FY 2016 Agency Financial Report 3

Table of Contents

Message from the Secretary of Labor.......................................................................................................5

Management’s Discussion and Analysis...................................................................................................7

Program Performance Overview............................................................................................................................ 11

Financial Performance Overview............................................................................................................................ 28

Management Assurances ....................................................................................................................................... 38

Financial Section ....................................................................................................................................39

Message from the Chief Financial Officer .............................................................................................................. 41

Independent Auditors’ Report................................................................................................................................ 43

Annual Financial Statements.................................................................................................................................. 57

Principal Financial Statements and Notes........................................................................................................ 59

Required Supplementary Stewardship Information ...................................................................................... 119

Required Supplementary Information ........................................................................................................... 125

Other Information................................................................................................................................155

Inspector General’s Top Management and Performance Challenges.................................................................. 157

Summary of Financial Statement Audit and Management Assurances............................................................... 168

Improper Payments Reporting Details................................................................................................................. 169

Civil Monetary Penalty Inflation Adjustment ....................................................................................................... 201

Schedule of Spending ........................................................................................................................................... 221

Open Government Links....................................................................................................................................... 222

Acronyms.............................................................................................................................................................. 223

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

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

AFRComments@dol.gov

or

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 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’ Web sites.

Unaudited

FY 2016 Agency Financial Report 5

Message from the Secretary of Labor

The Department of Labor plays a central role in expanding opportunity for 

millions of people in America and around the world. We have emphasized 

job-driven training to help workers of all ages, including veterans and 

people with disabilities, build meaningful careers and punch their tickets to 

the middle class. We have expanded minimum wage and overtime 

protections for home health-care workers, given more workers access to 

overtime pay, and implemented President Obama’s executive orders to 

raise wages for workers on federal contracts and provide them with paid

sick leave. We have increased our efforts to protect workers’ safety, 

workplace rights, and retirement security. To be sure, there is much more 

to be done—and the Department’s work continues. We are committed to 

building a stronger America through shared prosperity.

To learn more about our efforts, I encourage you to visit DOL.gov and read 

our Fiscal Year (FY) 2014-18 Strategic Plan. The Strategic Plan provides a 

five-year outline of the specific, measurable and strategic outcomes and 

goals toward which we are working.

We are committed to reaching these goals, focusing on performance 

management and on investing our resources smartly. That is why I am 

pleased to present the U.S. Department of Labor’s FY 2016 Agency Financial 

Report (AFR). This annual publication demonstrates to Congress and the 

public our operational record and financial stewardship of public funds. The 

report explains how we spend our budget dollars, highlighting both key 

accomplishments and plans for the future. Once again, an independent 

audit of our financial statements has resulted in an unmodified, “clean,” 

opinion.

I am also pleased to report that the Department can offer a statement of 

reasonable assurance that the financial and performance data in this report 

are reliable and complete per Office of Management and Budget (OMB) 

guidance. Our assessment of internal controls and compliance of our 

financial management systems is outlined in the Management 

Assurances in the Management’s Discussion and Analysis section of this

report.

Our independent auditor updated and reissued the FY 2015 material 

weakness and identified a new material weakness in FY 2016. During the 

past year, DOL made significant strides regarding the closeout of its prior 

material weakness related to lack of sufficient information technology 

general controls over key financial feeder systems. There is still more 

work to be done. DOL recognizes the importance of implementing 

adequate safeguards to protect information and information systems 

and will endeavor to eliminate these weaknesses in FY 2017. 

Additionally, the independent auditors issued a new material weakness 

concerning deficiencies in estimating future excise tax income used in 

the Statement of Social Insurance, which we also expect to eliminate in 

the next year.

Thomas E. Perez

U.S. Secretary of Labor

The Department of Labor’s 

Mission:

“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 of Labor’s 

Strategic Goals:

1: Prepare workers for 

better jobs.

2: Improve workplace safety 

and health.

3: Promote fair and highquality work environments.

4: Secure retirement, health, 

and other employee benefits 

and, for those not working, 

provide income security.

5: Produce timely and 

accurate data on the 

economic conditions of

workers and their 

families.
Message from the Secretary of Labor

(Unaudited)

6 United States Department of Labor

We have taken aggressive steps to ensure that our nearly 16,000 employees are focused on working for workers. 

We continue to analyze our programs to determine whether we are providing taxpayers with the best possible return 

on their investment. Our ambitious evaluation agenda allows us to assess the impact of our programs on the lives of 

workers and their families. To learn about our evaluation work, turn to the Program Performance Overview part of the 

Management Discussion and Analysis section of this AFR. For in-depth performance information, please see the 

Department’s Annual Performance Report, and FY 2017 Detailed Budget on our website.

I am proud of what we have achieved on behalf of workers around the country and around the world, and I believe our 

financial stewardship lends credibility to our work in an era of tight budgets. I also know that too many people are not 

getting to share in the prosperity that they help to create. We all have a shared commitment to build brighter futures for 

these workers and to strengthen our communities. That’s one reason that makes the Department of Labor and engine of 

opportunity today and for the future. 

Secretary Perez met with farmworkers in Oxnard, California, in April 2016, following a Regional Summit on Worker Voice, held 

in Los Angeles. The summit focused on innovative ways that workers, state and city officials, members of Congress, union 

advocates, community organizers and businesses are coming together to build an economy that works for everyone.
FY 2016 Agency Financial Report 7

Management’s Discussion and Analysis

(Unaudited)

FY 2016 Agency Financial Report 9

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 job seekers, wage earners 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
Management’s Discussion and Analysis

(Unaudited)

10 United States Department of Labor

Certificate of Excellence in Accountability Reporting

In May 2016, DOL received the Certificate of Excellence in Accountability Reporting (CEAR) from the Association of 

Government Accountants (AGA) for its FY 2015 Agency Financial Report. The CEAR Program was established by 

the AGA, in conjunction with the Chief Financial Officers Council, to further performance and accountability 

reporting. Receiving the CEAR Award represents a significant accomplishment for a federal agency. FY 2015

reporting marked the 15

th year the Department received this award.

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

DOL Headquarters, Frances Perkins Building

Washington, D.C., USA
(Unaudited)

FY 2016 Agency Financial Report 11 

Program Performance Overview

The Program Performance Overview presents the Department’s performance goals, objectives and results. It 

discusses 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 in 2017 with the FY 2018 Congressional Budget Justification. These reports will be posted at 

http://www.dol.gov/dol/aboutdol/#budget.

The Department’s current five-year Strategic Plan - http://www.dol.gov/osec/stratplan/ includes five Strategic 

Goals and 10 Strategic Objectives that support the Secretary’s vision of promoting and protecting opportunity for all 

workers and employers. These goals are presented in the following table:

STRATEGIC GOAL 1: Prepare workers for better jobs.

1.1. Advance employment opportunities for US workers in the 21st century demand sectors and occupations using 

proven training models through increased employer engagement and partnerships.

1.2. Provide marketable skills and knowledge to increase workers’ incomes and help them overcome barriers to the 

middle class through partnerships among business, education, labor, community organizations, and the workforce 

system.

1.3. Advance workers’ rights, acceptable work conditions, and livelihoods, particularly for the world’s vulnerable 

populations.

STRATEGIC GOAL 2: Improve workplace safety and health.

2.1. Secure safe and healthy workplaces, particularly in high-risk industries.

STRATEGIC GOAL 3: Promote fair and high-quality work environments.

3.1. Break down barriers to fair and diverse work-places and narrow wage and income inequality.

3.2. Protect workers’ rights.

3.3. Secure wages and overtime.

STRATEGIC GOAL 4: Secure retirement, health, and other employee benefits and, for those not working, provide 

income security.

4.1. Provide income support when work is impossible or unavailable and facilitate return to work. 

4.2. Improve health benefits and retirement security for all workers.

STRATEGIC GOAL 5: Produce timely and accurate data on the economic conditions of workers and their families.

5.1. Provide sound and impartial information on labor market activity, working conditions and price changes in the 

economy for decision making, including support for the formulation of economic and social policy affecting virtually 

all Americans.

The goal structure incorporates the Department’s commitment to measuring results that positively impact the dayto-day lives of working families. Reporting performance for these measures allows the public and the Department 

to track progress in implementation of the strategic goals and objectives.

The program performance overview organizes DOL program agencies into five categories that report FY 2016

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

Congressional liaison offices.
Management’s Discussion and Analysis

(Unaudited)

12 United States Department of Labor

Employment and Training

Employment and Training Administration (ETA)

Veterans’ Employment and Training Service (VETS)

Worker Protection

Office of Federal Contract Compliance Programs (OFCCP)

Occupational Safety and Health Administration (OSHA)

Wage and Hour Division (WHD)

Employee Benefits Security Administration (EBSA)

Mine Safety and Health Administration (MSHA)

Office of Labor‐Management Standards (OLMS)

Policy

Women’s Bureau (WB)

Office of Disability Employment Policy (ODEP)

Bureau of International Labor Affairs (ILAB)

Benefits

Office of Workers’ Compensation Programs (OWCP)

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

Statistics

Bureau of Labor Statistics (BLS)

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

results for key performance measures, and a brief statement of forward-looking information. The Department 

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

representative of agency activities.

EMPLOYMENT & TRAINING

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. These programs support the Department’s Strategic Goal 1, Prepare workers for better 

jobs and the associated Strategic Objectives 1.1, Advance employment opportunities for US workers in the 21st

century demand sectors and occupations using proven training models through increased employer engagement 

and partnerships, and 1.2, Provide marketable skills and knowledge to increase workers’ incomes and help them 

overcome barriers to the middle class through partnerships among business, education, labor, community 

organizations, and the workforce system. ETA also supports the Department’s Strategic goal 3, Promote fair and 

high-quality work environments and the associated Strategic Objective 3.3, Secure wages and overtime. Grants 

monitoring is a major agency-wide 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.

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. In FY2016, ETA strategically chose to direct its resources to 

provide much needed WIOA implementation efforts which included guidance and technical assistance to the now 

expanded public workforce system. In FY2016, we focused on fiscal and programmatic responsibility and progress 
Program Performance Overview

(Unaudited)

FY 2016 Agency Financial Report 13

towards WIOA implementation and exceeded our goal of 26%. The approach for FY2017 will be similar to FY2016. 

With the level of resources ETA has available, ETA will continue to implement WIOA and to monitor its grant 

portfolio, including both formula and competitively-awarded discretionary grants.

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 met its FY 2016 target of 26% by monitoring 26.61% of all active grants assigned to the regions. 

This outcome includes all monitoring that resulted in a monitoring report, whether on-site or Enhanced Desk 

Monitoring Review (EDMR). In FY 2016, consistent with limited Program Administration (PA) resources, 26% of all 

active grants were monitored (via on-site or Enhanced Desk Monitoring) versus the historical 33-35% per year. For 

example, in FY 2006, ETA had 323 regional Full-Time Equivalents (FTE) to monitor 1,995 active grants. In FY 2016, 

ETA had 255 regional FTE to monitor 2,486.

Strategic Goal 1: Prepare workers for better jobs

Measure FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016

Percent of Grants Monitored Annually by 

Regional Offices ‐‐ 25.00% 32.48% 28.45% 29.49% 26.61%

Looking Forward: As of October 1, 2016, ETA has a total of 2,586 active grants with a total funding portfolio of 

$23.7 billion; 2,199 grants are assigned to 253 regional FTE and 387 grants assigned to approximately 14 FTE in the 

national office. In light of these limited resources, ETA will continue to work towards the 2017 grant monitoring 

target of 26% in FY 2017. ETA will also explore options to coordinate grant monitoring processes with its federal 

partners and possible funding sources to update the core monitoring guide. 

Veterans’ Employment and Training Service (VETS)

VETS is committed to the nation’s responsibility 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’ programs contribute to the Department’s Strategic 

Goal 1, Prepare workers for better jobs, and the associated Strategic Objective 1.1, Advance employment 

opportunities for US workers in the 21st century demand sectors and occupations using proven training models 

through increased employer engagement and partnerships. The Jobs for Veterans State Grants (JVSG) program

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 promote 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. VETS is also responsible for administering its Uniformed Services Employment and 

Reemployment Rights Act (USERRA) program, which protects civilian job rights and benefits for active 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 strives to complete USERRA investigations within 90 days. For 

cases that require investigation beyond 90 days, investigators ensure claimants are consulted to approve an 

extension. Additionally, VETS conducts a review of a sampling of cases each quarter to ensure that cases meet the 

quality standards set by the agency.

In recent years, VETS has increased its focus on case quality with respect to investigations, and continues to seek 

new ways to institutionalize that focus on quality. This has resulted in the percentage of USERRA cases completed 

within 90 days decreasing slightly. In all cases where the 90 day target was not met, VETS obtained permission from 
Management’s Discussion and Analysis

(Unaudited)

14 United States Department of Labor

the claimant to keep open and resolve the claim. In FY 2016, the quality of investigations continued to increase 

compared to prior years. In FY 2015, VETS’ Senior Investigators and the DOL Solicitor met to assess the then-current 

quality assurance review process. In FY 2016, that work group concluded and VETS field tested (in two regions) a 

new electronic quality assurance review (QAR) tool. The new electronic QAR is more efficient, user friendly, and 

addresses critical elements necessary to determine case quality. In FY 2017, VETS anticipates implementing the new 

QAR nationwide.

Strategic Goal 1: Prepare workers for better jobs

Measure FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016

Percent of USERRA Investigations 

Completed Within 90 Days 87% 89% 89.6% 88.0% 88.5% 87.0%

Percent of Closed USERRA Cases Meeting 

Agency’s Quality Standard -- 83% 83% 91.5% 91.7% 95.5%

Looking Forward: VETS is committed to maintaining the 90% intensive services rate through FY 2017. In FY 2017, 

the agency will continue to work with ETA and other stakeholders to implement WIOA, effective July 1, 2016, to 

ensure VETS meets all statutory requirements. This act made significant changes to the public workforce system 

designed to improve coordination between workforce programs and to modify program performance measures.

WORKER PROTECTION

Office of Federal Contract Compliance Programs (OFCCP)

OFCCP ensures that nearly 200,000 Federal contractor facilities and locations provide equal employment 

opportunities 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 ban 

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 

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

pay of their co-workers. OFCCP supports the Department’s Strategic Goal 3, Promote fair and high-quality work 

environments and the associated Strategic Objective 3.1, Break down barriers to fair and diverse work-places and 

narrow wage and income inequality. 

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

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

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

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

placement into lower paying jobs due to sex 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. 

Subsequently, OFCCP has obtained nearly $6 million in financial remedies to more than 3,000 workers who were 

paid unfairly. These cases are in a wide variety of industries, from construction sites to STEM (science, technology, 

engineering, and math) jobs, and remedy workers from the bottom to the top of the wage scale. These cases 

require additional time, resources, and sophisticated fact-finding and analysis, but have substantially improved 

overall enforcement outcomes for both jobseekers and wage earners.

With this strategy, in FY 2016 OFCCP completed the fewest number of compliance evaluations and complaint 

investigations since FY 2011, but remedied as many victims of discrimination as it had in prior years, on average, 
Program Performance Overview

(Unaudited)

FY 2016 Agency Financial Report 15

with half the cases. Also in FY 2016, OFCCP obtained over $10.5 million in financial remedies for these victims, 

nearly double the $6 million in financial remedies obtained in FY 2015 with one-third fewer cases – and nearly as 

much as the $12 million obtained in FY 2014 with one-half fewer cases.

Strategic Goal 3: Promote fair and high quality work environments

Measure FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016

Compliance Evaluations and Complaint 

Investigations1 4,149 4,183 4,342 3,987 2,717 1,844

Victims of Discrimination 15,221 30,851 9,268 23,018 16,040 18,362

Percent of Discrimination Cases 

Remedying Systemic Compensation2 6% 3% 5% 23% 20% 35%

1

Beginning in FY 2016, OFCCP revised this measure to report both the number of compliance evaluations and complaint investigations, as this is a better 

indicator of the agency’s efforts to identify and remedy discrimination. The agency has updated the previous years’ outcomes to reflect this change.

2

Includes only compliance evaluations and not complaints.

Looking Forward: In FY 2017, OFCCP will continue to prioritize this high quality work by continuing to identify, 

investigate, and resolve cases that touch a wide variety of industries, occupations, and employment practices that 

make up today’s complex and fast changing labor market. The agency also will continue to expand its capacity for 

high-level technical and statistical expertise to sustain a growing inventory of high quality systemic discrimination 

cases to ensure fair and diverse workplaces and income equality among those who do business with the federal 

government.

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 our nation's economy. OSHA supports 

the Department’s Strategic Goal 2, Improve workplace safety and health, and Strategic Goal 3, Promote fair and 

high-quality work environments, and related Strategic Objectives 2.1, Secure safe and healthy workplaces, 

particularly in high‐risk industries and 3.2, Protect workers’ rights. 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, 

such as the chemical and refinery industries; industries that generate combustible dust; oil and gas well drilling; 

commercial construction; highway, street, bridge, and tunnel construction; arborist and logging work; water, sewer, 

pipeline, communications (including telecommunications), and power line construction; power distribution and 

generation; wind energy; forging; steel manufacturing; food manufacturing; grain handling; demolition; 

warehouses; and health care facilities. There are a multitude of serious safety hazards that workers can be exposed 

to in these industries.

Health inspections are conducted in general industry and construction and address hazards such as chemical 

hazards, biological hazards (e.g., blood borne pathogens and tuberculosis), physical hazards (e.g., noise, radiation, 

and heat and cold stress), and ergonomic hazards (e.g., patient handling, repetitive motion, excessive force, and 

awkward postures). Safety and health inspections increased from FY 2008 through FY 2012, but dropped from FY 

2013 to FY 2016 due to sequestration and decreasing OSHA resources. In FY 2016, OSHA increased its percentage of 

health inspections with a preliminary result of 6,236 inspections conducted, which was an increase of 0.2% from the 

previous year. OSHA met 95% of its inspection goal for safety with 25,680 inspections conducted. OSHA continued 

to allocate significant enforcement resources to employer-reported incidents resulting from OSHA’s new severe 

injury reporting (SIR) requirements. The SIR became mandatory in January 2015 because of OSHA’s new 

recordkeeping and reporting regulation, which requires employers to report to OSHA all work-related 

hospitalizations, amputations, and losses of an eye. The SIR increased the number of employer-reported referrals, 
Management’s Discussion and Analysis

(Unaudited)

16 United States Department of Labor

which OSHA addressed through either unprogrammed inspections or non-formal rapid response investigations 

(RRI). This reduced the time and resources available for programmed inspection activity. The RRI activity that began 

in January 2015 increased workload by adding almost 7,100 non-formal investigations for the fiscal year.

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 

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

agency, railroad, maritime, and securities laws. In FY 2016, OSHA completed more than 3,300 whistleblower 

investigations, awarding more than $39 million to complainants including 105 reinstatements.

Strategic Goal 2: Ensure workplaces are safe and healthy

Strategic Goal 3: Promote fair and high-quality work environments

Measure FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016*

Total Number of Safety Inspections Conducted 33,320[r] 33,580 31,948 29,356[r] 28,903[r] 25,6801

Total Number of Health Inspections Conducted 7,294[r] 7,381 7,280 6,818 6,917[r] 6,236

1

Preliminary result

[r] Indicates revised result from the FY 2015 AFR.

* Preliminary Data. Complete annual performance results for FY 2016 will not be available before November 2016.

Looking Forward: In FY 2017, OSHA will continue to target the most hazardous worksites and focus on complex 

hazards that require significant resources, such as fatality and catastrophe investigations, cases that involve process 

safety management hazards, and investigations of serious and prevalent hazards under OSHA’s General Duty 

Clause. OSHA will continue the use of the Enforcement Weighting System (EWS), which assigns a higher 

enforcement unit value to these complex inspections noted above, moving the focus from the simple number of 

inspections completed to the quality and complexity of inspections completed. The EWS will allow OSHA to better 

manage its resources to make the greatest impact.

In FY 2017, OSHA plans to continue implementing several programmatic changes to its Whistleblower Protection 

Programs, which OSHA believes will allow the Whistleblower Program to operate more efficiently and effectively. 

These changes include continuing the agency’s planned expansion of the alternative dispute resolution (ADR) 

process to additional Regions, continuing to prepare for the transition from the Web Integrated Management 

Information System database to the OSHA Information System database which will help manage investigative 

caseloads, improving training of whistleblower investigators through new training courses, and posting an 

electronic version of the revised Online Whistleblower Complaint Form. OSHA also plans to continue its focus on 

the quality of whistleblower investigations in FY 2017 through direct oversight of investigations by regional 

whistleblower managers conducting regional focused audits and through the National Office’s review of 

investigative case files under the Section 11(c) Request for Review program.

Wage and Hour Division (WHD)

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

working conditions. 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 investigators, supervisors, analysts, technicians and administrative employees enforce and administer 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 and Related Acts (DBRA) and Service Contract 

Act (SCA); the wages and working conditions under the Migrant and Seasonal Agricultural Worker Protection Act 

(MSPA); 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). WHD’s enforcement responsibilities directly contribute to the Department’s Strategic 
Program Performance Overview

(Unaudited)

FY 2016 Agency Financial Report 17

Goal 3, Promote fair and high–quality work environments, and related Strategic Objectives 3.2, Protect workers’ 

rights, and 3.3, Secure wages and overtime.

Since FY 2010, WHD has undergone a significant change in how the agency carries out the mission. Fragmentation 

of employment relationships and the scope and complexity of industry structures (i.e., fissuring) combined with the 

growth of the contingent workforce present complex enforcement challenges that require new levels of 

coordination and strategy.

Establishing strategic enforcement focused on (1) prioritizing industries with the greatest compliance problems and 

(2) developing strategies that focus on how industries are structured and how that impacts employment 

relationships and compliance. These business models, where companies outsource key aspects of their production, 

often lead to less compliance with wage and hour related statutes. Data show that agency-initiated investigations 

and the strategic use of enforcement resources have positive results for low-wage workers and result in a greater 

deterrent effect. The first measure below is directed investigations as a percentage of all investigations conducted.

In FY 2016, WHD increased the results for “Percent of Directed Investigations,” reaching the highest percentage 

(46%) in recent history. Moving forward, WHD is focused on the challenge of advancing strategic enforcement while 

identifying areas for increased efficiency.

The second and third measures reflect WHD’s commitment to prioritizing enforcement resources in those 

industries defined by their business models, resulting in tenuous employment relationships for some of the most 

vulnerable workers. The increased level of directed investigations, as well as prioritization of complaints, has 

increased the agency’s presence in those priority industries which have a history of violations and employ 

vulnerable workers. Since FY 2010, the agency has maintained a high percent of overall investigations in these 

priority industries. In FY 2008, WHD found back wages of $57.5 million in certain low-wage industries for 76,900 

workers. In FY 2016, WHD found more than $78 million in those low wage industries for over 109,000 workers.

Moreover, the average amount of back wages per employee in directed investigations rose from $622 in FY 2009 to 

$802 in FY 2015 to $896 in FY 2016—a significant increase for low wage workers. For example, those average back 

wages represent more than a month’s worth of rent or nearly 3 months’ worth of utility bills. WHD prioritized low 

wage industries in both complaint and directed investigations while increasing the back wage recoveries per worker 

in those industries.

Strategic Goal 3: Promote fair and high-quality work environments

Measure FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016

Percent of Directed Investigations 29% 41% 44% 44% 42% 46%

Percent of Directed Investigations in Priority 

Industries 82% 85% 83% 82%[r] 84% 84%

Percent of Complaint Investigations in 

Priority Industries 66%[r] 67% 68% 67% 67% 68%

[r] Indicates revised result from the FY 2015 AFR.

Looking Forward: The businesses that are covered by this nation’s labor standards laws are no longer confined to 

the traditional brick and mortar companies that operated when the laws enforced by WHD were first enacted.

Fragmentation of employment relationships and the scope and complexity of industry structures combined with 

the growth of the contingent workforce present complex enforcement challenges that require new levels of 

coordination and strategy. WHD has three strategic priorities to meet these challenges:

1. Updating a fair day’s pay by ensuring that the regulatory agenda of providing a fair day’s pay for a hard 

day’s work is fully and properly implemented;

2. Building a strategic enforcement structure to support the agency’s mission, vision, and values; and

3. Modernizing key enforcement initiatives, such as government contracts and WHD’s approach in 

program enforcement, including addressing the fragmented workplace.
Management’s Discussion and Analysis

(Unaudited)

18 United States Department of Labor

The agency's priorities are supported by performance measures to monitor the organization’s progress in achieving 

strategic enforcement and compliance outcomes. WHD has used a balance of measures to evaluate whether the 

agency is effective, productive, and consistent in applying new policies and strategies. WHD prioritizes efforts in 

industries where the problems are greatest, where workers are least likely to complain, and where WHD can have 

the greatest impact on compliance. The increased level of directed investigations has increased the agency’s 

presence in those priority industries. By focusing on priority industries, WHD also increases the likelihood of 

detecting instances of misclassification of employees as independent contractors.

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 $9.1 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. In particular, the primary objectives of EBSA’s 

enforcement program are to improve compliance with ERISA; recover losses and unjust profits resulting from 

misconduct by employee benefit plan fiduciaries and service providers; and increase the deterrent impact of the 

agency’s enforcement efforts on employee benefit plan sponsors, plan administrators and plan service providers. 

EBSA supports the Department’s Strategic Goal 4, Secure retirement, health, and other employee benefits and, for 

those not working, provide income security, and related Strategic Objective 4.2, Improve health benefits and 

retirement security for all workers.

EBSA’s enforcement program seeks to detect and correct violations that result in monetary recoveries for employee 

benefit plans, participants and 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 the three measures listed below that track investigation 

timeliness. The measures’ FY 2016 targets were based on a review of historical data, and EBSA’s FY 2016 results fell 

near or surpassed these targets. In particular, criminal investigations exhibited greater efficiencies than expected. 

EBSA focused its FY 2016 enforcement resources on National 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.

Strategic Goal 4: Secure retirement, health, and other employee benefits and, 

for those not working, provide income security

Measure FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016

Civil Non-Major Case Timeliness – Percent of Non-Major 

Civil Cases Closed or Referred for Litigation in the fiscal 

year within 30 Months of Case Opening except for case 

categories covered in the measure immediately below

-- -- -- -- 84% 87%

Percent of Delinquent Employee Contribution, 

Abandoned Plan, Bonding, Health-Part 7 Violation, and 

other Reporting and Disclosure Non-Fiduciary Breach 

Cases Closed or Referred for Litigation in the fiscal year 

within 18 Months of Case Opening

-- -- -- -- 71% 76%

Criminal Case Timeliness –Percent of Criminal Cases 

Closed or Referred for Litigation in the fiscal year within 

18 Months of Case Opening

-- -- -- -- 87% 90%
Program Performance Overview

(Unaudited)

FY 2016 Agency Financial Report 19

Looking Forward: In FY 2017, EBSA will 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; non-monetary results that promote compliance with ERISA; and the aggressive and timely pursuit of 

participant tips and complaints.

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 the Nation’s miners. MSHA supports the Department’s Strategic Goal 2, Improve workplace safety 

and health and Strategic Goal 3, Promote fair and high-quality work environments, and related Strategic Objectives 

2.1, Secure safe and healthy workplaces, particularly in high‐risk industries and 3.2, Protect workers’ rights.

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

inspections annually at active surface mines. The table below shows the number of inspections for Coal vs. Metal 

and Nonmetal mine types. Fluctuations in the number of inspections over time reflect variation in the number of 

mines operating during any given time period. In FY 2016, MSHA performed all mandated inspections.

Supports Strategic Goal 2: Improve workplace safety and health 

Measure FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016

Regular Mandated Coal Mine Inspections 5,139 5,117 4,658 4,176 3,992[r] 3,095

Regular Mandated Metal and Nonmetal Mine 

Inspections 16,269 16,620 16,624 16,253 16,518[r] 16,547

[r] Indicates revised result from the FY 2015 AFR.

Looking Forward: In 2017, MSHA aims to further improve miner safety and health via the following strategies: 

increasing inspection and enforcement effectiveness, strengthening and modernizing training and education, 

improving mine emergency response preparedness, strengthening health and safety regulations, increasing efforts 

to protect miners from discrimination and supporting open government.

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 supports the Department’s Strategic Goal 3, Promote fair and high-quality work‐life 

environments, and related Strategic Objective 3.2, Protect workers’ rights.

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 Audits 

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

exceeded the fallout rate goal each year with achievements ranging from 13.8% to a high of 21.7%. Timely 

resolution of union election complaints is a paramount goal of the LMRDA, and OLMS gauges its progress against 

this goal through the “Number of Days to Resolve Union Officer Election Complaints” measure. In 2009 OLMS 

established a baseline and since that point has dramatically reduced the average number of elapsed days per case. 

OLMS continues to exceed this goal.

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

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

Electronically” measure. OLMS continues to use existing outreach tools (e.g., seminars, compliance assistance 
Management’s Discussion and Analysis

(Unaudited)

20 United States Department of Labor

incidental to an audit, and its Voluntary Compliance Partnership program) to introduce and encourage union 

leaders and other filers to use web-based forms.

Strategic Goal 3: Promote fair and high-quality work-life environments

Measure FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016

Percent of Audits Resulting in a Criminal Case 

(Fallout Rate) 14.9% 13.8% 20.9% 21.7% 21.5% 17.1%

Number of Days to Resolve Union Officer 

Election Complaints 79 71 71 72 70 67

Percent of LMRDA Reports Filed Electronically 21.4% 37.8% 42.4% 45.0% 49.0% 50.1%

Looking Forward: These results measure progress in the three OLMS high priority programs. In the future, OLMS 

will focus its efforts on continued improvements. For the fallout measure, OLMS will continue to refine the 

targeting techniques in an effort to continue saving resources directed at audits and redirecting these saved 

resources to high priority programs. And while efforts to work closely and cooperatively with the Office of the 

Solicitor have resulted in dramatic improvement in election case processing, OLMS will explore additional areas of 

mutual cooperation. OLMS continues to enhance efforts to coordinate work between the National Office 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 that by enhancing this 

coordination and looking for additional areas of increased efficiency, the number of elapsed days can be further 

reduced. Finally, in FY 2015, OLMS allocated greater resources to its Voluntary Compliance Partnership (VCP) 

program, a cooperative effort with 43 international and national unions designed to provide targeted outreach to 

their affiliates, with one goal being fostering greater use of the electronic filing capabilities of the OLMS web site. In 

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

implemented (in FY 2018), over 80 percent of reports will be required to be filed electronically and electronic filing 

will be available for 90 percent of the full volume of reports expected to be filed. 

POLICY

Women’s Bureau (Bureau)

The mission of the Women’s Bureau is to develop policies and standards and conduct inquiries to safeguard the 

interests of working women, advocate for their equality and economic security for themselves and their families, 

and promote quality work environments. The Bureau is the only Federal office dedicated to serving and promoting 

the interests of the 72 million women in the U.S. workforce. The Bureau supports the Department’s Strategic Goal 

3, Promote fair and high-quality work environments and Strategic Objective 3.1, Break down barriers to fair and 

diverse work places and narrow wage and income inequality.

The Bureau conducts research to identify and formulate practices and policies and inform strategic interventions 

aimed at increasing equal economic and employment opportunity and advancement for working women and their 

families. It recommends these practices and policies within DOL and the Federal government, national 

organizations and local communities. The Bureau also identifies trends, data gaps, policy and programmatic needs, 

and promising practices; as well as informs and educates individuals and organizations at the local, state, and

national levels about the issues facing women in the labor force.

In FY 2016, the Bureau hosted a paid leave findings symposium for researchers and policy makers, and convened

stakeholder groups, state legislators, and businesses in 15 cities to participate in discussions on paid leave policies. 

To date, the Bureau has awarded over $3 million in grants for its Paid Leave Analysis Grant program. The Bureau 

also worked with Gallup to conduct a survey of working women to identify women’s current employment issues 

and reasons for exiting the workforce.
Program Performance Overview

(Unaudited)

FY 2016 Agency Financial Report 21

In FY 2016, the Bureau also convened a national forum and regional events to discuss the socio-economic factors 

that contribute to the gender wage gap and identify strategies to mitigate those barriers to equal pay. Additionally, 

the Bureau collaborated with the Office of Apprenticeship (OA) on initiatives to expand training and career 

opportunities for underrepresented populations through Registered Apprenticeship. 

In FY 2016, the Bureau launched a Portable Retirement Benefits Planning Grant Program to support innovative 

ways to increase retirement security for workers in a changing labor market, particularly low-wage workers and 

women, who face a higher risk of poverty in retirement. 

Looking Forward: In FY 2017, the Bureau will continue to serve as a strategic coordinator of issue/policy experts, 

practitioners, businesses and inter- and intra- agency collaborators to elevate the issue of paid leave, as well as to 

advance and improve women’s earning power through opportunities for preparation and training for women in 

growth and in-demand careers and by advocating for fair and equal wages. The Bureau will disseminate the findings 

of research it sponsored on the effects of providing child and elder care on women’s long-range financial security. 

The Bureau will also work with the U.S. Census Bureau to include questions related to maternity leave in the 2018 

Survey of Income and Program Participation (SIPP).

The Bureau will continue its ongoing public awareness and education efforts, including revamping and revising its 

popular women’s employment rights guide, promoting women’s presence in apprenticeships and non-traditional 

occupations, and developing a guide for stakeholders detailing key provisions for women within the federal 

workforce development system as administered by WIOA.

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, service providers and non-governmental 

organizations, and employers to aid them in adoption and implementation. These ODEP activities support the 

Department’s Strategic Goal 3, Promote fair and high-quality environments and the associated Strategic Objective 

3.1, Break down barriers to fair and diverse work-places and narrow wage and income inequality.

ODEP’s key performance measures are the numbers of “Policy Outputs”, “Effective Practices”, and “Formal and 

Informal Collaborations.” “Policy Outputs” include documents recommending or putting in place a significant policy 

change or an interpretation of existing policy related to disability employment. “Effective Practices” are technical 

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

“Formal and Informal Collaborations” are working relationships between ODEP and governmental and nongovernmental entities that help ODEP increase its reach and impact. 

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

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

with disabilities spurred by new regulations. In FY 2016, the majority of ODEP’s resources were invested in

developing effective practices and policy guidance, providing technical assistance, and conducting outreach to

support the implementation of legislations such as WIOA as well as Section 501 and Section 503 of the 

Rehabilitation Act. As developing “Effective Practices” were instrumental to the successful implementation of the 

referenced legislations, “Effective Practices” increased in FY 2016, achieving an output that exceeds results of the 

preceding five fiscal years. Additionally, ODEP spent a great deal of effort to promote the adoption of accessible 

technology through the Partnership for Employment and Accessibility Technology (PEAT) program.
Management’s Discussion and Analysis

(Unaudited)

22 United States Department of Labor

Strategic Goal 3: Promote fair and high quality work environments

Measure FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016

Policy Outputs 42 39 54 114 146 123

Effective Practices 44 131 192 153 193 199

Formal and Informal Collaborations -- -- -- -- 364 279

Looking Forward: With the signing of the WIOA, the issuance of updated regulations for Section 503 of the 

Rehabilitation Act, and the Executive Order to increase hiring of people with disabilities that helps the Government 

fulfill its responsibilities under Section 501 of the Rehabilitation Act, there are significant legislative and regulatory 

successes that have the potential to significantly improve the employment of people with disabilities. In order to 

capitalize on these opportunities, ODEP will target its strategic approaches to compel the entities responsible for 

executing the new requirements – state agencies, workforce boards, federal contractors, and federal agencies – to 

adopt effective practices and policies that increase the employment opportunities for people with disabilities.

Bureau of International Labor Affairs (ILAB)

In the global economy, working conditions and compliance with international labor standards shape the 

opportunities for American and foreign workers. Addressing worker rights and livelihoods overseas helps level the 

global playing field for American workers, while protecting and promoting the rights of all workers. The Secretary’s 

vision of promoting and protecting opportunity requires an inclusive growth strategy to help improve working 

conditions, raise living standards, protect workers’ ability to exercise their rights, and the elimination of workplace 

exploitation of children and other vulnerable populations.

ILAB has three major strategies for achieving its goal: (1) promoting labor standards through an integrated 

approach of policy, research, and technical assistance; (2) combatting child labor, forced labor and human 

trafficking through research and evidence-based programming; and (3) improving workers’ rights through targeted 

labor policy engagement, including monitoring and enforcement of labor provisions of free trade agreements. ILAB 

supports the Department’s Strategic Goal 1, Prepare workers for better jobs, and Strategic Objective 1.3, Advance 

workers’ rights, acceptable work conditions, and livelihoods, particularly for the world’s vulnerable populations.

Looking Forward: ILAB has adopted a multi-pronged strategy to promote worker rights particularly for vulnerable 

populations through efforts to amend laws, strengthen monitoring and enforcement, improve industrial relations, 

effectively engage companies, and raise awareness about worker rights and exploitative practices of child labor and 

forced labor. In FY 2017, ILAB will increase its efforts to monitor and enforce labor provisions of free trade 

agreements and promote worker rights through technical assistance, continue oversight of over $360 million in 

grants for over 70 projects operating in over 60 countries, represent the United States in various international 

meetings, and provide relevant research on forced labor and the worst forms of child labor.

BENEFITS

Office of Workers’ Compensation Programs (OWCP)

OWCP is composed of four separate programs that provide workers’ compensation benefits supporting the 

Department’s Strategic Goal 4, Secure retirement, health, and other benefits and, for those not working, provide 

income security, and Strategic Objective 4.1, Provide income support when work is impossible or unavailable and 

facilitate return-to-work:

 The Federal Employees' Compensation Act (FECA) Program provides wage-loss compensation, payment for 

medical treatment, return to work assistance, and vocational rehabilitation to civilian employees of the 

federal government injured at work and to certain other designated groups. In the event of death, FECA 

provides ongoing monetary compensation to dependents.
Program Performance Overview

(Unaudited)

FY 2016 Agency Financial Report 23

 The Longshore and Harbor Workers' Compensation Act (Longshore) Program oversees the provision of 

similar benefits to injured private sector workers engaged in certain maritime and related employment, and 

by extension to contractors working overseas for the U.S. government under the Defense Base Act.

