FY 2017 Agency Financial Report 3

Table of Contents

Management’s Discussion and Analysis................................................................................................. 5

Program Performance Overview............................................................................................................................ 10

Financial Performance Overview............................................................................................................................ 22

Management Assurances....................................................................................................................................... 28

Financial Section..................................................................................................................................29

Independent Auditors’ Report................................................................................................................................ 31

Annual Financial Statements.................................................................................................................................. 47

Principal Financial Statements and Notes........................................................................................................ 49

Required Supplementary Stewardship Information...................................................................................... 109

Required Supplementary Information........................................................................................................... 115

Other Information .............................................................................................................................145

Inspector General’s Top Management and Performance Challenges.................................................................. 147

Summary of Financial Statement Audit and Management Assurances............................................................... 160

Payment Integrity ................................................................................................................................................. 161

Civil Monetary Penalty Inflation Adjustment ....................................................................................................... 189

Grants Oversight and New Efficiency Act............................................................................................................. 209

Open Government Links....................................................................................................................................... 210

Acronyms.............................................................................................................................................................. 211

This report can be found on the Internet at www.dol.gov/dol/aboutdol/.

If you have questions or comments regarding this report, contact:

Office of the Chief Financial Officer

U.S. Department of Labor

200 Constitution Avenue, NW, Room S-4030

Washington, DC 20210

202-693-6800

The photographs in this publication were furnished by numerous individuals. All photographs are proprietary and prior permission from the 

photographer is required for any use or reproduction of the photographs. All references to non-governmental companies or organizations, 

their services, products or resources in this report are offered for informational purposes and should not be construed as an endorsement by 

the Department of Labor of any of the companies or organizations, or their services, products or resources. The U.S. Department of Labor 

does not endorse, takes no responsibility for, and exercises no control over non-governmental organizations’ Web sites mentioned in this 

report, or their views or contents; nor does it vouch for the accuracy of the information contained on other organizations’ websites.

FY 2017 Agency Financial Report 5

Management’s Discussion and Analysis

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FY 2017 Agency Financial Report 7
Management’s Discussion and Analysis

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8 United States Department of Labor

The Department of Labor's (DOL or the Department) annual Agency Financial Report (AFR) provides fiscal data and 

summary performance results that enable the President, Congress, and American people to assess the 

Department’s accomplishments for each fiscal year (October 1 through September 30). This report provides an 

overview of programs, accomplishments, challenges, and management’s accountability for the resources entrusted 

to the Department. The AFR is prepared in accordance with the requirements of Office of Management and Budget 

(OMB) Circular No. A-136, Financial Reporting Requirements.

Mission Statement and Organizational Structure

DOL’s mission remains as relevant today as at the Department’s founding in 1913:

“To foster, promote, and develop the welfare of the wage earners, job seekers, and retirees 

of the United States; improve working conditions; advance opportunities for profitable 

employment; and assure work-related benefits and rights.”

The Department accomplishes this mission through component agencies and offices that administer various 

statutes and programs. These programs are carried out through a network of regional offices and smaller field, 

district, and area offices, as well as through grantees and contractors.

US Department of Labor Organizational Chart
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FY 2017 Agency Financial Report 9

U.S. Department of Labor Headquarters: Frances Perkins Building

DOL Headquarters, Frances Perkins Building

Washington, D.C., USA
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10 United States Department of Labor

Program Performance Overview

The Program Performance Overview discusses the Department’s key performance measures and program priorities. 

This section includes results for measures related to spending as reported in the following Financial Section. 

Performance results for outcome measures reported under the Government Performance and Results Act are 

included in the Annual Performance Report, which will be published by February 6, 2018 with the FY 2019 

Congressional Budget Justification. These reports will be posted at http://www.dol.gov/dol/aboutdol/#budget.

The Program Performance Overview broadly organizes DOL program agencies into three categories that report FY 

2017 performance data. The Department’s mission is also supported by administrative, policy, legal, public affairs, 

and Congressional liaison offices.

Employment and Statistical Programs

Employment and Training Administration (ETA)

Veterans’ Employment and Training Service (VETS)

Office of Disability Employment Policy (ODEP)

Women’s Bureau (WB)

Bureau of Labor Statistics (BLS)

Worker Protection Programs

Occupational Safety and Health Administration (OSHA)

Mine Safety and Health Administration (MSHA)

Wage and Hour Division (WHD) 

Office of Federal Contract Compliance Programs (OFCCP)

Bureau of International Labor Affairs (ILAB)

Office of Labor-Management Standards (OLMS)

Compensation and Benefits Programs

Office of Workers’ Compensation Programs (OWCP)

Federal-State Unemployment Insurance (UI) Program (administered by ETA) 

Employee Benefits Security Administration (EBSA)

The following section presents a brief description of the programs administered by each agency, a brief statement 

of forward-looking information, and the most recent results for key performance measures. The Department tracks 

performance through over 400 output and outcome measures. The selected measures below are most 

representative of agency activities.

EMPLOYMENT AND STATISTICAL PROGRAMS

Employment and Training Administration (ETA)

ETA provides employment assistance, labor market information, and job training through the administration of 

programs authorized by the Workforce Innovation and Opportunity Act (WIOA) for adults, youth, dislocated 

workers, and other targeted populations. Additionally, ETA administers the Job Corps program; Trade Adjustment 

Assistance (TAA) program; Employment Services (ES), authorized under the Wagner-Peyser Act; Foreign Labor 

Certification activities; the Community Service Employment for Older Americans program (CSEOA); and 

Apprenticeship programs. Grants monitoring is a major component of ETA’s grants management function. All ETA 

grants are monitored throughout their period of performance requiring a substantial amount of human capital and 

financial resources.
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FY 2017 Agency Financial Report 11

Percent of Grants Monitored Annually by Regional Offices – Staff in the six ETA Regional Offices monitor grants to 

ensure compliance with federal statutes and regulations and assess performance progress through enhanced desk 

monitoring reviews and on-site monitoring reviews. WIOA underscores the importance of strategic efforts and 

strong communication with our federal partners. ETA is working with its federal partners to ensure technical 

assistance and monitoring activities are coordinated, as appropriate. ETA monitored 27.83% of all active grants 

assigned to the regions in FY 2017, exceeding the target of 26%. This outcome includes all monitoring that resulted 

in a monitoring report, whether on-site or Enhanced Desk Monitoring Review (EDMR).

Looking Forward: As of October 1, 2017, ETA has a total of 2,439 active grants with a total funding portfolio of 

$21.9 billion; 2,085 grants are assigned to 233 regional FTE and 354 grants assigned to approximately 16 FTE in the 

national office. In light of workload demands, ETA will continue to work towards the FY 2018 grant monitoring 

target of 26% in FY 2018.

Veterans’ Employment and Training Service (VETS)

VETS is committed to meeting the employment and training needs of veterans, transitioning service members, and 

eligible spouses - especially those with significant barriers to employment. VETS also focuses on connecting

employers across the country with work-ready veterans. VETS’ mission is to prepare America's veterans, service 

members, and their spouses for meaningful careers, provide them with employment resources and expertise, 

protect their employment rights, and promote their employment opportunities. One focal point on preparing 

America's veterans for meaningful careers is the Homeless Veterans’ Reintegration Program (HVRP). HVRP 

addresses the needs of one of the most vulnerable populations of veterans, those who are homeless or at risk of 

homelessness. HVRP provides employment and training services to homeless veterans, equipping them with the 

skills to gain meaningful employment. VETS has increased the grant ceiling for each HVRP grantee to $500,000 to 

aid them in serving a complex and vulnerable population with barriers to employment. The target population of 

this grant program requires specialized services to include supportive services that are costly. VETS achieved 98% 

of its target with an HVRP participant job placement rate of 67%.

VETS is also responsible for administering the Uniformed Services Employment and Reemployment Rights Act 

(USERRA) program, which protects civilian job rights and benefits for active duty service members, veterans, and 

members of the National Guard and Reserves. USERRA provides anti-discrimination provisions that prohibit 

employers from taking adverse actions against any current or prospective employee, due in part to those 

individuals’ past, present, or future military service, status, or obligations. To provide prompt resolution for both 

claimants and employers, VETS assesses the percent of closed USERRA cases meeting the agency’s quality standard 

and customer satisfaction of USERRA cases. VETS FY 2017 performance exceeded previous year’s performance with 

a result of 99.0%, against a 97.0% target. VETS is currently assessing other agencies’ metrics and quality assessment 

procedures in an effort to consider alternative methods to gauge the quality of USERRA investigations and referrals. 

In FY 2017, VETS worked closely with the Office of the Solicitor and Department of Justice (DOJ) to develop and 

implement a new Memorandum of Referral template that includes sections requiring VETS investigators and 

reviewers to ensure that relevant evidence is obtained to support conclusions reached in the investigations before 

they are referred to DOJ. Additionally, VETS is developing an improved interactive Quality Assurance Review (QAR)

mechanism, which will better reflect actual performance and quality in investigations, as well as ensure proper 

supervisory review of those cases. VETS is no longer including the USERRA timeliness metric in this report as 

VETS has consistently maintained high levels of case closures and is now focusing efforts on continuous 

improvements for quality and efficiency.

Looking Forward: In FY 2018, VETS will continue to measure HVRP success by using the job placement metric in 

conjunction with average hourly wages of those job placements. One key to assisting this population is to provide 

quick job placement into a career path with sustainable wages. VETS will continue to work closely with the Office of 

the Solicitor to explore ways to engage with regional solicitors earlier in the USERRA investigation process to ensure 
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12 United States Department of Labor

issues are being identified and investigated. The revised QAR has undergone a three-month field test in two 

regions, and following Solicitor review VETS anticipates that it will be implemented in early FY 2018.

Veterans' Employment and Training Service (VETS)

Measure FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017

Percent of USERRA Closed Cases Meeting 

the Agency's Quality Standard (Annual) 83.3% 83.4% 91.5% 91.7% 95.5% 99.0%

Office of Disability Employment Policy (ODEP)

ODEP uses data and evidence to promote the adoption and implementation of policy strategies and effective 

practices to increase the number and quality of job opportunities for people with disabilities. Based on research 

and evaluation, ODEP develops or identifies effective policy and practices, conducts outreach to share this critical 

information, and provides technical assistance to all levels of government and employers to aid them in adoption 

and implementation. 

In FY 2017 ODEP monitored “Policy Outputs” as a key performance measure using a revised definition from 

previous years and implemented two new key performance measures, “Implementation Tools” and “Analyses, 

Research and Evaluation.” ODEP issued 43 “Policy Outputs,” against a target of 23, which include documents 

recommending or implementing a significant policy change or an interpretation of existing policy related to 

disability employment. ODEP issued 147 “Implementation Tools,” which are technical assistance and informational 

materials developed to aid entities in adopting and implementing proven practices. 

ODEP has produced a steady stream of policy outputs, capitalizing on interest by states in implementing effective 

practices that prioritize competitive, integrated employment and an increased interest by employers in hiring 

people with disabilities spurred by new regulations. In FY 2017, the majority of ODEP’s resources were invested in 

developing implementation tools and policy guidance, providing technical assistance, and conducting outreach to 

support the implementation of legislations such as the Workforce Innovation and Opportunity Act (WIOA), as well 

as Section 501 and Section 503 of the Rehabilitation Act. ODEP’s implementation tools remain critical to the 

successful adoption and implementation of the referenced legislation and regulations. Additionally, ODEP 

continued working with states to promote the adoption of implementation tools and policies through its State 

Exchange on Employment and Disability initiative.

Looking Forward: In FY 2018, ODEP will research Stay-at Work/Return-to-Work (SAW/RTW) policies and practices 

and begin a project to build evidence for what works in retaining employees or bringing them back to work after a 

temporary absence due to occupational, as well as non-occupational illness and/or injury. ODEP plans to work with 

states that are interested in adopting systemic changes that facilitate retention and return-to-work rates after a 

temporary work disability.

Women’s Bureau (WB)

WB conducts research to formulate practices and policies aimed at increasing equal economic and employment 

opportunity and advancement for working women and their families. WB identifies trends, data gaps, policy and 

programmatic needs, and strategic interventions necessary to safeguard the interest of working women. These 

efforts allow the WB to inform and educate individuals and organizations at the local, state, and national levels 

about the issues facing women in the labor force.

In 2017, WB oversaw a research study, conducted by the Urban Institute, quantifying the economic impact on 

women providing unpaid caregiving for children, elders, and family members with disabilities. Additionally, WB

published a comprehensive catalog of women’s employment rights; updated its web-based map identifying state-
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FY 2017 Agency Financial Report 13

level pregnancy discrimination and accommodation and workplace lactation protections; and updated its online 

compendium of information on federal and state-level equal pay and pay transparency protections for workers. WB 

also developed a brief guide to WIOA for individuals and organizations concerned with women’s economic security. 

The guide details strategies for ensuring that WIOA is a reliable and consistent vehicle for low-income women’s 

access to the education, training, and support services they need to succeed.

Looking Forward: In FY 2018, WB plans to examine how the costs of child care affect women’s labor force 

participation using county-level data. WB will also disseminate research findings on the effects of providing 

informal care on women’s long-range financial security. WB will continue to work with the CEO on its five-year 

evaluation of the American Apprenticeship Initiative, which involves testing an intervention related to outreach to

and recruitment of women into apprenticeship programs. Additionally, WB will collaborate with ETA and VETS to 

support ETA’s grant work on state licensing and promote employment for military spouses.

Bureau of Labor Statistics (BLS)

BLS is the principal federal statistical agency responsible for measuring labor market activity, working conditions, 

and price changes in the economy. Its mission is to collect, analyze, and disseminate some of the nation’s most 

sensitive and important economic data to support public and private decision-making. BLS serves the general 

public, the U.S. Congress, DOL and other federal agencies, state and local governments, and business and labor by 

providing data products that are accurate, objective, relevant, timely, and accessible, as well as technical assistance 

and consulting services. Policies and decisions based on BLS data affect virtually all Americans, and the wide range 

of BLS data products is necessary to fulfill the diverse needs of a broad customer base.

BLS strives to ensure that its data products are readily accessible to its customers through the internet, most 

commonly through www.bls.gov, and meet users’ needs. BLS uses the average number of website page views to 

track the dissemination of its data. In addition, BLS uses the ForeSee Experience Index (FXI), formerly known as the 

E-Government Satisfaction Index (EGSI), to measure customer feedback with its website. The FXI survey prompts 

users for feedback while they are on the www.bls.gov website regarding the extent to which the website meets 

their needs. BLS uses these results to improve the website, to better serve its stakeholders, and to measure mission 

achievement.

In FY 2017, BLS reached 100 percent of the underlying timeliness, accuracy, and relevance targets (each set at 

100%) for all of its Principal Federal Economic Indicators (PFEIs). BLS experienced fewer average website page views 

when compared to FY 2016, averaging approximately 15.5 million page views each month. BLS scored slightly lower 

in the FXI when compared to FY 2016, with a year-end score of 75. 

Looking Forward: BLS will continue to report timeliness, accuracy, and relevance for its PFEIs, track dissemination 

of its website, and measure customer satisfaction with its website. BLS also will continue to evaluate its targets in 

the interest of continuous improvement.
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14 United States Department of Labor

Bureau of Labor Statistics (BLS)

Measure FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017

Percentage of Timeliness Targets Achieved 

for the Principal Federal Economic 

Indicators (PFEIs).

100% 100% 100% 100% 100% 100%

Percentage of Accuracy Targets Achieved 

for the PFEIs. 100% 100% 95% 100% 100% 100%

Percentage of Relevance Targets Achieved 

for the PFEIs. 90% 100% 100% 100% 100% 100%

Average Number of BLS Website Page 

Views Each Month (Dissemination)1 -- -- 17,423,845 16,965,254 16,324,885 15,514,973

Customer Satisfaction with the BLS Website 

Through the ForeSee Experience Index 

(Mission Achievement)2

77 77 77 75 76 75

1 In FY 2015, BLS replaced its dissemination measure due to a change in software. The FY 2014 result is shown for trend comparison purposes.

2 In FY 2017, the E-Government Satisfaction Index (EGSI) was renamed to the ForeSee Experience Index (FXI). FXI Score is calculated on a 100 point scale.

WORKER PROTECTION PROGRAMS

Occupational Safety and Health Administration (OSHA)

OSHA is authorized by the Occupational Safety and Health Act of 1970 (OSH Act) to assure safe and healthful 

conditions for working men and women by setting and enforcing standards and providing training, outreach, 

education, and technical assistance. OSHA aims to reduce the number of work related illnesses, injuries, and 

fatalities and contributes to the broader goal to promote competitiveness of America’s economy. The most recent 

data for key measures of OSHA’s activity – the number of safety and health inspections – are presented in the table 

below.

Safety inspections conducted in general industry and construction take place in a variety of high-hazard industries. 

Health inspections are conducted in general industry and construction and address chemical, biological, physical, 

and ergonomic hazards. 

Preliminary results show there was a slight increase in Safety Inspections to 26,516 in FY 2017. The preliminary 

number for completed Health Inspections is 5,767, which is below the number of previous years’ inspections. OSHA 

continued to allocate significant enforcement resources to respond to employer-reported incidents in accordance 

with OSHA’s severe injury reporting (SIR) requirements. These requirements stem from the Occupational Injury and 

Illness Recording and Reporting Requirements--NAICS Update and Reporting Revisions regulation which took effect 

January 1, 2015. The SIR increased the number of employer-reported referrals, as employers must now report 

hospitalizations of one employee or more and any fatality to the Agency. OSHA addressed these reports through 

either unprogrammed inspections or non-formal rapid response investigations (RRI). This activity reduced the time 

and resources available for previously programmed inspection activity, which prioritized high hazard industries or 

focused emphasis program related inspections. Preliminary data indicates the RRI activity increased unprogrammed 

workload by adding almost 7,700 non-formal investigations for FY 2017. 

OSHA administers the whistleblower protection provisions of Section 11(c) of the OSH Act. Section 11(c) prohibits 

any person from discharging or in any manner retaliating against any employee because the employee has 

exercised rights under the OSH Act. Also, OSHA protects workers from retaliation through 21 other whistleblower 

protection statutes; this includes reported violations of various airline, commercial motor carrier, consumer 
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FY 2017 Agency Financial Report 15

product, environmental, financial, food safety, health care, nuclear, pipeline, public transportation agency, railroad, 

maritime, and securities laws. In FY 2017, according to preliminary data, OSHA completed 3,347 whistleblower 

investigations, exceeding the targeted 2,900 investigations, awarding more than $28 million to complainants 

including 81 reinstatements.

Looking Forward: In FY 2018, OSHA’s effort to promote Safety and Health Programs (SHP) and move employers 

along the path to safety excellence will unite the various programmatic components of the agency in a common, 

proactive, and positive message addressing the agency’s core mission. Companies that adopt a SHP improve both 

their safety culture and safety performance. In addition, OSHA cooperative program participants often reach 

stakeholders that OSHA may not otherwise interact with through dissemination of safety and health information 

locally, within their company, or industry. OSHA will also refine current enforcement strategies and implement new 

programs to target inspection resources to the most egregious employers and serious hazards. 

Occupational Safety and Health Administration (OSHA)

Measure FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017

Number of Safety Inspections 33,580 31,948 29,356 28,903 25,704[r] 26,516[p]

Number of Health Inspections 7,381 7,280 6,818 6,917 6,244[r] 5,767[p]

[r] Indicates revised result from the FY 2016 AFR.

[p] Indicates preliminary result.

Mine Safety and Health Administration (MSHA)

MSHA protects the safety and health of the nation’s miners under the provisions of the Federal Mine Safety and 

Health Act of 1977, as amended by the Mine Improvement and New Emergency Response (MINER) Act of 2006. 

MSHA focuses on the prevention of death, disease, and injury from mining and on promoting safe and healthful 

workplaces for America’s miners.

MSHA is required to conduct four inspections annually at active underground mines and two inspections annually 

at active surface mines. The table below shows the number of inspections conducted by mine type. Fluctuations in 

the number of inspections over time reflect variation in the number of mines operating during any given year. In FY 

2017, MSHA met its target, performing all mandated inspections at coal and metal and nonmetal mines (MNM).

Looking Forward: MSHA will use the following strategies in pursuit of achieving this target: increasing inspection 

and enforcement effectiveness, strengthening and modernizing training and education, strengthening health and 

safety regulations, and increasing efforts to protect miners from discrimination.

Mine Safety and Health Administration (MSHA)

Measure FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017

Number of Regular Mandated MNM 

Underground Inspections 850 857 964 862 905 883

Number of Regular Mandated Coal 

Underground Inspections 2,308 2,068 1,657 1,642 1,342 1,220

Number of Regular Mandated MNM Surface 

Inspections 15,770 15,767 15,289 15,656 15,642 16,073

Number of Regular Mandated Coal Surface 

Inspections 2,809 2,590 2,519 2,350 1,753 2,042
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16 United States Department of Labor

Wage and Hour Division (WHD)

WHD is responsible for administering and enforcing laws that establish the minimum standards for wages and 

working conditions. WHD enforces and administers the minimum wage, overtime and child labor provisions of the 

Fair Labor Standards Act (FLSA); the prevailing wage requirements and wage determination provisions of the Davis 

Bacon Act (DBA) and Related Acts (DBRA), Service Contract Act (SCA), Contract Work Hours and Safety Standards 

Act (CWHSA), Walsh-Healey Act, and Copeland Act; the wages and working conditions under the Migrant and 

Seasonal Agricultural Worker Protection Act (MSPA); the Family and Medical Leave Act (FMLA); and the Employee 

Polygraph Protection Act (EPPA). WHD also enforces the field sanitation and temporary labor camp standards in 

agriculture and certain employment standards and worker protections of the Immigration and Nationality Act (INA). 

Collectively, these labor standards cover most private, state, and local government employment. They protect over 

135 million workers in more than 7.3 million establishments throughout the U.S. and its territories.

WHD prioritizes resources by using an evidence-based, multi-pronged approach to improve compliance including

compliance assistance to employers, investigations in high-violation industries, engagement and education of 

private and public stakeholders, and the use of communications tools. WHD focuses on (1) prioritizing industries 

with the greatest compliance problems, and (2) developing strategies that impact compliance. In FY 2017, WHD 

increased the results for “Percent of Agency-Initiated Investigations,” reaching the highest percentage (51% against 

a 46% target) in recent history. Data show that agency-initiated investigations and the strategic use of enforcement 

resources have achieved positive results for low-wage workers and result in a greater deterrent effect. 

“Percent of Agency-Initiated Investigations in Priority Industries” and “Percent of Complaint Investigations in 

Priority Industries” reflect WHD’s commitment to prioritizing enforcement resources in those industries with the 

most serious violations rather than burdening compliant employers with investigations that do not uncover 

compliance problems. The increased level of agency-initiated investigations, as well as prioritization of complaints, 

has increased the agency’s presence in those priority industries that have a history of violations. WHD’s 

performance has led to significant outcomes. In the last 5 years, WHD has helped more than 1.3 million workers 

and recovered more than $1.2 billion dollars in back wages. In FY 2017 alone, WHD collected over $270 million in 

back wages. WHD enforcement actions in FY 2017 found, on average, more than $1,120 for each employee due 

back wages.

Looking Forward: To protect fair and vigorous competition, WHD addresses compliance issues systemically and 

prevents violations through compliance assistance to reach a broader audience. The combination of compliance 

assistance and enforcement increases compliance with the laws. Moving forward, WHD is focused on the challenge 

of advancing effective enforcement while identifying areas for increased efficiency. To ensure a level playing field 

for all employers, WHD will conduct its business smarter and more effectively by assessing existing evidence and 

generating new knowledge to achieve agency goals. Compliance assistance to the employer community is a central 

component of WHD’s efforts to meet its mission and the demand for accessible information about the laws WHD 

enforces remains high. WHD will expand on efforts to modernize compliance assistance information and reach and 

inform a broader audience. 

Office of Federal Contract Compliance Programs (OFCCP)

OFCCP ensures that nearly 200,000 Federal contractor establishments provide equal employment opportunity 

leading to a fair and diverse workplace. OFCCP administers and enforces three legal authorities: Executive Order 

11246, as amended; Section 503 of the Rehabilitation Act of 1973, as amended; and the Vietnam Era Veterans’ 

Readjustment Assistance Act (VEVRAA) of 1974, as amended. Together, these legal authorities prohibit 

discrimination and require Federal contractors and subcontractors to take affirmative action to ensure that all 

individuals have an equal opportunity for employment, without regard to race, color, religion, sex, sexual 

orientation, gender identity, national origin, disability, or status as a protected veteran. Additionally, federal 

contractors and subcontractors are prohibited from, under certain circumstances, taking adverse employment 
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FY 2017 Agency Financial Report 17

actions against applicants and employees for asking about, discussing, or sharing information about their pay or the 

pay of their co-workers.

OFCCP’s compliance evaluations and complaint investigations play a critical role in assessing Federal contractor 

compliance with legal obligations under these authorities. Since 2009, OFCCP has refocused its efforts almost 

exclusively from systemic hiring discrimination on the basis of sex or race in low-wage jobs to systemic 

compensation discrimination to ensure workers also receive equal pay without discrimination. This includes 

placement into lower paying jobs due to gender stereotyping. To accomplish this, OFCCP gradually reduced its case 

production to focus on fewer, but more complex high quality cases that span a wide variety of industries and job 

occupations. OFCCP also invested in training front-line compliance officers and managers to carry out this mission. 

With this strategy, OFCCP closed 1,142 compliance evaluations in FY 2017 that included $23.9 million in financial 

remedies for 11,653 victims of discrimination (e.g., hiring, pay, promotion, etc.). Also in FY 2017, OFCCP completed 

79% of construction evaluations from high-impact construction projects that have a significant employment and 

economic impact on communities across the country. Moreover, 93% of the agency’s compliance evaluations were 

free of major deficiencies that could otherwise impact the ability to identify discrimination or failure to engage in 

affirmative action. This is against a 95% target.

Looking Forward: In FY 2018, OFCCP will rebalance the agency’s mix of scheduling and conducting compliance 

evaluations, and delivering compliance assistance. This is essential to OFCCP’s long-term success as a civil rights 

agency. OFCCP will explore new ways and launch new initiatives to encourage all contractors to voluntarily meet 

their mandatory compliance obligations. In addition, OFCCP will seek to implement a scheduling process for 

compliance evaluations that focuses on industries or sectors that have a greater likelihood of having compliance 

issues. And, when compliance evaluations are conducted, they will be efficient and thorough, and appropriately 

transparent. 

Bureau of International Labor Affairs (ILAB)

When other countries fail to enforce their labor laws or abide by other trade-related labor commitments, or allow 

exported goods to be produced through child labor, forced labor, or in other exploitative labor conditions, business 

in those countries receive an unfair subsidy that can undermine the competitiveness of goods made in the United 

States. ILAB pursues a comprehensive strategy to promote a level global playing field for American workers and 

businesses by improving labor conditions around the world. ILAB seeks to make trade fair for U.S. workers and 

businesses; combat abusive child labor, forced labor, and human trafficking; and improve global labor standards. 

ILAB’s goal is to support quality job creation in the United States by ensuring U.S. trade agreements and preference 

programs are fair for American workers; combating international child labor, forced labor, and human trafficking; 

and improving global working conditions. ILAB has four main cross-cutting strategies for achieving this goal: (1) 

monitoring, evaluating, and publicly reporting on countries’ compliance with international labor standards and 

related trade commitments, including international labor standards; (2) developing, advocating for, and negotiating 

policy positions that advance U.S. interests both domestically (e.g., in U.S. government interagency groups) and 

internationally (e.g., in the G20, International Labor Organization, Organization for Economic Cooperation and 

Development, and United Nations); (3) undertaking technical assistance and cooperative activities to strengthen 

implementation of international labor standards and reduce the exploitation of vulnerable workers and children in 

key countries, including evaluating technical assistance and cooperative activities to provide lessons learned and 

best practices to the Department of Labor and the international community; and (4) conducting and disseminating 

research on various international labor, trade, and economic issues and conditions.

Looking Forward: In FY 2018, ILAB will pursue a multifaceted strategy to promote workers’ rights and strengthen 

cooperation and collaboration with key countries and international organizations. ILAB will also continue to ensure 

trade partners comply with their commitments and continue to strengthen labor law enforcement so that U.S. 
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18 United States Department of Labor

workers are not placed at a competitive disadvantage. ILAB engages in a variety of negotiating, monitoring, 

enforcing, reporting and research activities with partners and stakeholders in key countries. 

Office of Labor‐Management Standards (OLMS)

OLMS protects the rights of American workers by administering the Labor-Management Reporting and Disclosure 

Act (LMRDA) and related laws, which safeguard union democracy and financial integrity, and promote financial 

transparency. 

OLMS focuses audit resources by using advanced targeting techniques to identify the labor unions most likely to be 

subject to a violation of the law. The success of audit targeting strategies is measured by Percent of Targeted Audits 

that Result in a Criminal Case (Fallout Rate). Since the implementation of this performance measure, OLMS has 

increased the fallout rate from 13.8% to 18.75% between FY 2012 and FY 2017. Timely resolution of union election 

complaints is a paramount goal of the LMRDA, and OLMS gauges its progress against this goal through the “Average 

Number of Days to Resolve Union Officer Election Complaints” measure. From FY 2012 to FY 2017, OLMS has 

reduced the average number of days per case from the target and previous year’s outcome of 71 days to 64.7 days.

OLMS is also making it easier for unions, employers, and consultants to file the financial and activity reports 

required under the LMRDA, and tracks the success of these efforts through the “Percent of Disclosure Reports Filed 

Electronically” measure. OLMS continues to use existing outreach tools (e.g., seminars, compliance assistance 

incidental to an audit, and its Voluntary Compliance Partnership program (VCP) to introduce web-based forms and 

encourage union leaders and other filers to use them.

Looking Forward: For the fallout measure, OLMS will continue to refine the targeting techniques to continue 

saving resources directed at audits and redirecting these saved resources to high priority programs. OLMS 

continues to enhance efforts to coordinate work between the National Office, SOL, and field staff by identifying 

new means of communications and extending existing channels to more efficiently process election cases. In the 

past, these efforts have expedited processing and OLMS believes the number of elapsed days can be further 

reduced. In FY 2016, OLMS published a regulation that will require filers of LM-3 and LM-4 reports to do so 

electronically. Once fully implemented in FY 2019, over 80 percent of reports will be required to be filed 

electronically and electronic filing will be available for 85 percent of the full volume of reports expected to be filed. 

COMPENSATION AND BENEFITS PROGRAMS

Office of Workers’ Compensation Programs (OWCP)

OWCP provides workers’ compensation benefits through four programs: the Federal Employees' Compensation Act 

(FECA) Program provides wage-loss compensation, payment for medical treatment, and return-to-work assistance 

for federal employees who are injured or ill on the job; the Longshore and Harbor Workers' Compensation Act 

(Longshore) Program oversees the delivery of benefits by private sector employers and insurance carriers to injured 

workers in certain maritime and related employment, and to federal government contractors working overseas; the 

Black Lung Benefits Act (Black Lung) Program oversees or provides compensation and medical benefits to coal 

miners who are totally disabled due to pneumoconiosis; and the Energy Employees Occupational Illness 

Compensation Program Act (Energy Program) provides compensation and medical benefits to employees or 

survivors of employees of the Department of Energy (DOE) and contractors or subcontractors of DOE, who worked 

on the nuclear weapons program and became ill due to exposure to radiation or toxic substances.

The FECA program provides disability management intervention and rehabilitative and placement services to assist 

with injury recovery and to facilitate the return-to-work of the individuals who sustained an injury or illness. There 

was an unfavorable decline in re-employed injured workers due, in part, to the expiration of the Presidential 
Program Performance Overview

(Unaudited)

FY 2017 Agency Financial Report 19

Memorandum that established the POWER Initiative. This resulted in less focus on return-to-work efforts by federal 

agencies.

A major aspect of the Longshore program focuses on ensuring that employer injury reports and first payment of 

benefits are timely. The percentage of first payments of compensation issued for non-Defense Base Act cases 

within 30 days from the date disability begins has increased from 85 percent in FY 2012 to 88 percent in FY 2017, 

which exceeded the 86% target.

The Black Lung program experienced a significant increase in the number of claims filed in FY 2010, another surge in 

FY 2014, and claims volumes remained high through FY 2017. As incoming claims continued to climb, staffing 

remained level and the pending claims continued to age. The Black Lung program focused on processing older 

pending claims in FY 2016 and FY 2017, so the average time to process a Black Lung claim rose from 273 days in FY 

2015 to 334 days in FY 2016 and 332 days in FY 2017. In FY 2017, the program issued 7,072 Proposed Decisions and 

Orders, a record high since FY 2006. The Black Lung program also continued to pursue quality initiatives for issuing 

accurate decisions.

The Energy program works closely with DOE, the Department of Justice, the Social Security Administration, and the 

National Institute for Occupational Safety and Health (NIOSH) to issue claim decisions. The average number of days 

between filing date and final decision for cases not sent to NIOSH when a hearing was not held was reduced from 

177 days in FY 2012 to 169 days in FY 2017 (exceeding the FY 2017 target of 170 days); this measure accounts for 

approximately 70 percent of all claims. 

Looking Forward: In FY 2018, OWCP will continue development of the OWCP Workers’ Compensation System 

(OWCS), an integrated claims processing and management system for all four programs. OWCP expects the 

Longshore program to begin using OWCS by the end of 2018. OWCP will continue to use data analytics and process 

improvement strategies to manage the pending Black Lung claims, improve stakeholder partnerships and data 

sharing, and recruit and train credentialed physicians available for diagnostic examinations.

Federal-State Unemployment Insurance (UI) Program (administered by ETA)

The Federal-State UI Program, authorized under the Federal Unemployment Tax Act and Title III of the Social 

Security Act, provides temporary, partial wage replacement for eligible unemployed workers, providing them with 

income support when suitable work is unavailable. To qualify for benefits, unemployed workers must meet 

eligibility requirements established by state laws that conform to federal law, including that they have worked 

recently, are involuntarily unemployed, are able and available for work, and are actively seeking work. The “Total 

Unemployment Rate” of 4.2% in FY 2017 is calculated using Bureau of Labor Statistics data. It is the sum of the (not 

seasonally adjusted) unemployment level for October through September divided by the sum of the (not seasonally 

adjusted) labor force level for October through September. 

One of the key measures for this program, “First Payment Timeliness” (Percent of All Intrastate First Payments 

Made within 21 Days after the Last Day of the First Compensable Week) has a preliminary FY 2017 result of 84.4%. 

The FY 2017 result is an improvement over previous year’s results and ETA will continue efforts to increase 

timeliness.

In FY 2017, using the states’ performance on the first payment timeliness core measure data, ETA worked with all 

states failing to meet the performance standard by requiring corrective action plans to achieve first payment 

timeliness in their State Quality Service Plans. In addition, using the new methodology for designating “High 

Priority” states, ETA selected three states with the poorest overall performance to provide them intensive technical 

assistance in FY 2018 and increased monitoring to support performance improvement. Please refer to UI Program 

Letter No. 17-16 for details on the selection criteria for these “High Priority” states: 

https://wdr.doleta.gov/directives/attach/UIPL/UIPL_17-16.pdf.
Management’s Discussion and Analysis

(Unaudited)

20 United States Department of Labor

Looking Forward: In FY 2018, ETA UI staff will work with “High Priority” states to develop comprehensive Corrective 

Action Plans (CAPs) designed to improve performance. Examples of ETA’s customized technical assistance strategies 

to support performance improvement for the poor performing states include:

• Work collaboratively with the state(s) to conduct enhanced analysis of all relevant data (including 

performance data) to inform strategic approaches to performance improvement. The data analysis may 

also involve examining data in similarly situated states.

• Deploy a team of experts composed of ETA and state subject matter experts, to conduct a thorough review 

of each High Priority state’s administrative and business processes relevant to the poor performance using 

business process analysis and process mapping tools, resulting in recommendations and an action plan the 

state will implement.

• Engage high-level state officials to bring focus to the egregious performance and promote prioritizing state 

resources to support performance improvement.

• Conduct enhanced monitoring and follow-up that may include additional reporting by the state in area of 

performance deficiency and on-site visits by ETA or partnering with state staff to assess process changes.

In FY 2018, ETA launches the new UI benefits operations state self-assessment process which will aid states in 

identifying and addressing operational issues impacting performance. The new process involves a comprehensive 

review of 15 functional and program areas within UI benefits operations.

ETA, in collaboration with the National Association of State Workforce Agencies’ Information Technology Support 

Center (ITSC), continues to diligently work with individual states and state consortia to provide appropriate 

technical assistance in support of their information technology modernization efforts. Pending availability of 

funding in future years, ETA will continue to support the states’ system modernization efforts. 

Employment and Training Administration  Unemployment Insuranc

Measure FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017

Total Unemployment Rate 9.2% 6.7% 5.5% 4.8% 4.5% 4.2%

First Payment Timeliness (Unemployment 

Insurance) 82.6%[r] 80.6%[r] 79.3%[r] 83.3%[r] 84.1% 84.4%[p]

[r] Indicates revised result from the FY 2016 AFR.

[p] Indicates preliminary result.

Employee Benefits Security Administration (EBSA)

EBSA is charged with protecting more than 149 million workers, retirees and their families who are covered by 

nearly 685,000 private retirement plans, 2.2 million health plans, and similar numbers of other welfare benefit 

plans. Together, these plans hold estimated assets of $9.6 trillion. EBSA’s proactive enforcement, outreach and 

education programs protect the most vulnerable populations while ensuring broad compliance with the Employee 

Retirement Income Security Act of 1974 (ERISA) and related laws. EBSA assists plan fiduciaries and others in 

understanding their obligations under ERISA by providing interpretive guidance and making related materials 

available through its website and publications, training programs, and more. EBSA is also committed to helping 

workers and retirees understand their benefits and receive the benefits they have earned. The primary objectives 

of EBSA’s enforcement program are to improve ERISA compliance by recovering losses and unjust profits stemming 

from misconduct by plan fiduciaries and service providers and to increase the deterrent impact of the agency’s 

enforcement efforts on employee benefit plans, participants and beneficiaries. 

EBSA’s enforcement program, within the context of its integrated approach to compliance assistance, seeks to 

detect and correct violations that result in monetary recoveries for employee benefit plans, participants and 
Program Performance Overview

(Unaudited)

FY 2017 Agency Financial Report 21

beneficiaries or in other corrective remedies including, but not limited to, significant broad-based reforms for large 

plans or common service providers. In FY 2014, EBSA developed measures designed to increase the effectiveness of 

its enforcement program while avoiding reliance on raw case numbers. As a result, EBSA replaced its cases closed 

measures in FY 2015 with three measures that track investigation timeliness. EBSA’s FY 2017 results met or 

exceeded results from FY 2015 and FY 2016, as well as FY 2017 targets, for these measures. Both civil and criminal 

investigations exhibited greater efficiencies than expected. EBSA focused its FY 2017 enforcement resources on 

National Enforcement Projects and the Major Case Enforcement Priority. The Major Case Enforcement Priority 

concentrates a significant portion of the agency’s enforcement resources on those cases likely to have the greatest 

impact on the protection of plan assets and participants’ benefits.

Looking Forward: In FY 2018, EBSA will continue to assist individuals in understanding their rights and 

responsibilities under ERISA. In particular, the agency’s participant assistance and outreach and education programs 

will focus on disseminating information related to health and retirement benefit protections and retirement savings 

education. EBSA will also continue to implement performance measurement changes designed to increase the 

effectiveness of its enforcement program. The following overlapping and related attributes will be emphasized: 

effective targeting, prompt detection and pursuit of violations; the successful pursuit of monetary recoveries; nonmonetary results that promote compliance with ERISA; and the aggressive and timely pursuit of participant tips and 

complaints.
(Unaudited)

22 United States Department of Labor

Financial Performance Overview

Sound financial management is an integral part of the Department's efforts to deliver services and administer 

programs. With the Department's emphasis on internal controls, accurate financial information delivery to key 

decision makers, and transparent and accountable reporting, the Department's stakeholders can be confident that 

resources are used efficiently and effectively.

DOL implemented the FY 2016 requirements of OMB Circular A-123, Management’s Responsibility for Enterprise 

Risk Management and Internal Control (revised July 15, 2016), and the Government Accountability Office’s (GAO’s) 

Standards for Internal Control in the Federal Government (revised September 2014). DOL's internal control program 

and centralized processes for reporting financial data help to ensure the relevance and reliability of financial 

performance data. DOL's comprehensive internal control program has the objective of providing, on a continuing 

basis, reasonable assurance that all financial, non-financial, performance, statistical records, and related reports are 

reliable. DOL's internal control program helps ensure that appropriate internal controls are in place for financial 

performance management and that agencies institute sound, effective internal control policies and procedures for 

financial performance measurement and regular evaluation of their processes. Financial performance is evaluated 

during comprehensive ongoing financial management reviews and corrective actions are implemented as required 

to resolve audit findings and increase efficiency. These business processes help to ensure that reported financial 

performance information is relevant and reliable.

In FY 2017 and FY 2016, DOL used managerial cost accounting for costing programs and performance indicator 

results in accordance with the Federal Accounting Standards Advisory Board’s (FASAB) Statement of Federal 

Financial Accounting Standards (SFFAS) No. 4, Managerial Cost Accounting Standards and Concepts, as amended by 

SFFAS No. 30, Inter-Entity Cost Implementation. The statements outline the standards for Federal entities to 

provide “reliable and timely information on the full cost of Federal programs, their activities, and outputs.” This 

information can be used to allocate resources and evaluate program performance. Managerial cost accounting 

directly supports the sections of the AFR that address Net Program Cost in the Statements of Net Cost. Total Net 

Cost of DOL activities was $49.7 billion for FY 2017 and $48.7 billion for FY 2016.

Analysis of Financial Statements and Stewardship Information

The principal financial statements summarize the Department's financial position, net cost of operations, and 

changes in net position, and provide information on budgetary resources and social insurance.
Financial Performance Overview 

(Unaudited)

FY 2017 Agency Financial Report 23

Figure 1: Summary of Selected Financial Data for FY 2017 and FY 2016

(Dollars in billions) 2017 2016 Amount Percent

Financial position

Total assets $ 82.3 $ 75.3 $ 7.0 9.3%

 Funds with U.S. Treasury 12.1 12.0 0.1 0.8%

Investments 61.1 54.1 7.0 12.9%

Total liabilities $ 33.4 $ 34.8 $ (1.4) (4.0)%

Debt 8.4 14.3 (5.9) (41.3)%

Future workers' 2.6 1.9 0.7 36.8%

 Compensation benefits

Energy employees 19.7 15.4 4.3 27.9%

 occupational illness

 compensation benefits

Net cost of operations

Net cost of operations $ 49.7 $ 48.7 $ 1.0 2.1%

Income maintenance 41.0 39.8 1.2 3.0%

Employment and training 6.1 6.3 (0.2) (3.2)%

Budgetary resources

Appropriations (discretionary $ 45.3 $ 47.6 $ (2.3) (4.8)%

 and mandatory)

Agency outlays, net 44.8 46.5 (1.7) (3.7)%

 (discretionary and mandatory)

Summary of Selected Financial Data

Change

Financial Position

The Department's Balance Sheet presents DOL’s financial position through the identification of agency assets, 

liabilities, and net position, as shown below. The Department's total assets increased from $75.3 billion at the end 

of FY 2016 to $82.3 billion at the end of FY 2017, an increase of 9.3%, primarily due to an increase in investments.

Investments increased primarily due to net inflows in the Unemployment Trust Fund (UTF) in excess of immediate 

program needs for benefit payments and administrative costs. (See Figure 2 on next page for reported Assets by 

Type for FY 2017 and FY 2016.) 
Management’s Discussion and Analysis

(Unaudited)

24 United States Department of Labor

Figure 2: Assets by Type for FY 2017 and FY 2016

Liabilities decreased from $34.8 billion at the end of FY 2016 to $33.4 billion at the end of FY 2017, a decrease of 

$1.4 billion [(4.0)%]. This decrease was due to a combination of factors, including a decrease in intra-governmental 

debt of $5.9 billion [(41.3)%], offset by an increase in future workers’ compensation benefits of $0.7 billion [36.8%] 

and an increase in Energy employees occupational illness compensation benefits of $4.3 billion [27.9%]. The 

decrease in intragovernmental debt was due to Unemployment Trust Fund (UTF) repayments of borrowings from 

the General Fund of the Treasury as tax collections by the states exceeded the requirements of benefits payments. 

The increase in future workers’ compensation benefits was primarily due to the increase in projected benefits 

under the War Hazards Compensation Act. The increase in the Energy employees occupational illness 

compensation benefits was primarily due to the increase in medical inflation assumptions.

Figure 3: Liabilities by Type for FY 2017 and FY 2016

* OIC = Occupational Illness Compensation.
Financial Performance Overview 

(Unaudited)

FY 2017 Agency Financial Report 25

Net Cost of Operations 

The Department's net cost of operations for the year ended September 30, 2017, was $49.7 billion, an increase of 

$1.0 billion [2.1%] from FY 2016. This increase was attributable to the increases in program costs discussed below:

Figure 4: Net Cost of Operations by Program for FY 2017 and FY 2016

1 The Department’s Net Cost of Programs include costs not assigned to specific programs, which were $0.02 billion and 

$0.02 billion for FY 2017 and FY 2016, respectively.

**Represents Labor, Employment, and Pension Standards. 

Income Maintenance programs continue to comprise the major portion of departmental costs. These programs 

include unemployment benefits paid to covered individuals who are out of work and seeking employment, as well 

as payments to individuals who qualify for disability benefits due to injury or illness suffered on the job, and the 

costs to administer these programs. Income maintenance net costs were $41.0 billion in FY 2017, an increase of 

3.0% from FY 2016. This increase was primarily due to costs for increases in projected benefits under the workers’ 

compensation program (for War Hazards Compensation Act) and Energy employees occupational illness 

compensation program, offset by decreases in costs for unemployment insurance benefits.

Employment and Training programs comprise DOL’s second largest cost. These programs are designed to help 

individuals deal with the loss of a job, identify new occupational opportunities, find training to acquire different 

skills, start a new job, and make long-term career plans, as well as connect employers to workers with the skills 

they need. Employment and training costs were $6.1 billion in FY 2017, a decrease of 3.2% from FY 2016. 

Budgetary Resources

The Statements of Budgetary Resources report the budgetary resources available to DOL to effectively carry out the 

activities of the Department during FY 2017 and FY 2016, as well as the status of these resources at the end of each 

fiscal year. During FY 2017, total budgetary resources decreased $2.2 billion or (3.7)% from $58.8 billion to $56.6 

billion, primarily due to the decrease in appropriations of $2.3 billion or (4.8)%. Agency outlays, net decreased by 

$1.7 billion or 3.7% primarily due to lower outlays, gross as a result of lower outlays for unemployment benefits.
Management’s Discussion and Analysis

(Unaudited)

26 United States Department of Labor

Social Insurance and the Black Lung Disability Benefit Program

FASAB has classified the Black Lung Disability Benefit Program as a social insurance program that is required to 

report a Statement of Social Insurance (SOSI) and a Statement of Changes in Social Insurance Amounts (SCSIA) for 

the Black Lung Disability Trust Fund (BLDTF); these are sustainability statements.

The SOSI reports for the projection period (which begins on the September 30 valuation date of the reporting year) 

for current and new participants (the open group), the open group measure, which is the present value of 

estimated future coal excise tax income, less the present value of estimated future administrative costs and the 

actuarial present value of future benefit payments. For the SOSI as of September 30, 2013, 2014, 2015, and 2016, 

the projection period had a fixed terminus of September 30, 2040. In FY 2017, DOL revised the projection period 

from the fixed terminus to a rolling 25-year projection period that begins on the September 30 valuation date; the 

revised projection period became effective for the September 30, 2017 valuation date and the rolling 25-year 

projection period ends September 30, 2042.

For the five years presented in the SOSI, the open group measure has decreased significantly from $4.6 billion as of 

September 30, 2013 to $31.0 million as of September 30, 2017. The decrease in the open group measure is 

primarily due to the decrease in the present value of estimated future coal excise tax income, which depends on,

among other things, the business and regulatory environment of the coal industry. Assumptions that, among other 

things, lead to favorable conditions for energy sources that compete with coal will reduce coal’s market share; 

lower demand for coal will lead to lower collections of excise taxes.

Figure 5: Black Lung Disability Benefit Program  Table of Key Measures for FY 2017 and FY 201

(Dollars in millions) 2017 2016 Amount Percent 

 Total assets $ 144.7 $ 108.8 $ 35.9 33.0% 

 Less: total liabilities (5,755.4) (5,713.2) (42.2) 0.7% 

 Net position (assets net of liabilities) $ (5,610.7) $ (5,604.4) $ (6.3) 0.1% 

 Net cost of operations $ (370.6) $ (339.5) $ (31.1) 9.2% 

 Total financing sources 364.4 379.3 (14.9) (3.9)%

 Net change of cumulative results of operations $ (6.2) $ 39.8 $ (46.0) (115.6)%

 Open group measure, beginning of year $ 890.0 $ 1,596.7 $ (706.7) (44.3)%

 Open group measure, end of year $ 31.0 $ 890.0 $ (859.0) (96.5)%

Social insurance

Black Lung Disability Benefit Program – Table of Key Measures

 Change 

Financial position 

Costs and changes in net position

The increase in the total assets of $35.9 million [33.0%] was due to a higher Funds with Treasury balance as of 

September 30, 2017. The increase in the net cost of operations for the year ended September 30, 2017 of $(31.1) 

million [9.2%] from FY 2016 was primarily due to an increase in benefit payments to claimants. FY 2017 total 

financing sources decreased $(14.9) million [(3.9)%] from FY 2016 mainly due to a decrease in tax collections. The 

resulting net change of cumulative results of operations for FY 2017 was $(6.2) million, a decrease of $(46.0) million 

[(115.6)%] from FY 2016.
Financial Performance Overview 

(Unaudited)

FY 2017 Agency Financial Report 27

Liabilities increased $42.2 million [0.7%] at the end of FY 2017 due to an increase in debt. The increase in debt is 

important because it demonstrates that although the BLDTF repaid debt of $1.3 billion, the debt balance increased 

due to additional borrowing of $1.285 billion and accrued interest of $55.7 million as of September 30, 2017.

In FY 2017, the open group measure decreased by $(859.0) million primarily due to projected lower coal excise tax 

revenues and projected higher costs of beneficiaries as a result of, among other things, projected higher costs for 

new participants. In FY 2016, the open group measure decreased by $(706.7) million primarily due to projected 

lower coal excise tax revenues and higher administrative costs, offset in part due to the change in interest rates 

used to discount the cash flows from 2.25% in FY 2015 to 1.63% in FY 2016.

The total of open group measure plus fund assets as of September 30, 2017 represents a projected net positive 

cash flow that may be used to liquidate the liabilities of the BLDTF. As of September 30, 2017, the open group 

measure plus fund assets is $175.7 million whereas the BLDTF debt and interest maturing on September 30, 2018 is 

$1.86 billion and the carrying value of all BDLTF debt as of September 30, 2017 is $5.74 billion. The excess of BLDTF 

debt over the open group measure plus fund assets together with the fund deficit of $(5.61) billion represent a 

material concentration of risk for the Department.

Refer to Notes 1-W, 1-Y, and 21, and Required Supplementary Information (RSI) for additional information on the 

SOSI, including the summary section; SCSIA; the Black Lung Disability Benefit Program; its reported activity and 

balances; and projections and sensitivity analysis in constant dollars through 2042.

Limitations on the Principal Financial Statements

As required by the Government Management Reform Act of 1994 (31 U.S.C. 3515(b)), the principal financial 

statements report the Department's financial position and results of operations. While the statements have been 

prepared from the Department's books and records in accordance with U.S. Generally Accepted Accounting 

Principles (GAAP) for Federal entities and the formats prescribed by OMB, the statements are in addition to the 

financial reports used to monitor and control budgetary resources, which are prepared from the same books and 

records. The statements should be read with the realization that they are a component of the U.S. Government, a 

sovereign entity, and that liabilities reported in the financial statements cannot be liquidated without legislation 

providing resources to do so.

Financial Management Systems and Strategy

The Department maintains and enhances financial management systems, processes, and controls that ensure 

financial accountability, transparency, and provides information to DOL’s decision makers that complies with 

Federal laws, regulations, and policy. As part of these responsibilities, the Department maintains New Core 

Financial Management System (NCFMS), the system of record for the Department’s financial activities.

In FY 2017, the Department worked with the Unified Shared Services Management (USSM) office, under the U.S. 

General Services Administration (GSA), using the Modernization and Migration Management (M3) framework, to 

plan for the migration of NCFMS to a Federal Shared Services Provider (FSSP). The M3 framework is the successor 

to the Treasury Office of Financial Innovation and Transformation (OFIT) Federal Agency Migration Evaluation 

(FAME) process. The Department completed the first two phases of the M3 framework to USSM’s satisfaction but 

as a result of a change in direction by USSM, further efforts to convert to a FSSP were postponed. 

In FY 2018, NCFMS will continue to be used to support DOL's finance and accounting activities. The Department will 

work with the USSM office on implementing a government-wide Software as a Service (SaaS) solution for financial 

management.
(Unaudited)

28 United States Department of Labor

Management Assurances 
FY 2017 Agency Financial Report 29

Financial Section

KPMG LLP is a Delaware limited liability partnership and the U.S. member

firm of the KPMG network of independent member firms affiliated with 

KPMG International Cooperative (“KPMG International”), a Swiss entity. 

KPMG LLP

Suite 12000

1801 K Street, NW

Washington, DC 20006

Independent Auditors’ Report

FY 2017 Agency Financial Report 31

Independent Auditors’ Report

Secretary and Inspector General 

U.S. Department of Labor 

Report on the Financial Statements 

The accompanying financial statements of the U.S. Department of Labor (DOL) comprise the consolidated 

financial statements and the sustainability financial statements. We have audited the consolidated 

financial statements, which comprise the consolidated balance sheets as of September 30, 2017 and 2016, 

and the related consolidated statements of net cost, and changes in net position, and combined 

statements of budgetary resources for the years then ended, and the related notes to the consolidated 

financial statements. 

We have audited the 2017 sustainability financial statements, which comprise the statements of social 

insurance as of September 30, 2017, 2015, 2014, and 2013; and the related notes to the 2017

sustainability financial statements. 

Further, we were engaged to audit the 2016 sustainability financial statements, which comprise the 

statement of social insurance as of September 30, 2016, the statement of changes in social insurance 

amounts for the year ended 2016, and the related notes to the 2016 sustainability financial statements. 

We were also engaged to audit the statement of changes in social insurance amounts for the year ended 

September 30, 2017 and the related notes to this financial statement. 

Management’s Responsibility for the Financial Statements 

Management is responsible for the preparation and fair presentation of these financial statements in 

accordance with U.S. generally accepted accounting principles; this includes the design, implementation, 

and maintenance of internal control relevant to the preparation and fair presentation of financial 

statements that are free from material misstatement, whether due to fraud or error. 

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We 

conducted our audits of the consolidated financial statements and the 2017 sustainability financial 

statements in accordance with auditing standards generally accepted in the United States of America, in 

accordance with the standards applicable to financial audits contained in Government Auditing Standards

issued by the Comptroller General of the United States, and in accordance with Office of Management 
Financial Section 

32 United States Department of Labor 

and Budget (OMB) Bulletin No. 17-03, Audit Requirements for Federal Financial Statements. Those 

standards and OMB Bulletin No. 17-03 require that we plan and perform the audit to obtain reasonable 

assurance about whether the consolidated financial statements and the 2017 sustainability financial 

statements are free from material misstatement. 

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in 

the financial statements. The procedures selected depend on the auditors’ judgment, including the 

assessment of the risks of material misstatement of the financial statements, whether due to fraud or 

error. In making those risk assessments, the auditor considers internal control relevant to the entity’s 

preparation and fair presentation of the financial statements in order to design audit procedures that are 

appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness 

of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating 

the appropriateness of accounting policies used and the reasonableness of significant accounting 

estimates made by management, as well as evaluating the overall presentation of the financial 

statements. 

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for 

our audit opinions on the consolidated financial statements and the 2017 sustainability financial 

statements. 

Because of the matter described in the Basis for Disclaimer of Opinion paragraph, however, we were not 

able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on the 2016 

sustainability financial statements or the statement of changes in social insurance amounts for the year 

ended September 30, 2017. 

Basis for Disclaimer of Opinion on the 2016 Sustainability Financial Statements and the Statement of 

Changes in Social Insurance Amounts for the Year Ended September 30, 2017 

As described in Note 1.W.2, DOL refined its methodology for estimating future excise tax income in fiscal 

year 2016. DOL was unable to provide sufficient analyses or other documentation to evidence that its 

methodology and certain underlying assumptions used in the determination of the present value of 

estimated future excise tax income for the current and new participants and related balances in the 

accompanying 2016 sustainability financial statements were prepared and fairly presented in accordance

with U.S. generally accepted accounting principles. Therefore, we were unable to obtain sufficient, 

appropriate audit evidence for the present value of estimated future excise tax income for the current 

and new participants and related balances. 

