighting the attractors, the Department has 

attracted a broader pool of highly skilled applicants successfully. Foundation Financial Information System (FFIS) 

uses career patterns language for GS-701 Veterinary Medical Science and GS-1863 Food Inspection vacancies; and 

FNS uses career patterns language for its GS-630 Dietician and Nutritionist vacancies. 

The ARS also recently recruited for a GS-301-5/7 Volunteer and Internship Program Coordinator to develop and 

enhance formal and informal educational programs associated with research activities, grounds, and living displays 

at the National Arboretum in Washington, D.C. Among its family friendly flexibilities, the position allows for an 

adjustable work schedule that best suits the incumbent’s personal and professional needs, and the opportunity to 

telecommute.

A USDA CP workgroup monitors compliance and implementation of the Career Patterns guidelines. The CP 

workgroup meets quarterly to brainstorm ideas for vacancy announcements that will incorporate career patterns and 

streamline announcements, thus making the process of searching for a job more applicant-friendly. The CP 

workgroup plans to draft a template for Department-wide review in the near future. 

Through the adoption of a strategic goal focusing solely on accountability, USDA has demonstrated its 

commitment to excellence. The Department progressed substantially in completing its accountability reviews. It 

conducted all required reviews. Implementation of the resulting recommendations has strengthened human 

resources processes throughout USDA, which is enhancing its accountability program further by institutionalizing 

and standardizing the delegated examining review process. Through more consistent and timely internal reviews, 

USDA can focus additional accountability resources on strategic and workforce planning, leadership and knowledge 

management, and talent management. 

USDA scored green for status and yellow for progress on the September 30, 2008, scorecard. 

USDA will continue to work with its human capital partners to create programs that will enhance employee 

development. These programs will also increase the use of human capital flexibilities for managers in recruitment 

and retention, streamline processes for more efficient and faster service, and ensure that the Department workforce 

has the skills to meet the challenging demands of the 21st century. USDA is committed to leading by example and 

serving as the vanguard of the Federal Government’s overall human capital transformation efforts. Specifically, the 

Department will: 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

20 

 Continue reviewing opportunities for greater organizational and operational efficiencies within selected mission 

areas; 

 Complete its scheduled accountability reviews and report; and 

 Develop and maintain a diverse, talented workforce capable of achieving the USDA mission. 

The Office of the Chief Financial Officer (OCFO) oversees 

USDA’s Commercial Services Management (CSM) initiative. 

The Department implements CSM reasonably and rationally 

to achieve significant cost savings, improved performance, and 

a better alignment of the agency’s workforce to its mission. This initiative is designed to improve the efficiency and 

effectiveness of agency operations by employing a variety of management tools. In addition to commercial services 

studies, which were previously the primary focus of this initiative, CSM uses management efficiency assessments to 

identify projects for more in-depth analysis by means of other management tools. In addition to standard 

commercial services studies, USDA employs other tools such as business process reengineering, Lean Six Sigma, 

and High Performance Organizations for the purpose of continuing to simplify and improve the procedures for 

evaluating operations and resources. 

USDA requires that a management efficiency assessment, including a cost-benefit analysis, be completed prior to a 

recommendation to use one of the CSM management tools referenced above. This strategy ensures that functions 

selected for further evaluation result in an organization implemented with lower costs and increased operational 

efficiencies. Assessments continue to be linked to agency human capital plans to ensure that workforce planning 

and restructuring, and retention goals are met while achieving cost savings. 

USDA continues to review its functions to identify those that can be evaluated to achieve efficiency and/or quality 

improvement. 

USDA has earned a yellow for status and a green for progress on the September 30, 2008, scorecard. 

Commercial Services results are reported annually to Congress by December 31 for the preceding fiscal year. The 

results through FY 2007 reflected actual accrued savings of more than $70 million. 

Actions taken by USDA include: 

 Activities seeking to improve productivity and produce savings: 

 NRCS completed a competition of its Headquarters Administrative function of 39 full-time employees 

(FTE). The estimated gross savings is $3.1 million over the 5-year performance period; 

 For FY 2009, USDA plans reviews covering more than 2,300 FTE. When the results of an efficiency 

assessment indicate a favorable return on investment and/or improved operational efficiency, an appropriate 

tool is implemented to achieve the desired outcome; 

 The OCFO has two commercial services studies in progress as of the end of the fourth quarter; 

 USDA continues to track completed competitions for annual accrued savings and desired performance 

targets; and

 A system of independent validation and post competition review has been further defined to monitor 

performance and verify annual accrued savings for completed competitions; 

 Conducted training on OMB’s Commercial Services and Workforce Inventory Tracking system and the Federal 

Activities Inventory Reform (FAIR) Act Inventory; and 

 Issued a CSM Plan which incorporates USDA’s major management improvement projects. 

Status Progress 

↔

COMMERCIAL 

SERVICES 

MANAGEMENT ↔
MANAGEMENT’S DISCUSSION AND ANALYSIS 

21 

Challenges 

 Forest Service Legislative Restrictions—Congress, through the Department of Interior FY 2008 Appropriations 

Bill, placed a one-year moratorium on FS’ Commercial Services activities.

 Farm Service Agency and Rural Development Legislative Restriction Continues—The Consolidated Appropriations Act 

of 2008 prohibits funds to be used to study, complete a study of, or enter into a contract with a private party to 

execute a commercial services activity with the Secretary of Agriculture without a subsequent act of Congress. 

This act covers USDA support personnel relating to rural development or farm loan programs. This will require 

the FSA and Rural Development (RD) to use other management improvement tools under the CSM Initiative 

to achieve operational efficiencies and/or savings. 

OCFO oversees USDA’s financial performance. The 

office works with all USDA agencies and staff offices to 

ensure the Department’s financial management reflects 

sound business practices. Receiving an “unqualified” 

financial audit opinion from an independent auditor indicates that the information reported in the financial 

statements is free of significant errors or misstatements. It also certifies that USDA can account for the dollars 

entrusted to it. The FY 2007 audit opinion was “qualified” because the independent auditors were unable to 

complete their review, as RD did not provide sufficient evidence to support its changes to the Single Family 

Housing Program cash flow model. Improvements were made to the quality and timeliness of the data provided to 

the auditors. OIG was able to complete its audit by November 17, 2008. USDA received a clean opinion for 2008.

OCFO led efforts to improve financial management information by helping its agencies develop and access useful 

and timely information. This information includes monthly financial reports, online access to real-time information 

and program cost reporting. By enhancing the integrity of financial and administrative data, the Department 

protects corporate assets and conserves scarce resources. 

The Management Initiative Tracking System (MITS) is an interactive, Web-based database and management system 

that monitors and manages an agency's progress in implementing management initiatives. A new module was 

developed to integrate audit tracking processes. Data were tracked to monitor IT security and financial 

management weaknesses. Another module will soon be going into production to track budget data requests. MITS 

benefits employees and managers by reducing time, redundancy, and errors in reports and improving the timeliness 

of management information. This corporate performance and reporting system also improved program oversight 

and evaluations and increased visibility of performance and business data at USDA. 

Financial Management Modernization Initiative (FMMI)—FMMI’s primary objective is to improve financial 

management performance. It accomplishes the objective by efficiently providing agencies with a modern, core 

financial management system. This system complies with Federal accounting and systems standards and provides 

maximum support to the USDA mission. FMMI targets the replacement of FFIS and the legacy financial and 

program ledgers used in the Department’s programs. Replacing FFIS, the core financial management system and 

program ledgers, with a modern, Web-based core financial management system is also expected to eliminate the 

need to operate and maintain many of USDA’s legacy feeder systems. It would also make the financial statements 

data warehouse, currently required to produce timely external financial statements, obsolete.

The FMMI investment has the following key attributes: 

 Integration with such existing and emerging eGovernment initiatives as eGovernment Travel Services, ePayroll, 

Grants.gov, and eLoans; 

 Current corporate solutions for which financial results must be reflected in the budgetary and general ledger 

accounts of the Department (e.g., asset management and procurement);

 Program-specific systems that support the general ledger (e.g., programmatic loan systems); 

Status Progress 

↔

FINANCIAL 

PERFORMANCE ↔
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

22 

 Integration with performance management and budgeting, allowing USDA to meet the PMA and Government 

Performance and Results Act requirements; and 

 Compliance with the Federal Financial Management Improvement Act (FFMIA), including Federal financial 

management system requirements, applicable Federal accounting standards, and U.S. Government Standard 

General Ledger at the transaction level. 

In FY 2008, FMMI Planning and Analysis phases were completed. The FMMI Design Phases for the USDA 

Corporate Configuration and FMMI Hosting Services are underway. The FMMI integration of Earned Value 

Management System has been certified as American National Standards Institute (ANSI) 748-A compliant. 

The Managerial Cost Accounting Workgroup, led by OCFO, met to discuss accounting issues and guidance 

reporting requirements. Workgroup members also discussed best practices within the Department. They continue 

to work closely with their Chief Financial Officer (CFO) counterparts during FMMI’s design and implementation 

to ensure that the system will meet the cost management needs of decision makers. 

Eliminating/Reducing Material Weaknesses 

 Credit Reform Quality Control Processes—The FY 2008 audit opinion on the RD financial statements audit 

confirmed that deficiencies in quality controls have been remediated. Additional work is needed to reduce the 

material weakness at the CCC. Improvements will be made in FY 2009 to ensure the timeliness and quality 

controls over changes made to the CCC credit reform models.

 Unliquidated Obligations—The assessment of test results for unliquidated obligations as of June 30, 2008, did not 

support downgrading this material weakness. USDA plans to develop a metric to measure agency compliance 

with Department guidance on review of obligations and assess additional tools needed for reviews. 

 Funds Control—CCC needs to prepare a proposal request to replace and/or modify its non-compliant systems. 

 Information Technology—The Department reviewed OMB Circular A-123, Appendix A assessment results for 17 

general support systems and major applications. Logical access controls, physical access controls, disaster 

planning, and configuration management/change controls remain a material weakness for the Department as a 

whole based on the results of OMB Circular A-123, Appendix A, General Computer Controls testing. 

USDA’s plans to improve financial management include: 

 Obtaining an unqualified audit opinion on its financial statements; 

 Continuing to work toward eliminating all material weaknesses; 

 Improving financial reporting procedures and systems; and 

 Increasing the use of financial information in day-to-day decision-making. 

USDA scored red for status and green for progress on the September 30, 2008, scorecard. 

Actions taken by USDA in FY 2008 to achieve these results include: 

 Met monthly with agency CFOs to discuss financial management policy, information systems, and quality 

assurance issues and initiatives. At these meetings, agencies are provided with financial indicator data to provide 

focus for financial reporting quality control activities; 

 Improved agencies’ financial performance measures, targets, and milestones as part of their efforts to expand the 

use of financial information for decision-making. Financial Data Integration reporting is prepared quarterly. 

Reporting enhancements were implemented this year to improve synchronization with MITS and PMA 

reporting; 

 Developed significant initiatives using the Lean Six Sigma methodology (LSS). LSS originated in 

manufacturing industries during a time of great demand for quality and speed. One initiative OCFO developed 

with the Forest Service is automating the contract invoice process, the LSS Transaction Process (LSTP). This 

move was designed to improve efficiency and shorten the time required for issuing payments, which will save 
MANAGEMENT’S DISCUSSION AND ANALYSIS 

23 

interest. USDA completed the implementation schedule for two other LSS processes, one for grants and one for 

insurance payments; 

 Continued its partnership with the Department of Veterans Affairs Financial Services Center in Austin, Texas, 

to process USDA telephone and utility bills through the Electronic Data Interchange (EDI) process. This new 

process will allow for the invoices to be received electronically rather than by mail in a paper invoice form. More 

than 250,000 bills will be processed annually through EDI; and 

 Completed all in-scope cycles and results as required to implement OMB Circular A-123 Appendix A, 

“Internal Control over Financial Reporting.” During the past 2 fiscal years, USDA identified and tracked 218 

control deficiencies. Component agencies have corrected 172, or 72 percent, of the prior year’s deficiencies. 

USDA continues its commitment to leadership in 

Expanding Electronic Government under PMA and using 

IT to help respond more directly and effectively to its 

stakeholders. The Department implements sound and 

integrated enterprise architecture and manages secure IT investments that perform on schedule and within budget. 

USDA also participates in 31 Presidential Initiatives and Lines of Business. 

 Activities for FY 2008 support the following goals: 

 Provide customers with single points of access to information and shared services; 

 Simplify and unify business processes spanning multiple agencies; 

 Establish information and service-delivery standards; and 

 Consolidate redundant IT services and systems through shared USDA or Government-wide services. 

USDA scored red for status and green for progress on September 30, 2008 scorecard, as compared to yellow for 

status and red for progress on September 30, 2007. The status downgrade is due to an open Certification and 

Accreditation process finding by the OIG. The improved progress score reflects USDA’s hard work in meeting its 

milestones for the year. 

Presidential E-Government Initiatives Activities in FY 2008 

 Grants.gov—USDA grant-making agencies have posted 125 funding opportunities on Grants.gov and received 

7,704 electronic applications via Grants.gov in FY 2008. USDA continues to offer the option to apply 

electronically to 100 percent of its posted discretionary grants and cooperative agreements to applicants through 

the Web site. 

 Grants Management Line of Business—USDA signed a letter of intent with the Department of Health and Human 

Services, Administration for Children and Families. By joining the consortium, USDA’s 14 grant-making 

agencies are collaborating with the consortia members to simplify the disparate application processes, improve 

timely reporting and delivery of services, and allow greater coordination among the Department’s service 

providers. 

 Information Systems Security Line of Business (ISS LoB)—USDA leveraged Government-wide best practices in IT 

security through participation in the ISS LoB. USDA adopted an ISS LoB-approved cyber security awareness 

training course. USDA avoided significant costs of time and money by modifying an existing course rather than 

developing a course in order to meet the Federal standards as defined by the ISS LoB. 

 Disaster Assistance Improvement Plan—USDA identified 10 internal programs related to disaster benefits and 

updated information about those programs on GovBenefits.gov. Through use of the Disaster Benefits Web site, 

those affected will be able obtain a list of benefits for which they may be eligible and apply for them all in one 

place. The Disaster Benefits Web site will be live on December 31, 2008. 

 E-Clearance— USDA continues to meet or exceed requirements to process 95 percent or greater of background 

investigations through the Electronic Questionnaires for Investigations Processing system, a single electronic 

system that ensures compliance with government standards. USDA processed 100 percent of all National 

Security and Public Trust investigations for new employees in FY 2008. 

Status Progress 

↓

EXPANDING 

E-GOVERNMENT ↔
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

24 

Presidential Directives Activities in FY 2008 

 Homeland Security Presidential Directive (HSPD) 12—USDA was a leader in implementation of HSPD-12 across the 

Federal government in FY 2008. USDA made strides internally to prepare the infrastructure necessary to 

support the new HSPD-12 credential, the LincPass. USDA rolled out a comprehensive plan to implement two 

unique methods of verifying identity (Two-Factor Authentication) processes and installed necessary hardware 

and software updates to enable 40 percent of targeted USDA laptops with the new security feature. USDA was 

at the forefront of deploying a nation-wide mobile enrollment station project that took human and technological 

resources to USDA employees throughout the continental United States, Alaska, Hawaii, and Guam. 

 International Trade Data System (ITDS)—USDA is playing a leading role in designing and implementing the 

integrated government-wide system for the electronic collection, use, and dissemination of international trade 

data. ITDS will provide the framework to collect information on behalf of Federal agencies and will enable 

Customs and Border Protection (CBP) to more effectively assist them in enforcing regulations related to 

international trade. USDA agencies completed the following activities: 

 Co-located USDA Food Safety and Inspection Service agency staff with CBP at the National Targeting 

Center; 

 USDA implemented the Import Alert Tracking System (IATS) that enables better coordination in 

enforcement actions through quicker access to information collected on illegal entries; 

 Supplemented by the access to entry summary data through the acceleration of Automated Commercial 

Environment Portal, FSIS detected and took enforcement action on 347 shipments (3.7 million pounds) of 

potentially ineligible shipments that entered U.S. commerce without FSIS inspection; and

 Initiated electronic transfer of certificate data elements from the New Zealand Food Safety Authority into 

the FSIS Automated Import Information System (AIIS). 

USDA Shared Services Activities in FY 2008 

 AgLearn—AgLearn now offers more than 2,300 agency-specific courses and in an average month, 20,348 

employees complete 4,599 courses. USDA’s Learning Management System (LMS) is now recognized as a LMS 

across the Federal government. Over 1.6 million courses were completed in more than 100 professional 

certification areas. 

 USDA eAuthentication Service—The USDA eAuthentication Service has centralized the protection of 32 systems in 

FY 2008 and 284 USDA systems overall (in addition to 10 Federal systems). In a typical month, more than 

95,000 employees and approximately 190,000 customers have an active eAuthentication credential. 

eAuthentication Service customers use their credentials for nearly 2 million authentications of personal identify 

and over 65 million Web site authorizations for access to protected content every month. 

 Enterprise Content Management (ECM)—USDA agencies have leveraged the common hardware and software 

infrastructure of this commercial off-the-shelf product to customize and fine-tune additional modules to meet 

unique business needs. A current list of ECM modules and brief descriptions of their impact on USDA's 

business processes follows: 

 Correspondence Management Module—The Correspondence Management Module helps USDA employees at 

any organizational level manage correspondence and other documents from initial receipt through 

completion and archival storage. The module supports a paperless environment, eliminating document loss 

and reducing time required for document review and revision. Currently, there are 1,414 active users of this 

module and 2,154,654 documents have been created since its launch; 

 Content Analysis Module (CAM)—USDA is using CAM for non-correspondence applications such as viewing 

public comments solicited by USDA on the 2008 Farm Bill; 

 General Use Module (GUM)—USDA uses GUM to track documents, record actions taken, and utilize archival 

storage. In RD, GUM is used to track payments and tenant certifications, maintain a running case record for 

their accounts, and for general tasking of employees; 
MANAGEMENT’S DISCUSSION AND ANALYSIS 

25 

 Invoice Processing Module (IPM)—Agencies and staff offices are using the IPM to store all USDA invoices in a 

centralized repository. USDA plans to use the module to follow the invoices through all stages of the 

business process; and 

 Acquisition Management Module (AMM)—USDA’s Forest Service uses AMM to manage and document approval 

of acquisition requests for their procurement staff. As a result, procurement managers can track the status of 

these requests at any stage of the business process. 

Other PMA Related Initiatives Activities in FY 2008 

 Federal Desktop Core Configuration—USDA strengthened IT security by reducing the opportunity for hackers to 

access and exploit government computer systems and to reduce the threat of espionage and cyber crime by 

standardizing approximately 300 desktop settings on all Windows XP and Vista based computers. 

 Trusted Internet Connections (TICs)—This initiative will improve the Federal government's security posture and 

incident response capability through the reduction and consolidation of external internet connections and 

provide centralized gateway monitoring at a select group of TIC Access Providers. USDA submitted a plan 

regarding consolidation of external connections based on the TIC requirements to OMB. 

 Cyber Security Scorecard Program—The scorecard was a centerpiece in monthly briefings to USDA’s management. 

USDA maintained an aggressive posture toward IT security in several key areas: 

 Cyber Security Assessment and Management (CSAM) Tool Migration: USDA continued monitoring the 

status of agency annual assessments and contacted agencies to resolve issues or provide additional training or 

instructions on how to document internal control testing through CSAM; 

 Cyber Security Awareness and Privacy Basics Training: More than 120,000 employees and contracted 

partners completed the FY 2008 ISS LoB-approved IT security training courses; and

 Personally Identifiable Information (PII): USDA made significant progress toward better understanding and 

protecting PII. USDA completed a data call identifying systems containing PII throughout the Department. 

USDA also completed a review of all public facing Web sites for PII. USDA held a poster contest designed 

to increase awareness of PII and measures we can take to protect data. 

 Capital Planning and Investment Control—USDA continues to successfully implement the Integrated IT 

Governance Process (IGP). IGP combines capital planning, security and privacy, enterprise architecture (EA), 

earned value management (EVM), and portfolio analysis to plan, manage, and control the Department’s IT 

investment portfolio more effectively. 

 USDA provided current EVM cumulative and monthly performance data and variance analyses for projects 

in the major IT portfolio;

 Expanded the EA information base to support more robust analysis used to inform and guide the decision 

making process. EA establishes the enterprise-wide roadmap to support the capital planning and investment 

control process; 

 Developed a geospatial segment architecture report detailing the “as-is” environment and began developing 

cost benefit and alternatives analyses as part of an effort to document all USDA geospatial information 

systems investments in a consolidated Unified Geospatial Environment business case; and 

 Began the initial phases of developing the human capital resource management segment architecture. 

USDA continues to improve how it integrates 

performance information into its budget decisions and 

throughout the budget process. This integration includes 

the use of the Program Assessment Rating Tool (PART). 

PART is designed to assess and improve program performance and efficiency to achieve better results. USDA 

establishes its budget priorities based on the strategic goals and desired outcomes included in its strategic plan. The 

Department continues to improve its ability to measure performance with an emphasis on measuring gains in 

efficiency. 

Status Progress 

↔

PERFORMANCE 

IMPROVEMENT 

INITIATIVE ↔
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

26 

USDA plans to: 

 Continue implementing Executive Order (EO) 13450: “Improving Government Program Performance;” 

 Develop and improve the agencies’ strategic plans, annual performance plans, and annual performance reports, 

and ensure the use of such information in agency budget justifications;

 Create program goals that are aggressive, realistic, and accurately measured;

 Regularly convene agency program management personnel to assess and improve program performance and 

efficiency; and

 Assist agency leadership in the development and use within the agency of performance measures in personnel 

performance appraisals, particularly those of program managers, to ensure real accountability for greater 

effectiveness. 

USDA scored green for status and progress on the September 30, 2008, scorecard. To achieve these results the 

Department: 

 Conducted seven PART assessments in conjunction with OMB. Of the seven PARTs, one rated “Moderately 

Effective,” five rated “Adequate” and one rated “Results Not Demonstrated (RND).” Based on actual funding 

levels for FY 2008, less than three percent of funding for USDA programs is associated with programs that have 

PART ratings of RND. Additionally, no USDA programs scored an “Ineffective” rating; 

 Created an implementation plan for the new EO and actively participated with the Performance Improvement 

Council; 

 Worked with agencies to ensure that the specific plans and milestones developed to address PART 

recommendations are reasonable and detailed enough to address them fully. The Department uses the internal 

scorecard process to track agency progress toward meeting performance targets and addressing PART 

recommendations; 

 Developed budget requests and made budget decisions supported by sound and thorough analysis. This analysis 

considered the effects of funding decisions on costs and performance. These budget decisions were presented 

and justified to Congress and others using performance information; 

 Defined targets for improvements in performance and efficiency, and developed action plans to achieve targets. 

The Deputy Secretary, subcabinet, and other senior managers continue to receive and discuss the Quarterly 

Budget and Performance Tracking Report. They use the report to monitor progress in achieving planned 

performance and efficiency gains and take action where needed to ensure targets are met. All PARTed USDA 

programs have at least one efficiency measure that indicates programmatic strides in cost-effectiveness; and

 Continued to use the Management Initiatives Tracking System (MITS) PART module to enable more active 

and efficient participation by senior Department officials during the PART process. MITS also provides 

managers with the ability to track the implementation of PART improvement plans and achievement of 

performance targets. 

Executive Order 13327, “Federal Real Property Asset 

Management,” establishes the framework for improved use 

and management of real property owned, leased, or 

managed by the Federal Government. It is USDA policy 

to promote the efficient and economical use of its real property assets and assure management accountability for 

implementing Federal real property management reforms. Based on this policy, Department agencies recognize the 

importance of real property resources through increased management attention, the establishment of clear goals and 

objectives, improved policies and levels of accountability, and other appropriate actions. As the foundation of 

USDA’s real property asset management program, the following strategic objectives will be used for real property 

management improvement: 

Status Progress 

↑

REAL PROPERTY 

↔
MANAGEMENT’S DISCUSSION AND ANALYSIS 

27 

USDA Real Property Asset Management Strategic Objectives 

1. Department’s holdings support agency missions and strategic goals and objectives 

2. Maximize facility utilization by co-locating agency operations when possible 

3. Accurately inventory and describe real property assets using the Corporate Property Automated Information System 

4. Use performance measures as part of the asset management decision process 

5. Employ life-cycle, cost-benefit analysis in the real property decision-making process 

6. Provide appropriate levels of investment 

7. Eliminate unneeded assets 

8. Use appropriate public and commercial benchmarks and best practices to improve asset management 

9. Advance customer satisfaction 

10. Provide for safe, secure, and healthy workplaces 

USDA’s plans include: 

 Achieving a green status score by July 1, 2009; 

 Updating the USDA Asset Management Plan (AMP) and accompanying agency building block plans (BBP); 

 Revising interim-year targets and out-year goals for asset management performance measures; 

 Assessing agency progress with completing physical inventories and data validation; 

 Maintaining a comprehensive inventory and profile of agency real property and providing timely and accurate 

information for inclusion into the Government-wide real property inventory database; 

 Ensuring continued use of the Capital Programming and Investment Process to ensure scarce resources are 

directed to highest priority asset needs; 

 Assembling Department-wide multi-year consolidated estimated capital requirements;

 Developing agency-specific methodologies for prioritizing assets for maintenance; 

 Updating the Asset Management Initiatives and Three Year Timeline document for meeting goals and 

objectives of the AMP and BBPs; and 

 Participating in such Government-wide management vehicles as the Federal Real Property Council (FRPC). 

FRPC provides a forum to address critical real estate and workplace issues challenging all Federal agencies.

USDA scored yellow for status and green for progress on the September 30, 2008, scorecard. 

USDA took the following actions to progress toward achieving a green status score: 

 Revised the comprehensive AMP, including agency-specific BBPs, with the latest policies, practices, and 

procedures for maintaining property holdings in an amount and type according to agency budget and mission. 

The AMP presents the Department’s strategic vision and plan of action for compliance with the Governmentwide real property asset management initiative; 

 Developed a methodology for prioritizing assets for maintenance; 

 Developed a Process for Performing Condition Assessments; 

 Specified the frequency for conducting condition surveys based on asset priority; 

 Developed a process and requirements for establishing Operation and Maintenance Plans commensurate with 

the maintenance level required for the asset being managed; 

 Developed a process and requirements for completing Facility Master Plans as the basis for multi-year planning; 

 Assembled Department-wide multi-year consolidated estimated capital requirements;

 Developed guidance and procedures for allocating funding between capital improvement, maintenance and 

repair, and disposal activities; 

 Assessed agency progress in meeting interim-year targets and out-year goals for asset management performance 

measures; 

 Revised FY 2008-2010 interim-year targets and out-year goals for asset management performance measures; 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

28 

 Completed an implementation plan for the Deferred Maintenance Strategy; 

 Ensured that USDA agencies closed data gaps in constructed asset-level reporting and required that agencies 

validated and verified data accuracy; 

 Maintained a comprehensive inventory and profile of agency real property and provision of timely and accurate 

information for inclusion into the Government-wide real property inventory database;

 Submitted a final interagency agreement between USDA and the Departments of Interior and Labor regarding 

Job Corps Centers; and

 Updated the Asset Management Initiatives and Three Year Timeline document for meeting goals and objectives 

of the AMP and BBPs. The timeline includes a list of assets for disposition and an investment prioritization list 

for mission critical and dependent assets. 

The Improper Payments Information Act (IPIA) of 2002 

is an initiative to identify programs susceptible to 

significant improper payments and reduce the amount and 

number of erroneous payments. The high risk program 

measurements and action plans are also included in the PMA under the category of “Eliminating Improper 

Payments.” The goal of this initiative is to improve the integrity of the government's payments and the efficiency of 

its programs and activities. 

USDA first reported on improper payments in the 2004 Performance and Accountability Report by disclosing error 

rates and amounts for the Food Stamp Program and the Federal Crop Insurance Corporation Program. The 

Department now measures and reports annually on 16 programs considered a high risk for significant improper 

payments. Measuring and reporting improper payments is mandatory for five of the programs under OMB Circular 

A-11, “Preparation, Submission, and Execution of the Budget,” USDA identified the additional 11 programs at 

risk of significant improper payments through the Departmental risk assessment process. 

IPIA requires that agencies measure their improper payments annually, establish reduction targets and corrective 

action plans, and track the results annually to ensure that the corrective actions are effective. OCFO issued specific 

policy guidance including templates and timelines for implementing IPIA and meeting the goals of the PMA 

initiative. USDA continues to make progress in accurately measuring and reporting improper payments, developing 

and implementing corrective actions, and recovering improper payments.

USDA scored green for status and green for progress on the PMA scorecard for September 30, 2008. The 

Department’s overall goal is to remain “green” in FY 2009. 

USDA measured the 16 programs with $67.4 billion in outlays using an OMB-approved statistical sampling 

methodology. The measurement results estimate that the Department’s improper payments totaled $4.1 billion 

(improper payment rate of 6.1 percent), down from the FY 2007 amount of $4.4 billion (improper payment rate of 

6.1 percent). Of the estimated improper payments, $4.0 billion (5.9 percent) were due to incorrect disbursement 

and $151 million (0.2 percent) were due to incomplete paperwork. The estimated improper payments consisted of 

$3.4 billion (5.0 percent) in overpayments and $778 million (1.1 percent) in underpayments. 

Seven high risk programs, representing 58 percent of $67.4 billion in high risk program outlays, reported improper 

payment error rates below their reduction targets. This demonstrates that improper payments are being reduced and 

consistent progress is being made as shown in the following FY 2008 results:

 NRCS’s Farm Security and Rural Investment Program Act programs achieved an error rate of 0.00 percent 

which was below their reduction target of 0.40 percent; 

 Forest Service’s Wildland Fire Suppression Management Program achieved an error rate of 0.02 percent which 

was below their reduction target of 0.90 percent;

Status Progress 

↑

ELIMINATE IMPROPER 

PAYMENTS 

↔
MANAGEMENT’S DISCUSSION AND ANALYSIS 

29 

 FNS Food Stamp Program achieved an error rate of 5.64 percent which was below their reduction target of 5.80 

percent. The error rate is a new historic low for the program and is the fourth consecutive year below 6 percent, 

long considered the standard for recognition; 

 FNS’ Child and Adult Care Food Program achieved an error rate of 1.56 percent which was below their 

reduction target of 1.64 percent; 

 FSA’s Marketing Assistance Loan Program achieved an error rate of 1.76 percent which was below their 

reduction target of 7.00 percent; 

 FSA’s Milk Income Loss Contract Program error rate of 0.21 percent which was below their reduction target of 

2.00 percent; and 

 FSA’s Miscellaneous Disaster Programs error rate of 3.13 percent was below their reduction target of 5.00 

percent. 

FSA programs continue to make significant improvement in reducing improper payments. FSA’s estimated 

improper payments for all seven high risk programs were $186.6 million (improper payment rate of 1.3 percent), 

down from $563 million (improper payment rate of 2.5 percent) for FY 2007 and down from $2.9 billion (improper 

payment rate of 11.2 percent) for FY 2006. To achieve these reductions, FSA implemented aggressive corrective 

action plans focusing on direct senior management involvement; provided agency-wide training; increased 

accountability at all levels; created and used checklists; enhanced program eligibility verification; eliminated 

automatic rollover of eligibility determination; improved documentation controls; engaged comprehensive 

re-examination of payment files; and increased internal controls and independent audits. 

Actions taken by USDA during FY 2008 include: 

 Consolidated small and similar programs together for improved focus in the risk assessment process. USDA 

moved from 138 programs in FY 2007, to 124 programs;

 Completed 46 risk assessments as scheduled on a 3-year cycle. No new programs were declared high risk as a result of 

the risk assessments; 

 Recovered $138 million in improper payments, exceeding the Departmental recovery target of $68 million; 

 Developed corrective actions for all high risk programs and set reduction targets and recovery targets for 

programs where appropriate; and 

 Measured 16 programs determined to be at risk for significant improper payments by statistical or other 

approved methods. The results of these measurements are shown in Appendix B of this report.

USDA’s plans for FY 2009 include: 

 Maintaining the overall status of Green for the PMA initiative; 

 Achieving results that allow one or more USDA programs being designated as no longer at high risk for 

significant improper payments;

 Revising sampling methodologies to provide improper payment rates nearer the time of payment, leading to more 

timely corrective actions; 

 Setting and meeting appropriate improper payment reduction targets; 

 Setting appropriate improper payment recovery targets and meeting the targets through aggressive recovery efforts;

 Creating aggressive correction plans with measured performance that demonstrate that the documentation and 

internal control issues have been addressed; 

 Developing and implementing policies, controls, procedures, and checklists at appropriate levels to reduce the 

number of improper payments; 

 Providing training to field personnel and cooperative partners on the importance of key internal controls, control 

procedures, and the potential risks of noncompliance; 

 Providing technical assistance to State agencies and cooperative partners; and 

 Increasing accountability at all levels by incorporating the employee’s individual results into their annual 

performance evaluations. 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

30 

Improved Credit Program Management is a new initiative 

under the President’s Management Agenda. Beginning in 

FY 2006, this initiative required USDA to: 

 Develop risk factors for predicting the cost of loan programs; 

 Require that guaranteed lending partners have effective loan-portfolio management and loss recovery rates; 

 Verify that lending partners have established quality collateral valuation processes; 

 Calculate the cost of originating, servicing, and liquidating loans; and 

 Comply with all relevant provisions of the Debt Collection Improvement Act. 

USDA scored red for status and yellow for progress on the September 30, 2008, scorecard. 

USDA’s loan portfolio is approximately $100 billion in outstanding public debt. It represents nearly one-third of all 

debt in the Federal Government. In addition, USDA is the guarantor for another $30 billion in loans made by 

lending partners. The Department’s mission often makes it the lender of last resort, to target borrowers at a higher 

risk for default. 

USDA continues to improve lending policies and practices to better manage the risk to the taxpayer. The 

Department continually verifies that partner lenders utilize sound lending procedures and create proper collateral 

valuation processes. The Department persistently looks for ways to reduce the cost of servicing and liquidating 

loans while increasing recoveries. USDA strives to accomplish these goals while improving customer satisfaction 

ratings. 

USDA’s plans include: 

 Setting goals related to reaching target borrowers and reducing deviation from risk standards; 

 Setting goals to reduce the total cost of servicing and liquidating loans and improve the debt-recovery rate; 

 Establishing customer satisfaction ratings that meet or exceed industry standards; 

 Defining its target borrower segments clearly, regularly assessing whether its borrowers meet that definition and 

whether such borrowers comprise an acceptable risk that can be managed effectively; 

 Establishing or verifying that partner lenders have established sound lending policies and procedures 

implemented in effective transaction-approval processes, loan portfolio management, and loss recovery; 

 Establishing or verifying that partner lenders have created collateral valuation processes with clear policies and 

procedures ensuring independence in appraisals and valuations, and adequate monitoring of appraisers’ quality 

and certification; 

 Maintaining a reasonable level of risk and productivity of taxpayer cash used in lending programs through 

effective management information reporting. This reporting includes indicators of loan volume, exceptions to 

underwriting standards, concentrations of credit risk, delinquency and default rates, rating changes, problem 

loans and charge offs, and using such information to improve program results; 

 Establishing mutually agreeable goals that can be justified by comparisons to relevant programs to control the 

total cost of originating, servicing, and liquidating loans to improve the rate of debt recovery; and 

 Complying with all relevant provisions of the Debt Collection Improvement Act. 

Actions taken by USDA in FY 2008 include:

 RD has invested in its credit estimating capacity through the development of a new credit model for Utility 

Loans; 

 FSA has recently introduced a new forward looking credit model for its Farm Loan Programs that incorporates 

risk factors detailed in the President’s Budget; 

 USDA continues to be a leader in the Federal government in referring nearly all eligible delinquent debt to the 

Department of Treasury for collection. USDA referred 99.7 percent of the eligible $1.2 billion to the Treasury 

for collection utilizing their Offset Program; and

Status Progress 

↔

IMPROVED CREDIT 

PROGRAM MANAGEMENT ↑
MANAGEMENT’S DISCUSSION AND ANALYSIS 

31 

 USDA established Administrative Wage Garnishment (AWG) hearing procedures in 7 CFR Part 3, Debt 

Management, Final Rule, published in the Federal Register on January 2, 2008. AWG is an optional collection 

tool provided by the Debt Collection Improvement Act.

USDA is keenly aware of the pivotal role sound fiscal management plays to deliver the Department’s programs to 

our citizens. It is important that taxpayers and customers know how resources are safeguarded and have confidence 

that programs and services are operating in continually more efficient ways. Through the individual leadership and 

collaborative efforts of USDA employees and lending partners, USDA made significant strides during this 

Administration in advancing the Department’s impressive record of excellence in credit program management. 

The Faith-Based and Community Initiative is working to 

create a more open and competitive awards process. This 

work helps ensure that the Federal Government partners 

with the best organizations to deliver the most effective 

services to those in need.

For years, USDA has partnered with faith-based and community organizations to help deliver food and other vital 

assistance to the needy. The initiative works to strengthen these existing partnerships and create new ones to extend 

the Department’s outreach. Faith-based and community groups already work with the individuals that USDA's 

assistance programs serve. These groups are valuable to the Department’s efforts in reaching more people with its 

programs and being more successful in alleviating hunger and building stronger communities. 

The initiative works to: 

 Promote opportunities and build the capacity of faith-based and community organizations through outreach and 

technical-assistance activities; 

 Identify and eliminate barriers that impede the full participation of faith-based and community organizations in 

the Federal grants process;

 Ensure that equal treatment principles are understood at the Federal, State, and local levels of Government and, 

in turn, educate faith-based and community organizations receiving Federal funds on their responsibilities; and

 Develop and launch pilot programs to test new strategies and strengthen the partnership between faith-based 

and community organizations and the Federal Government. 

USDA scored green for both status and progress on the September 30, 2008, scorecard. 

Actions taken by USDA in FY 2008 to achieve these results include: 

 Conducting 3,065 outreach and technical assistance activities to strengthen the ability of faith-based and 

community organizations to serve those in need; 

 Hosting 496 educational activities for State and local Government agencies and faith-based and community 

groups on equal treatment principles; 

 Developing additional toolkits and Web-based resources for State and local program administrators to help 

them learn about and expand partnerships with faith-based and community organizations; 

 Updating compliance review materials to ensure continued implementation of equal treatment principles; 

 Reducing barriers to access for faith-based and community organizations applying for Federal funds; and 

 Creating new program partnership opportunities for faith-based and community groups. 

FINANCIAL STATEMENT HIGHLIGHTS 

Budgetary Resources 

USDA receives most of its funding from appropriations authorized by Congress and administered by the U.S. 

Department of the Treasury. Total budgetary resources consist of the balance at the beginning of the year, 

appropriations received during the year, spending authority from offsetting collections and other budgetary 

Status Progress 

↔

FAITH-BASED AND 

COMMUNITY INITIATIVE ↔
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

32 

resources. Total budgetary resources was $172.7 billion for FY 2008 compared to $161.9 billion in FY 2007, an 

increase of $10.8 billion. 

The unobligated balance brought forward including recoveries of prior year unpaid obligations increased $8.7 

billion, budget authority net of transfers and resources temporarily not available decreased $15.9 billion and 

budgetary resources permanently not available increased $18.1 billion. The decrease of budget authority was 

primarily due to less appropriations of $5.8 billion and less borrowing authority of $8.5 billion. 

Obligations Incurred And Net Outlays 

Obligations Incurred increased $10.4 billion in FY 2008. This 

increase is primarily due to a $6 billion increase at FNS for 

food stamps and other programs; a $2.7 billion increase at RD 

for credit programs; a $2 billion increase at FSA for disaster 

payments; a $1.7 billion increase at RMA for insurance 

delivery costs and underwriting gains; offset by a $4.2 billion decrease at CCC due to favorable market conditions 

for commodities. 

Net Outlays increased $6.2 billion in FY 2008, primarily in relation to the increase in obligations described above. 

BALANCE SHEET 

CONDENSED BALANCE SHEET DATA 

AS OF SEPTEMBER 30, 2008 AND 2007 (IN MILLIONS) 

FY 2008 FY 2007 % CHANGE 

Fund Balance with Treasury $64,595 $47,340 36% 

Accounts Receivable, Net 10,298 9,218 12% 

Direct Loan and Loan Guarantees, Net 81,774 80,348 2% 

General Property, Plant and Equipment, Net 2,973 4,931 -40% 

Other 733 651 13% 

Total Assets 160,373 142,488 13% 

Debt 77,577 75,101 3% 

Loan Guarantee Liability 1,333 1,258 6% 

Benefits Due and Payable 2,764 2,854 -3% 

Other 39,298 35,568 10% 

Total Liabilities 120,972 114,781 5% 

Unexpended Appropriations 30,783 30,937 0% 

Cumulative Results of Operations 8,618 -3,230 -367% 

Total Net Position 39,401 27,707 42% 

Total Liabilities and Net Position $160,373 $142,488 13% 

Total Assets 

Total assets increased $17.9 billion in FY 2008. This increase is primarily due to an increase in Fund Balance with 

Treasury for 30 percent of customs duties at AMS of $14.9 billion; an increase in accounts receivable at RMA of 

$1.2 billion for premiums due as a result of higher commodity prices; and the write-off of $2 billion in road prism 

costs at the FS. 

Direct Loan and Loan Guarantees, Net is the single largest asset on the USDA Balance Sheet. RD offers both 

direct and guaranteed loan products for rural housing and rural business infrastructure. These represent 85 percent 

2008 2007 % Change 

Total Budgetary 

Resources 

$172,749 $161,918 7% 

Obligations Incurred $139,357 $128,954 8% 

Net Outlays $96,182 $89,950 7% 

Data in millions 
MANAGEMENT’S DISCUSSION AND ANALYSIS 

33 

of the total USDA loan programs. Loan programs administered by the FSA represent 8 percent of the total. FSA 

provides support to farmers who are temporarily unable to obtain private, commercial credit. The remaining 

7 percent represents commodity loans and credit programs administered by CCC. CCC’s loans are used to improve 

economic stability and provide an adequate supply of agricultural commodities. CCC credit programs provide 

foreign food assistance, expand foreign markets and provide domestic low-cost financing to protect farm income 

and prices. 

Total Liabilities 

Total liabilities increased $6.2 billion in FY 2008. This increase is primarily due to a $2.5 billion increase in Debt 

and a $2.9 billion increase at RMA for estimated underwriting gains and indemnities. 

Debt represents amounts owed to Treasury primarily by CCC and RD. For CCC, the debt primarily represents 

financing to support Direct and Counter Cyclical, Crop Disaster and Loan Deficiency programs. For RD, the debt 

primarily represents financing to support Single and Multi Family Housing loan programs. 

Total Net Position 

Total net position increased $11.7 billion in FY 2008. This increase is primarily due to an increase in cumulative 

results of operations at AMS of $13.6 billion for 30 percent of customs duties and a decrease of $2 billion at the FS 

for road prisms, both considered changes in accounting principles. 

NET COST OF OPERATIONS 

CONDENSED STATEMENT OF NET COST 

For the Years Ended September 30, 2008 and 2007 

(in millions) 

 FY 2008 FY 2007 % CHANGE 

Goal 1: Enhance International 

Competitiveness of American Agriculture $2,029 $1,484 37% 

Goal 2: Enhance the Competitiveness and Sustainability of Rural 

and Farm Economies 17,159 15,099 14% 

Goal 3: Support Increased Economic Opportunities and Improved 

Quality of Life in Rural America 3,879 2,202 76% 

Goal 4: Enhance Protection and Safety of the Nation’s Agriculture 

and Food Supply 2,439 2,509 -3% 

Goal 5: Improve the Nation’s Nutrition and Health 60,132 53,948 11% 

Goal 6: Protect and Enhance the Nation’s Natural Resource Base 

and Environment 11,095 11,079 0% 

Net Cost of Operations $96,733 $86,321 12% 

Net Cost of Operations 

Net cost of operations increased $10.4 billion in FY 2008. This increase is primarily due to increased participation 

and higer food costs in the food stamps and other programs at FNS of $6 billion; less revenue earned at CCC of 

$3 billion because of favorable market conditions for commodities; and a $1 billion increase at RD for credit 

programs. 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

34 

Systems, Controls, and Legal Compliance 

Management Assurances 

STATEMENT OF ASSURANCE 

The Department of Agriculture’s (USDA) management is responsible for establishing and maintaining 

effective management control, financial management systems, and internal control over financial reporting 

that meet the objectives of the Federal Managers’ Financial Integrity Act (FMFIA). USDA provides a 

qualified statement of assurance that management control, financial management systems, and internal 

controls over financial reporting meet the objectives of FMFIA, with the exception of three material 

weaknesses and one financial system non-conformance. The details of the exceptions are provided in the 

FMFIA and the Federal Financial Management Improvement Act (FFMIA) sections of this report. 

USDA conducted its assessment of the financial management systems and internal control over 1) the 

effectiveness and efficiency of operations and compliance with applicable laws and regulations as of 

September 30, 2008, and 2) financial reporting as of June 30, 2008, which includes safeguarding of assets 

and compliance with applicable laws and regulations, in accordance with the requirements of OMB 

Circular A-123, “Management’s Responsibility for Internal Control.” Based on the results of these 

evaluations, USDA reduced its existing material weaknesses under financial reporting from four to three. 

USDA eliminated the duplicate reporting of “Funds Control Management” under Section 2 and 4 of 

FMFIA. Funds Control Management is now reported only under Section 4 in FMFIA. Therefore, a total 

of three material weaknesses and one system non-conformance is reported in Fiscal Year (FY) 2008. 

Other than the exceptions noted in the FMFIA and FFMIA sections, financial management systems 

conform substantially with the objectives of FMFIA and the internal controls were operating effectively 

and no other material weaknesses were found in the design or operation of the internal control over 1) the 

effectiveness and efficiency of operations and compliance with applicable laws and regulations as of 

September 30, 2008; and 2) financial reporting as of June 30, 2008. However, Department management 

reported in FY 2008 on prior year violations of the Anti-Deficiency Act that were not considered chronic 

or significant. The violations related to restrictions on the use of funds to combat forest fires and costs for 

donated food commodities. 
MANAGEMENT’S DISCUSSION AND ANALYSIS 

35 

Federal Managers’ Financial Integrity Act Report on Management Control 

BACKGROUND 

The Federal Managers’ Financial Integrity Act (FMFIA) requires ongoing evaluations of internal control and 

financial management systems. These evaluations lead to an annual statement of assurance by the agency head that: 

 Obligations and costs comply with applicable laws and regulations; 

 Federal assets are safeguarded against fraud, waste, and mismanagement; 

 Transactions are accounted for and properly recorded; and 

 Financial management systems conform to standards, principles, and other requirements to ensure that Federal 

managers have timely, relevant, and consistent financial information for decision-making purposes. 

FMFIA also authorizes the Office of Management and Budget (OMB), in consultation with the Government 

Accountability Office (GAO), to periodically establish and revise the guidance to be used by Federal agencies in 

executing the law. 

In addition to FMFIA, the Federal Information Security Management Act (FISMA) requires agencies to report 

any significant deficiency in information security policy, procedure, or practice identified (in agency reporting): 

 As a material weakness in reporting under FMFIA; and 

 If relating to financial management systems, as an instance of a lack of substantial compliance under FFMIA. 

(See the FFMIA Report on Financial Management Systems.) 

 USDA conducts its annual evaluation of internal controls over financial reporting in accordance with OMB 

Circular A-123, “Management’s Responsibility for Internal Control,” Appendix A. Assessment results are 

reviewed and analyzed by the USDA Senior Assessment Team. Final assessment results are reviewed and 

approved by the Senior Management Control Council. 

The Department operates a comprehensive internal control program to ensure compliance with FMFIA 

requirements and other laws and OMB Circulars A–123, Appendix A, and A–127, “Financial Management 

Systems.” All USDA managers must ensure that their programs operate efficiently and effectively and comply with 

relevant laws. They must also ensure that financial management systems conform to applicable laws, standards, 

principles, and related requirements. In conjunction with OIG and GAO, USDA management works 

aggressively to determine the root causes of its material weaknesses to promptly and efficiently correct them.

USDA remains committed to reducing and eliminating the risks associated with its deficiencies, and efficiently and 

effectively operating its programs in compliance with FMFIA. 

FY 2008 Results 

In FY 2007, USDA reported four material weaknesses: Information Technology, Funds Control Management, 

Financial Reporting/Unliquidated Obligations and Financial Reporting/Credit Reform. The Department is 

eliminating the duplicate reporting of Funds Control Management as a material weakness under Section 2 and a 

financial system non-conformance under Section 4 of FMFIA. USDA is now reporting the Funds Control 

Material Weakness under FMFIA Section 4 only to comply with OMB Circular A-136, “Financial Reporting 

Requirements.” Progress has been made regarding quality control over credit reform models although more work is 

needed at the Commodity Credit Corporation to improve the timeliness and controls over model changes. The 

Department now has three material weaknesses and one financial system non-conformance. Thus, the “Secretary’s 

Statement of Assurance” provides qualified assurance that USDA’s system of internal control complies with 

FMFIA objectives. The following exhibit summarizes the results reported in USDA’s Consolidated Financial 

Statement Audit Report. 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

36 

Exhibit 4: Summary of Financial Statement Audit 

Audit Opinion Unqualified 

Restatement No 

Material Weakness 

Beginning 

Balance New Resolved Consolidated Reassessed 

Ending 

Balance 

Improvements Needed in Overall Financial 

Management 

1 1 

Improvements Needed in Information 

TechnologyTechnology Security and Controls 

1 1 

TOTAL MATERIAL WEAKNESSES 2 2 

The following exhibit provides a listing of USDA’s material weaknesses and the financial system non-conformance 

as related to the management’s assurance for FMFIA and the certification for FFMIA. 

Exhibit 5: Summary of Management Assurances 

Effectiveness of Internal Control Over Financial Reporting (FMFIA § 2) 

Statement of Assurance Qualified 

Material Weakness 

Beginning 

Balance New Resolved Consolidated Reassessed 

Ending 

Balance 

Information Technology 1 1 

Funds Control Management 1 √ 0 

Financial Reporting – Unliquidated 

Obligations 

1 1 

Financial Reporting – Credit Reform 1 1 

TOTAL MATERIAL WEAKNESSES 4 1 3 

Effectiveness of Internal Control Over Operations (FMFIA § 2) 

Statement of Assurance Unqualified 

Material Weakness 

Beginning 

Balance New Resolved Consolidated Reassessed 

Ending 

Balance 

TOTAL MATERIAL WEAKNESSES 0 0 

Conformance with Financial Management System Requirements (FMFIA § 4) 

Statement of Assurance Qualified 

Material Weakness 

Beginning 

Balance New Resolved Consolidated Reassessed 

Ending 

Balance 

Funds Control Management 1 1 

TOTAL NON-CONFORMANCE 1 1 

Compliance with Federal Financial Management Improvement Act (FFMIA) 

Agency Auditor 

Overall Substantial Compliance No No 

1. System Requirements No 

2. Accounting Standards No 

3. United States Standard General Ledger at 

Transaction Level 

No 

4. Information security policies, procedures, 

and practices 

No 
MANAGEMENT’S DISCUSSION AND ANALYSIS 

37 

MATERIAL WEAKNESSES CONSOLIDATED 

USDA consolidated one of its four prior-year material weaknesses in FY 2008. 

Funds Control Management—This material weakness, identified in FY 2004, results from the inability of CCC’s legacy 

financial systems to capture obligations at the transaction level. USDA categorized this deficiency as both a material 

internal control weakness and a financial system non-conformance in FY 2007. Consistent with the reporting 

requirements of OMB Circular A-136, “Financial Reporting Requirements,” the funds control weakness is now 

reported under FMFIA Section 4 only.

Commodity Credit Corporation—Prepared a request for proposal to replace and/or modify non-compliant systems and 

fund systems acquisition and development in FY 2009.

Summary of Outstanding Material Weaknesses 

Material Weakness 1. USDA Information Technology Overall Estimated Completion Date FY 2009 

Existing Internal control design and operating effectiveness deficiencies in four areas: software change control, disaster recovery, 

logical access controls, and physical access that aggregate to an overall IT material weakness. 

 FY 2008 Accomplishments: FY 2009 Planned Actions: 

• Standardized and streamlined FISMA and A-123 testing by implementing 

NIST baseline security control objectives; 

• Fully implemented CSAM system throughout USDA; 

• Executed internal control education plan for all levels and agencies 

throughout USDA; 

• Demonstrated substantial remediation progress in each of the 4 areas 

contributing to the material weakness by completing 64 percent of the 

corrective actions identified in 2007;

• Monitored agency progress through the Information Technology Executive 

Steering Committee;

• Chartered an Account Management Work Group tasked with providing 

departmental oversight on system logical access issues; 

• Completed revisions to the security awareness training policy, the disaster 

recovery planning guidelines, scanning and patching requirements, and 

the incident response policy and procedures to align with current NIST 

and OMB guidance; 

• Reviewed Configuration Management Plans for NIST compliance during 

the concurrency reviews of Certification and Accreditation documentation; 

• Reviewed and validated selected USDA agency network/system patching 

reports; 

• Reviewed USDA agency’s contingency plans for completeness and 

compliance with NIST and Department guidelines; and 

• Updated and issued guidance on the preparation of Disaster Recovery 

plans. 

• Continue monitoring progress through the Information Technology 

Executive Steering Committee;

• Integrate the A-123 process with the FISMA monitoring and 

reporting process to streamline documentation and reporting;

• Develop baseline of inherited controls provided by service center 

providers to assess their impact on the assurance of the service 

center agencies;

• Conduct reviews of POA&M closure and control testing 

documentation and monitor progress using scorecard and the 

CSAM; 

• Initiate policy gap analysis and revise the Access Control and 

Configuration Management policies and procedures;

• Publish revised policy and procedures for Access Control; 

• Publish revised policy and procedures on Continuity Planning; 

• Update regulations to meet the NIST and other Federal 

requirements relating to Change Control processes; 

• Review configuration management guidance and update; 

• Test all USDA agencies’ Continuity of Operations plans;

• Monitor USDA agencies’ compliance with disaster recovery plan 

testing requirements through the Cyber Security Scorecard, 

Certification and Accreditation concurrency review process, and 

CSAM; and 

• Continue to review and validate selected USDA agency 

network/system patching reports. 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

38 

2. Financial Reporting – Unliquidated 

Obligations 

Material Weakness Overall Estimated Completion Date FY 2009 

Existing 

Lack of consistent review and follow-up on unliquidated obligations. 

 FY 2008 Accomplishments: FY 2009 Planned Actions: 

• Increased breadth of testing to better understand the scope and root 

cause of this weakness.

• Develop a metric and performance standard to measure component 

agency compliance with Departmental guidance; 

• Assess the need for additional tools to assist component agencies in 

performing and adequately documenting the results of periodic 

reviews; 

• Revise Departmental guidance to require quarterly reviews and 

certifications for obligations more than 1 year old.

• Perform compliance monitoring on a sampling of obligation reviews 

and the related obligations to ensure that justifications are adequate 

and obligations are removed timely; and 

• Monitor component agency activities to remediate this deficiency.

Material Weakness 3. Financial Reporting – Credit Reform Overall Estimated Completion Date FY 2009 

Existing Controls are lacking in the credit reform quality assurance process to ensure that cash flow models, data inputs, estimates, 

and reestimates are subject to appropriate management oversight. 

FY 2008 Accomplishments: FY 2009 Planned Actions: 

• RD developed and implemented standard operating procedures for model 

changes, data extracts, and re-estimates to improve quality assurance for 

credit program management; 

• CCC provided training to personnel working with the direct credit and 

credit guarantee programs to enhance the collective departmental 

expertise in performing calculations and conducting effective 

management reviews; and 

• CCC created a specific policy for reviewing and implementing changes to 

ensure that further cash-flow model enhancements are adequately 

reviewed and approved.

CCC will: 

• Establish a team to review all model changes to include members 

of both the budget and the accounting disciplines. OIG will be 

invited to all Configuration Control Board meetings to monitor 

CCC's efforts; 

• Establish a timeline for all model changes that will allow adequate 

time for test and review prior to delivery to the auditors; 

• Test all model changes/development results to ensure that model 

outputs properly capture all elements of the cash flow, not just 

those affected by the change(s) in OMB’s Credit Subsidy 

Calculator 2 to ensure that those results do not produce 

unintended consequences; and 

• Procure a contractor for Independent Verification and Validation 

review and oversight for any newly developed models. 

USDA will: 

• Reinstitute Credit Reform Working Group to improve 

communication and coordination of model changes. 

SUMMARY OF OUTSTANDING SYSTEM NON-CONFORMANCE 

System Non- 1. Funds Control Management Overall Estimated Completion Date FY 2012 

Conformance 

Existing System improvements needed in recording obligations at the transactions level. 

 FY 2008 Accomplishments: FY 2009 Planned Actions: 

• Documented CCC obligations business events and developed solutions 

for providing pre-authorization of funds; and 

• Developed functionality to capture obligations within current financial 

system.

• Migrate to USDA’s enterprise solution under FMMI; and 

• Develop functionality to do funds control at the time of obligation 

request from program applications.
MANAGEMENT’S DISCUSSION AND ANALYSIS 

39 

Federal Financial Management Improvement Act Report on Financial Management Systems 

BACKGROUND 

FFMIA is designed to improve financial and program managers’ accountability, provide better information for 

decision-making, and improve the efficiency and effectiveness of Federal programs. FFMIA requires that financial 

management systems provide reliable, consistent disclosure of financial data in accordance with Generally Accepted 

Accounting Principles and standards. These systems must also comply substantially with: (1) Federal Financial 

Management System requirements; (2) applicable Federal Accounting Standards; and (3) the Standard General 

Ledger at the transaction level. Additionally, FISMA requires that there be no significant weaknesses in 

information security policies, procedures or practices to be substantially compliant with FFMIA (referred to as 

Section 4 in the accompanying table).

Exhibit 6: Initiatives To Be Completed 

Outstanding Initiatives to Achieve FFMIA Compliance 

Initiative 

Section of 

Non-compliance Agency 

Target Completion 

Date 

Information Technology1 Sections 1 and 4 Multiple 9/30/2009 

Funds Control Management Section 1 

Sections 1 and 3 

Sections 1, 2 and 3

CCC

FS 

NRCS 

9/30/2012

12/31/2008 

9/30/2009 

Sections: 

FFMIA: 

1 – Federal Financial Management System requirements. 

2 – Federal Accounting Standards 

3 – Standard general ledger at the transaction level. 

FISMA: 

4 – Information Security Policies, Procedures, or Practices. 

1 The information technology material weakness, which is reported in the Federal Managers’ Financial Integrity Act Report on Management Control, is 

comprised of four issues: Software Change Control; Disaster Recovery; Logical Access Controls; and Physical Access Controls. 

FY 2008 RESULTS 

During FY 2008, USDA evaluated its financial management systems to assess substantial compliance with the Act. 

In assessing FFMIA compliance, USDA considered all the information available. This information included the 

auditor’s opinions on component agencies’ financial statements, the work of independent contractors and progress 

made in addressing the material weaknesses identified in the FY 2007 Performance and Accountability Report –

Systems, Controls, and Legal Compliance section. The Department is not compliant with Federal Financial 

Management System requirements, Federal accounting standards, and the standard general ledger at the 

transaction level. Additionally, as reported in the FMFIA section of this report, USDA continues to have 

weaknesses in information technology controls that result in non-compliance with the FISMA requirement. As 

part of the financial systems strategy, USDA agencies continue to work to meet FFMIA and FISMA objectives. 

The Information Technology Executive Steering Committee continues to monitor the correction of information 

technology weaknesses in USDA’s financial systems. While the Department made substantial progress in 

addressing its information technology weakness, more work is needed to comply substantially with the Act’s 

requirements. The description of the corrective actions taken to address the information technology, financial 

accounting and reporting, and funds control initiatives reported in FY 2008 are included in the FMFIA section of 

this report.

Auditor-identified deficiencies at the Forest Service related to the requirement to record obligations in the standard 

general ledger at the transaction level were identified in FY 2007. Transactions were not obligated as required by 

appropriation law prior to payment. The transactions include temporary travel, grants, and other recurring utility 

type transactions. Posting models were needed at the transaction level to accommodate transfers of stewardship 

land acquisitions and record exchange review transactions to the proper general ledger accounts. Corrective action 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

40 

to implement the posting model for stewardship land acquisitions was completed in FY 2008. Other corrective 

actions for recording obligations are not scheduled to be completed by FS until FY 2009. NRCS is developing 

corrective action plans to address auditor-identified deficiencies: financial management systems did not 

substantially comply with Federal Financial Management System Requirements, the United States Standard 

General Ledger, and applicable Federal Accounting Standards for internal use software (including work in 

progress), undelivered orders, unfilled customer orders, expense accruals, and capital leases. Deficiencies were also 

noted regarding proper use of the United States Standard General Ledger. 

The financial management system non-compliance portion of the CCC FY 2007 Funds Control material weakness 

is now being reported under FFMIA. While additional work remains, CCC is implementing a funds control 

system to remediate the financial system noncompliance. 

Federal Financial Management System Requirements/Funds Control Management 

CCC continued to develop a fully integrated funds control system within the financial management system that can 

interface with CCC’s general ledger system at the transaction level. The system will also provide management with 

timely information to periodically monitor and control the status of budgetary resources recorded in the general 

ledger. FY 2008 accomplishments include: 

 Developed the to-be process design;

 Prepared a request for proposal for replacement and/or modification of non-compliant processing systems; 

 Documented CCC obligation business events and develop solutions for providing pre-authorization of funds; 

 Prepared system requirements documentation to current FSA financial applications to accept obligation 

transactions; and 

 Developed functionality to capture obligations within current FSA financial systems.

In FY 2009, CCC will: 

 Develop functionality to do funds control at the time of obligation request from program applications.

In FY 2012, CCC will: 

 Complete software modifications to program applications to send Obligation Transactions for Farm Programs, 

Farm Loan Programs, Foreign Programs, and Commodity Programs; and 

 Select and implement software package. 

Inspector General Act Amendments of 1988: Management’s Report on Audit Follow-Up 

BACKGROUND 

OIG audits USDA’s programs, systems, and operations. OIG then recommends improvements to management 

based on its findings. USDA management may agree or disagree with the audit’s findings or recommendations. An 

agreement is reached during the management-decision process. If management agrees with a recommendation, a 

written plan for corrective action with a target completion date is developed. The plan is then submitted to OIG for 

its concurrence. If both OIG and management agree that the proposed corrective action will correct the weakness, 

management decision is achieved for that recommendation.

Audit follow-up ensures that prompt and responsive action is taken. USDA’s OCFO oversees audit follow-up for 

the Department. An audit remains open until all corrective actions for each recommendation are completed. As 

agencies complete planned corrective actions and submit closure documentation, OCFO reviews it for sufficiency 

and determines if final action is completed. 
MANAGEMENT’S DISCUSSION AND ANALYSIS 

41 

FY 2008 Results 

USDA agencies closed 58 audits in FY 2008. The 

Department’s current inventory of audits that have 

reached management decision and require final action 

to close totals 150. This figure includes 41 new audits 

in FY 2008. One of these audits is in appeal status. 

As shown in the accompanying exhibit, the 

Department continued to reduce its inventory of 

open audits in FY 2008. This is a 27 percent decrease 

since FY 2004. 

Audit Follow-Up Process 

The Inspector General Act Amendments of 1988 

require an annual report to Congress providing the 

status of resolved audits that remain open. Reports on 

resolved audits must include the elements listed in the 

first three of the accompanying bullets: 

 Beginning and ending balances for the number of audit reports and dollar value of disallowed costs and funds to 

be put to better use (see definitions below); 

 The number of new management decisions reached;

 The disposition of audits with final action (see definition below);

 Resolved audits that remain open 1 year or more past the management decision date require an additional 

reporting element; and

 The date issued, dollar value, and an explanation of why final action has not been taken. For audits in formal 

administrative appeal or awaiting a legislative solution, reporting may be limited to the number of affected 

audits. 

Exhibit 8: Audit Follow-Up Definitions 

Term Definition 

Disallowed Cost An incurred cost questioned by OIG that management has agreed should not be chargeable to the Government. 

Final Action The completion of all actions that management has concluded is necessary in its management decision with respect to the findings 

and recommendations included in an audit report. In the event that management concludes no action is necessary, final action 

occurs when a management decision is accomplished. 

Funds To Be Put 

to Better Use 

(FTBU) 

An OIG recommendation that funds could be used more efficiently if management took actions to implement and complete the 

recommendation, including: 

• Reductions in outlays; 

• De-obligation of funds from programs or operations; 

• Withdrawal of interest subsidy costs on loans or loan guarantees, insurance or bonds; 

• Costs not incurred by implementing recommended improvements related to the operations of the establishment, a contractor or 

grantee; 

• Avoidance of unnecessary expenditures noted in pre-award reviews of contract or grant agreements; or 

• Any other savings which are identified specifically. 

Management 

Decision 

Management’s evaluation of the audit findings and recommendations and the issuance of a final decision on corrective action 

agreed to by management and OIG concerning its response to the findings and recommendations. 

OCFO works with component agencies and OIG to identify and resolve issues that affect the timely completion of 

corrective actions. USDA agencies are required to prepare combined, time-phased implementation plans and 

interim progress reports for all audits that remain open one or more years beyond the management decision date. 

Time-phased implementation plans are updated and submitted at the end of each quarter. They are updated to 

Exhibit 7: Decrease in Total Open Audit Inventory 

Note: The FY 2007 ending balance was revised from 154 to 167 to include 13 audits that 

reached management decision in September 2007. These adjustments are also reflected 

in the beginning balances for audits with disallowed costs and funds to be put to better 

use shown in Exhibit 9 and Exhibit 11. 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

42 

include newly reported audits that meet the 1-year-past-management decision criterion. These plans contain 

corrective action milestones for each recommendation and corresponding estimated completion dates. 

Quarterly interim progress reports are provided to OCFO on the status of corrective action milestones listed in the 

time-phased implementation plan. These reports show incremental progress toward the completion of planned 

actions; changes in planned actions, actual or revised completion dates; and explanations for any revised dates. 

The Department implemented an online, Web-based Audit Tracking Module (ATM) to improve the audit 

tracking and management processes. The ATM was designed to 1) make the tracking process more efficient and 

easier to manage; and 2) ensure that appropriate management and functional-level officials and staff have real-time 

accurate information. It also allows for efficient coordination between USDA agencies, OCFO, and OIG. 

Beginning and Ending Inventory for Audits with Disallowed Costs (DC) and Funds to Be Put to Better Use (FTBU)1 

Exhibit 9: Inventory of Audits with Disallowed Costs1 Exhibit 10: Distribution of Adjustments to Disallowed Costs 

Audits with Disallowed Costs 

# of 

Audits 

Amount 

($) Category Amount ($) 

Beginning of the Period 57 107,132,672 Changes in Management Decision 354,875 

Plus: New Management Decisions 11 31,163,685 Agency Appeals 1,123,163 

Total Audits Pending Collection of 

Disallowed Costs 

68 138,296,357 Write-Offs 4,981,042 

Adjustments 45,830,245 Agency Documentation 39,878,164 

Revised Subtotal 92,466,112 Agency Discovery -506,999 

Less: Final Actions (Recoveries)* 24 (16,467,492) Total 45,830,245 

OIG adjustment change in code -1 31,856

Audits with DC Requiring Final Action 

at the End of the Period 

43 75,966,764

*Recoveries do not include $338,852 interest collected. 

Exhibit 11: Inventory of Audits with Funds To Be Put to Better Use1

Audits with Funds to be Put to Better 

Use 

# of 

Audits Amount ($) 

Beginning of the Period 26 81,969,496 

Plus: New Management Decisions 4 450,419,813 

Total Audits Pending 30 532,389,309 

Less: Final Actions 12 61,983,775 

Audits with FTBU Requiring Final Action at the 

End of the Period 

18 470,405,534 

Disposition of Funds to Be Put to Better Use: 

FTBU Implemented 61,767,897 

FTBU Not Implemented 215,878 

Total FTBU Amounts for Final Action 

Audits 61,983,775 

 

1 Exhibit 9 and Exhibit 11 include only those open audits with disallowed costs and funds to be put to better use, respectively. Additionally, some 

audits contain both DC and FTBU amounts. For these reasons, the number of audits shown as the ending balances in Exhibit 9 and Exhibit 11 

does not equal the total resolved audit inventory balance in Exhibit 7. 
MANAGEMENT’S DISCUSSION AND ANALYSIS 

43 

Of the 58 audits that achieved final action during the fiscal year, 24 contained DCs. The number of DC audits 

remaining in the inventory at the end of the fiscal year is 43 with a monetary value of $75,966,764. 

For audits with disallowed costs that achieved final action in FY 2008, OIG and management agreed to collect 

$62,297,737. Adjustments were made totaling $45,830,245 (74 percent of the total) because of: 1) changes in 

management decision; 2) agency appeals; 3) write-offs; 4) USDA agencies’ ability to provide sufficient 

documentation to substantiate disallowed costs; and 5) agency discovery. Management recovered the remaining 

$16,467,492. 

Final action occurred on 12 audits that involved FTBU amounts. USDA projects more efficient use for 

99.7 percent of the amount identified based on the corrective actions implemented. The number of FTBU audits 

remaining in the inventory to date is 18 with a monetary value of $470,405,534. 

Audits Open One or More Years Past the Management Decision Date 

The number of audits open 1 or more years without 

final action decreased from 113 to 109 audits. USDA 

agencies continue to pursue compensating controls 

that address many of the underlying issues identified 

in these older audits.

Five audits are proceeding as scheduled and 81 are 

behind schedule. Agencies have completed all 

planned corrective actions on 23 audits that are 

pending collection of associated disallowed costs. 

This represents a 30-percent decrease in FY 2008. 

While an additional six audits were scheduled for 

completion by September 30, 2008, final action 

documentation was not evaluated during this 

reporting period. 

Audits without final action 1 year or more past the management decision date and behind schedule are listed 

individually in the table that follows. They are categorized by the reason final action has not occurred. More 

detailed information on audits on schedule and audits under collection is available from OCFO. 

The categories are pending the following activities: 

 Issuance of policy/guidance; 

 Conclusion of investigation, negotiation, or administrative appeal; 

 Completion of IT system security weaknesses, systems development, implementation, reconciliation, or 

enhancement; 

 Results of internal monitoring or program review; 

 Results of agency request for change in management decision; 

 Office of the General Counsel or OIG advice; and 

 Administrative action. 

Exhibit 13: Distribution of Audits Open 1 Year or More Past the Management Decision Date, Disallowed Costs, and FTBU 

Audits On Schedule Audits Behind Schedule Audits Under Collection 

Agency No. DC ($) FTBU ($) No. DC ($) FTBU ($) No. DC ($) FTBU ($) 

Totals 5 0 0 81 5,446,818 31,337,973 23 38,837,011 13,180,422 

Exhibit 12: Decrease in Audits Open One or More Years Past 

Management Decision Date 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

44 

Management’s Report on Audit Follow-Up 

Exhibit 14: Audits Open 1 Year or More Past the Management Decision Date and Behind Schedule 

Monetary Amount 

Audits 

Date 

Issued 

Revised 

Completion 

Date Audit Title DC FTBU 

(35) Pending issuance of policy/guidance 

02601-1-CH 9/30/05 12/31/08 Agricultural Research Service Adequacy of Controls to 

Prevent the Improper Transfer of Sensitive Technology 

Force 

- - 

03601-11-AT 11/17/05 4/30/09 Minority Participation in Farm Service Agency’s Programs - - 

04004-3-AT 6/26/03 10/31/08 Rural Housing Service, Rural Rental Program, Tenant 

Income Verification – Gainesville, Florida 

$134,639 $3,183,305 

04099-339-AT 3/23/05 12/31/08 Rural Housing Service Subsidy Payment Accuracy in MultiFamily Housing Program - - 

08001-1-AT 4/19/07 12/31/08 Forest Service Implementation of the Capital Improvement 

Program 

- - 

08601-38-SF 9/23/04 12/31/08 Forest Service Firefighting Safety Program - - 

08601-41-SF 1/13/06 12/31/08 Forest Service Collaborative Ventures and Partnerships 

with Non-Federal Entities 

$37,890 - 

08601-44-SF 12/7/06 12/31/08 Forest Service Large Fire Suppression Cost 

10099-10-KC 09/30/03 3/31/09 Natural Resources Conservation Service Protection of 

Federal Assets 

- - 

24501-1-FM 11/24/04 10/31/09 Food Safety and Inspection Service Application Controls - 

Performance Based Inspection Service System 

- - 

24601-1-CH 06/21/00 12/31/08 Food Safety and Inspection Service Laboratory Testing of 

Meat and Poultry Products 

- - 

24601-2-HY 6/9/04 10/31/09 Food Safety and Inspection Service Oversight of the 

Listeria Outbreak in the Northeastern United States. 

