Financial Management Service 

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. 

Program Summary by Appropriations Account Dollars in Thousands 

Appropriation FY 2006 FY 2007 FY 2007 FY 2008

Salaries and Expenses Enacted

President's 

Budget CR-rate Request

$ from 

CR-rate 

% from 

CR-rate 

Payments $144,135 $147,358 $147,130 $146,465 ($665) -0.45%

Collections 16,931 17,396 17,367 19,869 2,502 14.41%

Debt Collection 10,162 5,250 5,250 0 (5,250) -100.00%

Government-wide 

Accounting and Reporting 62,653 63,650 63,545 68,857 5,312 8.36%

Total Appropriated Resources $233,881 $233,654 $233,292 $235,191 $1,899 0.81%

FY 2008 Priorities 

• Provide federal payments timely and accurately and continue to move toward an allelectronic Treasury for payments. 

• Provide timely collection of federal government receipts, at the lowest cost, and 

continue to move toward an all-electronic Treasury. 

• Maximize collection of government delinquent debt by providing efficient and 

effective centralized debt collection services. 

• Issue accurate, accessible, and timely financial reports and improve the compilation 

process and audit opinion on the Financial Report of the U.S. Government.
Table of Contents 

Section 1 – Purpose ........................................................................................................... 2

1A – Description of Bureau Vision and Priorities.......................................................... 2 

1B – Program History and Future Outlook..................................................................... 3 

Section 2 – Budget Adjustments and Appropriation Language................................... 6

2.1 – Budget Adjustments Table..................................................................................... 6 

2A – Budget Increases and Decreases Description......................................................... 6 

2.2 – Operating Levels Table........................................................................................ 10 

2B – Appropriation Language ...................................................................................... 11 

2B – Permanent, Indefinite Appropriations.................................................................. 11 

2.3 – Permanent, Indefinite Appropriations Table........................................................ 12 

2C – Legislative Proposals............................................................................................ 12 

Section 3 – Budget and Performance Plan ................................................................... 13

3.1 – Appropriation Detail Table.................................................................................. 13 

3A – Payments............................................................................................................. 13 

3.2.1 – Payments Budget and Performance Plan .......................................................... 15 

3B – Collections........................................................................................................... 16 

3.2.2 – Collections Budget and Performance Plan ....................................................... 17 

3C – Debt Collection ................................................................................................... 18 

3.2.3 – Debt Collection Budget and Performance Plan ................................................ 19 

3D – Government-wide Accounting and Reporting .................................................... 20 

3.2.4 – Government-wide Accounting and Reporting Budget and Performance Plan . 21 

Section 4 – Supporting Materials.................................................................................. 22

4.1 – Human Resources Table ...................................................................................... 22 

4A – Human Capital Strategy Description ................................................................... 22 

4.2 – Summary of IT Resources Table ......................................................................... 25 

4B – Information Technology Strategy ........................................................................ 26 

4.3 – PART Evaluation Table....................................................................................... 27 

FMS - 1 
Section 1 – Purpose

1A – Description of Bureau Vision and Priorities 

The Financial Management Service (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 agent for the federal 

government. This role includes managing the nation’s finances by collecting money due 

to the United States, making its payments and performing central accounting functions. 

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

$50 billion, disbursing 85 percent of the federal government’s payments, including 

income tax refunds, Social Security benefits, veterans’ benefits and other federal 

payments to individuals and businesses. FMS also administers the world’s largest 

collection system, collecting approximately $2.9 trillion in FY 2006. It also provides 

cash management guidance to Federal Program Agencies (FPAs), maintains the 

government’s accounting books and compiles and publishes government-wide financial 

information used to monitor the government’s financial status. Finally, it serves as the 

government’s central debt collection agency for delinquent non-tax debt. 

The Strategic Goals of FMS are: 

• Provide federal payments timely and accurately, and move toward an all-electronic 

Treasury for payments. 

• Provide timely collection of federal government receipts, at the lowest cost, through 

an all-electronic Treasury. 

• Maximize collection of government delinquent debt by providing efficient and 

effective centralized debt collection services. 

• Produce accurate, accessible, and timely government-wide financial information and 

reports which contribute to improved quality of the nation's financial decision 

making. 

• Facilitate the achievement of a clean audit opinion on the Financial Report of the U.S. 

Government through FMS’ internal operations and support to government agencies. 

• Establish policies and processes to facilitate the integration of e-commerce 

technologies into FMS’ business programs and infrastructure. 

The total resources required to support FMS activities for FY 2008 are $450,370,000 

including $235,191,000 from direct appropriations and $215,179,000 from offsetting 

collections and reimbursable agreements. 

FMS - 2 
1B – Program History and Future Outlook 

FMS provides critical services to millions of United States taxpayers and other 

customers. It embodies Treasury’s leadership strategy to create value for the American 

people, provide responsible and effective stewardship over the government’s finances, 

and focus on quality service results and innovation. History and future outlook by 

program are as follows: 

Payments

The Payments program 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. In FY 2006, 

FMS issued over 964 million non-Defense payments worth $1.5 trillion to a wide variety 

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

veteran’s benefits. Seventy-seven percent of all payments disbursed were via direct 

deposit. 

 

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. In FY 2008, FMS will continue to expand the use of electronic 

media to deliver federal payments. This helps provide a safer, more secure and more 

reliable method of payment for recipients, and decreases the number of paper checks 

issued, which minimizes costs and inefficiencies associated with the non-electronic 

delivery of benefits. 

Collections

The Collections program collects revenues needed to operate the federal government 

through the effective management of the government’s collections infrastructure. In 

FY 2006, FMS collected approximately $2.9 trillion through a network of more than 

9,000 financial institutions and 79 percent of the dollars FMS collected was done so 

electronically. Dollar revenue collected in FY 2006 exceeded those collected in FY 2005 

by 10 percent. The most important program that supports 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, 7 days a week, instead of using checks. In FY 

2006, taxpayers paid $1.9 trillion using EFTPS, up 16 percent from FY 2005, and the 

number of payments to the government rose 11 percent to 80.4 million. 

In FY 2008, FMS will continue to provide electronic collection mechanisms that use the 

most advanced and secure collection technologies and are flexible enough to 

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

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. FMS will also assist agencies in converting collections from paper to 

FMS - 3 
electronic media by converting checks to electronic payments at the point of receipt and 

truncating paper remittances and invoices by imaging those documents. Security 

oversight efforts will increase 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. 

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 Debt Collection Improvement Act of 1996 (DCIA) and related 

legislation. 

In FY 2006, FMS collected a record $3.34 billion in delinquent debt, including $1.59 

billion in past due child support, $1.23 billion in federal non-tax debt, and more than 

$520 million in federal tax levies and state tax debt offsets. Debt referrals from creditor 

agencies were at 95 percent of eligible debt at the end of FY 2006. As a result of 

continued improvements to the program, collections have steadily increased to more than 

$27.7 billion since the enactment of the DCIA in 1996. In calendar year 2006, IRS 

referred an additional $47 billion of tax debts for continuous levy, a 25 percent increase 

from calendar year 2005. 

