Financial Management Service (FMS) 

Mission Statement 

To provide central payment services to Federal Program Agencies (FPAs), operate the 

federal government’s collections and deposit systems, provide government-wide 

accounting and reporting services, and manage the collection of delinquent debt owed to 

the government. 

Program Summary by Budget Activity 

Dollars in Thousands 

Appropriation FY 2009 FY 2010 FY 2011

Enacted Enacted Request $ Change % Change

 Payments $147,717 $150,395 $142,537 ($7,858) (5.2%)

 Collections $21,521 $21,911 $21,690 ($221) (1.0%)

 Government-wide Accounting and Reporting $70,547 $71,826 $71,026 ($800) (1.1%)

Total Appropriated Resources $239,785 $244,132 $235,253 ($8,879) (3.6%)

Total FTE 1,500 1,500 1,375 (125) (8.3%)

*The FY 2009 figure does not include $7 million dollars received from the American Recovery and 

Reinvestment Act. 

FY 2011 Priorities 

• Provide timely, accurate, and efficient disbursement of federal government payments. 

• Provide timely, accurate, and efficient collection of federal government receipts. 

• Maximize collection of delinquent debt owed to the government. 

• Produce timely and accurate financial information that contributes to the improved 

quality of financial decision making. 

• Be a great place to work. 

FMS - 1 
Table of Contents 

Financial Management Service (FMS) ............................................................................ 1

Section 1 – Purpose ........................................................................................................... 3

1A – Description of Bureau Vision and Priorities .......................................................... 3

1B – Program History and Future Outlook ..................................................................... 4

Section 2 – Budget Adjustments and Appropriation Language ................................... 9

2.1 – Budget Adjustments Table ..................................................................................... 9

2A – Budget Increases and Decreases Description ........................................................ 9

2.2 – Operating Levels Table ........................................................................................ 11

2.3 – Appropriations Detail Table ................................................................................ 12

2B – Appropriations Language and Explanation of Changes ....................................... 12

Exhibit 2C – Permanent, Indefinite Appropriations ..................................................... 12

2C – Legislative Proposals ........................................................................................... 13

Section 3 – Budget and Performance Plan ................................................................... 16

3.1 – Budget by Strategic Outcome .............................................................................. 16

3A – Payments .............................................................................................................. 16

3.2.1 – Payments Budget and Performance Plan .......................................................... 18

3B – Collections ............................................................................................................ 18

3.2.2 – Collections Budget and Performance Plan ....................................................... 20

3C – Debt Collection .................................................................................................... 21

3.2.3 – Debt Collection Budget and Performance Plan ................................................ 22

3D – Government-wide Accounting and Reporting ..................................................... 22

3.2.4 – Government-wide Accounting and Reporting Budget and Performance Plan . 24

Section 4 – Supporting Materials .................................................................................. 25

4A – Human Capital Strategy Description ................................................................... 25

4.1 – Summary of IT Resources Table ......................................................................... 27

4B – Information Technology Strategy ........................................................................ 28

4.2 – Program Evaluation ............................................................................................. 29

FMS - 2 
Section 1 – Purpose

1A – Description of Bureau Vision and Priorities 

The Financial Management Service’s (FMS) vision is to provide world class delivery of 

government financial management services. 

FMS plays a key role in supporting the Department of the Treasury’s strategic goal of 

managing the United States Government’s finances effectively by operating as the 

financial manager and principal fiscal agency for the federal government. In ensuring the 

restoration of confidence in the nation’s financial system, FMS executes its role of 

managing the nation’s finances by collecting money due to the United States, making its 

payments, and performing central accounting functions. 

FMS Strategic Goals, as reflected in the FY 2011 priorities, are to: 

• Provide timely, accurate, and efficient disbursement of federal government payments. 

• Provide timely, accurate, and efficient collection of federal government receipts. 

• Increase use of direct deposit and direct debit to move towards a paperless Treasury. 

• Maximize collection of delinquent debt owed to the Government. 

• Produce timely and accurate financial information that contributes to the improved 

quality of financial decision making. 

• Be a great place to work. 

The National Critical Infrastructure was established as a result of the Homeland Security 

Act of 2002. Critical Infrastructure are the assets, systems, and networks, whether 

physical or virtual, so vital to the United States that their incapacitation or destruction 

would have a debilitating effect on security, national economic security, public health or 

safety, or any combination thereof. Under the Homeland Security Presidential Directive 

7, the Department of the Treasury was identified as a key sector-specific area for the 

Banking and Finance Sector. 

FMS is responsible for a major element of the federal government’s Financial Critical 

Infrastructure and certain key governmentally controlled resources which are essential to 

the operation of the economy and government. While 100 percent of FMS operational 

functionality comprises the processing and safeguarding of public funds, approximately 

75 percent of its direct salary and expense funding, three programs – payments, 

collections, and cash reporting ensure the viability of the Critical Infrastructure. FMS is 

required to ensure these activities are fully operational at all times. 

As part of the critical infrastructure, FMS provides critical services to millions of United 

States taxpayers, FPAs, and other customers. It embodies Treasury’s leadership strategy 

to create value for the American people, provides responsible and effective stewardship 

FMS - 3 
over the government’s finances, and focuses on quality service, results and innovation. 

FMS operates the largest tax collection system in the world and issues over one billion 

payments annually; therefore, the impact of its programs on the economy and the public 

is significant. These activities touch millions of people and virtually every FPA and state 

government across the country. 

As the government’s financial manager, FMS oversees a daily cash flow in excess of 

$60 billion, disbursing 85 percent of the federal government’s payments. These 

payments include Internal Revenue Service (IRS) income tax refunds, Social Security 

benefits, veteran’s benefits and other federal payments to individuals and businesses. 

FMS also administers the world’s largest collection system, having collected $2.86 

trillion in FY 2009. FMS provides cash management guidance to FPAs, maintains the 

government’s accounts, and compiles and publishes government-wide financial 

information used to monitor the government’s financial status, and serves as the 

government’s central debt collection agency for delinquent debt. 

1B – Program History and Future Outlook 

The Department is committed to moving to paperless processing throughout its bureaus 

and programs, including increasing the number of payments and collections made 

electronically. FMS will play a critical role through an increasing use of electronic 

benefit payments and collections. This will help streamline intergovernmental processes 

and enhance service to the general public. 

FMS continues to work on increasing operational efficiencies that streamline the four 

main activities of payments, collections, government-wide accounting and reporting, and 

debt collection. In keeping with the President’s goal of putting “our fiscal house in 

order,” FMS has, through its continued modernization efforts, identified several cost 

savings which can be found in section two of the budget. Modernization of these systems 

will help minimize/eliminate waste, save time and, ultimately, optimize the use of the 

taxpayers’ dollars. 

FMS strives to consistently look for ways to increase the number of payments and 

collections made electronically. The Paperless Treasury initiative will move FMS closer 

to an all-electronic organization. Two important components of this initiative include: 

the phasing in of government benefit check recipients to electronic deposit and requiring 

all businesses with $2,500 or more in quarterly tax liability to pay electronically. The use 

of electronics will allow FMS to improve the accuracy and efficiency of transactions and 

operations, eliminate paper-based processes, and contribute to increasing electronic 

transactions within government and with the public. 

In addition, FMS continues to implement systems that reduce the use of paper. An 

example of this is the roll-out of the Judgment Fund Internet Claims System, which 

allows federal agencies to submit claims electronically to the Judgment Fund, thereby 

eliminating paper throughout the entire federal government. 

FMS - 4 
In FY 2011, FMS will work with GSA to conduct a feasibility study to determine 

alternative space needs for FMS as the lease for the Hyattsville facility will expire in 

December 2012. 

Payments 

The Payments program, a component of the National Financial Critical Infrastructure, 

develops and implements federal payment policy and procedures, issues and distributes 

payments, promotes the use of electronics in the payment process, and assists agencies in 

converting payments from paper checks to Electronic Funds Transfer (EFT). This 

includes controlling and providing financial integrity to the payments process through 

reconciliation, accounting, and claims activities. It also includes special payments such 

as Federal Emergency Management Agency payments. In FY 2009, FMS issued over 

one billion non-Defense payments worth almost $2.27 trillion to a wide variety of 

recipients, such as those who receive IRS tax refunds, Social Security benefits, and 

veteran’s benefits. Nearly eighty-one percent of all payments disbursed were issued via 

EFT. 

In calendar year (CY) 2008, FMS issued 119 million Economic Stimulus Payments 

valued at over $96 billion. Over 36 percent of the FY 2008 Stimulus Payments were 

issued by direct deposit. In FY 2009, FMS disbursed over 54.9 million Economic 

Recovery Act Payments (ERP) totaling $13.7 billion with 85 percent of the payments 

made by EFT. FMS expects total ERP payments disbursed will be over 55 million 

valued at over $13.8 billion. 

