Forest Service

The Knutson-Vandenberg Trust Fund is the Forest Service's primary source of money for the reforestation of timber harvest areas. The fund is also used to improve timber stands and other renewable resources within the harvested areas. Although the amount of expenditures from the Fund may vary from year to year, expenditures for fiscal year 1997 totaled a little more than $166 million. This testimony draws on a June 1996 GAO report (GAO/RCED-96-15) on shortcomings in the Fund's administration. GAO discusses (1) transfers from the Fund that have not been fully restored, (2) the effect of unrestored transfers on planned projects, (3) the lack of financial information to ensure compliance with the Knutson-Vandenberg Act's requirements, and (4) the lack of a standardized methodology for calculating and limiting program support costs. GAO also discusses the Agriculture Department's subsequent actions on GAO's recommendations for improving the management of the Knutson-Vandenberg program.

GAO noted that: (1) between 1990 and 1996, $645 million was transferred from the K-V Fund to support emergency firefighting activities that was not reimbursed; (2) to assist Congress in its consideration of any future requests for appropriations to restore previously transferred funds, GAO recommended that the Secretary of Agriculture report to Congress on the financial status of the K-V fund; (3) the Department has begun providing Congress with additional information on the financial status of the K-V Fund; (4) in fiscal year 1997, Congress acted upon that information by providing $202 million to partially repay moneys transferred from the K-V Fund; (5) the Secretary of Agriculture has not directed the Forest Service to revise the list of planned K-V projects to take into account the actual balance in the K-V Fund; (6) although the K-V Act requires that K-V Fund expenditures in one sale area be limited to amounts collected in the same area, the Forest Service does not collect expenditure data on a sale-by-sale basis; (7) GAO recommended that the Secretary of Agriculture direct the Forest Service to perform an analysis of alternatives to obtain the financial data necessary to ensure that the K-V Fund's expenditures in one sale area are limited to the amounts collected from that area, as required by the K-V Act; (8) the Secretary of Agriculture indicated that such an analysis was not necessary and that the current Forest Service methods fulfilled the requirements of the K-V Act; (9) at the time of GAO's 1996 report, the Forest Service did not have a system in place to ensure the consistent handling of program support charges for the K-V program agencywide; and (10) since that time, the Forest Service has completed an analysis of the methodological changes that are needed to standardize the Forest Service's practices for assessing and withholding program support costs for the K-V program and the results of the agency's work should be implemented when the practices become part of the Forest Service's directives in September 1998.