In FY 2008, FMS will continue to focus on incorporating all non-Treasury disbursed 

salary and vendor payments into FMS’ offset program for collecting delinquent debt. By 

FY 2008, Integrated FedDebt will combine the Cross-Servicing program and the 

Treasury Offset Program (TOP) into one system. This will reduce redundancies, improve 

data integrity, and provide direct on-line access to agencies. FMS will also continue to 

roll out Debt Check, FMS’ on-line program used to help agencies bar delinquent debtors 

from obtaining new loans or loan guarantees. 

Government-wide Accounting and Reporting

The Government-wide Accounting and Reporting program 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. For the third 

consecutive year, FMS released the Financial Report of the United States Government

(FR) 75 days after the fiscal year-end. 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. 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. With this release schedule, 

agency financial managers are better able to verify and use the data in their own reports. 

In FY 2008, FMS will continue to revamp government-wide accounting processes to 

provide more useful and reliable financial information on a regular basis. FMS is 

FMS - 4 
building and implementing a system that replaces existing government-wide accounting 

functions and processes that vastly improves the exchange of financial information 

among FMS, Federal Program Agencies, OMB and the banking community. This project 

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 

will eliminate duplicate reporting and reconciliation burdens by agencies, resulting in 

significant government-wide savings. As part of the system redesign, FMS provides 

agencies with a web-based account statement resembling a bank statement, which 

contains summarized Treasury fund account balance activity. Once fully implemented, 

agencies will have daily direct access through a web-based system to the data supporting 

the items on the account statement for reconciliation and fund reclassification, rather than 

having to use multiple systems. Fund balance information will be available to agencies 

on a near real-time (one-day lag) basis. This will move the government one step closer to 

achieving its objective of producing financial information on a regular, recurring basis 

more quickly and reliably. 

FMS - 5 
Section 2 – Budget Adjustments and Appropriation Language 

2.1 – Budget Adjustments Table 

Dollars in Thousands 

Appropriation: Salaries and Expenses FTE Amount

FY 2006 Appropriation (P.L. 109-115) 1818 $236,243

Rescission (P.L. 109-148) 0 $(2,362)

FY 2006 Enacted 1818 $233,881

FY 2007 President's Budget 1,761 $233,654

CR-rate Adjustment (362)

FY 2007 CR-rate 1,761 $233,292

Changes to Base: 

Technical Adjustment to FY 2007 Base due to CR:

Base Adjustment (2,043)

Maintaining Current Levels (MCLs):

Non-Pay Inflation Adjustment 2,079

Pay Annualization 778

Pay Inflation Adjustment 4,829

Non-Recurring Costs:

Accounting Architecture (424)

Workstation Replacement (800)

Total FY 2008 Base 1,761 $237,711

Program Decreases:

Claims Contract Support (210)

Debt Fee Revenue (56) (5,250)

Government Financial Reporting System (GFRS) (533)

Government-wide Accounting and Reporting (400)

Payments Capital Investments (PCI) (920)

Realignment to Enhance Collections/Government-wide Accounting and 

Reporting (61) (4,700)

Program Reinvestment:

Realignment/Restructuring Study 2,000

Capital Assets Refresh 1,400

Enhancements to Collections/Government-wide Accounting and 

Reporting 48 3,700

Financial Information Reporting Standardization (FIRST) 2,393

Subtotal FY 2008 Program Changes (69) (2,520)

Total FY 2008 Request 1,692 $235,191

2A – Budget Increases and Decreases Description 

Adjustments ........................................................................................-$362,000 / +0 FTE 

CR-rate Adjustment -$362,000 / +0 FTE Adjustment from the FY 2007 President's 

Budget to reach the FY 2007 Continuing Resolution annualized rate (CR-rate). 

Technical Adjustment to FY 2007 Base due to CR ......................-$2,043,000 / +0 FTE 

Base Adjustment -$2,043,000 / +0 FTE Technical adjustment to FY 2007 base due to CR 

Maintaining Current Levels (MCLs) ...........................................+$7,686,000 / +0 FTE 

Non-Pay Inflation Adjustment +$2,079,000 / +0 FTE Funds are requested for other nonlabor related items such as contracts, travel, supplies, equipment and GSA rent. 

FMS - 6 
Pay Annualization +$778,000 / +0 FTE Funds are requested for the FY 2008 cost of the 

January 2007 pay raise. 

Pay Inflation Adjustment +$4,829,000 / +0 FTE Funds are requested for the FY 2008 

pay raise. 

Non-Recurring Costs ......................................................................-$1,224,000 / +0 FTE 

Accounting Architecture -$424,000 / +0 FTE Funding has been identified in 

Government-wide Accounting and Reporting from prior year Accounting Architecture 

initiatives. 

Workstation Replacement -$800,000 / +0 FTE A portion of prior year funds from

Workstation Replacement initiatives. 

Program Decreases ....................................................................-$12,013,000 / -117 FTE 

Claims Contract Support -$210,000 / +0 FTE Funding from improvements in the 

payments claims activity, can be redirected to the Financial Information Reporting 

Standardization (FIRST) initiative. 

Debt Fee Revenue -$5,250,000 / -56 FTE As a result of projected increased debt 

revenues, FMS is able to redirect the remaining funds allocated to the debt collection 

activity without adversely impacting the program. 

Government Financial Reporting System (GFRS) -$533,000 / +0 FTE Funding identified 

in GFRS will be redirected to FIRST initiative. 

Government-wide Accounting and Reporting -$400,000 / +0 FTE As a result of 

efficiencies gained through modernization and a decreased requirement for contractor 

support for legacy applications, program funds in Government-wide Accounting and 

Reporting can be redirected. 

Payments Capital Investments (PCI) -$920,000 / +0 FTE Funding in the PCI project will 

be redirected. 

Realignment to Enhance Collections/Government-wide Accounting and Reporting -

$4,700,000 / -61 FTE Due to continued modernization of the Payments function by FMS 

there has been a major shift from routine transaction processing to highly complex 

analytical reviews of data and information relating to trend analysis, comparative 

analysis, error resolution and customer relationship management. Associated dollars and 

FTE from Payments can be realigned to Collections and Government-wide Accounting 

and Reporting which will more accurately reflect program requirements. 

FMS - 7 
Program Reinvestment ................................................................+$9,493,000 / +48 FTE 

Realignment/Restructuring Study +$2,000,000 / +0 FTE As part of its strategic planning 

process and to ensure continued success in meeting key mission performance measures, 

FMS senior leadership identified challenges and proposed to find solutions through a 

dynamic and continuous review of operations. All aspects of the organization have been 

scrutinized including successes, funding constraints, management, data operations, work 

flow processes, personnel, skill sets and peripheral issues such as physical site locations. 

Funding is requested to examine the functional distribution of key operations and 

physical location of employees, capital assets and other property. FMS will relocate and 

transfer the Hyattsville Regional Operation Center data center functions to the Kansas 

City Regional Operations Center (KROC). The primary benefit is improved safety of 

FMS employees, garnered by separating primary data center and platforms from

operational activities at the Prince George’s Metro Complex to a more secure location. 

