United States General Accounting Office

GAO Testimony

Before the Subcommittee on Space and Aeronautics,

Committee on Science, House of Representatives

For Release on Delivery

Expected at

10:00 a.m., EDT

Thursday,

July 18, 1996

NASA BUDGET

Carryover Balances in

Selected Programs

Statement of Thomas J. Schultz, Associate Director,

Defence Acquisitions Issues, National Security and

International Affairs Division

G O A

years

1921 - 1996

GAO/T-NSIAD-96-207

Mr. Chairman and Members of the Subcommittee:

We are pleased to be here today to discuss the National Aeronautics and

Space Administration’s (NASA) carryover balances. In March of this year,

Mr. Chairman, you expressed concern about the extent of such balances

for Mission to Planet Earth and other programs. Our recent report to you

is attached to this statement.1

 The report presents basic information on

carryover balances for Mission to Planet Earth and other programs in

NASA’s Human Space Flight and Science, Aeronautics, and Technology

appropriations for fiscal years 1995, 1996, and 1997. The report (1) defines

carryover balances and its uncosted components, (2) analyzes Mission to

Planet Earth’s carryover balances in relation to NASA’s other programs, and

(3) describes NASA’s reaction to high carryover balances in many of its

programs.

The purpose of our testimony today is to place the report in context.

Specifically, we want to focus on how important it is to use information on

carryover balances when considering NASA’s request for new budget

authority. There are also issues we believe warrant further review as part

of our basic legislative responsibility.

Simply stated, while assessing NASA’s request for new budget authority and

determining what adjustments, if any, to make to that request, the focus

should be on the total resources NASA has available for the next fiscal year,

not just the amount requested. Carryover balances, which represent

available budgetary resources from prior years, along with new budget

authority, provide the total budget resources available to a program. Some

level of carryover balance is appropriate for government programs. Table

1 in our report shows that carryover balances represent a significant

portion of total budgetary authority. For example, at the start of fiscal year

1996, NASA’s carryover balances for its Human Space Flight and Science,

Aeronautics, and Technology programs totaled $3.6 billion—about a

quarter of all the budgetary resources available to those programs during

that fiscal year.

Carryover balances consist of uncosted obligations and unobligated funds.

Uncosted obligations represent the portion of its authority that NASA has

obligated for goods and services but for which it has not yet incurred

costs. Funding provided for NASA’s Human Space Flight and Science,

Aeronautics, and Technology programs is available for obligation over a

2-year period. In such circumstances, some funds are expected to be

1

NASA Budget: Carryover Balances for Selected Programs (GAO/NSIAD-96-206, July 16, 1996).

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obligated during the second year of availability. NASA officials pointed out

that funds carried over will eventually be expended to cover program

costs.

To illustrate how significant carryover balances can be as part of total

budget resources available, let’s look at the Mission to Planet Earth

program. We see that NASA requested $1.402 billion for the program for

fiscal year 1997. If approved, this would provide about two-thirds of the

$2.1-billion total budget authority available to the program in 1997. The

other third is the nearly $654 million that NASA estimated would be carried

over from fiscal year 1996. Therefore, the request for $1.402 billion in new

authority really is part of the larger question of how NASA will use $2.1

billion in budgetary resources in fiscal year 1997. Part of the answer is the

amount of costs that will be incurred for work performed in fiscal year

1997. NASA estimates such costs at $1.425 billion, which would leave close

to $631 million to be carried into fiscal year 1998. The question for NASA

and the Committee is whether $631 million should be carried over as part

of acceptable operations of this program. A related question is how much,

if any, should be rolled over for costs anticipated beyond the current

budget year? There are several NASA programs with large carryover

balances where these questions need to be addressed.

Our report notes some reasons NASA has given as to why these balances

have accumulated over the years. Again, while we agree that some level of

carryover balance is appropriate for government programs, more in-depth

review is needed on the justifications for carryover balances in order to

provide the context for assessing these balances. For example, in one

case, a NASA official told us that a portion of a program’s carryover balance

was part of a strategy to accumulate budget authority in earlier years of a

project to cover later years when high levels of costs will be incurred,

without having to request increases in budget authority at that time. There

are indications that this practice, referred to as “banking” by that official,

may occur in other NASA activities. Given that the program can annually

request and receive new authority, significant carryover balances are a

reason for discussion on how much future work to fund in the pending

budget request, and how much in future budget requests.

Mr. Chairman, you are not alone regarding your concern about the size of

NASA’s carryover balances. NASA is also concerned that the current amounts

of carryover are too high and is taking action to reduce the balances. We

are specifically referring to the recent NASA Chief Financial Officer’s study

of carryover balances that established a threshold for amounts of

Page 2 GAO/T-NSIAD-96-207
carryover and recommended actions to bring NASA programs within that

threshold. The study noted that the threshold needs to be studied over

time to determine if it is appropriate. Our report also notes the NASA

Comptroller’s actions to scrutinize carryover amounts as part of the fiscal

year 1998 budget development process. These are good first steps to help

gain an understanding of the issues.

NASA has shown that it is paying more attention to carryover balances.

However, NASA has not yet reached the point where it fully understands

individual programs’ carryover balances and what each program’s

carryover threshold could or should be. The agency at some time will have

to make decisions on how to develop and enforce appropriate changes.

We intend to follow the agency’s progress in developing and implementing

these changes. We believe that this hearing will help focus attention on an

important matter for consideration during deliberations on NASA’s budget

request.

This completes my statement, Mr. Chairman. My colleagues and I will be

happy to respond to any questions you or Members of the Subcommittee

may have at this time.

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