- - 

24601-6-CH 3/15/06 10/31/08 Food Safety and Inspection Service's In-Plant Performance 

System 

- - 

24601-7-CH 9/28/06 10/31/08 Food Safety and Inpsection Service Review of Pathogen 

Reduction Enforcement Program Sampling Procedures 

- - 

27601-3-CH 03/22/96 09/30/09 Food and Consumer Service Food Stamp Program—

Disqualified Recipient System – Alexandria, Virginia 

- - 

27601-27-CH 04/30/02 10/31/08 Food and Nutrition Service National School Lunch Program 

Food Service Management Companies 

- - 

33099-5-CH 4/20/05 9/30/08 Animal and Plant Health Inspection Service National 

Cooperative State/Federal Bovine Tuberculosis Eradication 

Program 

- - 

33099-11-HY 6/12/06 12/31/08 Animal and Plant Health Inspection Service Oversight of 

Avian Influenza 

- - 

33601-2-AT 6/23/05 12/31/08 Animal and Plant Health Inspection Service Evaluation of 

the Implementation of the Select Agents or Toxins 

Regulations (Phase 1) 

- - 

34099-2-AT 09/14/01 12/31/08 Rural Development Rural Business-Cooperative Service

Business and Industry Loan Program, OMNIVEST 

Resources, Inc. – Fort Gaines, Georgia 

$4,052,351 - 

34601-1-HY 07/22/98 12/31/08 Rural Development Business and Industry Loan 

Program—Morgantown, West Virginia 

- - 
MANAGEMENT’S DISCUSSION AND ANALYSIS 

45 

Monetary Amount 

Audits 

Date 

Issued 

Revised 

Completion 

Date Audit Title DC FTBU 

34601-3-CH 03/11/03 12/31/08 Rural Development Processing of Loan Guarantees to 

Members of the Western Sugar Cooperative 

- - 

34601-7-SF 12/04/02 12/31/08 Rural Development Liquidation of a Business and Industry 

Guaranteed Loan Washington State 

- $14,000,000 

34601-8-SF 9/30/03 12/31/08 Rural Development Liquidation of Business and Industry 

Guaranteed Loans 

$45,246 $598,112 

34601-15-TE 09/30/03 12/31/08 Rural Development Rural Business-Cooperative Service 

National Report on the Business and Industry Loan 

Program 

- - 

50601-2-HY 9/9/05 11/30/08 Departmental Administration Review of Management 

Oversight of Federal Employees’ Compensation Act 

Operations within the U.S. Department of Agriculture 

- - 

50601-6-TE 03/04/04 12/30/08 Agricultural Research Service Controls Over Plant Variety 

Protection and Germplasm Storage 

- - 

50601-9-AT 3/24/04 12/31/08 Departmental Administration Controls Over Chemical and 

Radioactive Materials at U.S. Department of Agriculture 

Facilities 

- - 

50601-10-AT 3/8/04 12/31/08 Homeland Security Follow-up Report on the Security of 

Biological Agents at U.S. Department of Agriculture 

Laboratories 

- - 

50801-12-AT 9/9/02 11/30/08 Departmental Adminstration Management of Hazardous 

Materials Management Funds 

- $1,813,809 

60801-1-HQ 9/30/98 6/30/09 Evaluation of the Office of Civil Rights’ Efforts to Reduce 

the Backlog of Program Complaints 

- - 

60801-3-HQ 3/10/00 6/30/09 Office of Civil Rights Management of Employment 

Complaints 

- - 

60801-4-HQ 3/10/00 9/30/09 Office of Civil Rights Status of the Implementation of 

Recommendations Made in Prior Evaluations of Program 

Complaints 

- - 

89017-1-HY 3/1/07 10/31/08 Office of Procurement and Property Management Review 

of Acquisition Planning and Processing 

- - 

(1) Pending conclusion of investigation, negotiation or administrative appeal 

04801-3-KC 03/31/99 10/31/08 Rural Housing Service – Rural Rental Housing Program 

Bosley Management, Incorporated – Sheridan, Wyoming 

$146,690 $85,516 

(21) Pending completion of IT system security weaknesses, systems development, implementation, or enhancement

04601-14-CH 3/20/07 12/31/08 Improper Payments - Monitoring the Progress of Corrective 

Action for High-Risk Programs in Rural Housing Service 

- - 

06401-17-FM 11/5/04 09/30/09 Commodity Credit Corporations’ Financial Statements for 

Fiscal Years 2004 and 2003 

- - 

08401-2-FM 02/28/03 10/31/08 Forest Service’s Financial Statements for Fiscal Year 2002

– Summary of Information Technology Findings 

- - 

08401-4-FM 11/10/04 12/31/08 Forest Service’s Financial Statements for Fiscal Years 

2004 and 2003 

- - 

08401-6-FM 11/24/06 12/31/08 Forest Service’s Financial Statements for Fiscal Years

2005 and 2004 

- - 

08401-7-FM 2/27/08 12/31/08 Forest Service's Financial Statements for Fiscal Years 

2006 and 2005 

- - 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

46 

Monetary Amount 

Audits 

Date 

Issued 

Revised 

Completion 

Date Audit Title DC FTBU 

08601-2-HY 12/22/06 3/31/09 Forest Service Follow up on Recommendations Made on 

the Maintenance of Forest Service Infrastructure 

- - 

08601-6-AT 11/24/06 12/31/08 Forest Servcie Implementation of the Healthy Forests 

Initiative 

- - 

08601-30-SF 03/31/03 12/31/08 Forest Service Review of Security Over 

Explosives/Munitions/Magazines Located Within the 

National Forest System 

- - 

08601-40-SF 7/6/05 12/31/08 Forest Service Emergency Equipment Rental Agreements - - 

10001-1-HY 3/20/07 3/31/09 Review of Contract Administration at the Natural 

Resources Conservation Service 

- - 

11099-44-FM 12/14/06 11/30/08 Departmental Administration Purchase Card Management 

System Controls Need Strengthening 

- - 

24601-3-CH 9/30/04 10/31/09 Food Safety and Inspection Service Use of Food Safety 

Information Systems 

- - 

33002-3-SF 9/30/05 12/31/08 Animal and Plant Health Inspection Service Animal Care 

Program Inspection and Enforcement of Activities 

- $562,761 

33501-1-CH 03/31/05 12/31/08 Animal and Plant Health Inspection Service Review of 

Application Controls for the Import Tracking System 

- - 

33601-1-HY 2/14/05 10/31/09 Animal and Plant Health Inspection Service Oversight of 

the Importation of Beef Products from Canada 

- - 

33601-4-CH 03/31/03 TBD Animal and Plant Health Inspection Service Controls Over 

Permits to Import Biohazardous Materials into the United 

States 

- - 

50401-59-FM 11/14/06 10/31/2008 Office of the Chief Financial Officer U.S. Department of 

Agriculture’s Consolidated Financial Statements for Fiscal 

Years FY 2006 and 2005 

- - 

50501-4-FM 10/21/05 9/30/08 Office of the Chief Information Officer Review of the U.S. 

Department of Agriculture’s Certification and Accreditation 

Efforts 

50801-2-HQ 2/27/97 3/31/09 Assistant Secretary for Civil Rights Report for the 

Secretary on Civil Rights Issues, Phase I 

- - 

60016-01-HY 9/8/05 9/30/09 Assistant Secretary for Civil Rights Follow up on Prior 

Recommendations for Civil RightsProgram and 

Employment Complaints 

- - 

(3) Pending results of internal monitoring or program review

06401-4-KC 2/26/02 6/30/09 CCC Financial Statements for FY 2001 - $19,586 

08601-42-SF 3/14/06 12/31/08 FS Firefighting Contract Crews - - 

08601-45-SF 8/8/06 3/31/08 FS Follow-up Review of FS Security Over 

Explosives/Munitions Magazines Located within the 

National Forest System 

- - 

(6) Pending results of request for change in management decision

03099-27-TE 5/24/01 10/01/08 FSA Payment Limitations – Majority Stockholders of 

Corporations 

- - 

08099-6-SF 03/27/01 09/30/08 FS Security Over USDA Information Technology 

Resources 

- - 

08003-5-SF 12/15/00 09/30/08 FS Land Acquisitions and Urban Lot Management Program - $10,329,300 
MANAGEMENT’S DISCUSSION AND ANALYSIS 

47 

Monetary Amount 

Audits 

Date 

Issued 

Revised 

Completion 

Date Audit Title DC FTBU 

33601-7-CH 8/14/07 12/31/08 APHIS Review of Customs and Border Protection 

Inspection Activities - - 

50601-9-CH 9/28/06 12/31/08 APHIS Control Over the Bovine Tuberculosis Eradication 

Program 

- - 

50601-10-HQ 7/24/06 3/31/09 NRCS Chesapeake Bay Restoration Agricultural Impacts 

on Water Quality 

- - 

(3) Pending Office of General Counsel (OGC) or OIG advice 

04801-6-KC 12/18/00 10/31/08 RHS Rural Rental Housing Program Insurance Expenses, 

Phase I 

$1,029,999 $9,000 

24099-1-FM 08/11/03 10/31/08 Security Over Information Technology Resources at FSIS - - 

85401-13-FM 11/9/06 10/31/08 RD Financial Statements for FY 2006 and FY 2005 - - 

(13) Pending Administrative Action

05099-18-KC 6/1/04 9/30/08 RMA Management and Security of Information Technology 

Resources 

- - 

05099-109-KC 1/27/05 12/31/10 RMA Activities to Renegotiate the Standard reinsurance 

Agreement 

- - 

05600-1-TE 09/28/89 9/30/08 RMA Crop Year 1988 Insurance Contracts with Claims - - 

0641-15-FM 12/26/02 09/30/09 CCC Financial Statements for FY 2002 - - 

06401-21-FM 11/13/06 10/30/08 CCC Financial Statements for FY 2006 - - 

13001-3-TE 8/16/04 6/6/09 Cooperative State Research, Education, and Extension 

Service Implementation of Agricultural Research, 

Extension and Education Reform Act of 1998 

$3 $482,400 

23801-1-HQ 8/20/98 12/31/08 Review of Office of Operations Contract with B&G 

Maintenance, Incorporated – Washington, D.C. - $249,866 

24601-8-CH 8/23/07 3/31/09 Food Safety and Inspection Service Egg Products 

Processing Inspection 

- - 

50099-11-HY 03/31/05 12/30/08 Research Education and Economics Implementation of 

Federal Research Misconduct Policy in the U.S. 

Department of Agriculture 

- - 

50099-13-AT 03/29/02 12/30/08 Multi-Agency Audit Oversight and Security of Biological 

Agents at Laboratories Operated by the United States 

Department of Agriculture 

- - 

50099-17-KC 2/17/05 12/31/08 Cooperative State Research, Education, and Extension 

Service Biosecurity Grant Funding Controls over 

Biosecurity Grants Funds Usage 

- $4,318 

50601-10-KC 1/25/06 10/31/09 Animal and Plant Health Inspection Service Bovine 

Spongiform Encephalopathy (BSE) Surveillance Program – 

Phase II and Food Safety and Inspection Service Controls 

Over BSE Sampling, Specified Risk Materials and 

Advanced Meat Recovery Products - Phase III 

- - 

60801-2-HQ 3/24/99 9/30/09 Evaluation of the Office of Civil Rights Efforts to Implement 

Civil Rights Settlements 

- - 

Total Number Audits (81) Total $5,446,818 $31,337,973 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

48 
ANNUAL PERFORMANCE REPORT 

49 

Annual 

Performance 

Report 

The Department of Agriculture’s (USDA) mission is to provide leadership on food, 

agriculture, natural resources, and related issues based on sound public policy, the best 

available science, and efficient management. The Department executed this mission in fiscal 

year (FY) 2008 through activities such as: 

 Completing new free trade agreements, opening new international markets and 

maintaining existing markets; 

 Meeting with experts from around the globe to discuss current and emerging economic 

opportunities; 

 Providing farmers and ranchers with risk management and financial tools; 

 Expanding economic opportunities by improving the quality of life through financing 

housing, utilities, and community facilities in rural areas; 

 Ensuring the safety and protection of the Nation’s food supply; 

 Helping millions of low-income households and most of America’s children improve 

their health and diets via targeted nutrition assistance programs; 

 Fostering better nutrition and health with dietary guidance and promotion; 

 Fighting potential pest and disease outbreaks; 

 Working to ensure the health and protection of the environment; and 

 Providing aid to those impacted by severe weather and other disasters. 

Strategic Goal 1: Enhance International Competitiveness of American Agriculture 

Expanding global markets for agricultural products will increase demand for agricultural 

products and contribute directly to economic stability and prosperity for America’s farmers. 

USDA accomplishes this through negotiation, monitoring, and enforcement of trade 

agreements. Working with producers and commodity trade associations, USDA administers 

an array of market development and export promotion programs designed to build longterm markets abroad. The Department helps expand trade opportunities through technical 

assistance and training programs. USDA also provides food assistance programs to 

developing countries. These programs are designed to provide greater food security which 

leads to greater economic stability in the recipient countries. These tools support 

agricultural development and growth in developing countries. They also help these countries 

participate in, and benefit from, international trade. USDA works to facilitate trade by 

adopting and promoting science-based regulatory systems and standards. These activities 

are reflected in the three objectives and four performance measures that follow. 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

50 

OBJECTIVE 1.1: EXPAND AND MAINTAIN INTERNATIONAL EXPORT OPPORTUNITIES 

 

 

 

Overview 

The Department works closely with the Office of the U.S. 

Trade Representative (USTR) to negotiate new trade 

agreements to expand access to global markets for U.S. 

agriculture. The largest multilateral negotiation, under the 

auspices of the World Trade Organization (WTO), is the 

Doha Development Agenda. USDA has led negotiations on the agricultural portions of the agreement. USDA 

played an integral role in the July 21-29, 2008, WTO Ministerial meeting in Geneva aimed at reaching a final 

agreement. While these meetings resulted in an impasse, primarily over the Special Safeguard Mechanism for 

sensitive agricultural products, Foreign Agricultural Service (FAS) officials continue to work to advance a 

convergence of proposals at the technical level. 

To further expand global trade, U.S. officials negotiated bilateral accession agreements with countries seeking 

WTO membership. In 2008, USDA played a critical role in negotiating such agreements with Russia, Kazakhstan, 

and several other countries. The Department also helped Ukraine join the WTO in May 2008, thus opening the 

country to American imports, notably poultry, beef, and pork. Estimates indicate that annual beef and pork exports 

to Ukraine could reach $120 million. 

USDA also works to expand U.S. agricultural export opportunities by supporting regional and bilateral free trade 

agreements. The Department continues to negotiate the Malaysia Free Trade Agreement. USDA is awaiting 

congressional approval of free trade agreements with Colombia, Panama, and Korea. It is also monitoring final 

implementation of the Peru and Costa Rica trade agreements. 

The Department oversaw the full implementation of the final provisions of the North American Free Trade 

Agreement (NAFTA) between Canada, Mexico, and the U.S. USDA’s work lifted the final trade restrictions on a 

handful of agricultural commodities, notably U.S. exports of corn, dry edible beans, nonfat dry milk, and high 

fructose corn syrup. 

The Department is also monitoring and taking action with respect to more than 500 trade barriers relating to 

established trade agreements. Some barriers are being addressed through the WTO dispute-settlement process. 

Others are being addressed bilaterally. Working closely with USTR, USDA successfully re-established a tariff rate 

quota (TRQ) for poultry and pork trade with the Philippines in 2008. A TRQ provides an opportunity for 

exporting a limited quantity of products with little or no tariffs. 

Analysis of Results 

USDA employs a performance measure that estimates the value of trade preserved through WTO agreement 

enforcement, creation, and maintenance of free trade agreements and addressing trade barriers. USDA failed to 

meet its targeted level of performance. The July collapse of the Doha Round of WTO negotiations and delays in 

congressional approval of already negotiated free trade agreements were significant factors. Though USDA cannot 

control such externalities, in FY 2009, the Department will continue to seek approval of pending agreements. 

Extensively monitoring and enforcing existing trade agreements, which USDA can influence more effectively, will 

help the Department reach its 2009 targets. 

Key Outcome 

Increased Access to Global Markets for U.S. 

Agricultural Producers and Exporters 

Measure 1.1.1: Dollar value of agricultural trade preserved through trade agreement negotiation, monitoring, 

and enforcement 
ANNUAL PERFORMANCE REPORT 

51 

Selected Results in Research, Extension and Statistics 

China in 21st Century Agricultural Markets—USDA researches how policy and economic developments in China affect global 

agricultural markets. Recent research, China Currency Appreciation Could Boost U.S. Agricultural Exports, shows that U.S. 

exports of soybeans and cotton to China have boomed in recent years. Despite the increases, the undervalued exchange rate for 

the Chinese yuan keeps the prices of most other U.S. food and agricultural products higher than their Chinese counterparts. With 

an undervalued exchange rate, China’s prices are not high enough to attract imports of grains or most livestock products. In 

another article, Who Will China Feed?, Department economists examined the growing resource constraints and environmental 

costs facing China’s agricultural sector. They also looked at a possible end to “easy” growth for Chinese agriculture. 

Increase in Commodity Prices—World market prices for such major food commodities, such as grains and vegetable oils, have 

risen sharply to historic highs of more than 60 percent above levels just 2 years ago. USDA’s Global Agricultural Supply and 

Demand: Factors Contributing to the Increase in World Food Commodity Prices report discusses the many factors contributing to 

the run-up in food commodity prices. Recent factors that have tightened world markets include increased global demand, adverse 

weather conditions in some major grain and oilseed producing areas, and the declining value of the U.S. dollar. 

Exhibit 15: Increase U.S. Export Opportunities and Trends in Expanding and Retaining Market Access 

Fiscal Year 2008 Annual Performance Goals, Indicators and 

Trends 

2004 2005 2006 2007 

Target Actual Result 

1.1.1 Dollar value of agricultural trade preserved 

through trade agreement negotiation, monitoring, 

and enforcement (Non-Sanitary and 

Phytosanitary) ($ Mil) Baseline: 1999 = $2,567 

$3,950 $800 $14 $670 $900 $484 Unmet 

FY 2004 data is based on Sanitary and Phytosanitary (SPS) and non-SPS related trade barriers. FY 2005 - 2008 data is based on non-SPS trade barriers. 

Rationale for Met Range: The target for this measure is controlled by international parties. It reflects U.S. expectations for negotiating new agreements, addressing 

compliance with existing trade agreements and resolving trade access issues that arise so that domestic exports can continue. A met or exceeded target reflects USDA 

successes in addressing barriers to U.S. trade. An unmet target may conceal that USDA monitoring activities prevented noncompliance. 

• Data assessment metrics to meet the target allow for an actual number in the range 600-900. 

Exhibit 16: Data Assessment of Performance Measure 1.1.1 

1.1.1 Dollar value of agricultural trade preserved annually through trade agreement negotiation, monitoring, and enforcement 

(non-SPS). 

• Data for the World Trade Organization and tariff rates are projected estimates based on results posted to the performance tracking system within the 

FAS. Data for successfully retaining and assuring U.S. trade access to export markets are projected estimates based on results posted during the 

first three quarters of FY 2008. 

• Completeness of Data—Data for successfully retaining and assuring U.S. trade access to export markets are projected estimates based on results 

posted during the first three quarters of FY 2008. 

• Reliability of Data—Data are reliable and used by the Department to highlight successes in the trade-policy arena. 

• Quality of Data—USDA maintains a standardized methodology to forecast trade impacts. Calculation of trade benefits from preserving existing trade 

is fairly straightforward and easy using this standard methodology. The primary sources of trade data are Department of Homeland Security’s U.S. 

Customs and Border Protection, the Census Bureau, the USDA publication Foreign Agricultural Trade of the United States and other databases. In 

addition to trade data, other sources include market reports compiled by USDA and industry estimates. Since measuring expected trade benefits 

from broad new trade agreements is extremely difficult, the Department evaluates its estimates against other outside estimates when available. 

Challenges for the Future 

The key challenge for increasing access to global markets is progress in the WTO negotiations. The conclusion of 

the Doha negotiations may be delayed into 2009 due to external factors and the difficulties inherent in negotiating 

sensitive agricultural issues. Improvement in market opportunities under bilateral and regional trade agreements is 

contingent on approval and implementation of agreements by all partners. Currently, three bilateral agreements are 

pending approval by Congress and waiting implementation by our Free Trade Agreement partners. Approval 

procedures may include legislative, administrative, and judicial processes. 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

52 

The United States is engaged in a number of dispute settlement cases in the WTO. These are inherently lengthy 

processes with favorable outcomes for U.S. trade sometimes taking years to realize. 

OBJECTIVE 1.2: SUPPORT INTERNATIONAL ECONOMIC DEVELOPMENT AND TRADE CAPACITY BUILDING 

Overview 

One billion people in the developing world live with chronic 

hunger, and more than 800 million are undernourished. 

Today’s higher food prices pose significant risks to people 

and nations already vulnerable to food insecurity and 

poverty. Major goals of USDA trade and development 

programs include increasing agricultural productivity, increasing trade with, and investment in, developing 

countries to enhance economic growth, food security, and the supply and affordability of food. Linking producers 

to markets with improved transportation, storage, market information, and food processing, as well as increasing 

private-sector participation in the agricultural value chain, are also USDA priorities for strengthening rural 

economic activity and moving food from surplus to deficit areas. 

To strengthen global food security, USDA deploys experts and institutional resources to help developing countries 

become economically stable and capable of supporting their populations, which is mutually beneficial. In 

combination with food assistance that covers gaps in supplies and helps to keep the population healthy, USDA 

trade and development programs assist foreign governments in adopting productivity-enhancing technologies, 

reconstructing agriculture in post-conflict or disaster areas, developing sustainable natural resource management 

systems, and strengthening agricultural research and extension programs. USDA also works with foreign 

counterparts to advance market-based policies and institutions and expand international trade through trade 

capacity building, which helps countries meet their WTO obligations, avoid or eliminate barriers to trade, and 

strengthen policy and regulatory frameworks, with an emphasis on food safety and biotechnology. 

USDA measures the number of countries that benefit from improved trade policy and regulatory frameworks. 

These benefits help developing countries prosper, thus bolstering food security. To develop trade capacity and 

facilitate market access for U.S. agricultural products, USDA implemented more than 140 technical assistance 

activities in 2008. These activities targeted regulatory systems in Sub-Saharan Africa, the Middle East, Eastern 

Europe, Central America, and Russia with emphasis on plant and animal disease diagnosis and mitigation, 

laboratory efficiency, biotechnology, and Biosafety, as well as generally improving sanitary and phytosanitary (SPS) 

systems. 

Under the Central America–Dominican Republic–Free Trade Agreement (CAFTA-DR), for example, USDA 

implemented capacity building projects to transfer skills in laboratory analysis, detection of pesticide residues, risk 

assessment, diagnosis of animal health diseases, and policy regulations. In September, USDA facilitated a successful 

Trade and Investment Mission in Guatemala for CAFTA-DR. USDA also implemented Asia Pacific Economic 

Cooperation workshops on food defense, food safety, and biotechnology in cooperation with the Department of 

State and the Food and Drug Administration. Work on the African Global Competitiveness Initiative (AGCI) 

focused on activities related to food safety and plant health. A significant AGCI success was approval of a 

streamlined regulatory process, which resulted in six new African commodities being eligible for export to the U.S. 

market. In addition, USDA implemented successful Trade and Investment Missions to West and North Africa. 

Key Outcome 

Improved Ability in Developing Countries to Sustain 

Economic Growth and Benefit from International Trade 

Measure 1.2.1: Number of countries in which substantive improvements have been made in national trade policy 

and regulatory frameworks that increase market access 
ANNUAL PERFORMANCE REPORT 

53 

The Department led Good Agricultural Practices (GAP) training for Honduran fruit and vegetable producers 

which trained roughly 80 fruit and vegetable producers and processors on GAP. For WTO accessions, FAS 

specialists in WTO negotiations led training on the SPS Agreement and the Checklist of Illustrative SPS and 

Technical Barriers to Trade (TBT) Issues for Consideration in Accessions. 

USDA continues to encourage and support developing-country participation in international regulatory and 

standard-setting organizations like the Codex Alimentarius Commission. The World Health Organization and the 

Food and Agriculture Organization of the United Nations (FAO) created the commission to protect consumers 

from unsafe food products and ensure fair practices in international food trade. In June, the Department 

implemented Latin American and Caribbean regional workshops. The workshops presented the U.S. positions on 

Codex Alimentarius issues. Collaborating closely with the FAO, the Environmental Protection Agency, Rutgers 

University, and USDA co-sponsored a Minor Use Summit. The summit, attended by more than 40 countries, 

covered issues relating to maximum pesticide levels for minor crops. In addition, the Department coordinated 

closely with the Codex Office to sponsor outreach activities to increase international understanding of U.S. 

positions on Codex issues. 

Analysis of Results 

The performance measure was exceeded, with impacts in nine countries. With training in agricultural 

biotechnology via USDA’s Cochran Fellowship Program, four officials in Nicaragua provided expert consultations 

to the Health Commission of the Nicaraguan National Assembly, prompting the Commission to send a positive 

report on a comprehensive Biosafety Bill to the President of the National Assembly. In addition, Nicaraguan 

officials established laws and regulations to support equivalence with the United States in meat and poultry 

products, following USDA assistance on regulatory frameworks to ensure product safety. 

Internationally recognized food safety laboratories are critical for ensuring that exported food products meet global 

trade and health standards. The highest level of this recognition for laboratories is ISO 17025 accreditation, 

provided by the International Organization for Standardization (ISO). The food safety laboratory in Guatemala is 

the only Central American government laboratory to achieve this status. The Guatemalan laboratory actively 

implemented the training content and has been recognized for it. USDA also provided regional training for the 

laboratories on Exotic Newcastle Disease (END) that can be highly destructive to the poultry industry. As a result, 

the food safety laboratory in Honduras has become highly proficient in testing and diagnosing the disease. Other 

countries in the region now rely on Honduras as the region’s “reference laboratory” or authority for END. 

Training for 19 officials from the Kenya Plant Health Inspectorate Service (KEPHIS) under the Cochran 

Fellowship Program resulted in adoption of USDA’s organizational structure for conducting animal and plant 

health inspections at ports of entry in Kenya, thus strengthening regional food security and trade. Other than South 

Africa, Kenya's plant regulatory body, KEPHIS, is the model to which other national plant protection 

organizations in sub-Saharan Africa aspire. 

Following USDA participation in several projects in Vietnam intended to promote compliance with WTO 

obligations, Vietnam has made five SPS-related notifications since January 2008, thus advancing the interests of 

bilateral trade and improving the transparency of Vietnamese trade regulations. Vietnam’s WTO notification on 

the biosafety management of genetically modified crops allowed the United States to comment on the importance 

of science-based regulations. 

As a result of an intensive, two-year USDA technical-assistance project that provided Egyptian officials training on 

biotechnology, the Minister of Agriculture in Egypt approved commercialization of a genetically modified Bt corn 

variety (MON 810). This marks the first genetically modified crop approved for domestic planting in Egypt. 

USDA technical assistance in Iraq is building a greater understanding of the U.S. regulatory system and 

international standards for animal health; facilitating the reintegration of Iraqi Ministry of Agriculture officials into 

international standards-setting bodies; and re-establishing networks with their counterparts in the Middle East. As 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

54 

a result, Iraq’s National Animal Health Program was developed in line with standards of the World Organization 

of Animal Health and five animal disease-control strategies were adopted in 2008. 

USDA experts have also been working with government officials in Armenia to achieve greater consistency and 

transparency with international standards. As a result, new sample collection forms for the National Animal 

Diseases Reporting System were approved by the Ministry of Agriculture, and two village-based Examination-andTherapy animal-holding units are serving as models for veterinary inspection in the Armenia National Animal 

Health Program. More than 10,000 animals have been inspected and samples taken for the four priority animal 

diseases in these units. 

With the goal of facilitating Serbia’s accession to the WTO, USDA specialists led training in Belgrade on the 

WTO SPS Agreement. By early 2008, the Serbian Ministries of Agriculture and Health had developed a new Food 

Safety law that is more consistent with the WTO-SPS Agreement and is under consideration by the Government. 

Selected Results in Research, Extension and Statistics 

International Investment in U.S. Agriculture—Several next-generation, larger-scale, pasture-based dairies owned by three 

New Zealand investment groups began operating in Missouri as a result of USDA-funded dairy grazing research and extension 

efforts being conducted by the University of Missouri. These efforts include the development of low-cost winter feeding systems

for beef cattle. The largest of these dairies manages more than 3,000 cows and the smallest, 500. The New Zealand groups have 

invested more than $50 million to date with more farms being developed. 

USDA Provides Support for Trade Negotiations—USDA continues to provide the U.S. Trade Representative with analysis 

supporting Doha Round negotiators and that of the U.S.–South Korea free trade agreement. The Department’s program of tradepolicy research has developed models, databases, and other analytical tools specifically designed to answer questions related to 

changes in trade policies and domestic policy instruments subject to multilateral or bilateral negotiation. USDA provided modelbased analyses of negotiating proposals or questions related to impacts of tariff cuts, cuts in U.S. domestic support, changes in 

import quotas and special treatment for “sensitive” products or developing countries. 

Exhibit 17: Support International Trade Capacity Building 

Fiscal Year 2008 

Annual Performance Goals, Indicators and Trends 

2004 2005 2006 2007 

Target Actual Result 

1.2.1 Number of countries in which substantive 

improvements have been made in national trade 

policy and regulatory frameworks that increase 

market access. 

n/a n/a 6 13 8 9 Exceeded 

Rationale for Met Range: The target for this measure, based on three years of program history, is driven by international Governments and parties, and

U.S. reimbursable-program funding levels. Annual targets reflect USDA expectations for substantive improvements in national trade policy and 

regulatory frameworks that increase market access for U.S. agricultural products in developing countries. 

• Data assessment metrics to meet the target allow for an actual number in the range 5-8.

Data Assessment of Performance Measure 1.2.1 

• Data for the World Trade Organization and tariff rates are projected estimates based on results posted to the performance tracking system within the 

Foreign Agricultural Service (FAS). Data for successfully retaining and assuring U.S. trade access to export markets are projected estimates based 

on results posted during the first three quarters of FY 2008. Fourth quarter estimates were derived using the average quarterly reporting and 

discounting the results to reflect any large, one-time annual events not expected to be repeated in the final quarter. 

• Completeness of Data—Data are based on specific criteria developed for measuring intangible and qualitative outcomes, and those which are 

concrete and quantifiable. 

• Reliability of Data—Data are reliable, of good quality, and are used by Agency officials to highlight successes in the trade capacity building arena.
ANNUAL PERFORMANCE REPORT 

55 

• Quality of Data—Data for successfully verifying the numbers of countries in which USDA has made significant impact in trade capacity building are 

captured from a variety of credible sources, including: 

− Reports from overseas posts and project offices, such as Global Agriculture Information Network reports and progress reports; 

− Individual activity reports as provided by FAS partner institutions; 

− Questionnaires submitted by international participants regarding training programs; 

− Reports from other USDA agencies, FAS offices, the Department of State, the Agency for International Development, and the Office of the U.S. Trade 

Representative, and U.S. embassies; 

− Assessment of the progress of projects through interviews conducted with ministry officials and other host-country recipients on the impact of USDA technical 

assistance; 

− Written and verbal observations by program managers who regularly monitor projects in the field; 

− Internal evaluations of activities conducted by the agency and evaluations conducted by external parties; 

− Special workshops designed to elicit feedback and evaluation on “how things are working;” and 

− “Lessons learned” workshops conducted with facilitators to review what is working and what can be improved. 

Challenges for the Future 

Food insecurity is most prevalent in failed and weakened states characterized by stagnant growth, low-income 

levels, conflict, dependence on the natural resource base, and poor governance and policy environments. The failure 

of the growth process in these societies is the core concern and development challenge. Moreover, world market 

prices for major food commodities have risen sharply to historic highs of more than 60 percent above levels of just 

two years ago. According to USDA economists, factors including steep increases in prices for agricultural inputs 

and in transportation costs, two years of poor harvests, export controls in many countries, low world grain-stocks, 

and increased demand for food and biofuels have increased commodity costs. Although grain prices have fallen in 

recent months, several of these factors are expected to continue for the foreseeable future continuing to impact 

many countries for several years. 

Since 2007, the McGovern-Dole Program received more than $20 million of additional, processed products 

through the initiative. Moreover, USDA is developing a Department-wide Action Plan for Food Security, focusing 

on improvements in policy frameworks, trade and investment, research and technology, natural resources 

management, global information and monitoring systems, and food safety nets. The Department is also working 

with other Federal agencies to finalize a consolidated U.S. Government strategy for worldwide food security. 

Challenges to implementing the strategy and action plan include the factors mentioned above, as well as insufficient 

global investment in agricultural innovation, research, and market infrastructure; inadequate veterinary and plant 

protection services to control the spread of disease; and conversion of natural ecosystems to agriculture that could 

exacerbate climate change, ultimately harming agricultural productivity. 

Overview 

The goal for supporting developing countries is to help them become economically stable and capable of supporting 

their populations. USDA participates in this effort, along with other Federal agencies, such as the U.S. Agency for 

International Development (USAID). Priorities include reducing hunger and malnutrition with sustainable, 

productivity-enhancing technologies and supporting agricultural reconstruction in post-conflict or disaster areas. 

USDA currently administers two food assistance grant programs: the McGovern-Dole International Food for 

Education and Child Nutrition Program and the Food for Progress program. The beneficiaries under the 

McGovern-Dole program are developing countries’ school children and their mothers. The program provides for 

the donation of U.S. agricultural commodities and associated financial and technical assistance for pre-school and 

school-based feeding programs. McGovern-Dole also authorizes the support of maternal, infant, and child 

nutrition programs. Its purpose is to support a healthy young population necessary for a stable society and a capable 

Measure 1.2.2: Food Aid Targeting Effectiveness Ratio 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

56 

workforce. A healthy and literate workforce attracts jobs, supports a sustainable economy, and helps establish a 

secure food supply through domestic production and imports. 

All private voluntary organizations that offer food aid through McGovern-Dole conduct extensive operational and 

results surveys; USDA evaluates the results to determine the programs’ effectiveness. Additionally, semi-annual 

reports share results and challenges. 

The Food for Progress program provides for the donation of U.S. agricultural commodities to developing countries 

and emerging democracies committed to introducing and expanding free enterprise in the agricultural sector. 

Priority is given to countries, with the greatest need for food, that are making efforts to improve food security and 

agricultural development, alleviate poverty, and promote broad-based, equitable, and sustainable development. 

Americans want a world in which all countries are stable. The 2002 National Security Strategy of the United States 

recognizes that the root of a foreign threat is the lack of economic development, which often results in political 

instability. For most developing countries, a productive and sustainable agricultural sector bolsters economic wellbeing. Thus, agricultural development is crucial to the National Security Strategy. 

Analysis of Results 

The Food Aid Targeting Effectiveness Ratio (FATER) applied to USDA programs was 56.9 percent, which 

exceeded the performance target. USDA entered into a process in 2007 that refined priorities for food assistance, 

resulting in the selection of a set of priority countries more in line with the FATER process. USDA food assistance 

programs are now making a greater impact because of the priority-country process. Programs are targeting 

countries where food gaps are greatest, and commodities furnished under USDA food assistance programs are 

making more of a difference; hence the higher FATER percentage. 

Exhibit 18: Support Foreign Food Assistance 

Fiscal Year 2008 Annual Performance Goals, Indicators 

 and Trends 

2004 2005 2006 2007 

Target Actual Result 

1.2.2 Food Aid Targeting Effectiveness Ratio 40-44%1 30-35%1 30-35%1 38% 35% 56.9%, Exceeded 

1 Measure was new in FY 2007; FY 2004-FY 2006 figures are estimates. 

Rationale for Met Range: The FATER is based on the Food Security Assessment conducted by the Economic Reporting Service of USDA. For 

countries with greater food insecurity, there is a larger estimated food gap. FATER measures the effectiveness of USDA food aid in closing the gap. The 

higher the FATER score, the larger the percentage of the estimated food gap met by Department food aid. In countries with greater food insecurity, the 

FATER value would be relatively low because of large food gaps in those countries. The FATER value would be higher in countries with less food 

insecurity, where the food gaps are smaller. A target of 35 percent represents a balance of food aid programming across countries with greater and 

lesser levels of food insecurity. 

• Data assessment metrics to meet the target allow for an actual number in the range 30%-35%.

Data Assessment of Performance Measure 1.2.2 

Data on quantities and use of food aid commodities of food aid are captured through the USDA Food Assistance Division database.

• Completeness of Data—Data for successfully reporting on the effectiveness ratio is based on the annual provision and use of food aid. Total 

quantities of commodities and how these commodities are used by the beneficiary in the country of donation is compiled by the Foreign Agricultural 

Service and submitted to the Economic Research Service for analysis. Data includes food aid provided by USDA. 

• Reliability of Data—Data are reliable, of good quality and used by agency officials to highlight the success and impacts of food aid programs, and

strengthen food security. 

• Quality of Data— Data for successfully verifying the quantities and use of food aid commodities in which USDA analyzes to show the effectiveness 

of food aid are captured through the USDA Food Assistance Division database. The outcome from the analysis also is further confirmed through a 

variety of credible sources, including: 

− Reports from FAS and Department of State personnel at overseas posts; 

− Program activity reports as provided by FAS partner organizations; 

− Follow-on evaluations conducted by FAS; 

− Reports from other USDA agencies, FAS offices, the Department of State, and the U.S. Agency for International Development; 

− On-going assessment of the progress of projects; and 

− Evaluation of activities by outside consulting firms. 
ANNUAL PERFORMANCE REPORT 

57 

Data Assessment of Performance Measure 1.2.2 

Data on quantities and use of food aid commodities of food aid are captured through the USDA Food Assistance Division database.

• Completeness of Data—Data for successfully reporting on the effectiveness ratio is based on the annual provision and use of food aid. Total 

quantities of commodities and how these commodities are used by the beneficiary in the country of donation is compiled by the Foreign Agricultural 

Service and submitted to the Economic Research Service for analysis. Data includes food aid provided by USDA. 

• Reliability of Data—Data are reliable, of good quality and used by agency officials to highlight the success and impacts of food aid programs, and

strengthen food security. 

• Quality of Data— Data for successfully verifying the quantities and use of food aid commodities in which USDA analyzes to show the effectiveness 

of food aid are captured through the USDA Food Assistance Division database. The outcome from the analysis also is further confirmed through a 

variety of credible sources, including: 

− Reports from FAS and Department of State personnel at overseas posts; 

− Program activity reports as provided by FAS partner organizations; 

− Follow-on evaluations conducted by FAS; 

− Reports from other USDA agencies, FAS offices, the Department of State, and the U.S. Agency for International Development; 

− On-going assessment of the progress of projects; and 

− Evaluation of activities by outside consulting firms. 

Challenges for the Future 

USDA faces similar challenges in meeting its food assistance targets as it does with maintaining or expanding or 

maintaining market access. Uncertainty about WTO negotiations, rising food prices, and the rising cost of shipping 

are major challenges. There are also weather and fuel issues and that cannot be predicted. The effect of pockets of 

foreign opposition to biotechnology is also a challenge. 

Higher commodity and freight costs are one factor contributing to a reduction in the amount of commodities 

shipped under the Food for Progress and McGovern-Dole programs. To address these challenges, USDA is 

continuing the “Stocks-for-Food Initiative,” in which Credit Commodity Corporation (CCC)-owned, bulk 

commodities are bartered in exchanges with U.S. food processors to obtain additional, processed agricultural 

products for USDA’s international food assistance programs. 

OBJECTIVE 1.3: IMPROVED SANITARY AND PHYTOSANITARY (SPS) SYSTEM TO FACILITATE AGRICULTURAL TRADE 

Overview 

Sanitary and Phytosanitary (SPS) measures are those imposed 

by governments to protect human, animal, and plant health 

from pests, diseases, and contaminants. USDA works closely 

with USTR and other agencies to pursue and enforce trade 

agreements to ensure that technical regulations and measures 

are designed to enhance food safety and protect plant and 

animal health not to become unjustified barriers to trade. USDA staff working on such issues in more than 90 

countries includes veterinarians, economists, marketing experts, plant pathologists, and others. 

The largest single technical trade issue was the normalization of beef trade after the market closures caused by 

findings of Bovine Spongiform Encephalopathy (BSE) in the U.S. beginning in 2003. BSE is a chronic degenerative 

disease that affects the central nervous system of cattle. The 2007 classification of the United States as “controlled 

Key Outcome 

An Improved Global SPS System for 

Facilitating Agricultural Trade 

Measure 1.3.1: Value of trade preserved annually through USDA staff interventions leading to resolutions of 

barriers created by SPS or Technical Barrier to Trade (TBT) measures 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

58 

risk” for BSE by the World Organization for Animal Health (OIE) Scientific Commission affects U.S. efforts to 

regain market access. An OIE consistent agreement was reached with South Korea, which should restore access to 

an $800 million market. Further, the Philippines set a standard for other Asian nations by fully complying with 

OIE standards on beef and allowing complete market access for U.S. beef and beef products of all ages. U.S. beef 

exports to the Philippines reached $6.3 million in 2006 when partial market access was achieved. Under this new 

agreement, USDA estimates that U.S. beef exports to the Philippines could double. In addition, Egypt removed its 

restrictions on sourcing product from animals imported by the U.S. from Canada. This could expand U.S. exports 

to Egypt by $40 million. Discussions on beef continue with Japan, China, and Taiwan. Expanding access to the 

Japanese beef market remains a priority. Key trading partners remain resistant to establishing science-based import 

requirements based upon OIE standards due to political and social factors. 

The Department addressed other SPS and TBT in 2008. Notably, USDA helped persuade Korea to implement its 

requirements for living modified organisms in a less restrictive manner, which preserved U.S. corn and soybean 

trade, valued at $1 billion annually. Also, of note were successful efforts to eliminate China's requirement for 

testing biotech seeds that could have affected all U.S. soybean exports to China. USDA earned Taiwan's approval 

of Agrisure corn, which made uninterrupted exports of U.S. corn to Taiwan possible. The Department also gained 

the European Union's (EU) approval of four biotech corn products. This agreement restarted U.S. corn gluten feed 

exports to the EU. Meanwhile, workshops conducted by USDA for parties to the Cartagena Protocol on Biosafety 

helped prevent the adoption of liability and redress provisions; adoption would have imposed major financial risks 

on agricultural suppliers. 

The EU also lifted destination testing of U.S. long grain rice for the presence of a genetically engineered trait. This 

development allowed the resumption of U.S. rice exports to the EU. USDA negotiations with Chile and El 

Salvador resulted in the opening of those markets to U.S. poultry. In response to U.S. objections raised at a WTO 

SPS Committee meeting, Malaysia dropped a requirement that would have imposed a $27,000-per-plant 

inspection fee on international meat and poultry plants. The fee would have stopped U.S. meat and poultry exports. 

Analysis of Results 

The Department measures the value of trade preserved by resolving trade barriers arising from SPS and TBT 

measures imposed by foreign governments. Trade issues and their impact on U.S. exports depend primarily on 

foreign action, sometimes in response to events in the U.S., such as a livestock disease outbreak. Both the problems 

and the solutions are unpredictable. Solutions can range from a quick agreement with officials at the port of entry 

to a long negotiation process followed by a lengthy regulatory or legislative process in the country in question. The 

impact of an action can range from a few thousand to billions of dollars. While USDA can establish priorities in 

advance for known constraints, unforeseen events will occur that require realigning priorities. 

Selected Results in Research, Extension, and Statistics 

Economic Analysis of Sanitary and Phytosanitary Systems—Increased trade helps meet U.S. consumers’ growing demand 

for a variety of fresh and processed foods. Imports rose from 4.7 percent of the total value of U.S. food and beverage 

consumption in 1995 to 6.8 percent in 2005. The import share of certain categories of foods (such as fruits and vegetables) has

grown at a faster rate. Unfortunately, increased agricultural imports could inadvertently introduce foreign pests and diseases. The 

resulting damage to domestic crops, livestock, and the environment can reduce or offset some of the trade benefits. In the Amber 

Waves article, Regulating Agricultural Imports to Keep Out Foreign Pests and Disease, USDA noted that, while increasing 

agricultural imports benefits U.S. consumers, shipments can transport harmful foreign pests and diseases. The U.S. and other 

nations use a number of approaches to reduce agricultural risks to prevent pests and diseases entering through trade. 
ANNUAL PERFORMANCE REPORT 

59 

Exhibit 19: Increase U.S. Export Opportunities 

Fiscal Year 2008 Annual Performance Goals, Indicators, 

 and Trends 

2004 2005 2006 2007 

Target Actual Result 

1.3.1 Value of trade preserved annually through USDA 

staff interventions leading to resolutions of barriers 

created by SPS or Technical Barrier to Trade 

(TBT) measures. ($ Million). 

$3,950 $2,000 $2,600 $2,457 $2,000 $7,316 Exceeded 

Baseline: 1999 = $2,567 

Rationale for Met Range: The target for this measure is controlled by international parties. It reflects U.S. expectations for addressing compliance with existing trade 

agreements and resolving trade access issues that arise so that domestic exports can continue. A met or exceeded target reflects USDA successes in addressing these 

barriers. An unmet target may conceal that USDA monitoring activities prevented noncompliance. 

• Data assessment metrics to meet the target allow for an actual number in the range 1,500-2,000. 

Data Assessment of Performance Measure 1.3.1 

• USDA uses a performance tracking system to collect and analyze actual performance data. The data are collected from the Department’s network of 

overseas offices and headquarters staff. The staff conducts trade compliance and enforcement activities, provides trade negotiation support to the 

U.S. Trade Representative. 

• Completeness of Data—Data for successfully retaining and assuring U.S. trade access to export markets are projected estimates based on results 

posted during the first three quarters of FY 2008. 

• Reliability of Data—Data are reliable and used by agency and Agency officials to highlight successes in the trade-policy arena. 

• Quality of Data—In addition to audits and internal control review of the performance tracking system, an established procedure is maintained to 

review each reported success for verification and the prevention of double counting. 

USDA’s selection of this performance measure reflects the growing importance of addressing unjustified SPS 

barriers in order to maintain or expand trade. As the U.S. Government continues to negotiate new bilateral, 

regional, and multilateral trade agreements, the challenge will be to monitor and enforce compliance with both 

trade and technical commitments. This monitoring will ensure that U.S. agriculture receives full benefits from 

negotiated reductions in tariff rates by preventing needless SPS and technical trade barriers. 

Challenges for the Future 

Given the increasing global flow of food and agricultural products, the ability of foreign countries to develop and 

implement sound, science-based regulatory systems is vital to the long-term safety of U.S. agriculture and our food 

supply. U.S. agriculture benefits greatly from the development of transparent and science-based regulatory 

frameworks in other countries. Besides monitoring and enforcing its rights under the WTO SPS agreement, 

USDA is working to support the development and adoption of science-based international standards and SPS 

regulatory systems. These efforts are critical to the Department’s ability to bring developing countries into the 

global trading system, so they can support further liberalization through multilateral trade negotiations.
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

60 

Strategic Goal 2: Enhance the Competitiveness and Sustainability of Rural and Farm Economies 

Rural America is of critical importance to the Nation’s prosperity. USDA enhances the competitiveness and 

sustainability of rural and farm economies by expanding domestic market opportunities, increasing the efficiency of 

domestic agricultural production and marketing systems, and providing risk management and financial tools to 

farmers and ranchers. 

OBJECTIVE 2.1: EXPAND DOMESTIC MARKET OPPORTUNITIES 

Overview 

Agricultural and forestry resources provide renewable raw 

materials for a broad range of non-food and non-feed 

products. These products include chemicals, fibers, 

construction materials, lubricants, and fuels. The 

development and commercialization of such biobased and 

bioenergy products provide new and expanded markets for 

agricultural feedstock, accelerate market penetration, reduce U.S. dependence on international oil, and diversify 

agriculture while fostering rural and sustainable development. Such products are friendlier to the environment than 

their petroleum-based counterparts. 

Section 9002 of the Farm Security and Rural Investment Act of 2002 (FSRIA) authorized the Federal Biobased 

Products Preferred Procurement Program (FB4P). FB4P, also called “BioPreferred,” is designed to increase the 

Government’s purchase and use of biobased products. FSRIA requires Federal agencies to purchase biobased 

products instead of their petroleum-based counterparts. The products bought must be readily available, reasonably 

priced and comparable in performance. As the single largest consumer in the U.S., purchasing roughly $400 billion 

annually in goods and services, the Federal Government's preferred use of biobased resources will help create new 

jobs in rural communities and provide new markets for farm commodities. 

The Departmental Administration is implementing BioPreferred through successive rulemakings. BioPreferred 

authorizes the preferred procurement of biobased products that fall under items (generic groupings of products) 

designated by rulemaking. Congress created BioPreferred to: 

 Spur demand growth for new biobased products; 

 Increase domestic demand for agricultural commodities; 

 Encourage the development of processing and manufacturing in rural communities; 

 Capture environmental benefits; and 

 Enhance the Nation’s energy security. 

The first final rule (round 1) was published March 16, 2006. Subsequently, three more rules (rounds 2, 3, and 4) 

were published in the Federal Register in 2008. Once finalized, these rules will add 30 designated items. Five more 

rounds of designations are in the approval process. There are five more planned rounds of rulemaking. 

Technical information to support each proposed rule is available at the BioPreferred Web site, www.biopreferred.gov. 

Key Outcome 

Increased use of biobased products throughout the 

U.S. Government and increase the demand for 

agricultural commodities 

Measure 2.1.1: Number of Items Designated as Biobased for Federal Procurement 
ANNUAL PERFORMANCE REPORT 

61 

Analysis of Results 

The Department measures the number of items designated as biobased products as a proxy measure until data is 

available to directly measure USDA’s impact on sales of biobased products. USDA exceeded its targets for this 

performance measure because three rules were published designating 33 items. BioPreferred is expected to increase 

the use of biobased products within the Federal Government significantly. This increased usage, in turn, will 

encourage the production of biobased products. 

USDA continues to inform farmers and other consumers about the benefits of biodiesel fuel and other biobased 

products. The Department works with the manufacturers and vendors of biobased products, who must provide the 

material and data necessary to test and evaluate biobased content, environmental attributes, and life-cycle costs. 

This information will allow USDA to designate generic groupings of products for preferred procurement within the 

program. 

Selected Results in Research, Extension, and Statistics 

Specialty Crops Program Contributes to the Economy—The USDA-funded Interregional Research Project number 4 (IR-4) 

Project is a cooperative program with the Land-Grant University Experiment Stations. The project develops data to support and 

expedite regulatory clearances of newer, reduced-risk, pest-control products for specialty crop growers. A study by the Center for 

Economic Analysis at Michigan State University concluded that, including direct, indirect and induced effects, IR-4 contributes

nearly $7.7 billion to annual U.S. gross domestic product. The project also supports the employment of 113,411 workers who earn

$4.8 billion annually. 

 “Green” Cleaning Agents—USDA researchers in Albany, California, developed biobased cleaning products, charcoal 

briquettes, odor-removing non-woven substrates and biodegradable cleaning substrates that are “flushable” and still effective at 

scrubbing. The use of eco-compatible plant polymers in cleaning products and charcoal creates greener, more economical 

products. It also aids the American farmer by opening new markets for surplus crops, reduces U.S. dependence on petroleum 

and minimizes the carbon footprint of single-use products. 

Exhibit 20: Number of Items Designated as Biobased for Federal Procurement.

Fiscal Year 2008 Annual Performance Goals, Indicators, 

and Trends 

2004 2005 2006 2007 

Target Actual Result 

2.1.1 Number of items designated as biobased 

for Federal procurement 

n/a Deferred 6 6 26 33 Exceeded

Numbers signify Items published as final rule in Federal Register. Increase in FY 2008 target reflects larger number of items to be designated in the year’s series of 

rulemakings. 

Rationale for Met Range: Based on a count of items for designation, the target is a number with no range. 

Data Assessment of Performance Measure 2.1.1 

The performance measure is the number of items included in final rule designations for the BioPreferred Program (formerly known as the Federal 

Biobased Preferred Procurement Program). 

• Completeness of Data—The performance data are complete and unambiguous. The performance indicator for reporting past performance is a 

straightforward counting of the number of items included in final rule designations. Projections are based on “rule designations” in process. 

• Reliability of Data—The information is reliable. There is no subjectivity or ambiguity in determining the measure’s value. 

• Quality of Data—The quality of the data is very high due to its reliability. The data for projections are more ambiguous as they incorporate “rule 

designations” in process and expected progress by multiple Federal agencies in the process of designating additional rules. The performance 

measure, “items” included in final rule designations does not reflect the amount of BioPreferred program work. Multiple stakeholders and Federal 

agencies are involved. In addition, there are technical demands in reporting information and support of the program not reflected in the measure. 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

62 

Challenges for the Future 

USDA is addressing the challenge of marketing BioPreferred products by encouraging vendors to voluntarily post 

product and contact information on the program Web site at www.biopreferred.gov. This will allow Federal 

agencies to find biobased products for procurement. 

USDA is developing a model procurement program for Federal agencies to help them meet their responsibilities 

within the program’s parameters. The program will educate and help Federal agencies, manufacturers and vendors. 

The Department seeks to better measure the increase in demand for biobased products as it seeks data and studies 

to support enhanced performance measurement and management. 

OBJECTIVE 2.2: INCREASE THE EFFICIENCY OF DOMESTIC AGRICULTURAL PRODUCTION AND MARKETING SYSTEMS 

Overview 

USDA supports sound decision-making about agriculture by 

providing readily available, accurate data, and assessments. 

The Agricultural Statistics Board (ASB) prepares and issues 

official national and State forecasts and estimates relating to 

numerous agricultural subjects. ASB covers crop production, 

stocks of agricultural commodities, livestock products, dairy products, poultry products, agricultural prices, 

agricultural wage rates, chemical usage, and other related subjects. The reports calendar lists release dates and 

specified times for USDA’s national agricultural statistics reports. These reports cover more than 120 crops and 45 

livestock items. All 428 of the agricultural statistics reports, except for 2 scheduled by ASB, were released on time 

to achieve the 99.5-percent performance target in FY 2008. 

Analysis of Results 

USDA seeks to enhance agricultural competitiveness by providing timely data, which is measured by the percentage 

of statistical reports released on time. USDA did not meet its performance target of 100 percent. USDA was unable 

to release two reports on time. One provider delivered data late for one report, and USDA experienced technical 

difficulties with the second report. 

USDA strives to release its ASB reports on time 100 percent of the time each year. It is imperative to deliver highquality, objective, relevant, timely and accurate statistics to producers, and other data users. Such statistics allow 

users to make sound decisions. Official agricultural statistics promote a level playing field in production agriculture 

with impartial information available to all at a publicized time. These data, provided throughout the year, are 

important to the commodity and agricultural markets. They help provide a fair and equitable environment. Public 

officials use the data to make informed decisions. USDA policymakers and Congress use this information to help 

build a strong sustainable farm economy. 

Selected Results in Research, Extension, and Statistics 

Healthy Bee Populations—U.S. honeybees are important agricultural workers, pollinating an estimated $15 billion worth of fruit, 

seed, and fiber crops annually. In response to their declining population, a USDA-funded project team in Arizona developed a 

nutritional supplement, called MegaBeeTM. Colonies fed the nutritious “bee smoothie” retained 30 percent more adult bees and 

more efficiently converted food for young bees. MegaBeeTM increased adult bee populations and colony pollination. 

Key Outcome 

Agricultural Producers Who Compete Effectively 

in the Economic Market 

Measure 2.2.1: Timeliness: Percent of time official reports are released on the date and time 

pre-specified to data users 
ANNUAL PERFORMANCE REPORT 

63 

Increase Poultry Production—USDA-funded research at the University of Arkansas developed methods being implemented by 

the two largest poultry integrators in the Nation. Nearly half of all broilers produced in the U.S. have been produced utilizing these 

new methods for storing eggs during hatching. A 1-2 percent increase in hatchings across the U.S. would produce 2.5 to 5 million 

more chicks per week by the end of the year, This rise would result in a potential net increase of $1.25 million in direct chick-cost 

savings. 

Provide New Genetic Resources To Protect Corn From Genetic Vulnerability—While corn is the most widely grown domestic 

crop, it has a narrow genetic base. An expanded genetic base protects crops from new diseases and pests. USDA scientists in 

Ithaca, New York; Raleigh, North Carolina; and Columbia, Missouri, have produced more than 5,000 diverse corn lines to 

determine how complicated agronomic traits are genetically controlled in any species. The researchers broke down the lines to 

produce basic genetic maps using more than 18 million data points. This project will provide an unparalleled understanding of the 

number, location, and agronomically valuable gene forms that can be exploited for corn improvement. 

Provide Statistical Data to Promote Efficient Domestic Agricultural Production and Marketing Systems—USDA 

collaborates with the United Soybean Board (USB), supplying it with soybean samples from 11 States. USDA analyzes the 

samples to determine such variables as oil and protein content. These analyses help determine the quality of soybeans produced 

in the U.S. Researchers also compare them with those grown in other countries. This process helps USB provide analyses back 

to USDA for research. 

Commodity Programs and Farm Structure—USDA examined the links between commodity payments and the changing 

structure of production for program commodities. Production is shifting to larger farms. The report assesses the pace of those 

shifts. It also identifies a strong relationship between commodity payments and shifts of production: those locations with the

highest commodity payments per acre also have the most rapid consolidation of production into larger enterprises. The statistical 

relationship is large and pervasive. The report assesses several alternative explanations for the relationship. 

Exhibit 21: Agricultural Statistics Reports Released On-Time 

Fiscal Year 2008 Annual Performance Goals, Indicators, and 

Trends 

2004 2005 2006 2007 

Target Actual Result 

2.2.1 Timeliness – Percent of time official reports 

are released on the date and time prespecified to data users 

99.4% 99.8% 100.0% 100.0% 100.0% 99.5% Unmet 

428 official reports were published in FY 2008. 

Rationale for Met Range: The target is a number with no variance. Any result less than 100% is considered unmet. This measure cannot be designated as exceeded. 

Data Assessment of Performance Measure 2.2.1 

The Agricultural Statistics Reports provide statistics to producers and data users. Other stakeholders use the data to make informed decisions and 

impact the commodity and agricultural markets. 

• Completeness of Data—The data are considered complete as of September 30, 2008. 

• Reliability of Data—The data are considered reliable and is supported by multiple data sources, public, and private. The data undergo extensive 

review and checks to ensure proper reporting. 

• Quality of Data—Data are obtained from farm and ranch operators, agribusinesses such as grain elevators, shippers, processors, and commercial 

storage firms. Scientifically designed sampling methods are used to determine the operations to be included in each survey. The national 

Agricultural Statistics Service (NASS) also maintains an area sampling frame, essentially the entire land mass of the United States. Detailed 

information on reports may be found at: http://www.nass.usda.gov/About_NASS/index.asp. 

Challenges for the Future 

Collecting and preparing large volumes of Agricultural data for the Department involves multiple stakeholders and 

deadlines which may affect timely reporting. Delayed data collection from sources and unanticipated technical or 

other difficulties impact timeliness. 

Measure 2.2.2: Percent of market-identified quality attributes for which USDA has provided standardization 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

64 

Overview 

USDA facilitates the marketing of agricultural products in 

domestic and international markets. The Department’s 

programs enhance the marketing and distribution of 

agricultural products which benefits producers, traders, and 

consumers of U.S. food and fiber products. Activities include: 

 Disseminating market information; 

 Implementing and monitoring the Country of 

Origin Labeling (COOL) Program; 

 Purchasing specialty crops, meats, fish, and poultry 

products that are provided to USDA nutrition 

assistance programs; 

 Monitoring egg handling operations; 

 Developing commodity grade standards; 

 Protecting producers from unfair marketing 

practices; 

 Developing organic standards and managing the 

National Organic Program (NOP); 

 Conducting research, providing technical 

assistance, and establishing grants aimed at 

improving efficiency of food marketing and 

distribution; 

 Sampling and testing commodities for pesticide 

residues and pathogens: 

 Verifying pesticide recordkeeping; and 

 Providing grading, certification, and audit 

verification services to confirm marketing claims. 

USDA improves market competitiveness and increases the efficiency of agricultural marketing systems through its 

Market News program. Market News gathers and publishes price and other market data on specific agricultural 

commodities. This timely, accurate, and unbiased market information covers local, regional, national, and 

international markets. 

NOP develops, implements and administers national production, handling and labeling standards for organic 

agricultural products. It also accredits the certifying agents (domestic and international) who inspect organic 

production and handling operations to certify that they meet USDA standards. Through these regulatory activities, 

consumers may be assured that organically produced products meet a consistent standard. The activities also show 

that the market can conduct commerce in fresh and processed food produced organically. The program provides the 

infrastructure needed for an efficient and competitive system for the marketing of organic agricultural products. 

During FY 2008, USDA reorganized NOP into three branches: Standards Development and Review; 

Accreditation, Auditing, and Training; and Compliance and Enforcement. NOP worked closely with the National 

Organic Standards Board (NOSB) and the rapidly expanding organic agriculture industry to strengthen operations 

and communication. NOSB is charged with assisting the Secretary of Agriculture in developing standards for 

substances to be used in organic production. Both NOP and NOSB looked to refine the definitions and 

requirements for organic production and labeling. On July 14, 2008, USDA issued a proposed rule to amend the 

legislatively mandated National List of Allowed and Prohibited Substances regulations. The changes reflected 

recommendations submitted to the Secretary by NOSB. 

Farmers markets allow consumers to buy locally grown farm-fresh produce. They also allow farmers to develop 

personal relationships with their customers and gain their loyalty. To aid small farmers and the agriculture 

community, USDA marketing experts provide technical advice and assistance to States and municipalities 

interested in creating or upgrading wholesale market facilities, auction and collection markets, and retail farmers 

markets. 

Since 2006, many States have used specialty crop block grants funding for marketing programs to enhance the 

competitiveness of these commodities. Some of these specialty crop programs promote State-grown products. 

Specialty crops are defined as fruits and vegetables, tree nuts, dried fruits, and nursery crops (including floriculture). 

All 50 States, the District of Columbia and the Commonwealth of Puerto Rico are eligible to participate. 

Key Outcome 

Economically Sound Agricultural Production Sector 
ANNUAL PERFORMANCE REPORT 

65 

Mandatory COOL labeling began in 2008 for beef and veal, lamb, pork, fish, chicken, goat, macadamia nuts, 

pecans, ginseng, perishable agricultural commodities, and peanuts. The program includes activities related to 

quality assurance, regulations, protocols, general administration, and program management. The 2008 Farm Bill 

amended COOL to require retailers to notify their customers of the country of origin of an expanded list of food 

products. The Farm Bill also added provisions for labeling products of multiple origin and specifications for 

international compliance. 

Additionally, the 2008 Farm Bill increased how much USDA will spend on fresh fruits, vegetables, and nuts to 

provide nutritious foods for schools and service institutions participating in domestic nutrition-assistance programs. 

Dietary Guidelines for Americans recommends increasing fruit and vegetable consumption. Since USDA’s nutrition 

assistance programs reach 20 percent of Americans, this change will provide readily accessible servings of fruits and 

vegetables to low-income populations and schools. 

Setting official standards for agricultural products and regulating and monitoring them enhance the marketing and 

distribution of agricultural products. For example, USDA establishes the official U.S. standards for grain; conducts 

official weighing and grain inspection activities; and grades rice, dry beans and peas, processed grain products, and 

hops. USDA also establishes official U.S. Standards, specifications, and marketing claim descriptions for cotton, 

dairy products, fruits, vegetables, other specialty crops, meat, poultry products, and eggs. 

Analysis of Results 

When new standards are needed, USDA initiates a process to develop and implement the standards. Measuring the 

number of standards developed by the Department to meet market needs indicates how USDA is performing in its 

efforts to support a sound agricultural sector in the economy. USDA accomplished its standards development goal 

for FY 2008 by publishing quality standards for Llama/Alpaca Meat and Caprine Meat Carcasses and Cuts. These 

standards were developed in conjunction with the United Nations Economic Commission for Europe (UNECE). 

The purpose of these UNECE standards is to facilitate trade for meat products by an internationally recognized 

description for use between buyer and seller for meat items commonly traded internationally. They also establish 

and define a coding system for communication and electronic trade. 

USDA issued revised U.S. Standards for Grades of Potatoes, Pineapples, and Tomatoes on the Vine. USDA also 

proposed revised U.S. Standards for Beef Greens, Carrots, Frozen Okra, and Table Grapes (European or Vinifera 

Type). The U.S. Standards for Grades of Olive Oil and Olive-Pomace Oil, and the U.S. Standards for Grades of 

Frozen Onions are slated for publication in FY 2009. 

USDA also developed three quality assessments for grain: 

 A rapid, field-based test for Ochratoxin A, a mycotoxin which can occur in wheat and barley; 

 Official inspection services for Blue Corn; and 

 Amendments to the U.S. Standards for Sorghum. 

Mycotoxins are produced by various fungi and can endanger humans and animals when consumed. Because many 

U.S. trading partners have established tolerance levels for mycotoxins, USDA has approved rapid tests for use in its 

official inspection system to certify toxin levels and facilitate grain trade. 

The Department also established official inspection services for blue corn under the U. S. Grain Standards Act 

(USGSA) at the request of blue corn producers. USGSA is designed to facilitate the marketing of grain, oilseeds, 

pulses, rice, and related commodities. Additionally, the Department has laid the groundwork for additional colors 

of specialty corn, such as red and purple, if they come into the market. 

USDA revised the United States Standards for Sorghum to amend: 

 The definitions of the classes of sorghum; 

 The definition of non-grain sorghum; 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

66 

 The grade limits for broken kernels and foreign material; 

 The grade limits for the subfactor foreign material; 

 The total count limit for other material into the standards; and 

 The method of certifying test weight. 

All changes were made in response to requests from the market. They were announced and finalized through the 

public rulemaking process. The revised standards will promote the marketing of higher quality sorghum. They offer 

better descriptions of the types of grain sorghum produced by American farmers. The standards also reduce the 

allowable levels of broken sorghum kernels and foreign material in the various quality grades of sorghum. 

Exhibit 22: Percent of market-identified quality attributes for which USDA has provided standardization 

Fiscal Year 2008 Annual Performance Goals, Indicators and 

Trends 

2004 2005 2006 2007 

Target Actual Result 

2.2.2 Percent of market-identified quality attributes 

for which USDA has provided standardization 

96% 96% 94% 95.7% 97% 98% Exceeded 

Rationale for Met Range: The target is a number with no variance. Any result greater than or less than 97% is considered unmet or exceeded, respectively. 

Data Assessment of Performance Measure 2.2.2 

The development of quality standards is a complex, multi-stage process requiring extensive review and discussion with the client industry. Thus, yearly 

milestones have been established for completing of the standards development process. For Agricultural Marketing Service (AMS), the development of 

a new standard requires a great deal of research into a wide range of activities, including: 1) a study of the product to determine the quality factors 

involved and the range of quality produced; 2) an investigation into the production practices in major producing areas, varieties or types of production, 

packing, processing techniques, and consumer-buying practices; 3) a statistical plan for sampling product; and 4) interviews with producers, packers, 

processors, shippers, receivers, consumers, and scientists. 

• Completeness of Data—Data used in conjunction with performance information are based on information reported by the Grain Inspection, Packers 

and Stockyards Administration (GIPSA) and each Commodity Standards Branch: Cotton, Tobacco, Dairy, Fruits and Vegetables, Livestock and 

Seed, and Poultry – through the end of the third quarter of the reporting year, and a projection for the fourth quarter of the fiscal year based on prioryear performance. The Department also calculates the quarterly and annual results based on a statistical model of percentage of goal attained by 

the AMS and Grain Inspection, Packers and Stockyards Administration for standards development. 

• Reliability of Data—The data are reliable because of extensive research and field testing. These tests are used to adjust the standard or 

specification until it is an accurate measure of the commodity. It is then made available for review and comment in the Federal Register by industry 

stakeholders, clients, and customers. Performance shortfalls may occur if resources are limited or if the standard under development is 

controversial. 

• Quality of Data—Data are projected based on industry requirements, program plans, and historical performance trends. The target information uses 

data dependent upon the baseline projections from AMS Commodity Standards programs. To the extent that any of the USDA projections are 

inaccurate, the projection of value also will be inaccurate. 

Challenges for the Future 

Keeping up with changes in consumer demand, domestic and international marketing practices, and new 

technologies present challenges for USDA. New legislation may introduce the need to modify or add standards. 

Standards bodies are another source of new or modified standards. USDA must react quickly to these changes 

while continuing to monitor the entities that follow these standards. 

OBJECTIVE 2.3: PROVIDE RISK MANAGEMENT AND FINANCIAL TOOLS TO FARMERS AND RANCHERS 

Measure 2.3.1: Increase the normalized value of risk protection provided to agriculture producers 

through FCIC-sponsored insurance 
ANNUAL PERFORMANCE REPORT 

67 

Overview 

USDA provides and supports cost-effective means of managing risk for agricultural producers. This assistance is 

designed to improve the economic stability of agriculture. It assesses the producers’ need and develop a variety of 

suitable risk-management tools. These tools help farmers and ranchers protect their livelihood in times of disasters 

or other uncontrollable conditions. USDA uses the value of risk protection to measure the effectiveness of risk 

management. The value of risk protection denotes the amount of insurance used to protect and stabilize the 

agricultural economy. 

The USDA Federal Crop insurance program provides an actuarially sound risk management program to reduce 

agricultural producers’ economic losses due to natural disasters. This program is available to producers solely 

through private insurance companies. These companies market and provide full service on policies upon which they 

share the risk with USDA. A Standard Reinsurance Agreement (SRA) defines the amount of risk they share. The 

SRA calls for insurance companies to deliver risk-management insurance products to eligible entities under certain 

terms and conditions. Companies are responsible for all aspects of customer service and guarantee payment of 

producer premiums to the Federal Crop Insurance Corporation (FCIC). In return, FCIC reinsures the policies and 

provides premium subsidy to producers. It also reimburses for administrative and operating expenses associated 

with the companies delivering the insurance products. During most of 2008, the number of participating companies 

totaled 16 with another company approved effective July 1. The value of risk protection provided over the past year 

to agricultural producers through FCIC-reinsured policies exceeded $88 billion in 2008 dollars. This amounts to a 

three-fold increase in program liability during the last decade. 

USDA also has implemented several initiatives to increase awareness and service to small and limited resource 

farmers and ranchers and other under-served groups and areas. Through partnership agreements, the Department 

provides a venue for public and private agricultural organizations, land grant colleges and universities community 

based organizations, farmers and ranchers, and other stakeholders. USDA also partners with community-based 

organizations, and Hispanic Serving Institutions. These partnerships provide technical program assistance and riskmanagement education on strategies associated with legal, production, marketing, human resources, and labor risks. 

Analysis of Results 

Agricultural producers need protection from the multiple perils of weather, disease, wildlife, wildfire and market 

volatility. For producers who experience severe losses, crop insurance proceeds can prevent mortgage defaults or 

bankruptcy. USDA continued to assess producers’ needs and private risk-management tools to ensure that new and 

innovative alternatives are available that result in increased program participation. Measuring the amount of riskprotection offered to agricultural producers demonstrates how the Department helps provide a sound agricultural 

economy by protecting its members from severe economic losses. 

USDA exceeded its target by $0.3 billion in FY 2008. During the 2008 crop year, the economic risk of American 

agricultural producers dropped by approximately $88.5 billion (liability) through Federal crop insurance coverage. 

The performance measure illustrates the normalized/real dollar value of FCIC insurance within the agricultural 

economy. It also shows the amount of potential collateral provided to qualify for commercial loans. Since the 1999 

crop year, the normalized value of the liability of the policies has increased by approximately $19 billion. While 

there are a number of factors that influence these figures, including market-price increases and inflation, they still 

represent a major growth in the amount of the agricultural economy insured via FCIC-reinsured policies. 

USDA has significantly increased the value of risk protection through FCIC-reinsured policies since FY 2000. The 

Department continues to work closely with insurance companies that market and provide full service on crop 

insurance policies. It researches and develops new products that address the needs of producers. USDA has 

partnered with State departments of agriculture, universities, and farm organizations to deliver regionalized risk 

management education programs for producers in the historically underserved States, and for specialty crop 

producers. Due to these efforts, the Federal Crop Insurance Program should continue to provide actuarially sound 

risk-management solutions to strengthen and preserve the economic stability of American agricultural producers. 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

68 

Selected Results in Research, Extension, and Statistics 

Adoption of Farm Management Tools—With USDA funding, Pennsylvania Extension teaches the use of farm financialmanagement tools. Armed with this knowledge, 1,668 participants in Pennsylvania indicated that they had implemented or 

adopted business plans, market research, decision-making tools, risk-management practices, and/or human resource 

management practices. With the extension’s help, another 1,328 indicated that they implemented or adopted sustainable 

agriculture or nutrient management practices and methods on their farm. 

Credit: Access, Constraints, and Implications for Farms and Sole Proprietorships—USDA’s Agricultural Resource 

Management Survey asked farmers about their use of debt. If the response was that debt was neither used in purchasing capital 

items nor acquiring operating inputs, a follow-up question asked why the operation did not take out loans or use a line of credit. A 

range of responses was allowed that extended from self-financing due to the sufficiency of available funds, to transaction costs, 

risk associated with debt, and the inability to obtain new or additional credit. Questions have also been asked to inquire whether a 

producer’s credit application has been rejected or reduced in amount. Initial research using these data is underway. 

Exhibit 23: Providing Risk Management Tools to Farmers and Ranchers Economically Viable 

Fiscal Year 2008 

Annual Performance Goals, Indicators and Trends 

2004 2005 2006 2007 

Target Actual Result 

2.3.1 Increase the normalized value of risk protection provided to 

agriculture producers through FCIC-sponsored insurance 

($ Billion) 

$43.0 $45.3 $48.7 $50.7 $53.7 $51.01 Met 

As of October 2, 2008. 

New methodology described in the Analysis of Results has produced revised figures for previous years. 

1The total value in 2008 dollars is $88 billion. 

Rationale for Met Range: Annual targets for this measure, based on five years of program history, have consistently seen a variability of plus or minus 4.4.

Data Assessment of Performance Measure 2.3.1 

The value of risk protection denotes the amount of insurance protecting and stabilizing the agricultural economy. The target is based on projections 

developed in November 2003. The baseline model uses the latest information from the crop insurance program and combines it with USDA baseline 

projections for major crops. In making the projections, the model holds various factors constant, such as premium rates and average coverage level. The 

model assumes that all non-major crops behave consistently with projections for major crops. The liability from the baseline projection is adjusted to 

remove the effect of year-to-year variations in price to produce “normalized liability” projections. The reference price used for the normalization is the 

average commodity price from 2002 to 2006. The baseline model is a tool for developing budget projections contained in Presidential budget requests. 

