Financial Report

of the

United States

Government

1999
A Mes sage from the Sec re tary of the Treasury .................................... 1

Man age ment’s Dis cus sion and Anal y sis.......................................... 3

General Accounting Office Report

Comp trol ler Gen eral’s State ment ............................................... 15

Au di tor’s Re port............................................................ 19

Financial Statements

State ment of Op er a tions and Changes in Net Po si tion............................... 46

State ment of Net Cost........................................................ 47

Bal ance Sheet .............................................................. 49

Stewardship Information (Unaudited)

Stew ard ship As sets:

Na tional De fense As sets..................................................... 51

Stew ard ship Land .......................................................... 54

Her i tage As sets............................................................ 56

Stew ard ship Re spon si bil ities:

So cial Se cu rity ............................................................ 58

Medicare ................................................................. 59

Rail road Re tire ment ........................................................ 60

Black Lung Ben e fits........................................................ 62

Un em ploy ment In sur ance ................................................... 63

Stew ard ship In vest ments:

Non-Federal Phys i cal Prop erty ............................................... 64

Hu man Cap i tal ............................................................ 65

Re search and De vel op ment .................................................. 65

Cur rent Ser vices As sess ment .................................................. 67

Notes to the Financial Statements

Note 1 - Sum mary of Sig nif i cant Ac count ing Pol icies............................... 69

Note 2 - Cash and Other Mon e tary As sets ........................................ 72

Note 3 - Ac counts Receivable.................................................. 73

Note 4 - Loan and Loan Guar an tee Pro grams...................................... 74

Note 5 - Taxes Re ceiv able .................................................... 76

Note 6 - In ven tories and Re lated Property ........................................ 76

Note 7 - Prop erty, Plant and Equip ment.......................................... 77

Note 8 - Other As sets ........................................................ 77

Note 9 - Ac counts Pay able .................................................... 78

Note 10 - Fed eral Debt Se cu ri ties Held by the Public ............................... 78

Note 11 - Fed eral Em ployee and Vet eran Ben e fits Pay able ........................... 81

Note 12 - En vi ron men tal and Dis posal Li a bil i ties .................................. 84

Note 13 - Ben e fits Due and Pay able ............................................. 85

Note 14 - Other Liabilities .................................................... 85

Note 15 - Col lec tions and Re funds of Fed eral Revenue ............................. 86

Note 16 - Un rec on ciled Trans ac tions Af fecting the Change in Net Position .............. 87

Note 17 - Prior Pe riod Adjustments ............................................. 88

Note 18 - Com mit ments and Contingencies ....................................... 88

Note 19 - Ded i cated Col lec tions................................................ 91

Note 20 - In dian Trust Funds .................................................. 94

Contents
Supplemental Information (Unaudited)

Net Cost De tail............................................... 95

De ferred Main te nance ......................................... 101

Rec on cil i a tion of the Ex cess of Rev e nue Over Net Cost................ 102

Un ex pended Bud get Au thor ity................................... 104

Tax Bur den ................................................. 105

Other Information (Unaudited)

Other Claims for Re fund ....................................... 107

Fed eral Taxes Re ceiv able Net................................... 107

Appendix

List of Sig nif i cant Gov ern ment En tities In cluded 

and En tities Ex cluded from these Fi nan cial State ments .............. 109
 

A MES SAGE FROM THE 

SEC RE TARY OF THE TREA SURY

I am pleased to present the fiscal year 1999 Financial Report of the United States

Government. The Report includes audited financial statements that cover the

Executive Branch, as well as parts of the Legislative and Judicial branches of U.S.

Government. The Administration initiated the development of this financial report in

order to create what we believe is a practical management tool for policy-makers and

a source of useful information for the public about the assets, liabilities, and

operations of the government.

This report is another significant milestone in our efforts, begun in 1994, to account

for the financial activities of the U.S. Government in a timely and professional manner.

Developing the capability for the government to produce financial reports in

accordance with generally accepted accounting principles is an enormous task.

I am also pleased to report that the standards developed by the Federal Accounting

Standards Advisory Board (FASAB) are now recognized by the American Institute of

Certified Public Accountants as being generally accepted accounting principles

(GAAP) for the Federal Government. This is a major accomplishment. It will enhance 

the acceptability of our reports and will add to the level of financial professionalism

throughout the U.S. Government.

Significant progress continues to be made in the area of financial management. More

agencies are completing their financial statements on time and the quality of the data

continues to improve. The successful Year 2000 remediation process has resulted in

better systems and we have established, through the Joint Financial Management

Improvement Program, a government-wide financial software certification process

that is beginning to ensure that commercial systems meet the government’s needs.

Despite this progress, we have much yet to achieve. A great deal of additional effort

will be necessary to fully implement an entirely new and reliable system of reporting

on the operations of the U.S. Government. The audit report from the General

Accounting Office (GAO) discusses many significant areas in which the reliability of

the current financial statements need to be improved before the GAO will be able to

render an opinion on these statements.

We are committed to producing and reporting financial information that meets the

highest standards of integrity, and to provide to the American people the

accountability and professionalism they expect from their government.

 Law rence H. Sum mers

 

 
 DIS CUS SION AND ANAL Y SIS 3

No other en tity in the world

com pares in size, scope and

com plex ity to the U.S. Gov ern -

ment. A ci vil ian Fed eral

workforce of nearly two mil lion

in di vid u als serves a di verse Na -

tion of more than 270 mil lion

Amer i cans. The Fed eral Gov -

ern ment is the larg est land owner 

in the world. Its bud geted spend -

ing for fis cal 1999 was $1.7 tril -

lion.

To ful fill its con sti tu tional

man dates, the U.S. Gov ern ment

un der takes a wide va ri ety of pro -

grams to:

• Main tain strong, ready

and mod ern mil i tary

forces.

• Pro vide crit i cal in ter na -

tional lead er ship.

• Con trib ute to en ergy se -

cu rity.

• Pro tect the en vi ron ment.

• Boost ag ri cul tural pro -

duc tiv ity.

• Fa cil i tate com merce and 

sup port hous ing.

• Sup port the trans por ta tion

sys tem.

• Help eco nom i cally dis -

tressed ur ban and ru ral com -

mu ni ties.

• As sist States and lo cal i ties

in pro vid ing es sen tial ed u ca -

tion and train ing.

• Pro mote health care.

• Fos ter in come se cu rity.

• Pro vide ben e fits and ser -

vices to vet er ans.

• Ad min is ter jus tice.

Introduction

“No other entity 

in the world compares

 in size, scope and complexity

 to the U.S. Government . . .”

Man age ment’s Dis cus sion and Anal y sis

Fis cal 1999 Fi nan cial Re port

of the United States Gov ern ment

Through the bud get pro cess, the Pres i dent and Con gress de -

cide how much to spend and tax in any one fis cal year. The Fed -

eral bud get, of course, is not the only bud get that af fects the

econ omy or the Amer i can peo ple. The bud gets of State and lo cal

gov ern ments have an im pact as well. Fed eral Gov ern ment

spend ing was a lit tle less than 19 per cent of the gross do mes tic

prod uct (or GDP, which mea sures the size of the econ omy) in

1999, the low est since 1966.

The Budget

and Economy
 4 DIS CUS SION AND ANAL Y SIS

Continued Improvement in Fiscal Performance

Seven years ago, the Fed eral bud -

get def i cit had ex ploded. It dom i nated 

the Gov ern ment’s abil ity to make pol -

icy and im posed an in sid i ous bur den

on our econ omy. In 1992, the $290

bil lion def i cit was the larg est in

Amer i can his tory and was pro jected

to con tinue spi ral ing up ward with out

re straint. The econ omy suf fered, in -

ter est rates were high and job cre ation 

stalled. Cap i tal that should have been

used for pro duc tive in vest ments to

cre ate new jobs was used to fi nance

the Gov ern ment’s mas sive def i -

cit-driven bor row ing.

In 1993, the Om ni bus Bud get Rec -

on cil i a tion Act was signed. Its def i cit

re duc tion plan was to cut the def i cit in 

half as a per cent age of the econ omy

in 5 years. That goal was met in only 3 

years. The 1997 Bal anced Bud get Act 

pro posed to elim i nate the Fed eral def -

i cit by fis cal 2002. In fact, it reached

its goal 4 years ahead of sched ule,

pro duc ing the first bud get sur plus

($69 bil lion) in a gen er a tion in 1998.

We can now look back with pride at 

our prog ress and ahead with con fi -

dence as we con sider the suc cess of

our fis cal dis ci pline and the op por tu -

nity to build upon it. To day we have

lower in ter est rates, a higher level of

in vest ment and un prec e dented pros -

per ity. Our econ omy has added more

than 20 mil lion new jobs. The un em -

ploy ment rate is the low est in 30

years; the wel fare rolls are down by

more than 50 per cent since 1993; the

core in fla tion rate is the low est in 35

years; and more Amer i cans own their

homes than at any time in our his tory.

Strong eco nomic growth and pas sage

of def i cit re duc tion pro grams placed

the bud get on its path to ward sur plus.

The fis cal dis ci pline we have dem -

on strated, com bined with a

fast-growing econ omy and ris ing

stock mar ket, con trib uted to an other

uni fied Fed eral bud get sur plus in fis -

cal 1999 of $124 bil lion. That was

$55 bil lion above the sur plus in fis cal

1998. The sur plus rel a tive to GDP

amounted to 1.4 per cent in 1999, the

high est such ra tio in al most 50 years.

Fed eral debt held by the pub lic was

re duced by more than $85 bil lion in

fis cal 1999 and by a to tal of al most

$140 bil lion over the last 2 years.

These were the first re duc tions in

pub licly held debt since 1969 and the

larg est debt re duc tions in his tory.

Re ceipts in creased by about 6 per -

cent in fis cal 1999 to $1,827 bil lion.

This was slower growth than the 9

per cent in crease in fis cal 1998. The

slow down mainly re flected a de cline

in net cor po rate tax re ceipts, the first

since 1990, due in part to weak ness in

over seas econ o mies, which dampened prof its of U.S. ex port ers. In di -

vid ual in come and pay roll tax re -

ceipts also grew more slowly in 1999

but still posted a siz able 6.5 per cent

in crease.

Growth of out lays was held to just

over 3 per cent in fis cal 1999, ris ing to

$1,703 bil lion. The in crease was in

line with the gain in 1998. Out lays in

re la tion to GDP were the small est

since 1974, dip ping to an 18.7 per cent 

share from 19.1 per cent in fis cal

1998. 

Pushing out lays down was a drop

of $13 bil lion in net in ter est pay -

ments, re flect ing the shrink ing size of 

the Fed eral debt and the re place ment

of older debt with new debt at lower

in ter est rates. Medicare pay ments

also fell mod estly over the fis cal year.

Spending in creased for most other

ma jor Fed eral Gov ern ment func tions, 

in clud ing de fense (up 2.4 per cent after a small de cline in 1998) and So cial 

Se cu rity (up about 3 per cent in fis cal

1999). The larg est per cent age gain by

far among the ma jor spend ing cat e gories was for farm price sup ports, re -

flect ing large out lays of the Com modity Credit Cor po ra tion in the wake of

de pressed ag ri cul tural prices.

Ac cord ing to the Fis cal Year 2001

Bud get, the to tal uni fied bud get surpluses are pro jected to in crease each

year through out the fore cast ho ri zon

to 2010. The Ad min is tra tion is commit ted to us ing the bulk of the sur -

pluses to strengthen and mod ern ize

the So cial Se cu rity and Medicare programs; in vest in key pri or i ties that

will ex tend the eco nomic ex pan sion,

such as ed u ca tion; and pay down the

pub licly held debt. Un der Ad min istra tion pro pos als, the cur rent $3.6 tril -

lion of debt held by the pub lic is pro -

jected to be com pletely elim i nated on

a net ba sis by 2013.

-400

-300

-200

-100

0

100

200

300

400

7 5 78 8 1 84 87 90 93 96 99 02 05 08

(In b illions of dolla rs)

Fiscal years

“Today we have lower interest rates, a

higher level of investment and

unprecedented prosperity. ”

Fig ures for fis cal 2000-2010 are pro jected. (Fis cal 2001 Bud get)

Unified Federal Budget Surpluses and Deficits

Ac tual

Pro jected
 DIS CUS SION AND ANAL Y SIS 5

Continued Strong Economic Performance

Fis cal 1999 was one of ac cel er at -

ing eco nomic growth. The ex pan -

sion en tered its ninth year and

moved closer to a new re cord length. 

Real GDP grew by 4.3 per cent

across the four quar ters of fis cal

1999, which en com passes the fourth 

quar ter of cal en dar 1998 through the 

third quar ter of cal en dar 1999. This

was faster than growth over the pre -

vi ous fis cal year and higher than the

av er age through out the ex pan sion -

ary pe riod.

Growth was led by strong gains in

pro duc tiv ity. Af ter trending up at an

av er age an nual rate of about 1.5 per -

cent from 1974 to 1995, av er age in -

creases in la bor pro duc tiv ity ac cel -

er ated by more than a full

per cent age point to 2.7 per cent over

the past 4 fis cal years. In 1999, pro -

duc tiv ity growth picked up even

more, to 3.1 per cent over the four

quar ters of the fis cal year. This is an

un usu ally fa vor able per for mance at

this stage of an ex pan sion when pro -

duc tiv ity growth typ i cally slows

down from its ear lier pace. Partly, it 

re flects the cap i tal deep en ing that has

oc curred in re cent years due to rapid

gains in busi ness in vest ment, and

partly, it may re flect im prove ments

in pro duc tion de riv ing from in for ma -

tion tech nol ogy. The faster rate of

growth of pro duc tiv ity has in creased

over all eco nomic growth and stan -

dards of liv ing, al low ing the un em -

ploy ment rate to fall with out a

buildup of in fla tion ary pres sures.

Growth in con sumer spend ing and

busi ness in vest ment in cap i tal equip -

ment and soft ware was very rapid in

fis cal 1999. Real con sumer pur chases 

ac cel er ated to more than 5 per cent

over the year to post the fast est rate of

in crease in 14 years. Higher spend ing

was fu eled by ris ing em ploy ment and

in comes and higher net worths pri -

mar ily due to the ris ing stock mar ket.

Pri vate in vest ment in equip ment and

soft ware, which in creased at dou -

ble-digit rates over the past 7 years,

also ac cel er ated in fis cal 1999 and re -

corded its best year of the ex pan sion,

ris ing by 14.5 percent. Falling prices

for com put ers and other high-tech

goods due to im prove ments in qual ity 

and pro cess ing ca pac ity con trib uted

to the rapid growth in real in vest ment. 

A wid en ing for eign trade def i cit con -

tin ued to off set strength in other sec -

tors of the econ omy in fis cal 1999, al -

though the drag on real GDP

di min ished over the year as ex ports

picked up due to some firm ing in

over seas econ o mies.

La bor mar kets re mained strong in

fis cal 1999. The un em ploy ment rate

drifted down from 4.5 per cent at the

start of the year to 4.2 per cent by the

end of fis cal 1999, and dipped even

lower in the first quar ter of fis cal

2000. These read ings were the low est

in al most three de cades. The share of

the work ing-age pop u la tion with jobs

reached a re cord high, and long-term

un em ploy ment fell. The econ omy

added 2.7 mil lion jobs in the fis cal

year, just a bit less than an nual gains

in the prior 2 fis cal years.

The rate of in fla tion in creased in

fis cal 1999 due to higher oil prices,

but un der ly ing in fla tion ary pres sures

re mained in check even with strong

eco nomic growth and low un em ploy -

ment. The ac cel er a tion in pro duc tiv -

ity growth to more than 3 per cent

helped to hold down costs. The Con -

sumer Price In dex (CPI) rose by 2.6

per cent over the fis cal year com pared

with only 1.4 per cent in fis cal 1998

when oil prices fell. Ex clud ing en ergy 

and food, how ever, growth in con -

sumer prices slowed to 2.1 per cent in

fis cal 1999 from 2.4 per cent in fis cal

1998.

The Fed eral Re serve raised

short-term in ter est rates in the sec ond

half of the fis cal year and again in fis -

cal 2000. These ac tions more than re -

versed ear lier eas ing moves that had

been un der taken in 1998 to deal with

tem po rary fi nan cial tur moil both here 

and abroad. In rais ing rates, the Fed -

eral Re serve cited con cerns that con -

tin ued faster growth in eco nomic de -

mand than in po ten tial sup ply could

fos ter in fla tion ary im bal ances.

Long-term in ter est rates moved

higher over the course of the fis cal

year, damp en ing some what the very

strong growth in hous ing. 

-1

0

1

2

3

4

5

90 91 92 93 94 95 96 97 98 99

Growth of Real GDP

Fisc al Ye ars

“The ex pan sion en tered its ninth

 year and moved closer to a new

re cord length.”

Per cent age change of the four quar ters of each fis cal year.
 6 DIS CUS SION AND ANAL Y SIS

Improving Financial Management of the Federal Government

For the first 200 years of the U.S.

Gov ern ment’s ex is tence, it did not

pub lish con sol i dated fi nan cial re ports 

other than on a bud get ary ba sis. Much 

prog ress has been made in the area of

fi nan cial man age ment over the 3

years since the ini tial au dited Con sol -

i dated Fi nan cial Re port of the United

States Gov ern ment. Agencies are pro -

duc ing better re cords and better fi -

nan cial state ments. The Year 2000

(Y2K) pro cess has re sulted in better

sys tems, and the Joint Fi nan cial Man -

age ment Im prove ment Pro gram

(JFMIP) cer tif i ca tion pro cess has

forced many ven dors to pro duce sys -

tems that more di rectly meet Gov ern -

ment re quire ments. None the less, we

have more to achieve.

His torically, ef fec tive man age ment 

of the U.S. Gov ern ment has been

ham pered by a lack of re li able fi nan -

cial in for ma tion. To help im prove the

in teg rity of fi nan cial in for ma tion, in

1990 the Of fice of Man age ment and

Bud get (OMB), the De part ment of

the Trea sury (Trea sury) and the Gen -

eral Ac count ing Of fice (GAO) es tab -

lished the Fed eral Ac count ing Stan -

dards Ad vi sory Board (FASAB) to

de velop ac count ing stan dards for the

U.S. Gov ern ment. The work of

F ASAB aug ments the ef forts of the

JFMIP to strengthen over all Fed eral

fi nan cial man age ment.

The stan dards de vel oped by the

FASAB are now rec og nized by the

Amer i can In sti tute of Cer tified Pub lic 

Ac coun tants (AICPA) as be ing gen -

er ally ac cepted ac count ing prin ci ples

(GAAP) for the Fed eral Gov ern ment. 

This is a ma jor ac com plish ment. It

will en hance the ac cept abil ity of our

re ports and will add to the level of fi -

nan cial pro fes sion al ism through out

the U.S. Gov ern ment.

Working to is sue agency fi nan cial

re ports con sis tent with GAAP and to

ob tain clean au dit opin ions, the Ad -

min is tra tion is com mit ted to im prov -

ing the re li abil ity of Fed eral fi nan cial 

in for ma tion. Achieving an un qual i -

fied opin ion on the fi nan cial state -

ments of Fed eral agen cies and the

U.S. Gov ern ment is a first step. Un -

qual i fied opin ions lead to the de vel -

op ment of better fi nan cial in for ma -

tion which, when pro vided to

man age ment, will pro vide the ba sis

for pro duc ing better de ci sions.

Agencies and the Gov ern ment as a

whole must con tinue to work to im -

ple ment sys tems that re port fi nan cial

and pro gram in for ma tion quickly and 

re li ably, and then must use that in for -

ma tion in the stew ard ship of the Na -

tion’s re sources. 

The ac com pa ny ing Fi nan cial Re -

port is re quired by 31 U.S.C.

331(e)(1) and con sists of the Man -

age ment’s Dis cus sion and Anal y sis

(MD&A), State ment of Op er a tions

and Changes in Net Po si tion, State -

ment of Net Cost, Bal ance Sheet,

Stew ard ship In for ma tion, Notes to

the Fi nan cial State ments and Sup ple -

men tal In for ma tion. Each sec tion is

pre ceded by a de scrip tion of its con -

tents. 

Basis of Accounting and Reporting Entity

The ac com pa ny ing fi nan cial state -

ments gen er ally were pre pared

based on GAAP stan dards de vel oped 

by FASAB. The re cent rec og ni tion

of Fed eral ac count ing stan dards by

the AICPA as GAAP en hances their

ac cept abil ity. These stan dards form

the foun da tion for pre par ing con sis -

tent and mean ing ful fi nan cial state -

ments both for in di vid ual Fed eral

agen cies and the Gov ern ment as a

whole.

GAAP for the Fed eral Gov ern -

ment is tai lored to the U.S. Gov ern -

ment’s unique char ac ter is tics and

spe cial needs. For ex am ple, land not

used in U.S. Gov ern ment op er a tions

(stew ard ship land), weapon sys tems

and sup port prop erty used in the per -

for mance of mil i tary mis sions, and

ves sels held as part of the Na tional

De fense Re serve Fleet (na tional de -

fense as sets) are re ported in the

Stew ard ship In for ma tion sec tion

rather than val ued on the Bal ance

Sheet. The Gov ern ment’s re spon si -

bil i ties and pol icy com mit ments are

much broader than the re ported Bal -

ance Sheet li a bil i ties. They in clude

the so cial in sur ance pro grams dis -

closed in the Stew ard ship In for ma -

tion sec tion, as well as a wide range

Accounting

Standards

“Much progress

has been made

 in the area

 of financial

management . . . ”

 “The recent recognition of Federal

accounting standards by the AICPA as

GAAP enhances their acceptability...” 
 DIS CUS SION AND ANAL Y SIS 7

The fi nan cial state ments cover the ex ec u tive branch, as well as parts of

the leg is la tive and ju di cial branches of the U.S. Gov ern ment. A list of the

sig nif i cant en ti ties in cluded in these fi nan cial state ments is in the Ap pen -

dix. In for ma tion from the leg is la tive and ju di cial branches is lim ited be -

cause those en ti ties are not re quired by law to sub mit com pre hen sive fi nan -

cial state ment in for ma tion to Trea sury. Due to its in de pend ence, the Fed eral 

Re serve Sys tem is ex cluded. In ad di tion, Gov ern ment-sponsored but pri -

vately owned en ter prises (such as Fed eral Home Loan Banks and the Fed -

eral Na tional Mort gage As so ci a tion) are ex cluded.

Cov er age

of other pro grams un der which the

Gov ern ment pro vides ben e fits and

ser vices to the peo ple of this Nation.

Stan dards that were implemented

in fis cal 1999 at the Governmentwide

level re quire re port ing of an nual Fed -

eral ex penses for stew ard ship in vest -

ments. These also are ex am ples of

stan dards tai lored to the spe cial char -

ac ter is tics of the U.S. Gov ern ment.

Such in vest ments in clude:

• Non-Federal phys i cal prop -

erty; the Fed eral in vest ment in

prop er ties owned by State and

lo cal gov ern ments (e.g., high -

ways and air ports).

• Hu man cap i tal; in vest ments

in ed u ca tion and train ing pro -

grams fi nanced by the U.S.

Gov ern ment for the ben e fit of

the pub lic.

• Re search and de vel op ment;

the U.S. Gov ern ment’s in vest -

ments in ba sic and ap plied

re search and de vel op ment.

The an nual ex pense re lated to these 

in vest ments in cluded in the State -

ment of Net Cost is sep a rately re -

ported in the Stew ard ship In for ma -

tion sec tion.

A new ac count ing stan dard, which

be came ef fec tive for fis cal 1999, re -

quires that de ferred main te nance be

pre sented as re quired sup ple men tary

in for ma tion. Re porting de ferred

main te nance high lights the re al ity

that it is an ex pected cost, which has

not been paid.

The ex cess of rev e nue over net

cost fig ure (ac crual ba sis) con tained

in these fi nan cial state ments for fis -

cal 1999 is $76.9 bil lion. In fis cal

1999, there was a uni fied bud get sur -

plus (pri mar ily on the cash ba sis) of

$124.4 bil lion. The pri mary com po -

nents of the dif fer ence that have been 

iden ti fied are prin ci pal pay ments of

pre-credit re form loans, $32.4 bil -

lion; de creases in the li a bil ity for

vet eran com pen sa tion and burial

ben e fits, $94.9 bil lion; de creases in

the li a bil ity for mil i tary em ployee

ben e fits, $31.1 bil lion; in creases in

the li a bil ity for ci vil ian em ployee

ben e fits, $41.6 bil lion; in creases in

en vi ron men tal li a bil i ties, $88.7 bil -

lion; and, in creases in cap i tal ized

fixed as sets, $41.5 bil lion. For more

in for ma tion on the de tailed rec on cil -

i a tion, see the Rec on cil i a tion of the

Ex cess of Rev e nue Over Net Cost to

the Unified Bud get Sur plus in the

Sup ple men tal In for ma tion sec tion.

Fi nan cial

Re sults

These fi nan cial state ments of

the U.S. Gov ern ment are pre -

pared based on GAAP that re -

quires us ing the ac crual ba sis of 

ac count ing. Un der the ac crual

ba sis, trans ac tions are re ported

when the events giv ing rise to

the trans ac tions oc cur, rather

than when cash is re ceived or

paid (cash ba sis). In con trast,

Fed eral bud get ary re port ing is

gen er ally on the cash ba sis in

ac cor dance with ac cepted bud -

get con cepts.

The most sig nif i cant dif fer -

ence be tween these two bases

in volves the tim ing of rec og ni -

tion and mea sure ment of rev e -

nues and costs. For ex am ple,

GAAP re quires rec og ni tion of

li a bil i ties for costs re lated to envi ron men tal cleanup when the

events re quir ing such costs oc -

cur. By con trast, cur rent bud get

con cepts rec og nize such costs

later, at the time pay ment is

made. The ef fects of these dif -

fer ences are re flected in the

Rec on cil i a tion of the Ex cess of

Rev e nue Over Net Cost to the

Unified Bud get Sur plus, in the

Sup ple men tal In for ma tion section of this Fi nan cial Re port.

Ac crual Ba sis

Ac count ing

Standards, cont.
 8 DIS CUS SION AND ANAL Y SIS

Revenue and Expense Summary

Rev e nue

Non-exchange rev e nue is an in flow 

of re sources to the Gov ern ment that

the Gov ern ment de mands or re ceives

by do na tions. The in flows that it de -

mands in clude taxes, du ties, fines and 

pen al ties. Non-exchange rev e nue is

the U.S. Gov ern ment’s pri mary

source of rev e nue and to taled

$1,822.4 bil lion in 1999. More than

95 per cent of this to tal came from tax

re ceipts, with the re main der com ing

from cus toms du ties and other mis -

cel la neous re ceipts.

Earned rev e nues are in flows of re -

sources that arise from ex change

trans ac tions; for ex am ple, when the

U.S. Gov ern ment sells goods or ser -

vices to the pub lic. Dur ing 1999, the

U.S. Gov ern ment earned $192.6 bil -

lion in ex change rev e nue. Of these

rev e nues, $182.1 bil lion is off set

against the gross cost of the re lated

func tions to ar rive at the func tion’s

net cost. The U.S. Gov ern ment also

earned $10.5 bil lion that was not off -

set against the cost of any func tion

(e.g., roy al ties on the Outer Con ti nen -

tal Shelf lands). 

0.9%

1.3%

1.4%

2.1%

3.5% 72.3%

9.6%

9.0%

Corporate

income tax

Excise tax

Individual income

tax and tax 

withholdings

Unemployment

tax

Miscellaneous

Estate and

gift tax

Customs duties

Exchange

revenue

72.3%

0.9%

1.3%

1.4%

2.1%

3.5%

9.0%

9.6%

Components of Revenue 

by Major Source

De tail may not add

to to tals due to round ing.

Expenses by Function

The net cost of U.S. Gov ern ment

op er a tions was $1,756.0 bil lion for

1999. Net cost rep re sents the gross

cost of op er a tions less at trib ut able

earned rev e nues. The State ment of

Net Cost re flects the cost in curred

to carry out the na tional pri or i ties

iden ti fied by the Pres i dent and the

Con gress. The func tions and

subfunctions used to ac cu mu late

costs as so ci ated with the na tional

pri or i ties are iden ti fied in the Pres i -

dent’s bud get and de scribed in de -

tail in the Sup ple men tal In for ma -

tion sec tion of this Fi nan cial

Re port. The ac com pa ny ing chart

pres ents the per cent age of the net

cost of U.S. Gov ern ment op er a tions 

rep re sented by each of the U.S.

Gov ern ment’s ma jor func tions.

51.6%

23.5% 13.1%

6.4%

5.4%

National 

defense

23.5%

13.1% Interest

Human 

resources

51.6%

Physical 

resources

Other 

functions

5.4%

6.4%

De tail may not add to to tals due to round ing.

Net Cost by Major Function
 DIS CUS SION AND ANAL Y SIS 9

37.6%

2.4%

4.5%

0.5%

1.1%

1.2%

52.6%

Other liabilities

Environmental and

disposal liabilities

Accounts payable

Federal employee and

veterans benefits

Benefits due and payable

Loan guarantee liabilities

Federal debt held

by the public

1.1%

2.4%

4.5%

1.2%

37.6%

0.5%

52.6%

Major Categories of Liabilities

De tail may not add to to tals due to round ing.

Asset and Liability Summary

Assets

The as sets of the U.S. Gov ern ment

are the re sources avail able to pay li a -

bil i ties or to sat isfy fu ture ser vice

needs. The ac com pa ny ing chart de -

picts the ma jor cat e go ries of re ported

as sets as of Sep tem ber 30, 1999, as a

per cent age of re ported to tal as sets. De -

tailed in for ma tion about the com po -

nents of these as set cat e go ries can be

found in the Notes to the Fi nan cial

State ments.

The as sets pre sented on the Bal ance

Sheet are not a com pre hen sive list of

Fed eral re sources. For ex am ple, the

U.S. Gov ern ment’s most im por tant fi -

nan cial re source, its abil ity to tax and

reg u late com merce, can not be quan ti -

fied and is not re flected. Nat u ral re -

sources, stew ard ship land (na tional

parks, for ests and graz ing lands), na -

tional de fense as sets and her i tage as -

sets are other ex am ples of re sources

that are not in cluded in the $883.0 bil -

lion of Fed eral as sets re ported on the

Bal ance Sheet at the end of fis cal 1999. 

As can be seen, sig nif i cant as sets of the 

Fed eral Gov ern ment are not re flected

on the Bal ance Sheet.

33.8%

4.0%

13.0%

6.1%

20.8%

19.6%

Loans receivable

Inventories and related property

Cash and other monetary assets

Property, plant and equipment

Accounts receivable

Taxes receivable

19.6%

20.8%

13.0%

33.8%

2.6%

6.1% Other

4.0%

2.6%

Major Categories

of Assets

De tail may not add to to tals due to round ing.

Liabilities

At the end of fis cal 1999, the U.S.

Gov ern ment re ported li a bil i ties of

$6,909.2 bil lion. These li a bil i ties are 

prob a ble and mea sur able fu ture out -

flows of re sources aris ing out of past

trans ac tions or events. The larg est

com po nent of these li a bil i ties

($3,631.6 bil lion) is rep re sented by

Fed eral debt se cu ri ties held by the

pub lic. The next larg est com po nent

($2,600.7 bil lion) re lates to pen sion,

dis abil ity and health care costs for

Fed eral ci vil ian and mil i tary employ ees as well as for vet er ans. In -

cluded in this com po nent is a De part -

ment of Vet eran Af fairs pro gram

whereby vet er ans or their de pend -

ents re ceive com pen sa tion ben e fits if 

the vet eran was dis abled or died

from mil i tary ser vice-connected

causes. Changes in the as sump tions

for this ac tu ar ial li a bil ity re sulted in

a li a bil ity de crease of $94.9 bil lion.

An other li a bil ity, which will likely

re quire sub stan tial fu ture bud get ary
 10 DIS CUS SION AND ANAL Y SIS

re sources to liq ui date, is re lated to en vi ron men tal

cleanup costs as so ci ated with en vi ron men tal damage/con tam i na tion. As of Sep tem ber 30, 1999, the cost of 

clean ing up en vi ron men tal dam age/con tam i na tion

across Gov ern ment pro grams was es ti mated to be $313.2 

bil lion, an in crease of $88.7 bil lion from 1998.

The ac com pa ny ing chart pres ents the per cent age of to -

tal Fed eral li a bil i ties rep re sented by each of the cat e go -

ries of li a bil i ties re ported on the Bal ance Sheet. Ad di -

tional de tails about the U.S. Gov ern ment’s re ported

li a bil i ties can be found in the Notes to the Fi nan cial

State ments.

The lon ger term eco nomic and

bud get out look is fa vor able—even

more so than only a few years ago.

With pru dent fis cal pol icy, the bud -

get could re main in sur plus for many 

de cades. The Ad min is tra tion pro -

jects bud get sur pluses in 2000 and

through out the cus tom ary 10-year

bud get win dow. How ever, such pro -

jec tions are in her ently un cer tain,

be cause, while pru dent fis cal pol icy

can safe guard our hard-earned pros -

per ity, so too can reck less choices

dis si pate the ben e fits of the bud get

dis ci pline that is re spon si ble for our

on go ing suc cess.

There are fore see able chal lenges

that will threaten bud get ary sta bil ity

in the 21st cen tury. In less than 10

years, the “baby-boomers”—the

large gen er a tion born be tween 1946

and 1964—will be come el i gi ble for

early re tire ment un der So cial Se cu -

rity. In the space of two de cades, the

el derly’s share of the U.S. pop u la -

tion will jump from around 13 per -

cent to 21 per cent. This de mo -

graphic bulge will put pres sure on

the Fed eral bud get through

Medicare and So cial Se cu rity. Fis -

cal dis ci pline—pay ing down the

debt and re duc ing or elim i nat ing in -

ter est pay ments—im proves the

long-run bud get bal ance. Ad di tional 

re forms such as the Ad min is tra tion

pro pos als de scribed be low, will be

needed to strengthen So cial Se cu -

rity and Medicare. Ad di tional in for -

ma tion on re ceipt and out lay es ti -

mates can be found in the Cur rent

Ser vices As sess ment in the Stew -

ard ship In for ma tion sec tion of this

Fi nan cial Re port.

Long-term Bud get ary Out look

Two trust funds have been es tab lished to fi nance the

Medicare pro gram. The Medicare Part A Hos pi tal In sur -

ance Trust Fund is fi nanced by a 2.9 per cent tax on wages

and sal a ries re quired to be paid equally by em ploy ees and

em ploy ers. The Medicare Part B Sup ple men tary Med i cal

In sur ance Trust Fund re ceives pre mium pay ments on be -

half of Medicare ben e fi cia ries who have elected cov er age. 