Improved national security, continuity of operations and disaster recovery will be 

possible by reestablishing critical applications, some which are part of the National 

Critical Infrastructure. The transfer of functions and capital assets to KROC will allow 

FMS to avoid significant salary and benefit costs through a reduction in FTE in FY 2010, 

and reduced contractor and electrical costs. 

KROC is a logical and intelligent choice as a primary computer operations center. It 

currently runs several applications on a production basis while serving as the primary 

FMS back-up site. FMS examined how it conducts business, including where the work is 

best done, opportunities to consolidate like functions, and how to perform the work 

better. This initiative is fully funded with redirects from Debt Fee Revenue. 

Capital Assets Refresh +$1,400,000 / +0 FTE FMS needs to “refresh” its capital assets to 

maintain a healthy and viable enterprise information technology infrastructure. These 

assets host system applications that support the National Critical Financial Infrastructure 

and support FMS' mission. Therefore, FMS must ensure that its systems, assets and 

software are reliable as they are used to issue close to a billion payments a year valued at 

$1.5 trillion and to collect information to calculate the daily cash position and the cash 

forecasting needs of the United States Treasury. Properly maintaining the existing 

information technology infrastructure allows FMS the flexibility to create systems such 

as the Payment Application Modernization (PAM) and Financial Information Reporting 

Standardization (FIRST), which will have the ability to provide for government-wide 

savings. FMS will have efficiencies as fewer but more powerful hardware replaces 

existing hardware as part of the relocation of the FMS data center to Kansas City 

Regional Operations Center (KROC). FMS, using the Strategic Asset Management 

Model, has identified the level at which its assets should be maintained in order to be 

effective. Funds will be used to upgrade equipment for the FMS data center relocation to 

KROC. FMS will continuously analyze its current capital assets and non-capital 

inventory to determine required investment needed to ensure a strong, dependable 

enterprise infrastructure. FMS’ IT capital assets and non-capital inventory will be 

maintained in excellent condition, providing a reliable and stable enterprise for FMS and 

its customers. This initiative is fully funded with redirects from Debt Fee Revenue. 

FMS - 8 
Enhancements to Collections/Government-wide Accounting and Reporting +$3,700,000 / 

+48 FTE FMS’ continued modernization of the payments function has resulted in a 

major shift from routine transaction processing to highly complex analytical reviews of 

data and information relating to trend analysis, comparative analysis, error resolution and 

customer relationship management. Associated dollars and FTE from Payments can be 

realigned to Collections and Government-wide Accounting and Reporting which will 

more accurately reflect program requirements. 

Financial Information Reporting Standardization (FIRST) +$2,393,000 / +0 FTE FIRST 

integrates budget and financial reports from Federal Program Agencies. It will improve 

the integrity of information by validating data and balances against FMS’ central 

accounting system. This investment will move FMS closer to achieving its strategic goal 

of producing accurate, accessible and timely government-wide financial information and 

reports that contribute to improved quality of the nation’s financial decision making. 

FIRST will accomplish this by: 

• Making the United States Standard General Ledger accessible to a wider audience 

and easier to use through an interactive database on the Internet. 

• Combining five current FMS stovepipe accounting data collection systems into one 

quarterly submission. 

• Improving the accuracy, consistency and timeliness of agency reporting by validating 

the agency data and balances against authoritative balances in FMS’ central 

accounting system. 

Consistent reporting is required for central managers to make good decisions and crucial 

to attaining FMS’ strategic goal of facilitating the achievement of a clean audit opinion 

on the Financial Report of the United States Government (FR). 

The government-wide savings expected when the project is fully completed in FY 2011 

is conservatively estimated by FMS at $31 million annually. If FMS does not build 

FIRST, the five current reporting systems will need upgrading to comply with FMS’ 

enterprise architecture, at significant cost without improving functionality. 

Funds for FIRST will be redirected from the following: $533,000 from Government 

Financial Reporting System (GFRS), $1,650,000 from Debt Fee Collection Revenue, and 

$210,000 from Claims Contract Support. 

FMS - 9 
2.2 – Operating Levels Table 

Dollars in Thousands 

Appropriation Title: FMS Salaries & Expenses FY 2006

Enacted

FY 2007

President's 

Budget

CR-rate

Adjustment

FY 2007

CR-rate

Proposed

Reprogra

mmings

FY 2007

Proposed

Operating 

Level

FY 2008

Requested

Level

FTE 1,818 1,818 1,818 1,818 1,692

Object Classification:

11.1 Full-Time Permanent Positions..................... $117,054 $117,054 $117,054 $117,054 $118,955

11.1 Other than Full-Time Permanent Positions.... 1,500 1,500 1,500 1,500 1,500

11.5 Other Personnel Compensation.................... 2,500 2,500 2,500 2,500 3,000

11.8 Special Personal Services Payments............ 0 0 0 0 0

11.9 Personnel Compensation (Total)............... 121,054 121,054 121,054 $0 $121,054 $123,455

12.0 Personnel Benefits........................................ 25,950 26,000 26,000 26,000 26,200

13.0 Benefits to Former Personnel........................ 175 175 175 175 175

21.0 Travel............................................................ 1,553 1,553 1,553 1,553 1,603

22.0 Transportation of Things............................... 195 195 195 195 195

23.1 Rental Payments to GSA.............................. 14,950 14,900 14,900 14,900 13,500

23.2 Rent Payments to Others.............................. 365 365 365 365 365

23.3 Communications, Utilities, & Misc................. 12,658 12,858 12,858 12,858 12,569

24.0 Printing and Reproduction............................. 700 700 700 700 500

25.1 Advisory & Assistance Services.................... 4,750 4,750 4,750 4,750 4,800

25.2 Other Services.............................................. 22,157 22,443 (362) 22,081 22,081 22,081

25.3 Purchase of Goods/Serv. from Govt. Accts... 6,000 6,000 6,000 6,000 7,037

25.4 Operation & Maintenance of Facilities........... 950 1,000 1,000 1,000 1,000

25.5 Research & Development Contracts............. 0 0 0 0 0

25.6 Medical Care................................................. 0 0 0 0 0

25.7 Operation & Maintenance of Equipment........ 7,500 7,500 7,500 7,500 7,500

25.8 Subsistence & Support of Persons................ 0 0 0 0

26.0 Supplies and Materials.................................. 4,250 4,250 4,250 4,250 4,300

31.0 Equipment..................................................... 10,149 9,386 9,386 9,386 9,386

32.0 Lands and Structures.................................... 475 475 475 475 475

33.0 Investments & Loans....................................

0

. 0 0 0 0

41.0 Grants, Subsidies.........................................

0

. 0 0 0 0

42.0 Insurance Claims & Indemn.......................... 50 50 50 50 50

43.0 Interest and Dividends...........................

0

... 0 0 0 0

44.0 Refunds........................................................

0

. 0 0 0 0

Total Budget Authority....................................

0

... $233,881 $233,654 ($362) $233,292 $0 $233,292 $235,191

Budget Activities:

Payments...................................................... $144,135 $147,358 $147,130 $147,130 $146,465

Collections...................................................... 16,931 17,396 17,367 17,367 19,869

Debt Collection................................................ 10,162 5,250 5,250 5,250 0

Government-wide Accounting and Reporting......... 62,653 63,650 63,545 63,545 68,857

Total Budget Authority....................................... $233,881 $233,654 ($362) $233,292 $0 $233,292 $235,191

FMS - 10 
2B – Appropriation Language 

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, $235,191,000, of which not to exceed 

$9,220,000 shall remain available until September 30, 

2010, for information systems modernization initiatives;

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

official reception and representation expenses. 