 The Black Lung Benefits Act (Black Lung) Program oversees the provision of monetary compensation and 

medical benefits to coal mine employees who are totally disabled due to pneumoconiosis arising out of coal 

mine employment, and monetary benefits to their eligible dependent survivors.

 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 DOE contractors or subcontractors who worked on the nation’s nuclear weapons program and 

became ill due to exposure to radiation or toxic substances.

One of the FECA program’s principal focus areas is to provide 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. The participation of federal employers was reinforced in recent years by Executive

Order (EO) 13548 and successive government-wide initiatives, including the Safety, Health, and Return to Employment 

(SHARE) Initiative (FYs 2004-2009), and the Protecting Our Workers and Ensuring Reemployment (POWER) Initiative 

(FYs 2011-2014).

EO 13548, of July 26, 2010, directed federal agencies to make special efforts to recruit and hire people with 

disabilities and ensure the retention of employees injured on the job. Under the EO, agencies are to work to 

improve, expand, and increase successful return-to-work outcomes by increasing the availability of job 

accommodations and light- or limited-duty jobs and removing disincentives for FECA claimants to return-to-work. 

The SHARE and POWER initiatives set specific performance targets for (non-Postal Service) federal employers for 

the periods FYs 2004 to 2009 and FYs 2011 to 2014 including: 

 Reduction of total injury and lost-time injury rates; 

 Improved analysis and reporting of on-the-job injuries; 

 Reduction of federal agency lost-production-day rates; 

 Increase in the percentage of employees who suffer a serious workplace injury or illness who return-towork; and

 Required electronic and timely submission of Notices of Injury and Wage-Loss Claims by federal employers.

Federal agencies responded to these initiatives and continue to work constructively with DOL to improve workplace 

safety, improve injury case management, and increase the number of employees who return-to-work. Although the 

performance measure, “Government-Wide Lost Production Days (LPD) Rate in Non-Postal Agencies” favorably 

declined in 2016, the measure is a better indicator of government-wide performance rather than OWCP program 

performance because of the number of factors involved that are not under OWCP’s or DOL’s control. The 

unfavorable decline in the “Percent of Federal Employees With Work-related Injuries or Illnesses Under FECA’s 

Disability Management (DM) That Are Re-employed Within Two Years by Non-postal Agencies” is reflective of the 

reduction of federal agency resources from Return-to-Work due to budget reductions and the lack of attention to 

Return-to-Work by agencies. 

The Longshore program focuses on employer performance to ensure that injury reports and first payment of 

benefits are timely and that disputed claims are resolved as quickly as possible. The measure, “Percent of First 

Payment of Compensation Issued Within 30 days for Defense Base Act Cases” monitors the improvement of 

insurance carriers and providers in providing compensation to workers injured on the job. In FY 2016, the 

Longshore program realized improvements from the 2015 regulation change allowing submission of most forms 

and supporting documentation electronically through the Secure Electronic Access Portal. By accelerating the 

delivery of documents to Longshore staff, the claims examiners may intervene sooner to assist with resolution of 

outstanding issues. The FY 2016 result for the aforementioned measure is 70 percent, three percentage points 

higher than the FY 2015 result and 27 percentage points higher than FY 2009 result. The program expects 

performance in this area to continue to improve in FY 2017.
Management’s Discussion and Analysis

(Unaudited)

24 United States Department of Labor

For a number of years, the Black Lung program has monitored the timeliness of claim processing for miners with 

black lung disease through its “Average Number of Days to Process Black Lung Claims” measure. With the passage 

of the Patient Protection and Affordable Care Act of 2010, which reinstated two provisions in the Black Lung 

Benefits Act favorable to claimants, the program experienced a significant increase in the number of claims filed in 

2010. Another surge was felt in FY 2014; wherein claims volumes exceeded 2010 levels. Fueled by the economic 

challenges facing the coal mine industry, claims volumes remained high in FY 2015 and in FY 2016 due to an

increase in responsible operator bankruptcy filings. As incoming workloads continued to climb, staffing remained 

level and the pending claims continued to age.

In FY 2016, the Black Lung program set a goal to reduce the volume of pending claims older than 240 days (as of 

October 1, 2015) by 90 percent and to process all other claims in 265 days on average. As older pending claims 

were closed, the average time to process a Black Lung claim rose from 273 days in FY 2015 to 334 days in FY 2016. 

The Black Lung program successfully reduced the volume of pending claims older than 240 days (as of October 1, 

2015) by 85 percent. The Black Lung program continued to pursue quality initiatives to ensure that the most 

accurate decisions are being issued.

The measure, “Average Number of Days Between Filing Date and Final Decision for Cases Not Sent to National 

Institute for Occupational Safety and Health (NIOSH) When a Hearing is Not Held” focuses on shortening the overall 

time to make claims decisions on the type of claim most frequently encountered by the program. The Energy 

program works closely with DOE, the Department of Justice, the Social Security Administration, and NIOSH, as each 

partner agency has a role in final claims decisions. The average number of days between filing date and final 

decision for cases not sent to NIOSH when a hearing was not held has fallen from 182 days in FY 2011 to 167 days in 

FY 2016.

Strategic Goal 4: Secure retirement, health benefits, and other benefits 

and, for those not working, provide income security

Measure FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016

Government-Wide LPD Rate in Non-Postal Agencies 

(FECA) 33.2[r] 34.5[r] 34.2[r] 31.8 30.4 30.2

Percent of Federal Employees With Work-related 

Injuries or Illnesses Under FECA’s DM That Are Reemployed Within Two Years by Non-postal Agencies

(FECA)

91.6% 91.5% 91.9% 90.7% 90.3%[r] 89.1%

Percent of First Payment of Compensation issued 

Within 30 days for Defense Base Act Cases (Longshore) 56% 63% 67% 63% 67% 70%

Average number of days to process Black Lung Claims 

(Black Lung)

238 262 221 234 273 334

Average Number of Days Between Filing Date and Final 

Decision for Cases Not Sent to NIOSH When a Hearing 

is Not Held (Energy)

182 177 170 166 169 167

[r] Indicates revised result from the FY 2015 AFR.

Looking Forward: In FY 2017, OWCP will consider expansion of the reemployment opportunities for injured 

workers, increasing the number of injured or ill workers placed in jobs when they cannot be reemployed by their 

date-of-injury federal employer, and using Labor for America’s candidate bank to expand the use of assisted 

reemployment and increase placement with employers in the public and private sectors. OWCP will continue to 

strengthen the quality and timeliness of medical examinations, improve stakeholder partnerships and data sharing, 

and maintain or increase the pool of credentialed physicians available for diagnostic examinations.
Program Performance Overview

(Unaudited)

FY 2016 Agency Financial Report 25

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 unemployed workers, providing them with income 

support when suitable work is unavailable. This program supports Strategic Goal 4, Secure retirement, health, and 

other employee benefits and, for those not working, provide income security and the associated Strategic Objective 

4.1 Provide income support when work is impossible or unavailable and facilitate return to work. To be eligible for 

benefits, unemployed workers must meet eligibility requirements established by state laws that conform to federal 

law, including that they have worked recently, be involuntarily unemployed, and be able and available for work. 

The “Total Unemployment Rate,” calculated using BLS data, 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 is “First Payment Timeliness” (Percent of All Intrastate First Payments 

Made within 21 Days after the Last Day of the First Compensable Week). Although the FY 2016 “First Payment 

Timeliness” performance has improved, when compared to FYs 2013, 2014, and 2015, this performance is still 

below the acceptable level of performance for this measure – 87%. Reasons for the states’ inability to achieve the 

“First Payment Timeliness” performance standard include state staff layoffs, high state staff turnover, and 

technology issues. The staff layoffs are a consequence of the reduction in administrative funding resulting from 

lower workloads and an improved economy. States have experienced a high turnover of staff leaving them with a 

less experienced and trained staff to make claim eligibility determinations which led to workload backlogs in the 

claims-taking and adjudication units. Additionally, several states have reported technology issues following system 

modernization efforts or because they have antiquated technology systems. ETA continues to provide intensive 

technical assistance and enhanced monitoring to underperforming states. The table below provides historical data, 

along with unemployment statistics.

Strategic Goal 4: Secure retirement, health benefits, and other benefits

and for those not working, provide income security

Measure FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016

Total Unemployment Rate 9.2% 8.3% 7.6% 6.5% 5.4% 4.9%

First Payment Timeliness184.6%[r] 82.9%[r] 80.9%[r] 79.7%[r] 83.7%[r] 84.4%2

1

Results have been revised to reflect updated results.

2

FY 2016 data is for 12-months ending June 30, 2016. 

[r] Indicates revised result from the FY 2015 AFR.

Looking Forward: In FY 2016, using the states’ performance on the first payment timeliness core measure data, ETA 

worked with all states failing to meet the performance standard to include corrective action plans (CAPs) to achieve 

first payment timeliness in their State Quality Service Plans. In addition, using the new methodology for identifying 

“High Priority” states, ETA selected four states with the poorest overall performance to provide them intensive 

technical assistance 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.

In FY 2017, ETA UI staff will work with “High Priority” states to develop comprehensive 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 from ETA, and state experts, to conduct a thorough review of the state’s 

administrative and business processes relevant to the poor performance using state-of the-art business 
Management’s Discussion and Analysis

(Unaudited)

26 United States Department of Labor

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

implement, as appropriate.

 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(s) of 

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

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.

STATISTICS

Bureau of Labor Statistics (BLS)

BLS supports the Department’s Strategic Goal 5, Produce timely and accurate data on the economic conditions of 

workers and their families, and Strategic Objective 5.1, Provide sound and impartial information on labor market 

activity, working conditions, and price changes in the economy for decision making, including support for the 

formulation of economic and social policy affecting virtually all Americans.

BLS produces accurate, objective, relevant, timely, and accessible statistics reflecting labor market activity, working 

conditions, and price changes in the economy. Its mission is to collect, analyze, and disseminate essential economic 

information to support the public and private decision-making that forms the basis of our democratic, freeenterprise system. 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 E-Government Satisfaction Index (EGSI), formerly 

known as the American Customer Satisfaction Index (ACSI), to measure customer feedback with its website. The 

EGSI 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 2016, BLS reached 100 percent of the underlying timeliness, accuracy, and relevance targets for all of its 

Principal Federal Economic Indicators (PFEIs). BLS experienced fewer average website page views when compared 

to FY 2015, averaging approximately 16.3 million page views each month. BLS scored higher in the EGSI when 

compared to FY 2015, with a year-end score of 76. Results for the five performance measures are shown in the 

table below.

Strategic Goal 5: Produce timely and accurate data on the economic conditions

of workers and their families

Performance Measure FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016

Percentage of Timeliness Targets 

Achieved for the Principal Federal 

Economic Indicators (PFEIs) 1

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

Percentage of Accuracy Targets 

Achieved for the PFEIs 1 100% 100% 100% 95% 100% 100%

Percentage of Relevance Targets 

Achieved for the PFEIs 1 100% 90% 100% 100% 100% 100%
Program Performance Overview

(Unaudited)

FY 2016 Agency Financial Report 27

Strategic Goal 5: Produce timely and accurate data on the economic conditions

of workers and their families

Performance Measure FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016

Average number of BLS website page 

views each month (Dissemination) 2 N/A N/A N/A 17,423,845 16,965,254 16,324,885

Customer Satisfaction with the BLS 

website through the E-Government

Satisfaction Index (Mission 

Achievement) 3

75 77 77 77 75 76

1 Measure is new beginning in FY 2014. The FY 2011 – 2013 results are shown for trend comparison purposes.

2

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

3

In FY 2016, the American Customer Satisfaction Index (ACSI) was renamed to the E-Government Satisfaction Index (EGSI). EGSI Score is calculated on a 100 

point scale.

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.
(Unaudited)

28 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 2016 and FY 2015, 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 $48.7 billion for FY 2016 and $46.4 billion for FY 2015.

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 2016 Agency Financial Report 29

Figure 1: Summary of Selected Financial Data for FY 2016 and FY 2015

(Dollars in billions) 2016 2015 Amount Percent

Financial position

Total assets $ 75.3 $ 66.2 $ 9.1 13.7%

 Funds with U.S. Treasury 12.0 11.6 0.4 3.4%

Investments 54.1 44.6 9.5 21.3%

Total liabilities $ 34.8 $ 37.7 $ (2.9) (7.7)%

Debt 14.3 18.5 (4.2) (22.7)%

Net cost of operations

Net cost of operations $ 48.7 $ 46.4 $ 2.3 5.0%

Income maintenance 39.8 37.6 2.2 5.9%

Employment and training 6.3 6.2 0.1 1.6%

Budgetary resources

 Appropriations (discretionary 

 and mandatory) $ 47.6 $ 46.9 $ 0.7 1.5%

 Agency outlays, net

 (discretionary and mandatory) 46.5 46.2 0.3 0.7%

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 $66.2 billion at the end 

of FY 2015 to $75.3 billion at the end of FY 2016, an increase of $9.1 billion, 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 2016 and FY 2015.)
Management’s Discussion and Analysis

(Unaudited)

30 United States Department of Labor

Figure 2: Assets by Type for FY 2016 and FY 2015

$12.0 

$54.1

$6.9 $1.1 $1.3 

$11.6 

$44.6 

$7.4 $1.4 $1.3 

$0.0

$5.0

$10.0

$15.0

$20.0

$25.0

$30.0

$35.0

$40.0

$45.0

$50.0

$55.0

Funds with U.S.

Treasury

Investments Accounts

Receivable

Advances General

Property, Plant

and Equipment

ASSETS ($ in Billions)

2016 - $75.4 2015 - $66.2

Total liabilities decreased from $37.7 billion at the end of FY 2015 to $34.8 billion at the end of FY 2016, a decrease 

of (7.7)%. This decrease was primarily due to a decrease in intra-governmental debt of (22.7)% due to UTF 

repayments of borrowings from the General Fund of the Treasury as tax collections by the states exceeded the 

requirements for benefit payments; offset by increases in future workers’ compensation benefits of $0.4 billion and 

accrued benefits of $0.3 billion. Future workers’ compensation benefits increased primarily due to an increase in 

projected benefits under the War Hazards Compensation Act for actuarial projections based on claims data; 

accrued benefits increased primarily due to an increase in State regular and extended unemployment benefits 

payable which corresponded with an increase in claims that may be related to, among other things, sectors of the 

economy affected by changes in oil prices.

Figure 3: Liabilities by Type for FY 2016 and FY 2015

$14.3 

$1.6 $1.9 

$15.4 

$1.6 

$18.5 

$1.3 $1.5 

$14.8 

$1.6 

$0.0

$5.0

$10.0

$15.0

$20.0

$25.0

$30.0

Intra-govtal

Debt

Accrued

Benefits

Future Workers'

Compensation

Benefits

Energy

Employees OIC

Benefits *

Remaining

Liabilities

LIABILITIES ($ in Billions)

2016 - $34.8 2015 - $37.7

*

OIC = Occupational Illness Compensation.
Financial Performance Overview

(Unaudited)

FY 2016 Agency Financial Report 31

Net Cost of Operations 

The Department's net cost of operations for the year ended September 30, 2016, was $48.7 billion, an increase of 

$2.3 billion 5.0% from FY 2015. This increase was attributable to the increases in the program costs discussed 

below:

Figure 4: Net Cost of Operations by Program for FY 2016 and FY 2015 

$39.8 

$6.3 

$0.9 $1.1 $0.6 

$37.6 

$6.2 

$0.9 $1.1 $0.6 

$0

$10

$20

$30

$40

$50

Income

Maintenance

Employment

and Training

Standards** Safety and

Health

Statistics

NET COST OF PROGRAMS 1($ in Billions)

2016 - $48.7 2015 - $46.4

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 2016 and FY 2015, 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, 

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 $39.8 billion in FY 2016, an increase of 5.9% 

from FY 2015. This increase was primarily due to increases in the expenses which corresponded with the increases 

in liabilities for the future workers’ compensation benefits from the War Hazards Compensation Act (as described in 

the liabilities section above) and, similarly, the increases in liabilities for the Energy employees occupational illness 

compensation benefits for actuarial projections based on claims data.

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 net costs were relatively unchanged in FY 2016 compared to FY 2015.
Management’s Discussion and Analysis

(Unaudited)

32 United States Department of Labor

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 2016 and FY 2015, as well as the status of these resources at the end of each 

fiscal year. During FY 2016, total budgetary resources increased $0.7 billion or 1.5% from $58.1 billion to $58.8

billion, primarily due to the increase in appropriations from $46.9 billion to $47.6 billion. Agency outlays, net 

increased $0.3 billion or 0.7% from $46.2 billion to $46.5 billion primarily due to lower distributed offsetting 

receipts of $0.3 billion from lower collections for employer reimbursements and interest from loans to states.

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 Statements of Social Insurance (SOSI) and Statements 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 September 30 of the reporting year and ends 

September 30, 2040), for current participants (closed group), new participants, and current and new participants 

(open group), 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 to disabled coal miners and 

dependent survivors. 

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 for 

participants for whom the BLDTF has an adjudicated liability as of September 30 (due to, among other things, 

bankruptcy of the Responsible Mine Operator (RMO)), but had not yet been added to the rolls.

In FYs 2012 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 2012 through 2015, 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 closed group and the 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. Accordingly, for FY 2016 reporting, the 

SOSI presents values for the closed group, new participants, and open group.

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. To calculate the closed group measure, closed group values exclude 

values for the new participants: the pro-rated present value of estimated future administrative costs for the closed 

group and the actuarial present value of future benefit payments for the closed group are subtracted from the prorated present value of estimated future coal excise tax income for the closed group. To calculate the open group 

measure, open group values include values for the closed group and the new participants: the present value of 

estimated future administrative costs for the open group and the actuarial present value of future benefit 

payments for the open group are subtracted from the present value of estimated future coal excise tax income for 

the open group.

As presented in the SOSI, for FY 2012 through FY 2016, the open group measure has been positive; however, the 

open group measure has declined from about $4.7 billion to $890 million primarily due to a combination of lower 

excise tax income and higher administrative costs.
Financial Performance Overview

(Unaudited)

FY 2016 Agency Financial Report 33

Figure 5: Black Lung Disability Benefit Program - Table of Key Measures for FY 2016 and FY 2015

(Dollars in millions) 2016 2015 Amount Percent 

 Total assets $ 113.8 $ 54.9 $ 58.9 107.3% 

 Less: total liabilities (5,718.3) (5,699.1) (19.2) (0.3)%

 Net position (assets net of liabilities) $ (5,604.5) $ (5,644.2) $ 39.7 0.7% 

 Net cost of operations $ (339.5) $ (382.8) $ 43.3 11.3% 

 Total financing sources 379.3 493.9 (114.6) (23.2)%

 Net change of cumulative results of operations $ 39.8 $ 111.1 $ (71.3) 64.2% 

 Open group measure, beginning of year $ 1,596.7 $ 4,482.8 $ (2,886.1) (64.4)%

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

Social insurance

Black Lung Disability Benefit Program – Table of Key Measures

 Change 

Financial position 

Costs and changes in net position

The decrease in the net cost of operations for the year ended September 30, 2016 of $43.3 million [11.3%] from FY 

2015 was mainly due to a decrease in costs for benefits. FY 2016 total financing sources decreased $(114.6) million 

[(23.2)%] from FY 2015 mainly due to decreases in tax collections. The resulting net change of cumulative results of 

operations for FY 2016 was $39.8 million, a decrease of $(71.3) million [64.2%] from FY 2015.

Total assets increased $58.9 million [107.3%] at the end of FY 2016 primarily due to an increase in the Funds with 

U.S. Treasury balance from September 30, 2016 borrowing to finance operations of the fund. Liabilities increased 

$19.2 million [0.3%] at the end of FY 2016 due to net effects of additional borrowing at September 30, 2016 and 

repayments of debt that matured on September 30, 2016. The resulting net position (deficit) decreased $39.7

million at the end of FY 2016.

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; and in FY 2015, the open group measure decreased by 

$(2,886.1) million primarily due to projected lower coal excise tax revenues and higher administrative costs, offset 

in part due to lower beneficiary costs and the change in interest rates used to discount the cash flows from 2.50% 

and 2.63% in FY 2014 to 2.25% for income payments, medical payments, administrative expenses, and coal excise 

tax collections in FY 2015.

In FYs 2015 and 2016, the lower projected coal excise tax revenues reflect, among other things, regulation pursuant 

to the Clean Power Plan (CPP). In February 2016 the U.S. Supreme Court stayed implementation of regulation 

pursuant to the CPP due to litigation pending in the U.S. Court of Appeals; as of September 30, 2016 the stay 

remained in effect. DOL did not change its sources or approaches for estimating future excise tax income because 

of the stay.

The total of open group measure plus fund assets as of September 30, 2016, of $1,003.9 million represents a 

projected net positive cash flow that may be used to liquidate the liabilities of the BLDTF, which were $5,718.3

million as of September 30, 2016.
Management’s Discussion and Analysis

(Unaudited)

34 United States Department of Labor

Refer to Notes 1-W, 1-Y, 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 2040.

Limitations on the Principal Financial Statements

As required by the Government Management Reform Act of 1994 (31 USC 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.

Reducing Improper Payments

Improved financial performance through the reduction of improper payments (IP) is a key financial management 

focus of the Federal government. At DOL, developing strategies and the means to reduce IP is a matter of good 

stewardship. Accurate payments lower program costs and allow us to focus on the mission.

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)

1

, requires Federal agencies to identify and reduce IP, and to report annually on our efforts per OMB

guidance in OMB Circular A-123, Appendix C, Requirements for Effective Measurement and Remediation of 

Improper Payments. DOL performs testing to estimate the rates and amounts of IP, establishes IP reduction targets 

in accordance with OMB guidance, and develops and implements corrective actions.

IPERA Section 2(a) requires agency heads to “review all programs to identify risk susceptibility for improper 

payments every three years.” The last Department-wide risk assessment was performed in FY 2014 based on 

criteria prescribed in IPERA Section 2(a)3(b).

Based on DOL’s FY 2014 Department-wide risk assessment, two programs, the UI and FECA benefit programs, are 

required to provide IP rate estimates in FY 2016, based on the susceptibility threshold in statute2:

 Either potential estimated improper payments greater than 1.5% of outlays and greater than $10 million, or

 Potential estimated improper payments of more than $100 million, regardless of percentage.

One additional DOL program area, the Workforce Investment Act (WIA) of 1998 Title I programs (WIA Programs), 

provided estimates based on inclusion in Exhibit 57B, Section 57, of OMB Circular A-11 (2002)3. Although Section 57 

was rescinded in 2003, these programs continued to provide IP information beyond that which is required by IPIA.

On July 22, 2014, the President signed WIOA into law. WIOA supersedes WIA. Funding under WIA ended on June 

30, 2015. The Department remains strongly committed to mitigating IPs for all new programs authorized by WIOA.

Risk assessments of programs newly authorized by WIOA were conducted in FY 2016. These risk assessments 

indicated that all WIOA authorized programs reviewed are not susceptible to significant improper payments and did 

not support IP reporting under A-123, Appendix C guidance.

 

1

IPIA, Public Law (P.L.) 107-300 (2002); IPERA, P.L. 111-204 (2010); IPERIA, P.L. 112-248 (2013). Codified at 31 U.S.C. 3321 note.

2

IPERA §2(a)(3)(A)(ii)(I) and (II).

3

In July 2001, OMB issued Section 57, Information on Erroneous Payments, as part of the 2002 revision to Circular A-11, Preparation, 

Submission, and Execution of the Budget. Exhibit 57B of Section 57 listed programs required “. . . to provide improper payment data, 

assessments and action plans with initial budget submission beginning in 2003.” All “benefit programs” exceeding obligations of $2 billion 

were included on Exhibit 57B.
Financial Performance Overview

(Unaudited)

FY 2016 Agency Financial Report 35

DOL has implemented various corrective actions to address the causes and to reduce IP in all programs. Like many 

other Federal agencies, the DOL faces challenges in meeting its IP reduction and recovery targets, particularly with 

programs that are sensitive to economic fluctuations and natural disasters.

Additionally, meeting IP reduction and recovery targets for programs such as UI are contingent upon the 

cooperation and support of state agencies and other outside stakeholders who are responsible for the day-to-day 

administration and management of these programs’ payments and activities. In contrast to most other Federal 

benefit programs, the Federal-state partnership creates complexities leading to significant challenges in controlling 

IP in the UI program. These complexities include varied state UI laws and resource capacities under which the 

program is administered; structural impediments such as the legal requirement to pay UI benefits “when due” 

causing states to make payments before all eligibility information has been received and verified; and aging IT 

systems. 
Management’s Discussion and Analysis

(Unaudited)

36 United States Department of Labor

DOL Programs Required to Submit Improper Payments Estimates 

Program Requirement 

Based on...

Estimated Rate

FY16 FY 15

Unemployment 

Insurance (UI) 1

Risk analysis

Improper Payment Rate

(Overpayments plus Underpayments): 11.65% 10.73%

 Overpayment Rate

11.19% 10.29%

 Underpayment Rate

0.46% 0.44%

Net Improper Payment Rate

(Improper Payment Rate Minus 

Amounts Recovered by States)

8.70% 7.28%

Improper Payment Rate Minus “Work 

Search” Errors 7.69% 7.95%

Federal 

Employees’ 

Compensation 

Act (FECA) 1

Risk analysis

Improper Payment Rate

(Overpayments plus Underpayments) 3.54% 2.87%

Workforce 

Investment Act 

(WIA) Title I 

Programs

Inclusion in 

Exhibit 57B of 

OMB Circular A11 (2002)

Rate of funds with Possible Eligibility 

Issues under Single Audit Act NA 2

<0.88%

Note: 

1

Covers the 12-month period from July 1, 2014 through June 30, 2015. 2- Funding under WIA ended on June 30, 2015.

See the Improper Payments Reporting Details in the Other Information section of this report for detailed 

information on payment integrity.
Financial Performance Overview

(Unaudited)

FY 2016 Agency Financial Report 37

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 2016, NCFMS was supported by the Enterprise Service Center (ESC), a franchise fee chartered organization 

within the Federal Aviation Administration (FAA), an independent agency of the Department of Transportation 

(DOT), to operate and maintain NCFMS. During the last quarter of FY 2016, as a cost savings and contract efficiency 

measure, the Department contracted directly for NCFMS operations and maintenance services. The Department 

continues to move forward with efforts to transition to a Federal Shared Services Provider for financial 

management services. 

During FY 2017, the Department will work with the Unified Shared Services Management (USSM) office, under 

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. The M3 framework is the successor to the 

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

process. DOL began the Treasury OFIT FAME process in FY 2015, which is now mandated by USSM through the M3 

framework and is designed to help the government achieve successful outcomes and reduce risk during 

administrative system and/or service modernizations and migrations.
.
Financial Section

FY 2016 Agency Financial Report 41

Message from the Chief Financial Officer

The Department of the Labor (DOL) received its 20th unmodified 

opinion on its consolidated financial statements in the FY 2016 

independent audit. We are proud of this sustained achievement. It 

is a reflection of DOL’s commitment to sound financial stewardship 

of taxpayer dollars. The Office of the Chief Financial Officer (OCFO) 

Strategic objectives are our bedrock; demonstrating financial 

stewardship, providing outstanding customer service, and 

enhancing financial performance, operations, and systems.

OCFO AT A GLANCE

In last year’s Message, I talked about the enormous challenge DOL 

faced when our financial management system provider collapsed 

into bankruptcy. DOL led a multi-agency effort to secure these 

legacy systems, reintegrate them for continued use, and begin the 

process of transition. As a result of extensive collaboration with our 

Federal partners, DOL has taken back possession and operational 

control of the financial management system. DOL and OCFO are 

committed to moving forward with efforts to transition to a Federal 

Shared Services Provider for financial management services.

In February of this year, OCFO was successful in implementing the 

2

nd Generation Government-wide Electronic Travel System (ETS2). 

ETS2 builds on the success of the first generation ETS, enabling the 

Department in its mission to ensure a strengthened travel 

operations environment, complete with a robust funds 

management platform, comprehensive reporting capabilities, and 

improved internal controls.

LOOKING FORWARD

In the coming fiscal year, we look forward to taking on new 

challenges and opportunities. Our independent auditor updated 

and reissued the FY 2015 material weakness regarding the lack of 

sufficient information technology general controls over key financial 

feeder systems. During the past year, DOL made significant strides 

regarding the closeout of this prior material weakness. Additionally, 

the independent auditors issued a new material weakness 

concerning deficiencies in estimating future excise tax income. 

These estimates are used in the Statement of Social Insurance. DOL 

recognizes the importance of implementing adequate safeguards in 

its information systems and having reliable estimates for the 

outlook of future social insurance activities. We will endeavor to 

eliminate these weaknesses in FY 2017.

At the end of October, the Department took a step toward improving the efficiency of the Department’s resource 

allocation processes by bringing DOL’s Departmental Budget Center (DBC) into OCFO. I believe this realignment will 

also improve the oversight of the Department’s financial operations by breaking down silos between budget 

planning, execution, and systems. The Department now has one central authority for all financial issues.

DOL has begun ramping up efforts to comply with the Digital Accountability and Transparency Act (DATA Act). The 

DATA Act aims to increase fiscal transparency by making Federal spending data accessible, searchable and reliable.

Geoffrey Kenyon

Principal Deputy Chief Financial Officer

Department of Labor

OCFO's Mission

“The Office of Chief 

Financial Officer (OCFO) 

is responsible for the 

financial leadership of 

DOL and its primary duty 

is to uphold strong 

financial management 

and accountability while 

providing timely, 

accurate, and reliable 

financial information 

and enhancing internal 

control.”
Message from the Chief Financial Officer

42 United States Department of Labor

It will also afford taxpayers the opportunity to better understand the impact of Federal funds in improving their 

lives. This large undertaking has been challenging in terms of time and resources but the Department is set to be up 

and running by May 2017.

This Agency Financial Report provides timely information that the American public can use to better understand 

DOL and its programs. The sections that follow in this report provide extensive financial information outlining the 

hard work done by OCFO and DOL staff. We hope that you find it useful and an informative showcase of our efforts 

toward bringing you greater transparency and accountability.

Geoffrey Kenyon

Principal Deputy Chief Financial Officer

December 15, 2016
FY 2016 Agency Financial Report 43

KPMG LLP

Suite 12000

1801 K Street, NW

Washington, DC 20006

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, 2016 and 2015, 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 2015 sustainability financial statements, which comprise the statements of social 

insurance as of September 30, 2015, 2014, 2013, and 2012; the statements of changes in social insurance 

amounts for the year ended September 30, 2015; and the related notes to the 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; and the related notes to the 2016 sustainability financial statements. 

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 opinions on these financial statements based on our audits. We conducted 

our audits of the consolidated financial statements and the 2015 sustainability financial statements in 

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

applicable to financial audits contained in Government Auditing Standardsissued by the Comptroller General 

of the United States; and Office of Management and Budget (OMB) Bulletin No. 15-02, Audit Requirements 

for Federal Financial Statements. Those standards and OMB Bulletin No. 15-02 require that we plan and 

perform the audit to obtain reasonable assurance about whether the 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
Financial Section

44 United States Department of Labor

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 2015 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.

Basis for Disclaimer of Opinion on the 2016 Sustainability Financial Statements

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.

Disclaimer of Opinion on the 2016 Sustainability Financial Statements

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 year then ended. Accordingly, we do not express an opinion on the 

sustainability financial statements as of and for the year ended September 30, 2016. 

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, 2016 and 2015, 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 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, 2015, 2014, 2013, 

and 2012 and its changes in social insurance amounts for the year ended September 30, 2015, in accordance 

with U.S. generally accepted accounting principles.

Emphasis of 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 a projection period ending in 2040. The sustainability financial statements are 

intended to aid users in assessing whether future resources will likely be sufficient to sustain public services
Independent Auditors’ Report

FY 2016 Agency Financial Report 45

and to meet obligations 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 2015 opinion is not modified with respect to this matter.

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 Message from the Secretary of Labor, Message from the Chief Financial Officer, and 

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.
Financial Section

46 United States Department of Labor

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, 2016, 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 

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

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, we identified certain deficiencies in internal control 

that we consider to be material weaknesses.

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. 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 I to be material weaknesses.

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

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 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 of 

compliance disclosed no instances of noncompliance or other matters that are required to be reported herein 

under Government Auditing Standards or OMB Bulletin No. 15-02.

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 of FFMIA disclosed no instances in which DOL’s financial management systems did not 

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

accounting standards, and (3) the United States Government Standard General Ledger at the transaction level.

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

financial statements, other matters involving compliance with certain provisions of laws, regulations, 

contracts, and grant agreements may have been identified and reported.
Independent Auditors’ Report

FY 2016 Agency Financial Report 47

DOL’s Response to Findings

DOL’s responses to the findings identified in our audit is described in Exhibit II. 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 DOL’s internal control or 

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

December 15, 2016
Financial Section

Material Weaknesses

Exhibit I

48 United States Department of Labor

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

During our testing of entity-level controls (ELC) and general information technology controls performed 

as part of the fiscal year (FY) 2016 audit of the U.S. Department of Labor’s (DOL) consolidated financial 

statements, we noted that management did not have consistent procedures in place to ensure: 

 A sufficient risk assessment was conducted over the information technology (IT) control 

environment to identify the root causes of identified deficiencies,

 The performance of IT controls that functioned effectively in the past did not deteriorate, and

 The implemented milestones and corrective actions to remediate IT deficiencies were tracked 

and completed timely.

Specifically, management charged with oversight and accountability for the DOL IT control environment

had not taken appropriate action to address ongoing pervasive deficiencies that had been identified in 

multiple key financial feeder systems and reported to management as a material weakness or significant 

deficiency since FY 2003. 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. Table 1 below provides a summary of IT control deficiencies 

included in our audit reports on DOL’s consolidated financial statements since FY 2006.

Table 1: Summary of IT Control Deficiencies Included in Our Audit Reports Since FY 2006

Control 

Category Control Description

20062007200820092010201120122013201420152016

IT Entity-Level Controls

Access 

Controls

Incident Response*

Account Authorization

Account Recertification

Account Termination

Logical Access

Identification and 

Authentication

Production Infrastructure 

Layer Separation of Duties 

(SoD)

Audit Logging

Third Party Oversight 

Data Center Access 

Authorization

Account Inactivity

*Note: Beginning in FY 2014, we classified incident response deficiencies in the ELC category. 
Independent Auditors’ Report

Material Weaknesses

Exhibit I

FY 2016 Agency Financial Report 49

Control 

Category Control Description

20062007200820092010201120122013201420152016

Configuration 

Management

Application Software 

Changes

Production and Development 

Environment SoD

Patch Management

Vulnerability Management

Legend

Included in audit report in the FY

Not included in audit report in the FY

Control not in scope for the FY

In summary, during our FY 2016 testing of significant DOL financial and support systems in the four 

DOL agencies responsible for them, we identified 14 new control deficiencies, 41 previously-reported 

deficiencies that were not corrected or not corrected timely, and 19 previously-reported deficiencies for 

which DOL agencies completed sufficient corrective action in FY 2016.

We classified the deficiencies identified into the following categories: account management and system 

access settings, configuration management, system audit log configuration and reviews, and patching 

and vulnerability management.

The first category summarizes the identified deficiencies related to controls that were designed to help 

prevent unauthorized access to IT systems. Control deficiencies related to account management and 

system access settings increase the risk that current employees, separated employees, and/or contractors 

may obtain unauthorized or inappropriate access to financial systems and/or data. Such access could lead 

to unauthorized activities and/or inappropriate disclosures of sensitive data. System access setting control 

deficiencies may be exploited, in either a singular fashion or in combination, by a malicious user, which 

may affect the confidentiality, integrity, and/or availability of DOL systems and data. The specific FY 

2016 deficiencies identified in this category were as follows: 

Account Management and System Access Settings

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

 Certain application and network separated users had active accounts and accessed their accounts 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; 

 Account management controls were not consistently performed, as evidenced by roles that were 

improperly authorized and provisioned in conflict with separation of duties principles, insufficient 

access re-certifications, lack of separation of duties matrices, and missing or insufficient access 

requests; 

 Certain generic accounts did not have business justifications, and management could not identify

who had access to the accounts; and 

 Certain password and inactivity settings did not comply with the Office of the Chief Information 

Officer Computer Security Handbook.
Financial Section

Material Weaknesses

Exhibit I

50 United States Department of Labor

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 

configuration management, including monitoring and tracking of changes, we identified during our FY 

2016 audit procedures that account management controls were not consistently implemented over 

developers with access to perform configuration management changes, as evidenced by incomplete 

re-certifications. The lack of consistently implemented configuration management controls 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 and system access settings risks, we identified during 

our FY 2016 audit procedures that certain audit logs were not captured, 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.

Patching and Vulnerability Management

Controls related to patching and vulnerability management are designed to prevent weaknesses in IT 

systems from being exploited. Such controls include proactively monitoring system vulnerabilities, 

timely patching related security issues, and configuring IT systems in compliance with baseline security 

requirements. During our FY 2016 audit procedures, we identified numerous critical and high-risk 

operating system patches and configurations that were not implemented timely. Additionally, we noted 

that certain database infrastructures were configured on unsupported versions instead of the latest 

supported versions from the vendors.

Vulnerabilities that are not remedied in a timely manner may result in information leaks or system threats. 

These vulnerabilities may also disrupt normal system processes, allow inappropriate access, prevent 

updates from being implemented, and jeopardize the integrity of financial information. Additionally, 

vulnerabilities that are not remedied or mitigated can present an opportunity to circumvent account 

management, system access settings, and audit logging controls. Furthermore, not upgrading to a vendorsupported database increases susceptibility to threats and vulnerabilities developing after the database’s 

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.

Collectively, the aforementioned IT control deficiencies pose a significant 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 systems impacted 

by them, have been communicated separately to management. These deficiencies were the result of issues 

in the design, implementation, or monitoring of departmental procedures and controls. DOL agencies 

have not invested 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.
Independent Auditors’ Report

Material Weaknesses

Exhibit I

FY 2016 Agency Financial Report 51

The National Institute of Standards and Technology Special Publication 800-53, Revision 4, Security

and Privacy Controls for Federal Information Systems and Organizations, and the Government 

Accountability Office’s Standards for Internal Control in the Federal Government (GAO-14-704G), 

provide federal information systems standards and guidelines for controls that include, but are not limited 

to, the controls in which deficiencies were identified.