The Bal anced Bud get Act of 1997 pro vides that the

Medicare Part B pre mium is set at a level that will cover

25 per cent of pro gram costs. The re main der of the pro -

gram cost is funded by con gres sio nal ap pro pri a tions.

The 1999 Trustees’ An nual Re port pro jects that the

Medicare Part A Trust Fund’s as sets will be de pleted by

2015 us ing in ter me di ate or “best es ti mate” as sump tions.

The Ad min is tra tion has pro posed changes that will ex tend 

that date by at least a de cade to at least 2025. Ad di tional

in for ma tion about the Medicare pro gram can be found in

the Stew ard ship In for ma tion sec tion of this Fi nan cial Re -

port. At the time this re port was pre pared, the 2000

Trustees’ An nual re port was sched uled to be re leased on

March 30, 2000. It’s re vised es ti mates will dif fer from

those re ported the pre vi ous year, which have been in -

cluded in this Fi nan cial Re port.

Fi nan cial Con di tion of the Medicare Trust Funds

Fi nan cial Con di tion of the So cial Se cu rity Trust Funds

Two trust funds have been es tab -

lished by law to fi nance the So cial

Se cu rity pro gram (OASDI): Fed eral

Old-Age and Sur vi vors In sur ance

(OASI) and Fed eral Dis abil ity In sur -

ance (DI). OASI pays re tire ment and

sur vi vors ben e fits and DI pays ben e -

fits af ter a worker be comes dis abled.

OASDI rev e nues con sist pri mar ily

of taxes on earn ings that are paid by

em ploy ees, their em ploy ers and the

self-employed. OASDI also re ceives 

rev e nue from tax a tion of some So -

cial Se cu rity ben e fits. Rev e nues that

are not needed to pay cur rent ben e -

fits or ad min is tra tive ex penses are

in vested in Trea sury se cu ri ties to

earn in ter est for the trust funds. The

Board of Trustees of the OASI and

DI Trust Funds pro vides the Pres i -

dent and the Con gress with

short-range (10 years) and

long-range (75 years) ac tu ar ial es ti -

mates of each trust fund. Be cause of

the in her ent un cer tainty in es ti mates

for as long as 75 years into the fu -

ture, the So cial Se cu rity Trustees
 DIS CUS SION AND ANAL Y SIS 11

use three al ter na tive sets of eco -

nomic and de mo graphic as sump tions

to show a range of pos si bil i ties. Most

an a lysts use the Trustees’ in ter me di -

ate or “best es ti mate” set of as sump -

tions to eval u ate the fi nan cial con di -

tion of the So cial Se cu rity pro gram.

Un der cur rent leg is la tion and us ing 

in ter me di ate as sump tions, the

Trustees es ti mated in their 1999 re -

port, re leased on March 30, 1999, that 

by 2014 cash dis burse ments for the

pro grams will ex ceed cash re ceipts

and by 2034 the com bined trust fund

as sets, pri mar ily in vest ments in Trea -

sury se cu ri ties, will be ex hausted.

With no change in the pro gram, in

2014 the trust funds are ex pected to

be gin us ing in ter est on their in vest -

ments to cover the cash short fall and

to pay ben e fits. Starting in 2022, they

would be gin re deem ing their in vest -

ments in Trea sury se cu ri ties to

pro vide the needed fund ing. In 2034,

trust fund as sets would be ex hausted;

at that time, ded i cated tax rev e nues

would be suf fi cient to pay only ap -

prox i mately 71 per cent of the ben e fits 

due. At the time this re port was pre -

pared, the Trustees’ An nual Re port

was sched uled to be re leased on

March 30, 2000. Its re vised es ti mates 

will dif fer from those re ported the

pre vi ous year, which have been in -

cluded in this Fi nan cial Re port.

The Ad min is tra tion has pro posed

plans that would ex tend the life of the 

trust funds to at least 2050, and in -

tends to work with Con gress on a bi -

par ti san ba sis to en act long-term Social Se cu rity sol vency and re form.

Acting sooner rather than later to ad -

dress the long-term fi nanc ing needs

of the pro gram will make the re -

quired changes less se vere and dis -

rup tive and en sure that So cial Se curity works as well for fu ture

gen er a tions as it has for past gen er a -

tions. Ad di tional in for ma tion about

the So cial Se cu rity pro gram can be

found in the Stew ard ship In for ma tion 

sec tion of this Fi nan cial Re port.

Im proving Gov ern ment Man age ment Over all

In ad di tion to im prov ing fi nan cial

man age ment, the Fed eral Gov ern -

ment has in re cent years de voted

sub stan tial ef forts to im prov ing

other ar eas of man age ment. These

ef forts are es tab lished and re ported

an nu ally by OMB as Pri or ity Man -

age ment Ob jec tives (PMOs). Co or -

di nated, sus tained and in ten sive

man age ment ini tia tives have been

de signed to ad dress the is sues in the

ac com pa ny ing text.

Real prog ress has been made to

im prove pro gram im ple men ta tion

and ex e cu tion through out the Gov -

ern ment, on both a Governmentwide

and agency-specific ba sis. For ex am -

ple:

Man aging the Year 2000 (Y2K)

com puter prob lem . The Ad min is tra -

tion’s first and fore most man age -

ment ob jec tive was to re solve the

Y2K com puter prob lem. Y2K posed

the sin gle larg est tech nol ogy man -

age ment chal lenge in his tory. The

Fed eral Gov ern ment’s tran si tion

through the date change was, be yond 

all ex pec ta tions, re mark ably trou ble

free.

Mod ern izing stu dent aid de liv ery.

Sig nif i cant prog ress was made mod -

ern iz ing stu dent aid ben e fit de liv ery

by ex pand ing elec tronic ac cess to

ben e fits and ser vices and re form ing

con tract ing, sys tems de vel op ment,

and pro gram over sight prac tices.

The new per for mance-based or ga ni -

za tion, cre ated in 1998, hired a chief

op er at ing of fi cer, as sessed cus tomer

needs, de vel oped a sys tems mod ern -

iza tion blue print, is sued a 5-year

per for mance plan and re or ga nized

the staff into three ser vice-oriented

chan nels for stu dents, schools and fi -

nan cial in sti tu tions. 

 Reengineering the nat u ral iza tion

pro cess and re duc ing the cit i zen ship

ap pli ca tion back log. The De part -

ment of Jus tice’s Im mi gra tion and

Nat u ral iza tion Ser vice (INS) re de -

signed its nat u ral iza tion pro cess to

stream line and au to mate op er a tions,

and si mul ta neously re duced a back -

log of more than 1.8 mil lion ap pli ca -

tions for cit i zen ship. In 1999, INS re -

duced the back log by more than

500,000 ap pli ca tions, and the av er -

age pro cess ing time be tween ap plica tion and nat u ral iza tion of qual ified can di dates has been re duced

from 27 months in 1998 to 12

months in 1999. INS ex pects per for -

mance to im prove fur ther.

Im proving man age ment of the de -

cen nial cen sus. The Bu reau of the

Cen sus in the De part ment of Com -

merce en sured that the nec es sary

sup port struc ture—which in cludes

open ing data cap ture cen ters, re -

gional cen sus of fices and lo cal cen -

sus of fices; print ing forms; es tab -

lish ing a tele phone ques tion naire

as sis tance pro gram; print ing language as sis tance guides; and re cruit -

ing and train ing tem po rary cen sus

work ers—was es tab lished and

tested and ready for op er a tion.

“Co or di nated, sus tained and in ten sive

man age ment ini tia tives have been de signed

to address the issues . . . ”

“The Ad min is tra tion

has pro posed plans

that would ex tend the

life of the trust funds 

to at least 2050 . . .”
 12 DIS CUS SION AND ANAL Y SIS

Strengthening 

Governmentwide Man age ment

1. Use per for mance in for ma tion to im prove pro gram 

man age ment and make better bud get de ci sions.

2. Im prove fi nan cial man age ment in for ma tion.

3. Use cap i tal plan ning and in vest ment con trol to better man age

in for ma tion tech nol ogy.

4. Pro vide for com puter se cu rity and pro tect crit i cal in for ma tion

in fra struc ture.

5. Strengthen sta tis ti cal pro grams.

6. Im ple ment ac qui si tion re forms.

7. Im ple ment elec tronic Gov ern ment ini tia tives. 

8. Better man age Fed eral fi nan cial port fo lios.

9. Align Fed eral hu man re sources to sup port agency goals.

10. Ver ify that the right per son is get ting the right ben e fit.

11. Stream line and sim plify Fed eral grant man age ment.

12. Cap i tal ize on Fed eral en ergy ef fi ciency.

Im proving Pro gram Im ple men ta tion

13. Mod ern ize stu dent aid de liv ery.

14. Im prove the De part ment of En ergy’s (DOE’s) pro gram

and con tract man age ment.

15. Strengthen the Health Care Fi nancing Ad min is tra tion’s

(HCFA’s) man age ment ca pac ity.

16. Im ple ment Housing and Hu man De vel op ment (HUD) re form.

17. Re form man age ment of In dian Trust Funds.

18. Im ple ment Fed eral Avi a tion Ad min is tra tion (FAA) 

man age ment re forms.

19. Im ple ment In ter nal Rev e nue Ser vice (IRS) re forms.

20. Stream line the So cial Se cu rity Ad min is tra tion’s (SSA’s) 

dis abil ity claims pro cess.

21. Rev o lu tion ize De part ment of De fense (DOD) busi ness af fairs.

22. Man age risks in build ing the In ter na tional Space Sta tion.

23. Im prove se cu rity at dip lo matic fa cil i ties around the world.

24. Reengineer the nat u ral iza tion pro cess and re duce

the cit i zen ship ap pli ca tion back log.

Sys tems,

Con trols

and Le gal

Com pli ance

The Fed eral Gov ern ment

faces daunt ing prob lems in

mod ern iz ing its fi nan cial man -

age ment sys tems. Changing

tech nol ogy, as well as chang -

ing in for ma tion needs, are oc -

cur ring so rap idly that tech nol -

ogy ad vances in to day’s

sys tems be come ob so lete with

iden ti fi ca tion of new data and

sys tems re quire ments. The

cor ner stone of sound fi nan cial

man age ment, as well as

performance mea sure ment, is

ac cu rate, timely and use ful in -

for ma tion. Many Fed eral fi -

nan cial sys tems are sim ply

un able to pro vide the data

needed to man age pro grams

and make good de ci sions. The

Gov ern ment needs to up grade

and re place many of its fi nan -

cial man age ment sys tems.

The Fed eral Fi nan cial Man -

age ment Im prove ment Act

(FFMIA) pointed out that the

de vel op ment of fi nan cial man -

age ment sys tems that sup port

GAAP will im prove Fed eral

fi nan cial man age ment. Improve ment in fi nan cial sys -

tems de pends upon: (1) an en -

vi ron ment in which fi nan cial

man age ment sys tems can be

suc cess fully planned, de vel -

oped, op er ated and main -

tained; (2) Governmentwide

sys tems re quire ments that sup -

port in for ma tion stan dards;

and (3) the avail abil ity of sys -

tems that meet the Gov ernmentwide sys tems re quire -

ments ar tic u lated in FFMIA.

FFMIA sup ports and com ple -

ments the Chief Fi nan cial Of -

fi cers (CFO) Act, the Gov ern -

ment Per for mance and

Re sults Act, and the Gov ern -

ment Man age ment Re form

Act. It es tab lishes in stat ute

cer tain fi nan cial man age ment

sys tem re quire ments that are

Pri or ity Man age ment Objectives
 DIS CUS SION AND ANAL Y SIS 13

al ready es tab lished by the ex ec u tive 

branch. Spe cifically, Fed eral sys -

tems must com ply with Fed eral Fi -

nan cial Man age ment Sys tems re -

quire ments, Fed eral Ac count ing

Stan dards and the Stan dard Gen eral

Led ger, at the trans ac tion level. 

The CFO Coun cil, OMB, Trea -

sury, the Joint Fi nan cial Man age -

ment Im prove ment Pro gram

(JFMIP) and Fed eral agen cies are

all work ing to im ple ment crit i cal

im prove ments to Fed eral fi nan cial

man age ment sys tems in six ar eas:

(1) plan ning and in vest ment; (2)

Governmentwide and agency fi nan -

cial man age ment sys tems in frastruc tures; (3) com pre hen sive data

re quire ments; (4) com pre hen sive

func tional re quire ments; (5) in dus -

try part ner ships; and (6) sys tems de -

ploy ment. 

This past year, JFMIP im ple -

mented a pro gram of com pre hensive test ing of ven dor core sys tems

to de ter mine com pli ance with

JFMIP stan dards. Nine sys tems in -

volv ing seven ven dors have passed

the rig or ous tests. Only those sys -

tems cer ti fied by JFMIP as com pliant may be pur chased by pro gram

agen cies as of Oc to ber 1, 1999.

Nu mer ous strong in ter nal con -

trols ex ist over Fed eral as sets.

These con trols in clude the ex is -

tence of a stat u tory bud get and cen -

tral ized cash man age ment, debt and 

dis burse ment func tions. In ad di -

tion, Trea sury’s Fi nan cial Man age -

ment Ser vice (FMS) pub lishes the

“Monthly Trea sury State ment of

Re ceipts and Out lays of the United

States Gov ern ment” (MTS), a sum -

mary state ment pre pared from

agency ac count ing re ports. The

MTS pres ents the re ceipts, out lays,

re sult ing bud get sur plus or def i cit,

and Fed eral debt for the month and

the fis cal year-to-date and com -

pares those fig ures to the same pe -

riod in the pre vi ous year.

Fi nan cial Man age ment Chal lenges

GAO has re ported that se ri ous fi -

nan cial man age ment im prove ment

chal lenges face the U.S. Gov ern ment. 

The cen tral chal lenge to pro duc ing

re li able, use ful and timely data

through out the year and at yearend is

over haul ing fi nan cial and re lated

man age ment in for ma tion sys tems.

Agencies also must ad dress prob lems

with fun da men tal recordkeeping, in -

com plete doc u men ta tion and weak

in ter nal con trols be fore their sys tems

can pro duce re li able in for ma tion on

an on go ing ba sis.

Au dits of agency fi nan cial state -

ments dis close de fi cien cies that im -

pede com pli ance with GAAP and, ac -

cord ingly, im proved fi nan cial

man age ment. As a re sult, de spite

prog ress over the past year, GAO

again was un able to ren der an opin ion 

on the re li abil ity of the

Governmentwide fi nan cial state -

ments. The fol low ing ex hibit il lus -

trates agency prog ress to ward un -

qual i fied au dit opin ions on their

fi nan cial state ments. (Au dits for all of 

the 24 ma jor agen cies were not re -

quired un til fis cal 1996.)

In 1996, only six agen cies were

able to ob tain clean opin ions. In 1999, 

13 (and ul ti mately per haps as many as 

15) agen cies re ceived clean opin ions

and 4 oth ers re ceived qual i fied opin -

ions. This leaves only five agen cies

with dis claimed opin ions, a con di tion 

where the au di tors are un able to ren -

der an opin ion, gen er ally be cause of

de fi cien cies in the ac count ing re -

cords. How ever, in a few cases, agen -

cies could not pre pare their fi nan cial

state ments in time for the au dits to be

com pleted within the March 1

timeframe. A to tal of seven agen cies

made some im prove ment in their au -

dit opin ions and four more than last

year sub mit ted their state ments by the 

due date. While ef forts have been

sub stan tial and there has been real

prog ress, the task is ex tremely large

and has been ham pered by Y2K work

re ceiv ing the bulk of sys tems re -

sources in 1999. Ad di tional prog ress

is ex pected in 2000.

While prog ress has been made, re -

cent au dits dis closed that ma jor agen -

cies con tinue to have se ri ous short -

com ings in fi nan cial man age ment

re port ing and sys tems that pre clude

their fi nan cial re ports from be ing au -

dited and re ceiv ing un qual i fied opin -

ions. These agen cies must sat is fac to -

rily ad dress these prob lems in or der

to re ceive an un qual i fied opin ion on

their fi nan cial state ments and for the

U.S. Gov ern ment to re ceive an un -

qual i fied opin ion on its fi nan cial

state ments. 

With re spect to intragovernmental

trans ac tions, the chal lenge per tains to 

iden ti fy ing and elim i nat ing trans ac -

tions be tween agen cies. The au dits of

the U.S. Gov ern ment’s fi nan cial

state ments for fis cal 1997 through

1999 dis closed that agen cies could

not ef fec tively iden tify trans ac tions

with other agen cies so they could be

elim i nated for Governmentwide re -

port ing. If these trans ac tions are not

prop erly elim i nated, to tal U.S. Gov -

ern ment as sets, li a bil i ties, rev e nues

and ex penses will be mis stated by the

amount of these trans ac tions.

 “While ef forts

have been

sub stan tial and

there has been

real prog ress,

 the task 

is ex tremely

large . . .”

Con trols and Com pli ance, cont.
 14 DIS CUS SION AND ANAL Y SIS

CFO Act Agency Audit Opinions

 on Financial Statements

Agency 1996 1997 1998 1999

USDA

Com merce

DOD

Ed u ca tion

DOE

HHS

HUD

DOI ?

DOJ

DOL

State ?

DOT

Trea sury

VA

AID

EPA

FEMA

GSA

NASA

NRC

NSF

OPM

SBA

SSA

To tal

 un qual i fied 6 11 12 13

Un qual i fied

 opin ions

Qual ified

opin ions

Opin ion dis claim ers 

 ? Agencies that have

not yet filed.

Dur ing fis cal 1999, Trea sury con -

tin ued to fo cus on re solv ing

intragovernmental trans ac tion is -

sues. For fi du ciary bal ances to tal ing

over $2 tril lion in volv ing the Bu reau

of the Pub lic Debt and the Fed eral

Fi nancing Bank, vir tu ally all of the

ac count ing dif fer ences have been

ex plained so that these trans ac tions

can be elim i nated. Prog ress also has

been made re gard ing intragovernmen tal buy ing and sell ing trans ac -

tions by us ing a re vised elim i na tion

meth od ol ogy, but work re mains to

be done in this area.

Trea sury con tin ues to as sist agen -

cies in rec on cil ing their fund bal ance 

amount with the amount re ported by

Trea sury. Dur ing this past year, Trea -

sury is sued pol icy state ments and

guide lines for ac com plish ing the

rec on cil i a tion. Rec on cil i a tion is an

on go ing ac count ing func tion, and

agen cies have made sig nif i cant

strides to in sti tu tion al ize the pro cess.

Ad di tional

Information

Ad di tional de tails about the in for ma tion con tained in these fi nan cial

state ments can be found in the fi nan cial state ments of the in di vid ual

agen cies listed in the Ap pen dix. In ad di tion, re lated U.S. Gov ern ment

pub li ca tions such as the “Bud get of the United States Gov ern ment,” the

“Trea sury Bul le tin,” the “Monthly Trea sury State ment of Re ceipts and

Out lays of the United States Gov ern ment,” the “Monthly State ment of

the Pub lic Debt of the United States,” and the Trustee’s re ports for the So -

cial Se cu rity and Medicare pro grams may be of in ter est.

Chal lenges,

cont.
GENERAL ACCOUNTING OFFICE REPORT 15

B-285019

March 28, 2000

The President

The President of the Senate

The Speaker of the House of Representatives

Implementation of important legislative reforms remains underway to promote greater

accountability in managing the finances of our national government. These reforms

include requirements for annual audited financial statements for 24 major departments

and agencies as well as preparation of the financial statements of the U.S. government,

which GAO is required to audit. The report on our audit of these financial statements for

fiscal year 1999 is enclosed.

These financial reporting requirements are prompting steady improvements in federal

financial accountability, and there has been progress toward meeting the related

legislative objectives. The President has designated financial management improvement

as a priority management objective and efforts are underway across government to

address the pervasive, generally long-standing financial management problems discussed

in our accompanying report. Thus far, 13 of 24 major agencies have received unqualified

opinions on their fiscal year 1999 financial statements and others have resolved certain

previously reported financial statement deficiencies. For example, the Department of

Energy resolved its previously reported deficiency related to its environmental and

disposal liability associated with nuclear weapons. Also, in October 1999, the American

Institute of Certified Public Accountants recognized federal accounting standards as a

generally accepted basis of accounting, which represents a major milestone for the

federal government.

At the same time, several major departments are not yet able to produce auditable

financial statements on a consistent basis. There are several major obstacles to

overcome, both at the agency level and in preparing reliable financial statements for the

U.S. government. The deficiencies discussed in our accompanying report prevented us

from being able to form an opinion on the reliability of the accompanying fiscal year

1999 financial statements, as was the case in our fiscal years 1998 and 1997 audits.

These deficiencies continue to significantly impair the federal government's ability to
16 GENERAL ACCOUNTING OFFICE REPORT

B-285019

adequately safeguard certain significant assets, properly record various transactions, and

comply with selected provisions of laws and regulations related to financial reporting.

Additionally, (1) the government is unable to determine the full extent of improper

payments—estimated to total billions of dollars annually—and therefore cannot develop

effective strategies to reduce them, (2) serious, long-standing computer security

weaknesses expose the government's financial and other sensitive information to

inappropriate disclosure, destruction, modification, and fraud, and critical operations to

disruption, and (3) material control weaknesses affect the government's tax collection

activities.

The executive branch recognizes that, because of the extent and severity of the financial

management deficiencies, addressing them will require concerted improvement efforts

across government. With a concerted effort, the federal government, as a whole, can

continue to make progress toward achieving accountability and generating reliable

financial and management information on a timely basis and in an ongoing manner.

Annual financial audits represent an important means to assure continued progress in

connection with improving federal financial management.

While obtaining unqualified “clean” audit opinions on federal financial statements is an

important objective, it is not an end in and of itself. The key is to take steps to

continuously improve internal control and underlying financial and management

information systems as a means to assure accountability, increase the economy, improve

the efficiency, and enhance the effectiveness of government. These systems must

generate timely, accurate, and useful information on an ongoing basis, not just as of the

end of the fiscal year. Unfortunately, for fiscal year 1999, the financial management

systems of almost all agencies were again found not to be in substantial compliance with

the requirements of the Federal Financial Management Improvement Act of 1996. In

addition, while some attention to delineating core competencies and training has

occurred, a great deal more needs to be done to improve financial management human

capital.

Reliable financial information is essential for analyzing the government’s financial

condition and helping inform budget deliberations by providing additional information

beyond that provided in the budget. The budget of the federal government is primarily

formulated on a cash basis, which also is generally the basis for calculating the annual

budget surplus or deficit. The financial statements are prepared generally on the accrual

basis of accounting. The most significant difference between the budget and accrual

basis of accounting is the timing of recognition and measurement of revenues and costs.
GENERAL ACCOUNTING OFFICE REPORT 17

B-285019

Accrual information can be used with budgetary information to provide a valuable

perspective on the costs of agency programs and the government’s assets and long-term

commitments. This is especially important given current demographic trends and the

fiscal challenges that will result.

Last year we discussed the Year 2000 challenge in our report. The federal government

has met the “date change” challenge. The leadership exhibited by the legislative and

executive branches and the partnerships formed by a myriad of public, private, and

international organizations were critical factors behind this success.

The accompanying Financial Report and our report include certain information

concerning the Social Security and Medicare (Part A) trust funds, such as projected

contributions and expenditures, dates when expenditures are expected to exceed

contributions, and dates when such funds are expected to be exhausted. Such information

is as of January 1, 1999 for Social Security and as of September 30, 1999 for Medicare

(Part A), the most recent information publicly reported by the government. The

government plans to issue, on March 30, 2000, updated information as of January 1,

2000. The government’s issuance of dated information in this Financial Report at about

the same time that it issues more current information may cause confusion to the

Congress and the public. Steps should be taken, in future years, to ensure that the

government’s Financial Report contains up-to-date information as of no earlier than the

end of the most recent fiscal year. Because current information on the solvency of the

Social Security and Medicare programs is critical to assessing the financial condition of

the federal government, aiding in budget deliberations, and fostering public debate, we

will include the updated information on these two important federal programs in a report

that will also contain the Fiscal Year 1999 Financial Report of the United States

Government.

We appreciate the cooperation and assistance we received from the Chief Financial

Officers and Inspectors General throughout government, as well as Department of the

Treasury and Office of Management and Budget officials, in carrying out our

responsibility to audit the government’s financial statements. We look forward to

continuing to work with these officials and the Congress to achieve the goals and

objectives associated with financial management reform.
18 GENERAL ACCOUNTING OFFICE REPORT

B-285019

Our report was prepared under the direction of Jeffrey C. Steinhoff, Acting Assistant

Comptroller General for Accounting and Information Management, and Robert F. Dacey,

Director, Consolidated Audit and Computer Security Issues. If you have any questions,

please contact me on (202) 512-5500 or them on (202) 512-3317.

David M. Walker

Comptroller General

of the United States
GENERAL ACCOUNTING OFFICE REPORT 19

B-285019

The President

The President of the Senate

The Speaker of the House of Representatives

The Secretary of the Treasury, in coordination with the Director of the Office of

Management and Budget (OMB), is required to annually submit financial statements for

the U.S. Government to the President and the Congress.1 GAO is required to audit these

statements. This is our report on our audit of the financial statements of the U.S.

government for fiscal year 1999.2

In summary, certain significant financial systems weaknesses, problems with

fundamental recordkeeping and financial reporting, incomplete documentation, and weak

internal control, including computer controls, continue to prevent the government from

accurately reporting a significant portion of its assets, liabilities, and costs. Some of

these deficiencies primarily relate to specific major agencies; others, such as

intragovernmental transactions, affect the entire government. These deficiencies affect

the reliability of the accompanying financial statements and much of the related

information in the Fiscal Year 1999 Financial Report of the United States Government, as

well as the underlying financial information. They also affect the government's ability to

accurately measure the full cost and financial performance of certain programs and

effectively manage related operations.

 

1

The Government Management Reform Act of 1994 requires such reporting beginning with financial

statements prepared for fiscal year 1997.

2Our report on the fiscal year 1998 financial statements is entitled Financial Audit: 1998 Financial Report

of the United States Government (GAO/AIMD-99-130, March 31, 1999).
20 GENERAL ACCOUNTING OFFICE REPORT

B-285019

 Major problems included the federal government's inability to:

• properly account for and report (1) material amounts of property, equipment,

materials, and supplies and (2) certain stewardship assets, primarily at the Department

of Defense;

• properly estimate the cost of certain major federal credit programs and the related

loans receivable and loan guarantee liabilities, primarily at the Department of

Agriculture;

• estimate and reliably report material amounts of environmental and disposal liabilities

and related costs, primarily at the Department of Defense;

• determine the proper amount of various reported liabilities, including postretirement

health benefits for military employees and accounts payable and other liabilities for

certain agencies;

• accurately report major portions of the net cost of government operations;

• ensure that all disbursements are properly recorded; and

• properly prepare the federal government’s financial statements, including balancing

the statements, accounting for substantial amounts of transactions between

governmental entities, properly and consistently compiling the information in the

financial statements, and reconciling the results of operations to budget results.

Such deficiencies prevented us from being able to form an opinion on the reliability of

the accompanying fiscal year 1999 financial statements, as was the case in our fiscal

years 1998 and 1997 audits. These deficiencies continue to significantly impair the

federal government's ability to adequately safeguard certain significant assets, properly

record various transactions, and comply with selected provisions of laws and regulations

related to financial reporting. Additionally, (1) the government is unable to determine the

full extent of improper payments—estimated to total billions of dollars annually—and,

therefore, cannot develop effective strategies to reduce them, (2) serious, long-standing

computer security weaknesses expose the government's financial and other sensitive

information to inappropriate disclosure, destruction, modification, and fraud, and critical

operations to disruption, and (3) material control weaknesses affect the government's tax
GENERAL ACCOUNTING OFFICE REPORT 21

B-285019

collection activities. Further, the financial management systems of almost all agencies

were again found not to be in substantial compliance with the requirements of the Federal

Financial Management Improvement Act of 1996.

Our audit and the Inspectors General (IG) audits of major component agencies' financial

statements for fiscal year 1999 continue to result in (1) an identification and analysis of

deficiencies in the government's recordkeeping, financial reporting, and control systems

and (2) recommendations to correct them. Fixing these problems represents a significant

challenge because of the size and complexity of the government and the discipline and

human capital needed to follow sound financial management and reporting practices.

This report provides our (1) disclaimer of opinion on the government's fiscal year 1999

financial statements, (2) report on internal control, and (3) report on compliance with

selected provisions of laws and regulations related to financial reporting. It also provides

illustrations of the identified material deficiencies. A more complete discussion of these

issues may be found in individual agency reports. Additionally, the report highlights

certain long-term financing issues facing government. The objectives, scope, and

methodology of our work are discussed in the appendix to this report. We provided a

draft of this report to Department of the Treasury and OMB officials, who expressed their

commitment to address the deficiencies this report outlines. We did our work in

accordance with generally accepted government auditing standards.

DISCLAIMER OF OPINION

Because we were unable to determine the reliability of significant portions of the

accompanying financial statements for the reasons outlined above and described in more

detail below, we are unable to, and we do not, express an opinion on the accompanying

fiscal year 1999 financial statements.

Because of the serious deficiencies in the government’s systems, recordkeeping,

documentation, financial reporting, and controls, readers are cautioned that amounts

reported in the financial statements and related notes may not be a reliable source of

information for decision-making by the government or the public. These deficiencies

also affect the reliability of information contained in the accompanying Management's

Discussion and Analysis and any other financial management information--including

information used to manage the government day-to-day and certain budget information

reported by agencies--which is taken from the same data sources as the financial

statements.
22 GENERAL ACCOUNTING OFFICE REPORT

B-285019

Further, while we have not audited and do not express an opinion on the Stewardship

Information, Supplemental, or Other Information included in the accompanying Financial

Report, we noted certain material omissions related to the presentation of national

defense assets and issues related to the reconciliation of the results of operations to

budget results, which are discussed below.

The accompanying Financial Report and our report include certain information

concerning the Social Security and Medicare (Part A) trust funds, such as projected

contributions and expenditures, dates when expenditures are expected to exceed

contributions, and dates when such funds are expected to be exhausted. Such information

is as of January 1, 1999 for Social Security and as of September 30, 1999 for Medicare

(Part A), the most recent information publicly reported by the government. The

government plans to issue, on March 30, 2000, updated information as of January 1,

2000. The government’s issuance of dated information in this Financial Report at about

the same time that it issues more current information may cause confusion to the

Congress and the public. Steps should be taken, in future years, to ensure that the

government’s Financial Report contains up-to-date information as of no earlier than the

end of the most recent fiscal year. Because current information on the solvency of the

Social Security and Medicare programs is critical to assessing the financial condition of

the federal government, aiding in budget deliberations, and fostering public debate, we

will include the updated information on these two important programs in a report that will

also contain the Fiscal Year 1999 Financial Report of the United States Government.

Material Deficiencies

The following sections describe material deficiencies that contribute to our disclaimer of

opinion, discuss their effects on the financial statements and the management of

government operations, and highlight certain corrective actions. Although the federal

government has made steady progress, the fundamental nature of these deficiencies

remains unchanged from our fiscal year 1998 and 1997 financial statement reports. Each

of these deficiencies also constitutes a material weakness in internal control.3

 

3

 A material weakness is a condition in which the design or operation of one or more of the

internal control components does not reduce to a relatively low level the risk that errors, fraud, or

noncompliance in amounts that would be material to the financial statements may occur and not

be detected on a timely basis by employees in the normal course of performing their duties.
GENERAL ACCOUNTING OFFICE REPORT 23

B-285019

Property, Plant, and Equipment and Inventories and Related Property

The federal government--one of the world's largest holders of physical assets—does not

have adequate systems and controls to ensure the accuracy of information about the

amount of assets held to support its domestic and global operations. A majority of the

$472 billion of these reported assets is not adequately supported by financial and/or

logistical records. Assets that are not adequately supported include: (1) buildings,

structures, facilities, and equipment, (2) various government-owned assets that are in the

hands of private sector contractors, and (3) operating materials and supplies comprised

largely of ammunition, defense repairable items, and other military supplies. Also, the

government cannot ensure that all assets are reported. For example, no Department of

Defense (DOD) contractor-held personal property was reported. Further, national

defense asset unit information reported as Stewardship Information was incomplete

because (1) it did not include major national defense support equipment, such as

uninstalled engines and communications equipment, and (2) amounts were reported in

units, rather than in dollars as required by current generally accepted accounting

principles. DOD, the largest holder of these assets, has acknowledged the challenges it

faces to implement effective systems and accurately record data to properly account for

and report its physical assets and has a number of initiatives underway that are intended

to address this problem. These initiatives are expected to span several years.

Because the government lacks complete and reliable information to support its asset

holdings, it could not satisfactorily determine that all assets were included in the financial

statements, verify that reported assets actually exist, or substantiate the amounts at which

they were valued. For example, periodic physical counts have shown that inventory

records contain significant error rates. Further, weak controls significantly impair the

government’s ability to detect and investigate fraud or theft of assets.

Accurate asset information is necessary for the government to (1) know the assets it owns

and their location and condition, (2) safeguard its assets from physical deterioration,

theft, or loss, (3) account for acquisitions and disposals of such assets, (4) prevent

unnecessary storage and maintenance costs or purchase of assets already on hand, and (5)

determine the full costs of government programs that use these assets.
24 GENERAL ACCOUNTING OFFICE REPORT

B-285019

Loans Receivable and Loan Guarantee Liabilities

As of the end of fiscal year 1999, the government reported $184 billion of loans

receivable and $35 billion of liabilities for estimated losses related to estimated future

defaults of guaranteed loans. Certain federal credit agencies, responsible for significant

portions of the government’s lending programs, were unable to properly estimate the cost

of these programs in accordance with generally accepted accounting principles and

budgeting requirements. As an example, the Department of Agriculture, which

represents a significant portion of loans receivable, could not estimate the net loan

amounts expected to be collected because it does not maintain some of the key historical

data needed to predict borrower behavior, such as the amount and timing of future

defaults and prepayments. Agriculture’s lack of historical data is largely the result of

system inadequacies. Certain affected agencies are in the process of implementing action

plans intended to develop reliable loan and loan guarantee information. Reliable

information about the cost of credit programs is important in supporting annual budget

requests for these programs, making future budgetary decisions, managing program costs,

and measuring the performance of credit activities. Federal credit programs include

direct loans and loan guarantees for farms, rural utilities, low and moderate income

housing, small businesses, veterans’ mortgages, and student loans.

Environmental and Disposal Liabilities

Significant portions of the liability for remediation of environmental contamination and

disposal of hazardous waste, reported at $313 billion, lacked adequate support and may

not be complete. For example, the estimated cost to remove unexploded ordnance and

residual contaminants from training ranges, amounting to over 40 percent of DOD’s

recorded liability, is not adequately supported. Also, the cost of significant estimated

liabilities associated with certain major weapons systems and training ranges, initially

recorded in fiscal year 1999, was reported as a current year cost, rather than as a prior

period adjustment as required by generally accepted accounting principles.