Because the present value of estimated future excise tax income for current and new participants as of 

September 30, 2016 enters into the determination of the changes in social insurance amounts, we were 

unable to determine whether any adjustment might have been necessary in respect to the changes in 

assumptions about excise tax revenues and the changes in assumptions about interest rates amounts 

reported in the statement of changes in social insurance amounts for the year ended September 30, 2017. 
Independent Auditors’ Report

FY 2017 Agency Financial Report 33

Disclaimer of Opinion on the 2016 Sustainability Financial Statements and the Statement of Changes in 

Social Insurance Amounts for the Year Ended September 30, 2017 

Because of the significance of the matter described in the Basis for Disclaimer of Opinion paragraph, we 

have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion 

on the U.S. Department of Labor’s social insurance information as of September 30, 2016 and its changes 

in social insurance amounts for the years ended September 30, 2017 and 2016. Accordingly, we do not 

express an opinion on the sustainability financial statements as of and for the year ended September 30, 

2016 and the statement of changes in social insurance amounts for the year ended September 30, 2017. 

Opinions on the Financial Statements 

In our opinion, the consolidated financial statements referred to above present fairly, in all material 

respects, the financial position of the U.S. Department of Labor as of September 30, 2017 and 2016, and 

its net costs, changes in net position, and budgetary resources for the years then ended in accordance 

with U.S. generally accepted accounting principles. 

Also, in our opinion, the 2017 sustainability financial statements referred to above present fairly, in all 

material respects, the U.S. Department of Labor’s social insurance information as of September 30, 2017, 

2015, 2014, and 2013, in accordance with U.S. generally accepted accounting principles. 

Emphasis of a Matter 

As discussed in Notes 1-W and 1-Y to the financial statements, the sustainability financial statements are 

based on management’s assumptions. These sustainability financial statements present the actuarial 

present value of DOL’s future expenditures to be paid to or on behalf of participants, the present value of 

estimated future income to be received from excise taxes, and the present value of estimated future 

expenditures for administrative costs during the projection period. The sustainability financial statements 

are intended to aid users in assessing whether future resources will likely be sufficient to sustain public 

services and to meet obligation as they come due. The statements of social insurance and changes in 

social insurance amounts are based on income and benefit formulas in current law and assume that 

scheduled benefits will continue after the related trust fund is exhausted. The sustainability financial 

statements are not forecasts or predictions. The sustainability financial statements are not intended to 

imply that current policy or law is sustainable. In preparing the sustainability financial statements, 

management considers and selects assumptions and data that it believes provide a reasonable basis to 

illustrate whether current law or policy is sustainable. Assumptions underlying such sustainability 

information do not consider changes in policy or all potential future events that could affect future 

income, future expenditures, and sustainability. Because of the large number of factors that affect the 

sustainability financial statements and the fact that future events and circumstances cannot be estimated 

with certainty, even if current policy is continued, there will be differences between the estimates in the 

sustainability financial statements and the actual results, and those differences may be material. Our 

opinion on the 2017 sustainability financial statements is not modified with respect to this matter. 
Financial Section 

34 United States Department of Labor 

Other Matters 

Interactive Data 

Management has elected to reference to information on websites or other forms of interactive data 

outside the Agency Financial Report to provide additional information for the users of its financial 

statements. Such information is not a required part of the basic financial statements, or supplementary 

information required by the Federal Accounting Standards Advisory Board. The information on these 

websites or the other interactive data has not been subjected to any of our auditing procedures, and 

accordingly we do not express an opinion or provide any assurance on it. 

Required Supplementary Information 

U.S. generally accepted accounting principles require that the information in the Management’s 

Discussion and Analysis, Required Supplementary Information, and Required Supplementary Stewardship 

Information sections be presented to supplement the basic financial statements. Such information, 

although not a part of the basic financial statements, is required by the Federal Accounting Standards 

Advisory Board who considers it to be an essential part of financial reporting for placing the basic financial 

statements in an appropriate operational, economic, or historical context. We have applied certain limited 

procedures to the required supplementary information in accordance with auditing standards generally 

accepted in the United States of America, which consisted of inquiries of management about the methods 

of preparing the information and comparing the information for consistency with management’s 

responses to our inquiries, the basic financial statements, and other knowledge we obtained during our 

audits of the basic financial statements. We do not express an opinion or provide any assurance on the 

information because the limited procedures do not provide us with sufficient evidence to express an 

opinion or provide any assurance. 

Other Information

Our audits were conducted for the purpose of forming an opinion on the basic financial statements as a 

whole. The information in the Other Information section is presented for purposes of additional analysis 

and is not a required part of the basic financial statements. Such information has not been subjected to 

the auditing procedures applied in the audits of the basic financial statements, and accordingly, we do not 

express an opinion or provide any assurance on it. 

Other Reporting Required by Government Auditing Standards 

Internal Control Over Financial Reporting 

In planning and performing our audit of the financial statements as of and for the year ended September 

30, 2017, we considered the DOL’s internal control over financial reporting (internal control) to determine 

the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion 

on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the 

DOL’s internal control. Accordingly, we do not express an opinion on the effectiveness of the DOL’s 

internal control. We did not test all internal controls relevant to operating objectives as broadly defined 

by the Federal Managers’ Financial Integrity Act of 1982. 
Independent Auditors’ Report

FY 2017 Agency Financial Report 35

Our consideration of internal control was for the limited purpose described in the preceding paragraph 

and was not designed to identify all deficiencies in internal control that might be material weaknesses or 

significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that have 

not been identified. However, as described in Exhibit I and II, we identified certain deficiencies in internal 

control that we consider to be material weaknesses and significant deficiencies. 

A deficiency in internal control exists when the design or operation of a control does not allow 

management or employees, in the normal course of performing their assigned functions, to prevent, or 

detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination 

of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement 

of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis. We 

consider the deficiencies described in Exhibit Ito be material weaknesses. 

A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less 

severe than a material weakness, yet important enough to merit attention by those charged with 

governance. We consider the deficiencies described in Exhibit IIto be significant deficiencies. 

Had we been able to perform all of the procedures necessary to express an opinion on the 2016 

sustainability financial statements, the statement of changes in social insurance amounts for the year 

ended September 30, 2017, and the related notes to these financial statements, other matters involving 

internal control may have been identified and reported. 

Compliance and Other Matters 

As part of obtaining reasonable assurance about whether the DOL’s financial statements are free from 

material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, 

contracts, and grant agreements, noncompliance with which could have a direct and material effect on 

the determination of financial statement amounts. However, providing an opinion on compliance with 

those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. 

The results of our tests disclosed no instances of noncompliance or other matters that are required to be 

reported under Government Auditing Standards or OMB Bulletin No. 17-03. 

We also performed tests of its compliance with certain provisions referred to in Section 803(a) of the 

Federal Financial Management Improvement Act of 1996 (FFMIA). Providing an opinion on compliance 

with FFMIA was not an objective of our audit, and accordingly, we do not express such an opinion. The 

results of our tests disclosed no instances in which the DOL’s financial management systems did not 

substantially comply with the (1) Federal financial management systems requirements, (2) applicable 

Federal accounting standards, and (3) the United States Government Standard General Ledger at the 

transaction level. 

Other Matters: On September 21, 2017, DOL’s Office of Inspector General (OIG) issued report number 

26-17-002-03-370, in which it concluded certain violations of the Antideficiency Act (ADA) had occurred 

related to the Job Corps’ operations funds for program years 2012 and 2013. However, DOL management 

disagreed with the OIG’s conclusion that ADA violations had occurred. The OIG and management are 

currently in the process of determining the actions necessary to resolve this matter. As of the date of this 

report, no final determination has been made. 
Financial Section 

36 United States Department of Labor 

DOL’s Responses to Findings 

DOL’s responses to the findings identified in our audit are described in Exhibit III. DOL’s responses were 

not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, 

we express no opinion on the responses. 

Purpose of the Other Reporting Required by Government Auditing Standards

The purpose of the communication described in the Other Reporting Required by Government Auditing 

Standards section is solely to describe the scope of our testing of internal control and compliance and the 

result of that testing, and not to provide an opinion on the effectiveness of the DOL’s internal control or 

compliance. Accordingly, this communication is not suitable for any other purpose. 

November 15, 2017 
Independents Auditors’ Report

Material Weakness 

Exhibit I 

FY 2017 Agency Financial Report 37

1. Improvement Needed in the Review of Liability Estimates

The preparation of the U.S. Department of Labor’s (DOL) consolidated financial statements requires

management to make certain estimates and assumptions that affect the reported amounts of liabilities and

the related expenses during the reporting period. Two of these estimates are the Energy Employees

Occupational Illness Compensation (EEOIC) benefits liability and the grant accrual liability. During our fiscal

year (FY) 2017 audit of DOL’s consolidated financial statements, we identified certain deficiencies in the

management review controls over these estimates. Specifically, we noted that the management review

controls were not performed at a sufficient level of detail to ensure that errors in the development of the

estimates were identified and corrected. Collectively, these deficiencies increase the risk that material

misstatements in DOL”s consolidated financial statements will not be prevented, or detected and corrected

in a timely manner. As a result of these deficiencies, we identified the following errors:

EEOIC Benefits Liability

During our testing of the EEOIC benefits liability, we identified the following errors within the actuarial

model used to calculate the estimate:

 The formula that calculated the discount factor used in the discounted cash flow projection for medical

payments was not updated for the current fiscal year. This resulted in an understatement of $407 million

in the calculation of the discounted liability.

 The formula used to calculate the number of individuals eligible for medical expenses in historical years

contained an error that linked the “total number of individuals eligible” to the incorrect cells for FYs

2001 and 2002. This resulted in an understatement of $267 million in the calculation of the discounted

liability.

In addition to the errors above and in response to questions we raised during the audit, DOL’s external 

actuary also determined there were errors in the formulas used to calculate the number of assumed deaths 

for both historical years and future years that referenced the incorrect cells in the mortality table. These 

errors resulted in an overstatement of $417 million in the calculation of the discounted liability. 

Grant Accrual Liability 

During our testing over the grant accrual liability, we noted that the grant accrual look-back analysis 

improperly included 111 document IDs/footprints. The document IDs/footprints erroneously included in 

the look-back analysis impacted the cost ratios used to calculate the grant accrual liability as of September 

30, 2017, which resulted in an understatement of $52 million. 

In addition, management’s review of the grant accrual that was calculated as of September 30, 2017, did 

not identify that the incorrect cost ratios were used in the calculation. Management’s use of the incorrect 

cost ratios resulted in an additional understatement of $54 million in the grant accrual liability. 

Based on our observations, we determined that the Office of Workers’ Compensation Programs and the 

Employment Training Administration need to enhance its risk assessment process to identify and assess the 

accounting reporting risks for critical estimates. As a result, critical estimates did not always receive the 

appropriate level of attention needed to ensure errors were timely identified. Furthermore, management 
Financial Section

Material Weakness

Exhibit I

38 United States Department of Labor

of these components had not implemented sufficient monitoring controls to ensure the management 

review controls over these estimates were operating at a level of precision to identify significant errors. 

Without effective controls over critical estimates, material errors may occur and go undetected by 

management. 

The following criteria are relevant to the conditions noted above:

 The Government and Accountability Office Standards for Internal Control in the Federal Government 

(the Standards), Section 10.02 states:

Management designs control activities in response to the entity’s objectives and risks to 

achieve an effective internal control system. Control activities are the policies, procedures, 

techniques, and mechanisms that enforce management’s directives to achieve the entity’s 

objectives and address related risks. As part of the control environment component, 

management defines responsibilities, assigns them to key roles, and delegates authority to 

achieve the entity’s objectives. As part of the risk assessment component, management 

identifies the risks related to the entity and its objectives, including its service organizations; 

the entity’s risk tolerance; and risk responses. Management designs control activities to 

fulfill defined responsibilities and address identified risk responses.

 Office of Management and Budget (OMB) Circular No. A-123, Appendix A, Section II, Management’s 

Responsibility for Internal Controls, states that 

Internal control over financial reporting is a process designed to provide reasonable 

assurance regarding the reliability of financial reporting. Reliability of financial reporting 

means that management can reasonably make the following assertions: 

 All reported transactions actually occurred during the reporting period and all assets 

and liabilities exist as of the reporting date (existence and occurrence); 

 All assets, liabilities, and transactions that should be reported have been included and

no unauthorized transactions or balances are included (completeness); and,

 All assets and liabilities have been properly valued, and where applicable, all costs have 

been properly allocated (valuation).

To address the deficiencies noted above, we recommend that the Director, Office of Workers’ 

Compensation Programs and the Acting Assistant Secretary for Employment and Training Administration:

1. Implement monitoring controls over their respective estimates to ensure management’s review of the 

estimates are performed at a sufficient level of detail, including the underlying data, assumptions and 

formulas used.

2. Provide additional training as necessary to the reviewers of the estimates to ensure they fully 

understand the components of the estimates that should be reviewed in detail.
Independents Auditors’ Report

Material Weakness

Exhibit I

FY 2017 Agency Financial Report 39

Management’s Response: See Exhibit III for management’s response.

Auditors’ Response: We will conduct follow-up procedures in FY 2018 to determine whether corrective 

actions have been developed and implemented
Financial Section

Significant Deficiency

Exhibit II

40 United States Department of Labor

2. Lack of Sufficient Information Technology General Controls over Key Financial Feeder Systems

During our FY 2017 testing of DOL’s entity-level controls and general information technology controls, we 

identified new control deficiencies in addition to certain ones that were reported in prior years across key 

DOL financial and support systems. This control environment included general and application controls and 

system-generated reports (information produced by the entity) that support the completeness, accuracy, 

and validity of financial information. In summary, during our FY 2017 testing of significant DOL financial and 

support systems in the four DOL agencies responsible for them, we identified 11 new control deficiencies,

and 32 previously-reported deficiencies that were not corrected or not corrected timely that remained 

open. However, we did note that 20 previously-reported deficiencies for which DOL agencies completed 

sufficient corrective action in FY 2017. 

While we continued to identify deficiencies in the current year, we did note that the extent of the 

exceptions identified for certain controls related to user access, segregation of duties, and audit logs 

decreased as compared to the prior year. In addition, the DOL agencies conducted risk assessments in FY 

2017 over the information technology (IT) control environment to identify the root causes of certain 

deficiencies that were previously identified. As a result, the agencies were able to develop and implement 

appropriate corrective actions to remediate them and had procedures in place to ensure the performance 

of key financially-relevant IT controls that functioned effectively in the past did not deteriorate.

We classified the deficiencies identified into the following categories: account management, configuration 

management, system audit log configuration and reviews, and patch management.

Account Management 

Control deficiencies related to account management increase the risk that current employees, separated 

employees, and/or contractors may conduct unauthorized activities and/or obtain inappropriate 

disclosures of sensitive data, which may affect the confidentiality, integrity, and/or availability of DOL 

systems and data. The specific FY 2017 deficiencies identified in this category were as follows:

 Certain application user accounts were not timely removed for separated users;

 Certain network user accounts were not timely removed for separated users and their accounts were 

accessed after their separation dates;

 Contractor separation dates were not consistently maintained or monitored within department-wide 

Federal Human Resources listings or other consolidated listings for the timely removal of accounts of 

separated system users;

 Inactive accounts were not consistently disabled in a timely manner; and 

 Account management controls were not consistently performed, as evidenced by roles that were 

improperly authorized and provisioned in conflict with separation of duties principles and insufficient 

access re-certifications. 

Configuration Management

Controls related to configuration management are designed to provide reasonable assurance that changes 

to information system resources are authorized and systems are configured and operated securely and as 

intended. Although DOL had designed controls to establish accountability and responsibility for 
Independent Auditors’ Report

Significant Deficiency

Exhibit II

FY 2017 Agency Financial Report 41

configuration management, including monitoring and tracking of changes, we identified during our FY 2017 

audit procedures that account management controls were not consistently performed over change 

migrators and developers with access to perform configuration management controls. Failure to perform 

access re-certifications for change migrators and developers may allow for unauthorized or inappropriate 

changes to be applied and remain undetected by management, resulting in lower assurance that the 

information system will operate as intended and that the data is reliable, valid, and complete. 

System Audit Log Configuration and Reviews

The system audit log configuration and reviews category represents controls designed to detect 

unauthorized access to IT systems. Although DOL had certain detective controls in place to partially mitigate 

the aforementioned account management risks, we identified during our FY 2017 audit procedures that 

certain audit logs were not captured, retained, monitored, reviewed timely, or independently reviewed. 

Additionally, evidence of audit log reviews was not consistently maintained or was insufficient. The lack of 

effective and timely system audit log configuration and reviews may allow for unauthorized or 

inappropriate activities to remain undetected by management for lengthy periods of time.

Patch Management

Controls related to patch management are designed to prevent weaknesses in IT systems from being 

exploited. Such controls include proactively and timely patching of related security issues, and configuring 

IT systems in compliance with baseline security requirements. During our FY 2017 audit procedures, we 

noted that certain database and operating system infrastructures were configured on unsupported or 

outdated versions instead of the latest supported versions from the vendors. We also noted that certain 

patches were approved and tested after the patches were implemented into the production environment. 

Additionally, evidence of approval, successful testing and deployment was not consistently maintained or 

was insufficient. 

Not upgrading to a vendor-supported database or operating system increases susceptibility to threats and 

vulnerabilities developing after the databases or operating systems end of support date, which ultimately 

increases the risk of a compromise of the confidentiality, integrity, and availability of the data residing on 

the information system. Patches that are not upgraded in a timely manner or where evidence is not 

maintained or completed out of order may result in information leaks or system threats, which may also 

disrupt normal system processes, allow inappropriate access, prevent updates from being implemented, 

and jeopardize the integrity of financial information. 

Collectively, the aforementioned IT control deficiencies pose a risk to the integrity of DOL’s data, which 

could ultimately impact DOL’s ability to accurately and timely perform its financial reporting duties. The 

specific nature of these deficiencies, their specific causes, and the system impacted by them, have been 

communicated separately to management. These deficiencies were the result of issues in the monitoring 

or operation of departmental procedures and controls. DOL has started to invest the necessary level of 

effort and resources to perform root cause analyses to address issues previously reported, and to ensure 

that certain IT policies and procedures are developed, implemented, and operating effectively. 

The National Institute of Standards and Technology Special Publication 800-53, Revision 4, Security and 

Privacy Controls for Federal Information Systems and Organizations, the Government Accountability 
Financial Section

Significant Deficiency

Exhibit II

42 United States Department of Labor

Office’s Standards for Internal Control in the Federal Government (GAO-14-704G), and the DOL Computer 

Security Handbook (CSH) define the criteria for the controls in which the deficiencies were identified.

To address the deficiencies noted above, we recommend the Chief Information Officer continue to:

a) Conduct a sufficient risk assessment to identify the root causes of identified deficiencies;

b) Document, track, and implement milestones and corrective actions to timely remediate all 

identified deficiencies that have been communicated to DOL management; 

c) Coordinate efforts among the DOL agencies to design and implement procedures and controls to 

address account management, configuration management, system audit log configuration and 

reviews, and patching management control deficiencies in key financial feeder systems; and

d) Monitor the agencies’ progress to ensure that established procedures and controls are operating 

effectively and maintained.

Management’s Response: See Exhibit III for management’s response.

Auditors’ Response: We will conduct follow-up procedures in FY 2018 to determine whether corrective 

actions have been developed and implemented
Independent Auditors’ Report

Management’s Response

Exhibit III

FY 2017 Agency Financial Report 43
Financial Section

Management’s Response

Exhibit III

44 United States Department of Labor
Independent Auditors’ Report

Management’s Response

Exhibit III

FY 2017 Agency Financial Report 45
Financial Section

Management’s Response

Exhibit III

46 United States Department of Labor
47

Annual Financial Statements
48 United States Department of Labor
49

Principal Financial Statements and Notes
Financial Section (Unaudited)

PRINCIPAL FINANCIAL STATEMENTS

50 United States Department of Labor

Principal Financial Statements Included in This Report

The principal financial statements included in this report have been prepared in accordance with the requirements 

of the Chief Financial Officers Act of 1990 (P.L. 101-576), the Government Management Reform Act of 1994, and 

OMB Circular No. A-136, Financial Reporting Requirements. The responsibility for the integrity of the financial 

information included in these statements rests with management of the Department. The audit of DOL’s principal 

financial statements was performed by KPMG LLP. The auditors’ report accompanies the principal financial

statements.

The Department’s principal financial statements for FY 2017 and FY 2016 consist of the following: 

• The Consolidated Balance Sheets, which present as of September 30, 2017 and 2016, those resources owned 

or managed by DOL that are available to provide future economic benefits (assets); amounts owed by DOL that 

will require payments from those resources or future resources (liabilities); and residual amounts retained by 

DOL, comprising the difference (net position).

• The Consolidated Statements of Net Cost, which present the net cost of DOL operations for the years ended 

September 30, 2017 and 2016. DOL’s net cost of operations includes the gross costs incurred by DOL less any 

exchange revenue earned from DOL activities. The classification of gross cost and exchange revenue by 

program and program agency is presented in Note 15 to the consolidated financial statements.

• The Consolidated Statements of Changes in Net Position, which present the change in DOL’s net position 

resulting from the net cost of DOL operations, budgetary financing sources other than exchange revenue, and 

other financing sources for the years ended September 30, 2017 and 2016.

• The Combined Statements of Budgetary Resources, which present the budgetary resources available to DOL, 

change in obligated balance, and budget authority and net outlays of budgetary resources for FYs 2017 and

2016; and the status of these resources as of September 30, 2017 and 2016.

• The Statements of Social Insurance, which present the net present values of projected cash inflows and 

outflows for the current participants (closed group), new participants, and current participants and new 

participants (open group) of the Black Lung Disability Trust Fund (BLDTF) as of September 30, 2017, 2016, 2015, 

2014, and 2013.

• The Statements of Changes in Social Insurance Amounts, which present the net change in the open group 

measure of the BLDTF for the years ended September 30, 2017 and 2016, and provide information about the 

change.
Annual Financial Statements 

CONSOLIDATED BALANCE SHEETS

As of September 30, 2017 and 2016

(Dollars in Thousands)

FY 2017 Agency Financial Report 51 

2017 2016

ASSETS

Intra-governmental

Funds with U.S. Treasury (Note 1-C and 2) $ 12,121,697 $ 11,960,730

Investments (Note 1-D and 3) 61,067,309 54,098,358

Accounts receivable (Note 1-E and 4) 5,396,238 5,534,674

Advances (Note 1-G and 6) 6,389 3,409

Total intra-governmental 78,591,633 71,597,171

Accounts receivable, net of allowance (Note 1-E and 4) 1,352,217 1,379,029

General property, plant and equipment, net (Note 1-F and 5) 1,210,868 1,264,080

Advances (Note 1-G and 6) 1,130,773 1,105,972

Total assets $ 82,285,491 $ 75,346,252

LIABILITIES AND NET POSITION

Liabilities (Note 1-I and 12)

Intra-governmental

Accounts payable $ 21,022 $ 15,865

Debt (Note 1-J and 8) 8,368,258 14,264,915

Other liabilities (Note 9) 276,653 249,811

Total intra-governmental 8,665,933 14,530,591

Accounts payable 246,691 325,041

Accrued benefits (Note 1-K and 10) 1,302,857 1,642,495

Future workers' compensation benefits (Note 1-L and 11) 2,622,296 1,917,478

Energy employees occupational illness compensation benefits (Note 1-M) 19,722,715 15,373,336

Accrued leave (Note 1-N) 126,959 128,045

Other liabilities (Note 9) 747,294 836,870

Total liabilities 33,434,745 34,753,856

Contingencies (Note 13)

Net position (Note 1-R)

Funds from dedicated collections

Cumulative results of operations (Note 21) 53,763,672 40,442,362

All other funds

Unexpended appropriations 7,911,467 7,919,543

Cumulative results of operations (12,824,393) (7,769,509)

Total net position - all other funds (4,912,926) 150,034

Total net position 48,850,746 40,592,396

Total liabilities and net position $ 82,285,491 $ 75,346,252

The accompanying notes are an integral part of these statements.
Financial Section 

CONSOLIDATED STATEMENTS OF NET COST

For the Years Ended September 30, 2017 and 2016

(Dollars in Thousands)

52 United States Department of Labor

2017 2016

NET COST OF OPERATIONS (Note 1-S and 15)

CROSSCUTTING PROGRAMS

Income maintenance

Gross cost $ 44,305,656 $ 43,314,156

 Less earned revenue (3,261,780) (3,546,200)

 Net program cost 41,043,876 39,767,956

Employment and training

Gross cost 6,126,985 6,301,715

 Less earned revenue (3,320) (10,045)

 Net program cost 6,123,665 6,291,670

Labor, employment and pension standards

Gross cost 883,981 912,018

 Less earned revenue (11,547) (19,277)

 Net program cost 872,434 892,741

Worker safety and health

Gross cost 1,039,028 1,072,944

 Less earned revenue (3,331) (7,678)

 Net program cost 1,035,697 1,065,266

OTHER PROGRAMS

Statistics

Gross cost 659,662 660,604

 Less earned revenue (29,127) (32,165)

 Net program cost 630,535 628,439

COSTS NOT ASSIGNED TO PROGRAMS

Gross cost 48,285 18,505

 Less earned revenue not attributed to programs (33,069) (9,680)

 Net cost not assigned to programs 15,216 8,825

Net cost of operations $ 49,721,423 $ 48,654,897

The accompanying notes are an integral part of these statements.
Annual Financial Statements

CONSOLIDATED STATEMENTS OF CHANGES IN NET POSITION

For the Years Ended September 30, 2017 and 2016

(Dollars in Thousands)

FY 2017 Agency Financial Report 53 

Funds from Funds from 

Dedicated All Other Dedicated All Other

Collections Funds Total Collections Funds Total

Cumulative results of operations, beginning $ 40,442,362 $ (7,769,509) $ 32,672,853 $ 27,153,317 $ (6,653,649) $ 20,499,668

Budgetary financing sources (Note 1-T)

Appropriations used - 10,300,499 10,300,499 - 10,277,935 10,277,935

Non-exchange revenue (Note 16)

Employer taxes 44,484,373 - 44,484,373 47,370,792 - 47,370,792

Interest 1,307,018 3 1,307,021 1,219,327 25 1,219,352

Reimbursement of 

 unemployment benefits and other 1,605,373 3,581 1,608,954 1,596,876 536 1,597,412

Total non-exchange revenue 47,396,764 3,584 47,400,348 50,186,995 561 50,187,556

Transfers without reimbursement (Note 17) (3,647,697) 3,841,568 193,871 (3,635,425) 3,885,853 250,428

Other financing sources (Note 1-U)

Imputed financing from 

 costs absorbed by others 2,152 90,788 92,940 2,734 104,743 107,477

Transfers without reimbursement (Note 17) - 1,595 1,595 - 4,930 4,930

Other - (1,404) (1,404) - (244) (244)

Total financing sources 43,751,219 14,236,630 57,987,849 46,554,304 14,273,778 60,828,082

Net cost of operations (30,429,909) (19,291,514) (49,721,423) (33,265,259) (15,389,638) (48,654,897)

Net change 13,321,310 (5,054,884) 8,266,426 13,289,045 (1,115,860) 12,173,185

Cumulative results of operations, end of period 53,763,672 (12,824,393) 40,939,279 40,442,362 (7,769,509) 32,672,853

 Unexpended appropriations, beginning - 7,919,543 7,919,543 - 7,991,121 7,991,121

Budgetary financing sources (Note 1-T)

Appropriations received (Note 18-F) - 10,869,138 10,869,138 - 10,761,084 10,761,084

Appropriations used - (10,300,499) (10,300,499) - (10,277,935) (10,277,935)

Appropriations transferred - 6,478 6,478 - (1,000) (1,000)

Other adjustments - (583,193) (583,193) - (553,727) (553,727)

Total budgetary financing sources - (8,076) (8,076) - (71,578) (71,578)

 Unexpended appropriations, end of period - 7,911,467 7,911,467 - 7,919,543 7,919,543

Net position $ 53,763,672 $ (4,912,926) $ 48,850,746 $ 40,442,362 $ 150,034 $ 40,592,396

2017 Consolidated 2016 Consolidated

The accompanying notes are an integral part of these statements.
Financial Section 

COMBINED STATEMENTS OF BUDGETARY RESOURCES

For the Years Ended September 30, 2017 and 2016

(Dollars in Thousands)

54 United States Department of Labor

2017 2016

Note 18 

BUDGETARY RESOURCES

Unobligated balance brought forward, October 1 $ 3,956,265 $ 3,447,458

Recoveries of prior year unpaid obligations 416,033 603,674

Other changes in unobligated balance (373,569) (228,293)

Unobligated balance from prior year budget authority, net 3,998,729 3,822,839

Appropriations (discretionary and mandatory) 45,286,228 47,611,750

Spending authority from offsetting collections (discretionary and mandatory) 7,378,389 7,410,865

Total budgetary resources $ 56,663,346 $ 58,845,454

STATUS OF BUDGETARY RESOURCES

New obligations and upward adjustments (total) $ 52,732,162 $ 54,889,189

Unobligated balance, end of year

 Apportioned, unexpired accounts 3,140,440 3,083,935

 Exempt from apportionment, unexpired accounts 33,211 37,251

 Unapportioned, unexpired accounts 87,891 73,288

Unexpired unobligated balance, end of year 3,261,542 3,194,474

Expired unobligated balance, end of year 669,642 761,791

 Total unobligated balance, end of year $ 3,931,184 $ 3,956,265

Total budgetary resources $ 56,663,346 $ 58,845,454

CHANGE IN OBLIGATED BALANCE

Unpaid Obligations:

Unpaid obligations, brought forward, October 1 $ 12,879,651 $ 13,200,831

New obligations and upward adjustments 52,732,162 54,889,189

Less: outlays (gross) (52,850,156) (54,606,695)

Less: recoveries of prior year unpaid obligations (416,033) (603,674)

Unpaid obligations, end of year $ 12,345,624 $ 12,879,651

Uncollected Payments: 

Uncollected payments, Federal sources, brought forward, October 1 (1,748,177) (1,697,626)

Change in uncollected payments, Federal sources 124,566 (50,551)

Uncollected payments, Federal sources, end of year (1,623,611) (1,748,177)

Obligated balance, start of year $ 11,131,474 $ 11,503,205

Obligated balance, end of year $ 10,722,013 $ 11,131,474

BUDGET AUTHORITY AND OUTLAYS, NET

Budget authority, gross (discretionary and mandatory) $ 52,664,617 $ 55,022,615

Actual offsetting collections (discretionary and mandatory) (7,518,175) (7,389,858)

Change in uncollected customer payments from Federal 

sources (discretionary and mandatory) 124,566 (50,551)

Recoveries of prior year paid obligations (discretionary and mandatory) 15,220 29,544

Budget authority, net (discretionary and mandatory) $ 45,286,228 $ 47,611,750

Outlays, gross (discretionary and mandatory) $ 52,850,156 $ 54,606,695

Actual offsetting collections (discretionary and mandatory) (7,518,175) (7,389,858)

Outlays, net (discretionary and mandatory) 45,331,981 47,216,837

Distributed offsetting receipts (559,128) (740,914)

Agency outlays, net (discretionary and mandatory) $ 44,772,853 $ 46,475,923

The accompanying notes are an integral part of these statements.
Annual Financial Statements

STATEMENTS OF SOCIAL INSURANCE

As of September 30, 2017, 2016, 2015, 2014, and 2013

(Dollars in Thousands)

FY 2017 Agency Financial Report 55 

Unaudited

2017 2016 2015 2014 2013

BLACK LUNG DISABILITY BENEFIT PROGRAM (Note 1-W and 1-Y)

Current participants (closed group)

Present value of estimated future excise tax

 income during the projection period $ 2,011,565 $ 2,906,046 $ 4,738,572 $ 7,301,416 $ 7,494,800

Less the present value of estimated future administrative

 costs during the projection period 713,472 953,474 1,242,920 942,107 920,740

Less the actuarial present value of future benefit

 payments to disabled coal miners and dependent

 survivors during the projection period 1,280,920 1,359,109 1,898,939 1,876,522 1,953,763

Excess of present value of estimated future excise tax

 income over present value of estimated future

 administrative costs and actuarial present value of

 future benefit payments during the projection period

 (closed group measure) 17,173 593,463 1,596,713 4,482,787 4,620,297

New participants

Present value of estimated future excise tax

 income during the projection period 1,616,686 1,452,086 - - -

Less the present value of estimated future administrative

 costs during the projection period 573,414 476,429 - - -

Less the actuarial present value of future benefit

 payments to disabled coal miners and dependent

 survivors during the projection period 1,029,469 679,116 - - -

Excess of present value of estimated future excise tax

 income over present value of estimated future

 administrative costs and actuarial present value of

 future benefit payments during the projection period 13,803 296,541 - - -

Current and new participants (open group)

Present value of estimated future excise tax

 income during the projection period 3,628,251 4,358,132 4,738,572 7,301,416 7,494,800

Less the present value of estimated future administrative

 costs during the projection period 1,286,886 1,429,903 1,242,920 942,107 920,740

Less the actuarial present value of future benefit

 payments to disabled coal miners and dependent

 survivors during the projection period 2,310,389 2,038,225 1,898,939 1,876,522 1,953,763

Excess of present value of estimated future excise tax

 income over present value of estimated future

 administrative costs and actuarial present value of

 future benefit payments during the projection period

 (open group measure) $ 30,976 $ 890,004 $ 1,596,713 $ 4,482,787 $ 4,620,297

Trust fund net position deficit at start 

 of projection period (Note 1-W and 21) $(5,610,709) $ (5,604,460) $ (5,644,208) $ (5,755,352) $ (5,894,222)

Summary Section

Closed group measure $ 17,173 $ 593,463 $ 1,596,713 $ 4,482,787 $ 4,620,297

Add: Funds with U.S. Treasury and receivables from

 benefit overpayments (Note 21) 144,697 113,856 54,859 129,376 145,794

Total of closed group measure plus fund assets (Note 1-W) $ 161,870 $ 707,319 $ 1,651,572 $ 4,612,163 $ 4,766,091

Open group measure $ 30,976 $ 890,004 $ 1,596,713 $ 4,482,787 $ 4,620,297

Add: Funds with U.S. Treasury and receivables from

 benefit overpayments (Note 21) 144,697 113,856 54,859 129,376 145,794

Total of open group measure plus fund assets (Note 1-W) $ 175,673 $ 1,003,860 $ 1,651,572 $ 4,612,163 $ 4,766,091

As of September 30,

The accompanying notes are an integral part of these statements.
Financial Section

STATEMENTS OF CHANGES IN SOCIAL INSURANCE AMOUNTS

For the Years Ended September 30, 2017 and 2016 

(Dollars in Thousands)

56 United States Department of Labor

BLACK LUNG DISABILITY BENEFIT PROGRAM (Note 1-W and 1-Y)

Open Group Measure

(Dollars in Thousands) Unaudited Unaudited

2017 2016

The excess of present value of estimated future excise tax income

 over present value of estimated future administrative costs and

 actuarial present value of future benefit payments to disabled coal

 miners and dependent survivors in the open group during the

 projection period (open group measure), beginning of year $ 890,004 $ 1,596,713 

 Changes in the assumptions about beneficiaries, including

 costs, number, type, age and life expectancy (387,457) (22,732)

 Changes in assumptions about coal excise tax revenues (481,019) (652,225)

 Changes in assumptions about Federal civilian pay raises for income benefits 12,764 9,653

 Changes in assumptions about medical cost inflation for medical benefits (26,784) (8,373)

 Changes in assumptions about administrative costs 54,230 (95,670)

 Changes in assumptions about interest rates (30,762) 62,638 

Net change in open group measure (859,028) (706,709)

Open group measure, end of year $ 30,976 $ 890,004 

The accompanying notes are an integral part of these statements.
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2017 and 2016

FY 2017 Agency Financial Report 57

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIE

A. Reporting Entity

DOL, a cabinet level agency of the Executive Branch of the United States Government, was established in 1913, to 

promote the welfare of the wage earners of the United States. Today the Department’s mission remains the same: 

to foster, promote and develop the welfare of the wage earners, job seekers and retirees of the United States; 

improve working conditions; advance opportunities for profitable employment; and assure work-related benefits 

and rights. 

DOL accomplishes this mission through the execution of its congressionally approved budget, operating under four 

major budget functions: (i) education, training, employment, and social services; (ii) health (protecting workers in 

their place of employment); (iii) income security; and (iv) veterans benefits and services (veterans employment and 

training). DOL is organized into program agencies, which administer the various statutes and programs for which 

the Department is responsible. DOL’s program agencies are shown below.

1. Program Agencies

• Employment and Training Administration (ETA)

- Office of Job Corps

• Office of Workers’ Compensation Programs (OWCP)

• Occupational Safety and Health Administration (OSHA)

• Bureau of Labor Statistics (BLS)

• Mine Safety and Health Administration (MSHA)

• Employee Benefits Security Administration (EBSA) 

• Veterans’ Employment and Training Service (VETS)

• Wage and Hour Division (WHD)

Other Program Agencies

• Office of Federal Contract Compliance Programs (OFCCP)

• Office of Labor-Management Standards (OLMS)

• Office of Disability Employment Policy (ODEP)

• Departmental Management

- Office of the Secretary - Office of the Deputy Secretary

- Office of the Assistant Secretary for - Office of Inspector General

Administration and Management - Office of the Solicitor

- Office of the Assistant Secretary for Policy - Office of Public Affairs

- Office of Congressional and - Office of the Chief Financial Officer

Intergovernmental Affairs - Women’s Bureau

- Bureau of International Labor Affairs

The Pension Benefit Guaranty Corporation (PBGC), wholly owned by the Federal government and whose Board of 

Directors is chaired by the Secretary of Labor, has been designated by OMB as a separate reporting entity for

financial statement purposes and has been excluded from these financial statements.
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2017 and 2016

58 United States Department of Labor

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES- Continu

A. Reporting Entity  Continue

2. The major programs are

• Income maintenance

• Employment and training

• Labor, employment and pension standards 

• Worker safety and health

• Statistics 

3. Fund accounting structure

DOL’s financial activities are accounted for by Federal account symbol, using individual funds and fund 

accounts within distinct fund types to report to the U.S. Department of the Treasury’s (Treasury) Bureau of 

the Fiscal Service and to OMB. For financial statement purposes, DOL funds are further classified as funds 

from dedicated collections, fiduciary funds, and all other funds, and are discussed below:

 

Funds from dedicated collections

Funds from dedicated collections are financed by specifically identified revenues, which can be 

supplemented by other financing sources, both of which remain available over time. These revenues and 

financing sources are required by statute to be used for designated purposes and must be accounted for 

separately from the Government’s general revenues. DOL’s funds from dedicated collections are disclosed 

in Note 21 and are discussed below:

Unemployment Trust Fund (UTF) was established under the authority of Section 904 of the Social Security 

Act of 1935, as amended, to receive, hold, invest, and disburse monies collected under the Federal 

Unemployment Tax Act (FUTA), as well as state unemployment taxes collected by the states and 

transferred to the Fund, and unemployment taxes collected by the Railroad Retirement Board and 

transferred to the Fund. The Federal Additional Unemployment Compensation (FAUC) fund is a component 

of the UTF, funded by the General Fund of the Treasury and provided a $25 weekly supplement to the 

unemployment compensation of eligible claimants. 

Black Lung Disability Trust Fund (BLDTF) was established under Part C of the Black Lung Benefits Act, to 

provide compensation and medical benefits to coal miners who suffer total disability due to 

pneumoconiosis (Black Lung disease), and compensation benefits to their dependent survivors for claims 

filed subsequent to June 30, 1973. Claims filed from the origination of the program until June 30, 1973, are 

paid by the Special Benefits for Disabled Coal Miners fund. (See Note 1.A.3 – All other funds.) 

Gifts and Bequests Fund uses miscellaneous funds received by gift or bequest to support various activities 

of the Secretary of Labor. 

Panama Canal Commission Compensation Fund was established to provide for the accumulation of funds 

provided by the Commission to pay its workers compensation obligations under the Federal Employees’

Compensation Act (FECA).

H-1B Funds provide demonstration grants to regional and local entities to provide technical skills training 

to unemployed and incumbent workers. As authorized by the American Competitiveness and Workforce
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2017 and 2016

FY 2017 Agency Financial Report 59 

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES- Continu

A. Reporting Entity  Continue

3. Fund accounting structure  continue

Funds from dedicated collections – continued

Improvement Act of 1998, the funds are supported by fees paid by employers petitioning the U.S 

Department of Homeland Security for visas for foreign workers under the H-1B program.

Fiduciary funds

Fiduciary funds are used to account for DOL’s fiduciary activities, which involve the collection or receipt and 

subsequent disposition of cash or other assets in which non-Federal entities have an ownership interest 

that the Department must uphold. Fiduciary assets are not assets of DOL or the Federal Government, and 

accordingly, are not recognized on the Department’s balance sheet. The fiduciary assets held by DOL and 

the fiduciary activities related to these assets are disclosed in Note 22 to these financial statements. DOL’s 

fiduciary funds are discussed below.

Wage and Hour and Public Contracts Restitution Fund, a deposit fund established by the Fair Labor 

Standards Amendments of 1949, receives deposits from employers assessed by the Department for unpaid 

minimum wages or unpaid overtime compensation owed to employees as a result of labor law violations, 

and pays these wages directly to the affected employees. 

Longshore and Harbor Workers’ Compensation Act Trust Fund, established under the authority of the 

Longshore and Harbor Workers’ Compensation Act, provides medical benefits, compensation for lost 

wages, and rehabilitation services for job-related injuries and diseases or death to private sector workers 

engaged in certain maritime and other employment covered by extensions such as the Defense Base Act. 

The Act authorizes the Department to assess insurance carriers on behalf of these beneficiaries.

District of Columbia Worker’s Compensation Act Trust Fund, established under the authority of the District 

of Columbia Worker’s Compensation Act, provides compensation and medical payments to theDistrict of 

Columbia employees for work-related injuries or death which occurred prior to July 26, 1982. The Act 

authorizes the Department to assess insurance carriers on behalf of these beneficiaries.

Davis-Bacon Act Trust Fund established under the Davis-Bacon Act, provides payment for claims relating to 

violations of the Davis-Bacon Act and Contract Work Hours and Safety Standards Act. The Department 

investigates violation allegations to determine if federal contractors owe additional wages to covered 

employees. If the Department concludes that a violation has occurred, the Department collects the amount 

owed from the contracting federal agency, deposits the funds into an account with the U.S. Treasury, and 

remits payment to the claimant. 
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2017 and 2016

60 United States Department of Labor

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES- Continu

A. Reporting Entity  Continue

3. Fund accounting structure  continue

All other funds 

Salaries and Expenses include appropriated funds which are used to carry out the missions and functions of 

the Department, except where specifically provided for from other departmental funds.

Training and Employment Services provides for a flexible, decentralized system of Federal and local training 

programs and other services for the economically disadvantaged and others, designed to lead to 

permanent gains in employment, through grants to states and Federal programs, authorized by the 

Workforce Investment Act (WIA) and Workforce Innovation and Opportunity Act (WIOA). 

Office of Job Corps supports the administration and management of the Job Corps program, which helps atrisk youth who need and can benefit from intensive education and training services to become more 

employable, responsible, and productive citizens. 

State Unemployment Insurance and Employment Service Operations (SUIESO) includes grants to states for 

administering the Unemployment Compensation (UC) and Employment Service (ES) programs. UC

Programs provide administrative grants to state agencies which pay unemployment benefits to eligible 

individuals and collect state unemployment taxes from employers. The ES Program is a nationwide system 

providing no-fee ES to individuals seeking employment and to employers seeking workers. ES funding 

allotments for state activities are determined upon a demographically based funding formula established 

under the Wagner-Peyser Act, as amended.

Advances to the Unemployment Trust Fund and Other Funds provides advances to other accounts within 

the UTF to pay UC whenever the balances in these accounts prove insufficient or whenever 

reimbursements to certain accounts, as allowed by law, are to be made. This account also makes advances 

to the Federal Unemployment Benefits and Allowances account to pay the cost of benefits and services 

under the Trade Adjustment Assistance (TAA) for Workers program; and provides loans to the BLDTF to 

make disability payments whenever the fund balance proves insufficient.

Federal Unemployment Benefits and Allowances provides for payment of benefits, training, job search, 

relocation allowances, and employment and case management services (and state administrative expenses 

for all benefits other than Trade Readjustment Allowances, Reemployment TAA , and Alternative TAA) as 

authorized by the Trade Act of 1974 and subsequent amendments. 

Community Service Employment for Older Americans (CSEOA) provides part-time work experience in 

community service activities to unemployed, low income persons aged 55 and over.

Federal Employees’ Compensation Act Special Benefit Fund provides wage replacement benefits and 

payment for medical services to covered Federal civilian employees injured on the job, Federal employees 

and certain other workers who have incurred a work-related illness or injury, and survivors of employees 

whose death is attributable to a job-related injury. The Fund also provides for vocational rehabilitation of 

injured employees to facilitate their return to work. Under extensions of FECA, benefits are also paid to 

certain groups related to War Hazards, non-Federal law enforcement officers, Job Corps enrollees, and 

certain Federally-supported volunteers. Section 10(h) of the amended Longshore and Harbor Workers’ 
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2017 and 2016

FY 2017 Agency Financial Report 61 

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES- Continu

A. Reporting Entity  Continue

3. Fund accounting structure  continue

All other funds  continue

Compensation Act and the District of Columbia Worker’s Compensation Act authorized payments from the 

Special Benefit fund for 50% of the annual increase in benefits for compensation and certain related 

benefits.

Energy Employees Occupational Illness Compensation Fund was established to adjudicate, administer, and 

pay claims for benefits under the Energy Employees Occupational Illness Compensation Program Act

(EEOICPA) of 2000. The Act authorizes compensation payments and the reimbursement of medical 

expenses to employees of the Department of Energy (DOE) or of private companies under contract with 

DOE, who suffer from specified diseases as a result of their work in the nuclear weapons industry. The Act 

also authorizes compensation to the survivors of these employees under certain circumstances. The Act 

was amended by the Ronald Reagan National Defense Authorization Act of 2005 to provide coverage to 

additional claimants. 

Special Benefits for Disabled Coal Miners was established under the Federal Mine Safety and Health Act to 

pay benefits to coal miners disabled from pneumoconiosis and to their widows and certain other 

dependents. Part B of the Act assigned processing of claims filed from the origination of the program until 

June 30, 1973, to the Social Security Administration (SSA), after which time DOL began processing new 

claims under Part C. SSA continued to administer Part B claims until DOL permanently assumed 

responsibility effective October 1, 2003. 

Working Capital Fund (WCF) maintains and operates a program of centralized services in the national office 

and the field. The WCF is paid in advance by the agencies, bureaus, and offices for which centralized 

services are provided at rates which cover the full cost of operations.

General fund receipt accounts hold non-entity receipts and accounts receivable from DOL activities which 

by law cannot be deposited into funds under DOL control. The Treasury automatically transfers all fund 

balances in these receipt accounts to the General Fund of the Treasury at the end of each fiscal year. 

Deposit funds account for monies held by DOL as an agent for others or monies held temporarily by DOL 

until ownership is determined. 

4. Inter-departmental relationship

DOL and Treasury are jointly responsible for the operations of the UTF and the BLDTF. DOL is responsible 

for the administrative oversight and policy direction of the programs financed by these trust funds. 

Treasury acts as custodian over monies deposited into the funds and also invests amounts in excess of 

disbursing requirements in Treasury securities on behalf of DOL. DOL consolidates the financial results of 

the UTF and the BLDTF into these financial statements.
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2017 and 2016

62 United States Department of Labor

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES- Continu

B. Basis of Accounting and Presentation

These financial statements present the financial position, net cost of operations, changes in net position and 

budgetary resources of DOL, and estimated and actuarial projections, and changes therein, for the Department’s 

Black Lung social insurance program, in accordance with U.S. GAAP and the form and content requirements of OMB 

Circular No. A-136. To ensure that the Department’s financial statements are meaningful, other liabilities as defined 

by OMB Circular No. A-136 have been disaggregated on the balance sheet. These include energy employees 

occupational illness compensation benefits, accrued leave, and other liabilities. Except as described in the following 

paragraphs, the financial statements have been prepared from the books and records of DOL, and include the 

accounts of all funds under the control of the DOL reporting entity. All inter-fund balances and transactions have 

been eliminated, except in the Statements of Budgetary Resources, which are presented on a combined basis, as 

required by OMB Circular No. A-136. 

DOL is a party to allocation transfers with other Federal agencies as both a transferring (parent) entity and a 

receiving (child) entity. Allocation transfers are delegations by one department of its authority to obligate budget

authority and outlay funds to another agency as prescribed by law. OMB Circular No. A-136 requires the parent to 

report all budgetary and proprietary activity in its financial statements. DOL (parent entity) allocates appropriations 

to the U.S. Department of Agriculture and the U.S. Department of the Interior (child entities) to provide funds for 

youth training programs. Accordingly, all activity for these allocation accounts is included in the DOL financial 

statements. DOL (child entity) receives allocated appropriations from the U.S. Department of State to support 

international HIV/AIDS relief efforts (parent entity). Accordingly, activity for this allocation account is excluded 

from the DOL financial statements.

U.S. GAAP encompasses both accrual and budgetary transactions. Under accrual accounting, revenues are 

recognized when earned and expenses are recognized when incurred. Budgetary accounting facilitates compliance 

with legal constraints on, and controls over, the use of Federal funds. These financial statements are different from

the financial reports, also prepared by DOL pursuant to OMB directives, used to monitor DOL’s use of budgetary 

resources.

Throughout these financial statements, assets, liabilities, earned revenue, and costs have been classified according 

to the type of entity with whom the transactions were made. Intra-governmental assets and liabilities are those 

from or to other Federal entities. Intra-governmental earned revenue represents collections or accruals of revenue 

from other Federal entities, and intra-governmental costs are payments or accruals of costs to other Federal 

entities. 

C. Funds with U.S. Treasury 

DOL’s cash receipts and disbursements are processed by the U.S. Treasury. Funds with U.S. Treasury represent 

obligated and unobligated balances available to finance allowable expenditures, and restricted balances, including 

amounts related to expired authority and amounts not available for use by DOL. (See Note 2)

D. Investments 

Funds from Dedicated Collections

The Federal Government does not set aside assets to pay future benefits or other expenditures associated with 

DOL’s funds from dedicated collections. The cash receipts collected from the public for funds from dedicated 

collections are deposited in the U.S. Treasury, which uses the cash for general government purposes. Interest 
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2017 and 2016

FY 2017 Agency Financial Report 63 

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES- Continu

D. Investments Continue

earning Treasury securities are issued to DOL’s funds from dedicated collections as evidence of the receipts. These 

Treasury securities are assets to DOL and liabilities to the U.S. Treasury. Because DOL and the U.S. Treasury are 

both parts of the U.S. Government, these assets and liabilities offset each other from the standpoint of the 

government as a whole. For this reason, they do not represent an asset or a liability in the U.S. Government-wide 

financial statements. Treasury securities provide DOL with authority to draw upon the U.S. Treasury to make future 

benefit payments or other expenditures. When DOL requires redemption of these securities to make expenditures, 

the government finances those expenditures out of accumulated cash balances, by raising taxes or other receipts,

by borrowing from the public or repaying less debt, or by curtailing other expenditures, just as the government 

finances all other expenditures.

Balances held in the UTF are invested in non-marketable, special issue Treasury securities (certificates of

indebtedness and bonds) available for purchase exclusively by Federal government agencies and trust funds. 

Special issues are purchased and redeemed at face value (cost), which is equivalent to their net carrying value on

the Consolidated Balance Sheets. Interest rates and maturity dates vary. The UTF special issue Treasury bonds may 

be redeemed, in whole or in part, prior to their maturity date and continue to accrue interest until fully redeemed.

Balances held in the Panama Canal Commission Compensation Fund are invested in marketable Treasury securities. 

These investments are stated at amortized costs that equal their net carrying value on the Consolidated Balance 

Sheet. Discounts and premiums are amortized using the effective interest method. Interest rates and maturity 

dates vary. Management expects to hold these marketable securities until maturity; therefore, no provision is 

made in the financial statements for unrealized gains or losses. (See Note 3)

E. Accounts Receivable, Net of Allowance

Accounts receivable consists of intra-governmental amounts due to DOL, as well as amounts due from the public. 

(See Note 4)

1. Intra-governmental accounts receivabl

The Federal Employees Compensation (FEC) account within the UTF provides unemployment compensation

to eligible Federal employees (UCFE) and ex-service members (UCX). DOL recognizes as accounts receivable 

amounts due from other Federal agencies for unreimbursed UCFE and UCX benefits. DOL’s FECA Special 

Benefit Fund provides workers’ compensation benefits to eligible Federal workers on behalf of other 

Federal agencies. DOL recognizes as accounts receivable amounts due from other Federal agencies to the 

Special Benefit Fund for unreimbursed FECA benefits. 

DOL also has receivables from other Federal agencies for work performed on their behalf under various 

reimbursable agreements.

2. Accounts receivable due from the public

DOL recognizes as accounts receivable state unemployment taxes due from covered employers and 

reimbursements of benefits paid on behalf of other employers. Also recognized as accounts receivable are 

benefit overpayments made to individuals not entitled to receive the benefit.

DOL recognizes as accounts receivable amounts due from the public for fines and penalties levied against 

employers by OSHA, MSHA, WHD, and EBSA and for amounts due from grantees and contractors for grant 

and contract costs disallowed by ETA and other agencies.
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2017 and 2016

64 United States Department of Labor

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES- Continu

E. Accounts Receivable, Net of Allowance Continue

3. Allowance for uncollectible accounts

Accounts receivable due from the public are stated net of an allowance for uncollectible accounts. The 

allowance is estimated based on an aging of account balances, past collection experience, and/or an 

analysis of outstanding accounts at year-end. Intra-governmental accounts receivable are considered fully 

collectible.

F. General Property, Plant and Equipment, Net

The majority of DOL’s general property, plant and equipment (PP&E) is general purpose PP&E held by Job Corps 

centers owned and operated by DOL through a network of contractors. Internal use software is considered general 

purpose PP&E. 

DOL’s capitalization thresholds for assets with a useful life of 2 years or longer and the related depreciable lives are 

displayed in the following table.

Capitalization Threshold Years

Structures, facilities and improvements $500,000 20 - 50

Furniture and equipment $50,000 2 - 36

Internal use software and software in development $500,000 2 - 15

Construction-in-progress $500,000 -

Land $500,000 -

Internal use software development costs are capitalized as software in development until the development stage 

has been completed and successfully tested. Upon completion and testing, they are reclassified as internal use 

software and amortized over their estimated useful lives. 

PP&E purchases and additions are stated at cost. Normal repairs and maintenance are charged to expense as 

incurred. PP&E are depreciated or amortized over their estimated useful lives using the straight-line method. 

Furniture and equipment include a capital lease for the financial management system.

Job Corps center construction costs are capitalized as construction-in-progress until completed. Upon completion 

they are reclassified as structures, facilities, and improvements and depreciated over their estimated useful 

lives. Structures, facilities, and improvements also include a capital lease for a Job Corps facility. Leasehold 

improvements made at Job Corps centers and DOL facilities leased from the General Services Administration (GSA)

are capitalized as construction-in-progress until completed. Upon completion, they are reclassified as 

improvements to leased facilities, and amortized over the remaining life of the lease or the useful life of the 

improvements, whichever is shorter, using the straight-line method of amortization. DOL operating leases have 

one-year terms with multiple option years. The leases are cancelable by the government upon appropriate notice 

as specified in the lease agreements. Historically, these leases have not been canceled and DOL has no intention to 

cancel these leases in the near term. (See Note 5)
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2017 and 2016

FY 2017 Agency Financial Report 65 

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES- Continu

G. Advances

DOL advances consist primarily of payments made to State Employment Security Agencies (SESA) and to grantees 

and contractors to provide for future DOL program expenditures. These advance payments are recorded by DOL as 

an asset, which is reduced when actual expenditures or the accrual of estimated expenditures are recorded by DOL. 

(See Note 6)

H. Non-entity Asset

Assets held by DOL which are not available to DOL for obligation are considered non-entity assets. DOL holds nonentity assets for the Railroad Retirement Board and for transfer to the U.S. Treasury. (See Note 7)

I. Liabilities

Liabilities represent probable amounts to be paid by DOL as a result of past transactions and are recognized when 

incurred, regardless of whether there are budgetary resources available to pay them. However, the liquidation of 

these liabilities will consume budgetary resources and cannot be made until available resources have been 

obligated. For financial reporting purposes, DOL’s liabilities are classified as covered or not covered by budgetary 

resources. 