To address the deficiencies noted above, we recommend the Acting Chief Information Officer: 

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, system access settings, configuration management, system 

audit log configuration and reviews, and patching and vulnerability 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 II for management’s response.

Auditors’ Response: During the audit period, management was provided opportunities to provide 

additional information in response to our findings when they were first identified through the formal 

reporting process. Of the 61 individual findings that we issued during the audit, management nonconcurred with 13 of them, but did not provide a response to the findings to indicate the basis for nonconcurrence or additional information to dispute the findings. The plans outlined in management’s 

response alone do not sufficiently reduce identified risks that have been impacting DOL information 

security controls for the past 10 years.

In accordance with auditing standards generally accepted in the United States of America, we considered 

the deficiencies noted above during our FY 2016 audit individually and in the aggregate. In our 

professional judgment, the aggregation of these deficiencies results in a material weakness. Although 

management stated that they do not concur with our categorization of these deficiencies as a material 

weakness, they plan on taking steps to address them. We will conduct follow-up procedures in FY 2017 

to determine whether corrective actions have been developed and implemented.

2. Deficiencies in Estimating Future Excise Tax Income

For purposes of preparing DOL’s FY 2016 sustainability financial statements for the projection period 

of FY 2017 through FY 2040, management estimated future excise tax income using two approaches, 

one for the first ten years in the projection period and one for the remaining years. For the first ten years 

(i.e., FY 2017 through FY 2026), DOL used as a calculation input excise tax projections that the U.S. 

Department of the Treasury’s Office of Tax Analysis (OTA) prepared for the Mid-Session Review, 

Budget of the U.S. Government. 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 its initial projection, DOL estimated future excise tax income of $524 million for FY 2017.

As part of the Office of the Chief Financial Officer’s (OCFO) procedures over estimated future excise 

tax income, the OCFO performed certain analyses in late October 2016. Based on these analyses, the 

OCFO determined that actual excise taxes received in FY 2016 of $439.6 million decreased significantly 
Financial Section

Material Weaknesses

Exhibit I

52 United States Department of Labor

because of the poor condition of the coal industry. However, DOL’s procedures did not require a change 

to the estimated future excise tax income as of September 30, 2016 based on such contradictory evidence.

The actual excise taxes received by DOL for the 9-month period ended June 30, 2016 and the year ended 

September 30, 2016, decreased by 16 percent and 20 percent, respectively, when compared to the same 

period in the prior year. These changes correlated with the decrease in coal production reported by the 

U.S. Energy Information Administration. However, we determined that DOL had not designed and 

implemented procedures and controls to monitor and assess benchmarking information related to key 

economic assumptions relevant to the coal industry throughout the year.

After we discussed these matters with management, DOL revised its estimated future excise tax income 

projection for FY 2016 in late November. This revision caused the initial amount of the present value of 

estimated future excise tax income for the projection period reported in the statement of social insurance 

to decrease by approximately $427 million. 

Although DOL ultimately revised its estimated future excise tax income projection, management had not 

designed and implemented relevant policies and procedures to:

 Determine the completeness and accuracy of certain underlying assumptions related to the coal 

industry, such as growth or decline in coal production; and

 Analyze the reasonableness of proposed changes to its estimate or estimation methodology prior 

to implementation.

Because of the insufficient policies and procedures noted above, DOL also did not properly design and 

implement controls that operated at a sufficient level of precision to prevent or detect and correct material 

misstatements in the estimate of future excise tax income. As a result, management was unable to provide 

sufficient analyses or other documentation to support the revised estimated future excise tax income 

methodology and certain underlying assumptions used in the final FY 2016 sustainability financial 

statements. 

The following criteria are relevant to the conditions noted above:

 Statement of Federal Financial Accounting Standard No. 17, Accounting for Social Insurance, 

paragraph 25 states:

The projections and estimates should be based on the entity’s reasonable estimates 

of demographic and economic assumptions, taking each factor individually and 

incorporating future changes mandated by current law.

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

Government (the Standards), Sections 12.02 and 12.03 state:

Management documents in policies the internal control responsibilities of the 

organization. Management documents in policies for each unit its responsibility for 

an operational process’s objectives and related risks, and control activity design, 

implementation, and operating effectiveness.
Independent Auditors’ Report

Material Weaknesses

Exhibit I

FY 2016 Agency Financial Report 53

 Section 13.04 of the Standards states:

Management obtains relevant data from reliable internal and external sources in a 

timely manner based on the identified information requirements. Relevant data have 

a logical connection with, or bearing upon, the identified information requirements. 

Reliable internal and external sources provide data that are reasonably free from 

error and bias and faithfully represent what they purport to represent. Management 

evaluates both internal and external sources of data for reliability. Sources of data 

can be operational, financial, or compliance related. Management obtains data on a 

timely basis so that they can be used for effective monitoring.

To address the deficiencies noted above, we recommend the Principal Deputy Chief Financial Officer

perform the following to enhance the existing policies, procedures, and controls: 

a) Identify and document the benchmarking information related to key economic assumptions that

should be monitored and assessed throughout the year to determine the reasonableness of the 

assumptions used to determine the estimated future excise tax income projection. 

b) Establish documentation requirements for these periodic assessments, and develop and 

implement appropriate supervisory review of the assessment and the conclusions contained 

therein. This review should be documented. 

c) Clearly establish when changes in economic conditions warrant revisions to the underlying 

assumptions used in the estimated future excise tax income projection.

d) Develop and implement a control to analyze changes to the estimated future excise tax income 

projection for reasonableness before changes are implemented. This analysis should be 

documented and retained. 

e) Develop and implement procedures and controls to obtain and review the details of OTA’s key 

excise tax assumptions to determine if the assumptions are reasonable. This review should be 

documented. 

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

Auditors’ Response: We will conduct follow-up procedures in FY 2017 to determine whether corrective 

actions have been developed and implemented.
Financial Section

Management’s Response

Exhibit II

54 United States Department of Labor
Independent Auditors’ Report

Management’s Response

Exhibit II

FY 2016 Agency Financial Report 55
Financial Section

Management’s Response

Exhibit II

56 United States Department of Labor
Annual Financial Statements
58 United States Department of Labor
59

Principal Financial Statements and Notes
Financial Section (Unaudited)

PRINCIPAL FINANCIAL STATEMENTS

60 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 2016 and FY 2015 consist of the following: 

 The Consolidated Balance Sheets, which present as of September 30, 2016 and 2015, 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, 2016 and 2015. 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, 2016 and 2015.

 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 FY’s 2016 and

2015; and the status of these resources as of September 30, 2016 and 2015.

 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), respectively, of the Black Lung Disability Trust Fund (BLDTF) as of September 30, 

2016, 2015, 2014, 2013, and 2012, respectively. The net present value of projected cash flows for the closed 

group is also known as the closed group measure; the net present value of the projected cash flows for the 

open group is also known as the open group measure. The summary section presents the total of closed group 

measure plus fund assets and the total of open group measure plus fund assets; fund assets consist of Funds 

with U.S. Treasury and receivables.

 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, 2016 and 2015, and provides information about the 

change.
Annual Financial Statements 

CONSOLIDATED BALANCE SHEETS

As of September 30, 2016 and 2015

(Dollars in Thousands)

FY 2016 Agency Financial Report 61 

2016 2015

ASSETS

Intra-governmental

Funds with U.S. Treasury (Note 1-C and 2) $ 11,960,730 $ 11,568,982

Investments (Note 1-D and 3) 54,098,358 44,644,478

Accounts receivable (Note 1-E and 4) 5,534,674 5,616,399

Advances (Note 1-G and 6) 3,409 11,831

Total intra-governmental 71,597,171 61,841,690

Accounts receivable, net of allowance (Note 1-E and 4) 1,379,029 1,747,211

General Property, plant and equipment, net (Note 1-F and 5) 1,264,080 1,294,528

Advances (Note 1-G and 6) 1,105,972 1,343,733

Total assets $ 75,346,252 $ 66,227,162

LIABILITIES AND NET POSITION

Liabilities (Note 1-I and 12)

Intra-governmental

Accounts payable $ 15,865 $ 22,324

Debt (Note 1-J and 8) 14,264,915 18,527,186

Other liabilities (Note 9) 249,811 348,713

Total intra-governmental 14,530,591 18,898,223

Accounts payable 325,041 259,334

Accrued benefits (Note 1-K and 10) 1,642,495 1,301,844

Future workers' compensation benefits (Note 1-L and 11) 1,917,478 1,479,265

Energy employees occupational illness compensation benefits (Note 1-M) 15,373,336 14,832,013

Accrued leave (Note 1-N) 128,045 115,177

Other liabilities (Note 9) 836,870 850,517

Total liabilities 34,753,856 37,736,373

Contingencies (Note 13)

Net position (Note 1-R)

Funds from dedicated collections

Cumulative results of operations (Note 21) 40,442,362 27,153,317

All other funds

Unexpended appropriations 7,919,543 7,991,121

Cumulative results of operations (7,769,509) (6,653,649)

Total net position - all other funds 150,034 1,337,472

Total net position 40,592,396 28,490,789

Total liabilities and net position $ 75,346,252 $ 66,227,162

The accompanying notes are an integral part of these statements.
Financial Section 

CONSOLIDATED STATEMENTS OF NET COST

For the Years Ended September 30, 2016 and 2015

(Dollars in Thousands)

62 United States Department of Labor

2016 2015

NET COST OF OPERATIONS (Note 1-S and 15)

CROSSCUTTING PROGRAMS

Income maintenance

Gross Cost $ 43,314,156 $ 41,384,332

 Less Earned Revenue (3,546,200) (3,757,686)

 Net Program Cost 39,767,956 37,626,646

Employment and training

Gross Cost 6,301,715 6,245,765

 Less Earned Revenue (10,045) (13,496)

 Net Program Cost 6,291,670 6,232,269

Labor, employment and pension standards

Gross Cost 912,018 864,880

 Less Earned Revenue (19,277) (11,834)

 Net Program Cost 892,741 853,046

Worker safety and health

Gross Cost 1,072,944 1,055,674

 Less Earned Revenue (7,678) (4,432)

 Net Program Cost 1,065,266 1,051,242

OTHER PROGRAMS

Statistics

Gross Cost 660,604 645,560

 Less Earned Revenue (32,165) (28,823)

 Net Program Cost 628,439 616,737

COSTS NOT ASSIGNED TO PROGRAMS

 Gross Cost 18,505 17,825

 Less Earned Revenue not attributed to programs (9,680) (572)

 Net Cost not assigned to programs 8,825 17,253

Net cost of operations $ 48,654,897 $ 46,397,193

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, 2016 and 2015

(Dollars in Thousands)

FY 2016 Agency Financial Report 63 

Funds from Funds from 

Dedicated All Other Dedicated All Other

Collections Funds Total Collections Funds Total

Cumulative results of operations, beginning $ 27,153,317 $ (6,653,649) $ 20,499,668 $ 11,304,501 $ (7,461,467) $ 3,843,034

Budgetary financing sources (Note 1-T)

Appropriations used - 10,277,935 10,277,935 - 9,964,324 9,964,324

Non-exchange revenue (Note 16)

Employer taxes 47,370,792 - 47,370,792 49,628,888 - 49,628,888

Interest 1,219,327 25 1,219,352 1,194,863 - 1,194,863

Reimbursement of 

 unemployment benefits and other 1,596,876 536 1,597,412 1,902,743 7,389 1,910,132

Total non-exchange revenue 50,186,995 561 50,187,556 52,726,494 7,389 52,733,883

Transfers without reimbursement (Note 17) (3,635,425) 3,885,853 250,428 (3,682,768) 3,925,290 242,522

Other financing sources (Note 1-U)

Imputed financing from 

 costs absorbed by others 2,734 104,743 107,477 2,868 105,537 108,405

Transfers without reimbursement (Note 17) - 4,930 4,930 - 4,544 4,544

Other - (244) (244) - 149 149

Total financing sources 46,554,304 14,273,778 60,828,082 49,046,594 14,007,233 63,053,827

Net cost of operations (33,265,259) (15,389,638) (48,654,897) (33,197,778) (13,199,415) (46,397,193)

Net change 13,289,045 (1,115,860) 12,173,185 15,848,816 807,818 16,656,634

Cumulative results of operations, end of period 40,442,362 (7,769,509) 32,672,853 27,153,317 (6,653,649) 20,499,668

 Unexpended appropriations, beginning - 7,991,121 7,991,121 - 9,272,731 9,272,731

Budgetary financing sources (Note 1-T)

Appropriations received (Note 18-F) - 10,761,084 10,761,084 - 10,450,010 10,450,010

Appropriations used - (10,277,935) (10,277,935) - (9,964,324) (9,964,324)

Appropriations transferred - (1,000) (1,000) - (294) (294)

Other adjustments - (553,727) (553,727) - (1,767,002) (1,767,002)

Total Budgetary Financing Sources - (71,578) (71,578) - (1,281,610) (1,281,610)

 Unexpended appropriations, end of period - 7,919,543 7,919,543 - 7,991,121 7,991,121

Net position $ 40,442,362 $ 150,034 $ 40,592,396 $ 27,153,317 $ 1,337,472 $ 28,490,789

2016 Consolidated 2015 Consolidated The accompanying notes are an integral part of these statements.
Financial Section 

COMBINED STATEMENTS OF BUDGETARY RESOURCES

For the Years Ended September 30, 2016 and 2015

(Dollars in Thousands)

64 United States Department of Labor

2016 2015

Note 1-Z and 18 

BUDGETARY RESOURCES

Unobligated balance brought forward, October 1 $ 3,447,458 $ 4,611,740

Recoveries of prior year unpaid obligations 603,674 564,577

Other changes in unobligated balance (228,293) (1,216,674)

Unobligated balance from prior year budget authority, net 3,822,839 3,959,643

Appropriations (discretionary and mandatory) 47,611,750 46,890,818

Spending authority from offsetting collections (discretionary and mandatory) 7,410,865 7,286,090

Total budgetary resources $ 58,845,454 $ 58,136,551

STATUS OF BUDGETARY RESOURCES

New obligations and upward adjustments (Total) $ 54,889,189 $ 54,689,093

Unobligated balance, end of year

 Apportioned, unexpired account 3,083,935 2,767,119

 Exempt from apportionment, unexpired accounts 37,251 41,804

 Unapportioned, unexpired accounts 73,288 100,030

Unexpired unobligated balance, end of year 3,194,474 2,908,953

Expired unobligated balance, end of year 761,791 538,505

 Total unobligated balance, end of year $ 3,956,265 $ 3,447,458

Total budgetary resources $ 58,845,454 $ 58,136,551

CHANGE IN OBLIGATED BALANCE

Unpaid Obligations:

Unpaid obligations, brought forward, October 1 $ 13,200,831 $ 14,053,217

New obligations and upward adjustments 54,889,189 54,689,093

Less: outlays (gross) (54,606,695) (54,976,902)

Less: recoveries of prior year unpaid obligations (603,674) (564,577)

Unpaid obligations, end of year $ 12,879,651 $ 13,200,831

Uncollected Payments: 

Uncollected payments, Federal sources, brought forward, October 1 (1,697,626) (2,017,703)

Change in uncollected payments, Federal sources (50,551) 320,077

Uncollected payments, Federal sources, end of year (1,748,177) (1,697,626)

Obligated balance, start of year $ 11,503,205 $ 12,035,514

Obligated balance, end of year $ 11,131,474 $ 11,503,205

BUDGET AUTHORITY AND OUTLAYS, NET

Budget authority, gross (discretionary and mandatory) $ 55,022,615 $ 54,176,908

Actual offsetting collections (discretionary and mandatory) (7,389,858) (7,762,559)

Change in uncollected customer payments from Federal 

sources (discretionary and mandatory) (50,551) 320,077

Recoveries of prior year paid obligations (discretionary and mandatory) 29,544 156,392

Budgetary authority, net (discretionary and mandatory) $ 47,611,750 $ 46,890,818

Outlays, gross (discretionary and mandatory) $ 54,606,695 $ 54,976,902

Actual offsetting collections (discretionary and mandatory) (7,389,858) (7,762,559)

Outlays, net (discretionary and mandatory) 47,216,837 47,214,343

Distributed offsetting receipts (740,914) (1,058,051)

Agency outlays, net (discretionary and mandatory) $ 46,475,923 $ 46,156,292

The accompanying notes are an integral part of these statements.
Annual Financial Statements

STATEMENTS OF SOCIAL INSURANCE

As of September 30, 2016, 2015, 2014, 2013, and 2012

(Dollars in Thousands)

FY 2016 Agency Financial Report 65 

Unaudited

2016 2015 2014 2013 2012

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 $ 2,906,046 $ 4,738,572 $ 7,301,416 $ 7,494,800 $ 7,804,178

Less the present value of estimated future administrative

 costs during the projection period 953,474 1,242,920 942,107 920,740 963,995

Less the actuarial present value of future benefit

 payments to disabled coal miners and dependent

 survivors during the projection period 1,359,109 1,898,939 1,876,522 1,953,763 2,181,654

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) 593,463 1,596,713 4,482,787 4,620,297 4,658,529

New participants

Present value of estimated future excise tax

 income during the projection period 1,452,086 - - - -

Less the present value of estimated future administrative

 costs during the projection period 476,429 - - - -

Less the actuarial present value of future benefit

 payments to disabled coal miners and dependent

 survivors during the projection period 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 296,541 - - - -

Current and new participants (open group)

Present value of estimated future excise tax

 income during the projection period 4,358,132 4,738,572 7,301,416 7,494,800 7,804,178

Less the present value of estimated future administrative

 costs during the projection period 1,429,903 1,242,920 942,107 920,740 963,995

Less the actuarial present value of future benefit

 payments to disabled coal miners and dependent

 survivors during the projection period 2,038,225 1,898,939 1,876,522 1,953,763 2,181,654

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) $ 890,004 $ 1,596,713 $ 4,482,787 $ 4,620,297 $ 4,658,529

Trust fund net position deficit at start 

 of projection period (Note 1-W and 21) $ (5,604,460) $ (5,644,208) $ (5,755,352) $ (5,894,222) $ (5,977,619)

Summary Section

Closed group measure $ 593,463 $ 1,596,713 $ 4,482,787 $ 4,620,297 $ 4,658,529

Add: Funds with U.S. Treasury and receivables from

 benefit overpayments (Note 21) 113,856 54,859 129,376 145,794 102,498

Total of closed group measure plus fund assets (Note 1-W) $ 707,319 $ 1,651,572 $ 4,612,163 $ 4,766,091 $ 4,761,027

Open group measure $ 890,004 $ 1,596,713 $ 4,482,787 $ 4,620,297 $ 4,658,529

Add: Funds with U.S. Treasury and receivables from

 benefit overpayments (Note 21) 113,856 54,859 129,376 145,794 102,498

Total of open group measure plus fund assets (Note 1-W) $ 1,003,860 $ 1,651,572 $ 4,612,163 $ 4,766,091 $ 4,761,027

For the Projection Period Ending September 30, 2040

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, 2016 and 2015 

(Dollars in Thousands)

66 United States Department of Labor

BLACK LUNG DISABILITY BENEFIT PROGRAM (Note 1-W and 1-Y)

Open Group Measure

(Dollars in Thousands) Unaudited

2016 2015

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 $ 1,596,713 $ 4,482,787 

 Changes in the assumptions about beneficiaries, including

 costs, number, type, age and life expectancy (22,732) 25,406

 Changes in assumptions about coal excise tax revenues (652,225) (2,726,804)

 Changes in assumptions about Federal civilian pay raises for income benefits 9,653 4,431

 Changes in assumptions about medical cost inflation for medical benefits (8,373) (1,652)

 Changes in assumptions about administrative costs (95,670) (253,365)

 Changes in assumptions about interest rates 62,638 65,910 

Net change in open group measure (706,709) (2,886,074)

Open group measure, end of year $ 890,004 $ 1,596,713 

The accompanying notes are an integral part of these statements.
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2016 and 2015

FY 2016 Agency Financial Report 67

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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 (occupational health and 

safety); (iii) income security; and (iv) veterans benefits and services (veterans education 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)

 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 - Office of Disability Employment Policy

- 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, 2016 and 2015

68 United States Department of Labor

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

A. Reporting Entity - Continued

2. Major programs

 Income maintenance

 Employment and training

 Labor, employment and pension standards 

 Worker safety and health

 Statistics 

 

The table above shows the relationship between the Department’s strategic goals and its major programs.

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. 

 

 Major Programs

Strategic Goals Income 

Maintenance

Employment 

and Training

Labor, 

Employment 

and Pension 

Standards

Worker 

Safety and 

Health Statistics

1: Prepare workers for better jobs  

2: Improve workplace safety and health 

3: Promote fair and high-quality work 

environments 

4: Secure retirement, health, and other employee 

benefits and, for those not working, provide 

income security 

 

5: Produce timely and accurate data on the 

economic conditions of workers and their 

families 


Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2016 and 2015

FY 2016 Agency Financial Report 69 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

A. Reporting Entity - Continued

3. Fund accounting structure - continued

Funds from dedicated collections - continued

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. The funds are supported by fees paid by employers applying for 

foreign workers under the H-1B temporary alien labor certification program authorized by the American 

Competitiveness and Workforce Improvement Act of 1998.

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 Workmen’s Compensation Act Trust Fund, established under the authority of the 

District of Columbia Workmen’s Compensation Act, provides compensation and medical payments to the

District 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.
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2016 and 2015

70 United States Department of Labor

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

A. Reporting Entity - Continued

3. Fund accounting structure - continued

Fiduciary funds - continued

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. Effective November 

21, 2013, responsibility for administrating this fund was transferred from the Government Accountability 

Office (GAO) to the Department of Labor. 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. 

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.

Payments to the Unemployment Trust Fund was initiated as a result of amendments to the Emergency 

Unemployment Compensation (EUC) law, which provided general fund financing to the UTF to pay EUC 

benefits and the related administrative costs. This account is currently used to provide general fund 

financing for EUC benefits and administrative costs under the Supplemental Appropriations Act of 2008, as 

extended by the Recovery Act and other authorizing legislation.

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.
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2016 and 2015

FY 2016 Agency Financial Report 71 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

A. Reporting Entity - Continued

3. Fund accounting structure - continued

All other funds - continued

Revolving Fund for Advances to Employment Security Administration Account (ESAA), Unemployment Trust 

Fund was established under the authority of Social Security Act Section 901(e), to advance amounts to ESAA 

in the event that balances in this account prove insufficient to cover expenditures relating to administrative 

costs associated with the administration of the UTF. 

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 adjustment assistance, and 

alternative TAA) as authorized by the Trade Act of 1974 and subsequent amendments. 

Short-Time Compensation provides grants to states to implement or improve short-time compensation 

programs as authorized by the Middle Class Tax Relief and Job Creation Act of 2012. Short-time

compensation programs allow employers to voluntarily reduce the number of hours worked by employees 

in lieu of layoffs and permits employees to collect a pro rata portion of the UC which would otherwise be 

payable to the employee if the employee was unemployed. 

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’ 

Compensation Act and the District of Columbia Workmen’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. 
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2016 and 2015

72 United States Department of Labor

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

A. Reporting Entity - Continued

3. Fund accounting structure - continued

All other funds - continued

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 Fund 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 relationships

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.

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. 
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2016 and 2015

FY 2016 Agency Financial Report 73 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

B. Basis of Accounting and Presentation - Continued

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 and the Executive Office of the President of the United States to support an 

unemployment insurance (UI) financial data access project (parent entities). Accordingly, activity for these 

allocation accounts 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. The Department’s compliance with U.S. GAAP includes the implementation in FY 2015 of SFFAS 44, 

“Accounting For Impairment Of General Property, Plant, And Equipment Remaining In Use.” This has an immaterial 

impact on DOL’s financial statements. 

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 

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,
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2016 and 2015

74 United States Department of Labor

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

D. Investments - Continued

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)

All Other Funds

Balances held in the Energy Employees Occupational Illness Compensation Fund are invested in non-marketable 

Treasury one-day certificates. (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 receivable

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. 
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2016 and 2015

FY 2016 Agency Financial Report 75 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

E. Accounts Receivable, Net of Allowance - Continued

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)

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)
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2016 and 2015

76 United States Department of Labor

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

H. Non-entity Assets

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, 2016 and 2015, represents 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 USC 1323). Although no draws were made on borrowing authority in FY 

2016, these advances were appropriated 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; and appropriated in FY 2015 through 

three continuing resolutions with P.L. 113-164, P.L. 113-202 and P.L. 113-203 and an appropriations act P.L. 

113-235. These repayable advances bear interest rates ranging between 2.375% and 2.875%, 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. 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)
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2016 and 2015

FY 2016 Agency Financial Report 77 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

J. Debt - Continued

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, 2015 (due September 30, 2016) bearing an 

interest rate of 0.330%, and on September 30, 2016 (due September 30, 2017) bearing an interest rate of 

0.589%. (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.

Unemployment benefits to unemployed Federal workers are paid from the FEC account within the UTF, 

which is then reimbursed by the responsible Federal agency. 
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2016 and 2015

78 United States Department of Labor

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

K. Accrued Benefits - Continued

1. Unemployment benefits payable - continued

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 

Workmen’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. 
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2016 and 2015

FY 2016 Agency Financial Report 79 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

L. Future Workers’ Compensation Benefits - Continued

DOL selects the COLA factors, CPIM factors, and discount rate 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 2016 and FY 2015 were as follows:

 COLA CPIM 

 FY 2016 2015 2016 2015

 

2016 N/A 1.64 % N/A 2.94 %

2017 1.31 % 1.47 % 2.99 % 2.98 %

2018 1.13 % 1.33 % 3.09 % 3.09 %

2019 1.23 % 1.43 % 3.40 % 3.39 % 

2020 1.45 % 1.65 % 3.68 % 3.69 %

2021+ 1.85 % 1.65 % 3.87 % 3.69 %

 

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 years and 9.8 years in FY 2016 and 

14.9 years and 9.8 years in FY 2015, 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 2.781% and 

2.261% in FY 2016 and 3.134% and 2.496% in FY 2015, respectively.

In FY 2016, there was 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.). In FY 2015, OWCP established a unit 

to expedite processing of WHCA cases. As a result, the number and value of WHCA settled claims increased in FYs 

2015 and 2016. To accommodate the claims, in FY 2016 DOL applied a triangle approach to enhance matching 

between the actuarial technique and the lump-sum nature of the WHCA claims. In FY 2015, DOL used an annuity 

approach. In FY 2016, OWCP applied to WHCA projected benefits a similar methodology for selecting the interest 

rate assumptions; for both WHCA income payments and medical payments, the average durations and interest rates 

were 8.3 years and 2.012%, 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 workers’ 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.
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2016 and 2015

80 United States Department of Labor

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

M. Energy Employees Occupational Illness Compensation Benefits - Continued

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 average durations for compensation payments and medical payments were 10.9 years and 17.4 years in FY 

2016 and 9.2 years and 17.0 years in FY 2015, respectively. The interest rate assumptions for compensation 

payments and medical payments were 2.414% and 2.949% in FY 2016 and 2.387% and 3.282% in FY 2015, 

respectively. Using the interest rate assumptions to discount to present value, the undiscounted liability and 

discounted liability were, as of September 30, 2016, $22.3 billion and $15.4 billion over a 59-year period and, as of 

September 30, 2015, $21.7 billion and $14.8 billion over a 58-year period, respectively.

The estimated liability includes the expected compensation and estimated medical payments for approved 

compensation cases and cases filed 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. 

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 2016, DOL’s contributions to the FEHBP and FEGLIP were 

$120.5 million and $2.5 million, respectively. During FY 2015, DOL’s contributions to the FEHBP and FEGLIP were 

$113.4 million and $2.4 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 $81.9 million in FY 2016 and $72.1 million in FY 2015.
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2016 and 2015

FY 2016 Agency Financial Report 81 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

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 2016 and FY 2015 are presented in the table below.

Percentage of Gross Earnings

FY 2016 FERS FERS RAE FERS FRAE

Employee contribution/withholding 0.8% 3.1% 4.4%

DOL contribution 13.7% 11.9% 11.9%

FY 2015 FERS FERS RAE FERS FRAE

Employee contribution/withholding 0.8% 3.1% 4.4%

DOL contribution 13.2% 11.1% 11.1%

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 $125.5 million in FY 2016 and $121.0 million in FY 2015.

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 2016 and 2015 respectively, 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 2016 and 

2015 respectively. 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 2016 and 2015, 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.
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2016 and 2015

82 United States Department of Labor

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

Q. Employee Pension Benefits - Continued

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. 

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)
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2016 and 2015

FY 2016 Agency Financial Report 83 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

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.

2. Non-exchange revenues

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 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)
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2016 and 2015

84 United States Department of Labor

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

T. Budgetary Financing Sources - Continued

2. Non-exchange revenue - continued

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. 

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 and of appropriations for 

extended unemployment benefits. (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)
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2016 and 2015

FY 2016 Agency Financial Report 85 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

W. Significant Assumptions Used in the Statements of Social Insurance and Statements of Changes in 

Social Insurance Amounts (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.

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).

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.

DOL estimates future excise tax income using two approaches: one approach is used for the first ten

years in the projection period and another approach is used for the remaining years in the projection

period. For FYs 2012 through 2015, DOL’s projections were based on the estimates provided by Treasury’s 

Office of Tax Analysis (OTA) w h i c h provides 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, EIA projections used by OTA
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2016 and 2015

86 United States Department of Labor

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

W. Significant Assumptions Used in the Statements of Social Insurance and Statements of Changes in 

Social Insurance Amounts (FY 2016 Information is Unaudited) - Continued

2. Significant Assumptions - continued

of future coal production reflect, among other things, regulation pursuant to the Clean Power Plan (CPP). In 

FY 2016, DOL refined the approach to enhance alignment with recent experience. For FY 2016, DOL’s 

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 applies a growth rate to the projection for the tenth 

year and grows 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 

period. In FY 2016, the growth rate is based on the average EIA growth rates for future coal production 

that reflect, 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 2012 through 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 stayed implementation of regulation pursuant to the CPP due to 

litigation pending in the U.S. Court of Appeals; as of September 30, 2016 the stay remained in effect. DOL

did not change its sources or approaches for estimating future excise tax income because of the stay.

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 

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 2012 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 

2012 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. 
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2016 and 2015

FY 2016 Agency Financial Report 87 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

W. Significant Assumptions Used in the Statements of Social Insurance and Statements of Changes in 

Social Insurance Amounts (FY 2016 Information is Unaudited) - Continued

2. Significant Assumptions - continued

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. Accordingly, for FY 2016 reporting, the SOSI presents values for the closed group, new 

participants, and open group. 

In FYs 2012 through 2015, Social Security Administration (SSA) life tables were used to project the life 

expectancies of the beneficiary population, whereas in FY 2016, 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 1.0% 

in 2017, 1.38% in 2018, 1.88% in 2019, 2.38% in 2020, 2.88% in 2021, and 3.0% in each year thereafter and 

medical cost increases 5.0% in each year. 

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.

The projection period ends September 30, 2040, the date when the BLDTF’s last debt instrument matures. 

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 and receivables 

from benefit overpayments) available to service the BLDTF debt and interest until the last debt instrument 

matures.

In FYs 2014 through 2016, 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, and 2016.
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2016 and 2015

88 United States Department of Labor

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

W. Significant Assumptions Used in the Statements of Social Insurance and Statements of Changes in 

Social Insurance Amounts (FY 2016 Information is Unaudited) - Continued

2. Significant Assumptions - continued

Projected Annual

Cash Flows

Used for the Closed Group,

New Participant, and Open Group Populations

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%. In FY 2012, projected annual cash flows were discounted using an 

interest rate published by Treasury as of the start of the projection period for Treasury loans to 

government agencies for loans with a duration that approximated the projection period; the discount rate 

was 2.75%.

The valuation date for the FY 2016 and FY 2015 information presented in the SOSI, including the summary 

section, and in the SCSIA is September 30, 2016 and 2015, respectively.

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 $(5.6) billion, the amount of the trust fund net position deficit at the 

start of the projection period, September 30, 2016. 

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)
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2016 and 2015

FY 2016 Agency Financial Report 89 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

W. Significant Assumptions Used in the Statements of Social Insurance and Statements of Changes in 

Social Insurance Amounts (FY 2016 Information is Unaudited) - Continued

3. Disclosures for the social insurance financial statements - continued

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 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; and 

o In FY 2015, the open group measure decreased by $(2,886.1) million primarily due to projected 

lower coal excise tax revenues and higher administrative costs, offset in part due to lower 

beneficiary costs and the change in interest rates used to discount the cash flows from 2.50% and 

2.63% in FY 2014 to 2.25% for income payments, medical payments, administrative expenses, and 

coal excise tax collections in FY 2015.

The SOSI as of September 30, 2015, 2014, 2013, and 2012, were reclassified to conform to the 

presentation of the SOSI as of September 30, 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, 2013, and 2012, respectively.

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 debt and interest. As of September 30, 2016, the 

open group measure plus fund assets is $0.89 billion whereas the BLDTF debt and interest maturing on 

September 30, 2017 is $1.46 billion and the carrying value of all BDLTF debt as of September 30, 2016 is 

$5.71 billion. The excess of BLDTF debt over the open group measure plus fund assets together with the 

fund deficit of $(5.6) billion represent a material concentration of risk for the Department.

Subsequent Events. As of December 15, 2016 the U.S. Supreme Court stay of regulation pursuant to the 

Clean Power Plan remained in effect. DOL did not change its sources or approaches for estimating future 

excise tax income because of the stay.
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2016 and 2015

90 United States Department of Labor

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

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. Reclassifications 

The FY 2015 financial statements were reclassified to conform to the FY 2016 financial statement presentation 

requirements and include, among other things, changes in the presentation of the Combined Statements of 

Budgetary Resources in accordance with the requirements of OMB Circular No. A-136. The reclassifications had no 

effect on total budgetary resources as previously reported.
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2016 and 2015

FY 2016 Agency Financial Report 91 

NOTE 2 - FUNDS WITH U.S. TREASURY

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

Funds with U.S. Treasury as of September 30, 2015, consisted of the following:

(Dollars in thousands) Revolving funds Trust funds Special funds General funds Other Total

Unobligated Balance Available $ 8,909 $ 163 $ 265,528 $ 2,492,462 $ - $ 2,767,062

Unobligated Balance Unavailable 8,078 - 51,489 578,968 - 638,535

Obligated Balance Not Yet Disbursed 133,044 11,927 467,573 7,482,001 - 8,094,545

Non-Budgetary Fund Balance with Treasury - 63,629 220 66 - 63,915

Total Entity Assets 150,031 75,719 784,810 10,553,497 - 11,564,057

Non-entity Assets - (1,050) - - 5,975 4,925

Fund Balance with Treasury $ 150,031 $ 74,669 $ 784,810 $ 10,553,497 $ 5,975 $ 11,568,982

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, 2016 and 2015, 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, 2016 and 2015, includes $466.7 million and $491.7 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, 2016 and 2015

92 United States Department of Labor

NOTE 3 - INVESTMENTS

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
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2016 and 2015

FY 2016 Agency Financial Report 93 

NOTE 3 - INVESTMENTS - Continued

Investments as of September 30, 2015, 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, 2017 $ 33,635,788 $ - $ 189,201 $ 33,824,989 $ 33,635,788

 2.375% maturing June 30, 2016 3,751,987 - 22,277 3,774,264 3,751,987

Special issue Certificate of Indebtedness

 2.250% maturing June 30, 2016 6,980,612 - 22,049 7,002,661 6,980,612

$ 44,368,387 - $ 233,527 $ 44,601,914 $ 44,368,387

Panama Canal Commission

 Compensation Fund

Marketable

U.S. Treasury Notes

 4.50% maturing November 11, 2015 41,641 220 703 42,564 41,641

$ 44,410,028 $ 220 $ 234,230 $ 44,644,478 $ 44,410,028

Entity investments $ 44,302,725 $ 220 $ 233,665 $ 44,536,610 $ 44,302,725

Non-entity investments 107,303 - 565 107,868 107,303

$ 44,410,028 $ 220 $ 234,230 $ 44,644,478 $ 44,410,028
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2016 and 2015

94 United States Department of Labor

NOTE 4 - ACCOUNTS RECEIVABLE, NET OF ALLOWANCE

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

Accounts receivable, net as of September 30, 2015, consisted of the following:

Gross Net

(Dollars in thousands) Receivables Allowance Receivables

Entity intra-governmental assets

Due for UCFE and UCX benefits $ 281,752 $ - $ 281,752

Due for workers' compensation benefits 5,332,848 - 5,332,848

Other 1,799 - 1,799

 5,616,399 - 5,616,399

Entity assets

State unemployment taxes 1,268,232 (852,937) 415,295

Due from reimbursable employers 588,308 (47,827) 540,481

Benefit overpayments 3,482,077 (2,870,462) 611,615

Other 7,218 - 7,218

 5,345,835 (3,771,226) 1,574,609

Non-entity assets

Fines and penalties 218,643 (46,041) 172,602

 5,564,478 (3,817,267) 1,747,211

$ 11,180,877 $ (3,817,267) $ 7,363,610

The September 30, 2016 intra‐governmental balance due for workers’ compensation benefits includes a $1.5 billion 

receivable from the U.S. Postal Service (USPS). Section 8147 of Title 5 of the U.S.C. mandates that USPS reimburse 

the FECA Special Benefits Fund by October 15 for benefits incurred on its behalf and administration costs. The 

October 2016 USPS reimbursement excluded $151 million; however, DOL considers the USPS intra-governmental 

receivable to be fully collectible.

