Budget Issues
Reprogramming of Federal Air Marshal Service Funds in Fiscal Year 2003 Gao ID: GAO-04-577R March 31, 2004On May 15, 2003, and again on July 25, 2003, the Department of Homeland Security (DHS) notified the House and Senate Committees on Appropriations, Subcommittees on Homeland Security, of its intention to reprogram a large amount of funds appropriated to the Transportation Security Administration (TSA) for fiscal year 2003. In an August 2003 letter, Congress requested that we review the key events leading up to the reprogramming and subsequent revisions as they related to the Federal Air Marshal Service (FAMS). In particular, we were asked to determine (1) whether senior TSA, DHS, and Office of Management and Budget (OMB) officials were informed of the implications of the FAMS funding reductions prior to submission of the reprogramming notices; (2) the programmatic implications of the funding reductions on the FAMS program; (3) whether it was legally necessary to send an impoundment message to the Congress; and whether the Secretary of Homeland Security had delegated to the Under Secretary for Management the authority to transmit reprogramming notifications to the cognizant Appropriations Subcommittees. Finally, Congress asked us to identify, as appropriate, improvements in budget execution for future consideration. As agreed, we briefed Congressional staff on February 27, 2004, and March 3, 2004, on the results of our work. This report transmits the information we provided in those briefings.
Reprogramming actions allow agencies to shift funds within an account to fund other requirements within an existing appropriation that were not planned when the appropriation was made. Unless limited by some provision of law, agencies are implicitly authorized to reprogram funds as part of their general responsibility to manage funds. However, appropriations laws often set limits on reprogramming or require notification of reprogramming under certain conditions or over certain thresholds. The TSA fiscal year 2003 reprogramming met the notification thresholds established by Section 1601 of the Emergency Wartime Supplemental Appropriations Act. For the specific reprogramming notification requirements. The fiscal year 2003 TSA reprogramming was developed against a backdrop of both rapid program expansion and a changing organizational environment. Among the program expansions affecting TSA were the federalization of passenger and baggage screening functions at airports, establishment of federal airport security directors, deployment of explosives detection equipment for checked baggage, mandatory criminal history checks for employees working in secure airport areas, and working with airlines to strengthen cockpit doors on all passenger aircraft. Further, after the terrorist attacks of September 11, 2001, the President and the Congress decided to rapidly expand FAMS. Within 10 months of the terrorist attacks on the United States, the number of federal air marshals grew from fewer than 50 to thousands. Beyond these program expansions, two major organizational transitions occurred in a 16 month period. First, in November 2001, TSA was created within the Department of Transportation to centralize federal aviation and other transportation security efforts. Aviation security activities that were formerly the responsibility of the Federal Aviation Administration (FAA), including FAMS, were moved to the newly created TSA. Second, FAMS moved with the rest of TSA to DHS when the department was established on March 1, 2003. The budget and appropriations environment in fiscal year 2003 and changing mission needs added to the uncertainty of the situation. Like all federal civilian agencies, TSA faced the challenges inherent in operating under a series of continuing resolutions until February 2003--nearly half of the fiscal year. As a new agency with a newly expanded federal role and mission, TSA faced an additional challenge. It had no historical information to assist in estimating costs for efforts such as federalized checkpoints, baggage screening, and the full growth of the FAMS program. Additionally, initial budget estimates for TSA were created before its mission and organizational structure were established. All of this contributed to a situation described by TSA Chief Financial Officer (CFO) staff as a "misalignment" between fiscal year 2003 appropriations and mission needs at the time appropriations were enacted. TSA CFO staff told us that the need for a reprogramming was clear at that time.
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Director: Team: Phone:GAO-04-577R, Budget Issues: Reprogramming of Federal Air Marshal Service Funds in Fiscal Year 2003
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March 31, 2004:
The Honorable Martin Olav Sabo:
Ranking Minority Member:
Subcommittee on Homeland Security:
Committee on Appropriations:
House of Representatives:
Subject: Budget Issues: Reprogramming of Federal Air Marshal Service
Funds in Fiscal Year 2003:
Dear Mr. Sabo:
On May 15, 2003, and again on July 25, 2003, the Department of Homeland
Security (DHS) notified the House and Senate Committees on
Appropriations, Subcommittees on Homeland Security, of its intention to
reprogram a large amount of funds appropriated to the Transportation
Security Administration (TSA) for fiscal year 2003. In an August 2003
letter, you requested that we review the key events leading up to the
reprogramming and subsequent revisions as they related to the Federal
Air Marshal Service (FAMS). In particular, you asked that we determine
(1) whether senior TSA, DHS, and Office of Management and Budget (OMB)
officials were informed of the implications of the FAMS funding
reductions prior to submission of the reprogramming notices; (2) the
programmatic implications of the funding reductions on the FAMS
program; (3) whether it was legally necessary to send an impoundment
message to the Congress; and whether the Secretary of Homeland Security
had delegated to the Under Secretary for Management the authority to
transmit reprogramming notifications to the cognizant Appropriations
Subcommittees. Finally, you asked us to identify, as appropriate,
improvements in budget execution for future consideration. As agreed
with your office, we briefed your subcommittee staff on February 27,
2004, and the majority staff on March 3, 2004, on the results of our
work.[Footnote 1] This report transmits the information we provided in
those briefings.