Properly stating environmental and disposal liabilities and improving internal control

supporting the process for their estimation could assist in determining priorities for

cleanup and disposal activities and allow for appropriate consideration of future

budgetary resources needed to carry out these activities. DOD, which has significant

exposure for environmental and disposal liabilities, improved its initial estimate in fiscal
GENERAL ACCOUNTING OFFICE REPORT 25

B-285019

year 1999 by including additional categories of liabilities, such as nuclear weapons

systems. Also, DOD has a project in progress that is intended to better identify and

document all additional environmental and disposal liabilities.

Liabilities

Adequate systems and cost data were not available to accurately estimate the reported

$196 billion military postretirement health benefits liability included in federal employee

and veteran benefits payable. Information used to develop such estimates did not include

the full cost of providing health care benefits. In addition, some of the underlying patient

workload data were not reliable. DOD is evaluating methods to develop a reliable

estimate of this liability. Also, some agencies do not maintain adequate records or have

systems to ensure that accurate and complete data were used to estimate a reported $86

billion of accounts payable and a reported $169 billion in other liabilities. For example, a

liability was not reported for certain amounts owed to contractors that, under the terms of

the contracts, were held by the government pending the acceptance of goods or services.

Further, the government was unable to provide adequate information to determine

whether commitments and contingencies were complete and properly reported. These

problems significantly affect the determination of the full cost of the government’s

current operations, the value of its assets, and the extent of its liabilities.

Cost of Government Operations

The government was unable to support significant portions of the $1.76 trillion reported

as the total net cost of government operations. The previously discussed material

deficiencies in reporting assets and liabilities and the lack of effective cash disbursement

reconciliations and deficiencies in financial statement preparation, as discussed below,

affect reported net costs. Further, we were unable to determine whether the amounts

reported in the individual net cost categories on the Statement of Net Cost and in the

subfunction detail in Supplemental Information were properly classified. Accurate cost

information is important to the federal government’s ability to control and reduce costs,

assess performance, evaluate programs, and set fees to recover costs where required.

Cash Disbursement Activity

Several major agencies are not effectively reconciling cash disbursements. These

reconciliations are intended to be a key control to detect and correct errors and other
26 GENERAL ACCOUNTING OFFICE REPORT

B-285019

misstatements in financial records in a timely manner--similar in concept to individuals

reconciling personal checkbooks with a bank's records each month. Although

improvements in some agency reconciliation processes have been noted, there continued

to be billions of dollars of unreconciled differences between agencies' and Treasury

records of cash disbursements as of the end of fiscal year 1999. As a result, the

government is unable to ensure that all disbursements are properly recorded. Improperly

recorded disbursements could result in misstatements in the financial statements and in

certain data provided by agencies for inclusion in the President's budget concerning fiscal

year 1999 obligations and outlays.

Preparation of Financial Statements

The government does not have sufficient systems, controls, or procedures to properly

prepare financial statements for the U.S. government. Such deficiencies, described

below, impair the government’s ability to (1) properly balance the government’s financial

statements and account for billions of dollars of transactions between governmental

entities, (2) properly and consistently compile the information in the financial statements,

and (3) effectively reconcile the results of operations reported in the financial statements

with budget results. Also, certain financial information required by generally accepted

accounting principles was omitted from the financial statements.

Unreconciled Transactions. To make the financial statements balance, Treasury

recorded a net $24 billion item on the Statement of Operations and Changes in Net

Position, which it labeled unreconciled transactions. Treasury attributes this net out-ofbalance amount to the government’s inability to properly identify and eliminate

transactions between federal government entities, to agency adjustments that affected net

position, and to errors. An additional net $12 billion of unreconciled transactions was

improperly recorded in net cost. These unreconciled transactions result in material

misstatements of assets, liabilities, revenues, and/or costs.

Agencies’ accounts can be out of balance with each other, for example, when one or the

other of the affected agencies does not properly record a transaction with another agency

or the agencies record the transactions in different accounting periods. These out-ofbalance conditions can be detected and corrected by instituting procedures for reconciling

transactions between agencies on a regular basis and in a timely manner.
GENERAL ACCOUNTING OFFICE REPORT 27

B-285019

In fiscal year 1999, the government required agencies to reconcile certain

intragovernmental accounts. Some of these accounts, such as those related to employee

benefits, could not be reconciled. Also, in fiscal year 1999, the government gathered, for

the first time, the detail of certain intragovernmental accounts by “trading

partner”agency. Using this information, we estimated that the amounts reported for

agency trading partners for these specific intragovernmental accounts were out-ofbalance by more than $350 billion. With trading partner information, the government can

begin to analyze the nature of these intragovernmental account differences and develop

effective solutions. Solutions will also be required for significant differences reported in

other intragovernmental accounts, primarily related to appropriations. The government

stated that it plans to require agencies to reconcile additional intragovernmental accounts

in fiscal year 2000 and has formed task forces to recommend solutions to this longstanding problem.

Unreconciled transactions also may arise because the government does not have effective

controls over reconciling net position. The net position reported in the financial

statements is derived by subtracting liabilities from assets, rather than through balanced

accounting entries. Also, certain adjustments and eliminations do not balance. Such

control weaknesses, combined with unbalanced transactions and the significant volume

of transactions and number of reporting entities, result in misstatements in the financial

statements, hinder the ability of the government to identify misstatements that may exist,

and may contribute to the amount of reported unreconciled transactions.

Financial Statement Compilation. The federal government cannot ensure that the

information in the financial statements of the U.S. government is properly and

consistently compiled. To prepare the federal government’s financial statements, about

70 agencies submit data to Treasury on approximately 2,000 separate reporting

components, each having many account balances. In fiscal year 1999, the Department of

Treasury, which prepares the accompanying financial statements, implemented a new

process for reconciling these financial statements with the related agency financial

statements. While the process identified the nature of certain inconsistencies, the

government was unable to reconcile all amounts included in these financial statements

with agency financial statements. Further, material adjustments and reclassifications

were required to (1) make the financial statements more consistent with agency financial

statements, (2) correct identified inconsistencies in reporting similar transactions, (3)

conform footnote information to related financial statement line items, and (4) record

other audit adjustments. We identified over $350 billion of adjustments and
28 GENERAL ACCOUNTING OFFICE REPORT

B-285019

reclassifications which the government subsequently recorded, such as financial

statement compilation errors that had resulted in a $66 billion overstatement of interest

cost and a $70 billion overstatement of Medicare costs.

These problems are compounded by the substantial volume of information submitted and

limitations in the federal government’s general ledger (SGL) account structure. For

example, some SGL accounts must be split between different financial statement line

items. As a result, additional misclassifications and misstatements in the government’s

financial statements could exist. Also, the extensive manual intervention required to

compile the federal government’s financial statements requires significant resources

which lessens the government’s ability to perform effective financial analysis of the

information. For example, because of SGL limitations, the government separately

collects additional information needed to compile the financial statements. However,

such additional information, historically, is initially inconsistent with the related SGL

account balances by hundreds of billions of dollars. After substantial effort, such

inconsistencies were reduced to an immaterial amount.

Reconciling the Results of Operations With Budget Results. The federal

government does not yet have a process to obtain information to effectively reconcile the

reported $77 billion excess of revenue over net cost and a reported unified budget surplus

of $124 billion. Consequently, it could not identify all of the items needed to reconcile

these amounts. Certain differences are expected to occur because the financial statements

of the U.S. government are to be prepared on the accrual basis in accordance with

generally accepted accounting principles, which is a different basis than the budget.

Under accrual accounting, transactions are reported when the events giving rise to the

transactions occur, rather than when cash is received or paid. By contrast, federal

budgetary reporting is generally on the cash basis in accordance with accepted budget

concepts and policies.

Beginning in fiscal year 1998, 24 major agencies were required to reconcile their reported

net costs to budget information, which could provide a basis for preparing the

reconciliation. However, significant amounts reported in certain agency reconciliations,

including unliquidated obligations and certain other budget information, lacked adequate

supporting information and may be unreliable. For example, significant amounts of DOD

transactions were not applied or were incorrectly applied to specific budget

appropriations, which could misstate certain reported budget information. Once the

federal government produces reliable financial statements, an effective reconciliation

could help provide additional assurance of the reliability of budget results.
GENERAL ACCOUNTING OFFICE REPORT 29

B-285019

INEFFECTIVE INTERNAL CONTROL

Because of the effects of the material weaknesses discussed below, the federal

government has not maintained effective internal control to ensure that (1) transactions

are properly recorded, processed, and summarized to permit the preparation of financial

statements and stewardship information in accordance with generally accepted

accounting principles, and assets are safeguarded against loss from unauthorized

acquisition, use, or disposition and (2) transactions are executed in accordance with laws

governing the use of budget authority and with other laws and regulations that could have

a direct and material effect on the financial statements. Individual agency financial

statement audit reports describe the effects of such weaknesses on specific agencies and

identify additional internal control weaknesses, some of which are material to individual

agencies.

In addition to the material weaknesses related to the deficiencies discussed in our

disclaimer on the financial statements, we found that (1) the government’s inability to

determine the full extent of improper payments impairs the effective reduction of such

improper payments, (2) widespread and serious computer control weaknesses affect

virtually all federal agencies and significantly contribute to many of the material

deficiencies discussed above, and (3) material control weaknesses affect the government's

tax collection activities. Due to the deficiencies noted throughout this report, additional

material weaknesses may exist that have not been reported.

Improper Payments

The government is unable to determine the full extent of improper or erroneous

payments, which include payments made for unauthorized purposes, for excessive

amounts, such as overpayments to program recipients or contractors and vendors, and/or

not in accordance with applicable laws and regulations. Across government, improper

payments occur in a variety of programs and activities, including those related to contract

management, federal financial assistance, and tax refunds. Reported estimates of

improper payments total billions of dollars annually.

The Department of Health and Human Services (HHS) has been reporting a national

estimate of improper Medicare Fee-for-Service payments since fiscal year 1996. In fiscal

year 1999, HHS reported estimated improper Medicare Fee-for-Service payments of

$13.5 billion, or about 8 percent of such benefits—down from $23.2 billion or 14 percent

for fiscal year 1996. HHS’ reporting and analysis of improper Medicare payments has
30 GENERAL ACCOUNTING OFFICE REPORT

B-285019

helped lead to the implementation of several initiatives to identify and reduce such

payments. Annual estimates of improper payments in future audited financial statements

will provide information on the progress of these initiatives.

However, most agencies have not estimated the magnitude of improper payments in their

programs, nor have they considered this issue in their annual performance plans. For

example, the Earned Income Tax Credit (EITC) program—a refundable tax credit

available to low income, working taxpayers—has historically been vulnerable to high

rates of invalid claims. During fiscal year 1999, IRS examined about 573,000 suspicious

tax returns claiming $1.25 billion in EITCs and found that $1.08 billion (86 percent) were

invalid. Although the full extent of refunds resulting from invalid EITCs is unknown, the

IRS has not disclosed any improper payment estimates in its financial statement reports.

In another example, HHS has not reported an estimate of improper payments in its $109

billion state-administered Medicaid program, but is currently studying methodologies for

developing an estimate and has formed partnerships with various state auditors to share

information on improper payments.

Improper payments can result from incomplete or inaccurate data used to make payment

decisions, insufficient monitoring and oversight, or other deficiencies in agency

information systems and weaknesses in internal control. The risk of improper payments

is increased in programs involving (1) complex criteria for computing payments, (2) a

significant volume of transactions, or (3) an emphasis on expediting payments. The

reasons for improper payments range from inadvertent errors to fraud and abuse.

Without a systematic measurement of the extent of the problem, agency management

cannot determine (1) if the problem is significant enough to require corrective action, (2)

how much to invest in internal control, or (3) the success of efforts implemented to

reduce improper payments. Developing mechanisms to identify, estimate, and report the

nature and extent of improper payments in annual financial statements is only a first step

for agencies. Without this fundamental knowledge, agencies cannot be fully informed

about the magnitude or trends of improper payments, nor can they pinpoint or target

mitigation strategies.4

 

4Financial Management: Increased Attention Needed to Prevent Billions in Improper Payments

(GAO/AIMD-00-10, October 29, 1999).
GENERAL ACCOUNTING OFFICE REPORT 31

B-285019

In October 1999, we recommended that OMB develop and implement a methodology for

annually estimating and reporting improper payments and for addressing improper

payments in agencies’ annual performance and strategic plans and performance reports.

OMB agrees with this recommendation. In this regard, the President has made estimating

and preventing improper payments a priority management objective and OMB plans to

require agencies to develop and implement procedures to estimate and report the nature

and extent of material improper payments in annual financial statements and have such

information audited.

Computer Security Weaknesses

Continuing serious and widespread computer security weaknesses are placing enormous

amounts of federal assets at risk of inadvertent or deliberate misuse, financial information

at risk of unauthorized modification or destruction, sensitive information at risk of

inappropriate disclosure, and critical operations at risk of disruption. Significant

computer security weaknesses in systems that handle the government's unclassified

information have been reported in each of the major federal agencies. The most serious

reported problem is inadequately restricted access to sensitive data. Other types of

weaknesses pertain to not adequately segregating duties to help ensure that people do not

conduct unauthorized actions without detection, preventing unauthorized software from

being implemented, and mitigating and recovering from unplanned interruptions in

computer service. In today's highly computerized and interconnected environment, such

weaknesses are vulnerable to exploitation by outside intruders as well as authorized users

with malicious intent. Recent media reports highlight the potential damage that can result

from computer security breaches.

The government cannot estimate the full magnitude of actual damage and loss resulting

from federal computer security weaknesses because it is likely that many such incidents

are either not detected or not reported. GAO and agency reviews illustrate the potential

for negative impacts. For instance, weaknesses in DOD information security continue to

provide hackers and hundreds of thousands of authorized users the opportunity to modify,

steal, and destroy DOD data including financial, procurement, logistics and other

sensitive information. Also, identified weaknesses at HCFA, SSA, IRS, and VA place

tax, medical and other sensitive records at risk of unauthorized disclosure, modification,

and destruction. Unauthorized disclosure of sensitive information has led to instances of

identity theft, in which individuals use such information to commit financial crimes, such

as fraudulently establishing credit and running up debts. Likewise, serious and pervasive

computer security problems at EPA increase the risk that mission-related systems and
32 GENERAL ACCOUNTING OFFICE REPORT

B-285019

financial operations are vulnerable to tampering, disruption, and misuse. Further,

pervasive weaknesses at the Department of the Treasury, which collects virtually all of

the government’s revenues and makes most of its disbursements, expose such collections

and disbursements to significant risk of loss or fraud.

GAO and the IGs have issued numerous reports that identify information security

weaknesses in the federal government and made recommendations to address them.5

Also, GAO has reported information security as a high-risk area across government since

February 1997.6

Information security problems continue to persist, in large part, because agency managers

have not fully established comprehensive security management programs. An effective

program would include a central security function and effective procedures for assessing

risks, establishing appropriate policies and related controls, raising employee awareness

of prevailing risks and mitigating controls, and monitoring and evaluating the

effectiveness of established controls. Such programs, if properly implemented, would

provide the government with a solid foundation for resolving computer security problems

and managing computer security risks on an ongoing basis.

The Congress continues to express concern about the significant risks to federal

government systems and information that result from computer security weaknesses.

Congressional hearings have focused on specific agency deficiencies and have clarified

the problem across government. Further, S. 1993, the Government Information Security

Act of 1999, recently introduced in Congress, seeks to strengthen information security

practices throughout the federal government.

The Administration has recognized the importance of computer security and has taken

some steps to prompt improvement from a governmentwide perspective. In January

 

5 See, for example, Critical Infrastructure Protection: Comprehensive Strategy Can Draw on Year

2000 Experiences (GAO/AIMD-00-1, October 1, 1999) and Information Security: Serious

Weaknesses Place Critical Federal Operations at Risk (GAO/AIMD-98-92, September 23, 1998).

6High-Risk Series: An Update (GAO/HR-99-1, January 1999), High-Risk Series: An Overview

(GAO/HR-97-1, February 1997), and High-Risk Series: Information Management and

Technology (GAO/HR-97-9, February 1997).
GENERAL ACCOUNTING OFFICE REPORT 33

B-285019

2000, the President released the National Plan for Information Systems Protection,

7

which calls for new initiatives to strengthen the nation’s defenses against threats to public

and private sector information systems that are critical to the country’s economic and

social welfare. In addition, the President designated computer security as a priority

management objective.

Tax Collection Activities

The federal government continues to have material weaknesses in controls related to its

tax collection activities, which affect its ability to efficiently and effectively account for

and collect the government's revenue. This situation results in the need for extensive,

costly, and time-consuming ad hoc programming and analysis, as well as material audit

adjustments, to prepare basic financial information—an approach that cannot be used to

prepare such information on a timely, routine basis to assist in ongoing decision-making.

Additionally, the severity of the system deficiencies that give rise to the need to resort to

such procedures for financial reporting purposes, as well as deficient physical safeguards,

result in burden to taxpayers and lost revenue.

Serious financial management system deficiencies continue to affect the federal

government's ability to effectively manage its taxes receivable and other unpaid

assessments.8 The lack of appropriate subsidiary systems to track the status of taxpayer

accounts affects the government's ability to make informed decisions about collection

efforts. This weakness has resulted in the government pursuing collection efforts against

individual taxpayers who had already paid their taxes in full. In addition, the government

does not always pursue collection efforts against taxpayers owing taxes to the federal

government. This could result in billions of dollars not being collected and adversely

affect future compliance.

 

7 Defending America’s Cyberspace: National Plan for Information Systems Protection: Version

1.0: An Invitation to a Dialogue. Released January 7, 2000. The White House.

8Other unpaid assessments consist of amounts for which (1) neither the taxpayer nor a court has

affirmed are owed or (2) the government does not expect further collections due to factors such as

the taxpayer's death, bankruptcy, or insolvency.
34 GENERAL ACCOUNTING OFFICE REPORT

B-285019

The federal government also continues to be vulnerable to loss of tax revenue due to

weaknesses in preventive and detective controls over disbursements for tax refunds.

Although the government does have detective controls in place, they are not applied to

millions of tax returns estimated to have billions of dollars in underreported tax liabilities.

These conditions expose the government to potentially billions of dollars in losses due to

inappropriate refund disbursements.

Also, the government does not perform sufficient up-front verification procedures to

ensure the validity of amounts claimed by taxpayers as overpayments prior to making

disbursements for refunds. Additionally, delays in recording tax amounts owed result in

lost opportunities to retain or offset overpayments made by a taxpayer for one period to

collect on outstanding amounts owed for another period, resulting in lost revenue.

Finally, serious deficiencies in physical controls over cash, checks, and sensitive data

received from taxpayers increase both the government's and the taxpayers' exposure to

losses and increases the risk of taxpayers becoming victims of crimes committed through

identity fraud.

IRS senior management has expressed a commitment to address many of these

operational and financial management issues and has made a number of improvements to

address some of these weaknesses. Successful implementation of long-term efforts to

resolve these serious problems will require the continued commitment of IRS

management as well as substantial resources and expertise.

NONCOMPLIANCE WITH

CERTAIN LAWS AND REGULATIONS

Tests for compliance with selected provisions of laws and regulations related to financial

reporting disclosed no instances of material noncompliance. However, other instances of

noncompliance, some of which are material to individual federal agencies, are reported in

the individual agency financial statement audit reports. Additionally, as described below,

we noted that federal systems do not substantially comply with federal financial

management systems requirements. We caution that noncompliance other than that

discussed in our report may occur and not be detected by these tests and that our limited

testing may not be sufficient for other purposes. Further, the scope of our tests was

limited by the material deficiencies discussed above. Our objective was not to, and we

do not, express an opinion on overall compliance with laws and regulations.
GENERAL ACCOUNTING OFFICE REPORT 35

B-285019

Noncompliance With the Federal Financial Management Improvement Act of 1996

The Federal Financial Management Improvement Act (FFMIA) of 1996 requires

auditors, as part of financial audits of certain major agencies, to report whether agencies'

financial management systems comply substantially with federal accounting standards,

financial systems requirements, and the government's standard general ledger at the

transaction level. Thus far, for fiscal year 1999, agency financial auditors have reported

that 19 of 22 major agencies' financial systems did not comply with the act's

requirements. Systems of the remaining two major agencies that have not yet issued

audited fiscal year 1999 financial statements did not comply with the act’s requirements

for fiscal years 1998 and 1997. Noncompliance with FFMIA, which we further discuss

in our report, Financial Management: Federal Financial Management Improvement Act

Results for Fiscal Year 1998 (GAO/AIMD-00-3, October 1, 1999), is indicative of the

overall continuing poor condition of agency financial systems. Also, as we reported,

agency remediation plans, required by FFMIA, may not adequately address the system

deficiencies. Significant time and investment are needed for agencies to address and

correct these long-standing financial management systems problems.

The majority of federal agencies' financial management systems do not meet systems

requirements and cannot provide reliable financial information for managing day-to-day

government operations and holding managers accountable. For many agencies, the

preparation of financial statements requires considerable reliance on ad hoc programming

and analysis of data produced by inadequate financial systems that are not integrated,

reconciled, and often require significant adjustments. As a result, reliable financial

information on a day-to-day basis is not available for effective financial management.

For example, as discussed above, the IRS relies on extensive, costly, and time-consuming

ad hoc programming and analysis, as well as material audit adjustments, to prepare basic

financial information. The significant financial management deficiencies discussed

throughout this report underscore the challenge.

FINANCIAL STATEMENTS AND BUDGET DECISIONS:

ADDING THE LONG-TERM PERSPECTIVE

A view of the long-term sustainability of fiscal policies can assist decisionmakers in

considering the government’s financial position and making decisions about resource
36 GENERAL ACCOUNTING OFFICE REPORT

B-285019

allocation. Such a view requires projections of spending and revenues into the future. In

this context, the sovereign power to tax and the commitments of social insurance

programs—such as Social Security and Medicare—must be considered.

The accompanying Financial Report and our report include certain information

concerning the Social Security and Medicare (Part A) trust funds, such as projected

contributions and expenditures, dates when expenditures are expected to exceed

contributions, and dates when such funds are expected to be exhausted. Such information

is as of January 1, 1999 for Social Security and as of September 30, 1999 for Medicare

(Part A), the most recent information publicly reported by the government. The

government plans to issue, on March 30, 2000, updated information as of January 1,

2000. The government’s issuance of dated information in this Financial Report at about

the same time that it issues more current information may cause confusion to the

Congress and the public. Steps should be taken, in future years, to ensure that the

government’s Financial Report contains up-to-date information as of no earlier than the

end of the most recent fiscal year. Because current information on the solvency of the

Social Security and Medicare programs is critical to assessing the financial condition of

the federal government, aiding in budget deliberations, and fostering public debate, we

will include the updated information on these two important federal programs in a report

that will also contain the Fiscal Year 1999 Financial Report of the United States

Government.

Commitments for the Social Security and Medicare programs are included in the

Stewardship Information accompanying the financial statements. The government’s 75

year estimates of the present value of expenditures in excess of contributions for the

Social Security (Old Age Survivors and Disability Insurance (OASDI)) programs

amounted to $ 3.7 trillion, as of January 1, 1999, and for the Medicare (Part A) program

amounted to $3.1 trillion, as of September 30, 1999. The government’s projections also

indicate that Social Security and health care costs will absorb an increasing share of the

federal budget.

In fiscal year 1999, Social Security trust funds reported surpluses of $124.7 billion and

Medicare (Part A) reported surpluses of $21.5 billion, which included non-cash

intragovernmental interest income of $52.1 billion and $9.3 billion, respectively. These

surpluses contributed to the $124.4 billion unified budget surplus. However, for

example, as discussed in the accompanying Stewardship Information, using the

government’s best estimates as of January 1, 1999, cash disbursements of the Social
GENERAL ACCOUNTING OFFICE REPORT 37

B-285019

Security trust funds (OASDI) are expected to exceed cash receipts beginning in fiscal

year 2014.

When trust funds’ receipts exceed disbursements, they are invested in Treasury securities

and used to meet current cash needs of the government. These securities are assets to the

trust funds and liabilities to the Treasury. In effect, one part of the government is lending

to another. As disclosed in notes 10 and 19, both the investments and liabilities, which

amounted to $2 trillion at September 30, 1999, are netted out in the accompanying

financial statements. Such investments are expected to increase to over $4 trillion in the

next 20 years.

Expected cash shortfalls in the trust funds will require them to redeem their investments

in Treasury securities. When this occurs, the government must fund these redemptions

through some combination of future surpluses, if available, lower relative spending for

other federal programs, higher relative taxes, and/or greater relative borrowing from the

public. Further, under the government’s projections, absent any program or financing

change, the Social Security trust funds and Medicare (Part A) Trust Fund will exhaust

their Treasury security holdings in 2034 and 2015, respectively.

There is general recognition that the Social Security and Medicare (Part A) programs

require major reforms to deal with the long-term solvency and sustainability of these two

programs. The fact that Social Security is expected to draw down its Treasury securities

holdings in less than 15 years, and that it is expected that Medicare will need to do so in

less time, highlights the importance of acting soon in order to avoid more dramatic

changes in the future.

- - - - -

We are working with OMB, the Treasury, and other agencies across government to

provide recommendations for fixing the major deficiencies cited in our audit.

Considerable effort is now being exerted to address the problems, and several agencies,

such as SSA, have made good progress toward achieving financial management reform

goals. We have designated the most serious situations as high risk, including financial

management at DOD, IRS, the Forest Service, and the Federal Aviation Administration,

as well as information security.
38 GENERAL ACCOUNTING OFFICE REPORT

B-285019

In addition, the continued coordinated efforts of the Treasury and OMB will be required

to provide solutions for certain governmentwide deficiencies, such as the inability to

properly identify and eliminate transactions between federal entities and the compilation

of the financial statements. We will continue to provide suggestions for resolving

governmentwide problems and to evaluate progress in overcoming them.

David M. Walker

Comptroller General

of the United States

March 20, 2000
GENERAL ACCOUNTING OFFICE REPORT 39

APPENDIX

OBJECTIVES, SCOPE, AND METHODOLOGY

The federal government is responsible for

• preparing the annual financial statements in conformity with generally accepted

accounting principles;

• establishing, maintaining, and assessing internal control to provide reasonable

assurance that the broad control objectives of the Federal Managers' Financial

Integrity Act (FMFIA) are met9; and

• complying with applicable laws and regulations and FFMIA requirements.

Our objective was to audit the fiscal year 1999 financial statements.

The Government Management Reform Act expanded on the requirements of the CFO Act

by requiring that the IGs of 24 major federal agencies annually audit agencywide

financial statements prepared by these agencies.10 Our work was performed in close

coordination and cooperation with the IGs to achieve our joint audit objectives. This

work included separate GAO audits of certain material agency components, as discussed

below. Our audit approach focused on the Departments of the Treasury, Defense, and

Health and Human Services and the Social Security Administration. These agencies

comprise a major portion of the amounts reported in the federal government's financial

statements. At other federal agencies, we focused largely on accounts that are material to

the financial statements. Additionally, for two agencies, information has been included

in these financial statements but the agencies have not, at this date, finalized their

individual financial statements for fiscal year 1999. Therefore, we were unable to

determine the reliability of the amounts included in the accompanying financial

statements for these agencies. We performed sufficient audit work to provide our report

on the financial statements, internal control, and compliance with laws and regulations.

 

9

The FMFIA requires agency managers to evaluate and report annually to the President on the

adequacy of their internal controls and accounting systems and what is being done to correct the

problems.

10GMRA authorized OMB to designate agency components that also would receive a financial

statement audit.
40 GENERAL ACCOUNTING OFFICE REPORT

APPENDIX

We separately audited the following material agency components.

• We audited and expressed an unqualified opinion on the IRS statement of custodial

activity for fiscal year 1999. IRS was able to reliably report on the results of its

custodial activities, including nearly $1.9 trillion of tax revenue, $185 billion of tax

refunds, and $21 billion of net federal taxes receivable. However, we issued an

opinion on the IRS balance sheet that was qualified for the components of net

position, disclaimed an opinion on its statements of net cost, changes in net position,

budgetary resources, and financing, and reported numerous material internal control

weaknesses.11

• We audited and expressed an unqualified opinion on the Schedule of Federal Debt

Managed by Treasury's Bureau of the Public Debt for the fiscal year ended September

30, 1999.12 This schedule reported (1) over $3.6 trillion of federal debt held by the

public comprising individuals, corporations, state or local governments, the Federal

Reserve System, and foreign governments and central banks, (2) $2 trillion of federal

debt held by federal entities, such as the Social Security trust funds, and (3) $230

billion of interest on federal debt held by the public.

• We performed audit procedures on cash balances maintained and internal controls

over the cash receipts and disbursements processed by Treasury on behalf of the

federal government. We provided the results of our work to the Treasury Office of

Inspector General for consideration in its audit of the Treasury's fiscal year 1999

departmentwide financial statements.

 

11Financial Audit: IRS' Fiscal Year 1999 Financial Statements (GAO/AIMD-00-76, February

29, 2000).

12Financial Audit: Bureau of the Public Debt's Fiscal Years 1999 and 1998 Schedules of Federal

Debt (GAO/AIMD-00-79, March 1, 2000).
GENERAL ACCOUNTING OFFICE REPORT 41

APPENDIX

• We audited and expressed unqualified opinions on the December 31, 1998, financial

statements for the funds administered by the Federal Deposit Insurance Corporation

(FDIC), including the Bank Insurance Fund, the Savings Association Insurance Fund,

and the FSLIC Resolution Fund.13 In addition, we performed audit procedures and

tests of internal controls for cash, investments, and other material balances of the

funds administered by FDIC as of September 30, 1999.

At CFO Act agencies and other agencies, we reviewed the fiscal year 1999 financial

statement audits performed by the IGs or their contractors and, for certain agencies,

assisted in the development of audit plans for fiscal year 1999 audits. Financial

statements and audit reports for these agencies provide additional information about the

operations of each of these entities. For example, these audits have identified numerous

internal control and accounting systems weaknesses and noncompliance with laws and

regulations, some of which are material to the respective agencies or components.

Further, as of the completion of our field work on March 20, 2000, 22 of the 24 CFO Act

agencies had received audit opinions or disclaimers on their fiscal year 1999 financial

statements. Of the 22 agencies, 13 received unqualified opinions. These agencies are the

Social Security Administration,

National Science Foundation,

General Services Administration,

Department of Energy

National Aeronautics and Space Administration,

Nuclear Regulatory Commission,

Department of Labor,

Small Business Administration,

Federal Emergency Management Agency,

Department of Commerce,

Department of Health and Human Services,

Department of Transportation, and

Department of Veterans Affairs.

 

13Financial Audit: Federal Deposit Insurance Corporation's 1998 and 1997 Financial Statements

(GAO/AIMD-99-202, June 30, 1999).
42

Intentional Blank Page
 FI NAN CIAL STATE MENTS 43

Fi nan cial State ments 

of the United States Gov ern ment

for the Year Ended Sep tem ber 30, 1999

This State ment re ports the re sults of Gov ern -

ment op er a tions. This in cludes rev e nues prin ci -

pally gen er ated by the Gov ern ment’s sov er eign

power to tax, levy du ties, and as sess fines and

pen al ties. This state ment cov ers the cost of Gov -

ern ment op er a tions, net of rev e nue earned from

the sale of goods and ser vices to the pub lic. It

also in cludes any ad just ments and un rec on ciled

trans ac tions that af fect the net po si tion.

Statement 

of Operations 

and Changes

Revenue

The main source of rev e nue

for Gov ern ment op er a tions

con sists of taxes and other rev -

e nue the Fed eral Gov ern ment

gen er ates un der its sov er eign

pow ers. 

“In di vid ual In come Tax and

Tax With hold ings” con sist of

Fed eral in di vid ual in come

taxes, So cial Se cu rity taxes,

Medicare taxes and rail road re -

tire ment taxes, net of re lated re -

funds.

“Mis cel la neous earned rev e -

nue” con sists of earned rev e -

nues re ceived from the pub lic

with vir tu ally no as so ci ated

cost. This cat e gory in cludes

rev e nues gen er ated from spec -

trum auc tions and rents and

roy al ties on the Outer Con ti -

nen tal Shelf Lands.

Net Cost 

of Government

Operations

The State ment of Net Cost

sum ma rizes the “Net cost of

Gov ern ment op er a tions,”

which is gross cost mi nus

earned rev e nue.

Unreconciled

Transactions

“Un rec on ciled trans ac tions”

are ad just ments made to bal -

ance the change in net po si tion.

Net Position,

Beginning of Period

The “Net po si tion, be gin ning

of pe riod” re flects the net po si -

tion re ported on the prior year’s

Bal ance Sheet.

Prior Period

Adjustments

“Prior pe riod ad just ments”

are re vi sions to cor rect the be -

gin ning net po si tion. 

Net Position, 

End of Period

This amount re flects the net

po si tion on the cur rent year’s

Bal ance Sheet.
 44 FI NAN CIAL STATE MENTS

As sets in cluded on the Bal ance

Sheet are re sources of the Fed eral

Gov ern ment that re main avail able to

meet fu ture needs. The most sig nif i -

cant as sets that are re ported in the

Bal ance Sheet are loans re ceiv able

and in ven to ries, as well as prop erty,

plant and equip ment. There are,

how ever, other sig nif i cant re sources

avail able to the Gov ern ment that ex -

tend be yond the as sets pre sented in

this Fi nan cial State ment. Those as -

sets in clude Stew ard ship As sets and

the Gov ern ment’s sov er eign pow ers

to tax, reg u late com merce and set

mon e tary pol icy. They also in clude

nat u ral re sources. 

Se lected as sets are high lighted in

the Stew ard ship In for ma tion sec tion

of this re port to dem on strate the Fed -

eral Gov ern ment’s ac count abil ity for 

these as sets. Stew ard ship as sets in -

clude na tional de fense as sets, stew -

ard ship land and her i tage as sets.

National defense assets

 “Na tional de fense as sets” are

weapon sys tems and sup port ing as -

sets used by the mil i tary for the Na -

tion’s com mon de fense and gen eral

wel fare. 

Stewardship land

“Stew ard ship land” is land that the

Fed eral Gov ern ment does not ex pect

to use to meet its ob li ga tions, un like

the as sets listed in the Bal ance

Sheet. This land in cludes land set

aside for the use and en joy ment of

pres ent and fu ture gen er a tions and

land on which mil i tary bases are lo -

cated. Stew ard ship land is mea sured 

in non-financial units such as acres

of land and lakes, miles of park -

ways, and miles of wild and sce nic

rivers. Ex am ples of stew ard ship

land in clude na tional parks, na tional 

for ests, wil der ness ar eas, and land

used to en hance eco sys tems to en -

cour age an i mal and plant spe cies

and to con serve na ture.

