Congressional Oversight
FAA Case Study Shows How Agency Performance, Budgeting, and Financial Information Could Enhance Oversight Gao ID: GAO-06-378 March 8, 2006Pursuant to various statutes, federal agencies develop an abundance of performance, budget, and financial information that could be useful for Congress' review and monitoring of agencies. However, agencies' understanding of Congress' information needs is often limited and agencies may not be providing timely information in a format that aids congressional understanding of trends and issues. Thus, Members and their staff may not be aware of or avail themselves to certain information. To describe the information available and how it might be used to support congressional oversight, the Federal Aviation Administration was selected as a case study in part due to the large quantity of information already available. GAO was asked to identify: (1) information FAA produces that could enhance congressional oversight, (2) other technology and information resources that could enhance congressional oversight, and (3) how committee access to FAA's information could be improved to enhance its timeliness and usefulness.
The Federal Aviation Administration (FAA) has made available much of the information and analytic resources that Congress needs to carry out its oversight function. For example, FAA has a strategic plan with long-term, outcome-oriented goals and objectives. Its annual Performance and Accountability Report includes the agency's progress in achieving its goals, and allows Congress to monitor performance trends. This report also provides financial information useful for analyzing its operating results and financial position. FAA's budget documents combined with performance data could provide Congress information to use in determining whether resources are achieving the planned performance improvements. Used together, this information could assist Members of Congress and congressional staff in their oversight responsibilities. Through its legislative support agencies--GAO, Congressional Research Service and the Congressional Budget Office--and the Department of Transportation's (DOT) Inspector General (IG), congressional committee staff also have access to considerable resources for oversight. For example, GAO's 2005 High Risk Series Update includes FAA's Air Traffic Control Modernization program and discusses progress the agency has made in addressing its problems. DOT's IG annually reports on the top management challenges facing FAA, such as safety and capacity challenges. Effective communication is needed to ensure that information agencies provide meets congressional needs. While considerable information resources are available, they may not be available in a manner that is useful to committees. We have reported that although agencies collect and produce a great deal of information, much of it did not reach the interested committees, and the information that did reach them was difficult to digest, highly aggregated, or was received too late to be useful. In the case of FAA, House Transportation and Infrastructure Committee staff said FAA has a large quantity of information available and effective communication between the staff and agency, but is interested in using technology to gain additional agency data. While FAA provides a great deal of information on its Web site, it could take additional advantage of technology to improve the timeliness and usefulness of information to the Congress. For example, a Frequently Asked Questions section could provide quick access to information often requested by committees. As a result of our discussions with committee and agency staff, FAA has initiated two suggested technology enhancements, a For Congress page on its Web site, providing a single point of access for information relevant for oversight, and a Web site subscription service notifying committee staff when relevant information has been updated on its Web site. Further, regular meetings between congressional committees and agency officials could identify the committee's oversight objectives, provide a forum to discuss the issues, and develop approaches to meet them. Importantly, these findings constitute lessons learned that may be transferable to other agencies.
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Director: Team: Phone:GAO-06-378, Congressional Oversight: FAA Case Study Shows How Agency Performance, Budgeting, and Financial Information Could Enhance Oversight
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Report to the Chairman, House Committee on Transportation and
Infrastructure:
March 2006:
Congressional Oversight:
FAA Case Study Shows How Agency Performance, Budgeting, and Financial
Information Could Enhance Oversight:
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-378]:
GAO Highlights:
Highlights of GAO-06-378, a report to the Chairman, House Committee on
Transportation and Infrastructure:
Why GAO Did This Study:
Pursuant to various statutes, federal agencies develop an abundance of
performance, budget, and financial information that could be useful for
Congress‘ review and monitoring of agencies. However, agencies‘
understanding of Congress‘ information needs is often limited and
agencies may not be providing timely information in a format that aids
congressional understanding of trends and issues. Thus, Members and
their staff may not be aware of or avail themselves to certain
information. To describe the information available and how it might be
used to support congressional oversight, the Federal Aviation
Administration was selected as a case study in part due to the large
quantity of information already available. GAO was asked to identify:
(1) information FAA produces that could enhance congressional
oversight, (2) other technology and information resources that could
enhance congressional oversight, and (3) how committee access to FAA‘s
information could be improved to enhance its timeliness and usefulness.
What GAO Found:
The Federal Aviation Administration (FAA) has made available much of
the information and analytic resources that Congress needs to carry out
its oversight function. For example, FAA has a strategic plan with long-
term, outcome-oriented goals and objectives. Its annual Performance and
Accountability Report includes the agency‘s progress in achieving its
goals, and allows Congress to monitor performance trends. This report
also provides financial information useful for analyzing its operating
results and financial position. FAA‘s budget documents combined with
performance data could provide Congress information to use in
determining whether resources are achieving the planned performance
improvements. Used together, this information could assist Members of
Congress and congressional staff in their oversight responsibilities.
Through its legislative support agencies”GAO, Congressional Research
Service and the Congressional Budget Office”and the Department of
Transportation‘s (DOT) Inspector General (IG), congressional committee
staff also have access to considerable resources for oversight. For
example, GAO‘s 2005 High Risk Series Update includes FAA‘s Air Traffic
Control Modernization program and discusses progress the agency has
made in addressing its problems. DOT‘s IG annually reports on the top
management challenges facing FAA, such as safety and capacity
challenges.
Effective communication is needed to ensure that information agencies
provide meets congressional needs. While considerable information
resources are available, they may not be available in a manner that is
useful to committees. We have reported that although agencies collect
and produce a great deal of information, much of it did not reach the
interested committees, and the information that did reach them was
difficult to digest, highly aggregated, or was received too late to be
useful. In the case of FAA, House Transportation and Infrastructure
Committee staff said FAA has a large quantity of information available
and effective communication between the staff and agency, but is
interested in using technology to gain additional agency data. While
FAA provides a great deal of information on its Web site, it could take
additional advantage of technology to improve the timeliness and
usefulness of information to the Congress. For example, a Frequently
Asked Questions section could provide quick access to information often
requested by committees. As a result of our discussions with committee
and agency staff, FAA has initiated two suggested technology
enhancements, a For Congress page on its Web site, providing a single
point of access for information relevant for oversight, and a Web site
subscription service notifying committee staff when relevant
information has been updated on its Web site. Further, regular meetings
between congressional committees and agency officials could identify
the committee‘s oversight objectives, provide a forum to discuss the
issues, and develop approaches to meet them. Importantly, these
findings constitute lessons learned that may be transferable to other
agencies.
What GAO Recommends:
While FAA makes much of its information available on its Web site, GAO
recommends that FAA further use technology to enhance congressional
access to information, and offer regular meetings with Members of the
committee and key staff to discuss areas of mutual concern. The agency
generally concurred.
www.gao.gov/cgi-bin/getrpt?GAO-06-378.
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Bernice Steinhardt at
(202) 512-6543 or steinhardtb@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Agency Performance, Budget, and Financial Management Documents Can
Enhance Oversight Efforts:
Analytical Agencies and Organizations Can Provide Information and
Analysis to Enhance Oversight Efforts:
Regular Communication and Timely Access to Useful Information Can
Enhance Oversight:
Conclusions:
Recommendations for Executive Action:
Agency Comments:
Appendixes:
Appendix I: Objectives, Scope and Methodology:
Appendix II: Analytical Agencies and Organizations Can Provide
Information and Analysis to Enhance Oversight Efforts:
Appendix III: Financial Statements Provide Insights into Agency
Financial Management and Resources:
Appendix IV: GAO Contact and Staff Acknowledgements:
Tables:
Table 1: FAA's Four Strategic Goals:
Table 2: Example of ATO's Business Plan Efforts to Support a Flight
Plan Goal:
Table 3: Estimated Funding to Support FAA's Safety Strategic Goal by
Performance Goal:
Table 4: Example of a Strategy and Research Area in the Next Generation
Air Transportation System Integrated Plan:
Table 5: Analytical Resource for Congressional Oversight, as
Illustrated by FAA Information:
Figures:
Figure 1: Status and Trends: Number of Operational Errors:
Figure 2: FAA Scorecard for General Aviation Fatalities:
Figure 3: Using Budget Information for Operations Obligations, Trust
Fund and General Fund:
Figure 4: Using Budget Information: Trust Fund Outlays Outpacing
Receipts Since FY 2002:
Figure 5: FAA's For Congress Web site Page:
Figure 6: FAA's Consolidated Balance Sheets for Fiscal Years 2003 and
2004:
Figure 7: Composition of FAA's Assets and Liabilities, as of September
30, 2004:
Figure 8: FAA's Consolidated Statements of Net Cost for Fiscal Years
2003 and 2004:
Figure 9: Net Costs for FAA's Airport Program for Fiscal Years 2000
through 2004:
Figure 10: Composition of FAA's Net Costs, for Fiscal Year 2004, by
Business Line and Strategic Goal:
Figure 11: FAA's Consolidated Statements of Changes in Net Position for
Fiscal Years 2003 and 2004:
Figure 12: FAA's Consolidated Statements of Budgetary Resources for
Fiscal Years 2003 and 2004:
Figure 13: Composition of Budgetary Resources, by Major Fund Type:
Figure 14: FAA's Consolidated Statements of Financing for Fiscal Years
2003 and 2004:
Abbreviations:
ARTCC: Air Route Traffic Control Centers:
ATO: Air Traffic Organization:
CAS: Cost Accounting System:
CBO: Congressional Budget Office:
CFO: Chief Financial Officer:
CIP: Capital Improvement Plan:
CRS: Congressional Research Service:
DOT: Department of Transportation:
FAA: Federal Aviation Administration:
FAQ: Frequently Asked Questions:
FFMIA: Federal Financial Management Improvement Act of 1996:
FSAS: Flight Services Automation System:
GA: General Aviation:
GMRA: Government Management and Reform Act of 1994:
GPRA: Government Performance and Results Act:
NAS: National Airspace System:
OASIS: Operational and Supportability Implementation System:
OIG: Office of Inspector General:
OMB: Office of Management and Budget:
PAR: Performance and Accountability Report:
PART: Program Assessment Rating Tool:
PMA: The President's Management Agenda:
QFR: Questions for the Record:
Letter March 8, 2006:
The Honorable Don Young:
Chairman, Committee on Transportation and Infrastructure:
House of Representatives:
Dear Mr. Chairman:
In your letter dated September 13, 2004, you noted that federal
agencies develop an abundance of performance, budget, and financial
information for internal use as well as to report to Congress for
oversight purposes. However, Congress may not be fully aware of or
availing itself of this information. Further, communication between
agencies and Congress to clarify Congress' information needs is
limited. For example, you stated that agencies often do not provide
information in a timely manner or in a format that facilitates
understanding of trends and issues, making it difficult to synthesize
and use the information to identify areas of greatest concern and
conduct effective oversight. As a result, you stated that too often
oversight occurs in an ad hoc manner as problems arise, and with
inadequate information to determine and address root causes. Further,
as government grows more complex, and agencies produce more
information, it becomes harder for Congress to access, analyze, and
summarize this information to develop its policy positions and
legislative enactments. New ways must be continually found to use
emerging technology and approaches to make agency information
transparent and readily available.