Streamlining the payments processes while continually investing in state-of-the-art 

technology is integral in processing payments accurately, timely, and more safely and 

securely for the taxpayer. The Payment Application Modernization (PAM) Project is an 

effort to replace the current mainframe-based software applications that are used to 

disburse approximately one billion federal payments annually. Ultimately, PAM will be 

a single application that will generate check, wire transfer, and ACH payments for FPAs, 

including IRS, Social Security, Veterans Affairs, and others. 

In FY 2011, FMS will continue to expand the use of electronic media to deliver federal 

payments by pursuing the continued implementation of the Debt Collection Improvement 

Act of 1996 (DCIA), as amended, which generally requires all federal agencies to make 

payments by EFT. Electronic media provides a safer, more secure and reliable method of 

payment for recipients. In addition, electronic payments decrease the number of paper 

checks issued, minimizing costs and inefficiencies associated with the delivery of nonelectronic benefits. 

FMS - 5 
Collections 

The Collections program, also part of the National Financial Critical Infrastructure, 

collects revenues needed to operate the federal government through the effective 

management of the government’s collections infrastructure. In FY 2009, FMS collected 

$2.86 trillion, of which 83 percent was collected electronically, through a network of 

more than 9,000 financial institutions. A major component supporting electronic 

collections is the Electronic Federal Tax Payment System (EFTPS). EFTPS is a tax 

payment system that offers all businesses and individuals the convenience of making 

their federal tax payments electronically 24 hours a day, seven days a week. Under the 

proposed Paperless Treasury initiative, all businesses with $2,500 or more in quarterly 

tax liability will be required to pay electronically. 

FMS is undergoing a comprehensive effort to streamline, modernize and improve the 

processes and systems supporting Treasury’s collections and cash management program. 

Collections and Cash Management Modernization (CCMM), will improve financial 

performance by enabling FMS and government agencies to more effectively manage 

financial transaction information and improve the efficiency of the collections 

information reporting processes. 

In FY 2011, FMS will continue to expand the use of electronic collection mechanisms 

using the most advanced and secure collection technologies that are flexible enough to 

accommodate the varying needs and technical sophistication of all taxpayers and FPAs. 

FMS will improve the collection channels and its interaction with the public. Currently, 

financial agents report collections information to many FPAs and multiple United States 

Treasury systems. To collect this information, the FPAs and Treasury systems interface 

with numerous sources using a variety of formats and interface technologies. FMS is 

developing a system which will provide a single touch point for information reporting 

and retrieval to FPAs via transaction brokering, data warehousing, and business 

intelligence. This will enable the standardization and consolidation of collections 

information and eliminate redundancies in the government’s collections reporting 

processes. FMS will also continue to focus on security oversight efforts at financial 

agent processing facilities and banking institutions as a way to proactively identify 

security control weaknesses and detect and deter fraud, waste, theft and unauthorized 

access associated with the collection of government remittances and protection of 

sensitive information. 

Government-wide Accounting and Reporting 

The Government-wide Accounting and Reporting program maintains the federal 

government’s account structure for its monetary assets and liabilities by operating and 

overseeing the government’s central accounting and reporting system. This includes cash 

reporting which is part of the National Critical Infrastructure. FMS has consistently 

released the Financial Report of the United States Government (FR) 75 days after the 

fiscal year-end. However, for FY 2009, some agencies that were significantly impacted 

FMS - 6 
by the substantial reporting requirements of the American Recovery and Reinvestment 

Act (ARRA) were granted reporting deadline extensions, which consequently impact the 

timing of the FR, now scheduled for February 16, 2010. The FR presents a picture of 

government-wide finances that complements the traditional federal government budget 

information. Treasury releases the Monthly Treasury Statement (the monthly public 

source of the federal government’s budget surplus/deficit) on the eighth workday of each 

month. With this release schedule, agency financial managers are better able to verify 

and use the data in their own reports. 

In FY 2011, FMS will continue to revamp and implement government-wide accounting 

processes to provide more useful and reliable financial information on a regular basis. 

Two major initiatives will modernize long standing federal accounting processes and 

provide agencies with methodologies and tools to improve the accuracy and consistency 

of their financial data. 

Government-wide Accounting (GWA) Modernization Program is a new process and 

system intended to improve the exchange of financial information among FMS, FPAs, 

OMB, and the banking community. Once completed, it will replace current governmentwide accounting functions and processes that are both internal and external to FMS. 

FMS will continue working with FPAs to implement the new process for the reporting of 

payments, collections, and intra-governmental transactions. The system will improve the 

reliability, usefulness, and timeliness of the government’s financial information, provide 

FPAs and other users with better access to that information, and eliminate duplicate 

reporting and reconciliation burdens on agencies. In addition, FPAs will have better tools 

for reporting financial information and access to daily account statements for monitoring 

the status of their financial information at the Treasury Department. While FMS will 

realize modest savings from this program, the most significant savings will be 

government-wide as agencies will no longer have to prepare month-end reports 

classifying all of their disbursement and collection transactions or perform reconciliations 

on statements of differences associated with month-end reporting. FMS anticipates 

GWA Modernization Program will be implemented by 2014. 

The Financial Information and Reporting Standardization (FIRST) initiative integrates 

budget and financial reports from FPAs. FIRST will improve the consistency of the 

budgetary and proprietary accounting data recorded in agency financial statements and 

reported to FMS through adjusted trial balances. It is also designed to provide 

authoritative information, contained in Treasury’s central accounting system, to the 

agencies, to facilitate the reconciliation process for specific intra-governmental 

transactions. FMS anticipates FIRST will be in production by 2013. 

Debt Collection 

The Debt Collection program recovers delinquent government and child support debt by 

providing centralized debt collection, oversight, and operational services to FPAs and 

states as required by the DCIA, as amended, and related legislation. 

FMS - 7 
In FY 2009, FMS collected $5.07 billion in delinquent debt. Debt referrals from creditor 

agencies were at 100 percent of eligible debt at the end of FY 2009. As a result of FMS 

continued program improvements, total debt collections since the enactment of the DCIA 

are over $42.5 billion through FY 2009. 

In FY 2011, FMS will continue to enhance FedDebt, a comprehensive system that 

integrated FMS existing collection programs: Cross-Servicing and the Treasury Offset 

Program (TOP). TOP compares the names and Taxpayer Identifying Numbers (TINs) of 

debtors with the names and TINs on state and federal payment files. If there is a match, 

the federal payment is reduced, or “offset,” to satisfy the overdue debt. Cross-Servicing 

includes use of various collection tools such as offset, demand letters to debtors, 

repayment agreements, administrative wage garnishment, referrals to the Department of 

Justice, credit bureau reporting, reporting discharged debts to the IRS, and use of private 

collection agencies. 

In 2009, 1,020,892 offsets in the amount of $239,162,817 were collected from Economic 

Recovery Payments to satisfy delinquent Child Support, Federal Non Tax and State Debt. 

The United States Postal Service also began taking vendor payment offsets and levies in 

June 2009, as well as The Centers for Medicare and Medicaid Services who began 

offsetting debts in October 2009. Enhancements of collection tools such as 

Administrative Wage Garnishment and Debt Check, an online database used to assist 

agencies in barring delinquent debtors from obtaining new loans or loan guarantees, will 

improve program performance. 

FMS - 8 
Section 2 – Budget Adjustments and Appropriation Language 

2.1 – Budget Adjustments Table 

Dollars in Thousands 

Financial Management Service FTE Amount

FY 2010 Enacted 1,500 244,132

Changes to Base: 

Maintaining Current Levels (MCLs): - $4,560

FERS % Change - 369

Non-Pay Inflation Adjustment - 843

Pay Annualization - 933

Pay Inflation Adjustment - 2,415

Efficiencies Savings: (125) ($13,439)

Payment Modernization/Operational Efficiency (60) (3,020)

Realignment PM/DMS (30) (3,390)

Elimination of Paper-Based Process (35) (4,429)

IT Efficiency Savings - (2,600)

Subtotal FY 2011 Changes to Base (125) ($8,879)

Total FY 2011 Base 1,375 235,253

Total FY 2011 Budget Request 1,375 235,253

2A – Budget Increases and Decreases Description 

Maintaining Current Levels (MCLs) ........................................... +$4,560,000 / +0 FTE 

Non-Pay Inflation Adjustment +$843,000 / +0 FTE 

Funds are requested for non-labor related items such as contracts, travel, supplies, 

equipment and GSA rent. 

Pay Annualization +$933,000 / +0 FTE 

Funds are requested for the FY 2011 cost of the January 2010 pay raise. 