To address these objectives, we reviewed relevant documentation on the
proposed reprogramming and other documentation on the FAMS program and
budget. We interviewed senior DHS, TSA and FAMS officials and their
staffs and staff at OMB to discuss the reprogramming process and the
reductions in funding for FAMS. We also interviewed DHS and TSA General
Counsel staff to obtain their perspectives on questions regarding
impoundments and delegation. We conducted our work from August 2003
through February 2004 in accordance with generally accepted government
auditing standards. Our scope and methodology is described in more
detail at the end of this report.
Background:
Reprogramming actions allow agencies to shift funds within an account
to fund other requirements within an existing appropriation that were
not planned when the appropriation was made.[Footnote 2] Unless limited
by some provision of law, agencies are implicitly authorized to
reprogram funds as part of their general responsibility to manage
funds. However, appropriations laws often set limits on reprogramming
or require notification of reprogramming under certain conditions or
over certain thresholds. The TSA fiscal year 2003 reprogramming met the
notification thresholds established by Section 1601 of the Emergency
Wartime Supplemental Appropriations Act.[Footnote 3] For the specific
reprogramming notification requirements, see enclosure II.
The fiscal year 2003 TSA reprogramming was developed against a backdrop
of both rapid program expansion and a changing organizational
environment. Among the program expansions affecting TSA were the
federalization of passenger and baggage screening functions at
airports, establishment of federal airport security directors,
deployment of explosives detection equipment for checked baggage,
mandatory criminal history checks for employees working in secure
airport areas, and working with airlines to strengthen cockpit doors on
all passenger aircraft. Further, after the terrorist attacks of
September 11, 2001, the President and the Congress decided to rapidly
expand FAMS. Within 10 months of the terrorist attacks on the United
States, the number of federal air marshals grew from fewer than 50 to
thousands.[Footnote 4] Beyond these program expansions, two major
organizational transitions occurred in a 16-month period. First, in
November 2001, TSA was created within the Department of Transportation
to centralize federal aviation and other transportation security
efforts. Aviation security activities that were formerly the
responsibility of the Federal Aviation Administration (FAA), including
FAMS, were moved to the newly created TSA. Second, FAMS moved with the
rest of TSA to DHS when the department was established on March 1,
2003.[Footnote 5]
The budget and appropriations environment in fiscal year 2003 and
changing mission needs added to the uncertainty of the situation. Like
all federal civilian agencies, TSA faced the challenges inherent in
operating under a series of continuing resolutions until February 2003-
-nearly half of the fiscal year. As a new agency with a newly expanded
federal role and mission, TSA faced an additional challenge. It had no
historical information to assist in estimating costs for efforts such
as federalized checkpoints, baggage screening, and the full growth of
the FAMS program. Additionally, initial budget estimates for TSA were
created before its mission and organizational structure were
established. All of this contributed to a situation described by TSA
Chief Financial Officer (CFO) staff as a "misalignment" between fiscal
year 2003 appropriations and mission needs at the time appropriations
were enacted. TSA CFO staff told us that the need for a reprogramming
was clear at that time.
Reprogramming Process:
On May 15, 2003, DHS formally notified the homeland security
appropriations subcommittees of its intention to reprogram $763.3
million (reducing FAMS funding by $104 million) among several of its
programs within the TSA budget account and to transfer $150 million
from other DHS appropriation accounts. DHS told us that both the Senate
and House subcommittees advised DHS that the proposed reprogramming was
denied. DHS budget and TSA CFO staff told us that in order to ease the
subcommittees' concerns with the May reprogramming, they engaged in
discussions with congressional staff. A revised reprogramming was
submitted on July 25, 2003, which was then modified again on July 31,
2003. Both subcommittees eventually concurred with this reprogramming,
but with caveats. According to the letter sent by the Chairman of the
Subcommittee on Homeland Security, Senate Committee on Appropriations,
"approval of [the reprogramming] is based on the understanding that
this reallocation of appropriated funds will not decrease the number of
air marshals currently assigned to domestic and international flights."
The Subcommittee on Homeland Security, House Committee on
Appropriations, approved of the revised reprogramming, but "denied the
proposed reduction of $95 million from the FAMS program." The May 15
and July 25 reprogramming plans would have reduced fiscal year 2003
funding for FAMS from $545 million to $441 million (a difference of
$104 million); the revised July 31 proposal reduced fiscal year 2003
funding to approximately $450 million (a difference of $95 million).
The timeline in figure 1 highlights key events in this process.
Figure 1: TSA Reprogramming Timeline for Fiscal Year 2003:
[See PDF for image]
[End of figure]
TSA and FAMS disagree on when and what FAMS was told about the
reprogramming, about whether FAMS agreed to a cut, about the ability of
FAMS to absorb a cut, about the likely programmatic impact of the
proposed cuts, and even about the nature of the hiring freeze imposed
on FAMS. Although evidence provided by DHS reflects some of the
communication between TSA and FAMS, the documents and data provided to
GAO permit us to opine on neither the accuracy of assertions by either
TSA or FAMS nor the reasonableness of TSA's analysis and conclusions
and the FAMS counterarguments. What follows is a description derived
from interviews, documents, and other testimonial evidence of key
points in the process. In cases in which TSA and FAMS disagreed on what
happened, both views are given. A more detailed sequence of the
reprogramming process is included in enclosure I.
