Federal User Fees

This report reviews agencies' adherence to the user fee review and reporting requirements in the Chief Financial Officers (CFO) Act of 1990 and Office of Management and Budget Circular A-25. The CFO Act and OMB circular are designed to help ensure that government fees are periodically reviewed and updated to reflect changes in cost or in market value. User fees may be based on the recovery costs of providing the service, the market value of the goods and services provided, or may be set by legislation. In fiscal year 1997, user fees and charges provided the government with $217.1 billion in revenues--more than 13 percent of the federal revenues collected that year. This report discusses whether the 24 agencies subject to the CFO Act (1) reviewed their user fee rates biennially during fiscal years 1993 through 1997, (2) determined both direct and indirect costs when reviewing fees on the basis of costs or current market value for fees based on market value, (3) reviewed other programs within the agency to identify potential new user fees, and (4) reported the results of the user fee reviews in their CFO annual reports. GAO also determines whether agencies were more likely to review fees when they could use such fees for their expenses than when the fees went to Treasury's general fund.

GAO noted that: (1) six of the 24 CFO agencies reviewed all of their reported user fees at least every 2 years as required by OMB Circular A-25 during FY 1993 through FY 1997, 3 reviewed all of their reported fees at least once, 11 reviewed some of their reported fees, and 4 did not review any of their reported fees during this period; (2) the 24 agencies reported 546 user fees, of which 418 were reviewed either annually or biennially; (3) the agencies provided various reasons for not reviewing fees, including insufficient cost data and because some of the fees set by legislation could not be changed without new legislation; (4) it appeared that agencies did not place significantly less emphasis on reviewing fees that went to the Department of the Treasury's general fund than on fees authorized to cover agency expenses; (5) documentation provided by the agencies indicated that of the reviewed fees that were based on cost recovery, 99 percent included both direct and indirect costs; (6) fee review documentation indicated that of the 23 reviewed fees that were based on market value, 14 reviews included a determination of current market value; (7) GAO did not verify these cost data or market evaluations; (8) agency documentation also indicated that of the 20 agencies that conducted user fee reviews, 8 agencies that had the potential for new fees did not consider new fee opportunities in their reviews; (9) twelve of the 20 agencies either looked for potential new fees or reported that they did not provide a service for which a fee was not already charged; (10) eleven of the 24 agencies had not reported the results of their biennial reviews, or lack thereof, in their CFO annual reports for FY 1993 through FY 1997; (11) only six agencies reported the review results two or more times during the 5-year period; (12) most of the agencies not reporting their user fee reviews said they did not do so either because the total amount of the fees was considered to be minimal and not considered material or because they found the reporting requirements confusing; and (13) OMB agreed that reporting instructions for the user fee review need to be clarified and plans to address this matter during 1998, as it revises its instructions.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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