Financial Management Service 

Program Summary by Budget Activity 

(Dollars in thousands)

Appropriation FY 2010 FY 2011 FY 2012 FY 2010 to FY 2012

Enacted Annualized 

CR Level

Request $ Change % Change

 Payments $150,395 $142,537 $132,868 ($17,527) (11.7%)

 Collections $21,911 $24,267 $21,265 ($646) (2.9%)

 Government-wide Accounting and Reporting $71,826 $77,328 $64,672 ($7,154) (10.0%)

Subtotal, Financial Management Service $244,132 $244,132 $218,805 ($25,327) (10.4%)

Offsetting Collections - Reimbursables $234,690 $216,730 $231,223 ($3,467) (1.5%)

Total Program Operating Level $478,822 $460,862 $450,028 ($28,794) (6.0%)

Direct FTE 1,500 1,500 1,200 (300) (20.0%)

Reimbursable FTE 483 460 460 (23) (4.8%)

Total FTE 1,983 1,960 1,660 (323) (16.3%)

Summary 

 

FMS provides critical and essential payment, 

collections, debt collection and governmentwide accounting and reporting functions 

essential to the successful operation of the 

federal government. These functions are far 

reaching. This includes issuing over 70 

million benefit payments distributed monthly 

to the American public, the collection of all 

federal revenues that fund government 

operations and programs, processing and 

collecting of delinquent debts owed to the 

federal government including collection of 

past due child support, and providing financial 

reports to varied stakeholders. FMS touches 

almost every American and federal agency 

proving these very important and essential 

services. 

FMS’ budget reflects a strong commitment to 

fiscal stewardship of taxpayers funding. The 

FY 2011 and FY 2012 budget represents a 

10% reduction from FY 2010 levels. This 

will bring FMS to funding levels not seen 

since FY 2002. Even though FMS will 

operate at FY 2002 operating levels, we are 

committed to providing continued high service 

levels to our customers. We believe we can 

fulfill this objective due to FMS’ innovative 

modernization efforts which have been 

implemented and finalized over the past years. 

FMS’ FY 2012 budget directly addresses the 

Department’s high priority performance goal 

of significantly increasing the number of 

paperless transactions with the public. It also 

addresses the Administration’s priority of 

“going green” and consolidating data centers. 

FMS supports Treasury’s paperless initiative, 

which requires all new enrollees in federal 

benefit programs (e.g., Social Security 

Administration) to receive payments 

electronically by March 1, 2011. Anyone 

currently receiving checks would be required 

to switch to electronic payment by March 1, 

2013. A second important component of the 

all-electronic Treasury initiative requires all 

businesses currently required to use a Federal 

Tax Deposit (FTD) coupon to pay 

electronically beginning January 1, 2011. 

In response to a request from the Office of the 

Fiscal Assistant Secretary, the Commissioners 

of FMS and the Bureau of the Public Debt 
(BPD) determined that they could improve the 

efficiency and effectiveness of their collective 

information technology (IT) infrastructures. 

As a result, FMS, in partnership with BPD, 

initiated a project to consolidate the data 

centers across the two bureaus to help achieve 

the Secretary’s objective of increasing the 

utilization and efficiency of combined IT 

assets, while reducing technology costs. This 

effort also conforms to the Office of 

Management and Budget’s (OMB) Data 

Center Consolidation Directive which requests 

that all federal agencies review IT spending, 

placing emphasis on consolidating and sharing 

IT services to reduce expenditures. Five data 

centers will be consolidated into two shared by 

both bureaus with one acting as a back-up to 

the other. This effort also includes the 

creation of a single corporate governing body, 

in-sourcing of select contractor functions, and 

consolidation of application development 

methodologies and associated infrastructure; 

resulting in a more “green” approach to the 

delivery of IT services. 

FMS continues to work toward increasing 

operational efficiencies that streamline our 

four main activities of payments, collections, 

government-wide accounting and reporting, 

and debt collection. Given FMS’ recent 

history of cost reduction, it is clear that FMS is 

a conscientious steward of taxpayer money. 

These cost saving measures do not inhibit our 

ability to deliver the products and services that 

are vital to our nation’s economic security. 

FMS continues to work toward increasing 

operational efficiencies and by implementing 

these initiatives will greatly facilitate the 

ongoing effort to modernize the Federal 

government’s payment, collections, debt 

collection and central accounting and reporting 

systems. The end result will be greater 

efficiency, cost savings, and data quality 

improvements throughout government. 