Soon after the enactment of the appropriation act for fiscal year
2003[Footnote 6] in February, the TSA CFO informed the DHS CFO that
there was a "shortfall" of nearly $2 billion within TSA and that a
reprogramming would be necessary to realign TSA programs and funds.
FAMS was only one part of a very large reprogramming and transfer
package,[Footnote 7] and funding levels for multiple accounts and
activities were reviewed during this reprogramming. TSA CFO staff said
that during the months leading up to the submission of the
reprogramming they were in communication with FAMS and other program
offices, requesting spending plans detailing budget activities, funding
needs, and explanations of how the offices arrived at their
assumptions. TSA CFO staff also noted that they had difficulty
obtaining timely information from FAMS; that the budget data supplied
by FAMS did not support the accompanying narrative provided on the
impacts of proposed budget reductions; and that instead of providing
details on obligations, FAMS officials provided projections, which did
not incorporate actual spending.
TSA CFO staff told us that their review of spending data that showed
FAMS was obligating funds at a slower rate than expected, and that
since FAMS was still meeting its mission targets, TSA was comfortable
with proposing budget reductions for FAMS. However, they also told us
that the data on which they relied were from several legacy financial
systems and were of questionable quality, that they did not have access
or did not get data on the funds FAMS received from FAA, and that no
one in the TSA CFO's office had time to perform program impact
analyses.
Although FAMS memos written to TSA during the development of the
reprogramming asserted that there would be "significant to severe"
operational impacts if funds were reduced, TSA officials said that FAMS
provided TSA with little supporting data to validate these claims. The
TSA CFO objected to FAMS's impact characterizations and said FAMS's
spending estimates were inconsistent. In order to settle the funding
questions, the TSA Administrator decided to conduct a program audit of
FAMS's funding and operations. The results of this review revealed that
as of late July 2003, there was a projected deficit of approximately
$16 million out of the FAMS $529 million[Footnote 8] budget ($441
million in fiscal year 2003 funding, plus $88 million carryover). This
deficit was partially alleviated when DHS adjusted the second
reprogramming notice to restore approximately $9 million to FAMS.
Consequently, the total reduction in the FAMS budget from its initial
fiscal year 2003 funding level was $95 million, rather than the $104
million described in the first reprogramming, as shown in table 1.
Table 1: Progression of FAMS Funding Level During Fiscal Year 2003:
Dollars in millions.
February 26: Fiscal year 2003 congressional mark;
Fiscal year funding level: $545;
Change: [Empty];
Reprogramming total: [Empty].
March 26: Reduction based on attrition and other unspecified agency
requirements;
Fiscal year funding level: [Empty];
Change: -$40;
Reprogramming total: [Empty].
April 28: Reduction based on personnel compensation and benefits
savings;
Fiscal year funding level: [Empty];
Change: -$38.7;
Reprogramming total: [Empty].
April 28: Reduction to cover the cost of other Aviation Operations
purposes;
Fiscal year funding level: [Empty];
Change: -$25;
Reprogramming total: [Empty].
Total reductions proposed in May 15 and July 25 reprogrammings;
Fiscal year funding level: [Empty];
Change: [Empty];
Reprogramming total: -$104.
Resulting proposed funding level;
Fiscal year funding level: $441;
Change: [Empty];
Reprogramming total: [Empty].
Plus fiscal year 2002 carryover funds;
Fiscal year funding level: [Empty];
Change: +$88;
Reprogramming total: [Empty].
Total funds available to FAMS;
Fiscal year funding level: $529;
Change: [Empty];
Reprogramming total: [Empty].
Adjustment to reprogramming plan;
Fiscal year funding level: [Empty];
Change: +$9;
Reprogramming total: [Empty].
Revised total reductions proposed in final July 31 reprogramming;
Fiscal year funding level: [Empty];
Change: [Empty];
Reprogramming total: -$95.
Final total of funds available to FAMS;
Fiscal year funding level: $538;
Change: [Empty];
Reprogramming total: [Empty].
Source: GAO summary of TSA and FAMS budget information and memos.
[End of table]
Degree of Senior Officials' Awareness of the Implications of FAMS
Funding Reductions Is Unknown:
The TSA Administrator was made aware of both the FAMS characterization
of the anticipated impact of the funding reductions and the TSA CFO's
objections to the FAMS claims. In fact, the TSA Deputy Administrator
told us that he and the Administrator approved the reprogramming in
early May 2003.
The reprogramming was approved and submitted by DHS. In response to a
question regarding the Secretary's involvement, DHS officials told us
that "Secretary Ridge was briefed regarding the fact [that] there were
TSA reprogrammings, but was not briefed on the specifics of the impact
on FAMS. Instead Department officials relied on TSA for its detailed
analysis and evaluation of the FAMS impact.":
In addition, OMB staff cleared the reprogramming. When asked whether
the OMB Director was informed of the reprogramming implications for
FAMS, an attorney from OMB General Counsel's office told us that the
OMB Director is informed of budget execution matters on an "as needed"
basis and that it is not OMB's policy to say whether the Director was
notified of any specific reprogramming. When asked about programmatic
impact, OMB staff said that no one in DHS, TSA, or FAMS is able to
describe the impact in other than in dollar terms.