Pay Inflation Adjustment +$2,415,000 / +0 FTE 

Funds are requested for the January 2011 pay raise. 

FERS % Change +$369,000 / +0 FTE 

Funds are requested for the increase in agency retirement contribution percentages for GS 

employees from 11.2% to 11.5% for FY 2011 as required by OPM. 

Efficiencies Savings .................................................................... -$13,439,000 / -125 FTE 

Payment Modernization/Operational Efficiency -$3,020,000 / -60 FTE 

The Payment Application Modernization (PAM) Project streamlines the FMS payments. 

PAM will replace the current mainframe-based software applications used to disburse 

approximately one billion federal payments annually, which along with other 

modernization efforts will result in operational efficiencies savings. 

Realignment PM/DMS -$3,390,000 / -30 FTE 

Consolidation of Debt Management and Payment Management business processes will 

allow FMS to assure operational continuity and maximize use of its call centers. 

FMS - 9 
FMS - 10 

Elimination of Paper-Based Process -$4,429,000 / -35 FTE 

The implementation of several IT systems will eliminate current paper processes. For 

example, the implementation of the Judgment Fund Internet Claims System (JFICS) 

allows federal agencies to submit their claims for payment electronically to the Judgment 

Fund. FMS is in the process of rolling out JFICS to federal agencies which will eliminate 

paper and result in savings to FMS. Additionally, FMS plans to analyze its 

administrative needs and redistribute resources to critical areas. 

IT Efficiency Savings -$2,600,000 / +0 FTE 

FMS will consolidate several software contracts and move applications from the Bureau 

of Public Debt server and expects to gain efficiency savings from its transition to 

broadband. 
2.2 – Operating Levels Table 

Financial Management Service FY 2009 

Enacted

FY 2010 

President's 

Budget

Congression

al Action 

Including 

Rescission

FY 2010 

Enacted 

Level

Proposed 

Reprogram

mings

FY 2010 

Proposed 

Operating 

Level

FY 2011 

Requested 

Level

 

FTE 1,500 1,500 0 1,500 0 1,500 1,375

Object Classification: 

11.1 - Full-time permanent 124,544 127,561 0 127,561 0 127,561 120,662

11.3 - Other than full-time permanent 1,500 1,540 0 1,540 0 1,540 1,540

11.5 - Other personnel compensation 3,000 3,081 0 3,081 0 3,081 5,081

11.8 - Special personal services payments 3,508 3,603 0 3,603 0 3,603 3,603

12 - Personnel benefits 30,975 31,703 0 31,703 0 31,703 29,763

13 - Benefits for former personnel 175 180 0 180 0 180 180

21 - Travel and transportation of persons 1,503 1,511 0 1,511 0 1,511 1,511

22 - Transportation of things 275 278 0 278 0 278 278

23.1 - Rental payments to GSA 13,500 13,635 0 13,635 0 13,635 14,708

23.2 - Rental payments to others 670 677 0 677 0 677 677

23.3 - Comm, utilities, and misc charges 10,351 10,455 0 10,455 0 10,455 9,942

24 - Printing and reproduction 500 505 0 505 0 505 505

25.1 - Advisory and assistance services 6,002 6,062 0 6,062 0 6,062 6,062

25.2 - Other services 18,759 18,574 0 18,574 0 18,574 15,974

25.3 - Other purchases of goods and 2,768 2,795 0 2,795 0 2,795 2,795

services from Govt. accounts 

25.4 - Operation and maintenance of 500 505 0 505 0 505 505

facilities 

25.7 - Operation and maintenance of 8,005 8,085 0 8,085 0 8,085 8,085

equip 

26 - Supplies and materials 3,600 3,636 0 3,636 0 3,636 3,636

31 - Equipment 9,100 9,191 0 9,191 0 9,191 9,191

32 - Land and structures 500 505 0 505 0 505 505

42 - Insurance claims and indemnities 50 50 0 50 0 50 50

Total Budget Authority $239,785 $244,132 $0 $244,132 $0 $244,132 $235,253

 

Budget Activities: 

Payments 147,717 150,395 0 150,395 0 150,395 142,537

Collections 21,521 21,911 0 21,911 0 21,911 21,690

Government-wide Accounting and 70,547 71,826 0 71,826 0 71,826 71,026

Reporting 

Total Budget Authority $239,785 $244,132 $0 $244,132 $0 $244,132 $235,253

 

FMS - 11 
2.3 – Appropriations Detail Table 

Dollars in Thousands 

FY 2009 FY 2009 FY 2010 FY 2011 FY 2010

Resources Available for Obligation Obligations Enacted Enacted Request to FY 2011

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Resources:

Payments 922 $139,350 963 $147,717 963 $150,395 850 $142,537 -11.73% -5.22%

Collections 129 23,804 135 21,521 135 $21,911 132 21,690 -2.22% -1.01%

Gov. Accounting and Reporting 382 70,541 402 70,547 402 $71,826 393 71,026 -2.24% -1.11%

Subtotal New Appropriated Resources 1,433 $233,695 1,500 $239,785 1,500 $244,132 1,375 $235,253 -8.33% -3.64%

Other Resources:

Recoveries

Offsetting Collections - Reimbursable 464 225,109 441 228,010 483 234,690 460 216,730 -4.76% -7.65%

Available multi-year/no-year funds

Transfers In/Out

Subtotal Other Resources 464 $225,109 441 $228,010 483 $234,690 460 $216,730 -4.76% -7.65%

Total Resources Available for Obligation 1,897 $458,804 1,941 $467,795 1,983 $478,822 1,835 $451,983 -7.46% -5.61%

(Dollars in Thousands)

% Change

2B – Appropriations Language and Explanation of Changes 

Appropriations Language Explanation of Changes

DEPARTMENT OF THE TREASURY 

FINANCIAL MANAGEMENT SERVICE 

Federal Funds 

SALARIES AND EXPENSES: 

For necessary expenses of the Financial Management 

Service, [$244,132,000] $235,253,000 of which not to 

exceed $9,220,000 shall remain available until September 

30, [2012] 2013, for information systems modernization 

initiatives, of which not to exceed $2,500 shall be available 

for official reception and representation expenses. 

 [Department of the Treasury Appropriations Act, 2010]

Exhibit 2C – Permanent, Indefinite Appropriations 

Federal Reserve Bank Permanent, Indefinite Appropriation

The Federal Reserve Banks (FRBs) act as fiscal agents of the United States when directed 

by the Secretary of the Treasury in accordance with 12 United States Code (U.S.C.) 391. 

The FRBs support the fiscal operations and provide banking and financial services on 

behalf of the United States Treasury. FMS estimates that the cost of FRB services for FY 

2011 will be approximately $321 million. 

FMS - 12 
Financial Agent Services Permanent, Indefinite Appropriation

Congress has given the Secretary of the Treasury broad discretion to deposit money in 

financial institutions and to obtain banking services by designating financial institutions 

to act/serve as Financial Agents (FA) of the United States. The services support many 

FMS programs such as EFTPS, the Lockbox Networks, plastic cards, e-commerce 

systems, and the deposit reporting and cash concentration system called CA$HLINK II. 

These and other programs are vital to FMS strategic goals, the Government’s financial 

critical infrastructure, and the expanding E-Government. The services provided by the 

FAs are authorized under numerous statutes including, but not limited to, 12U.S.C. 90 

and 265. In FY 2004, Treasury received a permanent indefinite appropriation to pay for 

these services. 

FMS estimates that the cost of FA services for FY 2011 will be approximately $625 

million, which includes $25 million for Government Sponsored Enterprise - Mortgage 

Backed Securities (GSE-MBS) administrative costs. Approximately $60 million will be 

reimbursed from other government agencies and deposited into the General Fund. 

Table 2.4 – Permanent, Indefinite Appropriations

2009 2010 2011 Permanent, Indefinite Appropriation Enacted Request Request

Federal Reserve Bank $305,000 $321,000 $321,000

Financial Agent Services* $593,000 $633,000 $625,000

* FY 2010 & FY 2011 include costs for the Government Sponsored Enterprise - Mortgage Backed Securities 

administrative costs of $36M and $25M, respectively. 

Note: Approximately $60 million is reimbursed from other government agencies and deposited into the General 

Fund. 

(Dollars in Thousands)

2C – Legislative Proposals 

Debt Collection 

Authorize Post-Levy Due Process

This proposed amendment to 26 U.S.C. § 6330 would allow the IRS to levy the payment 

of a federal contractor who owes delinquent taxes, and provide the taxpayer with notice 

and an opportunity for an administrative collection due process (CDP) hearing, and for 

judicial review, within a reasonable time after the levy. The IRS currently has this 

authority for levies against state tax refunds and to collect federal employment taxes. 