You requested that we help to address these issues by working with
committee staff to develop a framework for establishing timely and
constructive oversight of programs under the committee's jurisdiction.
To establish a working precedent, the Federal Aviation Administration
(FAA) was selected as a case study as a result of its large quantity of
information already available, the forward-looking management systems
being developed, and the effective communications between the staff and
agency. Our objectives were to identify: (1) information FAA produces
that could enhance congressional oversight, (2) other available
information resources that could enhance congressional oversight and,
(3) how committee access to FAA's information could be improved to
enhance its timeliness and usefulness.
To achieve our objectives, we worked with members of your committee's
oversight staff, as well as Aviation Subcommittee staff to better
understand their information needs and delivery mechanisms. In
addition, we identified relevant FAA performance, budget, and financial
documents and met with senior officials from across FAA, including
several lines of business--Airports, Air Traffic Organization, Aviation
Safety--and staff offices--Aviation Policy, Planning and Environment,
Financial Services, Government and Industry Affairs, Human Resources
and Management. We also met with officials from the Department of
Transportation's (DOT) Office of Inspector General (OIG), the DOT's
Chief Information Officer, the Congressional Research Service, the
General Service Administration's FirstGov initiative, and the Office of
Management and Budget, as well as representatives from several think
tanks. Our review was conducted from September 2004 through December
2005 in accordance with generally accepted government auditing
standards.
Results in Brief:
FAA has made available much of the information and analytic resources
that Congress needs to conduct its oversight role. For example, FAA
developed a strategic plan with long-term, outcome-oriented goals and
objectives. Its annual Performance and Accountability Report includes
the agency's progress in achieving its goals, and allows Congress to
monitor performance trends. This report also provides financial
information useful for analyzing its operating results and financial
position. FAA's budget documents combined with performance data could
provide Congress information to use in determining whether resources
are achieving the planned performance improvements. Used together, this
information provides a valuable tool to assist Members of Congress and
congressional staff in their oversight responsibilities.
Through its legislative support agencies--GAO, Congressional Research
Service and the Congressional Budget Office--as well as the Department
of Transportation's Inspector General, congressional committees also
have access to considerable resources for oversight. For example, GAO's
High Risk Series Update includes FAA's Air Traffic Control
Modernization program and discusses progress it has made in addressing
its problems. The DOT IG annually reports on the top management
challenges facing FAA, such as safety and capacity challenges.
Effective communication among agency officials, Members of Congress and
congressional staff is needed to ensure that information agencies
provide meets committee needs. While considerable information resources
are available, they may not be available in a manner that is useful to
committees. We have previously reported, in a review of interactions
between the Congress and other executive branch agencies, that although
agencies collect and produce a great deal of useful information, much
of it did not reach the interested congressional committees, and the
information that did reach the committees was difficult to digest, too
highly aggregated, or was received too late to be useful.[Footnote 1]
In the case of FAA, House Transportation and Infrastructure Committee
staff noted that the agency has a large quantity of information
available and effective communication between the staff and the agency,
but it is also interested in using technology to gain additional,
timely access to agency data when conducting oversight. While FAA
provides a great deal of information on its Web site, enhancing access
to agency information using technology can improve the timeliness and
usefulness of agency information to the Congress. For example,
information alerts and summaries from the agency could be effective
information sharing tools. Further, regular meetings between
committees, staff and agency officials could identify the committee's
principal oversight objectives, provide a forum to discuss the issues,
and develop the best approaches to meet them.
To further enhance committee access to information about FAA, we
recommend the Secretary of the Department of Transportation direct the
Administrator of the FAA to implement a number of technology solutions
to improve access to information, such as:
* Continue to work with committee staff to further refine the For
Congress Web site by improving the flow of information and taking
advantage of emerging technologies;
* Include a Frequently Asked Questions page on the For Congress site,
allowing oversight committees to quickly find answers to commonly
requested items relevant to Congress;
* Add moderated access on the For Congress Web site to allow access to
information that should be made available to congressional committees,
yet may not be appropriate for the general public; and:
* Consider offering regular meetings between the Members of the
committee and key staff with senior FAA executives to address matters
of mutual concern.
We provided a draft of this report to the Secretary of the Department
of Transportation for review and comment. We received comments from FAA
officials, including the Deputy Assistant Administrator for Financial
Services, on behalf of the Secretary who indicated that they were
pleased to have FAA serve as our case study and they would consider the
report's recommendations as they continue to strive for excellence in
fulfilling the Congress' information needs. They highlighted a number
of ways in which they are using technology solutions, including a
dedicated Web page for Congress and a subscription e-mail service for
Congress to receive notices of new information. We note that both
improvements resulted from our discussions with committee and FAA
staff, the latter in response to a recommendation contained in the
draft of this report.
Agency Performance, Budget, and Financial Management Documents Can
Enhance Oversight Efforts:
Congressional oversight is the review, monitoring, and supervision of
federal agencies, programs and policy implementation. This oversight
provides the legislative branch with an opportunity to inspect,
examine, review and check the executive branch and its agencies.
Congressional oversight includes two different features--that which is
ongoing throughout the course of a year and that which is done at a
specific time in the year in response to the issuance of the
President's budget. For the latter, House and Senate committees with
jurisdiction over federal programs are required to submit a views and
estimates report--a report containing the committee's comments or
recommendations on budgetary matters within its jurisdiction--to its
respective budget committees each year within 6 weeks of the submission
of the President's budget. For example, the House Transportation and
Infrastructure Committee's fiscal year 2006 views and estimates report
identified a number of aviation-related issues and recommended
increased funding over the President's proposed budget for facilities
and equipment to pay for capital improvements designed to increase
capacity and reduce aviation gridlock and for airport safety upgrades,
including explosive detection systems for airport baggage systems.
Ongoing oversight and the specific views and estimates oversight
reports can draw information from documents and reports issued by
federal departments over the course of the year.
Pursuant to the Government Performance and Results Act of 1993 (GPRA)
and other statutes, federal agencies produce performance, budget, and
financial information for internal management purposes and for
reporting to Congress which can also be useful to congressional
committees to enhance their oversight efforts. GPRA required federal
agencies to develop strategic plans with long-term, outcome-oriented
goals and objectives, annual goals linked to achieving the long-term
goals, and annual reports on the results achieved. The Chief Financial
Officers Act of 1990 (CFO) as expanded by the Government Management and
Reform Act of 1994 (GMRA) requires annual audited agencywide statements
for 24 major federal departments. In the case of FAA, the agency has
made available much of the information and analytic resources that
Congress needs to conduct its oversight role.
As part of DOT, FAA addresses some of the requirements of GPRA through
its inclusion in DOT's Performance and Accountability Report. However,
FAA also produces its own strategic plan, unit-specific business plans
and performance reports that identify agency priorities, goals,
strategies and progress toward these goals and the success of the
strategies employed. Collectively, these documents help Congress
determine whether FAA's goals are aligned with congressional goals and
whether FAA is achieving them. Linking performance information to FAA's
budgetary resources, such as FAA is beginning to do in its performance-
based budget, can also provide Congress the opportunity to oversee the
results planned or achieved with budgeted resources and indicate FAA's
priorities for funding. Used together, these agency documents could
assist committees in identifying and tracking progress on the issues
related to reauthorization and oversight.
FAA's Strategic and Performance Reporting Documents Outline Agency
Goals and Priorities:
FAA manages performance through a series of integrated performance
documents. FAA's principal performance reports are: the strategic plan,
called the Flight Plan; unit specific business plans; the annual
Performance Accountability Report; and quarterly performance reports.
The Flight Plan includes the agency's mission, goals and strategies. In
addition, each of FAA's lines of business has a unit-specific business
plan that outlines how its actions will support the goals and measures
identified in the Flight Plan. FAA monitors and reports on the Flight
Plan's key performance targets through quarterly and annual performance
reports.
FAA's Strategic Plan:
FAA's current 5-year strategic plan, or Flight Plan, is designed to
outline the agency's mission, goals and strategies to achieve these
goals through 2009, with the overall aim of seeking "to provide the
safest, most efficient aerospace system in the world." Among other
things, GPRA requires agencies to consult with Congress and solicit the
input of others as they develop these plans--a good opportunity for
congressional committees and staff to influence FAA's future. According
to FAA senior executives, the Flight Plan is the primary document that
identifies the agency's priorities and performance expectations and is
the driver of decision making at all levels. As such, the Flight Plan
is key for internal agency and congressional oversight purposes.
Committees can refer to the plan to determine whether national
priorities are appropriately recognized and to raise questions about
whether the strategies laid out are likely to lead to success. The
Flight Plan identifies four strategic goals (see table 1), each of
which are supported by objectives, strategies, initiatives, and
performance targets the agency is responsible for achieving. FAA's
Flight Plan can be accessed via its Web site at [Hyperlink,
http://www.faa.gov/about/plans_reports/].
Table 1: FAA's Four Strategic Goals:
Increased safety; Achieve the lowest possible accident rate and
constantly improve safety.
Greater capacity; Work with local governments and airspace users to
provide capacity in the U.S. airspace system that meets projected
demand in an environmentally sound manner.
International leadership; Increase the safety and capacity of the
global civil aerospace system in an environmentally sound manner.
Organizational excellence; Ensure the success of FAA's mission through
stronger leadership, a better trained and safer workforce, enhanced
cost-control measures, and improved decision making based on reliable
data.
Source: FAA.
[End of table]
Committees could use the strategic plan to identify oversight
questions.[Footnote 2] For example:
* Do these goals take into account legislative priorities?
* Are the strategies that support each goal consistent with legislative
decisions?
* How effective are the strategies in achieving these goals?
* How were the specific initiatives and performance targets for each
objective strategy developed?
* What key factors--external to FAA and beyond its control--exist and
how will FAA mitigate or leverage them as appropriate, if they affect
the achievement of the strategic plan goals?
* Does the plan include strategies for working with stakeholders (e.g.,
airlines, local governments or airport authorities)?
Unit-Specific Business Plans:
The agency's Flight Plan is supported by unit-specific performance
plans, called business plans. Each line of business and staff office
produces annual business plans that demonstrate strategic alignment
with the agency Flight Plan and define core business activities. The
business plans are important tools for oversight because they provide a
detailed description of the activities and responsibilities of each
business line in supporting the Flight Plan. Specifically, the business
plans define the Flight Plan's performance targets, the specific
initiatives that support the performance targets--and type of support
required of each line of business (e.g., lead responsibility or support
responsibility)--outline the key strategic activities in support of
those initiatives; and define strategic activity targets to help gauge
progress towards achieving the strategic initiative. The business plans
can be found on FAA's external Web site, at [Hyperlink,
http://www.faa.gov/about/plans_reports/business_plan2005/].