FMS FY 2012 Budget Highlights

(Dollars in thousands)

Appropriation Amount

FY 2010 Enacted $244,132

FY 2011 Annualized CR Level $244,132

Changes to Base: 

Adjustment to Reach Policy Level: ($10,537)

Adjustment to Reach FY 2011 President's 

Policy 

($10,537)

Maintaining Current Levels (MCLs): $2,000

Maintaining Current Levels $2,000

Efficiencies, Savings & Base Reductions: ($11,690)

Elimination of Bureau of Economic 

Analysis Interagency Agreement 

($175)

Reduce Systems Development ($1,400)

Paperless Treasury / Payment Center 

Repurposing 

($6,297)

Data Center Consolidation ($685)

Migration of Human Resources Operations 

to Shared Service Provider 

($533)

Operational Efficiencies & Space 

Consolidation 

($2,600)

Subtotal FY 2012 Changes to Base ($20,227)

Total FY 2012 Base $223,905

Program Changes: 

Program Decreases: ($5,100)

FIRST and GWAMP Project Savings ($5,100)

Subtotal FY 2012 Program Changes ($5,100)

Total FY 2012 Request $218,805

FY 2012 Budget Adjustments 

 

FY 2011 Enacted 

The FY 2011 enacted direct appropriation for 

FMS is $235,253,000. 

Adjustment to Reach Policy Level 

Adjustment to Reach FY 2011 President's 

Policy -$10,537,000 / +0 FTE 

Adjustment from the FY 2011 Annualized 

Continuing Resolution (CR) Rate to reach the 

FY 2011 President's Policy Level. The 

President's Policy Level is equal to the 

FY 2011 President's Budget as adjusted for the 

proposed pay freeze. 

Maintaining Current Levels (MCLs) 

Maintaining Current Levels +$2,000,000 / +0 

FTE 

 Funds are required for inflation adjustments in 

non-labor expenses such as GSA rent 

adjustments, postage, supplies and equipment 
and health benefits and the increase in Federal 

Employee Retirement System participation. 

 

Efficiencies, Savings & Base Reductions 

Elimination of Bureau of Economic Analysis 

Interagency Agreement -$175,000 / +0 FTE 

FMS has an interagency agreement with the 

Department of Commerce’s Bureau of 

Economic Analysis for statistical analysis 

required each year for the International 

Monetary Fund. However, FMS no longer has 

programs or activities that benefit directly or 

indirectly from this expense. Elimination of 

this service would not hamper FMS efforts. 

Reduce Systems Development -$1,400,000 / 

+0 FTE 

FMS will reduce funding related to low 

priority program system development and 

maintenance. 

Paperless Treasury / Payment Center 

Repurposing -$6,297,000 / -49 FTE 

In FY 2012, the Paperless Treasury Initiative 

will not only save the government through 

consumable savings but will also allow FMS 

to move from four payment centers to three. 

The repurposing of the Austin Financial 

Center provides FMS the opportunity to 

expand its delinquent debt activity by targeting 

more of the delinquent debt referred to FMS 

for collection. 

Data Center Consolidation -$685,000 / -121 

FTE 

FMS, along with BPD, will consolidate five 

data centers to two which will produce savings 

due to reductions in energy consumption, 

equipment, software, and staff. The 

consolidation of Fiscal Service data centers 

includes the transferring of staff from FMS to 

the Treasury Franchise Fund. The salary and 

benefit costs of those FTE will be used to pay 

for the resulting new contract. 

Migration of Human Resources Operations to 

Shared Service Provider -$533,000 / -5 FTE 

FMS examined the feasibility of migrating its 

human resources program to a shared service 

provider. Based on the analysis, FMS elected 

to transition its HR operational functions to the 

Administrative Resource Center of the Bureau 

of the Public Debt. This migration is expected 

to improve the quality and cost-effectiveness 

of FMS HR operational processes. This 

reduction will offset the full cost of the shared 

services agreement with full implementation in 

2012. 

Operational Efficiencies & Space 

Consolidation -$2,600,000 / +0 FTE 

FMS will identify operational efficiencies 

gained through improved process and 

modernization efforts. Additionally, in 

coordination with GSA, FMS will work to 

consolidate space and reduce the FMS' 

footprint in the Hyattsville Center to 

accommodate changes in staffing and Data 

Center consolidation. 

Program Decreases 

FIRST and GWAMP Project Savings – 

$5,100,000 / +0 FTE FMS will reduce 

funding related to development for both the 

Government-wide Accounting and Modernization Project (GWAMP) and FIRST. 