Under the automated Federal Payment Levy Program, Treasury matches federal tax 

liabilities against federal payments to contractors. When a match occurs, IRS issues the 

CDP notice but cannot levy the payment until the CDP requirements are complete. By 

this time the payment has already been made and the opportunity for levy is lost. This 

proposal would remedy this situation by allowing the IRS to levy the payment at the time 

the payment is identified. 

FMS - 13 
Allow IRS to Levy 100 Percent of All Vendor Payments 

This proposed amendment to 26 U.S.C. § 6331(h)(3) would allow IRS to continuously 

levy up to 100% of federal payments made to all federal vendors who owe delinquent 

taxes, not only vendors of “goods or services.” Currently, continuous levies of payments 

made to vendors of “goods or services” allow for collection from up to 100% of the 

levied payment, whereas continuous levies of other payments attach to no more than 15% 

of the payment. 

The current law excludes from the 100 percent continuous levy authority a sizable 

number of federal vendor payments, most notably payments related to the purchase or 

lease of real estate by the Federal Government, but also payments for other purchases 

such as intellectual property or software. As an operational matter, without this 

legislative change, it is not feasible for FMS to automate the continuous levy of vendor 

payments because of the significant changes to systems and accounting practices required 

across a wide array of agencies to allow for the differentiation between payments to 

vendors of “goods or services” versus other vendor payments. To identify vendor real 

estate payments, for example, would require more than 30 agencies to change the manner 

in which they code payments certified to FMS, as well as months of testing and 

verification of agency compliance. In addition, IRS would be relying upon the ability of 

agencies to accurately classify vendor payments in order to avoid improper seizure. 

Authorize FMS to Deduct Fees from Amounts Collected from Levies of Federal 

Payments Rather Than Have Fees Paid Out of IRS's Appropriation 

This proposal improves the way FMS collects fees from IRS to cover FMS’s costs in 

developing and operating the Federal Payment Levy Program (FPLP), which utilizes the 

Treasury Offset Program (TOP) to process levies of federal payments to collect 

delinquent tax debts. Rather than IRS paying fees from its annual discretionary 

appropriation pursuant to the Economy Act, this proposal would allow FMS to retain 

directly a portion of the levied funds. The proposal would ensure that sufficient funds are 

available to cover the costs of the program, and it is consistent with how other federal 

agencies reimburse FMS for collecting nontax debts through TOP. The proposal would 

modify the way that FMS recovers its transaction fees for processing IRS levies by 

permitting FMS to add the fee to the liability being recovered, thereby shifting the cost of 

collection to the delinquent taxpayer. The offset amount would be included within the 15-

percent limit on continuous levies against income. 

 

Allow The Offset of Certain Federal Benefit Payments to Collect Delinquent Child 

Support Debts. 

This proposal would authorize the collection of delinquent, state-enforced child support 

debts from Social Security, Black Lung, and Railroad Retirement benefit payments in the 

same way that such payments are currently offset to collect federal nontax debts. Under 

current law, FMS offsets up to 15% of a benefit payment to collect nontax debts, and the 

amount of $750 per month is exempt from offset. Although States may directly request a 

benefit agency to garnish benefit payments to collect delinquent child support debts, this 

proposal provides a cost-efficient way for States to collect support from payments that 

FMS - 14 
States have been unable to identify as a source of funding from the delinquent child 

support obligor. 

While many federal benefit payments are statutorily protected from collection actions, the 

Debt Collection Improvement Act of 1996, as codified at 31 U.S.C. § 3716(c)(3)(A)(i), 

expressly waived any statutory limitation for purposes of offset under section 3716 to 

collect federal nontax debts. Section 3716(h)(3), however, provides that the statutory 

waiver does not apply to collection of debts owed to States, which includes child support. 

The proposed language amends 3716(h)(3) to include child support debts in the waiver. 

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. 

FMS - 15 
Section 3 – Budget and Performance Plan

This table lists all FY 2011 resources by strategic goal, objective and outcome outlined in 

the FY 2007-2012 Treasury Department Strategic Plan. The Treasury Strategic Plan is a 

corporate level plan for the Department that provides a description of what the agency 

intends to accomplish over the next five years. 

For detailed information about the FY 2007-2012 Treasury Strategic Plan, please go to: 

http://www.treas.gov/offices/management/budget/strategic-plan/

3.1 – Budget by Strategic Outcome 

Dollars in Thousands 

Treasury Strategic Outcome FY 2010 

Request

FY 2011 

Request Percent Change

 Financial information 75,403 75,241 -0.2%

 Payments 293,048 273,597 -6.6%

 Revenue collected 110,371 103,145 -6.5%

Total $478,822 $451,983 -5.61%

3A – Payments ($142,537,000 from direct appropriations and $131,060,000 from 

reimbursable programs): FMS issues and distributes payments, develops and implements 

federal payment policy and procedures, promotes the use of electronics in the payment 

process, and assists agencies in converting payments from paper checks to Electronic 

Funds Transfer (EFT). This includes controlling and providing financial integrity to the 

payments process through reconciliation, accounting, and claims activities. Also 

included is the claims activity which settles claims against the United States. These 

claims result from federal government checks that have been forged, lost, stolen or 

destroyed. FMS collects monies from those parties liable for fraudulent or otherwise 

improper negotiation of government checks. It also includes processing claims and 

reclamations for EFT payments. 100 percent of funds devoted to the payments activity 

supports the National Financial Critical Infrastructure. 

FMS continues to expand and market the use of electronic media to deliver federal 

payments, improve service to payment recipients, and reduce government program costs. 

This helps decrease the number of paper checks issued and minimizes costs associated 

with postage, the re-issuance of lost, stolen and misplaced checks, and non-electronic 

delivery of benefits inefficiencies. 

Direct deposit offers federal benefit payment recipients ease and convenience, and 

protects against fraud and identity theft. This also generates significant cost savings to 

the government over paper checks. This is attributable to consumable inventory and 

postage costs which are mitigated with each EFT payment. However, FMS faces 

challenges to increasing growth in electronic payments. As the government prepares for 

the huge increase in retiring baby boomers in the near future, it is critical that FMS 

dramatically increase use of direct deposit for issuing benefit payments. To help with 

this endeavor, a nationwide campaign called “Go Direct” encourages current check 

recipients to switch to direct deposit. In its extremely successful fourth year, over 1.1 

million conversions were attributed to Go Direct, saving millions of dollars for the United 

FMS - 16 
States Treasury in the years to come. As of December 2009, the total number of 

conversions obtained since the inception of the campaign is estimated to be over 3.8 

million. 

In April FY 2008, FMS implemented Direct Express, a branded debit card program, 

which provides an electronic option for those federal check recipients who do not have 

bank accounts to receive their federal benefit payments. The card is currently available to 

Social Security and SSI recipients, and FMS is optimistic that other benefit payments will 

be implemented in CY 2010. As of January 10, 2010 , approximately 866,000 

beneficiaries had signed up for Direct Express. 

FMS has undertaken considerable effort to modernize its payment systems, incorporating 

new technologies and the internet. Some of the programs are: 

• Stored Value Card (SVC): This smartcard is similar to a credit/debit card, using an 

encrypted computer chip to process "electronic money" stored on the card. This 

program is aimed at reducing the float-loss and reducing risk associated with the 

more than $2 billion in coin and currency in circulation at military bases, ships at sea, 

and other closed government locations around the world. From 1997 through 

September 2009, over 20.5 million EFT transactions with a dollar value in excess of 

$3 billion were processed via the SVC programs. In fiscal year 2009 alone, the SVC 

programs collected over $1 billion through the processing of over 7 million EFT 

transactions. 

• Print and Check Enclosing (PrinCE): This project is the ongoing replacement and 

modernization of Regional Financial Center (RFC) manual check wrapping 

equipment and the legacy software sub-system with intelligent mail piece inserter 

equipment. FMS produces approximately 197 million Treasury checks annually, 

including IRS income tax refunds Social Security Administration benefits, Veterans 

Affairs benefits and others. In addition to check production, specialized jobs are also 

performed where documents are printed and inserted with or without checks. 

Treasury checks and payment related documents are currently handled by the Check 

Wrapper Systems at the RFCs, some of which are 40 years old. PrinCE will produce 

upgraded check processing software and hardware components, which will provide 

improved accountability for each mail piece that is received from the mainframe 

payment systems. Check payment mail pieces will be tracked through the check 

enclosing process until each mail piece is successfully enclosed for mailing. The 

upgraded check enclosing process will improve internal controls and reduce the 

opportunity for human error and fraud. The Automated Document Factory (ADF) 

function of PrinCE will automatically track and account for each check processed 

through a network interface, and enhance accountability in a seamless and transparent 

manner. ADF will position FMS to better react in the event it needs to deploy its 

Business Continuity Plan. 