Impact of FAMS Budget Reductions Was Minimal:
As the budget reductions were being imposed on FAMS by TSA, FAMS
officials stated in memos and other documents that the impact of the
reductions could have ranged from significant to severe. The Deputy
Assistant Administrator for Aviation Security Law Enforcement[Footnote
9] claimed that reducing the program to the $441 million level would
result in a budget shortfall totaling tens of millions of dollars,
staff shortages, and a reduction in FAMS coverage of long-haul flights
by approximately 90 percent. FAMS officials were also concerned that
the budget reductions would not allow FAMS to bring the number of air
marshals to its fully anticipated level. They estimated that as a
result of the budget reductions, many thousands of domestic missions on
which they could have placed air marshals would not be covered.
However, although DHS and TSA reduced FAMS's fiscal year 2003 budget by
about 20 percent, the actual impacts of the budget reductions on FAMS
operations were not as significant as FAMS officials had estimated. The
number of air marshals remained relatively constant over the fiscal
year; by the end of the period, the number of air marshals was only 1
percent lower than at the beginning of the year. The number of
missions[Footnote 10] flown monthly by air marshals decreased by about
22 percent during fiscal year 2003, but according to FAMS officials
much of this reduction was attributable to factors other than the
budget reduction. One factor was the more than 230 percent increase in
the number of international missions. FAMS officials told us that
international missions significantly reduced the total number of
missions conducted, since each additional international mission results
in approximately four fewer domestic missions. Another factor was the
assignment during the year of 58 air marshals to support Joint
Terrorism Task Force functions. In addition, almost 100 air marshals
were taken off-line because their background clearances had not been
completed. Other factors contributing to the reductions in missions
flown included decreases in the average number of days flown by air
marshals to address "quality of life" issues and disruptions in flight
schedules late in the fiscal year caused by blackouts in the Northeast
and Hurricane Isabel.
Senior FAMS officials stated that the eventual fiscal year 2003
operational impacts on the program resulting from the budget reductions
were "minimal," but that significant to severe impacts on the program
were narrowly avoided. One of these officials said that the impacts
were minimal because they took measures to maintain a level of
operations consistent with the number of available air marshals.
Consequently, they reduced equipment and supply purchases, delayed
training activities, and used funds originally intended to establish
the FAMS field office structure to support ongoing FAMS operations
instead. They said that by midsummer 2003, the budget reductions began
to have operational impacts. The number of overnight stays was reduced
by 80 percent during an 11-day period in order to reduce travel costs,
and air marshals flew mostly regional flights to enable them to return
home at the completion of each day's missions.[Footnote 11] The FAMS
officials said that these program reductions would have continued for
the remainder of the fiscal year, but the restoration of the $8.7
million in late July 2003 permitted them to restore the level of
overnight stays, longer duration flights, and advanced training
programs.
Although the reductions in FAMS funding did not have a significant
impact on its current level of operations, they contributed to FAMS not
reaching anticipated staffing levels. FAMS had intended to increase the
number of air marshals to a certain level during fiscal year
2003,[Footnote 12] but was unable to do so because of funding
constraints. During the fiscal year, the number of on-board air
marshals differed by 4 to 7 percent from fully anticipated levels.
Although more air marshals would result in greater coverage of flights,
the reduction in coverage because FAMS was not at fully anticipated
levels was not substantial. Because FAMS was operating under a
continuing resolution until late February 2003 and was precluded from
increasing the number of air marshals during that period, and because
it would have taken until June 2003 to achieve fully anticipated staff
levels, only a relatively small amount of additional flights would have
been covered by air marshals for the remainder of fiscal year 2003 had
FAMS received greater funding.[Footnote 13]
Although the budget reductions had some impact on ongoing operations
and FAMS's ability to increase staffing to fully anticipated levels and
implement stand-up activities, it is not possible to determine what
effect, if any, these impacts had on aviation security. According to
FAMS officials, concept of operations allows for varying coverage of
flights as long as all high-risk flights are covered. According to FAMS
officials, all high-risk flights were covered during fiscal year 2003.
Moreover, while the FAMS funding was reduced, funding for other
aviation security programs increased as a result of the reprogramming.
Consequently, any negative impacts on aviation security that may have
resulted from the FAMS reductions may have been offset by positive
security impacts in other aviation security programs. In this regard,
OMB staff noted that it is not possible to determine the impact of the
TSA reprogramming, other than that FAMS funding was reduced.
Legal Issues: No Impoundment or Delegation Problems:
You asked us to determine whether a special impoundment message
reporting a deferral should have been sent to the Congress. Based on
what we learned in our review of this reprogramming, we conclude that
DHS was not required to transmit a special impoundment message in
accordance with the Impoundment Control Act of 1974. The act requires
the President to transmit a special message to the House of
Representatives and the Senate whenever there is an impoundment, which
is defined as any action or inaction by an officer or employee of the
U.S. government that delays or precludes the obligation or expenditure
of budget authority provided by the Congress. One type of impoundment
is a deferral--a temporary delay in obligating or expending budget
authority. There is a distinction between deferrals,[Footnote 14] which
require a special message, and "programmatic" delays, which do not.