For example, the Air Traffic Organization's[Footnote 3] (ATO) fiscal
year 2005 business plan details six strategic initiatives it is
employing to help the agency meet its goal to reduce General Aviation
(GA) fatal accidents.[Footnote 4] Each of the strategic initiatives,
which indicates whether ATO is the lead business line or is supporting
other business lines, includes related strategic activities and
activity targets that enable the ATO to further define and measure the
degree its performance is contributing to overall agency performance.
Table 2 shows an example of one of ATO's strategic initiatives,
activities and activity targets for supporting a Flight Plan goal.
Table 2: Example of ATO's Business Plan Efforts to Support a Flight
Plan Goal:
FAA's Flight Plan performance target; Reduce GA fatal accidents.
Strategic initiative in ATO's business plan supporting Flight Plan's
performance target; Human factors: identify human factors that may
cause accidents and develop strategies, methods, and technologies that
will reduce those accidents (ATO has lead responsibility.)
Strategic activity in ATO's business plan; Develop pilot proficiency
recommendations for technically advanced aircraft.
Activity target in ATO's business plan; Complete reports on: (1)
proficiency standards for technically advanced aircraft, (2) the impact
of technology on pilot performance metrics, and (3) the impact of
technology on pilot aeronautical decision making.
Source: FAA:
[End of table]
Committees can use the business plans to identify oversight questions
and additional reports that could be made available to them. For
example:
* How will the information from these reports affect the strategies for
reducing accidents?
* Do the activities being implemented match congressional priorities?
Annual Performance Reports:
FAA annually publishes a detailed account of agency performance,
including its audited annual financial statements, in its Annual
Performance and Accountability Report (PAR). While this report is not
required, FAA believes it is essential to clearly and fairly present
and discuss FAA's finances and performance. GPRA requires agencies to
measure performance toward the achievement of their goals and report
annually on their progress in program performance reports. If a goal
was not met, the report must provide an explanation and present the
actions needed to meet any unmet goals in the future. These reports
provide important information to agency managers, policy makers, and
the public on what each agency accomplished with the resources it was
given. FAA's PAR provides Congress with annual and historical trend
information for its key performance goals. For example, under the
strategic goal Increased Safety, FAA has a performance target tied to
its goal to reduce the number of operational errors.[Footnote 5] Figure
1 shows the trend in the actual number of operational errors between
fiscal year 2002 and fiscal year 2005. FAA exceeded its target number
of operational errors in fiscal year 2003 by 38 and again in fiscal
year 2004 by 8.
Figure 1: Status and Trends: Number of Operational Errors:
[See PDF for image]
[End of figure]
Based on this, potential questions for oversight could be:
* What are the primary causes of operational errors?
* What changes were put into place between fiscal year 2003 and 2004 to
decrease operational errors?
* How was the target for 2005 set and what efforts will be put into
place to meet this target?
The financial statements, supplementary information, and notes to the
financial statements included in the PAR present historical
information, showing the financial activity of the agency for the last
2 fiscal years and the financial position as of the end of each of
those years. The five principal financial statements include:
consolidated balance sheets, consolidated statements of net cost,
consolidated statements of changes in net position, consolidated
statements of budgetary resources, and consolidated statements of
financing. The notes to the financial statements present more detailed
information about transactions or conditions reflected in these
statements. Often the Management's Discussion and Analysis section of
the PAR will address the kinds of operating conditions or changes that
financial statement analysis discloses.
The statement of budgetary resources, which interrelates with the other
financial statements, includes key information that is also included in
the agency's budget. This information is subjected to audit scrutiny,
providing some assurance of the reliability of related budgetary
information. The individual statements and examples of how they can be
used for congressional oversight are discussed in appendix III.
The independent auditor's report included in the PAR tells readers
whether or not, or to what extent, the information provided in FAA's
financial statements and related notes is, in the opinion of the
auditor, fairly stated. This report also includes the auditor's
statements on whether FAA had effective internal control over financial
reporting and over compliance with laws and regulations, which would
indicate whether financial management issues need more attention. They
also report on any identified significant matters of noncompliance with
selected provisions of applicable laws and regulations. In effect, the
audit report is a report card on how well the agency is managed from a
financial perspective.
The auditor's unqualified opinions on FAA's financial statements for
fiscal years 2002 through 2005 suggest that those statements are
sufficiently reliable to be used as a tool for public and congressional
oversight. However, the auditor's reports for each of those years
disclosed that FAA's financial management systems did not substantially
comply with federal financial management systems requirements under the
Federal Financial Management Improvement Act of 1996 (FFMIA)[Footnote
6], an issue that may warrant additional oversight. For fiscal years
2004 and 2005, the auditor noted, among other things, that in
connection with FAA's conversion to Delphi as its core financial
system, several key financial systems that feed or support Delphi
exhibited weaknesses regarding function, reporting or internal control.
In addition, the auditor reported that in 2005 FAA, also in conjunction
with the implementation of Delphi, had not timely processed all of its
transactions and reconciled all of its key accounts. Similar problems
had been reported for fiscal year 2004 by the auditor. While
adjustments to the recorded balances were made during the preparation
of the year end audited financial statements, these weaknesses could
indicate that the agency's financial information during the year may
not be fully reliable.
Committee staff could use information from FAA's independent auditor to
facilitate an understanding of financial management and compliance
issues, addressing questions such as:
* Can users rely on the information provided in FAA's financial
statements?
* Did FAA have effective internal control over financial reporting and
compliance with laws and regulations?
* Did FAA's independent auditor report on any identified significant
matter of noncompliance with applicable laws and regulations?
* Did FAA's financial management improve or deteriorate over the fiscal
year?
The answers to the above questions are also key to assessing the
reliability of cost accounting information, which is discussed later.
Cost accounting information generated from FAA's financial reporting
systems is essential to managing on-going agency operations and
provides useful information to Congress about the cost of specific
programs, activities, or outputs.
FAA's annual Performance and Accountability Report can be accessed via
FAA's Web site at [Hyperlink, http://www.faa.gov/about/plans_reports/].
Quarterly Performance Reporting:
In addition to annual performance reporting, FAA monitors and reports
quarterly on performance towards the strategic goals through the
tracking of 31 key performance measures. FAA management conducts
monthly, day-long meetings with executives from each line of business.
At these meetings, the designated leaders for each of the four
strategic goals present information related to the performance targets
for their goal. Each of the 31 performance targets is displayed using
the traffic light graphics colors of red, yellow, and green. When a
target is either yellow or red, the goal leader will discuss the steps
needed to get to green--which indicates that the performance measure is
met.
Committees could use these reports to raise similar questions about
ways to improve performance to achieve the performance target. FAA
reports performance for these 31 measures on its external Web site
quarterly, at [Hyperlink,
http://www.faa.gov/about/plans_reports/Performance/]. For example,
under the strategic goal Increased Safety, FAA has a performance target
tied to its goal to reduce the number of GA fatal accidents. FAA's
target for fiscal year 2005 is not to exceed 343 GA fatal accidents.
However, according to its final quarterly performance report for fiscal
year 2005 published on the FAA Web site, the agency failed to meet its
target, with a total of 350 GA fatal accidents, 7 fatal accidents above
the target. Figure 2 shows the quarterly report for FAA's measure on GA
fatal accidents.
Figure 2: FAA Scorecard for General Aviation Fatalities:
[See PDF for image]
[End of figure]
Committees could use this performance information to identify oversight
questions. For example:
* Why was FAA unable to meet its target for fiscal year 2005?
* What has the agency been doing to improve on its performance for this
target?
* Does FAA measure the number of nonfatal GA accidents? If so, how does
it use those data?
In addition, questions could be raised about the measure itself. For
example, why does the measure track the number of GA fatal accidents
rather then the rate of GA fatal accidents?
FAA's Budget and Long-Term Planning Documents Can Be Used to Generate
Questions About FAA's Planned Resource Use:
The annual federal budget is developed using a year-round
administrative process of budget preparation and review. By the first
Monday in February, the President submits a budget request to Congress
for the fiscal year starting on the following October 1. However,
preparation of that particular budget request began about 10 months
before it was submitted to Congress. For example, for the fiscal year
2006 budget request, transmitted to Congress in February 2005, the
budget process began in the spring of 2004. Thus federal agencies deal
concurrently with three fiscal years: (1) the current year, that is,
the fiscal year in progress; (2) the coming fiscal year beginning
October 1, for which they are seeking funds; and (3) the following
fiscal year, for which they are preparing information and requests. In
the spring and summer, agencies work with the Office of Management and
Budget (OMB) to identify major issues for the upcoming budget request,
develop and analyze options for the upcoming reviews of agency spending
and program requests, and plan for the analysis of issues that will
need decisions in the future. In September and October agencies submit
their budget requests and other initial materials to OMB, typically on
the first Monday after Labor Day of the year prior to the start of the
year that the budget request covers. From October to December OMB
reviews and briefs the President and senior advisors on the proposed
budget policies and recommends a set of proposals after reviewing all
agency requests. Budget decisions are passed back to agencies in late
November and may be appealed. Final budget decisions are transmitted to
Congress in the President's budget request.
At the same time an agency is working to formulate a new budget, it is
executing its approved budget by spending the money Congress has
appropriated to carry out the objectives of its program legislation.
During the budget execution phase, agencies sometimes find they need
more funding than appropriated because of unanticipated circumstances.
Under such circumstances, agencies may request and Congress may enact a
supplemental appropriation.
FAA manages and reports budget decisions in several documents that
could be used to enhance oversight. The three principal budget
documents include the annual budget, the budget-in-brief and the
performance-based budget justification. FAA's annual budget presents
actual receipts and spending levels for the fiscal year just completed,
current year estimated receipts and spending, and estimated receipts
and spending for the upcoming year as proposed by the President. The
budget-in-brief summarizes the justification for FAA's estimated budget
by strategic goal. Finally, FAA's performance-based budget
justification provides a more detailed outline of its planned budget
according to the Flight Plan's strategic goals and describes the
expected performance improvements.
FAA's Budget:
The fiscal year 2006 budget reports the total funding for all FAA
programs and provides program and financing information by budget
account. FAA's budget has four components: operations; facilities and
equipment; grants-in-aid for airports; and research, engineering, and
development. There are two sources of FAA funding: the airport and
airway trust fund, which contains ticket tax and other earmarked
receipts, and general fund appropriations. In fiscal year 2006, the
trust fund provides all funding for facilities and equipment; the
airport improvement grants; and research, engineering and development,
as well as partial funding for operations. The general fund is also
used for operations and other, smaller accounts.