The budget and performance projections for the crop insurance program mainly depend on the baseline projections from numerous USDA agencies. 

• Completeness of Data—The data used in conjunction with performance information are based on information reported through the end of the third 

quarter. To provide the annual data, USDA projects the results for the fourth quarter of the fiscal year based on prior-year performance. Analysis has 

shown that normally 99 percent of the final actual data will be reported to USDA during the first quarter of the next fiscal year. The Department 

receives the actual data from insurance companies. It then maintains data through two integrated processing systems that validate the information 

transmitted by insurance companies. The data then are sent through the system to generate all accounting functions. These processing systems 

provide a mechanism to ensure that data received are accurate, errors are corrected quickly, and timely monthly accounting reports are provided. 

• Reliability of Data—USDA deems this information to be reliable. The insurance companies receive data from the producers and transmit them to 

USDA. Once received, the Department takes extensive steps to verify the data’s accuracy and validity. The SRA also provides reinsured companies 

with disincentives for not following prescribed guidelines and procedures. A recent audit by the Office of the Inspector General (OIG) (see Audit OIG05099-111-KC, under Goal 2 in the Program Evaluations section) found that the Risk Management Agnecy (RMA) information technology 

environment might be vulnerable to errors, misuse, abuse, unauthorized access, disruption of service, and willful destruction. RMA generally agreed 

with these findings and has implemented memorandums of understanding with their information partners with procedures to ensure reliable data. 

• Quality of Data—Data are projected based on historical performance and the target information uses information dependent upon the baseline 

projections from numerous USDA agencies. The accuracy of the projections directly affects the accuracy of the projections of value. 
ANNUAL PERFORMANCE REPORT 

69 

Challenges for the Future 

USDA’s challenge is to continue expanding and improving insurance coverage and other risk-management 

solutions, particularly for underserved States, areas, communities, and commodities. The Department needs to 

address the management and financial information technology costs associated with operating and maintaining 

existing program data needs. These systems and technologies also service new and revised products. USDA 

continues to research how to deliver more crop and livestock products suited for a diverse agriculture and cover 

specialty crops with unique agronomic and economic characteristics. This research includes reviewing and 

approving private-sector insurance products reinsured by FCIC that are targeted to the unique needs of 

underserved areas and various specialty crops. The Department also continues to evaluate the delivery of risk 

management products to ensure their efficient delivery to agricultural producers. To further contribute to the 

producers’ ability to protect their financial stability, USDA will continue to provide education, outreach, and noninsurance risk management assistance initiatives, and tools through partnerships. 

Overview 

Farmers must have access to timely and accurate information. 

Without it, they will not be able to compete in a rapidly 

growing marketplace. USDA provides farmers with the risk 

management and financial tools needed to minimize risk and 

enhance their operations. 

To help maintain the economic stability of agriculture, USDA has programs that reduce the volatility of price and 

climate fluctuations. Stable commodity supplies and prices assure an affordable supply of food for the Nation. In 

times of natural disaster, the Department also administers emergency loan and disaster relief programs to return 

farms and ranches to their pre-disaster state as quickly as possible. USDA’s NAP provides financial assistance to 

producers of non-insurable crops when natural disasters cause low yields or inventory loss, or prevent planting. 

Those eligible for assistance through NAP are landowners, tenants, or sharecroppers who share in the risk of 

producing an eligible crop. Eligible crops must be non-insurable agricultural commodities for which there is no 

available crop insurance. By obtaining NAP coverage, producers are able to provide some level of assurance to 

lending institutions that USDA will assume a portion of the insurance risk. 

Analysis of Results 

This measure, like the previous one, shows performance in providing a sound agricultural sector by helping mitigate 

severe losses. USDA did not meet its target for increasing the percentage of eligible crops with NAP coverage. 

Participation in the program was lower because prior ad hoc disaster legislation mandated participation in NAP as a 

precondition for receiving disaster payments. However, producers who had not purchased NAP were allowed to 

participate in the disaster program if they agreed to purchase NAP for the following two crop years. This legislative 

requirement expired with the 2007 crop; therefore, producers dropped out of the fee-based NAP program, resulting 

in a drop in enrollments. Also, the NAP measure uses proxy data derived from claims made on the 2007 crop 

year. NAP payments for the 2007 crop year were roughly half what they had been the prior year due to generally 

favorable weather conditions. In low loss years the use of a proxy measure may result in underreporting the actual 

performance of the program. Further, the program has documented increased enrollment for FY 2008 and should 

trend upwards in the next fiscal year due to the requirement in the 2008 Farm Bill that a producer must have 

obtained a policy or plan of insurance or NAP coverage to maintain eligibility for four of the five new standing 

disaster programs. 

Key Outcome 

Economically Sound Agricultural Production Sector 

Measure 2.3.2: Increase the percentage of eligible crops with Noninsured Crop Disaster Assistance Payments (NAP) coverage 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

70 

Exhibit 24: Providing Tools to Help Farmers and Ranchers Stay Economically Viable 

Fiscal Year 2008 Annual Performance Goals, Indicators, and 

Trends 

2004 2005 2006 2007 

Target Actual Result 

2.3.2 Increase percentage of eligible crops with 

Noninsured Crop Disaster Assistance 

Payments (NAP) coverage 

11.12% 12.82% 12.70% 11.76% 11.76 % 7.2%1 Unmet 

• Estimated results as of September 30, 2008.

• The target and threshold represents the value of crops participating in the program compared to the universe of the value of crops eligible to 

participate in the NAP program.

Rationale for Met Range: Data assessment metrics to meet the target allow for an actual number in the range 10.76%-12.76%. 

Data Assessment of Performance Measure 2.3.2

• Completeness of Data—The data are estimated as of September 30, 2008. 

• Reliability of Data—The Farm Service Agency (FSA) collects performance information from key program partners that it uses to manage NAP and 

improve performance. RMA conducts numerous edit checks of its source data. NASS’ review of its data includes peer review. FSA correlates RMA 

and NASS data to NAP. It uses a simple formula approved by the Office of Management and Budget in the NAP Program Assessment Rating Tool 

process. External factors which contribute to and impact the program’s performance data include natural disasters, crop eligibility, legislated linkage 

requirements, and commodity price fluctuations. While the participation rate may fluctuate from year to year, the program is on track towards 

meeting long-term targets. The 2008 Farm Bill links eligibility requirements to receive disaster benefits to NAP participation.

• Quality of Data—Data reviews for integrity and accuracy are conducted by FSA and its partner agencies. It is considered to be of high quality.

Challenges for the Future 

Because of the volatile nature of the market and the unpredictability of natural disasters, USDA regularly reviews 

NAP and other farm support programs in keeping with legislation to provide effective, customer-focused programs. 

Information technology and infrastructure modernization also pose an ongoing challenge to the Department. 

Significant costs are associated with providing adequate technical assistance to support USDA programs and 

management. 

Overview 

USDA Farm Loan Programs (FLP) provides loans and loan guarantees to eligible farmers and ranchers. The 

programs are designed to promote, build, and sustain family farms, which help support a thriving agricultural 

economy. Department assistance is particularly important to minorities, women, and beginning farmers. These 

groups typically have limited financial assets or limited farming experience. Barriers to entering production 

agriculture are quite high, and include the initial capital investment, high land values, and increasing input costs. 

Beginning farmers, minorities, and women are particularly impacted by these barriers. Access to credit is an 

important tool in overcoming the barriers and allowing these groups to begin or maintain a farming operation.

Analysis of Results 

USDA met the performance measure target. The Department currently provides agricultural credit to more than 

16.2 percent of the Nation’s minority, women, and beginning farmers. This credit includes direct and guaranteed 

farm ownership and operating loans. Farm ownership loans are used to purchase farm real estate, enlarge existing 

farms, construct or improve farm structures, and improve the environmental soundness of farms. Farm operating 

loans are used for normal operating expenses, equipment, machinery and livestock purchases, and refinancing 

Measure 2.3.3: Increase percentage of beginning farmers, racial and ethnic minority farmers, 

and women farmers financed by USDA 
ANNUAL PERFORMANCE REPORT 

71 

existing debt. In FY 2008, USDA provided an estimate of 15,273 loans to the targeted groups – roughly $1.63 

billion. USDA currently has 44,343 minority, women, and beginning farmers in its loan portfolio, a 33 percent 

increase since FY 2000. This is a significant accomplishment when considering that the overall loan portfolio has 

declined during that time period. 

Exhibit 25: Providing Tools to Help Farmers and Ranchers Stay Economically Viable 

Fiscal Year 2008 Annual Performance Goals, Indicators, and 

Trends 

2004 2005 2006 2007 

Target Actual Result 

2.3.3 Increase percentage of beginning farmers, 

racial and ethnic minority farmers, and 

women farmers financed by USDA 

14.50% 15.00% 15.50% 15.9% 16.5% 16.22%1 Met 

1 Estimated as of September 30, 2008. 

Rationale for Met Range: Data assessment metrics to meet the target allow for an actual number in the range 16%-17%. 

Data Assessment of Performance Measure 2.3.3

FLP data reside in the Program Loan Accounting System, Guaranteed Loan System, Direct Loan System, and FLP Databases. Information obtained 

from the 2002 Census of Agriculture is also used for this performance measure. The measure is calculated by taking the total number of minority, 

women, and beginning farmers in the loan portfolio and dividing it by the number of members of those three groups listed in the 2002 Census of 

Agriculture with at least $10,000 in sales (this sales figure excludes hobby farms, which are not the intended market for FLPs). 

• Completeness of Data—Data reported will be considered final as of September 30, 2008. 

• Reliability of Data—Data are considered reliable. System enhancements and built-in edits, coupled with comprehensive internal control review 

programs help ensure data reliability and quality. Census of Agriculture data are considered reliable. However, the resulting percentage reported 

likely understates the importance of USDA's service to these targeted groups. It does not account for how many of these farmers would meet 

USDA's test for credit. Given that less than 50 percent of farm operators have any debt, it is unlikely that all of the targeted farm operators identified 

in the census would meet the credit test. Despite this limitation, these data are the best available for estimating USDA's performance in reaching the 

targeted groups. 

• Quality of Data—FLP data is of high quality. Most FLP data originate from accounting systems, which are subject to OIG audit. FLP data are 

collected for multiple purposes and gathered throughout the normal lending process. Data derived from the 2002 Census of Agriculture were 

developed in FY 2006 and will be used until the next census is completed. 

Challenges for the Future 

The structure of U.S. agriculture continues to change as most farms become larger and increasingly dependent on 

technology, resulting in increased capital needed to gain entry into farming. The costs of operating a farm continue 

to increase because of higher input costs. These factors result in significant barriers and challenges for the groups 

that the USDA farm loan programs are intended to assist. To keep pace, USDA will continue efforts to modernize 

the program delivery system and refine and adjust program requirements to maximize opportunities for our nation's 

minority, women, and beginning farmers.
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

72 

Strategic Goal 3: Support Increased Economic Opportunities and Improved Quality of Life In Rural America 

OBJECTIVE 3.1: EXPAND ECONOMIC OPPORTUNITIES BY USING USDA FINANCIAL RESOURCES TO LEVERAGE PRIVATE SECTOR RESOURCES 

AND CREATE OPPORTUNITIES FOR GROWTH 

Overview 

USDA’s programs help finance rural businesses and promote 

opportunities for economic growth as measured by jobs 

created and saved. 

One of USDA’s core missions is to ensure that rural residents 

can enjoy the same economic opportunities other Americans do. This is not a simple mission. Credit limitations 

and other market imperfections can prevent rural economies from creating jobs and generating incomes sufficient to 

allow rural families to thrive. These factors also deter rural youth from staying in local communities. To address this 

issue, USDA programs provide capital enhancement tools for rural America. These programs provide affordable 

access to funding for investment in businesses and economic infrastructure. 

The development of an Internet-based economy provides unique opportunities for rural America. A rural 

broadband infrastructure can ease many limitations on rural business development caused by geographic distance 

and a small local customer base. Thus, USDA is providing capital to finance access to broadband service for rural 

communities. Internet access is critical to enable rural businesses to participate in the developing global economy. 

The Department’s grant programs provide funds to under-resourced rural communities. The funds help improve 

local infrastructure or expertise to be more attractive to new businesses and maintain appeal to local residents. For 

instance, while rural improvements are usually funded by special local business tax assessments, in marginally viable 

areas, such an assessment may not be affordable. USDA can help. Frequently, companies looking for a new location 

need special skill sets, and USDA grants can fund small targeted job-training programs. 

The USDA Value-Added Producer Grant is designed to help producers expand their customer base for the 

products or commodities that they produce. It gives rural producers a chance to make more money from their 

processed products. The program has allowed many agricultural producers to embrace new marketing opportunities 

for their agricultural commodities. 

Whether a grant of $20,000 is used to improve small town lighting or provide targeted training to attract a 

business, all rural residents benefit from these investments. A USDA loan or grant to a rural business for start-up, 

expansion or modernization enhances the local job market and tax base. The local economy is stimulated, jobs are 

created, and the quality of life improves for most citizens. 

Renewable energy projects funded by USDA loans and grants improve the local economy through new jobs at the 

energy plants, enhanced tax base, and local profits. Recent funds allowed many small business owners to decrease 

their energy consumption, and increasing profit margins. 

Analysis of Results 

USDA met its goals for this objective. The number of jobs created or saved is linked directly to the amount of total 

available USDA business program funding, amounts obligated and disbursed to awardees, and local economic 

conditions. Annual job targets are based on historical program operations, subsidy rates and annual appropriations. 

The target job numbers assume a level funding horizon and timely allocations of funds without regard to the 

Key Outcome 

Enhanced Capital Formation for Rural Communities 

Measure 3.1.1: Jobs Created or Saved 
ANNUAL PERFORMANCE REPORT 

73 

potential impact of major natural disasters. Annual budget authorities, subsidy rates, and program levels vary 

annually. Recently, these factors caused a general decline in annual job numbers. The targets, results and usage of 

funds for USDA programs fulfilled expectations. Any remaining program funds will be carried over into FY 2009 

and continue to provide benefits to rural communities in the next fiscal year. 

Selected Results in Research, Extension, and Statistics 

Helping Americans to Save for the Future—USDA-funded Cooperative Extension in 21 States has either led or participated in 

a coalition to offer 31 local Saves campaigns. One finding showed that 16,530 Savers enrolled in 2007 committed to a cumulative

savings goal of $1.6 million monthly. The top five savings goals were emergency savings, education, debt repayment, 

homeownership, and investment/saving. 

Exhibit 26: Strengthen Rural Businesses 

Fiscal Year 2008 Annual Performance Goals, Indicators and 

Trends 

2004 2005 2006 2007 

Target Actual Result 

3.1.1 Jobs Created or Saved 80,169 73,328 71,715 72,710 72,373 70,476 Met 

Numbers previously reported were adjusted for the new methodology. Newly revised numbers still meet original targets. 

Rationale for Met Range: Job projected data is gathered when projects are obligated in Guaranteed Loan System (GLS) based on a formula driven by 

historical results. Final job counts are verified on closing the loan and grant. A met range of 5 percent is used.

• Data assessment metrics to meet the target allow for an actual number in the range 68,468-75,676.

Data Assessment of Performance Measure 3.1.1 

Business program data are collected in various systems and ways. The finance office records and reports total loan and grant obligations as of the date 

they are executed. These data are collected as part of the obligation process. USDA also uses one of its own systems, the GLS, to collect additional 

information to satisfy reporting requirements, and for management and evaluation purposes. This information includes the number of jobs projected at 

obligation and verified jobs created or saved at the transaction’s closing. Data used to determine the Business and Industry Guaranteed Loan 

Program’s delinquency status are generally reported directly by lenders into GLS. For other programs, USDA staff reports delinquency information. 

• Completeness of Data—Business program data are considered final and complete as of September 30, 2008, unless there are any year-end 

closing adjustments. 

• Reliability of Data—Borrower financial performance is reported by many, but not all, lenders semi-annually to the Rural Business Cooperative 

Service. There is inconsistency in the time periods represented by lender reports. In lieu of a reliable, consistent and complete data set from lenders, 

the Finance Office’s financial data have been found acceptable to OIG, as are State office-verified data on the financial performance of loans. Data 

for jobs created or saved are obtained by State office staff from borrowers and lenders. They are entered into GLS at the same time obligations are 

recorded. These data are reliable when they have been updated and verified by State staff. USDA reports the computed jobs saved or created 

based on underlying market and financial feasibility projections that support loan applications. The jobs are counted only in one fiscal year, the year 

the loan is obligated. The delinquency rate, which excludes loans in bankruptcy, is based on reports supplied by lenders on the performance of each 

loan. While the percentage of States verifying third-party financial and jobs data have improved each year, further improvements are needed. Rural 

Development (RD) is testing an economic model to show the impact of business programs in rural areas more accurately and completely.

• Quality of Data—While the percentage of States verifying third-party financial and jobs data has improved each year, further improvements are 

needed. The economic model described above should lead to these improvements. 

Challenges for the Future 

Rural economies face challenges different from those of urban and suburban areas. These challenges include: 

 Historical dependence on local natural resources and farm commodities, subject to cyclical trends, and changing 

regulatory standards and oversight; 

 Low profit margins on local commodity sales yet strong competition from international commodities; 

 Large-scale changes in technology and related efficiency gains; and 

 Inaccessibility and low-density populations resulting in limited foot traffic for retail establishments, and limited 

discretionary budgets for business improvements, upgrades, and modernization. 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

74 

Additionally, rural areas typically have underdeveloped public services that make it difficult to attract or retain 

businesses. The lack of public funding for amenities which are common in urban areas, such as dedicated business 

parks or expanded transportation links, creates additional challenges. Education, health care, and entertainment are 

perceived to be marginally acceptable in rural areas. 

OBJECTIVE 3.2: IMPROVE THE QUALITY OF LIFE THROUGH USDA FINANCING OF QUALITY HOUSING, MODERN UTILITIES, AND NEEDED 

COMMUNITY FACILITIES 

Overview 

Basic infrastructure services are essential for rural 

communities to compete in today’s rapidly changing 

economy. These communities need clean water, effective 

wastewater systems, and reliable and affordable electricity and 

telecommunications to survive. These services act as the 

foundation of economic development. 

While the largest number of loans and grants goes to fire, 

rescue and public safety, historically, the greatest amount of community facilities funding has gone for health care 

projects. More than $250 million was invested in 139 health care facilities serving 3 million rural residents. During 

the same period 595 communities received more than $95 million to finance fire, rescue, and public safety facilities, 

equipment, and vehicles. Overall, more than 12 million rural Americans will enjoy a better quality of life directly 

attributable to the $500 million investment in essential community facilities. 

USDA utilities programs help rural businesses build and maintain cost effective electrical infrastructure. USDA can 

help businesses achieve favorable interest rates on loans to finance energy saving endeavors. Programs that help 

rural businesses save on energy costs can also save rural jobs, since keeping energy costs down can mean the 

difference between success and insolvency. 

A New Mexico company used funds from 2 USDA telecommunications loans totaling $70 million to buy and 

upgrade local telephone facilities. These facilities served portions of Navajo lands in the Four Corners and 

Canoncito areas of northwestern New Mexico. The company’s efforts earned it a USDA Community Connect 

Grant. The Community Connect Program serves rural communities where broadband service is least likely to be 

available, but where it can make a tremendous difference in the quality of life for citizens. The grant was used to 

build and manage an Internet training center and an e-commerce center. More than 2,000 visitors last year used the 

center’s computers for school work, job searches, business research, medical information, and recreation. A retail 

Web site was created to sell Navajo arts and crafts, benefitting Navajo artisans. 

Through its water programs, USDA invested $1.36 billion to finance construction, repairs and upgrades in 

FY 2008. While an infusion of Farm Bill funds may have contributed to the Department exceeding its goals. 

Key Outcome 

Improved Rural Quality of Life Through 

Homeownership, New and/or Improved Facilities for 

Water, Waste Disposal, Electric, Telecommunications, 

and Essential Community Facilities 

Measures 3.2.1–3.2.5 

3.2.1 Number of borrowers/subscribers with new and/or improved electric facilities 

3.2.2 Number of borrowers/subscribers with new or improved telecommunication services (Broadband) 

3.2.3 Number of borrowers/subscribers with new/improved service from agency funded water facility 

3.2.4 Homeownership opportunities provided 

3.2.5 Percentage of customers who are provided access to new and/or improved essential community facilities 
ANNUAL PERFORMANCE REPORT 

75 

USDA has also marketed its water programs aggressively to rural communities. This marketing has created brandname recognition for its services and financial assistance. Additionally, upgraded underwriting tools have improved 

the water programs’ performance by helping to identify communities with greater loan potential. 

Community Facilities (CF) Programs are designed to develop essential community facilities for public use in rural 

areas. In one instance, USDA approved a package of loans to finance the construction of a replacement hospital in 

Michigan. The existing critical-access hospital, built in 1953, lacked adequate space and modern facilities to 

accommodate changing health care needs. The Department approved a $10.4 million CF direct loan and 

guaranteed another $26.8 million loan. A capital campaign raised $3 million and the Sault Ste. Marie Tribe of 

Chippewa Indians contributed a 16.5-acre site valued at $1.2 million. The new 110,000-square-foot facility houses 

15 acute care beds, 60 long-term care beds, a primary care rural health clinic, a renal dialysis unit and a tribal clinic 

for the Sault Ste. Marie Indians. The town’s rural residents now have access to modern health care. 

Home ownership remains important to strong, vibrant rural communities. Local economies strengthen, crime 

drops, and incomes rise when families settle. USDA’s direct and guaranteed housing programs help fill the gap left 

by private lenders as affordable home financing–especially in rural and remote areas–has largely disappeared. For 

FY 2008, loan activity hit record levels. The Department provided more homeownership opportunities for rural 

families than anytime during the past 25 years. In the early 1980s, the average home financed cost less than 

$30,000, compared to more than $110,000 in 2008. 

USDA’s housing programs have surpassed the $100 billion milestone. Since the Department began making and, 

later, guaranteeing home loans in rural areas, more than 2.5 million families have obtained loans or loan guarantees 

totaling more than $104 billion. In an effort to adhere to the Administration’s homeownership initiative, nearly 18 

percent of the housing program customers are minorities, who comprise a little more than 13 percent of the 

Nation’s rural population. The performance measure was exceeded as a result. 

Analysis of Results 

The electric and telecommunications programs fully utilized their FY 2008 loan-lending authority and exceeded 

their target performance measures. 

The water and environmental programs fully utilized their FY 2008 lending authority and exceeded their target 

performance measures. Projections for FY 2009 and FY 2010 are 1,418,000 and 1,457,000 subscribers, respectively. 

The community facilities program met its goal by emphasizing health care and public safety facilities. Department 

staff provided outreach at national, State and regional conferences, showing its ability to provide facilities at 

reasonable rates and terms for rural Americans. 

The performance of the housing programs far exceeded goals. FY 2008 showed a greatly increased demand for the 

guaranteed program and lower-than-expected average home costs for the direct program. Significant improvements 

in program delivery through Guaranteed Underwriting System (GUS) made USDA’s Guaranteed Section 502 

loans quicker and easier for lenders to obtain. These loans are designed to provide long-term financing at 

reasonable rates and terms with no down payment. 

Equally important, demand increased significantly for one of the few remaining no-down payment, affordablehousing mortgage programs. A record $6.2 billion in guaranteed loans were provided through USDA’s Section 502 

Guaranteed Loan Program in FY 2008. USDA anticipates a growing need for increased funding in coming years as 

demand continues to spiral upwards. 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

76 

Selected Results in Research, Extension, and Statistics 

Healthier Homes—Through USDA’s “Healthy Indoor Air for America’s Homes,” 186,025 participants made behavior changes to 

improve indoor air quality. More than 55,000 homes were tested for radon and another 9,044 were mitigated. Additionally, 40,980

people stopped exposing their children to second-hand smoke and 29,925 people tested their homes for lead. 

4-H Proven to have Positive Effects—The 4-H Study of Positive Youth Development showed that 4-H youth were more than 

one and a half times more likely to expect to go on to college than non-4-H youth. The former also had higher school grades and

were more emotionally engaged in school. They also scored significantly higher on six of eight factors related to civic identity and 

civic engagement. 

Agritourism Opportunities for Farm Operators—While farm-based recreation provides an important niche market for farmers, 

limited empirical information is available on the topic. Two USDA databases provided researchers with a deeper understanding of

who operates farm-based recreation enterprises. These activities include hunting and fishing operations, horseback riding 

businesses, on-farm rodeos, and petting zoos. Recent data showed that approximately 52,000 U.S. farms – 2.5 percent of all 

farms – received income from farm-based recreation totaling about $955 million. 

Exhibit 27: Improving Rural Quality of Life Through Electric Opportunities 

Fiscal Year 2008 

Annual Performance Goals, Indicators, and Trends 

2004 2005 2006 2007 

Target Actual Result 

3.2.1 Number of borrowers/subscribers receiving new 

and/or improved electric facilities (thousands) 

4,326 2,360 8,184 5,826 7,125 8,093 Exceeded

Rationale for Met Range: Annual targets for this measure are based on historical activity and adjusted according to program level received each fiscal year. Met range 

represents a 5-percent deviation from target. 

• Data assessment metrics to meet the target allow for an actual number in the range 6,768-7,481. 

Data Assessment of Performance Measure 3.2.1 

RD’s electric programs data are collected from various Rural Utilities Service (RUS) documents including RUS Forms 740c and 130, Borrower’s 

Statistical Profile, Information Publication 201-1 and the borrower’s loan application. 

• Completeness of Data—The data are complete and accurate, and collected at the time of loan approval and reported annually. 

• Reliability of Data—Applicants are required to report essential data to the RD electric programs. These data are used to administer USDA loan 

funds and ensure loan security. The electric program is developing a new loan tracking and data collection system as part of the Community 

Program Application Processing – Electric Programs. 

• Quality of Data—Applications are reviewed to ensure the borrower meets the eligibility requirements for the various loans, guarantees and grants 

offered by RD’s electric programs. All approved applications must show feasibility from a financial standpoint and ensure loan security. Loan funds 

may be used only for the approved purposes for which the loan was made. 

Exhibit 28: Improving Rural Quality of Life Through Telecommunication Services 

Fiscal Year 2008 Annual Performance Goals, Indicators and 

Trends 

2004 2005 2006 2007 

Target Actual Result 

3.2.2 Number of borrowers/subscribers receiving new or 

improved telecommunication services 

(Broadband) (thousands) 

373,813 232,2491 297,027 356,4402 394,931 755,342 Exceeded 

1FY 2005 figure was incorrectly reported in the FY 2007 Par as 240,000. It should be 232,249. 

2 The FY 2007 estimate of 1,205,000 reported in the FY 2007 PAR has been replaced with the actual figure of 356,440. 

Rationale for Met Range: Annual targets for this measure are based on historical activity and adjusted according to program level received each fiscal year. Met range 

represents a 7-percent deviation from target. 

• Data assessment metrics to meet the target allow for an actual number in the range 367,286-422,575. 
ANNUAL PERFORMANCE REPORT 

77 

Data Assessment of Performance Measure 3.2.2 

The county data are collected from each approved loan application. Applicants identify their proposed service territories, including the number of 

subscribers to be served in the location by county. Measuring the extent to which broadband service is deployed in rural America on a county-by-county 

basis will enable USDA to assess improved economic conditions. The data on the number of counties to be served for each loan are derived from 

applicants’ loan applications. 

• Completeness of Data—Data are based on third quarter data and fourth quarter projections. 

• Reliability of Data—Applicants are required to perform market surveys of their proposed service areas, but the actual counties served may vary if all 

funds are not used or the borrower later requests a change of purpose from the original loan application. Overall, the data are reliable. 

• Quality of Data—All applications are reviewed to determine eligibility. These applications must show feasibility from financial and technical 

standpoints. Applicants must perform market surveys of their proposed service areas. The data depend on the borrower drawing down loan funds and 

constructing the system as portrayed in the applicant’s loan design. Variance may result if a borrower does not draw down all loan funds or request 

approval for a change of purpose from the original loan, resulting in differences in the number of counties served and the number specified in the plan. 

Exhibit 29: Improving Rural Quality of Life Through Water and Waste Disposal Facilities 

Fiscal Year 2008 Annual Performance Goals, Indicators, 

and Trends 

2004 2005 2006 2007 

Target Actual Result 

3.2.3 Number of borrowers/subscribers receiving 

new or improved service from agency funded 

water facility 

965,780 1,325,000 1,637,554 1,332,0631 1,380,000 4,361,872 Exceeded 

1 The FY 2007 estimate of 1,457,000 reported in the FY 2007 PAR has been replaced with the actual figure of 1,332,063. 

Rationale for Met Range: Annual targets for this measure are based on historical activity and adjusted according to program level received each fiscal year. Met range 

represents a 5-percent deviation from target. 

• Data assessment metrics to meet the target allow for an actual number in the range 1,311,000-1,449,000. 

Data Assessment of Performance Measure 3.2.3

The Water and Environmental Programs (WEP) collects data through the Community Programs Application Processing (CPAP) system. CPAP is a nonfinancial system where agency field staff input data about applicants, borrowers, funding, and services provided. The data obligations flow through the 

Rural Utilities Loan Servicing System to the Program Loan Accounting System and through a data server to a data warehouse. 

• Completeness of Data—CF data are based on third quarter data and fourth quarter projections. 

• Reliability of Data—USDA’s data warehouse stores historical information on Department programs and such non-agency data as census 

information. Program data are downloaded to the warehouse every evening from several accounting databases. Data generally are current through 

the previous day. The warehouse provides obligations data, used to measure the number of loans, loan amounts, number of borrowers, and funds 

advanced. 

• Quality of Data—Based on CPAC information, the number of subscribers receiving new or improved water or wastewater service can be 

extrapolated from the data warehouse. The WEP National Office and USDA field offices use data from CPAP, the data warehouse and Department 

accounting systems to review or evaluate the financial, operational, and managerial programs of the utilities serving rural customers. 

Exhibit 30: Homeownership Opportunities Provided 

Fiscal Year 2008 Annual Performance Goals, Indicators, and 

Trends 

2004 2005 2006 2007 

Target Actual Result 

3.2.4 Homeownership opportunities provided 

Guaranteed Loans 31,751 34,251 31,131 32,481 36,363 54,660 

Direct Loans 14,643 11,744 11,041 10,646 10,490 9,474 

Total 46,394 45,995 42,172 43,127 46,853 64,134 

Exceeded 

Numbers previously reported were adjusted for the new methodology. Newly revised numbers still meet original targets. 

Rationale for Met Range: The range of 10 percent is based on the historical variance from the target during the past several years in the number of houses sold in the 

Guaranteed and Direct Single Family Housing Loan Programs. 

• First figure in each column represents guaranteed loans, the second row is direct loans, and the total is listed in the third row. 

• Data assessment metrics to meet the target allow for an actual total number in the range 39,150-47,850 for direct and guaranteed loans combined. 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

78 

Fiscal Year 2008 Annual Performance Goals, Indicators, and 

Trends 

2004 2005 2006 2007 

Target Actual Result 

• Excludes an (estimated) 6,150 hurricane supplemental / natural disaster homeownership opportunities (5,780 guaranteed, 370 direct) and 

homeownership opportunities funded with natural disaster and hurricane supplemental appropriations: FY 2004–2; FY 2005–0; FY 2006–2,475; 

FY 2007–3,554; FY 2008–6,150. 

Data Assessment of Performance Measure 3.2.4

Homeownership data is entered in the Web-based UniFi system. This centralized server application ensures viable data collection. It tracks performance 

and forecasts needs. Information entered into UniFi also uploads nightly into the MortageServ (a.k.a. Fasteller) system. This system obligates funds, 

establishes closed loans, administers escrow accounts, manages defaulted loans, and performs other administrative functions. Brio, a query and 

reporting tool, serves as the interface between the data warehouse and RD staff. 

• Completeness of Data—Homeownership data are actual, final, and complete. 

• Reliability of Data—Homeownership data originate in systems used to obligate funding and are reliable. Data for initial placement of households into 

their own homes are reliable. They are linked directly to homeownership loans maintained in USDA’s financial accounting systems. No adjustments 

are made for later defaults and the resulting loss of homeownership. 

• Quality of Data—Homeownership data are based on loan obligations collected in the Dedicated Loan Origination and Servicing System, and stored 

in USDA’s Data Warehouse. Thus, the data on the number of households are auditable. Data represent the population served based on available U.S. 

census information. 

Exhibit 31: Improving Rural Quality of Life Through Community Facilities 

Fiscal Year 2008 Annual Performance Goals, Indicators, 

and Trends 

2004 2005 2006 2007 

Target Actual Result 

3.2.5 Percentage of customers who are 

provided access to new and/or improved 

essential community facilities 

• Health facilities 

• Safety facilities 

n/a 

n/a 

3.5% 

4.1% 

3.8% 

3.8% 

7.2%1

6.16%1

5.7% 

3.0% 

4.8% 

5.7% 

Met 

1The FY 2007 PAR reported 4.25% and 2.87% as third quarter estimates for Health Facilities and Safety Facilities, respectively. They have been updated 

to reflect the actual percentages. 

Numbers previously reported were adjusted for new methodology. Newly revised numbers still meet original targets. 

Rationale for Met Range: It is a challenge to measure the range of residents served because each grant may vary widely. One grant for a fire engine could 

serve 22,000 people whereas the same grant amount for a hospital could serve 22,000. It is difficult, if not impossible, to estimate with any precision a 

range of residents served. One grant for a fire engine could serve 4,000 people whereas the same grant amount for a hospital could serve 22,000. 

Therefore, USDA would consider its 2008 goal unmet, if CF serves fewer than 5.0 percent of the rural population with new health care facilities and 

provides new fire, rescue, and public safety facilities for less that 2.5 percent of the rural population. 

• Data assessment metrics to meet the target allow for an actual number in the range 5-6 percent for health facilities and the range 2.5-3.5 percent for 

safety facilities. The health facilities component of the measure was 0.02 percent short of meeting met range. The health facilities component of the 

measure exceeded the met range by 2.2 percent. The combined value yields a “met” result. 

Data Assessment of Performance Measure 3.2.5 

CFprogram data are collected by means of two streams of input. The finance office records and reports total loan and grant obligations as of the date of 

obligations. These data are collected as part of the obligation process. Additionally, USDA collects information for management and evaluation purposes. 

Data on delinquency status are reported by the finance office for community facilities direct loans, and by lenders for CF guaranteed loans. 

• Completeness of Data—CF program data are complete and final. 

• Reliability of Data—CF data are entered into GLS by field staff as the program funds are obligated. They also represent the population served based 

on available U.S. census information. Population data served by community facilities are estimates. USDA screens data annually for irregularities. 

Population estimates served by community facilities are based on engineering studies used for the design of new or expanded public utilities systems. 

The Department is developing mapping technologies to improve the determination of service areas for community facilities. 

• Quality of Data—When new programs are authorized, CPAP is used to create data systems that field staff can use to work directly and interactively 

with applicants. Planned system requirements can be developed quickly. CPAP contains a number of edit checks to enhance reliability. The data are 

stored and archived nightly at the data warehouse. This manner of developing system plans greatly enhances data reliability since they are integral to 

program planning. 
ANNUAL PERFORMANCE REPORT 

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Challenges for the Future 

Challenges related to USDA’s electric programs include control of greenhouse gas emissions, addressing State and 

local support for power plant projects, and legal challenges. Escalating construction and fuel-costs continue to cause 

economic uncertainty. The demand for increased energy efficiency and conservation will pose both opportunities 

and challenges. 

Modifications to the Rural Broadband Access Loan and Loan Guarantee Program in the 2008 Farm Bill create 

short-term implementation challenges. Regulations must be revised and telecommunication program staff must 

develop and conduct outreach on the changes. 

More than ever, rural communities must invest in water and wastewater facilities to upgrade aging facilities, meet 

new environmental quality standards and enhance the security of their operations. As communities increase their 

investments in water utilities, they must also manage costs better and set appropriate rates to ensure system 

sustainability. A regional approach to water and waste water service delivery in some rural areas helps address rising 

costs. Underwriting and meeting funding requirements for these larger regional systems will continue to challenge 

utilities programs. 

USDA is committed to assisting critical-access hospitals in planning, designing, and developing financial packages 

for renovations or replacement facilities. These facilities are becoming more complex and expensive. The challenge 

will be to develop a level of expertise that benefits communities the most. 

With few other affordable lending products available for rural families, the demand for USDA’s direct and 

guaranteed housing loans have grown and will continue to grow for the foreseeable future. The Department will be 

challenged to meet the need for rural mortgage funds in times of budgetary constraints. 

USDA will also be challenged by further expected increases in the use of guaranteed housing loans by lenders 

serving rural areas. To meet the increased demand for guarantees without significant increases in overhead, it has 

developed and introduced the GUS. This automated underwriting system reviews applications and provides 

commitments electronically. GUS is designed to help mortgage lenders make informed credit decisions on 

guaranteed rural housing loans. Similar improvements are being studied to streamline the delivery of direct loans. 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

80 

Strategic Goal 4: Enhance Protection and Safety of the Nation’s Agriculture and Food Supply 

OBJECTIVE 4.1: REDUCE THE INCIDENCE OF FOODBORNE ILLNESSES RELATED TO MEAT, POULTRY, AND EGG PRODUCTS IN THE U.S. 

Overview 

Ensuring the safety of the Nation’s food supply requires a strong and robust infrastructure coupled with sound 

science. USDA uses a scientific approach to food safety, incorporating risk analysis critical to combating the everchanging threats to public health. The Department works to reduce foodborne illness through testing, risk 

assessments, partnership with its stakeholders, and science-based policy decisions. 

USDA monitors and enforces Federally regulated establishments’ compliance with its science-based food safety 

system, the Hazard Analysis and Critical Control Point (HACCP) system. The establishments must also follow 

other programs and Sanitation Standard Operating Procedures, procedures an establishment uses to prevent the 

contamination or adulteration of food products. These programs represent USDA’s foundation of preventing and 

controlling contamination of the food supply during slaughter and processing. By placing the responsibility on the 

slaughter or processing facility to implement systems for monitoring and controlling contamination, the 

Department can best use its inspection resources to ensure the safety of the Nation’s food supply. USDA audits onsite systems and practices, and inspects carcasses and product. 

Routine sampling of product for pathogens known to cause serious human illness is a critical element to monitoring 

the effectiveness of the establishments’ HACCP and supporting programs. These pathogens include: 

 Salmonella in broilers; 

 Listeria monocytogenes (Lm) in ready-to-eat (RTE) products; and 

 Escherichia coli (E. coli) O157:H7 in raw ground beef. 

On-site inspectors collect samples and send them for testing to USDA’s field-service laboratories based on a pre-set 

schedule. Sampling allows the Department to monitor how well establishments control food safety through 

HACCP, sanitation and supporting programs. USDA focuses on the percentage of positive tests from all 

establishments and measures the industry’s performance as a whole to form the basis of the Department’s food 

safety performance measures. 

If a positive is detected at a plant, USDA performs a series of follow-up activities. If the Department determines 

that the pathogen’s presence threatens public health and product has not been held, it works with the establishment 

in support of the product’s recall. Finally, the Department performs a food safety assessment to determine why 

contamination occurred and requires the plant to develop an action plan to address any problems. 

Analysis of Results 

The following three measures provide indications that USDA is reducing exposure to pathogens. USDA met the 

performance target of reducing overall public exposure to generic Salmonella from broiler carcasses. The target was 

80 percent of broiler establishments in Category 1 based on data ending August 25, 2008 (USDA categorizes 

slaughter processing plants as Category 1, Category 2, or Category 3 based on their consistency in process control 

Measure 

4.1.1: Reduce overall public exposure to generic Salmonella from broiler carcasses using existing scientific standards 

4.1.2: Reduce the overall public exposure to Listeria monocytogenes in ready-to-eat products 

4.1.3: Reduce the overall public exposure to E. coli O157:H7 in ground beef 
ANNUAL PERFORMANCE REPORT 

81 

for Salmonella reduction. Category 1 represents the most consistent). The Department also met its Healthy People 

2010 goal for Salmonella. Healthy People 2010 is a national effort to promote health and disease prevention. 

USDA also met the performance target of decreasing the percentage of RTE meat and poultry products testing 

positive for Listeria monocytogenes. The FY 2008 target for Listeria monocytogenes was 0.27 percent of cases per 

100,000 people and the actual performance in FY 2008 is 0.19 percent (as of August 31, 2008). The Department 

also exceeded the Healthy People 2010 goal for human illnesses due to Listeria monocytogenes in RTE products of 

0.24 percent of cases per 100,000. 

USDA did not meet the performance measure of reducing the presence of E. Coli in ground beef. The FY 2008 

target was 0.23 percent positive while the performance for E. coli in ground beef was 0.48 percent. Likewise, the 

Department did not meet its Healthy People 2010 goal for illnesses for E. coli in ground beef of 0.32 cases per 

100,000 people. USDA worked with the affected establishments on recalls of contaminated products. It also 

conducted almost 300 Food Safety Assessments in ground beef establishments. The target for E.coli 0157:H7 was 

not met in part due to a change in sampling methodology. In order to better represent the public-health risk 

inherent in high-volume establishments, in January 2008, FSIS began taking into account establishment volume 

when scheduling establishments for E. coli sampling. Higher volume establishments may pose a greater risk to the 

public if a contamination event occurs, because of the potential for greater public exposure to a pathogen. 

Selected Results in Research, Extension, and Statistics 

USDA Updates Foodborne Illness Costs—USDA researchers updated the cost of foodborne illness from E. coli using the 

Centers for Disease Control and Prevention estimate of annual cases and newly available data. Updating the costs to 2006 

dollars, the Department estimates that the annual cost of illness from E. coli was $445 million. This figure includes $405 million for 

premature deaths, $35 million for medical care and $5 million in lost productivity. 

Salmonella Contamination of Tomatoes—In the U.S., tomatoes have become the most implicated vehicle for fresh produceassociated salmonellosis. While contamination appears to originate from the fields where the tomatoes were grown or their 

packing sheds, the contamination route remains elusive. USDA scientists evaluated the role of contaminated soil. They found 

results suggesting that such events as flooding, contaminated compost or fecal contamination by animals could lead to 

subsequent crop contamination, even though time may pass between the contamination event and planting. 

Exhibit 32: Pathogen Reduction (Food Inspection) 

Fiscal Year 2008 Annual Performance Goals, Indicators, and 

Trends 

2004 2005 2006 2007 

Target Actual Result 

4.1.1 Reduce overall public exposure to generic 

Salmonella from broiler carcasses using 

existing scientific standards 

n/a n/a 45% of 

Category 1 

Industry 

71% of 

Category 1 

Industry 

80% of 

Category 1 

Industry 

80% of 

Category 1 

Industry 

Met 

4.1.2 Reduce the overall public exposure to Listeria 

monocytogenes in ready-to-eat products 

n/a 0.28% 0.24% 0.23% 0.27% 0.19% Met 

4.1.3 Reduce the overall public exposure to E. coli

O157:H7 in ground beef 

0.04% 0.21% 0.40% 0.28% 0.23% 0.48% Unmet 

FY 2008 Data reflects the volume adjusted percent positive rate, better estimate population exposure to pathogens, which may differ from the non volume adjusted percent 

positive rates reported in prior years. 

Rationale for Met Range: This measure targets reducing human foodborne illness rates from E. coli O157:H7 in ground beef. USDA’s FY 2013 goal is 0.17 cases per 

100,000. USDA met its Healthy People 2010 goal for E. coli illnesses from ground beef as of FY 2007.The Department aggressively set its FY 2013 goal at 50% under the 

goal. To reach its FY 2013 goal, USDA has set its FY 2008 performance objective as 0.27 cases per 100,000 or a volume adjusted percent positive rate of 0.23. A lower 

number of cases indicates better performance. 

• 4.1.1: Data assessment metrics to meet the target range is 80% of industry in Category 1. 

• 4.1.2: Data assessment metrics to meet the target range is 0.27 cases per 100,000. 

• 4.1.3: Data assessment metrics to meet the target range is 0.23 cases per 100,000. 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

82 

Data Assessment of Performance Measures 4.1.1, 4.1.2 and 4.1.3 

Through consultations with our stakeholders, USDA continuously examines the Nation’s changing food safety system and practices, and articulates a 

long-term view in regard to the Department’s performance and the benefits to public health. The Department also monitors its performance against the 

Healthy People 2010 goals for these three critical pathogens -- Salmonella, Lm and E. coli O157:H7. The Department developed an attribution model to 

determine what percentage of all Salmonella, Lm, and E. coli O157:H7 illnesses result from Department-regulated contaminated products. 

• Completeness of Data—Results are based upon USDA’s laboratory results analyzed as of August 31, 2008, for the selected ready-to-eat products 

at regulated establishments. The results provided as of August 31, 2008, are the best available indication of the FY 2008 fourth quarter results. 

Quarterly and annual data are based on sampling at a range of establishments from very small to large.

• Reliability of Data—The data are reliable because it is based on testing and verification from the Department’s field service laboratories for regulated 

establishments. Each positive sample is subjected to highly specific verification testing. The primary goal of these sampling programs is to monitor 

how well each establishment is maintaining control of food safety through its HACCP, sanitation and supporting programs. The percent of these 

routine, scheduled tests that return a positive (the percent-positives) result across all of the establishments is an important measure of the 

performance of the industry as a whole to form the basis of the Department’s food safety performance measures. If the presence of the pathogen 

represents a threat to public health and product has not been held, we work intensely with the establishment in support of their recall of the affected 

product. Finally, the Department performs a Food Safety Assessment to identify the underlying causes of the breakdown in the plant’s food safety 

control programs, and requires an action plan from the plant to address these problems. Performance shortfalls may occur due the Department 

consistently setting aggressive goals to measure its performance in food safety and its focus on verifying each plant’s food safety system. In addition, 

it has redesigned its sampling and test program to target the establishments that represent the highest risk. 

• Quality of Data—The volume adjusted data show that these measures historically correlated with the Centers for Disease Control and Prevention 

foodborne illness outbreak data. 

Challenges for the Future 

The Department will continue to verify the adequacy of each establishment’s HACCP system and supporting 

programs and their conformance with those programs, and to monitor the pathogen levels in product destined for 

consumers. Particular emphasis will continue to be placed on E. coli O157:H7. This systemic approach involves all 

parties in the production chain, through slaughterhouses, processors, retailers, and consumers. The Department will 

continue to strive in the multitude of activities necessary to protect the Nation’s supply of meat, poultry, and 

processed egg products. 

OBJECTIVE 4.2: REDUCE THE NUMBER AND SEVERITY OF AGRICULTURAL PEST AND DISEASE OUTBREAKS 

Overview 

USDA provides a secure agricultural production 

system and healthy food supply for U.S. consumers. 

This is done by reducing the number and severity of 

pest and disease outbreaks by: 

 Safeguarding animal and plant resources against the introduction of foreign pests and diseases; 

 Detecting and quickly responding to new invasive species and emerging agricultural health situations; 

 Eradicating or managing existing agricultural pests and diseases and wildlife damage; and 

 Developing and applying more effective scientific methods. 

The Department has several programs that focus on this goal each with its own set of performance measures. As an 

indicator of success in FY 2008, one performance measure has been selected to represent the range of activities 

conducted by its programs–the Animal Health Monitoring and Surveillance (AHMS) Program. It evaluates and 

Key Outcome 

A Secure Agricultural Production System and Healthy Food Supply 

Measure 4.2.1: Number of significant introductions of foreign animal diseases or pests that spread beyond the original area of introduction and cause severe economic or environmental damage, or damage to the health of 

animals or humans 
ANNUAL PERFORMANCE REPORT 

83 

enhances disease control and eradication programs. AHMS monitors surveillance activities to detect incursions of 

foreign and emerging animal diseases. AHMS also monitors international disease trends and threats, and provides 

timely and accurate animal health information. This work is designed to prevent the introduction of foreign animal 

diseases. If such diseases enter the country, AHMS works to prevent their spread. The program seeks to minimize 

economic and environmental damage, and threats to the health of animals or humans. 

Analysis of Results 

USDA met its target related to animal disease outbreaks in FY 2008. USDA developed animal-health monitoring 

and surveillance systems to ensure success in future years. These two systems, the National Animal Identification 

System (NAIS) and the Comprehensive Surveillance System (CSS), are discussed below. 

NAIS is a voluntary, cooperative Federal, State, and industry program designed to enhance the response to highly 

contagious diseases, especially those that can be transmitted to humans. A fully implemented system will include a 

48-hour “trace back” and a “trace forward” capability. Trace back will allow agricultural and public health officials 

to trace the origin of sick animals and determine if other animals have come into contact with the infected ones. 

NAIS provides for the registration of animal premises, the identification of animals by standardized devices, and 

the development of information systems for tracing animal movements. 

By the end of June, NAIS had 471,299 premises under registration. USDA authorized 7 manufacturers of animalidentification devices to produce 15 devices for use in the NAIS program. The Department has endorsed 

technology standards published by the ISO. USDA has developed a single information portal, called the Animal 

Trace Processing System (ATPS). This system will enable State and Federal animal health officials to obtain 

information from Animal Tracing Databases (ATDs). Currently, State and private ATDs are coming online and 

being integrated with the ATPS portal. 

To uncover contaminations, USDA uses CSSs. The Department made progress on CSS components for classical 

swine fever (CSF) and pseudorabies virus (PRV). (CSF is a highly contagious virus that affects swine. PRV is a 

contagious herpes virus that causes reproductive and respiratory problems, and occasional deaths in swine.) USDA 

approved a PRV surveillance plan that will be implemented in FY 2009. Leading up to this milestone, 14 slaughter 

plants participated in the Department’s Market Swine Surveillance System. USDA sampled swine slaughtered at 

these plants for Porcine Reproductive and Respiratory Syndrome (PRRS). PRRS causes reproductive failure in adult 

female pigs, reduced-growth and pneumonia in nursing pigs, and premature death in swine herds. The disease is an 

emerging threat to domestic swine populations. The Department also used the Market Swine Surveillance Stream 

to develop data on other swine diseases. 

Additionally, the Department has enhanced and maintained the capability of its personnel. These employees are 

charged with responding to the threat of a catastrophic animal disease outbreak. USDA conducted a training-needs 

analysis to assess their knowledge, skills, and abilities to respond to animal-health emergencies. This analysis will be 

used to identify gaps to be closed. 

Two of the most important potential emergencies looming are Highly Pathogenic avian influenza (HPAI), or “bird 

flu,” and foot-and-mouth disease (FMD). HPAI is an extremely infectious and fatal form of the bird flu for 

chickens. FMD is a severe, highly contagious viral disease of cattle and swine. Should an outbreak of either of these 

two occur, USDA will need to collaborate with State and local organizations to respond appropriately. The 

Department revised its national emergency response objectives and plans for these two diseases. The emergency 

plans provide specific guidelines, actions, timelines, and checklists to help Federal, State and local responders in the 

event of an outbreak. USDA conducted a successful National Veterinary Stockpile (NVS) deployment exercise with 

the State of California. The NVS exists to augment State, and local resources. Under NVS, the Department will 

deploy sufficient amounts of animal vaccine, antiviral, and therapeutic products within 24 hours of a serious 

outbreak. 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

84 

Determining the performance result involves: (1) routine monitoring and surveillance of world animal health 

problems; (2) investigating reports identifying any new introduction of a significant foreign animal disease (FAD); 

testing to determine the extent of spread; and (3) evaluating the severity of the damage. 

(1) Notice of the need to investigate a FAD may come from a wide variety of sources. USDA veterinarians observe thousands of 

animals daily for FADs while conducting surveillance and eradication activities for the agency’s domestic animal 

disease programs. USDA also provides specialized FAD training to approximately 60,000 veterinarians working in 

private practice, State Governments and universities through its National Veterinary Accreditation Program. These 

veterinarians notify the Department when they observe an animal(s) showing signs of a FAD. All reported animals 

are quarantined and samples are submitted to the National Veterinary Services Laboratories (NVSL). The National 

Animal Health Monitoring System (NAHMS) conducts planned surveys of diseases likely to impact production 

and marketing. Specific causes of loss by age group within each commodity are gathered. Besides conducting 

domestic surveys, USDA also deploys animal health professionals overseas to collect surveillance information on 

FADs to prevent them from entering the United States. 

(2) Foreign Animal Disease Investigations and Testing: USDA set a target of 700 FAD investigations for FY 2008. When a 

disease is reported and confirmed, area-wide testing is conducted around the foci of infection. Investigators use 

statistically significant diagnostic samples. The samples are tested in USDA or USDA-approved laboratories. 

Testing data are recorded in the Emergency Management Response System (EMRS), NAHMS and the National 

Animal Health Reporting System. All susceptible animals within an appropriate distance of the foci of infection are 

tested. The appropriate area for testing is determined using data regarding disease agents and how those agents are 

spread, either through the air or by biological or mechanical means. Investigators also consider the anticipated 

expectations of trading partners regarding testing and surveillance. The anticipated spread rate is based on weather 

conditions and movements or contacts on and off of the affected premises. Animals that test positive or have 

known exposure are retested until the quarantine is removed or they are destroyed. If there are limited numbers of 

animals around the foci of infection, the testing area may be expanded to ensure that no animals are infected. This 

move will allow investigators to perform trace-out investigations and test all animals from the foci herd. Sampling 

focuses on clinical suspects, fallen stock or casualty slaughter. Censuses are completed or requests made that the 

public report any sick animals meeting a particular case description. Sampling data is entered into NVSL databases, 

EMRS and National Animal Health Laboratory Network (NAHLN) databases. NVSL validates all samples found 

positive by other network laboratories. 

(3) Reporting and Summarizing Results: Veterinarians on USDA’s emergency management staff receive data and analyze 

them. They apply criteria to determine if the introductions are significant and have spread. Introductions of agents 

listed by the World Organization for Animal Health and considered to be foreign to the United States are reported 

to that body. 

Selected Results in Research, Extension, and Statistics 

Leading the Way to Prevent Avian Influenza—The threat of a pandemic outbreak of the avian influenza H5N1 continues. The 

emergence of avian influenza costs the commercial poultry industry millions of dollars annually. These events consist of the low 

pathogenic strain of the virus which does not threaten humans. Its continued presence in the poultry industry increases the 

likelihood of a shift to the high pathogenic strain. The National Research Initiative Avian influenza Coordinated Agricultural Project 

brought together 19 States and 23 institutions to tackle this problem. In only three years, the program has made considerable 

progress in preventing and controlling virus in the U.S. The program has made considerable progress in preventing and 

controlling virus in the United States. Two new internally available diagnostic tests are available. Two training programs share the 

latest information with poultry industry and game bird producers. The team developed equipment disinfection methods to 

inactivate the virus. The project has succeeded in determining interspecies viral transmission and pathogenesis involving wild 

aquatics to domestic poultry, swine, and turkeys. The team also identified four major wild bird migratory flyways over the United 

States. All of these steps will provide further protection to mitigate incidences before they become national problems. 
ANNUAL PERFORMANCE REPORT 

85 

Information System Saves Crops and Money—USDA funds the Integrated Pest Management (IPM) Pest Information Platform 

for Extension and Education (PIPE). This monitoring and early-warning system advises farmers and others of the status of Asian 

Soybean Rust (SBR). SBR, a recently discovered and devastating soybean disease, entered the continental U.S. in 2004. Two 

years later, IPMPIPE focused on soybean rust and aphids. It was expanded in 2007 to include pests and diseases of all other 

legume and pulse crops. The information provided by this highly trusted and widely adopted system (more than a million hits in 

July 2005) reduced production costs for U.S. soybean farmers by as much as $299 million. It also minimized non-target exposure 

of pesticide applicators and the environment. 

Saving the Nation’s Pollinators—USDA learned that queen bees who mate with multiple males produce colonies with genetic 

diversity. This diversity improves resistance to microbial diseases in their colonies. It also allows these colonies to more effectively 

survive winter and produce swarms the following season because of improved fitness. This investigation shows the tremendous 

need to provide virgin queens with a large and genetically diverse population of drones for mating. Queens that cannot find 

numerous and diverse mates will produce colonies vulnerable to microbial diseases. 

USDA Area-wide biological control program to manage Melaleuca quinquenervia in Florida is successfully completed—

The weedy tree Melaleuca is one of the Florida Everglades ecosystem’s worst enemies. The tree causes almost $168 million in 

environmental losses annually. USDA created the Area-wide Management and Evaluation of Melaleuca project. This project 

promotes Melaleuca management and integrates biocontrol into other current management strategies. The project deployed three 

highly effective biocontrol agents in the form of self-perpetuating and self-dispersing insects. Surveys have shown that 85 percent 

of program participants now use the biocontrol insects. Melaleuca has almost disappeared from public lands because of this 

effort.

Exhibit 33: Reduce the Number and Severity of Pest and Disease Outbreaks

Fiscal Year 2008 Annual Performance Goals, Indicators and 

Trends 

2004 2005 2006 2007 

Target Actual Result 

4.2.1 Number of significant introductions of foreign 

animal diseases or pests that spread beyond the 

original area of introduction and cause severe 

economic or environmental damage, or damage to 

the health of animals or humans 

0 0 0 0 0 0 Met 

Rationale for Met Range: These foreign animal diseases could have significant economic impact and animal health consequences. USDA seeks to prevent the spread of 

every single one. 

• Data assessment metrics to meet the target is 0 introductions.

Data Assessment of Performance Measure 4.2.1 

• Completeness of Data—The data are complete when the scheduled testing is finished; the samples are analyzed and the quarantined animals are 

tested and released. The cutoff for the data is set at one month before the reporting date. 

• Reliability of Data—The data are considered reliable when USDA’s Deputy Administrator of Veterinary Services has reviewed and approved them. 

• Quality of Data—The issues related to collection and reporting of performance information are described above. 

Challenges for the Future 

USDA faces many challenges in its efforts to reduce the number and severity of pest and disease outbreaks. Every 

year, the flow of animals, plants, and host material from abroad increases. This growth creates new pathways into 

the country. The social and biological environment in which Federal efforts must be coordinated is becoming more 

complex every year. Agencies must stay informed about new technologies. For each of these challenges, USDA has 

developed strategies. One of them is to monitor and survey the land in cooperation with States and industry. 

Another is to gather and update pest and disease information world wide. When learning of a possible threat, the 

Department conducts science-based, early-detection, and rapid response efforts. It creates and enforces regulations 

to prevent the entry and spread of invasive species. USDA also develops new networks and tools in collaboration 

with States, universities, and the private sector. 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

86 

Overview 

The National Animal Diagnostic Network and Plant 

Diagnostic Network Centers ensure timely disease detection. 

They also maintain a nationally accessible database of pests 

and diseases. This database allows USDA to identify new 

pests and diseases, and take all necessary steps should an 

outbreak occur. Measuring improvements in the capabilities of plant and diagnostic laboratories serves as a 

representative measure for assessing performance in these fields of scientific research. 

Analysis of Results 

The performance target was met. Trend data show a steady increase in the number of plant and animal diseases the 

networks can detect. Additionally, USDA continues to improve the capabilities of plant and diagnostic laboratories. 

In FY 2008, USDA added Potato Cyst Nematode to its list of plant and insect diseases for which it has developed 

detection criteria. Potato cyst nematode, a major potato-crop pest, can cause up to 80 percent yield loss. It joins 

soybean rust, sudden oak death, Ralstonia stem rot, plum pox virus, pink hibiscus mealybug, potato wart, and 

huanglongbing (citrus greening) on the detection criteria list. 

The Department also has animal disease-detection criteria for nine high-consequence diseases. Scientists have 

added Rift Valley Fever to this list. This fever-causing disease affects livestock (including cattle, buffalo, sheep, and 

goats) and humans. NAHLN personnel participated in training to develop the diagnostic capability for this disease. 

NAHLN is part of a national strategy to coordinate the Nation’s Federal, State, and university laboratory resources. 

USDA agencies partner with State agencies and universities to achieve a high level of agricultural biosecurity. This 

process is completed through the early detection, response and containment of outbreaks of invasive pests and 

diseases. The diagnostic laboratories, adequately staffed and stocked with cutting-edge technology, are essential to 

accomplishing this mission. 

Exhibit 34: Ensure the Capabilities of Plant and Diagnostic Laboratories are Improved 

Fiscal Year 2008 

Annual Performance Goals, Indicators and Trends 

2004 2005 2006 2007 

Target Actual Result 

4.2.2 Improve the capabilities of animal and plant diagnostic 

laboratories: 

• Specific Plant diseases labs are prepared to detect 

3 5 6 7 8 8 Met 

• Specific Animal diseases labs are prepared to detect 6 7 8 8 9 9 Met 

Data Assessment of Performance Measure 4.2.1 

• The National Plant Diagnostic Network (NPDN) and the National Animal Health Laboratory Network (NAHLN) work to detect and diagnose disease 

outbreaks. They study a number of high-consequence pests, bacterial, parasitic and vital pathogens, and disease threats. Their subjects affect 

animal, plant and human health, and impact the national economy. 

• Completeness of Data—The data are based on actual information reported by NPDN and NAHLN. 

• Reliability of Data—The data are considered reliable. 

• Quality of Data—Data are projected based on historical performance. The target information uses data dependent upon the baseline projections. 

Any inaccuracies in the projections would impact the accuracy of the value. The following five dimensions are assessed when a high consequence 

disease/pest qualifies as one that NPDN or NAHLN are prepared to detect and diagnose. 

Key Outcome 

Improve Animal and Plant Diagnostic Laboratory 

Capabilities 

Measure 4.2.2 Improve the capabilities of animal and plant diagnostic laboratories 
ANNUAL PERFORMANCE REPORT 

87 

− Is the disease/pest a significant threat to animal, plant or human health and/or impact the national economy? 

− Is there a valid diagnostic test or other means of reliable diagnosis for the disease/pest? 

− Does the laboratory network have the capability/capacity to perform the valid diagnostic test or other means of reliable diagnosis? 

− Does the network have the partnerships in place to generate the samples required to detect/diagnose the disease/pest? 

− Does the network have the partnerships and/or autonomous capacity in place to provide necessary outreach regarding the disease/pest? 

• USDA assesses the progress/qualification on these five dimensions based on feedback from its partners and stakeholders. This feedback is 

generated through formal progress reports, meeting minutes, and less formal one-on-one correspondence. 

Challenges for the Future 

Future challenges to improving laboratory capabilities include making non-Federal funding available. This funding 

could be used to expand laboratories in each State, increase the number of screened diseases and their detection 

criteria, and ensure that more strategically located laboratories are prepared to deal with geographically relevant 

disease threats. Improving plant laboratory quality assurance and first-detector training also poses a challenge. Plans 

are underway to build an advanced quality-assurance system. Improved first-detector training will improve 

laboratory sample quality and speed initial detection of high-consequence pathogens. 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

88 

Strategic Goal 5: Improve the Nation’s Nutrition and Health 

Nutrition is the link between agriculture and the Nation’s health. USDA’s leadership of the Federal nutrition 

assistance programs made a healthier diet available for millions of children and low-income families. Additionally, 

the Department’s cutting-edge nutrition promotion efforts harnessed interactive technologies to motivate all 

Americans to make positive dietary behavioral changes, in line with the Dietary Guidelines for Americans and the 

President’s HealthierUS initiative. The Guidelines provide authoritative advice about how good dietary habits can 

promote health and reduce risk for chronic diseases. The HealthierUS initiative’s goal is to help Americans live 

longer, better, and healthier lives. 

Key FY 2008 accomplishments include: 

 Promoting Access to the Food Stamp Program (FSP)—FSP–which was renamed the Supplemental Nutrition Assistance 

Program (SNAP) through the 2008 Farm bill–is the Nation’s largest nutrition assistance program, serving more 

than 28 million people monthly. The most current information on the participation rate showed that in 2006, 

67 percent of those eligible for FSP participated compared with 54 percent in 2001; 

 Promoting the MyPyramid Food Guidance System—MyPyramid.gov’s Web-based educational tools help Americans 

assess and personalize their diet and physical activity plans. FY 2008 marked the debut of the MyPyramid Menu 

Planner. The planner is designed to help individuals and family nutrition “gatekeepers” plan more healthful 

menus and determine daily, weekly, and monthly consistency with the recommendations of the Dietary 

Guidelines for Americans and the MyPyramid Food Guidance System. Consumers continue to respond 

enthusiastically to this educational approach. They accessed MyPyramid.gov and used other nutrition–

interactive, Web-based tools more than 5 billion times; and 

 Continuing to Ensure That Food Stamp Benefits Are Issued Accurately—In the most current data available, the FSP 

payment accuracy rate for FY 2007 reached a record-high 94.4 percent. That number reflects effective 

partnerships with State administering agencies. It also shows the extensive use of policy options to streamline 

program administration while improving access for working families. 

OBJECTIVE 5.1: ENSURE ACCESS TO NUTRITIOUS FOOD 

Overview 

USDA’s commitment to the nutrition assistance programs 

represents the core of the Nation’s effort to improve food 

security and reduce and prevent hunger. The Department 

looks to ensure that all eligible Americans who wish to 

participate can receive program services easily and with dignity and respect. The programs’ solid performances in 

FY 2008 reflect their fundamental strengths. They also demonstrate USDA’s efforts to promote access and improve 

service to its clients in cooperation with State partners. 

Analysis of Results 

As program participation is voluntary, projections are based on economic and other factors that impact the likely 

behavior of eligible populations. An analysis of the most recent information available follows. 

Food Stamp Program—The program served approximately 28 million participants monthly, an increase of about 

7.7 percent from FY 2007. USDA executed a range of efforts to support and encourage food stamp participation, 

including: 

Key Outcome 

Reduce hunger and improve nutrition 

Measure 5.1.1: Participation levels for the major Federal nutrition assistance programs 
ANNUAL PERFORMANCE REPORT 

89 

 Securing key improvements to food stamps in the 2008 Farm Bill. These improvements include Administration 

proposals to exclude the value of retirement and educational savings accounts, military combat pay, and all 

dependent care expenses from food stamp eligibility determination, which increased access for some low-income 

families; 

 Efforts with States to develop outreach strategies. More than 60 percent of States have formal outreach plans or 

other documented outreach activities in place; 

 Support for innovative State practices to promote access by simplifying the application process. The most 

current data show that 21 States have Internet-based application filing. 25 States allow recertification interviews 

to be done by telephone while another 18 states have call centers. Additionally, nine states have waivers to allow 

initial certification interviews to be done by telephone; and 

 The debut of a new publication, Eat Right When Money’s Tight. The publication offers low-income families tips 

on thrifty shopping, meal preparation, and the availability of food stamps, and other nutrition-assistance 

programs. It serves as a critical tool for low-income families facing rising food costs. 

USDA also measures the number of people eligible for the program to determine the rate at which eligible people 

are participating. The most recent data show that in 2006, 67 percent of those eligible for FSP participated, a 

substantial increase from the previous year. Additionally, participants received 83 percent of all food stamps 

available if every eligible person participated. This number shows that FSP is effectively reaching those most in 

need. 

National School Lunch Program (NSLP)—Program participation levels reached 31.5 million in FY 2008, up slightly from 

FY 2007. This number continues the trend of increases in recent years. More than 100,000 schools and residential 

child-care institutions used NSLP in FY 2008. 

School Breakfast Program (SBP)—Program participation levels reached 10.8 million in FY 2008, up more than 6 

percent from FY 2007. This number continues a trend of increases over the last several years. More than 85,000 

institutions used SBP in FY 2008. USDA continues to support and encourage program participation in FY 2008 

by: 

 Promoting SBP through outreach activities and materials; 

 Working with organizations and partners to develop strategies for program expansion; and 

 Developing school breakfast outreach materials for schools and parents.

Trend data also indicate that the proportion of all children enrolled in schools who participate in SBP has risen 

slowly but steadily in recent years. This growth reflects USDA’s continuing efforts to encourage schools to operate 

the program. 

Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) —Approximately 8.7 million participants 

received WIC benefits. USDA continued to support and encourage WIC participation, and improve benefits and 

services by: 

 Maintaining the Administration’s commitment to ensure adequate funding to support participation by all 

eligible people who seek services; and 

 Completing a historic update to the standards for WIC food benefits – the first major changes to the WIC food 

packages since 1980. These new packages will be aligned with the 2005 Dietary Guidelines for Americans and 

infant feeding practice guidelines of the American Academy of Pediatrics. These important steps will keep the 

program optimally aligned to meet today’s nutrition needs. 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

90 

Selected Results in Research, Extension, and Statistics 

Healthier Food Research—Researchers investigated the effects of post-harvest treatments and storage conditions on 

antioxidant availability in wheat-based food ingredients. They also studied the effects of food-processing conditions on the 

availability/bioavailability of wheat antioxidants in functional food, specifically whole-wheat pizza crusts. The research findings 

suggest the availability of health beneficial antioxidants in wheat-based functional foods may be enhanced by optimizing postharvest treatments, storage conditions and food formulation, and processing techniques without significant extra effort or cost. 

These findings provide a scientific basis to promote the production and consumption of wheat-based functional foods in general. 

Household Food Security in the U.S.—Food security for a household means that its members have enough food for an active, 

healthy life. To inform policymakers and the public about the extent to which U.S. households consistently have economic access

to food, USDA publishes an annual statistical report on household food security in the U.S. The report and its underlying data are 

widely used by Government agencies, the media and advocacy groups. The groups use the data to monitor the extent of food 

insecurity in this country, progress toward national objectives and performance of USDA’s food-assistance programs. Results 

showed that 89 percent of American households were food secure throughout 2006. The remaining 11 percent were food 

insecure at least some time during that year. 

Offset of obesity transmission from mother to infant—The incidence of obesity among children has tripled in the past few 

decades. Additionally, the role of genes has been hotly debated because not enough time has passed for the genes to have 

changed. USDA scientists showed in a mouse model that the genetic tendency for obesity increases through successive 

generations. They add that the rise can be prevented by increasing a combination of the dietary nutrients folic acid, vitamin B12, 

betaine, and chlorine. The fundamental change was established as epigenetic rather than genetic, meaning that instead of 

changes in the genetic make-up, other inherited mechanisms affected by diet silenced the gene causing obesity. These results 

offer an explanation of the inherited tendency to obesity and a way in which proper diet can offset that predisposition.

Exhibit 35: Improve Access to Nutritious Food 

Fiscal Year 2008 Annual Performance Goals, Indicators, and 

Trends 

2004 2005 2006 2007 

Target Actual Result 

5.1.1 Participation levels for the major Federal 

nutrition assistance programs (millions per 

month): 

• Food Stamp Program Avg. (Monthly) 23.9 25.7 26.7 26.5 27.8 28.1 

• National School Lunch Program Avg. 

(Daily) 29.0 29.6 30.1 30.5 31.6 31.5 

• School Breakfast Program Avg. (Daily) 8.9 9.3 9.8 10.2 10.8 10.8 

• WIC Program (Monthly) 7.9 8.0 8.1 8.3 8.5 8.7 

Met 

As of May 31, 2008. 

• Rationale for Met Range: Thresholds for 5.1 reflect the margin of error in forecasts of future participation. For food stamp participation, results from 

2 independent assessments suggest that predictions of the number of food stamp participants are accurate to within plus-or-minus 7.5 percent (on 

average). The threshold range for the school meals and WIC participation levels are 5 percent and 3 percent respectively. This reflects the pattern of 

variance between actual and target performance for both programs over the past five years.

• Data assessment metrics to meet the target allow for an actual number in the range (in millions) 25.7-29.9, 70 for the Food Stamp Program, 30.0-

33.2 for the National School Lunch Program, 10.3-11.3 for the School Breakfast Program and 8.2-8.8 million for the WIC program.

Data Assessment of Performance Measures 5.1.1 

Participation data are drawn from USDA administrative records. State agency reports are certified accurate and submitted to regional offices. There, 

they are reviewed for completeness and consistency. If the data are acceptable, the regional analyst posts them to the National Data Bank (NDB) 

Preload System. NDB is a holding area for data review prior to release. Otherwise, regional-office personnel reject the report and the State agency is 

contacted. Data posted by regional personnel into NDB are reviewed at USDA. If data are reasonable and consistent with previous reports, they will be 

downloaded to NDB for public release. If not, USDA works with regional offices and States to resolve problems and inconsistencies. This process of 

review and revision ensures that the data are as accurate and reliable as possible. 
ANNUAL PERFORMANCE REPORT 

91 

Fiscal Year 2008 Annual Performance Goals, Indicators, and 

Trends 

2004 2005 2006 2007 

Target Actual Result 

• Completeness of Data—Figures for FSP and WIC participation represent 12-month fiscal year averages. Figures for NSLP and SBP are based on 

nine-month (school year) averages. Participation data are collected and validated monthly before being declared annual data. Reported estimates 

are based on data through April 2008, as available July 25, 2008. 

• Reliability of Data—The data are highly reliable. Participation-data reporting is used to support program financial operations. All of the data are 

used in published analyses, studies and reports. They also are used to support dialogue with and information requests from the Government 

Accountability Office (GAO), the Office of Inspector General (OIG) and the Office of Management and Budget. 

• Quality of Data—As described above, the data used to develop this measure are used widely for multiple purposes, both within and outside USDA.

The measure itself is reported in stand-alone publications as an important, high-quality indicator of program performance. 

Challenges for the Future 

Studies and analyses show that there continue to be large numbers of eligible people who do not participate in 

Federal nutrition assistance programs. Many may not be aware of their eligibility. Thus, efforts to improve access to 

and promote awareness of these programs are an ongoing challenge. Additionally, USDA must seek improvements 

in policy and operations to make these programs easier to apply. 