Programmatic delays typically occur when an agency is taking steps to
implement a program even if funds temporarily go unobligated. A
withholding of funds pending consideration of reprogramming by
congressional committees is generally considered to be based on
programmatic considerations and represents a reasonable means of
facilitating an agency's authority to reprogram budget authority among
activities funded from the same lump-sum appropriation.
TSA delayed obligating funds pending consideration of its reprogramming
notification by the appropriate congressional committees, and TSA
intended to obligate the FAMS funds for an authorized purpose within
its lump-sum appropriation.[Footnote 15] Thus, we conclude that the
agency's delay in obligating funds based on the facts and circumstances
presented did not constitute a deferral requiring the transmittal of a
special message to the Congress under the Impoundment Control Act.
Furthermore, it was appropriate that the Under Secretary for Management
signed the reprogramming notice rather than the Secretary of Homeland
Security. There is no statute or other authority that requires the
Secretary to sign the department's reprogramming notifications himself.
The Homeland Security Act gives the responsibility to the Under
Secretary for Management to act for the Secretary in the management and
administration of the department, including budget, appropriations,
expenditure of funds, accounting, and financial duties.
Improvements in Budget Execution for Future Consideration:
The Antideficiency Act requires that an agency head prescribe, by
regulation, a system of administrative control of funds that must be
approved by OMB.[Footnote 16] OMB staff said that they are working with
DHS on a more formalized apportionment process, which could potentially
serve as a framework for a system of administrative control of
funds.[Footnote 17] For fiscal year 2004, the department issued budget
execution guidance that included procedures for reprogramming funds.
The procedures provide specific guidance on reprogrammings based on
congressional criteria, clear expectations of what information is
required to justify a proposed reprogramming action, and an early post-
appropriations review to determine the need to reprogram funds.
Furthermore, the current guidance encourages, but does not require,
components to identify separately the obligation and expenditure of
earmarked funds and notes that cumulative reprogrammings below
reporting thresholds can result in a need to notify the appropriations
subcommittees. Although these are all positive developments, DHS could
better articulate the consultation and approval process that it will
use.
We recommend that the Secretary of Homeland Security (1) articulate the
consultation and approval process for reprogrammings and, in
particular, state how senior management will communicate final
reprogramming decisions to officials of affected programs; (2) require
components to identify separately the obligation and expenditure of
earmarked funds, which agencies must be able to report; and (3) specify
how the department plans to monitor cumulative reprogramming actions
below reporting thresholds that can result in a need to notify the
appropriations subcommittees.
Agency Comments and Our Evaluation:
We provided DHS and the OMB with a draft of this report for review and
comment. OMB had no comments. DHS's written comments are reprinted in
their entirety in enclosure IV.
In its comments, DHS generally agreed with our observations. However,
while recognizing that the scope of our engagement was limited to the
reprogramming of FAMS funding, DHS felt that it was important to
emphasize that during the period covered by our review there was
tremendous uncertainty regarding (1) the availability of funding, (2)
new mission requirements, and (3) lack of a baseline funding history.
DHS also suggested five specific changes to our report language as
follows:
DHS suggested that we state that the fiscal year 2004 Appropriation
Conference Report included $95 million in carryover (the amount in
question from the House reprogramming denial) to be available to
address TSA Aviation Security needs. The scope of our review only
covered fiscal year 2003. This congressional action is outside the
scope of our report.
DHS suggested that a reference be inserted in our sequence of events in
the enclosure that the program audit was completed before the
reprogramming package was resubmitted on July 31, and a chart
summarizing its findings was presented at meetings with House and
Senate Appropriations Committee staff. Although we asked for
documentary support, DHS did not provide evidence that this was
completed prior to the submission of the July 31 revised reprogramming
notification and therefore we have not made that change.
DHS also suggested that we change our statement in the second paragraph
on page five that "no one in the TSA CFO's office had time to perform
program impact analyses." DHS commented that the TSA CFO staff
conducted some limited analysis. However, TSA officials told us that
their agency did not have the time or the staff to conduct "program
impact evaluations." Although justifications for moving funds from FAMS
were provided by DHS to us, the data to support these judgments were
not.
In addition, DHS suggested that we use the term "target strength"
rather than "fully authorized level" when describing FAMS staffing
levels. We have made changes in the text of our report to reflect
"anticipated level," which we believe appropriately characterizes the
level of air marshal staffing that FAMS had planned to reach and that
the Congress had intended.
For the first bullet in the reprogramming sequence for July/August 2003
in the enclosure, DHS suggested that a comment should be added to state
the revised reprogramming amount submitted on July 25, 2003, was "at
the same level proposed in May." We have made changes in the text of
our report to incorporate this suggestion.
Scope and Methodology:
To examine the reprogramming process DHS and TSA followed in fiscal
year 2003 with specific attention to coordination with the FAMS
program, we interviewed senior DHS, TSA, and FAMS officials and their
staffs. We also interviewed OMB's Homeland Security Branch Chief and
program examiners to understand their roles in the May and July
proposals and to get their perspectives on the actions taken. Although
evidence provided by DHS reflects some of the communication between TSA
and FAMS, the documents and data provided permit us to opine on neither
the accuracy of assertions by either TSA or FAMS nor the reasonableness
of TSA's analysis and conclusions and the FAMS counterarguments.