Many different analyses can be done with budget data to identify
oversight questions. For example, as shown in figure 3, fiscal year
2000 general fund financing of operations and maintenance increased
from its pre-2000 level.
Figure 3: Using Budget Information for Operations Obligations, Trust
Fund and General Fund:
[See PDF for image]
[End of figure]
Further, figure 4 shows that trust fund outlays have outpaced receipts
since fiscal year 2002, resulting in a decline in the trust fund
balance.
Figure 4: Using Budget Information: Trust Fund Outlays Outpacing
Receipts Since FY 2002:
[See PDF for image]
[End of figure]
Based on these analyses, some oversight questions could be:
* What steps are being taken to understand the cost drivers of the
operations and maintenance portion of budget?
* What is the desired balance between trust fund and general fund
financing for FAA operations?
FAA's Budget-In-Brief:
FAA's budget-in-brief is a publicly available summary of FAA's budget
justification. The budget-in-brief summarizes the FAA's annual budget
request by appropriation and by goal area. It provides committees with
a quick comparison of resource allocation by goal and program activity
for the prior year, current year and the budget year. For example, the
budget-in-brief states that safety is FAA's primary goal and proposes
spending 71 percent of the fiscal year 2006 request for the safety-
related goals shown in table 3. For the goal of reducing GA fatal
accidents, FAA is proposing a decrease from fiscal year 2005 in
resources for facilities and equipment, and grants-in-aid for airports,
and in the number of full time equivalent employees devoted to this
goal.
Table 3: Estimated Funding to Support FAA's Safety Strategic Goal by
Performance Goal:
Dollars in millions.
Reduce commercial fatal accident rate;
FY 2004 actual: $7,276,192;
FY 2005 enacted: $7,669,769;
FY 2006 request: $7,885,275.
Reduce general aviation fatal accidents;
FY 2004 actual: $1,411,095;
FY 2005 enacted: $2,000,514;
FY 2006 request: $1,851,296.
Zero commercial space accidents;
FY 2004 actual: $13,019;
FY 2005 enacted: $12,955;
FY 2006 request: $13,209.
Total Estimated Funding for Safety;
FY 2004 actual: $8,700,306;
FY 2005 enacted: $9,713,239;
FY 2006 request: $9,749,780.
Source: FAA's Budget-in-Brief, Fiscal Year 2006.
[End of table]
Based on this, potential questions for oversight could be:
* What changes were made in these areas to permit a reduction in
funding while still making progress toward the goal of reducing GA
fatalities?
* How is the decrease going to affect more ambitious targets for GA
fatal accident reductions in performance plans?
* Was funding shifted from reducing GA fatal accidents to a different
safety-related activity? If so, which activity and why?
As table 3 shows, at the same time FAA is proposing decreases in
certain types of spending for reducing GA fatal accidents, FAA is
proposing budget increases for reducing commercial fatal accident rates
and achieving zero commercial space accidents. Another potential
oversight question could therefore be: is FAA proposing increases in
these other areas--where FAA is meeting its performance targets--while
proposing decreases in reducing GA fatal accidents, a goal for which
FAA is not meeting its performance target? FAA's budget-in-brief can be
accessed on its external Web site at [Hyperlink,
http://www.faa.gov/about/budget/].
FAA's Performance-Based Budget:
FAA's performance-based budget, first done in fiscal year 2005 and
submitted to the appropriations committees, is a prominent source of
both performance and budgetary information on FAA and could also be
useful for oversight. It highlights FAA's identified resource needs and
what the agency deems to be the most important performance goals for
that particular year. One goal of agency performance budgets is to show
the relationship between resources and incremental improvements in
performance. Congressional oversight could focus on whether planned
performance improvements were achieved with the resources provided or,
if not, raise questions about why they were not achieved.
For example, FAA's fiscal year 2005 performance-based budget shows a
request for $10.2 million to reduce GA fatalities through the
implementation of the Flight Services Automation System (FSAS) and
Operational and Supportability Implementation System (OASIS). According
to the budget, FSAS and OASIS will enable flight specialists to more
efficiently provide weather and flight information, thereby aiding in
the reduction of accidents through increased pilot awareness of weather
conditions along the flight route. Committees could use information
from the performance-based budget to oversee spending on and
installation of the systems. For example:
* Was the installation completed within the originally estimated
funding level?
* What percentage of GA fatal accidents results from the pilots'
insufficient knowledge of weather conditions?
* Are the GA fatality rates decreasing in areas where the installation
has occurred?
FAA's Other Long-Term Planning and Budget Documents:
FAA also produces some long-term planning and budget documents that
could be helpful for oversight. Intended to integrate and coordinate
longer-term perspectives and needs of organizations affecting airspace
usage, these documents are:
* National Plan of Integrated Airport Systems,
* Operational Evolution Plan,
* The Next Generation Air Transportation System Integrated Plan, and:
* Capital Investment Plan.
The first three plans were cited by FAA officials as key documents
presenting FAA's long-term direction. The National Plan of Integrated
Airport Systems for 2005 to 2009 identifies 3,344 airports that are
significant to national air transportation and, therefore, eligible to
receive grants under the FAA's Airport Improvement Program. The plan
and grant program support the Flight Plan's goals of increased safety
and greater capacity. The plan describes the condition and performance
of the airport system according to six performance areas: safety,
capacity, pavement condition, financial performance, surface
accessibility, and noise. In addition, the plan provides cost estimates
for needed improvements to airports by airport type--large, medium or
small hub primary; no hub primary; non-primary commercial service;
relievers;[Footnote 7] or general aviation--and by purpose of
development--safety, security, reconstruction, standards, environment,
airfield capacity, terminal buildings, ground access, and new airports.
The projects are not prioritized, but inform the grant decisions for
the Airport Improvement Program. The National Plan of Integrated
Airport Systems for 2005 to 2009 can be accessed on FAA's Web site at
[Hyperlink, http://www.faa.gov/arp/planning/npias/index.cfm?nav=].
Based on this plan, some oversight questions could be:
* How are the projects in the National Plan of Integrated Airport
Systems selected for airport improvement grants?
* To what extent have the grant-funded improvements to airports
achieved performance improvements for the Flight Plan goals of
increased safety and greater capacity?
The Operational Evolution Plan, created in collaboration with the
aviation community, the Department of Defense, the National Weather
Service and the National Aeronautics and Space Administration, is a
rolling 10-year tactical implementation plan designed to increase the
capacity and efficiency of the national airspace system[Footnote 8] by
approximately 30 percent within its initial 10-year horizon. The plan
identifies four specific areas for improvement: terminal area, en
route, and airport congestion; and air traffic management flow
efficiency. It also identifies milestones for expected improvements at
each of the airports included in the plan. The Operational Evolution
Plan can be accessed on FAA's Web site at [Hyperlink,
http://www.faa.gov/programs/oep/].
Based on this plan, some oversight questions could be:
* Are the milestones for expected improvements realistic and are they
being met?
* As airport improvements are completed what has been the impact on
congestion? Are the changes as great as anticipated?
The Next Generation Air Transportation System Integrated Plan is a
multiorganization plan designed to transform the nation's air
transportation system to meet expected needs in 2025. This plan
outlines eight transformation strategies that will be researched,
developed, implemented and maintained by teams composed of federal,
state, and local governments; quasi-government research institutions;
universities; and the private sector. For each strategy there is a
description of the research area and milestones for completion.
Table 4: Example of a Strategy and Research Area in the Next Generation
Air Transportation System Integrated Plan:
Strategy; Develop airport infrastructure to meet future demand; Provide
a system that meets or exceeds user demand by integrating airport,
airspace and air traffic management design, development, and
deployment. Airport infrastructure must address the need to expand in a
way that meets future capacity while satisfying the other objectives.
This strategy is intended to provide customers a wide-range of options
for air transportation in an efficient cost-conscious manner.
Research areas; Develop requirements and concepts for servicing a
variety of future demands, from maximizing overall metropolitan area
capacity to servicing smaller communities. Groundside questions address
airport access alternatives and associated transportation, security,
and information systems requirements, such as regional airports and
city check-in by specific location.
Source: Next Generation Air Transportation System Integrated Plan.
[End of table]
Based on this plan, some oversight questions could be:
* How do the strategic goals and performance targets in the Flight Plan
and unit-specific business plans relate to these transformation
strategies?
* How were these transformation strategies identified?
FAA also reports on long-term capital financing options in the Capital
Investment Plan (CIP), which is a rolling 5-year financial plan that
allocates planned funding to NAS projects. The Secretary of
Transportation transmits the CIP to Congress each year at the time of
the President's annual budget submission. It includes estimated
expenditures for each line item in the facilities and equipment budget
for the current fiscal year and for the following 4 years. However, the
CIP includes only projects that are likely to receive funding rather
than all initiatives originally considered.
According to the CIP, a project's planned funding is based on its
support for the agency's strategic goals and performance targets. As
such, the CIP is an important oversight tool because it not only
details estimated expenditures, but also provides the agency's
rationale for spending federal dollars on specific projects--or a group
of related projects--and explains how such spending will enhance the
agency's ability to meet its strategic goals, and ultimately its
mission.
Based on this plan, potential questions for oversight could include:
* Are the projects clearly linked to agency goals and priorities?
* What other projects could meet these goals and priorities? Why were
they rejected?
Cost Accounting Provides Detailed Operating Cost Analysis:
Financial accountability goes beyond an agency's obtaining an
unqualified opinion on its annual financial statements. The key to
financial accountability is obtaining accurate and useful information
on a timely and ongoing basis to support day-to-day managerial
decisions and oversight. As a critical part of its new Delphi financial
management system installation, FAA's cost accounting system (CAS)
draws upon accounting information in Delphi to provide financial
information that can be used to monitor ongoing operations as well to
plan for the future. CAS has been principally implemented in the ATO
and Commercial Space Transportation, which together comprise over 80
percent of FAA's budget. FAA's other two lines of business, Aviation
Safety and Airports are expected to implement CAS in fiscal year 2006.
CAS takes direct cost data from DOT's financial management system and
allocates those costs from the organization that incurred the costs to
the organization, product, or service that benefited from the costs.
The system allows analysis of costs aggregated within a program,
activity, location or strategic goal. Allocated costs can also be used
in an analysis of comparative operating efficiency for different
operating periods or different locations. An example is a ratio of
costs to a nonfinancial activity measure, such as cost per day, per
employee, or per flight. Apparent abnormalities in trends or at
particular locations may then be investigated. For example, at FAA the
direct cost of an air traffic controller at a terminal would be
allocated to airport operations, in proportion to takeoffs and
landings, which are a major "driver" of those costs. Similarly, the
indirect cost of a maintenance technician would be allocated to the
lines of business that benefited from those costs using an appropriate
allocation base.
A financial scoreboard in use at FAA regularly tracks trends in these
unit costs, overhead rates, and other performance measures. Tracking
these trends is key to identifying operating inefficiencies and, when
projected to anticipated operating volumes, can help determine future
financing needs.