The quality of program delivery by third parties—hundreds of thousands of State and local Government workers 

and their cooperators—is critical to USDA efforts to reduce hunger and improve nutrition. USDA’s ongoing 

efforts in partnership with these entities must always focus on customer service, ease of access to benefits, and 

efficiency. 

The Department and its delivery partners sustained effective program access in FY 2008. USDA saw greater-thantargeted participation in FSP and the WIC. The latter program provides Federal grants to States for supplemental 

foods, health care referrals, and nutrition education for low-income pregnant, breastfeeding and non-breastfeeding 

postpartum women, and to infants and children up to age five found to be at nutritional risk. SBP posted expected 

levels of average monthly participation in the States. SBP provides cash assistance for States to operate nonprofit 

breakfast programs in schools and residential childcare institutions. The NSLP saw slightly lower-than-targeted 

(but well within expected performance) average participation. NSLP provides nutritionally balanced, low-cost or 

free lunches to children each school day. 

OBJECTIVE 5.2: PROMOTE HEALTHIER EATING HABITS AND LIFESTYLES 

Overview 

Good nutrition and physical activity are vital to reducing the 

risk of death or disability from a wide range of chronic, dietrelated illnesses. USDA uses Federal nutrition policy and 

nutrition education to provide scientifically based information 

about healthful diets and lifestyles. 

The Dietary Guidelines for Americans, developed jointly by USDA and the Department of Health and Human 

Services, provide advice about food choices that promote health and prevent disease. The former’s MyPyramid food 

guidance system (mypyramid.gov) provides educational tools to help Americans take the necessary “Steps to a 

Healthier You.” These steps offer a wide range of cutting-edge information tools, including a personalized eating 

plan. 

Key Outcome 

Promote More Healthful Eating and Physical Activity 

across the Nation 

Measure 5.2.1: Application and usage level of nutrition guidance tools 

 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

92 

USDA uses partnerships and “information multipliers” to maximize the reach and impact of its interventions, both 

within Federal nutrition-assistance programs and the general public. These information multipliers include 

shopkeepers who post public-service messages in their shops and school teachers who teach their students about 

nutrition. 

Analysis of Results 

To meet the needs of the general population, USDA continued its leadership role in the promotion of nutrition 

guidance through educational tools designed to motivate people to live healthier: 

 Distributing more than three billion pieces of nutrition guidance materials via the Web and print. Additionally, 

registrations continue to increase for the MyPyramid Tracker. MyPyramid has averaged more than two million 

active registrations since 2005; 

 Launching a groundbreaking, collaborative effort to magnify the communication of dietary and physical activity 

guidance messages. The new Partnering with MyPyramid: Corporate Challenge showcases the role of various 

industries as partners with Government to encourage healthier eating habits and more physical activity among 

families. The challenge is designed to empower nutrition gatekeepers by providing easy-to-apply guidance for a 

healthy lifestyle. It also provides information to help them make healthy food choices for themselves and their 

families where they prepare foods, work, play and buy groceries; and 

 Unveiling the MyPyramid Menu Planner. The online menu planner shows whether a given individual’s diet is 

balanced and consistent with the Dietary Guidelines for Americans. It also advises ways for individuals to learn 

and adjust their diets to meet the dietary recommendations. The planner tracks an individual’s diet and helps 

that individual plan meals. 

Additionally, the Department advanced a number of important initiatives to promote healthy diets in nutrition 

assistance programs. Key accomplishments include: 

 Continued use of nutrition education in the Food Stamp Program to promote healthy food choices and 

physically active lifestyles. One educational tool includes the popular Loving Your Family, Feeding Their 

Future. This comprehensive nutrition education intervention, available in English and Spanish, is for lowincome people of limited literacy. The tool is designed to motivate its users to improve their families’ eating and 

physical activity behaviors; 

 Expanding and improving the HealthierUS Challenge. This program encourages schools to take a leadership role 

in helping students make healthy eating and lifestyle choices. The challenge establishes guidelines for schools 

that promote healthy nutrition. USDA recently announced new HealthierUS criteria that have been updated 

and revised to reflect the Dietary Guidelines for Americans. The Department also developed a new Gold Award of 

Distinction to recognize schools that exceed the regular requirements. USDA recognized more than 90 schools 

through the challenge this year; 

 Engaging an expert panel to recommend updates to requirements for school meal programs. The updates were 

based on the Dietary Guidelines for Americans and related nutrition requirements; and 

 Awarding a grant to the National Academies’ Institute of Medicine to support the review of the dietary 

reference intakes for vitamin D and calcium. The Dietary Guidelines Advisory Committee recognized these two 

nutrients, considered vital for a healthy diet, as a concern for the specific population groups. 

Selected Results in Research, Extension, and Statistics 

EFNEP Continues to Yield Valuable Results for Participants—The Expanded Food and Nutrition Education Program (EFNEP) 

is designed to assist limited resource audiences in acquiring the knowledge, skills, attitudes and behavioral changes necessary

for nutritionally sound diets. EFNEP continues to be highly effective. Ninety-one percent of adult participants improved their 

dietary intake, 88 percent of these participants improved at least one nutritional practice and 83 percent reported that they 

improved at least one or more food resource management practice. Seventy-one percent of youth EFNEP participants now eat a 
ANNUAL PERFORMANCE REPORT 

93 

variety of foods, 71 percent of the youth increased their knowledge of essentials of human nutrition and 64 percent of youth 

respondents improved practices in food preparation and safety. 

Could Behavioral Economics Help Improve Diet Quality for Nutrition Assistance Program Participants?—This study uses 

behavioral economics, food marketing and psychology to identify possible options for improving the diets and health of 

participants in Federal food-assistance programs. Findings from behavioral and psychological studies indicate that people 

regularly and predictably behave in ways that contradict some standard assumptions of economic analysis. Recognizing that 

consumption choices are determined by factors other than prices, income and information, the study shows that different 

strategies influence consumers’ food choices. These strategies expand the list of possible ideas for improving the diet quality and 

health of participants in USDA’s food-assistance programs.

Exhibit 36: Promoting Healthier Eating Habits and Lifestyles 

Fiscal Year 2008 Annual Performance Goals, Indicators, 

and Trends 

2004 2005 2006 2007 

Target Actual Result 

5.2.1 Application and usage level of nutrition 

guidance tools (pieces of nutrition guidance 

distributed, Billions) 

n/a n/a 1.5 2.6 2.7 3.2 Exceeded 

Rationale for Met Range: Thresholds reflect trends of MyPyramid.gov “hits” and print materials distributed (MyPyramid and the Dietary Guidelines for 

Americans).

• Data assessment metrics to meet the target allow for an actual number in the range 2.3-2.7 Billion. 

Data Assessment of Performance Measures 5.2.1 

Data on the application and usage level of nutrition guidance tools are drawn from electronic records associated with 

http://www.mypyamid.gov/MyPyramid.gov, survey analysis and records at headquarters and inventory control at the distribution center used by USDA’s 

Center for Nutrition Policy and Promotion. 

• Completeness of Data—Data related to MyPyramid.gov are collected instantaneously, indicating the number of e-hits to the Web site and 

registrations to MyPyramid Tracker. For print materials, data from national headquarters and a distribution center are also complete. This information 

representing the difference between what was distributed versus what remains in the inventory. 

• Reliability of Data—The data are highly reliable. The number of hits is instantaneously recorded, the on-line survey is continual and well-tested, and 

the number of distributed print materials is tracked. 

• Quality of Data—The data are used to report on the success of the MyPyramid Food Guidance System, and our high quality indicators of the degree 

to which USDA promotes, and customers respond to, interactive tools and print materials designed to help Americans personalize their diets. 

Challenges for the Future 

While USDA’s goal to address and prevent obesity begins with understanding what constitutes a healthy diet and 

the appropriate balance of exercise, success requires individuals to change their diets by modifying their eating 

behavior. Crafting more effective messages and nutrition education programs to help people make better food 

choices requires understanding their current choices and the relationships between these choices and their attitudes, 

knowledge and awareness of diet/health links. 

The ability of existing nutrition guidance and promotional materials to achieve behavior change may wane over 

time. Further, the food marketplace has limited resources available for nutrition promotion relative to other 

messages, products and practices. Additionally, physical activity and other lifestyle issues significantly impact body 

weight and health. 

USDA tracks its annual performance in promoting healthful eating and physical activity by monitoring distribution 

of nutrition education materials. Over the longer term, the Department assesses the effect of these efforts with its 

Healthy Eating Index (HEI). HEI measures diet quality to assess conformance to Federal dietary guidance. The 

index is based on nutrition surveillance data. 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

94 

OBJECTIVE 5.3: IMPROVE NUTRITION ASSISTANCE PROGRAM MANAGEMENT AND CUSTOMER SERVICE 

Overview 

USDA is committed to ensuring that nutrition-assistance 

programs serve those in need at the lowest possible costs. These 

programs must also offer a high level of customer service. 

Effectively managing Federal funds for nutrition assistance, 

including prevention of program error and fraud, is a key 

component of the President’s Management Agenda. The Department focused on maintaining strong performance 

in the food stamp payment accuracy rate as its key performance goal in this area. 

Analysis of Results 

While 2008 data will not be available until June 2009, the food stamp payment accuracy rate reached a record-high 

94.4 percent in 2007. The number demonstrates the excellent performance by State agencies in administering the 

program. This combined rate reflects 4.58 percent in overpayments and 1.06 percent in underpayments for a total 

of 5.64 in erroneous payments. 

Twenty-eight States had a payment-accuracy rate greater than 94 percent, including 12 States with rates topping 

the 96–percent mark. Data on each State’s payment accuracy can be found at: www.fns.usda.gov/fsp/qc/pdfs/2007-

rates.pdf. 

In June, USDA awarded $30 million in high performance bonuses to the 7 States with the best payment accuracy 

rates and the 3 States with the most improved rates. 

USDA’s close working relationship with its State partners, along with program changes to simplify rules and reduce 

the potential for error, has resulted in consistent increases in food stamp payment accuracy. Such Department 

efforts as an enhanced Partner Web and the National Payment Accuracy Work Group contributed significantly to 

this success. They both offered timely and useful payment accuracy-related information, tools best practices 

available across the country. Partner Web is an Intranet for State food stamp agencies. The National Payment 

Accuracy Work Group consists of representatives from USDA headquarters and regional offices. 

The Department will work with States to streamline the program by extending simplified reporting to elderly and 

disabled households. 

Additionally, USDA continued to use an early detection system to target States that may be experiencing a higher 

incidence of errors based on preliminary quality control data. Regional offices then address these situations in the 

individual States. 

Exhibit 37: Increase Efficiency in Food Management 

Fiscal Year 2008 Annual Performance Goals, Indicators, and 

Trends 

2004 2005 2006 2007 

Target Actual Result 

5.3.1 Increase Food Stamp Payment Accuracy 

Rate (Baseline: 2001 = 91.3%) 94.1% 94.1% 94.0% 94.4% 94.3% Not 

Available Deferred 

FY 2008 data will be available in 2009. 

Rationale for Met Range: The 95-percent confidence interval around the estimate of payment accuracy is ±.33. 

• Data assessment metrics to meet the target allow for an actual number in the range 94.0%-94.6%. 

Key Outcome 

Maintain a High Level of Integrity in the 

Nutrition Assistance Programs 

Measure 5.3.1: Increase Food Stamp Payment Accuracy Rate 
ANNUAL PERFORMANCE REPORT 

95 

Data Assessment of Performance Measures 5.3.1 

Food stamp payment accuracy data are used annually to support the food stamp Quality Control (QC) process, based upon a statistically valid 

methodology. The QC process uses a systematic random sampling of Food Stamp Program (FSP) participants. The results of these activities are used 

to determine individual States’ combined payment error rates. This rate is composed of over-issuances and under-issuances of FSP benefits. A 

regression formula is applied to review results to calculate official error rates. State agencies select cases monthly that are reviewed to determine the 

accuracy of the eligibility and benefit-level determination. They include a client interview and verification of all elements of eligibility, and the basis of 

issuance of food stamp benefits. Federal reviewers validate a sample of the State’s reviews by conducting a second one. State agencies can verify and 

validate data through an informal review process. This process and current protections designed to ensure the data’s accuracy are based on an 

agreement between the States and Federal reviewers. The process has proven to be a sound method of calculating reliable data. 

• Completeness of Data—The most current data available for this measure are for FY 2007. Analysis of FY 2008 performance will be deferred until 

next year’s report. Once available, the data are complete and reliable. 

• Reliability of Data—QC data are valid and accepted by State FSP agencies as a basis for performance-incentive payments and penalties. GAO 

and OIG also use it regularly. 

• Quality of Data—As described above, the data used to develop this measure are used widely for multiple purposes, both within and outside USDA.

The measure itself is frequently cited as an important, high-quality indicator of program performance. 

Challenges for the Future 

Some improper payment risks are inherent to the legislatively mandated program structure. This structure is 

intended and designed to be easily accessible to people in special circumstances and settings. USDA must make 

services convenient and accessible to participants. State and local Governments bear direct responsibility for 

delivering the programs. Thus, the Department must work with these groups through monitoring and technical 

assistance. This approach requires trained staff supported by a modernized information technology infrastructure to 

ensure full compliance with national program standards. 

Two significant challenges will impact future success. Congressional action has changed the quality control process, 

lowering the risk of penalties for poor State agency performance. However, State agencies have, for the most part, 

risen to the challenge and continue to achieve a high level of payment accuracy. Additionally, State budgets have 

been and will continue to be extremely tight. This factor could hurt State performance in payment accuracy. USDA 

will continue to provide technical assistance and support to maintain payment accuracy in the context of this 

changing environment.
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

96 

Strategic Goal 6: Protect and Enhance the Nation’s Natural Resource Base and Environment 

OBJECTIVE 6.1: PROTECT WATERSHED HEALTH TO ENSURE CLEAN AND ABUNDANT WATER 

Overview 

Healthy, well-cared for watersheds are essential to ensuring 

clean and abundant water resources. USDA manages national 

forests and grasslands to protect watersheds. The Department 

also offers services to help protect and enhance the Nation’s 

water resources on private lands. The Conservation Technical Assistance Program (CTA) provides technical 

assistance supported by science-based technology and tools to help people conserve, maintain and improve their 

natural resources. In 2008, USDA conservation experts assisted people in writing or updating conservation plans on 

private land covering more than 13.8 million acres of working cropland and 26.8 million acres of grazing and forest 

lands. Conservation plans provide producers with information on the capability of their soil, condition of their 

grazing lands and woodlands, irrigation water management, wildlife habitat needs, and measures to improve or 

protect soil, water and air quality. The Department also assisted agricultural producers with implementing water 

quality improvement practices on more than 36 million acres. Much of USDA’s assistance for water quality is 

directed towards livestock producers to reduce the risk of livestock waste and nutrients entering waterways. 

A third of all ground and surface water is used for agricultural irrigation. USDA helped producers improve their 

irrigation practices on 3.3 million acres in FY 2008. 

USDA also provided producers with financial assistance to help offset the cost of installing riparian and grassland 

buffers, and other conservation practices. Major programs providing financial assistance for water resources 

included the Environmental Quality Incentives Program (EQIP) and the CRP. The former provided nearly $560 

million in cost share and incentives for water conservation and water quality in FY 2008. EQIP financial assistance 

is used for capital-intensive, structural practices and the adoption of practices to improve management of working 

land. 

Analysis of Results 

USDA made significant progress in protecting watershed health and ensuring clean and abundant water. The 

Department exceeded its target for CTA and met its target for EQIP by helping livestock producers apply 

comprehensive nutrient management plans. These systems include conservation practices implemented for waste 

collection and storage, nutrient management, land treatment practices for erosion control, and vegetated buffers to 

protect bodies of water. As animal agriculture has become more concentrated, public concern about potential 

environmental damage has increased. USDA focuses on helping producers comply with State and local regulations 

to minimize the potential for damage to water or air resources from livestock operations. 

Key Outcome 

Clean and Abundant Water 

Measure 

6.1.1: Comprehensive Nutrient Management Plans applied 

• Conservation Technical Assistance 

• Environmental Quality Incentives Program 

6.1.2: Increase Conservation Reserve Program (CRP) acres of riparian and grass buffers 
ANNUAL PERFORMANCE REPORT 

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Selected Results in Research, Extension and Statistics 

A New Remote Sensing Technique To Estimate Nutrient Uptake By Cover Crops—While cover crops can reduce nitrogen 

losses from agricultural fields, they are difficult to monitor at the watershed/landscape scale. USDA researchers in Beltsville, 

Maryland, developed a remote sensing technique. The technique estimates the amount of nitrogen sequestered in cover crop 

biomass on farms enrolled in State cover crop cost share programs. The pilot study was conducted in the Choptank River 

watershed in Maryland, which is part of USDA’s watershed research network. The technique will allow managers to optimize and 

efficiently monitor this important best management practice at watershed and regional scales. 

Extension Program Reduces Contamination and Saves Money—Excess nitrogen runoff from agriculture pollutes in the 

Nation’s waterways. USDA funded North Dakota Extension programs to reduce nitrogen application rates with no crop yield or 

quality consequences. The programs are designed to increase grower profits and reduce water contamination. The work reduced 

nitrogen application by 20 pounds per acre on 500,000 acres of dry bean, canola and flax. At 40 cents per pound of nitrogen, 

growers saved $4 million in North Dakota.

Riparian and grass buffers intercept sediment and nutrients before they reach surface waters. To measure 

performance in achieving its strategy, USDA monitors acreage of agricultural lands to be enrolled as buffer zones in 

CRP. During the past five years, the number of acres set aside as buffer areas under the CRP program has increased 

steadily. CRP exceeded its performance target of 1.92 million acres for the measure by more than 100,000 acres. 

For FY 2008, producers have set aside approximately 2.02 million acres as CRP buffer areas. 

Exhibit 38: Healthy Watersheds, High Quality Soils and Sustainable Ecosystems 

Fiscal Year 2008 Annual Performance Goals, Indicators and 

Trends 

2004 2005 2006 2007 

Target Actual Result 

6.1.1 Comprehensive Nutrient Management Plans 

applied (number of plans) 

• Conservation Technical Assistance 2,372 2,421 2,269 1,911 1,550 1,745 Exceeded

• Environmental Quality Incentives Program 1,055 2,032 2,774 2,490 2,300 2,520 Met 

6.1.2 Increase Conservation Reserve Program 

(CRP) acres of riparian and grass buffers 

(Million acres, cummulative) 

1.65 1.75 1.86 1.95 1.92 2.02 Exceeded 

Actual performance as of September 30, 2008. 

Rationale for Met Range: 

• 6.1.1: 1) Conservation Technical Assistance. Data assessment metrics to meet the target allow for an actual number in the range 1,395 – 1,705. 2) Environmental 

Quality Incentives. Data assessment metrics to meet the target allow for an actual number in the range 2,070 – 2,530. 

• 6.1.2: Data assessment metrics to meet the target allow for an actual number in the range of 98%-102% of 1.92. 

Data Assessment of Performance Measures 6.1.1 

• Please refer to goal 6, Objective 6.4.1 

Data Assessment of Performance Measures 6.1.2 

The data source for this measure is the FSA National CRP Contract and Offer Data Files. 

• Completeness of Data— CRP targets and actual data are cumulative. Data is based on estimated results through September 30, 2008. The 

measure reports national acres under contract with the following types of conservation buffers: filter strips, riparian buffers and wildlife habitat buffers 

on marginal pasture land. There are no known data limitations. 

• Reliability of Data— FSA considers the data to be reliable. CRP is authorized through FY 2012. 

• Quality of Data— While current information only provides the number of acres in these buffers, ongoing research will show models that estimate

sediment and nutrients intercepted by these buffers. When available, these estimates may be used as performance measures. 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

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Challenges for the Future 

The demand for ethanol has lead to an increase in corn acreage. As a result, there may be increased demand for the 

collection and removal of crop residues/biomass for annually planted crops, in addition to perennial crops such as 

switchgrass. The changes in crop rotation, tillage, residue management, and nutrient and pesticide use on cropland 

could threaten water quality if not managed carefully. 

If markets support increased production, agricultural producers may continue to plant crops on environmentally 

sensitive land rather than establishing long-term conservation covers or buffers. CRP enrollment continues to be 

influenced by high commodity prices. These prices have reduced the attractiveness of retiring cropland from 

production and enrolling it in CRP. Also, the 2008 Farm Bill reduced the maximum CRP enrollment to 32 million 

acres beginning in FY 2010. 

USDA uses the multi-agency Conservation Effects Assessment Project (CEAP) to quantify the environmental 

benefits of conservation practices. Private landowners are cooperating with USDA in the CEAP effort. Watershedbased assessments are directed at evaluating interactions among practices and hydrology in the landscape. There is 

also a focus on the impacts of livestock, irrigation and drainage management, and conservation practices with 

significant watershed level impacts. 

OBJECTIVE 6.2: ENHANCE SOIL QUALITY TO MAINTAIN PRODUCTIVE CROPLAND BASE 

Overview 

High-quality soils support the efficient production of crops 

for food, fiber and energy. Proper soil management 

maximizes agricultural production and improves the 

environment. USDA helps producers install conservation 

practices and systems that meet established technical standards and specifications. In FY 2008, the Department 

assisted in applying conservation practices on 16 million acres of cropland. USDA also provides financial assistance 

to encourage producers to adopt land treatment practices proven to provide significant public benefits. In FY 2008, 

financial assistance for practices applied primarily to address soil quality issues included $187 million in EQIP costshares or incentives for adopting structural measures or management practices to reduce erosion and protect 

cropland. 

The voluntary Conservation Security Program (CSP) provides financial and technical assistance to promote 

conservation on agricultural lands. CSP supports natural resource stewardship by identifying and rewarding those 

farmers and ranchers meeting the highest standards of conservation and creating incentives for other producers to 

meet those same standards. 

USDA mapped or updated 35.2 million acres of soils, including Federal lands. Soil surveys provide information on 

the capabilities and conservation-treatment needs of soils. The Department provides the scientific expertise to 

enable a uniform system of mapping and assessing soil across the Nation. Historically, USDA has produced soil 

surveys along geo-political boundaries. Future efforts will be directed toward developing seamless national soil 

survey coverage. The soil survey program is initiating an effort to collect soil property data that vary with land use 

and management. These data will better enable planners to assess soil quality for a given land use and management 

Key Outcome 

Enhanced Soil Quality 

Measure 

6.2.1 Cropland with conservation applied to improve soil quality (millions of acres) 

• Conservation Technical Assistance Program 

• Environmental Quality Incentives Program 
ANNUAL PERFORMANCE REPORT 

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level. This will allow conservation practices to be tailored to address the greatest soil quality concerns and more 

accurately reflect the operator’s conditions. 

Analysis of Results 

USDA exceeded its target for helping producers apply conservation practices on cropland for CTA and met its 

EQIP target. Farmers frequently change crops, equipment, and management practices; thus, they need help in 

adjusting conservation systems, even on land well-protected under the previous system. USDA also met its CSP 

targets for enhanced soil management. 

Selected Results in Research, Extension, and Statistics 

Preventing Soil Erosion—Supported by Small Business Innovation Research, researchers have investigated the use of 

WoodStrawTM for erosion control. WoodStrawTM is a wood-based erosion control material that is weed-free, long-lasting and 

superior to agricultural straw in watersheds, forestlands and road construction. Its production supports rural jobs and improves 

independent veneer mill sustainability through value-added outlets for low grade veneer. 

“Green Payments” in Agriculture—USDA’s Integrating Commodity and Conservation Programs: Design Options and Outcomes

and a related Amber Waves article address the potential advantages and disadvantages of linking commodity and conservation 

programs into a single policy tool. The research examined the distribution of income support and environmental gains from 

various approaches to combining that objective of existing commodity programs and environmental objectives. Policy makers who 

attempt to join commodity and conservation policy may face a difficult trade-off between environmental gain and the existing 

distribution of farm income support. Program scenarios included existing commodity programs with enhanced conservation 

requirements (extensions of existing compliance requirements) and payments based on environmental performance 

(“performance-based” payments). This move would encourage “production” of environmental quality along side of traditional 

agricultural commodities. 

Effects of Elevated Carbon Dioxide (CO2) on Soil Carbon in Conventional and Conservation Cropping Systems 

Evaluated—USDA researchers in Auburn, Alabama, evaluated the contribution of agricultural management and rising 

atmospheric carbon dioxide to soil carbon sequestration. They also studied the ability of these systems to help ease gas’ higher 

atmospheric levels. Soil carbon was measured for 10 years in a cropping systems study. Researchers compared the effects of 

elevated atmospheric carbon dioxide CO2 in a conventional (standard tillage with no cover crops) management system with that 

of a conservation (no-till with three cover crops). The researchers found that conservation management can improve soil quality, 

and that the improvements are enhanced under elevated atmospheric carbon dioxide conditions. 

Exhibit 39: Enhanced Soil Quality 

Fiscal Year 2008 Annual Performance Goals, Indicators and 

Trends 

2004 2005 2006 2007 

Target Actual Result 

6.2.1 Cropland with conservation applied to 

improve soil quality (millions of acres) 

• Conservation Technical Assistance NA 6.0 6.4 7.3 7.0 8.3 Exceeded 

• Environmental Quality Incentives NA 2.2 3.4 5.3 5.5 5.6 Met 

• Conservation Security 1.3 7.2 1.4 0.14 1.4 1.3 Met 

Actual performance as of September 30, 2008. 

Rationale for Met Range: This measure was new for the Department in FY 2007, but relates to the prior measure for Cropland Soils Protected from Excessive Erosion. 

This measure was designed to provide a better indicator of soil quality and includes all cropland and hay land on which USDA assisted producers to apply conservation 

measures to maintain or enhance soil quality and enable sustained production of a safe, healthy, and abundant food supply. Performance data for FY 2006 and FY 2005 

have been provided to indicate prior year performance had this measure been employed at that time. 

• Conservation Technical Assistance: Data assessment metrics to meet the target allow for an actual number in the range of 6.3–7.7. 

• Environmental Quality Incentives: Data assessment metrics to meet the target allow for an actual number in the range of 5.0–6.1. 

• Conservation Security: Data assessment metrics to meet the target allow for an actual number in the range of 1.3–1.5 

Data Assessment of Performance Measures 6.2.1 

Please refer to goal 6, Objective 6.4.1 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

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Challenges for the Future 

Economics and weather can impact producers’ willingness to adopt conservation measures. In addition to an 

increase in demand for corn to make ethanol, demand is expected to increase for the collection and removal of crop 

residues/biomass for annually planted crops and perennial crops such as switchgrass, for cellulosic ethanol. Natural 

disasters and prolonged unfavorable weather conditions could also reduce the opportunities for producers to 

implement conservation practices. USDA continues to evaluate the effects of short-term and long-term 

conservation practices on soil quality, including impacts on organic matter and carbon sequestration. 

The Department will face challenges associated with soil data collection and dissemination. Economic constraints 

in partnering with other agencies and universities could reduce the number of acres mapped and the total number 

of soil surveys updated. USDA will seek to strengthen partnerships and form new ones with entities having 

common interests. It will also use technology to improve data-collection efficiency. 

OBJECTIVE 6.3: PROTECT FORESTS AND GRAZING LANDS 

Overview 

Forests and grasslands comprise nearly 55 percent of the 

Nation’s total land area of 2.3 billion acres. These lands 

provide timber and livestock forage. Additionally, healthy 

forests and grazing lands contribute to the health and wellbeing of the Nation’s soil, water, air and wildlife. USDA looks to reduce fire danger, minimize the threat of 

invasive species, and help producers apply conservation practices that reduce erosion and improve water quality. 

The Department manages more than 192 million acres of national forests and grasslands. It also acts as a technicalassistance provider on non-Federal forests and grasslands. These areas comprise almost half the continental U.S. 

On Federal lands, USDA protects and sustainably manages national forests and grasslands so they support multiple 

uses. Using technical and financial assistance, the Department also helps landowners and operators address the risks 

on privately owned land using conservation practices. These practices include prescribed grazing, integrated pest 

management, brush management, forest stand improvement, and tree planting. USDA assisted producers in 

applying conservation practices on 31.4 million acres of non-Federal grazing lands and forest. 

Several serious threats pose risks to public and private forestland and grassland. They include wildland fire, invasive 

species, loss of open space and unmanaged outdoor recreation. In many areas, especially in the West, most 

watersheds and landscapes include public land managed by several Federal agencies and private, State and Tribal 

lands. Protecting the natural resources in these areas requires cooperation among a large number of stakeholders, 

Key Outcome 

Sustainable Forest and Grassland Ecosystems 

Measure 

6.3.1 Number of acres of hazardous fuel treated that are in the wildland urban interface 

6.3.2 Number of acres of hazardous fuel treated that are in condition Classes 2 or 3 in Fire Regimes I, II or III 

outside the wildland-urban interface 

6.3.3 Number of acres in condition classes 2 or 3 in Fire Regimes I, II, or III treated by all land management 

activities that improve condition class 

6.3.4 Grazing and forest land with conservation applied to protect and improve the resource base: 

• Conservation Technical Assistance 

• Environmental Quality Incentives Program 
ANNUAL PERFORMANCE REPORT 

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with a focus on the whole landscape. USDA’s forest protection performance measure focuses on reducing the risks 

of catastrophic wildland fire. Its performance measure for grazing land and non-Federal forestland focuses on 

increasing the acreage managed under conservation systems that will sustain or improve long-term vegetative 

condition. 

Approximately a million acres of national forestlands burned during the 2008 fire season. Nationwide, wildfires 

affected approximately 5 million acres of public and private land. USDA and the Department of the Interior (DOI) 

are using tools and authority provided by the President’s Healthy Forests Initiative and the Healthy Forests 

Restoration Act of 2003 to reduce fire hazards and restore forests and grasslands. The USDA-DOI projects consist 

largely of removing excess vegetation and prescribed burning (collectively, “hazardous fuel reduction”) to reduce the 

risk from wildfires. 

The USDA-DOI projects improve firefighter and public safety. Since the inception of the National Fire Plan in 

2001, USDA has treated more than 16 million acres to remove excess vegetation through a combination of 

hazardous fuels reduction funds and other vegetation management program efforts. Unplanned ignitions, or those 

that occur through such natural causes as lightning, are also used as an ad-hoc tool to manage hazardous fuels. 

Natural fire reduces fuels, recycles nutrients and provides a host of other functions necessary to maintain healthy 

ecosystems. In 2008, management objectives were achieved on approximately 170,000 acres using naturally ignited 

fires. 

USDA’s efforts to reduce the risks of wildfire are conducted in collaboration with its stakeholders to develop and 

implement Community Wildfire Protection Plans (CWPPs). CWPPs identify wildland fire hazards in areas within 

and surrounding communities. They also identify high-priority hazardous fuels for treatment. Additionally, 

CWPPs help private citizens understand the role fire plays in ecosystem health, promote positive interactions with 

Federal land managers, and create local business opportunities. 

Hazardous fuel reduction accomplishments in 2008 include: 

 Investing more than 60 percent of the dollars available for hazardous fuel treatments in the wildland urban 

interface near communities; 

 Developing a scientific methodology to evaluate acres burned by unplanned ignition as acres approaching 

desired conditions, if the outcomes are consistent with management objectives; 

 Creating and implementing a process to document and display fuel-treatment effectiveness where on-theground treatments have been tested by wildfire; and 

 Deploying the Fire Program Analysis system to analyze initial response, fuels, and large fire-suppression 

activities relative to risks, impact, benefits, and cost. The system will provide managers decision-support and 

analysis tools to inform their allocation of fire preparedness resources and funding at both the local and national 

levels. 

Several key USDA programs contribute to management efforts that protect communities and restore forests and 

grasslands to sustainable conditions. The hazardous fuel reduction program is a crucial component of this effort. 

Programs to improve timber and range productivity, wildlife and fish habitat, forest health, and watershed quality 

also contribute to this effort. 

Analysis of Results 

USDA met or exceeded all of its performance goals for protecting the health of the Nation’s forests and grasslands 

against the risk of fire. USDA exceeded its 2008 CTA and EQIP targets for conservation applied to protect and 

enhance non-Federal grazing land and forest land. Nationwide drought conditions, expansion of the wildland 

urban interface, and densely vegetated forests increase the chances of more severe and damaging wildfires. 

Approximately 56 percent of all acres managed by USDA have missed 2 or more expected fire cycles. Many acres 

are at elevated risk from wildland fire. The finer scale data available from LANDFIRE is expected to show an even 

greater departure from expected conditions in the Nation’s forests and woodlands. 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

102 

Selected Results in Research, Extension, and Statistics 

Investing in the Future—A USDA program allowed 65 forestry schools and colleges to participate in environmental research. 

The study addressed the production, protection and utilization of forest resources and associated rangelands. Nearly 1,000 

scientists work on projects from the molecular to the landscape level. Knowledge and technologies developed are worth billions of 

dollars in direct and indirect benefits. Funding has supported 22,500 years of graduate student forestry studies, leading to 7,500 

masters and 2,200 doctoral degrees. 

Major economic and environmental disruptions by wildfires in Western States—The lack of information on the impacts of 

grazing on post-fire environments has limited the effectiveness of post-fire management strategies to simultaneously meet 

ecological and economic goals. USDA researchers in Burns, Oregon, evaluated plant community recovery after prescribed fire 

and the application of spring and summer grazing in a local rangeland ecosystem. They found that moderate grazing after fire did 

not limit the recovery of plant communities and productivity of herbaceous plants when compared with ungrazed treatments. This 

information enhances the ability of land managers to prescribe post-fire grazing practices that restore ecological health while

reducing income loss for livestock producers.

Exhibit 40: Trends in Treatment of Hazardous Fuel, Private Forests and Grasslands 

Fiscal Year 2008 Annual Performance Goals, Indicators and 

Trends 

2004 2005 2006 2007 

Target Actual Result 

6.3.1 Number of acres of hazardous fuel treated that are 

in the wildland urban interface (in thousands) 

1,311 1,094 1,045 1,139 1,110 1,110 Met 

6.3.2 Number of acres of hazardous fuel treated that are 

in condition classes 2 or 3 in Fire Regimes I, II, or 

III outside the wildland-urban interface (in 

thousands) 

492 470 409 528 515 515 Met 

6.3.3 Number of acres in condition classes 2 or 3 in Fire 

Regimes I, II, or III treated by all land management 

activities that improve condition class 

(in thousands) 

758 1,058 1,093 1,301 1,268 1,268 Met 

Rationale for Met Range: 

• 6.3.1: Data assessment metrics to meet the target allow for an actual number in the range of 1,055–1,166. 

• 6.3.2: Data assessment metrics to meet the target allow for an actual number in the range of 489–541. 

• 6.3.3: Data assessment metrics to meet the target allow for an actual number in the range of 1,205–1,331. 

Fiscal Year 2008 Annual Performance Goals, Indicators 

and Trends 

2004 2005 2006 2007 

Target Actual Result 

6.3.4 Grazing and forest land with conservation applied 

to protect and improve the resource base, millions 

of acres 

 Conservation Technical Assistance n/a 7.5 11.8 14.2 12.0 16.0 Exceeded 

 Environmental Quality Incentives Program n/a 8.0 12.2 16.5 12.3 16.9 Exceeded 

1 Actual performance as of September 30, 2008. 

• The FY 2007 PAR included performance figures from the Conservation Stewardship Program. It was removed this year from the measure so the 

focus would be on soil and water quality. 

Rationale for Met Range: This measure was re-defined and expanded in FY 2007 to include all private grazing or forest land on which the Department assisted producers 

to apply conservation measures to maintain or improve long-term vegetative condition and protect the resource base. Lands on which conservation measures may be 

applied include grazed range, grazed forest, native and naturalized pasture, and forest. Performance data for FY 2005 and FY 2006 have been provided to indicate prior 

year performance had this measure been employed at that time. 

• 6.3.4: 1) Conservation Technical Assistance. Data assessment metrics to meet the target allow for an actual number in the range 10.8–13.2. 

2) Environmental Quality Incentives. Data assessment metrics to meet the target allow for an actual number in the range 11.1–13.5. 
ANNUAL PERFORMANCE REPORT 

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Data Assessment of Performance Measures 6.3.1, 6.3.2, 6.3.3, 6.3.4

The following applies to measures 6.3.1, 6.3.2, and 6.3.3: The data for hazardous fuels treatments are reliable, of good quality, and certified by the 

respective line officer. USDA wildfire and other program managers collected, compiled, and analyzed the data. 

1 Please refer to Goal 6, Objective 6.4.1 for the data assessment of measure 6.3.4. 

• Completeness of Data—The data used in conjunction with performance information are based on those reported through the end of the third 

quarter. To provide the response to the initial data call, the Forest Service projects the results for the fourth quarter of the fiscal year based on yearto-date and prior year performance. That projection is replaced with end-of-year actual data after the end of the fiscal year. 

• Reliability of Data—All data for hazardous fuels were reported through the National Fire Plan Operations System. USDA and Department of Interior 

land-management agencies co-developed the system. Its data are collected, compiled, and analyzed by program managers, and certified by the 

respective line officer. 

• Quality of Data—Data quality has been assessed at about 90 percent for project data in all regions. The quality of these data is monitored 

continuously and being improved with focused training and policy direction on reporting requirements. Data are projected based on historical 

performance and year-to-date actual accomplishments. If information is not entered into the systems of record immediately upon completion of the 

project, the quality of the projection will be compromised. 

Challenges for the Future 

The cost of managing wildfires is staggering. Where feasible, use of excess vegetation for biomass and biobased 

products may lower costs. A barrier to expanding forest-biomass utilization is the limited market for this material 

and the rising cost of transportation from the source to scarce processing facilities. Where processing capacity exists, 

use is limited because much of the excess material is too small for its removal to be economically feasible. USDA 

and DOI are developing a strategy to encourage greater biomass utilization. 

With regard to private land, producers’ willingness and ability to implement conservation measures are affected by 

economic conditions, climate variability, drought and invasive species. USDA, in cooperation with other Federal, 

State, Tribal, and local agencies will work to provide producers information and other necessary resources to adopt 

needed conservation measures. 

OBJECTIVE 6.4: PROTECT AND ENHANCE WILDLIFE HABITAT TO BENEFIT DESIRED, AT-RISK AND DECLINING SPECIES 

Overview 

USDA addresses the needs of wildlife in managing national 

forests and grasslands. USDA also provides technical and 

financial assistance to landowners and managers to improve 

habitat on private lands. On non-Federal land, USDA 

conservationists provide on-site assistance to assess the quality 

of wildlife habitat. They also develop management plans that 

consider wildlife needs for shelter, nesting areas, and access to 

water and food during critical periods. These plans are designed to sustain and enhance wildlife habitat. 

The Department helped individuals and groups apply conservation management to maintain or improve habitat on 

13.5 million acres of non-Federal land. The land treated included 13.1 million acres of upland wildlife habitat and 

nearly 400,000 acres of wetland wildlife habitat. Several USDA programs encourage participants to enter into 

contracts to improve and restore grassland, rangeland, forest ecosystems, wetlands, and adjacent upland buffers. 

Key Outcome 

Improved Wildlife Habitat Quality While Supporting 

Desired Species and Species of Concern 

(At-Risk and Declining Species) 

Measure: 6.4.1 Wetlands Created, Restored or Enhanced 

• Conservation Technical Assistance Program 

• Wetlands Reserve Program 

• Conservation Reserve Program 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

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Easement acquisitions and agreements help ensure the long term viability of these habitat areas. These actions are 

designed to create productive, diverse, and resilient habitat. 

Analysis of Results 

USDA exceeded its targets for the creation, restoration or enhancement of wetlands. This performance measure set 

targets for three USDA programs: the CTA, the Wetlands Reserve Program (WRP) and CRP. The performance 

measure for wetlands includes land on which USDA provided technical and/or financial assistance in FY 2008. 

CTA provides technical assistance supported by science-based technology and tools to help people conserve, 

maintain and improve their natural resources. On wetlands where USDA provided technical assistance through 

CTA, no financial assistance was provided by Department programs. In some cases, financial assistance may have 

been provided through non-USDA sources. 

WRP is a voluntary conservation program that offers landowners the means and opportunity to protect, restore and 

enhance wetlands on their property. WRP participants sign an easement or agreement with USDA. 

The CRP performance target of 50,000 acres was exceeded by 30,103 acres, a 60 percent increase over the projected 

number of acres. This was due to the adoption of several initiatives, including the 100,000-acre Duck Nesting 

Habitat Initiative, the 500,000-acre Bottomland Hardwood Timber Initiative and the 250,000-acre non-floodplain 

Wetland Restoration Initiative. These restored wetlands and buffers have increased prime wildlife habitat and water 

storage capacity. They have also led to a net increase in wetland acres on agriculture land. 

The Duck Nesting Habitat Initiative was designed to increase duck populations by an estimated 60,000 birds 

annually and to restore 100,000 wetland acres. The Bottomland Hardwood Timber Initiative was designed to 

improve flood plains through the restoration of primarily bottomland hardwood trees. The Wetland Restoration 

Initiative was designed to restore up to 250,000 acres of wetlands and playa lakes that are located outside of the 

100-year floodplain. 

In April, the Council on Environmental Quality (CEQ) announced that the goals established in the President’s 

Wetland Initiative had been achieved a full year ahead of schedule. WRP, CRP and CTA served as the primary 

USDA contributors to this effort. They have restored, created and enhanced more than 1.3 million acres of 

wetlands, and protected more than 400,000 acres since Earth Day, 2004. CEQ coordinates Federal environmental 

efforts and works closely with agencies and other White House offices in developing environmental policies and 

initiatives. 

USDA uses the acreage of wetlands created, restored or enhanced as an indicator of progress toward improved 

habitat for many species. The Department is participating in cooperative efforts to quantify the results of its 

conservation practices for wildlife habitat. The results will be used to manage agricultural landscapes for 

environmental quality. 

Numerous species have benefitted from USDA’s projects. A recent study by the Fish and Wildlife Service (FWS) 

examined the effect of CRP in North Dakota, South Dakota and northeastern Montana. FWS estimated that the 

duck population grew by an average of 2 million annually between 1994 and 2004, a 30 percent increase compared 

to the same area without CRP. The program is also credited with enhancing the population of several bird species 

considered endangered. The Washington Department of Natural Resources found that a severe decline in an 

eastern Washington sage grouse population has been reversed in an area with substantial CRP enrollment. A 

Journal of Wildlife Management study credits CRP with a sharp rebound in Henslow’s Sparrow populations. 

In FY 2008, USDA and FWS evaluated the benefits of WRP to mid-continental migrating waterfowl. This 

collaborative effort was part of a CEAP Wildlife Component assessment. This assessment quantifies the effects of 

USDA conservation practices and programs on fish and wildlife in landscapes influenced by U.S. agriculture. The 

project, which took place in the Rainwater Basin Region of south central Nebraska, evaluated the value of WRP 
ANNUAL PERFORMANCE REPORT 

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wetland projects. This region is important for waterfowl migration in the Central Flyway of North America. The 

findings revealed that the 3,000 acres of WRP restored wetlands in the Rainwater Basin provided up to 12 percent 

of the food energy needs of the estimated 12.4 million ducks and geese that traveled through this area during spring 

and fall migration. 

Selected Results in Research, Extension, and Statistics 

Controlling Invasive Species Protects Wildlife—Rapid response resulting from rangeland monitoring has allowed for early 

control of invasive species on 8,156 acres and protecting an additional 10,000 adjacent acres. Thanks to USDA funding, this 

Washington State University program treated more than 16,000 acres of Spartina infested tidelands in Willapa Bay and Puget 

Sound with a new, safer, more cost effective and more successful herbicide. Spartina populations have dropped to less than 

1,000 acres (from 16,000). Shorebird populations utilizing these mudflats have increased from near zero to several thousand per

hectare.

Exhibit 41: Improved Wildlife Habitat 

Fiscal Year 2008 Annual Performance Goals, Indicators 

and Trends 

2004 2005 2006 2007 

Target Actual Result 

6.4.1 Wetlands created, restored or enhanced 

(acres) 

• Conservation Technical Assistance 59,293 53,498 65,345 62,093 51,300 72,806 Exceeded 

• Wetlands Reserve Program 123,363 180,358 181,979 149,326 100,000 128,860 Exceeded 

• Conservation Reserve Program 57,036 50,934 61,279 68,834 50,000 80,103 Exceeded 

Actual performance as of September 30, 2008. 

• Conservation Technical Assistance: Data assessment metrics to meet the target allow for an actual number in the range 46,170 – 56,430. 

• Wetland Reserve Program: Data assessment metrics to meet the target allow for an actual number in the range 90,000 – 110,000. 

• Conservation Reserve Program: Data assessment metrics to meet the target allow for an actual number in the range 45,000 – 55,000 acres. 

Data Assessment of Performance Measures 6.4.1 

The chief sources of data for this performance measure are the National Conservation Planning Database (NCP), the Program Contracts Database 

(ProTracts) and the Performance Results System (PRS). The CRP data source for this measure is the FSA National CRP Contract and Offer Data Files. 

This applies to the data for Measures 6.1.1, 6.2.1, 6.3.4. 

• Completeness of Data—The performance reported for these measures is based on actual data reported for FY 2008. Numerous data quality 

mechanisms within PRS ensure the completeness of each performance record entered in the system. There are no known data limitations. 

• Reliability of Data—For FY 2008, the data reported for these performance measures were calculated within PRS based on information validated and 

retrieved from the NCP and ProTracts. Conservation practices are developed in consultation with the customer and included in conservation plans 

stored in the NCP. Periodic reviews are conducted to assess the accuracy of reported data. 

• Quality of Data—Overall quality of the data is good. Field staffs, trained and skilled in conservation planning and application suited to the local 

resource conditions, report performance where the conservation is occurring. Error checking enhancements and reports within the PRS application 

maintain data quality by allowing users at local, State and national levels to monitor data inputs. Data on the linkage of programs and conservation 

practices applied are accurate because the conservation program responsible for applying each practice is documented in the conservation plan 

developed in Toolkit. The same land unit may benefit from the application of more than one conservation practice. Where more than one program is 

used to apply practices on the same land unit, each program is credited under the performance measure. 

Challenges for the Future 

Commodity prices, economic conditions, weather, and developmental pressures can impact the ability and 

willingness of agricultural producers to restore, improve and protect habitat areas. Given the current high prices for 

agricultural commodities, producers may be less willing to make long-term commitments regarding the use of their 

land. This could impact wetland restoration of prior converted cropland. Due to expiring CRP contracts and 

favorable commodity prices, USDA projects a slight decrease in the program’s cumulative enrolled acreage. Some of 

that land could return to crop production, which would reduce habitat for grassland bird species. Grassland birds 

are declining faster than any other type of North American birds. 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

106 

USDA works with other agencies and private organizations to provide producers with information and other 

resources to adopt conservation measures and management practices. Many wildlife projects are supported by a 

combination of Federal, State, local, and private funds. State and local budget constraints could impact project 

implementation.

Program Assessment Rating Tool (PART) Evaluations 

The Program Assessment Rating Tool (PART) assesses and improves program performance to allow the Federal 

Government to achieve better results. The PART is designed to look at all factors that affect and reflect USDA 

program performance. These factors include program purpose and design; performance measurement, evaluations, 

and strategic planning; program management; and program results. Because the PART includes a consistent series 

of analytical questions, it allows programs to show improvements over time. It also allows comparisons between 

similar programs. The summaries below represent programs PART’ed in Fiscal Year 2008. The programs are 

summarized by Strategic Objective. Further detail on USDA’s PART’ed programs can be found at: 

http://www.whitehouse.gov/omb/expectmore/.

Strategic Objective 1.1 Expand and Maintain International Export Opportunities 

Program Name Cochran Fellowship Program 

Current Rating • Adequate 

Lead Agency • Foreign Agricultural Service (FAS) 

Major Findings/ 

Recommendations 

• The Cochran Fellowship Program has a role in the overall effort to enhance technical capacity throughout the 

international agricultural sector. The program is designed to facilitate international trade and reduce the limiting 

factors in the economic development of middle-income countries and those in transition. Despite its work, it is 

unclear to what extent the program's agricultural training can be linked to specific significant results. FAS should 

continue to improve upon its efforts to address deficiencies in tracking the impact of training and the activities of 

Cochran alumni. 

Actions Taken/Planned • FAS is developing outreach to Cochran's alumni and improving information management tools to better monitor the 

impact of alumni within their respective countries. In addition, FAS is improving Cochran's cost-efficiency 

performance by reducing costs related to orientation, translation and staffing. 

Strategic Objective 2.3 Provide Risk Management and Financial Tools to Farmers and Ranchers 

Program Name Agricultural Credit Insurance Fund – Guaranteed Loans 

Current Rating • Moderately Effective 

Lead Agency • Farm Service Agency (FSA) 

Major Findings/ 

Recommendations 

• The Guaranteed Loan Program provides access to agricultural credit for farmers temporarily unable to obtain credit 

from private lenders at reasonable rates and terms. Historic economic uncertainties of production may have made 

agricultural credit hard to achieve. Despite these uncertainties, low loss rates and low delinquency rates over the 

last several years may make it feasible for private lenders to risk taking on more of these loans. 

Actions Taken/Planned • FSA is developing an independent evaluation process for the program. It is also establishing a new, long-term 

performance goal for loan losses that benchmarks against the performance of commercial agricultural lenders. 
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Strategic Objective 2.3 Provide Risk Management and Financial Tools to Farmers and Ranchers 

Program Name Direct Crop Payments 

Current Rating • Adequate 

Lead Agency • Farm Service Agency (FSA) 

Major Findings/ 

Recommendations 

• While program management has devised performance goals designed to improve the delivery of benefits to 

farmers, program design could be improved. Direct payments are provided to only 36 percent of U.S. farmers, 60 

percent of whom have annual sales of at least $50,000. 

Actions Taken/Planned • FSA is reviewing and implementing the new Farm Bill, including developing rules and regulations for direct crop 

payments. The agency also continues to work to decrease the number of improper payments. 

Strategic Objective 3.1 Expand Economic Opportunities by Using USDA Financial Resources to Leverage Private Sector 

Resources and Create Opportunities for Growth 

Program Name Rural Development 

Current Rating • Adequate 

Lead Agency • Rural Business-Cooperative Service (RBS) 

Major Findings/ 

Recommendations 

• Due to a lack of demand, the program has not fully obligated funds for the last two years and has extensive levels 

of carryover. RBS has agreed to extremely ambitious targets for their long-term measures. By 2013, they hope to 

have 95 percent of their business/loan recipients existing five years after the loan closes. This program has had 

problems in the past approving and executing loans. In 2006, it took an average of 59 days to process a loan – 

much higher than the 30-day average in the private sector. 

Actions Taken/Planned • RBS is rewriting program regulations to address identified concerns and deficiencies. They include lender 

performance and eligibility, borrower eligibility, priority goals and underwriting requirements. RBS is also rewriting 

program regulations and any Notices of Funding Availability to target the program more effectively. Finally, RBS is 

implementing internal efficiencies to decrease the amount of time it takes to approve and execute a loan. 

Strategic Objective 4.1 Reduce the Incidence of Foodborne Illnesses Related to Meat, Poultry, and Egg 

Products in the U.S. 

Program Name Plant and Animal Health Monitoring Programs 

Current Rating • Adequate 

Lead Agency • Food Safety and Inspection Service (FSIS) 

Major Findings/ 

Recommendations 

• FSIS has a clear program purpose and mission and works effectively with other Federal and State agencies to 

protect the food supply. While the agency has developed new methodologies to better estimate the population's 

exposure to the three pathogens–E.coli 0157:H7, Salmonella and Listeria monocytogenes–only two years of data 

exist using the new volume-based methodology for those measures. In addition, while budget requests are aligned 

with program goals and objectives in the strategic plan and corporate measures designed to protect public health, 

it is unclear how changes in funding, legislation or policy will impact FSIS' ability to meet the targets. 

Actions Taken/Planned • FSIS is conducting independent assessments of its programs to evaluate their scientific basis and effectiveness. 

They are developing a new information infrastructure to enable real-time data collection, data analysis, improve 

program effectiveness and allow greater information sharing among external agencies. The agency is also 

implementing effective, multi-year budget planning to establish closer links between budget and performance 

goals. 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

108 

Strategic Objective 4.2 Reduce the Number and Severity of Agricultural Pest and Disease Outbreaks 

Program Name Plant and Animal Health Monitoring Programs 

Current Rating • Adequate 

Lead Agency • Animal and Plant Health Inspection Service (APHIS) 

Major Findings/ 

Recommendations 

• While the programs do protect the agricultural sector from the impacts of pests and diseases, only one annual 

performance measure had ambitious targets. In general, the programs were ineffective in meeting both long term 

and annual targets. 

Actions Taken/Planned • APHIS is developing more ambitious performance targets. The agency also is enhancing infrastructure for surveys 

to protect against pests, pathogens and noxious weeds and for biotech permit holders to manage the safe 

movement and release of genetically engineered organisms. Finally, APHIS is reviewing and implementing 

published documents -- including significant regulations and the National Animal Identification System Business 

Plan -- to maximize benefits and minimize incremental costs. 

Strategic Objective 6.1, 6.2 Protect and Enhance the Nation’s Natural Resource Base and Environment 

Program Name Conservation Security Program 

Current Rating • Results Not Demonstrated 

Lead Agency • Natural Resources Conservation Service (NRCS) 

Major Findings/ 

Recommendations 

• It is difficult to estimate the environmental benefits from Conservation Security Program’s enhancement activities 

that provide incentives for producers to achieve benefits greater than the minimum standards. 

Actions Taken/Planned • NRCS is developing outcome measures to assess program effectiveness related to its goals. 
ANNUAL PERFORMANCE REPORT 

109 

Program Evaluations of Performance Information 

 Perform. 

Measure Title Findings and Recommendations/Actions Availability 

1.1.1 General Accountability Office 

(GAO) Report, November 7, 

2007, GAO-08-59 – 

International Trade: An 

Analysis of Free Trade 

Agreements and 

Congressional and Private 

Sector Consultations under 

Trade Promotion Authority 

Findings: While this report contains no direct recommendations 

for USDA, the Secretary is expected to work on recommendations 

made to the office of the U.S. Trade Representative (USTR). 

Actions: Both USDA and USTR have indicated that they will 

improve the trade advisory committees’ membership listings to 

clearly state which interest group each member represents. USDA 

will acknowledge USTR’s lead in the advisory committee rechartering and member appointment processes. It will also work 

closely with USTR in whatever action it proposes to ensure that 

committee charters are not allowed to lapse.

Report is available at 

http://www.gao.gov/new.items/d0

859.pdf

Summit Consulting LLC in 

collaboration with Bearing 

Point and Nineteen, Inc. 

Findings: Foreign Agricultural Service (FAS) contracted a detailed 

actuarial study of historical recovery rates under the export credit 

guarantee program GSM-102.

Actions: USDA adjusted the credit subsidy rate used in budget 

formulation and reduced subsidy needs by approximately 60 

percent.

Please contact the FAS Office of 

Trade Programs 

1.1.1, 

1.2.1, 

1.2.2, 

1.3.1 

USDA Foreign Agricultural 

Service Customer 

Satisfaction Survey 2008, 

September 2008, CFI Group 

Findings: FAS tailored an American Customer Satisfaction Index 

survey to generate baseline data on customer satisfaction with the 

agency’s abilities to achieve agency strategic goals and objectives. 

The results show FAS above the Government-agency average in 

customer satisfaction. The study recommended that improvements 

in operational excellence would have the most impact in improving 

customer satisfaction. 

Actions: FAS will generate specific management initiatives to 

address survey results.

Please contact the FAS Office of 

Administrative Operations 

1.2.1 Comparative Evaluation of 

the Rockefeller G&D Borlaug 

Women in Science Fellowship 

Programs by Zenda Offir, 

Evalnet South Africa (USAID: 

January 2008) 

Findings: United States Agency for International Development

(USAID) recommended that the Borlaug Women in Science 

Program establish measures for a monitoring and evaluation 

system to track progress and accountability and improve program 

outreach.

Actions: FAS is establishing a monitoring and reporting system 

that facilitates the tracking of progress, accountability and 

information sharing amongst program stakeholders.

Please contact the FAS Office of 

Capacity Building and 

Development 

1.2.1, 

1.2.2 

GAO Report, May 29, 2008, 

GAO-08-680 – International 

Food Security: Insufficient 

Efforts by Host Governments 

and Donors Threaten 

Progress to Halve Hunger in 

Sub-Saharan Africa by 2015 

Findings: GAO recommends that USAID collaborate with USDA, 

State and Treasury to develop an integrated Government-wide 

U.S. strategy. That strategy would define actions and resources, 

enhance collaboration with host Governments and donors and 

improve measures to monitor progress. It also recommended that 

the Department report annually to Congress on the strategy’s 

implementation. 

Actions: Other than the above collaboration, this report contains 

no recommendations for the Secretary and it is likely that no 

further action is required. 

Report is available at 

http://www.gao.gov/new.items/d0

8680.pdf

USDA/OIG Report, July 22, 

2008, 07601-2-Hy – Export 

Credit Guarantee Program 

Findings: The Office of the Inspector General (OIG) found that 

FAS needs to develop a new guarantee fee structure for the GSM102 program. That structure should include the financial risk of 

both the country and bank itself. It adds that FAS also needs to 

develop and implement a records management system that 

complies with USDA DR-3080. 

Report is available at 

http://www.usda.gov/oig/webdocs

/07601-2-HY.pdf
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

110 

 Perform. 

Measure Title Findings and Recommendations/Actions Availability 

Actions: FAS is currently conducting a review of the major factors 

to be considered when determining risk premiums and will 

implement a revised premium structure after the completion of this 

review. FAS already has brought the GSM-102 claim files into 

compliance with DR-3080. 

1.4.1 OIG-50401-16-FM, Financial 

Statements for Fiscal Years 

2007 and 2006 

Findings: Deloitte reports that the financial statements present 

fairly, in all material respect, USDA’s Risk Management Agency’s 

(RMA) financial position as of September 20, 2007, and 2006, its 

net costs, changes in net position and budgetary resources for the 

years then ended, in conformity with generally accepted 

accounting principles. No weaknesses related to internal controls 

or noncompliance with laws and regulations are reported. 

Actions: No further action is required.

Report is available at 

http://www.usda.gov/oig/rptsaudit

srma.htm

OIG-05099-111-KC, 

Improved Financial 

Management Controls over 

Reinsured Companies 

Findings: To further strengthen its procedures and policies, OIG 

recommended RMA formalize written procedures for its 

operational analyses of reinsured companies. RMA also needs to 

continue coordination with NAIC and individual State insurance 

departments to identify what specific supplemental information still 

needs to be addressed among the agency and individual State 

insurance department regulators. 

Actions: RMA developed written procedures for the analysis 

process including scheduling, planning and follow up.

Report is available at 

http://www.usda.gov/oig/webdocs

/05099-111-KC.pdf

OIG-05099-112-KC, 

Contracting for Services 

Under the ARPA of 2000 

Findings: OIG did not find any improprieties during the audit. They 

did identify management controls that could be strengthened 

relative to RMA’s procedures for documenting, monitoring and 

administering the Agricultural Risk Protection Act (ARPA) contracts 

and partnership agreements. Additionally, the training for RMA 

officials responsible for managing these ARPA research and 

development projects could also be strengthened. 

Actions: RMA developed two repository Web sites to manage 

contracts and partnerships. The sites will be linked to a tracking 

system to monitor their status. RMA will conduct contracting officer 

training.

Report is available at 

http://www.usda.gov/oig/webdocs

/05099-112-KC_2.pdf

3.2.1 EPA Clean Watersheds 

Needs Survey 2000 and the 

EPA 1999 Drinking Water 

Infrastructure Needs Survey 

Findings: The U.S. Environmental Protection Agency (EPA) 

Clean Watersheds Needs Survey 2000 showed that small 

communities of 10,000 people or less have documented needs of 

$16 billion for wastewater systems. Needs for drinking water are 

significantly higher. The EPA 1999 drinking water survey showed 

$48.1 billion in needs for communities of 10,000 people or less 

and $31.2 billion in needs for communities of 3,300 people or less. 

Investments in new, high-quality, environmentally safe water and 

wastewater infrastructure or in replacing aging infrastructure 

reduce reductions and the migration of young people and attract 

new businesses. 

Actions: The Water Programs have developed a measure to track 

annually the number of borrowers, subscribers (customers) 

receiving new or improved services from water systems and 

facilities.

Available at: 

http://www.whitehouse.gov/omb/e

xpectmore/detail/10000458.2005.

html

3.2.5 Distance Learning and 

Telemedicine 

Findings: Grantee performance information is collected and made 

available to the public. 

Actions: Grantee performance review was conducted in April-May 

2007 and results published on the agency’s public Web site. 

Annual reviews are planned. 

The report is available at 

http://www.usda.gov/rus/telecom/

publications/pdf_files/dltperforma

nce-reportstudy.pdf
ANNUAL PERFORMANCE REPORT 

111 

 Perform. 

Measure Title Findings and Recommendations/Actions Availability 

4.1 Automated Targeting System 

(ATS) Evaluation 

Findings: The USDA Food Safety Inspection Service (FSIS ) 

Office of Program Evaluation, Enforcement and Review (OPEER), 

Program Evaluation and Improvement Staff (PEIS) evaluated data 

from the ATS pilot conducted at the ports of Philadelphia and 

Houston to test the targeting and handling of FSIS-regulated 

shipments potentially at high risk from intentional contamination. 

The final report, issued May 29, 2007, contains recommendations 

for improving the accuracy and efficiency of the ATS. 

Actions: FSIS has implemented the Import Alert Tracking System 

that enables better coordination in enforcement actions through 

quicker access to information collected on illegal entries. The 

agency has also initiated the electronic transfer of certificate data 

elements from the New Zealand Food Safety Authority into the 

FSIS Automated Import Information System (AIIS). The transfer 

will be expanded to Australia upon completion of the testing 

phase. Additionally, FSIS coordinated a public meeting with local, 

State and Federal health partners and consumer groups and 

industry to share best practices and challenges for effective 

coordination during multi-jurisdictional foodborne outbreaks.

Information may be requested 

from the USDA Food Safety 

Inspection Service—Office of 

Program Evaluation, 

Enforcement and Review, 

Program Evaluation and 

Improvement Staff 

USDA-FSIS (202) 720-6735 

4.1.3 FSIS Notice 65-07 

Implementation Evaluation 

Findings: The FSIS Program Evaluation and Improvement Staff 

(PEIS) evaluated the development and implementation of Notice 

65-07, which directed establishments to reassess their Hazard 

Analysis and Critical Control Point (HACCP) plans regarding 

control of E. coli O157:H7. PEIS also evaluated the development 

and implementation of a checklist and worksheet circulated with 

the directive to collect data on establishments’ controls for E. coli

O157:H7. PEIS found that the response rate to the checklist and 

worksheet was very high, yielding copious data. PEIS also made a 

number of recommendations for improving the collection of such 

data in the future. It will focus on data collection instrument design 

and associated training. 

Actions: FSIS expects to implement a mechanism for inspectionprogram personnel to identify specific production records upon 

which such information is based. The agency will also provide the 

establishment management an opportunity to review the collected 

information. Collection of such information in this manner provides 

FSIS a means to verify the source and accuracy of the information. 

http://www.usda.gov/oig/webdocs

/24601-07-HY.pdf

OIG Report No. 24601-4-KC: 

Audit Memorandum - Food 

Safety and Inspection Service 

Sampling and Testing for E. 

coli 

Findings: OIG concluded FSIS plans for improving the sampling 

and testing procedures for E. coli O157:H7, “if timely and 

effectively implemented, will strengthen FSIS’ verification activities 

and have a positive impact on identifying and mitigating food 

safety risks.” OIG made no recommendations. 

Actions: FSIS announced a number of actions to improve its E. 

coli sampling and testing program based on the significant 

increase in positive test results, related illnesses and recalls of 

potentially contaminated raw ground beef product. Microbial 

testing is one of several activities FSIS uses to verify that meat 

process establishments have designed their food safety systems 

to prevent hazards.

http://www.usda.gov/oig/webdocs

/24601-04-KC.pdf
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

112 

 Perform. 

Measure Title Findings and Recommendations/Actions Availability 

OIG Report No. 24601-09-Hy: 

Food Safety and Inspection 

Service Recall Procedures for 

Adulterated or Contaminated 

Product 

Findings: OIG concluded that “FSIS has taken strides to 

strengthen and improve its investigative and recall procedures and 

took full advantage of its current authority to address recalls, such 

as the Topps Meat Company (Topps) recall.” OIG recommended 

that FSIS: 1) develop a science-based sampling protocol to collect 

and analyze a representative quantity of intact samples to submit 

for testing during an outbreak investigation; and 2) finalize and 

implement the new directive for investigating foodborne illnesses 

and the revised directive for handling recalls. 

Actions: FSIS will develop and implement a science-based 

sampling protocol to collect a more representative sample of a 

product at an establishment during epidemiological investigations. 

The protocol will take into consideration the amount of relevant 

product available for testing. FSIS will also finalize and implement 

new directives for investigating foodborne illnesses and handling 

recalls. 

GAO High Risk List Item High Risk Issue: Almost 76 million people contract a foodborne 

illness in the U.S. annually. Another 325,000 require 

hospitalization and almost 5,000 die. Fragmented systems among 

Federal agencies have caused inconsistent oversight, ineffective 

coordination, and inefficient use of resources.

http://www.gao.gov/new.items/d0

7310.pdf

GAO High Risk List Item

Goal 1: Reduce illness 

caused by contamination of 

the food supply 

Actions (Findings): Prevent or deter intentional and unintentional 

contamination of food supply through risk-based, cost-effective 

allocation of resources. 

Milestone (Actions): Implement the Salmonella Initiative Program 

to provide incentives for meat and poultry plants whose processes 

control foodborne pathogens. Focus inspection activities in FSISregulated establishments to enhance its inspection personnel’s 

ability to comprehensively evaluate food-safety systems and take 

action to minimize consumer exposure to foodborne pathogens. 

Initiate internal review of CBP food agriculture inspection 

requirements for the next decade.

GAO High Risk List Item

Goal 2: Reduce illness 

caused by contamination of 

the food supply 

Actions (Findings): Early detection of contamination of the food 

supply. 

Milestone (Actions): Build a quality public health infrastructure 

with readily accessible data for key decision-makers and front-line 

personnel. Improve FDA detection systems and improve risk 

based annual import activities. Conduct real time surveillance of 

high-risk shipments of meat, poultry and egg products coming into 

the U.S. and vulnerability assessments focused on imports with 

FDA, USDA and the Bureau of Customs and Border Patrol. 

GAO High Risk List Item 

Goal 3: Reduce illness 

caused by contamination of 

the food supply 

Actions (Findings): Protect human health and mitigate impact of 

food supply contamination by responding rapidly in the even to 

food supply contamination through risk-based, cost-effective 

allocation of resources. 

Milestone (Actions): Enhance the Food Emergency Response 

Network to ensure better geographic coverage. Implement Supply 

Chain Source Verification Requirements to accelerate both the 

response and return to normalcy. Initiate development of new rapid 

response teams built on the California Food Emergency Response 

Team model. 
ANNUAL PERFORMANCE REPORT 

113 

 Perform. 

Measure Title Findings and Recommendations/Actions Availability 

4.2.1 GAO Report, July 2007, 

GAO-07-592 

 – National Animal 

Identification System:

USDA Needs to Resolve 

Several Key Implementation 

Issues to Achieve Rapid and 

Effective Disease Trace-back 

Findings: GAO recommended that the Secretary of Agriculture 

direct the Administrator of Animal and Plant Health Inspection 

Service (APHIS) to re-establish participation benchmarks to gauge 

progress in registering premises and identifying and tracking 

animals; monitor participation. If participation does not meet the 

benchmarks, further action will be necessary. In addition, GAO 

recommended that the Administrator of APHIS take seven other 

specific actions, as listed in the report, to implement National 

Animal Identification System (NAIS) more effectively and efficiently 

and achieve the program's goal of rapid and effective trace-back. 

Actions: On September 23, 2008, USDA published an updated 

version of A Business Plan to Achieve Animal Disease Traceability 

(available at www.usda.gov/nais). APHIS collaborated with 

Species Working Groups, State animal health officials and the 

National Animal Identification System (NAIS) Subcommittee to 

establish species-specific participation objectives and benchmarks 

that emphasize options to expand and more fully utilize existing 

animal disease programs. This business plan outlines actions that 

address all but one of the GAO recommendations for NAIS. USDA 

will address the remaining recommendation–requiring that 

participants submit more information than what is currently 

required in NAIS animal identification and tracking databases–

once more data are collected and USDA can analyze how well the 

current requirements meet animal health officials' need.

Report is available at 

http://www.gao.gov/cgibin/getrpt?GAO-07-592

5.1 Pennsylvania SFSP Rural 

Eligibility Pilot Evaluation 

Findings: Examines the impact of reducing the Summer Food 

Service Program (SFSP) eligibility threshold for poor economic 

areas in rural Pennsylvania from 50 percent to 40 percent of the 

children eligible for free and reduced-price school meals. The 

study found a 15-percent growth in SFSP sites during the pilot. 

Actions: No recommendations for action.

Available on the Food and 

Nutrition Service (FNS) Web site 

at: 

http://www.fns.usda.gov/oane/ME

NU/Published/CNP/FILES/PASF

SPRuralPilot.pdf

The Nebraska Rural Area 

Eligibility Determin`ation Pilot 

for the CACFP 

Findings: Examines the impact of reducing the Child and Adult 

Care Food Program (CACFP) area eligibility threshold in rural 

areas in Nebraska. Found that previously participating providers 

stayed in the program for longer periods under the pilot, resulting 

in an increase in the number of rural family day care homes. 

Actions: No recommendations for action.

Available on the FNS Web site at: 

http://www.fns.usda.gov/oane/ME

NU/Published/CNP/FILES/neraed

.pdf

5.2 School Nutrition Dietary 

Assessment III 

Findings: Examines the nutrient content of school meals, other 

foods sold in school and children’s diets. 

Actions: No recommendations for action.

Available on the FNS Web site at: 

http://www.fns.usda.gov/oane/ME

NU/Published/CNP/FILES/SNDAI

II-SummaryofFindings.pdf

Food Stamp Program: 

Options for Delivering 

Financial Incentives to 

Participants for Purchasing 

Targeted Foods, July 2008 

Findings: Examined ways to encourage food stamp participants to 

purchase healthy foods. It also described key factors to consider 

when designing such a program and possible options for 

implementing incentives. 

Actions: No recommendations for action.

Available on the GAO Web site 

at: 

http://www.gao.gov/new.items/d0

8415.pdf

5.3 Access, Participation, 

Eligibility and Certification 

Study, November 2007 

Findings: Estimates the level of program errors and related 

improper payments in the school meals programs. Roughly $1.8 

billion in payment errors, including both overpayments and 

underpayments, were made in the school meals programs during 

the 2005-2006 school year. 

Actions: While the report has no recommendations for action, 

USDA is addressing improper payments in these programs.

Available on the FNS Web site at: 

http://www.fns.usda.gov/oane/ME

NU/Published/CNP/FILES/apecv

ol1.pdf
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

114 

 Perform. 

Measure Title Findings and Recommendations/Actions Availability 

School Lunch and Breakfast 

Meal Cost – II, April 2008 

Findings: Estimates the level and types of costs to produce 

school meals and the level and sources of revenues used to cover 

them in school year 2005-06. In general, the study found that little 

had changed since meal costs were last examined (SY 1992-

1993). 

Actions: No recommendations for action.

Available on the FNS Web site at: 

http://www.fns.usda.gov/oane/ME

NU/Published/CNP/FILES/MealC

ostStudy.pdf

Electronic Payments: Many 

Programs Electronically 

Disburse Federal Benefits 

and More Outreach Could 

Increase Use 

Findings: Describes the extent to which Federal benefit programs 

are using electronic payments, factors agencies consider for their 

use and options for increasing use of electronic payments. Food 

Stamp and Women Infant and Children Program (WIC) 

experiences with electronic benefit payments are discussed 

throughout. 

Actions: No recommendations for action by USDA.

Available on the GAO Web site 

at: 

http://www.gao.gov/new.items/d0

8645.pdf

6.1 OIG Report No. 50601-12-KC 

issued October 2007. 

Hurricane Relief Initiatives: 

Emergency Watershed 

Protection Program and 

Disposal of Dead Animals 

Findings: Initial Allocations of Emergency Watershed Protection 

(EWP) Funding Not Directed to the Highest Priority Projects across 

the Disaster Impacted Area. 

Recommendations: For future major disasters, evaluate the use of 

program funding across the multi-State disaster area to ensure 

that available funding can be put to the highest priority or best use. 

Actions: As of April 8, 2008, A National Bulletin 390-14, was sent 

to State Conservationists Stating that Damage Survey Report will 

be used to prioritize sites within a State and to prioritize sites for 

funding during multi-state disasters. The EWP Program Manual at 

502.14 B identifies the funding priorities for recovery measures. 

These priorities are established in regulation (7 CFR 624.8(c)(3)) 

and, in order of importance, are: 

(i) Exigency situations; 

(ii) Sites where there is a serious, but not immediate threat to 

human life; and 

(iii) Sites where buildings, utilities or other important infrastructure 

components are threatened.

Findings: In the aftermath of the hurricanes, Natural Resources 

Conservation Service (NRCS) also provided a process whereby 

producers with dead poultry could receive assistance to help with 

the costs of removal and disposal of dead birds. The assistance 

rate paid by NRCS, for producer costs associated with the removal 

and disposal of dead poultry, was 

established in relation to the number of poultry houses subject to 

clean out, rather than the number of dead birds subject to 

disposal/burial. Thus, the assistance rate was not commensurate 

with the activity for which assistance was being provided and 

payments to producers were not always reasonable, based on the 

amount of work to be performed. Additionally, the assistance rate 

was not limited to reimbursement of actual cost incurred by 

producers. While producers were certified to the completion of 

required work, they were not required to submit invoices 

supporting actual expenses incurred in the disposal of dead 

poultry. 