Explanation of Budget Activities 

 

Salaries and Expenses 

Payments ($132,868,000 from direct 

appropriations and $129,561,000 from 

reimbursable programs) 

FMS is responsible for managing and 

operating federal payment systems and for 

disbursing approximately 85 percent of all 

federal payments. It is comprised of a 

headquarters staff and Regional Financial 

Centers (RFCs). Major payments include: 

social security benefits, supplemental security 

income, federal pension benefits, veterans’ 
compensation, railroad retirement pensions, 

and tax refunds. An electronic payment is an 

electronic funds transfer made by direct 

deposit via the Federal Reserve Bank’s 

Automated Clearing House system to more 

than 28,000 member financial institutions 

nationwide. In FY 2010, the centers disbursed 

over one billion payments, totaling over $2.3 

trillion dollars. 

Collections ($21,265,000 from direct 

appropriations and $198,000 from 

reimbursable programs) 

FMS collects revenues needed to operate the 

federal government through the management 

of the federal government’s collections 

infrastructure. The collections activity is also 

part of the nation’s critical infrastructure. 

FMS collected nearly $2.94 trillion in FY 2010 

through a network of more than 8,000 

financial institutions. It also manages the 

collection of federal revenues such as 

individual and corporate income tax deposits, 

customs duties, loan repayments, fines and 

proceeds from leases. FMS establishes and 

implements collection policies, regulations, 

standards and procedures for the federal 

government. The majority of dollar 

collections are made electronically. While 85 

percent of federal revenue was collected 

electronically in FY 2010, the Paperless 

Treasury Initiative will help FMS improve the 

percentage of tax revenue collected 

electronically by requiring all businesses 

currently required to use a FTD coupon to pay 

electronically effective January 1, 2011. 

Government-wide Accounting and Reporting 

($64,672,000 from direct appropriations and 

$4,412,000 from reimbursable programs) 

The Government-wide Accounting and 

Reporting (GWA) activity maintains the 

federal government’s accounts for its 

monetary assets and liabilities by operating 

and overseeing the government’s central 

accounting and reporting system. It also 

works with federal agencies to adopt uniform 

accounting and reporting standards and 

systems. It provides support, guidance, and 

training to assist agencies in improving their 

government-wide accounting and reporting 

responsibilities. FMS collects, analyzes, and 

publishes government-wide financial 

information which is used in establishing fiscal 

and debt management policies and is also used 

by the public and private sectors to monitor the 

government’s financial status. Publications 

include the Daily Treasury Statement, the 

Monthly Treasury Statement, the Treasury 

Bulletin, the Combined Statement of the 

United States Government, and the Financial 

Report of the United States Government (FR). 

It is important to note, the cash reporting 

function of GWA supports the National 

Financial Critical Infrastructure. 

Legislative Proposals 

 

Technical Correction to Allow IRS to Levy 

100 percent of all Vendor Payments, 

Including Payments for the Purchase and 

Lease of Real Estate, to Collect Delinquent 

Taxes

Section 6331(h) of the Internal Revenue Code 

was amended in 2005 to allow the IRS to levy 

up to 100 percent of federal vendor payments. 

Before this change, the maximum was 15 

percent. The current language, which was 

intended to cover all federal vendor payments, 

refers to payments for "goods and services." 

This has been interpreted to exclude payments 

for the purchase or lease of real estate. 

Therefore, a technical correction is needed to 

ensure that all federal vendor payments are 

covered. 

Allow Offset of Federal Income Tax 

Refunds to Collect Delinquent State Income 

Taxes for Debtors Who Currently Reside in 

Other States

Under current law, federal tax refunds may be 

offset to collect delinquent state income tax 
obligations only if the delinquent taxpayer 

resides in the state collecting the tax. This 

proposal will allow FMS to offset federal 

income tax refunds to collect delinquent state 

tax obligations regardless of where the debtor 

resides. 

Increase Levy Authority for Payments to 

Medicare Providers with Delinquent Tax 

Debt 

The Budget proposes a change to the 

Department of the Treasury's debt collection 

procedures that will increase the amount of 

delinquent taxes collected from Medicare 

providers. Through the Federal Payment Levy 

Program, Treasury deducts (levies) a portion 

of a Government payment to an individual or 

business in order to collect unpaid taxes. 

Pursuant to the Medicare Improvements for 

Patients and Providers Act of 2008, Treasury 

is authorized to continuously levy up to 15 

percent of a payment to a Medicare provider in 

order to collect delinquent tax debt. The 

Budget proposal will allow Treasury to levy 

up to 100 percent of a payment to a Medicare 

provider to collect unpaid taxes. 