The September 30, 2015 intra-governmental balance due for workers’ compensation benefits included a $1.4 billion 

receivable from USPS. The October 2015 USPS reimbursement excluded $68 million; USPS paid the $68 million 

reimbursement in January 2016. 
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2016 and 2015

FY 2016 Agency Financial Report 95 

NOTE 5 - GENERAL PROPERTY, PLANT AND EQUIPMENT, NET 

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

General property, plant and equipment, net as of September 30, 2015, consisted of the following:

Accumulated

Depreciation/ Net Book

(Dollars in thousands) Cost Amortization Value

Structures, facilities and improvements

Structures and facilities $ 1,583,712 $ (677,031) $ 906,681

Improvements to leased facilities 398,274 (298,875) 99,399

 1,981,986 (975,906) 1,006,080

Furniture and equipment

Equipment held by contractors 136,107 (127,904) 8,203

Furniture and equipment 51,928 (34,588) 17,340

 188,035 (162,492) 25,543

Internal use software and software in development 262,788 (134,172) 128,616

Construction-in-progress 34,773 - 34,773

Land 99,516 - 99,516

$ 2,567,098 $ (1,272,570) $ 1,294,528

2015
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2016 and 2015

96 United States Department of Labor

NOTE 6 - ADVANCES

Advances as of September 30, 2016 and 2015, consisted of the following:

(Dollars in thousands) 2016 2015

Intra-governmental

Advances $ 3,409 $ 11,831

Advances to states for UI benefit payments 1,104,566 1,341,940

Other 1,406 1,793

 1,105,972 1,343,733

$ 1,109,381 $ 1,355,564

NOTE 7 - NON-ENTITY ASSETS

Non-entity assets as of September 30, 2016 and 2015, consisted of the following:

(Dollars in thousands) 2016 2015

Intra-governmental

Funds with U.S. Treasury $ 6,376 $ 4,925

Investments 68,094 107,868

 74,470 112,793

Accounts receivable, net of allowance 151,420 172,602

Total non-entity assets 225,890 285,395

Total entity assets 75,120,362 65,941,767

$ 75,346,252 $ 66,227,162

NOTE 8 - DEBT

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

Debt during FY 2015 consisted of the following:

Balance at Balance at

September 30, Additional Repayment of Interest September 30,

(Dollars in thousands) 2014 Borrowing Debt Change 2015

Intra-governmental debt to Treasury

Unemployment Trust Fund

 Advances from U.S. Treasury $ 20,823,599 $ 300,000 $ (8,265,085) $ (18,449) $ 12,840,065

Black Lung Disability Trust Fund

 Borrowing from U.S. Treasury 5,872,219 585,000 (891,768) 121,670 5,687,121

$ 26,695,818 $ 885,000 $ (9,156,853) $ 103,221 $ 18,527,186
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2016 and 2015

FY 2016 Agency Financial Report 97 

NOTE 8 - DEBT - Continued

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, 2015, interest expense for the UTF was $517.6 million, of which $479.9

million was paid, along with an additional interest payment of $56.1 million for interest accrued through 

September 30, 2014.

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. For the year ended September 30, 2015, interest expense for 

the BLDTF was $216.0 million, of which $121.7 million was capitalized interest and $94.3 million was paid. 

NOTE 9 - OTHER LIABILITIES

Other liabilities as of September 30, 2016 and 2015, consisted of the following:

(Dollars in thousands) 2016 2015

Intra-governmental

Non-entity receivables due to U.S. Treasury $ 151,420 $ 172,894

Amounts held for the Railroad Retirement Board 68,007 106,819

Accrued payroll and other liabilities 30,384 69,000

Total intra-governmental 249,811 348,713

Grant accruals 664,518 689,283

Capital lease liability 37,271 38,867

Environmental and disposal liability 34,885 33,393

Accrued payroll and other liabilities 100,196 88,974

Total other liabilities with the public 836,870 850,517

$ 1,086,681 $ 1,199,230

The amounts above are current liabilities, except for the capital lease and environmental and disposal liabilities. 

NOTE 10 - ACCRUED BENEFITS

Accrued benefits as of September 30, 2016 and 2015, consisted of the following:

(Dollars in thousands) 2016 2015

State regular and extended unemployment benefits payable $ 997,378 $ 646,421

Federal extended unemployment benefits payable 83,359 79,421

Federal emergency unemployment benefits payable 174,621 207,508

Federal employees' unemployment benefits payable 128,755 155,880

Federal additional unemployment benefits payable 25,435 25,812

Total unemployment benefits payable 1,409,548 1,115,042

Federal employees' disability and 10(h) benefits payable 185,968 134,697

Black lung disability benefits payable 19,513 20,623

Energy employees occupational illness compensation benefits payable 27,466 31,482

$ 1,642,495 $ 1,301,844
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2016 and 2015

98 United States Department of Labor

NOTE 11 - FUTURE WORKERS' COMPENSATION BENEFITS

DOL’s liability for future workers’ compensation benefits as of September 30, 2016 and 2015, consisted of the 

following:

(Dollars in thousands) 2016 2015

Projected gross liability of the Federal government

 for future FECA benefits $ 36,453,650 $ 35,333,800

Less liabilities attributed to other agencies:

U.S. Postal Service (16,228,868) (15,736,693)

Department of Homeland Security (2,752,677) (2,506,660)

Department of Veterans Affairs (2,322,213) (2,243,606)

Department of the Navy (2,140,650) (2,217,153)

Department of the Army (1,734,174) (1,749,103)

Department of Justice (1,725,538) (1,654,319)

Department of the Air Force (1,247,468) (1,286,627)

Department of Agriculture (904,661) (893,121)

Department of Transportation (874,184) (934,144)

Department of Defense, Other (810,252) (803,782)

Department of the Interior (773,999) (774,798)

Department of the Treasury (597,277) (587,144)

Tennessee Valley Authority (366,709) (387,274)

Social Security Administration (327,213) (329,399)

Department of Health and Human Services (272,268) (271,198)

Department of Commerce (206,611) (209,304)

General Services Administration (114,700) (121,818)

Department of Energy (93,810) (95,810)

Department of State (90,019) (88,176)

Department of Housing and Urban Development (64,434) (68,657)

Environmental Protection Agency (45,037) (46,165)

National Aeronautics and Space Administration (38,306) (43,072)

Small Business Administration (32,676) (31,691)

Office of Personnel Management (23,623) (22,825)

Agency for International Development (22,542) (24,731)

Department of Education (14,789) (14,549)

Nuclear Regulatory Commission (5,608) (6,040)

National Science Foundation (1,171) (1,215)

Other (704,695) (705,461)

 (34,536,172) (33,854,535)

$ 1,917,478 $ 1,479,265

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 $ 1,661,740 $ 1,223,125

FECA benefits due to eligible workers of DOL and Job Corps enrollees 221,560 218,055

FECA benefits due to eligible workers of the Panama Canal Commission 34,178 38,085

$ 1,917,478 $ 1,479,265
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2016 and 2015

FY 2016 Agency Financial Report 99 

NOTE 12 - LIABILITIES NOT COVERED BY BUDGETARY RESOURCES

Liabilities not covered by budgetary resources as of September 30, 2016 and 2015, consisted of the following:

(Dollars in thousands) 2016 2015

Intra-governmental

Debt $ 14,264,915 $ 18,527,186

Future workers' compensation benefits 664,271 150,736

Accrued annual leave 121,222 109,125

Other liabilities 67,711 67,969

 853,204 327,830

Total liabilities not covered by budgetary resources 15,118,119 18,855,016

Total liabilities covered by budgetary resources 19,635,737 18,881,357

$ 34,753,856 $ 37,736,373

NOTE 13 - CONTINGENCIES

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 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

Pension expense in FY 2015 consisted of the following:

Total

Employer Costs Imputed Pension

(Dollars in thousands) Contributions by OPM Expense

Civil Service Retirement System $ 8,855 $ 23,746 $ 32,601

Federal Employees' Retirement System 171,759 12,545 184,304

Thrift Savings Plan 57,630 - 57,630

$ 238,244 $ 36,291 $ 274,535
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2016 and 2015

100 United States Department of Labor

NOTE 15 - NET COST OF OPERATIONS

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, 2016 and 2015, 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, 2016 and 2015

FY 2016 Agency Financial Report 101 

This page left blank intentionally 
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2016 and 2015

102 United States Department of Labor

NOTE 15 - NET COST OF OPERATIONS - Continued

A. 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) -

Public earned revenue - - - -

 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, 2016 and 2015

FY 2016 Agency Financial Report 103 

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, 2016 and 2015

104 United States Department of Labor

NOTE 15 - NET COST OF OPERATIONS - Continued

B. Consolidating Statements of Net Cost by Program Agency 

Net cost of operations by program agency for the year ended September 30, 2015, 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 $ 632,423 $ 307,848 $ - $ -

With the public 36,839,537 3,595,476 - -

 Gross cost 37,471,960 3,903,324 - -

Intra-governmental earned revenue (704,239) (3,051,212) - -

Public earned revenue - (1,172) - -

 Less earned revenue (704,239) (3,052,384) - -

Net program cost 36,767,721 850,940 - -

 Employment and training

Intra-governmental 46,026 - 32,142 -

With the public 4,326,986 - 1,572,810 -

 Gross cost 4,373,012 - 1,604,952 -

Intra-governmental earned revenue (12,854) - (104) -

Public earned revenue - - - -

 Less earned revenue (12,854) - (104) -

Net program cost 4,360,158 - 1,604,848 -

 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 - - - 134,341

With the public - - - 480,133

 Gross cost - - - 614,474

Intra-governmental earned revenue - - - -

Public earned revenue - - - (1,210)

 Less earned revenue - - - (1,210)

Net program cost - - - 613,264

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 $ 41,127,879 $ 850,940 $ 1,604,848 $ 613,264
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2016 and 2015

FY 2016 Agency Financial Report 105 

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

$ - $ - $ 492 $ 33 $ - $ - $ 940,796

 - - 2,108 141 - 6,274 40,443,536

 - - 2,600 174 - 6,274 41,384,332

 - - (997) (66) - - (3,756,514)

 - - - - - - (1,172)

 - - (997) (66) - - (3,757,686)

 - - 1,603 108 - 6,274 37,626,646

 - - - 13,662 8 - 91,838

 - - - 253,374 - 757 6,153,927

 - - - 267,036 8 757 6,245,765

 - - - (208) - (330) (13,496)

 - - - - - - -

 - - - (208) - (330) (13,496)

 - - - 266,828 8 427 6,232,269

 - 83 58,382 419 100,795 63,561 223,240

 - 180 170,478 7,881 212,265 250,836 641,640

 - 263 228,860 8,300 313,060 314,397 864,880

 - - (6,822) (45) - (4,967) (11,834)

 - - - - - - -

 - - (6,822) (45) - (4,967) (11,834)

 - 263 222,038 8,255 313,060 309,430 853,046

 - 135,551 - - - - 269,892

 - 305,645 - - - 4 785,782

 - 441,196 - - - 4 1,055,674

 - (1,347) - - - - (1,347)

 - (1,875) - - - - (3,085)

 - (3,222) - - - - (4,432)

 - 437,974 - - - 4 1,051,242

 216,033 - - - - - 216,033

 429,517 - - - - 10 429,527

 645,550 - - - - 10 645,560

 (28,364) - - - - - (28,364)

 (459) - - - - - (459)

 (28,823) - - - - - (28,823)

 616,727 - - - - 10 616,737

 - - - - - 17,825 17,825

 - - - - - (572) (572)

 - - - - - 17,253 17,253

$ 616,727 $ 438,237 $ 223,641 $ 275,191 $ 313,068 $ 333,398 $ 46,397,193
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2016 and 2015

106 United States Department of Labor

NOTE 15 - NET COST OF OPERATIONS – Continued

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, 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

Net cost of operations for the year ended September 30, 2015, consisted of the following:

Employment Office of Workers'

and Training Compensation

(Dollars in thousands) Administration Programs

CROSSCUTTING PROGRAMS

 Income maintenance

Benefits $ 31,742,589 $ 3,296,197

Grants 3,930,663 -

Interest 518,896 215,960

Administrative and other 1,279,812 391,167

 Gross cost 37,471,960 3,903,324

Less earned revenue (704,239) (3,052,384)

Net program cost 36,767,721 850,940

 Employment and training

Grants 4,122,522 -

Administrative and other 250,490 -

 Gross cost 4,373,012 -

Less earned revenue (12,854) -

Net program cost 4,360,158 -

Net cost of operations $ 41,127,879 $ 850,940
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2016 and 2015

FY 2016 Agency Financial Report 107 

NOTE 16 - NON-EXCHANGE REVENUE

Non-exchange revenues reported on the Consolidated Statements of Changes in Net Position in FY 2016 and FY 

2015 consisted of the following:

(Dollars in thousands) 2016 2015

Employer taxes

Unemployment Trust Fund

State unemployment taxes $ 38,683,639 $ 40,157,002

Federal unemployment taxes 8,247,537 8,919,451

 46,931,176 49,076,453

Black Lung Disability Trust Fund excise taxes 439,616 552,435

 47,370,792 49,628,888

Interest

Unemployment Trust Fund 1,218,167 1,193,972

Other 1,185 891

 1,219,352 1,194,863

Reimbursement of unemployment benefits and other 1,597,412 1,910,132

$ 50,187,556 $ 52,733,883

NOTE 17 - TRANSFERS WITHOUT REIMBURSEMENT

Transfers from other Federal agencies in FY 2016 and FY 2015 consisted of the following:

(Dollars in thousands) 2016 2015

Budgetary financing sources

From H-1B Nonimmigrant Petitioner Account, Department of Homeland Security and other $ 250,428 $ 242,522

Other financing sources

From General Services Administration 4,930 4,544

$ 255,358 $ 247,066

The balance of $250.4 million and $242.5 million in budgetary financing sources for FY 2016 and FY 2015, reflect the 

elimination of intra-DOL transfers of ($3.6) billion and ($3.7) billion, respectively.
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2016 and 2015

108 United States Department of Labor

NOTE 18 - STATUS OF BUDGETARY RESOURCES

A. Apportionment Categories of New Obligations and Upward Adjustments

New obligations and upward adjustments reported on the Combined Statements of Budgetary Resources in FY 2016 

and 2015 consisted of the following:

(Dollars in thousands) 2016 2015

Direct obligations

Category A $ 4,432,941 $ 4,632,926

Category B 8,864,445 8,988,042

Exempt from apportionment 38,024,004 37,611,645

Total direct obligations 51,321,390 51,232,613

Reimbursable obligations

Category A 389,868 331,222

Category B 3,177,931 3,125,258

Total reimbursable obligations 3,567,799 3,456,480

$ 54,889,189 $ 54,689,093

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, 2016 and 2015, the 

Department returned unobligated, indefinite authority to Treasury in the amount of $0.24 billion and $2.1 billion, 

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, 2016 and 2015,

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, 2016 and 2015

FY 2016 Agency Financial Report 109 

NOTE 18 - STATUS OF BUDGETARY RESOURCES - Continued

C. Legal Arrangements Affecting Use of Unobligated Balances - Continued

(Dollars in millions) 2016 2015

Unemployment Trust Fund unavailable collections, beginning $ 40,620 $ 31,807

Budget authority from current year appropriations 46,483 45,088

Less: obligations (36,679) (36,275)

Excess of budget authority over obligations 9,804 8,813

Unemployment Trust Fund unavailable collections, ending $ 50,424 $ 40,620

D. Explanation of Differences between the Combined Statement of Budgetary Resources and the Budget 

of the United States Government for FY 2015

The Budget of the United States Government with actual amounts for the year ended September 30, 2016, has not 

been published as of the issue date of these financial statements. This document will be available in February 2017 

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 2015, to amounts 

included in the Budget of the United States Government for the year ended September 30, 2015, is shown below.

(Dollars in millions)

 Budgetary 

Resources 

 New 

Obligations and 

Upward 

Adjustments 

Distributed 

Offsetting 

Receipts Net Outlays

Combined Statement of Budgetary Resources $ 58,137 $ 54,689 $ 1,058 $ 47,214

Pension Benefit Guaranty Corporation reported separately 24,078 6,074 - (1,064)

Fiduciary activity 178 125 - 125

Expired accounts (667) (126) - -

Other (16) (30) - 5

Budget of the United States Government $ 81,710 $ 60,732 $ 1,058 $ 46,280

E. Undelivered Orders

Undelivered orders as of September 30, 2016 and 2015, were as follows:

(Dollars in thousands) 2016 2015

Undelivered orders $ 9,788,395 $ 10,726,781
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2016 and 2015

110 United States Department of Labor

NOTE 18 - STATUS OF BUDGETARY RESOURCES - Continued

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 2016 FY 2015

Appropriations Received, Consolidated Statements of Changes in Net Position $ 10,761 $ 10,450

Receipts recognized as revenue in current and prior years

Unemployment Trust Fund 40,859 44,239

Black Lung Disability Trust Fund 385 628

Other funds from dedicated collections 240 240

Repayment of debt from appropriated receipts

Unemployment Trust Fund (4,265) (7,965)

Black Lung Disability Trust Fund (71) (307)

Return of permanent indefinite authority (225) (321)

Reduction for sequestration, across the board reductions, and other (72) (73)

 36,851 36,441

Appropriations, Combined Statements of Budgetary Resources $ 47,612 $ 46,891

G. Borrowing Authority

As of September 30, 2016 and 2015, P.L. 114-113 and P.L. 113-235, 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 2016 and $300 million (of which all was repaid) for FY 2015.

The borrowing authority was used to allow states to borrow, as necessary, from the Federal government to pay 

unemployment benefits. 

Borrowing authority for the BLDTF was $910 million and $585 million for FY 2016 and FY 2015, respectively. The 

entire amount of borrowing authority plus current year receipts were applied to repay debt of $981.2 million and 

$891.8 million for FY 2016 and FY 2015, respectively.
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2016 and 2015

FY 2016 Agency Financial Report 111 

NOTE 19 - RECONCILIATION OF BUDGETARY RESOURCES OBLIGATED TO NET COST OF OPERATIONS 

(Dollars in thousands) FY 2016 FY 2015

Resources used to finance activities

Budgetary resources obligated

New obligations and upward adjustments (Total) $ 54,889,189 $ 54,689,093

Recoveries of prior year unpaid obligations (603,674) (564,577)

Recoveries of prior year paid obligations (29,544) (156,392)

Less: spending authority from offsetting collections (7,410,865) (7,286,090)

Obligations, net of offsetting collections and recoveries 46,845,106 46,682,034

Other resources

Imputed financing from costs absorbed by others 107,477 108,405

Transfers without Reimbursement 4,930 4,544

Exchange revenue not in budget (498,406) (773,760)

Total resources used to finance activities 46,459,107 46,021,223

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 994,792 1,383,527

Resources that finance the acquisition of assets (63,146) (87,620)

Transfers that do not affect the net cost of operations 4,678 (39,807)

Total resources used to finance items not part of the net cost of operations 936,324 1,256,100

Total resources used to finance the net cost of operations 47,395,431 47,277,323

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 12,868 (7,191)

Increase (decrease) in actuarial benefit liabilities 971,135 (1,178,056)

Increase in capitalized interest 90,523 121,670

Others (49,172) 10,674

Total 1,025,354 (1,052,903)

Components not requiring or generating resources

Depreciation and amortization 85,918 82,619

Revaluation of assets and liabilities 789,807 853,461

Benefit overpayments (641,613) (763,307)

Total 234,112 172,773

Total components of the net cost of operations that will not

 require or generate resources in the current period 1,259,466 (880,130)

Net cost of operations $ 48,654,897 $ 46,397,193
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2016 and 2015

112 United States Department of Labor

NOTE 20 - CUSTODIAL REVENUE

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

Custodial revenues in FY 2015 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 $ 103,060 $ 76,803 $ 179,863

Mine Safety and Health Administration 70,207 (787) 69,420

Employee Benefits Security Administration 18,159 (642) 17,517

Wage and Hour Division 35,721 1,667 37,388

 227,147 77,041 304,188

Other custodial activity

Employment and Training Administration

 and other agencies 5,739 (9,719) (3,980)

$ 232,886 $ 67,322 $ 300,208
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2016 and 2015

FY 2016 Agency Financial Report 113 

NOTE 21 - FUNDS FROM DEDICATED COLLECTIONS

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, 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, 2016 and 2015

114 United States Department of Labor

NOTE 21 - FUNDS FROM DEDICATED COLLECTIONS - Continued

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 period 32,039,648 (5,644,208) 757,877 27,153,317

Net position, end of period $ 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, 2016 and 2015

FY 2016 Agency Financial Report 115 

NOTE 21 - FUNDS FROM DEDICATED COLLECTIONS - Continued

The financial position of the funds from dedicated collections as of September 30, 2015, is shown below. 

Black Lung

(Dollars in thousands) Unemployment Disability Other Total

Assets

Intra-governmental

Funds with U.S. Treasury $ 37,332 $ 37,192 $ 785,047 $ 859,571

Investments 44,601,914 - 42,564 44,644,478

Accounts receivable

Due from other Federal agencies

 for UCFE and UCX benefits 281,752 - - 281,752

Other - - 6,033 6,033

Total intra-governmental 44,920,998 37,192 833,644 45,791,834

Accounts receivable, net of allowance

State unemployment tax 415,295 - - 415,295

Due from reimbursable employers 540,481 - - 540,481

Benefit overpayments 564,823 17,667 - 582,490

Other 69 - 3 72

Advances 1,323,196 - 1 1,323,197

Other - - 498 498

Total assets $ 47,764,862 $ 54,859 $ 834,146 $ 48,653,867

Liabilities

Intra-governmental

Accounts payable to DOL agencies $ 1,689,100 $ - $ 54 $ 1,689,154

Debt 12,840,065 5,687,121 - 18,527,186

Amounts held for the Railroad

 Retirement Board 106,819 - - 106,819

Other - 1 9,967 9,968

Total intra-governmental 14,635,984 5,687,122 10,021 20,333,127

Accounts payable - - 5,221 5,221

Future workers' compensation benefits - - 38,085 38,085

Accrued benefits 1,089,230 11,945 - 1,101,175

Other liabilities - - 22,942 22,942

Total liabilities 15,725,214 5,699,067 76,269 21,500,550

Net position

Cumulative results of operations 32,039,648 (5,644,208) 757,877 27,153,317

Total liabilities and net position $ 47,764,862 $ 54,859 $ 834,146 $ 48,653,867
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2016 and 2015

116 United States Department of Labor

NOTE 21 - FUNDS FROM DEDICATED COLLECTIONS - Continued

The net results of operations of the funds from dedicated collections for the year ended and as of September 30, 

2015, are shown below.

Black Lung

(Dollars in thousands) Unemployment Disability Other Total

Cost, net of earned revenues

Benefits $ (31,754,445) $ (162,347) $ - $ (31,916,792)

Grants - - (113,853) (113,853)

Interest (518,896) (215,958) - (734,854)

Administrative and other (1,064,603) (4,451) (71,121) (1,140,175)

 (33,337,944) (382,756) (184,974) (33,905,674)

Earned revenue 707,896 - - 707,896

Net cost of operations (32,630,048) (382,756) (184,974) (33,197,778)

Net financing sources

Taxes 49,076,453 552,435 - 49,628,888

Interest 1,193,972 840 51 1,194,863

Reimbursement of unemployment benefits and other 1,902,743 - - 1,902,743

Imputed financing - - 2,868 2,868

Transfers-in

Department of Homeland Security - - 257,443 257,443

DOL entities 42,485 - - 42,485

Transfers-out

DOL entities (3,905,721) (59,375) - (3,965,096)

Other - - (17,600) (17,600)

 48,309,932 493,900 242,762 49,046,594

Change in net position 15,679,884 111,144 57,788 15,848,816

Net position, beginning of period 16,359,764 (5,755,352) 700,089 11,304,501

Net position, end of period $ 32,039,648 $ (5,644,208) $ 757,877 $ 27,153,317
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2016 and 2015

FY 2016 Agency Financial Report 117 

NOTE 22 - FIDUCIARY ACTIVITY

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 period $ 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

The schedule of fiduciary activity and net assets for the fiduciary funds for the year ended and as of September 30, 

2015, is shown below.

Fiduciary assets

Cash $ 158,375 $ 95 $ 1 $ 5,270 $ 163,741

Investments - 51,900 3,837 - 55,737

Other assets 3,520 3,007 834 - 7,361

Less: liabilities - (38,717) (2,475) (5,270) (46,462)

Total fiduciary net assets $ 161,895 $ 16,285 $ 2,197 $ - $ 180,377

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 $ 70,814 $ 112,528 $ 7,259 $ - $ 190,601

Investment earnings - 8 1 - 9

Administrative and other - 5 (1) 7 11

Transfer of funds to Treasury (20,293) (2,177) - - (22,470)

Disbursements to beneficiaries (52,778) (114,639) (7,826) (7) (175,250)

Increase (decrease) in fiduciary net assets (2,257) (4,275) (567) - (7,099)

Fiduciary net assets, beginning of year 164,152 20,560 2,764 - 187,476

Fiduciary net assets, end of year $ 161,895 $ 16,285 $ 2,197 $ - $ 180,377
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2016 and 2015

118 United States Department of Labor

Note 22 - FIDUCIARY ACTIVITY - Continued

The FY 2015 audits were performed on the Longshore and Harbor Workers’ Compensation Act Trust Fund and the 

District of Columbia Workmen’s Compensation Act Trust Fund and are available on DOL's website.

NOTE 23 - MATERIAL CONCENTRATION OF RISK

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, 2016, of $16.2 billion represents the largest portion of the total 

projected gross liability of the Federal government for future FECA benefits attributed to other agencies of $34.5 

billion as of September 30, 2016.

In October 2016, USPS reimbursed the FECA Special Benefit Fund $1.3 billion for costs incurred on its behalf during 

the 12 months ended June 30, 2016, but excluded $151 million from its reimbursement. The USPS disclosed its lack 

of liquidity in its audited financial statements for FYs 2015 and 2016. The USPS’s portion of the FECA actuarial 

liability as of September 30, 2016, together with the USPS’s poor financial condition, represent a material 

concentration of risk for the Department.

NOTE 24 - SUBSEQUENT EVENTS

In addition to the USPS October 2016 reimbursement to the FECA Special Benefit Fund as disclosed in 

Note 4 and Note 23, management is disclosing the subsequent events as described below.

In October 2016, the UTF repaid $1.3 billion of Advances from U.S. Treasury; these EUCA borrowings bore 

interest rates of 2.75% and 2.875%.
Required Supplementary Stewardship Information

(Unaudited)
Financial Section

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION

(Unaudited)

120 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, Including the Office of Job Corps

ETA, including the Office of Job Corps, incurred total net costs of $42.6 billion in FY 2016. The majority of these 

costs consisted of unemployment benefits, which totaled $31.9 billion in FY 2016, an increase of $0.2 billion (0.6 %) 

over the previous fiscal year. Also included in ETA’s total net costs were investments in human capital of $4.4 

billion, which provided services to over 7.8 million participants in FY 2016. These investments were made through 

job training programs authorized by the Workforce Innovation and Opportunity Act (WIOA), 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, the American Recovery and Reinvestment Act of 2009 (ARRA) and other legislation.

Within ETA the Office of Job Corps also invests in human capital through WIOA’s Job Corps training program. OJC’s 

investment in human capital in FY 2016 was $1.6 billion, providing services to 110.8 thousand participants in 

primarily residential settings at 126 Job Corps centers. The ETA and OJC job training programs authorized by WIOA 

are discussed below.

Adult, Dislocated Worker, Youth and Job Corps Programs

Authorized by the Workforce Innovation and Opportunity Act (WIOA)

 Apprenticeship program – This is a new program that has been added effective Program Year 2017. ETA 

awards grants to the states 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 2016 investment in WIOA apprenticeship programs was $471 

thousand and will be reported in the ETA and OJC Investments in Human Capital table beginning in FY 2017.

 Adult employment and training programs – ETA awards grants to states to design and operate training 

and employment assistance programs for disadvantaged adults, including public assistance recipients. ETA’s 

FY 2016 investment in human capital through the WIOA Adult programs was $868 million.

 Dislocated worker employment and training programs – ETA awards grants to states to provide 

reemployment services and retraining assistance to individuals dislocated from their employment. ETA’s 

FY2016 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 2016 investment in human 

capital through the WIOA Youth programs was $912 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 27 centers 

are operated through interagency agreements between DOL and the U.S. Department of Agriculture, Forest 

Service. In addition, 51 operators are contracted to provide outreach and admissions and career transition 

services. OJC’s FY 2016 investment in human capital through the Job Corps program was $1.6 billion.
Annual Financial Statements

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION

(Unaudited)

FY 2016 Agency Financial Report 121 

 Reintegration of Ex‐Offenders programs – ETA supports programs to help individuals exiting prison 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 adult and juvenile ex‐offenders into 

mainstream society. ETA’s FY 2016 investment in human capital through the Ex‐offender programs was $77

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 2016 human capital investment in 

WIOA National Programs was $140 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 2016 investment in human capital through the CSEOA’s SCSEP was $431 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. The Trade Adjustment Assistance Reauthorization Act 

of 2015, title IV of the Trade Preferences Extension Act of 2015 (Public Law 114-27), was signed into law by 

President Barack Obama on June 29, 2015, and both amended and reauthorized the TAA Program. 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 (TRA); job search and relocation allowances; Health Coverage Tax Credit (HCTC) 

(as determined by the Internal Revenue Service); and for workers age 50 and older, a wage supplement in the form 

of Reemployment Trade Adjustment Assistance (RTAA). 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 Workforce Innovation Opportunity Act and the Wagner Peyser Act. Only 

TAA training costs are considered investments in human capital; these costs were $208 million for FY 2016.

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 2016 human capital investment in the TAACCCT Grant Fund was $382 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 
Financial Section

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION

(Unaudited)

122 United States Department of Labor 

like construction where apprenticeships have a long and successful history. The National Apprenticeship Act of 

1937 established the foundation for development of the nation’s skilled workforce through Registered 

Apprenticeship programs, which combine on‐the‐job learning with related technical instruction to teach workers 

the theoretical aspects of skilled occupations. ETA’s FY 2016 investment in Apprenticeship programs was $36 

million.

Program Costs and Outputs

The cost of ETA and OJC investments in human capital and the participants served are shown in the chart below, for 

the five year period FY 2016 through FY 2012.

ETA and OJC Investmentsin Human Capital

Program Costs (in Millions) and Participants Served (1) (in Thousands)

For The Five Year Period FY 2012 through FY 2016

2016 2015 2014 2013 2012

Program Costs Part. 

Served Costs Part. Served Costs Part. Served Costs Part. Served Costs Part. Served

WIOA

Adult $868 6,124.1 $852 6,520.8 $846 6,105.3 $883 6,761.5 $861 6,979.1

Dislocated 

Worker(2) 1,172 561.7 1,165 655.3 1,189 853.8 1,329 1,340.4 1,524 1,358.4

Youth(3) 912 163.6 878 200.3 905 204.1 942 224.0 944 239.6

Job Corps(4)

1,638 110.8 1,605 109.5 1,537 109.6 1,525 79.6 1,770 97.5

Ex‐Offenders 77 14.9 69 11.2 85 11.8 96 22.2 76 49.1

National 

Programs(5) 140 83.0 140 49.2 149 52.2 170 60.0 180 38.7

CSEOA

SCSEP $431 65.2 $436 67.4 $428 67.7 $445 66.9 $492 76.9

TAA for 

Workers 208 44.0 232 51.1 277 67.9 257 105.1 431 144.7

TAACCCT(6)

382 181.4 413 140.9 416 66.5 266 18.1

Apprenticeship 36 504.8 34 430.4 32 392.1 28 366.0 29 410.0

Other(7)

140 105.9 130 87.3 113 28.8 212 109.3 95 357.7

TOTAL $6,004 7,959.4 $5,954 8,323.4 $5,977 7,959.8 $6,153 9,153.1 $6,402 9,751.7

(1) Participant numbers are from grantee reports submitted for the Program Year (PY) ending on June 30 of the corresponding fiscal year. 

(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 FY2013 and prior years 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) 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 and Data Quality Initiatives. 
Annual Financial Statements

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION

(Unaudited)

FY 2016 Agency Financial Report 123 

Program Outcomes

Outcomes for training programs comprising ETA’s investment in human capital are presented in the Department’s 

Annual Performance Report for FY 2016, available on the DOL website at www.dol.gov/_sec/media/reports/ in 

2017.

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 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. 202, 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.

 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.
Financial Section

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION

(Unaudited)

124 United States Department of Labor 

Federal Administration, including the Uniformed Services Employment and Reemployment Rights Act of 1994 

(USERRA) and Veterans’ Preference

VETS is responsible for administering USERRA, which protects civilian job rights and benefits for active service 

members, veterans, and members of the National Guard and Reserves. USERRA, authorized under 38 U.S.C. 4301-

4335, 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. 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(1)(in Thousands)

For Fiscal Years (FY) 2012 through FY 2016

2016 2015 2014 2013 2012

Program Cost

Part. 

Served

Cost

Part. 

Served

Cost

Part. 

Served

Cost

Part. 

Served

Cost(2) Part. 

Served

JVSG(3)$174,996 154.0 $173,453 185.6 $170,764 332.1 $162,999 450.6 $210,671 508.8

TAP(4)14,100 140.2 13,917 180.8 14,103 207.0 13,176 187.0 13,093 153.0

USERRA(5)12,734 7.6 12,782 7.6 12,487(6)10.9 11,381 47.5 12,361 74.7

HVRP 38,056 16.6 38,146 17.0 36,885 16.1 40,691 17.4 35,562 19.8

TOTAL $239,886 318.4 $238,298 391.0 $234,239 566.1 $228,247 702.5 $271,687 756.3

(1) Funding for the VETS’ Veterans Workforce Improvement Program (VWIP) ended in FY 2013; therefore, was removed from the table.

(2) FY 2012 cost allocated based on historical program cost.

(3) This category was previously broken into its constituent components of DVOPs and LVERs. However, to ensure consistency of each funding 

mechanism representing a single row, DVOPs and LVERs have been consolidated into a single row entitled JVSG - Jobs for Veterans State 

Grants.

(4) Department of Defense participant estimates, which are not finalized until the end of the first quarter of the following fiscal year.

(5) 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.

(6) This reflects a correction to the previous year’s cost, which was inaccurately reported.

Program Outcomes

Outcomes for the programs comprising VETS’ investment in human capital will be presented in the Department’s 

Annual Performance Report for FY 2016, available in 2017 on the DOL website at:

www.dol.gov/_sec/media/reports/.
Required Supplementary Information

(Unaudited)
Financial Section

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

126 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-OJC, and located at one hundred twenty-six (126) 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 each 

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 2015, the portfolio’s aggregate FCI score for 

4,389 constructed assets was 93%, and deferred maintenance and repair costs to return the portfolio to an 

acceptable condition were estimated at $226.5 million, as adjusted for SFFAS 42, Deferred Maintenance and 

Repairs: Amending Statements of Federal Financial Accounting Standards 6, 14, 29, and 32. In FY 2016, the 

portfolio’s aggregate FCI score for 4,478 constructed assets was 91%, and DM&R costs to return the portfolio to an 

acceptable condition are estimated at $276.2 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.
Annual Financial Statements

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

FY 2016 Agency Financial Report 127

Deferred Maintenance and Repairs Costs

(Dollars in Thousands)

Asset Category FY 2016 Ending Balance FY 2016 Beginning Balance

Funded:

Structures, facilities and improvements 

 Active $75,609 $87,569

 Inactive 270 268

Subtotal, funded 75,879 87,837

Unfunded:

Structures, facilities and improvements 

 Active 200,137 138,428

 Inactive 212 211

Subtotal, unfunded 200,349 138,639

Total $ 276,228 $ 226,476

Significant Changes from Prior Year

The presentation of DM&R Costs reflects the reporting requirements effective in FY 2015 in accordance with SFFAS 

42; funded deficiencies, as well as critical and programmatic deficiencies are included in the reported amounts. 

For reporting purposes, DOL has determined that changes of 10% and $25 million between fiscal year beginning and 

ending balances are significant. The significant increase of $61.7 million in unfunded deficiencies for active 

structures, facilities and improvements as of September 30, 2016 is a net result of new deficiencies identified during 

the annual facility survey process, as well as prior deficiencies which may have had cost estimates updated for the 

current fiscal year. These deficiencies are currently undergoing review in order to make the appropriate funding 

determinations.
Financial Section

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

128 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 longterm 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 
Annual Financial Statements

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

FY 2016 Agency Financial Report 129

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 
Financial Section

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

130 United States Department of Labor

also receive payments and non-repayable advances from the General Fund of the Treasury to finance EUC 

benefits. Emergency unemployment benefits require Congressional authorization.

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 
Annual Financial Statements

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

FY 2016 Agency Financial Report 131

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 

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. 

Program Finances and Sustainability

As of September 30, 2016, total assets within the UTF exceeded total liabilities by $45.3 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, 2016 was $54.1 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 2016 was $1.2 

billion. Federal and state UI tax and reimbursable revenues of $48.5 billion and regular, extended and emergency 

benefit payment expense of $31.9 billion were recognized for the year ended September 30, 2016.

As discussed in Note 1-K.1 to the consolidated financial statements, DOL recognized a liability for regular, extended 

and emergency unemployment benefits to the extent of unpaid benefits applicable to the current period and for 

benefits paid by states that have not been reimbursed by the UTF. Accrued unemployment benefits payable as of 

September 30, 2016 were $1.4 billion. 
Financial Section

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

132 United States Department of Labor

During FY 2016, 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 $8.5 billion bearing interest between 2.375% and 2.875% as of September 30, 2016.

Subsequent Events

In October 2016, the UTF repaid $1.3 billion of Advances from U.S. Treasury; these EUCA borrowings bore interest 

rates of 2.75% and 2.875%.

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 2016 as the base year. The valuation date for the projections is September 30, 2016. 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 4.68% 

during FY 2017 and remaining between 4.60% and 4.80%. Total cash inflows exceed total cash outflows in 

FY 2017 and through the end of the projected period. As presented in table (1) Expected Economic 

Conditions, the net inflow (excluding interest) decreases from $12.6 billion in FY 2017 to $11.2 billion in FY 

2018, and decreases from about $7.0 billion to less than $900 million between FYs 2019 and 2026. The net 

inflow is sustained primarily by the excess of Federal tax collections over Federal expenditures in FYs 2017 

through 2023 and then primarily by interest on Federal securities in FYs 2024 through 2026.
Annual Financial Statements

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

FY 2016 Agency Financial Report 133

Chart I

30

35

40

45

50

55

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

$ - 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, 2026. 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 2017 and all other years in the 

projected period. The excess of total cash inflows over total cash outflows is highest in FY 2017. As 

presented in table (1) Expected Economic Conditions, starting at a nearly $45.2 billion fund balance at the 

beginning of FY 2017, net UTF assets increase nearly $76.3 billion over the next ten years to a nearly $121.5

billion fund net assets balance by the end of FY 2026. Chart II depicts the increase in the net assets of the

fund.
Financial Section

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

134 United States Department of Labor

Chart II

20

40

60

80

100

120

140

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

$ - 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, 2026, 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.