Evaluate whether producers who received assistance at the onset 

of the payment process for the removal and disposal of dead 

poultry received reasonable amounts of assistance based on the 

required work performed. Initiate appropriate corrective actions for 

all cases where the amount of assistance was not reasonable 

based on the number of poultry subject to disposal/burial. 

Actions: An analysis was conducted. 

http://www.usda.gov/oig/webdocs

/50601-12-KC.pdf
ANNUAL PERFORMANCE REPORT 

115 

 Perform. 

Measure Title Findings and Recommendations/Actions Availability 

6.1, 6.2, 

6.3, 6.4 

GAO-08-755T report issued 

May 2008. 

Management of Civil Rights 

Efforts Continues to Be 

Deficient Despite Years of 

Attention 

Findings: GAO findings were in regards to weaknesses described 

in resolving discrimination complaints and providing minorities 

access to programs. NRCS' Civil Rights Division (CRD) has not 

completed nor been required to complete any evaluations that 

would impact the Department’s Assistant Secretary for Civil Rights 

(ASCR) planned actions to address the audit's findings. Thus, the 

response to the findings and recommendations/actions would be 

provided by the Department's ASCR. 

Actions: NRCS’ CRD continues to support the Department's 

ASCR wherein employment and program information is noted in 

the agency's strategic plan; all employees have a Civil Rights and 

Equal Employment Opportunity critical-performance element; 

timely submission of the Section 10708 (program outreach) report; 

and efficient processing of program and employment complaints 

party contractor, selected competitively to examine the 

effectiveness of its program-allocation formula, concluded that 

NRCS needs to (1) develop better outcome-based performance 

information and integrate the information into its allocation formula; 

(2) improve the analytical soundness of the allocation formulas, 

factors, weights and data particularity through the elimination of 

redundant factors; and (3) improve the transparency of the 

allocation formulas. Thus, recommendation 5 is closed. 

Recommendations 6 and 7 submitting for change of management 

decision.

http://www.gao.gov/new.items/d0

8755t.pdf

6.1, 6.3, 

6.4 

OIG 50099-11-SF report 

issued August 2007 

Natural Resources 

Conservation Service and 

Farm Service Agency: Crop 

Bases on Lands with 

Conservation Easements in 

California 

Findings: OIG recommended NRCS provide training for field 

office staff in California on their responsibilities for notifying the 

Farm Service Agency (FSA) of recorded easements. 

Actions: To ensure that this recommendation was completed, 

NRCS placed it as an action item in the agency’s business plan 

and individual performance plans. As of January, 31, 2008, the 

Easement Programs Division conducted training with California 

State and field office staff regarding their responsibilities of 

notifying FSA of recorded easements. A program review was also 

conducted in January 2008. NRCS continues to conduct monthly 

programmatic and administrative training via teleconference with 

its State and field office staff nationwide. 

Actions: Management decision reached on all NRCS 

recommendations. The Office of the Chief Financial Officer 

accepted final action and closed this audit for NRCS in April 2008.

http://www.usda.gov/oig/webdocs

/50099-11-SF.pdf

6.2, 6.3 GAO-07-1054 report issued 

September 2007. 

Agricultural Conservation: 

Farm Program Payments Are 

an Important Factor in 

Landowners’ Decisions to 

Convert Grassland to 

Cropland 

Findings: GAO recommends that USDA (1) track the annual 

conversion of native grassland to cropland to provide policymakers 

with more comprehensive and current information on such 

conversions; and (2) the Secretary of Agriculture direct the 

Economic research Service and FSA administrators and the NRCS 

chief to jointly study the extent to which farm program payments 

and conservation programs may be working at cross purposes and 

report findings to the Secretary and Congress.

Actions: FSA adjusted its reporting system to provide information 

from its crop acreage reports to produce an annual report. The 

report identified the acres of crops planted on non-cropland, the 

greater part of which consists of rangeland that has not previously 

been cropped. Additionally, to the extent possible, FSA will also 

identify in the annual report those newly reported acres that were 

converted from native grasslands.

http://www.gao.gov/new.items/d0

71054.pdf
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

116 

 Perform. 

Measure Title Findings and Recommendations/Actions Availability 

ERS, FSA and NRCS will convene a working group to explore data 

availability and approaches to producing a report covering farm 

program payments and conservation programs that may be 

working at cross purposes. The multi-agency group will present a 

report plan to the Secretary of Agriculture. ERS has drafted one 

and is circulating it at the agency level for comments with the 

expectation it can be presented for the Secretary's review.

6.2, 6.4 OIG Report No. 50601-13-

KC issued June 2008. 

Natural Resources 

Conservation Service 

Status Review Process 

Findings: OIG evaluated changes to the status review process 

based on prior audit recommendations it made with GAO. The 

changes were related to tract selection for status reviews, steps for 

performing the status review process and the reporting of status 

review results. 

Actions: The report contains no recommendations. NRCS 

satisfactorily implemented key improvements regarding the 

sampling methodology and the process by which status review 

results are summarized, analyzed and reported.

http://www.usda.gov/oig/webdocs

/50601-13-KC.pdf

6.3.1 

6.3.2 

6.3.3 

OIG Audit 08601-52-SF, 

August 2008, FS Renewable 

Energy Program

Findings: The OIG found that FS needs to establish national and 

regional renewable energy goals. IG added that, while Forest 

Service (FS) does have a national strategy for woody biomass, the 

plan does not include annual performance measures for using 

woody biomass for renewable energy purposes, nor does it 

establish quantifiable performance measures for FS’ regions. 

Actions: When FS updates its national strategy plan, it will add 

objectives and strategies on renewable energy resources, as 

appropriate. Meantime, FS will use the climate change strategic 

framework and the woody biomass strategy for national renewable 

energy planning. 

Findings: OIG found that FS did not implement the woody 

biomass renewable energy program consistently. While FS made 

each of its regions responsible, it gave no direction about what 

staff resources to allocate and how to execute the program. Thus, 

some regions were noticeably less productive than others at 

fostering collaborative efforts to increase the supply of renewable 

energy.

Actions: FS will continue to assess staffing needs to meet 

multiple goals, including renewable energy resources. The regions, 

stations and Northeast area will identify key individuals for other 

aspects of renewable energy resources. FS will also develop 

standardized position descriptions as much as possible. If regional 

woody biomass renewable energy coordinator positions are 

established, the position description will be standardized.

Findings: OIG found that FS does not track information pertaining 

to its renewable energy program adequately. Specifically, 

hazardous fuels reduction work in FS’ forests produces green tons 

of biomass materials (e.g., underbrush) that are renewable energy 

resources. However, FACTS does not contain a field for these 

green tons. Instead, it has a checkbox that only allows the user to 

mark whether or not any biomass materials were produced during 

the fuels reduction, without a choice for the quantity produced. 

This practice denies FS the opportunity to: (1) track any green tons 

used for renewable energy purposes; and (2) ascertain the amount 

of potential renewable energy available nationwide from biomass 

materials harvested. even if they are not used. IG also found that 

policies and guidelines in the FS handbook/manual that establish 

tracking and reporting procedures for the improved automated 

database system(s) are needed.

Report is available at: 

http://www.usda.gov/oig/webdocs

/08601-52-SF.pdf. 
ANNUAL PERFORMANCE REPORT 

117 

 Perform. 

Measure Title Findings and Recommendations/Actions Availability 

Actions: FS began collecting woody biomass data (green ton) 

during Fiscal Year 2007 from all vegetation management activities 

that utilize woody biomass removed from National Forest System 

(NFS) lands for energy purposes. All other wood products 

removed from NFS lands are accounted for and tracked though 

the same processes and databases. FS will continue to use and 

modify current data base systems. It has developed and issued 

policy and guidelines using a policy letter to field units for woody 

biomass tracking. The policy letter will be added to the 

manual/handbook.

6.4 GAO-08-130 report issued 

December 2007. 

Coastal Wetlands: Lessons 

Learned from Past Efforts in 

Louisiana Could Help Guide 

Future Restoration and 

Protection 

Findings: While GAO’s review closed with no issuance of 

recommendations, it emphasized the need for agencies to 

carefully consider the lessons learned from the Coastal Wetlands 

Planning, Protection and Restoration Act program as they propose 

significantly larger efforts to restore Louisiana’s coast. GAO 

received technical comments from the U.S. Department of 

Commerce and the U.S. Environmental Protection Agency, which 

have been incorporated as appropriate. 

Actions: Audit closed October 14, 2007. Letter sent to GAO dated 

December 19, 2007, from Under Secretary of Natural Resources 

and Environmnet mission area addressing two incorrect items in 

the report.

http://www.gao.gov/new.items/d0

8130.pdf

OIG Report No. OIG/10099-4-

SF issued August 2008. 

Wetlands Reserve Program – 

Wetlands restoration and 

Compliance 

Findings: Management decision reached on recommendations 1, 

2, 3, 4, 5, 6, and 8 in late August 2008. OIG Recommendation 7: 

Direct the NRCS Arkansas State Office to collect the $578 cost 

share or provide supporting documentation to substantiate in-kind 

contribution from the landowner. 

Actions: NRCS is working with the landowner to collect the $578 

of cost-share. This transaction is scheduled to be completed in 

2008. 

http://www.usda.gov/oig/webdocs

/10099-4-SF.pdf
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

118 
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119 

 

Financial Statements, 

Notes, Supplemental and 

Other Accompanying 

Information

Message from the Chief Financial Officer 

The Department of Agriculture (USDA) programs and activities affect 

every American, every day, by providing a safe and stable food supply, 

nutrition assistance, renewable energy, rural economic development, 

care for forest and conservation lands, and global opportunities for 

farm and forest products. To successfully accomplish its mission, 

USDA operates more than 300 programs worldwide through an 

extensive network of Federal, State, and local cooperators. 

The employees of the USDA work hard. They understand the 

importance of customer centric service, efficient processes, and fiscal 

responsibility in executing the programs funded by Congress. Here is a 

brief list of our results: 

 As the nation’s eighth largest bank in terms of loan portfolios. USDA’s loan portfolio is 

valued at $107 billion. USDA makes loans for housing, power generation, water treatment 

facilities, and business and industry loans. The loan servicing center measures customer 

service, response times, and delinquent loans against national bank standards. These 

measurements show that USDA operations are in the top tier in all three measurements. 

The current delinquent amount for our loans is $3.3 billion or 3.1 percent of the portfolio. 

This is a vast reduction from the $6.6 billion or $6.6 percent recognized in fiscal year 2003. 

This year, with collections over $1.1 billion, USDA was recognized as one of the top 

collectors of delinquent debt in the government. 

 USDA was recognized through the President’s Management Agenda Scorecard for the 

reduction in improper payments from $4.6 billion in FY 2007 to $4.1 billion in FY 2008. 

This recognition and reduction occurred while including in the measurement of two 

additional nutrition assistance programs. 

 Over the past 2 fiscal years, USDA identified and tracked 218 control deficiencies and has 

corrected 172, or 72 percent, of the prior year’s deficiencies. Once again USDA reduced 

the number of open audit issues. 

 Twelve months ago, USDA began implementation of a 36 month plan to correct the 

material weakness for IT Security. This year USDA OCIO reorganized its operations, 

held monthly security meetings with the agencies, procured Department-wide security 

tools, and implemented a new monitoring system. The audit report notes that 

improvement in Information Technology Security for multiple agencies and the progress 

of the Department. 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

120 

While we continue to make progress in financial management, we cannot yet give unqualified assurance of 

compliance with the Federal Managers’ Financial Integrity Act or the financial systems requirements of the Federal 

Financial Management Improvement Act. We continue to focus on this issue by supporting the replacement of the 

core general ledger system and the farm payment systems. Both these systems are out dated and no longer 

supported by their vendors. 

Our employees are dedicated to protecting and managing the substantial resources entrusted to them by Congress 

and the American people to perform the important work of this Department. We are proud of our 

accomplishments for FY 2008 and the hard working employees at USDA. USDA is committed to providing sound 

management of the resources under our stewardship and to communicating the effectiveness of our efforts to all 

Americans through this Performance and Accountability Report.

Charles R. Christopherson, Jr. 

Chief Financial Officer 

Chief Information Officer 

November 17, 2008 
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Consolidated Balance Sheet

As of September 30, 2008 and 2007 

(In Millions) 

2008 2007

Assets (Note 2):

Intragovernmental:

Fund Balance with Treasury (Note 3) 64,595 $ 47,340 $ 

Investments (Note 5) 109 94 

Accounts Receivable, Net (Note 6) 249 364 

Other (Note 11) 5 - 

Total Intragovernmental 64,958 47,798 

Cash and Other Monetary Assets (Note 4) 348 218 

Investments (Note 5) 3 3 

Accounts Receivable, Net (Note 6) 10,049 8,854 

Direct Loan and Loan Guarantees, Net (Note 7) 81,774 80,348 

Inventory and Related Property, Net (Note 8) 15 185 

General Property, Plant, and Equipment, Net (Note 9) 2,973 4,931 

Other (Note 11) 253 151 

Total Assets 142,488 160,373 

Stewardship PP&E (Note 10)

Liabilities (Note 12):

Intragovernmental:

Accounts Payable 7 12 

Debt (Note 13) 77,577 75,101 

Other (Note 15) 13,678 13,753 

Total Intragovernmental 91,262 88,866 

Accounts Payable 848 806 

Loan Guarantee Liability (Note 7) 1,333 1,258 

Federal Employee and Veteran Benefits 832 775 

Environmental and Disposal Liabilities (Note 14) 25 105 

Benefits Due and Payable 2,764 2,854 

Other (Notes 15 & 16) 23,908 20,117 

Total Liabilities 114,781 120,972 

Commitments and Contingencies (Note 17)

Net Position:

Unexpended Appropriations - Earmarked Funds (Note 18) 1,428 1,113 

Unexpended Appropriations - Other Funds 29,355 29,824 

Cumulative Results of Operations - Earmarked Funds (Note 18) (490) 803 

Cumulative Results of Operations - Other Funds 9,108 (4,033) 

Total Net Position 27,707 39,401 

Total Liabilities and Net Position $ 142,488 160,373 $ 

Consolidated Financial Statements 

The accompanying notes are an integral part of these statements. 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 

149 

Consolidated Statement of Net Cost 

For the Years Ended September 30, 2008 and 2007 

(In Millions) 

2008 2007

Enhance International Competitiveness

of American Agriculture:

Gross Cost 2,484 $ 2,099 $ 

Less: Earned Revenue 455 615 

Net Cost 2,029 1,484 

Enhance the Competitiveness and Sustainability

of Rural and Farm Economies:

Gross Cost 20,995 21,424 

Less: Earned Revenue 3,836 6,325 

Net Cost 17,159 15,099 

Support Increased Economic Opportunities and 

Improved Quality of Life in Rural America:

Gross Cost 8,426 6,952 

Less: Earned Revenue 4,547 4,750 

Net Cost 3,879 2,202 

Enhance Protection and Safety of the Nation's

Agriculture and Food Supply:

Gross Cost 3,374 3,271 

Less: Earned Revenue 935 762 

Net Cost 2,439 2,509 

Improve the Nation's Nutrition and Health:

Gross Cost 60,181 53,991 

Less: Earned Revenue 49 43 

Net Cost 60,132 53,948 

Protect and Enhance the Nation's 

Natural Resource Base and Environment:

Gross Cost 12,105 11,824 

Less: Earned Revenue 1,010 745 

Net Cost 11,095 11,079 

Total Gross Costs 107,565 99,561 

Less: Total Earned Revenues 10,832 13,240 

Net Cost of Operations (Note 19) $ 86,321 96,733 $ 

The accompanying notes are an integral part of these statements. 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

150 

Consolidated Statement of Changes in Net Position 

For The Year Ended September 30, 2008 

(In Millions) 

Earmarked

Funds All Other Consolidated

(Note 18) Funds Eliminations Total

Cumulative Results of Operations:

Beginning Balances 803 $ (4,033) $ - $ (3,230) $ 

Changes in Accounting Principles (Note 30) (14) 11,550 - 11,536 

Beginning Balance, as Adjusted 789 7,517 - 8,306 

 Budgetary Financing Sources:

Appropriations Used 3,517 86,379 - 89,896 

Non-exchange Revenue - 19 - 19 

Donations and Forfeitures of Cash and Equivalents 1 23 - 24 

Transfers In (Out) without Reimbursement 1,247 5,291 - 6,538 

 Other Financing Sources (Non-Exchange):

Transfers In (Out) without Reimbursement (32) (359) - (391) 

Imputed Financing 46 3,429 (2,568) 907 

Other (32) 84 - 52 

Total Financing Sources 4,863 94,750 (2,568) 97,045 

Net Cost of Operations (6,142) (93,159) 2,568 (96,733) 

Net Change (1,279) 1,591 - 312 

 Cumulative Results of Operations 9,108 (490) - 8,618 

Unexpended Appropriations:

Beginning Balances 1,113 29,824 - 30,937 

Changes in Accounting Principles (Note 30) - - - - 

 Beginning Balance, as Adjusted 1,113 29,824 - 30,937 

 Budgetary Financing Sources:

 Appropriations Received 4,157 86,854 - 91,011 

 Appropriations Transferred In (Out) (3) 10 - 7 

 Other Adjustments (322) (954) - (1,276) 

 Appropriations Used (3,517) (86,379) - (89,896) 

Total Budgetary Financing Sources 315 (469) - (154) 

Unexpended Appropriations 29,355 1,428 - 30,783 

Net Position $ 38,463 938 $ - $ 39,401 $ 

The accompanying notes are an integral part of these statements. 
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151 

Consolidated Statement of Changes in Net Position 

For The Year Ended September 30, 2007 

(In Millions) 

Earmarked

Funds All Other Consolidated

(Note 18) Funds Eliminations Total

Cumulative Results of Operations:

Beginning Balances 518 $ (16,627) $ - $ (16,109) $ 

Changes in Accounting Principles (Note 30) (59) 1,020 - 961 

Beginning Balance, as Adjusted 459 (15,607) - (15,148) 

 Budgetary Financing Sources:

Appropriations Used 4,116 89,175 - 93,291 

Non-exchange Revenue - 12 - 12 

Donations and Forfeitures of Cash and Equivalents 1 - - 1 

Transfers In (Out) without Reimbursement 882 3,504 - 4,386 

 Other Financing Sources (Non-Exchange):

Transfers In (Out) without Reimbursement - (460) - (460) 

Imputed Financing 52 3,480 (2,527) 1,005 

Other - 4 - 4 

Total Financing Sources 5,055 95,711 (2,527) 98,239 

Net Cost of Operations (4,711) (84,137) 2,527 (86,321) 

Net Change 344 11,574 - 11,918 

 Cumulative Results of Operations (4,033) 803 - (3,230) 

Unexpended Appropriations:

Beginning Balances 976 25,409 - 26,385 

Changes in Accounting Principles (Note 30) - (209) - (209) 

 Beginning Balance, as Adjusted 976 25,200 - 26,176 

 Budgetary Financing Sources:

 Appropriations Received 4,392 94,999 - 99,391 

 Appropriations Transferred In (Out) (5) 15 - 10 

 Other Adjustments (134) (1,215) - (1,349) 

 Appropriations Used (4,116) (89,175) - (93,291) 

Total Budgetary Financing Sources 137 4,624 - 4,761 

Unexpended Appropriations 29,824 1,113 - 30,937 

Net Position $ 25,791 1,916 $ - $ 27,707 $ 

The accompanying notes are an integral part of these statements. 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

152 

Combined Statement of Budgetary Resources 

For The Years Ended September 30, 2008 And 2007 

(In Millions) 

Non-Budgetary Non-Budgetary

Credit Reform Credit Reform

Budgetary Financing Accounts Budgetary Financing Accounts

Budgetary Resources:

Unobligated balance, brought forward, October 1 27,756 $ 5,208 $ 21,282 $ 3,715 $ 

Recoveries of prior year unpaid obligations 4,103 1,226 3,175 1,445 

Budget Authority -

Appropriation 102,655 - 108,428 - 

Borrowing Authority 30,267 14,911 41,185 12,478 

Earned -

Collected 23,370 8,855 26,158 8,513 

Change in receivables from Federal Sources (45) (177) (1,069) 4 

Change in unfilled customer orders -

Advances received (6) - (170) - 

Without advance from Federal Sources 12 241 96 8 

Expenditure transfers from trust funds 963 - 934 - 

Nonexpenditure transfers, net, anticipated and actual (743) - (336) - 

Temporarily not available pursuant to Public Law (11) - (36) - 

Permanently not available (38,925) (6,911) (57,635) (6,257) 

Total Budgetary Resources 149,396 23,353 142,012 19,906 

Status of Budgetary Resources:

Obligations Incurred -

Direct 95,085 18,039 83,743 14,698 

 Reimbursable 26,233 - 30,513 - 

Unobligated Balance -

 Apportioned 7,925 2,784 8,794 1,917 

Exempt from Apportionment 1,100 5 1,351 5 

Unobligated balance not available 19,053 2,525 17,611 3,286 

Total Status of Budgetary Resources 149,396 23,353 142,012 19,906 

Change in Obligated Balances:

Obligated balance, net, brought forward October 1 25,472 18,107 26,537 18,900 

Obligations incurred 121,318 18,039 114,256 14,698 

Gross outlays (117,444) (14,162) (113,118) (14,034) 

Recoveries of prior year unpaid (4,103) (1,226) (3,175) (1,445) 

Change in uncollected payments from Federal Sources 33 (64) 973 (12) 

Obligated balance, net, end of period -

Unpaid obligations 26,616 21,590 26,844 18,940 

Uncollected customer payments from Federal Sources (1,339) (896) (1,372) (833) 

Obligated Balance, net, end of period 25,277 20,694 25,472 18,107 

Net Outlays:

Gross outlays 117,444 14,162 113,118 14,034 

Offsetting collections (24,327) (8,855) (26,921) (8,514) 

Distributed offsetting receipts (1,889) (353) (1,303) (464) 

Net Outlays 91,228 $ 4,954 $ 84,894 $ 5,056 $ 

2008 2007

The accompanying notes are an integral part of these statements. 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 

153 

Notes to the Consolidated Financial Statements 

As of September 30, 2008 and 2007 

(In Millions) 

NOTE 1. SIGNIFICANT ACCOUNTING POLICIES 

Organization 

The Department of Agriculture (USDA) provides a wide variety of services in the United States and around the 

world. USDA is organized into seven distinct mission areas and their agencies that execute these missions. 

Listed below are the missions and the agencies within each mission including four Government corporations: 

Farm and Foreign Agricultural Services (FFAS) 

 Farm Service Agency (FSA) 

 Commodity Credit Corporation (CCC) 

 Foreign Agricultural Service (FAS) 

 Risk Management Agency (RMA) 

 Federal Crop Insurance Corporation (FCIC) 

Food, Nutrition, and Consumer Services (FNCS) 

 Food and Nutrition Service (FNS) 

Food Safety 

 Food Safety and Inspection Service (FSIS) 

Marketing and Regulatory Programs (MRP) 

 Agricultural Marketing Service (AMS) 

 Animal and Plant Health Inspection Service (APHIS) 

 Grain Inspection, Packers and Stockyards Administration (GIPSA) 

Natural Resources and Environment (NRE) 

 Forest Service (FS) 

 Natural Resources Conservation Service (NRCS) 

Research, Education, and Economics (REE) 

 Agricultural Research Service (ARS) 

 Cooperative State Research, Education, and Extension Service (CSREES) 

 Economic Research Service (ERS) 

 National Agricultural Statistics Service (NASS) 

Rural Development 

 Rural Development (RD) 

 Rural Telephone Bank (RTB) – a corporation 

 Alternative Agricultural Research and Commercialization Corporation (AARC) 

With the passage of the 2006 Agriculture, Rural Development, Food and Drug Administration, and Related 

Agencies Appropriation Act, Public Law No. 109-97, the legal restriction on redeeming Government-owned Class 

A stock was removed for RTB. As a result of this change, the process of liquidation and dissolution of the RTB 

began. During FY 2008, RTB was dissolved in its entirety and will no longer be a reportable entity. 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

154 

Consolidation 

The financial statements consolidate all the agencies’ results. The effects of intradepartmental activity and balances 

are eliminated, except for the Statement of Budgetary Resources that is presented on a combined basis. The 

financial statements are prepared in accordance with generally accepted accounting principles for the Federal 

Government. 

Effective for FY 2007, the Statement of Financing will be presented as a note per Office of Management and 

Budget’s (OMB) authority under Statement of Federal Financial Accounting Standards (SFFAS) 7 and will no 

longer be considered a Basic Statement. The Statement of Financing will now be a display in the notes and 

referred to as “Reconciliation of Budgetary Resources Obligated to Net Cost of Operations.” 

Reclassifications 

Certain reclassifications have been made to prior year amounts to conform to the current year presentation. In 

FY 2008, liabilities for entitlements and grants were reclassified from Accounts Payable to Benefits Due and 

Payable and Other Liabilities, respectively to conform to OMB and Treasury guidance. 

Use of Estimates 

The preparation of financial statements requires management to make estimates and assumptions that affect the 

amounts reported in the financial statements and accompanying notes. Actual results could differ from those 

estimates. 

Revenue and Other Financing Sources 

Revenue from exchange transactions is recognized when persuasive evidence of an arrangement exists, delivery has 

occurred or services have been rendered, sales price is fixed or determinable, and collection is reasonably assured. In 

certain cases, the prices charged by the Department are set by law or regulation, which for program and other 

reasons may not represent full cost. Prices set for products and services offered through the Department’s working 

capital funds are intended to recover the full costs incurred by these activities. Revenue from non-exchange 

transactions is recognized when a specifically identifiable, legally enforceable claim to resources arises, to the extent 

that collection is probable and the amount is reasonably estimable. Appropriations are recognized as a financing 

source when used. An imputed financing source is recognized for costs subsidized by other Government entities. 

Investments 

The Department is authorized to invest certain funds in excess of its immediate needs in Treasury securities. 

Investments in non-marketable par value Treasury securities are classified as held to maturity and are carried at cost. 

Investments in market-based Treasury securities are classified as held to maturity and are carried at amortized cost. 

The amortized cost of securities is based on the purchase price adjusted for amortization of premiums and accretion 

of discounts using the straight-line method over the term of the securities. 

Accounts Receivable 

Accounts receivable are reduced to net realizable value by an allowance for uncollectible accounts. The adequacy of 

the allowance is determined based on past experience and age of outstanding balances. 

Direct Loans and Loan Guarantees 

Direct loans obligated and loan guarantees committed after fiscal 1991 are reported based on the present value of 

the net cash-flows estimated over the life of the loan or guarantee. The difference between the outstanding 

principal of the loans and the present value of their net cash inflows is recognized as a subsidy cost allowance; the 

present value of estimated net cash outflows of the loan guarantees is recognized as a liability for loan guarantees. 

The subsidy expense for direct or guaranteed loans disbursed during the year is the present value of estimated net 

cash outflows for those loans or guarantees. A subsidy expense also is recognized for modifications made during the 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 

155 

year to loans and guarantees outstanding and for reestimates made as of the end of the year to the subsidy 

allowances or loan guarantee liability for loans and guarantees outstanding. 

Direct loans obligated and loan guarantees committed before fiscal 1992 are valued using the present-value method. 

Under the present-value method, the outstanding principal of direct loans is reduced by an allowance equal to the 

difference between the outstanding principal and the present value of the expected net cash flows. The liability for 

loan guarantees is the present value of expected net cash outflows due to the loan guarantees. 

Inventories and Related Property 

Inventories to be consumed in the production of goods for sale or in the provision of services for a fee are valued on 

the basis of historical cost using a first-in, first-out method. Commodities are valued at the lower of cost or net 

realizable value using a weighted average method. 

Property, Plant and Equipment 

Property, plant and equipment (PP&E) are stated at cost less accumulated depreciation. Depreciation is determined 

using the straight-line method over the estimated useful lives of the assets. Useful lives for PP&E are disclosed in 

Note 9. Capitalization thresholds for personal property and real property are $25,000 and $100,000 for internal use 

software. There are no restrictions on the use or convertibility of PP&E. 

Pension and Other Retirement Benefits 

Pension and other retirement benefits (primarily retirement health care benefits) expense is recognized at the time 

the employees’ services are rendered. The expense is equal to the actuarial present value of benefits attributed by the 

pension plan’s benefit formula, less the amount contributed by the employees. An imputed cost is recognized for 

the difference between the expense and contributions made by and for employees. 

Other Post-employment Benefits 

Other post-employment benefits expense for former or inactive (but not retired) employees is recognized when a 

future outflow or other sacrifice of resources is probable and measurable on the basis of events occurring on or 

before the reporting date. The liability for long-term other post-employment benefits is the present value of future 

payments. 

Earmarked Funds 

In accordance with SFFAS 27, Identifying and Reporting Earmarked Funds, which became effective in FY 2006, 

the Department has reported the earmarked funds for which it has program management responsibility when the 

following three criteria are met: (1) a statute committing the Federal Government to use specifically identified 

revenues and other financing sources only for designated activities, benefits or purposes; (2) explicit authority for 

the earmarked fund to retain revenues and other financing sources not used in the current period for future use to 

finance the designated activities, benefits or purposes; and (3) a requirement to account for and report on the 

receipt, use, and retention of the revenues and other financing sources that distinguishes the earmarked fund from 

the Government’s general revenues. 

Stewardship PP&E 

SFFAS 29, Heritage Assets and Stewardship Land, was issued in July 2005. SFFAS 29 reclassified all heritage 

assets and stewardship land information as basic except for condition information, which is classified as RSI. The 

reclassification as basic is being phased in per SFFAS 29. Heritage assets and stewardship land information that 

was previously reported in RSSI will temporarily shift to RSI until it moves to a note on the balance sheet as basic 

information. The phase-in of disclosure requirements being reported as basic information provides that SFFAS 29 

will be fully implemented for reporting periods beginning after September 30, 2008. 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

156 

Contingencies 

Contingent liabilities are recognized when a past event or exchange transaction has occurred, a future outflow or 

other sacrifice of resources is probable, and the future outflow or sacrifice of resources is measurable. 

Allocation Transfers 

The Department is a party to allocation transfers with other federal agencies as both a transferring (parent) entity 

and/or a receiving (child) entity. Allocation transfers are legal delegations by one department of its authority to 

obligate budget authority and outlay funds to another department. A separate fund account (allocation account) is 

created in the U.S. Treasury as a subset of the parent fund account for tracking and reporting purposes. All 

allocation transfers of balances are credited to this account, and subsequent obligations and outlays incurred by the 

child entity are charged to this allocation account as they execute the delegated activity on behalf of the parent 

entity. 

The Department allocates funds, as the parent, to the Department of Transportation, Department of the Interior, 

Department of Defense, Department of Housing and Urban Development, U.S. Agency for International 

Development and the Small Business Administration. The Department receives allocation transfers, as the child, 

from the Department of Labor, Department of Transportation, Department of the Interior, Economic 

Development Administration, Appalachian Regional Commission and the Delta Regional Authority. 

Limitations of the Financial Statements 

The financial statements report the financial position and results of operations of the entity, pursuant to the 

requirements of 31 U.S.C. 3515(b). 

While the statements have been prepared from the books and records of the entity in accordance with the formats 

prescribed by the OMB, they also are used to monitor and control budgetary resources, which are prepared from 

the same books and records. 

The statements should be read with the realization that they are for a component of the U.S. Government, a 

sovereign entity. Thus, liabilities cannot be liquidated without enabling legislation that provides resources to do so. 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 

157 

NOTE 2. NON-ENTITY ASSETS 

Non-entity assets include proceeds from the sale of timber payable to Treasury, timber contract performance bonds, 

employer contributions and payroll taxes withheld for agencies serviced by the National Finance Center, property 

taxes and insurance for single family housing, interest, fines and penalties. 

FY 2008 FY 2007

Intragovernmental:

Fund balance with Treasury 62 $ 106 $ 

Accounts Receivable 23 - 

Subtotal Intragovernmental 85 106 

With the Public:

Cash and other monetary assets 125 109 

Accounts receivable 127 47 

Subtotal With the Public 252 156 

Total non-entity assets 337 262 

Total entity assets 160,036 142,226 

Total Assets 160,373 $ 142,488 $ 

NOTE 3. FUND BALANCE WITH TREASURY 

Other Fund Types include deposit and clearing accounts. Borrowing Authority not yet Converted to Fund Balance 

represents un-obligated and obligated amounts recorded at year-end that will be funded by future borrowings. 

Non-Budgetary Fund Balance with Treasury includes special fund receipt accounts; and clearing and suspense 

account balances awaiting disposition or reclassification. 

FY 2008 FY 2007

Fund Balances:

 Trust Funds $ 449 633 $ 

 Special Funds 1,498 17,239 

 Revolving Funds 8,338 6,395 

 General Funds 38,326 38,977 

 Other Fund Types 21 59 

Total 47,340 64,595 

Status of Fund Balance with Treasury:

Unobligated Balance:

 Available 12,067 11,814 

 Unavailable 20,897 21,577 

Obligated Balance not yet Disbursed 45,841 43,471 

Borrowing Authority not yet Converted to Fund Balance (29,681) (29,162) 

Non-Budgetary Fund Balance with Treasury 15,044 67 

Total $ 47,340 64,595 $ 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

158 

NOTE 4. CASH AND OTHER MONETARY ASSETS 

In fiscal 2008 and 2007, cash includes Federal crop insurance escrow amounts of $130 million and $79 million, 

funds held in escrow for single family housing borrowers of $125 million and $109 million and certificates of 

deposit of $1 million and $29 million, respectively. In fiscal 2008, $92 million of price support transfers were in 

transit. 

FY 2008 FY 2007

Cash $ 218 348 $ 

NOTE 5. INVESTMENTS 

FY 2008 Unamortized Market

Amortization Premium/ Interest Investments, Value

Method Cost (Discount) Receivable Net Disclosure

Intragovernmental:

Non-marketable

Par value - $ - $ - $ - $ - $ 

Market-based Straight Line 107 1 1 109 109 

Total 107 $ 1 $ 1 $ 109 $ 109 $ 

With the Public:

AARC 3 $ - $ - $ 3 $ 3 $ 

Total 3 $ - $ - $ 3 $ 3 $ 

FY 2007 Unamortized Market

Amortization Premium/ Interest Investments, Value

Method Cost (Discount) Receivable Net Disclosure

Intragovernmental:

Non-marketable

Par value 88 $ - $ - $ 88 $ - $ 

Market-based Straight Line 6 - - 6 6 

Total 94 $ - $ - $ 94 $ 6 $ 

With the Public:

AARC 3 $ - $ - $ 3 $ 3 $ 

Total 3 $ - $ - $ 3 $ 3 $ 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 

159 

NOTE 6. ACCOUNTS RECEIVABLE, NET 

FY 2008

Accounts 

Receivable, 

Gross

Allowance for 

Uncollectible 

Accounts

Accounts 

Receivable, 

Net

Intragovernmental 249 $ - $ 249 $ 

With the Public 10,079 (30) 10,049 

Total 10,328 $ (30) $ 10,298 $ 

FY 2007

Accounts 

Receivable, 

Gross

Allowance for 

Uncollectible 

Accounts

Accounts 

Receivable, 

Net

Intragovernmental 364 $ - $ 364 $ 

With the Public 8,899 (45) 8,854 

Total 9,263 $ (45) $ 9,218 $ 

NOTE 7. DIRECT LOANS AND GUARANTEES, NON-FEDERAL BORROWERS 

Direct Loans 

Direct loan obligations or loan guarantee commitments made pre-1992 and the resulting direct loans or loan 

guarantees are reported at net present value. 

Direct loan obligations or loan guarantee commitments made post-1991, and the Federal Credit Reform Act of 

1990 as amended governs the resulting direct loan or loan guarantees. The Act requires agencies to estimate the 

cost of direct loans and loan guarantees at present value for the budget. Additionally, the present value of the 

subsidy costs (i.e. interest rate differentials, interest subsidies, delinquencies and defaults, fee offsets and other cash 

flows) associated with direct loans and loan guarantees are recognized as a cost in the year the loan or loan 

guarantee is disbursed. The net present value of loans or defaulted guaranteed loans receivable at any point in time 

is the amount of the gross loan or defaulted guaranteed loans receivable less the present value of the subsidy at that 

time. 

The net present value of Direct Loan and Loan Guarantees, Net is not necessarily representative of the proceeds 

that might be expected if these loans were sold on the open market. 

Direct Loan and Loan Guarantees, Net at the end of FY 2008 was $81,774 million compared to $80,348 million at 

the end of FY 2007. Loans exempt from the Federal Credit Reform Act of 1990 represent $643 million of the total 

compared to $779 million in FY 2007. Table 1 illustrates the overall composition of the Department’s credit 

program balance sheet portfolio by mission area and credit program for FY 2008 and 2007. 

During the fiscal year, the gross outstanding balance of the direct loans obligated post-1991 is adjusted by the value 

of the subsidy cost allowance held against those loans. Current year subsidy expense, modifications and reestimates 

all contribute to the change of the subsidy cost allowance throughout the year. The subsidy cost allowance moved 

from $4,334 million to $4,475 million during FY 2008, an increase of $141 million. Table 2 shows the 

reconciliation of subsidy cost allowance balances from FY 2007 to FY 2008. 

Total direct loan subsidy expense is a combination of subsidy expense for new direct loans disbursed in the current 

year, modifications to existing loans, and interest rate and technical reestimates to existing loans. Total direct loan 

subsidy expense in FY 2008 was $461 million compared to negative $32 million in FY 2007. Table 3 illustrates the 

breakdown of total subsidy expense for FY 2008 and 2007 by program. 

Direct loan volume increased from $8,274 million in FY 2007 to $8,758 million in FY 2008. Volume distribution 

between mission area and program is shown in Table 4. 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

160 

Guaranteed Loans 

Guaranteed loans are administered in coordination with conventional agricultural lenders for up to 95 percent of 

the principal loan amount. Under the guaranteed loan programs, the lender is responsible for servicing the 

borrower’s account for the life of the loan. The Department, however, is responsible for ensuring borrowers meet 

certain qualifying criteria to be eligible and monitoring the lender’s servicing activities. Borrowers interested in 

guaranteed loans must apply to a conventional lender, which then arranges for the guarantee with a Department 

agency. Estimated losses on loan and foreign credit guarantees are reported at net present value as Loan Guarantee 

Liability. Defaulted guaranteed loans are reported at net present value as Loans Receivable and Related Foreclosed 

Property, Net. 

Guaranteed loans outstanding at the end of FY 2008 were $40,787 million in outstanding principal and $36,492 

million in outstanding principal guaranteed, compared to $34,482 and $30,648 million, respectively at the end of 

FY 2007. Table 5 shows the outstanding balances by credit program. 

During the fiscal year, the value of the guaranteed loans is adjusted by the value of the loan guarantee liability held 

against those loans. Current year subsidy expense, modification and reestimates all contribute to the change of the 

loan guarantee liability through the year. The loan guarantee liability is a combination of the liability for losses on 

pre-1992 guarantees and post-1991 guarantees. Table 6 shows that total liability moved from $1,258 million to 

$1,333 million during FY 2008, an increase of $75 million. The post-1991 liability moved from $1,256 million to 

$1,332 million, an increase of $76 million. Table 7 shows the reconciliation of total loan guarantee liability. 

Total guaranteed loan subsidy expense is a combination of subsidy expense for new guaranteed loans disbursed in 

the current year, modifications to existing loans, and interest rate and technical reestimates to existing loans. Total 

guaranteed loan subsidy expense in FY 2008 was $82 million compared to negative $192 million in FY 2007. 

Table 8 illustrates the breakdown of total subsidy expense for FY 2008 and 2007 by program. 

Guaranteed loan volume increased from $7,434 million in FY 2007 to $11,374 million in FY 2008. Volume 

distribution between mission area and program is shown in Table 9. 

Credit Program Discussion and Descriptions 

The Department offers direct and guaranteed loans through credit programs in the FFAS mission area through the 

FSA and the CCC, and in the RD mission area. 

The Farm and Foreign Agricultural Services Mission Area 

The FFAS mission area helps keep America’s farmers and ranchers in business as they face the uncertainties of 

weather and markets. FFAS delivers commodity, credit, conservation, disaster and emergency assistance programs 

that help strengthen and stabilize the agricultural economy. FFAS contributes to the vitality of the farm sector with 

programs that encourage the expansion of export markets for U.S. agriculture. 

FSA offers direct and guaranteed loans to farmers who are temporarily unable to obtain private, commercial credit 

and nonprofit entities that are engaged in the improvement of the nation’s agricultural community. Often, FSA 

borrowers are beginning farmers who cannot qualify for conventional loans due to insufficient financial resources. 

Additionally, the agency helps established farmers who have suffered financial setbacks from natural disasters, or 

have limited resources to maintain profitable farming operations. FSA officials also provide borrowers with 

supervision and credit counseling. 

FSA’s mission is to provide supervised credit. FSA works with each borrower to identify specific strengths and 

weaknesses in farm production and management, and provides alternatives to address weaknesses. FSA is able to 

provide certain loan servicing options to assist borrowers whose accounts are distressed or delinquent. These 

options include reamortization, restructuring, loan deferral, lowering interest rate, acceptance of easements, and 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 

161 

debt write-downs. The eventual goal of FSA’s farm credit programs is to graduate its borrowers to commercial 

credit. 

CCC’s foreign programs provide economic stimulus to both the U.S. and foreign markets, while also giving 

humanitarian assistance to the most-needy people throughout the world. CCC offers both credit guarantee and 

direct credit programs for buyers of U.S. exports, suppliers, and sovereign countries in need of food assistance. 

CCC permits debtor nations to reschedule debt under the aegis of the Paris Club (The Club). The Club is an 

internationally recognized organization under the leadership of the French Ministry of Economics and Finance. Its 

sole purpose is to assess, on a case-by-case basis, liquidity problems faced by economically disadvantaged countries. 

The general premise of the Club’s activities is to provide disadvantaged nations short-term liquidity relief to enable 

them to re-establish their credit worthiness. The Departments of State and Treasury lead the U.S. Delegation and 

negotiations for all U.S. Agencies. 

Farm and Foreign Agricultural Service List of Programs 

Farm Service Agency Commodity Credit Corporation 

Direct Farm Ownership 

Direct Farm Operating 

Direct Emergency Loans 

Direct Indian Land Acquisition 

Direct Boll Weevil Eradication 

Direct Seed Loans to Producers 

Guaranteed Farm Operating 

Subsidized/Unsubsidized 

Agricultural Resource Demonstration 

Fund 

Bureau of Reclamation Loan Fund 

Guaranteed Farm Ownership 

Unsubsidized 

General Sales Manager Guarantee Credit 

Program 

Facility Program Guarantee 

P.L. 480 Title 1 Program 

Direct Farm Storage Facility 

Direct Sugar Storage Facilities 

The Rural Development Mission Area 

Each year, RD programs create or preserve tens of thousands of rural jobs and provide or improve the quality of 

rural housing. To leverage the impact of its programs, RD is working with State, local and Indian tribal 

Governments, as well as private and not-for-profit organizations and user-owned cooperatives. 

Through its rural housing loan and grant programs, RD provides affordable housing and essential community 

facilities to rural communities. Rural housing programs help finance new or improved housing for moderate, low, 

and very low-income families each year. The programs also help rural communities finance, construct, enlarge or 

improve fire stations, libraries, hospitals and medical clinics, industrial parks, and other community facilities. 

The Rural Business Program goal is to promote a dynamic business environment in rural America. RD partners 

with the private sector and community-based organizations to provide financial assistance and business planning. It 

also provides technical assistance to rural businesses and cooperatives, conducts research into rural economic issues, 

and provides cooperative educational materials to the public. 

The Rural Utilities Program helps to improve the quality of life in rural America through a variety of loan programs 

for electric energy, telecommunications, and water and environmental projects. This program leverages scarce 

Federal funds with private capital for investing in rural infrastructure, technology and development of human 

resources. 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

162 

RD programs provide certain loan servicing options to borrowers whose accounts are distressed or delinquent. 

These options include reamortization, restructuring, loan deferral, lowering interest rate, acceptance of easements 

and debt write-downs. The choice of servicing options depends on the loan program and the individual borrower. 

Rural Development List of Programs 

Rural Housing Program Rural Business Program Rural Utilities Program 

Home Ownership Direct Loans 

Home Ownership Guaranteed Loans 

Home Improvement and Repair Direct Loans 

Home Ownership and Home Improvement and Repair 

Nonprogram Loans 

Rural Housing Site Direct Loans 

Farm Labor Housing Direct Loans 

Rural Rental and Rural Cooperative Housing Loans 

Rental Housing Guaranteed Loans 

Multi-family Housing–Nonprogram–Credit Sales 

Community Facilities Direct Loans 

Community Facilities Guaranteed Loans 

Business and Industry Direct Loans 

Business and Industry Guaranteed 

Loans 

Intermediary Relending Program Direct 

Loans 

Rural Economic Development Direct 

Loans 

Water and Environmental Direct Loans 

Water and Environmental Guaranteed Loans 

Electric Direct Loans 

Electric Guaranteed Loans 

Telecommunications Direct Loans 

Federal Financing Bank-Telecommunications 

Guaranteed 

Distance Learning and Telemedicine Direct 

Broadband Telecommunications Services 

Discussion of Administrative Expenses, Subsidy Costs and Subsidy Rates 

Administrative Expenses 

Consistent with the Federal Credit Reform Act of 1990 as amended, subsidy cash flows exclude direct Federal 

administrative expenses. Administrative expenses for FY 2008 and 2007 are shown in Table 10. 

Reestimates, Default Analysis, and Subsidy Rates 

The Federal Credit Reform Act of 1990 as amended governs the proprietary and budgetary accounting treatment 

of direct and guaranteed loans. The long-term cost to the Government for direct loans or loan guarantees is 

referred to as “subsidy cost.” Under the act, subsidy costs for loans obligated beginning in FY 1992 are recognized 

at the net present value of projected lifetime costs in the year the loan is disbursed. Subsidy costs are revalued 

annually. Components of subsidy include interest subsidies, defaults, fee offsets, and other cash flows. 

RD’s cash flow models are tailored for specific programs based on unique program characteristics. The models 

utilized are housing, guaranteed, electric underwriters, FFB modifications and a direct model that covers the 

remaining portfolio with similar characteristics. 

The annual reestimate process updates the budget assumptions with actual portfolio performance, interest rates and 

updated estimates for future loan performance. The FY 2008 reestimate process resulted in an $82 million increase 

in the post 1991 estimated cost of the direct loan portfolio and a $156 million reduction in the post 1991 estimated 

cost of the guaranteed loan portfolio. 

Table 3 discloses the direct loan subsidy expense including the $82 million increase due to reestimates. The increase 

was a result of a $975 million increase in RD’s programs less an $893 million decrease in the FFAS programs. 

Table 8 discloses the loan guarantee subsidy expenses including the $156 million reduction due to reestimate. The 

reduction was most affected by a $53 million reduction in the business and industry program, a $49 million 

reduction in the farm program and a $43 million reduction in the export program. 

Based on sensitivity analysis conducted for each cohort or segment of a loan portfolio, the difference between the 

budgeted and actual interest for both borrower and Treasury remain the key components for the subsidy 

formulation and reestimate rates of many USDA direct programs. USDA uses the Governmentwide interest rate 

projections provided by the OMB in order to do its calculations and analysis. 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 

163 

The Inter-agency Country Risk Assessment System is a Federal interagency effort chaired by OMB under the 

authority of the Federal Credit Reform Act of 1990 as amended. The system provides standardized risk assessment 

and budget assumptions for all direct credits and credit guarantees provided by the Government, to foreign 

borrowers. Sovereign and non-sovereign lending risks are sorted into risk categories, each associated with a default 

estimate. 

The CCC delinquent debt is estimated at a 100 percent allowance for losses. When the foreign borrower 

reschedules their debt and renews their commitment to repay CCC, the allowance is estimated at less than 100 

percent. 

Subsidy rates are used to compute each year’s subsidy expenses as disclosed above. The subsidy rates disclosed in 

Tables 11 and 12 pertain only to the FY 2008 and 2007 cohorts. These rates cannot be applied to the direct and 

guaranteed loans disbursed during the current reporting year to yield the subsidy expense. The subsidy expense for 

new loans reported in the current year could result from disbursements of loans from both current year cohorts and 

prior-year cohorts. The subsidy expense reported in the current year also includes reestimates. 

As a result of new guidance, CCC chose to reflect interest on downward reestimates in the Statement of Changes 

in Net Position as other financing sources for FY 2008 and 2007, respectively. The remainder of USDA credit 

programs chose to reflect downward reestimates in earned revenue on the Statement of Net Cost. Both 

methodologies are accepted alternatives that have been promulgated by Treasury. 

Foreclosed Property 

Property is acquired largely through foreclosure and voluntary conveyance. Acquired properties associated with 

loans are reported at their market value at the time of acquisition. The projected future cash flows associated with 

acquired properties are used in determining the related allowance (at present value). 

As of September 30, 2008 and 2007, foreclosed property consisted of 800 and 591 rural single-family housing 

dwellings, with an average holding period of 17 and 23 months, respectively. As of September 30, 2008 and 2007, 

FSA-Farm Loan Program properties consist primarily of 58 and 61 farms, respectively. The average holding period 

for these properties in inventory for FY 2008 and 2007 was 64 and 68 months, respectively. Certain properties can 

be leased to eligible individuals. 

Non-performing Loans 

Non-performing loans are defined as receivables that are in arrears by 90 or more days, or are on rescheduling 

agreements until such time two consecutive payments have been made following the rescheduling. 

When RD, FSA and CCC calculate loan interest income, however, the recognition of revenue is deferred. Late 

interest is accrued on arrears. 

Loan Modifications 

A modification is any Government action different from the baseline assumptions that affects the subsidy cost, such 

as a change in the terms of the loan contract. The cost of a modification is the difference between the present value 

of the cash flows before and after the modification. 

Multiple-family housing direct loan program modifications related to the revitalization project, which began in 

FY 2006, continued throughout FY 2008. The revitalization project is used to rehabilitate ailing housing 

developments. In this program, RD determines whether the development owner should be offered a financial 

restructuring plan and what type of incentives, if any, should be offered to the owner to rehabilitate an ailing 

housing development and to provide affordable rents for tenants. 

In FY 2007, loan extension modifications were granted for two borrowers in the FFB electric program. The 

maturity dates were extended up to 20 years on selected advances. Interest rates on the advances did not change. 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

164 

At the time of the modification, the liquidating fund was paid off and the advances were moved to the financing 

fund. The post-modification cash flows were discounted at the third quarter net present value discount factor from 

the FY 2007 President’s Budget relative to the effective date of the loan extension modifications. 

The Debt Reduction Fund is used to account for CCC’s “modified debt.” Debt is considered to be modified if the 

original debt has been reduced or the interest rate of the agreement changed. In contrast, when debt is 

"rescheduled," only the date of payment is changed. Rescheduled debt is carried in the original fund until paid. All 

outstanding CCC modified debt is carried in the Debt Reduction Fund and is governed by the Federal Credit 

Reform Act of 1990 as amended. 

Interest Credit 

Approximately $17,700 million and $17,800 million of Rural Housing Service (RHS) unpaid loan principal as of 

September 30, 2008, and 2007 were receiving interest credit, respectively. If those loans receiving interest credit had 

accrued interest at the full-unreduced rate, interest income would have been approximately $947 million and $1,000 

million higher for FY 2008 and 2007, respectively. 

Restructured Loans 

At the end of FY 2008 and 2007, the RD portfolio contained approximately 73,300 and 76,500 restructured loans 

with an outstanding unpaid principal balance of $2,400 million and $2,500 million, respectively. At the end of FY 

2008 and 2007, the farm loan portfolio contained approximately 20,000 and 22,000 restructured loans with an 

outstanding unpaid principal balance of $1,100 million and $1,200 million, respectively. Direct credit and credit 

guarantee principal receivables in the food aid and export programs under rescheduling agreements as of September 

30, 2008 and 2007, were $3,100 million and $3,400 million, respectively. 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 

165 

Table 1. Direct Loan and Loan Guarantees, Net 

FY 2008 Loans Present Value of Assets

Direct Loans Receivable, Interest Foreclosed Value Related to

Gross Receivable Property Allowance Loans

Obligated Pre-1992

Farm 1 $ 96 ,406 $ 12 $ $ 1 (59) $ ,455

Export - - - - - Food Aid 4 121 ,813 - 2 (1,949) ,985

Housing 111 10,462 33 5 (4,880) ,726

Electric 8 5 ,273 - 6 (1,689) ,589

Telecommunications 896 2 - 844 (54) Water and Environmental 1 14 ,328 - 1 (159) ,183

Business and Industry - - - - - Economic Development 38 - - 21 (17) Pre-1992 Total 27 349 ,216 45 18 (8,807) ,803

Obligated Post-1991

Farm 5 159 ,203 3 224 5 ,589

Export - - - - - Food Aid 1 79 ,837 - 881 (1,035) Housing 98 17,044 34 14 (2,387) ,789

Electric 29 28 ,216 - 28 (336) ,908

Telecommunications 3 2 ,151 - 187 3 ,340

Water and Environmental 8 87 ,583 - 7 (829) ,841

Business and Industry - 35 - 10 (25) Economic Development 530 2 - 357 (175) Post-1991 Total 65 455 ,599 37 61 (4,376) ,715

Total Direct Loan Program Receivables 92 804 ,815 82 80 (13,183) ,518

Defaulted Guarantee Loans

Pre-1992

Farm 1 - - - (1) Export 136 1 - 47 (90) Food Aid - - - - - Housing - - - - - Electric - - - - - Telecommunications - - - - - Water and Environmental - - - - - Business and Industry - 3 - - 3 Economic Development - - - - - Pre-1992 Total 140 1 - 50 (91) 

Post-1991

Farm 58 - - 2 (56) Export 615 7 - 437 (185) Food Aid - - - - - Housing - 61 - 28 (33) Electric - - - - - Telecommunications - - - - - Water and Environmental - - - - - Business and Industry 3 103 - 96 (10) Economic Development - - - - - Post-1991 Total 837 10 - 563 (284) Total Defaulted Guarantee Loans 977 11 - 613 (375) 

Loans Exempt from Credit Reform Act:

Commodity Loans 630 13 - - 643 Other Foreign Receivables - - - - - Total Loans Exempt 630 13 - - 643 

Total Direct Loan and Loan Guarantees, Net 81 $ ,774
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

166 

Table 1. Direct Loan and Loan Guarantees, Net (cont’d) 

FY 2007 Loans Present Value of Assets

Direct Loans Receivable, Interest Foreclosed Value Related to

Gross Receivable Property Allowance Loans

Obligated Pre-1992

Farm 1 $ 115 ,679 $ 10 $ $ 1 (129) $ ,675

Export - - - - - Food Aid 5 31 ,204 - 2 (2,365) ,870

Housing 118 11,014 21 6 (5,040) ,113

Electric 10 88 ,045 - 8 (1,373) ,760

Telecommunications 1 2 ,047 - 1 (24) ,025

Water and Environmental 1 12 ,438 - 1 (182) ,268

Business and Industry - - - - - Economic Development 44 - - 24 (20) Pre-1992 Total 30 366 ,471 31 21 (9,133) ,735

Obligated Post-1991

Farm 4 161 ,877 4 4 (440) ,602

Export - - - - - Food Aid 2 33 ,414 - 1 (1,192) ,255

Housing 81 16,023 24 14 (2,090) ,038

Electric 26 170 ,006 - 26 (42) ,134

Telecommunications 2 6 ,936 - 328 3 ,270

Water and Environmental 7 70 ,839 - 7 (638) ,271

Business and Industry - 51 - 13 (38) Economic Development 509 2 - 343 (168) Post-1991 Total 60 523 ,655 28 56 (4,280) ,926

Total Direct Loan Program Receivables 91 889 ,126 59 78 (13,413) ,661

Defaulted Guarantee Loans

Pre-1992

Farm 8 - - 3 (5) Export 349 5 - 240 (114) Food Aid - - - - - Housing - - - - - Electric - - - - - Telecommunications - - - - - Water and Environmental - - - - - Business and Industry 1 3 - - 4 Economic Development - - - - - Pre-1992 Total 360 6 - 247 (119) 

Post-1991

Farm 49 2 - 19 (32) Export 630 16 - 532 (114) Food Aid - - - - - Housing - 23 - 1 (22) Electric - - - - - Telecommunications - - - - - Water and Environmental - - - - - Business and Industry 3 118 - 109 (12) Economic Development - - - - - Post-1991 Total 820 21 - 661 (180) Total Defaulted Guarantee Loans 1 27 ,180 - 908 (299) 

Loans Exempt from Credit Reform Act:

Commodity Loans 744 15 - - 759 Other Foreign Receivables 21 - - 20 (1) Total Loans Exempt 765 15 - 779 (1) 

Total Direct Loan and Loan Guarantees, Net 80 $ ,348
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 

167 

Table 2. Schedule for Reconciling Subsidy Cost Allowance Balances (Post-1991) Direct Loans 

FY 2008 FY 2007

Beginning balance of the subsidy cost allowance 4,334 $ 5,080 $ 

Add: Subsidy expense for direct loans disbursed during the year by component

Interest rate differential costs (60) (56) 

Default costs (net of recoveries) 211 142 

Fees and other collections (2) (3) 

Other subsidy costs 286 226 

Total subsidy expense prior to adjustments and reestimates 375 369 

Adjustments

Loan modifications (3) 4 

Fees received 29 36 

Loans written off (274) (196) 

Subsidy allowance amortization (414) (467) 

Other (2) 254 

Total subsidy cost allowance before reestimates 4,393 4,732 

Add or subtract subsidy reestimates by component

Interest rate reestimate 636 12 

Technical/default reestimate (554) (410) 

Total reestimates (398) 82 

Ending balance of the subsidy cost allowance 4,475 $ 4,334 $ 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

168 

Table 3. Subsidy Expense for Direct Loans by Program and Component 

FY 2008

Interest Fees and Other Subtotal Total Interest Rate Technical 

Differential Defaults Collections Other Subsidy Modifications Reestimates Reestimates 

Direct Loan Programs

Farm (18) $ 130 $ - $ (9) $ 103 $ - $ - $ (549) $ 

Export - - - - - - - - 

Food Aid 9 2 - - 11 - (181) (163) 

Housing (123) 66 (1) 245 187 4 184 (52) 

Electric (32) 11 - (6) (27) - 334 155 

Telecommunications (1) 1 - - - - 211 (19) Water and Environmental 86 1 - (4) 83 - 94 63 Business and Industry - - - - - - - - 

Economic Development 19 - - (1) 18 - (6) 11 

Total Direct Loan Subsidy Expense (60) $ 211 $ (1) $ 225 $ 375 $ 4 $ 636 $ (554) $ 

.

FY 2007

Interest Fees and Other Subtotal Total Interest Rate Technical 

Differential Defaults Collections Other Subsidy Modifications Reestimates Reestimates 

Direct Loan Programs

Farm 23 $ 73 $ - $ (6) $ 90 $ - $ (64) $ (76) $ 

Export - - - - - - - - 

Food Aid 4 1 - - 5 - (29) (12) 

Housing (154) 61 (3) 306 210 1 (76) 1 

Electric (26) 5 - (10) (31) (4) 122 (108) 

Telecommunications 1 2 - (1) 2 - 16 (124) 

Water and Environmental 75 1 - (4) 72 - 31 (66) Business and Industry - - - - - - - (13) 

Economic Development 20 - - - 20 - 12 (11) 

Total Direct Loan Subsidy Expense (57) $ 143 $ (3) $ 285 $ 368 $ (3) $ 12 $ (409) $ 

.
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 

169 

Table 4. Total Amount of Direct Loans Disbursed (Post-1991) 

FY 2008 FY 2007

Direct Loan Programs

Farm 1,317 $ 1,069 $ 

Export - - 

Food Aid 20 9 

Housing 1,750 1,856 

Electric 4,047 3,814 

Telecommunications 551 503 

Water and Environmental 1,017 969 

Business and Industry - - 

Economic Development 56 54 

Total Direct Loans Disbursed 8,758 $ 8,274 $ 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

170 

Table 5. Guaranteed Loans Outstanding 

Pre - 1992 Post - 1991 Total Pre - 1992 Post - 1991 

FY 2008 Outstanding Principal, Outstanding Principal, Outstanding Principal, Outstanding Principal, Outstanding Principal, 

Face Value Face Value Face Value Guaranteed Guaranteed 

Loan Guarantee Programs

Farm $ 43 $ 10,081 $ 10,124 $ 38 $ 9,061 Export - 3,918 3,918 - 3,829 Food Aid - - - - - 

Housing 5 22,514 22,519 4 20,270 Electric 174 214 388 174 214 Telecommunications - - - - - Water and Environmental - 68 68 - 59 Business and Industry 14 3,756 3,770 10 2,833 Economic Development - - - - - 

Total Guarantees Disbursed $ 236 $ 40,551 $ 40,787 $ 226 $ 36,266 

Pre - 1992 Post - 1991 Total Pre - 1992 Post - 1991 

FY 2007 Outstanding Principal, Outstanding Principal, Outstanding Principal, Outstanding Principal, Outstanding Principal, 

Face Value Face Value Face Value Guaranteed Guaranteed 

Loan Guarantee Programs

Farm $ 66 $ 10,045 $ 10,111 $ 58 $ 9,027 Export - 2,371 2,371 - 2,312 Food Aid - - - - - Housing 8 17,872 17,880 7 16,075 Electric 184 218 402 184 218 Telecommunications - - - - - Water and Environmental - 37 37 - 30 Business and Industry 14 3,667 3,681 10 2,727 Economic Development - - - - - 

Total Guarantees Disbursed $ 272 $ 34,210 $ 34,482 $ 259 $ 30,389 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 

171 

Table 6. Liability for Loan Guarantees (Present Value Method for Pre-1992 Guarantees) 

FY 2008

Liabilities for 

Losses on Pre1992 

Guarantees 

Present Value

Liabilities for Loan 

Guarantees on 

Post-1991 

Guarantees 

Present Value

Total Liabilities for 

Loan Guarantees

Loan Guarantee Programs

Farm - $ 114 $ 114 $ 

Export - 162 162 

Food Aid - - - 

Housing - 766 766 

Electric - - - 

Telecommunications - - - 

Water and Environmental - - - 

Business and Industry 1 290 291 

Economic Development - - - 

Total Liability for Loan Guarantees 1 $ 1,332 $ 1,333 $ 

FY 2007

Liabilities for 

Losses on Pre1992 

Guarantees 

Present Value

Liabilities for Loan 

Guarantees on 

Post-1991 

Guarantees 

Present Value

Total Liabilities for 

Loan Guarantees

Loan Guarantee Programs

Farm 1 $ 126 $ 127 $ 

Export - 184 184 

Food Aid - - - 

Housing - 655 655 

Electric - - - 

Telecommunications - - - 

Water and Environmental - - - 

Business and Industry 1 291 292 

Economic Development - - - 

Total Liability for Loan Guarantees 2 $ 1,256 $ 1,258 $ 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

172 

Table 7. Schedule for Reconciling Loan Guarantee Liability 

FY 2008 FY 2007

Beginning balance of the loan guarantee liability 1,255 $ 1,293 $ 

Add:Subsidy expense for guaranteed loans disbursed during the year by component

Interest supplement costs 29 33 

Default costs (net of recoveries) 418 280 

Fees and other collections (209) (126) 

Other subsidy costs - - 

Total of the above subsidy expense components 238 187 

Adjustments

Loan guarantee modifications (90) - 

Fees received 105 169 

Interest supplements paid 15 (10) 

Claim payments to lenders (90) (107) 

Interest accumulation on the liability balance 99 (29) 

Other 195 (109) 

Ending balance of the subsidy cost allowance before reestimates 1,487 1,634 

Add or subtract subsidy reestimates by component:

Interest rate reestimate (64) 34 

Technical/default reestimate (189) (315) 

Total of the above reestimate components (155) (379) 

Ending balance of the loan guarantee liability 1,332 $ 1,255 $ 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 

Table 8. Subsidy Expense for Loan Guarantees by Program and Component 

FY 2008

Interest Fees and Other Total Interest Rate Technical 

Loan Guarantee Programs Supplement Defaults Collections Other Subtotal Modifications Reestimates Reestimates 

Farm 15 $ 49 $ (18) $ - $ 46 $ - $ 3 $ (52) $ 

Export - 58 (10) - 48 - (5) (38) Food Aid - - - - - - - - 

Housing 14 228 (146) - 96 - (1) (10) Electric - - - - - - - - 

Telecommunications - - - - - - - - 

Water and Environmental - - - - - - - - 

Business and Industry - 83 (35) - 48 - 37 (90) 

Economic Development - - - - - - - - 

Total Loan Guarantee Subsidy Expense $ 29 $ 418 $ (209) $ - $ 238 $ - $ 34 $ (190) 

FY 2007

Interest Fees and Other Total Interest Rate Technical 

Loan Guarantee Programs Supplement Defaults Collections Other Subtotal Modifications Reestimates Reestimates 

Farm 21 $ 51 $ (17) $ - $ 55 $ - $ - $ (37) $ Export - 48 (7) - 41 - (95) (294) 

Food Aid - - - - - - - - 

Housing 12 126 (80) - 58 - 12 (25) Electric - - - - - - - - 

Telecommunications - - - - - - - - 

Water and Environmental - - - - - - (1) 1 Business and Industry - 55 (22) - 33 - 21 39 

Economic Development - - - - - - - - 

Total Loan Guarantee Subsidy Expense $ 33 $ 280 $ (126) $ - $ 187 $ - $ (63) $ (316) 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

174 

Table 9. Guaranteed Loans Disbursed 

Principal, 

Face Value 

Disbursed

Principal, 

Guaranteed 

Disbursed

Principal, Face 

Value 

Disbursed

Principal, 

Guaranteed 

Disbursed

Loan Guarantee Programs

Farm 2,163 $ 1,944 $ 2,110 $ 1,896 $ 

Export 1,907 1,909 1,086 1,037 

Food Aid - - - - 

Housing 6,484 5,832 3,643 3,275 

Electric - - - - 

Telecommunications - - - - 

Water and Environmental 40 33 7 6 

Business and Industry 780 609 588 459 

Economic Development - - - - 

Total Guaranteed Loans Disbursed 11,374 $ 10,327 $ 7,434 $ 6,673 $ 

FY 2008 FY 2007

Table 10. Administrative Expenses 

FY 2008 FY 2007

Direct Loan Programs 537 $ 527 $ 

Guaranteed Loan Programs 293 230

Total Administrative Expenses 830 $ 757 $ 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 

175 

Table 11. Subsidy Rates for Direct Loans (percentage) 

FY 2008 Interest 

Differential Defaults

Fees and 

Other 

Collections Other Total

Direct Loan Programs

Farm Operating (1.11) 13.94 - (0.14) 12.69 

Indian Land Acquisition 2.83 0.31 - - 3.14 

Emergency Disaster 6.72 5.24 - (0.82) 11.14 

Boll Weevil Eradication (2.00) 1.45 - 0.28 (0.27) 

Farm Ownership (6.72) 11.00 - 0.17 4.45 

Farm Storage Facility Loan Program 0.02 1.10 (0.11) - 1.01 

Sugar Storage Facility Loan Program 0.36 0.62 - - 0.98 

Community Facility Loans 5.40 0.73 - (0.58) 5.55 

Water and Waste Disposal Loans 7.03 0.09 - (0.31) 6.81 

Distance Learning and Telemedicine Loans - 2.15 - (0.01) 2.14 

Broadband Treasury Loans - 2.17 - (0.02) 2.15 

Electric Hardship Loans (0.03) 0.96 - (0.81) 0.12 

FFB Electric Loans (1.37) 0.67 - - (0.70) 

Telecommunication Hardship Loans (0.96) 1.00 - 0.04 0.08 

FFB Telecommunications Loans (0.01) 0.85 - (0.22) 0.62 

Treasury Telecommunication Loans - 0.64 - 0.03 0.67 

Single-Family Housing Credit Sales 7.85 (15.38) - 6.38 (1.15) 

Multi-Family Housing Credit Sales 5.41 (17.41) - 49.15 37.15 

Section 502 Single-Family Housing 5.73 (13.44) - 17.09 9.38 

Section 504 Housing Repair 29.14 0.94 - (1.81) 28.27 

Section 515 Multi-Family Housing (17.92) 1.13 - 59.39 42.60 

Section 523 Self-Help Site Development 2.84 - - - 2.84 

Section 524 Site Development (1.71) 0.92 - - (0.79) 

Section 514 Farm Labor Housing 44.45 8.93 - (10.11) 43.27 

Multi-Family Housing Relending Program 46.39 - - - 46.39 

Intermediary Relending Program 43.53 - - (0.64) 42.89 

Rural Economic Development Loans 23.15 0.21 - (0.77) 22.59 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

176 

FY 2007 Interest 

Differential Defaults

Fees and 

Other 

Collections Other Total

Direct Loan Programs

Farm Operating 1.02 10.49 - 0.18 11.69 

Indian Land Acquisition 5.49 15.66 - - 21.15 

Emergency Disaster 12.38 0.08 - (0.69) 11.77 

Boll Weevil Eradication 2.85 (0.95) - - 1.90 

Farm Ownership 3.88 0.43 - (0.12) 4.19 

Farm Storage Facility Loan Program 0.03 7.27 (0.11) (6.81) 0.38 

Sugar Storage Facility Loan Program 0.63 7.40 - (10.74) (2.71) 

Community Facility Loans 7.04 0.18 - (0.81) 6.41 

Water and Waste Disposal Loans 10.31 0.09 - (0.44) 9.96 

Distance Learning and Telemedicine Loans (0.72) 1.35 - - 0.63 

Broadband Treasury Loans - 2.19 - (0.04) 2.15 

Electric Hardship Loans 2.25 - - (0.11) 2.14 

Municipal Electric Loans 1.26 - - 0.25 1.51 

FFB Electric Loans (1.21) 0.02 - - (1.19) 

Telecommunication Hardship Loans 0.36 0.01 - - 0.37 

FFB Telecommunications Loans (1.21) 0.02 - (0.30) (1.49) 

Treasury Telecommunication Loans - 0.03 - - 0.03 

FFB Guaranteed Underwriting (1.24) 0.80 - - (0.44) 

Single-Family Housing Credit Sales 9.56 (16.88) - 7.80 0.48 

Multi-Family Housing Credit Sales 0.11 (19.19) - 64.41 45.33 

Section 502 Single-Family Housing 5.37 (14.99) - 19.65 10.03 

Section 504 Housing Repair 30.08 1.47 - (2.00) 29.55 

Section 515 Multi-Family Housing (18.32) 0.07 - 63.92 45.67 

Section 523 Self-Help Site Development 2.47 - - - 2.47 

Section 524 Site Development (2.59) 0.93 - - (1.66) 

Section 514 Farm Labor Housing 45.52 0.21 - 2.22 47.95 

Multi-Family Housing Relending Program 47.81 - - 0.01 47.82 

Intermediary Relending Program 44.93 - - (0.86) 44.07 

Rural Economic Development Loans 23.45 0.18 - (1.79) 21.84 

Table 12. Subsidy Rates for Loan Guarantees (percentage) 

FY 2008 Interest

Fees and

Other

Differential Defaults Collections Other Total

Guaranteed Loan Programs

CCC Export Loan Guarantee Program - 7.08 - (4.74) 2.34 

Farm Operating—Unsubsidized - 3.32 (0.90) - 2.42 

Farm Operating—Subsidized 11.05 2.29 - - 13.34 

Farm Ownership—Unsubsidized - 1.28 - (0.88) 0.40 

Business and Industry Loans - 7.33 (3.01) - 4.32 

Guaranteed Business & Industry NadBank Loans - 10.84 - (3.14) 7.70 

Community Facility Loans - 4.54 (0.86) - 3.68 

Water and Waste Disposal Loans - - - (0.82) (0.82)

Section 502 Single-Family Housing Purchase - 3.20 - (2.00) 1.20 

Section 502 Single-Family Housing Refinance - 1.31 (0.50) - 0.81 

538 Multi-Family Housing-Subsidized 16.91 0.42 - (7.94) 9.39 

Renewable Energy - 11.97 (2.28) - 9.69 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 

177 

FY 2007 Interest

Fees and

Other

Differential Defaults Collections Other Total

Guaranteed Loan Programs

CCC Export Loan Guarantee Program - 9.28 (1.35) - 7.93 

Farm Operating—Unsubsidized - 3.37 - (0.90) 2.47 

Farm Operating—Subsidized 7.59 2.48 - - 10.07 

Farm Ownership—Unsubsidized - 1.48 - (0.90) 0.58 

Community Facility Loans - 4.52 (0.86) - 3.66 

Water and Waste Disposal Loans - - (0.90) - (0.90) 

Section 502 Single-Family Housing Purchase - 3.21 (2.00) - 1.21 

Section 502 Single-Family Housing Refinance - 1.00 (0.50) - 0.50 

538 Multi-Family Housing-Subsidized 14.59 0.50 - (7.35) 7.74 

Renewable Energy - 8.03 (1.54) - 6.49 

NOTE 8. INVENTORY AND RELATED PROPERTY, NET 

Commodity inventory is restricted for the purpose of alleviating distress caused by natural disasters, providing 

emergency food assistance in developing countries and providing price support and stabilization. Commodity loan 

forfeitures during the fiscal years ended September 30, 2008 and 2007 were $8 million and $77 million, 

respectively. 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

178 

Inventories - $ 1 $ 

Commodities: Volume 

(in millions) Amount

Volume 

(in millions) Amount

Corn (In Bushels):

On hand at the beginning of the year 1 2 1 2 

Acquired during the year 3 25 4 12 

Disposed of during the year

Sales - - (4) (12)

Donations (3) - (25) - 

Other (1) - (2) - 

On hand at the end of the year - - 1 2 

Wheat (In Bushels):

On hand at the beginning of the year 39 144 43 159 

Acquired during the year 29 295 35 182 

Disposed of during the year

Sales (56) (124) (30) (179)

Donations (6) (295) (7) (12)

Other (6) (20) (2) (6)

On hand at the end of the year - - 39 144 

Nonfat Dry Milk (In Pounds):

On hand at the beginning of the year 14 13 49 40 

Acquired during the year - - - - 

Disposed of during the year

Sales (1) (1) (1) (1)

Donations (11) (11) (34) (36)

Other (2) - (1) 10 

On hand at the end of the year - - 14 13 

Other:

On hand at the beginning of the year 25 24 

Acquired during the year 879 5,274 

Disposed of during the year

Sales (1) (5,223)

Donations (888) (46)

Other - (4)

On hand at the end of the year 15 25 

Allowance for losses - - 

Total Commodities 15 184 

Total Inventory and Related Property, Net 15 $ 185 $ 

FY 2008 FY 2007
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 

179 

NOTE 9. GENERAL PROPERTY, PLANT, AND EQUIPMENT, NET 

FY 2008 Useful Net

Life Accumulated Book

Category (Years) Cost Depreciation Value

Land and Land Rights 76 $ - $ 76 $ 

Improvements to Land 10 - 50 697 (588) 109 

Construction-in-Progress 982 - 982 

Buildings, Improvements and Renovations 15 - 30 1,936 (1,214) 722 

Other Structures and Facilities 15 - 50 1,728 (1,296) 432 

Equipment 5 - 20 1,650 (1,325) 325 

Assets Under Capital Lease 3 - 20 143 (78) 65 

Leasehold Improvements 10 66 (42) 24 

Internal-Use Software 5 - 8 560 (376) 184 

Internal-Use Software in Development 51 (1) 50 

Other General Property, Plant and Equipment 5 - 15 4 - 4 

Total $ (4,920) 7,893 $ 2,973 $ 

FY 2007 Useful Net

Life Accumulated Book

Category (Years) Cost Depreciation Value

Land and Land Rights 77 $ - $ 77 $ 

Improvements to Land 10 - 50 5,028 (2,823) 2,205 

Construction-in-Progress 884 - 884 

Buildings, Improvements and Renovations 15 - 30 1,903 (1,161) 742 

Other Structures and Facilities 15 - 50 1,685 (1,248) 437 

Equipment 5 - 20 1,687 (1,359) 328 

Assets Under Capital Lease 3 - 20 70 (34) 36 

Leasehold Improvements 10 63 (38) 25 

Internal-Use Software 5 - 8 482 (311) 171 

Internal-Use Software in Development 23 (1) 22 

Other General Property, Plant and Equipment 5 - 15 4 - 4 

Total $ (6,975) 11,906 $ 4,931 $ 

NOTE 10. STEWARDSHIP PP&E 

Stewardship PP&E consist of assets whose physical properties resemble those of General PP&E that are 

traditionally capitalized in the financial statements. Due to the nature of these assets however, valuation would be 

difficult and matching costs with specific periods would not be meaningful. Stewardship PP&E include heritage 

assets and stewardship land. 