• Payment Application Modernization (PAM): PAM is an effort to replace the current 

mainframe-based software applications that are used to disburse over one billion 

FMS - 17 
federal payments annually with a total dollar value of almost $2.27 trillion. This 

single application will generate check, wire transfer, and ACH payments for FPAs, 

including IRS, Social Security Administration, Veterans Affairs, and others. In 

addition to standardization, FMS is modernizing the technologies employed in the 

development of the system, using commercial software products where feasible, that 

incorporate new and enhanced functionality that supports improvements in the 

payment process. PAM currently processes Social Security Supplemental Income, 

(SSI) ACH monthly payments, SSI monthly check, and SSI Daily ACH/Check 

payments. 

3.2.1 – Payments Budget and Performance Plan 

Payments Budget Activity

Resource Level

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

Obligated Obligated Obligated Enacted Request

 Appropriated Resources $147,055 $171,686 $147,717 $150,395 $142,537

 Reimbursable Resources $132,712 $130,853 $138,584 $137,057 $131,060

Total Resources $279,767 $302,539 $286,301 $287,452 $273,597

Budget Activity Total $279,767 $302,539 $286,301 $287,452 $273,597

Payments Budget Activity

Measure FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

Actual Actual Target Actual Target Target

Number of check payments (millions) [WORKLOAD 214.777 205.604 196.686 0 186.442 

STATISTIC] 

Number of electronic payments (millions) 767.172 793.832 827.643 0 867.215 

[WORKLOAD STATISTIC] 

Percentage of Treasury Payments and associated 78 79 80 81 81 82 

information made electronically (Oe) 

Percentage of paper check and Electronic Funds 100 100 100 100 100 100 

Transfer (EFT) payments made accurately and on 

time (Oe) 

Unit cost for Federal Government payments ($) (E) 0.39 0.394 0.4 0.37 0.4 0.4 

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, DISC – discontinued, and B 

- baseline 

Description of Performance: FMS disburses payments to a wide variety of recipients, 

such as those who receive Internal Revenue Service tax refunds, Social Security 

Administration benefits, and the Department of Veterans Affairs benefits. In FY 2009 

FMS issued over 1 billion non-Defense payments, with a dollar value of approximately 

$2.3 trillion. Nearly 81 percent of these transactions were issued by Electronic Funds 

Transfer. In FY 2011, FMS is projecting the percentage of electronic payments to be 83 

percent. 

3B – Collections ($21,690,000 from direct appropriations and $1,419,000 from 

reimbursable programs): FMS collects revenue needed to operate the federal government 

through the management of the federal government’s collections infrastructure. The 

collections activity is also part of the National Critical Infrastructure. In FY 2009, $2.86 

trillion was collected through a network of more than 9,000 financial institutions. FMS 

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 

FMS - 18 
establishes and implements collection policies, regulations, standards and procedures for 

the federal government. The majority of dollar collections are made electronically, 83 

percent in FY 2009. While 83 percent of federal revenue was collected electronically in 

FY 2009, the proposed Paperless Treasury initiative will help FMS improve the 

percentage of tax revenue collected electronically by requiring all businesses with $2,500 

or more in quarterly tax liability to pay electronically. 

FMS develops and operates a variety of collection mechanisms and systems and has 

initiated a comprehensive effort, Collections and Cash Management Modernization 

(CCMM), to streamline, modernize and improve the processes and systems for this 

program. This will improve financial performance by enabling FMS and government 

agencies to more effectively manage financial transaction information and improve the 

efficiency of the collections information reporting processes. It will improve timeliness 

by providing FPAs with the ability to predefine accounting rules to facilitate timely 

processing of financial transactions through the re-engineering of reporting processes. It 

will also reduce the number of collections and cash management systems and processes 

and eliminate the duplication of data, products, interfaces, and technologies. This effort 

will simplify and standardize systems and processes that have accumulated over 30 years. 

FMS continues to promote the use of electronic systems in the collections process and 

assists agencies in converting collections from paper to electronic media with programs 

such as:

• Electronic Federal Tax Payment System (EFTPS): This system provides an accurate, 

secure and convenient way to collect all federal tax payments, including corporate, 

excise and employment taxes and 1040 quarterly estimated taxes. The collections are 

made via the internet or a telephone voice response system. Currently, EFTPS 

collects 82 percent of U.S. tax dollars and is required for businesses with annual 

federal tax obligations above $200,000. Under the proposed Paperless Treasury 

initiative, however, all businesses with $2,500 or more in quarterly tax liability will 

be required to pay electronically. FMS has been working to communicate the 

benefits of EFTPS – accuracy, security, simplicity and flexibility – to financial 

institutions, small businesses and tax practitioners. The goal is to encourage 

businesses and individuals to pay their federal taxes electronically through EFTPS 

rather than by using paper Federal Tax Deposit coupons, which numbered 

approximately 26.1 million in FY 2009, a reduction of 14.4 percent from FY 2008. 

FMS will direct its EFTPS efforts to financial institutions that process paper tax 

coupons as well as the tax practitioner community and small businesses to further 

expand the use of EFTPS. Additionally, FMS has implemented a new program that 

will allow financial institutions and other third parties to remit tax payments to 

EFTPS on behalf of their customers. In FY 2009, more than 97.9 million payments 

with a total value of $1.91 trillion were processed through EFTPS, a volume increase 

of 2.45 percent over FY 2008.

• Pay.gov: Pay.gov allows individuals and businesses to make non-tax payments to 

federal agencies over the internet. It provides collections, form submittal, bill 

FMS - 19 
presentment, and agency financial reporting services. Since inception in FY 2000, 

Pay.gov has processed 57.5 million transactions with an approximate value of $204.2 

billion. In FY 2009, Pay.Gov processed nearly 18.7 million items totaling $68.9 

billion. Pay.gov meets the increasing demands of consumers and businesses for 

electronic alternatives by providing the opportunity to complete forms and 

applications, make payments, and submit queries on-line 24 hours a day, seven days a 

week. Pay.gov, which has been implemented with 134 federal agencies representing 

565 cash flows. New development will focus on interfaces with new systems within 

the new Collections Business Line Enterprise Architecture, and improved interfaces 

with federal agencies. 

• Check Conversion and Truncation: This collections settlement service converts a 

paper check either into an image that is cleared through the banking system or into an 

EFT debit against the check writer’s bank account. In both cases, paper checks are 

digitized at the point of receipt and the transactions are cleared and settled 

electronically. This service is key in realizing the goal of increasing electronic 

collections and reducing collection costs. In FY 2009, more than 8.3 million items 

received over the counter, representing more than $15.7 billion, were processed 

through check conversion or truncation. Through FY 2009 more than 40.1 million 

items received through the mail at lockboxes, representing more than $17.9 billion, 

were similarly processed. The goal is that all paper checks remitted to the IRS and 

General Lockbox Networks will be converted or truncated and processed 

electronically by the end of FY 2011. 

3.2.2 – Collections Budget and Performance Plan 

Resource Level

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

Obligated Obligated Obligated Enacted Request

 Appropriated Resources $19,649 $23,103 $21,521 $21,911 $21,690

 Reimbursable Resources $0 $141 $0 $113 $1,419

Total Resources $19,649 $23,244 $21,521 $22,024 $23,109

Budget Activity Total $19,649 $23,244 $21,521 $22,024 $23,109

Collections Budget Activity

Measure FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

Actual Actual Target Actual Target Target

Percentage collected electronically of total dollar 79 80 80 83 80 81 

amount of Federal government receipts (Oe) 

Unit cost to process a Federal revenue collection 1.19 1.195 1.27 1.49 1.25 1.7 

transaction ($) (E) 

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, DISC – discontinued, and B 

- baseline 

Collections Budget Activity

Description of Performance: In FY 2009, although the dollars collected decreased due to 

a downturn in the economy, the percentage of dollars collected electronically increased. 

While FMS continued to promote and convert collections from paper to the more 

efficient electronic media in FY 2009, there are a number of factors that will cause the 

projected unit cost for collections to increase over the next few years, including the 

FMS - 20 
downturn in the economy and the increased expenses to fully implement the Collections 

and Cash Management Modernization initiative. 

The economic recession 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 EFTPS, and small business failures and job losses reduced 

the number of tax filers using the IRS Lockbox Network. 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 has increased. 

3C – Debt Collection ($80,036,000 from reimbursable programs): FMS collects 

delinquent government and child support debt by providing centralized debt collection, 

oversight and operational services to Federal Program Agencies (FPA) and states 

pursuant to the Debt Collection Improvement Act of 1996, as amended and related 

legislation. This includes, but is not limited to, collecting delinquent debts through 

Cross-Servicing and offsetting federal payments, providing a database for use as a tool 

for barring delinquent debtors, providing post-judgment collection, advising and 

educating agencies on improving debt management, and referrals to the Department of 

Justice. 