According to FAA, CAS provided labor and overhead cost data which were
used in the preparation of a competitive sourcing study for ATO flight
service stations. The cost data were used as a basis to estimate the
future cost of those existing in-house flight services. Comparison of
those projected in-house costs to the costs of procuring the services
from bidders in the private sector resulted in contracting out ATO
Flight Service Stations in fiscal year 2005 at a projected contract
savings of about $2.2 billion through fiscal year 2015. FAA has also
reported that CAS data led to cancellation of a $27 million airport
weather program and to savings of $7 million from modification of an
airport radar surveillance program.
CAS can break down the full costs for the individual activities
undertaken to provide each of ATO's services[Footnote 9]--En Route,
Oceanic, Flight Services, and Terminal Services--by location, program
and function. Using this kind of information, a separate fiscal year
2004 performance report prepared by ATO displayed unit costs of certain
activities and services as well as some overall ATO revenue and cost
trend analyses and other performance measures. The report cited a
reduction of ATO's total unit cost per flight by $17, or 4.21 percent.
This type of report is a tool for ongoing congressional oversight,
addressing key operating issues identified by ATO management.
Committees could use information from FAA's cost accounting system to
better understand costs and performance of individual programs,
activities, or outputs, addressing questions such as:
* What is the total cost of ATO services per flight?
* How do this year's costs per flight compare to last year's?
* How does the per flight cost of traffic controllers compare among
airports?
CAS can be used to link costs to strategic performance areas and to
combine air traffic safety data with financial information. FAA has
also used cost finding techniques for selected programs during the
fiscal year 2006 budget cycle to estimate the marginal cost of
performance, i.e., the incremental results that might be achieved at
different levels of funding.
Analytical Agencies and Organizations Can Provide Information and
Analysis to Enhance Oversight Efforts:
Through its legislative support agencies--GAO, Congressional Research
Service and the Congressional Budget Office--and the Department of
Transportation's Inspector General, congressional committees also have
access to considerable resources for oversight. See appendix II for a
summary of additional information resources.
GAO, as the investigative arm of Congress, examines the use of public
funds; evaluates federal programs and activities; and provides
analyses, options, and other assistance to help Congress make effective
oversight, policy, and funding decisions. Several documents that GAO
produces on an ongoing basis or as part of a body of work may prove
useful to congressional committees when setting an oversight agenda.
* GAO Strategic Plan (2004-2009)[Footnote 10] GAO's strategic plan,
which has been updated every 2 years since 2000, describes the trends
and issues that are likely to affect congressional decision makers over
the 6-year period of the plan. It also provides GAO's plans for
analyses and other activities to help support Congress's information
needs. One of GAO's strategic objectives is to support congressional
and federal efforts to obtain and maintain a safe, secure, and
effective national physical infrastructure. Several performance goals
under this objective involve transportation-related issues, including
assessing efforts to improve safety and security in the nation's
transportation system and assess the impact of transportation policies
and practices. As such, oversight committees can look to GAO for
information on these issues and more.
* High-Risk Series: An Update[Footnote 11] Since 1990, GAO has
periodically reported--generally at the start of each new Congress--on
government operations it identifies as having a high risk of fraud,
waste, abuse, and mismanagement. Increasingly, the list has grown to
include programs or agencies that need urgent attention or
transformation, such as the Department of Homeland Security. In the
January 2005 update, GAO presented the status of areas previously
identified as high-risk. These included two involving FAA--FAA
Financial Management and FAA Air Traffic Control modernization. We
determined that FAA's progress in improving financial management
overall, a high-risk area since 1999, has been sufficient to remove it
from the list. However, while FAA had made progress in addressing root
causes of problems with its Air Traffic Control modernization,
originally designated as high-risk in 1995, we maintained the high-risk
designation. Therefore, the status of FAA's Air Traffic Control
modernization may be an area for oversight by the Transportation and
Infrastructure Committee.
* 21st Century Challenges: Reexamining the Base of the Federal
Government[Footnote 12] In February 2005, GAO issued a report on 21st
century challenges facing the nation--including the federal
government's long-term fiscal imbalance and changing demographics--
that suggests the need to reexamine the base of the federal government.
The report is intended to help Congress address these challenges by
providing a series of illustrative questions, both generic and for 12
examination areas that could help support a fundamental and broad-based
reexamination initiative. One of the 12 examination areas we identified
is transportation, in which the report describes FAA's challenge in
addressing the declining revenues in the Aviation Trust Fund and how
that could affect funding for the agency. Committees could ask the
related illustrative question: Should the federal government continue
to provide public financing to stimulate private financing in areas
such as aviation, where a mix of private and public beneficiaries
exists?
In addition, through our review of federal programs and activities, we
have a large body of work on aviation issues, FAA management, programs,
and performance. Further, committees can also request additional
evaluations to address issues of further interest. Recent examples of
these reports include the following:
* National Airspace System: Initiatives to Reduce Flight Delays and
Enhance Capacity Are Ongoing but Challenges Remain;[Footnote 13]
* Airport and Airway Trust Fund: Preliminary Observations on Past,
Present, and Future;[Footnote 14]
* Air Traffic Control: FAA Needs to Ensure Better Coordination When
Approving Air Traffic Control Systems;[Footnote 15]
* Air Traffic Control: FAA's Acquisition Management Has Improved, but
Policies and Oversight Need Strengthening to Help Ensure
Results;[Footnote 16]
* Aviation Safety: FAA Needs to Strengthen the Management of Its
Designee Programs;[Footnote 17]
* National Airspace System: FAA Has Made Progress but Continues to Face
Challenges in Acquiring Major Traffic Control Systems;[Footnote 18]
DOT's OIG works within DOT to promote effectiveness and head off, or
stop, waste, fraud and abuse in departmental programs through audits
and investigations. The OIG also consults with Congress about programs
in progress and proposed laws and regulations. The OIG also publishes
semiannual reports, which summarize its recent audits and
investigations. In addition, the OIG annually reports on the top
management challenges facing DOT. DOT's Top Management Challenges
report can be found at: [Hyperlink,
http://www.oig.dot.gov/item.jsp?id=1701]. Three challenges identified
in the most recent management challenges report by the OIG,[Footnote
19] relate wholly to FAA.
* Mitigating flight delays and relieving congestion--actions needed to
meet demand. The OIG report states that the growth in aviation
operations has brought an increase in the number of aviation delays,
with the incidence, rate, and length of delays in the summer of 2005
approaching 2000 levels, generally regarded as the worst summer of
aviation delays. The report states that DOT will need to develop a
toolbox of relief measures to use including new construction,
technological improvements, procedural changes, administrative
controls, and market-based solutions. The report also states that new
runways provide the most increases in capacity, and that DOT and FAA
will need to ensure the navigation equipment and airspace modifications
are in place before the eight new runway projects, planned to be
completed by 2008, are constructed. Finally, FAA will need to continue
to consider the use of market-based solutions to mitigate congestion,
such as schedule caps and congestion pricing.
* Reauthorizing aviation programs--establishing requirements and
controlling costs are prerequisites for examining FAA financing
options. The OIG report states that a major focus of the FAA over the
next year will be preparing to reauthorize a wide range of aviation
programs and exploring alternative financing mechanisms. Challenges
facing FAA include (1) controlling costs with major acquisitions by
delivering new systems that work, are on time, and are within budget,
and by making decisions on the scope of billion-dollar projects that
have been delayed for years; (2) getting control of support service
contracts, reducing associated costs, and following through on the
implementation of new procedures; (3) establishing requirements for the
next generation air traffic management system; (4) addressing the
expected surge in controller attrition and negotiating an affordable
and equitable bargaining agreement; and (5) completing a cost-
accounting system to reduce costs and improve operations.
* Aviation safety--developing effective oversight programs for air
carrier operations, repair station maintenance, and operational errors.
The OIG report states that the FAA maintains an impressive safety
record, but still faces challenges with air carrier and repair station
oversight as a result of financial uncertainty, competition from low-
cost carriers, and rebounding air traffic. Further, the report states
that the FAA experienced an increase in the number of reported
operational errors--when planes come too close together in the air--
over the past year, and at additional locations where operational
errors were not reported.
Regular Communication and Timely Access to Useful Information Can
Enhance Oversight:
Effective communication among agency officials, Members of Congress and
congressional staff is needed to ensure that information agencies
provide meets committee needs. While considerable information resources
are available, they may not be available in a manner that is useful to
committees. We have previously reported, in a review of interactions
between the Congress and other executive branch agencies, that although
agencies collect and produce a great deal of useful information, much
of it did not reach the interested congressional committees, and the
information that did reach the committees was difficult to digest, too
highly aggregated, or was received too late to be useful.[Footnote 20]
While FAA provides a great deal of information on its Web site,
enhancing access to agency information using technology can improve the
timeliness and usefulness of agency information to the Congress. For
example, information alerts and summaries from the agency could be
effective information sharing tools. Further, regular meetings between
committees, staff and agency officials could identify the committee's
principal oversight objectives, provide a forum to discuss the issues,
and develop the best approaches to meet them.
Access to Timely and Useful Agency Information Could Improve Committee
Oversight:
Providing relevant agency information using technology solutions can
improve committee access and minimize the effort required of agency
staff. House Transportation and Infrastructure Committee staff
indicated that FAA has a large quantity of information available and
effective communication between the staff and the agency, but it is
also interested in using technology to gain additional, timely access
to agency data when conducting oversight. From our discussions with
committee and agency staff, improving access through technology
solutions could meet the needs of both groups. Access to information
could be improved by:
* A For Congress page on FAA's Web site,
* A Frequently Asked Questions section on the For Congress Web site,
* A Web site subscription service notifying committee staff when
relevant information has been updated, and:
* Moderated access rights to selected FAA documents.
Several applications allowing Web-based access to information could
benefit both the committee seeking information as well as the agency
that provides information. For example, as a result of our discussions
with committee and agency staff, FAA has initiated a For Congress page
on its Web site. The page provides a single point of access for
information committee staff identified in our discussions as relevant
for oversight, as shown in figure 5. In addition, following a
recommendation contained in our draft report, FAA added a subscription
e-mail service to notify congressional users about new information
available, such as new press releases and speeches by agency officials.
We had pointed out that a subscription service could enhance the
timeliness in which Congress receives information for oversight. For
example, a subscription service notifying committees when notices of
proposed rulemakings and other regulatory or policy guidance documents
are published would give committees relevant information in a timely
manner.