Heritage assets

“Her i tage as sets” are Gov ern -

ment-owned as sets that have one or

more of the fol low ing char ac ter is -

tics: his tor i cal or nat u ral sig nif i -

This State ment pres ents the net

cost of fis cal 1999 Gov ern ment op -

er a tions. It also shows the cost to

carry out na tional pri or i ties as de -

ter mined by law. 

It also cat e go rizes costs by ma jor 

func tion. It pres ents costs in much

the same way as does the bud get,

ex cept that costs are al lo cated to

func tions based on ac count ing

stan dards. Thus, this Statement re -

ports costs on an ac crual ba sis and

in some cases al lo cates them dif fer -

ently than the bud get. For ex am ple, 

this State ment al lo cates the cost of

pen sions and re tiree health ben e fits 

among all the func tions that em -

ploy work ers. The bud get cat e go -

rizes pen sion pay ments to ci vil ian

re tir ees as a subfunction, found un -

der “In come se cu rity.” The bud get

cat e go rizes agency con tri bu tions to 

re tire ment funds as intragovernmen tal out lays dis trib uted among

all the func tions that em ploy work -

ers. A de scrip tion of each of the

func tions and the com po nents of

net cost for the ac tiv i ties in cluded

in each func tion is pre sented in

Sup ple men tal In for ma tion as “Net

cost de tail.”

This State ment con tains the fol -

low ing three com po nents for each

func tion:

• The gross cost of Gov ern -

ment op er a tions.

• The rev e nues earned from

the sale of goods and pro vi -

sion of ser vices to the pub lic.

• The net cost of Gov ern -

ment op er a tions, which is

gross cost less rev e nue

earned.

Gross Cost

“Gross cost” in cludes the full

cost of all func tions. These costs

may be di rectly traced, as signed on

a cause and ef fect ba sis, or rea son -

ably al lo cated to the func tion.

Earned Revenue

This is rev e nue the Gov ern ment

earned by pro vid ing goods and ser -

vices to the pub lic at a price.

Net Cost

The “Net cost” of Gov ern ment

op er a tions is com puted by subtract ing “Earned rev e nues” from

“Gross cost.”

Statement 

of Net Cost

The Bal ance Sheet shows the Gov ern ment’s as sets and li a bil i ties.

When com bined with Stew ard ship In for ma tion, this in for ma tion pres ents

a more com pre hen sive un der stand ing of the Gov ern ment’s fi nan cial po -

si tion. Most line items on the Bal ance Sheet are de scribed in the Notes to

the Fi nan cial State ments. The first note, for ex am ple, pro vides in for ma -

tion on the ac count ing pol i cies for as sets and li a bil i ties.

Balance 

Sheet

Assets
 FI NAN CIAL STATE MENTS 45

cance; cul tural, ed u ca tional, or ar tis -

tic im por tance; or sig nif i cant

ar chi tec tural fea tures. The cost of

her i tage as sets of ten is not de ter mi -

na ble or rel e vant to their sig nif i -

cance. Like stew ard ship land, the

Gov ern ment does not ex pect to use

these as sets to meet its ob li ga tions.

The most rel e vant in for ma tion about 

her i tage as sets is non-financial. Ex -

am ples of her i tage as sets in clude:

the Dec la ra tion of In de pend ence,

the Con sti tu tion and the Bill of

Rights pre served by the Na tional

Ar chives. Also in cluded are na -

tional mon u ments such as the

Viet nam Vet erans Me mo rial, Jef -

fer son Me mo rial and the Wash -

ing ton Mon u ment as well as art

and cul tural trea sures at the

Smith so nian In sti tu tion and the

Li brary of Con gress.

Many other sites such as the bat -

tle fields, his toric struc tures and

na tional his toric land marks also

are placed in this cat e gory. 

Assets, cont.

Li a bil i ties are ob li ga tions of the Fed eral Gov -

ern ment re sult ing from prior ac tions that will re -

quire fi nan cial re sources. The most sig nif i cant

li a bil i ties re ported on the Bal ance Sheet are Fed -

eral debt se cu ri ties held by the pub lic and ac -

crued pen sion li a bil i ties for cur rent and re tired

Fed eral ci vil ian and mil i tary per son nel. Li a bil i -

ties also in clude so cial in sur ance ben e fits due

and pay able as of the re port ing date.

As with re ported as sets, the Gov ern ment’s re -

spon si bil i ties and pol icy com mit ments are much 

broader than these re ported Bal ance Sheet li a bil -

i ties. They in clude the so cial in sur ance pro grams 

dis closed in Stew ard ship In for ma tion, a wide

range of other pro grams un der which the Gov -

ern ment pro vides ben e fits and ser vices to the

peo ple of this Na tion, and cer tain fu ture loss

con tin gen cies.

The mag ni tude and com plex ity of so cial in -

sur ance pro grams, cou pled with the ex treme

sen si tiv ity of pro jec tions re lat ing to the many as -

sump tions of the pro grams, pro duce a large

range of pos si ble re sults. The Stew ard ship Re -

spon si bil ities sec tion de scribes the so cial in sur -

ance pro grams, re ports long-range estimates that 

can be used to as sess the fi nan cial con di tion of

the pro grams, and ex plains some of the fac tors

that im pact the var i ous pro grams. Using this in -

for ma tion, read ers can ap ply their own judg ment 

as to the sol vency and sustainability of the in di -

vid ual pro grams. 

Each of the so cial in sur ance pro grams has an

as so ci ated trust fund to ac count for its ac tiv ity.

A n ex pla na tion of the trust funds for so cial in -

sur ance and many of the other large trust funds is 

in cluded in Note 19—Ded i cated Col lec tions.

That note also con tains in for ma tion about trust

fund re ceipts, dis burse ments and as sets.

A broad per spec tive on the Fed eral Gov ern -

ment’s re spon si bil i ties is pro vided by the Cur -

rent Ser vices As sess ment, which also can be

found un der Stew ard ship In for ma tion. Pres -

ented in ac cor dance with the Pres i dent’s bud get,

this in for ma tion es ti mates Fed eral ex pen di tures

and re ceipts for fis cal 2000 to 2005, pro vided

there are no changes to cur rent law.

The Gov ern ment has en tered into con trac tual

com mit ments re quir ing the fu ture use of fi nan -

cial re sources and also has un re solved con tin -

gen cies where ex ist ing con di tions, sit u a tions or

cir cum stances cre ate un cer tainty about fu ture

losses. Com mit ments as well as con tin gen cies

that do not meet the cri te ria for rec og ni tion as a

li a bil ity on the Bal ance Sheet, but for which

there is at least a rea son able pos si bil ity that a

loss has been in curred, are dis closed in Note

18—Com mit ments and Con tin gencies.

“Net po si tion” is pre sented as the sum of Bal -

ance Sheet as sets less Bal ance Sheet li a bil i ties.

The large neg a tive net po si tion amount does

not im ply that the Gov ern ment is in sol vent. Be -

cause of its sov er eign power to tax, and the

coun try’s wide eco nomic base, the Gov ern ment

has unique ac cess to fi nan cial re sources to fi -

nance its debts. This pro vides the Fed eral Gov -

ern ment the abil ity to meet pres ent ob li ga tions

and those that are an tic i pated from fu ture op er a -

tions.

Liabilities and 

Net Position
 46 FI NAN CIAL STATE MENTS

United States Government 

Statement of Operations and Changes in Net Position 

for the Year Ended September 30, 1999

(In bil lions of dol lars) 

Revenue: 

Individual income tax and tax withholdings ............................... 1,456.0

Corporation income taxes............................................ 182.2

Unemployment taxes ............................................... 25.6

Excise taxes ..................................................... 70.5

Estate and gift taxes ............................................... 27.7

Customs duties ................................................... 18.4

Other taxes and receipts ............................................ 42.0

Miscellaneous earned revenues .......................................

10.5

Total revenue ...................................................

1,832.9

Net Cost of Government Operations:

National defense .................................................. 413.2

Human resources ................................................. 905.3

Physical resources ................................................. 95.1

Interest ......................................................... 230.1

Other functions ...................................................

112.3

Total net costof Government operations...............................

1,756.0

Excess of revenue over net cost ...................................... 76.9

Unreconciled transactions affecting the change 

in net position (Note 16) ...........................................

24.4

Increase in net position ............................................. 101.3

Net position, beginning of period ...................................... (6,134.4)

Prior Period Adjustments (Note 17) ......................................

6.9

Net position, end of period ...........................................

(6,026.2)

The ac com pa ny ing notes are an in te gral part of these fi nan cial state ments.
 FI NAN CIAL STATE MENTS 47

United States Government 

Statement of Net Cost 

for the Year Ended September 30, 1999

(In bil lions of dol lars)

 Gross

Cost

Earned 

Rev e nue Net Cost

National defense.................................

451.2 38.0 413.2 

Hu man Re sources:

Education, training , employment

and social services ............................. 57.9 1.4 56.5 

Health........................................ 140.6 0.7 139.9 

Medicare...................................... 207.0 21.7 185.3 

Income security ................................. 188.0 6.2 181.8 

Social Security.................................. 387.7 - 387.7 

Veterans benefits and services (Note 11) ..............

(43.2) 2.7 (45.9)

Total human resources ..........................

938.0 32.7 905.3 

Physical Resources:

Energy ....................................... 12.9 12.4 0.5 

Natural resources and environment .................. 27.1 2.9 24.2 

Commerce and housing credit ...................... 89.2 73.9 15.3 

Transportation .................................. 44.1 1.1 43.0 

Community and regional development ................

14.9 2.8 12.1 

Total physical resources .........................

188.2 93.1 95.1 

Interest ........................................

230.1 - 230.1 

Other Functions:

International affairs .............................. 29.6 9.6 20.0 

General science, space and technology ............... 17.5 0.1 17.4 

Agriculture ..................................... 27.2 2.4 24.8 

Administration of justice ........................... 31.2 1.6 29.6 

General government .............................

25.1 4.6 20.5 

Total other functions ............................

130.6 18.3 112.3 

Total ......................................

1,938.1 182.1 1,756.0 

The ac com pa ny ing notes are an in te gral part of these fi nan cial state ments.
 48 FI NAN CIAL STATE MENTS

Intentional Blank Page
 FI NAN CIAL STATE MENTS 49

United States Government 

Balance Sheet 

as of September 30, 1999

(In bil lions of dol lars)

Assets:

Cash and other monetary assets (Note 2)................................ 115.2

Accounts receivable (Note 3) ......................................... 35.0

Loans receivable (Note 4) ........................................... 183.7

Taxes receivable (Note 5) ........................................... 22.7

Inventories and related property (Note 6) ................................ 173.3

Property, plant and equipment (Note 7) ................................. 298.8

Other assets (Note 8) ..............................................

54.3

Total assets ....................................................

883.0

Liabilities:

Accounts payable (Note 9)........................................... 85.8

Federal debt securities held by the public (Note 10)........................ 3,631.6

Federal employee and veteran benefits payable (Note 11) ................... 2,600.7

Environmental and disposal liabilities (Note 12)............................ 313.2

Benefits due and payable (Note 13) .................................... 73.8

Loan guarantee liabilities (Note 4) ..................................... 35.1

Other liabilities (Note 14) ............................................

169.0

Total liabilities................................................... 6,909.2

Commitments and Contingencies (Note 18) 

Net Position ......................................................

 (6,026.2)

Total liabilities and net position ......................................

883.0

The ac com pa ny ing notes are an in te gral part of these fi nan cial state ments.
 50 FI NAN CIAL STATE MENTS

Intentional Blank Page
 STEW ARD SHIP IN FOR MA TION 51

United States Gov ern ment

Stew ard ship In for ma tion

for the Year Ended

Sep tem ber 30, 1999 (Un au dited)

The Fed eral Gov ern ment holds “Stew ard ship as sets” for the ben e -

fit of the Na tion. Be cause the Gov ern ment has been en trusted with,

and made ac count able for, these re sources and re spon si bil i ties, they

are rec og nized in the Fi nan cial Re port of the United States Gov ern -

ment. 

When ac quired, “Stew ard ship as sets” are treated as ex penses in the 

fi nan cial state ments. This sec tion pro vides more de tailed stew ardship in for ma tion on these re sources to high light their long-term bene fit and to dem on strate ac count abil ity. This in for ma tion fa cil i tates

the un der stand ing of the op er a tions and fi nan cial con di tion of the

Gov ern ment.

Na tional de fense prop erty,

plant and equip ment con sist of:

(1) as sets owned by the De part -

ment of De fense in the per for -

mance of mil i tary mis sions, such

as com bat op er a tions, peace -

keep ing and sup port of ci vil ian

au thor i ties dur ing civil emer gen -

cies; and (2) ves sels held in a

pres er va tion sta tus by the Maritime Ad min is tra tion’s Na tional

De fense Re serve Fleet.

“Na tional de fense as sets” are

de fined in terms of four cat e go -

ries:

Weapons sys tems— equipment that launches, re leases, car -

ries, or fires a par tic u lar piece of

ord nance and/or car ries weap ons

sys tems-related prop erty, equip -

ment, ma te ri als, or per son nel.

Ex am ples in clude air craft, ships,

tracked com bat ve hi cles and mis -

siles.

• Weapons sys tems sup port 

prin ci pal end items —items 

that are ac quired to sup port 

weap ons sys tems and may

ul ti mately be in cor po rated

in weap ons sys tems. Ex am -

ples in clude air craft en -

gines, tank en gines, air craft 

ra dars, ship so nar,

uninstalled mis sile mo tors,

gun mounts and guid ance

sys tems. 

• Mis sion sup port equip -

ment—de ploy able equip -

ment that: (1) is es sen tial

to the ef fec tive op er a tion

of a weap ons sys tem or is

used by the mil i tary de -

part ments to ef fec tively

per form their mil i tary mis -

sions; (2) has an in de ter mi -

nate or un pre dict able

use ful life due to the man -

ner in which it is used; and 

(3) is at a very high risk of 

be ing de stroyed dur ing use 

or of pre ma ture ob so les -

cence. 

National Defense Assets

Stewardship

Assets
 52 STEW ARD SHIP IN FOR MA TION

National Defense Assets

(In number of systems or items)

Restated*

Balance as of

September 30, 

1998 Additions Deletions

Balance as of

September 30,

1999

Aircraft:

 Combat ....................... 8,660 52 351 8,361 

 Airlift ......................... 6,059 23 148 5,934 

 Other aircraft ................... 3,740 67 247 3,560 

Ships:

 Submarines .................... 123 1 7 117 

 Aircraft carriers ................. 18 - - 18 

 Surface combatants .............. 269 26 13 282 

 Amphibious warfare ships .......... 83 - 7 76 

 Mine warfare ships ............... 38 1 - 39 

 Support ships ................... 241 6 33 214 

 Other ships .................... 3,921 55 229 3,747 

Combat Vehicles:

 Tracked ....................... 44,522 328 684 44,166 

 Wheeled ...................... 140,376 1,596 - 141,972 

 Towed ........................ 7,044 - 78 6,966 

 Other combat vehicles ............ 12,744 829 19 13,554 

Guided, Self-propelled Ordnance:

 Missiles ....................... 453,056 18,094 6,832 464,318 

 Torpedoes ..................... 8,486 216 29 8,673 

Space Systems:

 Satellites ...................... 78 8 1 85 

Weapons Systems Support Real Property:

 Active ammunition bunkers ........ 23,468 398 756 23,110 

 Active missile silos............... 993 1 158 836 

Active satellite ground stations ...... 81 - - 81 

Reserve Fleet Vessels n.a. n.a. n.a. 144

*The bal ances as of Sep tem ber 30, 1998, have been re stated to re flect changes from pre vi ous year’s re port ing. 

National Defense Assets, cont.

Ex am ples i nclude: sur veil lance

unmanned air ve hi cles, non-tactical

ve hi cles (e.g., fuel tank ers, com bat

op er a tions cen ters, mess ve hi cles),

field me te o ro log i cal sys tems, cryp -

tog ra phy sys tems, and field se cu rity

sys tems.

Weapons sys tems sup port real

prop erty—fa cil i ties and struc tures

af fixed to the land that are in te gral to

a weap ons sys tem. Ex am ples in clude

am mu ni tion bunk ers in ac tive use

and mis sile si los in ac tive use. 

The ac com pa ny ing “National de -

fense as set” in for ma tion does not re -

port quan ti ties of mis sion sup port

equip ment al though the an nual invest ments in these items are re -

ported.

The in vest ment amounts in

“National de fense as sets” pre sented

in this re port re flect the sum of an -

nual in vest ment amounts re ported by 

each mil i tary de part ment. DOD does 

not cur rently have cost ac count ing

sys tems that cap ture the full costs, as

de scribed in State ment of Fed eral Fi -

nan cial Ac count ing Stan dards

(SFFAS) No. 4 as so ci ated with

“National de fense as sets.” There -

fore, the an nual in vest ments shown

in this re port rep re sent an nual dis -

burse ments for each cat e gory of

“National de fense as sets.” 

n.a. = Not available
 STEW ARD SHIP IN FOR MA TION 53

Investments in National Defense Assets 

for the Period Ended September 30, 1999

(In millions of dollars)

Aircraft:

Combat .................................................... 6,901 

 Airlift ...................................................... 4,354 

 Other aircraft ................................................ 2,662 

 Aircraft support principal end items ................................ 1,387 

 Other aircraft support property, plant and equipment ................... 1,418 

Ships:

 Surface combatants ........................................... 3,591 

 Submarines ................................................. 1,409 

 Ship support principal end items .................................. 852 

 Aircraft carriers ............................................... 823 

 Amphibious warfare ships ....................................... 581 

 Support ships ................................................ 371 

 Mine warfare ships ............................................ 73 

 Other ships .................................................. 30 

 Other ship support property, plant and equipment ..................... 6 

Combat Vehicles:

 Combat vehicle support principal end items ......................... 1,199 

 Tracked .................................................... 354 

 Wheeled.................................................... 261 

 Other combat vehicles support property, plant and equipment ............ 1 

Guided, Self-propelled Ordnance:

 Missiles .................................................... 1,299 

 Guided, self-propelled support principal end items ..................... 815 

 Guided, self-propelled ordnance support property, plant and equipment ..... 245 

 Guided, self-propelled ordnance support ............................ 34 

 Torpedoes .................................................. 70 

Space Systems:

 Satellites ................................................... 1,438 

 Space systems support principal end items .......................... 558 

Weapons systems support real property:

 Active ammunition bunkers ..................................... 19 

General mission support property, plant and equipment ................. 5,274 

Other:

 Other weapons systems ........................................ 115 

 Other weapons systems support principal end items ................... 37 

 Other weapons support property, plant and equipment .................. 62 

Reserve fleet vessels...........................................

1,905 

Total investments in national defense assets 

 for fiscal year ended September 30, 1999 .......................

38,144 
 54 STEW ARD SHIP IN FOR MA TION

Stewardship

Land

United States Government Stewardship Land as of September 30

(In millions of acres) Predominate Use Acres

Percentage

Agency:

Bureau of Land Management .... Public land 264.2 40. 9

U.S. Forest Service ........... National Forest system 192.0 29. 8

U.S. Fish and Wildlife Service.... National Wildlife Refuge system 88.6 13. 7

National Park Service.......... National Park system 77.9 12. 1

Department of Defense......... Defense facilities 16.7 2. 6

Bureau of Reclamation......... Water, power and recreation 5.8 0. 9

Total acres ................

645.2 100. 0

The De part ment of the In te rior’s Bu reau of Land Man age ment (BLM) man ages 

264.2 mil lion acres of fed er ally owned land. Con gress has charged the Bu reau

with main tain ing this land and its re sources to best serve the pres ent and fu ture

needs of the Amer i can peo ple. To ward this end, BLM man ages these lands to al -

low for a com bi na tion of uses in clud ing min eral de vel op ment, out door rec re ation

and nat u ral hab i tat. Some BLM lands are pro tected and used for their sce nic,

scientific or his tor i cal value. The fol low ing ta ble de scribes those hold ings. 

Bureau of Land 

Management

Bureau of Land Management Public Lands as of September 30

Number

Acreage 

(in thousands) Miles

National wild and scenic river segments ..... 34 998 2,038

National wilderness areas ............... 136 5,243 -

Wilderness study areas ................. 622 17,298 -

National conservation areas .............. 8 11,692 -

National scenic areas................... 1 101 -

National recreation areas ................ 1 1,000 -

National historic trails................... 8 - 3,533

National scenic trails ................... 2 - 568

National recreation trails ................ 26 - 429

Outstanding natural areas ............... 1 - -

Herd management areas ................ 200 36,070 -

National monuments ................... 1 1,880 -

Areas of critical environmental concern...... 740 13,112 -

Research natural areas ................. 152 347 -

National natural landmarks ............... 43 599 -

National back country byways ............ 64 - 3,518

Globally important bird areas ............. 2 57 -

National "multiple use" lands .............

- 175,775 -

BLM total ..........................

2,041 264,172 10,086

“Stew ard ship Land” re fers to fed er ally owned land that is not used, or

held for use, in “Gen eral Gov ern ment” op er a tions. This cat e gory in cludes

land on which mil i tary bases are lo cated. This cat e gory ex cludes lands ad -

min is tered by the Bu reau of In dian Af fairs and held in trust. 

Most Stew ard ship land is “pub lic do main.” Be tween 1781 and 1867, the 

Gov ern ment ac quired acres of land equal to 79.4 per cent of the cur rent

acre age of the United States, spend ing a to tal of $85.1 mil lion.
 STEW ARD SHIP IN FOR MA TION 55

The U.S. For est Ser vice man ages 192.0 mil lion acres of 

fed er ally owned lands for the sus tained use of out door

rec re ation, range, tim ber, wa ter shed, wild life and fish.

For est land con tains 155 named Na tional For ests to tal -

ing 153.0 mil lion acres. 

The For est Ser vice re for ested 267,013 acres pri -

mar ily with ge net i cally im proved seed lings in fis -

cal 1999.

Wil der ness land con tains 34.8 mil lion acres in

38 states and is served by 133,087 miles of trails.

The U.S. For est Ser vice also man ages 20 named

grass lands on 3.8 mil lion acres and about 4,348

miles of the wild and sce nic river sys tem.

The U.S. Fish and Wild life Ser -

vice man ages 88.6 mil lion acres of

fed er ally owned lands held pri mar -

ily for wild life con ser va tion. It has

five goals:

• Pre serve, re store and en -

hance in their nat u ral eco sys -

tems, all spe cies of an i mals

and plants en dan gered or

threat ened.

• Per pet u ate the mi gra tory

bird re source.

• Pre serve a nat u ral di ver sity

and abun dance of fauna and

flora.

• Pro vide an un der stand ing

and ap pre ci a tion of fish and

wild life ecol ogy.

• Pro vide ref uge vis i tors a

safe, whole some and en joy -

able rec re ational ex pe ri ence

ori ented to ward wild life.

The U.S. Fish and Wild life Ser -

vice sub di vides its man age ment re -

spon si bil ity into the fol low ing

cat e go ries: 

• “Na tional Wild life Ref -

uges” (521 sites on 87.6 mil -

lion acres).

• “Ref uge Co or di na tion ar -

eas” (50 sites on 197,049

acres).

• “Wa ter fowl Pro duc tion ar -

eas” (200 sites on 715,200

acres).

• “Fish eries Re search Cen -

ters” (83 sites on 16,083

acres).

• “Wild and Sce nic Rivers”

(8 rivers to tal ing 1,258 miles

in length).

U.S. Forest Service

National Park

Service

The Na tional Park Ser vice man ages

77.9mil lion acres of fed er ally owned

lands. These lands are set aside to con -

serve scen ery, na ture, his toric ob jects and 

wild life so that cur rent and fu ture gen er a -

tions of Amer i cans can en joy them.

Other types of park ar eas in clude: na -

tional rivers, park ways, na tional lake

shores, his toric parks, sce nic trails, wild

and sce nic rivers, mil i tary parks, re -

serves, and bat tle fields.

Summary of Acreage

(In millions of acres) Acreage

Type of Park Area:

National parks ...................... 49.6

National preserves ................... 21.4

National recreation areas .............. 3.4

National monuments .................. 1.9

National seashores................... 0.5

Other park areas ....................

1.1

Total acres .......................

77.9

U.S. Fish and Wildlife Service

The De part ment of De fense uses 16.7

mil lion acres of fed er ally owned land for

mis sion es sen tial pur poses in clud ing:

• Mil i tary bases

• In stal la tions

• Training ranges

Department 

of Defense
 56 STEW ARD SHIP IN FOR MA TION

The Fed eral Gov ern -

ment in ven to ries, pre -

serves and in ter prets vast

num bers of her i tage as -

sets for the ben e fit of the

Amer i can pub lic. These

as sets en com pass many

of the Na tion’s most pre -

cious his toric, nat u ral and 

cul tural re sources. Her i -

tage as sets are unique

prop erty, plant and equip -

ment with:

• His toric or nat u ral 

sig nif i cance.

• Cul tural, ed u ca -

tional or ar tis tic im -

por tance.

• Sig nif i cant ar chi -

tec tural char ac ter is -

tics. 

The pub lic en trusts the

Gov ern ment with these

as sets and holds it ac count able for

their pres er va tion. Ex am ples of her -

i tage as sets in clude the Wash ing ton

Mon u ment, Dec la ra tion of In de -

pend ence, Yo sem ite Na tional Park

and mu seum ob jects on dis play at

the Smith so nian In sti tu tion.

The fol low ing dis cus sion of the

Gov ern ment’s her i tage as sets is not

all-inclusive. Rather, it high lights

sig nif i cant her i tage as sets re ported by 

Fed eral agen cies. 

The Gov ern ment clas si fies her i -

tage as sets into three broad cat e go -

ries:

• Col lec tion-type

• Nat u ral

• Cul tural

Col lec tion-type her i tage as sets

in clude ob jects gath ered and main -

tained for mu seum and li brary col -

lec tions. Nat u ral her i tage as sets in -

clude na tional wil der ness ar eas,

wild and sce nic rivers, nat u ral land -

marks, for ests and grass lands. Cul -

tural her i tage as sets in clude his toric 

places and struc tures, me mo ri als

and mon u ments, na tional cem e ter -

ies, and ar che o log i cal sites.

See the Stew ard ship Land sec tion

for the to tal acre age of some nat u ral

her i tage as sets such as Na tional

For ests.

Heritage

Assets

Federal Stewardship Land

Source: Na tional At las of the United States of Amer ica, 

U.S. Geo log i cal Sur vey

The De part ment of In te rior’s Bu reau of Rec la ma tion (BOR)

man ages 5.8 mil lion acres of Stew ard ship land. These lands

were with drawn from the pub lic do main in sup port of BOR’s

man date to pro vide ir ri ga tion wa ter, in dus trial wa ter, flood con -

trol and power. How ever, if it does not in ter fere with pro ject

pur poses, ac tiv i ties such as boat ing and camp ing, fish and wild -

life man age ment or the graz ing of live stock may be au tho rized.

Bureau of 

Reclamation
 STEW ARD SHIP IN FOR MA TION 57

Con gress has des ig nated

sev eral “wil der ness ar eas” to

pre serve their nat u ral con di -

tions. The De part ment of the

In te rior man ages 255 of these

wil der ness ar eas com pris ing

66.5 per cent of the Na tion’s

103.7 mil lion wil der ness

acres. The Cebolla Wil der ness 

in New Mex ico is one such

area. 

The “Na tional wild and sce -

nic rivers sys tem” in cludes

pro tected free-flowing rivers.

The Gov ern ment pro tects

these ar eas be cause of their

fish and wild life, or for their

sce nic, rec re ational, geo logic,

his toric or cul tural value. The

De part ment of the In te rior

man ages 54 per cent of these

10,947 river miles, in clud ing

the Bluestone Na tional Sce nic

River in West Vir ginia.

The Gov ern ment also sets

aside nat u ral land marks that

ex em plify a re gion’s nat u ral

char ac ter is tics. The Na tional

Park Ser vice iden ti fies 587 na -

tional nat u ral land marks, such

as the Gar den of the Gods in

Col o rado. 

The U.S. For est Ser vice

man ages 155 Na tional For ests

and 20 na tional grass lands on

over 192.0 mil lion acres.

These ar eas en com pass sig nif -

i cant her i tage re sources. Ex -

am ples in clude the White

Moun tain Na tional For est in

New Hamp shire and the

Thun der Ba sin Na tional

Grass land in Wy o ming. 

Natural Heritage Assets

The Na tional Reg is ter of His toric

Places lists his toric places and struc -

tures. This is Amer ica’s of fi cial list of 

cul tural re sources wor thy of pres er -

va tion. Of fi cial prop er ties in clude

dis tricts, sites, build ings, struc tures

and ob jects sig nif i cant to Amer i can

his tory. It also in cludes sig nif i cant ar -

chi tec tural, ar chae o log i cal en gi neer -

ing and cul tural prop er ties. For est

Ser vice land en com passes 887 such

prop er ties. 

The Na tion’s mon u ments and me -

mo ri als in clude the Wash ing ton

Mon u ment, the Viet nam Vet erans

Me mo rial and the Jef fer son Me morial in Wash ing ton, D.C. The Na -

tional Park Ser vice man ages these.

Also, the Amer i can Bat tle Mon uments Com mis sion man ages 27 me -

mo ri als, mon u ments and mark ers

around the world. This in cludes the

Belleau Wood Ma rine Mon u ment in

France. 

Ar che o log i cal sites con tain the re -

mains of hu man ac tiv ity. The De part -

ment of the In te rior man ages over

290,000 ar che o log i cal sites. The an -

cient earthen mounds at the Hopewell 

Cul ture Na tional His toric Site in

Ohio are no ta ble ex am ples.

Na tional cem e ter ies in clude the

Arlington Na tional Cem e tery in Vir -

ginia and the Fort Lo gan Na tional

Cem e tery in Col o rado. The De part -

ment of the Army man ages the

Arlington Na tional Cem e tery. The

De part ment of Vet erans Af fairs man -

ages Fort Lo gan Na tional Cem e tery

and 118 other cem e ter ies.

The Smith so nian In sti tu tion

holds some of the most prom i nent 

Fed eral mu seum col lec tions. The 

Smith so nian ac quires, pro tects

and pre serves ap prox i mately 140

mil lion in di vid ual ob jects for

pub lic ex hi bi tion, ed u ca tion and

re search.

Sim i larly, the Li brary of Con -

gress holds the world’s larg est li -

brary col lec tion. That col lec tion

com prises more than 115 mil lion

items. The Li brary re ceives two

cop ies of ev ery book, pam phlet,

map, print, pho to graph and piece

of mu sic reg is tered for copy right

in the United States.

The Na tional Ar chives holds

more than 2 mil lion cu bic feet of

re cords. These re cords en sure

ready ac cess to es sen tial in for ma -

tion doc u ment ing the rights of cit -

i zens, ac tions of Fed eral of fi cials

and the ef fects of those ac tions on

the na tional ex pe ri ence. These re -

cords in clude text and leg is la tive

re cords; car to graphic and ar chi -

tec tural re cords; mo tion pic ture,

sound and video re cords; and still

pic tures and graph ics. The Na -

tional Ar chives also main tains

his tor i cally im por tant doc u ments

such as the U. S. Con sti tu tion and

the Lou i si ana Pur chase Treaty. 

Collection-type 

Heritage

Assets

Cultural Heritage Assets
 58 STEW ARD SHIP IN FOR MA TION

Con gress passed the So cial Se cu -

rity Act in 1935. The Act, as sub se -

quently amended, in cludes pro grams

that pro vide re tire ment and dis abil ity

ben e fits.

Con gress es tab lished two trust

funds for So cial Se cu rity: The Fed -

eral Old-Age and Sur vi vors In sur -

ance ( OASI) and the Fed eral Dis abil -

ity In sur ance (DI) Trust Funds

(OASDI). OASI pays re tire ment and

sur vi vors ben e fits and DI pays ben e -

fits to dis abled work ers.

Rev e nue to OASDI con sists pri -

mar ily of taxes on earn ings paid by

em ploy ees, their em ploy ers and the

self-employed. OASDI also re ceives

rev e nue from the in come taxes on

some So cial Se cu rity and in ter est on

its in vest ments in Federal debt se cu ri -

ties. So cial Se cu rity rev e nues not

needed to pay cur rent ben e fits or ad -

min is tra tive ex penses are in vested in

spe cial-issue Federal debt se cu ri ties.

Those se cu ri ties are guar an teed as to

both prin ci pal and in ter est and backed 

by the full faith and credit of the Gov -

ern ment.

The Board of Trustees of the OASI

and DI Trust Funds pro vides in its

An nual Re port to the Pres i dent and

Con gress short-range (10 year) and

long-range (75 year) ac tu ar ial es ti -

mates of each trust fund. Be cause of

the in her ent un cer tainty in es ti mates

for 75 years into the fu ture, the Board

of Trustees uses three al ter na tive sets

of eco nomic and de mo graphic as -

sump tions to show the range of pos si -

bil i ties. As sump tions are made about

many eco nomic, and de mo graphic

fac tors, in clud ing gross do mes tic

prod uct, earn ings, the Con sumer

Price In dex (CPI), the un em ploy ment 

rate, the fer til ity rate, im mi gra tion,

mor tal ity, and dis abil ity in ci dence

and ter mi na tions. The as sump tions

used in the ac com pa ny ing ta bles gen -

er ally re ferred to as the “in ter me di ate

as sump tion,” re flect the best es ti mate

of ex pected fu ture ex pe ri ence, un der

cur rent law. 

The pres ent val ues of ac tu ar ial es ti -

mates were com puted as of Jan u ary 1, 

1999, the be gin ning of the val u a tion

pe riod. The ac tu ar ial es ti mated con -

tri bu tions equal the sum of the pres ent 

value of all es ti mated non-interest in -

come dur ing the pe riod. The ac tu ar ial

es ti mated ex pen di tures equal the sum

of the pres ent value of all es ti mated

pay ments dur ing the val u a tion pe riod. 

These es ti mates were pre pared us ing

the fi nanc ing method deemed the

most ap pro pri ate by both Con gress

and the Board of Trustees. Es ti mates

as sume the pro gram will cover fu ture

work ers as they en ter the la bor force. 

Un der cur rent leg is la tion and us ing

in ter me di ate as sump tions, the DI and

OASI Trust Funds are pro jected to be

ex hausted in 2020 and 2036 re spec -

tively. Com bined OASDI ex pen di -

tures will ex ceed cur rent tax in come

be gin ning in 2014 and will ex ceed to -

tal cur rent in come (in clud ing cur rent

in ter est in come) for cal en dar years

2022 and later. Thus, cur rent tax in -

come plus a por tion of an nual in ter est

in come will be needed to meet ex pen -

di tures for the years 2014 through

2021. There af ter, in ad di tion to cur -

rent tax in come and cur rent in ter est

in come, a por tion of the prin ci pal

(com bined OASDI as sets) will be

needed each year un til the trust fund

as sets are to tally ex hausted in 2034.