Liabilities are classified as covered by budgetary resources if budgetary resources are available to pay them. 

Liabilities are also considered covered by budgetary resources if they are to be funded by permanent indefinite 

appropriations, which have been enacted and signed into law and are available for use as of the balance sheet date, 

provided that the resources may be apportioned by OMB without further action by the Congress and without a 

contingency having to be met first. Liabilities are classified as not covered by budgetary resources if budgetary 

resources are not available. (See Note 12)

J. Debt

DOL’s debt consisted of the following:

1. Unemployment Trust Fund advances from U.S. Treasury

UTF advances from U.S. Treasury outstanding as of September 30, 2017 and 2016, represent borrowing 

authority used from the General Fund of the U.S. Treasury pursuant to the authority of Sections 905(d) and 

1203 of the Social Security Act (42 U.S.C. 1323). Although no draws were made on borrowing authority 

during FY 2017 and FY 2016, these advances were appropriated in FY 2017 through three continuing 

resolutions with P.L. 114-223, PL. 114-254, and P.L. 115-30 and an appropriations act P.L. 115-31; and in FY 

2016 through three continuing resolutions with P.L. 114-53, P.L. 114-96 and P.L. 114-100, and an

appropriations act P.L. 114-113. These repayable advances bear interest rates of 2.375% and 2.500%, which 

are equal to the average rate of interest, computed as of the end of the calendar month next preceding the 

date of such advance, borne by all interest bearing obligations of the United States then forming part of the 

public debt; except that in cases in which such average rate is not a multiple of one-eighth of 1 percent, the 

rate of interest shall be the multiple of one-eighth of 1 percent next lower than such average rate in 

accordance with Section 905(d) and Section 1203 of the Social Security Act. Interest on the repayable 

advances is due on September 30th of each year or upon the repayment of an advance and is subject to 

sequestration. Advances are repaid by transfers from the UTF to the General Fund of the U.S. Treasury 

when the Secretary of the Treasury, in consultation with the Secretary of Labor, has determined that the 

balances in the UTF allow repayment. (See Note 8)
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2017 and 2016

66 United States Department of Labor

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES- Continu

J. Debt Continue

2. Black Lung Disability Trust Fund borrowings from U.S. Treasury

The Energy Improvement and Extension Act of 2008 (P.L. 110-343, section 113), enacted October 3, 2008, 

authorized restructuring of the BLDTF debt by the repayment at market value the fund’s outstanding 

repayable Advances from U.S. Treasury, using the proceeds from borrowings from Treasury’s Bureau of the 

Fiscal Service and a one-time appropriation. Pursuant to this authority, in FY 2009, the BLDTF borrowed 

from Treasury $6.496 billion which was structured into 32 discounted instruments with sequential annual 

September 30th maturities over the 32-year period 2009 through 2040, bearing interest rates ranging from 

1.412% to 4.556%. Interest on each instrument accrues until its September 30th maturity date or the 

instrument’s prepayment, whichever occurs first. These debt payments are to be made from the excise 

taxes assessed on domestic sales of coal mined in the United States. In the event that the BLDTF cannot

repay a discounted instrument when it matures, or make benefit payments or other authorized 

expenditures, the Act authorizes the issuance of one-year discounted instruments to finance these 

activities. The BLDTF issued additional debt on September 30, 2016 (due September 30, 2017) bearing an 

interest rate of 0.589%, and on September 30, 2017 (due September 30, 2018) bearing an interest rate of 

1.311%. (See Note 8)

K. Accrued Benefits

The financial statements include a liability for unemployment, workers’ compensation, and disability benefits due 

and payable from various DOL funds, as discussed below. (See Note 10)

1. Unemployment benefits payable

The UTF provides benefits to unemployed workers who meet state and Federal eligibility requirements. 

Regular and extended unemployment benefits are paid from state accounts within the UTF, financed 

primarily by a state unemployment tax on employer payrolls. Fifty percent of the cost of extended 

unemployment benefits is paid from the Extended Unemployment Compensation Account (EUCA) within 

the UTF, financed by a Federal unemployment tax on employer payrolls. The Recovery Act provided for a 

100% Federal funding of Extended Benefits (EB) through December 2009. This 100% Federal funding 

provision, which was extended several times, phased out on January 1, 2014. Although the vast majority of 

EB activity has ceased, states are still reporting residual transactions related to the program on monthly 

reports.

The Recovery Act also provided for FAUC, a $25 weekly supplement entirely funded from Treasury General 

Fund revenues, payable through December 2009, to individuals who were entitled under state law to 

otherwise receive any type of UC. FAUC benefits were extended several times, with phase-out of benefit 

eligibility by December 2010. Although the vast majority of FAUC activity has ceased, states are still

reporting residual transactions related to the program on monthly reports.

EUC benefits, also paid from EUCA, were first authorized by the Supplemental Appropriations Act of 2008.

These benefits were extended by the Recovery Act and other authorizing legislation through January 1, 

2014, and were funded entirely from General Fund appropriations. Although the vast majority of EUC 

activity has ceased, states are still reporting residual transactions related to the program on monthly 

reports.
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2017 and 2016

FY 2017 Agency Financial Report 67 

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES- Continu

K. Accrued Benefits Continue

1. Unemployment benefits payable continue

Unemployment benefits to unemployed Federal workers are paid from the FEC account within the UTF, 

which is then reimbursed by the responsible Federal agency. 

A liability is recognized for unpaid unemployment benefits applicable to the current period and for benefits 

paid by states that have not been reimbursed by the fund. DOL also recognizes a liability for Federal 

employees’ unpaid unemployment benefits for existing claims filed during the current period, payable in 

the subsequent period, to the extent reimbursable by other Federal entities. 

2. Federal employees disability and 10(h) benefits payable

The FECA Special Benefit Fund provides income and medical cost protection to covered Federal civilian 

employees injured on the job, employees who have incurred a work-related occupational disease and 

beneficiaries of employees whose death is attributable to a job-related injury or occupational disease. The 

fund is reimbursed by other Federal agencies for the FECA benefit payments made on behalf of their 

workers. The fund assumes the liability for unreimbursed (non-chargeable) FECA benefits. The fund also 

provides 50% of the annual cost-of-living adjustments for pre-1972 compensation cases under the authority 

of Section 10(h) of the Longshore and Harbor Workers’ Compensation Act and the District of Columbia 

Worker’s Compensation Act. A liability for FECA benefits payable by the Special Benefit Fund to the 

employees of DOL and other Federal agencies and for Section 10(h) benefits is accrued to the extent of 

unpaid benefits applicable to the current period.

3. Black lung disability benefits payable

The BLDTF and Special Benefits for Disabled Coal Miners fund provide compensation and medical benefits 

for eligible coal miners who are totally disabled due to pneumoconiosis (black lung disease). DOL 

recognizes a liability for disability benefits to the extent of unpaid benefits applicable to the current period.

4. Energy employees occupational illness compensation benefits payable

The Energy Employees Occupational Illness Compensation Fund provides benefits to eligible current or 

former employees of the DOE and its contractors suffering from designated illnesses incurred as a result of 

their work with DOE. Benefits are also paid to certain survivors of those employees and contractors, as well 

as to certain beneficiaries of the Radiation Exposure Compensation Act (RECA). DOL recognizes a liability for 

disability benefits to the extent of unpaid benefits applicable to the current period.

L. Future Workers’ Compensation Benefits

The financial statements include an actuarial liability for future workers’ compensation benefits payable by DOL to 

its employees, to employees of the Panama Canal Commission and to enrollees of the Job Corps, as well as benefits 

not chargeable to other Federal agencies, which must be paid by DOL’s FECA Special Benefit Fund. The liability 

includes the expected payments for death, disability, medical, and miscellaneous costs for approved compensation 

cases, as well as a component for incurred but not reported claims. The liability is determined using historical 

benefit payment patterns related to injury years to predict the future payments. 

The actuarial methodology provides for the effects of inflation and adjusts historical payments to constant dollars 

by applying wage inflation factors (cost-of-living adjustments or COLA) and medical inflation factors (consumer 

price index-medical or CPIM) to the calculation of projected benefits.
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2017 and 2016

68 United States Department of Labor

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES- Continu

L. Future Workers’ Compensation Benefits Continue

DOL selects the COLA factors, CPIM factors, and discount rates by averaging the COLA rates, CPIM rates, and 

interest rates for the current and prior four years. Using averaging renders estimates that reflect historical trends 

over five years instead of conditions that exist in one year.

The COLAs and CPIMs used in the projections for FY 2017 and FY 2016 were as follows:

COLA CPIM

_FY_ 2017 2016 2017 2016

2017 N/A 1.31 % N/A 2.99 %

2018 1.22 % 1.13 % 3.20 % 3.09 %

2019 1.35 % 1.23 % 3.52 % 3.40 %

2020 1.59 % 1.45 % 3.80 % 3.68 %

2021 1.99 % 1.85 % 3.99 % 3.87 %

2022+ 2.26 % 1.85 % 3.91 % 3.87 % 

DOL selected the interest rate assumptions whereby projected annual payments were discounted to present value 

based on interest rate assumptions on the U.S. Department of the Treasury’s Yield Curve for Treasury Nominal 

Coupon Issues (the TNC Yield Curve) to reflect the average duration of income payments and medical payments. 

The average durations for income payments and medical payments were 14.7 and 9.5 years in FY 2017 and 14.7 

years and 9.8 years in FY 2016, respectively. Based on averaging the TNC Yield Curves for the current year and the 

prior four years, the interest rate assumptions for income payments and medical payments were 2.683% and 

2.218% in FY 2017 and 2.781% and 2.261% in FY 2016, respectively.

Since FY 2016, there has been an increase in FECA benefits not chargeable to other Federal agencies payable by 

DOL’s FECA Special Benefit Fund (See Note 11). The increase in the liability was due primarily to projected benefits 

under the War Hazards Compensation Act (WHCA), as amended (42 U.S.C. 1701 et seq.). As a result, the number 

and value of WHCA settled claims has increased since FY 2016. To accommodate the claims, starting in FY 2016 

DOL applied a triangle approach that enhanced matching between the actuarial technique and the lump-sum 

nature of the WHCA claims. For both WHCA income payments and medical payments, the interest rate 

assumptions were 2.683% and 2.012% in FY 2017 and FY 2016, respectively.

M. Energy Employees Occupational Illness Compensation Benefits 

The Energy Employees Occupational Illness Compensation Fund, established under the authority of the EEOICPA, 

provides benefits to eligible current or former employees of DOE and its contractors, or to certain survivors of those 

employees and contractors, as well as benefits to certain beneficiaries of RECA. DOL is responsible for adjudicating 

and administering claims filed under the EEOICPA. Effective July 31, 2001, compensation of $150,000 and payment 

of medical expenses from the date a claim is filed are available to covered individuals suffering from designated 

illnesses incurred as a result of their work with DOE.

The Ronald Reagan National Defense Authorization Act of 2005 amended EEOICPA to include Subtitle E –

Contractor Employee Compensation. The amended program grants compensation benefits to covered employees 

and their families for illness and death arising from exposure to toxic substances at a DOE facility. The amendment 

also makes it possible for uranium workers as defined under Section 5 of RECA to receive compensation under Part 

E for illnesses due to toxic substance exposure at a uranium mine or mill covered under that Act.
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2017 and 2016

FY 2017 Agency Financial Report 69 

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES- Continu

M. Energy Employees Occupational Illness Compensation Benefits Continue

The table below presents assumptions and liabilities as of September 30, 2017 and 2016.

Assumptions and Liabilities 2017 2016

Compensation Liabilities as of September 30

Average duration 11.1 years 10.9 years

Interest rate used in discounting 2.395% 2.414%

Undiscounted liability $7.4 billion $6.6 billion

Discounted liability $5.8 billion $5.2 billion

Medical Liabilities as of September 30

Average duration 19.6 years 17.4 years

Interest rate used in discounting 2.933% 2.949%

Medical inflation in future years 1 through 5 6.0% 5.0%

Medical inflation in future years 6+ 5.0% 3.9%

Society of Actuaries Retirement Plans (RP) Mortality Table RP-2014 RP-2014

Undiscounted liability $23.2 billion $15.7 billion

Discounted liability $13.9 billion $10.1 billion

Compensation and Medical Total Liabilities‡ as of September 30

Undiscounted $30.5 billion $22.3 billion

Discounted $19.7 billion $15.4 billion

Period used in discounting 59 years 59 years

‡

Totals may differ slightly due to rounding.

DOL selects interest rate assumptions by averaging interest rates on the TNC Yield Curves for the current and prior 

four years. Using averaging renders estimates that reflect historical trends over five years instead of conditions that 

exist in one year. DOL selected the interest rate assumptions whereby projected payments were discounted to 

present value based on interest rate assumptions on the TNC Yield Curve to reflect the average duration of 

compensation payments and medical payments.

The estimated liability includes the estimated compensation and medical payments for approved cases and filed 

cases pending approval, as well as claims incurred but not yet filed. The actuarial projection methodology provided 

an estimate of the ultimate number of reported cases as a result of estimating future reported claims from the 

historical patterns of reported claims and subsequent claim approval rates. Medical payments were derived by 

estimating an average benefit award per living employee claimant and by applying the Society of Actuaries 

Retirement Plans (RP) 2014 mortality tables.

The increases in undiscounted and discounted total liabilities as of September 30, 2017 were primarily due to the 

increases in the medical inflation assumptions for future years 1 through 5 and for future years 6 and thereafter. 

The medical inflation assumptions were increased due to the increase in medical costs observed over the past two 

years. 
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2017 and 2016

70 United States Department of Labor

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES- Continu

N. Accrued Leave

A liability for annual and compensatory leave is accrued as leave is earned and paid when leave is taken. The 

balance of leave earned but not taken will be paid from future funding sources. Sick leave and other types of nonvested leave are expensed as taken.

O. Employee Health and Life Insurance Benefits

DOL employees are eligible to participate in the contributory Federal Employees Health Benefit Program (FEHBP) 

and the Federal Employees Group Life Insurance Program (FEGLIP). DOL matches the employee contributions to 

each program to pay for current benefits. During FY 2017, DOL’s contributions to the FEHBP and FEGLIP were 

$123.2 million and $2.5 million, respectively. During FY 2016, DOL’s contributions to the FEHBP and FEGLIP were 

$120.5 million and $2.5 million, respectively. These contributions are recognized as current operating expenses.

P. Other Retirement Benefits

DOL employees eligible to participate in the FEHBP and the FEGLIP may continue to participate in these programs 

after their retirement. DOL recognizes a current operating expense for the future cost of these other retirement 

benefits (ORB) at the time the employee’s services are rendered. This ORB expense must be financed by the U.S. 

Office of Personnel Management (OPM). Using cost factors supplied by OPM, DOL recorded ORB imputed costs and 

imputed financing sources of $69.4 million in FY 2017 and $81.9 million in FY 2016.

Q. Employee Pension Benefits

DOL employees participate in either the Civil Service Retirement System (CSRS) or the Federal Employees 

Retirement System (FERS). For employees participating in CSRS, 7.0% of their gross earnings is withheld and 

transferred to the Civil Service Retirement and Disability Fund. DOL contributes an additional 7.0% of the employee 

gross earnings to the Civil Service Retirement and Disability Fund. P.L. 112-96, Section 5001, the “Middle Class Tax 

Relief and Job Creation Act of 2012,” changed the employee and employer contributions for new employees 

participating in FERS. Employees designated by OPM as FERS Revised Annuity Employees (RAEs) were, in general, 

new employees hired on or after January 1, 2013. The Bipartisan Budget Act of 2013, section 401, further changed 

the employee and employer contributions for new employees participating in FERS. Employees designated by OPM 

as FERS Further Revised Annuity Employees (FRAEs) were, in general, hired on or after January 1, 2014. The 

percentages of employee contribution/withholding and DOL contribution under FERS, FERS RAE, and FERS FRAE in 

FY 2017 and FY 2016 are presented in the table below.

Percentage of Gross Earnings

FY 2017 FERS FERS RAE FERS FRAE

Employee contribution/withholding 0.8% 3.1% 4.4%

DOL contribution 13.7% 11.9% 11.9%

FY 2016 FERS FERS RAE FERS FRAE

Employee contribution/withholding 0.8% 3.1% 4.4%

DOL contribution 13.7% 11.9% 11.9%
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2017 and 2016

FY 2017 Agency Financial Report 71 

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES- Continu

Q. Employee Pension Benefits Continue

These totals are transferred to the Federal Employees’ Retirement Fund. The CSRS and FERS retirement funds are 

administered by OPM. DOL contributions to the CSRS and FERS are recognized as current operating expenses. FERS 

participants are also covered under the Federal Insurance Contribution Act (FICA) and are subject to withholdings. 

DOL makes matching FICA contributions, recognized as current operating expenses. DOL’s matching contributions 

were $127.4 million during FY 2017 and $125.5 million for FY 2016. 

The Thrift Savings Plan (TSP) is a defined contribution retirement savings and investment plan for employees 

covered by either CSRS or FERS. CSRS participants may contribute up to $18,000 per year of their gross pay to the 

TSP during calendar years 2017 and 2016, but there is no departmental matching contribution. FERS participants 

may contribute up to $18,000 per year of their gross pay to the TSP during calendar years 2017 and 2016. CSRS and 

FERS participants aged 50 years or older may also contribute an additional $6,000 per year in “catch-up” 

contributions during calendar years 2017 and 2016, but there is no departmental matching on “catch-up” 

contributions. For employees covered under FERS, DOL contributes 1% of the employees’ gross pay to the TSP. DOL 

also matches employees’ contributions dollar-for-dollar on the first 3% of pay contributed each pay period and 50 

cents on the dollar for the next 2% of pay contributed. DOL contributions to the TSP are recognized as current 

operating expenses. Employee and employer contributions to the TSP are transferred to the Federal Retirement 

Thrift Investment Board. (See Note 14) 

DOL recognizes the full cost of providing future CSRS and FERS pension benefits to covered employees at the time 

the employees’ services are rendered. The pension expense recognized in the financial statements equals the 

service cost for covered DOL employees, less amounts contributed by these employees. Service cost represents the 

actuarial present value of benefits attributed to services rendered by covered employees during the accounting 

period. 

The measurement of service cost requires the use of actuarial cost methods to determine the percentage of the 

employees’ basic compensation sufficient to fund their projected pension benefit. These percentages (cost factors) 

are provided by OPM, and applied by DOL to the basic annual compensation of covered employees to arrive at the

amount of total pension expense to be recognized in DOL’s financial statements.

The excess of total pension expense over the amount contributed by the Department and by DOL’s employees 

represents the amount of pension expense which must be financed directly by OPM. DOL recognized an imputed 

cost and an imputed financing source equal to the excess amount. DOL does not recognize in its financial 

statements FERS or CSRS assets, accumulated plan benefits or unfunded liabilities, if any, applicable to its 

employees. (See Note 14)

R. Net Position

DOL’s net position consists of the following:

1. Cumulative results of operations

Cumulative results of operations include the accumulated historical difference between expenses 

consuming budgetary resources and financing sources providing budgetary resources in DOL’s trust, 

revolving, and special funds; liabilities not consuming budgetary resources net of assets not providing 

budgetary resources; and DOL’s net investment in capitalized assets. 
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2017 and 2016

72 United States Department of Labor

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES- Continu

R. Employee Pension Benefits Continue

2. Unexpended appropriations

Unexpended appropriations include the unobligated balances and undelivered orders of DOL’s appropriated 

funds. Unobligated balances associated with appropriations that expire at the end of the fiscal year remain 

available for obligation adjustments, but not new obligations, until those appropriations are cancelled, five 

years after the appropriations expire. Unexpired multi-year and no-year appropriations remain available to 

DOL for obligation in future periods. 

S. Net Cost of Operations 

1. Operating costs 

Full operating costs are comprised of all direct costs consumed by programs and those indirect costs which 

can be reasonably assigned or allocated to programs. Full costs are reduced by exchange (earned) revenues 

to arrive at net program cost. The full and net operating costs of DOL’s major programs are presented in the 

Consolidated Statements of Net Cost, and are also reported by program agency and major program. (See 

Note 15)

2. Earned revenues

Earned revenues arise from exchange transactions which occur through the provision of goods and services 

for a price, and are deducted from the full cost of DOL’s major programs to arrive at net program cost. 

Earned revenues are recognized by DOL to the extent reimbursements are payable from other Federal 

agencies and from the public, as a result of costs incurred or services performed on their behalf. Major 

sources of DOL’s earned revenue include reimbursements to the FECA Special Benefit Fund from Federal 

agencies for the costs of disability compensation and medical care provided to or accrued on behalf of their 

employees and reimbursements to the UTF from Federal agencies for the cost of unemployment benefits 

provided to or accrued on behalf of their former employees. (See Note 15)

T. Budgetary Financing Sources

Budgetary financing sources other than earned revenues provide funding for the Department’s net cost of 

operations and are reported on the Consolidated Statements of Changes in Net Position. These financing sources 

include appropriations received, less appropriations transferred and not available, non-exchange revenue, and 

transfers without reimbursement, as discussed below:

1. Appropriations received, appropriations used, appropriations transferred, and adjustments

DOL receives financing sources through congressional appropriations to support its operations. A financing 

source is recognized for these appropriated funds received, less appropriations transferred, or adjusted due 

to rescission, cancellation, sequestration, or return of permanent indefinite authority. Appropriations are 

considered used as a financing source when goods and services are received or benefits are provided.
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2017 and 2016

FY 2017 Agency Financial Report 73 

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES- Continu

T. Budgetary Financing Sources Continue

2. Non-exchange revenue

Non-exchange revenues arise primarily from the Federal government’s power to demand payments from 

the public. Non-exchange revenues are recognized by DOL on the Consolidated Statements of Changes in 

Net Position and are discussed below. (See Note 16)

Employer taxes 

Employer tax revenues are recognized on a modified cash basis, to the extent of cash transferred by the 

collecting entity to DOL, plus the change in inter-entity balances between the collecting entity and DOL. 

Inter-entity balances represent revenue received by the collecting entity, net of amounts due to the 

collecting entity and adjustments made to previous transactions by the collecting entity which have not 

been transferred to DOL. 

Federal and state unemployment taxes represent non-exchange revenues collected from employers based 

on wages paid to employees in covered employment. Federal unemployment taxes are collected by the

Internal Revenue Service and transferred to designated accounts within the UTF. State unemployment taxes 

are collected by each state and deposited in separate state accounts within the UTF. Among other things, 

Federal unemployment taxes are used to pay the Federal share of extended unemployment benefits and to 

provide for Federal and state administrative expenses related to the operation of the UI program, 

employment services including veterans’ ES, and foreign labor certifications (FLC). Additional Federal

collections from states with advances from the fund that have been outstanding for more than two years 

are used to reduce states’ outstanding advance balances. State unemployment taxes are restricted in their 

use to the payment of unemployment benefits.

Black Lung Disability Trust Fund excise tax

Black Lung Disability Trust Fund excise tax revenues are recognized on a modified cash basis, to the extent 

of warrants posted by Government-Wide Accounting and the Bureau of the Fiscal Service Funds into the 

BLDTF. These taxes are imposed on coal sold by producers from mines located in United States. The BLDTF 

excise taxes are used to pay BLDTF benefits, administrative costs, and debt as mentioned in Note 1.J.2. The 

BLDTF excise taxes are restricted to these uses. (See Note 1.W)

Interest

The UTF, the Panama Canal Commission Compensation Fund, and the Energy Employees Occupational 

Illness Compensation Fund receive interest on fund investments. The UTF receives interest from states that 

had accounts with loans payable to the Federal Unemployment Account (FUA) at the end of the prior fiscal

year. Interest is also earned on Federal funds in the possession of non-Federal entities. Interest is 

recognized as non-exchange revenue when earned. 

Reimbursement of unemployment benefits and other

The UTF receives reimbursements from state and local government entities and non-profit organizations for 

the cost of unemployment benefits provided to or accrued on behalf of their employees. These 

reimbursements are recognized as non-exchange revenue when earned. 
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2017 and 2016

74 United States Department of Labor

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES- Continu

T. Budgetary Financing Sources Continue

3. Transfers without reimbursement

Transfers recognized as budgetary financing sources by DOL include transfers from the Department of 

Homeland Security H-1B Nonimmigrant Petitioner Account to H-1B Funds in ETA and WHD. There are also 

transfers between DOL entities, primarily for the administration of the UI program. (See Note 17)

U. Other Financing Sources

Other financing sources include items that do not represent budgetary resources. 

1. Imputed financing from costs absorbed by others

Financing sources are imputed and recognized by DOL, to provide for pension and other retirement benefit 

expenses financed by OPM and cybersecurity expenses financed by the Department of Homeland Security. 

(See Notes 1-P, 1-Q, and 14) 

2. Transfers without reimbursement

Transfers recognized as other financing sources by DOL include the transfers of property from the GSA. (See 

Note 17)

V. Custodial Activity

DOL collects and transfers to the General Fund of the U.S. Treasury custodial non-exchange revenues for penalties

levied against employers by OSHA, MSHA, WHD, and EBSA for regulatory violations; and for FECA administrative 

costs assessed against government corporations in excess of amounts reserved to finance capital improvements in 

the FECA Special Benefit Fund; and for ETA collections and administrative charges and restitution payments. These 

collections are not available to the agencies for obligation or expenditure. Penalties and other assessments are 

recognized as custodial non-exchange revenues when collected or subject to collection. (See Note 20)

W. Significant Assumptions Used in the Statements of Social Insurance (FY 2016 Information is

Unaudited) and Statements of Changes in Social Insurance Amounts (FY 2017 and FY 2016 

Information is Unaudited)

1. Program Background

The Black Lung Disability Benefit Program provides for compensation, medical, and survivor benefits for 

eligible coal miners who are totally disabled due to pneumoconiosis (black lung disease) arising out of their 

coal mine employment and the BLDTF provides benefit payments when no responsible mine operator 

(RMO) can be assigned the liability or when the liability is adjudicated to the BLDTF, which may occur as a 

result of, among other things, bankruptcy of the RMO. The OWCP administers the program.

The Federal Coal Mine Health and Safety Act sets Black Lung benefits at 37.5% of the base salary of a 

Federal employee at level GS-2, Step 1. Black lung disability benefit payments are funded by excise taxes 

from coal mine operators based on the domestic sale of coal, as are the fund’s administrative costs. These 

taxes are collected by the Internal Revenue Service and transferred to the BLDTF, which was established 

under the authority of the Black Lung Benefits Revenue Act, and administered by the U.S. Department of 

the Treasury.
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2017 and 2016

FY 2017 Agency Financial Report 75 

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES- Continu

W. Significant Assumptions Used in the Statements of Social Insurance (FY 2016 Information is

Unaudited) and Statements of Changes in Social Insurance Amounts (FY 2017 and FY 2016 

Information is Unaudited) - Continued

1. Program Background continue

P.L. 110-343, Division B-Energy Improvement and Extension Act of 2008, enacted on October 3, 2008, 

among other things, restructured the BLDTF debt by refinancing the outstanding high interest rate 

repayable advances with low interest rate discounted debt instruments similar in form to zero-coupon 

bonds, plus a one-time appropriation. This Act also allowed that any subsequent debt issued by the BLDTF 

may be used to make benefit payments, other authorized expenditures, or to repay debt and interest from 

the initial refinancing. (See Notes 1-J and 8)

2. Significant Assumptions

The significant assumptions used in the projections for the Statements of Social Insurance (SOSI) are the 

coal excise tax revenue estimates, the tax rate structure, the number of beneficiaries, life expectancy, 

Federal civilian pay raises, medical cost inflation, and the interest rates used to discount future cash flows. 

These assumptions affect the amounts reported on the SOSI, summary section, and the Statements of

Changes in Social Insurance Amounts (SCSIA). The valuation date is September 30 for each year of 

information presented in the SOSI, including the summary section, and the SCSIA.

Estimated future excise tax income

The black lung coal excise tax rates are $1.10 per ton of underground-mined coal and $0.55 per ton of 

surface-mined coal sold, with a cap of 4.4% of sales price; these rates continue until the earlier of 

December 31, 2018 (used in the presentation of the SOSI and SCSIA) or the first December 31 in which 

there exists no (1) balance of repayable debt described in section 9501 of the Internal Revenue Code and 

(2) unpaid interest on the debt. At that time, the tax rates will revert to $0.50 per ton of undergroundmined coal and $0.25 per ton of surface-mined coal sold, with a limit of 2.0% of sales price.

FYs 2013 through 2016

For FYs 2013 through 2016, DOL estimated future excise tax income using two approaches: one approach

was used for the first ten years in the projection period and another approach was used for the remaining

years in the projection period. For FYs 2013 through 2015, DOL’s projections were based on the estimates 

provided by Treasury’s Office of Tax Analysis (OTA) which provided estimates of future excise tax income

of the black lung excise tax for the first ten years in the projection period. OTA’s estimates are based on

projections of future coal production prepared by the Energy Information Administration (EIA) of the U.S. 

Department of Energy and coal sale prices prepared by OMB. In FYs 2015 and 2016, OTA used EIA 

projections of future coal production that reflected, among other things, regulation pursuant to the Clean

Power Plan (CPP). In FY 2016, DOL refined the approach to enhance alignment with recent experience; 

projections were based on estimates provided by OTA (by averaging estimates provided in FYs 2015 and 

2016 to reflect regulation pursuant to the CPP), DOL’s actual excise tax collections, and actual coal 

production as reported by EIA.

For the remaining years in the projection period, DOL applied a growth rate to the projection for the tenth 

year and grew the estimates of future excise tax income year-by-year. In FY 2016, DOL further refined the 

approach for selecting the growth rate to enhance consistency of future tax receipts over the projection 
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2017 and 2016

76 United States Department of Labor

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES- Continu

W. Significant Assumptions Used in the Statements of Social Insurance (FY 2016 Information is

Unaudited) and Statements of Changes in Social Insurance Amounts (FY 2017 and FY 2016 

Information is Unaudited) - Continued

2. Significant Assumptions  continue

period. In FY 2016, the growth rate was based on the average EIA growth rates for future coal production 

that reflected, among other things, regulation pursuant to the CPP, adjustments to exclude coal exports

and lignite (coal exports and lignite are not subject to black lung excise tax), and inflation. In FY 2015, the 

growth rate was based on the average EIA growth rates for future coal production that reflected, among 

other things, regulation pursuant to the CPP. In FYs 2013 and 2014, for the remaining years, estimates of 

future excise tax income used a growth rate based on both historical tax receipts and the Treasury’s 

estimated tax receipts.

In February 2016 the U.S. Supreme Court (SCOTUS) stayed implementation of regulation pursuant to the 

CPP due to litigation pending in the U.S. Court of Appeals (USCA); as of September 30, 2016, the stay

remained in effect. DOL did not change its sources or approaches for estimating future excise tax income 

for the valuation date as of September 30, 2016 because of the SCOTUS stay.

FY 2017

In FY 2017, DOL developed a model for estimating future excise tax income for all years in the projection 

period. Among other things, the DOL-developed model was based on historical Treasury excise tax 

collections and EIA projections of future coal production and coal prices. Historical values for EIA coal 

production and Internal Revenue Service excise tax collections provide the initial coal production and sales 

price data to which growth rates are applied. The growth rates are derived from EIA projections of coal 

production (which are adjusted to exclude coal exports, lignite, and inventory) and average coal prices. 

The growth rates are applied to the initial production and sales price data to project the estimated future 

excise tax income. Other assumptions include that, in the long term, ratios for surface- and undergroundmined coal, taxed on tonnage or sales price, remain consistent.

In order to be consistent with Executive Branch policy on regulations pursuant to the CPP, DOL’s estimates 

of future excise tax income were based on, among other things, EIA projections that do not reflect CPP 

regulation. On August 8, 2017, the USCA ordered that the CPP litigation be held in abeyance for 60 days. 

As of September 30, 2017, the USCA abeyance remained in effect and the February 2016 SCOTUS stay of 

CPP regulation remained in effect.

Estimated future administrative costs

For the first ten years in the projection period, estimates for future administrative costs are supplied by 

DOL’s Budget Office, based on current year enacted amounts. For the remaining years in the projection 

period, estimates for future administrative costs are based on the number of projected beneficiaries. 

Actuarial future benefit payments to disabled coal miners and dependent survivors

The beneficiary population data is updated from information supplied by the program. The closed group 

population consists of those who are already participants as of September 30 (the beginning of the 

projection period); the open group population consists of participants in the closed group, plus new 

participants who will join during the projection period. New participants include, among others, estimates 
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2017 and 2016

FY 2017 Agency Financial Report 77 

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES- Continu

W. Significant Assumptions Used in the Statements of Social Insurance (FY 2016 Information is

Unaudited) and Statements of Changes in Social Insurance Amounts (FY 2017 and FY 2016 

Information is Unaudited) - Continued

2. Significant Assumptions  continue

for participants for whom the BLDTF has an adjudicated liability as of September 30 (due to, among other 

things, bankruptcy of the RMO), but had not yet been added to the rolls. 

In FYs 2013 through 2015, the beneficiary population was assumed to be a nearly closed universe in which 

attrition by death exceeded new entrants by a ratio of more than ten to one; projections for new 

participants were included in the overall projections and were considered immaterial. Therefore, in FYs 

2013 through 2015, the difference between the closed group population and the open group population 

due to new participants was immaterial and the SOSI presents the same values for the closed group and 

open group, including the closed group measure and open group measure. 

During FY 2016, the number of participants who joined the rolls increased due to, among other things, 

adjudicated liability as a result of RMO bankruptcy; projections for the number of new participants 

increased for similar reasons and the BLDTF management determined that the difference between the size 

of the closed group population and the open group population merited separate reporting for new 

participants. Effective for FY 2016 reporting and subsequent years, the SOSI presents values for the closed 

group, new participants, and open group. For FY 2017, projections for the number of new participants 

also increased.

In FYs 2013 through 2015, U.S. Social Security Administration (SSA) life tables were used to project the life 

expectancies of the beneficiary population, whereas in FYs 2016 and 2017, a blend of SSA tables and 

historical program data was used. OMB supplies assumptions for future monthly benefit rate increases 

based on increases in the Federal pay scale and future medical cost inflation based on increases in the 

CPIM, which are used to calculate future benefit costs.

During the current projection period, the future benefit rate (annualized for the fiscal year) increases 1.3% 

in 2018, 1.5% per year for 2019 through 2022, 1.7% in 2023, and 1.8% in 2024 and each year thereafter 

and medical cost increases 8.6% per year for 2018 through 2020, 7.6% in 2021, 6.5% in 2022 and 5.4% in 

2023 and each year thereafter. 

Other significant assumptions

Estimated future excise tax income and estimated future administrative costs were allocated to the closed 

group and new participant populations based on the ratio of each population’s future benefit payments to 

the sum of future benefit payments for both populations.

For the SOSI with valuation dates as of September 30, 2013, 2014, 2015, and 2016, the projection period 

had a fixed terminus of September 30, 2040, the date when the BLDTF’s last debt instrument matured. A

projection period ending at September 30, 2040 illustrated the future long-term condition and 

sustainability of the fund because it presented the value for open group measure plus fund assets (Funds 

with U.S. Treasury and receivables from benefit overpayments) available to service the BLDTF debt and 

interest until the last debt instrument matured.
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2017 and 2016

78 United States Department of Labor

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES- Continu

W. Significant Assumptions Used in the Statements of Social Insurance (FY 2016 Information is

Unaudited) and Statements of Changes in Social Insurance Amounts (FY 2017 and FY 2016 

Information is Unaudited) - Continued

2. Significant Assumptions  continue

In FY 2017, DOL revised the projection period from a fixed terminus of September 30, 2040 to a rolling 25-

year projection period that begins on the September 30 valuation date each year; using a 25-year 

projection period enhances comparability of social insurance information and continues to illustrate the 

fund’s long-term condition and sustainability. The revised projection period became effective for the 

September 30, 2017 valuation date.

In FYs 2014 through 2017, DOL’s approach for selecting the interest rate assumptions used to discount 

projected annual cash flows enhanced matching between the timing of cash flows and interest rates and 

increased comparability; the approach had been refined in FY 2014. The approach discounts projected 

annual cash flows to present value based on Treasury rates that reflect the average duration of cash flows. 

The table below presents the average duration in years and discount rates that were used in FYs 2014, 

2015, 2016, and 2017.

Projected Annual

Cash Flows

Used for the Closed Group,

New Participant, and Open Group Populations

FY 2017 Average Duration Discount Rate

Coal excise tax income 11.4 years 2.25%

Administrative costs 11.2 years 2.25%

Income benefit payments 9.8 years 2.13%

Medical benefit payments 11.4 years 2.25%

FY 2016 Average Duration Discount Rate

Coal excise tax income 10.6 years 1.63%

Administrative costs 11.0 years 1.63%

Income benefit payments 9.8 years 1.63%

Medical benefit payments 10.8 years 1.63%

FY 2015 Average Duration Discount Rate

Coal excise tax income 10.6 years 2.25%

Administrative costs 11.2 years 2.25%

Income benefit payments 10.3 years 2.25%

Medical benefit payments 11.2 years 2.25%

FY 2014 Average Duration Discount Rate

Coal excise tax income 12.2 years 2.63%

Administrative costs 11.2 years 2.63%

Income benefit payments 10.4 years 2.50%

Medical benefit payments 11.3 years 2.63%

In FY 2013, projected annual cash flows were discounted to present value based on OMB’s interest rate 

assumptions which were interpolated to reflect the average duration of cash flows; the discount rates 

ranged between 2.79% and 2.95%. 

3. Disclosures for the social insurance financial statements

As presented in the SOSI, the accumulated deficit of all past disbursements over past cash receipts, 

including interest on investments, is $(5.61) billion, the amount of the trust fund net position deficit at the 

start of the projection period, September 30, 2017. 
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2017 and 2016

FY 2017 Agency Financial Report 79 

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES- Continu

W. Significant Assumptions Used in the Statements of Social Insurance (FY 2016 Information is

Unaudited) and Statements of Changes in Social Insurance Amounts (FY 2017 and FY 2016 

Information is Unaudited) - Continued

3. Disclosures for the social insurance financial statements continue

As presented in the SOSI, the closed group measure is calculated by subtracting the closed group outflows 

for the: 

(a) present value of estimated future administrative costs and 

(b) actuarial present value of future benefit payments to disabled coal miners and dependent survivors 

who are current participants (closed group)

from the closed group inflows for the: 

(c) present value of estimated future excise tax income during the projection period. 

As presented in the SCSIA, as a result of changes in the assumptions above: 

o In FY 2017, the open group measure decreased by $(859.0) million primarily due to projected lower 

coal excise tax revenues and projected higher costs of beneficiaries as a result of, among other 

things, projected higher costs for new participants; and 

o In FY 2016, the open group measure decreased by $(706.7) million primarily due to projected lower 

coal excise tax revenues and higher administrative costs, offset in part due to the change in interest 

rates used to discount the cash flows from 2.25% in FY 2015 to 1.63% in FY 2016.

The SOSI as of September 30, 2015, 2014, and 2013 were reclassified to conform to the presentation of 

the SOSI as of September 30, 2017 and 2016. There were no changes in the values reported for the

o closed group, including the closed group measure,

o open group, including the open group measure,

o trust fund net position deficit,

o funds with U.S. Treasury and receivables from benefits overpayments,

o total of closed group measure plus fund assets, or

o total of open group measure plus fund assets

as of September 30, 2015, 2014, and 2013.

The projection period illustrates the future long-term condition and sustainability of the fund because it 

presents the value for open group measure plus fund assets (Funds with U.S. Treasury plus receivables 

from benefit overpayments) available to service the fund’s debt and interest. As of September 30, 2017, 

the open group measure plus fund assets is $175.7 million whereas the BLDTF debt and interest maturing 

on September 30, 2018 is $1.86 billion and the carrying value of all BDLTF debt as of September 30, 2017 is 

$5.74 billion. The excess of BLDTF debt over the open group measure plus fund assets together with the 

fund deficit of $(5.61) billion represent a material concentration of risk for the Department.
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2017 and 2016

80 United States Department of Labor

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES- Continu

W. Significant Assumptions Used in the Statements of Social Insurance (FY 2016 Information is

Unaudited) and Statements of Changes in Social Insurance Amounts (FY 2017 and FY 2016 

Information is Unaudited) - Continued

3. Disclosures for the social insurance financial statements continue

Subsequent Events. The August 8, 2017 USCA abeyance order expired; on November 9, 2017, the USCA 

issued another order to abey litigation pursuant to the CPP for 60 days. As of November 15, 2017, the

o February 2016 SCOTUS stay of regulation pursuant to the CPP remained in effect and

o November 9, 2017 USCA order to abey litigation pursuant to the CPP remained in effect. 

For FY 2017 reporting, DOL’s assumptions did not include regulation pursuant to the CPP. As of November 

15, 2017, these assumptions remained consistent with Executive Branch policy on regulation pursuant to 

the CPP.

X. Tax Exempt Status

As an agency of the Federal government, the Department is exempt from all taxes imposed by any governing body 

whether it is a Federal, state, commonwealth, local, or foreign government. 

Y. Application of Critical Accounting Estimates

The financial statements are based on the selection of accounting policies and the application of significant 

accounting estimates, some of which require management to make significant assumptions. 

Estimates and assumptions affect the reported amounts of assets and liabilities and the reported amounts of 

revenues and expenses during the reporting period. Actual results could differ from those estimates.

Estimates and assumptions also affect the amounts reported on the SOSI and the SCSIA. Further, the estimates are 

based on current conditions that may change in the future. Actual results could differ materially from the estimated 

amounts. The financial statements include information to assist in understanding the effect of changes in 

assumptions to the related information.

Z. Effects of Hurricanes 

Management has evaluated DOL’s program and administrative costs incurred through September 30, 2017 in 

response to Hurricanes Harvey, Irma, and Maria and has determined that the costs do not materially impact the 

financial statements.

DOL conducted assessments of its PP&E for damage caused by the hurricanes and management has determined 

that there are no material impairments that require adjustment to the carrying value of assets or disclosure in the 

financial statements.
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2017 and 2016

FY 2017 Agency Financial Report 81 

NOTE 2 FUNDS WITH U.S. TREASUR

Funds with U.S. Treasury as of September 30, 2017, consisted of the following:

(Dollars in thousands) Revolving Funds Trust Funds Special Funds General Funds Other Total

Unobligated Balance Available $ 219 $ 146 $ 104,146 $ 3,035,948 $ - $ 3,140,459

Unobligated Balance Unavailable 7,116 - 63,948 686,469 - 757,533

Obligated Balance Not Yet Disbursed 204,620 11,432 613,657 6,881,611 - 7,711,320

Non-Budgetary Fund Balance with Treasury - 507,359 127 66 4,293 511,845

Total Entity Assets 211,955 518,937 781,878 10,604,094 4,293 12,121,157

Non-entity Assets - (172) - - 712 540

Fund Balance with Treasury $ 211,955 $ 518,765 $ 781,878 $ 10,604,094 $ 5,005 $12,121,697

Funds with U.S. Treasury as of September 30, 2016, consisted of the following:

(Dollars in thousands) Revolving Funds Trust Funds Special Funds General Funds Other Total

Unobligated Balance Available $ 11,371 $ 138 $ 111,636 $ 2,960,740 $ - $ 3,083,885

Unobligated Balance Unavailable 5,696 - 54,423 774,960 - 835,079

Obligated Balance Not Yet Disbursed 180,495 11,891 650,129 6,686,753 - 7,529,268

Non-Budgetary Fund Balance with Treasury - 505,868 188 66 - 506,122

Total Entity Assets 197,562 517,897 816,376 10,422,519 - 11,954,354

Non-entity Assets - (86) - - 6,462 6,376

Fund Balance with Treasury $ 197,562 $ 517,811 $ 816,376 $ 10,422,519 $ 6,462 $11,960,730

Obligated and unobligated balances differ from the amounts reported on the Combined Statements of Budgetary 

Resources because budgetary balances are supported by amounts other than Fund Balance with Treasury, such as 

investments. Non-Budgetary Fund Balance with Treasury consists of amounts included in Fund Balance with 

Treasury but excluded from the Department’s budgetary resources, such as sequestered budget authority.

The negative fund balance reported as of September 30, 2017 and 2016, relates to the UTF and is the result of the 

timing of processing the investments and redemptions of UTF. The investments and redemptions relating to the last 

business day of the month are not processed until the first day of the next month. This results in a negative cash 

position for the preceding business day when the disbursements are greater than the receipts to the fund.

Annual and multi-year budget authority expires at the end of its period of availability. During the first through the 

fifth expired years, the unobligated balance is unavailable and may be used to adjust obligations and disbursements 

that were recorded before the budgetary authority expired or to meet a legitimate or bona fide need arising in the 

fiscal year for which the appropriation was made. The unobligated balance for no-year budget authority may be 

used to incur obligations indefinitely for the purpose specified by the appropriation act. No-year budget authority 

unobligated balances, except those specifically exempt, are subject to the annual apportionment and allotment 

process.

Unobligated Balance Available as of September 30, 2017 and 2016, includes $464.5 million and $466.7 million, 

respectively, of funds apportioned for use in the subsequent year period.
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2017 and 2016

82 United States Department of Labor

NOTE 3  INVESTMENT

Investments as of September 30, 2017, consisted of the following:

Face Premium Interest Net Market

(Dollars in thousands) Value (Discount) Receivable Value Value

Unemployment Trust Fund

Non-marketable

Special issue U.S. Treasury Bonds

 2.250% maturing June 30, 2019 $ 31,494,485 $ - $ 177,156 $ 31,671,641 $ 31,494,485

 2.250% maturing June 30, 2018 20,222,053 - 113,749 $ 20,335,802 20,222,053

Special issue Certificate of Indebtedness

 2.250% maturing June 30, 2018 8,994,316 - 31,832 9,026,148 8,994,316

$ 60,710,854 $ - $ 322,737 $ 61,033,591 $ 60,710,854

Panama Canal Commission

 Compensation Fund

Marketable

U.S. Treasury Notes

 4.250% maturing November 15, 2017 33,064 127 527 33,718 33,064

$ 60,743,918 $ 127 $ 323,264 $ 61,067,309 $ 60,743,918

Entity investments $ 60,667,972 $ 127 $ 322,860 $ 60,990,959 $ 60,667,972

Non-entity investments 75,946 - 404 76,350 75,946

$ 60,743,918 $ 127 $ 323,264 $ 61,067,309 $ 60,743,918
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2017 and 2016

FY 2017 Agency Financial Report 83 

NOTE 3  INVESTMENTS- Continu

Investments as of September 30, 2016, consisted of the following:

Face Premium Interest Net Market

(Dollars in thousands) Value (Discount) Receivable Value Value

Unemployment Trust Fund

Non-marketable

Special issue U.S. Treasury Bonds

 2.250% maturing June 30, 2018 $ 19,404,903 $ - $ 109,153 $ 19,514,056 $ 19,404,903

 2.250% maturing June 30, 2017 25,217,893 - 141,851 25,359,744 25,217,893

Special issue Certificate of Indebtedness

 2.250% maturing June 30, 2017 9,153,650 - 32,964 9,186,614 9,153,650

$ 53,776,446 $ - $ 283,968 $ 54,060,414 $ 53,776,446

Panama Canal Commission

 Compensation Fund

Marketable

U.S. Treasury Notes

 4.625% maturing November 15, 2016 37,112 188 644 37,944 37,112

$ 53,813,558 $ 188 $ 284,612 $ 54,098,358 $ 53,813,558

Entity investments $ 53,745,822 $ 188 $ 284,254 $ 54,030,264 $ 53,745,822

Non-entity investments 67,736 - 358 68,094 67,736

$ 53,813,558 $ 188 $ 284,612 $ 54,098,358 $ 53,813,558
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2017 and 2016

84 United States Department of Labor

NOTE 4  ACCOUNTS RECEIVABLE, NET OF ALLOWANC

Accounts receivable, net as of September 30, 2017, consisted of the following:

Gross Net

(Dollars in thousands) Receivables Allowance Receivables

Entity intra-governmental assets

Due for UCFE and UCX benefits $ 174,436 $ - $ 174,436

Due for workers' compensation benefits 5,215,870 - 5,215,870

Other 5,932 - 5,932

 5,396,238 - 5,396,238

Entity assets

State unemployment taxes 979,021 (688,746) 290,275

Due from reimbursable employers 508,816 (62,582) 446,234

Benefit overpayments 2,454,345 (2,024,907) 429,438

Other 11,005 (1,681) 9,324

 3,953,187 (2,777,916) 1,175,271

Non-entity assets

Fines and penalties 215,937 (38,991) 176,946

 4,169,124 (2,816,907) 1,352,217

$ 9,565,362 $ (2,816,907) $ 6,748,455

Accounts receivable, net as of September 30, 2016, consisted of the following:

Gross Net

(Dollars in thousands) Receivables Allowance Receivables

Entity intra-governmental assets

Due for UCFE and UCX benefits $ 211,619 $ - $ 211,619

Due for workers' compensation benefits 5,321,691 - 5,321,691

Other 1,364 - 1,364

 5,534,674 - 5,534,674

Entity assets

State unemployment taxes 1,039,105 (747,876) 291,229

Due from reimbursable employers 502,969 (43,261) 459,708

Benefit overpayments 2,922,204 (2,450,209) 471,995

Other 4,677 - 4,677

 4,468,955 (3,241,346) 1,227,609

Non-entity assets

Fines and penalties 192,142 (40,722) 151,420

 4,661,097 (3,282,068) 1,379,029

$ 10,195,771 $ (3,282,068) $ 6,913,703

The September 30, 2017 intra-governmental balance due for workers’ compensation benefits includes $1.51 billion 

in billed receivables from the U.S. Postal Service (USPS), of which $1.36 billion was billed in fiscal year 2017. The 

USPS reimbursed the Fund for costs incurred on its behalf during FY 2017 and 2016, except for a portion of the 

scheduled chargeback payment for the 12 months ended June 30, 2016, in the amount of $151 million that the 

USPS continued to withhold from payment since October 2016. However, OWCP considers all intra-governmental 

receivables fully collectible in general and, specifically, based on the statutory provision requiring the chargeback 

payment.
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2017 and 2016

FY 2017 Agency Financial Report 85 

NOTE 5  GENERAL PROPERTY, PLANT AND EQUIPMENT, NET

General property, plant and equipment, net as of September 30, 2017, consisted of the following:

Accumulated

Depreciation/ Net Book

(Dollars in thousands) Cost Amortization Value

Structures, facilities and improvements

Structures and facilities $ 1,596,640 $ (767,283) $ 829,357

Improvements to leased facilities 397,862 (317,119) 80,743

 1,994,502 (1,084,402) 910,100

Furniture and equipment

Equipment held by contractors 95,128 (95,128) -

Furniture and equipment 70,250 (45,469) 24,781

 165,378 (140,597) 24,781

Internal use software and software in development 272,150 (165,644) 106,506

Construction-in-progress 69,966 - 69,966

Land 99,515 - 99,515

$ 2,601,511 $ (1,390,643) $ 1,210,868

2017

General property, plant and equipment, net as of September 30, 2016, consisted of the following:

Accumulated

Depreciation/ Net Book

(Dollars in thousands) Cost Amortization Value

Structures, facilities and improvements

Structures and facilities $ 1,586,263 $ (721,587) $ 864,676

Improvements to leased facilities 398,136 (308,606) 89,530

 1,984,399 (1,030,193) 954,206

Furniture and equipment

Equipment held by contractors 115,414 (115,414) -

Furniture and equipment 76,823 (45,197) 31,626

 192,237 (160,611) 31,626

Internal use software and software in development 267,659 (153,398) 114,261

Construction-in-progress 64,471 - 64,471

Land 99,516 - 99,516

$ 2,608,282 $ (1,344,202) $ 1,264,080

2016
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2017 and 2016

86 United States Department of Labor

NOTE 6  ADVANCE

Advances as of September 30, 2017 and 2016, consisted of the following:

(Dollars in thousands) 2017 2016

Intra-governmental

Advances $ 6,389 $ 3,409

Advances to states for UI benefit payments 1,119,362 1,104,566

Other 11,411 1,406

 1,130,773 1,105,972

$ 1,137,162 $ 1,109,381

NOTE 7  NON-ENTITY ASSE

Non-entity assets as of September 30, 2017 and 2016, consisted of the following:

(Dollars in thousands) 2017 2016

Intra-governmental

Funds with U.S. Treasury $ 540 $ 6,376

Investments 76,350 68,094

 76,890 74,470

Accounts receivable, net of allowance 176,946 151,420

Total non-entity assets 253,836 225,890

Total entity assets 82,031,655 75,120,362

$ 82,285,491 $ 75,346,252

NOTE 8  DEB

Debt during FY 2017 consisted of the following:

Balance at Balance at

September 30, Additional Repayment of Interest September 30,

(Dollars in thousands) 2016 Borrowing Debt Change 2017

Intra-governmental debt to Treasury

Unemployment Trust Fund

 Advances from U.S. Treasury $ 8,558,484 $ - $ (5,922,657) $ (11,546) $ 2,624,281

Black Lung Disability Trust Fund

 Borrowing from U.S. Treasury 5,706,431 1,285,000 (1,303,126) 55,672 5,743,977

$ 14,264,915 $ 1,285,000 $ (7,225,783) $ 44,126 $ 8,368,258

Debt during FY 2016 consisted of the following:

Balance at Balance at

September 30, Additional Repayment of Interest September 30,

(Dollars in thousands) 2015 Borrowing Debt Change 2016

Intra-governmental debt to Treasury

Unemployment Trust Fund

 Advances from U.S. Treasury $ 12,840,065 $ - $ (4,265,223) $ (16,358) $ 8,558,484

Black Lung Disability Trust Fund

 Borrowing from U.S. Treasury 5,687,121 910,000 (981,213) 90,523 5,706,431

$ 18,527,186 $ 910,000 $ (5,246,436) $ 74,165 $ 14,264,915
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2017 and 2016

FY 2017 Agency Financial Report 87 

NOTE 8  DEBT- Continu

For the year ended September 30, 2017, interest expense for the UTF was $142.5 million, of which 132.6 million 

was paid, along with an additional interest payment of $21.4 million for interest accrued through September 30, 

2016. For the year ended September 30, 2016, interest expense for the UTF was $314.3 million, of which $293.0

million was paid, along with an additional interest payment of $37.7 million for interest accrued through 

September 30, 2015.

For the year ended September 30, 2017, interest expense for the BLDTF was $208.4 million, of which $55.6 million 

was capitalized interest and $152.8 million was paid. For the year ended September 30, 2016, interest expense for 

the BLDTF was $213.7 million, of which $90.5 million was capitalized interest and $123.2 million was paid. 

NOTE 9  OTHER LIABILITIE

Other liabilities as of September 30, 2017 and 2016, consisted of the following:

(Dollars in thousands) 2017 2016

Intra-governmental

Non-entity receivables due to U.S. Treasury $ 176,946 $ 151,420

Amounts held for the Railroad Retirement Board 76,177 68,007

Accrued payroll and other liabilities 23,530 30,384

Total intra-governmental 276,653 249,811

Grant accruals 581,198 664,518

Capital lease liability 35,708 37,271

Environmental and disposal liability 34,972 34,885

Accrued payroll and other liabilities 95,416 100,196

Total other liabilities with the public 747,294 836,870

$ 1,023,947 $ 1,086,681

The amounts above are current liabilities, except for the capital lease and environmental and disposal liabilities. 