Figure 5: FAA's For Congress Web site Page:
[See PDF for image]
[End of figure]
The For Congress Web site could be further improved by including a
Frequently Asked Questions (FAQ) section to provide information often
requested by committees. According to a manager within FAA, the agency
provides a great deal of budget information to Congress in response to
questions for the record (QFRs) that are submitted by the
appropriations committees of both chambers. However, the agency
response is shared only with the requesting committee, even though it
could be useful to all committees involved in oversight. In addition,
many of these QFRs, as well as other requests for information, are
handled in an ad hoc manner by individual FAA officials. When similar
requests for information arrive, FAA officials often have to create an
entirely new response. An FAA official said they had a general FAQ
section, available on the bottom of all FAA Web pages, but it does not
include the QFRs, or other questions regarding FAA planning, budgeting
or performance. A FAQ section on the For Congress Web page could
minimize agency efforts by allowing it to post requested information
once, rather than tying up valuable time and resources by repeatedly
responding to similar questions. In addition, sharing agency responses
to congressional information requests could enable quick access to
information likely to assist in other congressional efforts.
Other uses of technology, such as granting moderated access rights to
selected FAA documents, could also enhance committee access to
information. Moderated access would allow increased access of FAA
information to committee staff, beyond what is available on the
agency's public Web site. To provide moderated access, individual
committee staff would be issued accounts or use passwords to obtain
access to information restricted to congressional users. The content
allowed through the moderated access would be negotiated between the
agency and committee. One way for committees to identify documents that
are available would be to provide increased search capabilities on the
FAA Web site. Increasing the Web site search capability would allow
committees to identify what information exists, even if the entire
document content was not immediately available. Using this knowledge of
what information exists, committees could better identify exactly which
of the information they would like to have made available through
moderated access.
Regular Meetings Between Committees and Agency Officials Could Provide
a Forum to Discuss Oversight Issues:
We have previously reported in a review of interactions between
Congress and other executive branch agencies, that communication
between committees and agency staff is often one-way, with little
opportunity for direct discussion. According to Transportation and
Infrastructure Committee staff, they generally contact the agency when
they have a specific question, on an ad hoc basis. Transportation and
Infrastructure Committee staff and experts we interviewed said constant
communication with agencies within the committee's jurisdiction, both
formal and informal, could contribute to successful oversight.
Developing a routine schedule of meetings could create a degree of
certainty for both parties that issues important to each will be
discussed. The timing, frequency, attendees, and agenda items could be
negotiated in advance by both parties. Meetings could serve several
purposes--they could be used to identify the committee's principal
oversight objectives, provide a forum to discuss the issues, and
develop the best approaches to meet them.
Agency officials that we spoke with also supported regular meetings
with committees. An FAA official said establishing an effective way to
regularly communicate with Transportation and Infrastructure Committee
staff would better enable FAA to directly inform the committee about
emerging issues, whereas now the committee often relies on third party
analysis and information. They understood that such meetings were not
only opportunities for the committee to improve its oversight capacity,
but also were opportunities for the agency to identify issues that may
have received less attention and to help put the large amount of
performance, budget, and financial information in a broader context so
that committees can better understand the agency's operations. The
potential benefits of regular committee and agency staff meetings were
evident during the constructive discussions coordinated by GAO for this
report.
Conclusions:
In order to conduct effective oversight of federal agencies and
programs, congressional committees need access to timely and useful
information. The types of information we identified as available for
FAA management could also be used for oversight. Moreover, these types
of information are produced routinely by all federal agencies and could
be used by committees of jurisdictions to regularly monitor agency
performance.
However, as government grows more complex and agencies produce more
information, it becomes harder for Congress to access, analyze, and
summarize this information to develop its policy positions and
legislative enactments. New ways must be continually found to use
emerging technology and approaches to make agency information
transparent and readily available. But despite the availability of
information, and in FAA's case, its public accessibility, more can be
done to make this information readily accessible to congressional
committees. In particular, improving access to information via
technology solutions like those described in this report could allow
congressional committees to access information as needed and minimize
the number of duplicative information requests agencies are asked to
respond to. In addition, establishing a schedule of routine meetings
will provide congressional committees and agency officials with the
opportunity to discuss in-depth the issues and challenges facing all
federal agencies, including FAA. Establishing a collaborative approach
to oversight will allow more consistent, rather than ad hoc, committee
oversight. Importantly, these findings constitute lessons learned that
may be transferable to other agencies.
Recommendations for Executive Action:
We recommend the Secretary of the Department of Transportation, direct
the Administrator of FAA, to take the following actions to further
enhance committee access to FAA information:
* Continue to work with committee staff to further refine the For
Congress Web site by improving the flow of information and taking
advantage of emerging technologies;
* Include a Frequently Asked Questions page on the For Congress site,
allowing oversight committees to quickly find answers to commonly
requested items relevant to Congress;
* Add moderated access on the For Congress Web site to allow access to
information that should be made available to congressional committees,
yet may not be appropriate for the general public;
* Consider offering regular meetings between the Members of the
committee and key staff with senior FAA executives to address matters
of mutual concern.
Agency Comments:
We provided a draft of this report to the Secretary of the Department
of Transportation for review and comment. We received comments from FAA
officials, including the Deputy Assistant Administrator for Financial
Services, who indicated that they were pleased to serve as our case
study and they would consider the report's recommendations as they
continue to strive for excellence in fulfilling the Congress'
information needs. The officials said that they endeavor to ensure
Congress is fully informed of FAA's planned and ongoing programs and
activities, relying on a staff of dedicated professionals who know and
understand the needs of Congress to maintain a steady flow of useful
information to Congress. The officials also said that they make
extensive use of technology to enhance the information available to
Congress. They noted that a considerable amount of information is
available to Members of Congress and their staff in a section of FAA's
Web site dedicated to serving the information needs of Congress--as our
report notes, an improvement developed as a result of discussions
between agency and congressional staff during our review. In addition,
they indicated they had created a subscription e-mail service to enable
committee staff to be notified when information is updated on their Web
site, such as with new press releases and speeches by agency officials.
As noted earlier, this action was recommended in our draft report;
consequently, since FAA has taken these steps, we have eliminated the
recommendation from the final report.
As agreed with your office, unless you publicly announce the contents
of this report earlier, we plan no further distribution until 30 days
after its issuance date. At that time, we will send copies of this
report to the Secretary of Transportation and will make copies
available to others upon request. In addition, the report will be
available at no charge on GAO's Web site at [Hyperlink,
http://www.gao.gov].
Please contact me on (202) 512-6543 if you or your staff have any
questions about this report. Contact points for our Office of
Congressional Relations and Public Affairs may be found on the last
page of this report. Other contacts and staff acknowledgments are
listed in appendix IV.
Sincerely yours,
Signed by:
Bernice Steinhardt:
Director, Strategic Issues:
[End of section]
Appendixes:
Appendix I: Objectives, Scope and Methodology:
The objectives of this report were to identify (1) information FAA
produces that could enhance congressional oversight; (2) other
available information resources that could enhance congressional
oversight; and, (3) how committee access to FAA's information could be
improved to enhance timeliness and usefulness.
To identify the information and delivery mechanisms that would enhance
the committee's ability to oversee FAA programs and management, we met
with staff from the U.S. House of Representatives Committee on
Transportation and Infrastructure and its subcommittee on Aviation.
To identify information produced by FAA that could enhance oversight,
we met with FAA senior officials from numerous offices, including
several lines of business--Airports; Air Traffic Organization; and
Aviation Safety--and staff offices--Aviation Policy, Planning and
Environment; Financial Services; Government and Industry Affairs; Human
Resources and Management. In addition, we met with officials from the
Chief Information Office/Office of Information Services and the Office
of Inspector General for the Department of Transportation.
To identify information resources external to FAA that could enhance
congressional oversight, we met with officials from other government
entities such as the Congressional Research Service, the General
Service Administration's FirstGov initiative, and the Office of
Management and Budget. In addition, we met with technology
representatives from Lexis-Nexis. Finally, we attended meetings with
representatives from the Mercatus Center, CATO Institute, and the
Heritage Foundation, hosted by the House Committee on Transportation
and Infrastructure.
In addition, we reviewed FAA performance, budget and financial
documents and FAA's Web site. We also reviewed reports and evaluations
produced by analytical agencies and organizations and prior GAO work in
this area.
Written comments from FAA are included in appendix II. We conducted our
work from September 2004 through November 2005 in accordance with
generally accepted government auditing standards.
[End of section]
Appendix II: Analytical Agencies and Organizations Can Provide
Information and Analysis to Enhance Oversight Efforts:
Table 5: Analytical Resource for Congressional Oversight, as
Illustrated by FAA Information:
GAO; www.gao.gov;
* GAO Strategic Plan (2004-2009) (GAO-04-534SP). GAO's strategic plan,
which has been updated every 2 years since 2000, describes the trends
and issues that are likely to affect congressional decision makers over
the 6-year period of the plan. It also provides GAO's plans for
analyses and other activities to help support Congress's information
needs. One of GAO's strategic objectives is to support congressional
and federal efforts on a safe, secure, and effective national physical
infrastructure. Several performance goals under this objective involve
transportation-related issues, including assessing efforts to improve
safety and security in the nation's transportation system and the
impact of transportation policies and practices. As such, committee
oversight staff can look to GAO for support on these issues and more.
GAO's strategic plan can be found at: http://www.gao.gov/sp.html;
* High-Risk Series: An Update (GAO-05- 207). Since 1990, GAO has
periodically reported--generally at the start of each new Congress--on
government operations it identifies as having a high risk of fraud,
waste, abuse, and mismanagement. Increasingly, the list has grown to
include programs or agencies that need urgent attention or
transformation, such as the Department of Homeland Security. In the
January 2005 update, GAO presented the status of areas previously
identified as high-risk. These included two involving FAA-- FAA
Financial Management and FAA Air Traffic Control modernization. We
determined that FAA's progress in improving financial management
overall, a high-risk area since 1999, has been sufficient to remove it
from the list. However, while FAA had made progress in addressing root
causes of problems with its Air Traffic Control modernization,
originally designated as high-risk in 1995, we maintained the high-risk
designation. Therefore, the status of FAA's Air Traffic Control
modernization may be an area for oversight by the Transportation and
Infrastructure Committee staff. GAO's High Risk Series: An Update can
be found at: http://www.gao.gov/docsearch/featured/highrisk.html;
* 21st Century Challenges: Reexamining the Base of the Federal
Government (GAO-05-325SP). In February 2005, GAO issued a report on
21st century challenges facing the nation--including the federal
government's long- term fiscal imbalance and changing demographics--
that suggests the need to reexamine the base of the federal government.