Heritage Assets 

Heritage assets are unique and are generally expected to be preserved indefinitely. Heritage assets may be unique 

because they have historical or natural significance, are of cultural, educational or artistic importance, or have 

significant architectural characteristics. The assets are reported in terms of physical units rather than cost, fair 

value, or other monetary values. No amounts are shown on the balance sheet for heritage assets, except for multiuse heritage assets in which the predominant use of the asset is in general government operations. The costs of 

acquisition, betterment, or reconstruction of multi-use heritage assets is capitalized as general PP&E and 

depreciated. The costs of acquiring, constructing, improving, reconstructing, or renovating heritage assets, other 

than multi-use is considered an expense in the period incurred when determining the net cost of operations. 

Heritage assets consist of collection type, such as objects gathered and maintained for exhibition, for example 

library collections; and non-collection-type, such as memorials, monuments and buildings. 

National Forests, National Grasslands and Other Sites—FS manages its heritage assets by site. Some of these assets are 

listed on the National Register of Historic Places, and some are designated as National Historic Landmarks. 

Collection type assets held at museums and universities are managed by those entities. Heritage assets include 

historic structures consciously created to serve some human purpose, such as buildings, monuments, logging and 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

180 

mining camps and ruins. Heritage assets designated as National Historic Landmarks include buildings or 

structures that possess exceptional value in commemorating or illustrating the history of the U.S., and exceptional 

value or quality in illustrating and interpreting the heritage of the U.S. Heritage assets listed on the National 

Register of Historic Places include properties, buildings and structures that are significant in U.S. history, 

architecture and archaeology and in the cultural foundation of the Nation. 

Research Centers—ARS conducts research at 36 research centers nationwide to develop and transfer solutions to 

agricultural problems of high national priority and provides information access and dissemination to ensure highquality, safe food and other agricultural products; assess the nutritional needs of Americans; sustain a competitive 

agricultural economy; enhance the natural resource base and the environment; and provide economic opportunities 

for rural citizens, communities, and society as a whole. NRCS owns one research center, the Tucson Plant 

Material Center (TPMC). The TPMC develops and evaluates native plants and addresses an array of resource 

issues in the areas of rangeland, mined land, urban lands, cropland riparian areas and desert lands. Research centers 

are considered heritage assets because one or more buildings or structures at these centers is on the National 

Register of Historic Places or have been identified as eligible for inclusion on the National Register. 

Library Collections—The National Agricultural Library (NAL) as a whole is the largest collection of materials devoted 

to agriculture in the world. The collections are in constant use to support the research activities of USDA, 

departmental operations and to answer citizen inquiries. NAL houses and provides access to millions of books and 

periodicals. The overwhelming number of these items were published more than 25 years ago and almost all of 

them are out-of-print and unavailable for purchase. By statute, NAL is the primary depository of publications and 

information concerning the research and other activities of USDA. Included in the collection are government 

documents and many items that are unique and irreplaceable. NAL collects, preserves and provides access to 

manuscripts, rare books, photographs, posters, oral histories and other unique materials. Collection concentrations 

include the fields of agriculture, horticulture, entomology, poultry sciences, botany, natural history and agricultural 

history. Although focused primarily on American agriculture and related sciences, NAL holds numerous items of 

international origin. 

Stewardship Land 

Stewardship land is land and land rights not acquired for or in connection with items of general PP&E. Land is 

defined as the solid surface of the earth, excluding natural resources. Stewardship land is valued for its 

environmental resources, recreational and scenic value, cultural and paleontological resources, vast open spaces, and 

resource commodities and revenue provided to the Federal government, states, and counties. These assets are 

reported in terms of physical units rather than cost, fair value, or other monetary values. No asset amount is shown 

on the balance sheet for stewardship land. The acquisition cost of stewardship land is considered an expense in the 

period acquired when determining the net cost of operations. Stewardship land consists primarily of the national 

forests and grasslands owned by the FS and conservation easements purchased by NRCS. 

National Forests—National forests are formally established and permanently set aside and reserved for national forest 

purposes, including National Wilderness, National Primitive, National Wild and Scenic River, National 

Recreation, National Scenic Research, National Game Refuges and Wildlife Preserve, and National Monument 

areas. 

National Grasslands—National grasslands are designated by the Secretary of Agriculture and permanently held by the 

USDA under Title III of the Bankhead-Jones Farm Tenant Act. 

Research and Experimental Areas—Research and experimental areas are reserved and dedicated by the Secretary of 

Agriculture for forest and range research experimentation. Areas reported are located outside the exterior 

boundaries of a national forest or national grassland. 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 

181 

National Preserves and Other Areas—National preserves are units established to protect and preserve scientific, scenic, 

geologic, watershed, fish, wildlife, historic, cultural and recreational values; and provide for multiple use and 

sustained yield of its renewable resources. Other areas include areas administered by the FS that are not included in 

one of the above groups. 

Conservation Easements—NRCS provides landowners financial and technical assistance in return for maintaining and 

improving high quality productive soils, clean and abundant water, healthy plant and animal communities, clean air, 

an adequate energy supply, and working farm and ranch land. NRCS acquires conservation easements on private 

lands through the Wetlands Reserve, Grassland Reserve, Emergency Wetlands Reserve and Watershed Protection, 

Farm and Ranch Land Protection, and Healthy Forest Reserve programs. For the purpose of stewardship asset 

reporting in the financial statements, all easements where NRCS is named as grantee on the easement deed are 

included as a stewardship asset when the easement deed is signed by the grantor. Also included are easements 

where NRCS is not specifically named as grantee but has contributed to the purchase of a conservation easement 

under cooperative agreement and the agency has assumed the management responsibility of the easement due to 

non-compliance by the cooperator under the terms of the agreement. 

FY 2008

Heritage Assets

National Forests 155

National Grasslands 20

Other Sites 22

Research Centers 37

Library Collections 1

Total 235

Stewardship Land

National Forests 155

National Grasslands 20

Research and Experimental Areas 3

National Preserves and Other Areas 3

Conservation Easements 10,431

Total 10,612

NOTE 11. OTHER ASSETS 

In fiscal 2008 and 2007, other assets include investments in trust for loan asset sales of $35 million and $34 million, 

respectively. 

FY 2008 FY 2007

Intragovernmental:

Advances to Others 5 $ - $ 

With the Public:

Advances to Others 216 114 

Prepayments - - 

Other Assets 37 37 

Total Other Assets 258 $ 151 $ 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

182 

NOTE 12. LIABILITIES NOT COVERED BY BUDGETARY RESOURCES 

In fiscal 2008 and 2007, other intragovernmental liabilities not covered by budgetary resources include accruals for 

Federal Employee Compensation Act (FECA) of $164 million and $162 million, respectively, and contract 

disputes claims payable to Treasury’s Judgment Fund of $17 million and $15 million, respectively. 

In fiscal 2008 and 2007, other liabilities with the public not covered by budgetary resources include, Tobacco 

Transition Payment Program of $5,302 million and $5,380 million, accruals for rental payments under the 

Conservation Reserve Program (CRP) of $1,776 million and $1,810 million, unfunded leave of $616 million and 

$592 million, Payments to States $531 million and $394 million, and contingent liabilities of $29 million and $48 

million, respectively. In fiscal 2008, RMA reported a liability in the amount of $2,145 million for future funded 

indemnity costs. 

FY 2008 FY 2007

Intragovernmental:

Other 190 $ 178 $ 

Subtotal Intragovernmental 190 178 

With the Public:

Federal employee and veterans' benefits 832 775 

Environmental and disposal liabilities 18 105 

Other 10,410 8,222 

Subtotal With the Public 11,260 9,102 

Total liabilities not covered by budgetary resources 11,450 9,280 

Total liabilities covered by budgetary resources 109,522 105,501 

Total Liabilities 120,972 $ 114,781 $ 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 

183 

NOTE 13. DEBT 

FY 2008 Beginning 

Balance Net Borrowing

Ending 

Balance

Intragovernmental

Debt to the Treasury 49,197 $ 2,004 $ 51,201 $ 

Debt to the Federal Financing Bank 25,904 472 26,376 

Total Intragovernmental 75,101 2,476 77,577 

Agency Debt:

Held by the Public - - - 

Total Debt 75,101 $ 2,476 $ 77,577 $ 

FY 2007 Beginning 

Balance Net Borrowing

Ending 

Balance

Intragovernmental

Debt to the Treasury 58,187 $ (8,990) $ 49,197 $ 

Debt to the Federal Financing Bank 25,260 644 25,904 

Total Intragovernmental 83,447 (8,346) 75,101 

Agency Debt:

Held by the Public - - - 

Total Debt 83,447 $ (8,346) $ 75,101 $ 

NOTE 14. ENVIRONMENTAL AND DISPOSAL LIABILITIES 

The Department is subject to the Comprehensive Environmental Response, Compensation, and Liability Act, the 

Clean Water Act, and the Resource Conservation and Recovery Act for cleanup of hazardous waste. In FY 2008, 

the FS and CCC estimate the liability for total cleanup costs for sites known to contain hazardous waste to be $18 

million and $7 million respectively, $97 million for FS and $8 million for CCC in FY 2007, based on actual 

cleanup costs at similar sites. These estimates will change as new sites are discovered, remedy standards change and 

new technology is introduced. 

NOTE 15. OTHER LIABILITIES 

In fiscal 2008, other liabilities with the public include estimated losses on crop insurance claims of $3,881 million, 

estimated underwriting gains on crop insurance of $2,491 million, crop insurance premium subsidy deficiency 

reserve of $887 million, Payments to States of $531 million, estimated program delivery cost to reinsurer of $31 

million, loans paid in advance for multi-family housing of $20 million, and credit reform programs of $10 million. 

In fiscal 2007, other liabilities with the public include estimated losses on crop insurance claims of $2,579 million, 

estimated underwriting gains on crop insurance of $1,509 million, crop insurance premium subsidy deficiency 

reserve of $565 million, Payments to States of $394 million, credit reform programs of $12 million, undistributed 

credits for insured loans of $11 million and estimated program delivery cost to reinsurer of $9 million. 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

184 

FY 2008 Non-Current Current Total

Intragovernmental:

Other Accrued Liabilities 17 $ 126 $ 143 $ 

Employer Contributions and Payroll Taxes - 75 75 

Unfunded FECA Liability - 164 164 

Advances from Others - 12 12 

Liability for Deposit Funds, Clearing Accounts - (15) (15) 

Liability for Subsidy Related to Undisbursed Loans - 525 525 

Resources Payable to Treasury - 12,702 12,702 

Custodial Liability - 72 72 

Other Liabilities - - - 

Subtotal Intragovernmental 17 13,661 13,678 

With the Public:

Other Accrued Liabilities - 14,070 14,070 

Accrued Funded Payroll and Leave - 201 201 

Unfunded Leave - 616 616 

Advances from Others - 52 52 

Deferred Credits - 645 645 

Liability for Deposit Funds, Clearing Accounts - 285 285 

Contingent Liabilities 14 115 129 

Capital Lease Liability 28 37 65 

Custodial Liability - 2 2 

Other Liabilities 20 7,823 7,843 

Subtotal With the Public 62 23,846 23,908 

Total Other Liabilities 79 $ 37,507 $ 37,586 $ 

FY 2007 Non-Current Current Total

Intragovernmental:

Other Accrued Liabilities 15 $ 550 $ 565 $ 

Employer Contributions and Payroll Taxes - 45 45 

Unfunded FECA Liability - 162 162 

Advances from Others - 35 35 

Liability for Deposit Funds, Clearing Accounts - (29) (29) 

Liability for Subsidy Related to Undisbursed Loans - - - 

Resources Payable to Treasury - 12,921 12,921 

Custodial Liability - 54 54 

Subtotal Intragovernmental 15 13,738 13,753 

With the Public:

Other Accrued Liabilities - 13,644 13,644 

Accrued Funded Payroll and Leave - 44 44 

Unfunded Leave - 550 550 

Other Unfunded Employment Related Liability - 41 41 

Advances from Others - 63 63 

Deferred Credits - 406 406 

Liability for Deposit Funds, Clearing Accounts - 205 205 

Contingent Liabilities 11 37 48 

Capital Lease Liability 32 4 36 

Custodial Liability - 2 2 

Other Liabilities 20 5,058 5,078 

Subtotal With the Public 63 20,054 20,117 

Total Other Liabilities 78 $ 33,792 $ 33,870 $ 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 

185 

NOTE 16. LEASES 

USDA activities based in the Washington D.C. area are located in General Services Administration (GSA) leased 

facilities, and USDA owned buildings. The USDA Headquarter complex (Whitten Building, South Building and 

Cotton Annex) is a government owned facility, which is part of the GSA Federal Buildings Inventory. As the result 

of a 1998 Agreement between GSA and USDA, a moratorium was placed on the rental billings for the 

Headquarters complex beginning in FY 1999. 

At current market rate, the estimated yearly rental payment for the above mentioned space would be $51 million. 

This agreement is still in effect and as a result, USDA activities located in the Headquarter complex are not billed 

for rental costs. 

Effective September 30, 2007, the Department released the Cotton Annex to GSA and no longer occupies the 

building. 

FY 2008

Capital Leases:

Summary of Assets Under Capital Leases

Land and Building 142 $ 

Machinery and Equipment 1 

Accumulated Amortization (78)

Future Payments Due:

Land & Buildings Machinery & 

Equipment Other Totals

Fiscal Year

2009 22 - - 22 

2010 20 - - 20 

2011 19 - - 19 

2012 16 - - 16 

2013 13 - - 13 

After 5 Years 57 - - 57 

Total Future Lease Payments 147 - - 147 

Less: Imputed Interest 48 - - 48 

Less: Executory Costs 19 - - 19 

Less: Lease Renewal Options 15 - - 15 

Net Capital Lease Liability 65 - - $ 65 

Lease liabilities covered by budgetary resources 65 

Operating Leases:

Future Payments Due:

Fiscal Year Land & Buildings Machinery & 

Equipment Other Totals

2009 106 1 - 107 

2010 94 1 - 95 

2011 84 - - 84 

2012 73 - - 73 

2013 63 - - 63 

After 5 Years 426 - - 426 

Total Future Lease Payments 846 $ 2 $ - $ 848 $ 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

186 

FY 2007

Capital Leases:

Summary of Assets Under Capital Leases

Land and Building 68 $ 

Machinery and Equipment 2 

Accumulated Amortization (34)

Future Payments Due:

Land & Buildings Machinery & 

Equipment Other Totals

Fiscal Year

2008 11 - - 11 

2009 10 - - 10 

2010 10 - - 10 

2011 10 - - 10 

2012 10 - - 10 

After 5 Years 65 - - 65 

Total Future Lease Payments 116 - - 116 

Less: Imputed Interest 55 - - 55 

Less: Executory Costs 25 - - 25 

Less: Lease Renewal Options - - - - 

Net Capital Lease Liability 36 - - $ 36 

Lease liabilities covered by budgetary resources 36 

Operating Leases:

Future Payments Due:

Fiscal Year Land & Buildings Machinery & 

Equipment Other Totals

2008 82 1 - 83 

2009 - 73 - 73 

2010 - 68 - 68 

2011 - 62 - 62 

2012 56 - - 56 

After 5 Years 441 1 - 442 

Total Future Lease Payments 782 $ 2 $ - $ 784 $ 

NOTE 17. COMMITMENTS AND CONTINGENCIES 

The Department is subject to various claims and contingencies related to lawsuits as well as commitments under 

contractual and other commercial obligations. 

For cases in which payment has been deemed probable and for which the amount of potential liability has been 

estimated, $129 million and $48 million has been accrued in the financial statements as of September 30, 2008 and 

2007, respectively. 

No amounts have been accrued in the financial statements for claims where the amount is uncertain or where the 

probability of judgment against USDA is remote. The Department’s potential liability for claims where a judgment 

against the Department is reasonably possible ranges from $50 million to $260 million as of September 30, 2008, 

compared to $2,867 million to $2,969 million as of September 30, 2007. 

CRP rental payments are estimated to be $1,900 million annually through FY 2016. Commitments to extend loan 

guarantees are estimated to be $3,846 million and $2,719 million in fiscal 2008 and 2007, respectively. 

NOTE 18. EARMARKED FUNDS 

Earmarked funds are financed by specifically identified revenues, often supplemented by other financing sources, 

which remain available over time. These specifically identified revenues and other financing sources are required by 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 

187 

statute to be used for designated activities, benefits or purposes and must be accounted for separately from the 

Government’s general revenues. 

Financial information for all significant earmarked funds follows the descriptions of each fund’s purpose shown 

below. 

Risk Management Agency 

Federal Crop Insurance Corporation Fund (FCIC) 

Resources for the FCIC Fund includes funds collected from the public for insurance premiums and other insurance 

related fees that are used with appropriations from Congress and unobligated balances from previous years to fund 

the Federal Crop Insurance Program. Funds are available under 7 U.S.C. 1501-1519. 

Agricultural Marketing Service 

Funds for Strengthening Markets, Income, and Supply 

This fund is used to purchase commodities for schools and elderly feeding programs, to provide goods and other 

necessities in emergencies and disasters, and to purchase agricultural commodities to stabilize markets. The fund is 

permanently financed by statutory transfer of an amount equal to 30 percent of customs receipts collected during 

each calendar year and is automatically appropriated for expanding outlets for perishable, non-price supported 

commodities. An amount equal to 30 percent of receipts collected on fishery products is transferred to the Food 

and Nutrition Service and is used to purchase commodities under section 6 of the National School Lunch Act and 

other authorities specified in the child nutrition appropriation. Funds are available under section 32 of the Act of 

August 24, 1935, as amended (7 U.S.C. 612c). 

Expenses and Refunds, Inspection and Grading of Farm Products 

The commodity grading programs provide grading, examination, and certification services for a wide variety of 

fresh and processed food commodities using federally approved grade standards and purchase specifications. This 

fund is financed by the collection of fees charged to producers of various food commodities who request, on a 

voluntary basis, inspection and grading of agricultural food commodities. This program is authorized by the 

Agricultural Marketing Act of 1946 (7 U.S.C. 1621-1627). 

Animal Plant Health Inspection Service 

Agricultural Quarantine Inspection User Fee Account 

This fund is used to record and report expenditures and revenue associated with operating Agricultural Quarantine 

Inspection (AQI) activities at ports of entry. The Farm Bill of 1990, as amended by the Federal Agriculture 

Improvement and Reform Act of 1996, gave the Animal and Plant Health Inspection Service (APHIS) the 

authority to charge user fees for AQI services, and to use the revenue to fund AQI activities. In March of 2003, a 

portion of the AQI program was transferred to the Department of Homeland Security (DHS); however, APHIS 

retained the authority to collect AQI revenue. APHIS transfers a portion of the revenue to DHS periodically 

throughout the year to fund their expenditures. The revenue in the fund is collected from airlines, air passengers, 

vessels, trucks, and railroad cars that are subject to AQI inspection at ports of entry. These user fees are an inflow 

of revenue from the public that is used to fund AQI inspections that are required by APHIS and DHS. The 

authority is codified in 21 U.S.C. 136(a). 

Forest Service 

Cooperative Work 

Cooperative contributions are deposited for disbursement in compliance with the terms and provisions of the 

agreement between the cooperator and the Forest Service. Cooperators include timber purchasers, not-for-profit 

organizations, and local hunting and fishing clubs. The governing authorities are the Act of June 30, 1914 (16 

U.S.C. 498), and the Knutson-Vandenberg Act. 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

188 

Land Acquisition 

Each fiscal year this fund receives a transfer of recreation user fees from the Department of the Interior’s Land and 

Water Conservation Fund, to be used for the acquisition of land or waters, or interest therein, including 

administrative expenses, to carry out the provisions of the Land and Water Conservation Fund Act of 1965, as 

amended (16 U.S.C. 460l-4-11), pertaining to the preservation of watersheds. The Land Acquisition program is 

authorized by the Interior and Related Agencies Appropriations Act of December 30, 1982 (96 Stat. 1983, Public 

Law 97-394).

Payments to States, National Forest Fund 

The Payments to States, National Forest Fund receives receipts from the National Forest Fund. These monies are 

generated from the sale of goods and services at the national forests. Annually, revenue-sharing payments are made 

to the States in which the national forests are located, for public schools and public roads in the county or counties 

in which the national forests are situated. The Act of May 23, 1908, as amended (16 U.S.C. 500), authorized the 

Payments to States, National Forest Fund program. 

Timber Salvage Sales 

The Timber Salvage Sale Fund was established to facilitate the timely removal of timber damaged by fire, wind, 

insects, disease, or other events. Amounts collected from the sale of salvaged timber are used on other qualifying 

salvage sales to cover the cost of preparing and administering the sales. The Timber Salvage Sales program is 

authorized by 16 USC 472(a). 

State, Private, and International Forestry Land and Water Conservation Fund 

The Fiscal Year 2004 Department of the Interior and Related Agencies Appropriation Act (Public Law 108-108) 

authorizes the Forest Service to receive a transfer of receipts from the Department of the Interior’s Land and Water 

Conservation Fund to finance the existing Forest Legacy Program, funded previously by State and Private Forestry 

general appropriation. To accommodate the new financing arrangement and at OMB’s request, the U.S. 

Department of Treasury established a new special fund, “State, Private and International Forestry Land and Water 

Conservation Fund”. The program expenditures include grants and an occasional land purchase, but no real 

property will be procured or constructed.

Recreation Fee Demonstration Program 

The Recreation Fee Demonstration Program fund receives deposits of recreation fees collected from projects that 

are part of the Recreation Fee Demonstration Program. These monies are retained and used for backlog repair and 

maintenance of recreation areas, sites or projects. These funds are also used for interpretation, signage, habitat or 

facility enhancement, resource preservation, annual operation, maintenance, and law enforcement related to public 

use of recreation areas and sites. The Recreation Fee Demonstration Program is authorized by 16 U.S.C. 4601-

6(a). 

National Forest Fund Receipts 

The Federal Lands Recreation Enhancement Act (FLREA) (Public Law 108-447) sets forth provisions for 

collection of recreation fees and retention of special recreation permit fees by the FS. The FS deposits 85 percent 

of special use permit revenues from these authorizations into the National Forest Fund.

Restoration of Forest Lands and Improvements 

The Restoration of Forest Lands and Improvements Acts (16 U.S.C. 579(c)) provides that any moneys received by 

the United States with respect to lands under the administration of the Forest Service (a) as a result of the forfeiture 

of a bond or deposit by a permittee or timber purchaser for failure to complete performance of improvement, 

protection, or rehabilitation work required under the permit or timber sale contract or (b) as a result of a judgment, 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 

189 

compromise, or settlement of any claim, involving present or potential damage to lands or improvements, shall be 

deposited into the United States Treasury and are appropriated and made available until expended to cover the cost 

to the United States of any improvement, protection, or rehabilitation work on lands under the administration of 

the Forest Service rendered necessary by the action which led to the forfeiture, judgment, compromise, or 

settlement: Provided, that any portion of the moneys received in excess of the amount expended in performing the 

work necessitated by the action which led to their receipt shall be transferred to miscellaneous receipts.

Acquisition of Lands to Complete Land Exchanges 

As authorized by 7 statutes, this program is funded annually by congressional appropriation action, with forest 

revenues generated by the occupancy of public land or from the sale of natural resources other than minerals. All 

funds appropriated that remain unobligated at the end of the fiscal year are returned to the receipts of the affected 

national forests. These funds are used to purchase land and for related expenditures such as title search, escrow, 

recording, and personnel costs when the purchase is considered necessary to minimize soil erosion and flood 

damage. This appropriation is available for land acquisition within the exterior boundaries of the national forests.

Cooperative State Research Education and Extension Service 

Native American Institutions Endowment Fund 

The Native American Institutions Endowment Fund is authorized by Public Law 103-382 (7 U.S.C. 301 note). 

This program provides for an endowment for the 1994 land-grant institutions (31 Tribally controlled colleges) to 

strengthen the infrastructure of these institutions and develop Indian expertise for the food and agricultural sciences 

and businesses and their own communities. At the termination of each fiscal year, the Secretary shall withdraw the 

income from the endowment fund for the fiscal year, and after making adjustments for the cost of administering 

the fund, distribute the adjusted income on a formula basis to the 1994 land-grant institutions. 

Farm Service Agency 

Agricultural Disaster Relief Trust Fund 

The Agricultural Disaster Relief Trust Fund shall make amounts available for the purpose of expenditures to meet 

the obligations of the United States incurred under section 901 or section 531 of the Federal Crop Insurance Act. 

The trust fund will be used to make payments to farmers and ranchers under five disaster assistance programs: (1) 

Supplemental Revenue Assistance Payments (SURE) Program, (2) Livestock Feed Program (LFP), (3) Livestock 

Indemnity Program (LIP), (4) Tree Assistance Program (TAP), and (5) Emergency Assistance for Livestock, 

Honey Bees, and Farm-Raised Fish Program (ELAP). The fund has appropriated an amount equivalent to 3.08 

percent of the amounts received in the general fund of the Treasury of the United States during fiscal years 2008 

through 20011 attributable to the duties collected on articles entered, or withdrawn from warehouse, for 

consumption under the Harmonized Tariff Schedule of the United States. 

Other 

Financial information is summarized for all other earmarked funds with total assets less than $50 million listed 

below. 

Agricultural Marketing Service 

Perishable Agricultural Commodities Act 

Animal Plant Health Inspection Service 

Miscellaneous Contributed Funds 

Forest Service 

Roads and Trails for States, National Forest Fund 

Reforestation Trust Fund 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

190 

Payments to Counties, National Grasslands 

Timber Sales Pipeline Restoration Fund 

Operation and Maintenance of Forest Service Quarters 

Timber Roads, Purchaser Elections 

Expenses, Brush Disposal 

Range Betterment Fund 

Acquisition of Lands for National Forests, Special Acts 

Construction of Facilities or Land Acquisition 

Recreation Fees for Collection Costs 

Payment to Minnesota (Cook, Lake and Saint Louis Counties) 

Licensee Program 

Tongass Timber Supply Fund 

Resource Management Timber Receipts 

Quinault Special Management Area 

MNP Rental Fee Account 

Midewin National Tallgrass Prairie Restoration Fund 

Land Between the Lakes Management Fund 

Administration of Rights-of-Way and Other Land Uses Fund 

Valles Caldera Fund 

Hardwood Technology Transfer and Applied Research Fund 

Stewardship Contracting Product Sales 

Mount Saint Helens Highway 

Gifts, Donations and Bequests for Forest and Rangeland Research 

Land Between the Lakes Trust Fund 

Gifts and Bequests 

Natural Resources Conservation Service 

Miscellaneous Contributed Funds 

Agricultural Research Service 

Concessions Fees and Volunteer Services 

Gifts and Bequests 

Miscellaneous Contributed Funds 

Rural Development 

Alternative Agricultural Research and Commercialization Revolving Fund 

Foreign Agricultural Service 

Miscellaneous Contributed Funds 

Grain Inspection, Packers and Stockyards Administration 

Inspection and Weighing Services 

Office of the Inspector General 

Inspector General Assets Forfeiture, Department of Justice 

Inspector General Assets Forfeiture, Department of Treasury 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 

Earmarked Funds

RMA AMS AMS APHIS FS FS FS FS 

Balance Sheet As of September 30, 2008

Federal Crop 

Insurance 

Corporation Fund

Funds for 

Strengthening 

Markets, Income, 

and Supply

Expenses and 

Refunds, 

Inspection and 

Grading of Farm 

Products

Agricultural 

Quarantine 

Inspection User 

Fee Account Cooperative Work Land Acquisition

Payments to 

States, National 

Forests Fund

Timber Salva

Sales

12X4085 12X5209 12X8015 12X5161 12X8028 12X5004 12X5201 12X5204 

Fund Balance with Treasury 2,364 $ 362 $ 95 $ 153 $ 296 $ 32 $ 96 $ 

$ 

Investments - - - - - - - 

 

Other Assets 3,744 329 18 148 21 49 3 

 

Total Assets 6,108 691 113 301 317 81 99 

 

Other Liabilities 8,318 11 60 81 54 1 134 

 

Total Liabilities 8,318 11 60 81 54 1 134 

 

Unexpended Appropriations 944 302 - 130 - - - 

 

Cumulative Results of Operations (3,154) 378 53 90 263 80 (35) 

 

Total Liabilities and Net Position 6,108 691 113 301 317 81 99 

 

Statement of Net Cost For the PeriodEnded September 30, 2008Gross program costs 7,081 717 185 199 139 40 169 

 

Less Earned Revenues 1,440 1 155 607 105 - 59 

 

Net Cost of Operations 5,641 716 30 (408) 34 40 110 

 

Statement of Changes in Net PositionFor the period Ended September 30, 2008Net Position Beginning of Period (393) 854 25 132 304 66 76 

 

Changes in Accounting Principles - - - - (3) - (1) 

 

Beginning Balance, as Adjusted (393) 854 25 132 301 66 75 

 

Non-Exchange Revenue 3,824 542 25 (320) (4) 54 - 

 

Other Financing Sources - - 33 - - - - 

 

Net Cost of Operations (5,641) (716) (30) 408 (34) (40) (110) 

 

Change in net Position (1,817) (174) 28 88 (38) 14 (110) 

 

Net Position End of Period (2,210) $ 680 $ 53 $ 220 $ 263 $ 80 $ (35) $ 

$ 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

192 

Earmarked Funds

FS FS FS FS CSREES FSA

Balance Sheet As of September 30, 2008

Recreation Fee 

Demonstration 

Program

National Forest 

Fund Receipts

Restoration of 

Forest Lands and 

Improvements

Acquisition of 

Lands to 

Complete Land 

Exchanges

Native American 

Institutions 

Endowment Fund

Agricultural 

Disaster Relief 

Trust Fund Other 

12X5268 125008 12X5215 12X5216 12X5205 12X5531

Fund Balance with Treasury 147 $ 74 $ 113 $ 51 $ 11 $ 833 $ 315 $ 

$ 

Investments - - - - 101 - 10 

Other Assets 4 6 41 23 - - 33 

Total Assets 151 80 154 74 112 833 358 

Other Liabilities 4 - - - - - 44 

Total Liabilities 4 - - - - - 44 

Unexpended Appropriations - - - - 48 - 3 

Cumulative Results of Operations 147 80 154 74 64 833 311 

Total Liabilities and Net Position 151 80 154 74 112 833 358 

Statement of Net Cost For the PeriodEnded September 30, 2008Gross program costs 65 - 5 10 2 - 237 

Less Earned Revenues 61 34 108 20 4 - 167 

Net Cost of Operations 4 (34) (103) (10) (2) - 70 

Statement of Changes in Net PositionFor the period Ended September 30, 2008Net Position Beginning of Period 151 48 51 64 98 - 267 

Changes in Accounting Principles - - - - - - (10) 

Beginning Balance, as Adjusted 151 48 51 64 98 - 257 

Non-Exchange Revenue - - - - 12 833 60 

Other Financing Sources - (2) - - - - 67 

Net Cost of Operations (4) 34 103 10 2 - (70) 

Change in net Position (4) 32 103 10 14 833 57 

Net Position End of Period 147 $ 80 $ 154 $ 74 $ 112 $ 833 $ 314 $ 

$ 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 

Earmarked Funds

RMA AMS AMS APHIS FS FS FS 

Balance Sheet As of September 30, 2007

Federal Crop 

Insurance 

Corporation Fund

Funds for 

Strengthening 

Markets, Income, 

and Supply

Expenses and 

Refunds, 

Inspection and 

Grading of Farm 

Products

Agricultural 

Quarantine 

Inspection User 

Fee Account Cooperative Work Land Acquisition

Payme

States, N

Forests 

12X4085 12X5209 12X8015 12X5161 12X8028 12X5004 12X5

Fund Balance with Treasury 2,344 $ 560 $ 48 $ 135 $ 338 $ 17 $ 

$ 

Investments - - - - - - 

 

Other Assets 2,459 296 35 5 24 50 

 

Total Assets 4,803 856 83 140 362 67 

 

Other Liabilities 5,196 2 58 8 58 1 

 

Total Liabilities 5,196 2 58 8 58 1 

 

Unexpended Appropriations 642 302 - 129 - - 

 

Cumulative Results of Operations (1,035) 552 25 3 304 66 

 

Total Liabilities and Net Position 4,803 856 83 140 362 67 

 

Statement of Net Cost For the PeriodEnded September 30, 2007Gross program costs 4,869 926 163 176 171 55 

 

Less Earned Revenues 1,018 1 141 472 97 - 

 

Net Cost of Operations 3,851 925 22 (296) 74 55 

 

Statement of Changes in Net PositionFor the period Ended September 30, 2007Net Position Beginning of Period (782) 682 15 123 378 89 

 

Changes in Accounting Principles - - - - - - 

 

Beginning Balance, as Adjusted (782) 682 15 123 378 89 

 

Non-Exchange Revenue 4,240 1,097 2 (287) - 32 

 

Other Financing Sources - - 30 - - - 

 

Net Cost of Operations (3,851) (925) (22) 296 (74) (55) 

 

Change in net Position 389 172 10 9 (74) (23) 

 

Net Position End of Period (393) $ 854 $ 25 $ 132 $ 304 $ 66 $ 

$ 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

194 

Earmarked Funds

FS FS FS FS FS FS CSREES

Balance Sheet As of September 30, 2007

Timber Roads, 

Purchaser 

Elections

Expenses, Brush 

Disposal

State, Private, 

and International 

Forestry, Land 

and Water 

Conservation 

Fund

Recreation Fee 

Demonstration 

Program

Restoration of 

Forest Lands and 

Improvements

Acquisition of 

Lands to 

Complete Land 

Exchanges

Native American 

Institutions 

Endowment Fund 

12X5202 12X5206 12X5367 12X5268 12X5215 12X5216 12X5205

Fund Balance with Treasury 29 $ 40 $ 101 $ 149 $ 41 $ 48 $ 9 $ 

$ 

Investments - - - - - - 88 

 

Other Assets 2 1 2 5 10 17 1 

 

Total Assets 31 41 103 154 51 65 98 

 

Other Liabilities - 1 3 3 - 1 - 

 

Total Liabilities - 1 3 3 - 1 - 

 

Unexpended Appropriations - - - - - - 37 

 

Cumulative Results of Operations 31 40 100 151 51 64 61 

 

Total Liabilities and Net Position 31 41 103 154 51 65 98 

 

Statement of Net Cost For the PeriodEnded September 30, 2007Gross program costs 2 13 41 57 (9) 5 3 

 

Less Earned Revenues 7 10 - 60 16 20 5 

 

Net Cost of Operations (5) 3 41 (3) (25) (15) (2) 

 

Statement of Changes in Net PositionFor the period Ended September 30, 2007Net Position Beginning of Period 66 56 84 135 25 45 84 

 

Changes in Accounting Principles - - - - - - - 

 

Beginning Balance, as Adjusted 66 56 84 135 25 45 84 

 

Non-Exchange Revenue (40) (13) 57 13 1 4 12 

 

Other Financing Sources - - - - - - - 

 

Net Cost of Operations 5 (3) (41) 3 25 15 2 

 

Change in net Position (35) (16) 16 16 26 19 14 

 

Net Position End of Period 31 $ 40 $ 100 $ 151 $ 51 $ 64 $ 98 $ 

$ 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 

NOTE 19. SUBORGANIZATION 

PROGRAM 

COSTS/PROGRAM 

COSTS BY 

SEGMENT 

FY 2008

Intragovernmental With the Public Intragovernmental With the Public Intragovernmental 

Enhance International Competitiveness andthe Sustainability of Rural and Farm Economies:Gross Cost - $ - $ 176 $ 1,892 $ 95 $ Less: Earned Revenue - - 71 347 99 Net Cost - - 105 1,545 (4) Enhance the Competitiveness and Sustainabilityof Rural and Farm Economies:Gross Cost 953 3,434 1,339 7,254 - Less: Earned Revenue 213 578 16 1,394 - Net Cost 740 2,856 1,323 5,860 - Support Increased Economic Opportunities andImproved Quality of Life in Rural America:Gross Cost - - - - - Less: Earned Revenue - - - - - Net Cost - - - - - Enhance Protection and Safety of the Nation'sAgriculture and Food Supply: - - - - - Gross Cost - - - - - Less: Earned Revenue - - - - - Net CostImprove the Nation's Nutrition and Health:Gross Cost - - - - - Less: Earned Revenue - - - - - 

Net Cost - - - - - 

Protect and Enhance the Nation's Natural ResourceBase and Environment:Gross Cost - - 236 1,889 - 

Less: Earned Revenue - - - 2 - 

Net Cost - - 236 1,887 - 

Total Gross Costs 3,434 953 1,751 11,035 95 Less: Total Earned Revenues 578 213 87 1,743 99 

Net Cost of Operations $ 2,856 740 $ 1,664 $ 9,292 $ (4) $ 

FSA CCC FAS
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

196 

FY 2008

Intragovernmental With the Public Intragovernmental With the Public Intragovernmenta

Enhance International Competitiveness andthe Sustainability of Rural and Farm Economies:Gross Cost - $ - $ - $ - $ 

$ 

Less: Earned Revenue - - - - 

 

Net Cost - - - - 

 

Enhance the Competitiveness and Sustainabilityof Rural and Farm Economies:Gross Cost 53 7,124 - - 

 

Less: Earned Revenue - 1,440 - - 

 

Net Cost 53 5,684 - - 

 

Support Increased Economic Opportunities andImproved Quality of Life in Rural America:Gross Cost - - - - 

 

Less: Earned Revenue - - - - 

 

Net Cost - - - - 

 

Enhance Protection and Safety of the Nation'sAgriculture and Food Supply: - - - - 34

 

Gross Cost - - - - 

 

Less: Earned Revenue - - - - 33

 

Net CostImprove the Nation's Nutrition and Health:Gross Cost - - 815 59,735 

 

Less: Earned Revenue - - 1 27 

 

Net Cost - - 814 59,708 

 

Protect and Enhance the Nation's Natural ResourceBase and Environment:Gross Cost - - - - 

 

Less: Earned Revenue - - - - 

 

Net Cost - - - - 

 

Total Gross Costs 7,124 53 815 59,735 34

 

Less: Total Earned Revenues 1,440 - 1 27 

 

Net Cost of Operations $ 5,684 53 $ 814 $ 59,708 $ 33

$ 

RMA FNS 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 

FY 2008

Intragovernmental With the Public Intragovernmental With the Public Intragovernmenta

Enhance International Competitiveness andthe Sustainability of Rural and Farm Economies:Gross Cost - $ - $ - $ - $ 1

$ 

Less: Earned Revenue - - - - 

 

Net Cost - - - - 1

 

Enhance the Competitiveness and Sustainabilityof Rural and Farm Economies:Gross Cost 122 934 - - 1

 

Less: Earned Revenue 7 212 - - 

 

Net Cost 115 722 - - 1

 

Support Increased Economic Opportunities andImproved Quality of Life in Rural America:Gross Cost - - - - 

 

Less: Earned Revenue - - - - 

 

Net Cost - - - - 

 

Enhance Protection and Safety of the Nation'sAgriculture and Food Supply: - - 361 1,094 

 

Gross Cost - - 28 703 

 

Less: Earned Revenue - - 333 391 

 

Net CostImprove the Nation's Nutrition and Health:Gross Cost - - - - 

 

Less: Earned Revenue - - - - 

 

Net Cost - - - - 

 

Protect and Enhance the Nation's Natural ResourceBase and Environment:Gross Cost - - - - 

 

Less: Earned Revenue - - - - 

 

Net Cost - - - - 

 

Total Gross Costs 934 122 361 1,094 3

 

Less: Total Earned Revenues 212 7 28 703 

 

Net Cost of Operations $ 722 115 $ 333 $ 391 $ 3

$ 

AMS APHIS G
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

198 

FY 2008

Intragovernmental With the Public Intragovernmental With the Public Intragovernmenta

Enhance International Competitiveness andthe Sustainability of Rural and Farm Economies:Gross Cost - $ - $ - $ - $ 

$ 

Less: Earned Revenue - - - - 

 

Net Cost - - - - 

 

Enhance the Competitiveness and Sustainabilityof Rural and Farm Economies:Gross Cost - - - - 10

 

Less: Earned Revenue - - - - 2

 

Net Cost - - - - 7

 

Support Increased Economic Opportunities andImproved Quality of Life in Rural America:Gross Cost - - - - 

 

Less: Earned Revenue - - - - 

 

Net Cost - - - - 

 

Enhance Protection and Safety of the Nation'sAgriculture and Food Supply: - - - - 10

 

Gross Cost - - - - 2

 

Less: Earned Revenue - - - - 7

 

Net CostImprove the Nation's Nutrition and Health:Gross Cost - - - - 2

 

Less: Earned Revenue - - - - 

 

Net Cost - - - - 1

 

Protect and Enhance the Nation's Natural ResourceBase and Environment:Gross Cost 1,223 5,487 562 2,615 5

 

Less: Earned Revenue 250 616 74 73 1

 

Net Cost 973 4,871 488 2,542 4

 

Total Gross Costs 5,487 1,223 562 2,615 28

 

Less: Total Earned Revenues 616 250 74 73 7

 

Net Cost of Operations $ 4,871 973 $ 488 $ 2,542 $ 20

$ 

FS NRCS 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 

FY 2008

Intragovernmental With the Public Intragovernmental With the Public Intragovernmenta

Enhance International Competitiveness andthe Sustainability of Rural and Farm Economies:Gross Cost - $ 5 $ 8 $ 10 $ 

$ 

Less: Earned Revenue - - - - 

 

Net Cost - 5 8 10 

 

Enhance the Competitiveness and Sustainabilityof Rural and Farm Economies:Gross Cost 13 306 16 20 4

 

Less: Earned Revenue 16 - 1 - 

 

Net Cost (3) 306 15 20 3

 

Support Increased Economic Opportunities andImproved Quality of Life in Rural America:Gross Cost 6 142 3 4 2

 

Less: Earned Revenue 7 - - - 

 

Net Cost (1) 142 3 4 1

 

Enhance Protection and Safety of the Nation'sAgriculture and Food Supply: 7 163 2 2 

 

Gross Cost 9 - - - 

 

Less: Earned Revenue (2) 163 2 2 

 

Net CostImprove the Nation's Nutrition and Health:Gross Cost 5 108 9 12 

 

Less: Earned Revenue 6 - - - 

 

Net Cost (1) 108 9 12 

 

Protect and Enhance the Nation's Natural ResourceBase and Environment:Gross Cost 6 140 4 6 

 

Less: Earned Revenue 7 - - - 

 

Net Cost (1) 140 4 6 

 

Total Gross Costs 864 37 42 54 6

 

Less: Total Earned Revenues - 45 1 - 1

 

Net Cost of Operations $ 864 (8) $ 41 $ 54 $ 5

$ 

CSREES ERS N
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

200 

FY 2008

Intragovernmental With the Public Intragovernmental With the Public Intragovernmenta

Enhance International Competitiveness andthe Sustainability of Rural and Farm Economies:Gross Cost - $ - $ 12 $ 20 $ 30

$ 

Less: Earned Revenue - - 18 - 18

 

Net Cost - - (6) 20 11

 

Enhance the Competitiveness and Sustainabilityof Rural and Farm Economies:Gross Cost - - 125 210 2,78

 

Less: Earned Revenue - - 187 2 47

 

Net Cost - - (62) 208 2,31

 

Support Increased Economic Opportunities andImproved Quality of Life in Rural America:Gross Cost 3,858 4,358 67 111 3,95

 

Less: Earned Revenue 360 4,183 99 1 47

 

Net Cost 3,498 175 (32) 110 3,48

 

Enhance Protection and Safety of the Nation'sAgriculture and Food Supply: - - 107 179 91

 

Gross Cost - - 160 2 22

 

Less: Earned Revenue - - (53) 177 69

 

Net CostImprove the Nation's Nutrition and Health:Gross Cost - - 61 103 91

 

Less: Earned Revenue - - 92 1 10

 

Net Cost - - (31) 102 80

 

Protect and Enhance the Nation's Natural ResourceBase and Environment:Gross Cost - - 111 184 2,20

 

Less: Earned Revenue - - 165 2 51

 

Net Cost - - (54) 182 1,68

 

Total Gross Costs 4,358 3,858 483 807 11,07

 

Less: Total Earned Revenues 4,183 360 721 8 1,97

 

Net Cost of Operations $ 175 3,498 $ (238) $ 799 $ 9,09

$ 

RD DO T
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 

FY 2008 Intradepartmental

Eliminations GRAND TOTAL

Enhance International Competitiveness andthe Sustainability of Rural and Farm Economies:Gross Cost (94) $ 2,484 $ 

Less: Earned Revenue (100) 455Net Cost 6 2,029Enhance the Competitiveness and Sustainabilityof Rural and Farm Economies:Gross Cost (1,606) 20,995Less: Earned Revenue (307) 3,836Net Cost (1,299) 17,159Support Increased Economic Opportunities andImproved Quality of Life in Rural America:Gross Cost (189) 8,426Less: Earned Revenue (109) 4,547Net Cost (80) 3,879Enhance Protection and Safety of the Nation'sAgriculture and Food Supply: (235) 3,374Gross Cost (170) 935Less: Earned Revenue (65) 2,439Net CostImprove the Nation's Nutrition and Health:Gross Cost (773) 60,181Less: Earned Revenue (86) 49Net Cost (687) 60,132Protect and Enhance the Nation's Natural ResourceBase and Environment:Gross Cost (644) 12,105Less: Earned Revenue (201) 1,010Net Cost (443) 11,095Total Gross Costs 107,565 (3,541)Less: Total Earned Revenues 10,832 (973)Net Cost of Operations $ 96,733 (2,568) $ 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

202 

FY 2007

Intragovernmental With the Public Intragovernmental With the Public Intragovernmenta

Enhance International Competitiveness andthe Sustainability of Rural and Farm Economies:Gross Cost - $ - $ 176 $ 1,537 $ 6

$ 

Less: Earned Revenue - - 320 232 10

 

Net Cost - - (144) 1,305 (3

 

Enhance the Competitiveness and Sustainabilityof Rural and Farm Economies:Gross Cost 918 1,423 1,482 11,313 

 

Less: Earned Revenue 220 485 13 4,402 

 

Net Cost 698 938 1,469 6,911 

 

Support Increased Economic Opportunities andImproved Quality of Life in Rural America:Gross Cost - - - - 

 

Less: Earned Revenue - - - - 

 

Net Cost - - - - 

 

Enhance Protection and Safety of the Nation'sAgriculture and Food Supply: - - - - 

 

Gross Cost - - - - 

 

Less: Earned Revenue - - - - 

 

Net CostImprove the Nation's Nutrition and Health:Gross Cost - - - - 

 

Less: Earned Revenue - - - - 

 

Net Cost - - - - 

 

Protect and Enhance the Nation's Natural ResourceBase and Environment:Gross Cost - - 245 1,913 

 

Less: Earned Revenue - - - 1 

 

Net Cost - - 245 1,912 

 

Total Gross Costs 1,423 918 1,903 14,763 6

 

Less: Total Earned Revenues 485 220 333 4,635 10

 

Net Cost of Operations $ 938 698 $ 1,570 $ 10,128 $ (3

$ 

FSA CCC 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 

FY 2007

Intragovernmental With the Public Intragovernmental With the Public Intragovernmenta

Enhance International Competitiveness andthe Sustainability of Rural and Farm Economies:Gross Cost - $ - $ - $ - $ 

$ 

Less: Earned Revenue - - - - 

 

Net Cost - - - - 

 

Enhance the Competitiveness and Sustainabilityof Rural and Farm Economies:Gross Cost 54 4,904 - - 

 

Less: Earned Revenue 1 1,017 - - 

 

Net Cost 53 3,887 - - 

 

Support Increased Economic Opportunities andImproved Quality of Life in Rural America:Gross Cost - - - - 

 

Less: Earned Revenue - - - - 

 

Net Cost - - - - 

 

Enhance Protection and Safety of the Nation'sAgriculture and Food Supply: - - - - 27

 

Gross Cost - - - - 

 

Less: Earned Revenue - - - - 27

 

Net CostImprove the Nation's Nutrition and Health:Gross Cost - - 838 53,509 

 

Less: Earned Revenue - - 2 22 

 

Net Cost - - 836 53,487 

 

Protect and Enhance the Nation's Natural ResourceBase and Environment:Gross Cost - - - - 

 

Less: Earned Revenue - - - - 

 

Net Cost - - - - 

 

Total Gross Costs 4,904 54 838 53,509 27

 

Less: Total Earned Revenues 1,017 1 2 22 

 

Net Cost of Operations $ 3,887 53 $ 836 $ 53,487 $ 27

$ 

RMA FNS 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

204 

FY 2007

Intragovernmental With the Public Intragovernmental With the Public Intragovernmenta

Enhance International Competitiveness andthe Sustainability of Rural and Farm Economies:Gross Cost - $ - $ - $ - $ 1

$ 

Less: Earned Revenue - - - - 

 

Net Cost - - - - 1

 

Enhance the Competitiveness and Sustainabilityof Rural and Farm Economies:Gross Cost 195 1,046 - - 1

 

Less: Earned Revenue 9 194 - - 

 

Net Cost 186 852 - - 1

 

Support Increased Economic Opportunities andImproved Quality of Life in Rural America:Gross Cost - - - - 

 

Less: Earned Revenue - - - - 

 

Net Cost - - - - 

 

Enhance Protection and Safety of the Nation'sAgriculture and Food Supply: - - 309 1,132 

 

Gross Cost - - 131 555 

 

Less: Earned Revenue - - 178 577 

 

Net CostImprove the Nation's Nutrition and Health:Gross Cost - - - - 

 

Less: Earned Revenue - - - - 

 

Net Cost - - - - 

 

Protect and Enhance the Nation's Natural ResourceBase and Environment:Gross Cost - - - - 

 

Less: Earned Revenue - - - - 

 

Net Cost - - - - 

 

Total Gross Costs 1,046 195 309 1,132 3

 

Less: Total Earned Revenues 194 9 131 555 

 

Net Cost of Operations $ 852 186 $ 178 $ 577 $ 3

$ 

AMS APHIS G
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 

FY 2007

Intragovernmental With the Public Intragovernmental With the Public Intragovernmenta

Enhance International Competitiveness andthe Sustainability of Rural and Farm Economies:Gross Cost - $ - $ - $ - $ 

$ 

Less: Earned Revenue - - - - 

 

Net Cost - - - - 

 

Enhance the Competitiveness and Sustainabilityof Rural and Farm Economies:Gross Cost - - - - 8

 

Less: Earned Revenue - - - - 2

 

Net Cost - - - - 5

 

Support Increased Economic Opportunities andImproved Quality of Life in Rural America:Gross Cost - - - - 

 

Less: Earned Revenue - - - - 

 

Net Cost - - - - 

 

Enhance Protection and Safety of the Nation'sAgriculture and Food Supply: - - - - 8

 

Gross Cost - - - - 2

 

Less: Earned Revenue - - - - 5

 

Net CostImprove the Nation's Nutrition and Health:Gross Cost - - - - 1

 

Less: Earned Revenue - - - - 

 

Net Cost - - - - 1

 

Protect and Enhance the Nation's Natural ResourceBase and Environment:Gross Cost 1,203 5,112 515 2,636 4

 

Less: Earned Revenue 143 455 60 93 1

 

Net Cost 1,060 4,657 455 2,543 3

 

Total Gross Costs 5,112 1,203 515 2,636 23

 

Less: Total Earned Revenues 455 143 60 93 8

 

Net Cost of Operations $ 4,657 1,060 $ 455 $ 2,543 $ 15

$ 

FS NRCS 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

206 

FY 2007

Intragovernmental With the Public Intragovernmental With the Public Intragovernmenta

Enhance International Competitiveness andthe Sustainability of Rural and Farm Economies:Gross Cost - $ 5 $ 6 $ 10 $ 

$ 

Less: Earned Revenue - - - - 

 

Net Cost - 5 6 10 

 

Enhance the Competitiveness and Sustainabilityof Rural and Farm Economies:Gross Cost 12 541 11 18 3

 

Less: Earned Revenue 12 - - - 1

 

Net Cost - 541 11 18 2

 

Support Increased Economic Opportunities andImproved Quality of Life in Rural America:Gross Cost 5 231 2 4 1

 

Less: Earned Revenue 6 - - - 

 

Net Cost (1) 231 2 4 

 

Enhance Protection and Safety of the Nation'sAgriculture and Food Supply: 6 276 2 3 

 

Gross Cost 7 - - - 

 

Less: Earned Revenue (1) 276 2 3 

 

Net CostImprove the Nation's Nutrition and Health:Gross Cost 4 182 7 12 

 

Less: Earned Revenue 5 - - - 

 

Net Cost (1) 182 7 12 

 

Protect and Enhance the Nation's Natural ResourceBase and Environment:Gross Cost 5 248 3 5 

 

Less: Earned Revenue 6 - - - 

 

Net Cost (1) 248 3 5 

 

Total Gross Costs 1,483 32 31 52 5

 

Less: Total Earned Revenues - 36 - - 2

 

Net Cost of Operations $ 1,483 (4) $ 31 $ 52 $ 3

$ 

CSREES ERS N
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 

FY 2007

Intragovernmental With the Public Intragovernmental With the Public Intragovernmenta

Enhance International Competitiveness andthe Sustainability of Rural and Farm Economies:Gross Cost - $ - $ 14 $ 24 $ 28

$ 

Less: Earned Revenue - - 20 - 44

 

Net Cost - - (6) 24 (16

 

Enhance the Competitiveness and Sustainabilityof Rural and Farm Economies:Gross Cost - - 152 278 2,96

 

Less: Earned Revenue - - 213 3 51

 

Net Cost - - (61) 275 2,45

 

Support Increased Economic Opportunities andImproved Quality of Life in Rural America:Gross Cost 4,120 2,561 50 93 4,19

 

Less: Earned Revenue 314 4,431 71 1 39

 

Net Cost 3,806 (1,870) (21) 92 3,79

 

Enhance Protection and Safety of the Nation'sAgriculture and Food Supply: - - 70 128 74

 

Gross Cost - - 98 1 26

 

Less: Earned Revenue - - (28) 127 47

 

Net CostImprove the Nation's Nutrition and Health:Gross Cost - - 48 88 91

 

Less: Earned Revenue - - 69 - 8

 

Net Cost - - (21) 88 83

 

Protect and Enhance the Nation's Natural ResourceBase and Environment:Gross Cost - - 88 162 2,10

 

Less: Earned Revenue - - 123 2 35

 

Net Cost - - (35) 160 1,75

 

Total Gross Costs 2,561 4,120 422 773 11,20

 

Less: Total Earned Revenues 4,431 314 594 7 2,05

 

Net Cost of Operations $ (1,870) 3,806 $ (172) $ 766 $ 9,15

$ 

RD DO T
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

208 

FY 2007 Intradepartmental

Eliminations GRAND TOTAL

Enhance International Competitiveness andthe Sustainability of Rural and Farm Economies:Gross Cost (80) $ 2,099 $ 

Less: Earned Revenue (39) 615Net Cost (41) 1,484Enhance the Competitiveness and Sustainabilityof Rural and Farm Economies:Gross Cost (1,582) 21,424Less: Earned Revenue (322) 6,325Net Cost (1,260) 15,099Support Increased Economic Opportunities andImproved Quality of Life in Rural America:Gross Cost (160) 6,952Less: Earned Revenue (79) 4,750Net Cost (81) 2,202Enhance Protection and Safety of the Nation'sAgriculture and Food Supply: (191) 3,271Gross Cost (219) 762Less: Earned Revenue 28 2,509Net CostImprove the Nation's Nutrition and Health:Gross Cost (803) 53,991Less: Earned Revenue (64) 43Net Cost (739) 53,948Protect and Enhance the Nation's Natural ResourceBase and Environment:Gross Cost (597) 11,824Less: Earned Revenue (163) 745Net Cost (434) 11,079Total Gross Costs 99,561 (3,413)Less: Total Earned Revenues 13,240 (886)Net Cost of Operations $ 86,321 (2,527) $ 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 

209 

NOTE 20. COST OF STEWARDSHIP PP&E 

The acquisition cost of stewardship land in FY 2008 and FY 2007 was $228 million and $236 million, respectively. 

NOTE 21. APPORTIONMENT CATEGORIES OF OBLIGATIONS INCURRED 

FY 2008

Direct Reimbursable Total

Apportionment by Fiscal Quarter 66,732 $ 639 $ 67,371 $ 

Apportionment for Special Activities 45,431 25,593 71,024 

Exempt from Apportionment 961 1 962 

Total Obligations Incurred 113,124 $ 26,233 $ 139,357 $ 

FY 2007

Direct Reimbursable Total

Apportionment by Fiscal Quarter 69,018 $ 932 $ 69,950 $ 

Apportionment for Special Activities 28,400 29,573 57,973 

Exempt from Apportionment 1,023 8 1,031 

Total Obligations Incurred 98,441 $ 30,513 $ 128,954 $ 

NOTE 22. AVAILABLE BORROWING AUTHORITY, END OF PERIOD 

Available borrowing authority at September 30, 2008 and 2007 was $29,369 million and $28,899 million, 

respectively. 

NOTE 23. TERMS OF BORROWING AUTHORITY USED 

The Secretary of Agriculture has the authority to make and issue notes to the Secretary of Treasury for the purpose 

of discharging obligations for RD’s insurance funds and CCC’s nonreimbursed realized losses and debt related to 

foreign assistance programs. The permanent indefinite borrowing authority includes both interest bearing and 

non–interest bearing notes. These notes are drawn upon daily when disbursements exceed deposits. Notes payable 

under the permanent indefinite borrowing authority have a term of one year. On January 1 of each year, USDA 

refinances its outstanding borrowings, including accrued interest, at the January borrowing rate. 

In addition, USDA has permanent indefinite borrowing authority for the foreign assistance and export credit 

programs to finance disbursements on post-credit reform, direct credit obligations, and credit guarantees. In 

accordance with the Federal Credit Reform Act of 1990 as amended, USDA borrows from Treasury on October 1, 

for the entire fiscal year, based on annual estimates of the difference between the amount appropriated (subsidy) and 

the amount to be disbursed to the borrower. Repayment under this agreement may be, in whole or in part, prior to 

maturity by paying the principal amount of the borrowings plus accrued interest to the date of repayment. Interest is 

paid on these borrowings based on weighted average interest rates for the cohort, to which the borrowings are 

associated. Interest is earned on the daily balance of uninvested funds in the credit reform financing funds 

maintained at Treasury. The interest income is used to reduce interest expense on the underlying borrowings. 

USDA has authority to borrow from the Federal Financing Bank (FFB) in the form of Certificates of Beneficial 

Ownership (CBO) or loans executed directly between the borrower and FFB with an unconditional USDA 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

210 

repayment guarantee. CBO’s outstanding with the FFB are generally secured by unpaid loan principal balances. 

CBO’s outstanding are related to pre-credit reform loans and no longer are used for program financing. 

FFB’s CBO’s are repaid as they mature and are not related to any particular group of loans. Borrowings made to 

finance loans directly between the borrower and FFB mature and are repaid as the related group of loans become 

due. Interest rates on the related group of loans are equal to interest rates on FFB borrowings, except in those 

situations where an FFB funded loan is restructured and the terms of the loan are modified. 

Prepayments can be made on Treasury borrowings without a penalty; however, they cannot be made on FFB 

CBO’s, without a penalty. 

Funds may also be borrowed from private lending agencies and others. USDA reserves a sufficient amount of its 

borrowing authority to purchase, at any time, all notes and other obligations evidencing loans made by agencies and 

others. All bonds, notes, debentures, and similar obligations issued by the Department are subject to approval by the 

Secretary of the Treasury. Reservation of borrowing authority for these purposes has not been required for many 

years. 

NOTE 24. PERMANENT INDEFINITE APPROPRIATIONS 

USDA has permanent indefinite appropriations available to fund 1) subsidy costs incurred under credit reform 

programs, 2) certain costs of the crop insurance program, (3) certain commodity program costs and 4) certain costs 

associated with FS programs. 

The permanent indefinite appropriations for credit reform are mainly available to finance any disbursements 

incurred under the liquidating accounts. These appropriations become available pursuant to standing provisions of 

law without further action by Congress after transmittal of the Budget for the year involved. They are treated as 

permanent the first year they become available, as well as in succeeding years. However, they are not stated as 

specific amounts but are determined by specified variable factors, such as cash needs for liquidating accounts, and 

information about the actual performance of a cohort or estimated changes in future cash flows of the cohort in the 

program accounts. 

The permanent indefinite appropriation for the crop insurance program is used to cover premium subsidy, delivery 

expenses, losses in excess of premiums and research and delivery costs. 

The permanent indefinite appropriation for commodity program costs is used to encourage the exportation of 

agricultural commodities and products, to encourage domestic consumption of agricultural products by diverting 

them, and to reestablish farmers’ purchasing power by making payments in connection with the normal production 

of any agricultural commodity for domestic consumption. 

The permanent indefinite appropriation for FS programs is used to fund Recreation Fee Collection Costs, Brush 

Disposal, License programs, Smokey Bear and Woodsy Owl, Restoration of Forest Lands and Improvements, 

Roads and Trails for States, National Forest Fund, Timber Roads, Purchaser Elections, Timber Salvage Sales and 

Operations, and Maintenance of Quarters. Each of these permanent indefinite appropriations is funded by receipts 

made available by law, and is available until expended. 

NOTE 25. LEGAL ARRANGEMENTS AFFECTING USE OF UNOBLIGATED BALANCES 

Unobligated budget authority is the difference between the obligated balance and the total unexpended balance. It 

represents that portion of the unexpended balance unencumbered by recorded obligations. Appropriations are 

provided on an annual, multi-year, and no-year basis. An appropriation expires on the last day of its period of 

availability and is no longer available for new obligations. Unobligated balances retain their fiscal-year identity in an 

expired account for an additional five fiscal years. The unobligated balance remains available to make legitimate 

obligation adjustments, i.e., to record previously unrecorded obligations and to make upward adjustments in 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 

211 

previously underestimated obligations for five years. At the end of the fifth year, the authority is canceled. 

Thereafter, the authority is not available for any purpose. 

Any information about legal arrangements affecting the use of the unobligated balance of budget authority is 

specifically stated by program and fiscal year in the appropriation language or in the alternative provisions section at 

the end of the appropriations act. 

NOTE 26. DIFFERENCES BETWEEN THE STATEMENT OF BUDGETARY RESOURCES AND THE BUDGET OF THE UNITED STATES GOVERNMENT 

The differences between the fiscal 2007 Statement of Budgetary Resources and the fiscal 2007 actual numbers 

presented in the fiscal 2009 Budget of the United States Government (Budget) are summarized below. 

The Budget excludes expired accounts that are no longer available for new obligations. Adjustments were made 

subsequent to the Budget submission as follows: 

AMS returned to Treasury Section 32 funds in excess of its authorized funding level and reduced obligations for 

disaster relief. 

Unavailable collections for the Native American Institution Endowment Fund were included as budgetary resources 

in the Statement of Budgetary Resources. 

The Budget includes the Milk Market Orders Assessment Fund since employees of the Milk Market 

Administrators participate in the Federal retirement system, though these funds are not available for use by the 

Department. 

Other items mainly consist of balances in suspense accounts and differences due to rounding that are excluded from 

the Budget. 

A comparison between the fiscal 2008 Statement of Budgetary Resources and the fiscal 2008 actual numbers 

presented in the fiscal 2010 Budget cannot be performed as the fiscal 2010 Budget is not yet available. The fiscal 

2010 Budget is expected to be published in February 2009 and will be available from the Government Printing 

Office. 

FY 2007

Budgetary 

Resources

Obligations 

incurred

Distributed 

offsetting 

receipts Net Outlays

Combined Statement of Budgetary Resources $ 161,918 $ 128,954 $ 1,767 $ 89,950

Reconciling items:

 Expired accounts (10,657) (1,008) - - 

 Adjustment - AMS 89 9 - - 

 Native American Institutions (5) (3) - - 

 Milk Market Orders Fund 49 49 - - 

 Other (2) (6) (7) 6 

Budget of the United States Government $ 127,995 151,392 $ 1,773 $ 89,943 $ 

NOTE 27. UNDELIVERED ORDERS AT THE END OF THE PERIOD 

Budgetary resources obligated for undelivered orders as of September 30, 2008 and 2007 was $37,794 million and 

$35,851 million, respectively. 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

212 

NOTE 28. INCIDENTAL CUSTODIAL COLLECTIONS 

Custodial collections represent National Forest Fund receipts from the sale of timber and other forest products, 

miscellaneous general fund receipts such as collections on accounts receivable related to canceled year 

appropriations, civil monetary penalties and interest, and commercial fines and penalties. Custodial collection 

activities are considered immaterial and incidental to the mission of the Department. 

Revenue Activity: FY 2008 FY 2007

Sources of Collections:

Miscellaneous $ 75 83 $ 

Total Cash Collections 75 83 

Accrual Adjustments (4) - 

Total Custodial Revenue 83 71 

Disposition of Collections:

Transferred to Others:

Treasury (63) (15) 

( Increase )/Decrease in Amounts Yet to be Transferred (68) (8) 

Net Custodial Activity $ - - $ 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 

213 

NOTE 29. RECONCILIATION OF BUDGETARY RESOURCES OBLIGATED TO NET COST OF OPERATIONS 

Budgetary and proprietary accounting information are inherently different because of the types of information and 

the timing of their recognition. The reconciliation of budgetary resources obligated and the net cost of operations 

provides a link between budgetary and proprietary accounting information. It serves not only to explain how 

information on net obligations relates to the net cost of operations but also to assure integrity between budgetary 

and proprietary accounting. 

Net obligations and the net cost of operations are different because (1) the net cost of operations may be financed by 

non-budgetary resources (e.g. imputed financing); (2) the budgetary and non-budgetary resources used may finance 

activities which are not components of the net cost of operations; and (3) the net cost of operations may contain 

components which do not use or generate resources in the current period. 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

214 

2008 2007

Resources Used to Finance Activities:

Budgetary Resources Obligated -

Obligations Incurred $ 128,954 139,357 $ 

Less: Spending authority from offsetting collections and recoveries 38,542 39,094 

Obligations net of offsetting collections and recoveries 100,815 89,860 

Less: Distributed Offsetting receipts 1,767 2,242 

Net Obligations 88,093 98,573 

Other Resources -

Transfers in(out) without reimbursement (391) (460) 

Imputed financing from costs absorbed by others 907 1,005 

Other 4 52 

Net other resources used to finance activities 568 549 

Total resources used to finance activities 88,642 99,141 

Resources Used to Finance Items not Part of the Net Cost of Operations:

Change in undelivered orders 501 (1,926) 

Resources that fund expenses recognized in prior periods (144) (649) 

Budgetary offsetting collections and receipts that do not affect net cost of operations -

Credit program collections which increase liabilities for loan guarantees or allowances for subsidy 13,357 13,534 

Change in Unfilled Customer Orders 967 77 

Decrease in exchange revenue receivable from public 7,625 6,810 

Other (287) 1,024 

Resources that finance the acquisition of assets (24,997) (27,000) 

Other resources or adjustments to net obligated resources that do not affect net cost of operations (194) (1,412) 

Total resources used to finance items not part of the net cost of operations (5,178) (7,536) 

Total resources used to finance the net cost of operations 81,106 93,963 

Components of the Net Cost of Operations that will not Require or Generate

Resources in the Current Period:

Components Requiring or Generating Resources in Future Periods -

Increase in annual leave liability 3 25 

Increase in environmental and disposal liability - 44 

Upward/Downward reestimates of credit subsidy expense 608 (293) 

Increase in exchange revenue receivable from the public - - 

Other 926 1,633 

Total components of Net Cost of Operations that will require or generate

 resources in future periods 680 2,266 

Components not Requiring or Generating Resources -

Depreciation and amortization 433 408 

Revaluation of assets or liabilities (176) (134) 

Other Components not Requiring or Generating Resources:

Bad Debt Expense (1,256) (753) 

Cost of Goods Sold 5,413 1,047 

Other 121 (64) 

Total components of Net Cost of Operations that will not require or generate resources 504 4,535 

Total components of Net Cost of Operations that will not require or generate

 resources in the current period 5,215 2,770 

Net Cost of Operations $ 86,321 96,733 $ 

NOTE 30. CHANGES IN ACCOUNTING PRINCIPLES 

The Department of Homeland Security (DHS) deposits 30% of customs duties collected into an unavailable receipt 

account. AMS receives an amount annually from this account in accordance with 7 USC 612c to encourage 

exportation and domestic consumption of agricultural products. Responsibility for the unavailable receipt account 

had been assigned to DHS in the Governmentwide Accounting (GWA) system. Treasury and OMB decided that 

AMS should be assigned responsibility for the unavailable receipt account to improve governmentwide reporting. 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 

215 

Accordingly, the GWA was changed effective October 1, 2007. Consequently, the cumulative effect of this change 

on prior periods increased the beginning balance of Cumulative Results of Operations by $13,621 million. 

Effective October 1, 2007, the FS implemented a voluntary change in accounting principle to reclassify its road 

prism assets from General PP&E to Stewardship PP&E. This change removes the capitalized road prism assets, 

with a net book value of $2,085 million as of September 30, 2007, from the Balance Sheet as reflected in the 

adjustment to the FY 2008 beginning balance of Cumulative Results of Operations in the Statement of Changes in 

Net Position. This change was adopted to more accurately reflect the stewardship nature of these assets, consistent 

with other federal land management agencies. 

Effective for FY 2007, OMB Circular A-136, requires the parent to report all budgetary and proprietary allocation 

transfer activity in its financial statements, whether material to the child, or not. Adjustments of $961 million to 

the beginning balance of Cumulative Results of Operations and negative $209 million to the beginning balance of 

Unexpended Appropriations reflected in the Statement of Changes in Net Position were made to comply with 

reporting requirements for allocation transfers. 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

216 

Required Supplementary Stewardship Information 

STEWARDSHIP INVESTMENTS (UNAUDITED) 

Stewardship investments are substantial investments made by the Federal Government for the benefit of the nation 

but are not physical assets owned by the Federal Government. When incurred, they are treated as expenses in 

determining the net cost of operations. However, these items merit special treatment so that users of Federal 

financial reports know the extent of investments that are made for long-term benefit. Such investments are 

measured in terms of expenses incurred for non-federal physical property, human capital, and research and 

development. 