 

 

2B – 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 Treasury of the United States. The Federal Reserve Reimbursement and 

Fiscal Responsibility Act of 1997 amended section 3302 (f) of title 31, U.S.C. and 

provided a permanent and indefinite appropriation of amounts necessary to pay the FRBs 

for the services they provide as fiscal agents on behalf of the Treasury. Since the FRBs 

support each FMS program activity, the performance measures listed in the Salaries and 

Expense section of this budget apply to the work done by the FRBs. FMS estimates that 

the cost of FRB services for FY 2008 will be approximately $295 million. 

Financial Agent Services Permanent, Indefinite Appropriation

Congress has given the Secretary of the Treasury longstanding, broad discretion to 

deposit money in financial institutions and to obtain banking services by designating 

financial institutions to act/serve as Financial Agents of the United States Government. 

The services are in support of such programs as EFTPS, the Lockbox Networks, plastic 

cards, e-commerce systems, and CA$HLINKII, a deposit reporting and cash 

concentration system. These and other programs are vital to FMS’ Strategic Goals, the 

FMS - 11 
government’s financial critical infrastructure, and the President’s emphasis on expanding 

E-Government. The services provided by such financial institutions are authorized under 

numerous statutes including, but not limited to, 12.U.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 Financial Agent services for FY 2008 will be 

approximately $426 million. Of this amount, agencies provide approximately $40 

million in reimbursements to FMS, which is deposited into the General Fund. 

2.3 – Permanent, Indefinite Appropriations Table 

FY 2006 FY 2007 FY 2008

Enacted CR-rate Request

Federal Reserve Bank $220,000 $245,000 $295,000

Financial Agent Services $322,000 $311,000 $426,000

Table 2.3

Permanent, Indefinite Appropriations

(Dollars in Thousands)

Permanent, Indefinite Appropriation

2C – Legislative Proposals 

Payment Transaction Integrity - - Allow the federal government to trace and 

recover federal payments sent electronically to the wrong account. The proposal, 

which amends 12 U.S.C. 3413, revises an existing exception to the Right to Financial 

Privacy Act so that improper electronic payments and improperly negotiated Treasury 

checks can be traced and recovered. This revision will also permit the federal 

government to verify that the correct party is making electronic payments to or receiving 

electronic payments from the government.

Estimated collections: $273 million the first year, $3.105 billion over ten years. 

Eliminate the Ten-Year Limitations Period on Offset -- This proposal would eliminate 

the ten-year limitation on the collection of delinquent non-tax federal debts by 

administrative offset. Delinquent debts could be collected by offset without regard to any 

statutory, regulatory or administrative limitation on the period within which debts may be 

collected. The proposed change would allow for the collection by offset of other federal 

debts consistent with the current law for student loans. 

Estimated collections: $11 million the first year, $65 million over ten years. 

FMS - 12 
Assessment of the Transaction Costs for the Referral of Tax Debts from the IRS to 

the Financial Management Service for Debt Collection Levy -- Under current law, when 

the Internal Revenue Service (IRS) levies a federal payment to collect a delinquent tax debt under 

the Federal Payment Levy Program operated by the FMS, the IRS pays a fee out of its annual 

appropriation to FMS to process the transaction. The budget proposes to instead have the debtor 

pay the transaction costs in addition to their original debt. This would allow the IRS to fully

utilize the levy program, maximize revenue, and shift the cost of enforcement to delinquent tax 

debtors. 

Estimated collections: This proposal is budget neutral over ten years as the increased collections 

from the public (i.e., the debtors) offsets the increased direct spending for FMS for the 

administration of the debt collection program. 

Section 3 – Budget and Performance Plan

3.1 – Appropriation Detail Table 

Dollars in Thousands 

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Resources:

Payments 1,173 $144,135 1,016 $142,979 1,173 $147,358 1,173 $147,130 1,112 $146,465 -5.20% -0.45%

Collections 113 16,931 136 18,291 113 17,396 113 $17,367 137 19,869 21.24% 14.41%

Debt Collection 113 10,162 47 5,393 113 5,250 56 5,250 0 0 -100.00% -100.00%

Gov. Accounting and Reporting 419 62,653 405 67,338 419 63,650 419 63,545 443 68,857 5.73% 8.36%

Subtotal New Appropriated Resources 1,818 $233,881 1,604 $234,001 1,818 $233,654 1,761 $233,292 1,692 $235,191 -3.92% 0.81%

Other Resources:

Recoveries

Offsetting Collections - Reimbursable 320 $167,770 373 $183,363 320 $196,282 370 $196,282 428 $215,179 15.68% 9.63%

Available multi-year/no-year funds

Transfers In/Out

Subtotal Other Resources 320 $167,770 373 $183,363 320 $196,282 370 $196,282 428 $215,179 15.68% 9.63%

Total Resources Available for Obligation 2,138 $401,651 1,977 $417,364 2,138 $429,936 2,131 $429,574 2,120 $450,370 -0.52% 4.84%

% Change

Enacted CR-rate to FY 2008

FY 2007

Resources Available for Obligation

FY 2006 FY 2006 FY 2007 FY 2008

Obligations Request

FY 2007

President's Budget

3A – Payments ($146,465,000 from direct appropriations and $137,849,000 from 

reimbursable programs): The Payments activity 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 activity controls and provides 

financial integrity to the payments process through reconciliation, accounting and claims

activities. The claims activity settles claims against the United States resulting from

federal government checks which have been forged, lost, stolen or destroyed, and 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. In FY 2006, FMS issued over 964 million non-Defense payments, with a 

dollar value of approximately $1.5 trillion and 77 percent of these transactions were 

issued by EFT, an increase of one percent over FY 2005. 

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 minimize costs associated 

FMS - 13 
with postage, the re-issuance of lost, stolen and misplaced checks, and inefficiencies 

associated with the non-electronic delivery of benefits. 

Direct deposit offers payment recipients ease and convenience, and protects against fraud 

and identity theft. Direct deposit also generates significant cost savings to the 

government over paper checks. Each payment converted from paper to direct deposit 

saves the taxpayer about 80 cents per transaction. However, FMS faces challenges in 

increasing growth in electronic payments. The direct deposit growth rate for federal 

benefit payments has leveled off from increases in the late 1990s. As the government 

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

FMS reverse this trend. To increase the use of direct deposit for federal benefit 

payments, FMS began a nationwide campaign called “Go Direct” to encourage current 

check recipients to switch to direct deposit. The goal for the first year of the campaign 

was to convert approximately half a million check recipients to direct deposit, and the 

campaign, in fact, exceeded that goal, savings millions of dollars for the United States 

Treasury in the years to come. In addition, FMS is implementing a pilot program in FY 

2007, which is directed at the un-banked, to disburse benefit payments through debit 

cards. FMS is also developing plans (entitled Universal Direct Deposit) which will 

require at some future date all newly enrolled beneficiaries to receive payments 

electronically unless they do not have a bank account. 