At that point, cur rent tax in come will

be suf fi cient to pay only ap prox i -

mately 71 per cent of the ben e fits due.

Social

Security

Stewardship Responsibilities

-20,0 00

-15,0 00

-10,0 00

-5,0 00

0

5,0 00

2001 20 13 2 025 2037 20 49 2 061 2073

(Inb illions ofd o la rs)

F eder al Old-Age and S urvivors

Insu ran ce Tru st Fund Net Ass ets

Fe deralDisab ility Ins ur anc e

Trust Fu nd Net As sets

Fisc alyears

Social Security Estimated Trust Fund Balances

Stew ard ship Responsibilities pro -

vides in for ma tion on the larg est

Social Insurance pro grams: So cial

Se cu rity, Medicare, Rail road Re tire -

ment, Black Lung and Un em ploy -

ment In sur ance. Its pur pose is to as -

sist the Amer i can peo ple in

evaluating the fi nan cial con di tion

and sustainability of these pro grams. 
 STEW ARD SHIP IN FOR MA TION 59

Social Security Present Value Estimates for the Period 

of 75 Years into the Future, as of January 1, 1999

(In billions of dollars) OASI DI O ASDI 

Present value of contributions 

to December 31, 2074.......................... 16,830 2,763 19,593 

Present value of expenditures

to December 31, 2074..........................

19,925 3,366 23,291 

Present value of future resources needed ............. 3,095 603 3,698 

Less: Net assets of Social Security as of January 1, 1999 .

682 81 763 

Present value of additional resources needed ..........

2,413 522 2,935 

Social Security, cont.

Fed eral Hos pi tal In sur ance Trust

Fund rev e nue con sists pri mar ily of

taxes on earn ings paid by em ploy ees,

their em ploy ers and the selfe mployed. The fund also re ceives

rev e nue from part of the tax a tion of

So cial Se cu rity ben e fits and from in -

ter est on its in vest ments in Fed eral

debt se cu ri ties. Rev e nues not needed

to pay cur rent ben e fits of the Fed eral

Hos pi tal In sur ance pro gram

(Medicare Part A) or ad min is tra tive

ex penses are in vested in spe cial is sue

Fed eral debt se cu ri ties. These se cu ri -

ties bear a mar ket rate of in ter est and

are guar an teed both as to prin ci pal

and in ter est. In ad di tion, the se cu ri ties 

are backed by the full faith and credit

of the U.S. Gov ern ment.

The pres ent val ues of ac tu ar ial es -

ti mates were com puted as of the be -

gin ning of the val u a tion pe riod,

Sep tem ber 30, 1999. The con tri bu -

tions con sist of the sum of the pres ent

value of var i ous pro gram in come

items ex pected to be re ceived through 

fis cal 2074. The ex pen di ture con sists

of the sum of the pres ent value of es -

ti mated payments through fis cal

2074, claims in curred through Sep -

tem ber 30, 1999, that were un paid as

of that date, and ad min is tra tive ex -

penses re lated to those claims. Un der

in ter me di ate as sump tions from the

1999 Trustees Re port, and leg is la tion 

in place at the time, the fund is pro -

jected to be ex hausted in the cal en dar

year 2015.

Ap pro pri a tions as well as pre mi -

ums paid by med i cal ben e fi cia ries fi -

nance the ben e fits and ad min is tra tive

ex penses of the Fed eral Sup ple mentary Med i cal In sur ance (SMI) program (Medicare Part B). The Bal -

anced Bud get Act of 1997 pro vides

that the monthly pre mium be set to

cover 25 per cent of the Medicare Part

B pro gram’s es ti mated cost of each

cal en dar year’s es ti mated Fed eral

Sup ple men tary Med i cal In sur ance 

pro gram costs. 

Medicare Part B has a sur plus of

$35.2 bil lion. This rep re sents the es ti -

mated book value amount of the Fed -

eral Sup ple men tary Med i cal In sur ance

Trust Fund as sets as of Sep tem ber 30,

1999, less un paid ben e fits and re lated

ad min is tra tive ex penses in curred

through Sep tem ber 30, 1999. 

Medicare

10

30

50

70

90

1 10

1 30

1 50

20 00 2003 20 06 2009 2012 2 01 5

Ca lend a r y ea rs

(In billio ns of dollars )

Estimated Balances of Federal Hospital

Insurance Trust Fund (Medicare Part A) 

Under Intermediate Assumptions
 60 STEW ARD SHIP IN FOR MA TION

Medicare Part A (Hospital Insurance)

Present Value Estimates 

for the Period of 75 Years into the Future, 

Beginning September 30, 1999

(In billions of dollars)

Present value of contributions 

to the year 2074 ......................................... 6,538.6

Present value of expenditures

to the year 2074 .........................................

9,615.2

Present value of future resources needed ...................... 3,076.6

Less: Net assets in Federal Hospital Insurance 

Trust Fund as of September 30 (Note 19) .....................

141.4

Present value of additional resources needed....................

2,935.2

Medicare Part B (Supplementary Medical

Insurance) Balances

as of September 30, 1999

(In billions of dollars)

Total Federal Supplementary Medical Insurance 

Trust Fund assets (Note 19) ............... 45.6

Total unpaid benefits ....................... 10.4

Excess of trust fund assets

 over unpaid benefits ...................

35.2

Rail road re tire ment pays full an nu -

ities when el i gi ble per sons reach age

65 with 10 years of ser vice or age 62

with 30 years of ser vice. It pays re -

duced an nu ities to el i gi ble ben e fi cia -

ries who are age 62 with 10 to 29

years of ser vice, or age 60 with 30

years of ser vice. The Rail road Re tire -

ment pro gram pays dis abil ity an nu -

ities based on to tal or oc cu pa tional

dis abil ity. It also pays an nu ities to di -

vorced spouses, re mar ried

widow(er)s, sur viv ing di vorced

spouses, chil dren and par ents of de -

ceased rail road work ers. Medicare

cov ers qual i fied rail road re tire ment

ben e fi cia ries in the same way as So -

cial Se cu rity ben e fi cia ries.

The Rail road Re tire ment Board

(RRB) and So cial Se cu rity Ad min is -

tra tion (SSA) share ju ris dic tion over

the pay ment of re tire ment and sur vi -

vors ben e fits. RRB has ju ris dic tion

over the pay ment of re tire ment ben e -

fits if the em ployee had at least 10

years of rail road ser vice. Ad di -

tionally, for sur vi vor ben e fits, RRB

re quires that the em ployee’s last reg -

u lar em ploy ment be fore re tire ment or 

death was in the rail road in dus try. If a

rail road em ployee or his or her sur vi -

vors do not qual ify for rail road re tire -

ment ben e fits, the RRB trans fers the

em ployee’s rail road re tire ment cred -

its to SSA. SSA treats them as So cial

Se cu rity cred its.

Pay roll taxes paid by rail road em -

ploy ers and their em ploy ees pro vide

the pri mary source of in come for the

Rail road Re tire ment-Survivor Ben e -

fit pro gram. By law, rail road re tire -

ment taxes are co or di nated with So -

cial Se cu rity taxes. Em ployees and

em ploy ers pay tier I taxes at the same

rate as So cial Se cu rity taxes. Tier II

taxes fi nance rail road re tire ment ben -

e fit pay ments that are higher than So -

cial Se cu rity lev els.

Railroad Retirement
 STEW ARD SHIP IN FOR MA TION 61

Railroad Retirement Account Present Value Estimates 

for the Period of 75 Years into the Future,

Beginning September 30, 1999*

(In billions of dollars)

Present value of contributions to December 31, 2074 .......................... 66.5

Present value of expenditures to December 31, 2074 ..........................

75.5

Present value of excess estimated expenditures over

estimated contributions ...............................................

9.0

Assets in the Railroad Retirement Account as of September 30, 1999.............

21.9

*These fig ures take into ac count fu ture

 en trants as well as for mer and pres ent em ploy ees.

0

10

20

30

40

50

60

70

2000 2012 2024 20 36 2048 2060 2 072

Annual co ntributions

An nual e xpen diture s

Fis c al ye ars

(In bilions o fdollars)

Railroad Railroad Retirement Account Estimated Activity

Retirement,

cont.

Other sources of pro gram in come

in clude:

• Fi nan cial in ter changes with

the So cial Se cu rity trust funds.

• In ter est on in vest ments.

• Rev e nue re sult ing from Fed -

eral in come taxes on rail road

re tire ment ben e fits.

• Ap pro pri a tions (pro vided af -

ter 1974 as part of a phase-out

of cer tain vested dual ben e fits).

The net book value of as sets in the

Rail road Re tire ment Ac count at Sep -

tem ber 30, 1999, was $21.9 bil lion. 
 62 STEW ARD SHIP IN FOR MA TION

The Black Lung Dis -

abil ity Ben e fits pro gram 

com pen sates el i gi ble

coal min ers who are dis -

abled be cause of em -

ploy ment-related pneu -

mo co ni o sis (black lung

dis ease). The pro gram

pro vides both med i cal

and sur vi vor ben e fits.

Un der Part C, the Black

Lung Dis abil ity Trust

Fund (BLDTF) pro vides

ben e fit pay ments to el i -

gi ble dis abled min ers

when no re spon si ble

mine op er a tor can be as -

signed the li a bil ity. The

De part ment of La bor

(La bor) op er ates Part C

of the Black Lung Dis -

abil ity Ben e fits pro gram.

Ex cise taxes on coal mine op er a -

tors, based on the sale of coal, par -

tially fund the black lung dis abil ity

pay ments and the re lated ad min is tra -

tive and in ter est costs. Intragovernmen tal ad vances to the Black Lung

Dis abil ity Trust Fund, which must be

re paid with in ter est, fund the shortfall.

Un der cur rent con di tions, an a lysts

pro ject that sched uled re duc tion in

taxes on coal sales will de crease cash

in flows for the year 2014 and be yond. 

Be tween the years 2013 and 2015,

pro jec tions es ti mate a 49-percent de -

crease in ex cise tax col lec tions. By

the year 2040, the rate re duc tion is ex -

pected to de crease cash in flows by a

to tal of more than $12.6 bil lion.

To ad dress the Black Lung Dis abil -

ity Trust Fund’s grow ing def i cit

prob lem, the fis cal 2001 bud get states

that the Ad min is tra tion will pro pose

leg is la tion that will re struc ture the

BLDTF debt and ex tend ex cise taxes

at cur rent rates.

The to tal li a bil i ties (net borrowings

from Trea sury to cover ben e fit pay -

ments) of the Black Lung Dis abil ity

Trust Fund ex ceed as sets by $6.3 bil -

lion. This def i cit rep re sents the ac cu -

mu lated short fall of ex cise taxes nec -

es sary to meet ben e fit pay ments and

in ter est ex penses. Intragovernmental

ad vances, which the Trust Fund must

re pay with in ter est, fi nance the short -

fall.

Black Lung Benefits

Black Lung Disability Trust Fund Present Value Estimates

for the Period of 41 Years into the Future, Beginning September 30, 1999

(In billions of dollars)

Present value of contributions to September 30, 2040 .......................... 9.4

Present value of expenditures to September 30, 2040..........................

16.7

Present value of excess estimated expenditures over

estimated contributions ...............................................

7.3

Excess of liabilities over assets in the Black Lung Disability Trust Fund .............

as of September 30, 1999.............................................

(6.3)

Black Lung Fund Estimated Activity

0

50 0

1, 00 0

1, 50 0

2, 00 0

2, 50 0

20 00 20 10 2020 2030 20 40

Fis cal ye ars

Annua le xpenditures

Annual contributions

(In millions o fdollars)
 STEW ARD SHIP IN FOR MA TION 63

Con gress cre ated the Un em -

ploy ment Trust Fund in 1935.

The Fund pro vides in come as sis -

tance to un em ployed work ers

who have lost their jobs through

no fault of their own. A unique

sys tem of Fed eral and State part -

ner ships ad min is ters the Un em -

ploy ment In sur ance pro gram.

Al though es tab lished by Fed eral

law, State of fi cials ex e cute the

pro gram. La bor pro vides broad

pol icy guid ance and pro gram di -

rec tion. State unemployment in -

sur ance stat utes es tab lish lo cal

pro gram de tails, which they ad -

min is ter. 

Fed eral and State un em ploy -

ment taxes paid by em ploy ers fi -

nance the Un em ploy ment Trust

Fund. The Gov ern ment de pos its

those funds in the Un em ploy -

ment Trust Fund and re ports the

in come as Fed eral tax rev e nue.

To tal Un em ploy ment Trust

Fund as sets ex ceeded li a bil i ties

by $78.9 bil lion. This bal ance

ap prox i mates the ac cu mu lated

sur plus of tax rev e nues and the

earn ing on these rev e nues. This

sur plus re mains avail able to sup -

ple ment fu ture ben e fit pay ments

if and when an nual rev e nues be -

come in suf fi cient. Trea sury in -

vests the sur plus in Fed eral debt

se cu ri ties. 

Unemployment Insurance

Unemployment Trust Fund Present Value

Estimates in Nominal Dollars for the Period

of 9 Years into the Future, 

Beginning September 30, 1999

(In billions of dollars)

Present value of contributions

to September 30, 2008 .............. 296.1

Present value of expenditures 

to September 30, 2008 ..............

262.3

Present value of excess

 estimated contributions 

over estimated expenditures ...........

33.8

Excess of assets over liabilities in the 

Unemployment Trust Fund 

as of September 30, 1999 (Note 19).....

78.9

Unemployment Fund Estimated Activity

0

10

20

30

40

50

60

1 999 2 001 2003 2005 20 07

Fiscal ye ars

Annual co ntributions

Annual e xpenditure s

(In b ilions o f dolla rs)
 64 STEW ARD SHIP IN FOR MA TION

Stewardship

Investments

The Fed eral Gov ern ment makes

grants and pro vides funds for the

pur chase, con struc tion and/or ma -

jor ren o va tion of State and lo cal

gov ern ment phys i cal prop er ties.

The Fed eral High way Ad min is -

tra tion re im burses States for con -

struc tion costs on pro jects re lated

to the Fed eral High way sys tem.

Im prove ments to na tional high -

ways, in ter state sys tems, sur face

trans por ta tion as well as con ges -

tion mit i ga tion and air qual ity

im prove ment are backed by these

ef forts. States con trib ute 10 per -

cent of the cost for in ter state sys -

tem im prove ments and 20 per cent

of costs for other con struc tion. 

The En vi ron men tal Pro tec tion

Agency (EPA) pro vides in fra struc -

ture as sis tance to State and tribal

gov ern ments. This as sis tance is in

the form of grants for the con struc -

tion of wastewater and drink ing

wa ter treat ment fa cil i ties and

ground wa ter pro tec tion.

Mean while, for mula grants as -

sist ur ban and non-urban ar eas.

States and lo cal i ties use these

grants for a va ri ety of mass tran sit

pur poses in clud ing plan ning, con -

struc tion of fa cil i ties, and pur -

chases of railcars and buses.

Funding also pays for trans por ta -

tion for the el derly and dis abled.

The Fed eral Avi a tion Ad min is -

tra tion’s (FAA’s) Air Trans por ta -

tion pro gram pro vides fund ing to

sus tain the cur rent in fra struc ture

and ad vances mod ern iza tion and

im prove ment of the Na tional Air -

space sys tem.

Gen eral Tran sit Ad min is tra tion

discretionary grants pro vide cap i -

tal as sis tance to fi nance ac qui si -

tion, con struc tion, re con struc tion

and im prove ment of fa cil i ties and

equip ment. Dis cre tion ary grants

fund the cat e go ries of new starts,

fixed guid ance mod ern iza tion and

bus and bus-related ac tiv i ties.

Investments in Non-Federal Physical Property for the Period Ended

September 30

(In billions of dollars)

 Highway program .................................................. 22.9

 Water infrastructure grants, Environmental Protection Agency ................. 2.2

 Formula grants .................................................... 2.1

 Air transportation .................................................. 1.6

 General Transit Administration ........................................ 1.5

 Economic Development Administration .................................. 0.4

 Washington Metro ................................................. 0.2

 Investments from all other programs ....................................

0.3

Fiscal 1999 investments in non-Federal physical property ..................

31.2

Non-Federal

Physical

Property

Stew ard ship Investments fo cus on

G ov ern ment pro grams aimed at pro -

vid ing long-term ben e fits by im prov -

ing the Nation’s pro duc tiv ity and en -

hanc ing eco nomic growth. These

investments can be pro vided through

di rect Fed eral spend ing or grants to

State and lo cal gov ern ments for cer -

tain ed u ca tion and train ing pro grams,

re search and de vel op ment, and fed er -

ally fi nanced but not fed er ally owned 

prop erty, such as bridges and roads.

When in curred, these in vest ments are 

in cluded as expenses in de ter min ing

the net cost of op er a tions.
 STEW ARD SHIP IN FOR MA TION 65

The Fed eral Gov ern ment runs sev -

eral pro grams that in vest in hu man cap -

i tal. Those in vest ments go to ward in -

creas ing and main tain ing a healthy

econ omy by ed u cat ing and train ing the

gen eral pub lic. Costs do not in clude

train ing ex penses for Fed eral work ers.

Ed u ca tion Grants and

Ad min is tra tive Pro grams

Ed u ca tion grant ac tiv i ties cover im -

prove ments of both pub lic and pri vate

pre school and sec ond ary ed u ca tion; as -

sis tance to post-secondary ed u ca tional

in sti tu tions and stu dents pur su ing a

post-sec ond ary ed u ca tion; pro grams

that as sist in ed u cat ing chil dren and

adults with spe cial needs and dis abil i -

ties; bi lin gual ed u ca tion; and vo ca -

tional-technical ed u ca tion.

Em ploy ment and Training

Ad min is tra tion

The De part ment of La bor pro vides

job train ing for the gen eral pub lic to in -

crease and main tain na tional eco nomic

pro duc tive ca pac ity. Pro grams in clude: 

adult em ploy ment and train ing; dis lo -

cated worker em ploy ment and train ing; 

youth train ing; school-to-work op por -

tu ni ties; Job Corps; train ing pro grams

for Na tive Amer i cans and mi grant and

sea sonal farm work ers.

Fed eral Fam ily Ed u ca tion

Loan Pro gram

The Fed eral Fam ily Ed u ca tion Loan

pro gram op er ates with State and pri vate 

non profit guar anty agen cies to pro vide

loan guar an tees and in ter est sup ple -

ments on loans by pri vate lend ers to el i -

gi ble stu dents at tend ing par tic i pat ing

post-secondary schools. 

Vet erans Ben e fits

Ad min is tra tion

This agency pro vides train ing to as -

sist dis abled vet er ans to be come em -

ploy able. Ed u ca tional as sis tance also 

is pro vided to vet er ans un der the GI

bill.

Na tional In sti tute of Health 

(NIH)

The NIH Re search and Training and

Ca reer De vel op ment pro gram ad -

dresses the need for trained per son nel

to con duct med i cal re search. The pri -

mary goal is to pro duce highly trained

in ves ti ga tors who are likely to per form

re search that will ben e fit the Na tion’s

health.

Vet erans Health

Ad min is tra tion

This agency pro vides ed u ca tion and

train ing ef forts for health pro fes sion

stu dents and res i dents through part ner -

ships with af fil i ated ac a demic in sti tu -

tions.

Bu reau of In dian Af fairs

This agency pro vides ed u ca tion and

Job Corps pro grams.

Investments in Human Capital for the Period Ended September 30

(In billions of dollars)

Education grants and administrative programs ............................. 31.5 

Employment and training administration .................................. 5.5 

Federal family education loans program .................................. 3.1 

Veterans Benefits Administration ....................................... 1.6 

National Institutes of Health ........................................... 0.8 

Veterans Health Administration......................................... 0.7 

Bureau of Indian Affairs.............................................. 0.5 

Investments from all other programs.....................................

 1.3 

Fiscal 1999 investments in human capital ...............................

 45.0 

Fed eral in vest ments in re search

and de vel op ment com prise those ex -

penses for ba sic re search, ap plied re -

search and de vel op ment that are in -

tended to in crease or main tain

na tional eco nomic pro duc tive ca pac -

ity or yield other fu ture ben e fits.

In vest ments in ba sic re search are a

sys tem atic study to gain knowl edge

or un der stand ing of the fun da men tal

as pects of phe nom ena and of ob serv -

able facts with out spe cific ap pli ca -

tions to ward pro cesses or prod ucts in

mind.

In vest ments in ap plied re search are

a sys tem atic study to gain knowl edge

or un der stand ing nec es sary for de ter -

min ing the means by which a rec og -

nized and spe cific need may be met.

In vest ments in de vel op ment are

sys tem atic use of the knowl edge and

un der stand ing gained from re search

for the pro duc tion of use ful ma te ri als, 

devices, sys tems, or meth ods, in clud -

ing the de sign and de vel op ment of

pro to types and pro cesses.

Human Capital

Research and Development
 66 STEW ARD SHIP IN FOR MA TION

Investments in Development for the Period Ended September 30

(In billions of dollars)

Department of Defense.............................................. 31.9

Science, Aeronautics and Technology ................................... 2.7

Human Space Flight ................................................ 2.5

Department of Energy ............................................... 2.2

National Institutes of Health .......................................... 1.7

Investments from all other programs ....................................

0.4

Fiscal 1999 investments in development................................

41.4

Investments in Basic Research for the Period Ended September 30

(In billions of dollars)

National Institutes of Health .......................................... 7.9

Department of Energy............................................... 2.5

Science, Aeronautics and Technology ................................... 1.8

Department of Defense.............................................. 1.1

Environmental Protection Agency ...................................... 0.6

Agricultural Research............................................... 0.4

Cooperative State Research, Education and Extension Service ................ 0.2

Investments from all other programs ....................................

1.1

Fiscal 1999 investments in basic research ..............................

15.6

Investments in Applied Research for the Period Ended September 30

(In billions of dollars)

National Institute of Health ........................................... 3.9

Department of Defense.............................................. 3.0

Science, Aeronautics and Technology ................................... 2.6

Department of Energy ............................................... 2.0

National Oceanic and Atmospheric Administration .......................... 1.0

U.S. Geological Survey.............................................. 0.7

Investments from all other programs ....................................

3.0

Fiscal 1999 investments in applied research.............................

16.2

Research and Development, cont.
 STEW ARD SHIP IN FOR MA TION 67

The Cur rent Ser vices As sess ment

ta ble shows the Of fice of Man age ment 

and Bud get’s (OMB’s) es ti mated re -

ceipts, out lays, and sur plus or def i cit in 

the bud get if no changes are made to

laws that are al ready en acted. Re ceipts 

and man da tory out lays, such as So cial

Se cu rity ben e fits and net in ter est, in -

volve on go ing ac tiv i ties that gen er ally

op er ate un der per ma nent le gal au thor -

ity au tho rized by leg is la tion. The cur -

rent ser vices es ti mates of re ceipts and

man da tory spend ing as sume that re -

ceipts and man da tory spend ing con -

tinue in the fu ture as spec i fied by cur -

rent laws. The cur rent ser vices

es ti mates for dis cre tion ary spend ing

as sume dis cre tion ary fund ing for fis -

cal 2000 equals ap pro pri a tions en acted 

by Con gress. It also as sumes that dis -

cre tion ary fund ing for sub se quent

years holds con stant in real terms. Be -

cause laws al ready en acted pro vide the 

bases for cur rent ser vices es ti mates,

they do not con sti tute a pro posed bud -

get, nor do they pre dict the most likely

bud get out comes.

The cur rent ser vices es ti mates may

be used to as sess the sustainability of

pro grams un der cur rent law. That is,

they may be used to pro ject if fu ture

re sources can sus tain pub lic ser vices

and meet ob li ga tions as they come

due. In this way, they can warn of fu -

ture prob lems in her ent in cur rent law.

They also can pro vide a bench mark

against which tax and spend ing pro -

pos als can be com pared. Cur rent ser -

vices es ti mates are use ful in as sess ing

the mag ni tude of pro posed changes.

Also, they can pro vide an an a lyt i cal

per spec tive of Gov ern ment by show -

ing the short- and me dium- term di rec -

tion of cur rent pro grams.

The fol low ing sched ule pres ents the

ac tual bud get re sults for fis cal 1999

and the cur rent ser vices es ti mates for

all Fed eral taxes and spend ing pro -

grams for the sub se quent 6 years. It

shows re ceipts by source and out lays

by func tion. The es ti mates for these

years are iden ti cal to the cur rent ser -

vices es ti mates in the Pres i dent’s bud -

get for fis cal 2001. The fol low ing es ti -

mates are based on the same

eco nomic, pro gram matic and other

tech ni cal as sump tions as the cur rent

ser vices es ti mates doc u ment.

Current Services Assessment

Current Services Assessment Receipt and Outlay Estimates

as Presented in the President's Budget

(In billions of dollars)

Base

Fiscal

Year

1999 2000 2001 2002 2003 2004 2005

Receipts:

Individual income 

taxes ........... 879 952 978 1,006 1,040 1,086 1,143

Corporate income 

taxes ........... 185 192 190 190 192 196 205

Social Insurance and 

retirement receipts . 612 650 683 713 742 771 814

Excise taxes ....... 70 68 69 71 72 74 76

Other receipts ......

81 94 90 100 105 111 11 2

Total receipts .....

1,827 1,956 2,010 2,080 2,151 2,238 2,350

Outlays:

National defense .... 275 284 295 300 309 318 326

Social Security...... 390 407 426 446 469 493 520

Medicare .......... 190 203 221 227 245 259 281

Income Security ..... 238 249 261 274 286 297 310

Health ............ 141 154 166 179 191 205 220

Veteran benefits and 

services ......... 43 45 48 49 52 54 58

Education, training, 

employment and 

social services .... 56 63 69 70 72 74 76

Transportation...... 43 47 48 50 51 53 55

Other programmatic 

functions ......... 137 148 143 139 141 143 145

Net interest ........ 230 220 208 198 189 176 161

Undistributed offsetting 

receipts .........

(40) (43) (46) (49) (47) (47) (4 9)

Total outlays......

1,703 1,777 1,839 1,883 1,958 2,025 2,103

 Unified surplus...

124 179 171 197 193 213 247
 68 STEW ARD SHIP IN FOR MA TION

Intentional Blank Page
 NOTES TO THE FI NAN CIAL STATEMENTS 69

United States Gov ern ment 

Notes to the Fi nan cial State ments 

for the Year Ended Sep tem ber 30, 1999

Note 1. Sum mary of Sig nif i cant Ac count ing Pol icies

A. Reporting

Entity

This Fi nan cial Re port in cludes the

fi nan cial sta tus and ac tiv i ties of the

ex ec u tive branch and por tions of the

leg is la tive and ju di cial branches of

the Gov ern ment. This in cludes those

Gov ern ment cor po ra tions that are

part of the Fed eral Gov ern ment. The

Ap pen dix con tains a list of sig nif i -

cant Gov ern ment en ti ties in cluded in

these fi nan cial state ments and also

con tains a par tial list of en ti ties ex -

cluded. For the pur poses of this doc u -

ment, “Gov ern ment” re fers to the

U.S. Gov ern ment. The fi nan cial re -

port ing pe riod is the same used for

the an nual bud get. It is based on the

Gov ern ment’s fis cal year, which

ends Sep tem ber 30.

Ma te rial intragovernmental trans -

ac tions were elim i nated in con sol i da -

tion, ex cept as de scribed in Note 16.

The Fi nan cial Re port was gen er ally based on

gen er ally ac cepted ac count ing prin ci ples. These

prin ci ples typ i cally rec og nize: 

• Ex penses when in curred.

• Non-exchange rev e nues on a mod i fied

cash ba sis of ac count ing.

• Ex change (earned) rev e nues when earned.

This ba sis of ac count ing dif fers from that used

for bud get ary re port ing.

This fis cal year, new ac count ing stan dards be -

came ef fec tive per tain ing to de ferred main te nance.

B. Basis of Accounting

C. Revenue

Recognition

Gov ern ment rev e nue co mes from two

sources: non-exchange trans ac tions and

ex change trans ac tions. Non-exchange

rev e nues arise pri mar ily from ex er cise of

the Gov ern ment’s power to tax and levy

du ties, fines and pen al ties. Ex change

(earned) rev e nues arise when a Gov ern -

ment en tity pro vides goods and ser vices

to the pub lic for a price.

Re mit tances of non-exchange rev e nue

are rec og nized when re ceived. Re lated

re ceiv ables are rec og nized when mea sur -

able and le gally col lect ible. Re funds

and other off sets are rec og nized when

mea sur able and le gally pay able and net -

ted against non-exchange rev e nue.

Earned rev e nue rep re sents rev e nue

earned from user charges such as ad mis -

sion fees to Fed eral parks, in sur ance

pre mi ums, and fees on Fed eral hous ing

and loan pro grams. It is rec og nized

when the Gov ern ment pro vides the

goods or ser vices.
 70 NOTES TO THE FI NAN CIAL STATE MENTS

Di rect loans ob li gated and loan

guar an tees com mit ted af ter fis cal

1991 are re ported based on the pres -

ent value of the net cash-flows es ti -

mated over the life of the loan or

guar an tee. The dif fer ence be tween

the out stand ing prin ci pal of the loans

and the pres ent value of their net cash

inflows is rec og nized as a sub sidy

cost al low ance; the pres ent value of

es ti mated net cash out flows of the

loan guar an tees is rec og nized as a li a -

bil ity for loan guar an tees. The sub -

sidy ex pense for di rect or guar an teed

loans dis bursed dur ing a year is the

pres ent value of es ti mated net cash

out flows for those loans or guar an -

tees. A sub sidy ex pense also is

rec og nized for mod i fi ca tions made

dur ing the year to loans and guar an -

tees out stand ing and for reestimates

made as of the end of the year to the

sub sidy al low ances or loan guar an tee

li a bil ity for loans and guar an tees out -

stand ing. 

Di rect loans ob li gated and loan

guar an tees com mit ted be fore fis cal

1992 may be re ported un der the al -

low ance-for-loss method or the pres -

ent-value method. Un der the al low -

ance-for-loss method, the out stand ing 

prin ci pal of di rect loans is re duced by

an al low ance for uncollectible

amounts; and the li a bil ity for loan

guar an tees is the amount the agency

es ti mates would more likely than not

re quire a fu ture cash out flow to pay

de fault claims. 

Un der the pres ent-value method,

the out stand ing prin ci pal of di rect

loans is re duced by an al low ance

equal to the dif fer ence be tween the

out stand ing prin ci pal and the pres ent

value of the ex pected net cash-flows;

and the li a bil ity for loan guar an tees is 

the pres ent value of ex pected net

cash out flows due to the loan guar an -

tees.

“Taxes re ceiv able” pri mar ily

con sist of un col lected tax as sess -

ments, pen al ties and in ter est

when tax pay ers have agreed the

amounts are owed, or a court has

de ter mined the as sess ments are

owed. The Bal ance Sheet does not 

in clude un paid as sess ments when

nei ther tax pay ers nor a court has

agreed that the amounts are owed

(com pli ance as sess ments) or the

Gov ern ment does not ex pect fur -

ther col lec tions due to fac tors

such as the tax payer’s death,

bank ruptcy or in sol vency

(writeoffs). Taxes re ceiv able are

re ported net of an al low ance for

the es ti mated por tion deemed to

be uncollectible.

E. Taxes Receivable

“Prop erty, plant and equip ment” used in Gov ern ment op er a tions are

car ried at cost. De pre ci a tion and am or ti za tion ex pense ap plies to prop -

erty, plant and equip ment re ported in the Bal ance Sheet ex cept land, un -

lim ited du ra tion land rights, and con struc tion in prog ress. De pre ci a tion

is rec og nized us ing the straight-line method over the as sets es ti mated

use ful lives. 

“Pen sion and post-retirement health ben e fit ex penses” are re corded dur -

ing the time em ployee ser vices are ren dered. The re lated li a bil i ties for de -

fined ben e fit pen sion plans and post-retirement health ben e fits are re -

corded at es ti mated pres ent value of fu ture ben e fits, less the es ti mated

pres ent value of fu ture nor mal cost con tri bu tions. 

“Nor mal cost” is the por tion of the ac tu ar ial pres ent value of pro jected

ben e fits al lo cated as ex pense for em ployee ser vices ren dered in the cur rent 

year. Ac tu ar ial gains and losses (and prior and past ser vice cost, if any) are

rec og nized im me di ately in the year they oc cur, with out am or ti za tion.

H. Pension and

Post-Retirement

Health Benefits

Programs

F. Inventories

and Related

Property

“In ven tories” are val ued at his tor -

i cal cost. His tor i cal cost meth ods in -

clude first-in-first-out, weighted av -

er age and mov ing av er age.

Es ti mated re pair costs re duce the

value of in ven tory held for re pair.

Ex cess, ob so lete and un ser vice able

in ven to ries are val ued at es ti mated

net re al iz able val ues.

D. Direct Loans

and Loan Guarantees

G. Property, Plant

and Equipment
 NOTES TO THE FI NAN CIAL STATEMENTS 71

“En vi ron men tal li a bil i ties” are re -

corded at the es ti mated cur rent cost

to remediate haz ard ous waste and en -

vi ron men tal con tam i na tion, as sum -

ing the use of cur rent tech nol ogy.

Remediation con sists of re moval,

treat ment and/or safe con tain ment.

Where tech nol ogy does not ex ist to

cleanup haz ard ous waste, only the

es ti ma ble por tion of the li a bil ity, typ -

i cally safe con tain ment, is re corded.

I. Environmental

Liabilities “De ferred main te nance” is main te nance that was not per formed

when it should have been or was sched uled to be per formed and, there -

fore, is put off or de layed for a fu ture pe riod. Main te nance is the act of

keep ing fixed as sets in ac cept able con di tion in clud ing pre ven ta tive

main te nance, nor mal re pairs, and other ac tiv i ties needed to pre serve

the as set so that it con tin ues to pro vide ac cept able ser vices and

achieves its ex pected life. Main te nance ex cludes ac tiv i ties aimed at

ex pand ing the ca pac ity of an as set or oth er wise up grad ing it to serve

needs dif fer ent from those orig i nally in tended. “De ferred main te -

nance” in for ma tion is dis closed in the Sup ple men tal In for ma tion to the 

Fi nan cial State ments.

De ferred main te nance ex penses are not ac crued in the State ment of

Net Cost, or rec og nized as li a bil i ties on the Bal ance Sheet.

Li a bil i ties for con tin gen cies

are rec og nized on the Bal ance

Sheet when both:

• A past trans ac tion or

event has oc curred.

• A fu ture out flow or

other sac ri fice of re -

sources is prob a ble and

mea sur able.