In FY 2011, FMS will continue to enhance FedDebt, a comprehensive system that 

integrates existing collection programs Cross-Servicing and the TOP. TOP compares the 

names and Taxpayer Identifying Numbers (TINs) of debtors with the names and TINs on 

state and federal payment files. If there is a match, the federal payment is reduced, or 

“offset,” to satisfy the overdue debt. Cross-Servicing includes use of various collection 

tools such as offset, demand letters to debtors, repayment agreements, administrative 

wage garnishment, referrals to the Department of Justice, credit bureau reporting, 

reporting discharged debts to the Internal Revenue Service (IRS), and use of private 

collection agencies. 

FedDebt integrates the payment offset and cross-servicing applications, provides FPAs 

with batch and online capabilities for all users, via a single sign-on interface and will 

employ a common file format for submitting debts to either Cross-Servicing or Treasury 

Offset Program (TOP) debts. FedDebt provides a single platform for debt business 

applications, a single entry portal, a web-based customer interface, and a single database 

for reporting. FedDebt eliminates many labor-intensive processes and hard-copy data 

exchanges for federal and state agency customers and service partners. 

FMS is currently working to incorporate additional payment types into the payment offset 

and levy programs. This effort is directed primarily at increasing collections of debt, 

especially tax debt owed by contractors and vendors. The Defense Finance and 

Accounting Service is also currently in the process of levying civilian salaries. In 

addition, the State Reciprocal Program will be expanded to include the State of New 

York in January 2010 and Kentucky in 2011. The following debt collection activities 

will also increase collections. The offset of medicare payments was implemented in 

FMS - 21 
October 2009. The final rule removing the restriction on the collection of federal non-tax 

debts that are over 10 years delinquent by offset of federal payments was implemented in 

January 2010. The Department of Education will begin to participate in the Federal 

Salary Offset program with a limited number of debts in April 2010. 

3.2.3 – Debt Collection Budget and Performance Plan 

Debt Collection Budget Activity

Resource Level

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

Obligated Obligated Obligated Enacted Request

 Appropriated Resources $0 $0 $0 $0 $0

 Reimbursable Resources $67,611 $74,705 $86,247 $93,397 $80,036

Total Resources $67,611 $74,705 $86,247 $93,397 $80,036

Budget Activity Total $67,611 $74,705 $86,247 $93,397 $80,036

Debt Collection Budget Activity

Measure FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

Actual Actual Target Actual Target Target

Amount of delinquent debt collected per $1 spent 53.55 54.76 43 53.76 43 43

($) (E) 

Amount of delinquent debt collected through all 3.76 4.41 3.9 5.03 4 4

available tools ($ billions) (Ot) 

Percentage of delinquent debt referred to FMS for 100 99 97 100 97 97

collection compared to amount eligible for referral 

(Ot) 

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, DISC – discontinued, and B - 

baseline 

Description of Performance: In FY 2009, FMS collected $5.07 billion in delinquent 

debt, including $44.2 million from Economic Stimulus payments, and $235.8 million 

from Economic Recovery payments. The amount collected includes $2.07 billion in past 

due child support, $2.14 billion in federal non-tax debt, and $865 million 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 2009. As a result of the continued program 

improvements, collections have steadily increased to more than $42.5 billion since the 

enactment of the DCIA. In calendar year 2009, the Internal Revenue Service referred an 

additional $56.5 billion of tax debts for continuous levy, an 18 percent increase over 

calendar year 2008.

3D – Government-wide Accounting and Reporting ($71,026,000 from direct 

appropriations and $4,215,000 from reimbursable programs): FMS maintains the federal 

government’s books and 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 and 

provides support, guidance and training to assist FPAs in improving their governmentwide accounting and reporting responsibilities. FMS gathers and publishes governmentwide 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 

FMS - 22 
Government, and the Financial Report of the United States Government (FR). The cash 

reporting function of GWA supports the nation’s financial critical infrastructure. 

FMS plays a key role in establishing and providing guidance to agencies on their core 

financial systems. It also builds integrated financial systems for these agencies. In 

partnership with OMB, FMS efforts to bring standardization in financial management 

have been a key objective. These efforts include establishing standard business processes, 

where feasible, and standardizing data elements throughout the federal financial 

management and systems. The goal has been to identify, standardize, and harmonize 

government-wide commonly used financial data elements. By standardizing these data 

elements into standard XML schemas, it will support their use in data exchange between 

central agencies and agencies for accounting and reporting. 

FMS is building and implementing a system to improve the exchange of financial 

information among FMS, FPAs, OMB and the banking community. Once completed, the 

Government-wide Accounting Modernization Program will comprehensively replace 

current government-wide accounting functions and processes that are both internal and 

external to FMS. In FY 2011 and beyond, FMS will continue working with FPAs to rollout the new GWA system for the reporting of payments, collections and intragovernmental collection and payment transactions. 

FMS is taking significant steps to address the material weaknesses found in the 

compilation process of the FR including: 

• Requiring comprehensive accounting data from agencies on a quarterly basis that 

will allow FMS to better analyze the data for consistency and completeness. 

• Providing agencies with authoritative data to reconcile inter-agency transfers and 

other transactions that agencies report to the central accounting system. 

• Using the Chief Financial Officers (CFO) Council, Central Reporting Team as a 

forum to discuss accounting and reporting issues that affect the FR. 

• Working with the CFO Council and OMB to develop more consistent business rules 

for intra-governmental transactions. 

• Organizing a General Fund Team to analyze intra-governmental activity that must 

be reported to offset agency reporting with the General Fund of the US Treasury. 

• Improving the two Reconciliation Statements in the FR that reconcile Net Operating 

Cost to Cash. 

• Strengthening internal controls over the process for preparing the FR. 

The goal of these actions is to remove the compilation process as a barrier to a clean audit 

opinion for the FR. 

FMS - 23 
In FY 2011, FMS will continue moving forward on the Financial Information and 

Reporting Standardization (FIRST) initiative. FIRST integrates budget and financial 

reporting from FPAs by collecting United States Standard General Ledger based trial 

balances. These trial balances will be carefully edited each quarter through a highly 

automated process that provides instant and actionable feedback to agencies. It will 

ensure consistency among agency budgetary and financial data and the central accounting 

system and provide accounting support for the FR. 

3.2.4 – Government-wide Accounting and Reporting Budget and Performance Plan 

Government-wide Accounting and Reporting Budget Activity

Resource Level

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

Obligated Obligated Obligated Enacted Request

 Appropriated Resources $64,954 $72,420 $70,547 $71,826 $71,026

 Reimbursable Resources $1,122 $726 $3,179 $4,123 $4,215

Total Resources $66,076 $73,146 $73,726 $75,949 $75,241

Budget Activity Total $66,076 $73,146 $73,726 $75,949 $75,241

Government-wide Accounting and Reporting Budget Activity

Measure FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

Actual Actual Target Actual Target Target

Percentage of Government-wide accounting reports 100 100 100 100 100 100

issued accurately (Oe) 

Percentage of Government-wide accounting reports 100 100 100 100 100 100

issued timely (E) 

Unit Cost to Manage $1 Million Dollars of Cash 10.36 8.958 12.38 7.08 11.77 10.15 

Flow (E) 

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, DISC – discontinued, and B - 

baseline 

Description of Performance: FMS issues 100 percent of its government-wide accounting 

reports accurately and timely. It consistently releases the Financial Report of the United 

States Government 75 days after the fiscal year-end. However, for FY 2009, some 

agencies that were significantly impacted by the substantial reporting requirements of the 

American Recovery and Reinvestment Act (ARRA) were granted reporting deadline 

extensions, which consequently impact the timing of the FR, now scheduled for February 

16, 2010. In FY 2008, the Government Accountability Office (GAO) issued an 

unqualified opinion on the 2007 and 2008 Statements of Social Insurance and 

acknowledged and noted improvements with regard to consistency with agency 

information in the Balance Sheets, the Statements of Net Cost and in the note disclosures 

that are directly linked to the amounts on these principal financial statements. GAO also 

acknowledged the progress made in conforming with Generally Accepted Accounting 

Principles, in the development and implementation of corrective action plans, and in 

addressing certain internal control weaknesses. 

For detailed information about each performance measure, including definition, 

verification and validation, please go to: http://treas.gov/offices/management/budget/

FMS - 24 
Section 4 – Supporting Materials 

4A – Human Capital Strategy Description 

FMS’ strategic management of human capital is consistent with its mission, vision and 

priorities supporting the Treasury’s strategic goal to manage the United States 

Government’s Finances Effectively. 