Stewardship Investments (in millions) FY 2008 FY 2007 FY 2006 FY 2005 FY 2004

Expense Expense Expense Expense Expense

Non-Federal Physical Property:

Food and Nutrition Service

Food Stamp Program 32 $ 20 $ 21 $ 22 $ 36 $ 

Special Supplemental Nutrition Program 10 15 12 17 8 

Cooperative State Research, Education, and Extension Service

Extension 1890 Facilities Program 17 17 17 17 15 

Total Non-Federal Property $ 52 59 $ 50 $ 56 $ 59 $ 

Human Capital:

Cooperative State Research, Education, and Extension Service

Higher Education and Extension Programs 521 $ 524 $ 525 $ 507 $ 502 $ 

Food and Nutrition Service

Food Stamp Program 36 51 66 49 75 

Agricultural Research Service

National Agricultural Library 22 22 22 21 21 

Risk Management Agency

Risk Management Education 10 11 10 10 7 

Total Human Capital $ 608 589 $ 623 $ 587 $ 605 $ 

Research and Development:

Agricultural Research Service

Human Nutrition 85 86 85 84 83 

Collaborative Research Program 4 3 7 6 5 

Product Quality/Value Added 105 106 107 105 104 

Livestock Production 85 85 85 84 82 

Crop Production 201 202 201 197 194 

Food Safety 104 105 105 103 96 

Livestock Protection 82 83 90 78 64 

Crop Protection 196 198 199 193 183 

Environmental Stewardship 223 224 223 219 216 

Homeland Security - - - - 21 

Cooperative State Research, Education, and Extension Service

Land-grant University System 663 661 661 645 610 

Forest Service 304 261 318 295 312 

Economic Research Service

Economic and Social Science 77 75 75 74 71 

National Agricultural Statistics Service

Statistical 8 6 5 5 5 

Total Research and Development $ 2,095 2,137 $ 2,161 $ 2,088 $ 2,046 $ 

Non-Federal Physical Property 

Food and Nutrition Service 

FNS’ non-Federal physical property consists of computer systems and other equipment obtained by State and local 

governments for the purpose of administering the Food Stamp Program. The total Food Stamp Program Expense 

for ADP Equipment & Systems has been reported as of the date of FNS’ financial statements. FNS’ non-Federal 

physical property also consists of computer systems and other equipment obtained by the State and local 

governments for the purpose of administering the Special Supplemental Nutrition Program for Women, Infants 

and Children. 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 

217 

Cooperative State Research, Education and Extension Service 

The Extension 1890 facilities program supports the renovation of existing buildings and the construction of new 

facilities that permit faculty, students, and communities to benefit fully from the partnership between USDA and 

the historically African-American land-grant universities. 

Human Capital 

Cooperative State Research, Education and Extension Service 

The Higher Education programs include graduate fellowship grants, competitive challenge grants, Secondary/2-

year Post Secondary grants, Hispanic serving institutions education grants, a multicultural scholars program, a 

Native American institutions program, a Native American institutions endowment fund, an Alaska Native Serving 

and Native Hawaiian Serving institutions program, a resident instruction grant program for insular areas, and a 

capacity building program at the 1890 institutions. These programs enable universities to broaden their curricula, 

increase faculty development and student research projects, and increase the number of new scholars recruited in 

the food and agriculture sciences. CSREES also supports extension-related work at 1862 and 1890 land-grant 

institutions throughout the country through formula and competitive programs. CSREES supported the Outreach 

and Assistance for Disadvantaged Farmers Program for the first time in fiscal 2003. The purpose is to enhance the 

ability of minority and small farmers and ranchers to operate farming or ranching enterprises independently to 

assure adequate income and maintain reasonable lifestyles. 

Food and Nutrition Service 

FNS’ human capital consists of employment and training (E&T) for the Food Stamp Program. The E&T program 

requires recipients of food stamp benefits to participate in an employment and training program as a condition to 

food stamp eligibility. 

Outcome data for the E&T program is only available through the third quarter. As of this period, FNS’ E&T 

program has placed 779,173 work registrants subject to the 3 - month Food Stamp Program participant limit and 

1,318,019 work registrants not subject to the limit in either job-search, job-training, job-workfare, education, or 

work experience. 

Agricultural Research Service 

As the Nation’s primary source for agricultural information, the National Agricultural Library (NAL) has a mission 

to increase the availability and utilization of agricultural information for researchers, educators, policymakers, 

consumers of agricultural products, and the public. The NAL is one of the world’s largest and most accessible 

agricultural research libraries and plays a vital role in supporting research, education, and applied agriculture. 

The NAL was created as the departmental library for USDA in 1862 and became a national library in 1962. One of 

four national libraries of the U.S. (with the Library of Congress, the National Library of Medicine, and the 

National Library of Education), it is also the coordinator for a national network of State land-grant and USDA 

field libraries. In its international role, the NAL serves as the U.S. center for the international agricultural 

information system, coordinating and sharing resources and enhancing global access to agricultural data. The NAL 

collection of over 3.5 million items and its leadership role in information services and technology applications 

combine to make it the foremost agricultural library in the world. 

Risk Management Agency 

In response to the Secretary’s 1996 Risk Management Education (RME) initiative, and as mandated by the Federal 

Agricultural Improvement and Reform Act of 1996, the FCIC has formed new partnerships with the CSREES, 

the Commodity Futures Trading Commission, the USDA National Office of Outreach, Economic Research 

Service, and private industry to leverage the federal government’s funding of its RME program by using both public 

and private organizations to help educate their members in agricultural risk management. The RME effort was 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

218 

launched in 1997 with a Risk Management Education Summit that raised awareness of the tools and resources 

needed by farmers and ranchers to manage their risks. RMA has built on this foundation since 2003 by expanding 

State and Regional education partnerships; encouraging the development of information and technology decision 

aids; supporting the National Future Farmers of America (FFA) foundation with an annual essay contest; 

facilitating local training workshops; and supporting Cooperative Agreements with Educational and outreach 

organizations. 

During fiscal years 2008 and 2007, the RME worked toward the goals by funding risk management sessions, most 

of which targeted producers directly. The number of producers reached through these sessions is approximately 

49,000 in fiscal years 2008 and 2007. Additionally, some training sessions helped those who work with producers, 

such as lenders, agricultural educators, and crop insurance agents, better understand those areas of risk management 

with which they may be unfamiliar. Total RME obligations incurred by the FCIC were approximately $10 million 

for fiscal year 2008 and $11 million for fiscal year 2007. The following table summarizes the RME initiatives since 

fiscal year 2004: 

(dollars in millions) 2008 2007 2006 2005 2004 

RME Obligations $ 10 11 10 9.4 10 

Number of producers attending RME sessions 49,000 49,000 48,000 47,000 46,000 

One of the directives of the Agricultural Risk Protection Act (ARPA) is to step up the FCIC’s educational and 

outreach efforts in certain areas of the country that have been historically underserved by the Federal crop insurance 

program. The Secretary determined that fifteen states met the underserved criteria. These states are Maine, 

Massachusetts, Connecticut, Wyoming, New Jersey, New York, Delaware, Nevada, Pennsylvania, Vermont, 

Maryland, Utah, Rhode Island, New Hampshire, and West Virginia. 

Natural Resources Conservation Service 

The Agency’s investment in human capital is expensed each year and is primarily for education and training 

programs intended to (1) increase or maintain national economic productive capacity and (2) produce outputs and 

outcomes that provide evidence of maintaining or increasing national productive capacity. 

As the Nation’s conservation agenda continues to become more complex, the need for technical information and 

advice will increasingly exceed the capacity of the Federal workforce to respond timely. NRCS is expanding the 

capacity of its workforce through three strategies: 

1. Relying on the non-Federal entities to provide technical assistance to participants in NRCS conservation 

programs. Under authority of the 2002 Farm Bill, NRCS established processes to certify individual 

Technical Service Providers (TSP’s) and to enter into agreements with governmental and nongovernmental entities to provide services. In FY 2008 NRCS signed agreements or renewed the 

certification of 375 individual TSP’s and 35 Business TSP’s. There are now more that 1100 individual 

TSP’s and 102 businesses certified and available to help program participants apply conservation. Since 

passage of the 2002 Farm Bill, NRCS has obligated over $248 million to acquire technical service. Webbased orientations and proficiency statements have been developed to help ensure that TSP’s have the 

necessary technical competencies to carry out the Agency’s programs. 

2. Acquiring the services of experienced workers on a temporary basis. NRCS is acquiring the expertise of 

older workers through the Agricultural Conservation Enrollees/Seniors (ACES) project conducted in 

partnership with the National Older Worker Career Center. This project evolved from and complements 

the TSP initiative to leverage conservation technical assistance capacity and help landowners meet 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 

219 

conservation goals. NRCS has filled 300 ACES positions across the country including 260 at the field 

level. 

3. Using the time, talent, and energy of volunteers. Since the organization of local conservation districts in 

the 1930’s people have volunteered their time and talent to help get conservation on the land. In 1981, 

using new authority enacted by Congress, NRCS established the National Volunteer Program. In 1985, 

that program became the Earth Team. During 2008, over 70,000 Earth Team Volunteers donated over 

1 million hours. Their time was valued at $19 million. 

Research and Development 

Agricultural Research Service 

The ARS mission is to conduct research to develop and transfer solutions to agricultural problems of high national 

priority and provide information access and dissemination to: ensure high quality, safe food, and other agricultural 

products; assess the nutritional needs of Americans; sustain a competitive agricultural economy; enhance the natural 

resource base and the environment; and provide economic opportunities for rural citizens, communities, and society 

as a whole. 

ARS has revised its Strategic Plan to align it with the Department’s new Strategic Plan. ARS’ major program areas 

are being aligned as follows: 

GOAL: Enhance the Competitiveness and Sustainability of Rural and Farm Economies. 

Product Quality/Value Added—Many agricultural products are marketed as low value commodities and harvested 

commodities often suffer losses due to spoilage or damage during shipping, storage, and handling. Healthy foods 

are often not convenient and/or are not widely accepted by many consumers. Biobased products represent a small 

fraction of the market for industrial products and their performance is often uncertain. Biofuels and some biobased 

products are not yet economically competitive with petroleum-based products. 

ARS has active research programs directed toward: 1) improving the efficiency and reducing the cost for the 

conversion of agricultural products into biobased products and biofuels; 2) developing new and improved products 

to help establish them in domestic and foreign markets; and 3) providing higher quality, healthy foods that satisfy 

consumer needs in the United States and abroad. 

Livestock Production—ARS’ livestock production program is directed toward: 1) safeguarding and utilizing animal 

genetic resources, associated genetic and genomic databases, and bioinformatic tools; 2) developing a basic 

understanding of the physiology of livestock and poultry; and 3) developing information, tools, and technologies 

that can be used to improve animal production systems. The research is heavily focused on the development and 

application of genomics technologies to increase the efficiency and product quality of beef, dairy, swine, poultry, 

aquaculture, and sheep systems. 

Current areas of emphasis include increasing efficiency of nutrient utilization; increasing animal well-being and 

reducing stress in production systems; increasing reproductive rates and breeding animal longevity; developing and 

evaluating non-traditional production systems (e.g., organic, natural); and evaluating and conserving animal genetic 

resources. 

Crop Production—ARS’ crop production program focuses on developing and improving ways to reduce crop losses 

while protecting and ensuring a safe and affordable food supply. The research program concentrates on effective 

production strategies that are environmentally friendly, safe to consumers, and compatible with sustainable and 

profitable crop production systems. Research activities are directed at safeguarding and utilizing plant genetic 

resources and its associated genetic, genomic, and bioinformatic databases that facilitate selection of varieties and/or 

germplasm with significantly improved traits. 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

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Current research activities attempt to minimize the impacts of crop pests while maintaining healthy crops and safe 

commodities that can be sold in markets throughout the world. ARS is conducting research to: discover and 

exploit naturally occurring and engineered genetic mechanisms for plant pest control; develop agronomic 

germplasm with durable defensive traits; and transfer genetic resources for commercial use. ARS is also providing 

taxonomic information on invasive species that strengthen prevention techniques, aid in detection/identification of 

invasives, and increase control through management tactics which restore habitats and biological diversity. 

GOAL: Enhance Protection and Safety of the Nation’s Agriculture and Food Supply. 

Food Safety—Assuring that the United States has the highest levels of affordable, safe food requires that the food 

system be protected at each stage from production through processing and consumption from pathogens, toxins, 

and chemical contaminants that cause diseases in humans. The U.S. food supply is very diverse, extensive, easily 

accessible, and thus vulnerable to the introduction of biological and chemical contaminants through natural 

processes, intentional means, or by global commerce. 

ARS’ current food safety research is designed to yield science-based knowledge on the safe production, storage, 

processing, and handling of plant and animal products, and on the detection and control of toxin producing and/or 

pathogenic bacteria and fungi, parasites, chemical contaminants, and plant toxins. ARS’ research activities involve 

a high degree of cooperation and collaboration both within the USDA-REE agencies as well as with USDA’s Food 

Safety and Inspection Service and the Animal and Plant Health Inspection Service, and with other entities, 

including the Food and Drug Administration, the Centers for Disease Control, the Department of Homeland 

Security, and the Environmental Protection Agency. ARS also collaborates in international research programs to 

address and resolve global food safety issues. 

Specific research efforts are directed toward developing new technologies that assist ARS stakeholders and 

customers, that is, regulatory agencies, industry, and commodity and consumer organizations in detecting, 

identifying, and controlling foodborne diseases that affect human health. 

Livestock Protection—ARS’ animal health program is directed at protecting and ensuring the safety of the Nation’s 

agriculture and food supply through improved disease detection, prevention, control, and treatment. Basic and 

applied research approaches are used to solve animal health problems of high national priority. Emphasis is given 

to methods and procedures to control animal diseases. 

The research program has ten strategic objectives: 1) establish ARS’ laboratories into a fluid, highly effective 

research network to maximize use of core competencies and resources; 2) access specialized high containment 

facilities to study zoonotic and emerging diseases; 3) develop an integrated animal and microbial genomics research 

program; 4) establish centers of excellence in animal immunology; 5) launch a biotherapeutic discovery program 

providing alternatives to animal drugs; 6) build a technology driven vaccine and diagnostic discovery research 

program; 7) develop core competencies in field epidemiology and predictive biology; 8) develop internationally 

recognized expert collaborative research laboratories; 9) establish a best in class training center for our Nation’s 

veterinarians and scientists; and 10) develop a model technology transfer program to achieve the full impact of 

ARS’ research discoveries. 

ARS’ current animal research program includes eight core components: 1) biodefense research, 2) animal genomics 

and immunology, 3) zoonotic diseases, 4) respiratory diseases, 5) reproductive and neonatal diseases, 6) enteric 

diseases, 7) parasitic diseases, and 8) transmissible spongiform encephalopathies. 

Crop Production—ARS research on crop protection is directed toward epidemiological investigations to understand 

pest and disease transmission mechanisms, and to identify and apply new technologies that increase our 

understanding of virulence factors and host defense mechanisms. 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 

221 

Currently, ARS’ research priorities include: 1) identification of genes that convey virulence traits in pathogens and 

pests; 2) factors that modulate infectivity, gene functions, and mechanisms; 3) genetic profiles that provide specified 

levels of disease and insect resistance under field conditions; and 4) mechanisms that facilitate the spread of pests 

and infectious diseases. 

ARS is developing new knowledge and integrated pest management approaches to control pest and disease 

outbreaks as they occur. Its research will improve the knowledge and understanding of the ecology, physiology, 

epidemiology, and molecular biology of emerging diseases and pests. This knowledge will be incorporated into pest 

risk assessments and management strategies to minimize chemical inputs and increase production. Strategies and 

approaches will be available to producers to control emerging crop diseases and pest outbreaks 

GOAL: Improve the Nation’s Nutrition and Health. 

Human Nutrition—Maintenance of health throughout the lifespan along with prevention of obesity and chronic 

diseases via food-based recommendations are the major emphases of ARS’ human nutrition research program. 

These health related goals are based on the knowledge that deficiency diseases are no longer the most important 

public health concerns. Excessive consumption has become the primary nutrition problem in the American 

population. This is reflected by increased emphasis on prevention of obesity from basic science through intervention 

studies to assessments of large populations. ARS’ research programs also actively study bioactive components of 

foods that have no known requirement but have health promoting activities. 

Four specific areas of research are currently emphasized: 1) nutrition monitoring and the food supply, e.g., a 

national diet survey and the food composition databank; 2) dietary guidance for health promotion and disease 

prevention, i.e., specific foods, nutrients, and dietary patterns that maintain health and prevent disease; 3) prevention 

of obesity and related diseases, including research as to why so few of the population do not follow the Dietary Guidelines for 

Americans; and 4) life stage nutrition and metabolism, in order to better define the role of nutrition in pregnancy, growth of 

children, and for healthier aging. 

GOAL: Protect and Enhance the Nation’s Natural Resource Base and Environment. 

Environmental Stewardship—ARS’ research programs in environmental stewardship support scientists at seventy 

locations. Emphasis is given to developing technologies and systems that support profitable production and 

enhance the Nation’s vast renewable natural resource base. 

ARS is currently developing the scientific knowledge and technologies needed to meet the challenges and 

opportunities facing U.S. agriculture in managing water resource quality and quantity under different climatic 

regimes, production systems, and environmental conditions. ARS’ air resources research is developing 

measurement, prediction, and control technologies for emissions of greenhouse gases, particulate matter, ammonia, 

hydrogen sulfide, and volatile organic compounds affecting air quality and land-surface climate interactions. The 

agency is a leader in developing measurement and modeling techniques for characterizing gaseous and particulate 

matter emissions from agriculture. In addition, ARS is evaluating strategies for enhancing the health and 

productivity of soils, including developing predictive tools to assess the sustainability of alternative land 

management practices. Finding mechanisms to aid agriculture in adapting to changes in atmospheric composition 

and climatic variations are also important components of ARS’ research program. 

ARS’ grazing and range land research includes the conservation and restoration of the Nation’s range land and 

pasture ecosystems and agroecosystems through improved management of fire, invasive weeds, grazing, global 

change, and other agents of ecological change. ARS is currently developing improved grass and forage legume 

germplasm for livestock, conservation, bioenergy, and bioproduct systems as well as grazing-based livestock systems 

that reduce risk and increase profitability. In addition, the agency is developing whole system management 

strategies to reduce production costs and risks. 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

222 

Management Initiative—Provide Agricultural Library and Information Services to USDA and the Nation via the 

National Agricultural Library. 

As the Nation’s primary source for agricultural information, the National Agricultural Library (NAL) has a mission 

to increase the availability and utilization of agricultural information for researchers, educators, policymakers, 

consumers of agricultural products, and the public. The NAL is one of the world’s largest and most accessible 

agricultural research libraries and plays a vital role in supporting research, education, and applied agriculture. 

The NAL was created as the departmental library for USDA in 1862 and became a national library in 1962. One of 

four national libraries of the U.S. (with the Library of Congress, the National Library of Medicine, and the 

National Library of Education), it is also the coordinator for a national network of State land-grant and USDA 

field libraries. In its international role, the NAL serves as the U.S. center for the international agricultural 

information system, coordinating and sharing resources and enhancing global access to agricultural data. 

The Library delivered 90 million direct customer service transactions in FY 2008. Recently, NAL, with partners in 

the land-grant university and agricultural information service communities, has initiated development of the 

National Digital Library for Agriculture (NDLA). Specific efforts are directed toward achieving two goals: 1) 

continuing to meet the needs of its customers, and 2) implementing the NDLA. 

Management Initiative—Provide Adequate Federal Facilities Required to Support the Research Mission of ARS. 

ARS has over 100 laboratories, primarily located throughout the United States. ARS’ facilities program is designed 

to meet the needs of its scientists and support personnel to accomplish the agency’s mission. 

Cooperative State Research, Education, and Extension Service Program 

CSREES participates in a nationwide land-grant university system of agriculture related research and program 

planning and coordination between State institutions and USDA. It assists in maintaining cooperation among the 

State institutions, and between the State institutions and their Federal research partners. CSREES administers 

grants and formula payments to State institutions to supplement State and local funding for agriculture research. 

Forest Service 

FS Research and Development (R&D) provides reliable, science-based information that is incorporated into 

natural resource decision making. Efforts consist of developing new technology and then adapting and transferring 

this technology to facilitate more effective resource management. Some major research areas include the following: 

 Fire 

 Invasives 

 Recreation 

 Research Management and Use 

 Water and Air 

 Fish and Wildlife 

 Research Data and Analysis 

Research staff is involved in all areas of the FS, supporting agency goals by providing more efficient and effective 

methods where applicable. 

A representative summary of FY 2008 accomplishments include the following: 

 40 new interagency agreements and contracts 

 12 interagency agreements and contracts continued 

 1,903 articles published in journals 

 1,487 articles published in all other publications 

 6 patents granted 

 1 patent licenses executed 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 

223 

Economic Research Service 

ERS provides economic and other social science research and analysis for public and private decisions on 

agriculture, food, natural resources, and rural America. Research results and economic indicators on these 

important issues are fully disseminated through published and electronic reports and articles; special staff analyses, 

briefings, presentations, and papers; databases; and individual contacts. ERS’ objective information and analysis 

helps public and private decision makers attain the goals that promote agricultural competitiveness, food safety and 

security, a well-nourished population, environmental quality, and a sustainable rural economy. 

National Agricultural Statistics Service 

Statistical research and service is conducted to improve the statistical methods and related technologies used in 

developing U.S. agricultural statistics. The highest priority of the research agenda is to aid the NASS estimation 

program through development of better estimators at lower cost and with less respondent burden. This means 

greater efficiency in sampling and data collection coupled with higher quality data upon which to base the official 

estimates. In addition, new products for data users are being developed with the use of technologies such as remote 

sensing and geographic information systems. Continued service to users will be increasingly dependent upon 

methodological and technological efficiencies. 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

224 

Required Supplementary Information 

STEWARDSHIP PROPERTY, PLANT AND EQUIPMENT (UNAUDITED) 

In accordance with SFFAS 29, physical units added and withdrawn during the year, and a description of the 

methods of acquisition and withdrawal are classified as RSI for FY 2008. For reporting periods beginning after 

September 30, 2008, all information on heritage assets and stewardship land will be reported as basic information, 

except for condition information which is classified as RSI. 

Heritage Assets 

Acquisition and Withdrawal of Heritage Assets 

The FS generally does not construct heritage assets, although in some circumstances important site-structural 

components may be rehabilitated or reconstructed into viable historic properties to provide forest visitors with use 

and interpretation. Heritage assets may be acquired through the procurement process, but this rarely occurs. 

Normally, heritage assets are part of the land acquisition and inventory process. Withdrawal occurs through land 

exchange or natural disasters. Most additions occur through inventory activities where previously undocumented 

sites are discovered and added to the total. Although not technically additions—they already existed on NFS 

lands—they do represent an increased management responsibility commensurate with the spirit of “additions.” For 

FY 2008 there were no additions or withdrawals of heritage asset sites. 

Condition 

The condition of FS heritage assets depends on the type of asset and varies from poor to fair. 

Stewardship Land 

Acquisition and Withdrawal of Stewardship Lands 

The Land and Water Conservation Fund (L&WCF) Land Acquisition Program acquires land for the National 

Forest System (NFS) of the FS. The program coordinates with a variety of partners, including State, local, and 

Tribal governments, and private landowners through statewide planning for development of a land-adjustment 

strategy. 

The Land Acquisition Program preserves, develops, and maintains access to NFS lands and waters for the public 

and provides permanent access to public lands for recreation, commodity production, resource management, public 

safety, and community economic viability. 

The L&WCF statutory authority specifically defines the purpose to also include protecting the quality of scientific, 

scenic, historical, ecological, environmental, air and atmospheric, water resource, archeological values as well as 

food and habitat for fish and wildlife, and managing the public lands for minerals, food, timber and fiber. 

From these several allowable uses of program funding, the program concentrates on protecting habitat for priority 

species identified in the national forest and grassland’s Land Management Plans (LMPs) and enhancing 

recreational opportunities for areas with high demand for recreation. The program focuses acquisitions on 

inholdings and areas adjacent to existing NFS lands. For FY 2008, there were no additions or withdrawals of 

stewardship land sites. 

Condition 

The condition of NFS lands varies by purpose and location. The FS monitors the condition of NFS lands based on 

information compiled by two national inventory and monitoring programs—Forest Inventory and Analysis (FIA) 

and Forest Health Monitoring (FHM). 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 

225 

The FIA program conducts annual inventories of forest status and trends. FIA has historic inventory data in all 50 

States and is currently collecting annual inventory data in 47 States, including 39 of the 41 States containing NFS 

land. Active throughout all 50 States, FHM provides surveys and evaluations of forest health conditions and trends. 

Although most of the estimated 193 million acres of NFS lands continue to produce valuable benefits (i.e., clean 

air, clean water, habitat for wildlife, and products for human use), significant portions are at risk to pest outbreaks 

or catastrophic fires. There are 25 million acres of NFS forestlands at risk to future mortality from insects and 

diseases, based on the 2007 Insect and Disease Risk Map. Invasive species of insects, diseases, and plants continue 

to affect our native ecosystems by causing mortality to, or displacement of, native vegetation. The FS completed 

insect and disease prevention and suppression treatments on over 53,000 acres of NFS lands in FY 2008. 

FY 2008 Additions Withdrawals FY 2007

Heritage Assets

National Forests 155 - - 155

National Grasslands 20 - - 20

Other Sites 22 - - 22

Research Centers 37 - - 37

Library Collections 1 - - 1

Total 235 - - 235

Stewardship Land

National Forests 155 - - 155

National Grasslands 20 - - 20

Research and Experimental Areas 3 - - 3

National Preserves and Other Areas 3 - - 3

Conservation Easements 10,431 712 - 9,719

Total 10,612 712 - 9,900

DEFERRED MAINTENANCE (UNAUDITED) 

Deferred maintenance is maintenance that was scheduled to be performed but was delayed until a future period. 

Deferred maintenance represents a cost that the Federal Government has elected not to fund and, therefore, the 

costs are not reflected in the financial statements. 

Maintenance is defined to include preventive maintenance, normal repairs, replacement of parts and structural 

components, and other activities needed to preserve the asset so that it continues to provide acceptable service and 

achieve its expected life. Maintenance excludes activities aimed at expanding the capacity of an asset or otherwise 

upgrading it to service needs different from, or significantly greater than, those originally intended. 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

226 

Forest Service 

FY 2008 Cost to Return to 

Acceptable Condition

Cost of Critical 

Maintenance

Cost of Non-critical 

Maintenance

Asset Class

Bridges 133 $ 28 $ 105 $ 

Buildings 712 117 595 

Dam 24 9 15 

Minor Constructed Features 102 - 102 

Fence 301 301 - 

Handling Facility 23 23 - 

Heritage 16 5 11 

Road 3,400 782 2,618 

Trail Bridge 10 3 7 

Wastewater 35 20 15 

Water 103 60 43 

Wildlife, Fish, TES 7 5 2 

Trails 279 7 272 

General Forest Area - - - 

Total Forest Service 5,145 $ 1,360 $ 3,785 $ 

FY 2007 Cost to Return to 

Acceptable Condition

Cost of Critical 

Maintenance

Cost of Non-critical 

Maintenance

Asset Class

Bridges 123 $ 29 $ 94 $ 

Buildings 543 114 429 

Dam 21 7 14 

Minor Constructed Features 90 - 90 

Fence 324 324 - 

Handling Facility 23 23 - 

Heritage 17 5 12 

Road 8,134 3,675 4,459 

Trail Bridge 9 3 6 

Wastewater 32 17 15 

Water 89 54 35 

Wildlife, Fish, TES 6 4 2 

Trails 224 2 222 

General Forest Area - - - 

Total Forest Service 9,635 $ 4,257 $ 5,378 $ 

Deferred maintenance is reported for general Property, Plant, and Equipment (PP&E), heritage assets, and 

stewardship assets. It is also reported separately for critical and noncritical amounts of maintenance needed to 

return each class of asset to its acceptable operating condition. Critical maintenance is defined as a serious threat to 

public health or safety, a natural resource, or the ability to carry out the mission of the organization. Noncritical 

maintenance is defined as a potential risk to the public or employee safety or health (e.g., compliance with codes, 

standards, or regulations) and potential adverse consequences to natural resources or mission accomplishment. 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 

227 

The FS uses condition surveys to estimate deferred maintenance on all major classes of PP&E. No deferred 

maintenance exists for fleet vehicles and computers that are managed through the agency’s working capital fund 

(WCF). Each fleet vehicle is maintained according to schedule. The cost of maintaining the remaining classes of 

equipment is expensed. 

The agency’s deferred maintenance for roads is determined from surveys of an annual random sample of a sufficient 

number of roads to achieve estimates of 95 percent accuracy and 95 percent confidence. Five hundred roads were 

included in the FY 2008 sample. 

Deferred maintenance needs for all other asset groups are determined from surveys of all individual assets on a 

revolving schedule where the interval between visits does not exceed 5 years. 

The overall condition of major asset classes range from poor to good depending on the location, age, and type of 

property. The standards for acceptable operating condition for various classes of general PP&E, stewardship, and 

heritage assets are as follows. 

Conditions of roads and bridges within the National Forest System (NFS) road system are measured by various 

standards: 

 Federal Highway Administration regulations for the Federal Highway Safety Act; 

 Best management practices (BMP) for the nonpoint source provisions of the Clean Water Act from 

Environmental Protection Agency and States; 

 Road management objectives developed through the National Forest Management Act (NFMA) forest 

planning process; 

 Forest Service Directives—Forest Service Manual (FSM) 7730, Operation and Maintenance (January 2003 

amendment was superseded with August 25, 2005, revision); Forest Service Handbook (FSH) 7709.56a, Road 

Preconstruction, and FSH 7709.56b, Transportation Structures Handbook. 

Dams shall be managed according to FSM 7500, Water Storage and Transmission, and FSH 7509.11, Dams 

Management Handbook, as determined by condition surveys. The overall condition of dams is below acceptable. 

The condition of a dam is acceptable when the dam meets current design standards and does not have any 

deficiencies that threaten the safety of the structure or public. For dams to be rated as in acceptable condition, the 

agency needs to restore the dams to the original functional purpose, correct unsightly conditions, or prevent more 

costly repairs. 

Buildings shall comply with the National Life Safety Code, the Forest Service Health and Safety Handbook, and 

the Occupational Safety Health Administration as determined by condition surveys. These requirements are found 

in FSM 7310, Buildings and Related Facilities, revised November 19, 2004. The condition of administrative 

facilities ranges from poor to good, with approximately 36 percent needing major repairs or renovations; 

approximately 11 percent of in fair condition; and 53 percent of the facilities in good condition. 

Recreation facilities include developed recreation sites, general forest areas, campgrounds, trailheads, trails, water 

and wastewater systems, interpretive facilities, and visitor centers. These components are included in several asset 

classes of the deferred maintenance exhibit. All developed sites are managed in accordance with Federal laws and 

regulations (CFR 36). 

Detailed management guidelines are contained in FSM 2330, Publicly Managed Recreation Opportunities, and 

forest-level and regional-level user guides. Quality standards for developed recreation sites were established as 

Meaningful Measures for health and cleanliness, settings, safety and security, responsiveness, and the condition of 

the facility. 

The condition assessment for range structures (fences and stock handling facilities) is based on (1) a determination 

by knowledgeable range specialists or other district personnel of whether the structure would perform the originally 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

228 

intended function, and (2) a determination through the use of a protocol system to assess conditions based on age. 

A long-standing range methodology is used to gather this data. 

Heritage assets include archaeological sites that require determinations of National Register of Historic Places 

status, National Historic Landmarks, and significant historic properties. Some heritage assets may have historical 

significance, but their primary function in the agency is as visitation or recreation sites and, therefore, may not fall 

under the management responsibility of the heritage program. 

Trails and trail bridges are managed according to Federal law and regulations (CFR 36). More specific direction is 

contained in FSM 2350, Trail, River, and Similar Recreation Opportunities, and the FSH 2309.18, Trails 

Management Handbook. 

Deferred maintenance of structures for wildlife, fish, and threatened and endangered species (TES) is determined 

by field biologists using their professional judgment. The deferred maintenance is considered critical if resource 

damage or species endangerment would likely occur if maintenance were deferred much longer. 

Agricultural Research Service 

FY 2008 FY 2007

Asset Class

Buildings 241 $ 314 $ 

Structures 36 44 

Heritage 80 4 

Total Agricultural Research Service 357 $ 362 $ 

Deferred Maintenance (DM) includes work needed to meet laws, regulations, codes and other legal direction as 

long as the original intent or purpose of the fixed asset is not changed. Also includes work performed to bring an 

asset up to present environmental standards or correction of safety problems. Critical DM is DM that is identified 

for critical systems including HVAC, electrical, roofing, and plumbing tasks. Non-critical DM is all other systems. 

DM is reported for buildings, structures and heritage assets. 

Executive Order (EO) 13327 requires all Federal agencies to assess the condition of their facilities and plan for 

their full life cycle management. The Condition Index (CI) is a general measure of the constructed asset’s 

condition at a specific point in time. It is calculated as the ration of repair needs, or DM, to plant replacement 

value (PRV). PRV can be calculated systematically and without much effort. The condition of the constructed 

asset is a more difficult figure to determine. A repair need is the amount necessary to ensure a constructed asset is 

restored to a condition substantially equivalent to the originally intended and designed capacity, efficiency or 

capability. Ideally, with enough money and time, repair needs would be determined for each asset by inspection, 

evaluation of the repairs required, and consistent estimating of the repairs throughout ARS. ARS does not have 

available manpower in-house to complete this type of inspection and estimating, nor the funding to contract. ARS 

looked at approaches to model ARS assets and evaluate the results for management purposes. 

Whitestone Research is a company that estimates DM based on the age of the facility, geographic location, typical 

major components and size of the structure. Whitestone first inspected a sample of representative buildings from 

eleven ARS sights (roughly 40 percent of the total inventory) and used parametric models to estimate DM and 

PRV. These results were generalized to the entire population of ARS facilities. Assuming a PRV of $3.5 billion, 

the CI ratio (1 - $DM/PRV) is 91 percent, an outcome commonly classified as “adequate.” 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 

STATEMENT OF 

BUDGETARY 

RESOURCES (UNAUDITED) 

FY 2008 FSA CCC FAS RMA FNS FSIS AMS APH

Non-Budgetary Non-Budgetary

Financing Financing

Budgetary Accounts Budgetary Accounts Budgetary Budgetary Budgetary Budgetary Budgetary Budge

Budgetary Resources:Unobligated balance, brought forward, October 1: 3,165 $ 1,820 $ 1,604 $ 2,139 $ 387 $ 2,262 $ 14,891 $ 57 $ 603 $ 

$ 

Recoveries of prior year unpaid obligations 40 81 1,246 27 96 2 637 1,074 14 

Budget Authority:

Appropriation 3,410 - 16,154 - 261 4,222 53,836 940 7,844 1,

Borrowing Authority - 1,897 30,267 302 - - - - - 

Earned -

Collected 791 1,499 13,812 1,250 141 2,068 85 150 110 

Change in receivables from Federal Sources (3) - 10 (177) (42) - - 5 - 

Change in unfilled customer orders -

Advances received - - 3 - - - - - - 

Without advance from Federal Sources (1) (1) - 194 22 - - - - 

Expenditure transfers from trust funds - - 959 - - - - - - 

Nonexpenditure transfers, net, anticipated and actual - - (2,620) - 2 1 6,277 (2) (6,296) (

Temporarily not available pursuant to Public Law - - - - - - - - - 

Permanently not available (365) (2,323) (33,375) (350) (35) (1) (838) (19) (687) 

Total Budgetary Resources 7,037 2,973 28,060 3,385 832 8,554 74,888 2,205 1,588 1,

Status of Budgetary Resources:Obligations Incurred:

Direct 4,413 2,104 2,868 869 325 6,497 60,602 2,008 1,096 1,

Reimbursable 409 - 23,094 - 125 - 28 168 59 

Unobligated Balance:

Apportioned 1,092 65 276 1,662 12 2,053 974 8 92 

Exempt from Apportionment - - 811 5 - - - - 289 

Unobligated balance not available 1,123 804 1,011 849 370 4 13,284 21 52 

Total Status of Budgetary Resources 7,037 2,973 28,060 3,385 832 8,554 74,888 2,205 1,588 1,

Change in Obligated Balances:Obligated balance, net, brought forward October 1 215 432 7,734 (53) 11 180 4,154 137 112 

Obligations incurred 4,822 2,104 25,962 869 450 6,497 60,630 2,176 1,155 1,

Gross outlays (4,504) (2,127) (24,797) (766) (365) (6,219) (59,859) (1,072) (1,132) (1,

Recoveries of prior year unpaid (40) (81) (1,246) (27) (96) (2) (637) (1,074) (14) (

Change in uncollected payments from Federal Sources 5 1 (10) (17) 20 - - (5) - 

Obligated balance, net, end of period -

Unpaid obligations 512 343 7,968 200 106 456 4,288 190 124 

Uncollected customer payments from Federal Sources (15) (13) (322) (194) (86) - - (28) (2) 

Obligated balance, net, end of period 497 330 7,646 6 20 456 4,288 162 122 

Net Outlays:

Gross outlays 4,504 2,127 24,797 766 365 6,219 59,859 1,072 1,132 1,

Offsetting collections (791) (1,499) (14,773) (1,249) (141) (2,068) (85) (150) (111) 

Distributed offsetting receipts (581) - - (353) (1) - (1) (13) (185) 

Net Outlays 3,132 $ 628 $ 10,024 $ (836) $ 223 $ 4,151 $ 59,773 $ 909 $ 836 $ 1,

$ 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

230 

FY 2008 GIPSA FS NRCS ARS CSREES ERS NASS RD DO 

Non-Budgetary 

Financing 

Budgetary Budgetary Budgetary Budgetary Budgetary Budgetary Budgetary Budgetary Accounts Budgetary 

Budgetary Resources:Unobligated balance, brought forward, October 1: 13 $ 1,672 $ 1,047 $ 210 $ 126 $ 3 $ 5 $ 1,182 $ 1,249 $ 167 $ 

Recoveries of prior year unpaid obligations 4 78 491 56 33 2 1 171 1,118 29 

Budget Authority:

Appropriation 39 6,309 1,434 1,202 1,211 78 165 3,669 - 444 

Borrowing Authority - - - - - - - - 12,712 - 

Earned -

Collected 46 561 148 81 38 1 19 4,374 6,106 834 

Change in receivables from Federal Sources (1) 38 (9) 3 3 - (3) (21) - (16) 

Change in unfilled customer orders -

Advances received - (7) (3) (1) 17 - - - - 4 

Without advance from Federal Sources - 3 27 16 (3) - - - 48 (52) 

Expenditure transfers from trust funds - 4 - - - - - - - - 

Nonexpenditure transfers, net, anticipated and actual - (2) 1,956 4 35 1 1 120 - 5 

Temporarily not available pursuant to Public Law - - - - (11) - - - - - 

Permanently not available (3) (71) (7) (17) (17) (2) (2) (3,455) (4,238) (7) 

Total Budgetary Resources 98 8,585 5,084 1,554 1,432 83 186 6,040 16,995 1,408 

Status of Budgetary Resources:Obligations Incurred:

Direct 42 6,055 3,174 1,212 1,245 78 166 3,701 15,066 535 

Reimbursable 42 360 117 101 60 1 16 512 - 815 

Unobligated Balance:

Apportioned 7 982 517 216 123 1 2 1,234 1,057 1 

Exempt from Apportionment - - - - - - - - - - 

Unobligated balance not available 7 1,188 1,276 25 4 3 2 593 872 57 

Total Status of Budgetary Resources 98 8,585 5,084 1,554 1,432 83 186 6,040 16,995 1,408 

Change in Obligated Balances:Obligated balance, net, brought forward October 1 4 1,859 3,176 478 1,411 31 14 5,381 17,728 168 

Obligations incurred 84 6,415 3,291 1,313 1,305 79 182 4,213 15,066 1,350 

Gross outlays (78) (6,448) (2,951) (1,376) (1,193) (79) (179) (4,528) (11,269) (1,373) 

Recoveries of prior year unpaid (4) (78) (491) (56) (33) (2) (1) (171) (1,118) (29) 

Change in uncollected payments from Federal Sources - (41) (18) (19) - - 3 21 (48) 68 

Obligated balance, net, end of period -

Unpaid obligations 11 2,132 3,092 436 1,566 29 23 4,924 21,047 349 

Uncollected customer payments from Federal Sources (5) (425) (86) (96) (77) - (3) (8) (689) (167) 

Obligated balance, net, end of period 6 1,707 3,006 340 1,489 29 20 4,916 20,358 182 

Net Outlays:

Gross outlays 78 6,448 2,951 1,376 1,193 79 179 4,528 11,269 1,373 

Offsetting collections (47) (558) (145) (81) (55) (1) (19) (4,374) (6,107) (835) 

Distributed offsetting receipts - (514) 3 (23) (4) - (1) (494) - (55) 

Net Outlays 31 $ 5,376 $ 2,809 $ 1,272 $ 1,134 $ 78 $ 159 $ (340) $ 5,162 $ 483 $ 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 

FY 2007 FSA CCC FAS RMA FNS FSIS AMS 

Non-Budgetary Non-Budgetary

Financing Financing

Budgetary Accounts Budgetary Accounts Budgetary Budgetary Budgetary Budgetary Budgetar

Budgetary Resources:Unobligated balance, brought forward, October 1: 370 $ 781 $ 1,165 $ 1,627 $ 296 $ 1,269 $ 12,418 $ 41 $ 248 $ 

Recoveries of prior year unpaid obligations 40 84 717 15 132 3 761 104 15 

Budget Authority:

Appropriation 4,480 - 25,873 - 346 4,456 51,313 901 7,262 

Borrowing Authority - 1,351 41,185 281 - - - - 

 

Earned -

Collected 808 1,342 16,885 1,188 58 1,364 86 135 187 

Change in receivables from Federal Sources 6 - (963) 4 6 - - 6 (3

 

Change in unfilled customer orders -

Advances received - - (181) - - - (2) - 

 

Without advance from Federal Sources - - - - 62 - (1) - 

 

Expenditure transfers from trust funds - - 934 - - - - - 

 

Nonexpenditure transfers, net, anticipated and actual - - (1,831) - 8 (6) 5,746 (1) (5,812

 

Temporarily not available pursuant to Public Law - - - - - - - - 

 

Permanently not available (419) (286) (51,934) (69) (3) (3) (1,034) (17) (120

 

Total Budgetary Resources 5,285 3,272 31,850 3,046 905 7,083 69,287 1,169 1,777 

Status of Budgetary Resources:Obligations Incurred:

Direct 1,707 1,452 2,894 907 357 4,820 54,372 976 1,11

 

Reimbursable 413 - 27,352 - 161 1 24 136 63 

Unobligated Balance:

Apportioned 3,045 396 401 1,083 107 2,260 639 22 37 

Exempt from Apportionment - - 808 5 - - - - 539 

Unobligated balance not available 120 1,424 395 1,051 280 2 14,252 35 27 

Total Status of Budgetary Resources 5,285 3,272 31,850 3,046 905 7,083 69,287 1,169 1,777 

Change in Obligated Balances:Obligated balance, net, brought forward October 1 245 462 8,006 (99) 38 276 4,165 96 107 

Obligations incurred 2,120 1,452 30,246 907 518 4,821 54,396 1,112 1,174 

Gross outlays (2,104) (1,398) (30,764) (843) (346) (4,914) (53,648) (961) (1,155

 

Recoveries of prior year unpaid (40) (84) (717) (15) (132) (3) (761) (104) (15

 

Change in uncollected payments from Federal Sources (6) - 963 (4) (68) - 1 (6) 3 

Obligated balance, net, end of period -

Unpaid obligations 235 446 8,046 125 117 180 4,154 160 115 

Uncollected customer payments from Federal Sources (20) (14) (312) (178) (106) - - (23) (3

 

Obligated balance, net, end of period 215 432 7,734 (53) 11 180 4,154 137 112 

Net Outlays:

Gross outlays 2,104 1,398 30,764 843 346 4,914 53,648 961 1,155 

Offsetting collections (808) (1,343) (17,637) (1,189) (58) (1,364) (84) (135) (187

 

Distributed offsetting receipts (89) - - (464) - - 3 (7) (140

 

Net Outlays 1,207 $ 55 $ 13,127 $ (810) $ 288 $ 3,550 $ 53,567 $ 819 $ 828 $ 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

232 

FY 2007 GIPSA FS NRCS ARS CSREES ERS NASS RD 

Non-Budgetary 

Financing 

Budgetary Budgetary Budgetary Budgetary Budgetary Budgetary Budgetary Budgetary Accounts B

Budgetary Resources:Unobligated balance, brought forward, October 1: 9 $ 1,809 $ 864 $ 308 $ 133 $ 1 $ 3 $ 1,818 $ 1,307 $ 

$ 

Recoveries of prior year unpaid obligations 10 112 564 98 213 5 6 169 1,346 

 

Budget Authority:

Appropriation 38 5,586 874 1,148 1,208 75 148 2,821 - 

 

Borrowing Authority - - - - - - - - 10,846 

 

Earned -

Collected 39 525 173 83 31 1 23 4,797 5,983 

 

Change in receivables from Federal Sources 1 (44) (21) (3) - - 1 (44) - 

 

Change in unfilled customer orders -

Advance received - 5 - - 13 - - - - 

 

Without advance from Federal Sources - (5) 6 (1) 13 - (6) - 8 

 

Expenditure transfers from trust funds - - - - - - - - - 

 

Nonexpenditure transfers, net, anticipated and actual - 21 1,747 3 5 - - 14 - 

 

Temporarily not available pursuant to Public Law - - - - (36) - - - - 

 

Permanently not available - - (1) (6) (2) - - (4,086) (5,902) 

 

Total Budgetary Resources 97 8,009 4,206 1,630 1,578 82 175 5,489 13,588 

Status of Budgetary Resources:Obligations Incurred:

Direct 45 6,048 3,000 1,336 1,388 78 151 3,790 12,339 

 

Reimbursable 39 289 159 84 64 1 19 517 - 

 

Unobligated Balance:

Apportioned 7 840 234 189 117 1 4 427 438 

 

Exempt from Apportionment - - 4 - - - - - - 

 

Unobligated balance not available 6 832 809 21 9 2 1 755 811 

 

Total Status of Budgetary Resources 97 8,009 4,206 1,630 1,578 82 175 5,489 13,588 

Change in Obligated Balances:Obligated balance, net, brought forward October 1 9 1,950 3,484 538 1,365 30 13 5,652 18,537 

 

Obligations incurred net 84 6,337 3,159 1,420 1,452 79 170 4,307 12,339 

 

Gross outlays (78) (6,366) (2,918) (1,387) (1,181) (74) (166) (4,452) (11,793) 

 

Recoveries of prior year unpaid (10) (112) (564) (98) (213) (5) (6) (169) (1,346) 

 

Change in uncollected payments from Federal Sources (1) 49 15 4 (12) - 4 44 (7) 

 

Obligated balance, net, end of period

Unpaid obligations 10 2,243 3,244 555 1,488 31 20 5,410 18,369 

 

Uncollected customer payments from Federal Sources (6) (384) (68) (77) (77) - (6) (29) (641) 

 

Obligated Balance, net, end of period 4 1,859 3,176 478 1,411 31 14 5,381 17,728 

Net Outlays:

Gross outlays 78 6,366 2,918 1,387 1,181 74 166 4,452 11,793 

 

Offsetting collections (39) (530) (173) (83) (44) (1) (23) (4,798) (5,982) 

 

Distributed offsetting receipts - (500) 6 (19) (3) - - (488) - 

 

Net Outlays 39 $ 5,336 $ 2,751 $ 1,285 $ 1,134 $ 73 $ 143 $ (834) $ 5,811 $ 

$ 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 

233 

RISK ASSUMED INFORMATION (UNAUDITED) 

Risk assumed is generally measured by the present value of unpaid expected losses net of associated premiums based 

on the risk inherent in the insurance or guarantee coverage in force. Risk assumed information is in addition to the 

liability for unpaid claims from insured events that have already occurred. The assessment of losses expected based 

on the risk assumed are based on actuarial or financial methods applicable to the economic, legal and policy 

environment in force at the time the assessments are made. The FCIC has estimated the loss amounts based on 

the risk assumed for its programs to be $9,859 million and $6,579 million as of September 30, 2008 and 2007, 

respectively. 
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OTHER ACCOMPANYING INFORMATION 

235 

Other 

Accompanying 

Information 

Appendix A—Management Challenges 
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Appendix B—Improper Payment and Recovery Auditing Details 

Since 2000, agencies have reported efforts to reduce erroneous payments through the Office of Management and 

Budget’s (OMB) Circular A-11. Under the Improper Payments Information Act (IPIA), executive agencies must 

identify any of its programs that may be susceptible to significant improper payments, estimate the annual amount 

of improper payments and submit those estimates to Congress. Section 831 of the Defense Authorization Act 

requires recovery auditing. In this process, agencies entering into contracts worth more than $500 million in a fiscal 

year must execute a cost effective program for identifying errors made in paying contractors and for recovering 

amounts erroneously paid to the contractors. In FY 2005, Eliminating Improper Payments became a President’s 

Management Agenda (PMA) initiative. On August 10, 2006, Government-wide guidance was consolidated into 

OMB Circular A-123, Management's Responsibility for Internal Control, Appendix C. Under this guidance, 

USDA has 5 programs required to report under Section 57 of A-11 and has identified an additional 11 at risk of 

significant improper payments through the risk assessment process. 

For the fourth quarter of FY 2008, USDA achieved “green” for both progress and status on the Eliminating 

Improper Payments PMA initiative. Accomplishments this year include: 

 Completed risk assessments for all programs; 

 Developed plans to measure improper payments for all high risk programs, and received OMB approval; 

 Developed corrective action plans to reduce improper payments and established both reduction and recovery 

targets (where appropriate) for the high risk programs; and

 Fully complied with reporting standards. 

USDA’s improper payment rate of 6.13 percent for FY 2008, was similar to the 6.11 percent rate reported for FY 

2007. The estimated improper payments amount of $4.1 billion for FY 2008 is a reduction from the $4.4 billion 

estimated for FY 2007. The 2008 results demonstrate that improper payments are being reduced and consistent 

progress is being made: 

 Seven USDA high risk programs, accounting for 58 percent of USDA’s total reportable outlays, reported error 

rates below their reduction targets in FY 2008. This meets the new Green score criteria of achieving reduction 

targets for 50 percent or more of the agency’s total reportable outlays.; 

 NRCS’ Farm Security and Rural Investment Program error rate of 0.00 percent was below its reduction target 

of 0.40 percent; 

 FS’ Wildland Fire Suppression Management Program error rate of 0.02 percent was below its reduction target 

of 0.90 percent;

 FNS’ Food Stamp Program (FSP) error rate of 5.64 percent was below its reduction target of 5.80 percent. The 

FSP error rate is a historic low for the program and is the 4th year in a row that the FSP error rate has been 

below 6 percent, long considered the standard for recognition in the program; 

 FNS’ Child and Adult Care Food Program error rate of 1.56 percent was below its reduction target of 1.64 

percent; 

 FSA’s Marketing Assistance Loan Program error rate of 1.76 percent was below its reduction target of 7.00 

percent; 

 FSA’s Milk Income Loss Contract Program error rate of 0.21 percent was below its reduction target of 2.00 

percent; and 

 FSA’s Miscellaneous Disaster Programs error rate of 3.13 percent was below its reduction target of 5.00%. 

In 2008, OIG removed improper payments from the list of Departmental management challenges based on the 

strategies implemented and progress made by the Department and the agencies with high risk programs. OIG 

noted that agencies have taken steps to accurately estimate the rate of improper payments and made significant 

improvements in internal controls and payment processes. Also noted was FSA’s decrease in improper payments 

from $2.9 billion in FY 2006 to $563 million in FY 2007 (a decline from 11.2 percent to 2.5 percent). 
OTHER ACCOMPANYING INFORMATION 

283 

USDA has established improper payment recovery targets, where appropriate, and actively collects recoveries. 

USDA’s total improper payment recoveries of $138.3 million reported for FY 2008 exceeded the Departmental 

recovery target of $68.3 million. USDA continues the contract payments recovery auditing program covering eight 

agencies. Since 2005, USDA agencies have recovered $1.1 million in contact payments identified for recovery. 

USDA’s goal is to continue to achieve Green for both status and progress in FY 2009. An additional goal for 2009 

is to achieve results which will allow 1 or more of USDA’s 16 programs to be removed from the high risk list. 

These goals are based USDA’s previous accomplishments, planned corrective actions in progress, and established 

improper payment reduction and recovery targets. 

OMB provided a reporting template for IPIA in OMB Circular A-136. The template requires responses to specific 

issues. USDA’s response to these issues follows. 

OCFO issued detailed guidance for the risk assessment process including templates and extensive reviews of drafts. 

Programs with larger outlays were required to perform more detailed assessments than smaller programs. For 

USDA’s largest programs, the risk assessment process required the following: 

 The amount of improper payments needed to meet the reporting standards; 

 A description of the program including purpose and basic eligibility requirements;

 Definition of improper payments specific to the program;

 Program vulnerabilities linked to improper payments; 

 Internal controls designed to offset the program vulnerabilities; 

 Internal controls testing for selected programs; 

 Listing of significant reviews and audits; 

 Final determination of risk level; 

 Planned future enhancements (optional); and 

 Description of how improper payments are recovered (optional). 

USDA has identified the following 16 programs as susceptible to improper payments. 

Selection Methodology Agency Program 

Farm Service Agency (FSA), Commodity 

Credit Corporation (CCC) 

Marketing Assistance Loan Program (MAL)

Food Stamp Program

National School Lunch Program (NSLP) 

School Breakfast Programs (SBP) 

Section 57 of OMB Circular A-11 

Food Nutrition Service (FNS)

Special Supplemental Nutrition Program for Woman, Infants and 

Children (WIC)

Milk Income Loss Contract (MILC) Program 

Loan Deficiency Payments (LDP) 

Direct and Counter-Cyclical Payments (LCP) 

Conservation Reserve Program (CRP) 

Miscellaneous Disaster Programs (MDP) 

USDA Identified as Susceptible to 

Significant Improper Payments 

Farm Service Agency (FSA), Commodity 

Credit Corporation (CCC)

Noninsured Assistance Program (NAP) 

I. Describe your agency’s risk assessments, performed subsequent to compiling your full program 

inventory. 

List the risk-susceptible programs identified through your risk assessments. 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

284 

Selection Methodology Agency Program 

Food Nutrition Service (FNS) Child and Adult Care Food Program (CACFP)

Forest Service (FS) Wildland Fire Suppression Management (WFSM)

Rural Development (RD) Rental Assistance Program (RAP)

Risk Management Agency (RMA) Federal Crop Insurance Corporation (FCIC) Program Fund

Natural Resources Conservation Service 

(NRCS)

Farm Security and Rural Investment Program (FSRIP)

Agency Program Sampling Process 

FSA/CCC Marketing Assistance 

Loan Program (MAL)

A statistical sample of high risk programs is conducted by the Farm Service Agency’s (FSA) County Office 

Review Program (CORP) under the direction of the Operations Review and Analysis Staff (ORAS). 

Testing is conducted using statistically sound samples drawn from the total population of program payments 

being tested. A professional statistician, under contract to FSA, is used to design the sampling approach, 

define the sample size and identify the sample items. Sample size is chosen to achieve a 95 percent 

confidence level. 

Once the universe of the program is determined for the target fiscal year, a stratified two-stage sampling 

approach is used. County offices (COFs) making payments for the target program are selected in the first 

stage and individual payments made or contracts reviewed by COFs are selected in the second stage. 

That sample list of individual contracts or payments is provided to the members of the CORP staff covering 

the respective States. The CORP staff visits each of the COFs shown on the list and reviews the individual 

contracts or payments identified in the statistically sound sample. The CORP reviewers use a list of program 

division provided criteria that is drawn from legal and program administrative guidance. Findings of nonadherence to the criteria related to the individual contracts or payments in the sample will identify potential 

improper payments made. The results of that review are summarized and submitted to the CORP national 

office staff to be analyzed by the contractor statistician. That contractor determines the rate of improper 

payments based on the data provided by the CORP staff that visited the COFs and completed the actual 

review of documents

FNS Food Stamp Program 

(FSP)

Statistical sampling 

Each month, States select a statistically random sample of cases from a universe of all households receiving 

FSP benefits for that given month. Most States draw the samples using a constant sampling interval. There 

are some which employ simple random and/or stratified sampling techniques. Required annual sample sizes 

range from 300 for State agencies with small FSP populations to more than 1,000 for larger States. The 

average is approximately 950 per State. States are required to complete at least 98 percent of selected cases 

deemed to be part of the desired FSP universe. Federal sub-samples are selected systematically by FNS 

from each State’s completed reviews. These sample sizes range from 150 to 400 per State.

Error Rate Calculation 

The National payment error rate is calculated using a multi-step process: 

• Each State agency conducts quality control (QC) reviews of the monthly sample of cases. The QC review 

measures the accuracy of eligibility and benefit determinations for each sampled case against FSP 

standards. State agencies are required to report to FNS the findings for each case selected for review.

• FNS then sub-samples completed State QC reviews and re-reviews selected individual case findings for 

accuracy. Based on this sub-sample, FNS determines each State agency’s official error rate using a 

regression formula.

• The national payment error rate then is computed by averaging the error rate of the active cases for each 

State weighted by the amount of issuance in the State. 

II. Describe the statistical sampling process conducted to estimate the improper payment rate for each 

program identified. 
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Agency Program Sampling Process 

FNS National School Lunch

Program (NSLP)

USDA makes use of periodic studies to assess the level of error in program payments because detailed 

information on the circumstances of the National School Lunch Program (NSLP) and School Breakfast 

Program (SBP) participating households are not collected administratively. The current study – NSLP/SBP 

Access, Participation, Eligibility and Certification (APEC) Study – makes use of a national probability sample 

of school food authorities (SFAs), schools, certified students and their households, and households that 

applied and were denied for program benefits in School Year 2005-06.

A stratified random sample of 78 unique public SFAs was selected in the first stage of sampling. Stratification 

variables included geographic region, prevalence of schools having a School Breakfast Program and those 

using Provision 2/3, and a poverty indicator. For SFAs that do not have Provision 2/3 schools, three schools, 

on average, were selected for inclusion in the studying the second stage of sampling. Schools were stratified 

into two groups: (1) elementary schools and (2) middle and high chools. The school sample included both 

public and private schools. A total of 264 schools participated in the study (216 non-Provision 2/3 schools, 24 

Provision 2/3 schools in their base year, and 24 Provision 2/3 schools not in their base year). For the third 

stage of sampling, samples of households were selected in 240 of these schools to yield completed 

interviews for about 3,000 students certified for free and reduced-price meals and 400 denied applicant 

households.

The sample of approved and denied applicant households was augmented by sampling of applications from 

Provision 2/3 schools in which household surveys were not conducted. Application reviews of about 6,800 

students approved for free and reduced-price meals and over 1,000 denied applicants were conducted to 

estimate the case error rate due to administrative error.

Data on counting and claiming errors were collected in all schools selected for application reviews. On 

randomly selected school days, field staff observed approximately 100 lunch transactions at each of the 245 

schools participating in the NSLP as well as 50 breakfast transactions at each of the 218 schools participating 

in the School Breakfast Program. Cashier error was estimated using information from these meal 

transactions. Data on school-recorded daily meal totals across all points of sale, aggregated meal counts 

reported to the district, and total meals submitted to the State Agency for reimbursement were examined to 

determine claiming errors.

To update the erroneous payment rate estimates in NSLP without having to conduct another full round of 

primary data collection, a series of econometric models were developed that captured the relationship 

between characteristics of the districts that participated in the APEC study and their estimated rates of 

certification error. Estimated coefficients from these models were used in conjunction with updated values of 

district characteristics obtained from the School Food Authorities Verification Summary Reports (Form FNS742) to predict certification error. Certification error rates were then translated into amounts and rates of 

erroneous payments in each district. Aggregating the district level estimates produced a national measure of 

predicted erroneous payments.

FNS School Breakfast 

Program (SBP) 

The statistical sampling process for this program is similar to the FNS National School Lunch Program 

(NSLP). See the NSLP description. 

FNS Special Supplemental 

Nutrition Program for 

Women, Infants and 

Children (WIC) 

FNS plans to continue periodic examinations of WIC certification and vendor error. 

Certification Error—The 1998 WIC Income Verification Study was designed to provide information on the 

characteristics of a nationally representative sample of WIC participants in the contiguous United States, 

certified for WIC during spring 1998. The sample was based on a multi-stage sample design, with 50 

geographic primary sampling units (PSUs) selected at the first stage, 79 local WIC agencies selected at the 

second stage, and 178 WIC service sites selected at the third stage. WIC participants were randomly 

sampled for the study at the 178 WIC service sites as they appeared for WIC certification. In-person 

interviews were completed with 3,114 WIC participants at the 178 WIC service sites. The estimate of 

improper payments comes from a follow-up in-home survey that was conducted with approximately one out of 

every three persons selected for the in-person interviews. The in-home survey was designed to verify income 

information through review of household income documents. In-home interviews were completed with 931 

respondents. 

FNS’ intent is that the 2008 decennial income verification study will use a similar sampling strategy that 

provides a nationally representative estimate of erroneous payments within the IPIA-specified precision 

parameters. The certification error rate will be reported in FY 2009. 

Vendor Error—The 2005 vendor error study employed a nationally representative probability sample of WIC 

vendors. A two-stage clustered design was developed to facilitate over-sampling of WIC-only stores. Current 

lists of authorized WIC vendors were collected from the 45 States plus the District of Columbia that use retail 

vendors from delivery of benefits. These lists were used to establish the retail vendors for delivery of benefits. 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

286 

Agency Program Sampling Process 

These lists were sued to establish the national sample frame of vendors active during the study period. 

Geographic Information System software was used to form 365 PSUs in contiguous counties. Most PSUs had 

at least 80 vendors. The study selected 100 PSUs using probability non-replacement sampling with 

probabilities proportional to the size of the PSU. About 16 vendors and 4 reserve vendors were selected from 

each of the 100 PSUs. The final sample size (unweighted) was 1,768 vendors. The study compared the 

purchase price paid by the compliance buyer with (i) observed shelf prices and (ii) the purchase amount the 

vendor reported to the State in order to yield estimates of overcharge and undercharge. 

FNS Child and Adult Care 

Food Program (CACFP)

The national estimate of erroneous payments for the sponsor error component is based on a nationally 

representative sample of sponsor files for 3,284 Family Day Care Homes (FDCHs) in 91 distinct sponsors in 

14 States. Data collectors went to each sampled sponsor with randomly drawn lists of 30 to 90 FDCHs and 

extracted documents necessary to establish eligibility for reimbursements from the sponsors’ files.

FSA Milk Income Loss 

Contract Program (MILC) 

See the process described in the Marketing Assistance Loan Program (MAL) discussion shown above. The 

same process was used for this program. 

FSA Loan Deficiency 

Payments (LDP) 

See the process described in the Marketing Assistance Loan Program (MAL) discussion shown above. The 

same process was used for this program. 

FSA Direct and CounterCyclical Payments (DCP) See the process described in the Marketing Assistance Loan Program (MAL) discussion shown above. The 

same process was used for this program. 

FSA Conservation Reserve 

Program (CRP) 

See the process described in the Marketing Assistance Loan Program (MAL) discussion shown above. The 

same process was used for this program. 

FSA Miscellaneous Disaster 

Programs (CDP) 

See the process described in the Marketing Assistance Loan Program (MAL) discussion shown above. The 

same process was used for this program. 

FSA Noninsured Assistance 

Program (NAP) 

See the process described in the Marketing Assistance Loan Program (MAL) discussion shown above. The 

same process was used for this program. 

FS Wildland Fire 

Suppression 

Management (WFSM)

WFSM employees Monetary Unit Sampling.Transactions coded to the Wildland Fire Suppression Fund 

(WFSU) are systematically analyzed and reviewed. The population was broken down into three sample 

groups: 

• Contracts; 

• PCMS; 

• Travel; and 

• Employee Payroll and Casual Pay 

Separate statistical samples were selected for each category, using the criteria required by OMB Circular A123, Appendix C. The samples were selected by systematic random sampling with probability proportional to 

size (dollar amount). 

To ensure the validity of the sample design, sample sizes, and measurement methodology, a PhD statistician 

from the University of New Mexico was consulted. The sample was selected using a 90 percent confidence 

level, with a precision range of 2.5 percent. Software used for sample selection was SAS 9.1 for Windows.

The population was broken down into four categories: Travel, Payroll, Purchase Card Management System 

(PCMS), and Contracts. Separate statistical samples were selected using the criteria required by OMB. An 

exception occurred when a transaction met the criteria for an improper payment as defined by the Improper 

Payment Improvement Act (IPIA). We categorized errors that were improper as errors that were either 

insufficiently documented or were improperly paid.

RD Rental Assistance 

Program

The agency reviewed the sampling plan developed by the U.S. Department of Housing and Urban 

Development for its studies. It engaged Rural Development (RD) statisticians to prepare a similar plan for this 

report. This report is based on a review of tenants receiving rental assistance (RA) during FY 2007. The 

sampling plan consisted of 667 RA payments from a universe of 3,326,352 or .020 percent. The methodology 

produced a sample with a 99-percent confidence level. This year, the audit unit from the Centralized Servicing 

Center (CSC) conducted the study rather than the RD field staff that were used in previous years. The study 

required CSC to evaluate tenant files and income calculations.

The universe of rental assistance payments FY 2007 was 3,326,352. The only parameter used to determine 

the eligible universe was the RA payment. No other data element, such as location, size of property, number 

of units and availability of other rental assistance (such as Section 8) was a consideration. The statisticians 

were provided a data extract from the Multi-Family Housing Information System (MFIS). The extract 
OTHER ACCOMPANYING INFORMATION 

287 

Agency Program Sampling Process 

contained a list of all tenants receiving RA during FY 2007. The data included month of payment, project 

name, project identifier (case number/project number) and tenant name and unit number. From the data 

extract, the statisticians selected the sample by a systematic sample technique.

Once the sample was identified, a letter was sent to the borrower/management agents that explained the 

process, provided the list of tenant payments to be reviewed and provided a list of documents that needed to 

be provided to the Centralized Servicing Center (CSC) for review. 

The data received from the borrower/management agent was used to compare agency records. The study 

required CSC to complete the survey for the selected tenant payments. There was to be no substitution of the 

selected payment and, if the management agent was unable to submit the file, the payment would be 

considered improper. The survey results for this year are higher than prior years. This is attributable to a more 

controlled, consistent, and accurate review. Future year surveys will be performed by CSC, which will provide 

more comparable data on which to measure improvements. 

RMA Federal Crop Insurance 

Corporation Program 

Fund

RMA drew 900 random 2004, 2005 and 2006 crop year indemnities to review during 2005, 2006 and 2007. 

For FY 2008 reporting, RMA sampled and reviewed the 2007 crop year, using those results to replace the 

2004 crop year results. This allowed RMA to maintain a running average error rate for the three most recent 

crop years. RMA will repeat this process for three years to compile 900 random indemnity reviews and build a 

database that will be used to identify the RMA program-error rate and identify any discernable trends. 

Samples are drawn by the compliance staff which oversees the compliance review data base and is 

responsible for data quality control. Limited resources make it impractical to conduct a statistically valid 

program review each year. Despite these limits, in combination with the National Operations Reviews 

conducted by RMA compliance personnel, these random reviews of paid indemnities should provide the 

program with sufficient data to establish an acceptable error rate for the purposes of the IPIA.

NRCS Farm Security and Rural 

Investment Program

NRCS determined the universe size of payments for all the programs by using all transactions for FY 2007 

entered into the accounting system against general ledger account 4902 and Treasury Symbols 12_1004. 

Transaction codes (PG, PV, etc) were identified and extracted which represented payments against the 

individual program Fund codes to create a universe of payments for each individual program.

Based upon last year’s results and conversations with the individual Program Managers, NRCS projected the 

anticipated rate of occurrence. This would be the error rate from the previous years sampling factoring in any 

substantial changes made which mitigates improper payment risk found in prior IPIA efforts, external and 

internal audits or reviews.

NRCS estimated the precision range, i.e. the upper and lower bounds around the estimated rate of 

occurrence as 5.00% (+/- 2.50%) based upon conversations with the Program Managers. OMB guidance 

recommended a 90 percent confidence level. However, NRCS used a more rigorous confidence level of 95% 

for the sample since accounting and financial applications typically use that confidence level. Based upon the 

four variables above (universe size, anticipated occurrence rate, precision range, and confidence level), we 

calculated the necessary sample size. 

Using a random number generator, NRCS selected payments for the sample. For program payments made 

through ProTracts system, payment amounts were aggregated by payment document number. ProTracts 

produced a payment transaction for each component of a payment request (NRCS-1245). This resulted in 

testing of the entire payment instead of a portion and simplifies the research required. 

A complete copy of the contract file was requested from the field office. The field office was required to verify 

HEL/WC compliance and obtain AGI compliance documentation from the participant. Headquarters financial 

management (FMD) personnel audited the contract information against the program’s business process using 

a standard template developed by FMD for each individual program. The template ensured consistency in the 

reviews and incorporated tests for known causes of improper payments, issues identified by the Program 

Managers and internal controls implemented as a result of prior internal and external audits and reviews. 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

288 

Agency Program Corrective Actions Planned 

FSA/CCC Marketing 

Assistance Loan 

program (MAL) 

The most significant causes for payments being identified as improper were as follows: 

• A lien search was not conducted before loan disbursement. 

• An acceptable acreage report is not on file at time of review. 

• Lien waiver was not obtained before loan disbursement. 

• Uniform Commercial Code (UCC-1) was not filed. 

• The loan quantity is not supported by acceptable documentation. 

Actions taken or that will be taken to reduce the weaknesses identified are as follows: 

a. Broad Scope Actions Taken: 

• FSA has committed to reducing improper payments and program weaknesses that contribute to improper 

payments. 

• The Agency has taken actions to correct its deficiencies in many areas and has incorporated the priority of 

reducing improper payments into its strategic planning documents. 

b. Actions Already Taken that Impact All Causes of Improper Payments Identified: 

The actions taken were completed late in FY 2007 or early FY 2008 so the impact would not be realized until review 

of the FY 2008 payment activity. The FY 2008 payment activity will be sampled as part of the FY 2009 review cycle. 

• Issued various National Notices to State and COFs providing them with instructions related to training, proper 

processing of payments, and the new checklist for processing loans. 

• Provided training on improper payments to field personnel and educate them on the importance of control 

procedures as well as the potential risks of noncompliance. Training was delivered through various means 

including in person and via Ag Learn, a Department of Agriculture enterprise-wide learning management system. 

• Integrated the employee’s individual performance results related to reducing improper payments into his/her 

annual performance rating. 

• Completed the CCC-770 MAL, the COF employee certifies that the applicable program provisions have, or have 

not been met. Handbook 8-LP was amended on December 13, 2006, to include policy that a CCC-770 MAL or 

CCC-770 eLDP/LDP must be completed for the first five applications processed by each employee before loans or 

LDPs are disbursed. 

• Developed a new checklist, the CCC-770 MAL, MAL Checklist, for COF employees to use. FSA implemented a 

new compliance review process for the 2007 crop year. The new compliance spot check review process allows 

FSA to (1) conduct a more meaningful and comprehensive spot check/compliance review and; (2) utilize a better 

mechanism for reporting spot check results. The reporting mechanism will allow the National Office to monitor 

improper payments discovered as result of a spot check. No deficiencies have been discovered as the result of 

this improved reporting system. 

• Training addressing the errors that resulted in improper payments was held along with training for the 

implementation of the provisions of the Food, Conservation, and Energy Act of 2008. The national training was 

held in October 2008. 

c. Actions That Will be Taken that Impact All Causes of Improper Payments Identified:

• Provide a Notice to State and COFs providing the detail findings discovered during the FY 2008 MAL Statistical 

Sample including established policy and procedure references for each finding. 

• In conjunction with the enactment of the Food, Conservation, and Energy Act of 2008, a review of applicable 

policy and provisions will be conducted. This review will include input from a task force made up of State Program 

Specialists who will work with National Office staff on the drafting of applicable regulations. In addition, a review of 

existing policy and procedures to determine program inefficiencies and inadequate program compliance controls 

will be conducted. 

III. Describe the Corrective Action Plans for reducing the estimated rate of improper payments. Include in 

this discussion what is seen as the cause of errors and the corresponding steps necessary to prevent 

future occurrences. 

If efforts are already underway, and/or have been ongoing for some length of time, it is appropriate to 

include that information in this section. 
OTHER ACCOMPANYING INFORMATION 

289 

Agency Program Corrective Actions Planned 

• Based on sample results, amend the CCC-770 MAL checklist, as appropriate, to ensure that COFs are reminded 

of the necessary policies and procedures for program compliance. 

• Contact State Office managers where the majority of improper payments were identified, according to the 

statistical sample, to determine possible training and/or job aids the State and county staff may need to assist in 

facilitating compliance to controls. 

• Re-enforce current program policies regarding program compliance through the issuance of National notices to 

State and COF personnel.

FNS Food Stamp 

Program 

Causes of improper payments 

An improper payment occurs when a participating household is certified for too many or too few benefits compared to 

the level for which they are eligible. This can result from incomplete or inaccurate reporting of income and/or assets 

by participants at the time of certification. It also can occur from changes subsequent to certification or errors in 

determining eligibility or benefits by caseworkers. Eligibility worker delays in action or inaction taken on client reported 

changes also can cause of improper payments. 