The es ti mated con tin gent li a -

bil ity may be a spe cific amount

or a range of amounts. If some

amount within the range is a

better es ti mate than any other

amount within the range, then

that amount is rec og nized. If no

a mount within the range is a

better es ti mate than any other

amount, then the min i mum

amount in the range is rec og -

nized.

Con tin gent li a bil i ties that do

not meet the above cri te ria for

rec og ni tion, but for which there

is at least a rea son able pos si bility that a loss has been in curred

are dis closed in Note

18—Com mit ments and Con tingencies.

K. Contingencies

A li a bil ity for so cial in sur -

ance pro grams (So cial Se cu -

rity, Medicare, rail road re tire -

ment, black lung and

un em ploy ment) is rec og nized

for any un paid amounts due as 

of the re port ing date. No li a -

bil ity is rec og nized for fu ture

ben e fit pay ments not yet due.

For fur ther in for ma tion, see

the Stew ard ship In for ma tion

sec tion on Stew ard ship Re -

spon si bil ities and Note 19 on

Dedicated Collections. 

L. Social

Insurance

Fed eral Re serve Banks (FRBs), which are not part of

the re port ing en tity, serve as the Gov ern ment’s de pos i tary

and fis cal agent. They pro cess Fed eral pay ments and de -

pos its to Trea sury’s ac count and ser vice Fed eral debt se -

cu ri ties. FRBs owned $488.9 bil lion of Fed eral debt se cu -

ri ties held by the pub lic as of Sep tem ber 30, 1999. FRB

earn ings that ex ceed stat u tory amounts of sur plus es tab -

lished for FRBs are paid to the Gov ern ment and are rec og -

nized as non-exchange rev e nue. Those earn ings to taled

$26.0 bil lion for the year ended Sep tem ber 30, 1999. The

pri mary source of these earn ings is from in ter est earned

on Fed eral debt se cu ri ties held by the FRBs.

FRBs is sue Fed eral Re serve notes, the cir cu lat ing cur -

rency of the United States. These notes are col lat er al ized

by spe cific as sets owned by FRBs, typ i cally Fed eral debt

se cu ri ties. Fed eral Re serve notes are backed by the full

faith and credit of the U.S. Gov ern ment.

The Gov ern ment does not guar an tee pay ment of Gov -

ern ment-sponsored en ter prises li a bil i ties such as the Fed -

eral Na tional Mort gage As so ci a tion or the Fed eral Home

Loan Mort gage Cor po ra tion, which are pri vately owned.

These en ter prises also are ex cluded from the re port ing en -

tity.

M. Related Party Transactions

J. Deferred Maintenance
 72 NOTES TO THE FI NAN CIAL STATE MENTS

Note 2. Cash and Other Mon e tary As sets

“Cash,” in the amount of $60.4 bil -

lion, con sists of:

• Trea sury bal ances held at the 

FRBs, net of out stand ing

checks.

• Trea sury bal ances in spe cial

depositaries , known as the U.S. 

Trea sury Tax and Loan Note

ac counts.

• Funds held out side of Trea -

sury and the FRBs by au tho -

rized fis cal of fi cers or agents.

• Mon ies held by Gov ern ment

col lec tion and dis burs ing of fi -

cers, agen cies’ undeposited col -

lec tions, un con firmed de pos its,

and cash trans fers.

• Time de pos its at fi nan cial in -

sti tu tions.

The Gov ern ment main tains for mal

ar range ments with nu mer ous banks

to main tain time de pos its known as

“com pen sat ing bal ances.” These bal -

ances com pen sate the banks for ser -

vices pro vided to the Gov ern ment,

such as main tain ing zero-balance ac -

counts for the col lec tion of pub lic

mon ies.

Cash

“Gold” is val ued at the stat u tory

price of $42.2222 per fine troy

ounce. As of Sep tem ber 30, 1999,

the num ber of fine troy ounces was

261,571,005. The mar ket value of

gold on the Lon don Fixing as of the

re port ing date was $299.00 per fine

troy ounce. Gold was pledged as

col lat eral for gold cer tif i cates is sued 

to the FRBs to tal ing $11.0 bil lion.

See Note 14—Other Li a bil i ties.

Gold Cash and Other Monetary Assets

as of September 30

(In billions of dollars)

Cash ............................... 60.4

Gold ................................ 11.0

Domestic monetary assets ................ 1.7

International monetary assets ..............

42.1

 Total cash and other monetary assets .....

115.2

Domestic Monetary Assets 

“Do mes tic mon e tary as sets” con sist of liq uid as sets, 

other than cash that are based on the U.S. dol lar, in -

clud ing coins, sil ver bul lion and other coin age met als.

These items to taled $1.7 bil lion.

International Monetary Assets

As sets val ued on a ba sis other than

the U.S. dol lar com prise “In ter na -

tional mon e tary as sets.”

The U.S. re serve po si tion in the In -

ter na tional Mon e tary Fund (IMF)

rep re sents an in vest ment in the IMF.

The IMF pro vides fi nan cial as sis -

tance to about 180 coun tries. It seeks

to pro mote cur rency ex change sta bil -

ity.

Only a por tion of the re quired pay -

ment to the IMF was paid in cash,

with the re main der treated as a sub -

scrip tion. The re corded bal ance is

shown net of the sub scrip tion por tion, 

which rep re sents a let ter of credit pay -

able to the IMF. 

As of Sep tem ber 30, 1999, the re -

main ing avail able bal ance un der the

let ter of credit to taled $31.4 bil lion.

The U.S. re serve po si tion in the IMF

has a U.S. dol lar equiv a lent of $19.2

bil lion as of that date.

Spe cial Draw ing Rights (SDRs) are 

in ter est-bearing as sets ob tained

through ei ther IMF al lo ca tions, trans -

ac tions with IMF mem ber coun tries

or in ter est earn ings onSDR hold ings.

Trea sury’s Ex change Sta bi li za tion

Fund held SDRs to tal ing $10.3 bil lion 

at the end of fis cal 1999. Those hold -

ings are sim i lar to an in vest ment in

the IMF. 

On Sep tem ber 30, 1999, “Other li a -

bil i ties” in cluded an $6.8 bil lion inter est-bearing li a bil ity to the IMF.

This li a bil ity con sisted of SDRs ob -

tained through IMF al lo ca tions.
 NOTES TO THE FI NAN CIAL STATEMENTS 73

“Ac counts re ceiv able” in clud ing re lated in ter est re -

ceiv able, rep re sent claims to cash or other as sets from

en ti ties out side the Fed eral Gov ern ment that arise

from the sale of goods or ser vices, du ties, fines, cer tain 

li cense fees, re cov er ies, or other pro vi sions of the law.

An al low ance for es ti mated losses due to uncollectible 

amounts is es tab lished when it is more likely than not

that the receivables will not be to tally col lected. Ac -

counts re ceiv able are net of an al low ance for

uncollectible amounts of $12.5 bil lion as of Sep tem -

ber 30, 1999.

The SDR Act of 1968 au tho rized

the Sec re tary of the Trea sury to is sue 

SDR cer tif i cates to FRBs in ex -

change for cash. The value of these

certificates can not ex ceed the value

of the SDR hold ings. The Sec re tary

of the Trea sury de ter mines when the

FRBs can re deem the SDR cer tif i -

cates. The li a bil ity for such re demp -

tions, which to taled $7.2 bil lion at the 

end of the fis cal year, is in cluded in

Note 14—Other Li a bil i ties. Each

SDR was val ued at $1.38769 as of

Sep tem ber 30, 1999.

“In ter na tional mon e tary as sets”

also in clude for eign cur rency and

other mon e tary as sets de nom i nated

in for eign cur rency.

Note 3. Ac counts Receivable

International

Monetary

Assets, cont.

Accounts Receivable as of September 30

(In billions of dollars)

Agency or Program Name: 

Department of Energy ........................................ 4.1

Bureau of Reclamation........................................ 3.5

Foreign military sales ......................................... 2.4

Federal family education loan program ............................ 1.8

Operations and maintenance ................................... 1.6

Multi-Peril Crop Insurance Fund................................. 0.8

Tennessee Valley Authority power program ......................... 0.7

Hazardous Substance Superfund ................................ 0.6

Minerals Management Service .................................. 0.5

Mail delivery service.......................................... 0.5

Veterans Health Administration .................................. 0.4

Veterans Benefits Administration................................. 0.2

All other programs ...........................................

17.9

Total accounts receivable, net................................

35.0
 74 NOTES TO THE FI NAN CIAL STATE MENTS

Note 4. Loan and Loan Guar an tee Programs

The Fed eral Gov ern ment uses two

meth ods, di rect loans and loan guar -

an tee pro grams, to ac com plish the

same goals. These goals are to pro -

mote the Na tion’s wel fare by mak ing

di rect loans and guar an tee ing

non-Federal loans to seg ments of the

pop u la tion not ad e quately served by

non-Federal in sti tu tions. For those

un able to af ford credit at the mar ket

rate, Fed eral credit pro grams pro vide

sub si dies in the form of di rect loans

of fered at an in ter est rate lower than

the mar ket rate. For those to whom

non-Federal fi nan cial in sti tu tions are

re luc tant to grant credit be cause of

the high risk in volved, Fed eral credit

pro grams guar an tee the pay ment of

these non-Federal loans and ab sorb

the cost of de faults.

The long-term cost of loans and

guar an tees out stand ing for loans ob li -

gated or guar an tees com mit ted af ter

fis cal 1991 is the sub sidy cost al low -

ance for di rect loans out stand ing and

the li a bil ity for loan guar an tees out -

stand ing as of the end of fis cal 1999.

The long-term cost for loans ob li -

gated or guar an tees com mit ted be fore 

fis cal 1992 is the al low ance for

uncollectible amounts (or pres ent

value al low ance) for di rect loans out -

stand ing and the li a bil ity for loan

guar an tees out stand ing. The

long-term cost is based on all di rect

loans and guar an teed loans dis bursed

in fis cal 1999 and pre vi ous years that

are out stand ing as of the end of fis cal

1999. It in cludes the sub sidy cost of

these loans and guar an tees es ti mated

as of the time of loan dis burse ment

and sub se quent ad just ments such as

mod i fi ca tions, reestimates, am or ti za -

tion and write-offs.

“Net Loans Re ceiv able” in clude re -

lated in ter est and fore closed prop erty. 

They are in cluded in the as sets sec -

tion of the Bal ance Sheet.

The to tal sub sidy ex pense is the

cost of di rect loans and loan guar an -

tees rec og nized dur ing fis cal 1999. It

con sists of the sub sidy ex pense in -

curred for di rect and guar an teed loans 

dis bursed dur ing fis cal 1999, for

mod i fi ca tions made dur ing fis cal

1999 of loans and guar an tees out -

stand ing, and for reestimates as of the

end of fis cal 1999 of the cost of loans

and guar an tees out stand ing. This ex -

pense is in cluded in the State ment of

Net Cost.

The Di rect Stu dent Loan pro gram,

es tab lished in fis cal 1994, of fers four

types of ed u ca tion loans: Stafford,

Unsubsidized Stafford, PLUS for par -

ents and con sol i da tion loans. Ev i -

dence of fi nan cial need is re quired for 

a stu dent to re ceive a sub si dized

Stafford loan. The other three loan

pro grams are avail able to bor row ers

at all in come lev els. These loans usu -

ally ma ture 9 to13 years af ter the stu -

dent is no lon ger en rolled. They are

un se cured.

Ru ral Elec tri fi ca tion and Tele com -

mu ni ca tions loans are for the con -

struc tion and op er a tion of gen er at ing

plants, elec tric trans mis sion, and dis -

tri bu tion lines or sys tems. These

loans carry an av er age ma tu rity of

greater than 20 years and are usu ally

se cured. 

The ma jor ru ral pro grams are

funded through the Ru ral Housing In -

sur ance Fund pro gram ac count,

which includes:

• Very low and low-to-mod er -

ate in come home own er ship

loans and guar an tees.

• Very low-income hous ing re -

pair loans.

• Mul ti fam ily hous ing loans

and guar an tees.

• Do mes tic farm la bor hous ing

loans.

• Housing site loans.

• Credit sales of ac quired prop -

erty.

Loan pro grams are lim ited to ru ral

ar eas that in clude towns, vil lages and

other places not part of an ur ban area.

The ma jor ity of these loans ma ture in

ex cess of 25 years and are se cured by

the prop erty of the bor rower.

The Fed eral Fam ily Ed u ca tion

Loan pro gram, for merly known as the 

Guar an teed Stu dent Loan pro gram,

was es tab lished in fis cal 1965. Like

the Di rect Stu dent Loan pro gram, it

of fers four types of loans: Stafford,

Unsubsidized Stafford, PLUS for

par ents and con sol i da tion loans. 

The Agency for In ter na tional De -

vel op ment pro vides eco nomic as sis -

tance to se lected coun tries in sup port

of U.S. ef forts to pro mote sta bil ity

and se cu rity in ter ests in stra te gic re -

gions of the world. 

Ex port-Import Bank aids in fi nanc -

ing and pro mot ing U.S. ex ports. To

ac com plish its ob jec tives, the bank’s

au thor ity and re sources are used to:

• As sume com mer cial and po -

lit i cal risk that ex port ers or pri -

vate in sti tu tions are un will ing

or are un able to un der take.

• Over come ma tu rity and other 

lim i ta tions in pri vate sec tor fi -

nanc ing.

• As sist U.S. ex ports to meet

for eign of fi cially spon sored ex -

port credit com pe ti tion.

• Pro vide lead er ship and guid -

ance in ex port fi nanc ing to the

U.S. ex port ing and bank ing

com mu ni ties and to for eign bor -

row ers.

Re pay ment terms for these loans

are usu ally 1 to 7 years.

The Fed eral Housing Ad min is tra -

tion (FHA) pro vides mort gage in sur -

ance en cour ag ing lend ers to make

credit avail able to ex pand home own -

er ship. FHA pre dom i nately serves

bor row ers that the con ven tional mar -

ket does not ad e quately serve such as

first-time home buy ers, mi nor i ties,

lower-income fam i lies and res i dents

of un der served ar eas. 

Vet eran Housing Ben e fits pro vide

par tial guar anty of res i den tial mort -

gage loans is sued to el i gi ble vet er ans

re serv ists and ser vice mem bers by

pri vate lend ers. This guar an tee al -

lows vet er ans, re serv ists and ser vice

mem bers to pur chase a home with out

a sub stan tial down pay ment.

Other loan guar an tees in clude:

Small Busi ness Ad min is tra tion loans

to mi nor ity busi nesses; and the Farm

Ser vice Agency for farm own er ship,

emer gency and di sas ter loans.
 NOTES TO THE FI NAN CIAL STATEMENTS 75

Loan and Loan Guarantee Programs as of September 30

(In billions of dollars)

Loans 

and Loan

Guarantees

Outstanding

 Long-term

Cost of

Loans and

Loan

Guarantees

Outstanding

Net

Loans

Receivable

Amount

Guaranteed

by the

Federal

Government

Subsidy 

Expense 

for the Fiscal 

Year ended

September 30,

1999

Di rect Loans:

Federal direct

student loans ........ 46.5 0.4 46.1 0.4

Rural development ...... 68.9 13.1 55.8 

Federal family 

education 

loan programs........ 23.7 14.5 9.2 

Assistance for states

of the former

Soviet Union ......... 11.0 4.4 6.6 

Food for progress

credits ............. 10.6 7.2 3.4 0.5

HUD, all other ......... 10.3 0.6 9.7 

Direct loans

for spectrum

auction sales ......... 8.3 (0.4) 8.7 1.2

Export credit

guarantees.......... 6.9 3.9 3.0 

All other direct loan

programs ...........

49.9 8.7 41.2 1.7

Total ..............

236.1 52.4 183.7 3.8

Guar an teed Loans:

Federal Housing

Administration........ 551.4 5.9 508.1 (5.2)

Veterans housing

benefit program....... 213.5 5.8 84.0 1.1 

Federal family

education

loan programs........ 127.6 12.2 121.2 3.1 

Small business loans .... 39.6 1.4 31.9 (0.1)

Financing account

guarantees and

insurance ........... 24.2 5.6 24.2 1.9 

Rural Housing Service..... 10.0 0.2 9.0 

All other guaranteed

loan programs........

38.6 4.0 36.9 1.0 

Total...............

1,004.9 35.1 815.3 1.8 
 76 NOTES TO THE FI NAN CIAL STATE MENTS

Note 6. In ven tories and Re lated Property

“In ven tories and re lated prop erty”

con sist of the cat e go ries listed be low,

net of al low ance for ob so lete and un -

ser vice able in ven tory, as of Sep tem -

ber 30, 1999.

“In ven tory held for sale” in cludes

tan gi ble per sonal prop erty held for

sale, net of al low ances.

 “Op er ating Ma te rials and Sup -

plies” are com prised of tan gi ble per -

sonal prop erty pur chased for use in

nor mal op er a tions.

“Ma te rials and sup plies held for fu -

ture use” in clude tan gi ble per sonal

prop erty not readily avail able in the

mar ket or held be cause there is more

than a re mote chance that they will

even tu ally be needed.

“Stock pile ma te ri als” are stra te gic

and crit i cal ma te ri als held for use in

na tional de fense, con ser va tion or na -

tional emer gen cies due to stat u tory

re quire ments; for ex am ple, co balt, tin

and nickel.

“Com mod i ties” in clude items of

com merce or trade that have an ex -

change value used to sta bi lize or sup -

port mar ket prices.

 “Seized mon e tary in stru ments”

com prise only mon e tary in stru ments.

These mon e tary in stru ments are

await ing judge ment to de ter mine

own er ship. The re lated li a bil ity is in -

cluded in “Other li a bil i ties.” Other

prop erty seized by the Gov ern ment,

such as real prop erty and tan gi ble

per sonal prop erty, is not in cluded as a 

Gov ern ment as set. It is ac counted for

in agency prop erty-management re -

cords un til the prop erty is for feited,

re turned or oth er wise liq ui dated.

“For feited prop erty” is com prised

of mon e tary in stru ments, in tan gi ble

prop erty, real prop erty and tan gi ble

per sonal prop erty ac quired through

for fei ture pro ceed ings; prop erty ac -

quired by the Gov ern ment to sat isfy a

tax li a bil ity; and un claimed and aban -

doned mer chan dise.

Inventories and Related Property as of September 30

(In bil lions of dol lars) De fense All Oth ers Total

Inventory held for sale ................. 67.0 1.1 68.1 

Operating materials and supplies ......... 40.9 5.5 46.4 

Materials and supplies held for future use... 17.8 0.1 17.9 

Stockpile materials ................... 2.8 37.5 40.3 

Commodities ........................ - 0.4 0.4 

Seized monetary instruments ............ - 0.1 0.1 

Forfeited property ....................

 - 0.1 0.1 

 Total inventories and related property ...

128.5 44.8 173.3 

Taxes Receivable as of September 30

(In billions of dollars)

Gross taxes receivable.............. 79.2

Allowance for doubtful accounts .......

(56.5)

Taxes receivable, net .............

22.7

Note 5. Taxes

Re ceiv able

Taxes re ceiv able are the gross

tax re ceiv ables net of al low ance

for doubt ful ac counts.
 NOTES TO THE FI NAN CIAL STATEMENTS 77

Note 7.

Property, Plant

and Equipment

“Prop erty, plant and equip ment” con sist of tan gi ble as sets, in clud -

ing land, build ings, struc tures and other as sets used to pro vide goods

and ser vices. Cer tain types of tan gi ble as sets, col lec tively re ferred to

as “Stew ard ship As sets,” are not re ported as prop erty, plant and

equip ment or else where on the Bal ance Sheet. This is based on ac -

count ing stan dards that be came ef fec tive for fis cal 1998. “Stew ard -

ship as sets” in clude “Na tional de fense as sets,” “Her i tage as sets” and

“Stew ard ship land.” These as sets are pre sented in the Stew ard ship In -

for ma tion sec tion.

Property, Plant and Equipment as of September 30

(In bil lions of dol lars) Cost

 Ac cu mu lated

 De pre ci a tion/

 Am or ti za tion Net

Buildings, structures and facilities .......... 284.8 135.3 149.5

Furniture, fixtures and equipment .......... 151.0 75.0 76.0 

Construction in progress................. 49.3 - 49.3 

Land and land improvements ............. 25.4 5.5 19.9 

Automated data processing software........ 3.8 2.0 1.8 

Assets under capital lease ............... 1.5 0.5 1.0 

Leasehold improvements ................ 2.0 0.7 1.3 

 Total property, plant and equipment ......

517.8 219.0 298.8 

Note 8. Other As sets

The cat e gory of “Other as sets” con sists of ad -

vances and pre pay ments, se cu ri ties and in vest ments,

and other Gov ern ment as sets not oth er wise clas si fied. 

This fig ure pres ents se cu ri ties at cost, net of un am or -

tized pre mi ums and dis counts.

Other Assets as of September 30

(In billions of dollars) 

Securities and investments ....... 17.2

Advances and prepayments....... 13.0

Other .......................

24.1

 Total other assets ............

54.3
 78 NOTES TO THE FI NAN CIAL STATE MENTS

Note 9.

Ac counts

Pay able

Accounts Payable as of September 30

(In billions of dollars)

Agency:

Interest on Federal debt securities

held by the public ....................... 42.6

DOD .................................. 16.7

OPM .................................. 1.2

U.S. Postal Service ....................... 4.0

NASA ................................. 2.9

Agriculture.............................. 2.7

VA .................................... 2.3

HUD .................................. 1.8

Justice................................. 1.6

AID ................................... 1.4

General Services Administration .............. 1.2

Transportation ........................... 1.0

Energy ................................. 1.0

Executive Office of the President ............. 1.0

All other departments ......................

4.4

 Total accounts payable.................. 85.8

The fig ure un der “Ac counts pay -

able” in cludes “In ter est on Fed eral

debt se cu ri ties held by the pub lic.”

This re flects un paid in ter est ac crued

on Federal debt se cu ri ties held by the

pub lic (see Note 10) as of Sep tem ber

30, 1999. Other ac counts pay able are

for goods and prop erty or dered and

re ceived, and for ser vices ren dered

by other than em ploy ees.

“Fed eral debt held by the pub lic”

to taled $3,631.6 bil lion at the end

of fis cal 1999. The ac com pa ny ing

Fed eral Debt Se cu ri ties ta ble de -

tails Gov ern ment bor row ing to fi -

nance op er a tions. This ta ble shows

debt at face value. Un am or tized pre -

mi ums are added and un am or tized

dis counts sub tracted. 

“ Intragovernmental hold ings”

rep re sent the por tion of the gross

Fed eral debt held as in vest ments by

Gov ern ment en ti ties.

This in cludes ma jor trust funds.

For more in for ma tion on trust

funds, see Note 19—Ded i cated Col -

lec tions. This re port elim i nates

intragovernmental hold ings in con -

sol i da tion.

Se cu ri ties that rep re sent debt held 

by the pub lic are pri mar ily is sued by

the Trea sury and in clude:

• In ter est-bearing mar ket able

se cu ri ties (bills, notes and

bonds).

• In ter est-bearing non mar ket -

able se cu ri ties (for eign se ries,

State and lo cal gov ern ment se -

ries, do mes tic se ries, and

sav ings bonds).

• Non-interest bear ing debt

(ma tured and other).

As of Sep tem ber 30, 1999, $5,568 

bil lion of Fed eral debt was sub ject

to a stat u tory limit (31 U.S.C.

3101). That limit was $5,950 bil -

lion. The debt sub ject to the limit in -

cludes:

• Debt held by the pub lic and

intragovernmental hold ings,

Definitions of Debt

• Gross Fed eral Debt - All Gov ern ment debt, whether is -

sued by Trea sury (Trea sury se cu ri ties) or by other agen -

cies (agency se cu ri ties). “Gross Fed eral debt” is ei ther held 

by the pub lic or by Fed eral Gov ern ment en ti ties.

• Debt Held by the Pub lic - Fed eral debt held out side the 

Gov ern ment by in di vid u als, cor po ra tions, State or lo cal

gov ern ments, the Fed eral Re serve Sys tem, and for eign

gov ern ments and cen tral banks.

• Intragovernmental hold ings - Fed eral debt held by

Gov ern ment trust funds, re volv ing funds and spe cial funds. 

Note 10.

Fed eral Debt

Se cu ri ties

Held by

the Pub lic
 NOTES TO THE FI NAN CIAL STATEMENTS 79

Federal Debt Securities Held by the Public as of September 30

(In bil lions of dol lars)

Be gin ning 

Bal ance

Sept. 30,

1998

Net

Change

Dur ing

Fis cal

1999

End ing

Bal ance

Sept. 30,

1999

Av er age

In ter est

Rate

Dur ing

Fis cal 1999

Treasury Securities:

Marketable securities ................... 3,331.0 (98.0) 3,233.0 6.341% 

Non-marketable securities ................ 2,187.7 226.6 2,414.3 6.674% 

Non-interest bearing debt ................ 7.5 1.5 9.0 

Total Treasury securities ...............

5,526.2 130.1 5,656.3 

Plus: Unamortized premium 

on Treasury securities................ 16.9 (0.9) 16.0 

Less: Unamortized discount 

on Treasury securities................

78.9 1.5 80.4 

Total Treasury securities, 

 net of unamortized premiums 

 and discounts....................

5,464.2 127.7 5,591.9 

Agency Securities:

Tennessee Valley Authority ............... 26.7 (0.8) 25.9 

All other agencies ......................

2.3 (0.2) 2.1 

 Total agency securities, 

 net of unamortized 

 premiums and discounts ............

29.0 (1.0) 28.0 

Total Federal debt ................

5,493.2 126.7 5,619.9 

Less: Intragovernmental holdings, 

 net of unamortized premiums

 and discounts ..................

1,775.5 212.8 1,988.3 

 Total Federal debt securities 

 held by the public ..............

3,717.7 (86.1) 3,631.6 

Types of mar ket able se cu ri ties:

Bills—Short-term ob li ga tions is sued with a term of 1 year or less.

Notes—Me dium-term ob li ga tions is sued with a term of at least 1 year, but not more than 10 years.

Bonds—Long-term ob li ga tions of more than 10 years.

less most agency securities, Fed eral Fi nancing Bank debt,

mis cel la neous debt, and un re al ized dis count on Gov ern ment

ac count se ries se cu ri ties.

• Un am or tized net dis counts on pub lic is sues of Trea sury

notes and bonds (other than zero-coupon bonds). 

Note 10. Federal

Debt, cont.
 80 NOTES TO THE FI NAN CIAL STATE MENTS

Intragovernmental Holdings: Federal Debt Securities

Held as Investments by Government Accounts as of September 30

(In billions of dollars)

Be gin ning

Bal ance

Sept. 30,

1998

Net

Change

Dur ing

Fis cal

1999

End ing

Bal ance

Sept. 30,

1999

SSA, Old-Age and Survivors Insurance .............. 653.3 108.9 762.2 

OPM, civil service retirement and disability ............ 451.3 30.0 481.3 

DOD, military retirement ......................... 133.8 7.5 141.3 

HHS, Hospital Insurance Fund..................... 118.3 35.4 153.7 

SSA, disability insurance......................... 77.0 15.7 92.7

Labor, unemployment............................ 70.6 6.8 77.4

HHS, supplementary medical insurance .............. 39.5 (13.0) 26.5 

FDIC funds ................................... 39.1 1.7 40.8

Railroad Retirement Board........................ 21.8 2.6 24.4

OPM, Employees Life Insurance ................... 19.4 1.3 20.7

Transportation, Highway Trust Fund ................. 17.9 10.2 28.1

Energy, nuclear waste disposal .................... 11.2 4.0 15.2

All other programs and funds ...................... 117.6 8.0 125.6 

 Subtotal ................................... 1,770.8 219.1 1,989.9 

Plus: Unamortized net premiums (discounts) ..........

4.7 (6.3) (1.6)

Total intragovernmental holdings, net .............

1,775.5 212.8 1,988.3 
 NOTES TO THE FI NAN CIAL STATE MENTS 81

The Gov ern ment of fers its em ploy ees life and health in sur ance, as

well as re tire ment and other ben e fits. These ben e fits ap ply to ci vil ian

and mil i tary em ploy ees.

The Fed eral Gov ern ment ad min is ters more than 40 pen sion plans.

The Of fice of Per son nel Man age ment (OPM) ad min is ters the larg est

ci vil ian plan. De part ment of De fense (DOD), mean while, ad min is ters

the larg est mil i tary plan. The Gov ern ment of fers both de fined ben e fit

and de fined con tri bu tion pen sion plans. The larg est are de fined ben e fit

plans. The change in ac tu ar ial ac crued post-retirement health ben e fits

li a bil ity and com po nents of re lated ex pense for fis cal 1999 are pre -

sented be low.

Federal Employee and Veteran Benefits Payable as of September 30

(In billions of dollars) Civilian Military Total 

Pensions.................................. 1,025. 2 661.8 1,687.0 

Post-retirement health benefits ................. 179.7 196.2 375.9

Veterans compensation 

and burial benefits ......................... - 483.2 483.2 

Liability for other benefits...................... 49.0 5.6 54.6

Total Federal employee and 

veteran benefits payable ...................

 1,253.9 1,346.8 2,600.7

Note 11.

Fed eral Em ployee

and Vet eran

Ben e fits Payable

Change in Actuarial Accrued Pension Liability 

and Components of Related Expenses

(In billions of dollars) Civilian1 Military To tal

Actuarial accrued pension liability, 

as of September 30, 1998.................... 990.3 650.5 1,640.8

Pen sion ex pense:

Normal costs ............................. 22.2 10.4 32.6

Interest on liability .......................... 72.0 33.7 105.7

Plan amendments and assumption changes ...... - 5.7 5.7

Actuarial (gains)/losses ...................... (13.2) (6.5) (19.7)

Total pension expense ..................... 81.0 43.3 124.3

Benefits paid ............................. (46.1) (32.0) (78.1)

Actuarial accrued pension liability,

as of September 30, 1999 ................

1,025.2 661.8 1,687.0

1 Does not in clude U.S. Tax Court and ju di cial branch

Significant Assumptions Used in Determining

Pension Liability and the Related Expense

(In percentages)

 

Civilian Military 

Rate of interest ............................. 7.00% 6.25%

Rate of inflation............................. 4.00% 3.00%

Projected salary increases ..................... 4.25% 3.50% 
 82 NOTES TO THE FI NAN CIAL STATE MENTS

Pensions

The larg est ci vil ian pen sion plan is

ad min is tered by OPM and cov ers ap -

prox i mately 90 per cent of all Fed eral

ci vil ian em ploy ees. This plan in -

cludes two com po nents of de fined

ben e fits. Those are the Civil Ser vice

Re tire ment Sys tem (CSRS) and the

Fed eral Em ployees’ Re tire ment Sys -

tem (FERS). The ba sic ben e fit com -

po nents of the CSRS and the FERS

are fi nanced and op er ated through the 

Civil Ser vice Re tire ment and Dis abil -

ity Fund (CSRDF). 

CSRDF mon eys are gen er ated pri -

mar ily from em ploy ees, agency con -

tri bu tions, pay ments from the gen eral 

fund and in ter est on in vest ments in

Fed eral debt se cu ri ties. See Note

19—Ded i cated Col lec tions, Civil

Ser vice Re tire ment and Dis abil ity

Fund.

The Fed eral Re tire ment Thrift In -

vest ment Board, an in de pend ent

Gov ern ment agency, op er ates the

Thrift Sav ings Plan. Fed eral em ploy -

ees and re tir ees cov ered by CSRS and 

FERS own the fund’s as sets. This Fi -

nan cial Re port ex cludes this fund be -

cause the em ploy ees own its as sets.

Fed eral debt held by the fund is in -

cluded and clas si fied as Fed eral debt

held by the pub lic. FERS em ploy ees

may con trib ute up to 10 per cent of

base pay to the plan, which the Gov -

ern ment matches up to 5 per cent.

CSRS em ploy ees may con trib ute up

to 5 per cent of base pay with no Gov -

ern ment match. 

The Thrift Sav ings Plan held $29.4

bil lion in non mar ket able Trea sury se -

cu ri ties as of Sep tem ber 30, 1999.

The Fed eral Gov ern ment’s re lated li -

a bil ity is in cluded in “To tal Fed eral

debt se cu ri ties held by the pub lic” in

the Bal ance Sheet.

Health Benefits 

Ci vil ian re tir ees pay the same in -

sur ance pre mium as ac tive em ploy -

ees un der the Fed eral Em ployee

Health Ben e fits Pro gram (FEHBP).

These pre mi ums cover only a por tion

of the costs. 

Other Benefits

Em ployee and an nu itant con tri bu -

tions and in ter est on in vest ments

fund a por tion of the Fed eral Em -

ployees Group Life In sur ance pro -

gram. This in sur ance pro gram pays

pri vate in sur ance com pa nies for Fed -

eral em ploy ees’ group life in sur ance.

The Of fice of Per son nel Man age -

ment ad min is ters this pro gram.

Civilian Employees

Significant Assumptions Used in Determining 

Post-Retirement Health Benefits and the Related Expense

(In percentages) Ci vil ian Mil i tary

Rate of interest.............................. 7.0% 6.5%

Rate of health care cost inflation ................. 7.0% 4.5-10.4%

Change in Actuarial Accrued Post-Retirement Health Benefits Liability 

and Components of Related Expenses

(In billions of dollars) Civilian Military To tal

Actuarial accrued post-retirement 

health benefits liability, 

as of September 30, 1998........................ 181.8 223.4 405.2

Prior period adjustments ........................... - (37.5) (37.5)

Corrected beginning post-retirement health

benefits liability ................................ 181.8 185.9 367.7

Post-retirement health ben e fits ex pense:

Normal costs ................................. 6.0 4.7 10.7

Interest on liability .............................. 11.8 12.0 23.8

Actuarial (gains)/losses ..........................

(13.5) - (13.5)

Total post-retirement 

health benefits expense ...................... 4.3 16.7 21.0

Claims paid .................................... (6.4) (6.4) (12.8)

Actuarial accrued post-retirement 

health benefits liability, as of September 30, 1999 ...

179.7 196.2 375.9
 NOTES TO THE FI NAN CIAL STATE MENTS 83

Pensions

The De part ment of De fense

(DOD) Mil i tary Re tire ment Fund fi -

nances mil i tary re tire ment and sur -

vi vor ben e fit pro grams.

The mil i tary re tire ment sys tem

con sists of a funded, noncontributory, de fined ben e fit plan. It ap -

plies to the Army, Navy, Ma rine

Corps and Air Force. This sys tem

in cludes non-disability re tire ment

pay, dis abil ity re tire ment pay and

re tire ment pay for re serve ser vice

and sur vi vor an nu ity pro grams. 

Health Benefits

Mil i tary ben e fits en ti tle re tir ees

and their de pend ents to health care

in mil i tary med i cal fa cil i ties if a fa -

cil ity can pro vide the needed care.