Most of our information on the development, review, and approval of the
reprogramming as it relates to FAMS is based on interviews and other
testimonial evidence. To determine what and when information was made
available to TSA and DHS officials and to find support for respective
claims, we reviewed and summarized FAMS, TSA, and DHS budget
information, internal memorandums and correspondence, and briefing
documents.
To examine the claims about programmatic implications, we analyzed data
provided by DHS, TSA, and FAMS. We also interviewed DHS, TSA, and FAMS
officials.
To determine whether a deferral or impoundment notice was necessary and
to consider delegation authority, GAO General Counsel staff interviewed
DHS and TSA General Counsel staff and reviewed relevant statutes,
committee reports, and DHS delegations.
We are sending copies of this report to the Secretary of Homeland
Security. In addition, this report will be available at no charge on
the GAO Web site at http://www.gao.gov.
If you or your staff have any questions about this report, please
contact Susan Irving at:
(202) 512-9142 or irvings@gao.gov or Cathleen Berrick at (202) 512-3404
or berrickc@gao.gov. This report was prepared under the direction of
Denise Fantone, Assistant Director, and Jack Schulze, Assistant
Director, with the assistance of Carlos Diz, Assistant General Counsel.
Other key contributors were Leo Barbour, Jonathan Barker, Joseph Byrns,
Leah Nash, and Gladys Toro.
Sincerely yours,
Signed by:
Susan J. Irving:
Director, Federal Budget Analysis:
Strategic Issues:
Cathleen A. Berrick:
Director, Homeland Security and Justice Issues:
Enclosures - 4:
Enclosure I:
DHS and TSA Reprogramming Sequence:
Note: Unless otherwise indicated, the information below is based on
interviews and other testimonial evidence. We were unable to obtain
documents that would permit us to substantiate many conflicting
assertions, and given the lengthy delay in receiving documents, we were
unable to go back to DHS, TSA, or FAMS for clarification and validation
while still meeting the requester's needs. The double asterisk (**)
indicates that we have documents to support statements, were otherwise
able to confirm assertions or facts, or both.
February/March 2003 - Development of Reprogramming and FAMS Cut:
* Appropriation enacted on February 20;** the TSA CFO informed the DHS
CFO of a $1.976 billion "shortfall" within the TSA account. To help
mitigate the situation, a reprogramming would be necessary to realign
TSA programs and funds.
* FAMS staff reported that on March 26 FAMS incurred a reduction from
$545 million to $505 million (-$40 million) for fiscal year 2003.
* FAMS acknowledged that it was asked to do a zero-based review;**
however, no evidence of the review or of the results of the review were
provided.
April 2003 - Further Development of Proposal and More FAMS Cuts:
* DHS and TSA staff continued to work on developing a reprogramming
proposal.
* On April 25 TSA notified FAMS of an immediate hiring freeze.**:
* On April 28 FAMS was affected by a second reduction of fiscal year
2003 funding from $505 million to $466 million (-$38.7 million) based
on personnel compensation and benefits savings.**:
* FAMS reported that on April 28 it incurred a third funding reduction
from $466 million to $441 million (-$25 million) to cover the cost of
other Aviation Operations purposes.
Early May 2003 - FAMS Claims Severe Impacts:
* FAMS claimed that TSA imposed a "hard" hiring freeze effective on
May 5, with no authority to backfill for attrition; the TSA CFO
disagreed with this characterization of the hiring freeze.
* On May 5 TSA's Chief Operating Officer (COO) directed FAMS in writing
to revise spending plans to stay within $529 million, $441 million in
fiscal year 2003 funding and $88 million in carryover available to
FAMS.**:
* On May 8 FAMS projected a $53 million budget "shortfall" based on the
$529 million funding level.**:
Early May 2003 - Reprogramming Sent to Homeland Security Appropriations
Subcommittees:
* The TSA Deputy Administrator told us that he and the Administrator
approved reprogramming.
* TSA CFO briefed DHS and OMB on the final proposal.
* OMB staff cleared the reprogramming; OMB told us that the OMB
Director is informed of budget execution matters on an "as needed"
basis and that it is not OMB's policy to comment on specific
reprogrammings.
* The reprogramming was submitted by DHS on May 15 with reduction of
$104 million for FAMS.
Mid to Late May 2003 - FAMS Continues to Claim Severe Impacts:
* After denial of the May 15 reprogramming by both subcommittees, DHS
and TSA sought to adjust the reprogramming.
* FAMS briefed the TSA COO on "impact of severe budget reductions";**
briefings and memos on FAMS's objections to the cutbacks were forwarded
to senior TSA officials, including the TSA Administrator.
* The TSA Administrator directed FAMS in writing to stay within $441
million and take recommended measures to achieve savings.**:
June 2003 - Ongoing Dialogue between FAMS and TSA:
* The TSA CFO objected to FAMS impact characterizations, saying** that
FAMS reductions were reviewed and approved by the TSA Administrator;
FAMS staff had indicated that they were "ok" at the $529 million level;
and FAMS spending estimates included inconsistencies, for example, FAMS
monthly spending estimates were higher than the average monthly
actuals.