NOTE 10  ACCRUED BENEFIT

Accrued benefits as of September 30, 2017 and 2016, consisted of the following:

(Dollars in thousands) 2017 2016

State regular and extended unemployment benefits payable $ 689,184 $ 997,378

Federal extended unemployment benefits payable 82,722 83,359

Federal emergency unemployment benefits payable 173,579 174,621

Federal employees' unemployment benefits payable 106,379 128,755

Federal additional unemployment benefits payable 24,756 25,435

Total unemployment benefits payable 1,076,620 1,409,548

Federal employees' disability and 10(h) benefits payable 182,347 185,968

Black lung disability benefits payable 18,094 19,513

Energy employees occupational illness compensation benefits payable 25,796 27,466

$ 1,302,857 $ 1,642,495
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2017 and 2016

88 United States Department of Labor

NOTE 11  FUTURE WORKERS' COMPENSATION BENEFIT

DOL’s liability for future workers’ compensation benefits as of September 30, 2017 and 2016, consisted of the 

following:

(Dollars in thousands) 2017 2016

Projected gross liability of the Federal government

 for future FECA benefits $ 37,730,695 $ 36,453,650

Less liabilities attributed to other agencies:

U.S. Postal Service (16,556,554) (16,228,868)

Department of Homeland Security (2,881,906) (2,752,677)

Department of Veterans Affairs (2,396,057) (2,322,213)

Department of the Navy (2,144,430) (2,140,650)

Department of the Army (1,774,529) (1,734,174)

Department of Justice (1,785,920) (1,725,538)

Department of the Air Force (1,230,531) (1,247,468)

Department of Agriculture (900,586) (904,661)

Department of Transportation (886,192) (874,184)

Department of Defense, Other (786,479) (810,252)

Department of the Interior (756,731) (773,999)

Department of the Treasury (593,169) (597,277)

Tennessee Valley Authority (356,583) (366,709)

Social Security Administration (319,429) (327,213)

Department of Health and Human Services (278,422) (272,268)

Department of Commerce (200,336) (206,611)

General Services Administration (113,261) (114,700)

Department of Energy (95,746) (93,810)

Department of State (94,687) (90,019)

Department of Housing and Urban Development (64,880) (64,434)

Environmental Protection Agency (45,244) (45,037)

National Aeronautics and Space Administration (37,856) (38,306)

Small Business Administration (34,889) (32,676)

Office of Personnel Management (25,000) (23,623)

Agency for International Development (26,938) (22,542)

Department of Education (13,763) (14,789)

Nuclear Regulatory Commission (5,370) (5,608)

National Science Foundation (1,249) (1,171)

Other (701,662) (704,695)

 (35,108,399) (34,536,172)

$ 2,622,296 $ 1,917,478

Projected liability of the Department of Labor for future FECA benefits

FECA benefits not chargeable to other Federal agencies payable by

 DOL's Federal Employees' Compensation Act Special Benefit Fund $ 2,369,528 $ 1,661,740

FECA benefits due to eligible workers of DOL and Job Corps enrollees 220,323 221,560

FECA benefits due to eligible workers of the Panama Canal Commission 32,445 34,178

$ 2,622,296 $ 1,917,478
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2017 and 2016

FY 2017 Agency Financial Report 89 

NOTE 12  LIABILITIES NOT COVERED BY BUDGETARY RESOURCE

Liabilities not covered by budgetary resources as of September 30, 2017 and 2016, consisted of the following:

(Dollars in thousands) 2017 2016

Intra-governmental

Debt $ 8,368,258 $ 14,264,915

Future workers' compensation benefits 1,060,654 664,271

Accrued annual leave 119,899 121,222

Other liabilities 64,051 67,711

 1,244,604 853,204

Total liabilities not covered by budgetary resources 9,612,862 15,118,119

Total liabilities covered by budgetary resources 23,821,883 19,635,737

$ 33,434,745 $ 34,753,856

NOTE 13  CONTINGENCIE

The Department is involved in various lawsuits incidental to its operations. In the opinion of management, the 

ultimate resolution of pending litigation will not have a material effect on the Department’s financial position.

NOTE 14  PENSION EXPENSE

Pension expense in FY 2017 consisted of the following:

Total

Employer Costs Imputed Pension

(Dollars in thousands) Contributions by OPM Expense

Civil Service Retirement System $ 5,967 $ 17,002 $ 22,969

Federal Employees' Retirement System 187,274 5,611 192,885

Thrift Savings Plan 60,899 - 60,899

$ 254,140 $ 22,613 $ 276,753

Pension expense in FY 2016 consisted of the following:

Total

Employer Costs Imputed Pension

(Dollars in thousands) Contributions by OPM Expense

Civil Service Retirement System $ 7,369 $ 20,346 $ 27,715

Federal Employees' Retirement System 184,971 4,302 189,273

Thrift Savings Plan 59,808 - 59,808

$ 252,148 $ 24,648 $ 276,796
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2017 and 2016

90 United States Department of Labor

NOTE 15  NET COST OF OPERATION

Note 15 A and B present detailed cost and revenue information by program and program agency (responsibility 

segment) in support of the summary information presented in the Consolidated Statements of Net Cost for the year 

ended September 30, 2017 and 2016, respectively. Note 15 C presents a further breakdown of this cost and 

revenue information for DOL’s two largest program agencies, ETA and the OWCP. (See Note 1-A.1 and 1-S)
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2017 and 2016

FY 2017 Agency Financial Report 91 

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Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2017 and 2016

92 United States Department of Labor

NOTE 15  NET COST OF OPERATIONS- Continu

A. Consolidating Statements of Net Cost by Program Agency

Net cost of operations by program agency for the year ended September 30, 2017, consisted of the following:

Employment Office of Workers' Office Occupational

and Training Compensation of Safety and Health

(Dollars in thousands) Administration Programs Job Corps Administration

CROSSCUTTING PROGRAMS

 Income maintenance

Intra-governmental $ 240,937 $ 292,954 $ - $ -

With the public 34,001,559 9,768,334 - -

 Gross cost 34,242,496 10,061,288 - -

Intra-governmental earned revenue (469,439) (2,786,455) - -

Public earned revenue (5,004) (882) - -

 Less earned revenue (474,443) (2,787,337) - -

Net program cost 33,768,053 7,273,951 - -

 Employment and training

Intra-governmental 52,223 - 58,471 -

With the public 4,285,205 - 1,536,251 -

 Gross cost 4,337,428 - 1,594,722 -

Intra-governmental earned revenue (1,662) - - -

 Less earned revenue (1,662) - - -

Net program cost 4,335,766 - 1,594,722 -

 Labor, employment and pension

 standards

Intra-governmental - - - -

With the public - - - -

 Gross cost - - - -

Intra-governmental earned revenue - - - -

Public earned revenue - - - -

 Less earned revenue - - - -

Net program cost - - - -

 Worker safety and health

Intra-governmental - - - 124,769

With the public - - - 490,126

 Gross cost - - - 614,895

Intra-governmental earned revenue - - - (29)

Public earned revenue - - - (1,950)

 Less earned revenue - - - (1,979)

Net program cost - - - 612,916

OTHER PROGRAMS

 Statistics

Intra-governmental - - - -

With the public - - - -

 Gross cost - - - -

Intra-governmental earned revenue - - - -

Public earned revenue - - - -

 Less earned revenue - - - -

Net program cost - - - -

COSTS NOT ASSIGNED TO PROGRAMS

 Gross cost - - - -

 Less earned revenue not attributed to programs - - - -

Net cost not assigned to programs - - - -

Net cost of operations $ 38,103,819 $ 7,273,951 $ 1,594,722 $ 612,916
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2017 and 2016

FY 2017 Agency Financial Report 93 

Bureau of Mine Safety Employee Benefits Veterans' Wage and Other

Labor and Health Security Employment Hour Program 

Statistics Administration Administration and Training Division Agencies Total

$ - $ - $ 166 $ - $ - $ - $ 534,057

 - - 474 - - 1,232 43,771,599

 - - 640 - - 1,232 44,305,656

 - - - - - - (3,255,894)

 - - - - - - (5,886)

 - - - - - - (3,261,780)

 - - 640 - - 1,232 41,043,876

 - - - 13,556 975 377 125,602

 - - - 175,854 2,896 1,177 6,001,383

 - - - 189,410 3,871 1,554 6,126,985

 - - - (1,658) - - (3,320)

 - - - (1,658) - - (3,320)

 - - - 187,752 3,871 1,554 6,123,665

 - 86 56,818 537 102,767 56,749 216,957

 - 214 171,912 7,298 228,232 259,368 667,024

 - 300 228,730 7,835 330,999 316,117 883,981

 - - (7,468) (69) (6) (4) (7,547)

 - - - - (4,000) - (4,000)

 - - (7,468) (69) (4,006) (4) (11,547)

 - 300 221,262 7,766 326,993 316,113 872,434

 - 118,304 - - - 210 243,283

 - 304,557 - - - 1,062 795,745

 - 422,861 - - - 1,272 1,039,028

 - - - - - - (29)

 - (1,352) - - - - (3,302)

 - (1,352) - - - - (3,331)

 - 421,509 - - - 1,272 1,035,697

 228,645 - - - - 133 228,778

 429,656 - - - - 1,228 430,884

 658,301 - - - - 1,361 659,662

 (28,625) - - - - - (28,625)

 (502) - - - - - (502)

 (29,127) - - - - - (29,127)

 629,174 - - - - 1,361 630,535

 - - - - - 48,285 48,285

 - - - - - (33,069) (33,069)

 - - - - - 15,216 15,216

$ 629,174 $ 421,809 $ 221,902 $ 195,518 $ 330,864 $ 336,748 $ 49,721,423
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2017 and 2016

94 United States Department of Labor

NOTE 15  NET COST OF OPERATIONS- Continu

B. Consolidating Statements of Net Cost by Program Agency 

Net cost of operations by program agency for the year ended September 30, 2016, consisted of the following:

Employment Office of Workers' Office Occupational

and Training Compensation of Safety and Health

(Dollars in thousands) Administration Programs Job Corps Administration

CROSSCUTTING PROGRAMS

 Income maintenance

Intra-governmental $ 431,992 $ 306,658 $ - $ -

With the public 36,726,222 5,840,503 - -

 Gross cost 37,158,214 6,147,161 - -

Intra-governmental earned revenue (522,330) (3,021,570) - -

Public earned revenue (74) (910) - -

 Less earned revenue (522,404) (3,022,480) - -

Net program cost 36,635,810 3,124,681 - -

 Employment and training

Intra-governmental 48,762 - 62,428 -

With the public 4,350,826 - 1,575,816 -

 Gross cost 4,399,588 - 1,638,244 -

Intra-governmental earned revenue (9,226) - (129) -

 Less earned revenue (9,226) - (129) -

Net program cost 4,390,362 - 1,638,115 -

 Labor, employment and pension

 standards

Intra-governmental - - - -

With the public - - - -

 Gross cost - - - -

Intra-governmental earned revenue - - - -

Public earned revenue - - - -

 Less earned revenue - - - -

Net program cost - - - -

 Worker safety and health

Intra-governmental - - - 126,310

With the public - - - 488,693

 Gross cost - - - 615,003

Intra-governmental earned revenue - - - (2,031)

Public earned revenue - - - (2,250)

 Less earned revenue - - - (4,281)

Net program cost - - - 610,722

OTHER PROGRAMS

 Statistics

Intra-governmental - - - -

With the public - - - -

 Gross cost - - - -

Intra-governmental earned revenue - - - -

Public earned revenue - - - -

 Less earned revenue - - - -

Net program cost - - - -

COSTS NOT ASSIGNED TO PROGRAMS

 Gross cost - - - -

 Less earned revenue not attributed to programs - - - -

Net cost not assigned to programs - - - -

Net cost of operations $ 41,026,172 $ 3,124,681 $ 1,638,115 $ 610,722
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2017 and 2016

FY 2017 Agency Financial Report 95 

Bureau of Mine Safety Employee Benefits Veterans' Wage and Other

Labor and Health Security Employment Hour Program 

Statistics Administration Administration and Training Division Agencies Total

$ - $ - $ 311 $ 21 $ - $ - $ 738,982

 - - 2,042 136 - 6,271 42,575,174

 - - 2,353 157 - 6,271 43,314,156

 - - (1,234) (82) - - (3,545,216)

 - - - - - - (984)

 - - (1,234) (82) - - (3,546,200)

 - - 1,119 75 - 6,271 39,767,956

 - - - 13,220 - 130 124,540

 - - - 249,730 - 803 6,177,175

 - - - 262,950 - 933 6,301,715

 - - - (283) - (407) (10,045)

 - - - (283) - (407) (10,045)

 - - - 262,667 - 526 6,291,670

 - 86 59,632 524 99,750 64,005 223,997

 - 206 175,273 10,422 217,008 285,112 688,021

 - 292 234,905 10,946 316,758 349,117 912,018

 - - (10,134) (56) (14) (6,273) (16,477)

 - - - - (2,800) - (2,800)

 - - (10,134) (56) (2,814) (6,273) (19,277)

 - 292 224,771 10,890 313,944 342,844 892,741

 - 136,544 - - - - 262,854

 - 321,397 - - - - 810,090

 - 457,941 - - - - 1,072,944

 - (1,687) - - - - (3,718)

 - (1,710) - - - - (3,960)

 - (3,397) - - - - (7,678)

 - 454,544 - - - - 1,065,266

 231,864 - - - - - 231,864

 428,740 - - - - - 428,740

 660,604 - - - - - 660,604

 (31,755) - - - - - (31,755)

 (410) - - - - - (410)

 (32,165) - - - - - (32,165)

 628,439 - - - - - 628,439

 - - - - - 18,505 18,505

 - - - - - (9,680) (9,680)

 - - - - - 8,825 8,825

$ 628,439 $ 454,836 $ 225,890 $ 273,632 $ 313,944 $ 358,466 $ 48,654,897
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2017 and 2016

96 United States Department of Labor

NOTE 15  NET COST OF OPERATIONS – Continue

C. Statements of Net Cost  Employment and Training Administration and Office of Workers’ Compensation

Programs

Net cost of operations for the year ended September 30, 2017, consisted of the following:

Employment Office of Workers'

and Training Compensation

(Dollars in thousands) Administration Programs

CROSSCUTTING PROGRAMS

 Income maintenance

Benefits $ 29,361,055 $ 9,438,758

Grants 3,789,097 -

Interest 145,733 208,431

Administrative and other 946,611 414,099

 Gross cost 34,242,496 10,061,288

Less earned revenue (474,443) (2,787,337)

Net program cost 33,768,053 7,273,951

 Employment and training

Grants 4,042,072 -

Administrative and other 295,356 -

 Gross cost 4,337,428 -

Less earned revenue (1,662) -

Net program cost 4,335,766 -

Net cost of operations $ 38,103,819 $ 7,273,951

Net cost of operations for the year ended September 30, 2016, consisted of the following:

Employment Office of Workers'

and Training Compensation

(Dollars in thousands) Administration Programs

CROSSCUTTING PROGRAMS

 Income maintenance

Benefits $ 31,940,871 $ 5,541,965

Grants 3,719,768 -

Interest 315,479 213,748

Administrative and other 1,182,096 391,448

 Gross cost 37,158,214 6,147,161

Less earned revenue (522,404) (3,022,480)

Net program cost 36,635,810 3,124,681

 Employment and training

Grants 4,128,706 -

Administrative and other 270,882 -

 Gross cost 4,399,588 -

Less earned revenue (9,226) -

Net program cost 4,390,362 -

Net cost of operations $ 41,026,172 $ 3,124,681
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2017 and 2016

FY 2017 Agency Financial Report 97 

NOTE 16  NON-EXCHANGE REVEN

Non-exchange revenues reported on the Consolidated Statements of Changes in Net Position in FY 2017 and FY 

2016 consisted of the following:

(Dollars in thousands) 2017 2016

Employer taxes

Unemployment Trust Fund

State unemployment taxes $ 35,931,506 $ 38,683,639

Federal unemployment taxes 8,124,155 8,247,537

 44,055,661 46,931,176

Black Lung Disability Trust Fund excise taxes 428,712 439,616

 44,484,373 47,370,792

Interest

Unemployment Trust Fund 1,305,370 1,218,167

Other 1,651 1,185

 1,307,021 1,219,352

Reimbursement of unemployment benefits and other 1,608,954 1,597,412

$ 47,400,348 $ 50,187,556

NOTE 17  TRANSFERS WITHOUT REIMBURSEMEN

Transfers from other Federal agencies in FY 2017 and FY 2016 consisted of the following:

(Dollars in thousands) 2017 2016

Budgetary financing sources

From H-1B Nonimmigrant Petitioner Account, Department of Homeland Security and other $ 193,871 $ 250,428

Other financing sources

From General Services Administration 1,595 4,930

$ 195,466 $ 255,358

The balance of $193.9 million and $250.4 million in budgetary financing sources for FY 2017 and FY 2016, reflect the 

elimination of intra-DOL transfers of ($3.6) billion and ($3.6) billion, respectively.
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2017 and 2016

98 United States Department of Labor

NOTE 18  STATUS OF BUDGETARY RESOURCE

A. Apportionment Categories of New Obligations and Upward Adjustments

New obligations and upward adjustments reported on the Combined Statements of Budgetary Resources in FY 2017 

and 2016 consisted of the following:

(Dollars in thousands) 2017 2016

Direct obligations

Category A $ 4,437,596 $ 4,432,941

Category B 9,324,971 8,864,445

Exempt from apportionment 35,671,429 38,024,004

Total direct obligations 49,433,996 51,321,390

Reimbursable obligations

Category A 257,139 389,868

Category B 3,041,027 3,177,931

Total reimbursable obligations 3,298,166 3,567,799

$ 52,732,162 $ 54,889,189

Apportionment Category A represents resources apportioned for calendar quarters. Apportionment Category B 

represents resources apportioned for other time periods for activities, projects or objectives, or for any 

combination thereof. 

B. Permanent Indefinite Appropriations

DOL’s permanent indefinite appropriations include trust funds, the FAUC Fund, the Panama Canal Commission 

Compensation Fund, the Energy Employees Occupational Illness Compensation Fund, ETA and WHD H-1B funds, 

ETA’s Advances and Payments to the UTF, Special Benefits for Disabled Coal Miners, Short-Time Compensation, 

and portions of State Unemployment Insurance and Employment Service Operations and Federal Unemployment 

Benefits and Allowances. These funds are described in Note 1-A.3. As of September 30, 2017 and 2016, the 

Department returned unobligated, indefinite authority to Treasury in the amount of $51 million and $236 million, 

respectively. 

C. Legal Arrangements Affecting Use of Unobligated Balances

UTF receipts are reported as budget authority in the Combined Statements of Budgetary Resources. The portion of 

UTF receipts collected in the current year in excess of amounts needed to pay benefits and other valid obligations is 

classified as temporarily not available pursuant to public law at September 30. Therefore, these excess receipts are 

reported as a reduction to Appropriations and Unobligated Balances – Exempt from Apportionment in the 

Combined Statements of Budgetary Resources. Conversely, when obligations exceed receipts in the current year, 

amounts are drawn from the temporarily unavailable collections to increase current year Appropriations and 

Unobligated Balances – Exempt from Apportionment on the Combined Statements of Budgetary Resources to cover 

these obligations. All excess receipts are reported as assets of the UTF and are included in the Consolidated Balance 

Sheets.

The cumulative amounts of excess UTF receipts are denoted as unavailable collections in the Budget of the United 

States Government. The cumulative amount of these excess receipts as of September 30, 2017 and 2016,

reclassified from unobligated balances to UTF unavailable collections is presented on the following page.
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2017 and 2016

FY 2017 Agency Financial Report 99 

NOTE 18  STATUS OF BUDGETARY RESOURCES- Continu

C. Legal Arrangements Affecting Use of Unobligated Balances  Continue

(Dollars in millions) 2017 2016

Unemployment Trust Fund unavailable collections, beginning $ 50,424 $ 40,620

Budget authority from current year appropriations 41,529 46,483

Less: obligations (33,942) (36,679)

Excess of budget authority over obligations 7,587 9,804

Unemployment Trust Fund unavailable collections, ending $ 58,011 $ 50,424

D. Explanation of Differences between the Combined Statement of Budgetary Resources and the Budget 

of the United States Government for FY 2016

The Budget of the United States Government with actual amounts for the year ended September 30, 2017, has not 

been published as of the issue date of these financial statements. This document will be available in February 2018 

at OMB’s website.

A reconciliation of budgetary resources, new obligations and upward adjustments, distributed offsetting receipts, 

and net outlays, as presented in the Combined Statement of Budgetary Resources (SBR) for FY 2016, to amounts 

included in the Budget of the United States Government for the year ended September 30, 2016, is shown below.

(Dollars in millions)

 Budgetary 

Resources 

 New Obligations 

and Upward 

Adjustments 

Distributed 

Offsetting 

Receipts Net Outlays

Combined Statement of Budgetary Resources $ 58,845 $ 54,889 $ 741 $ 47,217

Pension Benefit Guaranty Corporation reported separately 29,415 6,210 - (5,225)

Fiduciary activity 175 120 - 119

Expired accounts (808) (46) - -

Other 2 (3) - (5)

Budget of the United States Government $ 87,629 $ 61,170 $ 741 $ 42,106

E. Undelivered Orders

Undelivered orders as of September 30, 2017 and 2016, were as follows:

(Dollars in thousands) 2017 2016

Undelivered orders $ 10,018,833 $ 9,788,395
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2017 and 2016

100 United States Department of Labor

NOTE 18  STATUS OF BUDGETARY RESOURCES- Continu

F. Appropriations Received

Appropriations from the Consolidated Statements of Changes in Net Position and the Combined Statements of 

Budgetary Resources are reconciled below.

(Dollars in millions) FY 2017 FY 2016

Appropriations Received, Consolidated Statements of Changes in Net Position $ 10,869 $ 10,761

Receipts recognized as revenue in current and prior years

Unemployment Trust Fund 39,951 40,859

Black Lung Disability Trust Fund 401 385

Other funds from dedicated collections 194 240

Repayment of debt from appropriated receipts

Unemployment Trust Fund (5,923) (4,265)

Black Lung Disability Trust Fund (18) (71)

Return of permanent indefinite authority (41) (225)

Reduction for sequestration, across the board reductions, and other (147) (72)

 34,417 36,851

Appropriations, Combined Statements of Budgetary Resources $ 45,286 $ 47,612

G. Borrowing Authority

As of September 30, 2017 and 2016, P.L. 115-31 and P.L. 114-113, respectively, granted borrowing authority for 

repayable advances and other debt in the amount of “such sums as may be necessary” to (1) the UTF for advances 

as authorized by sections 905(d) and 1203 of the Social Security Act and (2) the BLDTF for advances as authorized 

by section 9501(c)(1) of the Internal Revenue Code. Although section 9501 of the Internal Revenue Code and P.L. 

113-76 use the terminology “advance," the Treasury has interpreted this to mean any debt owed by the BLDTF to 

the Bureau of the Fiscal Service.

There was no borrowing authority for the UTF for FY 2017 and FY 2016.

Borrowing authority for the BLDTF was $1,285 million and $910 million for FY 2017 and FY 2016, respectively. The 

entire amount of borrowing authority plus current year receipts were applied to repay debt of $1,303.1 million and 

$981.2 million for FY 2017 and FY 2016, respectively.
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2017 and 2016

FY 2017 Agency Financial Report 101 

NOTE 19  RECONCILIATION OF BUDGETARY RESOURCES OBLIGATED TO NET COST OF OPERATIONS

(Dollars in thousands) FY 2017 FY 2016

Resources used to finance activities

Budgetary resources obligated

New obligations and upward adjustments (Total) $ 52,732,162 $ 54,889,189

Recoveries of prior year unpaid obligations (416,033) (603,674)

Recoveries of prior year paid obligations (15,220) (29,544)

Less: spending authority from offsetting collections (7,378,389) (7,410,865)

Obligations, net of offsetting collections and recoveries 44,922,520 46,845,106

Other resources

Imputed financing from costs absorbed by others 92,940 107,477

Transfers without reimbursement 1,595 4,930

Exchange revenue not in budget (163,170) (498,406)

Total resources used to finance activities 44,853,885 46,459,107

Resources used to finance items not part of the net cost of operations

Change in budgetary resources obligated for goods, services and

 benefits ordered but not yet received or provided (256,293) 994,792

Resources that finance the acquisition of assets (31,060) (63,146)

Transfers that do not affect the net cost of operations (2,776) 4,678

Total resources used to finance items not part of the net cost of operations (290,129) 936,324

Total resources used to finance the net cost of operations 44,563,756 47,395,431

Components of the net cost of operations that will not require or generate

 resources in the current period

Components requiring or generating resources in other periods

Increase (decrease) in annual leave liability (1,086) 12,868

Increase (decrease) in actuarial benefit liabilities 5,013,310 971,135

Increase in capitalized interest 44,126 90,523

Others (25,707) (49,172)

Total 5,030,643 1,025,354

Components not requiring or generating resources

Depreciation and amortization 83,172 85,918

Revaluation of assets and liabilities 673,548 789,807

Benefit overpayments (629,696) (641,613)

Total 127,024 234,112

Total components of the net cost of operations that will not

 require or generate resources in the current period 5,157,667 1,259,466

Net cost of operations $ 49,721,423 $ 48,654,897
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2017 and 2016

102 United States Department of Labor

NOTE 20  CUSTODIAL REVENU

Custodial revenues in FY 2017 consisted of the following:

Net Cash Increase

Collections (Decrease) in

and Transfers to Amounts to

U.S. Treasury be Collected Total

(Dollars in thousands) General Fund and Transferred Revenues

Civil monetary penalties

Occupational Safety and Health Administration $ 119,108 $ 23,059 $ 142,167

Mine Safety and Health Administration 46,406 1,619 48,025

Employee Benefits Security Administration 20,284 672 20,956

Wage and Hour Division 19,010 (81) 18,929

 204,808 25,269 230,077

Other custodial activity

Employment and Training Administration

 and other agencies 3,580 138 3,718

$ 208,388 $ 25,407 $ 233,795

Custodial revenues in FY 2016 consisted of the following:

Net Cash Increase

Collections (Decrease) in

and Transfers to Amounts to

U.S. Treasury be Collected Total

(Dollars in thousands) General Fund and Transferred Revenues

Civil monetary penalties

Occupational Safety and Health Administration $ 111,887 $ (17,040) $ 94,847

Mine Safety and Health Administration 54,379 (5,690) 48,689

Employee Benefits Security Administration 19,552 (756) 18,796

Wage and Hour Division 36,448 (1,050) 35,398

 222,266 (24,536) 197,730

Other custodial activity

Employment and Training Administration

 and other agencies 4,929 (1,563) 3,366

$ 227,195 $ (26,099) $ 201,096
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2017 and 2016

FY 2017 Agency Financial Report 103 

NOTE 21  FUNDS FROM DEDICATED COLLECTION

DOL is responsible for the operation of certain funds from dedicated collections. Other funds from dedicated 

collections include Gifts and Bequests, Panama Canal Commission Compensation Fund, and H-1B Funds. The 

financial position of the funds from dedicated collections as of September 30, 2017, is shown below.

Black Lung

(Dollars in thousands) Unemployment Disability Other Total

Assets

Intra-governmental

Funds with U.S. Treasury $ 396,711 $ 121,909 $ 782,114 $ 1,300,734

Investments 61,033,591 - 33,718 61,067,309

Accounts receivable

Due from other Federal agencies

 for UCFE and UCX benefits 174,436 - - 174,436

Other - - 6,452 6,452

Total intra-governmental 61,604,738 121,909 822,284 62,548,931

Accounts receivable, net of allowance

State unemployment tax 290,275 - - 290,275

Due from reimbursable employers 446,234 - - 446,234

Benefit overpayments 373,272 22,788 - 396,060

Other 3,443 - 28 3,471

Advances 1,102,805 - 1 1,102,806

Other - - 242 242

Total assets $ 63,820,767 $ 144,697 $ 822,555 $ 64,788,019

Liabilities

Intra departmental and intra-governmental

Accounts payable to DOL agencies $ 1,447,179 $ - $ - $ 1,447,179

Debt 2,624,281 5,743,977 - 8,368,258

Amounts held for the Railroad

 Retirement Board 76,177 - - 76,177

Other - - 6,063 6,063

Total inter/intra-governmental 4,147,637 5,743,977 6,063 9,897,677

Accounts payable 5 - 3,214 3,219

Future workers' compensation benefits - - 32,445 32,445

Accrued benefits 1,051,864 11,429 - 1,063,293

Other liabilities - - 27,713 27,713

Total liabilities 5,199,506 5,755,406 69,435 11,024,347

Net position

Cumulative results of operations 58,621,261 (5,610,709) 753,120 53,763,672

Total liabilities and net position $ 63,820,767 $ 144,697 $ 822,555 $ 64,788,019
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2017 and 2016

104 United States Department of Labor

NOTE 21  FUNDS FROM DEDICATED COLLECTIONS- Continu

The net results of operations of the funds from dedicated collections for the year ended and as of September 30, 

2017, are shown below.

Black Lung

(Dollars in thousands) Unemployment Disability Other Total

Cost, net of earned revenues

Benefits $ (29,372,123) $ (159,751) $ - $ (29,531,874)

Grants - - (144,006) (144,006)

Interest (145,733) (208,429) - (354,162)

Administrative and other (772,873) (2,457) (83,364) (858,694)

 (30,290,729) (370,637) (227,370) (30,888,736)

Earned revenue 458,827 - - 458,827

Net cost of operations (29,831,902) (370,637) (227,370) (30,429,909)

Net financing sources

Taxes 44,055,661 428,712 - 44,484,373

Interest 1,305,370 1,377 271 1,307,018

Reimbursement of unemployment benefits and other 1,605,373 - - 1,605,373

Imputed financing - - 2,152 2,152

Transfers-in

Department of Homeland Security - - 256,418 256,418

DOL entities 2,803 - - 2,803

Transfers-out

DOL entities (3,778,643) (65,701) - (3,844,344)

Other - - (62,574) (62,574)

 43,190,564 364,388 196,267 43,751,219

Change in net position 13,358,662 (6,249) (31,103) 13,321,310

Net position, beginning of year 45,262,599 (5,604,460) 784,223 40,442,362

Net position, end of year $ 58,621,261 $ (5,610,709) $ 753,120 $ 53,763,672
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2017 and 2016

FY 2017 Agency Financial Report 105 

NOTE 21  FUNDS FROM DEDICATED COLLECTIONS- Continu

The financial position of the funds from dedicated collections as of September 30, 2016, is shown below. 

Black Lung

(Dollars in thousands) Unemployment Disability Other Total

Assets

Intra-governmental

Funds with U.S. Treasury $ 424,660 $ 93,003 $ 816,612 $ 1,334,275

Investments 54,060,414 - 37,944 54,098,358

Accounts receivable

Due from other Federal agencies

 for UCFE and UCX benefits 211,619 - - 211,619

Other - - 4,053 4,053

Total intra-governmental 54,696,693 93,003 858,609 55,648,305

Accounts receivable, net of allowance

State unemployment tax 291,229 - - 291,229

Due from reimbursable employers 459,708 - - 459,708

Benefit overpayments 420,061 20,853 - 440,914

Other 77 - 7 84

Advances 1,089,198 - - 1,089,198

Other - - 344 344

Total assets $ 56,956,966 $ 113,856 $ 858,960 $ 57,929,782

Liabilities

Intra-governmental

Accounts payable to DOL agencies $ 1,683,763 $ - $ 9 $ 1,683,772

Debt 8,558,484 5,706,431 - 14,264,915

Amounts held for the Railroad

 Retirement Board 68,007 - - 68,007

Other - 1 12,272 12,273

Total intra-governmental 10,310,254 5,706,432 12,281 16,028,967

Accounts payable - - 6,418 6,418

Future workers' compensation benefits - - 34,178 34,178

Accrued benefits 1,384,113 11,884 - 1,395,997

Other liabilities - - 21,860 21,860

Total liabilities 11,694,367 5,718,316 74,737 17,487,420

Net position

Cumulative results of operations 45,262,599 (5,604,460) 784,223 40,442,362

Total liabilities and net position $ 56,956,966 $ 113,856 $ 858,960 $ 57,929,782
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2017 and 2016

106 United States Department of Labor

NOTE 21  FUNDS FROM DEDICATED COLLECTIONS- Continu

The net results of operations of the funds from dedicated collections for the year ended and as of September 30, 

2016, are shown below.

Black Lung

(Dollars in thousands) Unemployment Disability Other Total

Cost, net of earned revenues

Benefits $ (31,945,860) $ (122,807) $ - $ (32,068,667)

Grants - - (125,203) (125,203)

Interest (315,479) (213,748) - (529,227)

Administrative and other (967,187) (2,949) (91,194) (1,061,330)

 (33,228,526) (339,504) (216,397) (33,784,427)

Earned revenue 519,168 - - 519,168

Net cost of operations (32,709,358) (339,504) (216,397) (33,265,259)

Net financing sources

Taxes 46,931,176 439,616 - 47,370,792

Interest 1,218,167 1,008 152 1,219,327

Reimbursement of unemployment benefits and other 1,596,876 - - 1,596,876

Imputed financing - - 2,734 2,734

Transfers-in

Department of Homeland Security - - 256,073 256,073

DOL entities 5,893 - - 5,893

Transfers-out

DOL entities (3,819,803) (61,372) - (3,881,175)

Other - - (16,216) (16,216)

 45,932,309 379,252 242,743 46,554,304

Change in net position 13,222,951 39,748 26,346 13,289,045

Net position, beginning of year 32,039,648 (5,644,208) 757,877 27,153,317

Net position, end of year $ 45,262,599 $ (5,604,460) $ 784,223 $ 40,442,362
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2017 and 2016

FY 2017 Agency Financial Report 107 

NOTE 22  FIDUCIARY ACTIVIT

The schedule of fiduciary activity and net assets for the fiduciary funds for the year ended and as of September 30, 

2017, is shown below.

Longshore District of

Wage and Hour and Harbor Columbia

and Public Workers' Workmen's

Contracts Compensation Compensation Davis-Bacon Total

Restitution Act Trust Act Trust Act Trust Fiduciary

(Dollars in thousands) Fund Fund Fund Fund Funds

Fiduciary activity

Assessments $ 88,830 $ 117,066 $ 6,006 $ - $ 211,902

Investment earnings - 225 28 - 253

Administrative and other - (2,273) (313) (16) (2,602)

Transfer of funds (15,205) (1,743) 1,743 16 (15,189)

Disbursements to beneficiaries (65,259) (103,783) (6,738) - (175,780)

Increase (decrease) in fiduciary net assets 8,366 9,492 726 - 18,584

Fiduciary net assets, beginning of year 168,459 14,750 2,955 - 186,164

Fiduciary net assets, end of year $ 176,825 $ 24,242 $ 3,681 $ - $ 204,748

Fiduciary assets

Cash $ 172,123 $ 1 $ 1 $ 5,290 $ 177,415

Investments - 59,825 5,161 - 64,986

Other assets 4,702 1,153 98 - 5,953

Less: liabilities - (36,737) (1,579) (5,290) (43,606)

Total fiduciary net assets $ 176,825 $ 24,242 $ 3,681 $ - $ 204,748

The schedule of fiduciary activity and net assets for the fiduciary funds for the year ended and as of September 30, 

2016, is shown below.

Longshore District of

Wage and Hour and Harbor Columbia

and Public Workers' Workmen's

Contracts Compensation Compensation Davis-Bacon Total

Restitution Act Trust Act Trust Act Trust Fiduciary

(Dollars in thousands) Fund Fund Fund Fund Funds

Fiduciary activity

Assessments $ 58,552 $ 111,851 $ 7,881 $ 4 $ 178,288

Investment earnings - 56 5 - 61

Administrative and other - 289 (238) (4) 47

Transfer of funds to Treasury (19,960) (2,479) 302 - (22,137)

Disbursements to beneficiaries (32,028) (111,252) (7,192) - (150,472)

Increase (decrease) in fiduciary net assets 6,564 (1,535) 758 - 5,787

Fiduciary net assets, beginning of year 161,895 16,285 2,197 - 180,377

Fiduciary net assets, end of year $ 168,459 $ 14,750 $ 2,955 $ - $ 186,164

Fiduciary assets

Cash $ 164,835 $ 5 $ - $ 5,274 $ 170,114

Investments - 52,595 4,743 - 57,338

Other assets 3,624 1,069 924 - 5,617

Less: liabilities - (38,919) (2,712) (5,274) (46,905)

Total fiduciary net assets $ 168,459 $ 14,750 $ 2,955 $ - $ 186,164
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2017 and 2016

108 United States Department of Labor

Note 22  FIDUCIARY ACTIVITY- Continu

The FY 2016 audits were performed on the Longshore and Harbor Workers’ Compensation Act Trust Fund and the 

District of Columbia Worker’s Compensation Act Trust Fund and are available on DOL's website.

NOTE 23  MATERIAL CONCENTRATION OF RIS

The Division of FEC within OWCP administers the payment of workers' compensation benefits to federal and postal 

workers for employment-related injuries and occupational diseases. Federal agencies and the USPS reimburse the 

FECA Special Benefit Fund for payments made on behalf of its workers. In Note 11, Future Workers’ Compensation 

Benefits, the USPS liability as of September 30, 2017, of $16.6 billion represents the largest portion of the total 

projected gross liability of the Federal government for future FECA benefits attributed to other agencies of $35.1 

billion as of September 30, 2017.

In October 2016, the USPS reimbursed the FECA Special Benefit Fund $1.3 billion for costs incurred on its behalf 

during FY 2016, except for a portion of the scheduled chargeback payment for the 12 months ended June 30, 2016, 

in the amount of $151 million that the USPS continued to withhold from payment since October 2016. In October 

2017, the USPS reimbursed the FECA Special Benefit Fund $1.36 billion for costs incurred on its behalf during FY 

2017. The USPS disclosed its lack of liquidity in its audited financial statements for FY 2016 and FY 2017. The USPS’s 

portion of the FECA actuarial liability as of September 30, 2017, together with the USPS’s poor financial condition, 

represent a material concentration of risk for the Department.

NOTE 24  SUBSEQUENT EVENT

Except for the USPS October 2017 reimbursement to the FECA Special Benefit Fund as disclosed in Note 4 and Note 

23 and the disclosures for the social insurance financial statements in Note 1.W, management has determined that 

there are no subsequent events requiring accrual or disclosure through November 15, 2017.
Required Supplementary Stewardship Information

(Unaudited)
Financial Section

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION

(Unaudited)

110 United States Department of Labor

STEWARDSHIP INVESTMENTS IN HUMAN CAPITAL

Stewardship investments are made by DOL on behalf of the nation, providing long-term benefits that cannot be 

measured in traditional financial reports. These investments are made for the general public, and are intended to 

maintain or increase national economic productive capacity. DOL’s stewardship investments are in human capital, 

reported as employment and training expenses in DOL’s net cost of operations. Within DOL, the Employment and 

Training Administration (ETA), including the Office of Job Corps (OJC), and the Veterans’ Employment and Training 

Service (VETS) administer training programs that invest in human capital.

Employment and Training Administration

ETA, including the Office of Job Corps, incurred total net costs of $39.7 billion in FY 2017. The majority of these 

costs consisted of unemployment benefits, which totaled $29.4 billion in FY 2017, a decrease of $2.5 billion (8%) 

over the previous fiscal year. Also included in ETA’s total net costs were investments in human capital of $4.3 

billion, which provided services to over 1 million participants in FY 2017 (amount excludes participants for various 

programs, please see table below). These investments were made through job training programs authorized by the 

Workforce Innovation and Opportunity Act (WIOA) of 2014, previously authorized by the Workforce Investment Act 

of 1998 (WIA), Title V of the Older Americans Act, as amended, the Trade Act of 1974, as amended, the Health Care 

and Education Reconciliation Act of 2010, the National Apprenticeship Act of 1937, and other legislation.

Within ETA the Office of Job Corps (OJC) also invests in human capital through WIOA’s Job Corps training program. 

OJC’s investment in human capital in FY 2017 was $1.6 billion, providing services to 104.7 thousand participants in 

primarily residential settings at 125 Job Corps centers. The job training programs authorized by WIOA and other 

legislation are discussed below.

Adult, Dislocated Worker, Youth, and Job Corps Programs

Authorized by the Workforce Innovation and Opportunity Act (WIOA) of 2014

• Apprenticeship grants program – ETA awards grants and contracts to the states, businesses, and 

intermediaries to be used to support innovative, job-driven approaches that result in the growth of 

Registered Apprenticeship programs to train workers with 21st Century skills that meet employer and 

industry workforce needs. ETA’s FY 2017 investment in apprenticeship programs was $34 million.

• Adult employment and training programs – ETA awards grants to states to design and operate training 

and employment assistance programs for adults, with priority for disadvantaged adults, including public 

assistance recipients. ETA’s FY 2017 investment in human capital through the WIOA Adult programs was 

$856 million. 

• Dislocated worker employment and training programs – ETA awards grants to states to provide 

reemployment services and retraining assistance to individuals laid-off from their employment. ETA’s FY

2017 investment in human capital through the WIOA Dislocated Worker programs was $1.2 billion.

• Youth programs – ETA awards grants to states to support a wide range of program activities and services 

to prepare low-income youth for academic and employment success, including summer jobs, by linking 

academic and occupational learning with youth development activities. ETA’s FY 2017 investment in human 

capital through the WIOA Youth programs was $923 million.

• Job Corps program – ETA’s Office of Job Corps awards contracts to support a system of primarily 

residential centers providing academic education, career technical training, service-learning, and social 

skills training for low-income young people. Large and small corporations and non-profit organizations 

manage and operate 99 Job Corps centers under these contractual arrangements. The remaining 26 centers 

are operated through interagency agreements between DOL and the U.S. Department of Agriculture, Forest 

Service. In addition, 29 operators are contracted to provide outreach and admissions and career transition 

services. OJC’s FY 2017 investment in human capital through the Job Corps program was $1.6 billion.

• Reentry Employment Opportunities programs – ETA supports programs to help individuals exiting prison 
Annual Financial Statements

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION

(Unaudited)

FY 2017 Agency Financial Report 111 

make a successful transition to community life and long-term employment through the provision of 

mentoring and job training programs to promote the successful return of formerly incarcerated adults and 

adjudicated youth into mainstream society. ETA’s FY 2017 investment in human capital through the Reentry 

Employment Opportunities programs was $83 million.

• National programs – ETA’s National programs provide evaluation resources and program support for 

WIOA activities, including nationally administered programs providing employment and training services to 

segments of the population that have special disadvantages in the labor market, including grants to 

federally recognized Indian tribes and other Native American governments or non-profit organizations and 

to Migrant and Seasonal Farmworker service organizations. ETA’s FY 2017 human capital investment in 

WIOA National Programs was $137 million.

Community Service Employment for Older Americans(CSEOA) Program

ETA also invests in human capital through the Community Service Employment for Older Americans program, 

authorized under Title V of the Older Americans Act, as amended in 2006. Known as the Senior Community Service 

Employment Program (SCSEP), the SCSEP is a federally sponsored community service employment and training 

program that provides part-time training through on-the-job work experience in community service activities for 

unemployed, low-income individuals ages 55 and older, so that they can prepare to enter or re-enter the 

workforce. ETA’s FY 2017 investment in human capital through the CSEOA’s SCSEP was $424 million.

Trade Adjustment Assistance for Workers Program

Trade Adjustment Assistance (TAA) for Workers (TAA Program) was first established at the Department of Labor by 

the Trade Act of 1974 and has been amended several times. Individual workers who are members of the certified 

worker group apply for benefits and services through the one-stop centers. Individual workers who meet the 

qualifying criteria may receive: job training; income support in the form of Trade Readjustment Allowances; job 

search and relocation allowances; Health Coverage Tax Credit; and for workers age 50 and older, a wage 

supplement in the form of Reemployment TAA. In addition, all workers covered by a certification are eligible for 

employment and case management services including career services either through the TAA Program or through 

and in coordination with the WIOA and the Wagner Peyser Act. Only TAA training costs are considered investments 

in human capital; these costs were $211 million for FY 2017.

Trade Adjustment Assistance Community College and Career Training (TAACCCT) Grant Fund

Implemented in cooperation with the U.S. Department of Education, the TAACCCT program provides grants to 

eligible institutions of higher learning to improve education and employment outcomes for students. Authorized by 

the Trade Act of 1974 and Health Care and Education Reconciliation Act of 2010, the program enables educational 

institutions to prepare students to succeed in growing occupations by acquiring the skills necessary for high-wage, 

in-demand jobs. ETA’s FY 2017 human capital investment in the TAACCCT Grant Fund was $206 million.

National Apprenticeship Program

Registered Apprenticeship is a leader in preparing American workers to compete in today’s economy. The program 

has trained millions of America’s workers through a network of 21,000 Registered Apprenticeship programs across 

the nation consisting of over 150,000 employers. Modern apprenticeships are now on the cutting edge of 

innovation in preparing a skilled workforce for today’s industries, including expanding industries like health care, 

information technology, transportation, telecommunications, and advanced manufacturing, as well as in industries 

like construction, where apprenticeships have a long and successful history. That is all the more true in light of the 

President’s new initiative on apprenticeships, which will focus on apprenticeship standards that are informed by 

those “on the ground” in each industrial sector. The National Apprenticeship Act of 1937 established the 

foundation for development of the nation’s skilled workforce through apprenticeship programs, which combine on-
Financial Section

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION

(Unaudited)

112 United States Department of Labor 

the-job learning with related technical instruction to teach workers the theoretical aspects of skilled occupations. 

ETA’s FY 2017 investment in Apprenticeship programs was $37 million.

Program Costs and Outputs

The cost of ETA investments in human capital and the participants served are shown in the chart below, for the five 

year period FY 2013 through FY 2017.

ETA Investmentsin Human Capital

Program Costs (in Millions) and Participants Served (1) (in Thousands)

For The Five Year Period FY 2013 through FY 2017

2017 2016 2015 2014 2013

Program Costs Part. 

Served Costs Part. Served Costs Part. Served Costs Part. Served Costs Part. Served

WIOA

Apprenticeship(8) $34 0.0

Adult(8) 856 0.0 $868 6,124.1 $852 6,520.8 $846 6,105.3 $883 6,761.5

Dislocated 

Worker(2) (8) 1,241 0.0 1,172 561.7 1,165 655.3 1,189 853.8 1,329 1,340.4

Youth(3) (8) 923 6.9 912 163.6 878 200.3 905 204.1 942 224.0

Job Corps(4) 1,595 104.7 1,638 110.8 1,605 109.5 1,537 109.6 1,525 79.6

Reentry 

Employment 

Opportunities 

programs

83 11.4 77 14.9 69 11.2 85 11.8 96 22.2

National 

Programs(5) 137 51.7 140 83.0 140 49.2 149 52.2 170 60.0

CSEOA

SCSEP 424 60.0 431 65.2 436 67.4 428 67.7 445 66.9

TAA for Workers 211 45.9 208 44.0 232 51.1 277 67.9 257 105.1

TAACCCT(6) 206 175.7 382 181.4 413 140.9 416 66.5 266 18.1

Apprenticeship 37 539.5 36 504.8 34 430.4 32 392.1 28 366.0

Other(7) 158 115.5 140 105.9 130 87.3 113 28.8 212 109.3

TOTAL $5,905 1,111.3 $6,004 7,959.4 $5,954 8,323.4 $5,977 7,959.8 $6,153 9,153.1

(1) Participant numbers are from grantee reports submitted for the Program Year (PY) ending on June 30 of the corresponding fiscal year, unless otherwise noted. 

(2) Dislocated Worker programs include the National Dislocated Worker Grants program.

(3) Youth programs include the YouthBuild program.

(4) Job Corps participants served in the FY 2013 report switches from reporting only the number of new enrollees to the number of participants served.

(5) National Programs include the Native American and Migrant and Seasonal Farmworker programs.

(6) TAA and TAACCCT participants served data is reported on a fiscal year basis which causes a one year lag in annual reporting. All TAACCCT participant 

counts are finalized January of the current fiscal year for the prior year ended.

(7) Other includes training programs for highly skilled occupations funded through H1-B fees.

(8) Preliminary data will not be available until late-November 2017; final counts will be available in the winter of 2018 for Apprenticeship, Adult, Dislocated 

Worker, and WIOA title I Youth program.
Annual Financial Statements

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION

(Unaudited)

FY 2017 Agency Financial Report 113 

Program Outcomes

Outcomes for training programs comprising ETA’s investment in human capital are presented in the Department’s 

Annual Performance Report for FY 2017, available on the DOL website at 

https://www.dol.gov/general/aboutdol#budget in February 2018.

Veterans’ Employment and Training Service (VETS)

VETS administers four major programs to meet the employment and training needs of veterans and eligible 

spouses, especially those with significant barriers to employment, and connect employers across the country with

work-ready veterans. VETS’ mission is to prepare America’s veterans, service members and their spouses for 

meaningful careers, provide them with employment resources and expertise, protect their employment rights, and 

promote their employment opportunities. VETS’ four major program activities and program costs and outputs are 

described below.

Program Activities

Jobs for Veterans State Grants (JVSG)

In accordance with 38 U.S.C Chapter 41, JVSG provides funding to 54 states and U.S. territories for Disabled 

Veterans’ Outreach Program (DVOP) specialists and Local Veterans’ Employment Representative (LVER) staff, 

located in American Job Centers and other locations. DVOP specialists provide intensive services to veterans with 

significant barriers to employment, including disabled veterans and other eligible populations. LVER staff promotes 

the hiring of veterans in communities through outreach activities that build relationships with local employers, and 

provide training to workforce center staff to facilitate the provision of services to veterans.

Transition Assistance Program (TAP) 

TAP, authorized under 10 U.S.C. 1144, is for separating and retiring service members and their spouses. The 

program is a cooperative effort among VETS; the U.S. Departments of Defense, Homeland Security, Veterans 

Affairs, and Education; and the U.S. Small Business Administration. VETS administers a 3-day DOL Employment 

Workshop as a component of TAP, both domestically and at overseas installations. The Workshop provides 

employment assistance to transitioning service members and their spouses by providing tools for a successful 

transition from the military to the civilian workforce.

Homeless Veterans’ Reintegration Program (HVRP)

HVRP, authorized under 38 U.S.C. 2021, addresses the needs of the most vulnerable population of veterans, those 

who are homeless or at risk of homelessness. HVRP provides employment and training services to homeless 

veterans, equipping them with the skills to gain meaningful employment. Funds are awarded to eligible applicants 

through a competitive grant process outlined in an annual Funding Opportunity Announcement. In addition to the 

main HVRP grants, funding is used to serve specific subsets of the homeless veteran population: 

• The Homeless Female Veterans and Veterans with Families Program specifically targets the subpopulation of 

female veterans experiencing homelessness and veterans with families experiencing homelessness. 

• The Incarcerated Veterans’ Transition Program provides employment services to incarcerated veterans at risk 

of becoming homeless.
Financial Section

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION

(Unaudited)

114 United States Department of Labor 

• Stand Down Grants are awarded to public and private organizations for local events typically held for one to 

two days, during which a variety of social services are provided to veterans experiencing homelessness.

Federal Administration, including the Uniformed Services Employment and Reemployment Rights Act of 1994 

(USERRA) and Veterans’ Preference

VETS is responsible for administering USERRA, 38 U.S.C. 4301-4335, which protects civilian job rights and benefits 

for active service members, veterans, and members of the National Guard and Reserves. USERRA also prohibits 

discrimination in employment against any current or prospective employee, due in part to those individuals’ past, 

present, or future military service, status, or obligations. Additionally, under the Veterans’ Employment 

Opportunities Act (5 U.S.C. 3330a-3330c) VETS is responsible for investigating claims alleging a Federal agency’s 

failure to apply Veterans’ Preference in hiring or during a reduction-in-force and claims from veterans alleging a 

lack of access to a Federal agency’s covered employment opportunities.

Program Costs and Outputs

The full cost of VETS programs is presented in the Consolidated Statement of Net Cost. The costs of VETS 

investments in human capital, and the participants served by this investment, are presented below, by major 

program.

VETS Investments in Human Capital

Program Costs and Participants Served (in Thousands)

For FY 2013 through FY 2017

(1) JVSG began using a new reporting system (Workforce Integrated Performance System) in FY 2017 to align with WIOA reporting. Several 

states have not reported data for FY 2017, and some data submitted may have errors. VETS is carefully reviewing the data submitted and 

working with states to produce fully accurate data. VETS expects reportable participant counts by the end of FY 2018.

(2) Department of Defense participant calculation reflects the number of people (retirees, separatees, and spouses) served during Program 

Year (PY) 2016. FY 2017 results are not finalized until the end of the first quarter of the following fiscal year. This result was collected from 

the Veterans' Employment and Training Operations and Programs Activity Report (VOPAR) for FY 2016, fourth quarter, and FY 2017, first 

through third quarters.

(3) The funding for the Career Technical Training Track (CTTT) program is included in TAP for 2017.

(4) USERRA Participants (USERRA Outreach Measure) reflects the number of people VETS connects with each year (service members, spouses, 

and employers) to inform them of their rights and responsibilities under the law. The participant served count is an estimate until results for 

FY 2017 are finalized at the end of the first quarter of the FY 2018. The estimate was calculated using data from the USERRA Technical 

Assistance Logs.

(5) HVRP Participants reflect the total number of homeless veterans enrolled during PY 2016. These results are provided in the HVRP Brief PY 

2016, 4th Quarter Summary.

Program Outcomes

Outcomes for the programs comprising VETS’ investment in human capital will be presented in the Department’s 

Annual Performance Report for FY 2017, available in February 2018 on the DOL website at:

https://www.dol.gov/general/aboutdol#budget

Program Cost Part. Served Cost

Part. 

Served Cost

Part. 

Served Cost

Part. 

Served Cost

Part. 

Served

JVSG(1) $ 172,000 (not 

available) $ 174,996 154.0 $ 173,453 185.6 $ 170,764 332.1 $ 162,999 450.6

TAP(2), (3) 16,600 155.8 14,100 140.2 13,917 180.8 14,103 207.0 13,176 187.0

USERRA(4) 13,538 9.0 12,734 7.6 12,782 7.6 12,487 10.9 11,381 47.5

HVRP (5) 45,000 16.2 38,056 16.6 38,146 17.0 36,885 16.1 40,691 17.4

TOTAL $ 247,138 181.0 $ 239,886 318.4 $ 238,298 391.0 $ 234,239 566.1 $ 228,247 702.5

2017 2016 2015 2014 2013
Required Supplementary Information

(Unaudited)
Financial Section

REQUIRED SUPPLEMENTARY INFORMATION

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116 United States Department of Labor

DEFERRED MAINTENANCE AND REPAIRS (DM&R)

DOL reports as general purpose property, plant and equipment (PP&E), structures, facilities and improvements on 

which maintenance and repair activities may be deferred. Over 99.3% of these buildings and other structures 

(based on net book value) are owned by DOL’s ETA, and located at one hundred twenty-five (125) Job Corps centers 

throughout the United States. The remaining 0.7% is owned by the Department’s MSHA. Periodic maintenance is 

performed to keep these properties in acceptable condition, as determined by DOL management. It is DOL policy to 

evaluate PP&E regardless of recorded values and the asset management system does not make any distinction 

between capitalized and non-capitalized PP&E when it comes to maintenance and repairs. Therefore, DM&R 

estimates reported relate to PP&E, whether capitalized or not or fully depreciated. Management has not noted any 

PP&E which is not included in the DM&R estimates reported below.

Defining and Implementing Maintenance and Repairs (M&R) Policies in Practice

Condition assessment surveys are conducted every three years at each property to determine the current condition 

of buildings and structures (constructed assets) and the estimated maintenance cost to correct deficiencies. The 

method of assessment used has not changed from previous years. Surveys conducted during years one and two of 

the three year cycle are updated to reflect maintenance and repairs performed, and rolled up with current 

assessments to provide a condition assessment for the entire DOL portfolio of constructed assets. Condition 

assessment surveys are based on methods and standards consistently applied, including descriptions of the facility 

condition; standardized condition codes, classifications and categories; estimated costs of maintenance and repair 

actions and recommended maintenance schedules. As a part of these condition assessment surveys, deficiencies 

are identified in terms of architectural, mechanical, electrical, structural, and civil areas. Each deficiency is assigned 

a Facilities Condition Index (FCI) score (1)

based on classification and categorization. 

Ranking and Prioritizing M&R Activities

Life Safety and Health deficiencies are funded shortly following the condition assessment surveys for correction. The 

remaining deficiencies are classified, categorized, and assigned an FCI score. In each construction, rehabilitation, 

and acquisition (CRA) budget, funding is allocated to accomplish the highest priority deficiencies based upon the FCI 

score and programmatic considerations. These deficiencies are funded for correction, while any remaining 

deficiencies become candidates for funding in a future CRA budget. 

Factors Considered in Setting Acceptable Condition

Condition assessment surveys are used to estimate the current plant replacement value and DM&R backlog for each 

constructed asset. Plant replacement value and repair backlog are used to calculate an FCI score for each building 

and structure. These FCI scores determine the asset condition and contribute to the overall FCI score for the

portfolio. Job Corps and MSHA have set the goal of achieving and maintaining an FCI score of 90% or greater for its 

portfolio of constructed assets (the standard used by the National Association of College and University Business 

Offices) as a level of acceptable condition for the periods reported. In 2016, the portfolio’s aggregate FCI score for 

4,478 constructed assets was 91%, and deferred maintenance and repair costs to return the portfolio to an 

acceptable condition were estimated at $276.2 million, in accordance with SFFAS 42, Deferred Maintenance and 

Repairs: Amending Statements of Federal Financial Accounting Standards 6, 14, 29, and 32. In FY 2017, the 

portfolio’s aggregate FCI score for 4,551 constructed assets was 91%, and DM&R costs to return the portfolio to an 

acceptable condition are estimated at $286.7 million. Factors considered in determining acceptable condition 

standards include health and life safety aspects, as well as certain environmental and building code compliance 

elements. These deficiencies are prioritized and corrected first as they lead to unacceptable conditions. 