Un til they reach age 65, mil i tary re -

tir ees and their de pend ents also are

en ti tled to be re im bursed for the

cost of health care from ci vil ian pro -

vid ers. A pre mium is charged to en -

roll in DOD’s ci vil ian care pro gram. 

In ad di tion, there are de duct ible and

copayment re quire ments for ci vil -

ian care. Af ter they reach 65 years

of age, Medicare cov ers mil i tary re -

tir ees.

Mil i tary re tiree health care figures in clude the cost of ed u ca tion

and train ing, staff ing, build ings and

equip ment, as well as the op er a tions 

and main te nance of med i cal fa cil i -

ties. They also in clude claims paid

to ci vil ian pro vid ers and the cost of

ad min is ter ing the pro gram. 

Compensation 

and Burial Benefits

The Gov ern ment com pen sates

dis abled vet er ans and their sur vi -

vors. Vet erans com pen sa tion is pay -

able as a dis abil ity ben e fit or a sur -

vi vor’s ben e fit. En ti tle ment to

com pen sa tion de pends on: the vet -

eran’s dis abil i ties hav ing been in -

curred in, or ag gra vated dur ing, ac -

tive mil i tary ser vice; death while on

duty, or death re sult ing from ser -

vice-connected dis abil i ties, if not in

ac tive duty.

Burial ben e fits in clude a burial

and plot or in ter ment al low ance

pay able for a vet eran, who at the

time of death, qual i fied to re ceive

com pen sa tion or a pen sion, or

whose death oc curred in a VA fa cil -

ity.

The li a bil ity for vet er ans com pensa tion and burial ben e fits pay able

de creased in fis cal 1999 by $97.8

bil lion. The pri mary fac tor con trib -

ut ing to this de crease was a change

in in ter est rate as sump tions. Due to

this change, the State ment of Net

Cost item ti tled “Vet erans ben e fits

and ser vices” de creased by $204.8

bil lion. 

Other Benefits

Vet erans in sur ance in cludes the

fol low ing pro grams: 

• United States Gov ern ment

Life In sur ance es tab lished in

1919 to han dle new is sues and

the con ver sion of World War I

Risk Term In sur ance.

• Na tional Ser vice Life In sur -

ance es tab lished in 1940 to

meet the needs of World War II 

ser vice per son nel.

• Vet erans Spe cial Life In sur -

ance es tab lished in 1951 for

Ko rean vet er ans who did not

have ser vice-connected dis abil -

i ties.

• Ser vice-Disabled Vet erans

In sur ance es tab lished in 1951

for vet er ans with ser -

vice-connected dis abil i ties.

• Vet erans Re opened In sur ance 

es tab lished a 1-year re open ing

in 1965 of Na tional Ser vice

Life In sur ance for cer tain dis -

abled World War II and Ko rean

vet er ans. 

Military Employees

 (Including Veterans)

Veterans Compensation and Burial Benefits

Payable as of September 30 

(In billions of dollars)

Veterans ................................................... 397.5

Survivors ................................................... 82.8

Burial benefits ............................................... 2.9

Total compensation and burial benefits payable .....................

483.2
 84 NOTES TO THE FI NAN CIAL STATE MENTS

Dur ing World War II and the Cold

War, the United States de vel oped a

mas sive in dus trial com plex to re -

search, pro duce and test nu clear

weap ons. This in cluded nu clear re -

ac tors, chem i cal pro cess ing build -

ings, metal ma chin ing plants, lab o -

ra to ries and main te nance fa cil i ties. 

These ac tiv i ties left an en vi ron -

men tal leg acy of con tam i nated ar eas

and build ings. Vol umes of waste and 

spe cial nu clear ma te ri als re quire

treat ment, sta bi li za tion and dis posal. 

The re sult ing en vi ron men tal li a bil i -

ties con sist of the costs as so ci ated

with re mov ing, con tain ing and/or

dis pos ing of this haz ard ous waste. 

Of those en vi ron men tal li a bil i ties,

this re port pres ents only cleanup

costs from Fed eral op er a tions

known to re sult in haz ard ous waste

that the Fed eral Gov ern ment is re -

quired to clean up by Fed eral, State,

or lo cal stat utes and/or reg u la tions.

The De part ment of En ergy in -

curred op er at ing and cap i tal ex pen -

di tures to tal ing $5.8 bil lion in fis cal 

1999. It used these funds to

remediate leg acy waste. This in -

cludes nu clear ma te ri als and fa cil i -

ties sta bi li za tion, and waste treat -

ment, stor age and dis posal ac tiv i ties

at each in stal la tion.

“En vi ron men tal man age ment fa -

cil i ties and sites” in clude costs for

en vi ron men tal res to ra tion; nu clear

ma te rial and fa cil ity sta bi li za tion;

and waste treat ment, stor age and dis -

posal ac tiv i ties at each in stal la tion.

It also in cludes cost for re lated ac tiv -

i ties such as land lord re spon si bil i -

ties, pro gram man age ment and le -

gally pre scribed grants for

par tic i pa tion and over sight by Na -

tive Amer i can tribes and reg u la tory

agen cies. 

“Ac tive and sur plus fa cil i ties”

rep re sent an tic i pated remediation

cost for those fa cil i ties that are con -

duct ing on go ing op er a tions but ul ti -

mately will re quire sta bi li za tion, de -

ac ti va tion and de com mis sion ing.

“High-level waste and spent nu -

clear fuel” in clude the full cost to

pro vide for per ma nent dis posal of

the Na tion’s high-level ra dio ac tive

waste and spent nu clear fuel. 

 Pro jects with no cur rent fea si bil ity 

remediation ap proach are ex cluded

from the es ti mate. Sig nif i cant pro -

jects not in cluded are:

• Nu clear ex plo sion test ar eas

(e.g., Ne vada test site).

• Large sur face wa ter bod ies

(e.g., Clinch and Co lum bia

Rivers).

• Most ground wa ter (even

with treat ment, fu ture use will

be re stricted).

• Some spe cial nu clear ma te -

rial (e.g., ura nium

hexafluoride).

The De part ment of De fense

(DOD) is re spon si ble for the cleanup

of fa cil i ties it op er ates or has op er -

ated, in clud ing res to ra tion of ac tive

and Base Re align ment and Clo sure

in stal la tions and for merly used de -

fense sites; dis posal of chem i cal

weap ons; en vi ron men tal costs as so -

ci ated with the dis posal of weap ons

sys tems (pri mar ily nu clear pow ered

air craft car ri ers and sub ma rines); and 

for train ing range cleanup.

Environmental and Disposal Liabilities as of September 30

(In billions of dollars)

Department of Energy:

Environmental management facilities and sites .................... 183.7

Active and surplus facilities ................................... 25.4

High-level waste and spent nuclear fuel .......................... 14.9

Other ................................................... 6.7

Total Energy ............................................ 230.7

DOD:

Training ranges............................................ 34.0

Active installations ......................................... 15.4

Nuclear powered aircraft carriers and submarines .................. 10.8

Chemical weapons disposal .................................. 8.9

Other ................................................... 10.6

Total DOD.............................................. 79.7

All other agencies ........................................ 2.8

 Total environmental and disposal liabilities.....................

313.2

Note 12. En vi ron men tal and Dis posal Li a bil i ties
 NOTES TO THE FI NAN CIAL STATE MENTS 85

Benefits Due and Payable as of September 30

(In billions of dollars)

Federal Old-Age and Survivors Insurance.... 29.0

Federal Hospital Insurance (Medicare Part A). 13.3

Grants to States for Medicaid ............. 11.6

Federal Supplemental Medical Insurance 

(Medicare Part B) .................... 10.4

Federal Disability Insurance .............. 6.8

Supplemental security income ............ 1.0

Railroad retirement..................... 0.7

Unemployment insurance ................ 0.4

Other benefits ........................ 0.6

 Total benefits due and payable ..........

73.8

Note 13.

Ben e fits Due

These amounts are the ben e fits

owed to pro gram re cip i ents or med ical ser vice pro vid ers as of the fis cal

year end that have not yet been paid.

For a de scrip tion of the pro grams, see 

the Stew ard ship Re spon si bil ities sec -

tion un der Stew ard ship In for ma tion.

Note 14. Other Li a bil i ties

“In sur ance pro grams” in clude

bank de posit in sur ance, guar an tees

of pen sion ben e fits, life and med i cal

in sur ance. They also in clude in sur -

ance against dam age to prop erty

(home, crops and air planes) caused

by per ils such as flood ing and other

nat u ral di sas ters, risk of war, and in -

sol vency.

“Ac crued wages and ben e fits”

con sist of the es ti mated li a bil ity for

ci vil ian and com mis sioned of fi cers’

sal a ries and wages earned but un -

paid. They also in clude funded

an nual leave and other em ployee

ben e fits that have been earned but

are un paid.

Amounts re ceived for goods and

ser vices to be pro vided com prise

“Ad vances from oth ers”.

 “Ex change Sta bi li za tion Fund”

in cludes Spe cial Draw ing Rights

(SDRs) cer tif i cates is sued to the

Fed eral Re serve Banks and al lo ca -

tions from the In ter na tional Mon e -

tary Fund.

 “Other debt” in cludes Gov ern ment 

ob li ga tions, whether se cured or un se -

cured, not in cluded in pub lic debt. 

“Gold cer tif i cates” are monetarized por tions of gold and the cer tif -

i cates are de pos ited in the Fed eral Re -

serve Bank. 

 “De ferred rev e nue” re fers to rev e -

nue re ceived but not yet earned. 

“Other mis cel la neous li a bil i ties”

in clude amounts ac crued for con tin -

gent liabilities.

Other Liabilities as of September 30

(In billions of dollars)

Insurance programs ........................................ 21.2

Accrued wages and benefits ................................. 18.5

Advances from others ...................................... 16.0

Exchange Stabilization Fund ................................. 14.0

Other debt............................................... 11.3

Gold certificates .......................................... 11.0

Deferred revenue ......................................... 9.5

Unclassified deposited funds ................................. 7.1

Other miscellaneous liabilities ................................ 60.4

 Total other liabilities ......................................

169.0
 86 NOTES TO THE FI NAN CIAL STATE MENTS

Note 15. Col lec tions and Re funds of Fed eral Revenue

Trea sury is the Fed eral Gov ern ment’s prin ci pal rev e -

nue-collecting agency. 

Col lec tions of “In di vid ual income and tax with hold -

ings” in clude es ti mated in come tax pay ments by in di vid -

u als, So cial Se cu rity and Medicare taxes, rail road re tire -

ment taxes and in di vid ual in come tax with hold ings. 

Re funds of “In di vid ual in come and tax with hold ings”

in clude re funds from the Earned In come Tax Credit

(EITC). The EITC is a re fund able credit for tax pay ers

who work and whose earn ings fall be low the es tab lished

ceil ing. A re fund able credit is first used to off set any in di -

vid ual taxes owed; any re main ing amounts are is sued to

the tax payer. Amounts re ported for cor po rate in come

taxes in tax year 1999 in clude cor po rate taxes of $8 bil -

lion for tax year 2000. In fis cal 1999, the IRS is sued $25.6 

bil lion in EITC re funds. An ad di tional $4.9 bil lion of the

EITC cred its were ap plied to re duce tax payer li a bil ity.

These EITC amounts are in cluded in “Gross Cost” in the

State ment of Net Costs as a com po nent of the in come se -

cu rity func tion.

Collections of Federal Revenue for the Fiscal Year Ended September 30

 Tax year to which collections relate

(In billions of dollars)

Federal

Revenue

Collections 1999 1998 1997 

Prior

years

Individual income and tax withholdings ... 1,588.2 1,020.4 547.4 11.4 9.0

Corporate income taxes .............. 216.0 142.8 62.5 1.1 9.6

Unemployment taxes ................. 26.5 24.6 1.9 - -

Excise taxes ....................... 72.0 48.4 23.5 - 0.1

Estate and gift taxes ................. 28.4 - 25.0 1.0 2.4

Customs duties..................... 19.1 19.1 - - -

Federal Reserve Bank earnings......... 26.0 18.6 7.4 - -

Fees and licenses................... 1.6 1.6 - - -

Fines, penalties, interest and other taxes. . 6.7 4.4 2.3 - -

Total ...........................

1,984.5 1,279.9 670.0 13.5 21.1
 NOTES TO THE FI NAN CIAL STATE MENTS 87

Federal Tax Refunds Disbursed for the Fiscal Year Ended September 30

 Tax year to which the refunds relate 

(In billions of dollars)

Refunds 

Dispersed 1999 1998 1997 

Prior

years

Individual income 

and tax withholdings .............. 149.2 0.6 138.9 7.2 2.5

Corporate income taxes ............. 33.8 1.5 14.2 6.3 11.8

Unemployment taxes ............... 0.1 - 0.1 - -

Excise taxes ..................... 1.3 0.2 0.4 - 0.7

Customs duties ................... 1.2 0.4 0.3 0.1 0.4

Estate and gift taxes ............... 0.7 - 0.2 0.3 0.2

Total .........................

186.3 2.7 154.1 13.9 15.6

Note 16. Un rec on ciled Trans ac tions

 Af fecting the Change in Net Po si tion

The rec on cil i a tion of the “Change in Net Po si tion” re -

quires that the dif fer ence be tween end ing and be gin ning

net po si tion equals the ex cess of rev e nues over cost, plus

or mi nus prior pe riod ad just ments. 

The un rec on ciled trans ac tions needed to bring the

change in net po si tion into bal ance net to $24.4 bil lion.

The three pri mary fac tors af fect ing this out-of-balance

sit u a tion are:

• Im proper re cord ing of intragovernmental trans -

ac tions by agen cies.

• Trans ac tions af fect ing Bal ance Sheet as sets and

li a bil i ties not prop erly iden ti fied by agen cies as

prior pe riod ad just ments.

• Tim ing dif fer ences and er rors in the re port ing of

trans ac tions.

The Fed eral fi nan cial com mu nity con sid ers the iden ti fi -

ca tion and re port ing of these un rec on ciled trans ac tions a

pri or ity. 
 88 NOTES TO THE FI NAN CIAL STATE MENTS

The Gov ern ment has en tered

into con trac tual com mit ments

that re quire fu ture use of fi nan -

cial re sources. It has sig nif i cant

amounts of long-term lease ob li -

ga tions as shown in the ta ble be -

low. “Un de liv ered or ders” rep re -

sent the value of goods and

ser vices or dered that have not yet

been re ceived. 

Con tin gent li a bil i ties re lated to

the loan guar an tee pro grams are

de scribed in Note 4.

A con tin gency is an ex ist ing

con di tion or sit u a tion in volv ing

un cer tainty as to a pos si ble loss.

A loss is con sid ered rea son ably

pos si ble if the fu ture con firm ing

event or events are more than re -

mote, but less than prob a ble.

These con tin gen cies do not in -

clude ex ist ing con di tions or sit u -

a tions where the fu ture oc cur ring

event is only con sid ered re mote,

nor do they in clude con tin gen cies 

that would re sult in a gain.

The Gov ern ment also is sub -

ject to con tin gen cies, in clud ing

lit i ga tion, that arise in the nor mal

course of op er a tions. The ul ti -

mate dis po si tion of these mat ters

is un known. Based on in for ma -

tion cur rently avail able, how ever, 

it is man age ment’s opin ion that

the ex pected out come of these

mat ters, in di vid u ally or in the ag gre -

gate, will not have a ma te rial ad verse

ef fect on the fi nan cial state ments, ex -

cept for lit i ga tion de scribed in the

next para graph. 

Nu mer ous cases are pend ing in -

volv ing su per vi sory good will at sav -

ings and loan in sti tu tions, Medicare

cost re port set tle ments, har bor main -

te nance fees and cer tain other mat -

ters. While it is likely that the United

States will have to pay some amount

of dam ages on the claims, the ul ti -

mate costs can not be rea son ably es ti -

mated at this time.

The Gov ern ment also has un used

stat u tory lines of credit to Gov ern -

ment spon sored en ter prises to tal ing

$10 bil lion.

Financial Treatment of Loss Contingencies

Probability of Loss Probable

Reasonably Possible, more

than remote but less than

probable

Remote, chance of

occurrence slight

Financial Treatment Balance Sheet Footnote Disclosure No disclosure

“Prior pe riod ad just ments”

con sist of a net $6.9 bil lion ad -

just ment to the open ing net po si -

tion, to cor rect er rors in prior pe -

ri ods.

Sig nif i cant com po nents of this

net ad just ment in clude:

• A $37.5 bil lion de crease

of the be gin ning post-re tire -

ment health ben e fits li a bility for mil i tary per son nel

(see Note 11— Fed eral Em -

ployee and Vet eran Ben e fits 

Pay able), and 

• A $28.5 bil lion in crease of

the en vi ron men tal li a bil i ties

for long-term sur veil lance and

main te nance, and de con tam i -

na tion and de com mis sion ing

costs. 

Note 17. Prior Pe riod Ad just ments

Note 18. Com mit ments and Con tin gencies
 NOTES TO THE FI NAN CIAL STATE MENTS 89

Commitments as of September 30

(In billions of dollars)

Capital

Leases

Operating

Leases

Long-term Leases:

General Services Administration (GSA) ................ 0.3 15.7

U.S. Postal Service ............................... 0.6 8.5

Department of Justice............................. - 3.9

National Institutes of Health......................... - 0.6

Other long-term leases ............................ 0.9 2.3

 Total long-term leases ...........................

1.8 31.0

Undelivered Orders:

HUD .......................................... 104.3

Navy .......................................... 28.0

Education ...................................... 21.5

HHS .......................................... 19.7

Executive Office of the President ..................... 16.4

Defense agencies ................................ 14.1

Rural development ............................... 13.9

Other undelivered orders........................... 187.1

Total undelivered orders ..........................

405.0

Other Commitments:

National Oceanic and Atmospheric Administration

satellites and weather systems ..................... 5.6

Transportation................................... 3.0

GSA .......................................... 1.5

Navy .......................................... 0.4

Commodity Credit Corporation ....................... 0.3

Total other commitments .........................

10.8
 90 NOTES TO THE FI NAN CIAL STATE MENTS

Contingencies as of September 30

(In billions of dollars)

Insurance:

Export-Import Bank................................ 40.9

Pension Benefit Guaranty Corporation .................. 19.0

Overseas Private Investment Corporation ............... 0.2

Bank Insurance Fund .............................. 0.2

Other insurance programs........................... 0.2

Total insurance programs ..........................

60.5

Unadjudicated Claims:

Air Force ....................................... 0.8

Interior ......................................... 0.4

GSA ........................................... 0.2

Federal Savings and Loan Insurance Corporation

Resolution Fund ................................ 0.1

Bank Insurance Fund .............................. 0.1

Army .......................................... 0.1

Other unadjudicated claims .......................... 0.6

Total unadjudicated claims .........................

2.3

Other Contingencies:

Multi-lateral development banks....................... 67.4

Production flexibility program......................... 5.1

Conservation reserve program ........................ 1.3

Environmental cleanup ............................. 1.1

Contingent liabilities ............................... 0.5

Nuclear waste fund................................ 0.5

Real property activities ............................. 0.4

Other contingencies ............................... 1.4

 Total other contingencies...........................

77.7
 NOTES TO THE FI NAN CIAL STATE MENTS 91

The term “trust fund,” as used in

this re port and in Fed eral bud get ac -

count ing, is fre quently mis un der -

stood. In the pri vate sec tor, “trust

fund” re fers to funds of one party held 

by a sec ond party (the trustee) in a fi -

du ciary ca pac ity. In the Fed eral bud -

get, the term “trust fund” means only

that the law re quires the funds be ac -

counted for sep a rately, used only for

spec i fied pur poses and des ig nated as

a “trust fund.” A change in law may

change the fu ture re ceipts and the

terms un der which the fund’s re -

sources are spent.

“Trust fund as sets” rep re sent the

un ex pended bal ance from all sources

of re ceipts and amounts due the trust

fund, re gard less of source. This in -

cludes re lated gov ern men tal trans ac -

tions. These are trans ac tions be tween

two dif fer ent en ti ties within the Fed -

eral Gov ern ment (for ex am ple, mon -

ies re ceived by one en tity of the Gov -

ern ment from an other en tity of the

Gov ern ment).

“Intragovernmental net as sets” are

com prised of in vest ments in Fed eral

debt se cu ri ties, re lated ac crued in ter -

est and fund bal ance with Trea sury.

These amounts were elim i nated in

pre par ing this Fi nan cial Re port.

 “Consolidated as sets” rep re sent

only the amounts due from in di vid u -

als and other en ti ties out side the Gov -

ern ment. This means that all re lated

gov ern men tal trans ac tions are re -

moved to pres ent the Gov ern ment’s

po si tion as a whole.

The ma jor ity of trust fund as sets is

in vested in intragovernmental Fed eral

debt se cu ri ties. These se cu ri ties re -

quire re demp tion if a fund’s dis burse -

ments ex ceed its re ceipts. Re deeming

these se cu ri ties will in crease the Gov -

ern ment’s fi nanc ing needs and re quire

more bor row ing from the pub lic (or

less re pay ment of debt prior to ma tu -

rity) or will re sult in higher taxes than

oth er wise would have been needed.

Note 19. Ded i cated Col lec tions

Dedicated Collections as of September 30*

As sets

(In billions of dollars) Receipts

Disbursements

Trust

Fund

Net

Assets

Less

Intragovernmental Net

Assets

Consolidated

 Assets

Fund Name

Federal Old-Age and 

Survivors Insurance 

Trust Fund .......... 444.7 334.4 745.9 745.9 -

Federal Disability 

Insurance Trust Fund . . 67.9 52.0 87.1 87.1 -

Medicare Part A........ 150.5 132.4 141.4 141.4 -

Medicare Part B ....... 85.1 79.6 45.6 45.6 -

Unemployment 

Trust Fund .......... 31.8 25.0 78.9 78.9 -

Hazardous Substance 

Superfund .......... 0.9 1.5 4.4 4.4 -

Highway Trust Fund..... 39.3 29.3 28.0 28.0 -

Airport and Airway 

Trust Fund .......... 11.1 7.7 12.7 12.7 -

Civil Service Retirement 

and Disability Fund.... 73.9 43.9 490.4 490.1 0.3 

Military Retirement Fund . 38.0 32.0 156.0 156.0 - 

Railroad Retirement Board

Trust Fund .......... 5.1 8.2 21.9 21.9 - 

*By law, cer tain ex penses (costs) re lated to the ad min is tra tion of the above funds are not c harged to the funds 

and are fi nanced by other sources.
 92 NOTES TO THE FI NAN CIAL STATE MENTS

The Fed eral Hos pi tal In sur ance Trust Fund fi nances the

Hos pi tal In sur ance pro gram (Medicare Part A). This pro -

gram funds the cost of hos pi tal and re lated care for in di vid -

u als age 65 or older, who meet cer tain in sured sta tus re -

quire ments, and for el i gi ble dis abled peo ple. The

De part ment of Health and Hu man Ser vices (HHS) ad min is -

ters the pro gram.

The Fed eral Hos pi tal In sur ance Trust Fund is fi nanced

pri mar ily by pay roll taxes, in clud ing those paid by Fed eral

agen cies. It also re ceives in come from in ter est earn ings on

Fed eral debt se cu ri ties and a por tion of in come taxes paid

on So cial Se cu rity ben e fits.

This trust fund pro vides as sis -

tance and pro tec tion against the

loss of earn ings due to re tire ment

or death. The as sis tance is in the

form of money pay ments. The

Fed eral Old-Age and Sur vi vors

In sur ance Trust Fund is ad min is -

tered by the So cial Se cu rity Ad -

min is tra tion (SSA).

Pay roll and self-employment

taxes pri mar ily fund the Fed eral

Old-Age and Sur vi vors In sur ance

Trust Fund. In ter est earn ings on

Fed eral debt se cu ri ties, Fed eral

agen cies’ pay ments for the So cial Se -

cu rity ben e fits earned by mil i tary and

Fed eral ci vil ian em ploy ees, and

Trea sury pay ments for a por tion of

in come taxes paid on So cial Se cu rity

ben e fits pro vide the fund with ad ditional in come.

Federal Disability

Insurance 

Trust Fund

The Fed eral Sup ple men tary

Med i cal In sur ance Trust Fund fi -

nances the Sup ple men tal Med i cal

In sur ance pro gram (Medicare Part

B), which pro vides sup ple men tary

med i cal in sur ance for el i gi ble par -

tic i pants to cover med i cal ex penses 

not cov ered by Medicare Part A.

The De part ment of Health and Hu -

man Ser vices ad min is ters the pro -

gram.

Ap pro pri a tions, pre mi ums

charged to en rollees and in ter est

earned on in vest ments in Fed eral

debt se cu ri ties fund the Fed eral

Sup ple men tary Med i cal In sur ance

Trust Fund.

Federal Hospital 

Insurance Trust Fund

Federal Supplementary Medical

 Insurance Trust Fund (Medicare Part B)

The Fed eral Dis abil ity In sur ance Trust

Fund pro vides as sis tance and pro tec tion

against the loss of earn ings due to a wage

earner’s dis abil ity. The as sis tance is in the 

form of money pay ments. SSA ad min is -

ters the Fed eral Dis abil ity In sur ance

Trust Fund.

Like the Fed eral Old-Age and Sur vi -

vors In sur ance Trust Fund, pay roll taxes

pri mar ily fund the Fed eral Dis abil ity Insur ance Trust Fund. The Fund also re -

ceives in come from in ter est earn ings on

Fed eral debt se cu ri ties, Fed eral agen cies’

pay ments for the So cial Se cu rity ben e fits

earned by mil i tary and Fed eral ci vil ian

em ploy ees, and a por tion of in come taxes

paid on So cial Se cu rity ben e fits. 

Federal Old-Age and Survivors Insurance Trust Fund

The Un em ploy ment Trust Fund pro tects work ers who lose their jobs through

no fault of their own. The Un em ploy ment In sur ance pro gram is a unique Fed eral

and State part ner ship based on Fed eral law, but ex e cuted through State law by

State of fi cials. The De part ment of La bor ad min is ters the Fed eral op er a tions of

the pro gram.

Taxes on em ploy ers pri mar ily fund the Un em ploy ment Trust Fund. How ever,

in ter est earned on in vest ments in Fed eral debt se cu ri ties also pro vides in come to

the fund. Ap pro pri a tions have sup ple mented its in come dur ing pe ri ods of high

and ex tended un em ploy ment.

Unemployment

Trust Fund
 NOTES TO THE FI NAN CIAL STATE MENTS 93

The Haz ard ous Sub stance Superfund was au tho rized to ad dress pub -

lic health and en vi ron men tal threats

from spills of haz ard ous ma te ri als

and from sites con tam i nated with

haz ard ous sub stances. The En vi ron -

men tal Pro tec tion Agency (EPA)

ad min is ters the fund.

The fol low ing fi nance the Haz -

ard ous Sub stance Superfund:

• Ex cise taxes col lected on

pe tro leum, chem i cals and im -

ported sub stances (ex pired in

1995).

• En vi ron men tal taxes from

cor po ra tions with al ter na tive

min i mum tax able in come in

ex cess of $2 mil lion (ex pired

in 1995).

• Fi nes and pen al ties and cost 

re cov er ies from re spon si ble

par ties.

• Ap pro pri a tions.

• In ter est earned on in vest -

ments in Fed eral debt se cu ri -

ties.

Hazardous

Substance

Superfund

Highway Trust Fund

The Air port and Air way Trust Fund pro vides for air port

im prove ment, main te nance of air port fa cil i ties and equip -

ment, re search, and a por tion of op er a tions. Trans por ta -

tion ad min is ters the Air port and Air way Trust Fund.

The fol low ing pro vide fund ing for the Air port and Airway Trust Fund:

• Taxes re ceived from trans por ta tion of per sons

and prop erty in the air and fuel used in

non-commercial air craft. 

• In ter na tional de par ture taxes.

• In ter est earned on in vest ments in Fed eral debt

se cu ri ties. 

Airport and Airway Trust Fund

Military Retirement 

Fund

The Mil i tary Re tire ment Fund pro vides re tire ment ben e fits for

Army, Navy, Ma rine Corps and Air Force per son nel and their sur -

vi vors. The fund is fi nanced by DOD con tri bu tions, ap pro pri a tions 

and in ter est earned on in vest ments in Fed eral debt se cu ri ties. 

The High way Trust Fund was es tab lished to pro mote do mes tic in terstate trans por ta tion, and mov ing peo ple and goods. The fund pro vides

Fed eral grants to States for high way con struc tion and re lated trans por ta -

tion pur poses. Trans por ta tion ad min is ters the High way Trust Fund. 

The fol low ing pro vide all fi nanc ing for the High way Trust Fund:

• Ear marked taxes on gas o line and other fu els, cer tain tires, ve -

hi cle and truck use.

• In ter est earned on in vest ments in Fed eral debt se cu ri ties. 

The Civil Ser vice Re tire ment

and Dis abil ity Fund cov ers two

Fed eral ci vil ian re tire ment sys -

tems: the Civil Ser vice Re tire -

ment Sys tem (CSRS) for em ploy -

ees hired be fore 1984 and the

Fed eral Em ployee Re tire ment

Sys tem (FERS), for em ploy ees

hired af ter 1983.

The CSRS is fi nanced by:

• Fed eral ci vil ian em ploy ees’

con tri bu tions. 

• Agencies’ con tri bu tions on

be half of the em ploy ees.

• Ap pro pri a tions.

• In ter est earned on in vest -

ments in Fed eral debt se cu ri -

ties.

Civil Service

Retirement and 

Disability Fund

Railroad Retirement 

Trust Fund

The Rail road Re tire ment Trust

Fund pro vides an nu ities and sur vi -

vor ben e fits to el i gi ble rail road em -

ploy ees and their sur vi vors. The

fund also pays dis abil ity an nu ities

based on to tal or oc cu pa tional dis -

abil ity. 

 Pay roll taxes paid by rail road

em ploy ers and their em ploy ees

pro vide the pri mary source of in -

come for the Rail road Re tire ment

Sur vi vor Ben e fit pro gram. By law,

rail road taxes are co or di nated with

So cial Se cu rity taxes.
 94 NOTES TO THE FI NAN CIAL STATE MENTS

Note 20. In dian Trust Funds

The In dian Trust Funds dif fer from

other ded i cated col lec tions re ported in

Note 19. The De part ment of the In te rior

(In te rior) has re spon si bil ity for the as -

sets held in trust on be half of Amer i can

In dian tribes and in di vid u als. The trust

funds are held in ac counts for ap prox i -

mately 315 tribes, 317,000 in di vid ual

In dian ac counts and other funds, in clud -

ing the Alaska Na tive Es crow Fund. 

The as sets held in trust for Na tive

Amer i cans are owned by the trust ben e -

fi cia ries and are not the Fed eral Gov ern -

ment’s as sets. There fore, these amounts

are not re flected in the Bal ance Sheet or

State ment of Op er a tions and Changes in 

Net Po si tion ex cept for their hold ings of

non mar ket able Trea sury se cu ri ties, for

which the Gov ern ment’s li a bil ity is in -

cluded in Fed eral debt se cu ri ties held by

the pub lic.

U.S. Government as Trustee for Indian Trust Funds 

Held for Indian Tribes and Other Special Trust Funds 

Statement of Changes in Trust Fund Balances as of September 30 

(Unaudited)

(In millions of dollars)

Receipts ............................................... 873. 0

Disbursements .......................................... (736.7)

Receipts in excess of disbursements .......................... 136. 3

Trust fund balances, beginning of year ........................ 2,460. 0

Adjustment ............................................. (0.5)

Trust fund balances, end of year ...........................

2,595. 8

U.S. Government as Trustee for Indian Trust Funds 

Held for Individual Indian Monies Trust Funds 

Statement of Changes in Trust Fund Balances as of September 30 

(Unaudited)

(In millions of dollars)

Receipts ............................................... 306.7

Disbursements .......................................... (336.6)

Receipts in excess of disbursements .......................... (29.9)

Trust fundbalances, beginning of year......................... 479.2

Trust fund balances, end of year............................

449.3
 SUP PLE MEN TAL IN FOR MA TION 95

Education, Training, Employment and Social Services

(In bil lions of dol lars) Gross Cost

Earned

Rev e nue Net Cost

Subfunctions:

Elementary, secondary and

 vocational education..... 17.6 - 17.6 

Higher education ........ 14.5 1.4 13.1 

Research and general 

 education aids......... 2.5 - 2.5 

Training and employment . . 5.7 - 5.7 

Other labor services ...... 1.0 - 1.0 

Social services.......... 16.6 - 16.6 

 Total education, 

 training, employment

 and social services ...

57.9 1.4 56.5 

Human

Resources

United States Gov ern ment

Sup ple men tal In for ma tion 

for the Year Ended Sep tem ber 30, 1999

(Un au dited)

Education, Training,

Employment and

Social Services

The “Ed u ca tion, train ing,

em ploy ment and so cial ser -

vices” func tion serves to ex -

tend knowl edge and skills, en -

hance em ploy ment and

em ploy ment op por tu ni ties,

pro tect work place stan dards

and pro vide ser vices to the

needy.

The State ment of Net Cost pres ents the cost of the Gov ern -

ment’s ma jor func tions. The ob jec tives of each of the func tions

are de scribed be low. Also, the state ment con tains the def i ni tions

of “Gross cost,” “Earned rev e nue” and “Net cost.”

Amounts listed un der this func -

tion in clude the cost to pro vide mil i -

tary forces to de ter war; to be pre -

pared to en gage in war; and to

pre serve the peace and se cu rity of

the United States, the Ter ri tories,

Com mon wealth, its pos ses sions and 

any area oc cu pied by the United

States. Na tional de fense also in -

cludes the cost to train, equip, com -

pen sate and pro vide re tire ment ben -

e fits for the armed forces; de velop,

ac quire, uti lize and dis pose of

weapon sys tems; con duct re search

and de vel op ment to main tain tech -

no log i cal su pe ri or ity, cut costs and

im prove per for mance of weapon

sys tems; and carry out other de fense 

re lated ac tiv i ties.

Net Cost Detail 

National

Defense
 96 SUP PLE MEN TAL IN FOR MA TION

Human 

Resources,

cont.

Health

(In bil lions of dol lars)

Gross

Cost

Earned

Rev e nue Net Cost

Subfunctions:

Health care services ........ 123.4 0.5 122.9 

Health research 

and training............. 14.7 0.1 14.6 

Consumer and occupational 

health and safety .........

2.5 0.1 2.4 

 Total health ...........

140.6 0.7 139.9 

Income Security

The cost of pro vid ing pay -

ments to per sons un re lated to

any cur rent ser vice com prises

the “In come se cu rity” func tion.