Table I

Conditions 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

Expected 4.68% 4.60% 4.60% 4.65% 4.70% 4.75% 4.80% 4.80% 4.80% 4.80%

Sensitivity

 Analysis I 5.83% 7.23% 7.31% 6.54% 5.69% 5.56% 5.20% 4.80% 4.80% 4.80%

Sensitivity

 Analysis II 6.11% 8.48% 10.28% 8.30% 7.32% 7.11% 6.67% 5.76% 4.77% 4.80%

Total Unemployment Rate for the Ten-Year Period Ending September 30, 2026
Annual Financial Statements

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

FY 2016 Agency Financial Report 135

Effect on UTF Assets, in Constant Dollars, in Sensitivity Analysis I

In this sensitivity analysis, which utilizes a higher unemployment rate of 5.83% beginning in FY 2017, as presented 

in table (2) Sensitivity Analysis I Higher Unemployment Rate, net cash inflows are negative in FYs 2017 through 

2020, but become positive in FY 2021 and continue to be positive through 2026. Chart III depicts the cross-over 

points where cash outflows exceed cash inflows before 2018 and cash inflows exceed cash outflows before FY 

2021. Starting at a nearly $45.2 billion fund balance at the beginning of FY 2017, net UTF assets increase by nearly

$9.0 billion over the next ten years to about a $54.1 billion fund net assets balance by the end of FY 2026. Chart III 

depicts the increase in net assets. 

Chart III

0

20

40

60

80

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

$ - 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

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 2017 through 2022 by 

amounts between about $400 million and $35.0 billion, but outflows exceed inflows in FYs 2023 through 

2026 by amounts between $2.8 billion and $12.0 billion. Net cash inflows are reestablished in FY 2023 and 

peak in FY 2025 with a drop in the unemployment rate to 8.30% in FY 2020 and then steadily downward for 

FYs 2021 through 2026. Chart IV depicts the cross-over points where outflows exceed inflows before FY 

2018 and inflows exceed outflows before FY 2023. The fund net assets decrease nearly $57.7 billion from a 

$ 45.2 billion fund balance at the beginning of FY 2017 to a nearly $(12.5) billion fund deficit in FY 2026. 

Chart IV depicts the low point in the fund’s financial position at a fund deficit of $43.8 billion in FY 2022 and 

then the decrease in fund deficit around FY 2023. At the end of the projection period of Sensitivity Analysis 

II, net assets are about $133.9 billion less than under expected economic conditions.
Financial Section

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

136 United States Department of Labor

Chart IV

(60)

(40)

(20)

0

20

40

60

80

100

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

$ - 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.)
Annual Financial Statements

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

FY 2016 Agency Financial Report 137

t 

(D o llars in millio ns) 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

B alance, start o f year $ 45,192 $ 59,117 $ 71,860 $ 80,549 $ 88,130 $ 95,108 $ 101,336 $ 107,037 $ 112,189 $ 116,978

C ash inflo w

State unemployment taxes 40,621 38,936 37,639 36,911 36,722 36,250 36,184 36,030 36,138 36,323

Federal unemployment taxes 8,034 8,359 5,799 5,749 5,691 5,636 5,580 5,530 5,488 5,435

General revenue appropriation - - - - - - - - - -

Interest on loans 60 9 1 1 1 1 1 1 1 1

Deposits by the Railroad Retirement Board 129 147 152 125 91 92 117 130 118 99

Total cash inflow excluding interest 48,844 47,451 43,591 42,786 42,505 41,979 41,882 41,691 41,745 41,858

Interest on Federal securities 1,352 1,513 1,700 1,956 2,285 2,653 2,977 3,248 3,457 3,622

Total cash inflow 50,196 48,964 45,291 44,742 44,790 44,632 44,859 44,939 45,202 45,480

C ash o utflo w

State unemployment benefits 31,838 31,901 32,338 32,919 33,589 34,195 34,967 35,608 36,247 36,857

State administrative costs 4,020 4,010 3,998 3,988 3,972 3,959 3,943 3,931 3,920 3,903

Federal administrative costs 167 166 165 164 163 162 161 161 159 157

Interest on tax refunds 1 1 1 1 1 1 1 1 1 1

Interest on advances 137 48 9 - - - - - - -

Railroad Retirement Board withdrawals 108 95 91 89 87 87 86 86 86 86

Total cash outflow 36,271 36,221 36,602 37,161 37,812 38,404 39,158 39,787 40,413 41,004

Excess of total cash inflow excluding

 interest over total cash outflow 12,573 11,230 6,989 5,625 4,693 3,575 2,724 1,904 1,332 854

Excess of total cash inflow over

 total cash outflow 13,925 12,743 8,689 7,581 6,978 6,228 5,701 5,152 4,789 4,476

B alance, end o f year $ 59,117 $ 71,860 $ 80,549 $ 88,130 $ 95,108 $ 101,336 $ 107,037 $ 112,189 $ 116,978 $ 121,454

Total unemployment rate 4.68% 4.60% 4.60% 4.65% 4.70% 4.75% 4.80% 4.80% 4.80% 4.80% 

U.S. D EP A R T M EN T OF LA B OR

SUP P LEM EN T A R Y SOC IA L IN SUR A N C E IN F OR M A T ION IN C ON ST A N T D OLLA R S

C A SH IN F LOW A N D OUT F LOW OF T H E 

UN EM P LOYM EN T T R UST F UN D EXC LUD IN G T H E F ED ER A L EM P LOYEES C OM P EN SA T ION A C C OUN T

F OR T H E T EN -YEA R P ER IOD EN D IN G SEP T EM B ER 30, 2026

(1) EXP EC T ED EC ON OM IC C ON D IT ION S
138 United States Department of Labor

(Unaudited)REQUIRED SUPPLEMENTARY INFORMATIONFinancial Section

(D o llars in millio ns) 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

B alance, start o f year $ 45,192 $ 44,682 $ 34,553 $ 25,791 $ 24,487 $ 29,355 $ 34,643 $ 38,188 $ 47,215 $ 50,589

C ash inflo w

State unemployment taxes 41,252 42,740 44,950 47,369 48,065 46,730 45,681 44,192 43,524 42,747

Federal unemployment taxes 7,909 8,040 8,212 8,844 9,756 9,961 6,875 11,485 7,020 8,119

General revenue appropriation - - - - - - - - - -

Interest on loans 81 108 183 251 274 277 307 322 320 329

Deposits by the Railroad Retirement Board 129 147 152 125 91 92 117 130 118 99

Total cash inflow excluding interest 49,371 51,035 53,497 56,589 58,186 57,060 52,980 56,129 50,982 51,294

Interest on Federal securities 1,162 991 867 856 966 1,152 1,284 1,536 1,665 1,755

Total cash inflow 50,533 52,026 54,364 57,445 59,152 58,212 54,264 57,665 52,647 53,049

C ash o utflo w

State unemployment benefits 46,195 57,325 58,328 53,985 49,561 48,291 46,188 44,157 44,871 45,256

State administrative costs 4,406 4,414 4,344 4,253 4,194 4,136 4,077 4,056 4,041 3,920

Federal administrative costs 167 166 165 164 163 162 161 161 159 157

Interest on tax refunds 1 1 1 1 1 2 1 2 1 2

Interest on advances 166 154 197 257 278 246 206 176 115 72

Railroad Retirement Board withdrawals 108 95 91 89 87 87 86 86 86 86

Total cash outflow 51,043 62,155 63,126 58,749 54,284 52,924 50,719 48,638 49,273 49,493

Excess (deficiency) of total cash inflow

 excluding interest over (under)

 total cash outflow (1,672) (11,120) (9,629) (2,160) 3,902 4,136 2,261 7,491 1,709 1,801

Excess (deficiency) of total cash inflow

 over (under) total cash outflow (510) (10,129) (8,762) (1,304) 4,868 5,288 3,545 9,027 3,374 3,556

B alance, end o f year $ 44,682 $ 34,553 $ 25,791 $ 24,487 $ 29,355 $ 34,643 $ 38,188 $ 47,215 $ 50,589 $ 54,145

Total unemployment rate 5.83% 7.23% 7.31% 6.54% 5.69% 5.56% 5.20% 4.80% 4.80% 4.80% 

U.S. D EP A R T M EN T OF LA B OR

SUP P LEM EN T A R Y SOC IA L IN SUR A N C E IN F OR M A T ION IN C ON ST A N T D OLLA R S

C A SH IN F LOW A N D OUT F LOW OF T H E 

UN EM P LOYM EN T T R UST F UN D EXC LUD IN G T H E F ED ER A L EM P LOYEES C OM P EN SA T ION A C C OUN T

F OR T H E T EN -YEA R P ER IOD EN D IN G SEP T EM B ER 30, 2026

(2) SEN SIT IVIT Y A N A LYSIS I H IGH ER UN EM P LOYM EN T R A T E
Annual Financial Statements

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

FY 2016 Agency Financial Report 139

t 131

(D o llars in millio ns) 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

B alance, start o f year $ 45,192 $ 40,115 $ 13,223 $ (21,738) $ (38,982) $ (43,416) $ (43,782) $ (40,945) $ (33,624) $ (21,622)

C ash inflo w

State unemployment taxes 41,561 44,098 47,927 53,147 54,954 54,006 52,323 50,457 48,602 46,218

Federal unemployment taxes 7,889 7,945 7,994 8,848 10,262 11,914 13,558 14,062 15,276 14,682

General revenue appropriation - - - - - - - - - -

Interest on loans 88 218 607 1,034 1,319 1,533 1,676 1,697 1,598 1,450

Deposits by the Railroad Retirement Board 129 147 152 125 91 92 117 130 118 99

Total cash inflow excluding interest 49,667 52,408 56,680 63,154 66,626 67,545 67,674 66,346 65,594 62,449

Interest on Federal securities 1,129 833 612 538 603 713 836 973 1,163 1,350

Total cash inflow 50,796 53,241 57,292 63,692 67,229 68,258 68,510 67,319 66,757 63,799

C ash o utflo w

State unemployment benefits 50,796 74,782 86,642 74,957 65,397 62,211 59,262 53,704 48,633 48,894

State administrative costs 4,635 4,811 4,659 4,503 4,408 4,327 4,223 4,123 4,092 3,928

Federal administrative costs 167 166 165 164 163 162 161 161 159 157

Interest on tax refunds 1 1 1 1 1 2 2 3 3 3

Interest on advances 166 278 695 1,222 1,607 1,835 1,939 1,921 1,782 1,572

Railroad Retirement Board withdrawals 108 95 91 89 87 87 86 86 86 86

Total cash outflow 55,873 80,133 92,253 80,936 71,663 68,624 65,673 59,998 54,755 54,640

Excess (deficiency) of total cash inflow

 excluding interest over (under)

 total cash outflow (6,206) (27,725) (35,573) (17,782) (5,037) (1,079) 2,001 6,348 10,839 7,809

Excess (deficiency) of total cash inflow

 over (under) total cash outflow (5,077) (26,892) (34,961) (17,244) (4,434) (366) 2,837 7,321 12,002 9,159

B alance, end o f year $ 40,115 $ 13,223 $ (21,738) $ (38,982) $ (43,416) $ (43,782) $ (40,945) $ (33,624) $ (21,622) $ (12,463)

Total unemployment rate 6.11% 8.48% 10.28% 8.30% 7.32% 7.11% 6.67% 5.76% 4.77% 4.80% 

U.S. D EP A R T M EN T OF LA B OR

SUP P LEM EN T A R Y SOC IA L IN SUR A N C E IN F OR M A T ION IN C ON ST A N T D OLLA R S

C A SH IN F LOW A N D OUT F LOW OF T H E 

UN EM P LOYM EN T T R UST F UN D EXC LUD IN G T H E F ED ER A L EM P LOYEES C OM P EN SA T ION A C C OUN T

F OR T H E T EN -YEA R P ER IOD EN D IN G SEP T EM B ER 30, 2026

(3) SEN SIT IVIT Y A N A LYSIS II H IGH ER UN EM P LOYM EN T R A T E
Financial Section

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

140 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 2016.

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

Minimally Solvent Not Minimally Solvent

State Ratio State Ratio State Ratio

Wyoming 2.29 Kansas 0.93 North Dakota 0.49 

Oregon 1.93 North Carolina 0.92 Rhode Island 0.46 

Mississippi 1.85 Arkansas 0.90 Illinois 0.40 

Oklahoma 1.85 Tennessee 0.88 Arizona 0.34 

Nebraska 1.79 Alabama 0.87 Pennsylvania 0.32 

Utah 1.78 Michigan 0.85 Connecticut 0.30 

South Dakota 1.65 Virginia 0.84 Massachusetts 0.30 

Vermont 1.63 Maryland 0.83 Texas 0.25 

Alaska 1.53 Georgia 0.79 Kentucky 0.23 

Montana 1.44 Nevada 0.65 New York 0.22 

Louisiana 1.33 Wisconsin 0.62 Ohio 0.20 

Washington 1.33 Colorado 0.59 West Virginia 0.14 

Idaho 1.32 Missouri 0.58 Indiana 0.05 

Iowa 1.29 South Carolina 0.58 California 0.00 

Hawaii 1.24 Delaware 0.56 Virgin Islands 0.00 

Puerto Rico 1.14 New Jersey 0.52 

Maine 1.13 

District of Columbia 1.09 

New Hampshire 1.08 

New Mexico 1.08 

Florida 1.02 

Minnesota 1.00 

*Includes the District of Columbia, Puerto Rico, and the Virgin Islands.
Annual Financial Statements

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

FY 2011 FY 2016 Agency Financial Report 141

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, 2016, total liabilities of the BLDTF exceeded assets by $5.6 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, 

2016 was $5.7 billion, bearing interest rates ranging from 0.589% to 4.556%. Excise tax revenues of $439.6 million, 

benefit payment expense of $122.8 million, and interest expense of $213.7 million were recognized for the year 

ended September 30, 2016. 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, 2016, the BLDTF issued debt in the amount 

of $910.0 million, bearing interest at 0.589% and maturing on September 30, 2017. At September 30, 2016, there 

were 25 debt instruments with staggered maturities of September 30 for years 2017 through 2040, with a total 

carrying value of nearly $5.7 billion and a total face value at maturity of nearly $8.9 billion. Of these 25 debt 

instruments, 24 are from the October 2008 refinancing and one debt instrument was issued on September 30, 

2016.

Subsequent Events

Management disclosed that the U.S. Supreme Court stay of regulation pursuant to the Clean Power Plan remained 

in effect as of September 30, 2016. As of December 15, 2016 the stay remained in effect. DOL did not change its 

sources or approaches for estimating future excise tax income because of the stay. 
Financial Section

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

142 United States Department of Labor

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, for FY 2016 reporting the SOSI presents values for the closed group, new participants, and open group. 

The significant assumptions used in the projections, in constant dollars, are coal excise tax revenue estimates, the 

tax rate structure, the number of beneficiaries, life expectancy, Federal civilian pay raises, medical cost inflation, the 

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 2016 as the base year. The valuation date for the 

projections is September 30, 2016. Cash projections depend on the assumptions used and actual experience may 

differ materially from the projections.

In FY 2016, the coal excise tax revenue estimates reflect regulation pursuant to the Clean Power Plan (CPP), DOL’s 

actual excise tax collections, and actual coal production as reported by the Energy Information Administration and 

future cash inflows from excise taxes have decreased significantly from those reported in prior years. The effects of 

the significant decrease in cash inflows from excise taxes are also reflected in the Statement of Social Insurance as 

of September 30, 2016 and are the largest change reported in the Statement of Changes in Social Insurance 

Amounts for the year ended September 30, 2016. 

In February 2016 the U.S. Supreme Court stayed implementation of regulation pursuant to the CPP due to litigation 

pending in the U.S. Court of Appeals; as of September 30, 2016 the stay remained in effect. DOL did not change its 

sources or approaches for estimating future excise tax income because of the stay.

The projections, in constant dollars for the open group, made over the 24-year period ending September 30, 2040, 

indicate that cash inflows from excise taxes will exceed cash outflows for benefit payments and administrative 

expenses for most of the years in the projection period. Cumulative net cash inflows are projected to reach $827.0 

million by FY 2040. However, 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 $8.1 billion by the end of FY 2040, resulting in a projected deficit 

of nearly $10.95 billion at September 30, 2040. 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, 2016, 2015, 2014, 

2013, and 2012 are presented in the SOSI.
Annual Financial Statements

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

FY 2011 FY 2016 Agency Financial Report 143

Chart I

0

100

200

300

400

500

600

700

800

900

2017 2021 2025 2029 2033 2037

$ - 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 cash inflows from estimated taxes was changed to reflect a smaller negative growth rate 

in FYs 2027 through 2040 of (0.96)% instead of a negative growth rate of (1.48)%, before accounting for inflation of 

2.30%; however, for FYs 2017 through 2026, the growth rate was left unchanged. Both growth rates for the FY 2027 

through FY 2040 period are based on the U.S. Department of Energy, Energy Information Administration, estimates 

of future growth in coal production (as adjusted for coal exports and lignite) that reflect, among other things, 

regulation pursuant to the CPP. The larger negative growth rate of (1.48)% in FYs 2027 through 2040 reflects 

regulation pursuant to the Clean Power Plan and the average growth in future coal production after decreases in 

production during FYs 2017 through 2026. The smaller negative growth rate of (0.96)% reflects a midpoint between 

the negative (1.48)% average growth rate and a negative (0.44)% average growth rate in FYs 2027 through 2040 had 

the regulation been absent. For the sensitivity analysis, the other significant assumptions (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 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. 

These projections with sensitivity analysis, in constant dollars for the open group, made over the 24-year period 

ending September 30, 2040, indicate that cash inflows from excise taxes would exceed cash outflows for benefit 

payments and administrative expenses for most of the years in the projection period. Cumulative net cash inflows 

would be projected to reach $900.3 million by the year 2040. However, when payments from the BLDTF’s maturing 

debt are applied against this surplus cash inflow, the BLDTF’s cash flow would turn negative in all periods included in 
Financial Section

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

144 United States Department of Labor

the projections. Net cash outflows after payments on maturing debt would be projected to reach nearly $8.0 billion 

by the end of the year 2040, and would result in a projected deficit of $10.86 billion at September 30, 2040 (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

2017 2021 2025 2029 2033 2037

$ - 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 negative growth rate for cash inflows from estimated taxes in FYs 2027 through 

2040, but the other significant assumptions were left unchanged. 

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 increase 

$55,265 from $2,906,046 to $2,961,311;

(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 remain unchanged; and

(4) the closed group measure would increase $55,265 from $593,463 to $648,728.
Annual Financial Statements

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

FY 2011 FY 2016 Agency Financial Report 145

(b) In the SOSI, for the new participants:

(1) the present value of estimated future excise tax income during the projection period would increase 

$27,615 from $1,452,086 to $1,479,701;

(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 remain unchanged; 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 increase $27,615 from $296,541 to $324,156.

(c) In the SOSI, for the open group:

(1) the present value of estimated future excise tax income during the projection period would increase 

$82,880 from $4,358,132 to $4,441,012;

(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 remain unchanged; and

(4) the open group measure would increase $82,880 from $890,004 to $972,884.

(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 increase $55,265 from $593,463 to $648,728;

(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 increase $55,265 from $707,319 to $762,584.

(f) In the SOSI Summary Section, for the open group:

(1) the open group measure would increase $82,880 from $890,004 to $972,884;

(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 increase $82,880 from $1,003,860 to $1,086,740.

Cash projections depend on the assumptions used and actual experience may differ materially from the 

projections.
146 United States Department of Labor

Annual Financial Statements(Unaudited)REQUIRED SUPPLEMENTARY INFORMATION 

Ta ble I 

(D o llars in tho usands) 2017 2018 2019 2020 2021 2022 - 2040 T o tal

B alance, start o f year $ (5,604,460) $ (5,571,947) $ (5,571,723) $ (5,626,933) $ (5,741,276) $ (5,888,349) $ (5,604,460)

C ash inflo w

Excise taxes 401,282 397,613 242,797 200,802 182,743 2,664,789 4,090,026

T o tal cash inflo w 401,282 397,613 242,797 200,802 182,743 2,664,789 4,090,026

C ash o utflo w

Disabled coal miners benefits 151,154 144,657 134,759 126,176 117,769 1,248,468 1,922,984

Administrative costs 68,066 68,660 69,136 69,661 70,082 994,422 1,340,026

Cash outflows before repayment of

 debt and interest 219,220 213,317 203,895 195,837 187,851 2,242,890 3,263,010

Cash inflow over cash outflow 

 before repayment of debt and interest 182,063 184,296 38,902 4,965 (5,108) 421,899 827,016

M aturity of obligations refinanced October 2008 529,172 538,222 170,423 179,823 188,745 4,420,813 6,027,198

Interest on annual borrowings 5,247 16,379 34,122 48,749 60,993 2,733,909 2,899,399

T o tal cash o utflo w 753,639 767,918 408,440 424,408 437,589 9,397,612 12,189,607

T o tal cash o utflo w o ver to tal cash inflo w (352,357) (370,306) (165,643) (223,607) (254,846) (6,732,823) (8,099,581)

Reduction of debt refinanced October 2008 384,870 370,529 110,432 109,265 107,773 1,672,310 2,755,180

B alance, end o f year $ (5,571,947) $ (5,571,723) $ (5,626,933) $ (5,741,276) $ (5,888,349) $ (10,948,861) $ (10,948,861)

U.S. D EP A R T M EN T OF LA B OR

SUP P LEM EN T A R Y SOC IA L IN SUR A N C E IN F OR M A T ION

C A SH IN F LOW A N D OUT F LOW OF T H E B LA C K LUN G D ISA B ILIT Y T R UST F UN D IN C ON ST A N T D OLLA R S

F OR T H E 24-YEA R P ER IOD EN D IN G SEP T EM B ER 30, 2040

OP EN GR OUP
11

Annual Financial Statements

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)Annual Financial Statements

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

Ta ble II 

(D o llars in tho usands) 2017 2018 2019 2020 2021 2022 - 2040 T o tal

B alance, start o f year $ (5,604,460) $ (5,571,947) $ (5,571,723) $ (5,626,933) $ (5,741,276) $ (5,888,349) $ (5,604,460)

C ash inflo w

Excise taxes 401,282 397,613 242,797 200,802 182,743 2,738,115 4,163,352

T o tal cash inflo w 401,282 397,613 242,797 200,802 182,743 2,738,115 4,163,352

C ash o utflo w

Disabled coal miners benefits 151,154 144,657 134,759 126,176 117,769 1,248,468 1,922,984

Administrative costs 68,066 68,660 69,136 69,661 70,082 994,422 1,340,026

Cash outflows before repayment of

 debt and interest 219,220 213,317 203,895 195,837 187,851 2,242,890 3,263,010

Cash inflow over cash outflow 

 before repayment of debt and interest 182,063 184,296 38,902 4,965 (5,108) 495,225 900,342

M aturity of obligations refinanced October 2008 529,172 538,222 170,423 179,823 188,745 4,420,813 6,027,198

Interest on annual borrowings 5,247 16,379 34,122 48,749 60,993 2,722,706 2,888,196

T o tal cash o utflo w 753,639 767,918 408,440 424,408 437,589 9,386,408 12,178,404

T o tal cash o utflo w o ver to tal cash inflo w (352,357) (370,306) (165,643) (223,607) (254,846) (6,648,293) (8,015,051)

Reduction of debt refinanced October 2008 384,870 370,529 110,432 109,265 107,773 1,672,310 2,755,180

B alance, end o f year $ (5,571,947) $ (5,571,723) $ (5,626,933) $ (5,741,276) $ (5,888,349) $ (10,864,332) $ (10,864,332)

C A SH IN F LOW A N D OUT F LOW OF T H E B LA C K LUN G D ISA B ILIT Y T R UST F UN D IN C ON ST A N T D OLLA R S

F OR T H E 24-YEA R P ER IOD EN D IN G SEP T EM B ER 30, 2040

OP EN GR OUP

SUP P LEM EN T A R Y SOC IA L IN SUR A N C E IN F OR M A T ION SEN SIT IVIT Y A N A LYSIS

 U.S. D EP A R T M EN T OF LA B OR FY 2016 Agency Financial Report 147
Financial Section

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

148 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 2016 and FY 2015. 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 2016 Agency Financial Report 149

This page left blank intentionally
Financial Section 

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

150 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 o f 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 account 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

Budgetary 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 2016 Agency Financial Report 151

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
Financial Section 

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

152 United States Department of Labor

COMBINING STATEMENTS OF BUDGETARY RESOURCES

For the Year Ended September 30, 2015

Occupational

(Dollars in thousands) Employment and Office of Workers' Office Safety and 

Training Compensation o f Health

Administration Programs Job Corps Administration

BUDGETARY RESOURCES

Unobligated balance brought forward, October 1 $ 1,943,330 $ 1,530,613 $ 937,506 $ 18,731

Recoveries of prior year unpaid obligations 446,573 4,843 52,546 7,368

Other changes in unobligated balance (1,207,669) (2,872) 22,718 (10,296)

Unobligated balance from prior year budget authority, net 1,182,234 1,532,584 1,012,770 15,803

Appropriations (discretionary and mandatory) 40,742,419 1,871,811 1,697,065 552,788

Spending authority from offsetting collections (discretionary and mandatory) 3,565,105 3,016,397 - (1,242)

Total budgetary resources $ 45,489,758 $ 6,420,792 $ 2,709,835 $ 567,349

STATUS OF BUDGETARY RESOURCES

New obligations and upward adjustments (total) $ 44,536,146 $ 4,966,004 $ 1,832,515 $ 556,916

Unobligated balance, end of year

Apportioned, unexpired account 464,693 1,376,143 834,410 420

Exempt from apportionment, unexpired accounts - 41,804 - -

Unapportioned, unexpired accounts 53,366 31,538 4,183 -

Unexpired Unobligated Balance, End of Year 518,059 1,449,485 838,593 420

Expired unobligated balance, end of year 435,553 5,303 38,727 10,013

Total unobligated balance, end of year 953,612 1,454,788 877,320 10,433

Total budgetary resources $ 45,489,758 $ 6,420,792 $ 2,709,835 $ 567,349

CHANGE IN OBLIGATED BALANCE

Unpaid Obligations:

Unpaid obligations, brought forward, October 1 $ 11,961,386 $ 268,292 $ 949,782 $ 96,545

New obligations and upward adjustments 44,536,146 4,966,004 1,832,515 556,916

Less: Outlays (gross) (45,121,908) (4,952,555) (1,665,860) (558,418)

Less: Recoveries of prior year unpaid obligations (446,573) (4,843) (52,546) (7,368)

Unpaid obligations, end of year 10,929,051 276,898 1,063,891 87,675

Uncollected Payments: 

Uncollected payments, Federal sources, brought forward, October 1 (1,984,537) (21,490) - (2,979)

Change in uncollected payments, Federal sources 294,201 19,430 - 2,479

Uncollected payments, Federal sources, end of year (1,690,336) (2,060) - (500)

Memorandum (non-add) entries: 

Obligated balance, start of year $ 9,976,849 $ 246,802 $ 949,782 $ 93,566

Obligated balance, end of year $ 9,238,715 $ 274,838 $ 1,063,891 $ 87,175

BUDGET AUTHORITY AND OUTLAYS, NET

Budget authority, gross (discretionary and mandatory) $ 44,307,524 $ 4,888,208 $ 1,697,065 $ 551,546

Less: actual offsetting collections (discretionary and mandatory) (3,978,975) (3,036,190) (34,014) (1,357)

Less: change in uncollected customer payments from Federal 

 sources (discretionary and mandatory) 294,201 19,430 - 2,479

Recoveries of prior year paid obligations (discretionary and mandatory) 119,669 363 34,014 120

Budgetary authority, net (discretionary and mandatory) $ 40,742,419 $ 1,871,811 $ 1,697,065 $ 552,788

Outlays, gross (discretionary and mandatory) $ 45,121,908 $ 4,952,555 $ 1,665,860 $ 558,418

Actual offsetting collections (discretionary and mandatory) (3,978,975) (3,036,190) (34,014) (1,357)

Outlays, net (discretionary and mandatory) 41,142,933 1,916,365 1,631,846 557,061

Distributed offsetting receipts (1,044,765) (1,852) - -

Agency outlays, net (discretionary and mandatory) $ 40,098,168 $ 1,914,513 $ 1,631,846 $ 557,061
Annual Financial Statements

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

FY 2016 Agency Financial Report 153

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

$ 9,648 $ 4,267 $ 5,007 $ 6,126 $ 42,953 $ 113,559 $ 4,611,740

 4,666 5,912 5,711 7,582 5,459 23,917 564,577

 (2,069) (2,495) (4,218) (5,573) (4,082) (118) (1,216,674)

 12,245 7,684 6,500 8,135 44,330 137,358 3,959,643

 527,212 375,888 181,000 38,109 274,812 629,714 46,890,818

 86,953 1,886 6,177 231,872 - 378,942 7,286,090

$ 626,410 $ 385,458 $ 193,677 $ 278,116 $ 319,142 $ 1,146,014 $ 58,136,551

$ 618,830 $ 378,669 $ 188,194 $ 272,925 $ 284,414 $ 1,054,480 $ 54,689,093

 807 597 813 213 26,910 62,113 2,767,119

 - - - - - - 41,804

 - - - - 2,455 8,488 100,030

 807 597 813 213 29,365 70,601 2,908,953

 6,773 6,192 4,670 4,978 5,363 20,933 538,505

 7,580 6,789 5,483 5,191 34,728 91,534 3,447,458

$ 626,410 $ 385,458 $ 193,677 $ 278,116 $ 319,142 $ 1,146,014 $ 58,136,551

$ 107,127 $ 58,298 $ 55,723 $ 110,995 $ 34,057 $ 411,012 $ 14,053,217

 618,830 378,669 188,194 272,925 284,414 1,054,480 54,689,093

(621,804) (387,289) (190,822) (269,044) (279,235) (929,967) (54,976,902)

 (4,666) (5,912) (5,711) (7,582) (5,459) (23,917) (564,577)

 99,487 43,766 47,384 107,294 33,777 511,608 13,200,831

 - - - - - (8,697) (2,017,703)

 - - (2,690) - - 6,657 320,077

 - - (2,690) - - (2,040) (1,697,626)

$ 107,127 $ 58,298 $ 55,723 $ 110,995 $ 34,057 $ 402,315 $ 12,035,514

$ 99,487 $ 43,766 $ 44,694 $ 107,294 $ 33,777 $ 509,568 $ 11,503,205

$ 614,165 $ 377,774 $ 187,177 $ 269,981 $ 274,812 $ 1,008,656 $ 54,176,908

 (87,385) (2,063) (3,514) (232,094) (251) (386,716) (7,762,559)

 - - (2,690) - - 6,657 320,077

 432 177 27 222 251 1,117 156,392

$ 527,212 $ 375,888 $ 181,000 $ 38,109 $ 274,812 $ 629,714 $ 46,890,818

$ 621,804 $ 387,289 $ 190,822 $ 269,044 $ 279,235 $ 929,967 $ 54,976,902

 (87,385) (2,063) (3,514) (232,094) (251) (386,716) (7,762,559)

 534,419 385,226 187,308 36,950 278,984 543,251 47,214,343

 - 5,508 - - - (16,942) (1,058,051)

$ 534,419 $ 390,734 $ 187,308 $ 36,950 $ 278,984 $ 526,309 $ 46,156,292

Other Information

(Unaudited)

FY 2016 Agency Financial Report 157

Inspector General’s Top Management and Performance Challenges
Other Information

(Unaudited)

158 United States Department of Labor

Top Management and Performance Challenges Facing the Department of Labor

As of November 2016, the Office of Inspector General (OIG) considers the following as the most serious management

and performance challengesfacing 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

• Securing and Managing Information Systems

• Reducing Improper Payments

 Monitoring and Managing Compounded Drug Medications in the FECA Program

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 126 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. 

Job Corps centers have been troubled by violence and other criminal behavior for years, and the program remains 

challenged in its efforts to prevent violence and provide a safe learning environment at its centers. In 2015, two 

students were murdered at two different Job Corps centers, allegedly by fellow students. OIG audits prior to these 

serious incidents 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. Our continuing work in this area revealed Job 

Corps 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. Job Corps also developed a Risk Management Dashboard that allows for targeted interventions at 

centers before problems fully emerge that could lead to safety issues. Additionally, Job Corps began conducting 

center culture and safety assessments and unannounced monitoring trips that review center safety, security, and 

culture through direct observation and interviews with center staff and students. During the year, Job Corps revised 

its “Zero-Tolerance” student conduct policy to increase student accountability and clarify center staff authority to 
Top Management and Performance Challenges

(Unaudited)

FY 2016 Agency Financial Report 159

address misconduct. Also, Job Corps stated “Industry Foundation Courses” were being implemented to quickly 

ramp up students’ academic and technical knowledge and skills. The courses are intended to increase student 

engagement and retention, and decrease behavioral issues. Job Corps is currently piloting a new enrollment 

process for potential students. The new enrollment process requires recruitment contractors to assess applicants’ 

readiness to participate in the program. Job Corps is implementing a more thorough process for conducting criminal 

background checks on potential students that includes a national search, as opposed to previous local searches. 

Job Corps is also implementing a toll-free student safety hotline. The hotline will handle calls of an urgent nature, 

including calls that relate to the safety and security of Job Corps students and staff. Lastly, Job Corps has a series of 

Center Safety and Security Vulnerabilities Assessments underway. These assessments include access control of 

buildings, campus lighting, and security operations.

WHAT REMAINS TO BE DONE

Job Corps needs to continue its efforts to provide a safe and healthy center environment for students and staff. To 

accomplish this, Job Corps needs to expeditiously complete the various safety initiatives it has recently begun. After 

these initiatives have been implemented, Job Corps must be more vigilant in its monitoring to ensure center 

operators and regional office personnel fully enforce Job Corps’ zero tolerance policy. Job Corps also needs to 

establish appropriate law enforcement jurisdiction and agreements for each center, assess campus physical security 

system-wide, and develop and implement policy for criminal background checks of center employees. 

CHALLENGE: Protecting the Safety and Health of Workers

BACKGROUND

The Department administers the Occupational Safety and Health Act of 1970 (OSH Act) and the Federal Mine Safety 

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

2006 (MINER Act). 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 350,000 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 programs. 

The Department’s recently completed multi‐year study of OSHA’s Site Specific Targeting found the impact of the 

program interventions on future employer compliance was not statistically significant. OSHA also encounters 

challenges in its efforts to protect workers from retaliation and discrimination when they “blow the whistle” on 

unsafe or unhealthy workplace practices.

Given the significant decline in coal production and closings of coal mines in the last year, MSHA is challenged to 

appropriately redeploy resources where needed. In addition, MSHA reports 64 percent of its top leadership will be 

eligible to retire in 2018. As a result, the agency is challenged to maintain an experienced and diverse cadre of top 

management. 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. 
Other Information

(Unaudited)

160 United States Department of Labor

DEPARTMENT’S PROGRESS 

OSHA has introduced 10 new performance measures (in addition to the 8 existing measures) for monitoring State 

Plans, one of which is intended to help OSHA determine the effectiveness of inspection targeting in states that 

operate their own worker safety and health programs. For its whistleblower protection program, OSHA has created 

and updated its dedicated website – www.whistleblowers.gov. The site provides workers, employers, and the 

public with information about the 22 federal whistleblower protection statutes OSHA currently administers. OSHA 

has also established whistleblower dedicated Assistant Regional Administrator positions in its regions.

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 stated it has taken actions 

to enhance its knowledge of underreporting of injuries and illnesses through a number of evaluations and is 

currently working on a proposal to evaluate predictors of injury and illness reporting patterns within the mining 

industry. MSHA further stated it has been following its succession plan for fiscal years (FYs) 2013-2017. The plan 

includes leadership development activities such as training, mentoring and detailing employees to developmental 

assignments.

WHAT REMAINS TO BE DONE

OSHA’s performance measures for federal and state enforcement have focused on output activities rather than 

outcomes. The agency needs to continue its efforts to develop performance measures that reflect the impact of its 

enforcement efforts on improving workplace safety and health. While OSHA has implemented timeliness measures 

for whistleblower investigations, it needs to develop outcome measures that will indicate if the Whistleblower 

Program is working as intended and complaints are being thoroughly investigated. 

MSHA needs to critically examine its resource allocations to ensure its enforcement staff is deployed where most 

needed and continue taking actions responsive to declining coal production. MSHA needs to continue taking action 

to further enhance its knowledge of the underreporting of accidents, injuries and illnesses by mine operators and 

use this knowledge to finalize its strategy 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. MSHA needs to update its succession plan as part of its continuing efforts to 

recruit and hire senior leadership.

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 
Top Management and Performance Challenges

(Unaudited)

FY 2016 Agency Financial Report 161

provide residential and nonresidential education, training, and support services to approximately 50,000 

disadvantaged, at-risk youths (ages 16-24), at 126 Job Corps centers nationwide. 

CHALLENGE FOR THE DEPARTMENT

The Department remains challenged to ensure its job training programs and related services are helping those with 

barriers to employment secure the skills and credentials they need to obtain jobs paying a living wage. This 

challenge is made even more difficult by a lack of reliable performance data. As the Government Accountability 

Office (GAO) reported in March 2016, state program officials have identified several challenges to WIOA 

performance reporting, including the cost and complexity of integrating data systems, limited staff expertise, and 

antiquated information technology systems. The Department also faces challenges in assuring credentials that 

participants obtain from DOL-funded training programs are industry-recognized 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 

On August 19, 2016, the Department published final rules to implement WIOA. Before issuing the final rules, the 

Department provided ongoing guidance and technical assistance to the public workforce system on how to prepare 

for full implementation. Through the Innovation and Opportunity Network (ION), stakeholders may access a range 

of information and technical assistance, such as ETA guidance letters, fact sheets, and webinars. Additionally, the 

Department provided for the use of Workforce Investment Act funds to plan and implement WIOA programs and 

related transition activities.