The report is intended to help Congress address these challenges by
providing a series of illustrative questions, both generic and for 12
examination areas, that could help support a fundamental and broad-
based reexamination initiative. One of the 12 examination areas we
identified is transportation, in which the report describes FAA's
challenge in addressing the declining revenues in the Aviation Trust
Fund and how that could affect funding for the agency. Committee staff
could use the related illustrative question--should the federal
government continue to provide public financing to stimulate private
financing in areas such as aviation where a mix of private and public
beneficiaries exists? GAO's 21st Century Challenges Report can be found
at http://www.gao.gov/index.html; In addition, through our review of
federal programs and activities, we have a large body of work on
aviation issues, FAA management, programs, and performance. Further,
committee staff can also request additional evaluations to address
issues of further interest. Recent examples of these reports include:
* National Airspace System: Initiatives to Reduce Flight Delays and
Enhance Capacity Are Ongoing but Challenges Remain (GAO-05-755T);
* Airport and Airway Trust Fund: Preliminary Observations on Past,
Present, and Future (GAO-05-657T);
* Air Traffic Control: FAA Needs to Ensure Better Coordination When
Approving Air Traffic Control Systems (GAO-05-11);
* Air Traffic Control: FAA's Acquisition Management Has Improved, but
Policies and Oversight Need Strengthening to Help Ensure Results (GAO-
05-23);
* Aviation Safety: FAA Needs to Strengthen the Management of Its
Designee Programs (GAO-05-40).
DOT's Inspector General; www.oig.dot.gov; DOT's OIG works within DOT to
promote effectiveness and head off, or stop, waste, fraud and abuse in
departmental programs through audits and investigations. The OIG also
consults with Congress about programs in progress and proposed laws and
regulations. Twice a year, the OIG also publishes semiannual reports,
which summarize its recent audits and investigations. In addition, the
OIG annually reports on the top management challenges facing DOT. DOT's
Top Management Challenges report can be found at:
http://www.oig.dot.gov/item.jsp?id=1701. Three challenges identified in
the most recent management challenges report by the OIG[A] relate
wholly to FAA;
* Mitigating flight delays and relieving congestion-- actions needed to
meet demand. The OIG report states that the growth in aviation
operations has brought an increase in the number of aviation delays.
The incidence, rate, and length of delays this past summer is
approaching 2000 levels, which was generally regarded as the worst
summer of aviation delays. The report states that DOT will need to
develop a toolbox of relief measures, including construction,
technological improvements, procedural changes, administrative
controls, and market-based solutions, that can be used as appropriate.
The report also states that new runways provide the most increases in
capacity, and that DOT and FAA will need to ensure the navigation
equipment and airspace modifications are in place before the eight
runway projects, planned to be completed by 2008, are constructed.
Finally, FAA will need to continue to consider use of market-based
solutions to mitigate congestion, such as schedule caps and congestion
pricing;
* Reauthorizing aviation programs--establishing requirements and
controlling costs are prerequisites for examining FAA financing
options. The OIG report states that a major focus of the FAA over the
next year will be preparing to reauthorize a wide range of aviation
programs and explore alternative financing mechanisms. Challenges
facing FAA include: (1) controlling costs with major acquisitions by
delivering new systems that work, are on time, and are within budget,
and making decisions on the scope of billion-dollar projects that have
been delayed for years; (2) getting control of support service
contracts, reducing associated costs, and following through on the
implementation of new procedures; (3) establishing requirements for the
next generation air traffic management system; (4) addressing the
expected surge in controller attrition and negotiating an affordable
and equitable bargaining agreement; and (5) completing a cost-
accounting system to reduce costs and improve operations;
* Aviation safety--developing effective oversight programs for air
carrier operations, repair station maintenance, and operational errors.
The OIG report states that the FAA maintains an impressive safety
record, but still faces challenges with air carrier and repair station
oversight as a result of financial uncertainty, competition from low-
cost carriers, and rebounding air traffic. Further, the report states
that the FAA experienced an increase in the number of reported
operational errors--when planes come too close together in the air--
over the past year, and additional locations where operational errors
were not reported.
Program Assessment Rating Tool (PART); www.whitehouse.gov/omb/; PART is
a diagnostic tool created as a central component to the President's
Management Agenda, and is intended to assess and improve program
performance and results by providing a consistent approach to
evaluating the management and performance of federal programs. It is
used by the Office of Management and Budget to conduct oversight. PART
evaluates a program's (1) purpose and design, (2) strategic planning,
(3) program management, and (4) program results (e.g., whether a
program is meeting its long-term and annual goals).[B] PART has been
used to assess five FAA programs from the fiscal year 2006 budget;
* Air traffic services;
* Grants-in-aid for airports;
* Facilities and equipment;
* Regulation and certification;
* Research, engineering and development.
The President's Management Agenda (PMA); www.results.gov; The
President's Management Agenda identifies five governmentwide goals to
improve federal management and deliver results. The goals are strategic
management of human capital, competitive sourcing, improved financial
performance, expanded electronic government, and budget and performance
integration. The Executive Branch Management Scorecard tracks how well
the departments and major agencies are executing the five
governmentwide initiatives. The scorecard employs a stoplight grading
system: green for success, yellow for mixed results, and red for
unsatisfactory. The Department of Transportation, of which FAA is a
part, received a rating of green for the strategic management of human
capital, competitive sourcing, expanded electronic government and
budget and performance integration, and a rating of red for improved
financial performance in the September 2005 ratings.
Congressional Research Service (CRS); www.crs.gov; CRS, a department of
the Library of Congress, is a nonpartisan analytical, research, and
reference arm for Congress with the mission to support an informed
national legislature. CRS serves Congress throughout the legislative
process by providing comprehensive and reliable legislative research,
analysis, and information services that are timely, objective,
nonpartisan, and confidential. CRS is organized into five
interdisciplinary research divisions: American Law; Domestic Social
Policy; Foreign Affairs, Defense and Trade; Government and Finance; and
Resources, Science and Industry.
Recent CRS reports related to the FAA include:
* Aviation Taxes and Fees: Major Issues (Order Code RS21321);
* Avoiding Gridlock in the Skies: Issues and Options for Addressing
Growth in Air Traffic (Order Code RL32707);
* Federal Transportation Funding: Selected Programs Fiscal Years 1994-
2004 (Order Code RL32472);
* Fiscal Year 2006 Appropriations for the Department of Transportation
(Order Code RL32945);
* Vision 100: An Overview of the Century of Aviation Reauthorization
Act (Pub. L. No. 108-176) (Order Code RL32498).
Congressional Budget Office (CBO); www.cbo.gov; CBO is a nonpartisan
legislative branch agency that produces material to inform
congressional decisions on spending and taxes. Specifically, CBO
publishes cost estimates and mandate statements for congressional
bills, reports needed for the budget process, budgetary and economic
analytical studies, policy briefs, background papers, and a monthly
budget review of the fiscal activity of the government. CBO is
organized into six divisions: budget analysis, heath and human
resources, macroeconomic analysis, microeconomic studies, national
security, and tax analysis; CBO publications containing information on
FAA include:
* Budget Options (February 2005);
* Financing Small Commercial-Service Airports: Federal Policies and
Options (April 1999); Examples of relevant CBO cost estimates include:
* H.R. 1496, Return of General Aviation to Ronald Reagan Washington
National Airport Act of 2005 (May 4, 2005);
* H.R. 2115, Vision 100-Century of Aviation Reauthorization Act (Dec.
9, 2003).
Think Tanks; Think tanks engage in a range of policy-related
activities, and comprise a diverse set of institutions that have varied
organizational forms. They could provide information and research to
enhance congressional oversight.
Industry, Interest and User Groups; Industry, interest and user groups
are public and private organizations involved in the aviation industry
that could provide research and information to inform committee staff
on oversight issues.
Source: GAO.
[A] Top Management Challenges: Department of Transportation, Nov. 15,
2005, PT-2006-007.
[B] For GAO's assessment of OMB's PART, see GAO, Performance Budgeting:
PART Focuses on Program Performance, but More Can Be Done to Engage
Congress, [Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-28]
(Washington, D.C.: Oct. 28, 2005) and GAO, Performance Budgeting:
Observations on the Use of OMB's Program Assessment Rating Tool for the
Fiscal Year 2004 Budget, [Hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-04-174] (Washington, D.C.: Jan. 30, 2004).
[End of table]
[End of section]
Appendix III: Financial Statements Provide Insights into Agency
Financial Management and Resources:
FAA's annual financial statements can be used to analyze the agency's
operating results and its financial position. Most of this analysis
involves looking at how various individual reported amounts interrelate
or represent the agency as a whole, and how those amounts or
relationships change from period to period. The historical information
presented can establish a baseline for estimates of future operations
and funding needs.
Agency financial information can be valuable for:
* facilitating an understanding of an agency's operations;
* providing a common database for the development, analysis, and debate
of alternative policies;
* supporting an historical perspective from which to evaluate future
plans, budgets, and spending proposals;
* assessing agency accountability for actual results when compared to
budgets; and:
* evaluating program costs.
Further information regarding federal financial statements can be found
in a guide to the annual financial report of the U.S. Government,
published recently by GAO. This guide can be helpful to Congress and
taxpayers in evaluating both governmentwide financial reports and those
of individual agencies.[Footnote 21]
FAA's Balance Sheet:
FAA's balance sheet shows an end-of-the-year view of its overall
financial position, its assets (what it owns), its liabilities (what it
owes), and the difference between the two (its net position). A wide
variety of analyses can be applied to information presented in FAA's
consolidated balance sheets for fiscal years 2003 and 2004, which are
presented in Figure 6.
Figure 6: FAA's Consolidated Balance Sheets for Fiscal Years 2003 and
2004:
[See PDF for image]
[End of figure]
Committee staff could use information from FAA's balance sheet to
facilitate a better understanding of the agency's financial position,
addressing questions such as:
* What are FAA's largest asset and liability categories?
* What is the makeup of FAA's assets and liabilities?
* What future funding may be required to replace deteriorating
operating assets and to satisfy long-term liabilities?
For example, as shown in Figure 7, FAA's two largest asset categories
are property, plant, and equipment valued at about $14.5 billion and
investments valued at about $10.3 billion. For additional information
about the makeup of these assets, the balance sheet refers readers to
the related notes. Referring to the related note 6, one can learn that
the acquisition value (cost) of personal property (e.g. equipment)
increased by $1.3 billion, or 10 percent, from fiscal year 2003 to
fiscal year 2004, and that the sizeable increase in the reported cost
of property, plant, and equipment includes new acquisitions of National
Airspace System equipment. The balance sheet and notes also show that
FAA has significant amounts invested in the Airport and Airway Trust
Fund but that the balance of these investments fell during fiscal year
2004. A possible inquiry to the FAA might address a relationship
between the investment balance and additions to property, plant and
equipment. Also disclosed in note 6, the accumulated depreciation of
each asset class is one potential indicator of the relative
deterioration of those assets. Accumulated depreciation is ultimately
limited to the original acquisition value of an asset, and
substantially depreciated assets may possibly soon require funding for
their replacement.
Figure 7: Composition of FAA's Assets and Liabilities, as of September
30, 2004:
[See PDF for image]
[End of figure]
The balance sheet also indicates a significant percentage increase in
accounts receivable that are not intragovernmental transactions among
federal entities. Though less significant than some of the other
amounts shown in the balance sheet, such an increase might warrant a
follow-up discussion with FAA regarding its cause and whether this
indicates a new trend that will require funding from additional
appropriations in the future.
