Defense Budget

Congress has raised concerns about the extent to which the military has moved funds that directly affect readiness, such as those that finance training, to pay for real property maintenance and base operations. GAO found that from fiscal years 1994 through 1999, the military reported obligations that were $7.1 billion (eight percent) more for real property maintenance and base operations than the $88.6 billion initially designated by Congress. Nearly three-fourths of the $2.7 billion increase from fiscal year 1996 to 1999 went for base operations, with the rest going to real property maintenance. For fiscal years 1994 through 1999, the services' movement of funds in and out of unit training varied. The Army and the Air Force have moved unit training funds to base operations and real property maintenance. This testimony summarizes the February 2000 report, GAO/NSIAD-00-87.

GAO noted that: (1) from FY 1994 through FY 1998, DOD changed funding amounts for 245 O&M subactivities by almost $43 billion compared with the amounts Congress initially designated for them; (2) these changes included both decreases and increases to the amounts designated by Congress; (3) DOD moved almost $16 billion out of and $27 billion into O&M subactivities; (4) the changes made to these O&M subactivities accounted for about 12 percent of the total amounts initially appropriated for O&M during the period; (5) over half of the $43 billion was moved out of or into 81 O&M subactivities DOD considers directly related to readiness, while $10 billion was moved out of or into 28 O&M subactivities that Congress considers high-priority readiness-related; (6) every year from FY 1994 through 1998 DOD obligated a different amount than Congress designated for the same 63 subactivities; (7) in total, DOD moved about $19 billion out of or into these subactivities; (8) about $4.3 billion was moved out of and about $6.7 billion was moved into 30 subactivities DOD considers directly related to readiness for a total of about $11 billion; (9) the 30 subactivities include 11 of the high-priority readiness-related subactivities; (10) further, of the 11 subactivities, DOD moved $3.2 billion out of 6 subactivities Congress considers high-priority readiness-related, while moving $2.3 billion into 5 others; (11) in recent years DOD has improved the information it gives to Congress on the movement of O&M funds; (12) but this budget information is still incomplete and does not provide adequate details of where funds are moved and why; (13) changes in the way DOD presents budget justification materials, as well as congressionally mandated changes in the level of details to be provided by DOD, have improved DOD's budget information available to Congress; (14) in particular, the high-priority readiness-related transfer reports offer the most information available on why DOD moves funds among selected subactivities; (15) however, the statutory requirement for these reports will expire when DOD submits its FY 2000 report; (16) in addition, from FY 1994 through FY 1998, little information was available to Congress about what DOD terms fact-of-life movements, which DOD says are made to reflect changes that occur between the time DOD formulates its budget request and the time Congress passes the appropriation act; and (17) DOD's financial management regulation does not define these adjustments and provides no guidance on when it is appropriate to make such adjustments, who should approve them, or how much funding can be moved.