Beyond the final rules, the Departments of Education and Labor developed several Information Collection Requests 

on performance accountability, state planning, and others, which have been approved by the Office of 

Management and Budget (OMB). States will use this information to create or revise management information 

systems used to collect the necessary data to satisfy WIOA reporting requirements. The Department also reported 

it completed the WIOA Integrated Performance System (WIPS) by its October 1, 2106 target, and is working with 

the Department of Education on several additional performance-related guidance documents for the workforce 

system.

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 stated a technology-based platform called MyPACE (Pathway to Achieving 

Career Excellence) 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. 

WHAT REMAINS TO BE DONE 

Now that WIOA final rules are in effect, and states can prepare reports under new performance requirements using 

WIPS, the Department will need to address data reliability and validity challenges as states begin to report. 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 complete in the workforce.
Other Information

(Unaudited)

162 United States Department of Labor

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 an estimated 685,000 

private retirement plans, 2.2 million health plans, and a similar number of other employee welfare plans that 

together hold $9.1 trillion in assets. EBSA’s responsibilities include providing oversight of the federal Thrift Savings 

Plan, the largest defined-contribution plan in the United States, with nearly $450 billion in assets and 5 million 

participants. 

CHALLENGE FOR THE DEPARTMENT

EBSA’s limited authority and resources present challenges in achieving its mission of administering and enforcing 

Employee Retirement Income Security Act (ERISA) requirements protecting the pensions, health, and other 

employee benefits for approximately 143 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. In order to do so, 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 limited-scope 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.

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 with their best interest in mind, but the rule faces 

significant opposition from Congress and the financial industry. 

EBSA also faces challenges in protecting participants in ERISA-covered, self-funded health plans from improper 

claim denials. EBSA has little or no information about the plans it oversees because it has exempted 98% of 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 the SIP as 

well as its overall enforcement program. EBSA has begun to focus 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 2016
Top Management and Performance Challenges

(Unaudited)

FY 2016 Agency Financial Report 163

As part of the Form 5500 “21st Century” project, EBSA is developing proposed changes to strengthen the 

requirements for limited scope audit certifications from banks and insurance companies. As part of the same 

project, EBSA is developing certain changes to the Form 5500 financial statements and schedules to improve 

reporting of alternative and hard-to-value assets and to improve group health plan reporting. The agency issued a 

proposed regulation in July 2016.

EBSA also published a proposed rule in July 2016 that would require all ERISA covered group health plans to file 

Form 5500 information and related health claims data.

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: 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. In FY 2015, the Department 

spent a total of $667 million on information technology investments, including $15 million for specific cyber 

security efforts. 

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 2015 we identified continuing deficiencies in the 

areas of access controls, configuration management, and contingency planning. For the past five years, we reported 

deficiencies in third-party oversight, incident response and reporting, risk management, and continuous 

monitoring. Despite many previous reports that identified similar control weaknesses, 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. We have recommended that realigning the position of the Chief Information Officer 

(CIO) to report directly to the Deputy Secretary would give 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. Such a realignment would bring the CIO’s placement in line with other cabinet 

level agencies such as Commerce, Interior, Justice, Agriculture, and Energy. 

Ensuring proper management of multimillion-dollar information technology systems is also a challenge for the 

Department. Under the Federal Information Technology Acquisition Reform Act, in FY 2017 the Department’s CIO

will have oversight responsibility for information technology investments totaling an estimated $759 million. The 

Department has encountered difficulties in managing its financial system due to the 2014 bankruptcy of the 
Other Information

(Unaudited)

164 United States Department of Labor

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 delivery order contract with some fixed price items.

DEPARTMENT’S PROGRESS 

According to the OCIO, the Department finalized an Enterprise-wide corrective action plan in the Spring of 2016 

that prioritizes actions to be taken to address the Department’s information security control deficiencies. OCIO 

reported significant material progress had been achieved, but there are likely to be some remaining issues 

identified in future audits. Accomplishments cited by OCIO included implementation of Personal Identity 

Verification (PIV) access for end users, publication of the DOL Third Party Monitoring Guide to improve oversight of 

systems owned or operated by contractors, improvements in capabilities to drive the deployment of critical 

patches, and the standing up of a failover site for critical systems to meet recovery time objectives. OCIO also 

reported agencies within the Department have been informed and trained on Computer Security Handbook policy 

and provided Plan of Action and Milestone scorecards semiannually. 

The Department stated it 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 will closely monitor 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 

Departmental agencies need to 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. OCIO needs to update the DOL Third Party Monitoring 

Guide to make it clear the Department’s responsibility for oversight of third-party systems applies to all systems 

that are owned and operated on behalf of Labor, including Cloud-based systems.

To improve the ability of the CIO to implement and maintain a more effective information security program, the 

Department needs to realign the position of the CIO to provide the proper independence and authority.

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.

CHALLENGE: Reducing Improper Payments 

BACKGROUND

The Department’s most recent risk assessment cycle in FY 2014 identified the Unemployment Insurance (UI) and 

Federal Employees’ Compensation Act (FECA) benefit programs as susceptible to improper payments. According to 

OMB, in 2015 the UI program had the seventh highest amount of reported improper payments ($3.5 billion) among 

all federal programs. OIG investigations continue to uncover fraud committed by individual UI recipients who do 

not report or underreport earnings, as well as fraud related to fictitious employer schemes. In FY 2015, the 

Department estimated improper payments in the FECA benefit program totaled roughly $86 million. The 

Department conducted risk assessments of programs newly authorized by the WIOA and determined all WIOA 

authorized programs were low risk and did not require improper payment reporting.
Top Management and Performance Challenges

(Unaudited)

FY 2016 Agency Financial Report 165

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 declined 

from $5.6 billion in 2014 to $3.4 billion in 2015. While this reduction was primarily due to the $16 billion decrease 

in total UI payments, the reduction of the improper payment rate from an estimated 11.6 percent in 2014 to an 

estimated 10.7 percent in 2015 also contributed to the decline. However, the UI improper payment rate of 10.7 

percent remained above OMB’s threshold of 10 percent. 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, 

and OIG continues to have concerns regarding the completeness of the claims universe used to determine DOL’s 

published FECA improper payment estimates. DOL again excluded two categories of compensation payments in its 

improper payment estimates for FECA, but did not determine and report the full effect of those exclusions on its 

estimates. Also, DOL could improve its improper payment estimate by identifying the FECA improper payment 

issues discovered by fraud investigations and estimating the extent to which these issues exist in the payment 

population.

DEPARTMENT’S PROGRESS 

The Department has worked with states to reduce UI improper payment rates, which decreased from an estimated 

11.6 percent in 2014 to 10.7 percent in 2015. For FY 2016, DOL is tracking state implementation of seven core 

strategies for lowering the rate of UI improper payments. Among these strategies is implementation of the State 

Information Data Exchange System (SIDES), a web-based system that allows electronic transmission of UI 

information requests from UI agencies to multi-state employers and/or Third Party Administrators, as well as 

transmission of replies containing the requested information back to the UI agencies. The core strategies also 

include the Treasury Offset Program to recover certain unemployment debts from federal income tax refunds, use 

of technology or other solutions designed to address improper payments due to a claimant’s failure to register with 

the state’s Employment Service, implementation of statewide claimant-employer messaging designed to improve 

claimants’ awareness of their responsibilities to report any work and earnings and improving their understanding of 

state work search requirements, and state use of published recommended operating procedures for using the 

National Directory of New Hires to identify claimants who have returned to work. The Department stated it has 

supported and promoted state implementation of strategies to lower the improper payment rate, such as software 

for states to identify multiple claims from the same Internet Protocol address. In addition, the Department cited 

the development of the state-driven UI Integrity Center for Excellence with the goal of promoting the development 

and implementation of innovative integrity strategies. According to the Department, the Center is also working to 

develop a secure data repository for state UI agencies to access information on known “suspicious actors” 

determined to be fraudulent as well as other data for cross-matching purposes.

With respect to improper payments in the FECA program, the Department stated that many improper payments in 

the FECA program were “technically proper” when they were initiated, but due to current payment cycles, the 

payments could not be adjusted when additional information was received. The Department believes the changes 

to an enhanced Treasury payment cycle that were initiated toward the end FY 2015 period will result in even larger 

improper payment reductions in FY 2016. The Department stated it has hired additional staff dedicated to process 

improvement and improper payment reduction, 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. In particular, the 

Department stated it has developed new controls to address issues associated with pharmaceutical payments. 

Additionally, the Department continues to work with other federal partners, such as the Social Security 
Other Information

(Unaudited)

166 United States Department of Labor

Administration, Internal Revenue Service, and Office of Personnel Management, to facilitate data matches aimed at 

reducing improper payments. 

WHAT REMAINS TO BE DONE

The Department needs to employ cost benefit and return on investment analyses to evaluate the impact of its 

improper payment reduction strategies for UI. The Department can further improve oversight of the states’ 

detection and prevention of UI overpayments by increasing the frequency of on-site reviews at State Workforce 

Agencies. 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, State Workforce Agencies should pay all UI claims by physical check, direct deposit, or a debit card issued 

by state-approved 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 identify multiple claims that originate from the same IP addresses, provide all identified fraudulent 

claimant information to a shared database that can be queried to identify the filing of fraudulent claims against 

multiple states, 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: Monitoring and Managing Compounded Drug Medications in the FECA 

Program 

BACKGROUND

FECA 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 billion in Chargeback Year 2015 (July 1, 2014 to June 30, 2015) 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 2015, compensation payments totaled about 

$1.92 billion (64%); medical payments totaled about $1.07 billion (36%). 

CHALLENGE FOR THE DEPARTMENT

The Department’s FECA program is challenged to monitor and manage compounded drug medications (drugs 

created by combining, mixing, or altering the ingredients of drugs to tailor them to individual patients). The FECA 

program, along with the other Federal and state government health programs and private sector benefit managers, 

has experienced a large increase in the use and cost of compounded drugs – medications about which there are 

safety and fraud concerns. Compounded drugs may be appropriate for a small number of patients who have 

distinct circumstances, but they are not subject to approval by the Food and Drug Administration (FDA). The FDA

has repeatedly reported and testified on the unsafe practices associated with the manufacturing of compounded 

drugs in both sterile and non-sterile pharmacies. State boards of pharmacy, which generally oversee the 

compounding pharmacies, have started to strengthen their oversight after multiple safety violations, such as a 2012 
Top Management and Performance Challenges

(Unaudited)

FY 2016 Agency Financial Report 167

meningitis outbreak caused by contaminated compounded injections, which resulted in over 60 deaths and over 

750 cases of severe fungal infection. 

The compounded drug industry has also come under much scrutiny due to the sharp rise in the cost and number of 

compounded drug prescriptions, and the recent detection of several fraud schemes. Pharmaceutical costs in the 

FECA program jumped from $184 million in FY 2011 to $413 million in FY 2015, or 124 percent. Costs for 

compounded drugs accounted for much of this increase, rising from just $2 million in FY 2011 to $214 million in FY 

2015. Compounded drug costs jumped from $80 million in FY 2014 to $214 million in FY 2015, surpassing the costs 

of all other drugs billed to FECA ($199 million). 

DEPARTMENT’S PROGRESS 

Effective July 1, 2016, the Department reduced FECA reimbursements for generic drugs from 70% of average 

wholesale price to 60%, and created a tiered reimbursement structure that pays 50% of average wholesale price for

compounded drugs with three or fewer ingredients and 30% of average wholesale price for compounded drugs 

with four or more ingredients. DFEC estimates this change should result in a reduction in reimbursements of nearly 

$118 million below 2015 levels. 

In October 2016, DFEC implemented a new policy requiring an injured worker’s treating physician to complete a 

certification/letter of medical necessity prior to authorization of any compounded medication, as well as a policy 

restricting authorizations for compounded drug prescriptions to a maximum of 90 days, with initial fills and refills to 

be issued in 30-day supplies. DFEC has been working with the Department of Veterans’ Affairs, TRICARE, and other 

insurance providers to identify the most effective practices for managing compounded drug medications. According 

to OWCP officials, the DFEC has formed a data integrity unit. OWCP officials stated it plans for this unit to analyze 

pharmaceutical and medical cost data for the purpose of identifying, evaluating, and proposing steps to remediate 

(if necessary) and monitor unusual or trending cost developments.

WHAT REMAINS TO BE DONE

The Department needs to take a proactive approach in working with the FDA and other federal benefit programs to 

decide if the reasons for providing compounded drugs are worth the associated safety risks and costs.

The Department stated that it plans to take additional actions related to the payment and authorization of 

compounded drugs. These actions include implementing a Pharmacy Benefits Manager, establishing an exceptionbased policy for payment of ingredients that have the same of similar mechanism of action in compounded drugs, 

requiring the use of the universal claim form for physician-dispensed compounded drugs to improve tracking, and 

establishing an exception-based policy for prescriptions containing herbal supplements. Other longer-term actions 

the Department is considering include limiting the cost or use of inactive ingredients, and implementing a prepayment/post-payment fraud and abuse detection capability in its medical bill processing contract. 

The Department needs to follow through on its planned actions and measure the impact of those actions on the 

use and cost of compounded drugs, as well as consider options for evaluating the safety, efficacy, and necessity of 

compounded drugs being dispensed to FECA recipients. It will need to modify its central bill processing contract to 

add the performance of medical necessity reviews. 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.
(Unaudited)

168     United States Department of Labor

Summary of Financial Statement Audit and Management Assurances

The following tables provide a summary of the Department’s FY 2016 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

Deficiencies in Estimating Future Excise Tax Income    1     1

Total Material Weaknesses 1 1     2

Summary of Management Assurances

Effectiveness of Internal Control over Financial Reporting (FMFIA § 2)

Statement of Assurance Unqualified

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 Unqualified

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 2016 Agency Financial Report 169

Improper Payments Reporting Details

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),1requires federal agencies to identify and reduce improper payments and report annually on their efforts 

according to guidance promulgated by the Office of Management and Budget in OMB Circular A-123, Appendix C,

Requirements for Effective Measurement and Remediation of Improper Payments.

Details for each program are provided in the following sections based on the format prescribed by OMB Circular A136 Section II.5.8.

I. Risk Assessments

All agencies must assess the IP risk level for each program that is not already reporting an IP estimate at 

least once every three years (See OMB Circular A-123, Appendix C for additional guidance related to risk 

assessments). All programs that are assessed for risk in a given year should be listed in this section. In 

addition, clearly identify the risk-susceptible programs (i.e., programs that are susceptible to significant IPs 

based on statutory thresholds listed in OMB Circular A-123, Appendix C, Part 1.A.9.Step 1) identified by the 

agency risk assessments performed in the fiscal year or required by OMB to be included (OMB may 

determine, on a case-by-case basis, that certain programs that do not meet the statutory threshold 

requirements may still be subject to the annual reporting requirements). For the newly identified risksusceptible programs indicate the fiscal year in which a rate and amount will be reported (per OMB Circular 

A-123, Appendix C, Part I.A.9.Step 2 footnote 8 this should be the fiscal year following the year in which the 

risk assessment was conducted). Agencies should briefly describe all of the risk assessment(s) performed in 

the fiscal year (the risk factors examined should be included in the description).Highlight any changes to the 

risk assessment methodology or results that occurred since the last AFR or PAR.

IPIA Section 2(a) requires agency heads to review all programs to identify risk susceptibility for improper payments 

(IP) every three years. The last Department-wide risk assessment was performed in FY 2014. DOL will conduct the 

next triennial Department-wide risk assessment in FY 2017.

Risk assessments of programs newly authorized by the Workforce Innovation and Opportunity Act (WIOA) were 

conducted in FY 2016. These risk assessments indicated that all WIOA authorized programs reviewed are not 

susceptible to significant improper payments and did not support IP reporting under A-123, Appendix C guidance.

Only one newly authorized WIOA program was not reviewed because it did not record any outlays in Program Year 

(PY) 2016. This program will be reviewed when appropriate.

WIOA Authorized Program Risk 

Assessment

Result

Adult Employment and Training Activities 09/2016 Not susceptible

Dislocated Worker Employment and Training Activities (National Reserve) 09/2016 Not susceptible

Youth Activities 09/2016 Not susceptible

Workforce Data Quality Initiative 09/2016 Not susceptible

Indian and Native American Programs 09/2016 Not susceptible

Migrant and Seasonal Farmworkers 09/2016 Not susceptible

YouthBuild 09/2016 Not susceptible

Reintegration of Ex-Offenders 09/2016 Not susceptible

Dislocated Worker Employment and Training Activities (Formula) 09/2016 Not susceptible

No other DOL programs were found to have experienced material changes requiring a review of previous risk 

assessments.

 

1

IPIA, Public Law (P.L.) 107-300 (2002); IPERA, P.L. 111-204 (2010); and IPERIA, P.L. 112-248 (2013) are codified at 31 U.S.C. 3321 note.
Other Information

(Unaudited)

170 United States Department of Labor

Susceptible to Significant Improper Payments: Based on DOL’s FY 2014 department-wide risk assessment, 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 statute1:

 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

Other Programs Required to Report Improper Payments: One DOL program area, the Workforce Investment Act 

(WIA) of 1998 Title I programs (WIA Programs), provided estimates based on inclusion in Exhibit 57B, Section 57, of 

OMB Circular A-11 (2002)2. Although Section 57 was rescinded in 2003, these programs continued to provide IP 

information beyond that which is required by IPIA.

On July 22, 2014, the President signed WIOA into law. WIOA rescinded the WIA of 1998. Funding for programs 

under WIA ended in FY15 on June 30, 2015. The new law strengthened internal controls and performance 

standards for all newly authorized programs. The Department remains strongly committed to finding new ways to 

combat IP for all of the new programs authorized under WIOA. As discussed above, risk assessments of programs 

newly authorized by WIOA were conducted in FY 2016. These risk assessments indicated that all WIOA authorized 

programs reviewed are not susceptible to significant improper payments and did not support IP reporting under A123, Appendix C guidance.

Program Integrity Overviews: The following provides an overview of payment integrity environments for all 

programs reporting.

Unemployment Insurance Program:

The Federal-state unemployment insurance (UI) program, established by the Social Security Act of 1935 (SSA), is a 

unique Federal-state partnership, based on Federal law but administered by state employees under state law. The 

program is designed to provide benefits to most individuals who are out of work, generally through no fault of their 

own, for periods between jobs. In order to be eligible for benefits, jobless workers must demonstrate workforce 

attachment, usually measured by amount of wages and/or weeks of work, and must be able and available for work 

and actively searching for work.

States also administer two federal unemployment compensation programs – Unemployment Compensation for 

Federal Employees (UCFE) and Unemployment Compensation for Ex-service members (UCX). The states also 

administer an Extended Benefits (EB) program in times of significant unemployment when the unemployment rate 

triggers for EB are met. In addition, Congress periodically enacts temporary episodic programs in times of recession, 

such as the Emergency Unemployment Compensation (EUC) program during the most recent recession and its 

aftermath.

Section 303(a)(1), Social Security Act, requires, as a condition for a state to receive administrative grants for its UI 

program, that the law of the state provide for "such methods of administration ... as are found by the Secretary of 

Labor to be reasonably calculated to insure full payment of unemployment compensation when due." Section 

303(a)(1) has also been interpreted to mean that states must have "methods of administration" to ensure that 

eligible claimants are paid UI benefits promptly when determined eligible and to ensure claimants who are not 

eligible are not paid. The payment decision process and payment when due provision are further complicated in 

that benefit eligibility is determined on a week by week basis. States must have methods of administration to 

 

1

IPERA §2(a)(3)(A)(II)(ii)

2

In July 2001, OMB issued Section 57, Information on Erroneous Payments, as part of the 2002 revision to Circular A-11, Preparation, 

Submission, and Execution of the Budget. Exhibit 57B of Section 57 listed programs required “. . . to provide improper payment data, 

assessments, and action plans with initial budget submission beginning in 2003.” All “benefit programs” exceeding obligations of $2 billion 

were included on Exhibit 57B.
Improper Payments Reporting Details

(Unaudited)

FY 2016 Agency Financial Report 171

protect against improper payments and fraud. This federal-state partnership structure makes UI unique among the 

nation’s social insurance programs, and program integrity depends almost entirely on actions by the states.

The combination of the requirement to pay “when due” as determined weekly and the complexity of managing a 

large program with eligibility rules and administrative resources that vary by state create a complex environment 

for states to ensure program integrity. As such, the Department uses targeted strategies to work with states across 

many fronts including integrity performance measures, monitoring and oversight, facilitating the development of 

information technology systems, employer and claimant communication tool-kits, legislation, a platform to share 

best practices, targeted technical assistance and supplemental funding opportunities for state program integrity 

related activities.

The UI program’s integrity efforts pre-date the IPIA. The Department’s comprehensive strategic plan focuses on 

state strategies that address specific root causes of improper payments. The plan is continuously evolving as new 

strategies are identified and the progress with each strategy in this plan is regularly monitored. These strategies 

target the three largest root causes of UI improper payments:

 Failure of claimants to comply with the state’s work search requirements (Work Search); 

 Payments to individuals who continue to claim benefits after they have returned to work (Benefit Year 

Earnings); and

 Failure of employers or their third party administrators to provide timely and adequate information on the 

reason for an individual’s separation from employment (Separation).

Under the Department’s guidance, each state’s Benefit Payment Control (BPC) unit is responsible for ensuring UI 

program integrity through prevention, detection, investigation, establishment, and recovery of improper payments. 

Every state BPC unit conducts post-award reviews for the prevention and detection of UI improper payments to 

determine whether error or willful misrepresentation has occurred. An additional tool, the Benefit Accuracy 

Measurement (BAM), is a statistical survey created in the 1980s as a quality control and improper payment 

estimation tool. For details on the BAM program, please see the section II. Statistical Sampling: UI.

The UI program uses both the BPC and BAM program results to support the state’s efforts by setting goals and 

performance targets, to continuously monitor and improve prevention, detection and recovery of improper 

payments. The results from both BPC and BAM help the Department to assess the progress made by the states and 

provide targeted technical assistance and support.

Benefit outlays for all UI programs increased slightly in FY 2016 to $33.09 billion from the $32.49 billion paid in FY 

2015. This increase reflects an increase in the average weekly payment, from $316 in FY 2015 to $332 in FY 2016. 

The number of first payments in the State UI, UCFE, and UCX programs decreased from 6.67 million in FY 2015 to an 

estimated 6.28 million in FY 2016. Outlays include $6.8 million for Emergency Unemployment Compensation (EUC) 

program claims filed prior to the January 1, 2014, expiration of the program. A small amount of benefits ($117 

thousand) were paid by states meeting the trigger thresholds for the Extended Benefits (EB) program.

Federal Employees’ Compensation Act Program:

The Federal Employees' Compensation Act provides workers' compensation coverage to approximately three 

million federal and postal workers around the world for employment-related injuries and occupational diseases. 

The Office of Workers’ Compensation Programs and its Division of Federal Employees' Compensation (DFEC or 

FECA) have responsibility for administering the Act through twelve district offices and national office staff. DFEC 

adjudicates new claims for benefits and manages ongoing cases; pays medical expenses and compensation benefits 

to injured workers and survivors; and helps injured employees return to work when they are medically able to do 

so.

The FECA program operates on a Chargeback year that runs from July 1st through June 30th. Approximately 8.50

million FECA payments totaling $3 billion were attributable to Chargeback Year (CBY) 2016. These totals reflect two 

basic types of FECA benefit payments: “compensation” and “medical” payments.
Other Information

(Unaudited)

172 United States Department of Labor

 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, equipment and supplies incurred 

from treatment for illness and/or injury sustained while an employee was engaged in job-related activities.

In CBY 2016, medical payments accounted for 90.6% of all FECA payments; the remaining 9.4% were compensation 

payments. By contrast, the total amount of compensation payments was about $1.88 billion (about 62%), whereas 

the total amount of medical payments was $1.13 billion (about 38%).

Workforce Investment Act Programs:

The stated intent of the WIA of 1998 and the objective of its multiple programs was “to consolidate, coordinate, 

and improve employment, training, literacy, and vocational rehabilitation programs in the United States” through 

grants to state agencies.

On July 22, 2014 President Obama signed WIOA into law. WIOA superseded the WIA of 1998 and amended the 

Adult Education and Family Literacy Act, the Wagner-Peyser Act, and the Rehabilitation Act of 1973. Funding under 

WIA ended in FY15 on June 30, 2015. FY 15 was the last year for improper payments reporting for rescinded WIAauthorized programs. In FY17, DOL will discontinue reporting of WIA programs historical IP rate.

The Department’s FY 2015 AFR provides a detailed description of all WIA-related programs and risk assessment 

methodology.

II. Statistical Sampling

Any agency that has programs or activities that are susceptible to significant IPs based on statutory 

thresholds listed in OMB Circular A-123, Appendix C, Part 1.A.9.Step 1 and are reporting an IP rate under 

section III below, shall briefly describe the statistical sampling process conducted to estimate the IP rate for 

each program identified as being susceptible to significant IPs. Agencies that were granted OMB approval to 

use an alternative sampling and estimation methodology must also include the justification for using the 

alternative methodology (i.e. explain why the agency was not able to follow the requirements in OMB 

Circular A-123, Appendix C Part 1.A.9.Step 2). In addition, briefly highlight any changes to any sampling and 

estimation plans that have occurred since the last AFR or PAR.

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.

Unemployment Insurance 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 improper payment rates are 

assumed 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 2016 are shown in Table 1 below, and are for the period July 1, 

2015 to June 30, 2016. 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. For 

the period July 1, 2015 to June 30, 2016, state agencies completed audits for 24,192 paid claims cases, a completion 
Improper Payments Reporting Details

(Unaudited)

FY 2016 Agency Financial Report 173

rate of 100%. For the FY 2016 reporting, the estimated UI Improper Payment rate consisted of all overpayments 

and underpayments.

Federal Employees’ Compensation Act Program:

DOL’s Office of Workers’ Compensation Programs (OWCP) consulted with Office of the Chief Financial Officer 

(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 

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 FECA improper payments estimation methodology excluded initial payments made in the first 90 days of a 

compensation claim and payments made on claims initiated prior to November 2000 that had not been imaged and 

stored electronically in OWCP’s Integrated Federal Employees Compensation System (iFECS) system. The 

Department is dedicated to ensuring beneficiaries receive the benefits they are entitled to in a timely manner, 

including these payments in a review would hinder timely payment to injured workers and would create a hardship 

if delayed. Additionally, OWCP has concluded that pursuing information on non-imaged (pre-November 2000) cases 

would not be cost effective, nor would it provide a significant benefit to sample this steadily diminishing 

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. This will include data analytics of improper 

payment trends identified in fraud investigations. The purpose of this will be to look for correlations and anomalies 

in order to understand causes and potential remedies. Additionally, the Program continues to implement effective 

practices to identify and address compensation and provider fraud. These practices include: instituting periodic 

claims reviews; allowing agencies and injured workers access to its data systems which contain compensation and 

medical-billing payment information; dedicating staff towards investigating potential fraud cases and processing

any resulting improper payment due to the government.

The Department’s methodology for estimating IP in the FECA program may be found at: 

http://www.dol.gov/ocfo/media/reports/20141104IPMETHODOLOGY.pdf.
Other Information

(Unaudited)

174 United States Department of Labor

III. Improper Payments Reporting

The table that follows (Table 1) is required for each agency that has programs and activities reporting under 

OMB Circular A-123 Appendix C Part I.A.9.Step 2 or Part I.A.14 or for programs that OMB has automatically 

deemed susceptible to significant IPs (please see footnote 8 under Part I.A.9.Step 2 for reporting timing 

expectations) regardless of whether the program or activity has IPs exceeding the statutory thresholds listed 

in OMB Circular A-123 Appendix C Part I.A.9.Step 1.v.

Table 1 below provides a breakdown of estimated IP and an outlook for IP reductions for each DOL program or 

activity reporting under OMB Circular A-123, Appendix C, Part I.A.9.Step 2 or Part I.A.14 or for programs that OMB 

automatically deemed susceptible to significant IPs.

Table 1: Improper Payments Reduction Outlook ($ in millions)

Program or Activity

FY1

5 Outlays

FY1

5 IP %

FY1

5 IP $

FY1

6 Outlays

FY1

6 IP %

FY1

6 IP $

FY16 Overpayments $FY16 Underpayments $FY1

7 Estimated Outlays

FY1

7 Estimated IP %

FY1

7 Estimated IP $

FY1

8 Estimated Outlays

FY1

8 Estimated IP %

FY1

8 Estimated IP $

FY1

9 Estimated Outlays

FY1

9 Estimated IP %

FY1

9 Estimated IP $

Unemployment 

Insurance (UI) 1

$32,895.31 

10.73%

$3,530.16 

$33,090.00 

11.65%

$3,853.99 $3,701.12 

$152.87 

$33,140.00 

11.55%

$3,827.67 

$33,870.00 

11.45%

$3,878.12 

$35,100.00 

11.35%

$3,983.85 

Federal Employees’ 

Compensation Act 

(FECA)

1

$2,987.19 

2.87%

$85.73 

$3,001.24 

3.54%

$106.32 

$41.97 $64.35 

$3,076.27 

3.50%

$107.67 

$3,153.18 

3.38%

$106.42 

$3,232.01 

3.25%

$105.04 

Workforce 

Investment Act 

(WIA) Title I 

Programs 2

$2,530.00 

0.88%

$22.26 

N/AN/AN/AN/AN/AN/AN/AN/AN/AN/AN/AN/AN/AN/A

TOTAL 3

$38,412.50 

9.47%

$3,638.15 

$36,091.24 

10.97%

$3,960.31 

$3,743.9 

$217.22 

$36,216.27 

10.57%

$3,827.67 

$37,023.18 

10.76%

$3,984.54 

$38,332.01 

10.67%

$4,088.89 

Note: 1 Current data is for 12-month ending June 30, 2016. 2 WIA funding ended as of FY 2015. 3Totals do not represent a true statistical 

estimate.

High Priority Program Supplemental Measure Info – Unemployment Insurance Program:

In addition to the Improper Payment rate required by IPERA, the Department has also implemented supplemental 

measures as required by Executive Order 13520. These supplemental measures, developed in consultation with 

OMB beginning with the FY 2014 reporting period, are important metrics that provide additional insight into root 

causes and possible corrective actions. The current supplemental measures are:

 The IP rate excluding recoveries (previously known as “net improper payment” rate), which subtracts 

recoveries from the IP rate; and
Improper Payments Reporting Details

(Unaudited)

FY 2016 Agency Financial Report 175

 The IP rate excluding work search, which subtracts IP due to work search errors.

These supplemental measures are tracked and reported on www.PaymentAccuracy.gov within 120 days after 

completion of a quarter. Both supplemental measures use the estimated overpayment and underpayment rate 

from BAM survey data.

Monitoring and reporting on the “net improper payment” rate is a positive incentive for states to improve IP 

recoveries. States making progress on both reducing overpayments and increasing recoveries will realize significant 

reductions in the “net improper payment” rate and will have achieved considerable improvement in efficient use of 

UI trust fund dollars.

 The IP rate excluding recoveries is defined as total overpayments plus total underpayments ($3,853.99

million - Table 1) minus the amount of overpayments recovered by state workforce agencies ($976.12 M -

Table 4.0). This supplemental measure includes both the overpayment and underpayment rates for all 

causes, but excludes payments determined to be technically proper under state UI law. The net improper 

payment rate includes two components – “IP”, which will continue to be estimated from BAM, and 

“overpayments recoveries”, which are based on actual amounts reported by the state workforce agencies 

on the ETA 227 Overpayment Detection and Recovery report.

The improper payment rate excluding work search as a supplemental measure allows for the review of improper 

payment rates without the influence of work search errors. During the recent quarters, work search errors are 

driving much of the increase in the improper payment rate as states have implemented stricter work search 

requirements. A 2016 review of structural issues in the UI program that impact the estimated improper payment 

rate was conducted by independent UI subject matter experts, statisticians, and economists. The group found that 

it is not feasible for states to prevent work search improper payments; they can only detect and recover them. The 

due process requirements related to establishing an improper payment related to work search errors cannot be 

accomplished before the payment must be made to the claimant in accordance with Federal law. Because the rate 

can only be reduced if improper payments are prevented, it is not possible for states to proactively reduce the 

portion of the improper payment rate associated with work search errors. They may only impact it marginally 

through effective education and messaging to claimants. In addition, states have limited resources to conduct work 

search audits outside of BAM. Since there are a multitude of challenges identifying realistic strategies to bring down 

the work search component of the overall improper payment rate, tracking the improper payment rate excluding 

the work search rate recognizes the inability of states to actively prevent these improper payments and help assess 

progress made on the other root causes.

 The supplemental improper payment rate excluding work search consists of all overpayments minus work 

search overpayments plus total underpayments. This supplemental measure includes the overpayment and 

underpayment rates for all causes except work search related errors. Both the overpayment and 

underpayment rates exclude payments determined to be technically proper under state UI law.

Table 1.1 -UI: UI Improper Payment Reduction Outlook FY 2015 – FY 2019 ($ in millions)

FY 2015 FY 2016 FY 2017 (Targets) FY 2018 (Targets) FY 2019 (Targets)

Est. IP% Est. IP$ Est. IP% Est. IP$ Est. IP% Est. IP$ Est. IP% Est. IP$ Est. IP% Est. IP$

Improper Payment 

Rate minus 

Recoveries

7.28%$2,393.00 8.70% $2,877.87 8.60% $2,850.04 8.50% $2,878.95 8.40% $2,948.40

Improper Payment 

Rate minus Work 

Search Errors

7.95%$2,616.00 7.69% $2,545.61 7.59% $2,515.33 7.49% $2,536.86 7.39% $2,593.89
Other Information

(Unaudited)

176 United States Department of Labor

The Department reports these supplemental measures quarterly for publication on the Department of the Treasury 

Payment Accuracy Web site at: http://www.paymentaccuracy.gov/.

IV. Improper Payment Root Cause Categories

The table that follows (Table 2) is required for each agency that has programs and activities reporting under 

OMB Circular A 123 Appendix C Part I.A.9.Step 2 or Part I.A.14 regardless of whether the program or activity 

has IPs exceeding the statutory thresholds listed in OMB Circular A-123 Appendix C Part I.A.9.Step 1.

Table 2: Improper Payment Root Cause Category Matrix ($ in millions)

Reason for 

Improper Payment

UI FECA

Overpayments Underpayments Overpayments Underpayments

Program Design or

Structural Issue TBD 1

TBD 1

Inability to 

Authenticate 

Eligibility

$3,089.77 $124.32 $8.84 $0.51

Failure to Verify

Excluded 

Party

Death Data

Financial 

Data

Prisoner 

Data

Other 

Eligibility 

Data

$185.14 $6.04 $5.89 $0.97

Administrative 

or Process Error 

Made by:

Federal 

Agency $14.29 $8.02

State or 

Local 

Agency

$271.83 $18.59

Other 

Party2 $0.40 $54.85

Medical Necessity $1.75

Insufficient 

Documentation to 

Determine

Other: 3$154.38 $3.92

Other: 4 $10.8

Total 5$3,701.12 $152.87 $41.97 $64.35

Notes: 1 ETA convened a Technical Working Group (TWG) in 2016 to study program and legal requirements which may create 

IP that states are unable to control. The TWG developed a methodological framework to quantify these structural IP. DOL will 

review the proposed methodology and take appropriate actions to measure and report these IP. 2“Other Party” for DFEC 

refers to administrative error by other Federal employing agencies. 3Improper payment had been identified and the state 

agency was in the process of taking corrective action at the time of the BAM sample selection. 4Indicates OIG fraud restitution 

average as explained in section VII. Accountability below.

5

Rounding error may contribute to imprecise totals.
Improper Payments Reporting Details

(Unaudited)

FY 2016 Agency Financial Report 177

Unemployment Insurance Program:

The Improper Payment Root Cause Category Matrix identified in Table 2 does not align precisely with the way the 

UI program classifies root causes. Additionally, the categories presented in Table 2 overlap between the root causes 

and responsibilities for the payment errors which make it difficult to describe corrective actions for each improper 

payment category as presented in Table 2. The discussion below attempts to clarify for the reader the intricacies of 

the UI program.

Program Design or Structural Issue: As noted previously in Section III, UI believes that a significant portion of the 

program’s IP may be categorized under this root cause. Among the errors included in this category are work search 

errors which cannot be prevented and can only be detected after the fact; payments made following an initial 

eligibility determination where all the information was unavailable; and payments that may go undetected due to a 

lag in data availability - such as the National Directory of New Hires (NDNH) data. A review of structural issues in the 

UI program that impact the estimated improper payment rate was conducted by independent Technical Working 

Group (TWG) of UI subject matter experts, statisticians, and economists. The TWG proposed several research 

methodology options for estimating the impact of these structural issues on the improper payment rate. Based on 

these recommendations, UI will be conducting a study to examine, quantify, and better understand program and 

legal requirements which may create IP that states are unable to control.

Inability to Authenticate Eligibility: In order to receive a weekly benefit payment, a claimant must retroactively 

certify that they have met a myriad of eligibility conditions for the benefit week for which they request payment. 

Much of this information can only be authenticated with an employer or other third parties who do not participate 

in the weekly certification process.

Similar to the structural issues discussed above, this section includes errors where the state agency followed official 

procedures and necessary forms were fully completed but a payment issue was not detectable by normal 

procedures at the time of payment. These errors may be due to the claimant providing inadequate or inaccurate 

information and/or no income verification sources to authenticate the claimant’s eligibility to prevent the improper 

payment. Examples include: inadequate time to verify the work search activities provided by the claimant with the 

employer listed as a contact, income data such as the NDNH information to verify whether or not that the claimant 

has returned to employment, and/or the employer failing to respond to the agency’s request for separation 

information.

Failure to Verify: This section includes errors where the state agency had sufficient documentation to identify that 

there was a payment issue but did not resolve the issue. Examples include: failure by the state agency to verify or 

follow-up to determine whether the claimant returned to work after receiving a NDNH cross-match hit, failure to 

follow-up adequately with the employer regarding an incomplete response to a separation request, and/or not 

verifying work search activities/contacts provided by the claimant.