In support of its payments function, FMS has also undertaken considerable efforts to 

modernize its payment systems, incorporating new technologies and the internet. Some

programs that will continue to be in focus are: 

• Stored Value Card (SVC): This is a smartcard, 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 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 to the end of FY 2006, over 5.5 

million Electronic Funds Transfer transactions representing a dollar value in excess of 

$816 million were processed via the SVC programs. 

• Payments Application Modernization (PAM): This is an FMS effort in coordination 

with the Federal Reserve Bank of Kansas City to modernize the current mainframebased software applications that are used to disburse approximately one billion 

federal payments worth over $1.5 trillion annually. PAM involves replacing over 30 

COBOL and Assembler applications that have evolved over the last several decades, 

with a single standardized application. Additionally, new and enhanced functionality 

will be incorporated to support improvements in the payment process. 

• ASAP.gov (Automated Standard Application for Payments): This is a web-based 

system built by FMS in coordination with the Federal Reserve Bank of Richmond. 

Through this all electronic grants payment system organizations including states, 

universities, for-profits, and non-profits receive federal funds from accounts preauthorized by Federal agencies. ASAP is one of two systems authorized by the Chief 

Financial Officer’s Council to disburse civilian grant payments on behalf of program

FMS - 14 
agencies. Eighteen federal agencies use ASAP.gov and total FY 2006 disbursements 

to organizations were $425 billion. FMS expects disbursements through ASAP.gov 

to increase dramatically with the addition of new agencies. 

• Treasury Check Information System (TCIS): This new web-based system was 

designed by Federal Reserve Bank of Philadelphia using commercial off the shelf 

software products. In June 2006, TCIS replaced the outdated Check Payment and 

Reconciliation System. It provides FMS with an electronic office environment for 

check activities including the reconciliation of more than 220 million check payments 

and the processing of over 1.5 million claims inquiries per year. Agencies are now 

able to access on-line both check and Automated Clearinghouse payment information 

through TCIS, and no longer have to use two systems to obtain this information. 

Other Resources:

Offsetting collections and reimbursements totaling $137,849,000 are collected for 

disbursement of federal agency payments to beneficiaries, including Social Security 

payments, Railroad Retirement Board payments, tax refunds and the Department of 

Veterans Affairs benefit payments. 

3.2.1 – Payments Budget and Performance Plan 

Dollars in Thousands 

Payments Budget Activity Includes Strategic Objective F4C

FY 2004 FY 2005 FY 2006 FY 2007 FY 2008

Resource Level Enacted Enacted Enacted President's 

Budget

Request

Financial Resources

 Appropriated Resources $136,534 $141,287 $144,135 $147,358 $146,465

 Other Resources 115,188 132,845 127,085 135,031 137,849

Total Operating Level $251,722 $274,132 $271,220 $282,389 $284,314

Human Resources

 Appropriated FTE 1,173 1,173 1,173 1,173 1,112

 Other FTE 39 39 43 40 41

Total FTE (direct and reimbursable) 1,212 1,212 1,216 1,213 1,153

Payments Budget Activity Includes Strategic Objective F4C

Measure FY 2004 FY 2005 FY 2006 FY 2007 FY 2008

Target 75% 76% 78% 78% 79%

Actual 75% 76% 77%

Percentage of Treasury Payments and 

associated information made electronically (%) 

(Oe) Met Yes Yes No

Target 100% 100% 100% 100% 100%

Actual 100% 100% 100%

Percentage of paper check and Electronic Funds 

Transfer (EFT) payments made accurately and 

on time (%) (Oe) Met Yes Yes Yes

Target Baseline $0.35 $0.35 $0.39 $0.39

Actual $0.35 $0.36 $0.37

Unit cost for Federal Government payments ($) 

(E) 

Met Yes No No

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

Satisfaction 

Description of Performance: FMS disburses 85 percent of the federal government's

payments to a wide variety of recipients, such as those who receive Social Security 

FMS - 15 
Administration payments, Internal Revenue Service tax refunds, and the Department of 

Veterans Affairs benefits. In FY 2006, FMS issued over 964 million non-Defense 

payments, with a dollar value of approximately $1.5 trillion. Seventy seven percent of 

these transactions are issued by Electronic Funds Transfer, an increase of one percent 

over FY 2005. Paper checks account for the remainder of disbursements. 

3B – Collections ($19,869,000 from direct appropriations): The Collections activity 

collects revenues needed to operate the federal government through the management of 

the federal government’s collections infrastructure. FMS collected approximately $2.9 

trillion in FY 2006 through a network of more than 9,000 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 - 79 

percent for FY 2006, a 10 percent increase over 2005. 

FMS develops and operates a variety of collection mechanisms and systems to meet 

program agency needs. It has initiated a comprehensive effort to streamline, modernize 

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

management program. It continues to promote the use of electronics in the collections 

process and assist agencies in converting collections from paper to electronic media with 

programs such as: 

• Electronic Federal Tax Payment System (EFTPS): This is an accurate, secure and 

convenient way to pay all federal tax payments, including corporate, excise and 

employment taxes and 1040 quarterly estimated taxes via the internet or a telephone 

voice response system. EFTPS processes 95 percent of United States tax dollars and 

is required for businesses with annual federal tax obligations above $200,000. FMS 

is also 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 number close to 38 million. FMS is also partnering with the state of 

Illinois in a pilot program between the Illinois Department of Revenue, FMS and the 

Internal Revenue Service. The program marks the first time business taxpayers can 

make state withholding tax deposits through EFTPS Online at the same time as their 

federal payments with a single PIN and password. Illinois is also examining whether 

making EFTPS available for state taxpayers will improve the efficiency of the state 

tax collection system. Results of this pilot will be used to help the Treasury 

Department determine whether to expand this service to other states and to add other 

state taxes for payment through EFTPS. The first phase of the EFTPS state pilot 

program officially was launched on January 11, 2007 in Chicago. 

FMS - 16 
• Pay.gov: This is a government collection portal that provides a single platform for EGovernment services and allows citizens, businesses and federal agencies to conduct 

business via the internet. Pay.gov provides collections, form submittal, bill 

presentment, authentication and agency financial reporting services. Since inception, 

it has processed approximately 14.4 million transactions valued at over $52 billion. 

Pay.gov responds to 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, 7 days a 

week. Pay.gov, which has been implemented with 95 federal agencies representing 

286 cashflows, collected $29.5 billion in FY 2006. 

• Paper Check Conversion Over-the-Counter System (PCC-OTC): This 

program/service converts paper checks into Electronic Funds Transfers (EFT) debits 

against the check writer’s bank account. PCC is being used at over the counter 

locations for agency deposits. As of October 2006, PCC-OTC processed more than 

6.6 million items representing more than $6.3 billion. Beginning in April 2005, the 

PCC system implemented “Check 21” functionality that allows for the image 

truncation and image clearing of negotiable instruments that cannot be converted into 

EFT debits. 