FMS Performance by Budget Activity

Budget Activity Performance Measure FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Actual Actual Actual Target Target

Payments Percentage of Treasury 

Payments and Associated 

Information Made 

Electronically (Oe)

79% 81% 82% 83% 85%

Revenue collected Amount of Delinquent 

Debt Collected Through 

All Available Tools ($ 

billions) (Ot)

4.41 5.03 5.45 4.84 5.03

Revenue collected Percentage Collected 

Electronically of Total 

Dollar Amount of Federal 

Government Receipts 

(Oe)

80.0 84.0 85.0 82.0 82.0

Financial information Percentage of 

Government-Wide 

Accounting Reports 

Issued Timely (%) (Oe)

100.0 100.0 100.0 100.0 100.0

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, M - Management/Cust. 

Satisfaction, DISC - Discontinued, and B – Baseline

Description of Performance 

 

Payments: FMS disburses payments to a 

wide variety of recipients, such as those who 

receive Social Security Administration 

payments, Internal Revenue Service tax 

refunds, and the Department of Veterans 

Affairs benefits. In FY 2010, FMS issued 

more than one billion non-Defense payments, 

with a dollar value of over $2.34 trillion. 

More than 82 percent of these transactions 

were issued by Electronic Funds Transfer 

(EFT). In FY 2012, FMS is projecting the 

percentage of electronic payments to be 84 

percent. 

Collections: In FY 2010, FMS collected $2.94

trillion through a network of more than 9,000 

financial institutions. Slightly more than 85 

percent of the funds was collected 

electronically. While FMS continued to 

promote and convert collections from paper to 

the more efficient electronic media in FY 

2010, there are a number of factors that have 
adversely affected the unit cost metric. It is 

projected that the unit cost metric for 

collections will increase over the next three 

years due to two primary factors: 1) The 

current economic conditions; and 2) Increased 

expenses during the transition to a fully 

implemented Collections and Cash 

Management Modernization (CCMM) 

initiative. 

The economic climate has had a major 

influence on the unit cost for collections. 

Recessionary business failures and job losses 

have caused fewer employers to report 

withholding transactions to the Electronic 

Federal Tax Payment System (EFTPS). 

Similarly, small business failures and job 

losses reduced the number of tax filers using 

the IRS Lockbox Network. For example, 

during the Spring 2009 tax season, tax 

transaction receipts were down by 22 percent. 

Since some of the costs of EFTPS and the IRS 

Lockbox Network are fixed, the unit cost per 

item increased. 

Government-wide Accounting and 

Reporting: FMS issues 100 percent of its 

government-wide accounting reports 

accurately and timely. Annually, FMS 

releases the Financial Report of the United 

States Government (FR). The FR has been 

audited by the Government Accountability 

Office (GAO) since 1997, and has received a 

disclaimer of opinion each year. For fiscal 

year ended September 30, 2010, the report was 

released on December 21, 2010, with a 

disclaimer of opinion. GAO acknowledge that 

while significant progress has been made in 

improving federal financial management since 

the federal government began preparing the 

consolidated financial statements 14 years ago, 

three major impediments continued to prevent 

them from rendering an opinion on the federal 

government’s accrual-based consolidated 

financial statements over this period: (1) 

serious financial management problems at the 

Department of Defense (DoD) that prevented 

DoD’s financial statements from being 

auditable, (2) the federal government’s 

inability to adequately account for and 

reconcile intergovernmental activity and 

balances between federal agencies, and (3) the 

federal government’s ineffective process for 

preparing the consolidated financial 

statements. GAO also acknowledged that: (1) 

Treasury continues to take steps to help 

resolve differences in intragovernmental 

activity and balances; and (2) during fiscal 

year 2010, Treasury, in coordination with the 

Office of Management and Budget, continued 

implementing corrective action plans and 

made progress addressing certain internal 

control deficiencies that they have previously 

reported.

Debt Collection: In FY 2010, FMS collected 

$5.45 billion in delinquent debt including 

$12.8 million from Economic Recovery 

Payments. The amount collected includes 

$2.10 billion in past due child support, $2.30 

billion in federal nontax debt, and over $1.05 

billion in federal tax levies and state tax debt 

offsets. Debt referrals from creditor agencies 

were at 100 percent of eligible debt at the end 

of FY 2010. As a result of the continued 

program improvements, cumulative collections 

since enactment of the Debt Collection 

Improvement Act of 1996 are $48.2 billion. In 

calendar year 2010, the Internal Revenue 

Service referred an additional $54 billion of 

tax debts for continuous levy, a 15 percent 

increase over calendar year 2009.