 (1) FCI = 1 – (Repair Backlog / Plant Replacement Value). In general, an FCI score closer to 100% would indicate a more positive asset condition.
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FY 2017 Agency Financial Report 117

Deferred Maintenance and Repairs Costs

(Dollars in Thousands)

Asset Category FY 2017 Ending Balance FY 2017 Beginning Balance

Funded:

Structures, facilities and improvements 

 Active $61,587 $75,609 

 Inactive 287 270 

Subtotal, funded 61,874 75,879

Unfunded:

Structures, facilities and improvements 

 Active 224,537 200,137

 Inactive 288 212 

Subtotal, unfunded 224,825 200,349

Total $286,699 $276,228 

Significant Changes from Prior Year

For reporting purposes, DOL has determined that changes of 10% and $25 million between fiscal year beginning and 

ending balances are significant. As of September 30, 2017, management has determined that there are no 

significant changes from prior year.
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118     United States Department of Labor

SOCIAL INSURANCE PROGRAMS

The Federal Accounting Standards Advisory Board (FASAB) has classified certain government income transfer

programs as social insurance programs.  Recognizing that these programs have complex characteristics that do not

fit traditional accounting models, the FASAB has developed accounting standards for social insurance programs

which require the presentation of supplementary information to facilitate the assessment of the program’s long‐

term sustainability.    

DOL operates two programs classified under Federal accounting standards as social insurance programs, the UI

Program and the Black Lung Disability Benefits Program.  Presented below is the supplementary information for the

two programs.

Unemployment Insurance Program

The UI Program was created in 1935 to provide income assistance to unemployed workers who lose their jobs

generally through no fault of their own, and are unemployed due to a lack of suitable work.  The program protects

workers during temporary periods of unemployment through the provision of UC benefits.  These benefits replace

part of the unemployed worker’s lost wages and, in so doing, stabilize the economy during recessionary periods by

increasing the unemployed worker’s purchasing power.  The UI program operates counter cyclically, with benefits

exceeding tax collections during recessionary periods and UI tax revenues exceeding benefit payments during

periods of recovery.

Program Administration and Funding

The UI program is administered through a unique system of Federal‐state partnerships, established in Federal law

but executed through conforming state laws by state officials.    The Federal government provides broad policy

guidance and program direction through the oversight of DOL, while program details are established through

individual state UI statutes, administered through state UI agencies.

Federal and State Unemployment Taxes  

The UI program is financed through the collection of Federal and state unemployment taxes levied on subject

employers and deposited in the UTF and Federal appropriations.    The UTF was established to account for the

receipt, investment, and disbursement of unemployment taxes.  Federal unemployment taxes are used to pay for

the administrative costs of the UI program, including grants to each state to cover the costs of state UI operations

and the Federal share of extended UI benefits.    Federal unemployment taxes are also used to fund an account

within the UTF, to make advances to state UI accounts that are unable to make benefit payments because the state

UI account balance has been exhausted.  State UI taxes are used exclusively for the payment of regular UI benefits,

as well as the state’s share of EB.  

Federal Unemployment Taxes

Under the provisions of the FUTA, a Federal tax is levied on covered employers, at a current rate of 6.0% of

the first $7,000 in annual wages paid to each employee.  This Federal tax rate is reduced by a credit of up to

5.4%, granted to employers paying state UI taxes under conforming state UI statutes.    Accordingly, in

conforming states, employers pay an effective Federal tax of 0.6%; employers in states with advances from

the fund may pay a higher effective Federal tax rate because the Federal tax rate credit of 5.4% may be

decreased in increments of 0.3% if a state has had an outstanding advance for more than two years.  

Additional Federal unemployment taxes collected as a result of the reduced Federal tax rate credit are used
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to pay down the state’s outstanding advance balance.  Federal unemployment taxes are collected by the

Internal Revenue Service.  

State Unemployment Taxes

In addition to the Federal tax, individual states finance their UI programs through state tax contributions

from subject employers based on the wages of covered employees.  (Three states also collect contributions

from employees.)  Within Federal confines, state tax rates are assigned in accordance with an employer’s

experience with unemployment.    Actual tax rates vary greatly among the states and among individual

employers within a state.  At a minimum, these rates must be applied to the Federal tax base of $7,000;

however, states may adopt a higher wage base than the minimum established by FUTA.  State UI agencies

are responsible for the collection of state unemployment taxes.

                                                                                                                                                                                                                               

Unemployment Trust Fund

Federal and state UI taxes are deposited into designated accounts within the UTF.  The UTF was established under

the authority of Title IX, Section 904 of the Social Security Act of 1935, as amended, to receive, hold, invest, loan,

and disburse Federal and state UI taxes.    The U.S. Department of the Treasury acts as custodian over monies

deposited into the UTF, investing amounts in excess of disbursing requirements in Treasury securities.  The UTF is

comprised of the following accounts:

Federal Accounts

The Employment Security Administration Account (ESAA) was established pursuant to Section 901 of the

Act.    Tax receipts collected under the FUTA are appropriated to the ESAA and used to pay the costs of

Federal and state administration of the UI program and veterans’ ES and 97% of the costs of the state ES;

and, amounts collected due to FUTA credit reductions are transferred to the FUA and are used to pay down

balances of state advances that have been outstanding for more than two years. Excess balances in ESAA,

as defined under the Act, are transferred to other Federal accounts within the Fund, as described below.

The Federal Unemployment Account was established pursuant to Section 904 of the Act.  FUA is funded by

any excesses from the ESAA as determined in accordance with Section 902 of the Act.    Title XII, Section

1201 of the Act authorizes the FUA to loan Federal monies to state accounts that are unable to make

benefit payments because the state UI account balance has been exhausted.  Title XII loans must be repaid

with interest.    The FUA may borrow from the ESAA or EUCA, without interest, or may also receive

repayable advances, with interest, from the general fund of the U.S. Treasury, when the FUA has a balance

insufficient to make advances to the states.   

The Extended Unemployment Compensation Account was established pursuant to Section 905 of the Act.  

EUCA provides for the payment of extended unemployment benefits authorized under the Federal‐State

Extended Unemployment Compensation Act of 1970, as amended.    Under the EB program, extended

unemployment benefits are paid to individuals who have exhausted their regular unemployment benefits.  

These EB are financed one‐half by State unemployment taxes and one‐half by FUTA taxes from the EUCA.  

The EUCA is funded by a percentage of the FUTA tax transferred from the ESAA in accordance with Section

905(b)(1) and (2) of the Act.  The EUCA may borrow from the ESAA or the FUA, without interest, or may

also receive repayable advances from the General Fund of the U.S. Treasury when the EUCA has a balance

insufficient to pay the Federal share of EB.  During periods of sustained high unemployment, the EUCA may

also receive payments and non‐repayable advances from the General Fund of the Treasury to finance EUC

benefits.  Emergency unemployment benefits require Congressional authorization.
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120 United States Department of Labor

The Federal Employees Compensation (FEC) Account was established pursuant to Section 909 of the Act. 

The FEC account provides funds to States for unemployment compensation benefits paid to eligible former 

Federal civilian personnel and ex-service members. Generally, benefits paid are reimbursed to the Federal 

Employees Compensation Account by the various Federal agencies. Any additional resources necessary to 

assure that the account can make the required payments to States, due to the timing of the benefit 

payments and subsequent reimbursements, will be provided by non-repayable advances from the General 

Fund of the U.S. Treasury.

State Accounts

Separate state accounts were established for each state and territory depositing monies into the Fund, in 

accordance with Section 904 of the Act. State unemployment taxes are deposited into these individual 

accounts and may be used only to pay state unemployment benefits. States may receive repayable 

advances from the FUA when their balances in the Fund are insufficient to pay benefits. 

Railroad Retirement Accounts

The Railroad UI Account and Railroad UI Administrative Account were established under Section 904 of the 

Act to provide for a separate UI program for railroad employees. This separate UI program is administered 

by the Railroad Retirement Board, an agency independent of DOL. DOL is not responsible for the 

administrative oversight or solvency of the railroad UI system. Receipts from taxes on railroad payrolls are 

deposited in the Railroad UI Account and the Railroad UI Administrative Account to meet benefit payment 

and related administrative expenses. 

UI Program Benefits

The UI program provides regular and extended benefit payments to eligible unemployed workers. Regular UI 

program benefits are established under state law, payable for a period not to exceed a maximum duration. In 

1970, Federal law began to require states to extend this maximum period of benefit duration by 50% during periods 

of high unemployment. These extended benefit payments are paid equally from Federal and state accounts. 

 

Regular UI Benefits

The UI program is a cooperative Federal and state program with the federal government providing 

oversight. Eligibility requirements, as well as benefit amounts and benefit duration are determined under 

state law. Under state laws, worker eligibility for benefits depends on experience in covered employment 

during a past base period, which attempts to measure the workers’ recent attachment to the labor force. 

Three factors are common to state eligibility requirements: (1) a minimum duration of recent employment 

and earnings during a base period prior to unemployment, (2) unemployment not the fault of the 

unemployed, and (3) availability of the unemployed for work. 

Benefit payment amounts under all state laws vary with the worker’s base period wage history. Generally, 

states compute the amount of weekly UI benefits as a percentage of an individual’s average weekly base 

period earnings, within certain minimum and maximum limits. Most states set the duration of UI benefits 

by the amount of earnings an individual has received during the base period. Currently, most states have 

established the maximum duration for regular UI benefits at 26 weeks. Regular UI benefits are paid by the 

state UI agencies from monies drawn down from the state account within the UTF.

Extended UI Benefits

The Federal/State Extended Unemployment Compensation Act of 1970 provides for the extension of the 

duration of UI benefits during periods of high unemployment. When the insured unemployment level 

within a state, or in some cases total unemployment, reaches certain specified levels, the state must 
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FY 2017 Agency Financial Report 121

extend benefit duration by 50%, up to a combined maximum of 39 weeks; certain states voluntarily 

extended the benefit duration up to a combined maximum of 46 weeks. Fifty percent of the cost of 

extended unemployment benefits is paid from the EUCA within the UTF, and 50% by the state, from the 

state’s UTF account. The ARRA of 2009 began temporary 100% Federal funding of EB. Subsequent 

legislation, most recently P.L. 112-240, the American Taxpayer Relief Act of 2012, authorized continuing 

100% Federal funding of extended unemployment benefits to December 31, 2013.

Emergency UI Benefits

During prolonged periods of high unemployment, Congress may authorize the payment of emergency 

unemployment benefits to supplement extended UI benefit payments. Emergency benefits began in July 

2008, authorized under the Supplemental Appropriations Act, 2008 (previously authorized in 1991 and 

2002). This emergency program was temporarily extended and additionally funded by the ARRA and has 

been subsequently modified several times, most recently by P.L. 112-240, the American Taxpayer Relief Act 

of 2012, which extended the emergency unemployment insurance program to January 1, 2014. 

Although the programs for emergency unemployment benefits and 100% Federal funding of extended 

unemployment benefits expired in FY 2014, the UI program continues to process residual transactions for 

benefit costs incurred prior to the programs’ expiration.

Federal UI Benefits

Unemployment benefits to unemployed Federal civilian personnel and ex-service members are paid from 

the Federal Employees Compensation Account within the UTF. These benefit costs are reimbursed by the 

responsible Federal agency and are not considered to be social insurance benefits. Federal UC benefits are 

not included in this discussion of social insurance programs. 

The Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1974, as amended, authorizes the President 

to provide benefit assistance to individuals unemployed as a direct result of a major disaster. The Disaster 

Unemployment Assistance (DUA) program provides financial assistance to individuals whose employment or selfemployment has been lost or interrupted as a direct result of a major disaster declared by the President of the 

United States and who are not eligible for regular UI benefits. DOL oversees the DUA program and coordinates with 

the Federal Emergency Management Agency (FEMA) to provide the funds to the state UI agencies for payment of 

DUA benefits and payment of state administration costs under agreements with the Secretary of Labor. DUA 

program activity increased in September 2017 as a result of Hurricanes Harvey and Irma. DUA program activity as a 

result of Hurricanes Harvey and Irma will continue after FY 2017 and include activity as a result of Hurricane Maria. 

Program Finances and Sustainability

As of September 30, 2017, total assets within the UTF exceeded total liabilities by $58.6 billion. At the present time 

there is a surplus; any surplus of tax revenues and earnings on these revenues over benefit payment expenses is 

available to finance benefit payments in future periods when tax revenues may be insufficient. Treasury invests 

any accumulated surplus in Federal securities. The net value of these securities, including interest receivable, as of 

September 30, 2017 was $61.0 billion. This interest is distributed to eligible state and Federal accounts within the 

UTF. Interest income from these investments and income from Title XII advances to states during FY 2017 was $1.3 

billion. Federal and state UI tax and reimbursable revenues of $45.7 billion and regular, extended, emergency, and 

disaster unemployment benefit payment expense of $29.4 billion were recognized for the year ended September 

30, 2017.

As discussed in Note 1-K.1 to the consolidated financial statements, DOL recognized a liability for regular, extended,

emergency, and disaster unemployment benefits to the extent of unpaid benefits applicable to the current period 
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122 United States Department of Labor

and for benefits paid by states that have not been reimbursed by the UTF. Accrued unemployment benefits 

payable as of September 30, 2017 were $1.08 billion.

 

During FY 2017, the FUA did not incur additional borrowing from the General Fund of the U.S. Treasury in the form 

of repayable advances; the FUA had repaid all its outstanding repayable advances as of September 30, 2015. The 

EUCA did not incur additional borrowing and repaid certain prior year (PY) advances. EUCA had an outstanding 

repayable advances balance of $2.6 billion bearing interest of 2.375 % and 2.50% as of September 30, 2017.

Subsequent Events

Management has determined that there are no UI program or UTF subsequent events requiring accrual or 

disclosure through November 15, 2017.

Effect of Projected Cash Inflows and Outflows on the Accumulated Net Assets of the UTF, in Constant Dollars 

The ability of the UI program to meet a participant’s future benefit payment needs depends on the availability of 

accumulated taxes and earnings within the UTF. The Department measures the effect of projected benefit 

payments on the accumulated net assets of the UTF, under an open group scenario, which includes current and 

future participants in the UI program. Future estimated cash inflows and outflows of the UTF are tracked by the 

Department for budgetary purposes. These projections allow the Department to monitor the sensitivity of the UI 

program to differing economic conditions, and to predict the program’s sustainability under varying economic

assumptions.

The significant assumptions used in the projections include total unemployment rates, civilian labor force levels, 

percent of unemployed receiving benefits, total wages, distribution of benefit payments by state, state tax rate 

structures, state taxable wage bases, interest rates on UTF investments, and the Consumer Price Index-Urban (CPIU) for goods and services. The use of CPI-U factors allows the projections to be presented in constant dollars with 

FY 2017 as the base year. The valuation date for the projections is September 30, 2017. Cash projections depend 

on the assumptions used and actual experience may differ materially from the projections.

Presented on the following pages is the effect of projected economic conditions on the net assets of the UTF, in 

constant dollars, excluding the Federal Employees Compensation Account. Amount totals for the expected 

economic conditions analysis and the two sensitivity analyses may differ due to rounding.

Expected Economic Conditions 

Charts I and II graphically depict the effect of expected economic conditions on the UTF, in constant dollars, over 

the next ten years. 

Projected Cash Inflows and Outflows, in Constant Dollars, Under Expected Economic Conditions

Chart I depicts projected cash inflows and outflows of the UTF, in constant dollars, over the next ten years 

under expected economic conditions. Both cash inflows and cash inflows excluding interest earnings are 

displayed. Current estimates by the Department are based on an expected unemployment rate of 4.45% 

during FY 2018 and remaining between 4.52% and 4.80%. Total cash inflows exceed total cash outflows in 

FY 2018 and through the end of the projected period. As presented in table (1) Expected Economic 

Conditions, the net inflow (excluding interest) decreases from $12.3 billion in FY 2018 to $3.5 billion in FY 

2027, with the largest decrease of $1.6 billion between 2018 and 2019. The decrease in net inflow is 

primarily due to lower FUTA collections and higher State benefits payments, offset by increases in interest 

received on Federal securities..
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FY 2017 Agency Financial Report 123

Chart I

30

35

40

45

50

55

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

$ - Billions

Excludes the Federal Employees Compensation Account

Unemployment Trust Fund

Expected Economic Conditions

Cash Inflow and Outflow in Constant Dollars

Total Cash Inflows Cash Inflow Excluding Interest Total Cash Outflow

Effect of Expected Cash Flows on UTF Assets in Constant Dollars

Chart II demonstrates the effect of these expected cash inflows and outflows on the net assets of the UTF, 

in constant dollars, over the ten-year period ending September 30, 2017. Yearly projected total cash 

inflows, including interest earnings, and cash outflows, including interest payments, are depicted as well as 

the net effect of this cash flow on UTF assets. 

As depicted in Chart II, total cash inflows exceed total cash outflows in FY 2018 and all other years in the 

projected period. The excess of total cash inflows over total cash outflows is highest in FY 2018. As 

presented in table (1) Expected Economic Conditions, starting at a nearly $58.0 billion fund balance at the 

beginning of FY 2018, net UTF assets increase nearly $ 102.3 billion over the next ten years to $160.3 billion 

fund net assets balance by the end of FY 2027. Chart II depicts the increase in the net assets of the fund. 
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124 United States Department of Labor

Chart II

20

40

60

80

100

120

140

160

180

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

$ - Billions

Excludes the Federal Employees Compensation Account

Unemployment Trust Fund 

Expected Economic Conditions

Effect of Net Cash Flow on Net Assets in Constant Dollars

Total Cash Inflows Total Cash Outflows Net Assets

Sensitivity Analyses in Constant Dollars

Charts III (Sensitivity Analysis I) and IV (Sensitivity Analysis II) demonstrate the effect on accumulated UTF assets of 

projected total cash inflows and cash outflows of the UTF, in constant dollars, over the ten-year period ending 

September 30, 2027, in two sensitivity analyses. Each sensitivity analysis uses an open group, which includes 

current and future participants in the UI program. Sensitivity Analysis I assumes higher rates of unemployment and 

Sensitivity Analysis II assumes even higher rates of unemployment compared to the expected economic conditions 

as shown in Charts I and II. Table I below summarizes the unemployment rates for expected conditions, Sensitivity 

Analysis I, and Sensitivity Analysis II.
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FY 2017 Agency Financial Report 125

Table I

Effect on UTF Assets, in Constant Dollars, in Sensitivity Analysis I

In this sensitivity analysis, which utilizes a higher unemployment rate of 5.72% beginning in FY 2018, as presented 

in table (2) Sensitivity Analysis I Higher Unemployment Rate, net cash inflows are negative in FYs 2018

through2021, but become positive in FY 2022 and continue to be positive through 2027. Chart III depicts the crossover point where cash outflows exceed cash inflows before 2022 and cash inflows exceed cash outflows afterward. 

Starting at a nearly $58.0 billion fund balance at the beginning of FY 2018, net UTF assets first decrease by $33.6

billion until 2021; then net UTF assets increase by $53.0 billion over the next six years to about a $77.4 billion fund 

net assets balance by the end of FY 2027. Chart III depicts the decrease in net assets until 2021 and then the

increase in net assets thereafter. 

Chart III

0

20

40

60

80

100

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

$ - Billions

Excludes the Federal Employees Compensation Account

Unemployment Trust Fund 

Higher Unemployment Rate in Sensitivity Analysis I

Effect of Net Cash Flow on Net Assets in Constant Dollars

Total Cash Inflows Total Cash Outflows Net Assets

Conditions 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

Expected 4.45% 4.52% 4.70% 4.75% 4.80% 4.80% 4.80% 4.80% 4.80% 4.80%

Sensitivity

 Analysis I 5.72% 7.23% 7.32% 6.54% 5.70% 5.56% 5.20% 4.80% 4.80% 4.80%

Sensitivity

 Analysis II 5.28% 8.50% 9.72% 9.16% 8.28% 7.59% 6.47% 5.45% 4.95% 4.80%

Total Unemployment Rate for the Ten-Year Period Ending September 30, 202
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126 United States Department of Labor

Effect on UTF Assets, in Constant Dollars, in Sensitivity Analysis II

In this sensitivity analysis, as presented in the table (3) Sensitivity Analysis II Higher Unemployment Rate, net cash 

outflows including interest earnings and expenses are projected in FYs 2019 through 2023 by amounts between 

about $5.3 billion and $25.7 billion, but outflows exceed inflows in FYs 2024 through 2027 by amounts between 

$14.6 billion and $23.2 billion. Net cash inflows are reestablished in FY 2024 and peak in FY 2026 with a drop in the 

unemployment rate to 8.28% in FY 2022 and then steadily downward for FYs 2023 through 2027. Chart IV depicts 

the cross-over points where outflows exceed inflows before FY 2019 and inflows exceed outflows before FY 2024. 

The fund net assets decrease nearly $14.0 billion from a $58.0 billion fund balance at the beginning of FY 2018 to 

$44.0 billion in FY 2027. Chart IV depicts the low point in the fund’s financial position at a fund deficit of $(34.3)

billion in FY 2023 and then the decrease in fund deficit around FY 2024. At the end of the projection period of

Sensitivity Analysis II, net assets are about $116.3 billion less than under expected economic conditions.

Chart IV

(60)

(40)

(20)

0

20

40

60

80

100

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

$ - Billions

Excludes the Federal Employees Compensation Account

Unemployment Trust Fund 

Higher Unemployment Rate in Sensitivity Analysis II

Effect of Net Cash Flow on Net Assets in Constant Dollars

Total Cash Inflows Total Cash Outflows Net Assets

The example of expected economic conditions and two sensitivity analyses, in constant dollars, demonstrate the 

counter cyclical nature of the UI program, which experiences net cash inflows during periods of low unemployment 

that are depleted by net cash outflows during periods of increased unemployment. During the expected conditions 

and two sensitivity analyses, state accounts without sufficient reserve balances to absorb negative cash flows are 

forced to obtain advances from the FUA and to meet benefit payment requirements. Advances to states also 

deplete the FUA, which borrows from the ESAA and the EUCA until they are depleted. The FUA then requires 

advances from the General Fund of the U.S. Treasury to provide borrowings to states. (See following discussion of 

solvency measures for state UI programs.)
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FY 2017 Agency Financial Report 127

(Dollars in millions) 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

Balance, start of year $ 57,972 $ 71,707 $ 84,033 $ 95,337 $ 105,937 $ 116,104 $ 125,624 $ 134,896 $ 143,586 $ 152,013

Cash inflow

State unemployment taxes 39,932 40,353 40,227 39,863 39,939 39,542 39,560 39,356 39,473 39,725

Federal unemployment taxes 7,868 5,966 5,936 5,905 5,881 5,854 5,840 5,820 5,797 5,769

General revenue appropriation - - - - - - - - - -

Interest on loans 4 2 1 1 1 1 1 - - -

Deposits by the Railroad Retirement Board 139 154 151 117 93 108 130 129 111 106

Total cash inflow excluding interest 47,943 46,475 46,315 45,886 45,914 45,505 45,531 45,305 45,381 45,600

Interest on Federal securities 1,435 1,663 1,967 2,348 2,805 3,273 3,719 4,140 4,509 4,823

Total cash inflow 49,378 48,138 48,282 48,234 48,719 48,778 49,250 49,445 49,890 50,423

Cash outflow

State unemployment benefits 31,839 32,267 33,467 34,141 35,072 35,791 36,522 37,311 38,035 38,729

State administrative costs 3,510 3,280 3,253 3,241 3,231 3,220 3,211 3,200 3,186 3,178

Federal administrative costs 166 163 163 161 159 158 156 155 153 151

Interest on tax refunds 1 1 1 1 1 1 1 1 1 1

Interest on advances 29 - - - - - - - - -

Railroad Retirement Board withdrawals 98 101 94 90 89 88 88 88 88 88

Total cash outflow 35,643 35,812 36,978 37,634 38,552 39,258 39,978 40,755 41,463 42,147

Excess of total cash inflow excluding

 interest over total cash outflow 12,300 10,663 9,337 8,252 7,362 6,247 5,553 4,550 3,918 3,453

Excess of total cash inflow over

 total cash outflow 13,735 12,326 11,304 10,600 10,167 9,520 9,272 8,690 8,427 8,276

Balance, end of year $ 71,707 $ 84,033 $ 95,337 $ 105,937 $ 116,104 $ 125,624 $ 134,896 $ 143,586 $ 152,013 $ 160,289

Total unemployment rate 4.45% 4.52% 4.70% 4.75% 4.80% 4.80% 4.80% 4.80% 4.80% 4.80% 

U.S. DEPARTMENT OF LABOR

SUPPLEMENTARY SOCIAL INSURANCE INFORMATION IN CONSTANT DOLLARS

CASH INFLOW AND OUTFLOW OF THE 

UNEMPLOYMENT TRUST FUND EXCLUDING THE FEDERAL EMPLOYEES COMPENSATION ACCOUNT

FOR THE TEN-YEAR PERIOD ENDING SEPTEMBER 30, 2027

(1) EXPECTED ECONOMIC CONDITIONS
128 United States Department of Labor

(Unaudited)REQUIRED SUPPLEMENTARY INFORMATIONFinancial Section

(Dollars in millions) 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

Balance, start of year $ 57,972 $ 54,235 $ 41,046 $ 29,023 $ 24,372 $ 26,995 $ 32,041 $ 51,870 $ 63,177 $ 70,717

Cash inflow

State unemployment taxes 40,426 43,261 45,917 47,833 49,286 49,294 49,281 48,118 47,442 47,218

Federal unemployment taxes 7,722 7,801 7,918 8,406 9,323 10,422 22,606 12,843 10,494 10,255

General revenue appropriation 1 12 17 4 - - - - - -

Interest on loans 18 101 274 448 571 620 468 270 183 189

Deposits by the Railroad Retirement Board 139 154 151 117 93 108 130 129 111 106

Total cash inflow excluding interest 48,306 51,329 54,277 56,808 59,273 60,444 72,485 61,360 58,230 57,768

Interest on Federal securities 1,293 1,089 963 989 1,098 1,256 1,654 1,822 2,102 2,361

Total cash inflow 49,599 52,418 55,240 57,797 60,371 61,700 74,139 63,182 60,332 60,129

Cash outflow

State unemployment benefits 49,058 61,161 62,690 57,858 53,243 52,232 50,105 48,069 49,075 49,731

State administrative costs 3,974 4,103 4,102 3,953 3,780 3,692 3,597 3,500 3,472 3,454

Federal administrative costs 166 163 163 161 159 158 156 155 153 151

Interest on tax refunds 1 1 1 1 1 1 3 2 2 2

Interest on advances 39 76 215 384 474 481 359 59 - -

Railroad Retirement Board withdrawals 98 103 92 91 91 90 90 90 90 89

Total cash outflow 53,336 65,607 67,263 62,448 57,748 56,654 54,310 51,875 52,792 53,427

Excess (deficiency) of total cash inflow

 excluding interest over (under)

 total cash outflow (5,030) (14,278) (12,986) (5,640) 1,525 3,790 18,175 9,485 5,438 4,341

Excess (deficiency) of total cash inflow

 over (under) total cash outflow (3,737) (13,189) (12,023) (4,651) 2,623 5,046 19,829 11,307 7,540 6,702

Balance, end of year $ 54,235 $ 41,046 $ 29,023 $ 24,372 $ 26,995 $ 32,041 $ 51,870 $ 63,177 $ 70,717 $ 77,419

Total unemployment rate 5.72% 7.23% 7.32% 6.54% 5.70% 5.56% 5.20% 4.80% 4.80% 4.80% 

U.S. DEPARTMENT OF LABOR

SUPPLEMENTARY SOCIAL INSURANCE INFORMATION IN CONSTANT DOLLARS

CASH INFLOW AND OUTFLOW OF THE 

UNEMPLOYMENT TRUST FUND EXCLUDING THE FEDERAL EMPLOYEES COMPENSATION ACCOUNT

FOR THE TEN-YEAR PERIOD ENDING SEPTEMBER 30, 2027

(2) SENSITIVITY ANALYSIS I HIGHER UNEMPLOYMENT RATE
Annual Financial Statements

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

FY 2017 Agency Financial Report 129

(Dollars in millions) 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

Balance, start of year $ 57,972 $ 60,387 $ 34,732 $ 3,898 $ (17,426) $ (29,077) $ (34,336) $ (19,723) $ 1,329 $ 24,486

Cash inflow

State unemployment taxes 40,223 42,398 45,800 48,723 51,057 51,932 52,284 51,625 50,237 49,035

Federal unemployment taxes 7,747 7,709 7,759 8,079 9,147 10,494 24,094 25,253 25,078 21,050

General revenue appropriation - 12 25 22 1 - - - - -

Interest on loans 10 116 484 917 1,348 1,715 1,709 1,376 970 655

Deposits by the Railroad Retirement Board 139 154 151 117 93 108 130 129 111 106

Total cash inflow excluding interest 48,119 50,389 54,219 57,858 61,646 64,249 78,217 78,383 76,396 70,846

Interest on Federal securities 1,349 1,099 824 723 752 830 1,040 1,371 1,688 1,995

Total cash inflow 49,468 51,488 55,043 58,581 62,398 65,079 79,257 79,754 78,084 72,841

Cash outflow

State unemployment benefits 42,948 72,400 80,563 74,265 68,131 64,219 58,621 53,216 50,096 49,007

State administrative costs 3,811 4,371 4,600 4,409 4,210 4,043 3,849 3,657 3,522 3,451

Federal administrative costs 166 163 163 161 159 158 156 155 153 151

Interest on tax refunds 1 1 1 1 1 1 4 4 4 3

Interest on advances 29 105 458 978 1,457 1,827 1,924 1,580 1,062 599

Railroad Retirement Board withdrawals 98 103 92 91 91 90 90 90 90 89

Total cash outflow 47,053 77,143 85,877 79,905 74,049 70,338 64,644 58,702 54,927 53,300

Excess (deficiency) of total cash inflow

 excluding interest over (under)

 total cash outflow 1,066 (26,754) (31,658) (22,047) (12,403) (6,089) 13,573 19,681 21,469 17,546

Excess (deficiency) of total cash inflow

 over (under) total cash outflow 2,415 (25,655) (30,834) (21,324) (11,651) (5,259) 14,613 21,052 23,157 19,541

Balance, end of year $ 60,387 $ 34,732 $ 3,898 $ (17,426) $ (29,077) $ (34,336) $ (19,723) $ 1,329 $ 24,486 $ 44,027

Total unemployment rate 5.28% 8.50% 9.72% 9.16% 8.28% 7.59% 6.47% 5.45% 4.95% 4.80% 

U.S. DEPARTMENT OF LABOR

SUPPLEMENTARY SOCIAL INSURANCE INFORMATION IN CONSTANT DOLLARS

CASH INFLOW AND OUTFLOW OF THE 

UNEMPLOYMENT TRUST FUND EXCLUDING THE FEDERAL EMPLOYEES COMPENSATION ACCOUNT

FOR THE TEN-YEAR PERIOD ENDING SEPTEMBER 30, 2027

(3) SENSITIVITY ANALYSIS II HIGHER UNEMPLOYMENT RATE
Financial Section 

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

130 United States Department of Labor

*States with Minimally Solvent UTF Account Balances

Each state’s accumulated UTF net assets or reserve balance should provide a defined level of benefit payments over 

a defined period. To be minimally solvent, a state’s reserve balance should provide for one year’s projected benefit 

payment needs based on the highest levels of benefit payments experienced by the state over the last twenty 

years. A ratio of 1.00 or greater indicates that the state UTF account balance is minimally solvent. States below this 

level are vulnerable to exhausting their funds in a recession. States exhausting their reserve balance must borrow 

funds from FUA to make benefit payments. In FY 2015 the FUA repaid all its outstanding borrowings; there were 

no FUA borrowings in FY 2017.

Chart V presents the state by state results of this analysis at September 30, 2016 in descending order by ratio. As 

the chart below illustrates, 31 state UTF accounts were below the minimal solvency ratio of 1.00 at September 30, 

2016. Some states borrow from the FUA and then issue bonds to repay their FUA borrowings; the ratios do not 

reflect a state’s debt to bondholders.

Chart V

*Includes the District of Columbia, Puerto Rico, and the Virgin Islands.

State Ratio State Ratio State Ratio

 Wyoming 2.24 Georgia 0.97 New Jersey 0.58

 Oregon 2.17 Virginia 0.96 Arizona 0.55

 Vermont 1.99 Michigan 0.94 Pennsylvania 0.45

 Mississippi 1.88 Minnesota 0.93 Kentucky 0.42

 Utah 1.78 Tennessee 0.92 Illinois 0.40

 Nebraska 1.76 Alabama 0.91 Connecticut 0.37

 Oklahoma 1.75 Nevada 0.90 New York 0.31

 South Dakota 1.74 Maryland 0.85 Massachusetts 0.29

 Alaska 1.66 South Carolina 0.78 West Virginia 0.26

 Idaho 1.41 Wisconsin 0.77 Texas 0.25

 Montana 1.40 North Dakota 0.76 Ohio 0.23

 Iowa 1.36 Missouri 0.72 Indiana 0.22

 Louisiana 1.35 Colorado 0.63 California 0.00

 Washington 1.28 Rhode Island 0.62 Virgin Islands 0.00

 Puerto Rico 1.25 Delaware 0.58

 Hawaii 1.20

 Maine 1.19

 New Mexico 1.19

 North Carolina 1.17

 District of Columbia 1.11

 Florida 1.07

 New Hampshire 1.07

 Arkansas 1.06

 Kansas 1.06

Minimally Solvent Not Minimally Solvent
Annual Financial Statements

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

FY 2017 Agency Financial Report 131

Black Lung Disability Benefit Program

The Black Lung Disability Benefit Program provides for compensation, medical, and survivor benefits for eligible 

coal miners who are totally disabled due to pneumoconiosis (black lung disease) arising out of their coal mine 

employment and the BLDTF provides benefit payments when no responsible mine operator can be assigned the 

liability. Other information about the BLDTF and social insurance reporting is also presented in Notes 1-W and 1-Y

of the financial statements.

Program Administration and Funding

The Federal Coal Mine Health and Safety Act sets Black Lung benefits at 37.5% of the base salary of a Federal 

employee at level GS-2, Step 1. Black lung disability benefit payments are funded by excise taxes from coal mine 

operators based on the domestic sale of coal, as are the program’s administrative costs. These taxes are collected 

by the Internal Revenue Service and transferred to the BLDTF, which was established under the authority of the 

Black Lung Benefits Revenue Act, and administered by the U.S. Department of the Treasury. 

P.L. 110-343, Division B-Energy Improvement and Extension Act of 2008, enacted on October 3, 2008, in section 

113, (1) allowed for the temporary increase in coal excise tax rates to continue an additional five years beyond the 

statutory limit and (2) restructured the BLDTF debt by refinancing the outstanding repayable advances (which had 

higher interest rates) with discounted debt instruments similar in form to zero-coupon bonds (which had lower 

interest rates), plus a one-time appropriation. This Act also allowed that any subsequent debt issued by the BLDTF 

may be used to make benefit payments, other authorized expenditures, or to repay debt and interest from the 

initial refinancing. All debt issued by the BLDTF was effected as borrowing from the Treasury's Bureau of the Fiscal 

Service. (See Notes 1-J and 8)

Program Finances and Sustainability

At September 30, 2017, total liabilities of the BLDTF exceeded assets by $5.61 billion This net position represents 

the accumulated shortfall of excise taxes necessary to meet benefit payments, administrative costs, and interest 

expense incurred prior to and subsequent to the debt refinancing pursuant to P.L. 110-343. Prior to enactment of 

P.L. 110-343, this shortfall was funded by repayable advances to the BLDTF, which were repayable with interest. 

Pursuant to P.L. 110-343, any shortfall will be financed with debt instruments similar in form to zero-coupon bonds, 

with a maturity date of one year and bear interest at the Treasury 1-year rate. Outstanding debt at September 30, 

2017 was $5.74 billion, bearing interest rates ranging from 1.311% to 4.556%. Excise tax revenues of $428.7

million, benefit payment expense of $159.8 million, and interest expense of $208.4 million were recognized for the 

year ended September 30, 2017. The interest expense is accrued and capitalized to the principal of the debt until 

the debt reaches its face value at the time of maturity. On September 30, 2017, the BLDTF issued debt in the 

amount of $1.3 billion, bearing interest at 1.311% and maturing on September 30, 2018. At September 30, 2017, 

there were 24 debt instruments with staggered maturities of September 30 for years 2018 through 2040, with a 

total carrying value of nearly $5.74 billion and a total face value at maturity of nearly $8.7 billion. Of these 24 debt 

instruments, 23 are from the October 2008 refinancing and one debt instrument was issued on September 30, 

2017.
Financial Section 

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

132 United States Department of Labor

Subsequent Events

Management disclosed that as of September 30, 2017, the U.S. Court of Appeals (USCA) August 8, 2017 order to 

abey CPP litigation remained in effect and the February 2016 U.S. Supreme Court (SCOTUS) stay of CPP regulation 

remained in effect. The August 8, 2017 USCA abeyance order expired; on November 9, 2017, the USCA issued 

another order to abey litigation pursuant to CPP for 60 days. As of November 15, 2017, the

o February 2016 SCOTUS stay of regulation pursuant to the CPP remained in effect and

o November 9, 2017 USCA order to abey litigation pursuant to the CPP remained in effect. 

For FY 2017 reporting, DOL’s assumptions did not include regulation pursuant to the CPP. As of November 15, 

2017, these assumptions remained consistent with Executive Branch policy on regulation pursuant to the CPP.

Projected Cash Inflows and Outflows, in Constant Dollars, for the Open Group

Prior to FY 2016, the beneficiary population was assumed to be a nearly closed universe in which attrition by death 

exceeded new entrants by a ratio of more than ten to one; projections for new participants were included in the 

overall projections and were considered immaterial. Therefore, in fiscal years prior to FY 2016, the difference 

between the closed group population and the open group population due to new participants was immaterial and 

the same values were presented for both the open group and the closed group.

During FY 2016, the number of participants who joined the rolls increased due to, among other things, adjudicated 

liability as a result of responsible mine operator bankruptcy; projections for the number of new participants 

increased for similar reasons and the DOL management determined that the difference between the size of the 

closed group population and the open group population merited separate reporting for new participants. 

Accordingly, since FY 2016 the SOSI presents values for the closed group, new participants, and open group. 

The significant assumptions used in the projections, in constant dollars, are the coal excise tax revenue estimates, 

tax rate structure, number of beneficiaries, life expectancy, Federal civilian pay raises, medical cost inflation, interest 

rate on new debt issued by the BLDTF, and the CPI-U for goods and services. The use of CPI-U factors allows the 

projections to be presented in constant dollars with FY 2017 as the base year. The valuation date for the 

projections is September 30, 2017. Effective for FY 2017 reporting DOL revised its projection period from a fixed 

terminus of FY 2040 to a rolling 25-year period beginning on the valuation date. Cash projections depend on the 

assumptions used and actual experience may differ materially from the projections.

In order to be consistent with Executive Branch policy on regulations pursuant to the Clean Power Plan (CPP), DOL’s 

estimates of future excise tax income were based on Energy Information Administration (EIA) projections of future 

coal production that do not reflect CPP regulation. The EIA projections reflect the continuing trend of lower coal 

production which would lead to lower future excise tax income. The effects of the significant decrease in projected 

cash inflows from excise taxes are also reflected in the Statement of Social Insurance as of September 30, 2017 and 

are the largest change reported in the Statement of Changes in Social Insurance Amounts for the year ended 

September 30, 2017. 

In February 2016 the SCOTUS stayed implementation of regulation pursuant to the CPP due to litigation pending in 

the USCA. On August 8, 2017, the USCA ordered that the CPP litigation be held in abeyance for 60 days. As of

September 30, 2017, the USCA abeyance remained in effect and the February 2016 SCOTUS stay of CPP regulation 

remained in effect.
Annual Financial Statements

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

FY 2017 Agency Financial Report 133

The projections, in constant dollars for the open group, made over the 25-year period ending September 30, 2042, 

indicate that cash inflows from excise taxes will exceed cash outflows for benefit payments and administrative 

expenses for FYs 2018 and 2019, but cash outflows will exceed cash inflows for FYs 2020 through 2032 before 

reversing again in FY 2033. Cumulative net cash inflows are projected as $46.2 million by FY 2042. When payments 

from the BLDTF’s maturing debt are applied against this surplus cash inflow, the BLDTF’s cash flow turns negative in 

all periods included in the projections. Net cash outflows after payments on maturing debt are projected to reach 

$9.3 billion by the end of FY 2042, resulting in a projected deficit of nearly $12.5 billion at September 30, 2042. 

Amount totals in tables may differ slightly due to rounding (See Chart I and Table I).

The net present value of future projected benefit payments and other cash inflow and outflow activities for the 

closed group and the open group together with the fund’s deficit positions as of September 30, 2017, 2016, 2015, 

2014, and 2013 are presented in the SOSI.

Chart I

0

100

200

300

400

500

600

700

800

900

2018 2022 2026 2030 2034 2038 2042

$ - Millions

BLACK LUNG DISABILITY TRUST FUND

CASH INFLOW AND OUTFLOW IN CONSTANT DOLLARS FOR THE OPEN GROUP

Total Cash Outflow Total Cash Inflow Cash Outflows Before Repayment of Debt and Interest

Projected Cash Inflows and Outflows with Sensitivity Analysis, in Constant Dollars, for the Open Group

For the projected cash inflows and outflows with sensitivity analysis, in constant dollars for the open group, the 

significant assumption for medical cost inflation was increased by 1.00%. For the sensitivity analysis, the other 

significant assumptions (coal excise tax revenue estimates, tax rate structure, number of beneficiaries, life 

expectancy, Federal civilian pay raises, interest rate on new debt issued by the BLDTF, and CPI-U for goods and 

services) were left unchanged. Cash projections depend on the assumptions used and actual experience may differ 

materially from the projections. 
Financial Section 

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

134 United States Department of Labor

These projections with sensitivity analysis, in constant dollars for the open group, made over the 25-year period 

ending September 30, 2042, indicate that cash inflows from excise taxes will exceed cash outflows for benefit 

payments and administrative expenses for FYs 2018 and 2019, but cash outflows exceed cash inflows for FYs 2020 

through 2033 before reversing again in FY 2034. Cumulative net cash outflows would be projected to reach $59.0

million by the year 2042. Furthermore, when payments from the BLDTF’s maturing debt are applied, the BLDTF’s 

net cash outflows after payments on maturing debt would be projected to reach $9.4 billion by the end of the year 

2042, and would result in a projected deficit of $12.6 billion at September 30, 2042 (See Chart II and Table II). 

Amount totals in tables may differ slightly due to rounding.

Chart II

0

100

200

300

400

500

600

700

800

900

2018 2022 2026 2030 2034 2038 2042

$ - Millions

BLACK LUNG DISABILITY TRUST FUND

CASH INFLOW AND OUTFLOW IN CONSTANT DOLLARS FOR THE OPEN GROUP

SENSITIVITY ANALYSIS

Total Cash Outflow Total Cash Inflow Cash Outflows Before Repayment of Debt and Interest

Closed Group, New Participants, and Open Group with Sensitivity Analysis

For the closed group, new participants, and open group with sensitivity analysis, we modified the significant 

assumptions as described above (see Projected Cash Inflows and Outflows with Sensitivity Analysis, in Constant 

Dollars for the Open Group) for the medical cost inflation but the other significant assumptions were left 

unchanged. 
Annual Financial Statements

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

FY 2017 Agency Financial Report 135

For the Sensitivity Analysis, the changes that we made in the assumptions as described above (see projected Cash 

Inflows and Outflows with Sensitivity Analysis, in Constant Dollars for the Open Group) had the following effects (in 

thousands of dollars):

(a) In the SOSI, for the closed group:

(1) the present value of estimated future excise tax income during the projection period would decrease

$37,420 from $2,011,565 to $1,974,145;

(2) the present value of estimated future administrative costs during the projection period would decrease 

$13,272 from $713,472 to $700,200;

(3) the actuarial present value of future benefit payments to disabled coal miners and dependent survivors 

during the projection period would increase $33,697 from $1,280,920 to $1,314,617; and

(4) the closed group measure would decrease $57,845 from $17,173 to $(40,672).

(b) In the SOSI, for the new participants:

(1) the present value of estimated future excise tax income during the projection period would increase 

$37,420 from $1,616,686 to $1,654,106;

(2) the present value of estimated future administrative costs during the projection period would increase 

$13,272 from $573,414 to $586,686;

(3) the actuarial present value of future benefit payments to disabled coal miners and dependent survivors 

during the projection period would increase $72,028 from $1,029,469 to $1,101,497; and

(4) the excess of present value of estimated future excise tax income over present value of estimated future 

administrative costs and actuarial present value of future benefit payments during the projection period 

would decrease $47,880 from $13,803 to $(34,077).

(c) In the SOSI, for the open group:

(1) the present value of estimated future excise tax income during the projection period would remain 

unchanged;

(2) the present value of estimated future administrative costs during the projection period would remain 

unchanged;

(3) the actuarial present value of future benefit payments to disabled coal miners and dependent survivors 

during the projection period would increase $105,725 from $2,310,389 to $2,416,114; and

(4) the open group measure would decrease $105,725 from $30,976 to $(74,749).

(d) In the SOSI, the trust fund net position at start of the projection period would remain unchanged. 

(e) In the SOSI Summary Section, for the closed group:

(1) the closed group measure would decrease $57,845 from $17,173 to $(40,672);

(2) the Funds with U.S. Treasury and receivables from benefit overpayments would remain unchanged; and

(3) the total of closed group measure plus fund assets would decrease $57,845 from $161,870 to $104,025.

(f) In the SOSI Summary Section, for the open group:

(1) the open group measure would decrease $105,725 from $30,976 to $(74,749);

(2) the Funds with U.S. Treasury and receivables from benefit overpayments would remain unchanged; and

(3) the total of open group measure plus fund assets would decrease $105,725 from $175,673 to $69,948.

Cash projections depend on the assumptions used and actual experience may differ materially from the 

projections.
(Unaudited)

REQUIRED SUPPLEMENTARY INFORMATIONFinancial Section

136 United States Department of Labor

Table I 

(Dollars in thousands) 2018 2019 2020 2021 2022 2023 - 2042 Total

Balance, start of year $ (5,610,709) $ (5,633,717) $ (5,714,121) $ (5,864,617) $ (6,044,630) $ (6,246,899) $ (5,610,709)

Cash inflow

Excise taxes 391,777 233,264 181,390 172,746 167,178 2,470,828 3,617,183

Total cash inflow 391,777 233,264 181,390 172,746 167,178 2,470,828 3,617,183

Cash outflow

Disabled coal miners benefits 159,761 156,016 151,278 145,435 138,850 1,536,510 2,287,850

Administrative costs 67,903 67,791 67,621 67,418 67,255 945,155 1,283,142

Cash outflows before repayment of

 debt and interest 227,664 223,807 218,899 212,852 206,105 2,481,665 3,570,993

Cash inflow over cash outflow 

 (cash outflow over cash inflow)

 before repayment of debt and interest 164,113 9,457 (37,509) (40,106) (38,927) (10,837) 46,190

Maturity of obligations refinanced October 2008 547,753 173,508 182,953 192,108 201,156 4,303,625 5,601,104

Interest on annual borrowings 16,459 28,783 41,200 57,492 71,062 3,506,186 3,721,183

Total cash outflow 791,876 426,099 443,053 462,453 478,323 10,291,475 12,893,279

Total cash outflow over total cash inflow (400,099) (192,835) (261,663) (289,707) (311,145) (7,820,647) (9,276,096)

Reduction of debt refinanced October 2008 377,091 112,431 111,167 109,694 108,877 1,595,153 2,414,413

Balance, end of year $ (5,633,717) $ (5,714,121) $ (5,864,617) $ (6,044,630) $ (6,246,899) $ (12,472,392) $ (12,472,392)

CASH INFLOW AND OUTFLOW OF THE BLACK LUNG DISABILITY TRUST FUND IN CONSTANT DOLLARS

FOR THE 25-YEAR PERIOD ENDING SEPTEMBER 30, 2042

SUPPLEMENTARY SOCIAL INSURANCE INFORMATION

OPEN GROUP

U.S. DEPARTMENT OF LABOR
FY 2017 Agency Financial Report 137

Annual Financial Statements

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

Table II 

(Dollars in thousands) 2018 2019 2020 2021 2022 2023 - 2042 Total

Balance, start of year $ (5,610,709) $ (5,634,524) $ (5,716,237) $ (5,868,585) $ (6,051,019) $ (6,256,270) $ (5,610,709)

Cash inflow

Excise taxes 391,777 233,264 181,390 172,746 167,178 2,470,828 3,617,183

Total cash inflow 391,777 233,264 181,390 172,746 167,178 2,470,828 3,617,183

Cash outflow

Disabled coal miners benefits 160,568 157,305 153,074 147,734 141,627 1,632,777 2,393,085

Administrative costs 67,903 67,791 67,621 67,418 67,255 945,155 1,283,142

Cash outflows before repayment of

 debt and interest 228,471 225,096 220,696 215,152 208,881 2,577,931 3,676,227

Cash inflow over cash outflow 

 (cash outflow over cash inflow)

 before repayment of debt and interest 163,306 8,168 (39,306) (42,406) (41,703) (107,103) (59,044)

Maturity of obligations refinanced October 2008 547,753 173,508 182,953 192,108 201,156 4,303,625 5,601,104

Interest on annual borrowings 16,459 28,804 41,256 57,613 71,268 3,543,715 3,759,115

Total cash outflow 792,683 427,408 444,905 464,873 481,306 10,425,271 13,036,446

Total cash outflow over total cash inflow (400,906) (194,144) (263,515) (292,127) (314,128) (7,954,443) (9,419,263)

Reduction of debt refinanced October 2008 377,091 112,431 111,167 109,694 108,877 1,595,153 2,414,413

Balance, end of year $ (5,634,524) $ (5,716,237) $ (5,868,585) $ (6,051,019) $ (6,256,270) $ (12,615,560) $ (12,615,560)

 U.S. DEPARTMENT OF LABOR

SUPPLEMENTARY SOCIAL INSURANCE INFORMATION SENSITIVITY ANALYSIS

CASH INFLOW AND OUTFLOW OF THE BLACK LUNG DISABILITY TRUST FUND IN CONSTANT DOLLARS

FOR THE 25-YEAR PERIOD ENDING SEPTEMBER 30, 2042

OPEN GROUP
Financial Section 

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

138 United States Department of Labor

COMBINING STATEMENTS OF BUDGETARY RESOURCES

The principal Combined Statements of Budgetary Resources combine the availability, status, and outlay of DOL’s 

budgetary resources during FY 2017 and FY 2016. Presented on the following pages is the disaggregation of this 

combined information for each of the Department’s major budget agencies. 
Annual Financial Statements

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

FY 2017 Agency Financial Report 139

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Financial Section 

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

140 United States Department of Labor

COMBINING STATEMENTS OF BUDGETARY RESOURCES

For the Year Ended September 30, 2017

Occupational

(Dollars in thousands) Employment and Office of Workers' Office Safety and 

Training Compensation of Health

Administration Programs Job Corps Administration

BUDGETARY RESOURCES

Unobligated balance brought forward, October 1 $ 1,387,035 $ 1,363,700 $ 1,057,769 $ 15,306

Recoveries of prior year unpaid obligations 257,279 27,384 61,530 8,379

Other changes in unobligated balance (331,643) (1,134) (17,994) (8,740)

Unobligated balance from prior year budget authority, net 1,312,671 1,389,950 1,101,305 14,945

Appropriations (discretionary and mandatory) 38,807,728 2,164,703 1,718,173 552,787

Spending authority from offsetting collections (discretionary and mandatory) 3,447,722 3,120,629 - 1,976

Total budgetary resources $ 43,568,121 $ 6,675,282 $ 2,819,478 $ 569,708

STATUS OF BUDGETARY RESOURCES

New obligations and upward adjustments (total) $ 42,465,992 $ 5,014,082 $ 1,793,774 $ 555,786

Unobligated balance, end of year

Apportioned, unexpired accounts 517,656 1,621,366 931,944 71

Exempt from apportionment, unexpired accounts - 33,211 - -

Unapportioned, unexpired accounts 61,845 5,370 7,500 -

Unexpired unobligated balance, end of year 579,501 1,659,947 939,444 71

Expired unobligated balance, end of year 522,628 1,253 86,260 13,851

Total unobligated balance, end of year 1,102,129 1,661,200 1,025,704 13,922

Total budgetary resources $ 43,568,121 $ 6,675,282 $ 2,819,478 $ 569,708

CHANGE IN OBLIGATED BALANCE

Unpaid Obligations:

Unpaid obligations, brought forward, October 1 $ 10,698,801 $ 319,952 $ 914,101 $ 70,336

New obligations and upward adjustments 42,465,992 5,014,082 1,793,774 555,786

Less: outlays (gross) (42,843,161) (4,997,864) (1,612,756) (557,894)

Less: recoveries of prior year unpaid obligations (257,279) (27,384) (61,530) (8,379)

Unpaid obligations, end of year 10,064,353 308,786 1,033,589 59,849

Uncollected Payments: 

Uncollected payments, Federal sources, brought forward, October 1 (1,732,249) (2,364) - (500)

Change in uncollected payments, Federal sources 281,943 (149,340) - 473

Uncollected payments, Federal sources, end of year (1,450,306) (151,704) - (27)

Memorandum (non-add) entries: 

Obligated balance, start of year $ 8,966,552 $ 317,588 $ 914,101 $ 69,836

Obligated balance, end of year $ 8,614,047 $ 157,082 $ 1,033,589 $ 59,822

BUDGET AUTHORITY AND OUTLAYS, NET

Budget authority, gross (discretionary and mandatory) $ 42,255,450 $ 5,285,332 $ 1,718,173 $ 554,763

Less: actual offsetting collections (discretionary and mandatory) (3,743,398) (2,971,463) (51) (2,492)

Less: change in uncollected customer payments from Federal 

 sources (discretionary and mandatory) 281,943 (149,340) - 473

Recoveries of prior year paid obligations (discretionary and mandatory) 13,733 174 51 43

Budget authority, net (discretionary and mandatory) $ 38,807,728 $ 2,164,703 $ 1,718,173 $ 552,787

Outlays, gross (discretionary and mandatory) $ 42,843,161 $ 4,997,864 $ 1,612,756 $ 557,894

Actual offsetting collections (discretionary and mandatory) (3,743,398) (2,971,463) (51) (2,492)

Outlays, net (discretionary and mandatory) 39,099,763 2,026,401 1,612,705 555,402

Distributed offsetting receipts (550,080) (2,166) - -

Agency outlays, net (discretionary and mandatory) $ 38,549,683 $ 2,024,235 $ 1,612,705 $ 555,402
Annual Financial Statements

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

FY 2017 Agency Financial Report 141

Employee Veterans'

Bureau of Mine Safety Benefits Employment Wage Other

Labor and Health Security and Training and Hour Program

Statistics Administration Administration Service Division Agencies TOTAL

$ 4,508 $ 5,817 $ 3,899 $ 6,615 $ 26,903 $ 84,713 $ 3,956,265

 4,081 4,680 3,210 13,318 4,286 31,886 416,033

 (1,369) (3,472) (3,120) (4,470) (4,315) 2,688 (373,569)

 7,220 7,025 3,989 15,463 26,874 119,287 3,998,729

 544,000 373,816 183,000 45,000 273,782 623,239 45,286,228

 93,813 1,352 5,670 235,768 4,001 467,458 7,378,389

$ 645,033 $ 382,193 $ 192,659 $ 296,231 $ 304,657 $ 1,209,984 $ 56,663,346

$ 639,258 $ 376,602 $ 189,191 $ 280,686 $ 290,742 $ 1,126,049 $ 52,732,162

 671 570 4 272 3,133 64,753 3,140,440

 - - - - - - 33,211

 - 5 - - 5,547 7,624 87,891

 671 575 4 272 8,680 72,377 3,261,542

 5,104 5,016 3,464 15,273 5,235 11,558 669,642

 5,775 5,591 3,468 15,545 13,915 83,935 3,931,184

$ 645,033 $ 382,193 $ 192,659 $ 296,231 $ 304,657 $ 1,209,984 $ 56,663,346

$ 111,718 $ 35,938 $ 41,958 $ 107,378 $ 31,251 $ 548,218 $ 12,879,651

 639,258 376,602 189,191 280,686 290,742 1,126,049 52,732,162

(635,978) (372,744) (193,522) (272,844) (292,983) (1,070,410) (52,850,156)

 (4,081) (4,680) (3,210) (13,318) (4,286) (31,886) (416,033)

 110,917 35,116 34,417 101,902 24,724 571,971 12,345,624

 - - (2,835) - - (10,229) (1,748,177)