* FAMS responded with detailed claims of "significant to severe"
operational impacts:** 90 percent reduction of long-haul flights
effective on or about July 1, continued "hard" hiring freeze, and a
halt in enhancements to the mission scheduler system and a delay in
Phase II training.
* The TSA CFO requested a review of FAMS program obligations.
July/August 2003 - Revised Reprogramming Sent to Homeland Security
Appropriations Subcommittees, and FAMS Program Audit Conducted:
* Revised reprogramming submitted by DHS on July 25 with FAMS
reductions at the same level proposed in May.
* Package resubmitted by DHS on July 31 with $9 million restored ($95
million reduction for FAMS).
* On August 25, TSA Aviation Operations, COO, and CFO staff finalized a
program audit of FAMS obligations and spending. This audit
identified**:
* a projected deficit of about $16 million with proposed reductions in
training, mission deployments, and other offsets; and:
* budget execution process issues:
* the lack of a TSA allotment to FAMS or other agency components,
* possible FAMS certification of funds without TSA knowledge, and:
* lack of updated FAMS spending plans.
August/September 2003 - Reprogramming Approved:
* The Senate approved the reprogramming on the condition that
reallocation would not, among other things, "decrease the number of air
marshals currently assigned to domestic and international flights."**:
* The House approved the reprogramming, except for the proposed
reduction from the FAMS program.**:
Date Uncertain - DHS Secretary Briefed on Reprogramming:
* According to DHS, "Secretary Ridge was briefed regarding the fact
[that] there were TSA reprogrammings, but was not briefed on the
specifics of the impact on FAMS. Instead Department officials relied on
TSA for its detailed analysis and evaluation of the FAMS impact.":
Enclosure II:
Specific Reprogramming Requirements for Agencies under the Jurisdiction
of Homeland Security Appropriations Subcommittees:
Emergency Wartime Supplemental Appropriations Act, 2003:
Pub. L. No. 108-11, 117 STAT. 584 (2003):
SEC. 1601. (a) None of the funds provided by this Act, or provided by
previous Appropriations Acts to the agencies in or transferred to the
Department of Homeland Security that remain available for obligation or
expenditure in fiscal year 2003, or provided from any accounts in the
Treasury of the United States derived by the collection of fees
available to the agencies funded by this Act shall be available for
obligation or expenditure through a reprogramming of funds which: (1)
creates a new program; (2) eliminates a program, project, or activity;
(3) increases funds for any program, project, or activity for which
funds have been denied or restricted by Congress; or (4) proposes to
use funds directed for a specific activity by either the House or
Senate Committees on Appropriations for a different purpose, unless the
Committees on Appropriations of both Houses of Congress are notified 15
days in advance of such reprogramming of funds.
(b) None of the funds provided by this Act, or provided by previous
Appropriations Acts to the agencies in or transferred to the Department
of Homeland Security that remain available for obligation or
expenditure in fiscal year 2003, or provided from any accounts in the
Treasury of the United States derived by the collection of fees
available to the agencies funded by this Act, shall be available for
obligation or expenditure for programs, projects, or activities through
a reprogramming of funds in excess of $5,000,000 or 10 percent,
whichever is less, that: (1) augments existing programs, projects, or
activities; (2) reduces by 10 percent funding for any existing program,
project, or activity, or numbers of personnel by 10 percent as approved
by Congress; or (3) results from any general savings from a reduction
in personnel which would result in a change in existing programs,
projects or activities, as approved by Congress; unless the Committees
on Appropriations of both Houses of Congress are notified 15 days in
advance of such reprogramming of funds.
Enclosure III:
Briefing Slides provided to the Staff of the Subcommittee on Homeland
Security, House Committee on Appropriations:
[See PDF for slides]
[End of section]
Enclosure IV:
Comments from the Department of Homeland Security:
U.S. Department of Homeland Security
Washington, DC 20528:
Homeland Security:
Susan J. Irving:
Director, Federal Budget Analysis
Strategic Issues:
Norm Rabkin:
Managing Director, Homeland Security and Justice Issues
U.S. General Accounting Office:
441. G Street, NW
Washington, DC 20548:
Re: GAO Draft, Report: Budget Issues: Reprogramming of Federal Air
Marshal Service Funds, GAO-04-5778,(450254):
Dear Ms. Irving, et. al:
On March 17, 2004, the General Accounting Office (GAO) presented the
Department of Homeland Security (DRS) with its draft report, Budget
Issues: Reprogramming of Federal Air Marshal Service Funds, GAO-04-
5778. As described in the report, GAO was asked to assess the
following:
1. Whether senior Transportation Security Agency (TSA), DHS, and Office
of Management and Budget (OMB) officials were informed of the
implications of the Federal Air Marshal Service (FAMS) funding
reductions prior to the submission of the reprogramming notices;
2. The programmatic implications of the funding reductions on the FAMS
program;
3. Whether or not it was legally necessary to send an impoundment
message to the Congress and whether the Secretary of DHS had delegated
to the Under Secretary for Management the authority to transmit
reprogramming notifications to the cognizant Appropriations
Subcommittees.
4. Provide recommendations, as appropriate, for improvements in budget
execution for future consideration.
