The various types of fees and other collections received by federal agencies are, in general, governed by two authorities—an authority to charge a fee and an authority to retain and obligate fee collections. An agency’s authority to charge fees or establish other collections is derived either from the general statutory authority to assess user charges pursuant to the Independent Offices Appropriation Act of 1952 (IOAA) or from a statutory provision authorizing or directing an agency to establish a particular fee or other collection. IOAA provides that, in general, each service or thing of value provided by an agency to a person is to be self- sustaining to the extent possible, and provides the head of each agency with authority to prescribe regulations to establish the charge for a service or thing of value provided by the agency. Fees assessed under IOAA must be (1) fair and (2) based on costs to the government, the value of the service or thing to the recipient, public policy or interest serviced, and other relevant facts. Without additional statutory authority to retain fee collections, however, such collections are deposited as miscellaneous receipts in the U.S. Treasury and are not available to the agency collecting the fees. OMB Circular A-25 establishes federal policy regarding fees assessed in accordance with IOAA and provides guidance for agency implementation of charges and disposition of such collections. More specifically, agencies must apply the provisions of OMB Circular A-25 to fees assessed pursuant to IOAA. For fees assessed pursuant to another statutory authority, OMB Circular A-25 provides guidance to agencies that is intended to be applied only to the extent permitted by law and to the extent it is not inconsistent with a controlling statute. In many instances, agencies receive specific authority through authorizing or appropriations legislation to collect fees and retain and obligate the collections. Such legislation may establish a specified rate or amount to be assessed, how the fee is to be calculated, the method and timing of collection, the authorized purposes for which fee collections may be used, and the degree of flexibility an agency has to set and revise fee rates through the regulatory process. Regardless of whether a fee program is established under the authority of IOAA or some other statute, we have reported on the benefits agencies could realize by applying the principles of OMB Circular A-25 to their programs receiving fees and other collections. Congress—through the authorization and appropriations processes— oversees DHS funding typically at the account level and may, through enacted legislation, specify the purpose for which appropriated funds may be used, restrict the amount or purpose for which the funds can be used, and require that an agency report on activities conducted at the account or program level. For each program receiving fees or other collections, DHS or its components must be provided with authority to (1) conduct the activity for which the fee or other collection is authorized, (2) collect the fee or other collection at authorized levels, and (3) obligate and expend the funds collected. Furthermore, the degree of flexibility a DHS component has with respect to managing its programs receiving fees and other collections depends upon the statutory authority upon which the fee or other collection is based. For example, in cases where a statute prescribes a specific amount the agency is to charge, component officials may lack the flexibility to adjust the amount charged through the regulatory process and instead must submit a legislative proposal seeking statutory changes if it is determined that circumstances warrant an adjustment. DHS OCFO has responsibility to oversee the department’s budget formulation process in order to ensure, among other things, that DHS resources from fees and other collections are used and managed in accordance with applicable laws and policies. To this end, DHS OCFO is to ensure components comply with the biennial reporting requirements and other applicable provisions of the CFO Act and OMB Circular A-25. For example, the CFO Act provides that, among other things, an agency’s CFO is to review the fees, royalties, rents, and other charges imposed by the agency for services and things of value it provides on a biennial basis, and make recommendations on revising those charges to reflect costs incurred by the agency. In addition, DHS OCFO periodically conducts department-wide reviews of its portfolio of programs receiving fees and other collections to identify ways to minimize the effects of increasing fiscal constraints on DHS’s mission and reduce reliance on annual appropriations. DHS OCFO has completed two such reviews. In fiscal year 2012, DHS OCFO conducted a Fee Structure Review that considered whether opportunities existed to increase flexibility in the discretionary budget in fiscal years 2014 through 2018 from both existing programs receiving fees and other collections and prospective new fees. The study focused on the amount of costs recovered by programs from collections for activities that are funded jointly by collections and annual appropriations for fiscal years 2014 through 2018. In March 2015, DHS completed the 2014-2015 User Fee Winter Study (Winter