• Electronic Check Processing (ECP): This is a service that processes all paper checks 

received at a financial agent lockbox within the General Lockbox Network. The 

system has the capacity to either convert a check to an EFT debit transaction or 

truncate the check into an image document under the auspices of Check 21. It 

provides a government-wide enterprise solution for imaging checks and remittance 

forms and a central repository for agencies to access their check transactions via a 

secure internet site. While similar to the Paper Check Conversion/Over the Counter 

system, ECP is recognized as a separate service because it requires different 

technology to process a higher volume of transactions and larger files from financial 

institutions, relative to the lower volumes processed over-the-counter at federal 

agencies. 

3.2.2 – Collections Budget and Performance Plan 

Dollars in Thousands 

Collections Budget Activity Includes Strategic Objectives F4A, F4B, and F4C

FY 2004 FY 2005 FY 2006 FY 2007 FY 2008

Resource Level Enacted Enacted Enacted President's 

Budget

Request

Financial Resources

 Appropriated Resources $16,426 $16,693 $16,931 $17,396 $19,869

 Other Resources 15,162 3,500 0 0 0

Total Operating Level $31,588 $20,193 $16,931 $17,396 $19,869

Human Resources

 Appropriated FTE 113 113 113 113 137

 Other FTE 0 0 0 0 0

Total FTE (direct and reimbursable) 113 113 113 113 137

FMS - 17 
Collections Budget Activity Includes Strategic Objectives F4A, F4B, and F4C

Measure FY 2004 FY 2005 FY 2006 FY 2007 FY 2008

Target 81% 82% 83% 80% 81%

Actual 81% 79% 79%

Percentage collected electronically of total dollar 

amount of Federal government receipts (%) (Oe)

Met Yes No No

Target Baseline $1.4 $1.37 $1.33 $1.3

Actual $1.4 $1.2 $1.1

Unit cost to process a Federal revenue collection 

transaction ($) (E) 

Met Yes Yes Yes

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

Satisfaction 

Description of Performance: FMS collected approximately $2.9 trillion in FY 2006 

through a network of more than 9,000 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. FMS develops and operates a variety of collection mechanisms and systems 

(e.g. Electronic Federal Tax Payment System, lockboxes, Treasury General Accounts, 

debit/credit cards, and Pay.gov) to meet program agency needs. The majority of the 

dollar amounts of FMS collections are made electronically; 79 percent for FY 2006. 

FMS continues to promote the use of technology in the collections process and assists 

agencies in converting collections from paper to electronic media. 

3C – Debt Collection ($77,330,000 from reimbursable programs): The Debt Collection 

activity collects delinquent government and child support debt by providing centralized 

debt collection, oversight and operational services to Federal Program Agencies and 

states as required by the Debt Collection Improvement Act of 1996 and related 

legislation. The services include, but are 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 towards improving debt management, and referrals to the Department 

of Justice. 

 FMS collects delinquent debt through two major programs: the Treasury Offset Program

(TOP) and cross-servicing. The Treasury Offset Program compares the names and 

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

of federal payments. If there is a match, the federal payment is reduced, or “offset,” to 

satisfy the overdue debt. 

Cross-servicing activities are conducted through FedDebt, a comprehensive system that 

replaced FMS’ prior cross-servicing system in October 2005. Cross-servicing includes 

applications for 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. 

In 2005, FMS implemented the initial phase of FedDebt. Future releases will integrate 

the Treasury Offset Program and cross-servicing into FedDebt, which will provide 

FMS - 18 
federal program agencies with batch and on-line capabilities for all users via a single 

sign-on interface and will employ a common file format for remitting cross-servicing or 

TOP debts. FedDebt provides increased flexibility; increased automation among a 

number of processes currently handled manually, and improved system access for federal 

agency customers and service partners. It allowed FMS to transfer a major portion of its 

debt collection functions performed in the Washington, D.C. area to the Birmingham

center in FY 2006 which has consolidated functions, streamlined operations, and reduced 

costs. FMS will continue development of FedDebt, making it more user-friendly by 

replacing the existing TOP program and enhancing applications to provide better service 

to agencies that refer debts for collection. 

FMS is 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. In addition, FMS will continue to promote 

and roll out Debt Check, its on-line database used to assist agencies in barring delinquent 

debtors from obtaining new loans or loan guarantees. 

3.2.3 – Debt Collection Budget and Performance Plan 

Dollars in Thousands 

Debt Collection Budget Activity Includes Strategic Objective F4A

FY 2004 FY 2005 FY 2006 FY 2007 FY 2008

Resource Level Enacted Enacted Enacted President's 

Budget

Request

Financial Resources

 Appropriated Resources $14,696 $9,855 $10,162 $5,250 $0

 Other Resources 31,049 33,675 40,185 61,251 77,330

Total Operating Level $45,745 $43,530 $50,347 $66,501 $77,330

Human Resources

 Appropriated FTE 113 113 113 56 0

 Other FTE 268 273 273 330 387

Total FTE (direct and reimbursable) 381 386 386 386 387

Debt Collection Budget Activity Includes Strategic Objective F4A

Measure FY 2004 FY 2005 FY 2006 FY 2007 FY 2008

Target Baseline $36.4 $36.5 $36.75

Actual $36.23 $39.97

Amount of delinquent debt collected per $1 

spent ($) (E) 

Met No Yes

Target $2.9 $3 $3.1 $3.2 $3.25

Actual $3 $3.25 $3.34

Amount of delinquent debt collected through all 

available tools (Billions $) (Ot)

Met Yes Yes Yes

Target 90% 92% 93% 94% 95%

Actual 99% 97% 95%

Percentage of delinquent debt referred to FMS 

for collection compared to amount eligible for 

referral (%) (Ot) Met Yes Yes Yes

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

Satisfaction 

Description of Performance: In FY 2006, FMS collected a record $3.34 billion in 

delinquent debt, including $1.59 billion in past due child support, $1.23 billion in federal 

non-tax debt, and more than $520 million in federal tax levies and state tax debt offsets. 

Debt referrals from creditor agencies were at 95 percent of eligible debt at the end of FY 

2006. As a result of our continued improvements to the program, collections have 

FMS - 19 
steadily increased to more than $27.7 billion since the enactment of the Debt Collection 

Improvement Act in 1996. In calendar year 2006, IRS referred an additional $47 billion 

of tax debts for continuous levy, a twenty-five percent increase from calendar year 2005 

for the same period. 

3D – Government-wide Accounting and Reporting ($68,857,000 from direct 

appropriations): The Government-wide Accounting and Reporting activity 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 Federal Program Agencies 

(FPAs) in improving their government-wide accounting and reporting responsibilities. 

FMS gathers 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. These 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). 

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

information among FMS, FPAs, Office of Management and Budget (OMB) and the 

banking community. Once completed, this Government-wide Accounting (GWA) 

Modernization Project will comprehensively replace current government-wide 

accounting functions and processes that are both internal and external to FMS. It 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 will 

eliminate duplicate reporting and reconciliation burdens by 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. This initiative will result in significant savings throughout government as 

agencies will no longer have to prepare month-end reports classifying all of their 

disbursement and collection transactions or performing reconciliations on statements of

differences associated with this month-end reporting. 

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

the compilation process of Financial Report (FR) of the United States Government, 

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, Treasury Reporting Group as a 

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

FMS - 20 
• Working with the CFO Council and OMB to develop more consistent business rules 

for intra-governmental transactions. 