Administrative or Process Errors: State procedures/forms had not been properly followed/completed thereby 

precluding ability to detect the payment issue; or state agency provided incorrect information or instructions. 

Examples include: failure by the state agency to verify whether the claimant returned to work using a NDNH crossmatch or other income verification sources, not requesting separation information from an employer, and/or not 

requesting work search activities/contacts from a claimant or requesting work search verification from an 

employer.

Other Reason: Improper payment had been identified and the state agency was in the process of taking corrective 

action at the time of the BAM sample selection. This includes those improper payments detected by the state 

agency through matching claimant information with state and national new hire directories and with wage records 

to detect individuals who continue to claim while being employed.
Other Information

(Unaudited)

178 United States Department of Labor

V. Corrective Actions

For all programs and activities as determined under OMB Circular A-123 Appendix C Part I.A.9.Step 2 with 

IPs exceeding the statutory thresholds listed in OMB Circular A-123 Appendix C Part I.A.9.Step 1, agencies 

shall identify the reasons their programs and activities are susceptible to significant IPs and put in place a 

corrective action plan to reduce them.

DOL has identified the root causes for IPs in all programs and activities listed in Table 2 above and has developed 

comprehensive corrective action plans (CAPs) to reduce them. These CAPs vary by program and a high-level review 

of these plans is described in the program-specific narratives below.

Unemployment Insurance Program:

In response to the level of IP in the UI program, the Department has developed a comprehensive and continuously 

evolving Strategic Plan to address several root causes of IP. A high level summary of the Strategic Plan is available 

at: http://www.dol.gov/dol/maps/Strategies.htm. The Strategic Plan was designed to specifically target UI program 

root causes prior to the generalized Federal root cause categories addressed in Table 2 above. The UI program 

specific root cause corrective actions detailed below overlap multiple generalized Federal categories.

Table 2.2 - UI reflects supplemental information on how the Department classifies the root causes of UI 

overpayments.

Table 2.2 - UI: Root Causes of UI Overpayments (% of Overpayments Reported in Table 1)

% of 

Overpayments 

(2016 IPIA Rate)

% of 

Overpayments 

(2015 IPIA Rate)

FY 15 to 

FY 16 % 

Point 

Change

Work Search (failure to actively seek employment) 37.54% 29.41% +8.13

Benefit Year Earnings (continuing to claim benefits after returning 

to work) 29.95% 33.27% -3.32

Separation (ineligible due to voluntarily quitting or discharge for 

cause) 12.46% 18.52% -6.06

Able and Available (Ineligible due to not being able to work or 

available for work) 6.64% 5.95% +0.69

Employer Service Registration (failing to register for referral to 

work or reemployment services) 3.27% 1.61% +1.66 

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) 

2.95% 2.35% +0.60 

Base Period Wages (Error in calculating claimant’s benefit based 

on wages earned prior to period of unemployment) 2.93% 4.42% -1.49

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)

4.27% 4.47% -0.20
Improper Payments Reporting Details

(Unaudited)

FY 2016 Agency Financial Report 179

The Department actively works with the states1to reduce IP. All states have been called to action to ensure that UI 

integrity is a top priority and to develop state-specific strategies to bring down the overpayment rate. Specific

attention and assistance has been given to those states with a high IP rate.

Supplemental Funding Opportunities for Integrity-Related Projects: 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 grants demonstrate DOL’s commitment to the development of 

integrity‐related systems focused on the proper payment of UI benefits. These improvements can result in 

significant savings of staff costs for integrity‐related activities, increased dollar amounts of overpayments 

recovered, and prevention of future overpayments.

Between FY 2005 and FY 2015, DOL provided approximately $330 million to states in supplemental funding for 

integrity-related projects. Additionally, between FY 2009 and FY 2015, approximately $361 million in supplemental 

funding was provided to state consortia to address outdated IT system infrastructure, which is necessary to 

improve UI integrity. Please see section VIII. Agency Information Systems and Other Infrastructure: UI for 

information on the state consortia.

In April 2016, DOL provided $112 million to 50 state workforce agencies to provide UI claimants with improved 

reemployment services and reemployment eligibility assessments. Additionally, in October 2016, DOL anticipates 

awarding approximately $30 million in supplemental funding to state workforce agencies for the prevention, 

detection, and recovery of improper UI benefit payments; to improve state performance; to address outdated IT 

system infrastructures necessary to improve UI program integrity.

Reducing Improper Payments in the UI Programs: Each state BPC unit conducts post-award audits of benefit 

payments for the prevention and detection of UI improper payments, and to determine whether error or willful 

misrepresentation has occurred.

These activities are conducted through the use of automated tools and procedures that confirm the identity and 

legal status of the claimants, search for unreported earnings, and detect other forms of fraud or errors contributing 

to IP in the UI program.

State agencies also maintain the integrity of UI and reduce IP by ensuring that employers contribute their fair share 

of taxes and facilitate the return to work of UI claimants.

UI Integrity Center of Excellence: DOL has developed the successful state-driven UI Integrity Center of Excellence 

with the goal of promoting the development and implementation of innovative integrity strategies to support all 

states, including the prevention and detection of fraud, in the UI program. The Center is focused on the following 

activities:

 The Center completed the development of a secure portal to enable rapid exchange of information among 

states about UI fraud schemes. This portal was launched in May 2014 with information on successful state 

integrity practices, information about the Center and its deliverables, and ways for states to share integrity 

practices with the UI community. Enhancements were made in April 2016 to enable state fraud 

investigators to exchange encrypted information about ongoing and active cases to assist prevention 

efforts.

 The Center is working with a vendor and three states to pilot a data analytics and predictive modeling tool 

to enable the prioritization of cross-match data for the prevention and detection of improper payments. 

Following the completion of the pilot in the 1st quarter of CY 2017, the Center will disseminate information 

and training on the tool, which will be available to all states across the UI system.

 The Center has developed and is offering program integrity training for states through the UI Community of 

Practice website. These modules include instructor-led and self-paced content addressing improper 

payments prevention, fraud detection, eligibility determinations, and fact finding. The Center is also 

 

1

For the purposes of UI program reporting, “states” refer to the 50 states and the territories of District of Columbia, Puerto Rico, and the 

Virgin Islands.
Other Information

(Unaudited)

180 United States Department of Labor

establishing a UI National Integrity Training Academy with self-paced and instructor-led training modules 

that can result in credentials. The Academy is planned to launch by the 4th quarter of FY 2017.

 DOL is working with the Center and eight states to design and build a secure data hub for state UI agencies 

to access characteristics of known UI fraud claims as well as incarceration data, death records, identity theft 

data, payroll deposit information, foreign travel records, employer quarterly Federal tax returns, fictitious 

employer schemes, and other data for cross-matching purposes. This data hub is planned to go live in the 

3rd quarter of FY 2017.

 The Center will assist with states’ internal control efforts by developing a model BPC blueprint. The Center 

has engaged states to conduct an assessment of current UI integrity efforts, to support implementation of 

an outreach strategy to solicit information on integrity issues, and create a model BPC blueprint. The 

information will also be used to highlight integrity practices that should be part of state UI IT 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. These activities are 

due for completion in the 1st quarter of FY 2017.

 In September 2015, the Center hosted an integrity symposium with states to showcase products and tools 

that individual states are using to improve UI program integrity. The Center is planning its next national 

symposium for December 2016. This event will provide an opportunity to highlight the Center’s efforts 

directed at developing innovative tools and strategies, training, and a platform for sharing state best 

practices for reducing improper payments that will benefit the entire UI system.

As noted above, the Improper Payment Root Cause Category Matrix identified in Table 2 does not align precisely 

with the way the UI program classifies root causes. Below are descriptions of national strategies underway to 

address the top root causes of UI IP:

Work Search Strategies: Work search issues were the leading cause of UI overpayments during the 2016 reporting 

period. Work search requirements vary significantly among states and are among the most difficult to control and 

costly for states to monitor. Specific strategies to address work search include:

 DOL continues to provide guidance and technical assistance to states for accurate and consistent coding of 

BAM cases related to work search errors. The guidance and technical assistance is intended to ensure that 

state BAM units access all agency information to determine facts of the case, and code the investigation 

outcomes following state law, policies, and procedures. 

 DOL convened a federal/state workgroup of program experts in UI, and employment and training, to reenvision work search requirements for the 21st Century labor market. Working in partnership with the 

National Association of State Workforce Agencies (NASWA), DOL and state agency representatives focused 

on ensuring that work search activities help claimants get good jobs, are acceptable to meet state eligibility 

requirements for UI, are verifiable, connect claimants to services provided by the public workforce system, 

and reflect the way individuals search for work in the current labor market. The products developed by this 

workgroup will be available for states’ use in the fourth quarter of calendar year 2016.

Benefit Year Earnings (BYE) Strategies: In order to address this root cause, the second most frequent cause of UI 

overpayments, it is critical to ensure that claimants understand their responsibility to report when they return to 

work and for states to identify as quickly as possible that the claimant has returned to work. The strategies to 

accomplish these purposes include:

 Improved cross-matching against the NDNH and the immediate notification of claimants that the state 

agency is aware they may have returned to work while still claiming benefits. As of September 2016, a total 

of 52 states are using NDNH for their BPC operations (California is working to implement NDNH).

 Promotion of messaging tools that are designed to improve claimant and employer understanding of, and 

compliance with, the established rules and procedures related to UI claims. In March 2012, DOL published a 

UI Program Letter announcing the availability of Claimant and Employer Messaging Toolkit containing 

products and tools designed to support these state messaging campaigns. As of March 2013, all states had 

implemented their own state-specific claimant and employer messaging campaigns using at least one tool 
Improper Payments Reporting Details

(Unaudited)

FY 2016 Agency Financial Report 181

from the Toolkit. DOL continues to encourage states’ efforts to implement these messaging tools.

Additional information on the toolkit is available at: http://www.dol.gov/dol/maps/tools.htm

 Targeted technical assistance and monitoring for states with high BYE error rates. DOL’s regional offices 

reviewed the selected states’ implementation of NDNH cross-matching procedures, and ensured that these 

states identified and began the implementation of specific strategies to address this root cause as part of 

the Fiscal Year (FY) 2016 State Quality Service Plan (SQSP). As of September 2016, 7 of the 17 selected 

states have achieved a BYE rate below 4%. ETA will continue to support these states efforts to reduce BYE 

overpayments and provide additional technical assistance to these states as appropriate.

 Support for state implementation of the Treasury Offset Program (TOP) that permits states to recover 

certain unemployment compensation debts due to fraud and certain non-fraud overpayments through 

Federal income tax refund offsets. As of September 2016, DOL has provided supplemental funding for TOP 

implementation to 49 states, and a total of 43 states have implemented TOP. One state previously 

implemented TOP but suspended operations in order to meet IRS safeguard requirements. Seven additional 

states are in various stages of TOP implementation. DOL will continue outreach with the remaining 2 states 

to encourage their implementation of TOP.

 DOL is currently piloting the use of employer payroll information with three states using Equifax’s The Work 

Number, a database compiled in real-time, directly from payroll feeds of many employers across the 

country. It includes current employment and income data on about one-third of the U.S. workforce and is 

the largest database of its kind. This effort is ongoing and is due for completion by the 4th quarter of FY 

2017. Based on the outcome of this pilot, DOL will examine the feasibility of other states adopting this 

strategy.

Separation Strategies: The goal of these strategies is to improve timeliness and accuracy of information received 

from employers needed for eligibility determinations, specifically concerning the reason for a UI claimant’s 

separation from employment.

 DOL is promoting the expansion of state and employer adoption and usage of the State Information Data 

Exchange System (SIDES), a system that enables the electronic communication of separation and other UI 

information between employers and State Workforce Agencies (SWAs). DOL provided funding for SIDES 

implementation to 51 state workforce agencies. As of September 2016, 49 states have implemented SIDES, 

and two additional states are in various stages of SIDES programming and testing. The funded states are 

working toward implementation by the 2nd quarter of FY 2017. DOL is now working with states to 

encourage employer use of SIDES.

Employment Service (ES) Registration Strategies: DOL has demonstrated success in addressing this root cause. By 

providing targeted and customized technical assistance, states with the highest error rates for this cause, achieved 

an ES Registration error rate of 0.44%, as of the 2016 reporting period. This is a 57.1% reduction in the ES 

Registration error rate compared to 2011.

State and Other Engagement Strategies: States administer the UI program and are responsible for its integrity and 

controlling improper payments. SWAs have been engaged in strategies to address bringing both the individual state 

and the national improper payment rates into compliance with the 10% threshold established by IPERA. These 

strategies include the following:

 DOL encourages states to convene cross-functional task forces to support the maintenance/enhancement 

of integrity action plans as part of each SWA’s SQSP, which becomes the foundation of states’ grant 

agreement with DOL. As of the 1st quarter of FY 2012, all states had established task forces and DOL 

continues to encourage states to convene them regularly.

 Continue technical assistance and monitoring to states with persistently high IP rates. Thirteen “High 

Priority” states were designated between FY 2012 and FY 2015. Nine of these states have achieved 

improved performance and were removed from this designation. DOL continues to work with the four High 

Priority states to achieve similar performance improvements.
Other Information

(Unaudited)

182 United States Department of Labor

DOL continues to collaborate with Federal benefit programs that have been targeted by fraud schemes involving 

the theft of personally identifying information and the use of that information for willful misrepresentation in 

claiming benefits. DOL will continue in FY 2017 to engage representatives from the Earned Income Tax Credit (EITC), 

Medicaid, Supplemental Nutrition Assistance Program (SNAP), Social Security Disability Insurance (SSDI), and the 

Temporary Assistance for Needy Families (TANF) programs with the goals of increasing information sharing and 

developing solutions to combat fraud schemes across multiple agencies and programs.

Federal Employees’ Compensation Act Program:

“Failure to Verify” Error: The IP’s in this area resulted from payments made after a return to work. Many of the IPs 

were “technically proper” when they were initiated, but the payments were not stopped promptly when the 

claimant returned to work. These payments are considered part of the “Failure to Verify” error in Table 2 above. In 

FY2015, FECA worked with Treasury to shorten the payment cycles, and as a result there were no errors of this type 

found in the FY2016 IP audit. This confirms that the corrective action was successful and that one type of improper 

payment has been largely eliminated. The small category of remaining errors was mostly due to communication 

issues between FECA and employing agency. FECA will continue to monitor efforts in this area and work to improve 

communications with its stakeholders. 

“Administrative or Process Errors” Error: The “Administrative or Process Errors” error category in Table 2 above 

reflects various errors in calculating wage loss pay rates. Specifically, a number of IPs resulted from the improper 

deduction of life insurance premiums. FECA is working closely with the Office of Personal Management (OPM) to 

share and cross-walk life insurance data to resolve these issues. In addition, the FECA Program Integrity Unit is 

conducting a comprehensive study in order to analyze trends and abnormalities in various areas of improper 

payments. This will assist in developing technology and analytic tools to detect and monitor both post and pre 

improper payments.

“Medical Necessity” Error: Only a single payment error was found in this category in FECA’s FY16 review, totaling 

less than $1,500. However, statistical sampling methodology extrapolates that in the universe of payments this 

could equal the $1.75 million reported in Table 2 above. This error occurred because the medical evidence was 

insufficient to support that the current level of disability related to the work related injury. FECA continues to 

implement effective periodic claims review practices to ensure that all compensation payments are supported by 

objective medical evidence.

“Inability to Authenticate Eligibility” and “Other” Error: This category of errors reflects issues in the prompt and 

accurate annual authentication of continued eligibility. FECA is working with OPM to improve communication that 

will address dual entitlement issues that lead to improper payments. Communication and data exchange between 

FECA and OPM will improve efficiencies in the FECA programs ability to accurately and timely address this problem. 

In addition, the program is also working on a Computer Matching Agreement with the Social Security 

Administration (SSA). The data exchange program will improve the Programs ability to reduce FECA benefits when 

an individual is concurrently receiving benefits from SSA, thereby minimizing improper payments of FECA disability 

benefits. The “Other” error category in Table 2 above reflects OIG fraud restitution issues which are detailed in 

section VII. Accountability, `below.
Improper Payments Reporting Details

(Unaudited)

FY 2016 Agency Financial Report 183

VI. Internal Control over Payments

The table that follows (Table 3) is required for each agency that has programs and activities as determined 

under OMB Circular A-123 Appendix C Part I.A.9.Step 2 with IPs exceeding the statutory thresholds listed 

in OMB Circular A-123 Appendix C Part I.A.9.Step 1. Agencies shall briefly summarize the status of internal 

control over payments using: (1) a single narrative explaining efforts undertaken to provide reasonable 

assurance that internal controls over payments are in place and operating effectively; and (2) Table 3 

illustrated below. The primary purpose of the summary is to provide a thoughtful analysis linking agency 

efforts in establishing internal controls and reducing IP rates. Agencies do not need to create a separate 

narrative for each program they are addressing in this section, rather, the agency may report using one 

narrative that encompasses the information for all of the programs reporting under the requirements of this 

section. Agencies should leverage existing internal control plans and at a minimum should address the 

internal control standards provided in OMB Circular A-123, Appendix C, Part II.C.2.

Effective internal controls are necessary for timely and reliable financial management information and fundamental 

to management accountability. DOL’s internal controls review provides reasonable assurance to the President and 

Congress that the Department’s internal controls are in place and operating effectively to prevent and detect 

improper payments. DOL applies the five standards included in Table 3: Status of Internal Controls below: Control 

Environment, Risk Assessment, Control Activities, Information & Communication, and Monitoring. DOL management 

is able to reasonably assess the design and operating effectiveness of control activities and to ultimately support an 

unqualified Assurance Statement published in the MD&A of this report. The UI program and the FECA program 

internal control activities over payments are discussed below.

Table 3: Status of Internal Controls

Internal Controls Standards UI FECA

Control Environment 4 4

Risk Assessment 4 4

Control Activities 4 4

Information & Communication 4 4

Monitoring 4 4

Legend:

4 = Sufficient controls are in place to prevent IPs.

3 = Controls are in place to prevent IPs but there is room for improvement.

2 = Minimal controls are in place to prevent IPs.

1 = Controls are not in place to prevent IPs.

Unemployment Insurance Program:

As mentioned in section I. Risk Assessments, the UI program is a unique Federal-state partnership, based on 

Federal law but administered by state employees under state law. Section 303(a)(1) has been interpreted to mean 

that states must have "methods of administration" to ensure that eligible claimants are paid UI benefits promptly 

when determined eligible and to ensure claimants who are not eligible are not paid. In addition, states must have 

methods of administration to protect against improper payments and fraud. This federal-state partnership 

structure makes UI unique among the nation’s social insurance programs and program integrity depends almost 

entirely on actions by the states. DOL provides oversight and monitoring for state workforce agencies to support 

their efforts to reduce UI improper payments.

Control Environment: DOL ensures that states are actively engaged in implementing strategies and activities to 

effectively reduce improper payments and promoting a culture of integrity throughout the entire UI system. All 

states are required to have an Integrity Strategic Plan embedded in their biennial State Quality Service Plan (SQSP), 

which is the UI administrative grant agreement between DOL and the states. State integrity performance measures 
Other Information

(Unaudited)

184 United States Department of Labor

are actively tracked and states failing to meet measures are required to include CAPs in the SQSP to support 

performance improvement. In addition, states may be identified as “high priority” for sustained poor performance 

related to program integrity and those so designated receive intensive technical assistance and increased 

monitoring and oversight. To accomplish that goal, an immediate call to action was issued to all state UI 

Administrators to ensure that all staff responsible for the operation of the program are engaged in a coordinated 

effort to address improper payments at all levels of the program. Everyone in UI owns program integrity and it is 

expected that all agency staff be aware of the causes of improper payments and what their role is regarding 

overpayment prevention. Integrity programs must be designed to discourage fraud and uncover potential issues of 

fraud at the earliest possible time.

Accountability mechanisms have been established for DOL’s OCFO to monitor the implementation of its integrity 

strategies and to share information on the improper payment rate in the Federal-state UI system with the 

Department’s leadership and the public.

Risk Assessment: States are responsible for day-to-day operations to ensure integrity for the UI program, across all 

program functions, and through all levels of staff. BAM units within the states conduct in-depth investigations of 

random samples of paid and denied claims made each week to measure the accuracy of UI benefit payments. Data 

from the BAM investigations provide the basis for the estimated improper payment rates at the state and national 

level. Refer to section II. Statistical Sampling for a more detailed discussion on BAM.

For claims that were improperly made, BAM determines the root cause of and the party responsible for the error, 

the point in the UI claims process at which the error was detected, and actions taken by the claimant, employer, 

and agency prior to sample selection. The root causes of improper payments derived from the BAM data are 

analyzed, prioritized, and used to develop strategies and corrective actions.

DOL validates and reports the BAM data on its public website. BAM data for the most recently completed period 

are available at: 

http://www.oui.doleta.gov/unemploy/bam/2015/IPIA_2015_Benefit_Accuracy_Measurement_Annual_Report.pdf.

Control Activities: All states have implemented pre-payment review processes for verifying and validating benefit 

eligibility requirements required under state UI law, although they may vary from state to state. Additionally, each 

state’s BPC unit is responsible for promoting and maintaining program integrity through prevention, detection, 

investigation, establishment, and recovery of improper payments. In addition, DOL collaborates with the National 

Association of State Workforce Agencies (NASWA) and state representatives on the UI Integrity Center of 

Excellence, which will assist with states’ internal control efforts by developing a data analytics and predictive 

modeling tool available for replication, as well as a UI data hub for states to compare information from different

sources.

Every state conducts post-award reviews for the prevention and detection of UI improper payments to determine 

whether error or willful misrepresentation has occurred. These post-award reviews include use of data sources and 

other analytical tools to help ensure that payments made to claimants were appropriate.

Cost-benefit analysis has been performed to the extent feasible on strategies and other corrective actions to 

address root causes of improper payments prior to implementation.

Information and Communication: DOL issues advisories and handbooks to provide guidance and technical 

assistance to states. Additionally, training sessions (in-person and remote), and conferences have been scheduled 

to provide technical assistance and share best practices between states.

DOL has established a robust set of performance measures used to evaluate the states’ overall operational 

performance including program integrity. States not meeting the criteria set for these measures are expected to 

submit CAPs as part of their annual SQSP submission. Additionally, the SQSP also includes a state-specific Integrity 

Action Plan that must discuss the state’s root causes of improper payments and present the state’s strategies to 

address these causes.
Improper Payments Reporting Details

(Unaudited)

FY 2016 Agency Financial Report 185

DOL established an integrity strategic plan to improve the prevention, detection, and recovery of UI improper 

payments by targeting the largest root causes of overpayments. The plan is continuously evolving as new strategies 

to address the root causes are identified. Additionally, program performance information and data is published in 

the Department’s AFR. DOL also publishes UI improper payment targets and data on websites operated and 

maintained by OMB, the Department, and ETA. The Department’s site clearly identifies each state’s improper 

payment rate over a three-year sample period and the status of each state’s progress in implementing the integrity 

strategies identified in the Department’s strategic plan, noting if a plan is in place to implement the strategy and 

rating the strategy implementation as complete, on track, or not on track.

DOL’s oversight process includes quarterly reviews on CAPs submitted as part of the SQSP, peer reviews and 

training for specific program areas such as BAM, Appeals and Benefit Timeliness and Quality, and enhanced 

monitoring and technical assistance provided to states with high improper payment rates or chronic poor

performance. Currently, DOL is in final implementation phase of its new accountability and review processes for the 

UI program that will include addressing the operational aspects of the program through a state self-assessment 

process. The self-assessment tool is expected to be available for state use sometime in FY 2017. 

Finally, the UI Integrity Center of Excellence will assist with states’ internal control efforts by developing a model 

BPC blueprint. The Center will also highlight integrity practices that should be part of state UI IT Modernization 

efforts, including state successful practices, and “how-tos” in areas such as collections, fraud identification, cross 

matching, and identifying fictitious employers.

Monitoring: DOL has implemented the BAM survey methodology to estimate the level of improper payments at the 

state and national level. Additionally, targets have been developed and progress tracked against these targets. The 

survey methodology and targets adhere to existing laws and OMB guidance. Additionally, DOL understands 

statutory barriers for the UI program that limit the agency’s corrective actions in reducing improper payments.

Federal Employees’ Compensation Act Program:

OWCP’s FECA program has several controls in place to ensure payment integrity. FECA conducts regular prepayment matches using the Death Master File (DMF) and the Excluded Parties List System (EPLS). FECA screens 

post-payments through the Treasury Do Not Pay (DNP) process. In FY2016, the Program ensured greater oversight 

towards the prevention of IP’s by implementing the Senior Claims Examiner Community of Practice Engagement 

(SCOPE) initiative which engages subject matter experts in payment training sessions at the district levels. In 

addition to the robust operational internal controls already in place, OWCP has initiated an annual audit process to 

estimate the improper payment rate and enhance internal controls to mitigate identified weaknesses. Longer term, 

OWCP has a FECA Program Integrity Unit with data and program analysts to provide greater oversight and analysis 

of payment accuracy. OWCP has also contracted with a data analytics firm to assist in developing technology and 

analytic tools to detect and monitor inherent risk in claims, payments, and providers. The resultant technology and 

analyses will enable OWCP to refine its policy, procedures and oversight interventions.
Other Information

(Unaudited)

186 United States Department of Labor

VII. Accountability

For all programs and activities as determined under OMB Circular A-123 Appendix C Part I.A.9.Step 2 with 

IPs exceeding the statutory thresholds listed in OMB Circular A-123 Appendix C Part I.A.9.Step 1, agencies 

shall describe the steps the agency has taken and plans to take (including timeline) to ensure that agency 

managers, accountable officers (including the agency head), programs, and States and localities (where 

appropriate) are held accountable for reducing and recapturing IPs. Specifically, they should be held 

accountable for meeting applicable IPs reduction targets and establishing and maintaining sufficient 

internal controls (including an appropriate control environment) that effectively prevents IPs from being 

made and promptly detects and recaptures any IPs that are made.

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.

Unemployment Insurance 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. State workforce agencies 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 ACPs as part of their annual State Quality Service Plan submission.

In response to the level of improper payments in the UI program, ETA developed a Strategic Plan to address several 

root causes of IP which were described in detail above in section V. Corrective Actions: UI. 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.

 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 that 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 CAPs. 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:

o Reduce by 25% from the three-year baseline period those overpayments attributable to individuals 

who continue to claim UI benefits after they return to work. For the calendar year (CY) 2015 

performance period, the most recent three-year baseline period is CY 2012 through CY 2014;
Improper Payments Reporting Details

(Unaudited)

FY 2016 Agency Financial Report 187

o Meet the less than 10% improper payment 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 in detail earlier in this document in section V. Corrective 

Actions: UI.

As discussed in section VI. Internal Control over Payments: UI, 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.

Federal Employees’ Compensation Act 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 improper payment rate, less fraud, was 

3.18%. CBY2016 fraud estimation was $10.8 million[1], which translates to a rate of 0.36%. This represents an 

increase from 0.01% from last year’s IP audit. OWCP attributes this to a change in bill payment processing 

requirements and a greater number of successful prosecutions by the Department of Justice. In FY 2015, the FECA 

program placed special emphasis on the billing of compound medication. As a result, a more in-depth audit of the 

entire bill payment process was undertaken, with particular focus on properly capturing adjustment and reversals. 

While this rate is above the IPERA threshold for risk susceptibility, issues identified during OWCP’s improper 

payments review should lead to substantial improvements in the FECA rate in the coming years.

As noted in section II. Statistical Sampling: FECA, the FECA estimate of fraudulent payments are based on actual 

restitution amounts and therefore did not reflect an estimate of undetected fraud. In the 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. This will also 

include data analytics of improper payment trends identified in fraud investigations. The purpose of this will be to 

look for correlations and anomalies in order to understand causes and potential remedies. Additionally, 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 staff to investigating potential fraud cases and 

processing any resulting improper payment due to the government.

With the goal of reducing IP in the FECA program, OWCP implemented an IP review process and is committed to 

addressing issues identified during the review. This review process should lead to substantial improvements in the 

estimated FECA IP rate in the coming years. Longer term, OWCP is developing plans to improve the program 

integrity function in its programs with auditors and data analysts to provide greater oversight and analysis of 

payment accuracy.

 

[1] As noted in Table 2, under the “Other” root cause category above.
Other Information

(Unaudited)

188 United States Department of Labor

VIII. Agency Information Systems and Other Infrastructure

a. For all programs and activities as determined under OMB Circular A-123 Appendix C Part I.A.9.Step 2 

with IPs exceeding the statutory thresholds listed in OMB Circular A-123 Appendix C Part I.A.9.Step 1, 

agencies shall describe whether the agency has the internal controls, human capital, and information 

systems and other infrastructure it needs to reduce IPs to the levels the agency has targeted.

b. If the agency does not have such internal controls, human capital, and information systems and other 

infrastructure, describe the resources the agency requested in its most recent budget submission to 

Congress to establish and maintain the necessary internal controls, human capital, and information 

systems and other infrastructure.

Unemployment Insurance 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 improper payments. These staffs work closely with agency management to ensure 

sufficient controls are in place to prevent improper payments, conduct complex fraud investigations, and operate 

the activities required to recover improper payments if they have been made.

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 improper payments. 

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 

over $800 million 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 integrity‐related activities, increased dollar amounts of overpayments recovered, and prevention of 

future overpayments. Included in these supplemental funding grants to states are approximately $361 million 

provided 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 14 states.

Federal Employees’ Compensation Act 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) 
Improper Payments Reporting Details

(Unaudited)

FY 2016 Agency Financial Report 189

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, 

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, benefits payment status and attorney fees 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.

Initial payments made in the first 90 days of a compensation claim and payments made on claims initiated prior to 

November 2000 that have not been imaged and stored electronically in OWCP’s iFECS system are not included in 

the FECA improper payment estimation methodology. The Department is dedicated to ensuring beneficiaries 

receive the benefits they are entitled to in a timely manner and has concluded that pursuing information on nonimaged (pre-November 2000) cases would not be cost effective and would not provide a statistically significant 

benefit to sample a steadily diminishing population.

IX. Barriers

For all programs and activities as determined under OMB Circular A-123 Appendix C Part I.A.9.Step 2 with 

IPs exceeding the statutory thresholds listed in OMB Circular A-123 Appendix C Part I.A.9.Step 1, agencies 

shall describe any statutory or regulatory barriers, which may limit the agency’s corrective actions in 

reducing IPs and actions taken by the agency to mitigate the barriers’ effects.

Unemployment Insurance Program:

The UI program complies with several statutory provisions establishing requirements that impose challenges to 

reducing improper payments.

Federal-State Partnership: Each state administers the UI program according to its own laws and policies, which 

must conform to broad federal requirements. Improper payment 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 improper payment reduction activities.

Delays in receiving separation information: As discussed in section I. Risk Assessments: Program Integrity 

Overview - 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: In recent years state staffing resources have been negatively impacted in two ways. First, 

the administration funding for the UI program 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. In addition, the per-staff cost factors have only been 

increased for inflation once since 1995, and that was by 1% in 2010. From 1995 through 2015 inflation, as 

measured by the consumer price index (CPI), has increased by 55.5%, causing prevailing wages to increase beyond 

states’ ability to compete for staff in the labor market. Also, state furloughs and hiring freezes have reduced the UI 
Other Information

(Unaudited)

190 United States Department of Labor

administrative staff overall. Due to these personnel dislocations and staffing mismatches, UI claims adjudication 

was often conducted by less experienced or inadequately trained staff, resulting in an increased number of claims 

processing errors.

Second, state agencies’ employees who leave through normal attrition or early 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 and in some cases use vague language making it difficult to interpret 

consistently. It is very difficult for state UI agencies to verify claimant work search contacts with employers, given 

the methods of employment application vary widely in the current labor market, such as the posting of resumes on 

employment search engines and large databases. In addition, employers do not maintain records on all applicants 

or individuals submitting resumes, also adding to the challenge of validating work search. Strategies to address 

these challenges are few. 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 a result of 

all these factors, 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 

resources available for integrity functions, such as cross-matching claimant information with the new hire and other 

databases. Additionally, many state systems are several decades old and cannot be easily adapted to new improper 

payment detection methods, such as generating follow-up communications with claimants and employers to verify 

new hire matches.

Federal Employees’ Compensation Act Program:

The largest category of discrepancies identified involved various elements of payments. The identified IPs highlight 

the ongoing difficulty that FECA has with its payment process, namely reliance on reporting by other Federal 

agencies. In many instances the information supplied by the injured worker’s employing agency is incomplete or 

inaccurate. No automated mechanism exists to determine or validate the accuracy of the information reported by

the employing agency. This plays a role in FECA’s improper payment rate, increasing the overall improper payment 

number. Had the proper pay rate information been received, the FY2016 FECA improper payment rate would have 

been estimated at only 2.85%, instead of the 3.54% found. 

Lastly, the urgency of FECA payments must be considered when reviewing payment performance. FECA wage-loss 

payments are issued to injured employees who are likely without any other source of income, so it is imperative 

that the program issues the payments in an accurate and timely manner. The priority to avoid undue hardship to 

the stakeholders FECA serves restricts the program’s ability to put additional controls in place, such as a more 

detailed pre-payment review process. Instead, FECA is focusing resources and training on enhancing the timely and 

accurate payment process.

X. Recapture of Improper Payments Reporting

a. Payment Recapture Audits Narrative. See OMB Circular A-123, Appendix C Part I.D for more information 

about payment recapture audits. All programs and activities that expend $1 million or more annually –

including grant, benefit, loan, and contract programs – shall be considered for payment recapture audits. An 

agency shall discuss payment recapture audit (or recovery auditing) efforts, if applicable.

b. Programs Excluded from the Payment Recapture Audit Program. If the agency has excluded any programs 

or activities from review under its payment recapture audit program (including any programs or activities 

where the agency has determined a payment recapture audit program is not cost-effective), the agency 

must:
Improper Payments Reporting Details

(Unaudited)

FY 2016 Agency Financial Report 191

1. List all of the programs and activities where it has been determined conducting a payment recapture 

audit program would not be cost effective (whether determination occurred in the current year or in a 

prior year),

2. Indicate when OMB was notified (month and year) that it was not cost effective to conduct a payment 

recapture audit and the program would be excluded from a payment recapture audit program, and

3. Provide the justification and a summary of the analysis that is used to determine that conducting a 

payment recapture audit program for the program or activity was not cost effective (i.e., a discussion of 

the analysis conducted to determine that a payment recapture audit program would not be costeffective).

c. Payment Recapture Audit Reporting. Complete the table (Table 4) below and include each program or 

activity that expends $1 million or more annually and either conducts a payment recapture audit or 

recaptures payments outside of a payment recapture audit (if any of this information is not available 

indicate by either note or by “n/a” in the relevant column or cell). Agencies may include a footnote to list the 

programs or activities that do not have a recovery audit program in place. Programs or activities where the 

agency has determined a payment recapture audit program is not cost effective should still be listed in the 

table below if they have overpayments recaptured outside of a payment recapture audit (see the 

Overpayments Recaptured Outside of Payment Recapture Audits section below for more information). 

Dollars shall be displayed in millions and shall be carried out by at least two decimal points or be carried out 

to as many decimal points as the agency deems necessary to convey accurate information beyond two 

decimal points. For 157 ease of presentation, if a column in Table 4 does not apply to any of the programs or 

activities listed in Table 4 for a particular agency, the column does not need to be displayed. Note that these 

will be payments that were identified and/or recaptured in the current reporting year; however, the actual 

payment itself may have been made in a prior reporting year or in the current reporting year.

d. Overpayments Recaptured Outside of Payment Recapture Audits. As applicable, agencies should also report 

on IPs identified and recovered through sources other than payment recapture audits. For example, 

agencies could report on IPs identified through: statistical samples conducted under IPIA; agency post 

payment reviews or audits; Office of Inspector General reviews; Single Audit reports; self-reported 

overpayments; or reports from the public. Agencies should use the “Overpayments Recaptured Outside of 

Payment Recapture Audits” section of Table 4 to report this information. Note that these will be payments 

that were identified and/or recaptured in the current reporting year; however, the actual payment itself 

may have been made in a prior reporting year or in the current reporting year.

e. Payment Recapture Audit Program Targets. If an agency has a payment recapture audit program in place, 

then the agency is required to establish annual targets to drive their annual performance. The targets shall 

be based on the rate of recovery. Agencies are expected to report CY amounts and rates, as well as 

recapture rate targets for two years (CY+1 and CY+2). Agencies are encouraged to set targets that show an 

increase in recapture rate over time.

As reported to OMB in November 2014 in the FY 2014 AFR and FY 2014 Recapture Audit Report, and in previous 

such reports, DOL risk assessments have found that recapture audit programs are cost effective for only the UI 

program. As part of the Department’s regular cycle of triennial Department-wide risk assessments, these 

determinations will be revaluated for all programs and reported in FY 2017.

In conjunction with IP risk assessments, recapture audit cost-benefit analysis of nine newly authorized WIOA 

programs was conducted in 2016. These analyses found recapture audits would not be cost effective at this time.
Other Information

(Unaudited)

192 United States Department of Labor

WIOA Authorized Program Cost-Benefit 

Analysis Date

Result

Adult Employment and Training Activities 09/2016 Not cost effective

Dislocated Worker Employment and Training Activities (National Reserve) 09/2016 Not cost effective

Youth Activities 09/2016 Not cost effective

Workforce Data Quality Initiative 09/2016 Not cost effective

Indian and Native American Programs 09/2016 Not cost effective

Migrant and Seasonal Farmworkers 09/2016 Not cost effective

YouthBuild 09/2016 Not cost effective

Reintegration of Ex-Offenders 09/2016 Not cost effective

Dislocated Worker Employment and Training Activities (Formula) 09/2016 Not cost effective

Table 4.0: Overpayments Recaptured through Payment Recapture Audits ($ in millions)

Benefits Total

Program 

or Activity

Amount 

Identified

Amount 

Recaptured

FY 2016 

Recapture %

FY 2017 

Recapture % 

(Target)

FY 2018 

Recapture % 

(Target)

Amount 

Identified

Amount 

Recaptured

UI $1,239.03 $976.12 78.78% 71.0% 71.0% $1,239.03 $976.12

Total $1,239.03 $976.12 78.78% 71.0% 71.0% $1,239.03 $976.12

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, 2015 through June 30, 2016, the most recent period for which data are available. 