Study). According to DHS OCFO officials, this study was initiated as part of the DHS Secretary’s “Unity of Effort” initiative, and the results of the Winter Study were expected to inform DHS’s fiscal year 2017 budget formulation process and educate internal DHS stakeholders on DHS’s portfolio of programs receiving fees and other collections. According to the Winter Study Terms of Reference, the purpose of the Winter Study was to provide DHS with an opportunity to consider broadly the use of user fees and similar financing alternatives—such as fines and trust funds—across DHS to examine how the use of these fees and other collections further key policy objectives and whether there is a need for greater cohesion in the management, budgeting, and oversight of user fees. Specifically, the goals of the study were to consider how to (1) best leverage resources from its fees and other collections across DHS; (2) examine how the use of fees and other collections further key policy objectives; and (3) strengthen management, budgeting, and oversight of user fees and other collections. According to DHS officials, to achieve these goals, representatives from each DHS component met on an ad hoc basis as part of the Winter Study working group. More specifically, the Winter Study sought to identify the current amounts of user fees and other collections and respective legal authorities, the intended degree of cost recovery, the history of previous requests for fee adjustments, and best practices among components. Findings and recommendations from the Fee Structure Review and Winter Study are discussed later in this report. DHS components have responsibility for the collection and obligation of fees and other collections in accordance with applicable laws and policies. CBP and the Federal Emergency Management Agency (FEMA) collected more than half of the approximately $15 billion DHS received from fees and other collections in fiscal year 2014, as shown in figure 1, with the Transportation Security Administration (TSA), U.S. Citizenship and Immigration Services (USCIS), and NPPD programs also collecting in excess of a billion dollars. Appendix I provides details on each of the 38 programs receiving fees and other collections, including general authorities, amounts collected in fiscal year 2014, and descriptions of the programs and purposes for which collections may be used. Our analysis of DHS collections and cost data showed that 14 of the 38 programs receiving fees and other collections in fiscal year 2014 collected amounts that fully covered identified program costs. Of the remaining 24 programs, collections for 20 programs partially covered identified program costs, and DHS did not provide cost data, or we determined such data may not be reliable, for 4 programs. For the 14 programs with full cost recovery, collections exceeded identified program costs by approximately $1.4 billion, and DHS did not rely on annual appropriations to cover any program costs. The $1.4 billion in collections that exceeded program costs was maintained in several ways, such as unobligated carryover balances, maintained in reserve funds, or deposited to the Treasury in accordance with applicable laws. For the 20 programs that had identified program costs exceeding collections in fiscal year 2014, costs exceeded collections by an estimated $6 billion. (See app. II.) A fee or collection may be assessed at a rate that either partially or fully recovers costs from the user, or it may be assessed according to some other basis, such as market value of the benefit provided. If a fee or collection is set at a rate that does not achieve full-cost recovery, the difference is generally funded through amounts received in an agency’s annual appropriations acts. According to component documentation, annual appropriations covered about 97 percent of the estimated $6 billion difference, unobligated carryover balances covered about 3 percent of the estimated difference, and transfers of collections from one fee program to another fee program covered less than 1 percent of the estimated difference in fiscal year 2014. For the 4 remaining programs, either DHS component officials cited reasons they could not provide cost data or we determined such data may not be reliable. For example, a CBP official stated that CBP’s activity based costing model does not capture costs for the Harbor Maintenance Fee, which is administered by another agency, and the Merchandise Processing Fee, from which CBP deposits collections in the general fund to offset CBP’s salaries and expenses appropriation. In addition, CBP does not collect cost or volume data at the level of detail needed to fully identify the costs associated with the 78 specific fees included under the Miscellaneous Fees Collections account that collectively constitute less than 1 percent of CBP’s total collections as reported in its biennial review. For the fourth remaining program—TSA’s Aviation Security Infrastructure Fee (Air Carrier Fee)—TSA reported that the statutes governing the Air Carrier Fee and the Passenger Civil Aviation Security Service Fee specify that collections from these programs be used to offset the authorized costs of providing civil aviation security services and, hence, TSA only tracks the costs of these programs in aggregate.