• Encouraging greater auditor participation by requiring agency auditors to more 

closely scrutinize intra-governmental out-of-balance conditions with other agencies. 

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

opinion for the FR. 

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

Dollars in Thousands 

Government-wide Accounting and 

Reporting Budget Activity

Includes Strategic Objective F4D

FY 2004 FY 2005 FY 2006 FY 2007 FY 2008

Resource Level Enacted Enacted Enacted President's 

Budget

Request

Financial Resources

 Appropriated Resources $59,554 $61,248 $62,653 $63,650 $68,857

 Other Resources 500 500 500 0 0

Total Operating Level $60,054 $61,748 $63,153 $63,650 $68,857

Human Resources

 Appropriated FTE 419 419 419 419 443

 Other FTE 4 4 4 0 0

Total FTE (direct and reimbursable) 423 423 423 419 443

Government-wide Accounting and Reporting 

Budget Activity

Includes Strategic Objective F4D

Measure FY 2004 FY 2005 FY 2006 FY 2007 FY 2008

Target 100% 100% 100% 100% 100%

Actual 100% 100% 100%

Percentage of government-wide accounting 

reports issued accurately (%) (Oe) 

Met Yes Yes Yes

Target 100% 100% 100% 100% 100%

Actual 100% 100% 100%

Percentage of government-wide accounting 

reports issued timely (%) (E) 

Met Yes Yes Yes

Target Baseline $10.69 $12.88

Actual $8.5

Unit Cost to Manage $1 Million Dollars of Cash 

Flow

Met Yes

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

Satisfaction 

Description of Performance: FMS issues 100 percent of its Government-wide 

accounting reports issued accurately and timely. For the third consecutive year, FMS 

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

fiscal year-end. FMS established a new measure, “Unit cost to manage $1 million of 

cash flow”, which will begin in FY 2007. 

For detailed information about each performance measure, including definition, 

verification and validation, please go to: 

http://www.treas.gov/offices/management/dcfo/accountability-reports/2006-

par/Part_IV_Appendices.pdf

FMS - 21 
Section 4 – Supporting Materials 

4.1 – Human Resources Table 

Changes in Full Time Equivalents

Direct FTE FY 2006 FY 2007 FY 2008

Base: Year-end Actual from Prior Year 1,645 1,604 1,761

Increases:

Reason #1

Normal Accession

164 65

Reason #2: Adjustment from actual to

budgeted 188

Subtotal, Increases 164 253 0

Decreases:

Reason #1: Normal Attrition -116

Reason #2: Reduction due to buyout -40 -39

Reason #3: Redirection of FTE to 

Reimbursable/Debt fund -49 -57 -56

Reason #4:

Reduction of FTE due to 

modernization of the payments 

function -13

Subtotal, Decreases -205 -96 -69

Year-end Actual/Estimated FTEs 1,604 1,761 1,692

Net Change from prior year SOY to budget year EOY 88

4A – Human Capital Strategy Description 

The Financial Management Service’s strategic management of human capital is 

consistent with its mission, vision and priorities supporting the President’s Management 

Agenda, and 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. It has taken steps 

to 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 mission, goals, 

organizational objectives and integrated into its strategic plans, performance plans 

and budgets. 

• Workforce Planning & Deployment: FMS is citizen-centered, delayered, missionfocused, and 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 

FMS - 22 
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, a performance management system and awards program that 

effectively differentiates between high and low performance. It holds employees 

accountable, links individual/team/unit performance to organizational goals and 

desired results. 

• Diversity: Under-representation is addressed, particularly in mission-critical 

occupations and leadership positions and processes are in place to sustain diversity. 

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

competency gaps. FMS is 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. 

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. Delegated Examination and student intern program authorities are used 

extensively to attract talent from some of the best colleges and universities. 

FMS has action plans to attain and maintain the right number of people with the right 

skills to accomplish the mission. It 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 

and back-filled or the FTE is redirected as appropriate. This is how FMS counters the 

possibility of either a surplus or deficiency of staff in certain job occupations. 

Through FY 2010, 29 percent of FMS’ current employees are eligible for Optional 

Retirement and 47 percent are eligible for Discontinued Service or Early Retirement. 

Strategies are in place to close skill-gaps and fill staffing requirements in mission-critical 

occupations. This includes use of all available pay incentives within budget constraints 

(e.g., Recruitment and Retention Incentives) and specialized employee development 

programs: SES Candidate Development, Project Management Certification, Management 

Preparatory Development, Federal Career Intern Program, Leadership, and Mentoring. 

Another strategy to manage staffing needs is use of contractors and/or outsourcing. FMS 

supplements its workforce with contractors in security, building maintenance, IT support 

and various finance functions provided by the Bureau of the Public Debt. Financial 

FMS - 23 
institutions and Federal Reserve Banks serve as financial and fiscal agents of the 

Treasury Department in providing banking, payment and other financial services to FMS. 

 

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 have been put into place to ensure a diverse workforce: 

• SES candidate program was developed to create a diverse pipeline of future senior 

executives. 

• Special emphasis programs were expanded and Equal Employment Opportunity 

(EEO) and diversity awareness training was instituted. 

• Hispanic recruitment was enhanced through the increased use of Hispanic 

Associations of Colleges and Universities (HACU) interns, which created a pipeline 

for new Hispanic employees. 

• Increased participation in the Washington Internship for Native Students (WINS) 

program. 

• Participation in the Department of Labor’s Workforce Recruitment Program for 

students with disabilities was increased. 

• Increased use of the Federal Career Internship Program (FCIP) to facilitate and 

accelerate general hiring of qualified and talented minority student interns. 

FMS has a solid and viable Human Capital Strategy to fulfill its primary mission. 

FMS - 24 
4.2 – Summary of IT Resources Table 

Dollars in Millions

Information Technology Investments 1/

(in $ Millions) FY 2006 FY 2007 Major IT Investments

Budget Activity/Funding 

Source

Operating 

Plan Obligations

Operating

Plan

President's 

Budget 

Automated Standard Application for Payment (ASAP) Payments $10.6 $10.6 $11.1 4.7% $12.4 11.6% Debt Management Accounting Systems (DMAS) Debt Management 3.1 3.1 5.2 66.3% 7.5 44.0% 

Electronic Federal Tax Payment System (EFTPS) -- jointEx. 300 w/IRS Collections 81.0 81.0 68.8 -15.1% 70.8 3.0% Financial Information Reporting and Standardization 

(FIRST) 2/ Governmentwide Accounting 2.9 2.9 7.7 162.4% 6.8 -11.7% 

Governmentwide Accounting Modernization (GWA) Governmentwide Accounting 20.5 20.5 21.4 4.0% 22.0 2.9% 

Integrated FedDebt Debt Management 21.0 21.0 19.9 -5.2% 13.2 -33.5% 

Intragovernmental Payments & Collections (IPAC) Governmentwide Accounting 9.8 9.8 7.2 -26.5% 6.5 -9.8% 

PACER Online Payments 4.6 4.2 4.5 7.1% 4.6 1.7% 

Payment Application Modernization (PAM) 3/ Payments 5.2 5.2 19.7 282.2% 19.3 -1.9% Pay.gov Collections 20.5 20.5 23.0 12.2% 21.3 -7.4% 