 - - 1,791 - - (10,301) 124,566

 - - (1,044) - - (20,530) (1,623,611)

$ 111,718 $ 35,938 $ 39,123 $ 107,378 $ 31,251 $ 537,989 $ 11,131,474

$ 110,917 $ 35,116 $ 33,373 $ 101,902 $ 24,724 $ 551,441 $ 10,722,013

$ 637,813 $ 375,168 $ 188,670 $ 280,768 $ 277,783 $ 1,090,697 $ 52,664,617

 (94,165) (1,436) (7,510) (235,792) (4,100) (457,768) (7,518,175)

 - - 1,791 - - (10,301) 124,566

 352 84 49 24 99 611 15,220

$ 544,000 $ 373,816 $ 183,000 $ 45,000 $ 273,782 $ 623,239 $ 45,286,228

$ 635,978 $ 372,744 $ 193,522 $ 272,844 $ 292,983 $ 1,070,410 $ 52,850,156

 (94,165) (1,436) (7,510) (235,792) (4,100) (457,768) (7,518,175)

 541,813 371,308 186,012 37,052 288,883 612,642 45,331,981

 - - - - - (6,882) (559,128)

$ 541,813 $ 371,308 $ 186,012 $ 37,052 $ 288,883 $ 605,760 $ 44,772,853
Financial Section 

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

142 United States Department of Labor

COMBINING STATEMENTS OF BUDGETARY RESOURCES

For the Year Ended September 30, 2016

Occupational

(Dollars in thousands) Employment and Office of Workers' Office Safety and 

Training Compensation of Health

Administration Programs Job Corps Administration

BUDGETARY RESOURCES

Unobligated balance brought forward, October 1 $ 953,612 $ 1,454,788 $ 877,320 $ 10,433

Recoveries of prior year unpaid obligations 470,277 7,539 71,448 13,067

Other changes in unobligated balance (189,934) 12,908 (18,271) (6,235)

Unobligated balance from prior year budget authority, net 1,233,955 1,475,235 930,497 17,265

Appropriations (discretionary and mandatory) 41,350,204 1,944,231 1,699,090 552,787

Spending authority from offsetting collections (discretionary and mandatory) 3,575,606 3,074,572 - 2,250

Total budgetary resources $ 46,159,765 $ 6,494,038 $ 2,629,587 $ 572,302

STATUS OF BUDGETARY RESOURCES

New obligations and upward adjustments (total) $ 44,772,730 $ 5,130,338 $ 1,571,818 $ 556,996

Unobligated balance, end of year

Apportioned, unexpired accounts 698,047 1,323,442 992,389 56

Exempt from apportionment, unexpired accounts - 37,251 - -

Unapportioned, unexpired accounts 35,288 1,768 10,334 -

Unexpired unobligated balance, end of year 733,335 1,362,461 1,002,723 56

Expired unobligated balance, end of year 653,700 1,239 55,046 15,250

Total unobligated balance, end of year 1,387,035 1,363,700 1,057,769 15,306

Total budgetary resources $ 46,159,765 $ 6,494,038 $ 2,629,587 $ 572,302

CHANGE IN OBLIGATED BALANCE

Unpaid Obligations:

Unpaid obligations, brought forward, October 1 $ 10,929,051 $ 276,898 $ 1,063,891 $ 87,675

New obligations and upward adjustments 44,772,730 5,130,338 1,571,818 556,996

Less: outlays (gross) (44,532,703) (5,079,745) (1,650,160) (561,268)

Less: recoveries of prior year unpaid obligations (470,277) (7,539) (71,448) (13,067)

Unpaid obligations, end of year 10,698,801 319,952 914,101 70,336

Uncollected Payments: 

Uncollected payments, Federal sources, brought forward, October 1 (1,690,336) (2,060) - (500)

Change in uncollected payments, Federal sources (41,913) (304) - -

Uncollected payments, Federal sources, end of year (1,732,249) (2,364) - (500)

Memorandum (non-add) entries: 

Obligated balance, start of year $ 9,238,715 $ 274,838 $ 1,063,891 $ 87,175

Obligated balance, end of year $ 8,966,552 $ 317,588 $ 914,101 $ 69,836

BUDGET AUTHORITY AND OUTLAYS, NET

Budget authority, gross (discretionary and mandatory) $ 44,925,810 $ 5,018,803 $ 1,699,090 $ 555,037

Less: actual offsetting collections (discretionary and mandatory) (3,544,152) (3,089,359) (89) (2,303)

Less: change in uncollected customer payments from Federal 

 sources (discretionary and mandatory) (41,913) (304) - -

Recoveries of prior year paid obligations (discretionary and mandatory) 10,459 15,091 89 53

Budget authority, net (discretionary and mandatory) $ 41,350,204 $ 1,944,231 $ 1,699,090 $ 552,787

Outlays, gross (discretionary and mandatory) $ 44,532,703 $ 5,079,745 $ 1,650,160 $ 561,268

Actual offsetting collections (discretionary and mandatory) (3,544,152) (3,089,359) (89) (2,303)

Outlays, net (discretionary and mandatory) 40,988,551 1,990,386 1,650,071 558,965

Distributed offsetting receipts (722,541) (1,617) - -

Agency outlays, net (discretionary and mandatory) $ 40,266,010 $ 1,988,769 $ 1,650,071 $ 558,965
Annual Financial Statements

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

FY 2017 Agency Financial Report 143

Employee Veterans'

Bureau of Mine Safety Benefits Employment Wage Other

Labor and Health Security and Training and Hour Program

Statistics Administration Administration Service Division Agencies TOTAL

$ 7,580 $ 6,789 $ 5,483 $ 5,191 $ 34,728 $ 91,534 $ 3,447,458

 5,627 3,222 2,753 5,829 7,496 16,416 603,674

 (2,647) (2,707) (3,644) (4,154) (6,254) (7,355) (228,293)

 10,560 7,304 4,592 6,866 35,970 100,595 3,822,839

 544,000 375,887 181,000 38,109 275,365 651,077 47,611,750

 91,059 1,710 6,427 233,001 2,800 423,440 7,410,865

$ 645,619 $ 384,901 $ 192,019 $ 277,976 $ 314,135 $ 1,175,112 $ 58,845,454

$ 641,111 $ 379,084 $ 188,120 $ 271,361 $ 287,232 $ 1,090,399 $ 54,889,189

 621 561 8 151 1,228 67,432 3,083,935

 - - - - - - 37,251

 - - - - 19,793 6,105 73,288

 621 561 8 151 21,021 73,537 3,194,474

 3,887 5,256 3,891 6,464 5,882 11,176 761,791

 4,508 5,817 3,899 6,615 26,903 84,713 3,956,265

$ 645,619 $ 384,901 $ 192,019 $ 277,976 $ 314,135 $ 1,175,112 $ 58,845,454

$ 99,487 $ 43,766 $ 47,384 $ 107,294 $ 33,777 $ 511,608 $ 13,200,831

 641,111 379,084 188,120 271,361 287,232 1,090,399 54,889,189

 (623,253) (383,690) (190,793) (265,448) (282,262) (1,037,373) (54,606,695)

 (5,627) (3,222) (2,753) (5,829) (7,496) (16,416) (603,674)

 111,718 35,938 41,958 107,378 31,251 548,218 12,879,651

 - - (2,690) - - (2,040) (1,697,626)

 - - (145) - - (8,189) (50,551)

 - - (2,835) - - (10,229) (1,748,177)

$ 99,487 $ 43,766 $ 44,694 $ 107,294 $ 33,777 $ 509,568 $ 11,503,205

$ 111,718 $ 35,938 $ 39,123 $ 107,378 $ 31,251 $ 537,989 $ 11,131,474

$ 635,059 $ 377,597 $ 187,427 $ 271,110 $ 278,165 $ 1,074,517 $ 55,022,615

 (91,292) (1,834) (6,330) (233,010) (2,909) (418,580) (7,389,858)

 - - (145) - - (8,189) (50,551)

 233 124 48 9 109 3,329 29,544

$ 544,000 $ 375,887 $ 181,000 $ 38,109 $ 275,365 $ 651,077 $ 47,611,750

$ 623,253 $ 383,690 $ 190,793 $ 265,448 $ 282,262 $ 1,037,373 $ 54,606,695

 (91,292) (1,834) (6,330) (233,010) (2,909) (418,580) (7,389,858)

 531,961 381,856 184,463 32,438 279,353 618,793 47,216,837

 - - - - - (16,756) (740,914)

$ 531,961 $ 381,856 $ 184,463 $ 32,438 $ 279,353 $ 602,037 $ 46,475,923

Other Information

(Unaudited)

FY 2017 Agency Financial Report 147

Inspector General’s Top Management and Performance Challenges
Other Information

(Unaudited)

148 United States Department of Labor

Top Management and Performance Challenges Facing the Department of Labor

As of November 2017, the OIG considers the following as the most serious management and performance 

challenges facing the Department:

• Providing a Safe Learning Environment at Job Corps Centers

• Protecting the Safety and Health of Workers

• Helping Adults and Youth Obtain the Education, Training, and Support Services Needed to Succeed in the 

Labor Market

• Protecting Retirement, Health, and Other Benefit Plans for Workers, Retirees, and Their Families

• Reducing Improper Payments

• Maintaining the Integrity of Foreign Labor Certification Programs

• Monitoring and Managing Pharmaceuticals in the FECA Program

• Securing and Managing Information Systems

CHALLENGE: Providing a Safe Learning Environment at Job Corps Centers

BACKGROUND

The Job Corps program provides residential and nonresidential education, training, and support services to 

approximately 50,000 disadvantaged, at-risk youth, ages 16-24, at 125 Job Corps centers nationwide. The goal of 

this $1.7 billion program is to offer an intensive intervention to this targeted population as a means to help them 

learn a career, earn a high school diploma or pass the high school equivalency test, and find and keep a good job.

CHALLENGE FOR THE DEPARTMENT

The Job Corps program remains challenged in its efforts to control violence and provide a safe learning 

environment at its centers. Without providing a safe learning environment for students and staff, Job Corps will 

struggle to meet its core mission of attracting young people who face economic disadvantages or come from 

debilitating environments, teaching them the skills they need to become employable and independent, and placing 

them in meaningful jobs or further education. 

OIG audits from 2015 and 2017 disclosed that some Job Corps centers failed to report and investigate serious 

misconduct, including drug abuse and assaults, or downgraded incidents of violence to lesser infractions to keep 

students enrolled, creating an unsafe environment for students and staff. We also found the Department had not 

determined what law enforcement organization had jurisdiction to enforce criminal laws on 99 center campuses 

operated by contractors. Where law enforcement agreements were in place, they lacked the specificity needed to 

ensure timely and effective law enforcement involvement. Furthermore, Job Corps had not conducted system-wide 

assessments of center campuses to determine the security challenges it faced. We found a variety of problems at 

the centers we visited, such as inadequate security camera monitoring and security staff shortages. We also found 

that Job Corps did not require background checks for all center employees. 

DEPARTMENT’S PROGRESS 

Job Corps established a Division of Regional Operations and Program Integrity, in part, to improve oversight of 

center safety. However, the Division has not been fully staffed. Job Corps also stated it is using data from its 

recently developed Risk Management Dashboard to perform targeted interventions and request issue-specific 

corrective actions on emerging safety-related issues. Additionally, Job Corps reported it has conducted 

approximately 50 unannounced center assessments to review center safety, security, and culture through direct 

observation and interviews with center staff and students. Job Corps revised its zero tolerance student conduct 

policy to increase student accountability and clarify center staff authority to address misconduct. 
Top Management and Performance Challenges

(Unaudited)

FY 2017 Agency Financial Report 149

Job Corps reported that it is implementing tools to improve assessment of applicants’ readiness to benefit from the 

program. Job Corps stated it completed the rollout of a new criminal background check process for student 

applicants in May 2017. According to Job Corps, the new process obtains available criminal background information 

about an individual through a national search, as well as a state search, where available, in addition to the 

previously used local searches. Job Corps is also working to develop a new background check policy for staff. In 

addition, Job Corps is implementing a toll-free student safety hotline to handle calls of an urgent nature that relate 

to the safety and security of Job Corps students and staff. Job Corps stated the hotline is now operating in its 

Atlanta, Boston, Chicago and San Francisco regions. Rollout to its remaining two regions is scheduled to be 

completed in 2017. Job Corps reports it has completed a series of Center Safety and Security Vulnerabilities 

Assessments. These assessments evaluated building access controls, campus lighting, and security operations. 

Finally, Job Corps reported it is improving physical security as funding permits, and has completed Phase 1 of a $12 

million physical security pilot for 12 centers. The goal of this pilot is to equip the centers with technology that will 

enable center staff to increase oversight and more quickly respond to incidents on center. Job Corps plans to begin 

and complete Phase 2 of the pilot at 18 more centers in FY 2018.

WHAT REMAINS TO BE DONE 

While Job Corps has taken numerous actions to make centers safer, OIG has received an increasing number of 

significant incident reports (SIR). This increase may be an indication centers are doing a better job of submitting 

SIRs as required, or it could be an indication of continuing safety and security problems. Job Corps needs to 

expeditiously complete the various safety initiatives it has recently begun. Moreover, Job Corps must be more 

vigilant in its monitoring to ensure center operators and regional office personnel fully enforce Job Corps’ zero 

tolerance policy, assess campus security system-wide, and complete and implement the new background check 

policy for staff. 

CHALLENGE: Protecting the Safety and Health of Workers

BACKGROUND

The Department of Labor (DOL) administers the Occupational Safety and Health Act of 1970 and the Federal Mine 

Safety and Health Act of 1977, as amended by the Mine Improvement and New Emergency Response Act of 2006. 

DOL’s effective enforcement of these laws is critical to protecting workers from death, injury, and illness. 

The two DOL agencies primarily responsible for enforcing these laws are the Occupational Safety and Health 

Administration (OSHA) and the Mine Safety and Health Administration (MSHA). OSHA and its state partners are 

responsible for the safety and health of 121 million workers employed at more than 9 million establishments. 

MSHA is responsible for the safety and health of almost 320,000 miners who work at more than 13,000 mines. 

CHALLENGE FOR THE DEPARTMENT

The Department faces challenges in determining how to best use its limited resources to help ensure the safety and 

health of workers, particularly in high-risk industries such as construction, forestry, fishing, agriculture, and mining. 

Past OIG audits have found OSHA lacks outcome-based data needed to determine the effectiveness of its 

enforcement programs. In its efforts to protect workers from retaliation and discrimination when they “blow the 

whistle” on unsafe or unhealthy workplace practices, OSHA must ensure complainants receive complete 

investigations within statutory timeframes. Abatement of construction hazards remained a challenge as many 

citations are closed, not because the employers had corrected the hazards, but because the construction projects 

had ended. As a result, OSHA had no assurance the employers will use improved safety and health practices on 

subsequent construction sites.

Given the significant decline in coal production and closings of coal mines in the past decade, MSHA is challenged to 

appropriately redeploy resources where needed. While coal production is expected to increase through 2018, the 
Other Information

(Unaudited)

150 United States Department of Labor

increase will vary across regions, with the largest increases in the West while forecasts for the Appalachian region 

are relatively flat. In addition, MSHA recently reported that 15 to 20 percent of its inspection and technical 

personnel who are required to meet medical standards do not meet medical standards mandated by the Office of 

Personnel Management for these positions. MSHA is also challenged by the underreporting of occupational injuries 

and illnesses by mine operators. This underreporting hinders MSHA’s ability to focus its resources on the most 

dangerous mines. 

DEPARTMENT’S PROGRESS 

To address the need for reasonable balance between quality and timeliness in the management of whistleblower 

cases, OSHA stated it has identified a number of process improvements such as streamlining investigative 

procedures, and developed new guidance to clearly define reasonable balance. These improvements will be 

outlined in the recently updated whistleblower policy and procedure manual which is currently in the Agency 

clearance process.

In February 2017, OSHA established the OSHA Program for Internal Control (PIC) as a comprehensive framework to 

develop, implement, and assess the effectiveness of agency internal controls. As part of OSHA’s PIC, the agency 

established the Evaluation and Analysis Program (EAP) to assess the efficiency and effectiveness of OSHA programs, 

policies, procedures, and standards, as well as their impact. 

MSHA has taken steps to reallocate resources based on need; for example, the agency has closed or consolidated 

some field offices, transferred personnel among offices, and offered relocation incentives. MSHA stated it stepped 

up its targeted enforcement at metal/nonmetal mines and continued to engage in compliance initiatives. These 

initiatives include implementing the third phase of the Respirable Dust Rule to end black lung disease among coal 

miners and promoting the Rules to Live By campaign to prevent common types of mining deaths. The agency also 

issued a final rule on proximity detection systems for continuous mining machines in underground coal mines and 

extended its mine rescue reach by establishing regional mine emergency stations. MSHA has developed an action 

plan to ensure personnel meet medical standards by conducting individualized assessments of personnel to 

determine if they meet required standards and taking actions to resolve issues as appropriate. MSHA has 

conducted one evaluation of the underreporting of injuries and illnesses and another evaluation is in process.

WHAT REMAINS TO BE DONE

OSHA needs to continue its efforts to develop performance measures that reflect the impact of its enforcement 

efforts on improving workplace safety and health. OSHA also needs to finalize and issue its updated whistleblower 

policy and procedure manual. To ensure employers take adequate and timely abatement actions in correcting 

hazards, OSHA needs to enhance its training to staff on abatement verification especially at smaller and transient 

construction employers, and to continue to look for opportunities to streamline citation issuance.

MSHA needs to critically examine its resource allocations to ensure its enforcement staff is deployed where most 

needed and continue to take actions responsive to changes in coal production. Moreover, closures of MSHA offices 

may result in enforcement personnel having to cover larger geographic areas, raising new challenges related to 

response times and the ability of inspectors and their supervisors to adequately cover expanded territories. MSHA 

needs to complete its current evaluation of illness and injury reporting and use this knowledge to address mine 

operator programs and practices that discourage reporting. MSHA also needs to continue: working on the next 

steps in mine safety, including training the mine rescue community on state-of-the-art communications, monitoring 

and tracking systems; developing new mine rescue and command and control guidance; investing in video tools for 

advancing rescue teams; and upgrading seismic and robotics technology.
Top Management and Performance Challenges

(Unaudited)

FY 2017 Agency Financial Report 151

CHALLENGE: Helping Adults and Youth Obtain the Education, Training, and Support 

Services Needed to Succeed in the Labor Market

BACKGROUND

In FY 2016, the Department’s Employment and Training Administration (ETA) was appropriated $3.3 billion to 

operate a system of education, skills training, and employment services directed toward increasing the postprogram employment and earnings of current and future workers, particularly low-income persons, dislocated 

workers, and at-risk and out-of-school youth. The majority of the activities are authorized by the Workforce 

Innovation and Opportunity Act (WIOA). WIOA contains provisions to strategically align workforce development 

programs to develop participants’ skills to meet the needs of employers and to improve accountability and 

transparency in reporting. ETA also operates the Job Corps program, spending $1.7 billion dollars annually to 

provide residential and nonresidential education, training, and support services to approximately 50,000 

disadvantaged, at-risk youths (ages 16-24), at 125 Job Corps centers nationwide. 

CHALLENGE FOR THE DEPARTMENT

The Department remains challenged to ensure participants in its job training programs are securing the education, 

training, and support services they need to succeed in the labor market. To address this challenge, the Department 

needs the right performance information to make evidence-based and data-driven decisions. The Department also 

faces challenges in assuring credentials that participants obtain from DOL-funded training programs are industryrecognized and actually help participants obtain jobs in those industries. Our work in Job Corps has found its 

graduates have been often placed in jobs unrelated to the occupational certifications and skills training they 

received or in jobs that required little or no training. 

DEPARTMENT’S PROGRESS 

The Department has continued to support WIOA implementation, both through technical assistance and guidance. 

In December 2016, the Department (with the U.S. Department of Education) issued guidance clarifying 

requirements for the performance accountability system, and helped states understand methodologies to calculate 

levels of performance for six primary performance indicators.1 In June 2017, ETA issued guidance to assist states in 

using supplemental wage information to implement WIOA’s performance accountability requirements.

During the spring of 2017, ETA, in collaboration with the U.S. Departments of Education and Health and Human 

Services, hosted three WIOA National Convenings for workforce development stakeholders. ETA reported that 

nearly 1,170 people participated in the convenings, held in Washington, D.C.; Dallas, TX; and San Diego, CA. 

Presentations and workshops covered such topics as business engagement, financial and grants management, and 

performance accountability. ETA posted resource materials from the convenings on its Innovation and Opportunity 

Network (ION) web site to promote ongoing information sharing for WIOA stakeholders. 

Job Corps indicated it is continuing its efforts to ensure access to a standards-based teaching and learning system. 

In response to requirements outlined within WIOA, Job Corps is assessing all credential attainments relative to indemand occupations and wages. The effort is intended to align credential offerings with those most valued by 

potential employers. Job Corps also started a technology-based platform called MyPACE (Pathway to Achieving 

Career Excellence), that will be used to help students identify education and training goals and allow Career 

Management Teams made up of teachers and counselors to track and support student progress from entry through 

transition to college or career. Job Corps also has begun implementation of a new admissions system to improve 

screening of applicants and expand career training availability for more eligible youth.

 1 “Performance Accountability Guidance for Workforce Innovation and Opportunity Act (WIOA) Title I, Title II, Title III and Title 

IV Core Programs.”
Other Information

(Unaudited)

152 United States Department of Labor

WHAT REMAINS TO BE DONE 

The Department needs to continue providing technical assistance to states regarding accessing and reporting 

performance information under WIOA. The Department should also continue pursuing statutory access to the 

National Directory of New Hires. Such access would streamline the process of obtaining earnings data needed to 

assess program impact. Additionally, the Department should use results from GAO’s review of WIOA 

implementation to identify promising practices states can use to promote regional collaboration and resource 

sharing — one of WIOA’s strategies for building job-driven labor markets. In Job Corps, the Department needs to 

refine its performance management system to focus on being proactive in identifying and addressing low 

performing centers and training programs to ensure its students are comprehensively prepared to enter and 

compete in the workforce. Job Corps also needs to complete the implementation of its new admissions system.

CHALLENGE: Protecting Retirement, Health, and Other Benefit Plans for Workers, 

Retirees, and Their Families 

BACKGROUND

The Employee Benefits Security Administration (EBSA) protects the integrity of pensions, health, and other 

employee benefits for about 149 million people. EBSA’s enforcement authority extends to approximately 685,000 

private retirement plans, 2.2 million health plans, and similar numbers of other welfare benefit plans covered by 

the Employee Retirement Income Security Act of 1974 (ERISA) that together hold $9.6 trillion in assets. EBSA’s 

responsibilities also include providing oversight of the federal Thrift Savings Plan (TSP), the largest definedcontribution plan in the United States, with nearly $510 billion in assets and 5.1 million participants. The TSP is the 

primary retirement system component for federal government employees.

CHALLENGE FOR THE DEPARTMENT

EBSA’s limited authority and resources present challenges in achieving its mission of administering and enforcing 

ERISA requirements protecting the pensions, health, and other employee benefits for approximately 149 million 

participants and beneficiaries. An important part of EBSA's mission is to deter and correct violations of ERISA 

through a strong enforcement program to ensure workers receive promised benefits. Given the number of plans 

the agency oversees relative to the number of investigators, EBSA has to devise ways to focus its available 

resources on investigations, audits, and other reviews that it believes will most likely result in the deterrence, 

detection, and correction of ERISA violations and act proactively to deter violations. EBSA employs about 400 

investigators, yielding almost 13,000 plans per investigator. In order to adequately protect the participants in these 

plans, EBSA must determine which of its enforcement initiatives are the most effective. 

For many years, EBSA’s oversight efforts have been challenged by the fact that billions of dollars in pension assets 

held in otherwise regulated entities, such as banks, escaped audit scrutiny. ERISA provides an option for a limitedscope audit under which plan auditors generally do not need to audit investment information certified by certain 

banks or insurance carriers, presumably because they are being audited by other entities for other purposes. As a 

result, the independent public accountants that conduct limited-scope audits express “no opinion” on the financial 

statements of plans that receive certifications from the banks or insurance carriers holding assets on behalf of the 

plans. These limited-scope audits weaken assurances to stakeholders and may put retirement plan assets at risk 

because such audits provide little or no confirmation regarding the existence or value of plan assets. These 

concerns were renewed by recent audit findings that as much as $3.3 trillion in pension assets, including an 

estimated $800 billion in hard-to-value alternative investments, received limited-scope audits that provided few 

assurances to participants as to the financial health of their plans.
Top Management and Performance Challenges

(Unaudited)

FY 2017 Agency Financial Report 153

EBSA is further challenged by the large increase in the types and complexity of investment products available to 

pension plans. EBSA’s final conflict of interest rule is intended to ensure workers enrolled in retirement plans can be 

assured the investment advice they receive is delivered in their best interest.

EBSA also faces challenges in protecting participants because of limited information it receives from its main 

information gathering tool, the Form 5500 series. The agency does not have comprehensive data about the health 

plans it oversees because it has exempted small employer plans that are fully insured or unfunded (an estimated 98 

percent of ERISA group health plans) from the requirement to file Form 5500 informational reports. EBSA should 

reexamine the filing exemption for small plans and begin capturing health plan claims data on Form 5500. 

DEPARTMENT’S PROGRESS 

EBSA created the Sample Investigation Program (SIP) to measure overall compliance with the civil provisions of 

ERISA and the impact of EBSA investigations on compliance rates of investigated employee benefit plans. EBSA has 

continued to analyze the compliance data available to the agency and use lessons learned to improve its overall 

enforcement program. EBSA is now focusing on specific compliance issues of special importance to the integrity of 

plans and plan benefits. For instance, EBSA initiated a bonding compliance project in FY 2015 that will continue into 

FY 2018. EBSA is also implementing the Major Case Initiative to concentrate enforcement resources on 

investigations that include professional fiduciaries and service providers responsible for managing multiple plans 

that hold a large number of plan assets and participants.

As part of a Form 5500 “Modernization” project, EBSA published for public comment proposed changes to the Form 

5500 reporting requirements and the implementation of annual reporting regulations to strengthen the 

requirements for limited scope audit certifications from banks and insurance companies that hold plan investment 

assets and improve reporting of plan financial information, including alternative investments and hard-to-value 

assets. The agency issued a proposed regulation in July 2016.

WHAT REMAINS TO BE DONE

EBSA should continue to analyze violation trends as an additional methodology to help guide its resource allocation 

strategies. The agency should concentrate on obtaining legislative changes to repeal the limited-scope audit 

exemption. In the interim, EBSA should further expand its existing authority to clarify and strengthen limited scope 

audit regulations and evaluate the ERISA Council’s recommendations on the issue. 

Regarding health plans, EBSA needs to finalize its proposed rule, increase its enforcement activities, and improve its 

analysis of the denial of claims data at the plan and insurer levels. EBSA should also collaborate with states on data 

and enforcement activities, and work with health plans to identify other ways it could improve the external review 

process for participants and beneficiaries.

CHALLENGE: Reducing Improper Payments 

BACKGROUND

In FY 2017, the Department continued to identify the Unemployment Insurance (UI) and Federal Employee 

Compensation Act (FECA) benefit programs as susceptible to improper payments. According to OMB, in 2016 the UI 

program had the seventh highest amount of reported improper payments ($3.9 billion) among all federal programs. 

In 2017, the reported amount of UI improper payments increased to $4.1 billion. OIG investigations continue to 

uncover fraud committed by individual UI recipients who do not report or underreported earnings, as well as fraud 

related to fictitious employer schemes. In FY 2017, the Department estimated improper payments in the FECA 

benefit program totaled roughly $57.2 million.
Other Information

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154 United States Department of Labor

CHALLENGE FOR THE DEPARTMENT

The Department remains challenged in its efforts to measure, report, and reduce improper payments in its UI and 

FECA benefit programs.

OMB has recognized the UI program as being at high risk for improper payments. UI improper payments increased 

from $3.9 billion in 2016 to $4.1 billion in 2017, and the improper payment rate increased from 11.7 percent to 

12.5 percent, remaining above OMB’s threshold of 10 percent. One of the leading causes of UI improper payments 

is overpayments due to claimant separation issues, which totaled about $678 million in FY 2017. Specifically, State 

Workforce Agencies (SWAs) overpaid UI claimants when employers did not provide timely and accurate information 

on the reasons individuals separated from employment. Fraud continues to be a significant threat to the integrity of 

the UI program, as identity thieves and organized criminal groups have found ways to exploit program weaknesses.

The Department also remains challenged in identifying the full extent of improper payments in the FECA program. 

The Department excluded certain categories of compensation payments in its improper payment estimate for 

FECA, but did not determine the full effect of those exclusions on its estimate. Further, the Department did not 

determine the effect of issues identified by fraud investigations and estimate the extent to which these issues 

existed in the payment population. 

DEPARTMENT’S PROGRESS 

The Department has continued working with the states to implement strategies for addressing the root causes of 

improper payments. Our audit of five SWAs’ use of the State Information Data Exchange System (SIDES) to facilitate 

their timely receipt of UI claimants’ job separation information found that SIDES contributed to a reduction in 

related UI improper payment rates; however, better strategies are needed to increase employer participation. 

The Department has established the UI Integrity Center of Excellence to be a state-driven source of innovative 

program integrity strategies to prevent and detect improper payments and reduce fraud. According to the 

Department, among other activities, the Center has completed the development of a secure portal to enable rapid 

exchange of information among states about UI fraud schemes and is offering program integrity training for states 

through the UI Community of Practice website.

In the FECA program, DOL is working with the Office of Personnel Management (OPM) to improve communication 

that will address dual entitlement issues that lead to improper payments. In addition, the program is also working 

on a Computer Matching Agreement with the Social Security Administration (SSA to improve the Department’s 

ability to reduce FECA benefits when an individual is concurrently receiving benefits from SSA. DOL has recently 

implemented a letter of medical necessity process that has already resulted in a marked decrease in compounded 

drug claims. Finally, the Department stated it hired additional staff for FECA program integrity and contracted with 

a data analytics firm to assist in developing technology and tools to detect and monitor inherent risk in claims, 

payments, and providers.

WHAT REMAINS TO BE DONE

Through our audits in seven states, we found ETA needs to work with states to identify and collect data needed to 

determine which state-specific strategies for improper payments reduction and recovery are most effective and use 

the data it obtains to promote the most effective state-specific strategies as National Strategies. The Department 

can further improve oversight of the states’ detection and prevention of UI overpayments by increasing the 

frequency of on-site reviews at SWAs. In addition, the Department needs to continue pursuing legislation to allow 

states to use a percentage of recovered UI overpayments to detect and deter benefit overpayments. 

OIG’s July 2015 investigative advisory report included several recommendations on actions the Department should 

take to address systemic weaknesses that make the UI program more susceptible to fraudulent activity. For 

example, SWAs should pay all UI claims by physical check, direct deposit, or a debit card issued by state-approved 
Top Management and Performance Challenges

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FY 2017 Agency Financial Report 155

vendors. Such cards provide for account holder verification and make it easier to identify individuals who are 

submitting fraudulent claims. The Department also needs to work with SWAs to implement strategies to 

discontinue auto-populating any data in their systems, and require UI claimants to fill out all employer contact 

information correctly and completely. Additionally, the Department needs to work with states to strengthen 

existing systematic audit controls to track access to personally identifiable information, and to identify and 

implement best practices and strategies for communication between tax operations and benefit operations. 

The Department also needs to continue developing the technology and analytic tools to enhance its FECA improper 

payment estimation methodology.

CHALLENGE: Maintaining the Integrity of Foreign Labor Certification Programs

BACKGROUND

The Department’s foreign labor certification programs are intended to provide U.S. employers access to foreign 

labor in order to meet worker shortages – as long as U.S. workers are unavailable for the work and their wages and 

working conditions are not adversely affected. The Department’s Office of Foreign Labor Certification (OFLC) 

reviews applications from employers seeking to hire and bring foreign workers as immigrants to the U.S. in 

permanent positions; non-immigrant workers for temporary professional positions; and agricultural and nonagricultural temporary or seasonal positions. In addition, OFLC processes employer requests for determination of 

prevailing wages they need to proceed with the employment-based immigrant and certain nonimmigrant 

processes. Statutes and regulations establish mandatory timeframes within which the OFLC must issue a final 

determination on an application for labor certification or take certain other actions.

CHALLENGE FOR THE DEPARTMENT

The Department faces challenges in ensuring U.S. employer compliance with statutory requirements protecting U.S. 

workers against adverse impact on their wages or working conditions when employers hire foreign workers. OIG 

investigations have shown the foreign labor certification programs, in particular the H-1B program, to be 

susceptible to significant fraud and abuse, often by dishonest immigration attorneys, employers, labor brokers, and 

organized criminal enterprises. DOL is statutorily required to certify H-1B applications unless it determines them to 

be “incomplete or obviously inaccurate.” Given this fact, it is not surprising that OIG investigations have revealed 

schemes where fraudulent applications were filed with DOL on behalf of individuals, fictitious companies, and 

dishonest businesses seeking to acquire foreign workers. As part of OIG investigations, we have also uncovered 

instances of unscrupulous employers misusing foreign labor certification programs to engage in human trafficking, 

with victims often exploited for economic gain. 

Another challenge for the foreign labor certification programs has been balancing the quality review of applications 

against employer needs for timely processing. OFLC has experienced an increase in application volumes in recent 

years, receiving 94 percent more applications in Fiscal Year (FY) 2016 when compared to FY 2010. These rising 

application levels and seasonal spikes in employer filing patterns have resulted in periodic application processing 

delays.
Other Information

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156 United States Department of Labor

DEPARTMENT’S PROGRESS

In FY 2017, the Department planned to reorient the focus of its H-2B timeliness measure to better reflect employer 

requirements by measuring the percent of H-2B employer applications processed within 30 days before the 

employer needs to hire the foreign workers. From FY 2016 to FY 2018, the Department’s budget has requested 

authorization to establish and retain fees to cover the operating costs for foreign labor certification programs. Once 

fully implemented, the Department believes these fees would eliminate the need for appropriations to administer 

its foreign labor certification programs.

In June 2017, the Secretary of Labor issued a memorandum to the Employment and Training Administration, Wage 

and Hour Division, and the Solicitor of Labor regarding enforcement and coordination within the Department’s nonimmigrant and immigrant labor certification programs. Pursuant to that memorandum, the OIG worked with the 

Department on protocols that ensure that allegations of criminal fraud involving both the non-immigrant and 

immigrant labor certification programs administered by the Department are referred to the OIG expeditiously. The 

protocols went into effect in August 2017. 

In August 2017, the Department published a 60-day Notice in the Federal Register proposing substantial 

improvements to the Labor Condition Application for Nonimmigrant Workers (LCA/Form ETA 9035/9035E 

electronic). The Department’s proposed enhancements to the form are intended to provide greater transparency 

for U.S. workers and the general public. 

In September 2017, the Department executed a comprehensive agreement with the OIG, authorizing the OFLC to 

share immigrant and non-immigrant visa program information for the purposes of enhancing worksite 

investigations and improving information sharing about program debarments and other sanctions imposed on 

program violators. 

WHAT REMAINS TO BE DONE

To combat fraud and abuse of the foreign labor certification programs, the Department needs to propose 

expanding its statutory and regulatory authority to enhance its ability to debar any employer and any individual 

acting directly or indirectly in the interest of an employer in relation to both non-immigrant and immigrant workers, 

and any successor in interest to the employer found to have violated foreign labor certification regulations. The 

Department also needs to further enhance the reporting and application of suspensions and debarments 

government-wide. In the H-2B program, the Department needs to continue its efforts to ensure applications are 

processed in time for employers to hire needed foreign workers while at the same time ensuring the review process 

protects the interests of American workers. Additionally, the Department needs to seek H-1B statutory authority to 

verify the accuracy of information provided on labor condition applications. After the Paperwork Reduction Act 

process has been completed, OFLC needs to move forward with implementing the new H-1B labor condition 

application.

As the only agency within DOL statutorily authorized to investigate criminal fraud against the foreign labor 

certification programs, the OIG is concerned with its ability to respond to increases in criminal referrals resulting 

from greater coordination among DOL agencies. To mitigate this concern, the OIG has requested authorization to 

access fee-based funding to conduct necessary criminal investigations and audits to combat threats against the 

foreign labor certification programs.
Top Management and Performance Challenges

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FY 2017 Agency Financial Report 157

CHALLENGE: Monitoring and Managing Pharmaceuticals in the FECA Program 

BACKGROUND

The Federal Employees' Compensation Act (FECA) program provides workers' compensation coverage to 

approximately three million federal and postal workers around the world for employment-related injuries and 

occupational diseases. FECA is administered by the Office of Workers’ Compensation Programs (OWCP), Division of 

Federal Employees’ Compensation (DFEC). DFEC made payments totaling about $3.2 billion in Chargeback Year 

2016 (July 1, 2016 to June 30, 2017) for compensation and medical benefits. Compensation payments are those 

made to replace lost wages for a work related injury, benefits for a permanent physical impairment due to those 

injuries, as well as benefits to beneficiaries of federal employees that die as a result of a work-related injury. 

Medical payments are made to cover the expenses of medical services, prescription drugs, equipment and supplies 

incurred from treatment for illness and/or injury sustained while an employee was engaged in job-related activities. 

In Chargeback Year 2016, compensation payments totaled about $2.1 billion (66%); medical payments totaled 

about $1.1 billion (34%). 

CHALLENGE FOR THE DEPARTMENT

The Department is challenged to effectively manage the usage and costs of pharmaceuticals in the FECA program, 

especially the cost of compounded drug medications, an area in which costs and fraud have rapidly escalated. The 

cost of prescription drugs in the FECA program rose from a reported $183 million in FY 2011 to $477 million in FY 

2016, an increase of 161 percent. This dramatic increase was almost exclusively due to the rise in reported costs for 

compounded drugs which jumped from approximately $2 million in FY 2011 to $263 million in FY 2016, more than a 

hundredfold increase. Other federal programs have experienced similar increases. Billings for compounded 

medications are highly susceptible to fraud. Our current investigations are focusing on collusion between 

prescribing physicians and dispensing pharmacies. In one case alone, the OIG has identified potential fraud 

involving nearly $158 million. Based on our improper payment work, the Department’s lack of comprehensive 

analysis of medical benefit payments in the FECA program allowed these increases to go undetected, and could 

overlook other problems, such as the overuse of opioids. It is critical that the Department’s oversight ensures 

prescription drugs reimbursed by the program are medically necessary, safe, effective, and obtained at a fair price.

DEPARTMENT’S PROGRESS 

The Department has published a Request for Information regarding the use of a Pharmacy Benefit Manager to 

control costs, improve the management of treatments, and improve claimant safety. Other actions the Department 

is planning to take to improve its oversight of pharmaceuticals include performing reviews of questionable 

providers acting in a fraudulent or abusive manner, implementing new procedures to ensure all prescription drugs 

were prescribed by the claimant’s physician, working with its medical bill processing contractor to obtain the 

necessary information to verify generic drug usage, and implementing quantity limits on initial fills and refills. 

Regarding compounded drugs, the Department has developed a pre-authorization process that requires physicians 

certify they recently physically examined the claimant, fully explain the need for a compounded drug, and certify 

that each ingredient in the compound is medically necessary and cost effective. This certification must be provided 

prior to a pharmacy providing the medication to the claimant and the Department approving payment. The 

Department also started requiring a certification of medical necessity by the prescribing physician prior to 

approving payments for compounded drugs. 

In May 2017, the Department published a FECA Bulletin that prescribes how matters involving suspected fraud 

committed by medical providers are to be referred to the OIG by OWCP for further investigation. Since that time, 

the Department has used its Program Integrity Unit to identify medical providers who may have committed fraud 

involving the prescribing or dispensing of compounded drugs. The Department has referred numerous matters 

involving suspected compounded drug fraud to the OIG for further investigation. 
Other Information

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158 United States Department of Labor

WHAT REMAINS TO BE DONE

The Department needs to follow through on its planned actions and measure the impact of those actions on the 

use and cost of prescription drugs, as well as consider additional options for monitoring and managing the use and 

cost of pharmaceuticals. These options include ensuring timely removal of questionable providers from the FECA 

program, implementing drug exclusion lists for drugs and drug ingredients, implementing drug formulary lists, 

implementing better methods for calculating pharmaceutical payments, requiring the use of preferred pharmacy 

providers, pursuing inclusion under the “ceiling price” statute, and improving edit checks to identify high drug 

prices requiring additional review and authorization. The Department also needs to ensure it has the most 

appropriate pricing structure for compounded drugs. The Department should continue its efforts to identify what 

insurance providers and other federal, state, and local agencies are doing to manage pharmaceutical use and costs 

and determine what best or promising practices may be transferable. Finally, the Department must continue its 

efforts to identify and refer allegations involving potential fraud in the FECA program to the OIG for further 

investigation.

CHALLENGE: Securing and Managing Information Systems 

BACKGROUND

The Department’s major information systems contain sensitive information that is central to its mission and to the 

effective administration of its programs. Departmental systems are used to analyze and house the nation’s leading 

economic indicators, such as the unemployment rate and the Consumer Price Index. These systems also maintain 

critical and sensitive data related to the Department’s financial activities, enforcement actions, worker safety, 

health, pension, and welfare benefits, job training services, and other worker benefits. Under the Federal 

Information Technology Acquisition Reform Act, in FY 2018 the Department’s CIO will have oversight responsibility 

for information technology investments totaling an estimated $750 million.

CHALLENGE FOR THE DEPARTMENT 

Safeguarding data and information systems is a continuing challenge for all federal agencies, including DOL. 

Consistent with findings reported over the past ten years, in FY 2016 we identified continuing deficiencies in the 

areas of access controls, configuration management, and contingency planning. For the past five years, we have 

also reported deficiencies in third-party oversight, incident response and reporting, risk management, and 

continuous monitoring. Despite many previous reports that identified similar control weaknesses and 

improvements the Department has made in response, these deficiencies continue to exist or reoccur, and represent 

ongoing, unnecessary risks to the confidentiality, integrity, and availability of DOL’s information. The Department 

has not placed sufficient emphasis or prioritized available resources necessary to address these deficiencies. 

Ensuring proper management of multimillion-dollar information technology systems is also a challenge for the 

Department. The Department has encountered difficulties in managing its financial system due to the 2014 

bankruptcy of the private-sector firm that was providing these services. The Department procured the financial 

system assets and entered into another interagency agreement for a federal shared services provider to assume 

operations and maintenance of the system at a cost of more than $2 million per month. From July 2014 to July 

2016, the Department operated under time and materials contracts to run and maintain the financial system. In 

July 2016, the Department entered into a $74 million delivery order contract with some fixed price items, but 53% 

of the contract remains time and materials. 

DEPARTMENT’S PROGRESS 

The Department reported it has taken significant steps in improving its security posture. These steps included the 

hiring of six additional federal employees to support the security program and obtaining approval for two more 

positions; acquiring and beginning to implement a suite of security tools to support protect and detect capabilities; 
Top Management and Performance Challenges

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FY 2017 Agency Financial Report 159

and updating the DOL Third Party Monitoring Guide. The Department also reports it is implementing Personal 

Identity Verification (PIV)-enforced identification and authentication, enhancing security of its wireless network, 

installing an unauthorized asset detection tool at DOL’s headquarters to support point-in-time view of devices 

connected to DOL’s network, and creating weekly patch and vulnerability scan reports to support patch and 

vulnerability management. 

The Department has taken steps to mitigate costs associated with its financial system, including entering into a new 

contract in July 2016, but contended financial system operations continue to lack the certainty needed to make a 

firm-fixed priced agreement a reasonable and prudent choice as we recommended. The Department stated it 

closely monitors costs under its current agreement and will consider a firm-fixed priced agreement if and when it 

becomes the more cost efficient model. 

WHAT REMAINS TO BE DONE

OCIO must ensure that departmental agencies prioritize available resources to implement planned actions to 

correct remaining deficiencies in identity and access management, configuration management, contingency 

planning, incident response, reporting, and monitoring of contractor systems. 

Consistent with the intent of the Clinger Cohen Act and the Federal Information Technology Acquisition Reform Act, 

we have recommended the Department realign the position of the Chief Information Officer (CIO) to provide the 

CIO greater independence and authority for implementing and maintaining an effective information security 

program, compared to the existing structure of reporting to the Assistant Secretary for Administration and 

Management, the Office of the Chief Information Officer’s (OCIO) largest customer. This organizational realignment 

would bring the CIO’s placement in line with other cabinet level agencies such as the U.S. Departments of 

Commerce, Interior, Justice, Agriculture, and Energy. 

The Department must closely monitor the operation and maintenance services of its financial system to mitigate 

financial and operational risks. The Department should establish a firm-fixed priced agreement with the service 

provider for routine operation and maintenance to assist the Department in managing its costs within budgeted 

amounts and reduce the need for agencies to shift funds from program-related requirements.
(Unaudited)

160 United States Department of Labor

Summary of Financial Statement Audit and Management Assurances

The following tables provide a summary of the Department’s FY 2017 financial statement audit and its management 

assurances.

Summary of Financial Statement Audit

Audit Opinion Unmodified

Restatement No

Material Weaknesses Beginning 

Balance

New Resolved Consolidated Ending 

Balance

Lack of Sufficient IT General Controls over Key Financial Feeder Systems 1 1 0

Deficiencies in Estimating Future Excise Tax Income 1 1 0

Improvement Needed for Estimate Reviews 1 1

Total Material Weaknesses 2 1 2 1

Summary of Management Assurances

Effectiveness of Internal Control over Financial Reporting (FMFIA § 2)

Statement of Assurance Unmodified

Material Weaknesses Beginning 

Balance

New Resolved Consolidated Reassessed Ending 

Balance

Total Material Weaknesses 0 0

Effectiveness of Internal Control over Operations (FMFIA § 2)

Statement of Assurance Unmodified

Material Weaknesses Beginning 

Balance

New Resolved Consolidated Reassessed Ending 

Balance

Total Material Weaknesses 0 0

Conformance with financial management system requirements (FMFIA § 4)

Statement of Assurance Systems conform to financial management system requirements

Non-Conformances Beginning 

Balance

New Resolved Consolidated Reassessed Ending 

Balance

Total Non-Conformances 0 0

Compliance with Federal Financial Management Improvement Act (FFMIA)

Agency Auditor

1. System Requirements No lack of compliance noted. No lack of compliance noted.

2. Accounting Standards No lack of compliance noted. No lack of compliance noted.

3. United States Standard General Ledger (USSGL) at 

Transaction Level

No lack of compliance noted. No lack of compliance noted.
(Unaudited)

FY 2017 Agency Financial Report 161

Payment Integrity

The Improper Payments Information Act of 2002 (IPIA), as amended by the Improper Payments Elimination and 

Recovery Act of 2010 (IPERA) and the Improper Payment Elimination and Recovery Improvement Act of 2012 

(IPERIA), requires federal agencies to identify and reduce improper payments (IP) and report annually on their 

efforts according to guidance promulgated by the Office of Management and Budget (OMB). For more detailed 

information on IP and all of the information previously reported in AFRs that is no longer included due to changes in 

OMB Circular A-136 requirements, please see: https://paymentaccuracy.gov/

IPIA Section 2(a) requires agency heads to review all programs to identify risk susceptibility for significant IP every 

three years. DOL conducted a Department-wide Triennial IPIA Review which included risk assessments and 

recapture audit cost-benefit analyses of all identified programs in FY 2016 through FY 2017. Information on the 

previous Department-wide reviews may be found in DOL’s FY 2014 AFR. Detailed information on the results of FY 

2017 IP susceptibility risk assessments may be found directly below, and results of recapture audit cost-benefit 

analyses in Section II. Recapture of Improper Payments Reporting.

OMB Circular A-123, Appendix C requires that all agencies institute a systematic method of reviewing all programs 

and identify programs susceptible to significant IP. This systematic method could be a quantitative evaluation based 

on a statistical sample or a qualitative method (e.g., a risk-assessment questionnaire). At a minimum, agencies are 

required to take into account the following risk factors likely to contribute to IP, regardless of which method 

(quantitative or qualitative) is used:

i. Whether the program or activity reviewed is new to the agency;

ii. The complexity of the program or activity reviewed, particularly with respect to determining 

correct payment amounts;

iii. The volume of payments made annually;

iv. Whether payments or payment eligibility decisions are made outside of the agency, for example, by 

a State or local government, or a regional Federal office;

v. Recent major changes in program funding, authorities, practices, or procedures;

vi. The level, experience, and quality of training for personnel responsible for making program 

eligibility determinations or certifying that payments are accurate;

vii. Inherent risks of improper payments due to the nature of agency programs or operations;

viii. Significant deficiencies in the audit reports of the agency including, but not limited to, the agency 

Inspector General or the Government Accountability Office (GAO) audit report findings, or other 

relevant management findings that might hinder accurate payment certification; and

ix. Results from prior improper payment work.

As part of the Department’s regular cycle of Department-wide Triennial IPERA Reviews, IP risk assessments were 

conducted for all programs in FY 2016 and 2017. FY 2016 reviews were conducted for newly authorized ETA WIOA 

programs, as reported in DOL’s FY 2016 AFR. FY 2017 reviews were conducted for all other identified programs 

based on the Department’s 2013 Program Inventory, including activities or sets of activities recognized as programs 

by the public, OMB, or Congress, as well as those that entail program management or policy direction. All programs 

identified in the 2013 Program Inventory were reviewed for suitability for reporting under IPIA guidelines. Some 

were excluded from review in FY 2017 due to cancellation (e.g. Workforce Investment Act programs replaced by 

WIOA programs reviewed in FY 2016), or because their financial functions were determined to be controlled by 

another reporting program and therefore not required to report separately. 

UI and FECA continue to be considered susceptible to IP because they report an IP rate above the legal threshold in 

IPERA. No additional DOL programs were determined to be susceptible for IP. OIG was not responsive to 

communication regarding the Department-wide Triennial IPERA Reviews.
Other Information

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162 United States Department of Labor

Susceptibility to Improper Payments Risk Assessment Results

Agency Program Result

ETA UI Susceptible to Improper Payments. Already reports.

ETA Job Corps Not Susceptible to Significant Improper Payments

ETA Community Service Employment for Older 

Americans

Not Susceptible to Significant Improper Payments

ETA Employment Service Not Susceptible to Significant Improper Payments

ETA Foreign Labor Certification Not Susceptible to Significant Improper Payments

ETA Workforce Information Not Susceptible to Significant Improper Payments

ETA Apprenticeship Not Susceptible to Significant Improper Payments

ETA ETA management and other Not Susceptible to Significant Improper Payments

EBSA EBSA Not Susceptible to Significant Improper Payments

OWCP FECA Susceptible to Improper Payments. Already reports.

OWCP Longshore and Harbor Workers Compensation Not Susceptible to Significant Improper Payments

OWCP Energy Employees Occupational Illness 

Compensation

Not Susceptible to Significant Improper Payments

OWCP Coal Mine Workers' Compensation Not Susceptible to Significant Improper Payments

OLMS OLMS Not Susceptible to Significant Improper Payments

WHD WHD Not Susceptible to Significant Improper Payments

OFCCP OFCCP Not Susceptible to Significant Improper Payments

OSHA OSHA Not Susceptible to Significant Improper Payments

MSHA MSHA Not Susceptible to Significant Improper Payments

BLS Labor Force Statistics Not Susceptible to Significant Improper Payments

BLS Prices and Cost of Living Not Susceptible to Significant Improper Payments

BLS Compensation and Working Conditions Not Susceptible to Significant Improper Payments

BLS Productivity and Technology Not Susceptible to Significant Improper Payments

BLS Executive Direction and Staff Services Not Susceptible to Significant Improper Payments

ILAB ILAB Not Susceptible to Significant Improper Payments

WB WB Not Susceptible to Significant Improper Payments

ODEP ODEP Not Susceptible to Significant Improper Payments

VETS Jobs for Veterans State Grants Not Susceptible to Significant Improper Payments

VETS Transition Assistance Program Employment 

Workshop

Not Susceptible to Significant Improper Payments

VETS Homeless Veterans' Reintegration Program Not Susceptible to Significant Improper Payments

VETS Federal Administration & USERRA Enforcement Not Susceptible to Significant Improper Payments

DM Departmental Management and other Not Susceptible to Significant Improper Payments

OIG OIG Not responsive.

NOTES: For the purposes of IPERA reporting, “Departmental Management and other” includes all OCFO-controlled finance operations, 

including payroll, contract procurement, property management, rent, and fleet.
Payment Integrity

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FY 2017 Agency Financial Report 163

I. PAYMENT REPORTING

DOL Programs Required to Submit Improper Payments Estimates ($ in millions) 1

Program Requirement 

Based on... Measure Estimated Rate (% of total outlays & total $)6

FY17 2 FY16 3

Unemployment 

Insurance (UI)

IP rate 

exceeds 

threshold

Proper Payments 87.50% $28,464.08 88.35% $28,736.10

IP Rate: 12.50% $4,065.92 11.65% $3,788.09

...Overpayments 12.11% $3,937.76 11.19% $3,637.83

...Underpayments 0.39% $128.17 0.46% $150.26

IP Made Directly by the Federal 

Government 0% $0.00 0% $0.00

IP Made By Recipients of 

Federal Money 4 12.50% $4,065.92 11.65% $3,788.09

Net IP (IP Minus Amounts 

Recovered by States) 10.12% $3,292.49 8.70% $2,828.58

IP Minus “Work Search” Errors 8.23% $2,676.89 7.69% $2,502.09

Federal 

Employees’ 

Compensation 

Act (FECA)

IP rate 

exceeds 

threshold

Proper Payments 97.94% $2,722.91 96.46% $2,895.00

IP Rate: 2.06% $57.19 3.54% $106.32

...Overpayments 1.17% $32.40 1.40% $41.97

...Underpayments 0.89% $24.79 2.14% $64.35

IP Made Directly by the Federal 

Government 1.37% $38.10 1.70% $51.07

IP Made By Recipients of 

Federal Money 5 0.69% $19.08 1.84% $55.25

Notes: 

1 Covers the 12-month period from July 1, 2016 through June 30, 2017.

2 FY 2017 UI outlays are based on the Unemployment Insurance Outlook for the President's FY 2018 Budget. The 

FY17 IP rate is estimated from the results of the Benefit Accuracy Measurement (BAM) survey. The rate reflects the population amounts of 

UI benefits paid reported by BAM. In some states these population outlays differ from the outlays reported on the ETA 5159 report. As a 

result of these variances, the IP rate may be underestimated by <= 0.09 percentage points.

3 The FY16 UI outlays and estimated IP differ from figures published in DOL's FY 2016 AFR. Outlays in the FY16 AFR ($33,090 M) were 

based on the Unemployment Insurance Outlook for the President's FY17 Budget. The revised outlays of $32,524.19M are based on the 

outlays reported by State Workforce Agencies on the ETA 5159 Claims and Payment Activities reports for the State UI, UCFE, UCX, EB, and 

EUC 2008 programs. The revised estimated IP amount is based on multiplying the estimated FY16 IP of 11.65% by the revised outlays. 4 These figures represent the IP amounts and percentages made by the UI agencies in the 53 states and territories. Although the 

significant majority of these payments are funded by taxes collected by the states and territories on employers in their jurisdictions, the 

funds are deposited in the Unemployment Trust Fund and are considered federal funds for IP purposes.

5 These payments encompass those made from the OWCP’s bill payment contractor. 6 Rounding error may account for imprecise totals.

FY 2018 IP REDUCTION TARGETS

Fiscal integrity is fundamental to the stewardship of public funds. Elimination and mitigation of IP is an important 

goal at the Department of Labor. DOL takes steps to continuously improve its processes to cost-effectively reduce 

fraud, waste, and abuse. The following chart shows IP targets by reporting program for the following fiscal year as 

a percent of total outlays.

IP Reduction Target Rates (% of total outlays)

Program or Activity FY18 IP Target Rate (as % of total outlays)

Unemployment Insurance (UI) 13.75%

Federal Employees’ Compensation Act (FECA) 3.38%
Other Information

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UI Program:

DOL’s Employment and Training Administration (ETA) estimates that the UI improper payment will increase in FY 

2018 to 13.75%. Although significant work has been done by ETA and the states to reduce the annual target to 

meet the IP rate of 10%, certain conditions have prevented the DOL from meeting that target. See the discussion in 

Section IV: Barriers, below. In addition, the Middle Class Tax Relief and Job Creation Act of 2012, enacted on 

February 22, 2012, amended the Social Security Act (SSA) to add a work search requirement as a condition of UI 

eligibility (SSA, Section 303(a)(12)). Prior to this enactment, all states had a work search requirement as part of their 

state laws and states had flexibility in interpreting and applying their work search requirements. A total of 19 states 

have a law or policy that provides formal or informal warning when claimants first fail to conduct required work 

search activities. However, state formal warning policies have been determined not permissible under the Federal 

work search law. ETA is in the process of issuing an Unemployment Insurance Program Letter informing the states 

that formal and informal warnings are no longer permitted. The target rate noted above is based on BAM data from 

2017 and does not reflect the possible full impact of this policy change. States will need time to amend their laws, 

policies, and regulations to implement this change. This new policy will lead to higher IP rates as states stop using 

warnings and start including these incidents in the count of IP. The full impact will depend on how quickly states are 

able to comply with the new policy. The target rate of 13.75% reflected above is provided based on the assumption 

that not all states will be able to implement the new guidance in the 2018 reporting year.