In cluded are dis abil ity, rail road

re tire ment ben e fits, tem po rary

as sis tance to needy fam i lies and

sim i lar pro grams, other than

amounts re lated to So cial Se cu -

rity and vet er ans. Also in cluded

are food stamps, spe cial milk

and child nu tri tion pro grams;

un em ploy ment com pen sa tion;

and work ers’ com pen sa tion

earned in come tax credit re -

funds and re duc tion of tax payer

liabilities; pub lic as sis tance cash 

pay ments; ben e fits paid to the

el derly and coal min ers; and

low- and mod er ate-income

hous ing as sis tance. The cost of

Fed eral pen sions and re tiree

health ben e fits are al lo cated to

other func tions.

Income Security

(In bil lions of dol lars)

Gross

Cost

Earned

Rev e nue Net Cost

Subfunctions:

Unemployment

compensation......... 24.5 0.7 23.8 

Housing assistance...... 27.8 - 27.8 

Food and 

nutritional assistance ... 34.1 0.1 34.0 

Other income security .... 89.8 3.7 86.1 

Cost not allocated 

to subfunctions........

11.8 1.7 10.1 

 Total income

security ............

188.0 6.2 181.8 

Health

Listed un der the “Health”

func tion are the costs to pro -

mote phys i cal and men tal

health, in clud ing the pre vention of ill ness and ac ci dents

and the Medicaid pro gram. Al -

though the Medicare pro gram

is the larg est Fed eral health

pro gram, by law it is in a sep a -

rate func tion for bud get pur -

poses. Also ex cluded from the

“Health” subfunction is Fed -

eral health care for mil i tary

per son nel and vet er ans.

Medicare

Fed eral Hos pi tal In sur ance

(Medicare Part A) and Fed eral

Sup ple men tary Med i cal In surance (Medicare Part B) pro -

grams make up Medicare. This 

func tion is not fur ther sub di -

vided. For more in for ma tion

on Medicare, see the note in

the Stew ard ship Re spon si bilities sec tion of Stew ard ship In -

for ma tion, and Note 19—Ded -

i cated Col lec tions.

Social Security

“So cial Se cu rity” costs in -

clude pay ments to el i gi ble ben -

e fi cia ries of the Old-Age and

Sur vi vors In sur ance (OASI )

and Dis abil ity In sur ance (DI)

pro grams. These are col lec -

tively re ferred to as “So cial Se -

cu rity.” The So cial Se cu rity

pro gram is the sin gle larg est

Fed eral pro gram and is funded

pri mar ily by pay roll taxes. For

more in for ma tion on So cial

Se cu rity, re fer to the Stew ard -

ship In for ma tion sec tion on

Stew ard ship Re spon si bil ities

and Note 19—Ded i cated Col -

lec tions.
 SUP PLE MEN TAL IN FOR MA TION 97

Human 

Resources, 

cont.

Veterans Benefits and Services

The amounts listed un der this func tion in clude spe cific ben e fits and ser vices paid to

those with prior mil i tary ser vice or their spouse, de pend ents and sur vi vors. In cluded are

vet er ans com pen sa tion, life in sur ance, pen sions, burial ben e fits, ed u ca tion, train ing,

med i cal care, vet er ans hous ing and ad min is tra tive ex penses of the De part ment of Vet -

erans Af fairs. The net cost line ti tled “Veterans ben e fits and ser vice” de creased this fis cal

year by $204.8 bil lion pri mar ily due to a change in in ter est rate as sump tions in the cal cu -

la tion of the re lated li a bil ity for vet er ans com pen sa tion.

Veterans Benefits and Services

(In bil lions of dol lars) Gross Cost

Earned 

Rev e nue Net Cost

Subfunctions:

Income security for veterans .............. (65.5) - (65.5)

Veterans education, 

training and rehabilitation ............... 1.7 0.2 1.5 

Hospital and medical care for veterans ....... 18.2 1.8 16.4 

Veterans housing....................... 1.3 0.5 0.8 

Other veterans benefits and services ........ 1.1 0.2 0.9 

Total veterans benefits and services .......

(43.2) 2.7 (45.9)

Physical

Resources

Energy

The “En ergy” function in cludes the cost of pro mot ing an ad e quate sup ply and 

ap pro pri ate use of en ergy to serve the needs of the Na tion.

Energy

(In bil lions of dol lars) Gross Cost

 Earned

Rev e nue Net Cost

Subfunctions:

Energy supply........... 11.3 11.9 (0.6)

Energy conservation ...... 0.6 - 0.6 

Emergency energy 

preparedness ......... 0.2 - 0.2 

Energy information, 

policy and regulation...

0.8 0.5 0.3 

Total energy ..........

12.9 12.4 0.5 

Natural Resources 

and Environment

This func tion is com prised of costs

in curred to de velop, man age and

main tain the Na tion’s nat u ral re -

sources and en vi ron ment. Ex cluded

are fund ing for com mu nity wa ter sup -

ply pro grams, ba sic sewer sys tems

and waste treat ment plants that are

part of com mu nity or re gional de vel -

op ment pro grams.

Natural Resources and Environment

(In bil lions of dol lars) Gross Cost

 Earned 

 Rev e nue Net Cost

Subfunctions:

Water resources................................ 5.5 0.5 5.0 

Conservation and land management ................. 6.2 0.9 5.3 

Recreational resources........................... 3.0 0.3 2.7 

Pollution control and abatement .................... 8.6 0.6 8.0 

Other natural resources .......................... 3.8 0.6 3.2 

Total natural resources and environment ............

27.1 2.9 24.2 
 98 SUP PLE MEN TAL IN FOR MA TION

Physical

Resources, cont.

Commerce and Housing Credit

(In bil lions of dol lars) Gross Cost

 Earned

 Rev e nue Net Cost

Subfunctions:

Mortgage credit.......... (3.4) 3.7 (7.1)

Postal Service........... 80.0 61.9 18.1 

Deposit insurance ........ 4.3 1.4 2.9 

Other advancement 

of commerce ..........

8.3 6.9 1.4 

Total commerce 

and housing credit.....

89.2 73.9 15.3 

Commerce and 

Housing Credit

This func tion en com passes the

pro mo tion and reg u la tion of the

com merce, hous ing and de posit in -

sur ance in dus tries. In cluded un der

“Com merce and hous ing credit” are

costs to col lect and dis sem i nate so -

cial and eco nomic data; pro vide gen -

eral pur pose sub si dies to busi ness

and in di vid u als, in clud ing credit

sub si dies for hous ing; and sup port

the Postal Ser vice fund.

Transportation

(In bil lions of dol lars) Gross Cost

 Earned 

Rev e nue Net Cost

Subfunctions:

Ground transportation .... 29.2 - 29.2 

Air transportation ........ 9.6 0.4 9.2 

Water transportation ..... 5.1 0.7 4.4 

Other transportation...... 0.2 - 0.2 

Total transportation.....

44.1 1.1 43.0 

Transportation

Grants to States and oth ers for lo -

cal or na tional trans por ta tion of pas -

sen gers and prop erty make up the

bulk of the cost as so ci ated with this

func tion. In cluded are costs to con -

struct fa cil i ties; pur chase equip ment;

do re search, test ing and eval u a tion;

and pro vide op er at ing sub si dies to

trans por ta tion fa cil i ties (such as air -

ports and rail roads).

The costs of pro mot ing vi a ble

com mu nity econ o mies by de vel op -

ing phys i cal fa cil i ties or fi nan cial

in fra struc tures com prise this func -

tion. Also in cluded are the costs of

de vel op ing trans por ta tion fa cil i ties 

that are in te gral parts of com mu -

nity de vel op ment pro grams. Aids

to busi nesses is usu ally ex cluded

from this func tion un less it pro -

motes the eco nomic de vel op ment of

de pressed ar eas and is not de signed

to pro mote par tic u lar lines of busi -

ness for their own sake.

Community and Regional Development

Community and Regional Development

(In bil lions of dol lars) Gross Cost

 Earned

 Rev e nue Net Cost

Subfunctions:

Community development .................... 5.1 - 5.1 

Area and regional development ............... 4.2 1.1 3.1 

Disaster relief and insurance ................. 5.6 1.7 3.9 

 Total community 

and regional development ................

14.9 2.8 12.1 
 SUP PLE MEN TAL IN FOR MA TION 99

International Affairs

(In bil lions of dol lars) Gross Cost

Earned

Rev e nue Net Cost

Subfunctions:

International development 

and humanitarian assistance .................... 9.8 0.4 9.4 

International security assistance..................... 5.8 0.8 5.0 

Conduct of foreign affairs .......................... 6.1 1.0 5.1 

Foreign information and exchange activities ............ 1.2 - 1.2 

International financial programs ..................... 6.7 7.4 (0.7)

Total international affairs.........................

29.6 9.6 20.0 

In ter est costs are pri mar ily amounts on Fed eral debt se -

cu ri ties held by the pub lic. In ter est pay ments on these se cu -

ri ties are made by Trea sury’s Bu reau of the Pub lic Debt.

Interest

International Affairs

This func tion in cludes the cost of

main tain ing peace ful re la tions, sup -

port ing com merce and travel be tween

the United States and the rest of the

world, and pro mot ing in ter na tional

se cu rity and eco nomic de vel op ment

abroad.

General Science, Space

and Technology

This func tion cov ers the cost of Na -

tional Sci ence Foun da tion re search,

NASA space pro grams and De part -

ment of En ergy gen eral sci ence re -

search.

Agriculture

Costs as so ci ated with pro mot ing

ag ri cul tural eco nomic sta bil ity and

main tain ing and in creas ing ag ri cul -

tural pro duc tion are found un der the

“Ag ri cul ture” func tion.

Other Functions

General Science, Space and Technology

(In bil lions of dol lars) Gross Cost

 Earned

 Rev e nue Net Cost

Subfunctions:

General science and basic research ................. 5.6 - 5.6 

Space flight, research and supporting activities ......... 11.9 0.1 11.8 

Total general science, space and technology .........

17.5 0.1 17.4 

Agriculture

(In bil lions of dol lars) Gross Cost

 Earned

Rev e nue Net Cost

Subfunctions:

Farm income stabilization ......................... 23.7 1.9 21.8 

Agriculture research and service .................... 3.5 0.5 3.0 

Total agriculture...............................

27.2 2.4 24.8 
 100 SUP PLE MEN TAL IN FOR MA TION

Administration of Justice

The cost of ju di cial ser vices in cludes po lice pro tec tion,

law en force ment (in clud ing civil rights), re ha bil i ta tion and

in car cer a tion of crim i nals, and the gen eral main te nance of

do mes tic or der. It also in cludes the cost of pro vid ing

court-appointed coun sel or other le gal ser vices for in di vid -

u als. Not found un der “Ad min is tra tion of jus tice” are the

costs of the leg is la tive branch and po lice and guard ac tiv i -

ties that pro tect Fed eral prop erty. Also, the cost of Na tional

Guard per son nel and mil i tary per son nel who are called

upon oc ca sion ally to main tain pub lic safety and the cost of

mil i tary po lice are in cluded un der the na tional de fense

func tion.

General Government

“Gen eral Gov ern ment” cov ers gen eral over head costs of 

the Fed eral Gov ern ment. This in cludes leg is la tive and ex -

ec u tive ac tiv i ties as well as cen tral fis cal, per son nel and

prop erty ac tiv i ties. All ac tiv i ties rea son ably or closely as -

so ci ated with other func tions are in cluded in those func -

tions rather than “Gen eral Gov ern ment.”

General Government

 (In bil lions of dol lars) Gross Cost

Earned 

Rev e nue Net Cost

Subfunctions:

Legislative functions ........................... 1.9 - 1.9 

Executive direction and management ............... 0.7 - 0.7 

Central fiscal operations ........................ 13.1 0.5 12.6 

General property and records management .......... 0.1 0.1 - 

Central personnel management................... 0.3 - 0.3 

General purpose fiscal assistance................. 1.1 - 1.1 

Other general Government ...................... 7.9 4.0 3.9 

 Total general Government ....................

25.1 4.6 20.5 

Administration of Justice

(In bil lions of dol lars) Gross Cost

Earned 

Rev e nue Net Cost

Subfunctions:

Federal law enforcement activities ................. 14.8 0.8 14.0 

Federal litigative and judicial activities ............... 7.8 0.3 7.5 

Federal correctional activities ..................... 3.6 0.1 3.5 

Criminal justice activities ........................ 5.0 0.4 4.6 

 Total administration of justice..................

31.2 1.6 29.6 

Other Functions, cont.
 SUP PLE MEN TAL IN FOR MA TION 101

De ferred main te nance is the es ti -

mated cost to bring Gov ern ment

owned prop erty to an ac cept able

con di tion. This re sults from not

per form ing main te nance on a

timely ba sis. De ferred main te -

nance ex cludes the cost of ex pand -

ing the ca pac ity of as sets or up -

grad ing them to serve needs

dif fer ent from those orig i nally in -

tended. The con se quences of not

per form ing reg u lar main te nance

could in clude in creased safety haz -

ards, poor ser vice to the pub lic,

higher cost in the fu ture and in ef fi -

cient op er a tions. Es ti mated de -

ferred main te nance costs are not

ac crued in the State ment of Net

Cost or rec og nized as a li a bil ity on

the Bal ance Sheet. 

The amounts dis closed for de -

ferred main te nance have been

mea sured us ing the fol low ing two

meth ods:

• Con di tion as sess ment sur -

veys are pe ri odic in spec tions

of the Gov ern ment owned

prop erty to de ter mine the cur -

rent con di tion and es ti mated

cost to bring the prop erty to an 

ac cept able con di tion.

• Life-cycle cost fore cast is an 

ac qui si tion or pro cure ment

tech nique that con sid ers op er -

at ing, main te nance and other

costs in ad di tion to the ac qui -

si tion cost of as sets. 

Some de ferred main te nance has

been deemed to be crit i cal. Such

amounts and con di tions are de fined

by the in di vid ual agen cies with re -

spon si bil ity for the safe keep ing for

these as sets.

Deferred Maintenance

Deferred Maintenance as of September 30

Deferred Maintenance

 Cost Range

 (In bil lions of dol lars) Low Estimate

High

Estimate

Crit i cal

Maintenance

Asset Category:

Buildings, structures and facilities ................. 44.3 52. 5 43.8

Furniture, fixtures and equipment.................. .4 . 8 -

Other general property, plant and equipment ......... .2 . 3 -

Total general property, plant and equipment.......... 44.9 53. 6 43.8

Heritage assets ............................... .3 1. 0 1.0

National defense assets ........................ 2.7 2. 7 -

Total stewardship assets ........................ 3.0 3. 7 1.0

Total deferred maintenance ...................

47.9 57. 3 44.8
 102 SUP PLE MEN TAL IN FOR MA TION

For fis cal 1999, the uni fied

bud get re ported a sur plus of

$124.4 bil lion. For the same pe -

riod, the Fi nan cial Re port re -

ports an ex cess of rev e nue over

cost of $76.9 bil lion. The dif fer -

ence be tween these two amounts 

oc curs be cause they are pre -

pared pri mar ily on dif fer ent

mea sure ment bases to carry out

their dif fer ent ob jec tives. 

The Fi nan cial Re port gen er -

ally is based on gen er ally ac -

cepted ac count ing prin ci ples.

Thus, ex penses and ex change

rev e nue are gen er ally rec og -

nized when the events giv ing

rise to the trans ac tions oc cur

rather than when the cash is re -

ceived or paid.

Non-exchange rev e nues are

rec og nized on a mod i fied cash

ba sis of ac count ing. By con trast, 

the uni fied bud get is com puted

pri mar ily on the cash ba sis, ac -

cord ing to ac cepted bud get con -

cepts and pol i cies. The most sig -

nif i cant dif fer ences be tween

these two bases in volve the tim -

ing of rec og ni tion and mea sure -

ment of rev e nue and costs. 

The dif fer ences be tween these 

two bases of ac count ing can be

di vided into four pri mary cat e -

go ries.

1. Re ceipts rec og nized in the

bud get that are not rec og nized as 

rev e nue in the Fi nan cial Re port,

such as:

• Col lec tions of pre-credit

re form loans.

• Col lec tions of taxes re -

ceiv able.

• Col lec tions of ac counts 

re ceiv able.

• Pro ceeds from the sale

of cap i tal as sets rep re sent -

ing “book value.”

2. Rev e nues rec og nized in the

Fi nan cial Re port that are not rec -

og nized as re ceipts in the bud -

get, such as:

• In creases in taxes re ceiv -

able.

• In creases in ac counts 

re ceiv able.

3. Out lays rec og nized in the

bud get that are not rec og nized as 

costs in the Fi nan cial Re port,

such as:

• Pur chases of in ven tory

and gen eral prop erty, plant

and equip ment.

• Pay ments of ac counts

pay able. 

• Pay ments of em ployee

pen sions and other ben e fits 

that re duce prior re lated li -

a bil i ties.

• Pay ments of en vi ron -

men tal cleanup and dis -

posal costs that re duce

prior re lated li a bil i ties.

4. Costs rec og nized in the Fi -

nan cial Re port that are not rec -

og nized as out lays in the bud get,

such as:

• De pre ci a tion on gen eral

prop erty, plant and equip -

ment.

• In creases in li a bil i ties

for em ployee pen sions and

other ben e fits.

• In creases in es ti mated

en vi ron men tal li a bil i ties.

• De faults on pre-credit

re form loans.

• De creases in in ven tory.

• In creases in ac counts

pay able.

The re main ing un iden ti fied

dif fer ence is a net of $30.5 bil -

lion. Since some of the dif fer -

ences may be off set ting, the

gross dif fer ence is larger than

the $30.5 bil lion and may in -

clude trans ac tions in all four cat -

e go ries listed above. It also in -

cludes the ef fect of

misclassifying intragov ern men -

tal trans ac tions and rel a tively

small dif fer ences in en tity cov er -

age.

Reconciliation of Excess

of Revenue over Net Cost
 SUP PLE MEN TAL IN FOR MA TION 103

Reconciliation of the Excess of Revenue over Net Cost to the Unified

Budget Surplus for the Year Ended September 30 (Unaudited)

(In billions of dollars)

Excess of revenue over net cost........................... 76.9

Decrease in veteran compensation and burial benefits:

Decrease in liability for veterans ........................... (64.8)

Decrease in liability for survivors........................... (29.3)

Decrease in liability for burial benefits ....................... (0.8)

Decrease in liability for veterans ......................... (94.9)

Increase in environmental liabilities:

Increase in Energy’s environmental liabilities .................. 44.3

Increase in Defense’s environmental liabilities ................. 45.7

Decrease in all others environmental liabilities ................. (1.3)

Increase in environmental liabilities ....................... 88.7

Capitalized fixed assets:

Department of Defense.................................. (23.5)

Civilian agencies ...................................... (18.0)

Total capitalized fixed assets ............................

(41.5)

Increase in liability for civilian employee benefits:

Increase in civilian pension liabilities........................ 28.8

Decrease in civilian health liabilities ........................ (2.1)

Increase in other civilian benefits liabilities ................... 14.9

Increase in liability for civilian employee benefits liabilities ...... 41.6

Decrease in liability for military employee benefits:

Increase in military pension liabilities........................ 11.3

Decrease in military health liabilities ........................ (27.2)

Decrease in other military benefits .........................

(15.2)

Decrease in liability for military employee benefits ............ (31.1)

Depreciation expense 1999 ................................ 17.3

Decrease in benefits due and payable ........................ (3.8)

Increase in inventory ..................................... (6.5)

Decrease in taxes receivable............................... 4.4

Increase in other liabilities ................................. 14.4

Seigniorage and sale of gold ............................... (1.0)

Decrease in accounts payable .............................. (4.2)

Decrease in accounts receivable ............................ 1.2

Principal repayments of pre-credit reform loans ................. 32.4

Net amount of all other differences......................... 30.5

Unified budget surplus...............................

124.4
 104 SUP PLE MEN TAL IN FOR MA TION

Unexpended Budget Authority as of September 30, 1999 (Unaudited)

(In bil lions of dol lars) 

Unobligated

Bud get 

Au thor ity 

Ob li gated

Bud get 

Au thor ity 

Social Security Administration...................... 819.6 36.1

Office of Personnel Management ................... 502.8 5.9

Department of Health and Human Services ............ 198.8 55.8

Department of Defense-Military ..................... 60.6 152.7

Other Defense Civil Programs ...................... 149.9 2.8

Department of Housing and Urban Development ........ 36.8 107.0

Department of Transportation ...................... 58.9 52.5

Department of the Treasury........................ 21.6 18.4

International Assistance Program ................... 36.0 65.2

Department of Labor............................. 90.4 8.4

Independent agencies ............................ 74.1 5.9

Department of Agriculture ......................... 23.2 15.1

Department of Education ......................... 10.2 24.4

Department of Veterans Affairs ..................... 16.1 7.1

Department of Energy ........................... 12.5 7.8

Department of Justice............................ 4.7 13.8

Environmental Protection Agency ................... 8.0 8.5

Department of State ............................. 12.7 3.0

Federal Emergency Management Agency ............. 0.8 8.3

Department of the Interior......................... 5.3 2.9

National Aeronautics and Space Administration ......... 0.9 5.3

Department of Commerce......................... 0.8 3.7

Corps of Engineers .............................. 4.0 0.4

National Science Foundation....................... 0.2 4.2

General Services Administration .................... 3.8 0.5

Legislative Branch .............................. 1.7 0.4

Small Business Administration ..................... 0.7 1.0

Judicial Branch................................. 0.7 0.5

Executive Office of the President.................... 0.3 0.1

Total .......................................

2,156.1 617.7

Un ex pended Bud get Au thor ity

is the sum of the ob li gated, but un -

liq ui dated, and unobligated bud get

au thor ity.

Unobligated bud get au thor ity,

in clud ing trust fund bal ances, is

the cu mu la tive amount of bud get

au thor ity that is not ob li gated and

that re mains avail able for ob li ga -

tion. In 1-year ac counts the

unobligated bal ance is not avail -

able af ter the end of the fis cal year.

In multi-year ac counts the ob li -

gated bal ance may be car ried for -

ward and re mains avail able for ob -

li ga tion for the pe riod spec i fied. In

no year ac counts the unobligated

bal ance is car ried for ward un til

spe cif i cally re scinded by law, or

un til the pur poses for which it was

pro vided have been ac com plished.

Ob li gated bud get au thor ity is the

cu mu la tive amount of bud get au -

thor ity that has been ob li gated but

not yet liquidated. This bal ance

can be car ried for ward for a max i -

mum of 5 years af ter the ap pro pri a -

tion has ex pired.

Unexpended Budget Authority
 SUP PLE MEN TAL IN FOR MA TION 105

The In ter nal Rev e nue Code pro vides for pro gres sive rates of tax,

whereby higher in comes are gen er ally sub ject to higher rates of tax. The

ta bles pres ent the lat est avail able in for ma tion on in come tax and on re -

lated in come, de duc tions and credit for in di vid u als by in come level and

for cor po ra tions by size of as sets.

Tax Burden

Individual Income Tax Returns for Tax Year 1997

Size of Adjusted Gross Income

(In mil lions of dol lars

un less oth er wise noted)

 Un der

 $15,000

$15,000

un der

 $30,000

 $30,000

un der

 $50,000 

$50,000

un der

$100,000

$100,000

un der

$200,000

Greater

than

 $200,000

Total number of

returns .......... 41.4 29.4 22.8 21.6 5.4 1.8

Gross income...... 251.9 649.1 895.2 1,490.0 717.3 1,013.4

Adjusted gross

 income.......... 247.9 642.9 887.9 1,478.9 707.8 1,004.5

Tax .............. 9.1 47.4 90.6 191.6 126.7 274.0

Tax burden, 

percentage 

of gross total

 receipts ......... 3.60% 7.30% 10.13% 12.86% 17.67% 27.04%

 Average tax dollars

per return........ 219 1,612 3,983 8,858 23,562 151,565

Deductions on taxable income:

Standard deduction . . 175. 4 137.2 82.6 42.1 3. 6 0.9

Medical and dental

 expense......... 5. 2 8.6 6.6 6.2 2. 0 0.6

Interest ........... 5. 3 18.4 45.5 100.0 46. 5 34.9

Charitable

 contributions ..... 1. 2 5.5 12.3 29.9 16. 9 33.4

Other itemized

 deductions.......

3. 5 14.0 35.9 91.1 50. 5 46.7

Total itemized 

deductions .....

15. 2 46.5 100.3 227.2 115. 9 115.6

 Total deductions ... 190. 6 183.7 182.9 269.3 119. 5 116.5

Total expenditures, 

 deductions.......

6. 9 13.4 18.5 34.6 21. 1 31.5

Credit against tax liability:

Child care credit .... - 0.6 0.7 0.9 0. 2 -

Credit for elderly and

 disabled ......... - - - - - -

Foreign tax credit.... - - 0.1 0.3 0. 6 3.0

EITC, offset

 tax liability....... 0. 4 3.5 - - - -

Other credits....... - - 0.1 0.3 0. 3 1.0

Total credits....... 0. 4 4.1 0.9 1.5 1. 1 4.2

Total expenditures

and credits, 

individual .......

7. 3 17.5 19.4 36.1 22. 2 35.7
 106 SUP PLE MEN TAL IN FOR MA TION

Corporate Income Tax Returns for Tax Year 1996

Size of Total Assets (in thousands)

(In mil lions of dol lars

un less oth er wise noted)

Un der

$1,000

$1,000

un der

$10,000

$10,000

un der

$50,000

$50,000

un der

$100,000

$100,000

un der

$250,000

Greater

than

$250,000

Total returns

 (in thousands) ....... 4,193.3 370. 9 42.9 8.5 7.6 8.2

Total receipts .......... 2,103.7 2,204. 3 1,357.3 505.4 741.0 8,614.1

Taxable income ........ 24.0 26. 2 25.8 16.3 28.9 518.6

Total tax .............. 5.6 8. 1 8.4 5.2 9.0 134.2

Tax burden, percent

of gross total receipts . . 0.27% 0.37% 0.62% 1.04% 1.22% 1.56%

Average tax 

per return

(in thousands) ...... 1.3 21. 8 196.1 618.5 1,187.2 16,346.4

Deductions on taxable income:

Net operating loss ..... 10.2 5. 6 4.4 2.5 4.2 28.2

Dividends received .... 0.4 0. 5 0.6 0.4 0.9 16.9

Public utility 

dividends paid ...... - - - - - 0.1

Total deductions ........ 2,064.5 2,163. 3 1,326.2 486.7 703.4 7,984.1

Total expenditures,

deductions..........

5.5 7. 9 8.2 5.0 8.6 124.4

Credits against tax liability:

Foreign tax credit ..... 0.1 - 0.1 0.2 0.6 39.2

U.S. Possessions

 tax credit .......... - - 0.2 0.2 0.3 2.4

Nonconventional

source fuel credit .... - - - - - 0.8

General 

business credit...... 0.2 0. 1 0.1 0.1 0.1 3.6

Other credits......... 0.1 0. 2 0.2 0.1 0.1 4.1

Total credits......... 0.4 0. 3 0.6 0.6 1.1 50.1

Total expenditures, 

corporation ........

5.9 8. 2 8.8 5.6 9.7 174.5
 OTHER IN FOR MA TION 107

Federal Taxes Receivable Net 

Man age ment has es ti mated

amounts that may be paid out as

other claims for tax re funds. This

es ti mate rep re sents an amount

(prin ci pal and in ter est) that may

be paid for claims pend ing ju di -

cial re view by the Fed eral courts

or, in ter nally, by Ap peals. The to -

tal es ti mated pay out (in clud ing

prin ci pal and in ter est) for claims

pend ing ju di cial re view by the

Fed eral courts is $7.6 bil lion and

by Ap peals is $11.4 bil lion. Al -

though these re fund claims have

been deemed to be prob a ble, they

do not meet the cri te ria in SFFAS

No. 5 for re port ing the amounts in

the bal ance sheet or for dis clo sure

in the notes to the fi nan cial state -

ments. How ever, they meet the cri -

te ria in SFFAS No. 7 for in clu sion

as sup ple men tal in for ma tion.

In ac cor dance with SFFAS No. 7, some

un paid as sess ments do not meet the cri te ria

for fi nan cial state ment rec og ni tion as dis -

cussed in Note 1 to the fi nan cial state ments. 

Al though com pli ance as sess ments and

write-offs are not con sid ered re ceiv ables

un der Fed eral ac count ing stan dards, they

rep re sent le gally en force able claims of the

IRS—act ing on be half of the Fed eral Gov -

ern ment. There is, how ever, a sig nif i cant

dif fer ence in the col lec tion po ten tial of

these cat e go ries.

The com po nents of the to tal un paid as -

sess ments and der i va tion of net Fed eral

taxes re ceiv able at Sep tem ber 30, 1999,

were as fol lows:

Federal Taxes Receivable as of September 30

(In billions of dollars)

Total unpaid assessments ................. $233.2

Less: Compliance assessments............. (27.0)

 Write-Offs ........................

(127.0)

Gross Federal Taxes Receivable ............ 79.2

Less: Allowance for doubtful accounts ........ (56.5)

Federal Taxes Receivable, Net .............

22.7

Other Information (Unaudited)

The Gov ern ment can not rea son -

ably es ti mate the amount of al low -

ance for doubt ful ac counts per tain ing

to its com pli ance as sess ments, and

thus can not de ter mine their net re al iz -

able value or the value of the pre-as -

sess ment work-in-prog ress.

To elim i nate dou ble-count ing, the

com pli ance as sess ments re ported

above ex clude trust fund re cov ery

pen al ties, to tal ing $15 bil lion, as sessed against of -

fi cers and di rec tors of busi nesses who were

in volved in the non re mit tance of Fed eral taxes

with held from their em ploy ees. The re lated un paid 

as sess ments of those busi nesses are re ported as

taxes re ceiv able or write-offs, but the Gov ern ment 

also may re cover por tions of those busi nesses’ un -

paid as sess ments from any and all in di vid ual of fi -

cers and di rec tors against whom a trust fund re -

cov ery pen alty is as sessed.

Other Claims

for Refund
 108 AP PEN DIX

This Fi nan cial Re port in cludes the ex ec u tive, leg is la tive

and ju di cial branches of the Gov ern ment. Ex cluded are

pri vately owned Gov ern ment-sponsored en ter prises such

as the Fed eral Home Loan Banks and the Fed eral Na tional

Mort gage As so ci a tion. The Fed eral Re serve Sys tem also

is ex cluded be cause or ga ni za tions and func tions per tain -

ing to mon e tary pol icy are tra di tion ally sep a rate from, and

in de pend ent of, other cen tral Gov ern ment or ga ni za tions

and func tions.

Significant Entities Included in these Statements:

Appendix: List of Significant Government 

Entities Included and Excluded 

De part ment of Ag ri cul ture (Ag ri cul ture)

www.usda.gov

De part ment of Com merce (Com merce)

www.doc.gov

De part ment of De fense (DOD)

www.defenselink.mil

De part ment of Ed u ca tion (Ed u ca tion)

www.ed.gov

De part ment of En ergy (En ergy)

www.doe.gov

De part ment of Health and Hu man Ser vices (HHS)

www.hhs.gov

De part ment of Housing and Ur ban De vel op ment (HUD)

www.hud.gov

De part ment of In te rior (In te rior)

www.doi.gov

De part ment of Jus tice (Jus tice)

www.usdoj.gov

De part ment of La bor (La bor)

www.dol.gov

De part ment of State (State)

www.state.gov

De part ment of the Air Force (Air Force)

www.af.mil

De part ment of the Army (Army)

www.army.mil

Army Corps of En gi neers

www.usace.gov

De part ment of the Navy (Navy)

www.navy.mil

De part ment of Trans por ta tion (Trans por ta tion)

www.dot.gov

De part ment of the Trea sury (Trea sury)

www.ustreas.gov

De part ment of Vet erans Af fairs (VA)

www.va.gov

Agency for In ter na tional De vel op ment (AID)

www.info.usaid.gov

Cen tral In tel li gence Agency (CIA)

www.odci.gov/cia/ciahome.html

Con gres sio nal Bud get Of fice (CBO )

www.cbo.gov

Com mod ity Credit Cor po ra tion

Com mod ity Fu tures Trading Com mis sion

En vi ron men tal Pro tec tion Agency (EPA)

www.epa .gov

Ex ec u tive Of fice of the Pres i dent

Ex port-Import Bank of the United States

www.exim.gov

Farm Credit Ad min is tra tion (FCA)

www.fca.gov

Fed eral Com mu ni ca tions Com mis sion (FCC)

www.fcc.gov

Fed eral De posit In sur ance Cor po ra tion (FDIC)

www.fdic.gov

Fed eral Emer gency Man age ment Agency (FEMA)

www.fema.gov

Fed eral Trade Com mis sion (FTC)

www.ftc.gov

Gen eral Ac count ing Of fice (GAO)

www.gao.gov

Gen eral Ser vices Ad min is tra tion (GSA)

www.gsa .gov

Gov ern ment Print ing Of fice (GPO)

www.gpo.gov

Li brary of Con gress (LOC)

www.loc.gov

Na tional Aero nau tics and Space Ad min is tra tion (NASA)

www.nasa.gov 

Na tional Ar chives and Re cords Ad min is tra tion

www.nara.gov

Na tional Credit Un ion Ad min is tra tion (NCUA)

www.ncua.gov

Na tional Sci ence Foun da tion (NSF)

www.nsf.gov

Na tional Trans por ta tion Safety Board ( NTSB)

www.ntsb.gov

Nu clear Reg u la tory Com mis sion (NRC)

www.nrc .gov

Of fice of Man age ment and Bud get (OMB)

www.whitehouse.gov/wh/eop/omb/html/

omb home.html

Of fice of Per son nel Man age ment (OPM)

www.opm.gov
 AP PEN DIX 109

Army and Air Force Ex change Ser vice

Board of Gov er nors of the Fed eral Re serve Sys tem

Fan nie Mae

Farm Credit Sys tem

Fed eral Home Loan Banks

Fed eral Re serve Banks (FRBs)

Fed eral Re tire ment Thrift In vest ment Board

Significant Entities Excluded from these Statements:

Entities Included, cont.

Fi nancing Cor po ra tion

Freddie Mac

Ma rine Corps Ex change

Navy Ex change Ser vice Com mand

Res o lu tion Funding Cor po ra tion

Sal lie Mae

Thrift Sav ings Fund

Other boards and commissions

Other leg is la tive and ju di cial

Pen sion Ben e fit Guar anty Cor po ra tion

www.pbgc.gov

Rail road Re tire ment Board (RRB)

www.rrb.gov

Se cu ri ties and Ex change Com mis sion (SEC)

www.sec.gov

Small Busi ness Ad min is tra tion (SBA)

www.sba.gov

Smith so nian In sti tu tion

www.si.edu

So cial Se cu rity Ad min is tra tion (SSA)

www.ssa. gov

Ten nes see Val ley Au thor ity (TVA)

www.tva. gov

U.S. In for ma tion Agency

www.usia.gov

U.S. Postal Ser vice

www.usps.gov