An analysis of the FY 2006 completed statistical sample revealed that approximately 67.75 percent of all variances 

occurred before or at the most recent certification/recertification. Additionally, 56.70 percent of the errors were State 

agency caused. About half of the errors (53.65 percent) were income related and caused by client misreporting or the 

agency misapplying the reported income. Misreporting or misapplying deductions was the second largest source of 

errors at 29.22 percent. 

The analysis of the FY 2007 data is scheduled for release in early 2009. 

Steps that are (or will be) taken to address specific findings in the last statistical sample 

Program regulations require State agencies to analyze data to develop corrective action plans to reduce or eliminate 

program deficiencies. A State with a high error rate must develop a QC corrective action plan to address deficiencies 

revealed through an analysis of its own QC data. A State with an excessive error rate will be required to invest a 

specified amount (depending on its error rate and size) designated specifically to correct and lower its error rate. The 

State also will face further fiscal penalties if it fails to lower its error rate in a future fiscal year.

Steps that are (or will be) taken to improve the overall control environment and improper payments 

FNS, through its regional offices, works directly with States to impart the importance of payment accuracy and correct 

payments to State leadership. The agency also helps those leaders develop effective corrective action strategies to 

reduce payment errors. Regional offices provide many forms of technical assistance to States, such as: 

• Analyzing data; 

• Reviewing and monitoring corrective action plans; 

• Developing strategies for error reduction and corrective action; 

• Participating on boards and in work groups; and 

• Hosting, attending and supporting payment accuracy conferences. 

FNS administers a State Exchange Program that provides funds to States to facilitate travel for obtaining, observing 

and sharing information on best practices and effective techniques for error reduction. Coalitions have been formed 

among States to promote partnerships, information exchange and collaborative efforts. These efforts address mutual 

concerns and support development of effective corrective action. 

FNS National School 

Lunch Program 

(NSLP) 

FNS has worked closely with OMB, Congress, the States, schools, and advocacy partners for two decades to gain a 

better understanding of erroneous payments, and to develop and implement initiatives to address them:

Strengthened the Certification Process through Legislative Program Reauthorization

FNS worked with Congress to develop the Child Nutrition and WIC Reauthorization Act of 2004 (CNR) to enact 

program changes that address school meals certification problems. The act strengthened the certification process by:

• Requiring food stamp direct certification for free meals in all school districts, and continuing authority for optional 

direct certification using data from the Temporary Assistance for Needy Families (TANF) and the Food Distribution 

Program on Indian Reservations (FDPIR); 

• Simplifying the certification process by requiring a single application for all eligible children in a household; 

• Requiring eligibility determinations to be in effect for the entire school year; 

• Modifying verification requirements, and adding authority for optional direct verification of children’s eligibility; 

• Requiring State agencies to conduct additional administrative reviews of school districts with higher rates of error; 

• Expanding authority for the use of public records for verification of applications; and 

• Requiring increased efforts to obtain household response to application verification requests; requiring districts 

with high rates of non-response to verification to target subsequent year verification activity toward error-prone 

applications. 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

290 

Agency Program Corrective Actions Planned 

FNS is engaged in continuing efforts to fully implement all the provisions of the CNR designed to improve program 

accountability.

Improved State and Federal Oversight and Technical Assistance

FNS conducted the following to improve oversight and technical assistance:

• Since 2004, required annual training for schools on certification and accountability issues; 

• Secured funding from Congress in 2004 for FNS technical assistance to help State and local partners reduce 

administrative errors and improve program integrity; 

• Provided ongoing guidance and training materials to State agencies to improve monitoring of schools; 

• Since 1995, provided ongoing guidance and training materials to States on the School Meals Initiative (SMI), to 

help schools improve compliance with program nutrition and menu planning standards in order to increase the 

accuracy of meal-counting; 

• Issued a revised Eligibility Manual which contains information on determining students’ eligibility for free and 

reduced price meals under 7 CFR Parts 210 and 220, the National School Lunch Program (NSLP) (including after 

school snacks and commodity schools) and the School Breakfast Program (SBP); 

• Revised the Coordinated Review Effort forms and training effort to ensure that performance standards related to 

meal counting and claiming and serving reimbursable meals are met; and 

• Issued Pursuant to the Child Nutrition and WIC Reauthorization Act of 2004 (P.L. 108-265), FNS released 

applications for the third round of Direct Certification/Verification grant funding in FY 2008. These grants are 

available to State agencies to assist in the implementation of mandatory direct certification, direct verification and 

other provisions of P.L. 108-265 related to determining eligibility to receive benefits in the National School Lunch 

and Breakfast Programs. Child Nutrition and Food Stamp State agencies are eligible to apply for funds. P.L. 108-

265 provided $9 million for this purpose. Approximately $3.7 million was awarded in Fiscal Year 2006 and $1.7 

million in FY 2007; the remaining funds are available to States in FY 2008. 

Expanded National Data Collection and Analysis to Inform Policy

FNS conducted the following to collect and disseminate program data:

• Initiated an annual measure of administrative errors in the certification process in school year 2004-2005; 

• As early as the 1990s, tested alternative approaches to the existing school meals certification and verification 

processes to assess their impact on accuracy and program access; 

• Highlighted the results of the data collections at numerous briefings with State and Federal partners and 

Congressional staff; 

• Published the APEC study, which provides the first comprehensive national estimate of erroneous school meal 

payments for the PAR, as required by the IPIA. Additionally we are working on developing an appropriate 

approach to improving the deficiencies noted in the APEC study; and 

• Published the second annual report, Accuracy of School Food Authorities’ (SFAs) Processing of School Lunch 

Applications – Regional Office Review of Applications (RORA) in May 2007. Covering the year 2006, the 

publication is part of a series of annual reports assessing administrative errors associated with SFAs approval of 

applications for free and reduced-price school meals. 

Additional Action Planned

FNS proposes to expand training, technical assistance, and other efforts to reduce payment errors that result from 

operational problems. Planned efforts include:

• Working with the National Food Service Management Institute to provide web-based training to States and 

schools on certification and other accountability issues; 

• Conducting an additional make-up session of the Coordinated Review Effort (CRE) training that was provided to 

State reviewers during the third quarter of FY 2008 as a continuation of FNS efforts to improve State agency 

oversight of local school food authorities that participate in the National School Lunch Program. We anticipate that 

this training session, which will be held in Alexandria, Virginia, October 27 - 31, 2008, will provide updated 

information to approximately 80 State agency and Federal reviewers. In addition, later this fall the new CRE Forms 

and Instructions that were developed by a task group made up of Federal and State staff will be posted to the FNS 

Web site along with the training materials that were used in the CRE training sessions. Also, the CRE Guidance, 

which was developed in the early 1990s, will be updated to include current procedures to be utilized during CRE 

Reviews. State agencies are implementing the CRE procedures that were identified during the training sessions 

for the 2008-2009 school year; 

• Emphasizing to State agencies that annual verification data must be used to ensure that corrective action is taken 

by school districts to address error rates; 

• Partnering with the School Nutrition Association to coordinate efforts on training and technical assistance to its 

membership on accountability issues; and 
OTHER ACCOMPANYING INFORMATION 

291 

Agency Program Corrective Actions Planned 

Pending the availability of funds, FNS will continue the APEC study, which would enable FNS to estimate and 

measure changes in erroneous payments over time, and would help inform FNS, Congress, the States, and 

advocacy partners on the development of additional guidance, training, and policy options. 

For the past two decades, research and evaluation conducted by FNS has suggested that there are potentially 

significant risks for payment errors in the School Meal Programs. During that time, FNS worked closely with 

Congress, State agencies, school food authorities, advocacy partners and others to assess and find ways to reduce 

erroneous payments in the programs. Now that we have a nationally-representative estimate, we are redoubling our 

efforts and focus on reducing erroneous payments in the programs. 

FNS School Breakfast 

Program (SBP) 

The corrective actions planned for this program are similar to the FNS National School Lunch Program (NSLP). See 

the NSLP description. 

FNS Special Supplemental 

Nutrition Program for 

Women, Infants and 

Children (WIC) 

Certification Error: 

FNS plans to continue periodic examinations of certification error in the WIC Program. The Child Nutrition Act was 

amended in 1998 to require income documentation for WIC Program applicants in all States. The Final WIC Policy 

Memorandum #99-4, Strengthening Integrity in the WIC Certification Process, February 24, 1999, the WIC 

Certification Integrity Interim Rule (65 FR 3375, January 21, 2000) and the WIC Certification Integrity Final Rule (65 

FR 77245, December 11, 2000) implemented this requirement. The WIC Food Delivery Final Rule (65 FR 83248, 

December 29, 2000) mandated one-year disqualifications for the most serious participant violations, including dual 

participation and misrepresentation of income. The WIC Miscellaneous Final Rule (71 FR 56708, September 27, 

2006) required State agencies to prevent conflicts of interest such as clinic staff certifying themselves, close friends, 

or relatives, and also required State agencies to maintain information on participant and employee fraud and abuse.

FNS will measure the level of improper payments due to certification error in Fiscal Years 2008-09. 

Vendor Error: 

The Child Nutrition Act was amended in 1996 to require the disqualification of WIC vendors who had been 

disqualified by the Food Stamp Program (FSP), and was amended in 1998 to require permanent disqualification of 

vendors who had been convicted of trafficking and illegal sales. The WIC/FSP Vendor Disqualification Final Rule (64 

FR 13311, March 18, 1999) implemented these requirements and also mandated three-year disqualifications for 

overcharging and charging for food not received. The WIC Food Delivery final Rule (65 FR 83248, December 29, 

2000) mandated nationwide standards for vendor authorization, training, and monitoring. FNS will annually estimate 

and report improper payments to vendors based on information on vendor investigations routinely conducted by the 

State WIC Agencies and reported to FNS. 

FNS Child and Adult Care 

Food Program 

(CACFP) 

CACFP has three distinct parts: Child Care Centers, Adult Day Care facilities and Family Day Care Homes 

(FDCHs). Overall program funding is provided to state agencies which provide funds to sponsoring organizations to 

pay for claims for reimbursable meals served at provider sites. Sites can be as large as an institution or as small as 

a household. Each part of CACFP has its own reimbursement structure.

Payments and claim information are transferred among FNS, State agencies, program sponsors and program sites; 

each such transaction represents a risk for improper payment. Because requirements vary significantly for each 

different type of program sponsor and site, a full and rigorous assessment of the rate of improper payments is 

extremely complex.

The original plan was to develop a program-wide study which would examine reimbursements for meals served and 

develop program error measurements that complied with the requirements of the IPIA. Because of the complexities 

of the program, FNS estimated that it would cost $20 million to measure improper payments at the precision 

required by IPIA. This amount has not been provided.

In lieu of funding for a program-wide measurement, FNS has identified the FDCH component of this program as 

potentially high risk. FDCHs participate in CACFP through public or private nonprofit sponsoring organizations. 

FDCH improper payments are most likely caused by sponsor error in determining a participating home’s 

reimbursement tier (tiering error) or by FDCH error in reporting the number of meals which are eligible for 

reimbursement (claiming error).

Two activities are underway which provide information on improper payments in the FDCH component of CACFP. A 

third activity was pilot tested during FY 2007.

• CCAP—In the spring of 2004, FNS began the Child Care Assessment Project (CCAP). This project was 

designed to measure the effectiveness of efforts to improve the integrity of CACFP family day care homes and 

provide information from a broadly representative national sample of sponsors and providers. Over a four-year 

period, FNS is conducting comprehensive on-site assessments of a sample of participating family day care home 

sponsors. These assessments are designed to analyze the effectiveness of FNS regulatory and policy initiatives 

on program performance. They will also offer insights on the control points in the claiming and reimbursement 

process that most frequently cause or contribute to improper payments. This information will also help to support 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

292 

Agency Program Corrective Actions Planned 

the effort to develop measurement strategies to estimate CACFP erroneous payments pursuant to IPIA. Data 

collection for this activity has been completed and the final results will be presented in the USDA PAR for FY 

2009. 

• Sponsor error—FNS has developed an annual sponsor tiering error measure and tested it. CACFP sponsors 

are responsible for determining whether family day care homes receive meal reimbursement at the higher rate 

(Tier 1) or lower rate (Tier 2). In FY 2007, the second annual data collection was conducted to determine a 

nationally representative sponsor tiering determination error rate. The findings are reported above. 

• Claiming error—FNS has identified two potential methods of estimating the risk of claiming error: 

1. State data approach: Use data from State monitoring visits of FDCHs.

2. Sponsor data approach: Federal staff select a random sample of sponsoring organizations and from each 

use a random selection of the sponsor’s monitoring visits of FDCHs. 

Both approaches compare the number of participants observed during a monitoring visit to the average number of 

meals claimed for reimbursement for the meal or snack closest to the time of the visit. FNS pilot tested both 

approaches in conjunction with the CCAP reviews in FY 2007. The pilot sample size included approximately 220 

FDCHs. Results will be available in FY 2008 and will be reported in the following year PAR.

FNS has contracted with Mathematica Policy Research, Inc. (MPR) to evaluate the feasibility of four different data 

collection methods for validating family day care homes (FDCHs) meal reimbursement claims. FNS is currently 

reviewing the results of MPR's pretest of the four possible data collection methods. The next step is for MPR to 

conduct a pilot test of the data collection method(s) which are perceived to have the greatest likelihood of producing 

valid comparison between the true number of reimbursable meals and the number claimed by FDCHs for 

reimbursement. Results of MPR's evaluation will be available in FY 2009. 

FSA Milk Income Loss 

Contract Program 

(MILC) 

The four most significant causes for payments being identified as improper were as follows: 

• Two instances where the contract was not on file; 

• Six instances where the payment is based on ineligible production; 

• One case where the changes made to contract were not allowed; and 

• Two instances where the payee’s share is incorrect. 

Actions taken or that will be taken to reduce the weaknesses identified are as follows: 

a. Broad Scope Actions Taken: 

• See the actions described in the Marketing Assistance Loan Program (MAL) shown above. The same actions 

apply to this program. 

b. Actions Already Taken that Impact All Causes of Improper Payments Identified: 

• Integrated the employee’s individual performance results related to reducing improper payments into his/her 

annual performance rating; 

• FSA implemented a new compliance review process for Fiscal Year 2007. The new compliance review spot 

check process allows FSA to conduct a more meaningful and comprehensive spot check/compliance review and 

utilize a better mechanism for reporting spot check results. The new reporting mechanism allows the National 

Office to monitor improper payments discovered as a result of a spot check. No deficiencies have been 

discovered as the result of this improved reporting system; and 

• In conjunction with training relating to the Food, Conservation, and Energy Act of 2008, training was provided 

during October 2008, addressing the issues resulting in improper payments. This training was provided to field 

staff of each state who will in turn train their field personnel on the importance of control procedures as well as 

the potential risks of noncompliance. 

c. Actions that Will be Taken that Impact All Causes of Improper Payments Identified: 

• Provide Notices to State and COFs with the detail findings discovered during the FY 2007 MILC Review 

including established policy and procedure references for each finding. Remind field offices of the proper filing 

requirements for contracts and the supporting production evidence required in accordance with program 

provisions; and 

• Amend the CCC-770 MILCX checklist, as appropriate, to ensure that COFs are reminded of the necessary 

policies and steps for program compliance.

FSA Loan Deficiency 

Payments (LDP) 

The four most significant causes for payments being identified as improper were as follows: 

1. Acceptable acreage report is not on file at time of review; 

2. The LDP quantity is not supported by acceptable documentation; 

3. The Incorrect LDP rate was used; and 

4. The LDP application was not on file. 
OTHER ACCOMPANYING INFORMATION 

293 

Agency Program Corrective Actions Planned 

Actions taken or that will be taken to reduce the weaknesses identified are as follows: 

a. Broad Scope Actions Taken: 

See the actions described in the Marketing Assistance Loan Program (MAL) shown above. The same actions apply 

to this program.

b. Actions Already Taken that Impact All Causes of Improper Payments Identified: 

The actions taken were completed late in FY 2007 or early FY 2008 so would have their impact on the FY 2008 

payment activity. The FY 2008 payment activity will be sampled as part of the FY 2009 review cycle. 

• Issued various National Notices to State and COFs providing them with instructions related to training, proper 

processing of payments, and the new checklist for processing loans; 

• Provided training on improper payments to field personnel and educate them on the importance of control 

procedures as well as the potential risks of noncompliance. Training was delivered through various means 

including in person and via Ag Learn; 

• Integrated the employee’s individual performance results related to reducing improper payments into his/her 

annual performance rating; 

• Developed a new checklist, the CCC-770 LDP/eLDP, LDP/eLDP Checklist, for COF employees to use. By 

completing the CCC-770 LDP/eLDP, the COF employee is certifying that the applicable program provisions 

have, or have not been met. Handbook 8-LP was amended to include policy that a CCC-770 LDP/eLDP must be 

completed before a loan or LDP is issued. Each employee must complete a CCC-770 eLPD/LDP for the first five 

applications they process each crop year; 

• FSA implemented a new compliance review process for the 2007 crop year. The new compliance spot check 

review process will allow FSA to (1) conduct a more meaningful and comprehensive spot check/compliance 

review and; (2) utilize a better mechanism for reporting spot check results. The new reporting mechanism will 

allow the National Office to monitor improper payments discovered as result of a spot check. No deficiencies 

have been discovered as the result of this improved reporting system; and

• National Training addressing the errors that resulted in improper payments was held during October 2008, along 

with training for the implementation of the provisions of the Food, Conservation and Energy Act of 2008.

c. Actions That Will be Taken that Impact All Causes of Improper Payments Identified: 

• Provide a Notice to State and COFs providing the detail findings discovered during the FY 2008 LDP Statistical 

Sample including established policy and procedure references for each finding; 

• In conjunction with the enactment of the Food, Conservation, and Energy Act of 2008, a review of applicable 

policy and provisions will be conducted. This review will include input from a task force made up of State 

Program Specialists who will work with National Office staff on the drafting of applicable regulations. In addition, 

a review of existing policy and procedures to determine program inefficiencies and inadequate program 

compliance controls will be conducted; 

• Based on sample results, amend the CCC-770 eLDP/LDP checklist, as appropriate, to ensure that COFs are 

reminded of the necessary policies and procedures for program compliance prior to issuing payments; 

• Contact State Office managers where the majority of improper payments were identified, according to the 

statistical sample, to determine possible training and/or job aids the State and county staff may need to assist in 

facilitating compliance to controls; and 

• Re-enforce current program policies regarding program compliance through the issuance of National notices to 

State and COF personnel. 

FSA Direct and CounterCyclical Payments 

(DCP) 

The results of DCP’s FY 2008 statistical sample of improper payments were based on FY 2007 DCP payment data.

DCP’s FY 2008 sample results indicate that the most significant error for FY 2007 DCP payments was that acreage 

report for all cropland on the farm was not filed before review began.

Actions taken or that will be taken to reduce the weakness identified are as follows: 

a. Broad Scope Actions Taken: 

See the actions described in the Marketing Assistance Loan Program (MAL) shown above. The same actions apply 

to this program. 

• FSA implemented a new compliance review process for the 2007 and subsequent crop years. The new 

compliance spot check review process allows FSA to (1) conduct a more meaningful and comprehensive spot 

check/compliance review and; (2) utilize a better mechanism for reporting spot check results. The new reporting 

mechanism allows the National Office to monitor improper payments discovered as result of a spot check. 

b. Actions Already Taken that Impact Situations where the Payee’s Interest in Base Acres on the Farm Did 

Not Support the Claimed Payment Share: 

The actions taken were completed late in FY 2007 or early FY 2008 so the impact would not be realized until review 

of the FY 2008 payment activity. The FY 2008 payment activity will be sampled as part of the FY 2009 review cycle. 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

294 

Agency Program Corrective Actions Planned 

• Provided training on improper payments to field personnel and educate them on the importance of control 

procedures as well as the potential risks of noncompliance. Training was delivered through various means 

including in person and via Ag Learn, and is being followed up with communications and job aid to help facilitate 

compliance controls; 

• Integrated the employee’s individual performance results related to reducing improper payments into his/her 

annual performance rating; and 

• Developed a new checklist, the CCC-770 DCP, DCP Contract Checklist, for COF employees to use. By 

completing the CCC-770 DCP, the COF employee is certifying that the applicable program provisions have, or 

have not, been met. Handbook 1-DCP was amended on December 11, 2006, to include policy that a CCC-770 

DCP must be completed before DCP payment is issued. 

In addition to the above actions, the following actions were completed in FY 2007 or early FY 2008; therefore the 

impact will not be realized until review of the FY 2008 payment activity. The FY 2008 payment activity will be 

sampled as part of the FY 2009 review cycle. 

• Issued Notice PM-2615, FSA Performance Management Program Improper Payments Standard, which provided 

the new required standard for improper payments. The Notice provided that all Field Office employees who work 

with Farm Program payments shall have the following standard in the “Program Management”, “Execution of 

Duties”, or similar element: 

• “Successfully completes FSA IPIA training requirements and ensures that agency Corrective Action Plan (CAP) 

procedures are followed to ensure that payments are accurate and that required payment documentation is upto-date and on file”; 

• Issued Notice DCP-182, FY 2007 National CORP Review for Improper Payments for DCP, providing detailed 

findings discovered during the FY 2007 DCP Statistical Sample including established policy and procedure 

references for each finding; and 

• Issued various National Notices to State and County offices re-enforcing current program policies regarding 

program compliance through the issuance of National Notices. 

c. Actions That Will be Taken that Impact Situations where the Payee’s Interest in Base Acres on the Farm 

Did Not Support the Claimed Payment Share: 

• Provide a Notice to State and COFs providing the detail findings discovered during the FY 2008 DCP Statistical 

Sample including established policy and procedure references for each finding; 

• Conduct National Farm Bill training to address 2009 DCP policy and provisions; 

• Re-enforce current program policies regarding program compliance through the issuance of National notices to 

State and COF personnel; and 

• Review existing policy and procedures to determine program compliance inefficiencies and eliminate inadequate 

program compliance controls. 

FSA Conservation 

Reserve Program 

(CRP) 

The three most significant causes for payments being identified as improper are as follows: 

1. Payment amount is incorrect for annual rental payment and calculated cost-share assistance. 

2. Original CRP-1 is not on file to support what was loaded through the automated process. 

3. Conservation Plan of Operation (CPO) that was on file lacks sufficient information to support the payment. 

Actions taken or that will be taken to reduce the weaknesses identified are as follows: 

a. Broad Scope Actions Taken: 

See the actions described in the Marketing Assistance Loan Program (MAL) shown above. The same actions apply 

to this program; and

b. Actions Already Taken that Impact All Causes of Improper Payments Identified. 

The actions taken were completed late in FY 2007 or FY 2008.

• Integrated the employee’s individual performance results related to reducing improper payments into his/her 

annual performance rating; 

• Amended checklist, the CCC-770-CRP was replaced with four separate checklists to specifically address the 

different processes involved with CRP that could impact the type of payment being issued to a participant. The 

CCC-770-CRP1 checklist is completed during the CRP-1 contract approval process; the CCC-770-CRP2 is 

completed before a cost-share payment, the CCC-770-CRP3 is completed before the issuance of an annual 

rental payment, and the CCC-770-CRP4 is completed for contracts with PIP, CP-23, CP-23A, CP-37, and SIP 

type payments., By completing the CCC-770-CRP, the COF employee is certifying that the applicable program 

provisions have, or have not been met. The checklists are a tool for employees to use to confirm that all 

necessary requirements for payment readiness have been completed before payment is issued;

• Notice CRP-575 was issued to State and County Offices on November 29, 2007, which specifically identified 

each FY 2007 CORP finding and the appropriate policy that must be followed to prevent improper payment 
OTHER ACCOMPANYING INFORMATION 

295 

Agency Program Corrective Actions Planned 

errors. State Executive Directors (SED) and applicable State Office staff developed corrective action plans 

(CAPs) implementing applicable program procedures required by national notices and program handbooks.

National training sessions were held during FY 2008 with SEDs, District Directors, and Administrative Officers to 

review results of the FY 2007 statistical sample; 

• FSA implemented a new compliance review process for the 2007 crop year. The new compliance spot check 

review process will allow FSA to (1) conduct a more meaningful and comprehensive spot check/compliance 

review and; (2) utilize a better mechanism for reporting spot check results. The new reporting mechanism will 

allow the National Office to monitor improper payments discovered as result of a producer spot check; and 

• National Training addressing the errors that resulted in improper payments was held during October 2008 along 

with training for the implementation of the provisions of the Food, Conservation, and Energy Act of 2008.

c. Actions That Will be Taken that Impact the Incorrect Payment Rates: 

• Provide a Notice to State and COFs providing the detail findings discovered during the FY 2008 CRP Statistical 

Sample including established policy and procedure references for each finding; 

• Based on sample results, amend the CCC-770-CRP checklist(s), as appropriate, to ensure that COFs are 

reminded of the necessary policies and procedures for program compliance; 

• Contact State Office managers where the majority of improper payments were identified, according to the 

statistical sample, to determine possible training and/or job aids the State and COF staff may need to assist in 

facilitating compliance to controls; 

• Review existing policy and procedures to determine program compliance inefficiencies and eliminate inadequate 

program compliance controls; 

• Continuation of training efforts related to improper payments for field personnel to educate them on the 

importance of control procedures as well as the potential risks of noncompliance. Once completed, the 

conservation training will consist of two levels and will be conducted through out FY 2008; and beyond if needed.

The following criteria is being used by CEPD to identify the level of training needed: 

Basic Course: This course is strongly recommended for State Office personnel with less than 5 years of State 

Office Conservation Reserve Program (CRP) experience who possess the basic knowledge, skills, and abilities 

to administer CRP. The participant will elevate their basic level of understanding of CRP policy and procedures, 

raising their performance level through practical exercises, case studies, and examples.

In order to provide some very efficient CRP training, CEPD will survey State Office program knowledge of CRP 

policies and provisions.

Advanced Course: This course is designed for State Office personnel with 5 years or more of State Office CRP 

experience that wish to elevate their level of quality for managing and understanding of the CRP within their 

state. 

This course will provide advanced CRP policy and procedure training in addition to in-depth area specific training 

for experienced State Office Conservation personnel; and 

• Enhancing existing web-based software and retiring legacy systems in order to more closely tie all program 

payments to a single contract file. This migration will reduce the potential that contract payment documents and 

records will contain inconsistent or out-of-date information. 

FSA Miscellaneous

Disaster Programs 

(CDP) 

The results of Miscellaneous Disaster Programs (Disaster Programs) FY 2008 Statistical Sample for improper 

payments were based on FY 2007 payment data for the following programs: 

• Livestock Compensation Program; 

• Livestock Indemnity Program;

• Hurricane Indemnity Program; 

• Tree Indemnity Program;

• Feed Indemnity Program; 

• Citrus Disaster Program; 

• Fruit and Vegetable Disaster Program; and 

• Nursery Disaster Program 

Each fiscal year’s payment data represents different disaster response programs based on authorities provided by 

legislation passed by Congress. Of the eight disaster programs included in the statistical sample, none are 

permanent programs. Approximately 92 percent of the payments sampled are limited to hurricane disaster 

payments that were issued in six states with over 70 percent of the dollars and payments issued in Florida. 

It is important to note that of the eight disaster programs included in the statistical sample, the majority of improper 

payments were made under the Nursery Disaster Program. The four most significant causes for payments being 

identified as improper and the corresponding disaster program(s) that made the improper payments were as follows: 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

296 

Agency Program Corrective Actions Planned 

• Required documentation (other than application) was not provided. This error only applies to the Nursery 

Disaster Program;

• Payment amount is incorrect for reasons other than payee share. This error only applies to the Nursery Disaster 

Program; 

• Unauthorized representative signed application. This error only applies to the Nursery Disaster Program and the 

Hurricane Indemnity Program; and 

• Application is not on file. This error only applies to the Nursery Disaster Program and the Tree Indemnity 

Program. 

Actions taken or that will be taken to reduce the weaknesses identified are as follows: 

a. Broad Scope Actions Taken: 

• See the actions described in the Marketing Assistance Loan Program (MAL) shown above. The same s actions 

apply to this program; and 

• FSA implemented a new compliance review process for the 2007 and subsequent crop years. The new 

compliance spot check review process allows FSA to (1) conduct a more meaningful and comprehensive spot 

check/compliance review and; (2) utilize a better mechanism for reporting spot check results. The new reporting 

mechanism allows the National Office to monitor improper payments discovered as result of a spot check.

b. Actions Already Taken that Impact All Causes of Improper Payments Identified: 

The actions taken were completed late in FY 2007 or early FY 2008 so the impact would not be realized until review 

of the FY 2008 payment activity. The FY 2008 payment activity will be sampled as part of the FY 2009 review cycle. 

• Provided training on improper payments to field personnel and educate them on the importance of control 

procedures as well as the potential risks of noncompliance. Training was delivered through various means 

including in person and via Ag Learn, and is being followed up with communications and job aid to help facilitate 

compliance controls; and 

• Integrated the employee’s individual performance results related to reducing improper payments into his/her 

annual performance rating. 

In addition to the above actions, the following actions were completed in FY 2007 or early FY 2008; therefore the 

impact will not be realized until review of the FY 2008 payment activity. The FY 2008 payment activity will be 

sampled as part of the FY 2009 review cycle. 

• Issued Notice PM-2615, FSA Performance Management Program Improper Payments Standard, which provided 

the new required standard for improper payments. The Notice provided that all Field Office employees who work 

with Farm Program payments shall have the following standard in the “Program Management”, “Execution of 

Duties”, or similar element:

“Successfully completes FSA IPIA training requirements and ensures that agency Corrective Action Plan (CAP) 

procedures are followed to ensure that payments are accurate and that required payment documentation is upto-date and on file.” 

• Issued Notice DAP-271, FY 2007 National CORP Review for Improper Payments for Miscellaneous Disaster 

Programs, providing detailed findings discovered during the FY 2007 Miscellaneous Disaster Programs 

Statistical Sample including established policy and procedure reference; 

• Developed the following new checklists for disaster programs being implemented in FY 2007: 

– FSA-770 CDP, 2005-2007 Crop Disaster Program Application Checklist; 

– FSA-770 LCP, 2005/2006/2007 Livestock Compensation Program Application Checklist; and 

– FSA-770 LIP, 2005/2006/2007 Livestock Indemnity Program Application Checklist. 

By completing the checklists, the COF employee is certifying that the applicable program provisions have, or have 

not, been met;

• In September 2007, the National Office conducted 2005-2007 Crop Disaster Program National Training for State 

and COF employees. Training was provided to State and COF personnel on program policy and procedure, and 

included software training; and 

• Issued various National Notices to State and County Offices re-enforcing current program policies regarding 

program compliance through the issuance of National Notices. 

c. Actions That Will be Taken that Impact All Causes of Improper Payments Identified: 

• Provide a Notice to State and COFs providing the detail findings discovered during the FY 2008 Miscellaneous 

Disaster Programs Statistical Sample including established policy and procedure references for each finding; 

• Contact State Office managers where the majority of improper payments were identified, according to the 

statistical sample, to determine possible training and/or job aids the State and COF staff may need to assist in 

facilitating compliance to controls; 

• Re-enforce current disaster programs’ policies regarding program compliance through the issuances of National 

notices to State and COF personnel; and 

• Based on the FY 2008 Disaster Programs Statistical Sample results, the National Office will develop a Checklist 

for any other new miscellaneous disaster program being implemented, if determined necessary. 
OTHER ACCOMPANYING INFORMATION 

297 

Agency Program Corrective Actions Planned 

FSA Noninsured 

Assistance Program 

(NAP) 

The six most significant causes for payments being identified as improper were as follows: 

1. Notice of loss filed late. 

2. Acceptable production evidence is not on file. 

3. Acreage report is not on file. 

4. CCC-576, Part G is not signed by LA or FSA representative. 

5. Notice of Loss lacks sufficient information. 

6. Unit yield is not properly calculated. 

Actions taken or that will be taken to reduce the weaknesses identified are as follows: 

a. Broad Scope Actions Taken: 

See the actions described in the Marketing Assistance Loan Program (MAL) shown above. The same actions apply 

to this program. 

• FSA implemented a new compliance review process for the 2007 and subsequent crop years. The new 

compliance spot check review process allows FSA to (1) conduct a more meaningful and comprehensive spot 

check/compliance review and; (2) utilize a better mechanism for reporting spot check results. The new reporting 

mechanism allows the National Office to monitor improper payments discovered as result of a spot check. The 

2007 Compliance review results have been distributed to the appropriate Divisions for review. During the 4th 

quarter of FY 2008, the Deputy Administrator for Farm Programs will meet with all divisions to analyze 

compliance review results and determine a plan of action, if needed.

b. Actions Already Taken that Impact All Causes of Improper Payments Identified: 

The actions taken were completed late in FY 2007 or early FY 2008 so the impact would not be realized until review 

of the FY 2008 payment activity. The FY 2008 payment activity will be sampled as part of the FY 2009 review cycle. 

• Provided training on improper payments to field personnel and educate them on the importance of control 

procedures as well as the potential risks of noncompliance. Training was delivered through various means 

including in person and via Ag Learn, and is being followed up with communications and job aid to help facilitate 

compliance controls; 

• Integrated the employee’s individual performance results related to reducing improper payments into his/her 

annual performance rating; and 

• Developed a new checklist, the CCC-770-NAP, Noninsured Crop Disaster Assistance Program Payment 

Checklist, for County Office employees to use. By completing the CCC-770-NAP, the County Office employee is 

certifying that the applicable program provisions have, or have not been met.

In addition to the above actions, the following actions were completed in FY 2007 or early FY 2008; therefore the 

impact will not be realized until review of the FY 2008 payment activity. The FY 2008 payment activity will be 

sampled as part of the FY 2009 review cycle. 

• Issued Notice PM-2615, FSA Performance Management Program Improper Payments Standard, which provided 

the new required standard for improper payments. The Notice provided that all Field Office employees who work 

with Farm Program payments shall have the following standard in the “Program Management”, “Execution of 

Duties”, or similar element: 

“Successfully completes FSA IPIA training requirements and ensures that agency Corrective Action Plan (CAP) 

procedures are followed to ensure that payments are accurate and that required payment documentation is upto-date and on file.” 

• Issued Notice NAP-104, FY 2007 National CORP Review for Improper Payments for NAP, providing detailed 

findings discovered during the FY 2007 NAP Statistical Sample including established policy and procedure 

references for each finding; 

• Contacted State Office managers where the majority of NAP improper payments were identified, according to the 

statistical sample, to determine possible training and/or job aids the State and COF staff needed to assist in 

facilitating compliance to controls; 

• Issued various National Notices to State and County Offices re-enforcing current program policies regarding 

program compliance through the issuance of National Notices; and 

• Conducted National NAP Training during October 2008 for State and County office employees that addressed 

yield calculations. The National office also addressed other significant causes for NAP improper payments at the 

training session. 

c. Actions That Will be Taken that Impact All Causes of Improper Payments Identified: 

• Provide a Notice to State and County Offices providing the detail findings discovered during the FY 2008 NAP 

Statistical Sample including established policy and procedure references for each finding; 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

298 

Agency Program Corrective Actions Planned 

• Based on sample results, amend the CCC-770-NAP checklist, as appropriate, to ensure that County Offices are 

reminded of the necessary policies and procedures for program compliance; 

• Contact State Office managers where the majority of improper payments were identified, according to the 

statistical sample, to determine possible training and/or job aids the State and county staff may need to assist in 

facilitating compliance to controls; 

• Re-enforce current program policies regarding program compliance through the issuance of National notices to 

State and county office personnel; and 

• Review existing policy and procedures to determine program compliance inefficiencies and eliminate inadequate 

program compliance controls. 

FS Wildland Fire 

Suppression 

Management 

Root cause of improper payment errors appear to be caused by noncompliance with administrative procedures, lack 

of training and inconsistent processing procedures. 

• Overpayments: failure to reconcile vendor statement to invoices; 

• Non-business/personal related charges to Purchase Card Management System (PCMA) card; 

• Underpayments: late payments and failure to include Prompt Payment interest on PCMS card payments; and 

• Insufficient documentation was not an issue in FY 2008. 

Corrective Actions. 

• Update and clarify policy and procedures and define oversight responsibilities for cardholder; 

• Issue Guidance on the appropriate use of Travel Card and Purchase Card use under the PCMS program; 

• Implement stricter monitoring over purchase card transactions with monthly audits; and 

• Implement internal controls to ensure correct posting of dates to improve timely payments and computation of 

prompt payment interest.

RD Rental Assistance 

Program 

Root cause of improper payment errors included: 

• Incomplete documentation for income verification; 

• Incomplete documentation for tenant verification; 

• Tenant certification error; and 

• Income calculation error. 

Corrective actions include: 

• Sent a letter to property management business partners regarding the importance of the IPIA process and the 

types of errors that were identified. Required industry groups to develop corrective action plans to be undertaken 

by their members. May 27, 2008; 

• Implemented a quarterly audit process that will be conducted by CSC on selected states tenant files. July 31, 

2008; 

• Required Agency follow-up for corrective actions on errors found in the FY 2008 improper payments report. July 

31, 2008; 

• Issued an unnumbered letter to the State Offices regarding the findings from the FY 2008 improper payments 

report. The unnumbered letter required State Offices, with an average error rate of 2% or higher during the past 

three years, to develop a corrective action plan. The plan will need to include procedures to train field staff, 

borrowers and property managers in appropriate required documentation and follow-up with tenants and incomeverifiers. May 28, 2008; 

• Added to HB-2-3560, Multi-Family Housing Asset Management Handbook, Chapter 6 – Project Occupancy, a 

check sheet for property management agents to review when verifying assets, income and adjustments to 

income and a check list of required tenant file documentation. September 30, 2008; 

• Developed a “Fact Sheet” for MFH tenants explaining their responsibilities and rights regarding income 

disclosure and verification. October 31, 2008; and 

• The National Office will continue to pursue access to the Department of Health and Human Services New Hires 

database and the Department of Housing and Urban Development’s Enterprise Income Verification System to be 

shared with State Offices and management agents. Ongoing. 

RMA Federal Crop 

Insurance 

Corporation Program 

Fund 

RMA completed the third year of the three-year review cycle established to determine the improper payment rate for 

the Federal Crop Insurance Program. The strategy for identifying and controlling the error rate includes identifying 

error trends and policy concerns and correct them, however, as with the first 600 policies reviewed, there are still no 

definitive trends in the 900 polices completed in 2007. No underlying policy or underwriting issues have become 

apparent. This is in part due to the diversity of crops being reviewed and suggests it may be several cycles before 

RMA may amass sufficient numbers of samples on any particular crop to draw meaningful comparisons in the errors 

identified.
OTHER ACCOMPANYING INFORMATION 

299 

Agency Program Corrective Actions Planned 

Data mining is used to create a comprehensive list of producers exhibiting anomalous behavior. The system was 

developed in partnership between Tarleton State University and Planning Systems Incorporated. It is used to 

facilitate crop insurance program integrity and deter program abuse.

When RMA negotiated and executed the new Standard Reinsurance Agreement (SRA) starting in 2005 it 

emphasized improved quality controls and enhanced penalties that together should encourage participating 

companies who sell and service Federal crop insurance policies to improve their improper payments rate. Based on 

the passage of the most recent Farm Bill, it appears that RMA will have another opportunity beginning with the 2011 

reinsurance year to further adjust and improve SRA holder quality control requirements. 

NRCS Conservation 

Security Program 

Despite a zero improper payment rate; we will continue to take actions to address the difficulties realized in 

successfully completing this audit. Lessons learned has been developed to improve our process. NRCS is including 

considerations for improper payments in developing and modifying program manuals to implement the new Farm 

Bill. NRCS has addressed the anticipated adjusted gross income compliance verification for future years and will 

continue to work with the Farm Service Agency to address these concerns. 

Below is a summary level table for all high risk programs outlining improper payment rates for the last two years 

and future reduction targets. When a number cannot be provided, an explanation is provided in the notes below. 

Amounts represent when the sampling results are reported. USDA programs report results the year following 

sampling activity. For example, results reported during FY 2008 represent measures of FY 2007 outlays and 

program activity.

Improper Payment Sampling Results ($ in millions) 

Results 

Reported in FY 2007 

Results 

Reported in FY 2008 

Program Outlays IP% IP$ Outlays IP% IP$ 

Marketing Assistance Loan Program, FSA/CCC [Note #12] 6,306 7.52% 458 4,981 1.76% 92 

Food Stamp Program, FNS 29,942 5.99% 1,794 30,373 5.64% 1,713 

National School Lunch Program, FNS [Note #1] 

Total Program 

Certification Error

Counting/Claiming Error 

8,602 

8,602 

8,602 

16.30% 

9.42% 

6.88% 

1,402 

810 

592 

8,756 

8,756 

8,756 

16.55% 

9.67% 

6.88% 

1,449 

847 

602 

School Breakfast Program, FNS [Note #1] 

Total Program 

Certification Error

Counting/Claiming Error 

2,086 

2,086 

2,086 

24.94% 

9.15% 

15.79% 

520 

191 

329 

2,150 

2,150 

2,150 

25.02% 

9.23% 

15.79% 

538 

198 

339 

Women, Infants and Children, FNS [Note #2] 

Total Program 

Certification Error Component 

Vendor Error Component 

3,598 

3,598 

3,598 

N/A 

N/A 

0.69% 

N/A 

N/A 

25 

3,950 

3,950 

3,950 

N/A 

N/A 

0.87% 

N/A 

N/A 

34 

Child and Adult Care Food Program, FNS [Note #2] 

Total Program 

FDC Homes – Tiering Decisions 

FDC Homes – Meal Claims 

2,187 

738 

738 

N/A 

1.69% 

N/A 

N/A 

12 

N/A 

2,311 

728 

738 

N/A 

1.56% 

N/A 

N/A 

11 

N/A 

IV. Based on the Rate(s) Obtained in Step III, Set Annual Improvement Targets through FY 2010. 

Improper Payment Reduction Outlook FY 2006 – FY 2010 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

300 

Improper Payment Sampling Results ($ in millions) 

Results 

Reported in FY 2007 

Results 

Reported in FY 2008 

Program Outlays IP% IP$ Outlays IP% IP$ 

Milk Income Loss Contract Program, FSA 351 2.17% 8 155 0.21% 0.3 

Loan Deficiency Payments, FSA 4,071 0.45% 18 134 0.60% 0.8 

Direct and Counter-Cyclical Payments, FSA [Note #3] 9,550 0.37% 37 7,144 0.70% 47 

Conservation Reserve Program, FSA [Note #3] 1,851 0.45% 9 1,888 1.25% 24 

Miscellaneous Disaster Programs, FSA 368 6.76% 25 154 3.13% 5 

Noninsured Assistance Program, FSA 64 13.14% 8 126 14.67% 18 

Wildland Fire Suppression Management, FS 1,412 0.95% 13 1,370 0.02% .2 

Rental Assistance Program, RD 855 3.07% 26 887 3.95% 35 

Federal Crop Insurance Corporation Program Fund, RMA [Note #4] 2,364 2.68% 63 3,508 4.70% 165 

Conservation Security Program, NRCS [Note #5] 227 0.47% 1 1,138 0.00% 0 

USDA Total 72,385 6.11% 4,420 67,442 6.13% 4,132 

Detailed Breakout of Improper Payment Reported in FY 2008

Total 

Payments 

$ in millions IP % 

OverPayments 

% 

UnderPayments 

% 

Other 

% 

Incorrect 

Disbursement % 

Incomplete 

Paperwork % 

Marketing Assistance Loan 

Program, FSA/CCC 

4,981 1.76% 1.76% N/A N/A 0.19% 1.57% 

Food Stamp Program, FNS [Note 

#6] 

30,373 5.64% 4.58% 1.06% N/A 5.64% N/A 

National School Lunch Program, 

FNS [Note #1] 

8,756 16.55% 12.51% 4.04% N/A 16.55% N/A 

School Breakfast Program, FNS 

[Note #1] 

2,150 25.02% 21.53% 3.49% N/A 25.02% N/A 

Women, Infants and Children, 

FNS [Note #2] 

3,950 0.87% 0.35% 0.52% N/A 0.87% N/A 

Child and Adult Care Food 

Program, FNS [Note #2] 

728 1.56% 1.54% 0.02% N/A 1.56% N/A 

Milk Income Loss Contract 

Program, FSA 

155 0.21% 0.13% 0.08% N/A 0.17% 0.04% 

Loan Deficiency Payments, FSA 135 .60% 0.50% 0.09% N/A 0.51% 0.09% 

Direct and Counter-Cyclical 

Payments, FSA 

7,144 0.70% 0.65% 0.05% N/A 0.22% 0.48% 

Conservation Reserve Program, 

FSA 

1,888 1.25% 1.21% 0.04% N/A 1.02% 0.23% 
OTHER ACCOMPANYING INFORMATION 

301 

Detailed Breakout of Improper Payment Reported in FY 2008

Total 

Payments 

$ in millions IP % 

OverPayments 

% 

UnderPayments 

% 

Other 

% 

Incorrect 

Disbursement % 

Incomplete 

Paperwork % 

Miscellaneous Disaster Programs, 

FSA [Note #7] 

154 3.13% 3.05% 0.08% N/A 2.52% 0.61% 

Noninsured Assistance Program, 

FSA 

126 14.67% 14.20% 0. 47% N/A 3.29% 11.38% 

Wildland Fire Suppression 

Management, FS 

1,370 0.02% 0.01% 0.01% N/A .02% 0.00% 

Rental Assistance Program, RD 887 3.95% 3.95% 0.0% N/A 1.97% 1.98% 

Federal Crop Insurance 

Corporation Program Fund, RMA 

3,508 4.70% 4.65% 0.05% N/A 4.70% N/A 

Farm Security and Rural Investment 

Program, NRCS 

1,138 0.00% 0.00% 0.00% N/A 0.00% 0.00% 

USDA Total 67,442 6.13% 4.97% 1.15% 0.00% 5.90% 0.22% 

Improper Payment Reduction Outlook ($ in millions)

FY 2009 Reporting FY 2010 Reporting FY 2011 Reporting 

Program Outlays IP% IP$ Outlays IP% IP$ 

Outlay

s IP% IP$ 

Marketing Assistance Loan Program, 

FSA/CCC 4,935 1.65% 81 6,609 1.55% 102 6,454 1.45% 94 

Food Stamp Program, FNS 33,866 5.64% 1,910 35,189 5.60% 1,970 35,483 5.40% 1,916 

National School Lunch Program, FNS 

[Note #1] 9,562 16.08% 1,538 9,715 15.63% 1,518 9,981 15.19% 1,516 

School Breakfast Program, FNS [Note #1] 2,418 24.20% 590 2,503 23.42% 590 2,623 22.66% 590 

Women, Infants and Children, FNS 

[Note #2] 4,547 0.82% 37 4,492 0.77% 35 4,594 0.72% 33 

Child and Adult Care Food Program, FNS 757 1.51% 11 776 1.46% 11 796 1.41% 11 

Milk Income Loss Contract Program, FSA 

[Note #6] 2 N/A N/A 10 0.21% 0.1 15 0.21% 0.1 

Loan Deficiency Payments, FSA [Note 

#6] 6 N/A N/A 7 0.60% 0.1 7 0.60% 0.1 

Direct and Counter-Cyclical Payments, 

FSA 3,988 0.65% 26 4,578 0.60% 27 4,406 0.60% 26 

Conservation Reserve Program, FSA 1,876 1.20% 23 1,891 1.15% 22 1,933 1.10% 21 

Miscellaneous Disaster Programs, FSA 2,245 3.00% 67 2,568 2.95% 76 1,291 2.90% 37 

Noninsured Assistance Program, FSA 67 14.00% 9 325 12.00% 39 325 10.00% 33 

Wildland Fire Suppression Management, 

FS 1,900 .02% 0.4 2,090 0.02% 0.4 2,300 0.02% 0.5 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

302 

Improper Payment Reduction Outlook ($ in millions)

FY 2009 Reporting FY 2010 Reporting FY 2011 Reporting 

Program Outlays IP% IP$ Outlays IP% IP$ 

Outlay

s IP% IP$ 

Rental Assistance Program, RD 924 3.90% 36 960 3.70% 36 999 3.50% 35 

Federal Crop Insurance Corporation 

Program Fund, RMA 3,600 4.60% 166 3,900 4.50% 176 3,900 4.40% 172 

Farm Security and Rural Investment, NRCS 1,519 0.30% 5 1,790 0.20% 4 1,800 0.15% 3 

Note #1: Does not adjust for interaction between the different sources of certification error and counting/claiming 

error. Improper Payment Rates (SY 2005/06) times School Breakfast Program Outlays (FY 2006). 

Note #2: WIC and CACFP tested components of their total program. WIC tested a vendor error component of the 

payment process using final 2006 numbers since FY 2007 are not yet available. CACFP tested the Family Day 

Care Home tiering decision component payment process of the total outlays. FNS intends to report a WIC 

certification error in FY 2009. 

Note #3: The FY 2008 estimated improper payment dollar amounts for the Marketing Assistance Loan program, 

Direct & Counter-Cyclical Payments and the Conservation Reserve program reflect a slight variance from the 

relationship between the improper payment percentage and the outlays amount. These variances result from the 

complex, multi-stage statistical sampling methodology used to calculate the independent projections of the 

dollars/percentages in error. The variances are not an attribute measurement, but rather a complex ratio estimate 

weighted with respect to the payments within their applicable county stratification. They reflect the variability 

within the payment data and occur with a 90% confidence level.

Note #4: RMA has completed the third year of a three year testing cycle. 

Note #5: For FY 2008, NRCS reviewed all of its Farm Security and Rural Investment (Farm Bill) programs due to 

concerns over eligibility data. For FY 2007, only the Conservation Security program was sampled. The 

Conservation Security program is one of six Farm Bill programs. For FY 2006, all Farm Bill programs were 

reviewed. 

Note #6: The Milk Income Loss Contract (MILC) Program and Loan Deficiency Programs (LDP) will not be 

sampled for the FY 2009 IPIA Review Cycle since sampling is not cost effective due to the very low outlay amounts 

($2.2 million for MILC and $5.5 million for LDP). 

USDA continued its recovery audit program with eight agencies in FY 2008. All agencies used independent 

recovery audit firms working on contingency. 

Steps taken to reduce future errors include strengthening internal controls by providing information related to all 

recovered monies and the underlying transactions to management. The most successful method of identifying funds 

to be recovered has been the review of vendor statements. Most amounts identified during FY 2008 were due to the 

vendor statements reviews of FY 2007 payments. 

V. Discussion of your Agency’s Recovery Auditing effort, if applicable, including any contract types excluded 

from review and the justification for doing so; actions taken to recoup improper payments, and the 

business changes and internal controls instituted and/or strengthened to prevent further occurrences. 

In addition, complete the table below. 
OTHER ACCOMPANYING INFORMATION 

303 

FY 2008 Recovery Auditing Results ($ in Million) 

Agency 

Component 

Amount 

Subject to 

Review for 

FY 2008 

Reporting 

Actual Amount 

Reviewed and 

Reported 

FY 2008 

Amounts 

Identified 

for 

Recovery 

FY 2008 

Amounts 

Recovered 

Prior Years 

Amounts 

Identified for 

Recovery 

Prior Years 

Amounts 

Recovered 

Cumulative 

(Current & 

Prior Years) 

Amounts 

Identified for 

Recovery 

Cumulative 

(Current & Prior 

Years)

Amounts 

Recovered 

Forest Service 2,010.333 2,010.333 0.041 0.111 .640 0.571 .682 0.682 

Natural 

Resources 

Conservation 

Service 

1,072.288 1,072.288 0.000 0.000 0.026 0.026 0.026 0.026 

Agricultural 

Research 

Service 

503.822 53.822 0.000 0.000 0.000 0.000 0.000 0.000 

Animal Plant 

Health 

Inspection 

Service 

445.300 445.300 0.000 0.000 0.374 0.374 0.374 0.374 

Farm Service 

Agency 196.985 196.985 0.000 0.000 0.047 0.047 0.047 0.047 

Food Safety 

and 

Inspection 

Service 

49.617 49.617 0.000 0.000 0.000 0.000 0.000 0.000 

Rural 

Development 232.860 232.860 0.000 0.000 0.000 0.000 0.000 0.000 

Agricultural 

Marketing 

Service 

59.556 59.556 0.000 0.000 0.002 0.002 0.002 0.002 

All Others 737.765 0.000 N/A N/A N/A N/A N/A N/A 

USDA Total 5,308.526 4,570.161 0.041 0.111 1.089 1.020 1.131 1.131 

FSA 

The following are steps that have or will continue to be taken to ensure agency managers are held accountable for 

reducing and recovering improper payments: 

The National Office will continue supporting the use of the program checklists for eligibility and program policy by 

local offices processing program applications. By completing the program Checklists, the County Office (COF) 

VI. Describe the steps the agency has taken and plans to take (including time line) to ensure that agency 

managers (including the agency head) are held accountable for reducing and recovering improper 

payments. 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

304 

employee is certifying that the applicable program provisions have or have not been met. The County Executive 

Director (CED) and State Committee (STC), or their designated representative, are required to spot check a 

certain number of program checklists. The CED, or their designated representative, must report to County Office 

Committee (COC) and the STC representative any checklists in which CED does not concur with the preparer’s 

determination. The STC, or their designee, shall submit the results of the spot checks to the State Executive 

Director (SED). SEDs are required to provide the National Office with a report of FSA programs spot checked. 

 FSA has a performance management program in place to improve individual and organizational effectiveness in 

accomplishing the agency’s mission and goals. This program provides for improper payments to be included in 

the SED Performance Plan, element 5 titled “Program Management”; 

 National and State Office (STO) managers are held accountable for ensuring that program policies and 

procedures are provided to the STO and COF employees accurately and on a timely basis. National Office 

managers are also held accountable, as reflected in the performance based rating measures, for overall program 

administration at the national level. FSA employees’ performance elements are directly related to FSA’s 

Strategic Plan; 

 COF employees, including the CED, are responsible for making payments to producers and following all 

administrative steps in doing so. Employees will be evaluated on program delivery and their compliance with 

regulations, policies, and procedures through their performance plans; 

 Deputy Administrator of Field Operations will facilitate meetings with the program areas to discuss any 

additional action necessary for senior management to address accountability; and 

 Employees at all levels of the agency will be held accountable for efficient and accurate delivery of all FSA 

programs. 

FNS 

An agency priority is to improve stewardship of Federal funds. Within this priority are specific goals applicable to 

programs at high risk for erroneous payments. The goal for the Food Stamp Program, Special Supplemental 

Nutrition Program for Women Infants and Children, and Child and Adult Care Food Program is to reduce the 

error rates. The agency goals and priorities are incorporated into each manager’s performance plan. 

FS 

The entire Albuquerque Service Center management team is held accountable by performance metrics that include 

compliance with the Improper Payments Information Act. Additionally, the agency chief financial officer will 

provide disbursement performance information to the agency head as part of the performance appraisals for senior 

leadership. 

RD 

RD State Offices with an error rate of two percent or higher must develop a corrective action plan. The plan will 

include procedures to train field staff, borrowers and property manager in appropriate required documentation and 

follow-up with tenants and income-verifiers. 

RMA 

RMA revised its strategic plan to provide results to enhance accountability. It also has established procedures to 

ensure RMA management takes future corrective actions to address program vulnerabilities. Additionally, every 

employee’s performance plan agreement contained a position-corresponding strategic objective element since FY 

2005. 

NRCS 

NRCS has incorporated all of PMA’s goals and objectives, including IPIA, in the performance standards for all 

senior executive service positions. These also are planned to be included in the regional assistant chiefs and state 

conservationist performance plans. 
OTHER ACCOMPANYING INFORMATION 

305 

While USDA is creating information systems and infrastructure to reduce improper payments, especially for 

programs susceptible to significant risk, efforts in some programs are constrained by limited resources. USDA has 

worked closely with OMB to develop action plans that focus available resources on the most critical needs with 

regard to improper payment measurement and risk reduction. 

FSA/CCC 

The Department of Agriculture Reorganization Act of 1994, Section 281 provides that “[E]ach decision of a State, 

county, or area committee or an employee of such a committee, made in good faith in the absence of 

misrepresentation, false statement, fraud, or willful misconduct shall be final not later than 90 calendar days after 

the date of filing of the application for benefits, [and] ...no action may be taken...to recover amounts found to have 

been disbursed as a result of the decision in error unless the participant had reason to believe that the decision was 

erroneous.” This statue commonly is referred to the “Finality Rule.” 

FNS 

Recent Child Nutrition reauthorization legislation, while it did include some changes requested by the 

Administration to improve accountability, limited USDA’s ability to act in this area because of concerns about 

potential barriers to participation. In many instances, the mandated goal of providing easy access to benefits must 

be balanced against the goal of reducing improper and erroneous payments. In addition, program administration is 

highly decentralized; there are approximately 100,000 school meals locations at which benefits are provided. Many 

of these benefit providers simply do not have the capacity to develop robust accountability processes. For these 

reasons, any approach to reducing school meals improper payments must: 

 Improve accuracy without compromising access for low-income families. A process that keeps eligible children from 

participating would undermine the program. 

 Not unduly increase burden on schools. Many schools consider the program burdensome now; adding burden could 

discourage schools from participating. 

 Be cost-effective. Improving accuracy is potentially resource-intensive; policymakers must not create a process that 

increases net program costs. 

VIII. Describe any statutory or regulatory barriers which may limit the agencies’ corrective actions in 

reducing improper payments and actions taken by the agency to mitigate the barriers’ effects. 

VII A. Discussion of your Agency’s Recovery Auditing effort, if applicable, including any contract types 

excluded from review and the justification for doing so; actions taken to recoup improper 

payments, and the business changes and internal controls instituted and/or strengthened to 

prevent further occurrences. 

VII B. If the agency does not have such systems and infrastructure, describe the resources the agency 

requested in its FY 2007 budget submission to Congress to obtain the necessary information 

systems and infrastructure. 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

306 

 Answer the needs of other users of program data, which often use certification data to distribute millions of dollars in 

other kinds of benefits to schools. As these needs contribute to the problem, a solution may also require new 

commitments from those users. 

USDA plans to develop additional proposals to address statutory barriers as part of the Child Nutrition 

reauthorization process planned for FY 2009. Opportunities for improvement in a number of areas will be explored, 

including potential changes the process under which schools select and verify an annual sample of certifications for 

accuracy. 

RD 

The RD program does not have the statutory requirements similar to the Department of Housing and Urban 

Development to gain access to data from the Department of Health and Human Service’s New Hire Database, 

Internal Revenue Service, Social Security Administration, and the Department of Labor to be shared with field 

offices and management agents.

NRCS

Verification of eligibility will be an ongoing challenge for NRCS. It would be advantageous for NRCS to 

determine adjusted gross income eligibility on current and future Farm Security and Rural Investment Program 

(Farm Bill) participants by coordinating with the Internal Revenue Service (IRS). For long term contracts the IRS 

requirement for participants to maintain tax records expires prior to the expiration of the Farm Bill contracts, 

limiting the ability to independently verify eligibility. 

USDA has no additional comments. 

IX. Additional comments, if any, on overall agency efforts, specific programs, best practices, or common 

challenges as a result of IPIA implementation. 
OTHER ACCOMPANYING INFORMATION 

307 

Appendix C—Table of Exhibits 

Exhibit 1: Headquarters Organization......................................................................................................... 2 

Exhibit 2: FY 2008 and 2007 USDA Program Obligations Dedicated to Strategic Goals......................... 5 

Exhibit 3: FY 2008 and 2007 USDA Staff Years Dedicated to Strategic Goals......................................... 6 

Exhibit 4: Summary of Financial Statement Audit.................................................................................... 36 

Exhibit 5: Summary of Management Assurances ...................................................................................... 36 

Exhibit 6: Initiatives To Be Completed..................................................................................................... 39 

Exhibit 7: Decrease in Total Open Audit Inventory ................................................................................. 41 

Exhibit 8: Audit Follow-Up Definitions.................................................................................................... 41 

Exhibit 9: Inventory of Audits with Disallowed Costs .............................................................................. 42 

Exhibit 10: Distribution of Adjustments to Disallowed Costs .................................................................... 42 

Exhibit 11: Inventory of Audits with Funds To Be Put to Better Use1...................................................... 42 

Exhibit 12: Decrease in Audits Open One or More Years Past Management Decision Date.................... 43 

Exhibit 13: Distribution of Audits Open 1 Year or More Past the Management Decision Date, 

Disallowed Costs, and FTBU ................................................................................................... 43

Exhibit 14: Audits Open 1 Year or More Past the Management Decision Date and Behind Schedule..... 44 

Exhibit 15: Increase U.S. Export Opportunities and Trends in Expanding and Retaining Market 

Access ........................................................................................................................................ 51 

Exhibit 16: Data Assessment of Performance Measure 1.1.1...................................................................... 51 

Exhibit 17: Support International Trade Capacity Building ....................................................................... 54 

Exhibit 18: Support Foreign Food Assistance ............................................................................................. 56 

Exhibit 19: Increase U.S. Export Opportunities.......................................................................................... 59 

Exhibit 20: Number of Items Designated as Biobased for Federal Procurement........................................ 61 

Exhibit 21: Agricultural Statistics Reports Released On-Time................................................................... 63 

Exhibit 22: Percent of market-identified quality attributes for which USDA has provided 

standardization .......................................................................................................................... 66 

Exhibit 23: Providing Risk Management Tools to Farmers and Ranchers Economically Viable............... 68 

Exhibit 24: Providing Tools to Help Farmers and Ranchers Stay Economically Viable ............................ 70 

Exhibit 25: Providing Tools to Help Farmers and Ranchers Stay Economically Viable ............................ 71 

Exhibit 26: Strengthen Rural Businesses ..................................................................................................... 73 

Exhibit 27: Improving Rural Quality of Life Through Electric Opportunities........................................... 76 

Exhibit 28: Improving Rural Quality of Life Through Telecommunication Services................................. 76 

Exhibit 29: Improving Rural Quality of Life Through Water and Waste Disposal Facilities .................... 77 

Exhibit 30: Homeownership Opportunities Provided................................................................................. 77 

Exhibit 31: Improving Rural Quality of Life Through Community Facilities............................................ 78 

Exhibit 32: Pathogen Reduction (Food Inspection) .................................................................................... 81 

Exhibit 33: Reduce the Number and Severity of Pest and Disease Outbreaks............................................ 85 

Exhibit 34: Ensure the Capabilities of Plant and Diagnostic Laboratories are Improved........................... 86 

Exhibit 35: Improve Access to Nutritious Food .......................................................................................... 90 

Exhibit 36: Promoting Healthier Eating Habits and Lifestyles .................................................................. 93 

Exhibit 37: Increase Efficiency in Food Management................................................................................. 94 

Exhibit 38: Healthy Watersheds, High Quality Soils and Sustainable Ecosystems .................................... 97 

Exhibit 39: Enhanced Soil Quality .............................................................................................................. 99 

Exhibit 40: Trends in Treatment of Hazardous Fuel, Private Forests and Grasslands............................. 102 

Exhibit 41: Improved Wildlife Habitat...................................................................................................... 105 
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

308 

Appendix D—Acronyms 

A 

AARC—Alternative Agricultural Research and Commercialization 

Corporation 

ACES—Agricultural Conservation Enrollees/Seniors 

AGCI—African Global Competitiveness Initiative 

AHMS—Animal Health Monitoring and Surveillance 

AIIS—Automated Import Information System 

AMM—Acquisition Management Module 

AMP—Asset Management Plan 

AMS—Agricultural Marketing Service 

ANSI—American National Scientific Institute 

APEC—Access, Participation, Eligibility and Certification 

APHIS—The Animal and Plant Health Inspection Service 

AQI—Agricultural Quarantine Inspection 

ARPA—Agricultural Risk Protection Act 

ARS—Agricultural Research Service 

ASB—Agricultural Statistics Board 

ASCR—Assistant Secretary for Civil Rights 

ATD—Animal Tracing Database 

ATM—Audit Tracking Module 

ATPS—Animal Trace Processing System 

ATS—Automated Targeting System 

AWG—Administrative Wage Garnishment 

B 

BBP—Building Block Plan 

BMP—Best Management Practices 

BSE—Bovine Spongiform Encephalopathy

C 

CACFP—Child and Adult Care Food Program 

CAFTA-DR—Central America Free Trade Agreement–Dominican 

Republic 

CAM—Content Analysis Module 

CAP—Corrective Action Plan 

CBO—Certificates of Beneficial Ownership 

CBP—Customs and Border Protection 

CCAP—Child Care Assessment Project 

CCC—Commodity Credit Corporation 

CDP—Miscellaneous Disaster Programs 

CEAP–Conservation Effects Assessment Project 

CED—Country Executive Director 

CEQ—Council on Environmental Quality 

CF—Community Facilities 

CFO—Chief Financial Officer 

CI—Condition Index 

CIMS—Corporate Information Management System 

CNPP—Center for Nutrition Policy and Promotion 

CNR—Child Nutrition and WIC Reauthorization Act of 2004 

COC—County Office Committee 

COF—County Office 

COOL—Country of Origin Labeling 

CORP—County Office Review Program 

CP—Career Pattern 

CPAP—Community Programs Application Processing 

CPO—Conservation Plan of Operation 

CRD—Civil Rights Division 

CRE—Coordinated Review Effort 

CRP—Conservation Reserve Program 

CSAM—Cyber Security Assessment and Management 

CSC—Centralized Serving Center 

CSF—Classical Swine Fever 

CSM—Commercial Services Management 

CSP—Conservation Security Program 

CSREES—Cooperative State Research, Education and 

Extension Service 

CSS—Comprehensive Surveillance System 

CSS—Country Strategy Statements 

CTA—Conservation Technical Assistance Program 

CWPP—Community Wildlife Protection Plan

D 

DC—Disallowed Costs 

DCP—Direct and Counter-Cyclical Payment 

DHS—The United States Department of Homeland Security 

DM—Deferred Maintenance 

DOI—The United States Department of the Interior
OTHER ACCOMPANYING INFORMATION 

309 

E 

E&T—Employment and Training 

EA—Enterprise Architecture 

ECM—Enterprise Content Management 

EDI—Electronic Data Interchange 

EEO—Equal Employment Opportunity 

EFNEP—Expanded Food and Nutrition Education Program 

EMRS—Emergency Management Response System 

END—Exotic Newcastle Disease 

EO—Executive Order 

EPA—The U.S. Environmental Protection Agency 

EQIP—Environmental Quality Incentives Program 

ERS—Economic Research Service 

EU—European Union 

EVM—Earned Value Management

F 

FAD—Foreign Animal Disease 

FAO—Food and Agriculture Organization of the United Nations 

FAS—Foreign Agricultural Service 

FATER—Food Aid Targeting Effectiveness Ratio 

FB4P—Federal Biobased Products Preferred Procurement Program 

FCIC—Federal Crop Insurance Corporation 

FDCC—Federal Desktop Core Configuration 

FDCH—Family Day Care Home 

FDPIR—Food Distribution Program on Indian Reservations 

FECA—Federal Employee Compensation Act 

FEMA—Federal Emergency Management Agency 

FFA—Future Farmers of America 

FFAS—Farm and Foreign Agricultural Service 

FFB—Federal Financing Bank 

FFIS—Foundation financial Information System 

FFMIA—Federal Financial Management Improvement Act 

FHM—Forest Health Monitoring 

FIA—Forest Inventory and Analysis 

FISMA—Federal information Security Management Act of 2002 

FLREA—Federal Lands Recreation Enhancement Act 

FLP—Farm Loan Program 

FMD—Financial Management Division 

FMD—Foot-and-Mouth Disease 

FMFIA—Federal Managers’ Financial Integrity Act 

FMMI—Financial Management Modernization Initiative 

FNCS—Food, Nutrition and Consumer Services 

FNS—Food and Nutrition Service 

FRPC—Federal Real Property Council 

FS–Forest Service 

FSA—Farm Service Agency 

FSRIA—Farm Security and Rural Investment Act of 2002 

FSH—Forest Service Handbook 

FSIS—Food Safety and Inspection Service 

FSM—Forest Service Manual 

FSP—Food Stamp Program 

FSRIP—Farm Security and Rural Investment Program 

FTBU—Funds to Be Put to Better Use 

FTE—Full Time Equivalents 

FWS—The United States Fish and Wildlife Service 

FY—Fiscal Year

G 

GAO—Government Accountability Office 

GAP—Good Agricultural Practice 

GIPSA—Grain, Inspection, Packers and Stockyards Administration 

GLS—Guaranteed Loan System 

GS—General Schedule 

GSA—General Services Administration 

GUM—General Use Module 

GUS—Guaranteed Underwriting System

H 

HACCP—Hazard Analysis and Critical Control Point 

HEI—Healthy Eating Index 

HPAI—Highly Pathogenic Avian Influenza 

HSPD-12—Homeland Security Presidential Directive 12

I 

IATS—Import Alert Tracking System 

IGP—Integrated IT Governance Process 

IPIA—Improper Payments Information Act 

IPM—Integrated Pest Management 

IPPS—In Plant Performance System 

IR-4—Interregional Research Project number 4 

IRS—Internal Revenue Service 

ISO—International Organization for Standardization 

ISS LoB—Information Systems Security Line of Business 

IT—Information Technology 

ITDS—International Trade Data System
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

310 

K 

KEPHIS—Kenya Plant Health Inspectorate Service

L 

L&WCF—Land and Water Conservation Fund 

LCP—Direct and Counter-Cyclical Payments 

LDP—Loan Deficiency Payment 

LDP—Loan Deficiency Program 

Lm—Listeria Monocytogenes 

LMP—Land Management Plan 

LMS—Learning Management System 

LOB—Line of Business 

LSS—Lean Six Sigma

M 

MAL—Marketing Assistance Loan Program 

MDP—Miscellaneous Disaster Programs 

MILC—Milk Income Loss Contract Program 

MFIS—Multi-Family Housing Information System 

MITS—Management Initiatives Tracking System 

MON810—Monsanto Insect protect YieldGard tm Corn 

MPR—Mathematica Policy Research 

MRP—Marketing and Regulatory Programs

N 

NAFTA—North American Free Trade Agreement 

NAHLN—National Animal Health Laboratory Network 

NAHMS—National Animal Health Monitoring System 

NAIS—National Animal Identification System 

NAL—National Agricultural Library 

NAP—Noninsured Assistance Program 

NASS—National Agricultural Statistics Service 

NCP—National Conservation Planning Database 

NDB—National Data Bank 

NDLA— National Digital Library for Agriculture 

NFMA—National Forest Management Act 

NFS—National Forest System 

NIST—National Institute of Standards Technology 

NOP—National Organic Program 

NOSB—National Organic Standards Board 

NPDN—National Plant Diagnostic Network 

NRCS—Natural Resources Conservation Service 

NRE—Natural Resources and Environment 

NSLP—National School Lunch Program 

NVS—National Veterinary Stockpile 

NVSL—National Veterinary Services Laboratory

O 

OCFO—Office of the Chief Financial Officer 

OCIO—Office of the chief Information Officer 

OGC—Office of the General Counsel 

OIE—World Organization for Animal Health 

OIG—The Office of Inspector General 

OMB—The U.S. Office of Management and Budget 

ORAS—Operations Review and Analysis Staff

P 

PAR—Performance and Accountability Report 

PART—Program Assessment Rating Tool 

PCMA—Purchase Card Management System 

PEIS—Program Evaluation and Improvement Staff 

PHDCIS—Public Health Data Communications Infrastructure 

Systems 

PHICP—Public Health Information Consolidation Projects 

PII—Personally Identifiable Information 

PIPE—Pest Information Platform for Extension and Education 

PMA—Performance Management Agenda 

POA&M—Plans Of Action and Milestones 

PP&E—Property, Plant, and Equipment 

ProTracts—Program Contracts Database 

PRRS—Porcine Reproductive and Respiratory Syndrome 

PRS—Performance Results System 

PRV— Plant Replacement Value 

PRV—Pseudorabies Virus 

PSU—Primary Sampling Unit

Q 

QC—Quality Control
OTHER ACCOMPANYING INFORMATION 

311 

R 

RA—Rental Assistance 

RAP—Rental Assistance Program 

RBS—Rural Business-Cooperative Service 

R&D—Research and Development 

RD—Rural Development 

REE—Research, Education and Economics 

RHS—Rural Housing Service 

RMA—Risk Management Agency 

RME—Risk Management Education 

RND—Results Not Demonstrated 

RORA—Regional Office Review of Applications 

RTB— Rural Telephone Bank 

RTE—Ready-to-Eat 

RUS—Rural Utilities Service

S 

SBP—School Breakfast Program 

SBR—Asian Soybean Rust 

SED—State Executive Directors 

SFA—School Food Authority 

SFFAS—Statement of Federal Financial Accounting Standards 

SFSP–Summer Food Service Program 

SMI—School Meals Initiative 

SNAP—Supplemental Nutrition Assistance Program 

SPS—Sanitary and Phytosanitary 

SRA—Standard Reinsurance Agreement 

STC—State Committee 

STO—State Office

T 

TANF—Temporary Assistance for Needy Families 

TBT—Technical Barriers to Trade 

TES—Threatened and Endangered Species 

TIC—Trusted Internet Connection 

TPMC—Tucson Plant Material Center 

TRQ—Tariff Rate Quota 

TSP—Technical Service Provider

U 

UCC—Uniform Commercial Code 

UNECE—United Nations Economic Commission for Europe 

USAID—The United States Agency for International Development 

USB—United Soybean Board 

USDA—The United States Department of Agriculture 

USGSA—United States Grain Standards Act 

USTR—U.S. Trade Representative

V 

VS—Veterinary Services

W 

WCF—Working Capital Fund 

WEP—Water and Environmental Programs 

WFSM—Wildland Fire Suppression Management 

WIC—Special Supplemental Nutrition Program for Women, 

Infants and Children 

WRP—Wetlands Reserve program 

WTO—World Trade Organization
FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

312