FECA Program:

DOL’s Office of Workers’ Compensation (OWCP) estimates that the FECA program’s IP rate will increase in FY 2018. 

Although the FECA program continues to implement changes to reduce the IP rate, FECA must consider critical 

factors which will prevent the DOL from reducing its target. See the discussion in Section IV: Barriers, below. In 

addition, the program anticipates a significant increase in fraud restitution for FY 2018. This is primarily due to a 

single $27.9 million court-ordered restitution awarded to the Department that will be taken into account in next 

year’s rate. Assuming no other changes, this one restitution order alone will drive the IP rate up by an estimated 

0.32% next year. With the increased activity related to provider fraud investigation, it is likely that other such 

judgements will occur over this next year. As shown in the FECA Program Improper Payment Root Cause 

Categories table below, the IP three-year base restitution totals for FY 2017 averaged $10.3 million. This accounts 

for 18% of FECA’s cumulative IP estimate. The error rate in this category is expected to increase to at least $19 

million in FY 2018 and may potentially reflect upwards of 30% of the total IP estimate. Since the amount of courtordered restitution is beyond OWCP’s control, OWCP will maintain its previously established FY 2018 reduction 

target rate of 3.38%. 
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FY 2017 Agency Financial Report 165

ROOT CAUSES

The following chart describes IP root causes as described in OMB Circular A-136 for programs found susceptible to 

improper payments, the amount of total overpayments and underpayments estimated to be attributable to those 

root causes, describes forward looking corrective actions, and actions taken, results, and completion dates. The 

root cause model provided in OMB Circular A-136 is highly generalized for application across the Federal 

government. DOL programs found susceptible to IP have developed program specific root cause models to improve 

payment integrity efforts.

UI Program:

The UI Program has a highly mature root cause category model which varies slightly from the model provided in 

OMB Circular A-136. The models are melded in the UI Program Improper Payment Root Cause Category Matrix

and narrative below by inserting the UI model root cause into the most appropriate generalized OMB root cause 

category. 

UI Program Improper Payment Root Cause Category Matrix ($ in millions)

OMB Root Cause Overpayments Underpayments

Program Design or Structural Issue $2,406.36 $97.71

Inability to Authenticate Eligibility $903.40 Failure to Verify

Excluded Party

Death Data

Financial Data

Prisoner Data

Other Eligibility Data $182.52 $10.11

Administrative 

or Process Error 

Made by:

Federal Agency

State or Local Agency $223.63 $12.42

Other Party

Medical Necessity

Insufficient Documentation to Determine $79.46

Other: 1 $142.39 $7.93

Total 2 $3,937.76 $128.17

Notes: 1 The “Other” category includes 1) IP which the State agency was in the process of resolving prior to the BAM sample being 

selected or state had correctly resolved the issue between the time of the original payment and the time the BAM sample was selected 

thereby resulting in the correct action being taken and all issues resolved before the BAM investigation was completed; and 2) IP which 

the State agency had detected as a result of crossmatch with the State or National Directory of New Hires or State wage record files and 

had taken official action to establish overpayment for recovery before the BAM investigation was completed. 2 Rounding error may account for imprecise totals.

Program Design or Structural Issue: Certain essential program features continue to contribute to the UI program’s 

IP rate. These structural features consist of legal requirements for the operation of the UI program which cause 

states to make payments when due that are later determined to be improper due to receipt of information that 

was not available at the time the payment was required to be made, or as a result of due process requirements for 

notice and the opportunity to be heard prior to stopping payment of benefits.

Work search IPs are currently the largest root cause of UI overpayments. As part of their continuing eligibility for 

ongoing benefits after being determined initially eligible for UI benefits, UI claimants are required to certify that 

they have met a state’s work search requirements for each continued week of benefits claimed and to document 

their work search in accordance with the state’s law. Federal law requires that when an eligibility issue is detected, 
Other Information

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166 United States Department of Labor

the claimant has a right to receive notice and to provide information before being denied benefits. If an eligibility 

issue associated with work search (or any other eligibility issue) is detected, there is a requirement to pay for a 

claimed week no later than the week after an issue is detected. The time it takes to work through the necessary due 

process steps prevents states from completing the determination process before the payment must be made. 

There are strong public policy reasons for these program design and structural requirements. They promote the 

effectiveness of the critical UI safety net by getting benefit payments to eligible unemployed individuals for whom 

suitable work is not available during periods between jobs. Additionally, by providing temporary partial wage 

replacement to the unemployed, the program plays a vital role in maintaining purchasing power and in stabilizing 

the economy. The design and structural requirements also ensure basic due process is provided before stopping 

these benefit payments.

Because work search errors generally cannot be prevented before the payment must be made to the claimant in 

accordance with Federal law, it is not possible for states to proactively reduce the largest root cause of UI improper 

payments. Additionally, the definition of improper payments established in IPERA requires that the Department 

report those overpayments that result from these essential statutory requirements as part of its overall IP rate, 

rather than as a separate, supplemental measure. The most significant structural and program design impediments 

to reducing the IP rates are the statutory requirements to pay benefits when due and the due process requirements 

requiring notice and an opportunity to be heard before stopping benefit payments. These requirements are critical 

to the nature of the UI program and should not be “corrected.” However, the Department continues to pursue 

strategies to ultimately help ensure proper payments and is pursuing the following actions. 

Corrective Action: Despite the difficulty states experience in preventing work search errors before they 

occur, the Department continues to take proactive steps to help states to attempt to address this root 

cause. In 2016, the Department published a Pathway to Reemployment Framework that contained a set of 

re-envisioned work search requirements that reflect the way individuals search for work in the 21st Century 

labor market and are acceptable to meet state eligibility requirements for UI.1

Timetable: On an ongoing basis, ETA encourages State Workforce Agencies (SWA) to consider the 

adoption of some of the re-envisioned work search activities contained in the Pathway to 

Reemployment Framework.

Corrective Action: As part of the Pathway to Reemployment Framework, the Department released a “My 

Reemployment Plan” that was developed as an interactive job search guide that outlines proven steps to 

successful reemployment in a 21st century job market and may be used by job seekers directly or as a case 

management tool.2 This tool is designed to support claimants’ work search activities and their 

documentation for UI purposes. Currently, the Department is partnering with the Information Technology 

Support Center (ITSC) to automate the My Reemployment Plan as part of the suite of Workforce Connect 

tools available to states.3

Timetable: The automated version of the My Reemployment Plan is planned for completion during 

FY 2018.

Inability to Authenticate Eligibility: Benefit Year Earnings are payments to individuals who continue to claim 

benefits after they have returned to work.4 In order to address this root cause, it is critical for states to identify as 

quickly as possible that a UI claimant has returned to work and to ensure that claimants understand their 

responsibility to report when they return to work. ETA has promoted state strategies to address this challenge. One 

 1 https://rc.workforcegps.org/resources/2016/10/03/05/36/Pathway_to_Reemployment_Framework

2 https://rc.workforcegps.org/resources/2016/10/03/05/28/My_Reemployment_Plan

3 http://www.itsc.org/Pages/WF_Connect.aspx 4 We note that the same structural issues discussed above, including due process protections and the requirement to pay 

“when due” apply here and can create IP, regardless of the compelling public policy reasons supporting these requirements.

For example in this area, the cross-matches with data sources to identify possible benefit year earnings must be independently 

verified before action stopping payment can be taken and this delay can result in an IP.
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FY 2017 Agency Financial Report 167

of its principal strategies is the establishment of the UI Integrity Center of Excellence (Integrity Center). The 

Integrity Center was established to be a state-driven source of innovative program integrity strategies to prevent 

and detect IP and reduce fraud. The Integrity Center is being implemented through a cooperative agreement with 

New York, in partnership with the National Association of State Workforce Agencies (NASWA).1

Corrective Action: Increasing cross-matching with the State and National Directory of New Hires (NDNH), 

and the immediate notification of claimants that the state agency is aware they may have returned to work 

while still claiming benefits.2

Timetable: As of September 2017, a total of 52 SWAs are using the NDNH in their integrity 

operations.

Corrective Action: In August 2017, the Integrity Center published a “model” integrity operations blueprint 

for states highlighting integrity practices that should be part of state UI Modernization efforts, including 

state successful practices, return on investment information, and ‘how-tos’ in areas such as collections, 

fraud identification, cross matching, and identifying fictitious employers.

Timetable: The Integrity Center is updating the State Practices Database that contains the model 

blueprint and adding new state practices to assist states on an ongoing basis.

Corrective Action: In February 2017, the Integrity Center launched a UI National Training Academy that 

offers program integrity training for state agency staff via online modules and instructor-led courses leading 

to credentials. Training curricula includes tracks in fraud investigation, UI claims intake and processing, and 

program leadership.

Timetable: Additional training modules are being developed and will be added to the UI National 

Training Academy on an ongoing basis.

Corrective Action: In September 2017, the Integrity Center finalized a data analytics tool piloted in three 

states that may assist states with the prevention and detection of IP.

Timetable: In late 2017, the Integrity Center will make the data analytics product available to states 

as a tool they may choose to implement.

Corrective Action: In September 2017, the Integrity Center launched a Suspicious Actor Repository (SAR) in 

pilot states to share specific data elements associated with fraudulent UI claims for cross-matching 

purposes as part of its integrated UI Integrity Data Hub.

Timetable: In 2018, the Integrity Center will expand the SAR to additional states. The Integrity 

Center is also in the preliminary stages of developing the Integrity Data Hub to be integrated with 

the SAR and serve as a secure portal for states to cross-match with public and private sources of 

data to help prevent and detect IP. The goal is to integrate at least two data sets initially and add 

additional data sets over time, particularly ones that may not be readily available to all states today 

and that are likely to provide the most valuable information to states to prevent and detect IP and 

fraud.

Failure to Verify  Other Eligibility Data: Employment Service Registration errors result when UI claimants are not

registered for services with the public workforce system and accessing public jobs bank as required in state law. 

Corrective Action: These errors are often the result of information technology system errors that exit a UI 

claimant from their required registration with the state Employment Service or job bank after a set time 

period. As a corrective action, ETA provides customized technical assistance to states with the highest error 

rates for this cause.

 1 http://integrity.naswa.org/

2 UIPL No. 19-11, Attachment A: http://wdr.doleta.gov/directives/attach/UIPL/UIPL19-11ATT.pdf
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168 United States Department of Labor

Timetable: On an ongoing basis, those states with high ES Registration root cause error rates submit 

specific corrective action plans to address this root cause and are monitored by ETA’s regional 

offices. This strategy was implemented in 2011 and has resulted in a 71% reduction in the ES 

Registration error rate versus the 2011 baseline rate.

Administrative or Process Error Made by – State or Local Agency: ETA continues to work aggressively with states 

to identify strategies to improve program integrity and reduce IP resulting from state errors, including identifying 

model integrity operations, sharing promising practices, and developing and providing training to address these 

issues.

Corrective Action: ETA developed a State Self-Assessment tool to assist states in identifying and correcting 

operational issues impacting performance and integrity.

Timetable: In October 2017, States will begin using the State Self-Assessment Tool to conduct 

comprehensive self-assessments of key functional and program areas in their UI benefits 

operations.

Corrective Action: In July 2017, the Integrity Center launched a Digital Library for the exchange of promising 

state practices and program integrity information.

Timetable: The Integrity Center is updating the Digital Library and adding information to assist 

states on an ongoing basis.

Corrective Action: In August 2017, the Integrity Center published a “model” integrity operations blueprint 

for states highlighting integrity practices that should be part of state UI Modernization efforts, including 

state successful practices, return on investment information, and ‘how-tos’ in areas such as collections, 

fraud identification, cross matching, and identifying fictitious employers.

Timetable: The UI Integrity Center is updating the State Practices Database that contains the model 

blueprint and adding new state practices to assist states on an ongoing basis.

Corrective Action: In December 2016, the Integrity Center hosted its second UI program integrity 

symposium to promote promising strategies to all SWAs. 

Timetable: The next UI program integrity symposium is planned for the spring of 2018.

Corrective Action: In February 2017, the Integrity Center launched a UI National Training Academy that 

offers program integrity training for state agency staff via online modules and instructor-led courses leading 

to credentials. Training curricula includes tracks in fraud investigation, UI claims intake and processing, and 

program leadership.

Timetable: Additional training modules are being developed and will be added to the UI National 

Training Academy on an ongoing basis.

Corrective Action: The Integrity Center is implementing new program integrity services to provide business 

process analysis directly to individual states. Integrity Center subject matter experts will directly assist 

states in-person, or virtually, to identify UI integrity issues, provide recommendations, and evaluate the 

effectiveness of state operations and practices on an ongoing basis.

Timetable: The Integrity Center is in the preliminary stages of building this capacity.

Insufficient Documentation to Determine: Separation errors result from the failure of employers, or their third 

party administrators, to provide timely and adequate information on the reason for an individual’s separation from 

employment, which can impact the claimant’s eligibility. 

Corrective Action: The State Information Data Exchange System (SIDES) was developed to enable the 

electronic communication of separation and other UI information between employers and SWAs, in order 

to improve the timeliness and accuracy of information from employers on the reason for a UI applicant’s 

separation at the point of eligibility determinations.
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FY 2017 Agency Financial Report 169

Timetable: UI is working with the NASWA SIDES team to develop new SIDES marketing materials 

aimed at increasing states and employers’ usage of SIDES. The NASWA SIDES team is compiling and 

publishing best practices for employer engagement, a refreshed SIDES marketing toolkit, and 

promotional items. These materials will be released in FY 2018. Additional outreach to the 

employer community is ongoing and a SIDES training conference is planned for April 2018.

The following UI Program Percent of Total Dollars Overpaid by Cause supplementary table describes root causes 

determined by the UI Program and percent of total overpayments attributable to each cause. The causes, described 

at https://oui.doleta.gov/unemploy/pdf/Overpayment_CauseDefinitions.pdf, more appropriately correlate to the IP 

in the UI program. 

UI Program Percent (%) of Total Dollars Overpaid by Cause

% of Total Dollars Overpaid by Cause

% of 

Overpayments 

(2017 IPIA Rate)

% of 

Overpayments 

(2016 IPIA Rate)

Relative 

Change

Work Search:

(Failure to actively seek employment) 37.38% 37.92% (0.54)%

Benefit Year Earnings 

(Continuing to claim benefits after returning to work) 26.41% 30.26% (3.85)%

Separation

(Ineligible due to voluntarily quitting or discharge for 

cause)

17.22% 12.58% 4.64%

Able and Available 

(Ineligible due to not being able to work or available for 

work)

5.54% 6.71% (1.17)%

Employer Service Registration 

(Failing to register for referral to work or reemployment 

services)

2.15% 2.31% (0.16)%

Other Eligibility Issues

(Refusal of work, self-employment, failure to report for 

agency review or report requested information, citizenship 

status, and claiming benefits using a false identity)

3.49% 2.98% 0.51%

Base Period Wages

(Error in calculating claimant’s benefit based on wages 

earned prior to period of unemployment)

3.16% 2.94% 0.22%

All Other Issues 

(Adjustments to dependents’ allowance, adjustments to 

benefits due to claimant receipt of income from severance 

pay, vacation pay, Social Security, or employer pension, 

back pay awards, payment during a period of 

disqualification, or agency redetermination of eligibility)

4.66% 4.31% 0.35%
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FECA Program:

The FECA Program Improper Payment Root Cause Categories table overlaps between the root causes and 

responsibilities for the payment errors which make it difficult to describe corrective actions and actions taken for 

each IP root cause category separately. The discussion below attempts to clarify for the reader the description of IP 

root causes, and actions planned or taken to address root causes.

FECA Program Improper Payment Root Cause Categories ($ in millions)

OMB Root Cause Overpayments Underpayments

Program Design or Structural Issue

Inability to Authenticate Eligibility $9.50 $0.24 Failure to Verify

Excluded Party

Death Data $2.37

Financial Data

Prisoner Data

Other Eligibility Data

Administrative or 

Process Error 

Made by:

Federal Agency $10.08 $5.57

State or Local Agency

Other Party $0.10 $18.98

Medical Necessity

Insufficient Documentation to Determine

Other: 1 $10.34

Total 2 $32.40 $24.79

Notes: 1 Reflects fraud restitution orders as described in Section VII: Sampling & Estimation, below. 2 Rounding error may account for imprecise totals.

Inability to Authenticate Eligibility: This category of errors reflects issues in the prompt and accurate annual 

authentication of continued eligibility. In order to receive ongoing compensation payments for disability, cases on 

the periodic roll must contain documentation to ensure continuing entitlement is substantiated in the file. The 

majority of errors in this category were considered overpayments and were attributed to a lack of medical 

documentation that would be necessary to support ongoing eligibility. Examples include the failure to develop 

medical evidence after the weight of medical evidence suggested that the claimant was capable of performing full 

duties or that the accepted work related medical condition had resolved. A small subset of errors in this category 

were attributed to a failure to adjust payments even though the claimant alerted the program of the changes in 

eligibility, such as with dual benefits or dependency status.

Corrective Action: Enhance existing controls to ensure current medical evidence is received for cases on the 

periodic roll and develop a database query that cross-matches active periodic roll cases with outdated 

medical documentation to help ensure compliance with medical entitlement verification policies. The FECA 

program has an established process in place to actively monitor all long–term periodic roll cases to ensure 

that compensation payments are supported by medical evidence via an automated medical request system. 

The medical request is automatically issued with the annual verification questionnaire; however, not all 

offices have consistently used this automatic functionality and instead have chosen to send manual 

requests. The automatic request at the time the CA-1032 is issued will now be required for all offices. The 

database query will be developed as an additional tool to identify cases with a lack of medical 

documentation.
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FY 2017 Agency Financial Report 171

Timetable: Implemented; FY 2017, a database query was developed to identify total disability cases where 

there was no current medical report in the file, and a request for updated medical documentation was 

issued. Implemented; FY 2017, the annual request for medical documentation for cases on the periodic roll 

for total disability was automated for all offices. Ongoing; FY 2018, refine the use automated database 

queries to potentially include all long-term periodic roll cases including those in partial disability and 

permanent disability status and consider development of additional database queries to monitor potential 

changes in status, e.g. dependent status or dual benefits.

Failure to Verify: The single error identified in this category was attributed to a failure to stop a payment after 

death which caused an overpayment.

Corrective Action: A single payment error was found in this category totaling less than $2,000. However, 

statistical sampling methodology extrapolates that in the entire universe of payments this could equal up to 

$2.37 million reported in the FECA Program Improper Payment Root Cause Categories table above. The 

error rate methodology provided a median value using a 90% confidence interval with a precision of 2.5%. 

The error was not a result of a data match oversight, but rather delays in notification.

Timetable: Ongoing; FY 2018, continue to effectively conduct regular pre-payment matches using the 

SSA Death Master File (DMF).

Administrative or Process Error Made by: This category reflects various errors in calculating compensation and 

medical benefits.

With regard to compensation payments, the largest category of discrepancies identified involved various 

components associated with the calculation of the payrate. Specifically, the majority (approximately 70%) of IP 

resulted from the issuance of compensation payments which were based on incorrect or unverified base pay rates, 

the inaccurate calculation of premium pay or the use of the wrong effective date for the payrate. The next highest 

cause for error was the improper deduction of life insurance premiums, despite having sufficient file 

documentation. There were no real trends with the remaining errors; they encompassed issues such as an incorrect 

period, compensation rate and health benefits deductions. About 66% of IP dollars for compensation payments 

resulted in overpayments, while 34% were underpayments.

The “Other Party” category reflects medical-billing errors that did not meet coverage, coding and reimbursement 

billing requirements. In FY 2017, OWCP’s contractor processed and paid medical bills for the FECA program. Only 4 

errors were identified; these errors were due to delays in file transmission and policy updates. Nearly all IP dollars 

for medical payments were underpayments.

Corrective Action: Errors cited for discrepancies with life insurance deductions were attributed to lack of 

staff understanding of the life insurance entitlement process and to communication issues between the 

FECA program and the Office of Personnel Management (OPM). In the latter half of FY 2017, the FECA 

program initiated several actions to reduce IP attributable to life insurance, to include the following: 

working closely with OPM to share and cross-walk insurance eligibility; updating outgoing correspondence 

to injured workers regarding life insurance entitlement; creating a new tracking mechanism for life 

insurance adjustments (to be implemented in October, 2018); providing mandatory life insurance training 

sessions, in-person and remote, for each district office (to be completed by October 2018); and updating 

the employing agency training module segments pertaining to life insurance.

To address the issues identified with payrate calculations, the FECA program will undertake a new in-depth 

assessment of initial payments, by individual district office, each month during FY 2018. While the FECA 

Program has historically reviewed initial payments and provided training to all offices, this review will focus 

on an individual office one at a time and then training will be tailored to that specific office’s needs. This 

review method will better identify individual training needs, and will help the program identify issues by 

specific office that may be contributing to IP, rather than just identifying program-wide trends.
Other Information

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The “Other Party” category reflects medical-billing errors that did not meet coverage, coding and 

reimbursement requirements. Only 4 errors were identified, and the FECA improper payment rate for 

medical-billing administrative or process errors was 1.35%. This represents a 3.68% decrease from last 

year’s IP audit. In FY 2017, the FECA program continued its emphasis on the billing of compound medication 

and initiated processes to implement policies pertaining to opioids. As a result of these initiatives, a more 

in-depth review of the entire bill payment process was undertaken and this will continue in FY 2018 as the 

FECA program actively works with its contractor to identify and implement additional procedures to 

prevent and detect IP processing errors. Also, District Office Trouble Shooter (DOTS) conduct monthly 

audits and are responsible for identifying overpayments and underpayments attributed to bill payment 

processing errors. The FECA program intends to work with the DOTS in FY 2018 to promote consistency of 

the reviews to better identify opportunities for improvement.

Timetable: Implemented; FY 2017, OPM cross-walk life insurance eligibility data. Implemented; FY

2017, updated outgoing correspondence to injured workers regarding life insurance entitlement. 

Implemented; FY 2017, updated the employing agency training module segments pertaining to life 

insurance. Complete; FY 2018, nation-wide life insurance training. Complete; FY 2018, new tracking 

mechanism for life insurance adjustments. Ongoing; FY 2018, conduct in-depth assessment of initial 

payments, by individual district office, each month during the fiscal year. Through program audits, 

identify individual training needs, ensure diverse sampling, and address error trends that may be 

contributing to a high volume of IP. Continue to work with bill pay contractor to identify and implement 

controls to prevent bill pay processing errors.

Other: The “Other” error category reflects OIG fraud restitution issues.

Corrective Action: The Department is committed to the detection and prevention of fraud in the FECA 

program and has taken significant steps in FY 2017 to enhance early detection of potential fraud. The 

Program Integrity Unit (PIU) began using structured data analytics methods to review spending patterns on 

a quarterly basis so that it can spot trends early and react more quickly to anomalous spending patterns. 

With regard to medical outlays, DFEC primarily uses a “year to year” comparison methodology, which 

projects spending for the current chargeback year based on actual year-to-date spending, and compares 

that number to the prior chargeback year. Using this methodology, DFEC targets specific providers for 

review based on a combination of total dollars paid in conjunction with the percentage increase in the 

outlays year over year; new providers with no payments in the prior year but rapidly escalating payments in 

the current year are also specifically targeted. If DFEC finds evidence of behavior that could be construed as 

deceptive, misleading, or unfair, a referral is sent to DOL OIG for further review. Additionally, in FY 2017, 

OWCP held an Anti-Fraud Conference designed to enhance collaboration with DFEC and agency OIGs and to 

introduce new fraud detection technology and protocols.

FECA continues to implement effective practices to identify and address compensation and provider fraud. 

These practices include instituting periodic claims reviews; allowing agencies access to its data systems that 

contain compensation and medical-billing payment information; dedicating full-time staff to investigating 

potential fraud cases and processing any resulting IP due to the government.

Timetable: Implemented; FY 2017, the FECA program’s PIU was realigned with a focus on fraud 

prevention and detection. Implemented; FY 2017, dedicated full-time staff to investigating potential 

fraud cases and processing any resulting IP due to the government. Implemented; FY 2017, new 

protocols for submitting provider and claimant referrals to DFEC. Implemented; FY 2017, developed a 

risk assessment data analytics platform. Completed; FY 2017, medical billing coding specialist 

conducted comprehensive medical bill processing training at the DFEC Anti-Fraud Conference. Ongoing; 

FY 2017, structured fraud detection and referral methods through the PIU.
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FY 2017 Agency Financial Report 173

II. RECAPTURE OF IMPROPER PAYMENTS REPORTING

As described throughout this Payment Integrity section of this AFR, DOL programs implement cost-effective 

controls to prevent, detect, and recover all IP. IPERA Section 2(h), requires agencies to conduct payment recapture 

audits (also known as recovery audits) for each program and activity that expends $1 million or more annually if 

conducting such audits would be cost-effective. DOL has taken extensive measures to ensure that managers, 

accountable officers (including agency heads), programs, and states and localities are held accountable for reducing 

and recapturing IPs. These measures are designed to hold the appropriate personnel accountable for meeting 

applicable IP reduction targets and establishing and maintaining sufficient internal controls to effectively manage IP 

risk and promptly detect and recapture any IPs that are made.

As part of the DOL’s regular cycle of Department-wide Triennial IPERA Reviews, IP risk assessments and cost-benefit 

analyses were conducted for all programs in FY 2016 and 2017. FY 2016 reviews were conducted for newly 

authorized WIOA programs as reported in DOL’s FY 2016 AFR. FY 2017 reviews were conducted for all appropriate 

identified programs based on the Department’s 2013 Program Inventory, as described above.

Department-wide cost-benefit analyses considered qualitative and quantitative factors. Many factors were 

considered in these assessments, including criteria described in OMB Circular A-123, Appendix C, Part I.D(5):

1. The likelihood that identified overpayments will be recaptured.

2. The likelihood that the expected recoveries will be greater than the costs incurred to identify and recover 

the overpayments.

The UI program already conducts a formal recapture audit program. OIG was not responsive to any communication 

regarding the Department-wide Triennial IPERA Reviews. While many programs noted that that overpayments are 

recaptured through fraud restitution orders, debt collection processes, post-award reviews, and other standard 

internal control processes, no other identified program determined a formal recapture audit program, as described 

in OMB Circular A-123, Appendix C, Part I.D, would be cost-effective.

Formal Recapture Audit Program Cost-Benefit Analyses Result

Agency Program Result

ETA UI Already conducts a formal recapture 

audit program.

ETA Job Corps Not Cost-Effective

ETA Community Service Employment for Older Americans Not Cost-Effective

ETA Employment Service Not Cost-Effective

ETA Foreign Labor Certification Not Cost-Effective

ETA Workforce Information Not Cost-Effective

ETA Apprenticeship Not Cost-Effective

ETA ETA management and other Not Cost-Effective

EBSA EBSA Not Cost-Effective

OWCP FECA Not Cost-Effective

OWCP Longshore and Harbor Workers Compensation Not Cost-Effective

OWCP Energy Employees Occupational Illness Compensation Not Cost-Effective

OWCP Coal Mine Workers' Compensation Not Cost-Effective

OLMS OLMS Not Cost-Effective

WHD WHD Not Cost-Effective

OFCCP OFCCP Not Cost-Effective

OSHA OSHA Not Cost-Effective

MSHA MSHA Not Cost-Effective

BLS Labor Force Statistics Not Cost-Effective

BLS Prices and Cost of Living Not Cost-Effective

BLS Compensation and Working Conditions Not Cost-Effective
Other Information

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174 United States Department of Labor

Formal Recapture Audit Program Cost-Benefit Analyses Result

Agency Program Result

BLS Productivity and Technology Not Cost-Effective

BLS Executive Direction and Staff Services Not Cost-Effective

ILAB ILAB Not Cost-Effective

WB WB Not Cost-Effective

ODEP ODEP Not Cost-Effective

VETS Jobs for Veterans State Grants Not Cost-Effective

VETS Transition Assistance Program Employment Workshop Not Cost-Effective

VETS Homeless Veterans' Reintegration Program Not Cost-Effective

VETS Federal Administration & USERRA Enforcement Not Cost-Effective

DM Departmental Management and other Not Cost-Effective

OIG OIG Not responsive.

NOTES: For the purposes of IPERA reporting, “Departmental Management and other” includes all OCFO-controlled finance operations, 

including payroll, contract procurement, property management, rent, and fleet.

UI Program:

The UI program was deemed cost effective for payment recapture audits. Performing UI payment recapture 

activities and providing states with tools to aid recovery are top priorities at DOL. DOL’s recapture activities have 

focused on areas that offer the greatest opportunity for improvement.

With oversight from the Department, states are responsible for the recovery of UI overpayments. Each state’s 

Benefit Payment Control (BPC) unit is responsible for promoting and maintaining UI program integrity through 

prevention, detection, investigation, establishment, and recovery of IP. BPC operations identify UI overpayments 

for recovery through such methods as cross-matching claimant Social Security Numbers with State and National 

Directories of New Hires, wage record files submitted each quarter by employers, matches with other databases 

such as Workers Compensation and State Corrections, and other sources such as appeal reversals and tips and 

leads. States collect overpaid claims through offsets of UI benefits, Federal income tax refunds under the Treasury 

Offset Program (TOP), state income tax offsets, and direct cash reimbursement from the claimant. From FY 2008 

through FY 2017, approximately $11.05 billion was recovered for the UI program (including the State UI, UCFE, UCX, 

EB, and EUC programs).

In February 2011, Treasury enacted a regulation to permit states to offset UI overpayments through TOP. 

Additionally, on December 26, 2013, the President signed into law the Bipartisan Budget Act. This Act amended 

section 303 of the SSA to require states, as a condition for receipt of grants to administer their UI programs, to use 

the TOP to recover covered UI debt that remains uncollected as of one year after the debt was finally determined 

to be due and collected. As of October 3, 2017, 49 state agencies have implemented TOP. An estimated $345.5 

million was recovered through TOP in FY 2017. The total recovered through TOP since inception is $2.162 billion.

The states must hold the claimants liable to repay benefits that were received improperly and take an active role to 

recover IP (payment recapture audits). States may waive repayments for non-fraud overpayments when it would be 

against equity and good conscience pursuant to their state’s law. Some of the recovery activities and tools used by 

states include:

• Offsets from benefits;

• Offsets from state and Federal income tax refunds;

• Offsets from lottery winnings, homestead exemptions, and other benefits,

o includes the Alaska Mineral Refund;

• Interstate recovery agreements;

• Repayment plans;

• Civil Actions, including wage garnishments and property liens;

• Skip tracing, collection agencies, and credit bureaus;
Payment Integrity

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FY 2017 Agency Financial Report 175

• Probate and bankruptcy;

• Referral to OIG and other law enforcement agencies;

• State and Federal prosecution; and

• Establishment of interest and penalties on overpayments, which adds an incentive to repay quickly.

Recovered overpayments for state UI claims are returned to the UI account from which the benefits were originally 

paid.

The tables below provides a summary of UI overpayments established and recovered as a result of the activities 

described above.

Overpayments Recaptured through UI Payment Recapture Audits ($ in millions)

Benefits Total

Amount 

Identified

Amount 

Recaptured

FY 2017 

Recapture %

FY 2018 

Recapture % 

(Target)

FY 2019 

Recapture % 

(Target)

Amount 

Identified

Amount 

Recaptured

UI $913.49 $773.44 84.67% 71.00% 71.00% $913.49 $773.44

Total $913.49 $773.44 84.67% 71.00% 71.00% $913.49 $773.44

Notes: UI payments are reviewed by each state, not by the DOL, in accordance with the provisions of the Single Audit Act and state UI law. 

Each state follows review procedures, such as matching paid claims against the NDNH and other databases to detect benefits which are 

improperly paid and use a variety of tools to recover benefits overpaid, such as leveraging the U.S. Treasury Offset Program. Overpayments 

detected and recovered are reported to DOL on the Quarterly Overpayment Report, ETA 227.

Includes total overpayments reported as outstanding on the ETA 227 and EUC 227 reports (line 313) as of the report date.

Excludes amounts waived for recovery.

Amounts based on data for the period July 1, 2016 through June 30, 2017, the most recent period for which data are available. Data have 

been estimated for states with missing ETA 227 and EUC 227 reports.

Massachusetts and New Jersey did not submit their ETA 227 reports during the 2017 reporting period. These states’ data are not included in 

the cells above.

Disposition of Amounts Recaptured Through UI Payment Recapture Audits ($ in millions)

Program or Activity Amount Recovered Type of Payment Original Purpose

UI $773.44 UI Benefits $773.44

Note: Federal law requires all recaptured UI benefits to be used for their original purpose.

Aging of Outstanding Overpayments Identified in UI Payment Recapture Audits ($ in millions)

Program or 

Activity

Type of 

Payment

Amount Outstanding

(0 – 6 months)

Amount Outstanding

(6 months to 1 year)

Amount Outstanding

(over 1 year)

Amount Determined to 

Not be Collectible 1

Dollars UI 

Benefits

$457.30 $361.28 $1,174.01 $942.66

% of 

Overpayments 22.95% 18.13% 58.92% 47.31%

Notes: Includes that portion of overpayments reported as outstanding on the ETA 227 and EUC 227 Reports (line 313) that were 360 days 

old or less as of the report date. Overpayment aging data are not available for EUC overpayments and have been imputed from UI, UCFE, 

UCX, and EB overpayment aging data. See explanation in narrative below. 1 Includes overpayments written off (ETA 227 and EUC 227 Reports, line 309) and receivables removed after two years unless recovery is in 

progress (ETA 227 and EUC 227 Reports, line 312).
Other Information

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176 United States Department of Labor

UI Overpayments Established and Recovered by Fiscal Year (Excluding Waivers) ($ in millions)

Fiscal 

Year

Overpayments 

Established 

UI/UCFE/UCX/EB

Overpayments 

Recovered 

UI/UCFE/UCX/EB

Recovered 

%

Overpayments 

Established 

UI/UCFE/UCX/EB + EUC

Overpayments 

Recovered 

UI/UCFE/UCX/EB + EUC

Recovered 

%

2009 $1,456.40 $850.99 58.43% $1,735.25 $914.27 52.69%

2010 $1,906.31 $966.02 50.67% $2,834.45 $1,179.89 41.63%

2011 $1,887.18 $997.97 52.88% $2,995.96 $1,299.43 43.37%

2012 $1,740.18 $1,015.21 58.34% $3,021.50 $1,400.16 46.34%

2013 $1,577.54 $1,075.82 68.20% $2,456.13 $1,512.61 61.59%

2014 $1,496.20 $983.35 65.72% $1,984.97 $1,297.26 65.35%

2015 $1,324.41 $933.47 70.48% $1,522.94 $1,142.17 75.00%

2016 1 $1,078.92 $840.41 77.89% $1,140.03 $959.51 84.17%

2017 2 $898.14 $691.39 76.98% $913.49 $773.44 84.67%

Notes: 1 FY 2016 overpayments established and recovered data have been revised from FY 2016 AFR. Data in the FY 2016 AFR were based 

on State agency reporting on the ETA 227 and ETA 227 EUC reports for the July 1, 2015 to June 30, 2016, which were the most recent data 

available for the 2016 AFR at the time of publication. The revised data are based on State agency reporting for the October 1, 2015 to 

September 30, 2016 period.

2 Amounts based on data for the period July 1, 2016 through June 30, 2017, the most recent period for which data are available.

Massachusetts and New Jersey submitted no ETA 227 reports during the 2017 reporting period. These states are excluded from the totals.

The states are required to report quarterly on overpayment detection and recovery activities on the ETA 227 

Report. The amounts established and recovered are based on reports submitted during the indicated fiscal year. 

However, the actual payment of benefits may have occurred in a prior fiscal year.

The information reported on the ETA 227 Report is based on actual amounts of UI overpayments identified and 

recovered by the state agencies. In contrast, the UI overpayment rates and amounts that are reported for the IPIA 

are estimates, based on the results of BAM. BAM is a statistical survey of paid and denied UI claims. The results of 

the BAM audits are projected to the population of benefit payments for all unemployment compensation 

programs: State UI, UCFE, UCX, EB, and EUC. These BAM estimates may be significantly higher than actual 

overpayments identified for recovery because:

1. BAM audits detect eligibility issues that usual BPC detection methods will not identify, because it is very 

workload intensive and/or not cost effective to detect; or

2. The overpayment is not recoverable because the responsibility for the IP is the agency’s action and/or the 

employer’s action, rather than the claimant’s action, or due to state finality rules.

Figures for “Overpayment Established” have been adjusted to subtract waivers, which are overpayments that the 

state agency has determined are not recoverable. The Unemployment Insurance Report Handbook (ET Handbook 

401, 4th edition, Section IV, Chapter 3, p. 10) defines a waiver as “a non-fraud overpayment for which the state 

agency, in accordance with state law, officially relinquishes the obligation of the claimant to repay. Usually, this is 

authorized when the overpayment was not the fault of the claimant and requiring repayment would be against 

equity and good conscience or would otherwise defeat the purpose of the UI law.”

All state laws provide for recovery of benefit overpayments. States must follow their individual state laws and 

policies in executing such recovery efforts. The expense of recovery efforts can vary greatly by state depending on 

the actions that are pursued. Also, the capacity of the state to pursue such actions is a factor that influences the 

level of recovery. DOL believes that the payment recapture audits used by states is consistent with the criteria 

established by OMB for evaluating the cost effectiveness of a payment recapture program in OMB Circular A123, Appendix C, Part I.D, Section 5, p.31.

The ETA 227 Report captures data on the causes of overpayments, the method of detection, recovery and 

reconciliation, criminal and civil actions, and the aging of benefit accounts. After eight quarters, the overpayments 

are removed from the total outstanding balance on this report. This does not affect the state’s accounting 

practices. When overpayments are recovered that have been removed from the reported outstanding balance, the 

amount will be added back to report the recovery in the quarterly report, regardless of when the overpayment 
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FY 2017 Agency Financial Report 177

originally occurred. States are now able to attempt recovery of these older unemployment compensation debts 

through TOP by offsetting the claimant’s Federal income tax returns. When IP are recovered, they are returned to 

the UI trust fund account from which they were paid.

As noted in the Aging of Outstanding Overpayments Identified in the Payment Recapture Audits table above, 

overpayment aging data are not available for EUC overpayments and have been imputed from UI, UCFE, UCX, and 

EB overpayment aging data by assuming that the age distribution of the outstanding EUC overpayments is the same 

as the UI, UCFE, UCX, and EB overpayments.

III. Agency Improvement of Payment Accuracy with the Do Not Pay Initiative

Do Not Pay (DNP) Initiative is a government-wide initiative to screen payment recipients before a grant, contract 

award or payment is made. DOL has implemented the screening of payments through the Treasury DNP Portal and, 

as appropriate, screens payments against databases directly.

Results of the DNP Initiative in Preventing Improper Payments ($ in millions)

Number (#) of 

payments reviewed 

for possible IP

Dollars ($) of 

payments reviewed 

for possible IP

Number (#) of 

payments 

stopped

Dollars ($)

of 

payments 

stopped

Number (#) of 

potential IP 

reviewed & 

determined proper

Dollars ($) of 

potential IP 

reviewed & 

determined proper

Reviews with the 

IPERIA specified 

databases 1

2,077,529 $6,586.10 0 $0 697 $0.56

Notes: 1 Indicates payments reviewed by the DNP Portal. 

Overview of DNP: IPERIA and OMB directives require agencies to integrate the use of existing databases 

(collectively known as the “Do Not Pay List”) to verify eligibility for Federal payments in order to reduce and 

eliminate payment errors before they occur. The DNP Business Center provides Federal agencies with a web-based 

single-entry access DNP Portal to these existing databases and payment data analytics services.

DNP Portal Payment Reviews: Since FY 2015, the DNP Portal has been comparing the Department’s PAM file 

against the SAM and DMF databases. The PAM file includes automated payments made by the Department. When 

a payment matches, the payment information is returned to OCFO for adjudication. OCFO reviews matches against 

business rules to cull false-positives. Matches which cannot be culled per business rules are reviewed by subject 

matter experts in the appropriate component agency to determine if the match represents a true positive IP. Since 

its inception, none of the matches returned by the DNP Portal have been found to be IP.

In late FY 2017, OCFO began a payment data analytics review of Treasury disbursed DOL payments made in FY 

2015-16. OCFO is reviewing these results and developing comprehensive risk management and payment integrity 

plans to target areas of potential concern.

DOL Program Reviews of DNP List and non-DNP List Specified Databases: DOL maintains comprehensive, cost

effective internal controls to ensure the payment integrity of all programs. Among these controls, DOL programs 

review private and government-owned databases directly, as appropriate for their business needs. Procurement 

and grants programs include internal controls requiring review of all vendors against the SAM database. OWCP 

benefit programs conduct batch matching against the DMF. These reviews are designed to prevent IP and vary 

significantly by specific programmatic need. Many state programs review UI beneficiaries against a variety of 

databases, (e.g. the National and/or State Directory of New Hires, etc.) independently. Prior to passage of the 

Federal Improper Payments Coordination Act (FIPCA) on December 18, 2015, states were prohibited by law from 

participating in the DNP Initiative. However many state programs review UI beneficiaries against versions of the 

DMF independently. In addition, many states have begun reviewing a variety of applicable information sources and 

expanded analytics capabilities in conjunction with the UI Integrity Center of Excellence’s secure data hub, as 
Other Information

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178 United States Department of Labor

discussed in Section I: Payment Reporting, above. These reviews are designed to prevent IP and vary significantly 

by specific programmatic need.

IV. BARRIERS

UI Program:

The UI program complies with several statutory provisions establishing requirements that impose challenges to 

reducing IP.

Federal-State Partnership: Each state administers the UI program according to its own laws and policies, which

must conform to broad federal requirements. IP rates often reflect differences in state law. For example, states 

with strict active work search requirements will have perennially higher overpayment rates than those states with 

minimal active work search requirements. It is extremely resource intensive for states to verify and enforce 

claimant work search contacts with employers given the more pervasive role employment search engines, large 

employment application databases, and online social networks play in the modern job search process.

Additionally, States have bottom-line authority to set operational priorities. The Department has limited authority 

to ensure states use their funding to pursue IP reduction activities.

Delays in receiving separation information: As discussed in Section I: Payment Reporting – Root Causes: UI above, 

Section 303(a)(1) of the Social Security Act requires payment “when due”, prohibiting states from suspending UI 

benefit payments until an official determination has been made that payments are no longer due. There are strong 

policy reasons for ensuring prompt payment of benefits when due - UI is a critical safety net program providing 

individuals funds to pay for necessities while searching for the next job, and UI funds circulating in the economy 

during times of increased unemployment has a stabilizing impact on the economy. In compliance with the “when 

due” provisions of the law, states make the determination of whether or not to pay benefits based on the best 

available information. A major challenge to addressing IP is created when claimants, employers, and third party 

administrators working for employers fail to report information timely and/or accurately.

State Resource Priorities and Capacity: In recent years state staffing resources have been negatively impacted in 

two ways. First, administrative funding for states’ UI program operations is based on projected workloads and, 

most importantly, weeks claimed. The decline in workload has resulted in a reduction of administration funding 

creating a challenge for states to adequately staff their UI program operations. This lack of capacity significantly 

impacts states’ ability to manage program integrity operations that are staff intensive, such as being able to 

independently validate cross-match hits and conduct random work search audits.

Second, state agencies’ employees who leave through normal attrition or retirements are often replaced by less 

experienced staff. Pressures on state budgets have reduced training, further contributing to the decrease in skilled 

staff who can accurately administer the relatively complex UI program.

Work Search as a Root Cause: Developing strategies to address work search errors, which is one of the largest root 

cause of UI improper payments nationally, is very challenging. State eligibility requirements with respect to active 

work search vary significantly among states. Additionally, a 2016 review of structural issues in the UI program by 

independent UI subject matter experts, statisticians, and economists found that it is not feasible for states to 

prevent work search IP; they can only detect and recover them. The most effective strategy is random work search 

audits, which is workload and resource intensive and states have not been specifically required or funded to do 

random work search audits. As discussed in further detail in the Root Causes, UI Program, Structural Issues section 

above, work search IP are increasing and driving up the overall UI improper payment rate.

Information Technology (IT) Capacity: State IT capacity has been strained by the decline in program administration 

funding provided to states to effectively operate the UI program. States have reported a lack of adequate IT 
Payment Integrity

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FY 2017 Agency Financial Report 179

resources available for integrity functions. Additionally, many state systems are several decades old and cannot be 

easily adapted to new IP detection methods, such as generating follow-up communications with claimants and 

employers to verify new hire matches.

FECA Program:

The FECA program faces several barriers that limit the agency’s corrective actions in reducing IP.

Inability to Authenticate Eligibility: This category of errors reflects issues in the prompt and accurate annual 

authentication of continued eligibility. Statutory and regulatory barriers limit the program’s ability to stop or adjust 

payments based on a medical review. Once a claim is accepted and periodic roll payments are initiated, the 

program is prohibited from terminating periodic compensation payments without a positive demonstration by the 

weight of evidence that entitlement to benefits has ceased and until due process has been afforded. This can result 

in payments being reported as improper even though they do not represent a loss to the government because the 

claimant continues to have a statutory right to that payment. Additionally, the FECA program does not have 

authority to directly access wage data or dual benefit eligibility data that is housed by other Federal agencies. 

Instead, to identify potential IP the program relies heavily on self-reporting of earnings and other entitlement 

criteria via annual benefit entitlement questionnaires.

Failure to Verify: FECA conducts regular pre-payment matches using the SSA Death Master File (DMF) process, 

however, barriers caused by reporting delays by family members or other parties hinder the timely termination of 

an IP.

Administrative or Process Errors: The largest category of discrepancies identified involved various elements of 

payments. The identified IP in this category highlight the ongoing difficulty that the FECA program has with its 

payment process, namely reliance on reporting by other Federal agencies in addition to the statutory, regulatory 

and procedural complexities inherent in the calculation of payments. In many instances the information supplied by 

the employing agency is incomplete or inaccurate, thereby increasing the risk of IP. Additionally, the operational 

program goal to process a large number of payments within 14 days from receipt of claim, coupled with strained 

resources that are required to resolve discrepancies add to the increased risk of IP. No automated mechanism 

exists to determine or validate the accuracy of the information reported by the employing agency. As with many 

programs, the FECA program faces data-sharing barriers. The “Other Party” category reflects medical-billing errors 

that did not meet coverage, coding and reimbursement billing requirements. DFEC faces the ongoing challenge of 

efficiently providing automated medical authorization and bill payment services within program guidelines, but 

the FECA medical IP rate of 1.35% in FY 2017 was a significant decrease from the 5.03% error rate from last year’s 

IP audit.

Fraud Restitution: The “Other” error category reflects OIG fraud restitution issues. The extent of fraudulent 

payments is based on actual restitution ordered and therefore did not reflect an estimate of undetected fraud. The 

Department’s methodology for estimating IP in the FECA program may be found at: 

http://www.dol.gov/ocfo/media/reports/20141104IPMETHODOLOGY.pdf

Barriers to Implementation of OIG Recommendations: The OIG continues to raise concerns with the validity of the 

Department’s published IP estimate for the FECA program. 

The FECA program excludes initial payments made in the first 90 days of the compensation claim from its universe 

and compensation payments made on non-imaged claims initiated prior to November 2000. The reliance on 

information that can only be authenticated by the employing agency make any compensation payment susceptible 

to IP, especially those payments made early in the life of the claim. DFEC also believes that that pursuing 

information on non-imaged cases initiated prior to November 2000 would not be cost effective or prudent since 

these paper files are disbursed across 12 district offices, and the files would have to be shipped to a central location 

for review, incurring both cost and risk if the files were lost. As noted in the Department’s response to the OIG’s 

report, this methodology was approved by OMB and consistent with the Office of Personnel Management’s (OPM) 

estimation methodology. OWCP believes that including these marginal population segments would not create a 
Other Information

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180 United States Department of Labor

statistically significant difference in its estimation, nor would it be cost effective. However, the Department is 

reevaluating the FECA IP Estimation Methodology with regard to the practice of excluding these subsets of cases, 

and the FECA program is currently conducting detailed analysis to determine the full effect of those exclusions on 

its estimate.

V. ACCOUNTABILITY

The Department has taken extensive measures to ensure that managers, accountable officers (including agency 

heads), programs, and states and localities are held accountable for reducing and recapturing IPs. These measures 

are designed to hold the appropriate personnel accountable for meeting applicable IP reduction targets and 

establishing and maintaining sufficient internal controls to effectively manage IP risk and promptly detect and 

recapture any IPs that are made. They vary by program and are described in detail in the program-specific 

narratives below.

UI Program:

DOL’s Employment and Training Administration (ETA) is responsible for Federal oversight of state UI programs, 

including oversight of state activities to reduce and recover improper UI benefit payments. ETA has taken and 

continues to take the steps discussed below to hold Federal managers accountable for reduction and recovery of 

improper UI payments by states. SWAs administer the UI program and set operational priorities within the 

resources available. ETA has established a robust set of performance measures used to evaluate the states’ overall 

operational performance. States not meeting the criteria set for these measures are expected to submit corrective 

action plans as part of their annual State Quality Service Plan submission.

In response to the level of IP in the UI program, ETA developed and implemented an aggressive and ever evolving

Strategic Plan to address several root causes of IP which were described in detail Section I: Payment Reporting –

Root Causes: UI, above. ETA continues to focus on the following integrity related activities and ensures the annual 

performance standards for managers include the completion of significant milestones for the projects listed below.

• As part of their SQSP, states are required to prepare an Integrity Action Plan. The plan must identify the 

state officer(s) accountable for reducing IP, summarize the state’s assessment of whether it has the internal 

controls, human capital, and information systems and other infrastructure needed to reduce IP to minimal 

cost-effective levels, and identify any statutory or regulatory barriers which may limit the agency’s 

corrective actions in reducing IP. Additionally, the plan must discuss the root causes of IP and present the 

state’s strategies to address these causes.

• The UI Integrity Center uses funding provided by ETA to conduct evaluations of promising program integrity 

practices. For example, the Integrity Center studied the results of seven Integrity Center-funded pilot 

projects to implement innovative strategies that prevent and detect IP. The results of these evaluations are 

provided to all states through the UI Integrity Center’s Digital Library.

• ETA requires states to operate the BAM survey to measure and report the percentage, dollar amount, and 

reasons for IP. Data are derived from investigations of a statistically valid sample of payments using 

federally prescribed procedures. ETA reviews this data for validity, analyzes the data for each state, and 

makes the data available publicly on ETA’s Office of Unemployment Insurance (OUI) website. Data review, 

analysis and publication are included in the performance plan of the Administrator of ETA’s OUI and in the 

elements and standards of numerous staff in the office.

• ETA has implemented a core performance measure for detection of overpayments by state UI programs. 

States that fail to meet the performance criterion submit corrective action plans. Analysis of state 

performance and monitoring of states’ corrective actions continue to be evaluation factors in OUI 

managers’ performance plans.

• ETA has developed additional performance measures that require states to:
Payment Integrity

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FY 2017 Agency Financial Report 181

o Meet the less than 10% IP rate criterion included in IPERA; and

o Meet a minimum UI overpayment recovery rate target.

• ETA has promoted and continues to promote cost effective methods for states to prevent, detect, and 

recover improper UI benefit payments. Development, delivery, and/or successful implementation of these 

initiatives by states have been and continue to be factors on which the OUI administrator and managers are 

evaluated. These initiatives were described earlier in this document in Section I: Payment Reporting – Root 

Causes: UI, above.

As discussed in Section I: Payment Reporting – Root Causes: UI above, as part of its monitoring and oversight 

responsibilities of each state's UI operations, DOL takes an active role in facilitating and promoting strategies to 

reduce IP and meet the payment accuracy and recovery targets required by IPERA. However, it should be noted 

that these strategies require the cooperation and implementation by individual states, including in some cases 

changes to state laws and regulations. DOL has no explicit authority on how states establish priorities in 

administering their UI programs and, therefore, can only make recommendations and provide technical assistance 

in the use of these strategies.

FECA Program:

The FECA improper payment rate estimate includes a fraud component. For the purposes of rate calculation, OWCP 

considers fraudulent payments to be those payments for which fraud has been admitted or proven in the judicial 

system. A fraudulent payment rate was determined by averaging the court-ordered restitution awarded to FECA as 

the result of fraud across a three year period. Using this process, the overall IP rate, less fraud, was 1.69%. Charge 

Back Year 2017 fraud estimation was $10.3 million1[

, which translates to a rate of 0.37%. This represents an 

increase of 0.01% from last year’s IP audit. OWCP attributes this increase to above average court-ordered 

restitutions awarded to the Department in Charge Back Year 2016, totaling over $27 million. This included nearly 

$18 million in restitution for a single conviction. As noted above, the three-year base restitution totals averaged 

$10.3 million.

As noted in Section VII. Sampling and Estimation: FECA, the FECA estimate of fraudulent payments are based on 

actual restitution amounts ordered and therefore did not reflect an estimate of undetected fraud. In the 

Congressional Budget Office's (CBO) report entitled "How Initiatives to Reduce Fraud in Federal Health Care 

Programs Affect the Budget" (10/2014), CBO found “...although fraud that has been successfully prosecuted can be 

quantified, there is no reliable method to estimate the amount of fraud that goes undetected...". Given the 

unreliability of such an estimate, OWCP has concluded that the most appropriate use of limited resources is to 

focus on understanding and preventing these types of IPs. The FECA program has taken significant steps to enhance 

early detection of potential fraud. In FY 2018, the FECA program’s Program Integrity Unit (PIU) was realigned in 

order to detect and prevent fraud in the FECA program. The PIU now uses structured data analytics methods to 

review spending patterns on a quarterly basis so that it can spot trends early and react more quickly to anomalous 

spending patterns. With regard to medical outlays, DFEC primarily uses a “year to year” comparison methodology, 

which projects spending for the current chargeback year based on actual year-to-date spending, and compares that 

number to the prior chargeback year. Using this methodology, DFEC targets specific providers for review based on a 

combination of total dollars paid in conjunction with the percentage increase in the outlays year over year; new 

providers with no payments in the prior year but rapidly escalating payments in the current year are also 

specifically targeted. If DFEC finds evidence of behavior that could be construed as deceptive, misleading, or unfair, 

a referral is sent to DOL OIG for further review.

The FECA program has IT infrastructure, processes, and staff responsible for reducing and establishing and 

maintaining sufficient internal controls towards the reduction of IPs. The FECA program incorporates internal 

controls and responsibilities into the annual performance standards of managers and subordinate staff to ensure 

focus on understanding and preventing IPs. The FECA program continues to implement effective practices to 

 1 As noted above in the FECA Program Improper Payment Root Cause Categories table, under the “Other” root cause 

category.
Other Information

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182 United States Department of Labor

identify and address root causes of IPs. These practices include instituting periodic claims reviews; allowing 

agencies and claimants access to its data systems that contain compensation and medical-billing payment 

information; dedicating full-time staff to investigating potential fraud cases and processing any resulting IP due to 

the government.

VI. AGENCY INFORMATION SYSTEMS AND OTHER INFRASTRUCTURE

UI Program:

States have internal controls, processes, programs, and staff in place throughout all operations of the UI program 

dedicated to protection from internal threats and vulnerabilities. These threats and vulnerabilities include physical 

damage and harm to staff and property, misuse of administrative funds and assets by agency staff, and misuse of UI 

funds by agency staff. It is incumbent upon the state agencies to have a series of protections in place addressing 

controls such as the granting of systems access, developing and upholding security policies and procedures, the 

proper configuration of hardware and software, basic physical safeguards, backup tests and disaster recovery 

provisions, regular audits, ongoing employee training, etc.

While state internal security programs are intended to identify and eliminate system vulnerabilities, the risk 

remains of losses from the issuance of improper UI benefit payments and misuse of administrative funds due to 

fraud, waste, and abuse. States are expected to review these controls and update them regularly to eliminate new 

threats and vulnerabilities as technology and business practices in the administration of the UI program evolve.

Although integrity is the responsibility of all agency staff, the states have dedicated staff conducting BPC activities 

to prevent, detect, and recover IP. These staffs work closely with agency management to ensure sufficient controls 

are in place to prevent IP, conduct complex fraud investigations, and operate the activities required to recover IP.