FMS is on the technology forefront in the performance of its mission. The benefits of 

some of FMS’ modernization and technological efforts are being realized through more 

efficient work processes. At the same time, FMS is taking a proactive approach at 

looking at redundant activities and functions in an effort to be more efficient while 

delivering the same level of service to our customers. The result is that FMS is 

requesting over 3.6% fewer resources in FY 2011 when compared to the FY 2010. In 

order to do this FMS must improve the quality of its professional workforce. A Human 

Capital Strategic Plan has been developed to identify current structure weaknesses and 

build upon its strengths. Achieving the following objectives will support and strengthen 

its work force: 

• Strategic Alignment: A human capital strategy is aligned with the FMS mission, 

goals, organizational objectives, and is integrated into the strategic plan, performance 

plans and budgets. 

• Workforce Planning & Deployment: FMS is citizen-centered and mission-focused. It 

leverages E-Government and competitive sourcing. 

• Leadership & Knowledge Management: Leaders and managers effectively manage 

people, ensure continuity of leadership, and sustain a learning environment that drives 

continuous improvement in performance. Succession strategies result in a diverse 

leadership talent pool that is continually updated. 

• Results-Oriented Performance Culture: FMS has a diverse, results-oriented, high 

performance workforce. It has a performance management system and awards 

program that effectively holds employees accountable, links individual/team/unit 

performance to organizational goals and desired results. 

• Diversity: FMS demonstrates its commitment to diversity by recognizing the 

contributions of all employees and by understanding the strengths that arise from the 

broad range of backgrounds, cultures, customs, and beliefs. Processes are in place to 

sustain diversity and to address under-representation particularly in mission-critical 

occupations and leadership positions. 

• Talent: FMS has significantly reduced gaps in mission-critical skills, knowledge and 

competency. It is also making significant progress and demonstrates continued 

improvement in meeting agreed-upon hiring timeline goals, i.e., the 45-day hiring 

model. 

• Accountability: Human capital decisions are guided by a data driven results-oriented 

planning and accountability system. 

FMS - 25 
FMS - 26 

• Improving Employee Satisfaction and Wellness: FMS promotes healthy activities and 

choices for all of its employees with on-site fitness facilities, health clinics, health 

fairs and health screenings. In addition, FMS sponsors an annual Walk/Run and 

Wellness Expo which is always well attended. 

Through these objectives FMS has strengthened its human capital position. Proactive 

identification and filling of vacant positions is a part of recruiting and retaining new 

talent. Student intern program authorities are used extensively to attract talent from 

some of the best colleges and universities. 

Action plans are in place to obtain and maintain the right number of people with the 

right skills to accomplish the mission. FMS continually manages the ongoing 

challenge of recruiting and retaining highly skilled individuals in critical areas, 

including Accountants (with strong analytical skills) and IT Specialists. These 

challenges have increased with heightened competition from the private sector. In 

addition, there is ongoing position management and assessment of FTE distribution. 

As vacancies occur, they are reviewed to determine whether the position should be 

back-filled, the position be redirected as appropriate, or eliminated. This is one way 

FMS manages the possibility of surplus or deficiency of staff in certain job 

occupations. 

Through FY 2010, 22 percent of FMS current employees are eligible for retirement 

and 41 percent are potentially eligible for Discontinued Service or Early Retirement. 

Strategies are in place to close skill-gaps and fill staffing requirements in missioncritical occupations. This includes specialized employee development programs such 

as the: SES Candidate Development, Project Management Certification, Management 

Preparatory Development, Federal Career Intern Program, Leadership, and 

Mentoring. 

FMS believes that a diverse workforce is vital to achieve its mission. It monitors 

recruitment and diversity goals to improve areas of under-representation and actively 

supports programs and initiatives to recruit minority college students. The following 

programs ensure a diverse workforce: 

• SES candidate program to create a diverse group of future senior executives. 

• Special emphasis programs expanded and Equal Employment Opportunity and 

diversity awareness training instituted. 

• Hispanic recruitment enhanced through the increased use of Hispanic Associations of 

Colleges and Universities interns, which create a gateway for new Hispanic 

employees. Increased participation in the Washington Internship for Native Students 

program and the Department of Labor’s Workforce Recruitment Program for students 

with disabilities. 

• Use of the Federal Career Internship Program to facilitate and accelerate general 

hiring of qualified and talented minority student interns. 
4.1 – Summary of IT Resources Table 

FY 2010 

FY 2008 FY 2009 % Change from President's % Change from 

Major IT Investments / Funding Source Budget Activity Enacted Enacted FY08 to FY09 Budget FY09 to FY10 Automated Standard Application for Payments (ASAP) Payments 2,234 2,422 8.4% 625 -74.2% Debit Gateway Collections 0 0 0.0% 500 0.0% 

Deposit and Data Management (DDM) Collections 1,226 1,276 0.0% 1,310 0.0% 

FMS EFTPS (Electronic Federal Tax Payment System) Collections 638 659 N/A 682 3.5% FedDebt Debt Collection 0 0 0.0% 0 0.0% 

Government-wide Financial Information and Reporting Standardization (FIRST) 6,039 7,342 21.6% 8,297 13.0% 

Accounting

Government-wide Government-Wide Accounting and Reporting Modernization (GWA) 10,011 9,787 -2.2% 9,983 2.0% 

Accounting

International Treasury Services (ITS.gov) Payments 1,650 341 0.0% 351 2.9% Internet Payment Platform (IPP) Payments 300 308 0.0% 320 3.9% 

Government-wide Intra-Governmental Payment and Collection (IPAC) 500 552 10.4% 625 13.2% 

Accounting

PACER Payments 2,489 2,631 5.7% 2,714 3.2% 

Pay.gov Collections 545 569 4.4% 573 0.7% Payment Application Modernization (PAM) Payments 12,167 12,123 -0.4% 13,406 10.6% Secure Payment System (SPS) Payments 20,332 3,901 -80.8% 3,988 2.2% Treasury Check Information System (TCIS) Payments 836 854 2.2% 1,154 35.1% 

Subtotal, Major IT Investments 58,967 42,765 -27.5% 44,528 4.1% Non-Major IT Investments 2/ 7,286 5,912 -18.9% 6,466 9.4% 

Infrastructure Investments 3/ 20,056 23,200 15.7% 143,151 517.0% 

Enterprise Architecture 1,400 5,493 292.4% 5,729 4.3% Total IT Investments 4/ 87,709 77,370 -11.8% 199,874 158.3% 

1/ ITS.gov was changed from a non-major to a major investment in FY 2009.2/ PRINCE was changed from a Non-Major to a Mojor in FY2009.3/ In FY 2009, the number of Non-Majors reporting increased to 17 investments. 4/ Figures provided for FY 2009 include funding amounts for the Treasury Web Application Infrastructure (TWAI) platform that were not included in previous years. 5/ Infrastructure reporting requirements changed in FY 2009, which resulted in changes to FY 2010 and FY 2011 figures.

(in $ Thousands)

FMS - 27 
4B – Information Technology Strategy 

The FMS IT Strategy addresses all bureau information resource management. It focuses 

on technology and how it supports the FMS Strategic Plan a long-range plan that supports 

the economic policies and mission of the Department of the Treasury for payments, 

collections, government-wide accounting and reporting, and collection of delinquent 

debt. 

FMS has an established governance process that selects, evaluates, and monitors new and 

existing IT investments. The IT Governance Process complies with Department of the 

Treasury and OMB requirements for Capital Planning and Investment Control, and 

Enterprise Architecture. In order to enhance its IT Governance Process FMS has 

implemented an IT Governance Board (ITGB) comprised of its Assistant Commissioners. 

Before projects are started or a major change implemented, there is a formal approval 

process beginning with the ITGB. After initial approval the project provides the DIO 

Council with project business case documentation, which describes the project, 

documents benefits, shows start-up costs, full life-cycle costs, other systems impacted, 

programmatic impact, and platforms that will be used. Costs include all project costs 

including contracts, FTE, hardware, and software. The FMS governing bodies, including 

the ITGB, DIO Council and Architecture Review Board, review each investment to 

ensure compliance with FMS target architecture, use of existing infrastructure, and 

shared resources (e.g. document imaging and Single Sign On). 

At least once a year, each FMS project is presented to the DIO Council. This includes 

the current cost, schedule, and performance goals status for the project. Any project that 

is not within acceptable cost, schedule, and performance goals must provide the DIO 

Council with a project remediation plan detailing the steps it plans to implement to get 

the investment back within acceptable ranges. The project is also required to provide the 

DIO Council with quarterly cost, schedule, and performance updates. 