Data have been estimated for states with missing ETA 227 and EUC 227 reports.

Table 4.1: Overpayments Recaptured Outside of Payment Recapture Audits ($ in millions)

No program which expended over $1 million or greater reported overpayments recovered outside of payment 

recapture audits.

Table 5: Disposition of Funds Recaptured Through Payment Recapture Audits ($ in millions)

Program 

or Activity

Amount 

Recovered

Type of 

Payment

Agency 

Expenses to 

Administer 

the Program

Payment 

Recapture 

Auditor Fees

Financial 

Management 

Improvement 

Activities

Original 

Purpose

Returned 

to 

Treasury

Other

UI $976.12 UI Benefits NA NA NA $976.12 NA NA

Total $976.12 NA NA NA $976.12 NA NA

Note: Federal law prohibits the use of UI funds recaptured for anything but the original purpose.
Improper Payments Reporting Details

(Unaudited)

FY 2016 Agency Financial Report 193

Table 6: Aging of Outstanding Overpayments Identified in the 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 collectable 1

UI UI Benefits $556.79 $468.26 $1,637.17 $1,229.08

Total NA $556.79 $468.26 $1,637.17 $1,229.08

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).

Unemployment Insurance 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.

The Department coordinates with states to recover UI overpayments. Each state’s 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 2016, approximately $10.29 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. As of 

September 2016, 45 state agencies have implemented TOP and 4 other states have scheduled testing and 

implementation. An estimated $179.3 million in UI overpayments were recovered through TOP in FY 2016. 

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 the date that is one year after the debt was 

finally determined to be due and collected.

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;

 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.
Other Information

(Unaudited)

194 United States Department of Labor

Table 4.0, above, provides a summary of UI overpayments established and recovered as a result of the activities 

described above.

Recovered overpayments for state UI claims are returned to the UI account from which the benefits were originally 

paid.

Table 4.2.UI: 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 $1,146.71 $827.16 72.13% $1,239.03 $976.12 78.78%

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 improper payment 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 
Improper Payments Reporting Details

(Unaudited)

FY 2016 Agency Financial Report 195

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 the revised OMB 

Circular A-123, 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 

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 states’ UI trust fund account from which they were paid.

As noted in Table 6.0 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.

No UI benefit overpayments were recovered outside of payment recapture audits.

XI. Additional Comments

Discuss any additional comments, if any, on overall agency efforts, specific programs, best practices, or 

common challenges identified, as a result of IPIA, IPERA, and or IPERIA implementation.

Unemployment Insurance Program:

Other Barriers and Department Response: The Department of Treasury requires states to use merit‐based state 

government staff to access TOP data. However, several states use contract staff to perform program activities that 

require accessing TOP data, most notably IT support staff. Some states have reported difficulties in implementing 

the TOP program due to Treasury’s mandate to use merit staff. Treasury is working with the Department to provide 

customized technical assistance to resolve this issue.

ETA is working to fulfill the requirement under Part II.B.1.c.ii of OMB Memorandum M-15-02 to submit proposed 

statutory changes to Congress that are necessary to help bring the program into compliance with IPERA. Program 

integrity legislative proposals, including allowing states to use a percentage of recovered UI overpayments to detect 

and deter benefit overpayments, was included in the FY 2017 President’s Budget. As of August 2016, an integrity 

legislative package is completing OMB review that, if enacted, will provide both new tools and resources for states 

to support improved program integrity and to help lower the UI improper payment rate.

Federal Employees’ Compensation Act Program:

The FECA program believes that the implementation of data analytics will provide greater oversight and insight into 

payment accuracy. FECA is analyzing the results of an Improper Payments audit conducted in FY2016 to determine 

further corrective actions to be applied in FY2017. FECA continues to work towards reducing IP, and plans enhanced 

program integrity efforts in FY2017. This includes conducting studies to review historical payment data in search of 

anomalies indicative of potential improper payments, using predictive analytics tools to identify behaviors and 

trends that might indicate the likelihood of future improper payments and continuous monitoring of all general 

payment activities. 

In addition, the Program continues to work with other Federal partners such as SSA and OPM to facilitate data 

matches and enhance communication aimed at IP reduction. These activities will benefit both partner agencies, 

resulting in government-wide improper payment reductions.
Other Information

(Unaudited)

196 United States Department of Labor

Barriers to Implementation of OIG Recommendations: In recent reports, the Department’s OIG has offered 

recommendations which the Department has worked to resolve. These recommendations include: changing the 

payment review methodology to include initial payments made in the first 90 days of compensation and payments 

for non-imaged cases; reporting limitations of the sampling methodology; and ensuring the identification of 

improper payment issues identified by fraud investigations and estimate the extent to which these issues exist in 

the payment population. However, as noted in the Department’s responses to these recommendations, OWCP

believes many of these recommendations are not cost effective to reduce IP performance or are infeasible.

The Department is dedicated to ensuring injured workers receive the benefits they are entitled to in an accurate 

and timely manner. Reviewing initial payments made in the first 90 days of a compensation claim, would hinder 

timely payment to injured workers and would create undue hardship. Additionally, OWCP has concluded that 

pursuing information on non-imaged (pre-November 2000) cases would not be cost effective, nor would it provide 

a significant benefit to sample this steadily diminishing population.

The improper payment estimate for fraudulent payments is based on actual restitution amounts awarded in 

Department of Justice (DOJ) prosecutions for FECA fraud and therefore does not reflect an estimate of undetected 

fraud. Given the unreliability of estimating the amount of fraud that goes undetected, OWCP maintains that the 

current OMB approved methodology is the best estimate of fraud for IP estimation. This is supported by the fact 

that the results of using this methodology have proven effective to identify and address compensation and provider 

fraud.

The Department understands the recommendations offered in relation to methodology and completeness and has 

taken many steps to address these issues as reported in the FY15 AFR. However, FECA does not believe the 

recommendations would provide any appreciable improvement to payment integrity and would not be cost 

effective.

XII. Reduction of Improper Payments with the Do Not Pay Initiative

IPERIA requires pre-payment and pre-award reviews by each agency to determine program or award 

eligibility and to prevent improper payments before the release of any Federal funds. The procedures must 

ensure that a thorough review on eligibility occurs with relevant information of available databases.

IPERIA also requires OMB to submit to the Congress an annual report, “which may be included as part of 

another report submitted to Congress by the Director, regarding the operation of the Do Not Pay Initiative, 

which shall:

A. include an evaluation of whether the Do Not Pay Initiative has reduced improper payments or 

improper awards; and

B. provide the frequency of corrections or identification of incorrect information.”

To support this requirement, all agencies shall provide a brief narrative discussing the agency's actions 

attributable to the Do Not Pay Initiative and respective databases on an annual basis, regardless of the 

agency’s susceptibility to improper payments. This narrative shall include an evaluation of whether the Do 

Not Pay Initiative has reduced improper payments or improper awards; identify the frequency of corrections 

or identification of incorrect information; and include completion of the table that follows (Table 7).

Do Not Pay (DNP) Initiative is a government-wide initiative mandated by OMB Memorandum M-12-11 dated April 

12, 2012, Reducing Improper Payments through the “Do Not Pay List,”, and the Improper Payments Elimination and 

Recovery Improvement Act (IPERIA) of 2012 (Pub. L. 112-248) to screen payment recipients before a grant, contract 

award or payment is made. DOL has implemented the screening of payments through the Treasury Do Not Pay 

Portal and, as appropriate, screens payments via the DNP databases directly.

IPERIA Specified Databases: In FY 2016, the following databases were specified by IPERIA:

 Death Master File of the Social Security Administration (DMF),

 General Services Administration’s Excluded Parties List System (EPLS), (or the updated System for Award 

Management (SAM))

 Debt Check Database of the Department of the Treasury (Debt Check),
Improper Payments Reporting Details

(Unaudited)

FY 2016 Agency Financial Report 197

 Credit Alert System or Credit Alert Interactive Voice Response System of the Department of Housing and 

Urban Development (CAIVRS),

 List of Excluded Individuals/Entities of the Office of Inspector General of the Department of Health and 

Human Services (LEIE), and

 Prisoner Update Processing System of the Social Security Administration (PUPS), as added to IPERIA by the 

Bipartisan Budget Act of 2013, Public Law 113–67.

Table 7: Results of the Do Not Pay Initiative in Preventing Improper Payments ($ in millions)

Program or 

Activity

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

2,141,859 $6,713 0 0 851 $0.95

Reviews with 

databases not 

listed in 

IPERIA 2 NA NA NA NA NA NA

Notes: 1Indicates payments reviewed by the DNP Portal. 2Information is not collectable at this time, as detailed in narrative below.

Overview of Do Not Pay: IPERIA and OMB directives require agencies to integrate the use of existing Federal 

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 webbased single-entry access DNP Portal to these existing databases.

Approach for Implementing DNP Portal: Incorporating the DNP Portal fully into DOL’s business processes is a major 

undertaking involving the active cooperation of not only OMB, Treasury, and DOL component agencies, but also the 

states. OCFO facilitated development of a Plan for enrollment and implementation with affected component 

agencies. Component agencies work with OCFO to implement the DNP Solution in their business processes. 

Component agencies are responsible for implementation of DNP within their business processes and interfacing 

with state stakeholders where appropriate.

DNP Portal Payment Reviews: Since FY 2015, the DNP Portal has been comparing the Department’s Payment 

Automation Manager (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 improper payment. Since its inception, none of the matches returned by the DNP 

Portal have been found to be improper payments.

Reviews of IPERIA Specified Databases Outside the DNP Portal: DOL programs review IPERIA specified databases 

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. 

Prior to passage of the Federal Improper Payments Coordination Act (FIPCA) on 12/18/2015, 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 discussed in detail in section V. Corrective Actions: UI, above. These reviews are designed to 

prevent IP and vary significantly by specific programmatic need. Because of programmatic variation and the high 

likelihood of “double matching” a single payment against multiple databases, comparable statistics on potential IP 
Other Information

(Unaudited)

198 United States Department of Labor

prevented by these efforts cannot be collected cost effectively. The Department is reviewing if this data can be cost 

effectively collected during the course of regular risk assessments.

Reviews of non-IPERIA Specified Databases: The Department maintains comprehensive, cost effective internal 

controls to ensure the payment integrity of all programs. Among these controls DOL programs review payment files 

against certain databases not specified by IPERIA. 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. These efforts are discussed in detail in section V. 

Corrective Actions: UI, above. Because of programmatic variation and the high likelihood of “double matching” a 

single payment against multiple databases, comparable statistics on potential IP prevented by these efforts cannot 

be collected cost effectively. The Department is reviewing if this data can be cost effectively collected during the 

course of regular risk assessments.
Other Information

(Unaudited)

FY 2016 Agency Financial Report 199

Freeze the Footprint

Consistent with Section 3 of OMB Memorandum M-12-12, Promoting Efficient Spending to Support Agency 

Operations and OMB Management Procedures Memorandum M-13-02, the “Freeze the Footprint” (FTF) policy 

implementing guidance, all Chief Financial Officer Act departments and agencies shall not increase the total square 

footage of their domestic office and warehouse inventory compared to the FY 2012 baseline. There are significant 

opportunities for reductions in square footage and cost savings through agency co-locations, consolidations, and 

disposals of unneeded space within the Federal Government’s vast portfolio of real property assets. As a result, 

OMB is working in partnership with GSA and other Federal agencies to better align the size of the Federal real 

property inventory.

Per Section 11.5.10 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 Freeze the Footprint

Overall, the space utilization for DOL personnel in GSA provided office space is 258.6 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 FTF 1 reflects the total square footage associated with DOL’s assets subject to “Freeze 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 2015, and compares it to the FY 2012 “Freeze the Footprint” 

baseline (as assigned by GSA). The square footage totals reported align with agency totals confirmed by GSA.

Table FTF 1: Freeze the Footprint Baseline Comparison

FY 2012 Baseline 2015 (CY) Change

(2015 CY - FY 2012 Baseline)

Square Footage 6,942,509 6,929,749 -12,760

Table FTF 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 “Freeze 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 submittal1. The cost data reported by DOL is based directly on data reported into the latest available Federal 

Real Property Profile database.

Table FTF 2: Operation and Maintenance Costs – Owned and Direct Lease Buildings ($ in millions)

FY 2012 Reported 

Cost 2015 (CY) Change(2015 CY - FY 2012 Baseline)

Operation and Maintenance Costs $6.9 $7.8 $0.9

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. We have developed a process for internal reviews and 

 

1

See GSA, Office of Government-wide Policy, Federal Real Property Council, 2016 Guidance for Real Property Inventory 

Reporting (May 16, 2016) p.6.
Other Information

(Unaudited)

200 United States Department of Labor

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 (Job Corps 

Centers), disposal is a unique challenge given the campus-like nature of the Centers.

The decrease in space from FY 2012 to FY 2015 occurred despite the addition of nearly 43,000 sq. ft. of office and 

warehouse space from construction of new Job Corps Centers in New Hampshire and Wyoming.
(Unaudited)

FY 2016 Agency Financial Report 201

Table CMP 1: 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 (Federal Register 81 (1 July 2016): 43429 – 43461).

Civil Monetary Penalty Inflation Adjustment

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 (Bureau)

EBSA

29 USC 

§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://ecfr.io/Title29/sp29.9.2575.a

EBSA

29 USC 

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 2016 Up to $2,063 per 

day per failure.

https://ecfr.io/Title29/sp29.9.2575.a

EBSA

29 USC 

§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 2016 Up to $1,632 per 

day per failure.

https://ecfr.io/Title29/sp29.9.2575.a
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 (Bureau)

EBSA

29 USC 

§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 2016 Up to $1,502 per 

day per failure.

https://ecfr.io/Title29/sp29.9.2575.a

EBSA

29 USC 

§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 2016

Up to $147 per 

day not to 

exceed $1,472 

per request.

https://ecfr.io/Title29/sp29.9.2575.a

EBSA

29 USC 

§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 2016 Up to $131 per 

day per failure.

https://ecfr.io/Title29/sp29.9.2575.a

EBSA

29 USC 

§1132(c)(

8); 29 CFR 

2575.2(g)

Employee Retirement Income Security Act of 

1974 (ERISA), as amended 

Section 502 (c)(8) – Failure to adopt a 

multiemployer Defined Benefit (DB), funding 

improvement, rehabilitation plan or meet 

benchmarks.

2006 2016 Up to $1,296 per 

day per failure.

https://ecfr.io/Title29/sp29.9.2575.a

EBSA

29 USC 

§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 2016 Up to $110 per 

day per failure.

https://ecfr.io/Title29/sp29.9.2575.a
Civil Monetary Penalty Inflation Adjustment

(Unaudited)

FY 2016 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 (Bureau)

EBSA

29 USC 

§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 2016 Up to $110 per 

day per failure.

https://ecfr.io/Title29/sp29.9.2575.a

EBSA

29 USC 

§1132(c)(

10); 29 

CFR 

2575.2(j)(

1)

Employee Retirement Income Security Act of 

1974 (ERISA), as amended 

Section 502(c)(10) - 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 2016

$110 per day per 

participant and 

beneficiary 

during 

noncompliance 

period.

https://ecfr.io/Title29/sp29.9.2575.a

EBSA

29 USC 

§1132(c)(

10); 29 

CFR 

2575.2(j)(

2)

Employee Retirement Income Security Act of 

1974 (ERISA), as amended 

Section 502(c)(10) - Minimum penalty for 

uncorrected de minimis violations.

2008 2016

Minimum 

penalty of $2,745 

per participant or 

beneficiary for de 

minimis failures 

not corrected 

prior to notice 

from Department 

of Labor.

https://ecfr.io/Title29/sp29.9.2575.a
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 (Bureau)

EBSA

29 USC 

§1132(c)(

10); 29 

CFR 

2575.2(j)(

3)

Employee Retirement Income Security Act of 

1974 (ERISA), as amended 

Section 502(c)(10) – Minimum penalty for 

uncorrected violations that are not de minimis.

2008 2016

Minimum 

penalty of 

$16,473 per 

participant or 

beneficiary for 

non- de minimis 

failures not 

corrected prior 

to notice from 

Department of 

Labor.

https://ecfr.io/Title29/sp29.9.2575.a

EBSA

29 USC 

§1132(c)(

10); 29 

CFR 

2575.2(j)(

4)

Employee Retirement Income Security Act of 

1974 (ERISA), as amended 

Section 502(c)(10) - Unintentional failure 

maximum.

2008 2016

Maximum of 

$549,095 for 

non-intentional 

failures.

https://ecfr.io/Title29/sp29.9.2575.a

EBSA

29 USC 

§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 2014 Up to $100 per 

day per failure.

https://ecfr.io/Title29/sp29.9.2575.a

EBSA

29 USC 

§1132(m); 

29 CFR 

2575.2(l)

Employee Retirement Income Security Act of 

1974 (ERISA), as amended 

Section 502 (m) – Penalty against fiduciary for 

failure to make a proper distribution from a 

defined benefit plan under section 206(e) of 

ERISA.

1994 2016 Up to $15,909 

per distribution.

https://ecfr.io/Title29/sp29.9.2575.a
Civil Monetary Penalty Inflation Adjustment

(Unaudited)

FY 2016 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 (Bureau)

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 Coverage 

under PHS Act section 2715(f), as incorporated in 

ERISA section 715 and 29 CFR 2590.715-2715(e).

2010 2016 Up to $1,087 per 

failure.

https://ecfr.io/Title29/sp29.9.2575.a

MSHA 30 CFR 

100.3(A)

Federal Mine Safety and Health Act of 1977 

(Mine Act).

General violation of a mandatory health or safety 

standard or violation of any other provision of 

the Mine Act, as amended.

1977 2007 Maximum 

$68,300

http://162.140.57.127/cgi

-

bin/retrieveECFR?gp=&SID

=b9fe08d372afea1283165

259e48c5ad6&mc=true&n

=pt30.1.100&r=PART&ty=

HTML#se30.1.100_13

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 2007

Minimum $127 

Maximum 

$68,300

http://162.140.57.127/cgi

-

bin/retrieveECFR?gp=&SID

=b9fe08d372afea1283165

259e48c5ad6&mc=true&n

=pt30.1.100&r=PART&ty=

HTML#se30.1.100_13
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 (Bureau)

MSHA 30 CFR 

100.4(a)

Federal Mine Safety and Health Act of 1977 

(Mine Act).

Unwarrantable failure and immediate 

notification. Minimum penalty for any citation or 

order issued under section 104(d)(1) of the Mine 

Act. 

1977 2007 Minimum $2,277

http://162.140.57.127/cgi

-

bin/retrieveECFR?gp=&SID

=b9fe08d372afea1283165

259e48c5ad6&mc=true&n

=pt30.1.100&r=PART&ty=

HTML#se30.1.100_14

MSHA 30 CFR 

100.4(b)

Federal Mine Safety and Health Act of 1977 

(Mine Act).

Unwarrantable failure and immediate 

notification. Minimum penalty for any order 

issued under section 104(d)(2) of the Mine Act.

1977 2007 Minimum $4,553

http://162.140.57.127/cgi

-

bin/retrieveECFR?gp=&SID

=b9fe08d372afea1283165

259e48c5ad6&mc=true&n

=pt30.1.100&r=PART&ty=

HTML#se30.1.100_14

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 2007

Minimum $5,692

Maximum

$68,300

http://162.140.57.127/cgi

-

bin/retrieveECFR?gp=&SID

=b9fe08d372afea1283165

259e48c5ad6&mc=true&n

=pt30.1.100&r=PART&ty=

HTML#se30.1.100_14

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 $7,399

http://162.140.57.127/cgi

-

bin/retrieveECFR?gp=&SID

=b9fe08d372afea1283165

259e48c5ad6&mc=true&n

=pt30.1.100&r=PART&ty=

HTML#se30.1.100_15
Civil Monetary Penalty Inflation Adjustment

(Unaudited)

FY 2016 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 (Bureau)

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 2007 Maximum $313

http://162.140.57.127/cgi

-

bin/retrieveECFR?gp=&SID

=b9fe08d372afea1283165

259e48c5ad6&mc=true&n

=pt30.1.100&r=PART&ty=

HTML#se30.1.100_15

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 2007 Maximum 

$250,433

http://162.140.57.127/cgi

-

bin/retrieveECFR?gp=&SID

=b9fe08d372afea1283165

259e48c5ad6&mc=true&n

=pt30.1.100&r=PART&ty=

HTML#se30.1.100_15

OSHA

29 CFR 

1903.15(d

)(1) and 

29 CFR 

1903.15(d

)(2)

Occupational Safety and Health Act (OSH Act)

Penalty per willful violation and penalty per 

repeated violation under section 17(a) of the Act, 

29 U.S.C. 666(a). 

1970 2016

Minimum $8,908

Maximum 

$124,709

http://www.ecfr.gov/cgibin/textidx?SID=d353713b702e3c

bd2e07df015e61a32c&mc

=true&node=pt29.5.1903

&rgn=div5#se29.5.1903_1

15

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 2016 Maximum 

$12,471

http://www.ecfr.gov/cgibin/textidx?SID=d353713b702e3c

bd2e07df015e61a32c&mc

=true&node=pt29.5.1903

&rgn=div5#se29.5.1903_1

15
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 (Bureau)

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, and 29 U.S.C. 666(c) 

1970 2016 Maximum 

$12,471

http://www.ecfr.gov/cgibin/textidx?SID=d353713b702e3c

bd2e07df015e61a32c&mc

=true&node=pt29.5.1903

&rgn=div5#se29.5.1903_1

15

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, and 29 U.S.C. 666(d).

1970 2016 Maximum 

$12,471 per day

http://www.ecfr.gov/cgibin/textidx?SID=d353713b702e3c

bd2e07df015e61a32c&mc

=true&node=pt29.5.1903

&rgn=div5#se29.5.1903_1

15

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 2016 Maximum 

$12,471

http://www.ecfr.gov/cgibin/textidx?SID=d353713b702e3c

bd2e07df015e61a32c&mc

=true&node=pt29.5.1903

&rgn=div5#se29.5.1903_1

15

OWCP 20 CFR 

702.204

Longshore and Harbor Workers’ Compensation 

Act

Failure to file first report of injury or filing a false 

statement or misrepresentation in first report.

1927 1984 Maximum 

$22,597

http://www.ecfr.gov/cgibin/textidx?SID=20abcf843ce6d89

11b601302575a5371&mc

=true&node=se20.4.702_

1204&rgn=div8
Civil Monetary Penalty Inflation Adjustment

(Unaudited)

FY 2016 Agency Financial Report 209

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 (Bureau)

OWCP 20 CFR 

702.236

Longshore and Harbor Workers’ Compensation 

Act

Failure to report termination of payments.

1927 1927 Maximum $275

http://www.ecfr.gov/cgibin/textidx?SID=72a3f0e337570e3

8a9bf4e18a1616601&mc=

true&node=se20.4.702_1

236&rgn=div8

OWCP

20 CFR 

702.271(a

)(2)

Longshore and Harbor Workers’ Compensation 

Act

Discrimination against employees who claim 

compensation or testify in a LHWCA proceeding.

1927 1984

Minimum $2,259

Maximum 

$11,293

http://www.ecfr.gov/cgibin/textidx?SID=ef6e14c9c6ec75a

23f1cabfddfdee0e4&mc=t

rue&node=se20.4.702_12

71&rgn=div8

OWCP

20 CFR 

725.621 

(b), (d)

Black Lung Benefits Act

Failure to report termination of payments.

1978 1978 Maximum $1,375

http://www.ecfr.gov/cgibin/textidx?SID=9fdbe5a0681e36f

6fd042d645030cd74&mc=

true&node=se20.4.725_1

621&rgn=div8

OWCP

20 CFR 

725.621(d

)

Black Lung Benefits Act

Failure to file required reports. 1978 1978 Maximum $1,375

http://www.ecfr.gov/cgibin/textidx?SID=9fdbe5a0681e36f

6fd042d645030cd74&mc=

true&node=se20.4.725_1

621&rgn=div8

OWCP 20 CFR 

726.300

Black Lung Benefits Act

Failure to secure payment of benefits. 1978 1978 Maximum, 

$2,500

http://www.ecfr.gov/cgibin/textidx?SID=95133e35a58c22

de7def8eea6964ef03&mc

=true&node=se20.4.726_

1300&rgn=div8
Other Information

(Unaudited)

210 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 (Bureau)

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 2001 Minimum $134

http://www.ecfr.gov/cgibin/textidx?SID=d353713b702e3c

bd2e07df015e61a32c&mc

=true&tpl=/ecfrbrowse/Tit

le20/20cfrv4_02.tpl#700

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 2001 Minimum $268

http://www.ecfr.gov/cgibin/textidx?SID=d353713b702e3c

bd2e07df015e61a32c&mc

=true&tpl=/ecfrbrowse/Tit

le20/20cfrv4_02.tpl#700

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 2001 Minimum $402

http://www.ecfr.gov/cgibin/textidx?SID=d353713b702e3c

bd2e07df015e61a32c&mc

=true&tpl=/ecfrbrowse/Tit

le20/20cfrv4_02.tpl#700

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 2001 Minimum $535

http://www.ecfr.gov/cgibin/textidx?SID=d353713b702e3c

bd2e07df015e61a32c&mc

=true&tpl=/ecfrbrowse/Tit

le20/20cfrv4_02.tpl#700
Civil Monetary Penalty Inflation Adjustment

(Unaudited)

FY 2016 Agency Financial Report 211

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 (Bureau)

OWCP

20 CFR 

726.302(c)

(4)

Black Lung Benefits Act

Failure to secure payment of benefits after 10th 

day of notice.

1978 2001 Minimum $134

http://www.ecfr.gov/cgibin/textidx?SID=d353713b702e3c

bd2e07df015e61a32c&mc

=true&tpl=/ecfrbrowse/Tit

le20/20cfrv4_02.tpl#700

OWCP

20 CFR 

726.302(c)

(5)

Black Lung Benefits Act

Failure to secure payment of benefits for repeat 

offenders.

1978 2001 Minimum $402

http://www.ecfr.gov/cgibin/textidx?SID=2abcaa162ed386

8bfda764c7b3f34f8e&mc=

true&node=se20.4.726_1

302&rgn=div8

OWCP

20 CFR 

726.302(c)

(6)

Black Lung Benefits Act

Failure to secure payment of benefits. 1978 1978 Maximum $2,750

http://www.ecfr.gov/cgibin/textidx?SID=2abcaa162ed386

8bfda764c7b3f34f8e&mc=

true&node=se20.4.726_1

302&rgn=div8

WHD

40 USC 

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 1962 Maximum $25 https://www.dol.gov/whd

/resources/cmp.htm
Other Information

(Unaudited)

212 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 (Bureau)

WHD

29 USC 

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 1988 Maximum 

$19,787 https://www.dol.gov/whd

/resources/cmp.htm
Civil Monetary Penalty Inflation Adjustment

(Unaudited)

FY 2016 Agency Financial Report 213

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 (Bureau)

WHD

29 USC 

211(d); 29 

CFR 

530.302

Fair Labor Standards Act (FLSA) Homeworker

(1) Violation of recordkeeping, monetary, 

certificate or other statutes, regulations or 

employer assurances.

1938 1988 Minimum $20

Maximum 989 https://www.dol.gov/whd

/resources/cmp.htm

WHD

29 USC 

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 2008 Maximum 

$12,080 https://www.dol.gov/whd

/resources/cmp.htm

(2) Violation of child labor standards (sec 212 or 

213(c)) resulting in serious injury or death. 1938 2008 Maximum $54,910 https://www.dol.gov/whd

/resources/cmp.htm

(3) Willful or repeated violation of child labor 

standards (sec 212 or 213(c)) resulting in serious 

injury or death.

1938 2008 Maximum 

$109,820 https://www.dol.gov/whd

/resources/cmp.htm

WHD

29 USC 

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 1989 Maximum 

$1,894 https://www.dol.gov/whd

/resources/cmp.htm
Other Information

(Unaudited)

214 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 (Bureau)

WHD

29 USC 

2619(b); 

29 CFR 

825.300(a

)

Family & Medical Leave Act (FMLA) 

Willful violation of posting requirement.

1993 1993 Maximum $163 https://www.dol.gov/whd

/resources/cmp.htm

WHD

8 USC 

1288(c)(4)

(E)(i); 20 

CFR 

655.620

Immigration & Nationality Act (D-1) 

(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 1990 Maximum $8,908 https://www.dol.gov/whd

/resources/cmp.htm

WHD

8 USC 

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 

1952 1990 Maximum $1,782 https://www.dol.gov/whd

/resources/cmp.htm
Civil Monetary Penalty Inflation Adjustment

(Unaudited)

FY 2016 Agency Financial Report 215

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 (Bureau)

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.
Other Information

(Unaudited)

216 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 (Bureau)

WHD

8 USC 

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 1998 Maximum $7,251 https://www.dol.gov/whd

/resources/cmp.htm

WHD

8 USC 

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 1998 Maximum 

$50,758 https://www.dol.gov/whd

/resources/cmp.htm
Civil Monetary Penalty Inflation Adjustment

(Unaudited)

FY 2016 Agency Financial Report 217

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 (Bureau)

WHD

8 USC 

1188(g)(2)

; 29 CFR 

501.19(c)

Immigration & Nationality Act (H-2A) 

Violation of the work contract or a requirement 

of 8 USC 1188, 20 CFR part 655 subpart B, or 29 

CFR part 501.

1952 2010 Maximum $1,631 https://www.dol.gov/whd

/resources/cmp.htm

WHD

8 USC 

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 USC 1188, 20 CFR part 655 

subpart B, or 29 CFR part 501.

1952 2008 Maximum $5,491 https://www.dol.gov/whd

/resources/cmp.htm

WHD

8 USC 

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 USC 1188, 20 CFR part 655 

subpart B, or 29 CFR part 501, that proximately 

causes the death or serious injury of any worker.

1952 2010 Maximum 

$54,373 https://www.dol.gov/whd

/resources/cmp.htm

WHD

8 USC 

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 USC 

1188, 20 CFR part 655 subpart B, or 29 CFR part 

501, that proximately causes the death or serious 

injury of any worker.

1952 2010 Maximum 

$108,745 https://www.dol.gov/whd

/resources/cmp.htm

WHD

8 USC 

1188(g)(2)

; 29 CFR 

501.19(d)

Immigration & Nationality Act (H-2A) 

Violation for failure to cooperate in an 

investigation.

1952 2008 Maximum $5,491 https://www.dol.gov/whd

/resources/cmp.htm
Other Information

(Unaudited)

218 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 (Bureau)

WHD

8 USC 

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 2010 Maximum 

$16,312 https://www.dol.gov/whd

/resources/cmp.htm

WHD

8 USC 

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 USC 1188, 20 CFR part 655 subpart B, or 29 

CFR part 501.

1952 2010 Maximum 

$16,312 https://www.dol.gov/whd

/resources/cmp.htm
Civil Monetary Penalty Inflation Adjustment

(Unaudited)

FY 2016 Agency Financial Report 219

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 (Bureau)

WHD

8 USC 

1184(c)(1

4); 29 CFR 

503.23(a)

Immigration & Nationality Act (H-2B) 

(1) Willful misrepresentation of a material fact on 

the H-2B Registration, Application for Temporary 

Employment Certification, or H-2B Petition;

(2) Substantial failure to meet any of the terms 

and conditions of the H-2B Registration, 

Application for Temporary Employment 

Certification, or H-2B Petition. A substantial 

failure is a willful failure to comply that 

constitutes a significant deviation from the terms 

and conditions of such documents; or

(3) Willful misrepresentation of a material fact to 

the Department of State during the visa 

application process.

1952 2005 Maximum 

$11,940 https://www.dol.gov/whd

/resources/cmp.htm

WHD

8 USC 

1184(c)(1

4); 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 2005 Maximum 

$11,940 https://www.dol.gov/whd

/resources/cmp.htm
Other Information

(Unaudited)

220 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 (Bureau)

WHD

8 USC 

1184(c)(1

4); 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 2005 Maximum 

$11,940 https://www.dol.gov/whd

/resources/cmp.htm

WHD

8 USC 

1184(c)(1

4); 29 CFR 

503.23(d)

Immigration & Nationality Act (H-2B) 

Any other violation that meets the standards 

described in section 503.19.

1952 2005 Maximum

$11,940 https://www.dol.gov/whd

/resources/cmp.htm

WHD

29 USC 

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 1983 Maximum $2,355 https://www.dol.gov/whd

/resources/cmp.htm

WHD

41 USC 

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 1936 Maximum $25 https://www.dol.gov/whd

/resources/cmp.htm
SCHEDULES OF SPENDING

For the Years Ended September 30, 2016 and 2015

(Unaudited)

FY 2016 Agency Financial Report 221

The Schedule of Spending presents an overview of how and where the Department is spending its money. It is 

presented on a budgetary basis, the same as the Combined Statements of Budgetary Resources (SBR). Amounts 

shown below as “Total amounts agreed to be spent” equal amounts shown as “New obligations and upward 

adjustments” on the SBR.

To improve public transparency and the quality of data reported on USASpending.gov, DOL has begun reconciliation 

efforts between new obligations and upward adjustments reported on the financial statements and spending 

reported on USASpending.gov. Obligations included on the financial statements that are not included on 

USASpending.gov generally include: financial assistance direct payments, personnel compensation and benefits, 

leases, interagency agreements, travel, and training. Differences may also exist due to timing differences between 

new obligations and upward adjustments reported in DOL's financial reporting system and data transmitted to 

USASpending.gov through the Federal Procurement Data System.

(Dollars in Millions) 2016 2015

Section I – What money is available to spend?

This section presents resources that were available to spend by the Department.

Total resources $ 58,845 $ 58,137

Less amount available but not agreed to be spent (3,121) (2,809)

Less amount not available to be spent (835) (639)

Total amounts agreed to be spent $ 54,889 $ 54,689

Section II – How was the money spent?

This section presents services or items purchased and grouped for the Department’s major programs.

Income maintenance

 Insurance claims and indemnities $ 36,864 $ 36,005

 Net internal transfers between DOL funds 3,892 4,248

 Personnel compensation and benefits 338 314

 Contractual services and supplies 398 414

 Grants, subsidies, and contributions 3,726 3,721

 Interest 455 649

 Other 67 122

Employment and training

 Personnel compensation and benefits 272 263

 Contractual services and supplies 1,537 1,723

 Grants, subsidies, and contributions 4,346 4,230

 Other 61 125

Labor, employment and pension standards; worker safety and health; 

 statistics; other

 Personnel compensation and benefits 1,507 1,473

 Contractual services and supplies 1,101 1,040

 Grants, subsidies, and contributions 280 301

 Other 45 62

Total amounts agreed to be spent $ 54,889 $ 54,689

Section III – Who did the money go to?

This section identifies with whom the Department is spending money based on new obligations and upward adjustments.

Individuals $ 37,041 $ 36,052

Net internal transfers between DOL funds 3,892 4,248

States and local governments 7,125 7,120

Other federal agencies 784 453

Vendors and other 2,951 3,809

Employees 755 795

Higher Education 1,633 1,595

Not-for-profits 708 617

Total amounts agreed to be spent $ 54,889 $ 54,689

Schedule of Spending
222 United States Department of Labor

Open Government Links

Department of Labor

RSS Feeds http://www.dol.gov/rss/

DOL Blog https://blog.dol.gov

Follow on Twitter https://www.twitter.com/usdol

Follow on Facebook http://www.facebook.com/departmentoflabor

YouTube http://www.youtube.com/usdepartmentoflabor

Instagram https://www.instagram.com/USDOL

Flickr http://www.flickr.com/photos/usdol

Newsroom https://www.dol.gov/newsroom

DOL A to Z http://www.dol.gov/dolAtoZ/index.htm

About DOL https://www.dol.gov/general/about-dol

Read the DOL Newsletter https://www.dol.gov/newsroom/newsletter

Thomas E. Perez - Secretary of Labor

The Secretary's Page https://www.dol.gov/agencies/osec

Speeches https://www.dol.gov/newsroom/speeches

Follow the Secretary on Twitter https://twitter.com/LaborSec

Follow the Secretary on Facebook https://www.facebook.com/LaborSecretary

Follow the Secretary on Instagram https://www.instagram.com/LaborSec

Featured Initiatives

Open Gov http://www.dol.gov/open/

Department of Labor Agency Pages

Bureau of International Labor Affairs http://www.dol.gov/ILAB/

Bureau of Labor Statistics http://www.bls.gov/

Employee Benefits Security Administration http://www.dol.gov/ebsa/

Employment and Training Administration http://www.doleta.gov

Mine Safety and Health Administration http://www.msha.gov

Occupational Safety and Health Administration http://www.osha.gov/

Office of Disability Employment Policy http://www.dol.gov/odep/

Office of Federal Contract Compliance Programs http://www.dol.gov/ofccp/

Office of Labor-Management Standards http://www.dol.gov/olms/

Office of Workers' Compensation Programs http://www.dol.gov/owcp/

Veterans' Employment and Training Service http://www.dol.gov/vets/

Wage and Hour Division http://www.dol.gov/whd/

Women's Bureau http://www.dol.gov/wb/

DOL Regulations and Enforcement

DOL Regulations Search http://www.regulations.gov

DOL Enforcement Data http://ogesdw.dol.gov/

Subscribe to E-mail Updates https://public.govdelivery.com/accounts/USDOL/subscriber/new
FY 2016 Agency Financial Report 223

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-Urban

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

DM&R Deferred Maintenance and 

Repairs

DNP Do Not Pay

DOE Department of Energy

DOL 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

FAC Federal Audit Clearinghouse

FASAB Federal Accounting Standards 

Advisory Board

FAUC Federal Additional 

Unemployment Compensation

FCI Facilities Condition Index

FDA Food and Drug Administration

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 Government Accountability 

Office

GSA 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

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 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

SCSEP Senior Community Service 

Employment Program

SCSIA Statement 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 Social Security Administration

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

USC United States Code

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