DOL is also engaged with the states to monitor activity and provide technical assistance to ensure that states are 

able to utilize available integrity tools. For example, as a result of DOL monitoring, states modified computer 

matching procedures to improve the productivity of NDNH as a resource to detect IP. Additionally, DOL has worked 

closely with state agencies to develop the information systems and infrastructure to support SIDES and to access 

TOP for UI overpayment recovery.

State UI benefit and tax IT systems vary in terms of performance capacities, capabilities, and adaptability to new UI 

programs requirements and integrity strategies. Many states continue to struggle with antiquated IT infrastructure, 

making it difficult to implement many integrity solutions. During the past decade, DOL has provided states with 

supplemental funding to implement strategies and technology-based infrastructure investments that will help the 

states prevent, detect, and recover UI overpayments. These investments result in staff cost savings for integrityrelated activities, increased dollar amounts of overpayments recovered, and prevention of future overpayments. As 

part of these supplemental funding grants to states, between FY 2009 and FY 2016 DOL provided approximately 

$376 million to state consortia to address outdated IT system infrastructures. These investments are necessary to 

improve UI integrity. Currently, there are five consortia projects under way involving 12 states.

FECA Program:

OWCP-DFEC is a claims processing organization adjudicating workers’ compensation claims for all Federal 

employees and certain non-Federal employees specifically covered under FECA. OWCP utilizes the Integrated 

Federal Employees Compensation System (iFECS) to administer the FECA program. iFECS is a major application that 

provides a case management system to support DFEC core business functions in administering FECA. iFECS includes 

the iFECS system and three sub-components, the Agency Query System (AQS), the Claimant Query System (CQS) 

and the Employees' Compensation Operations and Management Portal (ECOMP). iFECS is a three-tier application 

that was established to provide FECA with an automated case management system. iFECS provides data processing, 
Payment Integrity

(Unaudited)

FY 2017 Agency Financial Report 183

program management, financial management, and decision support functionalities to authorized users in DFEC. 

iFECS maintains an automated record of all claims filed, the adjudicatory status of those claims and benefits paid 

and denied. Data on entitlement and benefits payment status maintained on iFECS is available in accordance with 

the Privacy Act to authorized claimants, authorized representatives, and authorized user organizations verbally via 

telephone and in paper/electronic formats.

VII. SAMPLING AND ESTIMATION

Susceptible to Significant Improper Payments: Two DOL Programs, the Unemployment Insurance (UI) and the 

Federal Employees’ Compensation Act (FECA) benefit programs, are required to provide estimates based on the 

susceptibility threshold in statute:

• Either potential estimated IP greater than 1.5% of outlays and greater than $10 million, or

• Potential estimated IP of more than $100 million, regardless of percentage.

Payment integrity information/plans for UI and FECA can be found at:

• UI – http://www.oui.doleta.gov/unemploy/improp_pay.asp

• FECA – http://www.dol.gov/ocfo/media/reports/20141104IPMETHODOLOGY.pdf

In consultation with OMB and the DOL OIG, the Department developed statistical sampling processes conducted to 

estimate the IP rate for each program identified as being susceptible to significant IPs: UI and FECA. These 

methodologies vary by program and are described in detail in the program-specific narratives below.

UI Program:

UI Improper payment estimates are based on results of the BAM survey, described in detail below, which examines 

a nationally statistically valid sample of payments from the State UI, UCFE, and UCX programs (the three largest 

permanently authorized unemployment compensation (UC) programs), but does not include the episodic EUC and 

EB programs. For purposes of reporting payment accuracy data, the estimated IP rates are assumed to be 

generalizable to the EUC and EB programs, although those programs are not directly measured by the BAM survey.

BAM investigators in each state conduct comprehensive audits for randomly-selected weekly samples of paid and 

denied claims. The population includes paid and denied claims under the State UI, UCFE, and UCX programs.

UI overpayment and underpayment rates for FY 2017 are shown in the DOL Programs Required to Submit 

Improper Payments Estimates table above, and are for the period July 1, 2016 to June 30, 2017. Data are reported 

for this period rather than the fiscal year due to the 120 day period provided to state BAM investigators to 

complete claim audits following the end of the BAM IPIA reporting year. During this period, state agencies 

completed audits for 24,566 cases completed (data are based on a completion rate of 99.56%). Based on these 

results, the 95% confidence interval of the estimated IP rate is plus or minus 0.65%. For the FY 2017 reporting, the 

estimated UI Improper Payment rate consisted of all overpayments and underpayments.

FECA Program:

OWCP consulted with OCFO to develop a sampling methodology and approach to improper payment calculation for 

the FECA program. OWCP also consulted with the DOL OIG to determine a methodology for estimating fraud that 

could be added to the improper payment rate estimate. Ultimately this two part approach was approved by OMB in 

FY 2015.

The improper payment rate component for non-fraudulent FECA payments was derived by random sampling with 

replacement. The sample sizes used (504 compensation payments and 504 medical payments, for a total of 1008 

payments) were selected and validated by the OWCP statistician to assure a 90% confidence interval with a 

precision of 2.5%. Each sampled payment was closely examined in accordance with the law and program standards 
Other Information

(Unaudited)

184 United States Department of Labor

to determine whether or not it was proper. The absolute value of any IP found in the sample were totaled and 

projected to a dollar amount that represents the improper payment rate for the entire population.

The extent of fraudulent payments is based on actual restitution amounts and therefore did not reflect an estimate 

of undetected fraud. In the Congressional Budget Office's (CBO) report entitled "How Initiatives to Reduce Fraud in 

Federal Health Care Programs Affect the Budget" (10/2014), CBO found “...although fraud that has been 

successfully prosecuted can be quantified, there is no reliable method to estimate the amount of fraud that goes 

undetected...". Given the unreliability of such an estimate, OWCP has concluded that the most appropriate use of 

limited resources is to understand and prevent these types of IPs.

The OIG continues to raise concerns with the validity of the Department’s published improper payment estimate 

for the FECA program. These concerns are related to the FECA program’s exclusion of two subsets of cases in its 

sampling methodology: initial payments made in the first 90 days of the compensation claim, and compensation 

payments made on non-imaged claims initiated prior to November 2000. As noted in the Department’s response to 

the OIG’s report, this methodology was approved by OMB. This methodology is also consistent with the Office of 

Personnel Management’s (OPM) estimation methodology. OWCP’s initial review indicated that including these 

marginal population segments would not create a statistically significant difference in its estimation, nor would it 

be cost effective. 

In response to the OIG’s concerns, OWCP has agreed to reevaluate its FECA Improper Payments Estimation 

Methodology and is conducting a detailed analysis to determine the full effect of those exclusions on its 

estimate. This analysis will inform the methodology OWCP uses in FY 2018 or will provide further information on 

the effect of excluding these case types.
Other Information

(Unaudited)

FY 2017 Agency Financial Report 185

Fraud Reduction Report

Maintaining fiscal integrity is a fundamental responsibility for all government agencies. The Department of Labor 

(DOL) is committed to preventing, detecting, and mitigating fraud risk in all its forms, and to prosecuting fraud 

when it is discovered. DOL is committed to implementing the fraud risk principle as set out in the Standards for 

Internal Control in the Federal Government, and to improving mitigation strategies as instructed in the Fraud 

Reduction and Data Analytics Act (FRDAA) of 2015 (Pub. L. 114-186, 31 U.S.C. 3321 note). The Department has 

continuous and multilayered efforts to improve controls to prevent, detect, and prosecute fraud and attempted 

fraud.

DOL policy states that all DOL employees are responsible for promptly reporting information that they reasonably 

believe reflects fraud, waste, abuse, misconduct, or other wrongdoing. All DOL agency heads, supervisors, and 

managers are responsible for ensuring that allegations of fraud, waste, abuse, misconduct, or other wrongdoing are 

reported promptly to the Office of Inspector General (OIG). The DOL OIG is responsible for receiving all allegations 

of alleged fraud, waste, abuse, misconduct, or other wrongdoing, determining whether such allegations have audit 

or investigative merit, and conducting or arranging for audits or investigations when appropriate. The OIG may 

conduct its own audit or investigation, refer the matter to another law enforcement or other federal agency, or 

refer the matter to the Secretary of Labor or to a program agency within DOL. If a referral is made to the Secretary 

of Labor or to a program agency within DOL, the OIG may, at any time, and in the sole discretion of the OIG, 

reassume responsibility for such audit or investigation. 

Over the course of FY 2017, major DOL efforts to ascertain fraud risk included conducting the Triennial IPERA 

Review and the annual Entity Level Controls (ELC) Survey of agency management and personnel to review financial

and internal controls risks. The FY 2017 ELC survey, conducted with agencies and identified programs across the 

Department, asked a number of questions that focused on assessing fraud at an agency and program level. Results 

of these activities indicate that DOL has strong controls in place to manage fraud risk including established 

procedures to prevent and detect fraud and clear separation of duties. DOL’s OMB Circular A-123 internal control 

process identified key controls and practices to mitigate and detect fraud in areas such as grants, procurement, 

beneficiary payments, payroll, and purchase and travel cards. In addition, DOL has participated in the FRDAA 

Working Group to improve sharing and development of data analytics techniques, financial and administrative 

controls, and other best practices and techniques for detecting, preventing, and responding to fraud and other 

improper payments. Under OMB Circular A-123, the Unemployment Insurance (UI) and Federal Employees' 

Compensation Act (FECA) programs have been deemed susceptible to improper payments and therefore report 

separate fraud rates. Each program has a mature fraud detection set-up with prosecution efforts implemented. 

Once a potential fraud case is identified, it is shared with OIG for further review. Also, both programs have 

instituted program integrity units and data analytics teams which focus on areas determined to be at greater risk to 

fraud. Detailed information can be found in the Payment Integrity reporting section of this AFR. FECA fraud 

estimation is based on properly adjudicated restitution orders. Recovered restitution orders equaled $1.62 million 

in FY 2017. UI fraud estimation is based on fraud established by a proper adjudicating authority (i.e. the courts).

The level of “established fraud” in the UI program was $3.39 million for FY 2017.

Moving forward, the Department is committed to expanding our fraud reduction efforts. Plans include mining data 

for trends, further testing of key controls that focus on fraud, and working with DOL partners to help identify and 

curb fraud at the Department. 
Other Information

(Unaudited)

186 United States Department of Labor
Other Information

(Unaudited)

FY 2017 Agency Financial Report 187

Reduce the Footprint

Consistent with Section 3 of OMB Memorandum M-12-12, Promoting Efficient Spending to Support Agency 

Operations and OMB Management Procedures Memorandum 2013-02, the “Reduce the Footprint” (RTF) policy 

implementing guidance, all Chief Financial Officer Act entities must set annual targets to reduce the total square 

footage of their domestic office and warehouse inventory compared to the FY 2015 baseline.

Per Section II.5.8 of OMB Circular A-136, agencies are required to report cost data along with the most recent 

square footage information submitted to the Federal Real Property Profile in their annual AFR. 

Actions to Reduce the Footprint

Overall, the space utilization for DOL personnel in GSA-provided office space is 264.4 square feet per person, and 

represents an opportunity for DOL to achieve both rent savings and a reduction of the total office footprint 

nationwide. As GSA leases commercial space on a competitive basis and sets the rent for federal buildings, DOL has 

little control of the rent and maintenance cost per square foot for each office location. 

Using the initial President’s Management Agenda Real Property Benchmarking Metrics, DOL has identified potential 

space consolidations and co-locations that can result in significant reductions to the DOL office footprint and 

achieve rent savings for the agencies. 

Table RTF 1 reflects the total office and warehouse square footage associated with DOL’s assets subject to the 

Reduce the Footprint policy, as identified by Data Element #3 from Federal Real Property Council’s “Guidance for 

Real Property Inventory Reporting” from the latest available reporting year (FY 2016), and compares it to the FY 

2015 Freeze the Footprint baseline (as assigned by GSA)11. The reported square footage totals align with agency

totals confirmed by GSA, and are based on data from the Federal Real Property Profile and GSA’s Occupancy 

Agreement Database. 

Table RTF 1: Reduce the Footprint Baseline Comparison

FY 2015 Baseline FY 2016 Change

(FY 2015 Baseline – 2016)

Square Footage (SF in millions) 6.93 6.98 (0.05)

NOTE: The square footage increase from FY 2015 to FY 2016 was driven by a number a number of small additions, primarily at Job 

Corps Centers. 

Table RTF 2 reflects the annual operating costs, as reported in the most recent Federal Real Property Profile 

submittal for owned and direct lease facilities (direct lease facilities does not include GSA occupancy agreements) 

that are subject to the Reduce the Footprint policy, as identified by Data Element #3 from Federal Real Property 

Council’s “Guidance for Real Property Inventory Reporting” as reported in the most recent Federal Real Property 

Profile submittal12. The cost data reported by DOL is based directly on data reported into the latest available 

Federal Real Property Profile database. 

Table RTF 2: Operation and Maintenance Costs – Owned and Direct Lease Buildings 

FY 2015 

Reported Cost

FY 2016 Change

(FY 2015 – 2016)

Operation and Maintenance Costs ($ 

in millions) $8.8213 $9.47 ($0.65)

 11 See GSA, Office of Government-wide Policy, Federal Real Property Council, 2016 Guidance for Real Property Inventory Reporting (May 16, 2016) p.6.

12 See GSA, Office of Government-wide Policy, Federal Real Property Council, 2016 Guidance for Real Property Inventory Reporting (May 16, 2016) p.6.

13 In the FY 2016 AFR, DOL reported FY 2015 operation and maintenance costs of $7.8 million. This figure only included costs associated with owned facilities, excluding costs of leased facilities.
Other Information

(Unaudited)

188 United States Department of Labor

DOL is continuing to implement a Department-wide strategy to eliminate non-mission dependent space, improve 

utilization rates, and reduce the costs of the properties. DOL has developed a process for internal reviews and 

tracking of all office increases, including monthly meetings with DOL regional personnel and reviews of Request for 

Space submissions.

Co-location, where appropriate, places multiple offices in one location and allows the Department to more 

effectively manage its real property assets. The primary goals are to co-locate DOL facilities, close small offices 

where feasible, and implement the DOL standard of 150 usable sq. ft. per employee. This strategy has resulted in 

significant savings and streamlined the DOL portfolio. 

When DOL identifies an underutilized building or block of space in its inventory and there is no longer a need for 

the asset, DOL will dispose of it to the extent it is cost effective to do so, based upon life-cycle cost analysis. In the 

case of GSA-assigned leased space, DOL will examine all expiring leases and attempt to relocate to more efficient 

quarters in order to eliminate underutilized space from its inventory. For owned/direct-leased assets (primarily Job 

Corps Centers), disposal is a unique challenge given the campus-like nature of the Centers. 

Specific strategies to reduce the FY 2015 baseline include implementing the renegotiated collective bargaining 

agreements as well as the 2017 Department of Labor Manual Series (DLMS) Chapter 2-400 - DOL Space 

Management to reduce per person square footage, increasing telework, and introducing hoteling, all designed to 

increase space use efficiency. DOL is also participating with GSA in Consolidated Portfolio Reviews in the Chicago 

and National Capital Regions and will work closely with GSA in reviewing office space utilization nationwide with 

DOL agencies to identify opportunities to reduce space and co-locate offices. 
(Unaudited)

FY 2017 Agency Financial Report 189

Civil Monetary Penalty Inflation Adjustment

Table CMP 1 below describes the Department’s current civil monetary penalties, their authorities, year enacted, latest year of adjustments, current 

penalty level amounts, and additional details (81 FR 43449, July 1, 2016, as amended at 82 FR 5373-5387 (January 18, 2017)), and 82 FR 14147-14149 

(March 17, 2017).

Bureau

Name

Statutory 

Authority Penalty (Name and Description) Year Enacted

Latest Year 

of 

Adjustment 

(via Statute 

or 

Regulation)

Current Penalty 

Level 

($ Amount or 

Range)

Location for Penalty 

Update Details 

EBSA

29 U.S.C. 

§1059(b); 29 

CFR 2575.2(a)

Employee Retirement Income Security Act of 1974 

(ERISA), as amended 

Section 209(b) – Failure to furnish reports (e.g., 

pension benefit statements) to certain former 

participants and beneficiaries or maintain records.

1974 2016

$28 per 

employee per 

failure.

https://www.ecfr.gov/

82 FR 5373,

5384-5385

(January 18, 2017)

EBSA

29 U.S.C. 1132 

(c)(2); 29 CFR 

2575.2(b)

Employee Retirement Income Security Act of 1974 

(ERISA), as amended 

Section 502(c)(2) – Penalty for failure/refusal to 

properly file plan annual report; and failure of a 

multiemployer plan to certify endangered or 

critical status under §305(b)(3)(C) treated as 

failure to file annual report.

1987 2017 Up to $2,097 per 

day per failure.

https://www.ecfr.gov/

82 FR 5373,

5384-5385

(January 18, 2017)

EBSA

29 U.S.C. 

§1132(c)(4); 29 

CFR 2575.2(c)

Employee Retirement Income Security Act of 1974 

(ERISA), as amended 

Section 502(c)(4) – Failure to disclose certain 

documents upon request under ERISA 101(k) and 

(l); failure to furnish notices under 101(j) and 

514(e)(3) - each statutory recipient a separate 

violation.

1993 2017 Up to $1,659 per 

day per failure.

https://www.ecfr.gov/

82 FR 5373,

5384-5385

(January 18, 2017)
Other Information

(Unaudited)

190 United States Department of Labor

Bureau

Name

Statutory 

Authority Penalty (Name and Description) Year Enacted

Latest Year 

of 

Adjustment 

(via Statute 

or 

Regulation)

Current Penalty 

Level 

($ Amount or 

Range)

Location for Penalty 

Update Details 

EBSA

29 U.S.C. 

§1132(c)(5); 29 

CFR 2575.2(d)

Employee Retirement Income Security Act of 1974 

(ERISA), as amended 

Section 502(c)(5) – Failure to file annual report for 

Multiple Employer Welfare Arrangements 

(MEWAs).

1996 2017 Up to $1,527 per 

day per failure.

https://www.ecfr.gov/

82 FR 5373,

5384-5385

(January 18, 2017)

EBSA

29 U.S.C. 

§1132(c)(6); 29 

CFR 2575.2(e)

Employee Retirement Income Security Act of 1974 

(ERISA), as amended 

Section 502(c)(6) – Failure to provide Secretary of 

Labor requested documentation.

1997 2017

Up to $149 per 

day not to 

exceed $1,496 

per request.

https://www.ecfr.gov/

82 FR 5373,

5384-5385

(January 18, 2017)

EBSA

29 U.S.C. 

§1132(c)(7); 29 

CFR 2575.2(f)

Employee Retirement Income Security Act of 1974 

(ERISA), as amended 

Section 502(c)(7) – Failure to provide notices of 

blackout periods and of right to divest employer 

securities.

2002 2017 Up to $133 per 

day per failure.

https://www.ecfr.gov/

82 FR 5373,

5384-5385

(January 18, 2017)

EBSA

29 U.S.C. 

§1132(c)(8); 29 

CFR 2575.2(g)

Employee Retirement Income Security Act of 1974 

(ERISA), as amended 

Section 502(c)(8) – Per each failure by an 

endangered status multiemployer plan to adopt a 

funding improvement plan or meet benchmarks; 

failure of a critical status multiemployer plan to 

adopt a rehabilitation plan.

2006 2017 Up to $1,317 per 

day per failure.

https://www.ecfr.gov/

82 FR 5373,

5384-5385

(January 18, 2017)
Civil Monetary Penalty Inflation Adjustment

(Unaudited)

FY 2017 Agency Financial Report 191

Bureau

Name

Statutory 

Authority Penalty (Name and Description) Year Enacted

Latest Year 

of 

Adjustment 

(via Statute 

or 

Regulation)

Current Penalty 

Level 

($ Amount or 

Range)

Location for Penalty 

Update Details 

EBSA

29 U.S.C. 

§1132(c)(9)(A); 

29 CFR 

2575.2(h)

Employee Retirement Income Security Act of 1974 

(ERISA), as amended 

Section 502(c)(9)(A) – Failure by an employer to 

inform employees of CHIP coverage opportunities 

under Section 701(f)(3)(B)(i)(l) – each employee a 

separate violation.

2009 2017 Up to $112 per 

day per failure.

https://www.ecfr.gov/

82 FR 5373,

5384-5385

(January 18, 2017)

EBSA

29 U.S.C. 

§1132(c)(9)(B); 

29 CFR 2575.2(i)

Employee Retirement Income Security Act of 1974 

(ERISA), as amended 

Section 502(c)(9)(B) – Failure by a plan to timely 

provide to any State information required to be 

disclosed under Section 701(f)(3)(B)(ii), as added 

by CHIP regarding coverage coordination – each 

participant/beneficiary a separate violation.

2009 2017 Up to $112 per 

day per failure.

https://www.ecfr.gov/

82 FR 5373,

5384-5385

(January 18, 2017)

EBSA

29 U.S.C. 

§1132(c)(10) 

(B)(i); 29 CFR 

2575.2(j)(1)

Employee Retirement Income Security Act of 1974 

(ERISA), as amended 

Section 502(c)(10)(B)(i) – Failure by any plan 

sponsor of group health plan, or any health 

insurance issuer offering health insurance 

coverage in connection with the plan, to meet the 

requirements of Sections 702(a)(1)(F),(b)(3),(c) or 

(d); or Section 701; or Section 702(b) (1) with 

respect to genetic information.

2008 2017

$112 per day per 

participant and 

beneficiary 

during 

noncompliance 

period.

https://www.ecfr.gov/

82 FR 5373,

5384-5385

(January 18, 2017)
Other Information

(Unaudited)

192 United States Department of Labor

Bureau

Name

Statutory 

Authority Penalty (Name and Description) Year Enacted

Latest Year 

of 

Adjustment 

(via Statute 

or 

Regulation)

Current Penalty 

Level 

($ Amount or 

Range)

Location for Penalty 

Update Details 

EBSA

29 U.S.C. 

§1132(c)(10) 

(C)(i); 29 CFR 

2575.2(j)(2)

Employee Retirement Income Security Act of 1974 

(ERISA), as amended 

Section 502(c)(10)(C)(i) – Minimum penalty for 

uncorrected de minimis violations.

2008 2017

Minimum 

penalty of $2,790 

per participant or 

beneficiary for de 

minimis failures 

not corrected 

prior to notice 

from Department 

of Labor.

https://www.ecfr.gov/

82 FR 5373,

5384-5385

(January 18, 2017)

EBSA

29 U.S.C. 

§1132(c)(10) 

(C)(ii); 29 CFR 

2575.2(j)(3)

Employee Retirement Income Security Act of 1974 

(ERISA), as amended 

Section 502(c)(10)(C)(ii) – Minimum penalty for 

uncorrected violations that are not de minimis.

2008 2017

Minimum 

penalty of 

$16,742 per 

participant or 

beneficiary for 

non- de minimis 

failures not 

corrected prior 

to notice from 

Department of 

Labor.

https://www.ecfr.gov/

82 FR 5373,

5384-5385

(January 18, 2017)

EBSA

29 U.S.C. 

§1132(c)(10) 

(D)(iii); 29 CFR 

2575.2(j)(4)

Employee Retirement Income Security Act of 1974 

(ERISA), as amended 

Section 502(c)(10)(D)(iii) – Unintentional failure

maximum.

2008 2017

Maximum of 

$558,078 for 

non-intentional 

failures.

https://www.ecfr.gov/

82 FR 5373,

5384-5385

(January 18, 2017)

EBSA

29 U.S.C. 

§1132(c)(12); 29 

CFR 2575.2(k)

Employee Retirement Income Security Act of 1974 

(ERISA), as amended 

Section 502(c)(12) – Failure of a CSEC plan in 

restoration status to adopt a restoration plan.

2014 2017 Up to $102 per 

day per failure.

https://www.ecfr.gov/

82 FR 5373,

5384-5385

(January 18, 2017)
Civil Monetary Penalty Inflation Adjustment

(Unaudited)

FY 2017 Agency Financial Report 193

Bureau

Name

Statutory 

Authority Penalty (Name and Description) Year Enacted

Latest Year 

of 

Adjustment 

(via Statute 

or 

Regulation)

Current Penalty 

Level 

($ Amount or 

Range)

Location for Penalty 

Update Details 

EBSA

29 U.S.C. 

§1132(m); 29 

CFR 2575.2(l)

Employee Retirement Income Security Act of 1974 

(ERISA), as amended 

Section 502 (m) – Failure to make a proper 

distribution from a defined benefit plan under 

section 206(e) of ERISA.

1994 2017 Up to $16,169 

per distribution.

https://www.ecfr.gov/

82 FR 5373,

5384-5385

(January 18, 2017)

EBSA

29 U.S.C. 1185d

and 42 U.S.C.

300gg–15;29 

CFR 2590.715-

2715(e); 29 CFR 

2575.2(m)

Employee Retirement Income Security Act of 1974 

(ERISA), as amended 

Failure to provide Summary of Benefits and 

Coverage under PHS Act section 2715(f), as 

incorporated in ERISA section 715 and 29 CFR 

2590.715-2715(e).

2010 2017 Up to $1,105 per 

failure.

https://www.ecfr.gov/

82 FR 5373,

5384-5385

(January 18, 2017)

MSHA 30 CFR 100.3(a)

Federal Mine Safety and Health Act of 1977 (Mine 

Act) 

Regular assessment. General violation of a 

mandatory health or safety standard or violation 

of any other provision of the Mine Act, as 

amended.

1977 2017 Maximum 

$69,417.

https://www.ecfr.gov/

82 FR 5373

(January 18, 2017)

MSHA 30 CFR 100.3(g)

Federal Mine Safety and Health Act of 1977 (Mine 

Act) 

Regular assessment. Penalty conversion table, 

penalty conversion table which is used to convert 

the total penalty points to a dollar amount. 

1977 2017

Minimum $129, 

Maximum 

$69,417.

https://www.ecfr.gov/

82 FR 5373

(January 18, 2017)
Other Information

(Unaudited)

194 United States Department of Labor

Bureau

Name

Statutory 

Authority Penalty (Name and Description) Year Enacted

Latest Year 

of 

Adjustment 

(via Statute 

or 

Regulation)

Current Penalty 

Level 

($ Amount or 

Range)

Location for Penalty 

Update Details 

MSHA 30 CFR 100.4(a)

Federal Mine Safety and Health Act of 1977 (Mine 

Act) 

Unwarrantable failure and immediate notification. 

Penalty for any citation or order issued under 

section 104(d)(1) of the Mine Act. 

1977 2017 Minimum 

$2,314.

https://www.ecfr.gov/

82 FR 5373

(January 18, 2017)

MSHA 30 CFR 100.4(b)

Federal Mine Safety and Health Act of 1977 (Mine 

Act) 

Unwarrantable failure and immediate notification. 

Penalty for any order issued under section 104(d) 

(2) of the Mine Act.

1977 2017 Minimum 

$4,627.

https://www.ecfr.gov/

82 FR 5373

(January 18, 2017)

MSHA 30 CFR 100.4(c)

Federal Mine Safety and Health Act of 1977 (Mine 

Act) 

Unwarrantable failure and immediate notification. 

Penalty for failure to provide timely notification to 

the Secretary under section 103(j) of the Mine Act. 

2006 2017

Minimum 

$5,785,

Maximum 

$69,417.

https://www.ecfr.gov/

82 FR 5373

(January 18, 2017)

MSHA 30 CFR 100.5(c)

Federal Mine Safety and Health Act of 1977 (Mine 

Act) 

Determination of penalty amount; special 

assessment. Failure to correct a violation for which 

a citation has been issued under Section 104(a) of 

the Mine Act.

1977 2007 Maximum 

$7,520.

https://www.ecfr.gov/

82 FR 5373

(January 18, 2017)
Civil Monetary Penalty Inflation Adjustment

(Unaudited)

FY 2017 Agency Financial Report 195

Bureau

Name

Statutory 

Authority Penalty (Name and Description) Year Enacted

Latest Year 

of 

Adjustment 

(via Statute 

or 

Regulation)

Current Penalty 

Level 

($ Amount or 

Range)

Location for Penalty 

Update Details 

MSHA 30 CFR 100.5(d)

Federal Mine Safety and Health Act of 1977 (Mine 

Act) 

Determination of penalty amount; special 

assessment. Any miner who willfully violates the 

mandatory safety standards relating to smoking 

standards.

1977 2017 Maximum $318.

https://www.ecfr.gov/

82 FR 5373

(January 18, 2017)

MSHA 30 CFR 100.5(e)

Federal Mine Safety and Health Act of 1977 (Mine 

Act) 

Determination of penalty amount; special 

assessment. Violations that are deemed to be 

flagrant under section 110(b)(2) of the Mine Act. 

2006 2017 Maximum 

$254,530.

https://www.ecfr.gov/

82 FR 5373

(January 18, 2017)

OSHA 29 CFR 

1903.15(d)(1) 

Occupational Safety and Health Act of 1970 (OSH 

Act) 

Penalty per willful violation under section 17(a) of 

the Act, 29 U.S.C. 666(a).

1970 2017

Minimum 

$9,054,

Maximum 

$126,749.

https://www.ecfr.gov/

82 FR 5385-86

(January 18, 2017)

OSHA 29 CFR 

1903.15(d)(2)

Occupational Safety and Health Act of 1970 (OSH 

Act) 

Penalty per repeated violation under section 17(a) 

of the Act, 29 U.S.C. 666(a).

1970 2017 Maximum 

$126,749.

https://www.ecfr.gov/

82 FR 5385-86

(January 18, 2017)

OSHA 29 CFR 

1903.15(d)(3)

Occupational Safety and Health Act of 1970 (OSH 

Act) 

Penalty for a serious violation under section 17(b) 

of the Act, 29 U.S.C. 666(b).

1970 2017 Maximum 

$12,675.

https://www.ecfr.gov/

82 FR 5385-86

(January 18, 2017)
Other Information

(Unaudited)

196 United States Department of Labor

Bureau

Name

Statutory 

Authority Penalty (Name and Description) Year Enacted

Latest Year 

of 

Adjustment 

(via Statute 

or 

Regulation)

Current Penalty 

Level 

($ Amount or 

Range)

Location for Penalty 

Update Details 

OSHA 29 CFR 

1903.15(d)(4)

Occupational Safety and Health Act of 1970 (OSH

Act)

Penalty for an other-than-serious violation under 

section 17(c) of the Act, 29 U.S.C. 666(c).

1970 2017 Maximum 

$12,675.

https://www.ecfr.gov/

82 FR 5385-86

(January 18, 2017)

OSHA 29 CFR 

1903.15(d)(5)

Occupational Safety and Health Act of 1970 (OSH 

Act) 

Penalty for a failure to correct a violation under 

section 17(d) of the Act, 29 U.S.C. 666(d).

1970 2017 Maximum 

$12,675 per day.

https://www.ecfr.gov/

82 FR 5385-86

(January 18, 2017)

OSHA 29 CFR 

1903.15(d)(6)

Occupational Safety and Health Act of 1970 (OSH 

Act) 

Penalty for a posting requirement violation under 

section 17(i) of the Act, 29 U.S.C. 666(i).

1970 2017 Maximum 

$12,675.

https://www.ecfr.gov/

82 FR 5385-86

(January 18, 2017)

OWCP 20 CFR 702.204

Longshore and Harbor Workers’ Compensation Act

Failure to furnish and or falsifying. Knowingly and 

willfully fail or refuse to send any report required 

by §702.201, or knowingly or willfully make a false 

statement or misrepresentation in any report.

1927 2017 Maximum 

$22,957.

https://www.ecfr.gov/

82 FR 5386-87

(January 18, 2017)
Civil Monetary Penalty Inflation Adjustment

(Unaudited)

FY 2017 Agency Financial Report 197

Bureau

Name

Statutory 

Authority Penalty (Name and Description) Year Enacted

Latest Year 

of 

Adjustment 

(via Statute 

or 

Regulation)

Current Penalty 

Level 

($ Amount or 

Range)

Location for Penalty 

Update Details 

OWCP 20 CFR 702.236

Longshore and Harbor Workers’ Compensation Act

Failure to report termination of payments. Failure 

to notify the district director that the final 

payment of compensation has been made as 

required by §702.235.

1927 2017 Maximum $279.

https://www.ecfr.gov/

82 FR 5386-87

(January 18, 2017)

OWCP 20 CFR 

702.271(a)(2)

Longshore and Harbor Workers’ Compensation Act

Discrimination; against employees who bring 

proceedings, prohibition and penalty.

1927 2017

Minimum 

$2,296,

Maximum 

$11,478.

https://www.ecfr.gov/

82 FR 5386-87

(January 18, 2017)

OWCP 20 CFR 725.621 

(b)

Black Lung Benefits Act

Failure to report termination of payments.

1978 2017 Maximum 

$1,397.

https://www.ecfr.gov/

82 FR 5386-87

(January 18, 2017)

OWCP 20 CFR 

725.621(d)

Black Lung Benefits Act

Failure to file required reports. 1978 2017 Maximum 

$1,397.

https://www.ecfr.gov/

82 FR 5386-87

(January 18, 2017)

OWCP 20 CFR 726.300

Black Lung Benefits Act

Failure to secure payment of benefits. 1978 2017 Maximum 

$2,541.

82 FR 5386-87

(January 18, 2017)
Other Information

(Unaudited)

198 United States Department of Labor

Bureau

Name

Statutory 

Authority Penalty (Name and Description) Year Enacted

Latest Year 

of 

Adjustment 

(via Statute 

or 

Regulation)

Current Penalty 

Level 

($ Amount or 

Range)

Location for Penalty 

Update Details 

OWCP 20 CFR 

726.302(c)(2)(i)

Black Lung Benefits Act

Failure to secure payment of benefits for mines 

with fewer than 25 employees.

1978 2017 Minimum $136.

https://www.ecfr.gov/

82 FR 5386-87

(January 18, 2017)

OWCP 20 CFR 

726.302(c)(2)(i)

Black Lung Benefits Act

Failure to secure payment of benefits for mines 

with 25-50 employees.

1978 2017 Minimum $272.

https://www.ecfr.gov/

82 FR 5386-87

(January 18, 2017)

OWCP 20 CFR 

726.302(c)(2)(i)

Black Lung Benefits Act

Failure to secure payment of benefits for mines 

with 51-100 employees.

1978 2017 Minimum $409.

https://www.ecfr.gov/

82 FR 5386-87

(January 18, 2017)

OWCP 20 CFR 

726.302(c)(2)(i)

Black Lung Benefits Act

Failure to secure payment of benefits for mines 

with more than 100 employees.

1978 2017 Minimum $544.

https://www.ecfr.gov/

82 FR 5386-87

(January 18, 2017)
Civil Monetary Penalty Inflation Adjustment

(Unaudited)

FY 2017 Agency Financial Report 199

Bureau

Name

Statutory 

Authority Penalty (Name and Description) Year Enacted

Latest Year 

of 

Adjustment 

(via Statute 

or 

Regulation)

Current Penalty 

Level 

($ Amount or 

Range)

Location for Penalty 

Update Details 

OWCP 20 CFR 

726.302(c)(4)

Black Lung Benefits Act

Failure to secure payment of benefits after 10th 

day of notice.

1978 2017 Minimum $136.

https://www.ecfr.gov/

82 FR 5386-87

(January 18, 2017)

OWCP 20 CFR 

726.302(c)(5)

Black Lung Benefits Act

Failure to secure payment of benefits for repeat 

offenders.

1978 2017 Minimum $409.

https://www.ecfr.gov/

82 FR 5386-87

(January 18, 2017)

OWCP 20 CFR 

726.302(c)(6)

Black Lung Benefits Act

Failure to secure payment of benefits. 1978 2017 Maximum 

$2,795.

https://www.ecfr.gov/

82 FR 5386-87

(January 18, 2017)

WHD

40 U.S.C. 

3702(c); 29 CFR 

5.8(a) and 29 

CFR 5.5(b)(2)

Contract Work Hours and Safety Standards Act 

(CWHSSA)

Failure to pay laborers and mechanics at a rate 

not less than one and one-half times their basic 

rate of pay.

1962 2016 Maximum $25.

https://www.ecfr.gov/

82 FR 5386

(January 18, 2017)
Other Information

(Unaudited)

200 United States Department of Labor

Bureau

Name

Statutory 

Authority Penalty (Name and Description) Year Enacted

Latest Year 

of 

Adjustment 

(via Statute 

or 

Regulation)

Current Penalty 

Level 

($ Amount or 

Range)

Location for Penalty 

Update Details 

WHD

29 U.S.C. 

2005(a); 29 CFR 

801.42(a)

Employee Polygraph Protection Act (EPPA)

(1) Requiring, requesting, suggesting or causing an 

employee or prospective employee to take a lie 

detector test or using, accepting, referring to or 

inquiring about the results of any lie detector test 

of any employee or prospective employee, other 

than as provided in the Act or part 801.

(2) Taking an adverse action or discriminating in 

any manner against any employee or prospective 

employee on the basis of the employee's or 

prospective employee's refusal to take a lie 

detector test, other than as provided in the Act or 

part 801.

(3) Discriminating or retaliating against an 

employee or prospective employee for the 

exercise of any rights under the Act.

(4) Disclosing information obtained during a 

polygraph test, except as authorized by the Act or 

part 801.

(5) Failing to maintain the records required by the 

Act or part 801.

(6) Resisting, opposing, impeding, intimidating, or 

interfering with an official of the DOL during the 

performance of an investigation, inspection, or 

other law enforcement function under the Act or 

part 801.

(7) Violating any other provision of the Act or part 

801.

1988 2017 Maximum 

$20,111.

https://www.ecfr.gov/

82 FR 5386

(January 18, 2017)
Civil Monetary Penalty Inflation Adjustment

(Unaudited)

FY 2017 Agency Financial Report 201

Bureau

Name

Statutory 

Authority Penalty (Name and Description) Year Enacted

Latest Year 

of 

Adjustment 

(via Statute 

or 

Regulation)

Current Penalty 

Level 

($ Amount or 

Range)

Location for Penalty 

Update Details 

WHD

29 U.S.C. 

211(d); 29 CFR 

530.302 (a),(b)

Fair Labor Standards Act (FLSA) Homeworker

Violation of recordkeeping, monetary, certificate 

or other statutes, regulations or employer 

assurances.

1938 2017

Minimum $20,

Maximum 

$1,005.

https://www.ecfr.gov/

82 FR 5386

(January 18, 2017)

WHD

29 U.S.C. 

216(e)(1)(A)(i);

29 CFR 

579.1(a)(1)(i)(A);

29 CFR 

579.1(a)(1)(i)(B)

 Fair Labor Standards Act (FLSA) Child labor 

(1) Violation of child labor standards (sec 212 or 

213(c)).

1938 2017 Maximum 

$12,278.

https://www.ecfr.gov/

82 FR 5386

(January 18, 2017)

(2) Violation of child labor standards (sec 212 or 

213(c)) resulting in serious injury or death. 1938 2017 Maximum 

$55,808.

https://www.ecfr.gov/

82 FR 5386

(January 18, 2017)

(3) Willful or repeated violation of child labor 

standards (sec 212 or 213(c)) resulting in serious 

injury or death.

1938 2017 Maximum 

$111,616.

https://www.ecfr.gov/

82 FR 5386

(January 18, 2017)

WHD

29 U.S.C. 

216(e)(2); 29 

CFR 579.1(a)(2)

Fair Labor Standards Act (FLSA) Minimum Wage 

and Overtime 

Repeated or willful violation of section 206 or 207.

1938 2017 Maximum 

$1,925.

https://www.ecfr.gov/

82 FR 5386

(January 18, 2017)
Other Information

(Unaudited)

202 United States Department of Labor

Bureau

Name

Statutory 

Authority Penalty (Name and Description) Year Enacted

Latest Year 

of 

Adjustment 

(via Statute 

or 

Regulation)

Current Penalty 

Level 

($ Amount or 

Range)

Location for Penalty 

Update Details 

WHD

29 U.S.C. 

2619(b); 29 CFR 

825.300(a)(1)

Family & Medical Leave Act (FMLA) 

Willful violation of posting requirement.

1993 2017 Maximum $166.

https://www.ecfr.gov/

82 FR 5386

(January 18, 2017)

WHD

8 U.S.C. 

1288(c)(4)(E)(i); 

20 CFR 655.620 

(a)

Immigration & Nationality Act (D-1) 

Violation of the attestation or 20 CFR 655 subparts 

F or G related to utilizing alien crew for longshore 

activities in US ports.

1952 2017 Maximum 

$9,054.

https://www.ecfr.gov/

82 FR 5386

(January 18, 2017)
Civil Monetary Penalty Inflation Adjustment

(Unaudited)

FY 2017 Agency Financial Report 203

Bureau

Name

Statutory 

Authority Penalty (Name and Description) Year Enacted

Latest Year 

of 

Adjustment 

(via Statute 

or 

Regulation)

Current Penalty 

Level 

($ Amount or 

Range)

Location for Penalty 

Update Details 

WHD

8 U.S.C. 

1182(n)(2)(c)(i); 

20 CFR 

655.810(b)(1)

Immigration & Nationality Act (H-1B) 

(1) A violation pertaining to strike/lockout or 

displacement of US workers.

(2) A substantial violation pertaining to 

notification, labor condition application specificity, 

or recruitment of US workers.

(3) A misrepresentation of material fact on the 

labor condition application.

(4) An early-termination penalty paid by the 

employee.

(5) Payment by the employee of the additional 

filing fee.

(6) Violation of the requirements in 20 CFR 655 

subparts H and I or the provisions regarding public 

access where the violation impedes the ability of 

the Administrator to determine whether a 

violation of sections 212(n) or (t) of the INA has 

occurred or the ability of members of the public to 

have information needed to file a complaint or 

information regarding alleged violations of 

sections 212(n) or (t) of the INA.

1952 2017 Maximum 

$1,811.

https://www.ecfr.gov/

82 FR 5386

(January 18, 2017)
Other Information

(Unaudited)

204 United States Department of Labor

Bureau

Name

Statutory 

Authority Penalty (Name and Description) Year Enacted

Latest Year 

of 

Adjustment 

(via Statute 

or 

Regulation)

Current Penalty 

Level 

($ Amount or 

Range)

Location for Penalty 

Update Details 

WHD

8 U.S.C. 

1182(n)(2)(c)(ii); 

20 CFR 

655.810(b)(2)

Immigration & Nationality Act (H-1B) 

(1) A willful failure pertaining to wages/working 

conditions, strike/lockout, notification, labor 

condition application specificity, displacement 

(including placement of an H-1B nonimmigrant at 

a worksite where the other/secondary employer 

displaces a US worker), or recruitment.

(2) A willful misrepresentation of a material fact 

on the labor condition application; or 

(3) Discrimination against an employee.

1952 2017 Maximum 

$7,370.

https://www.ecfr.gov/

82 FR 5386

(January 18, 2017)

WHD

8 U.S.C. 

1182(n)(2)(c)(iii)

; 20 CFR 

655.810(b)(3)

Immigration & Nationality Act (H-1B) 

(1) A willful violation resulting in displacement of a 

US worker employed by the employer in the 

period beginning 90 days before and ending 90 

days after the filing of an H-1B petition in 

conjunction with:

 (i) A willful violation of the provisions pertaining 

to wages/working condition, strike/lockout, 

notification, labor condition application specificity, 

displacement, or recruitment; or

 (ii) A willful misrepresentation of a material fact 

on the labor condition application.

1952 2017 Maximum 

$51,588.

https://www.ecfr.gov/

82 FR 5386

(January 18, 2017)
Civil Monetary Penalty Inflation Adjustment

(Unaudited)

FY 2017 Agency Financial Report 205

Bureau

Name

Statutory 

Authority Penalty (Name and Description) Year Enacted

Latest Year 

of 

Adjustment 

(via Statute 

or 

Regulation)

Current Penalty 

Level 

($ Amount or 

Range)

Location for Penalty 

Update Details 

WHD

8 U.S.C. 

1188(g)(2); 29 

CFR 501.19(c)

Immigration & Nationality Act (H-2A) 

Violation of the work contract or a requirement of 

8 U.S.C. 1188, 20 CFR part 655 subpart B, or 29 

CFR part 501.

1952 2017 Maximum 

$1,658.

https://www.ecfr.gov/

82 FR 5386

(January 18, 2017)

WHD

8 U.S.C. 

1188(g)(2); 29 

CFR 501.19(c)(1)

 Immigration & Nationality Act (H-2A) 

Willful violation of the work contract or a 

requirement of 8 U.S.C. 1188, 20 CFR part 655 

subpart B, or 29 CFR part 501.

1952 2017 Maximum 

$5,581.

https://www.ecfr.gov/

82 FR 5386

(January 18, 2017)

WHD

8 U.S.C. 

1188(g)(2); 29 

CFR 501.19(c)(2)

Immigration & Nationality Act (H-2A) 

Violation of a housing or transportation safety 

and health provision of the work contract, or any 

obligation under 8 U.S.C. 1188, 20 CFR part 655 

subpart B, or 29 CFR part 501, that proximately 

causes the death or serious injury of any worker.

1952 2017 Maximum 

$55,263.

https://www.ecfr.gov/

82 FR 5386

(January 18, 2017)

WHD

8 U.S.C. 

1188(g)(2); 29 

CFR 501.19(c)(4)

Immigration & Nationality Act (H-2A) 

Repeat or willful violation of a housing or 

transportation safety and health provision of the 

work contract, or any obligation under 8 U.S.C. 

1188, 20 CFR part 655 subpart B, or 29 CFR part 

501, that proximately causes the death or serious 

injury of any worker.

1952 2017 Maximum 

$110,524.

https://www.ecfr.gov/

82 FR 5386

(January 18, 2017)
Other Information

(Unaudited)

206 United States Department of Labor

Bureau

Name

Statutory 

Authority Penalty (Name and Description) Year Enacted

Latest Year 

of 

Adjustment 

(via Statute 

or 

Regulation)

Current Penalty 

Level 

($ Amount or 

Range)

Location for Penalty 

Update Details 

WHD

8 U.S.C. 

1188(g)(2); 29 

CFR 501.19(d)

Immigration & Nationality Act (H-2A) 

Violation for failure to cooperate in an 

investigation.

1952 2017 Maximum 

$5,581.

https://www.ecfr.gov/

82 FR 5386

(January 18, 2017)

WHD

8 U.S.C. 

1188(g)(2); 29 

CFR 501.19(e)

Immigration & Nationality Act (H-2A) 

Violation for laying off or displacing any US worker 

employed in work or activities that are 

encompassed by the approved Application for 

Temporary Employment Certification for H-2A 

workers in the area of intended employment 

either within 60 days preceding the date of need 

or during the validity period of the job order, 

including any approved extension thereof, other 

than for a lawful, job-related reason.

1952 2017 Maximum 

$16,579.

https://www.ecfr.gov/

82 FR 5386

(January 18, 2017)

WHD

8 U.S.C. 

1188(g)(2); 29 

CFR 501.19(f)

Immigration & Nationality Act (H-2A) 

Violation for improperly rejecting a US worker 

who is an applicant for employment, in violation of 

8 U.S.C. 1188, 20 CFR part 655 subpart B, or 29 

CFR part 501.

1952 2017 Maximum 

$16,579.

https://www.ecfr.gov/

82 FR 5386

(January 18, 2017)
Civil Monetary Penalty Inflation Adjustment

(Unaudited)

FY 2017 Agency Financial Report 207

Bureau

Name

Statutory 

Authority Penalty (Name and Description) Year Enacted

Latest Year 

of 

Adjustment 

(via Statute 

or 

Regulation)

Current Penalty 

Level 

($ Amount or 

Range)

Location for Penalty 

Update Details 

WHD

8 U.S.C. 

1184(c)(14); 29 

CFR 503.23(b)

Immigration & Nationality Act (H-2B) 

Violation of any provisions of section 503.16 

related to wages, impermissible deductions or 

prohibited fees and expenses (equal to the 

difference between the amount that should have 

been paid and the amount that actually was paid

to such worker(s)).

1952 2017 Maximum 

$12,135.

https://www.ecfr.gov/

82 FR 14147-14149

(March 17, 2017)

WHD

8 U.S.C. 

1184(c)(14); 29 

CFR 503.23(c)

Immigration & Nationality Act (H-2B) 

Violation related to termination by layoff or 

otherwise or refusal to employ any worker in 

violation of section 503.16(r), (t), or (v), within the 

periods described in those sections (equal to the 

wages that would have been earned but for the 

layoff or failure to hire).

1952 2017 Maximum 

$12,135.

https://www.ecfr.gov/

82 FR 14147-14149

(March 17, 2017)

WHD

8 U.S.C. 

1184(c)(14); 29 

CFR 503.23(d)

Immigration & Nationality Act (H-2B) 

Any other violation that meets the standards 

described in section 503.19.

1952 2017 Maximum 

$12,135.

https://www.ecfr.gov/

82 FR 14147-14149

(March 17, 2017)

WHD

29 U.S.C. 

1853(a)(1); 29 

CFR 500.1(e)

Migrant and Seasonal Agricultural Worker 

Protection Act (MSPA) 

Willful and knowing violation the Act or any 

regulation under the Act.

1983 2017 Maximum 

$2,394.

https://www.ecfr.gov/

82 FR 5386

(January 18, 2017)
Other Information

(Unaudited)

208 United States Department of Labor

Bureau

Name

Statutory 

Authority Penalty (Name and Description) Year Enacted

Latest Year 

of 

Adjustment 

(via Statute 

or 

Regulation)

Current Penalty 

Level 

($ Amount or 

Range)

Location for Penalty 

Update Details 

WHD

41 U.S.C. 

6503(b); 41 CFR 

50-201.3(e)

Walsh-Healey Public Contracts Act (PCA) 

Knowing employment of persons under 16 years 

of age or convict labor in the performance of the 

contract.

1936 2017 Maximum $25.

https://www.ecfr.gov/

82 FR 5386

(January 18, 2017)
(Unaudited)

FY 2017 Agency Financial Report 209

Grants Oversight and New Efficiency Act (GONE Act)

Summary table GONE Act 1 below describes the Department's grant and cooperative agreement awards (awards) 

and balances for which closeout has not yet occurred but for which the period of performance has elapsed more 

than two years with zero dollar and undisbursed balances as reported in the U.S. Department of Health and Human 

Services (HHS), Payment Management System (PMS) as of September 30, 2017.

The above summary table displays the Department’s awards for which the period of performance has elapsed more 

than two years in the HHS, PMS. The majorities of those awards held have been administratively closed out in the 

Department’s Financial Management System upon required work associated with the awards have been 

completed. In addition, the Department awards shown in PMS include disbursed contracts that are outside the 

scope of GONE Act reporting.

The Department has robust procedures and dedicated resources to ensure the timely closeout of awards after the 

period performance. Less than 1% of grants awarded, for which the period of performance has elapsed beyond two

years for zero and undisbursed balances, remain open. Close out for these awards is delayed due to: 1) unresolved 

audit and monitoring findings; 2) financial reporting reconciliation issues; 3) grantees no longer in business; and 4)

unapproved indirect costs rates. 

The Department still recognizes the need to address these challenges. To date, the Department has teamed up with 

the grants and program offices to ensure the indirect cost agreement instructions are included in the terms and 

conditions of the award. The Department has reduced the number of awards remaining open due to financial 

report reconciliations by streamlining multiple appropriation codes on a single award. In addition, the Department 

is continuously evaluating the awards reconciliation process to determine if any system enhancements are needed.

The Department works closely with Audit Resolution team to obtain the status of final determinations of audit and 

monitoring reviews findings. Also, the Department reinforces existing financial reporting procedures to accurately 

and timely report to award recipients. Finally, the Department is aggressively working with HHS to expedite the 

closeout of awards in PMS.

Grants Oversight and New Efficiency Act

Awards Amount Awards Amount Awards Amount Awards Amount

Total Zero Dollar Balances 282 - 307 - 4,111 - 4,700 -

Total Undisbursed Balances 116 $4,161,650.26 134 $19,499,560.25 651 $20,455,407.39 901 $44,116,617.90

Total Zero Dollar and Undisbursed Balances 398 $4,161,650.26 441 $19,499,560.25 4,763 $20,455,407.39 5,601 $44,116,617.90

Description

Awards with Zero Dollar and Undisbursed Balances as Reported in PMS

2-3 Years >3-5 Years > 5 Years Tot
210 United States Department of Labor

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FY 2017 Agency Financial Report 211

Acronyms

AFR Agency Financial Report

ARRA American Recovery and 

Reinvestment Act

BAM Benefit Accuracy Measurement

BLDTF Black Lung Disability Trust Fund

BLS Bureau of Labor Statistics

BPC Benefit Payment Control

CAP Corrective Action Plan

CBO Congressional Budget Office

CIO Chief Information Officer

COLA Cost of Living 

Allowance/Adjustment

CPIM Consumer Price Index-Medical

CPI-U Consumer Price Index-Urba

CPP Clean Power Plan

CSEOA 

Community Service 

Employment for Older 

Americans

CSRS Civil Service Retirement System

CY Current Year

DFEC Division of Federal Employees’ 

Compensation

DMF Death Master File

DM&R Deferred Maintenance and 

Repairs

DNP Do Not Pay

DOE U.S. Department of Energy

DOL U.S. Department of Labor

DVOP Disabled Veterans Outreach 

Program

EB Extended Benefits

EBSA Employee Benefits Security 

Administration

EEOICPA

Energy Employees 

Occupational Illness 

Compensation Program Act

ERISA Employee Retirement Income 

Security Act

ES Employment Service

ESAA Employment Security 

Administration Account

ETA Employment and Training 

Administration

EUC Emergency Unemployment 

Compensation

EUCA Extended Unemployment 

Compensation Account

FASAB Federal Accounting Standards 

Advisory Board

FAUC Federal Additional 

Unemployment Compensation

FCI Facilities Condition Index

FEC Federal Employees 

Compensation

FECA Federal Employees’ 

Compensation Act

FERS Federal Employees Retirement 

System

FFMIA Federal Financial Management 

Improvement Act

FLSA Fair Labor Standards Act

FMFIA Federal Managers’ Financial 

Integrity Act

FUA Federal Unemployment 

Account

FUTA Federal Unemployment Tax Act

FY Fiscal Year

GAAP Generally Accepted Accounting 

Principles

GAO U.S. Government

Accountability Office

GSA U.S. General Services 

Administration

HVRP Homeless Veterans’ 

Reintegration Program

ILAB Bureau of International Labor 

Affairs

IP Improper Payments

IPERA Improper Payments Elimination 

and Recovery Act

IPERIA Improper Payments Elimination 

and Recovery Improvement Act

IPIA Improper Payments 

Information Act

IT Information Technology

JVSG Jobs for Veterans State Grants

LVER Local Veterans Employment 

Representative

MSHA Mine Safety and Health 

Administration

NASWA National Association of State 

Workforce Agencies

NCFMS New Core Financial 

Management System

NDNH National Directory of New 

Hires

NIOSH National Institute for 

Occupational Safety and Health

OCFO Office of the Chief Financial 

Officer

OCIO Office of the Chief Information 

Officer

ODEP Office of Disability Employment 

Policy

OFCCP Office of Federal Contract 

Compliance Programs

OIG Office of Inspector General

OJC Office of Job Corps

OLMS Office of Labor-Management 

Standards

OMB Office of Management and 

Budget

OPM U.S. Office of Personnel 

Management

OSH Act Occupational Safety and Health 

Act

OSHA Occupational Safety and Health 

Administration

OUI Office of Unemployment 

Insurance

OWCP Office of Workers’ 

Compensation Programs

PP&E Property, Plant, and Equipment

PY Prior Year/Program Year

RECA Radiation Exposure 

Compensation Act

RMO Responsible Mine Operator

SAM System for Award Management

SBR Statements of Budgetary 

Resources

SCOTUS Supreme Court of the United 

States

SCSEP Senior Community Service 

Employment Program

SCSIA Statements of Changes in 

Social Insurance Amounts

SFFAS Statement of Federal Financial 

Accounting Standards

SIDES State Information Data 

Exchange System

SOSI Statements of Social Insurance

SSA U.S. Social Security 

Administration

SWA State Workforce Agency

TAA Trade Adjustment Assistance

TAACCCT

Trade Adjustment Assistance 

Community College and Career 

Training

TOP Treasury Offset Program

UC Unemployment Compensation

UCFE Unemployment Compensation 

for Federal Employees

UCX Unemployment Compensation 

for Ex-Service Members

UI Unemployment Insurance

U.S.C. United States Code

USCA U.S. Court of Appeals

USERRA

Uniformed Services 

Employment and 

Reemployment Rights Act

USPS United States Postal Service

UTF Unemployment Trust Fund

VETS Veterans’ Employment and 

Training Service

WB Women’s Bureau

WHD Wage and Hour Division

WIA Workforce Investment Act

WIOA Workforce Innovation and 

Opportunity Act