The Department of Homeland Security generally agrees with GAO's
reporting of circumstances associated with the Reprogramming of the
FAMS Funds. We also agree with the GAO suggestions for future
consideration when DHS communicates and interfaces with our
organizational elements regarding reprogramming and tracking earmarked
funds.
There are, however, a few issues in your report that we would like to
reiterate for emphasis. While we recognize that the scope of your
engagement was limited to the reprogramming of FAMS funds, it is
important to remember that during the period of review there was
tremendous uncertainty regarding 1) the availability of funding. 2) new
mission requirements, and 3) a lack of a baseline funding history upon
which to draw to make important determinations with finite resources.
On March 1, 2003. like other DHS organizational elements, TSA was
folded into the new Department at the same time it inherited a new
expanded role and mission, and just one month after receiving its full
funding for a fiscal year that was nearly half completed. After a
limited analysis, it became apparent that it would be necessary for TSA
to realign funds to ensure that we at DHS met our mission in a prudent
manner. As you know, the FAMS reprogramming was just one aspect of a
larger reprogramming package.
The Department appreciates GAO's recognition of our efforts to improve
our budget execution process by issuing fiscal year guidance detailing
procedures for reporting plans and usage, as well as reprogramming
requirements. We also agree with the essence of GAO's suggestions
regarding the tracking of earmarked funds with special codes and will
incorporate this into our FY 2005 Budget Execution guidance. In
addition, we are taking this requirement into consideration in the
development of new financial management systems. The new policy will
emphasize clarity, transparency, consistency, and open infra-agency
communication.
Lastly, we request that the following changes be incorporated into your
final report.
We suggest that an additional statement be made on page 3 and an
additional bullet on page 14 that the FY 2004 Appropriation Conference
Report included $95 million in carryover (the amount in question from
the House reprogramming denial) to be available to address TSA Aviation
Security needs.
* The audit (Program review -noted as July 24 on the timeline on page 4)
was completed before the resubmitted package, and a PowerPoint chart
was presented at meetings with House and Senate Appropriations
Committee staff before the July 31 resubmission.
* On page 5, the last sentence of the 2nd paragraph is not a true
characterization. The TSA Chief Financial Officer's staff conducted
some limited analysis and follow-up questions were asked of the FAMS.
However, a Full. Impact Analysis could not be conducted as no follow-up
information was provided by the FAMS at that time.
* On page 7, first paragraph, we suggest using the term "target
strength" in lieu of "fully authorized level.":
Regarding the 1 st bullet in July/August 2003 on page 13: a comment
should be added to state the revised reprogramming amount submitted on
July 25, 2003, was "at the same level proposed in May."
Thank you for the opportunity to comment on this report and for your
continued support of the Department and its critical mission. If you
have any questions regarding this matter, I am available to meet or
discuss with you or your staff.
Sincerely,
Signed for:
Anna F. Dixon:
DHS GAO Liaison:
(450254):
FOOTNOTES
[1] The summary slides used during these briefings are reprinted in
enc. III.
[2] In contrast, a "transfer" is when an agency moves funds between
appropriation accounts.
[3] Pub. L. No. 108-11 § 1601 117 Stat. 559, 584 (2003).
[4] The exact number of federal air marshals is classified.
[5] FAMS has since moved from TSA to the Bureau of Immigration and
Customs Enforcement within DHS, but this occurred after the period
covered in this study.
[6] Pub. L. No. 108-7, 117 Stat. 11 (2003).
[7] The May 15 plan totaled $913 million ($763.3 million reprogramming
plus a $150 million transfer) and the July 25plan totaled $1.16 billion
($854.8 million reprogramming plus a $306.5 million transfer).
[8] The program audit conducted in late July 2003 identified an
additional $300,000 available to FAMS, which brought FAMS's funding
level to $529.7 million. However, since discussions within TSA and FAMS
surrounding the reprogramming commonly referred to a funding level of
$529.4 million, this figure is used in this report.
[9] Deputy Assistant Administrator for Aviation Security Law
Enforcement was the title of the FAMS Director.
[10] "Missions" includes both domestic and international flights.
[11] According to FAMS officials, one mission equals one flight.
[12] The number of air marshals on-board or anticipated is classified.
[13] The number of flights covered by air marshals is classified.
[14] Deferrals are authorized only when they provide for contingencies,
achieve savings made possible by changes in requirements or greater
efficiency in operations, or as otherwise specifically authorized by
law. 2 U.S.C. § 684(b).
[15] In fiscal year 2003, FAMS was funded within the TSA lump-sum
appropriation.
[16] 31 U.S.C. § 1514.
[17] The purpose of such a system is to ensure that when authority to
obligate funds is delegated to heads of offices or programs within an
agency, managers are prevented from overobligating or overexpending
either the amounts available in an appropriation or fund or the amounts
apportioned or reapportioned by OMB. This system must be designed to
enable the head of the department or agency to identify the person
responsible for an obligation or expenditure exceeding an
appropriation, apportionment, or reapportionment. It is at the agency's
discretion, in this case DHS, to decide how and to whom to delegate
authority to subdivide and obligate apportioned funds while also
considering the mission, organizational structure, and needs of senior
management, consistent with effective and efficient management.