Secure Payment System (SPS) Payments 5.4 5.4 5.7 5.0% 5.8 1.8% 

Treasury Check Information System (TCIS) Payments 6.5 6.5 8.3 27.8% 8.2 -0.7% Subtotal, Major IT Investments $191.1 $190.7 $202.4 6.1% $198.4 -2.0% CashTrack Governmentwide Accounting 3.75 3.75 3.4 -9.3% 3.5 2.9% Shared Accounting Module (SAM) 4/ Governmentwide Accounting 0.7 0.7 2.63 275.7% 3.362 27.8% Transaction Reporting System (TRS) Governmentwide Accounting 4 4 3.8 -5.0% 3.418 -10.1% Treasury Receivable, Accounting, and Collections System (TRACS) Collections 1.9 1.9 1.5 -21.1% 1.5 0.0% 

Non-Major IT Investments $10.4 $10.4 $11.3 9.5% $11.8 4.0% FMS Enterprise Infrastructure (Consolidated) 57.5 57.5 65.4 13.7% 61.3 -6.3% 

FMS Computer Security/Disaster Recovery

(Consolidated) 11.7 11.7 13.5 15.8% 12.6 -6.8% 

FMS Strategic Asset Management/Capital Asset RefreshInitiative (Consolidated) - - - 0.0% - 0.0% 

Infrastructure Investments $69.2 $69.2 $78.9 14.0% $73.9 -6.4% Enterprise Architecture $0.9 $0.9 $1.8 96.6% $1.4 -21.7% Total IT Investments $271.6 $271.2 $294.4 8.6% $285.5 -3.0% 1/ Amounts include all funding sources and FTEs.2/ FY05 Costs for FIRST are for the legacy GFRS system which will be included in this new investment.3/ PAM FY06-FY08 amounts reflect rebaselined legacy system costs designed to more accurately reflect all costs associated with the RO Payment System.4/ SAM received credits from the FRB in FY 05, leading to lower costs for FY 05.

FY 2005 % Change

from FY05

Actuals to

FY06

% Change 

from FY06 to

FY07

FMS - 25 
4B – Information Technology Strategy 

FMS focuses its IT investments on furthering web-based applications and eliminating 

paper processes to support operational efficiency and the President’s Management 

Agenda (PMA) E-Government initiatives. FMS is committed to establishing policies and 

processes to facilitate the integration of E-Commerce technologies into its infrastructure. 

FMS has undertaken considerable efforts to modernize its systems by incorporating new 

technologies and making full use of the internet. Moving to an all-electronic Treasury, 

especially for payments and collections, is a Treasury Department and FMS strategic 

goal. 

IT funding is critical for FMS to make significant progress in strengthening its entitywide IT security especially in the areas of robust intrusion detection, monitoring and 

patch management, and assuring adequate disaster recovery. These investments ensure 

that FMS’ products and services are provided in a secure environment and the federal 

government’s payment, collection and cash forecasting critical infrastructure assets do 

not become susceptible to computer attacks, viruses and terrorist activities. FMS’ 

certification and accreditation process is robust and continuously improving. Currently, 

all major applications and general support systems are certified and accredited. 

Maintaining the FMS computer security program at an acceptable level requires ongoing 

upgrades of tools and technologies. 

FMS - 26 
4.3 – PART Evaluation Table 

PART Name: Debt Collection

Year PARTed: 2003

Rating: Effective

OMB Major Findings/Recommendations

Bureau Actions Planned or Underway

PART Name: Collections

Year PARTed: 2004

Rating: Effective

OMB Major Findings/Recommendations

Bureau Actions Planned or Underway

4. Propose legislation to increase and enhance debt collection opportunities.

4. FMS has submitted numerous legislative proposals which will enable FMS to significantly enhance our debt collection 

opportunities.

1. Develop a more ambitious long-term performance measure.

2. Set interim targets and describe interim actions necessary to achieve the long-term performance measure.

3. Level fund the debt collection program for FY 2005.

2. FMS establishes annual performance measures for collections and referrals of debt by agencies. These 

targets/measures and actions help direct efforts to achieve our long-term measure.

3. Operate within budgetary resources. With the FY 08 budget submission, FMS has zeroed-out the salary and expenses

appropriated funding requirements for this program and the program will be self-funded through fee revenue. FMS will

analyze projected collections and fees with the goal of ensuring fees will cover the full cost of the program. 

1. Continuously review the trend in debt collection and revise/update the long-term measure as necessary.

1. Work with program partners to explore opportunities to better reduce paper-based collections.

2. Provide 2006 funding at the same level as in 2005 (excluding funding received for services provided to other federal

agencies).

1. FMS is working with federal agencies participating in the General Lockbox Network to eliminate the paper checks that are

received converting paper checks into electronic Automated Clearing House transactions (Electronic Check Processing) or

truncating the paper check and processing an image of the check (Check 21).

2. FMS has partnered with customs and Border Protection (CBP) to convert the financial piece of CBP's Automated 

Commercial Environment (ACE) System to Pay.gov. The ACE cash flow totals $20 billion annually.

3. FMS will work with federal agencies as it begins to pilot and implement TGAnet, an automated system designed to

eliminate the paper deposit ticket which accompanies over the counter deposits by Federal agencies at financial institutions.

4. Operate within budgetary resources. 

FMS - 27 
PART Name: Payments

Year PARTed: FY 2005

Rating: Effective

OMB Major Findings/Recommendations

Bureau Actions Planned or Underway

1. Working with Federal agencies to reduce the number of paper check payments and increasing the number of more efficient and secure 

electronic payments. This reflects FMS' efforts to work toward its 2010 goal of 90 percent of all payments made electronically.

2. Implemented Go Direct, a nationwide campaign to encourage current Federal check recipients to switch to direct deposit.

3. Continue to pursue requiring at some future date, that all new benefit recipients receive their benefit payments electronically rather than

check unless they do not have a bank account.

1. The program must continue its efforts toward and all electronic treasury.

PART Name: Governmentwide Accounting

Year PARTed: FY 2006

Rating: Moderately Effective

OMB Major Findings/Recommendations

Bureau Actions Planned or Underway

1. Developing a baseline for the efficiency performance measure that measures the unit cost to manage one million dollars of cash flow.

3. Developing the Financial Information Reporting Standardization (FIRST) system in order to better integrate and reconcile budget and

accounting data.

1. The program must develop a baseline for its efficiency performance measure. While FMS has unit cost, timeliness, and accuracy 

measures in its internal and external performance reporting that are used to manage for improved efficiency, at the time of this PART 

evaluation, a baseline for the new unit cost measure had yet not been established.

2. More work needs to be done in order to ahieve a clean opinion on the Financial Report of the U.S. Government. Improvement is needed 

on material weakness in the areas of accounting data compilation/consolidation and reconciliation of intragovernmental reporting differences.

2. Develop authoritative balances from FMS systems to which agencies will be required to reconcile.

For a complete list of PART results visit the following website: 

http://www.whitehouse.gov/omb/expectmore/all.html

FMS - 28