The FMS governance process includes recommendations by the DIO Council for 

approval/disapproval of all IT investments and major enhancements. The FMS 

executive board must also approve all large scale IT projects and it conducts quarterly 

reviews of all its major investments. 

FMS - 28 
4.2 – Program Evaluation 

Program Name: Debt Collection 

Assessment & Improvement Actions 

• The debt collection long-term measure was evaluated and updated as part of FMS' 

update to its Strategic Plan. The Strategic Plan set a target of collecting $8 billion per 

year by 2018. In FY 2009, FMS collected almost $4.80 billion, an increase of $390 

million over FY 2008. 

• In calendar year 2009, the Internal Revenue Service referred an additional $56.5 

billion of tax debts for continuous levy, an 18 percent increase over calendar year 

2008. 

• FMS is currently working to incorporate additional payment types into the payment 

offset and levy programs. This effort is directed primarily at increasing collections of 

debt, especially tax debt owed by contractors and vendors that do business with the 

federal government. 

• The Defense Finance and Accounting Service is in the process of levying civilian 

salaries. 

• The State Reciprocal Program will be expanded to include New York in January 

and Kentucky in June 2010. 

• FMS will continue to enhance FedDebt, a comprehensive system that integrates the 

payment offset and cross-servicing applications, provides Federal Program Agencies 

with batch and online capabilities for all users, via a single sign-on interface and will 

employ a common file format for submitting debts to either Cross-Servicing or 

Treasury Offset Program (TOP) debts. 

FMS - 29 
Program Name: Collections 

Assessment & Improvement Actions 

• In FY 2009, FMS collected nearly $2.9 trillion through a network of more than 9,000 

financial institutions with 83 percent of the dollars collected electronically compared 

to 80 percent collected electronically in FY 2008. 

• The Electronic Federal Tax Payment System (EFTPS) is a tax payment system that 

offers all businesses and individuals the convenience of making their federal tax 

payments electronically 24 hours a day, seven days a week. In FY 2009, EFTPS 

collected more than $1.89 trillion through more than 97.9 million transactions, 

increasing the percentage of total taxes collected electronically despite an overall net 

reduction in tax revenue related to economic conditions. 

• Pay.gov provides consumers and business the opportunity to complete forms and 

applications, make payments, and submit queries online 24 hours a day, seven days a 

week. Pay.gov has been implemented with 134 federal agencies representing 565 

cash flows, and collected $68.91 billion and processed 18.69 million transactions for 

FY 2009. 

• FMS will continue to focus on security oversight efforts at financial agent processing 

facilities and banking institutions as a way to proactively identify security control 

weaknesses and to detect and deter fraud, waste, theft and unauthorized access 

associated with the collection of government remittances and protection of sensitive 

information. 

• FMS is implementing a comprehensive effort to streamline, modernize and improve 

the processes and systems supporting Treasury’s collections and cash management 

program. Through the expanded use of web-based technologies, this effort supports 

the integration of financial and performance information government-wide by 

providing data on a daily basis. 

FMS - 30 
Program Name: Payments 

Assessment & Improvement Actions 

• In FY 2009 FMS issued over 1 billion non-Defense payments, with a dollar value of 

approximately $2.3 trillion. Overall, 81 percent of Treasury payments and associated 

information were made electronically, an increase of two percent from FY 2008. 

• Treasury’s Go Direct campaign which encourages current federal benefit check 

recipients to switch to direct deposit concluded an extremely successful fourth year, 

in which over one million conversions were attributed to the Go Direct campaign. 

The current number of total conversions obtained since the inception of the campaign 

is over three million. 

• In April 2008, FMS implemented Direct Express, a branded debit card program, 

which provides an electronic option for those federal check recipients who do not 

have bank accounts to receive their federal benefit payments. The card is currently 

available to Social Security and Supplemental Security Income recipients, and FMS is 

optimistic that other benefit payments will be implemented in CY 2010. As of 

December 31, 2009, over 851,000 beneficiaries had signed up for Direct Express. 

• In FY 2011, FMS is projecting the percentage of electronic payments to be 83 

percent. While electronic payments are expected to increase, the on-set of the baby 

boomer retirements, will not necessarily result in the equivalent decrease in check 

payments. 

• FMS has also undertaken considerable efforts to modernize its payment systems, 

incorporating new technologies and the internet. Some of the programs are: 

• Stored Value Card (SVC): This smartcard is similar to a credit/debit card, using an 

encrypted computer chip to process "electronic money" stored on the card. This 

program is aimed at reducing the float-loss and reducing risk associated with the 

more than $2 billion in coin and currency in circulation at military bases, ships at sea, 

and other closed government locations around the world. From 1997 through 

September 2009, over 20.5 million EFT transactions with a dollar value in excess of 

$3 billion were processed via the SVC programs. In FY 2009 alone, the SVC 

programs collected over $1 billion through the processing of over 7 million EFT 

transactions.

• Print and Check Enclosing (PrinCE): This project is the ongoing replacement and 

modernization of Regional Financial Center (RFC) manual check wrapping 

equipment and the legacy software sub-system with intelligent mail piece inserter 

equipment. FMS produces approximately 197 million Treasury checks annually, 

including IRS income tax refunds, Social Security Administration benefits, Veterans 

Affairs benefits and others. In addition to check production, specialized jobs are 

performed where documents are printed and inserted with or without checks. 

FMS - 31 
Treasury checks and payment related documents are currently handled by the Check 

Wrapper Systems at the RFCs, some of which are 40 years old. PrinCE will produce 

upgraded check processing software and hardware components, which will provide 

improved accountability for each mail piece that is received from the mainframe 

payment systems. Check payment mail pieces will be tracked through the check 

enclosing process until each mail piece is successfully enclosed for mailing. The 

upgraded check enclosing process will improve internal controls and reduce the 

opportunity for human error and fraud. The Automated Document Factory (ADF) 

function of PrinCE will automatically track and account for each check processed 

through a network interface, and enhance accountability in a seamless and transparent 

manner. ADF will position FMS to better react in the event it needs to deploy its 

Business Continuity Plan. 

• Payment Application Modernization (PAM): PAM is an effort to replace the current 

mainframe-based software applications that are used to disburse over one billion 

federal payments annually with a total dollar value of almost $2.7 trillion. This single 

application will generate check, wire transfer, and ACH payments for FPAs, 

including IRS, Social Security Administration, Veterans Affairs, and others. In 

addition to standardization, FMS is modernizing the technologies employed in the 

development of the system, using commercial software products where feasible, that 

incorporate new and enhanced functionality that supports improvements in the 

payment process. PAM currently processes Supplemental Security Income (SSI) 

monthly ACH payments, SSI monthly checks, and SSI Daily ACH/Check payments. 

FMS - 32 
FMS - 33 

Program Name: Government-wide Accounting and Reporting 

Assessment & Improvement Actions 

• FMS met the 45-day reporting deadline for the FY 2008 Consolidated Financial 

Report (FR) of the United States Government. The FR presents a picture of 

government-wide finances that complements the traditional federal government 

budget information. It is invaluable when assessing the long-term impact of the 

government’s policy decisions and the timely availability of this additional 

information is critical to a fully informed budget process. 

• FMS continues to make improvements to its policies, procedures, information 

systems, and internal controls associated with compiling and issuing the FR which 

resulted in the elimination of 16 of 56 open Government Accountability Office 

findings and recommendations in the FY 2008 Audit Report. FMS will continue to 

resolve the preparation issues that are within its realm of control. However, there are 

other preparation data integrity issues that depend on accurate and consistent data 

being submitted by the agencies. 

 

• To complement and support the accelerated release of the FR, Treasury continues to 

release the Monthly Treasury Statement (the monthly public source of budgetary 

results) on the eighth workday of each month which allows Treasury to provide 

agency financial managers complete and accurate financial data on a timelier basis for 

use in the preparation of their financial statements. 

• FMS performs the accounting for the federal government’s operating cash, and 

provides critical support related to government-wide cash forecasting and cash 

management functions. 

• One of FMS’ major initiatives, which will modernize long standing federal 

accounting processes and provide agencies with methodologies and tools to improve 

the accuracy and consistency of their financial data, is the Government-wide 

Accounting (GWA) Modernization Program. This multi-year effort will improve the 

reliability, usefulness, and timeliness of the government’s financial information, 

provide agencies and other users with better access to that information, and eliminate 

duplicate reporting and reconciliation burdens by agencies, resulting in significant 

government-wide savings. It will also improve the budgetary information being 

collected from the agencies at the transaction level. In 2009, the Provisional Account 

Statement was implemented to provide agencies the ability to view their transactions 

on a daily basis. The ability to reclassify these transactions daily was implemented in 

November 2009. The program has scheduled implementation of Common 

Government-wide Accounting Code Treasury Account Symbol for late 2010.