Statement of Net Cost:
FAA's statement of net cost is intended to show how much it costs
taxpayers to operate FAA. Net cost is calculated by subtracting any
earned revenues from gross cost, which include program costs as well as
administrative costs, resulting in FAA's costs to taxpayers. As shown
in Figure 8, FAA's statement of net costs presents cost information for
each of its four major lines of business - air traffic organization,
regulation and certification[Footnote 22], airports, and commercial
space transportation --and two categories that are not lines of
business, including agency overhead.
Figure 8: FAA's Consolidated Statements of Net Cost for Fiscal Years
2003 and 2004:
[See PDF for image]
[End of figure]
Committee staff could use information from FAA's statement of net cost
to enhance their understanding of possible future cost trends,
addressing questions such as:
* How much did FAA's net cost increase or decrease from the prior
fiscal year?
* Which of FAA's programs experienced the largest increase and which
experienced the largest decrease in net cost from the prior fiscal
year?
* Which of FAA's programs accounted for most of its net cost?
For example, FAA's statements of net cost for fiscal years 2003 and
2004 show that other than a nearly $200 million (6.8 percent) increase
in net costs related to the airport program, operating results were
substantially consistent for those two years, indicating that future
operating costs of FAA's other business lines may be stable. Based on
the airports' program increase, a reader may decide to perform further
analysis using FAA's statements of net cost from prior fiscal years. As
shown in Figure 9, further analysis of the airport program over time
indicates that net costs for the program have doubled over the last
four fiscal years. This may prompt questions to determine the causes
for the increase, whether this growth was expected and, going forward,
how much the airport program should continue to grow.
Figure 9: Net Costs for FAA's Airport Program for Fiscal Years 2000
through 2004:
[See PDF for image]
[End of figure]
FAA provides additional information about the distribution of net costs
in note 12 of its financial statements, which is summarized in Figure
10. This information shows that FAA's most costly line of business was
air traffic organization, which accounted for about two-thirds of its
net costs. The net cost information provided in note 12 also shows that
72 percent of FAA's net costs were used to support its strategic goal
of safety. Using the information about net costs disclosed by FAA, a
reader can consider whether FAA's current cost distribution
appropriately reflects its strategic goals and congressional
priorities, or whether resources should be redirected.
Figure 10: Composition of FAA's Net Costs, for Fiscal Year 2004, by
Business Line and Strategic Goal:
[See PDF for image]
[End of figure]
Statement of Changes in Net Position:
FAA's statement of changes in net position shows how it financed its
operations for the fiscal year. It shows the agency's net position at
the beginning of the fiscal year, the major inflows and outflows of
funds that caused the net position to change during the year, and the
ending net position. FAA's statements of changes in net position for
fiscal years 2003 and 2004 are displayed in figure 11.
Figure 11: FAA's Consolidated Statements of Changes in Net Position for
Fiscal Years 2003 and 2004:
[See PDF for image]
[End of figure]
Committee staff could use information from the statement of changes in
net position to facilitate a better understanding of FAA's financial
position and direction, addressing questions such as:
* What were FAA's primary financing sources and how much did they
increase or decrease?
* To what extent did FAA's excise tax revenue cover its net costs?
* Did FAA's net position improve or deteriorate?
For example, FAA's statement of changes in net position shows that FAA
is primarily financed through excise tax revenue and appropriations.
However, fiscal year 2004 appropriations used decreased by about 20
percent from the previous year, while excise taxes and associated
revenue rose by about three percent, conditions that if analyzed in
greater detail, might reveal important information about the agency's
future aggregate spending or income trends. For example, the decrease
from fiscal year 2003 to 2004 in appropriations used approximated the
amount associated with FAA's 2003 transferred operations, leading a
reader to infer that the two are related. However, analyzing the trend
of this information going forward may tell a different story about the
agency's direction. If the trend indicated by FAA's statement of
changes in net position for fiscal year 2004 continues, FAA may be able
to meet more of its costs through service fees and excise taxes rather
than appropriated funds. Also, the percentage composition of financing
sources can be compared to that of other agencies or programs.
Statement of Budgetary Resources:
The statement of budgetary resources presents the amount of budgetary
resources available during the fiscal year and the status of those
resources at the end of the year. This statement provides basic
information about budget authority made available from appropriations,
fee collection, and, when applicable, borrowing authority. The
relationship of obligations to outlays is also presented for the fiscal
year. FAA's statements of budgetary resources for fiscal years 2003 and
2004 are displayed in figure 12.
Figure 12: FAA's Consolidated Statements of Budgetary Resources for
Fiscal Years 2003 and 2004:
[See PDF for image]
[End of figure]
Committee staff could use information from FAA's statement of budgetary
resources to obtain an overview of the agency's financial position and
direction, addressing questions such as:
* Were there increases or decreases in budget authority, unobligated
budgetary resources, total budgetary resources, obligations incurred,
and/or disbursements?
* To what extent were current fiscal year budgetary resources used?
For example, FAA's statements of budgetary resources for fiscal years
2003 and 2004 show that budgetary authority, budgetary resources,
obligations incurred, and disbursements all increased in fiscal year
2004, indicating a possible expansion in FAA's overall activities for
the year. However, FAA's budgetary resources increased at a faster pace
than outlays and obligations, which might indicate a change in FAA's
budgetary needs that should be analyzed further.
FAA provides additional information about the use of its budgetary
resources in the required supplementary information section of its PAR,
which includes a schedule of budgetary resources by major fund type. As
shown in figure 13, an analysis of this schedule shows that the
operations fund uses the most budgetary resources followed by the
grants-in-aid to airports fund and the facilities and equipment fund.
In addition, readers may compare the fiscal year 2004 schedule of
budgetary resources by major fund type to schedules for prior years. A
comparison of the fiscal year 2003 and 2004 schedules included in the
2004 PAR shows that budgetary resources for facilities and equipment
grew by 3.8 percent, compared to 8.1 percent growth for grants and 5.0
percent growth for operations. This type of analysis allows for
consideration as to whether FAA's current use of budgetary resources is
efficient and reflects congressional priorities.
Figure 13: Composition of Budgetary Resources, by Major Fund Type:
[See PDF for image]
[End of figure]
Statement of Financing:
The statement of financing reconciles the resources used to finance an
agency's operations for each fiscal year using budgetary accounting
with the net cost of operations determined using the accrual basis of
accounting. It explains the differences between an agency's obligations
of budget authority as reported in budget documents and the statement
of budgetary resources, and the net cost of its operations as shown in
the statement of net cost, indicating the various categories of
transactions that are considered when preparing one of those statements
but not the other. The statement illustrates the link between budgetary
accounting (primarily cash basis), which records obligations when goods
and services are ordered, and financial (accrual basis) accounting,
which records expenses when goods are consumed and services are
received in fulfillment of the agency's objectives. FAA's fiscal year
2003 and 2004 statements of financing are shown in figure 14.
Figure 14: FAA's Consolidated Statements of Financing for Fiscal Years
2003 and 2004:
[See PDF for image]
[End of figure]
Committee staff could use information from the statement of financing
to facilitate an understanding of FAA's financial position and
direction, addressing questions such as:
* How much of FAA's net costs were due to the depreciation of its
assets?
* How much did FAA spend on capitalized fixed assets?
For example, FAA's statements of financing for fiscal years 2003 and
2004 show an increase of 29 percent in resources used to acquire
assets, transactions which affect budgetary resources but are not shown
on the statement of net costs until they are used up or depreciated, in
the case of property, plant, and equipment. As a result, additional
oversight may be warranted for the increase in resources being used to
finance the acquisition of assets.
[End of section]
Appendix IV: GAO Contact and Staff Acknowledgements:
GAO Contact:
Bernice Steinhardt on (202) 512-6543 or [Hyperlink,
steinhardtb@gao.gov].
Acknowledgments:
In addition to the contact names above, Linda Calbom, Director;
Christine Bonham, Assistant Director; Elizabeth Curda, Assistant
Director; Jack Warner, Assistant Director; Kevin J. Conway, Fred Evans,
Benjamin Licht, and Chelsa Gurkin made significant contributions to
this report.
(450362):
FOOTNOTES
[1] GAO, Program Evaluation: Improving the Flow of Program Information
to the Congress, GAO/PEMD-95-1 (Washington, D.C.: Jan. 30, 1995) and
GAO, Managing For Results: Views on Ensuring the Usefulness of Agency
Performance Information to Congress, GAO/GGD-00-35 (Washington, D.C.:
January 2000).
[2] GAO previously issued a guide to assist in congressional review of
federal departments' strategic plans that includes a number of
questions congressional staff may use to initiate discussion with the
department and to identify ways to improve the department's strategic
plans. GAO, Agencies' Strategic Plans Under GPRA: Key Questions to
Facilitate Congressional Review, GAO/GGD-10.1.16 (Washington, D.C.: May
1997).
[3] The primary mission of the ATO, one of FAA's four business lines,
is to move air traffic safely and efficiently. ATO's customers are
commercial and private aviation and the military.
[4] General aviation comprises a diverse range of aviation activities,
from single-seat homebuilt aircraft, helicopters, balloons, single and
multiple engine land and seaplanes, to extended range turbojets.
[5] According to FAA's Fiscal Year 2004 Performance and Accountability
Report, an operational error occurs when controllers fail to apply or
follow the procedures that enforce separation and allow aircraft to end
up too close to each other or to an obstruction. FAA differentiates
between technical violations and more severe operational errors, and
includes only the severe operational errors for the performance measure
to reduce operational errors.
[6] FFMIA requires that an agency shall implement and maintain
financial management systems that comply substantially with Federal
financial management systems requirements, applicable Federal
accounting standards, and the U.S. Government Standard General Ledger
at the transaction level.
[7] According to the National Plan of Integrated Airport Systems,
relievers are high capacity general aviation airports located in
metropolitan areas.
[8] The national airspace system consists of a network of navigational
aids and a number of air traffic control facilities designed to operate
in conjunction with the various defined classes of airspace. These
classes are subdivided into controlled, uncontrolled, special use, and
other airspace categories.
[9] ATO's services include: (1) En Route, the monitoring of aircraft
during flight provided by 21 Air Route Traffic Control Centers; (2)
Oceanic, procedural air traffic control provided from three locations
in the United States; (3) Flight Services, telephone and radio
communication provided by 61 automated stations that have been
substantially contracted out; and (4) Terminal Services, including air
traffic control, provided by a network of over 400 combined control
facilities, terminal radar facilities, and towers.
[10] GAO, GAO Strategic Plan (2004-2009), GAO-04-534SP (Washington,
D.C.: March 2004).
[11] GAO, High-Risk Series: An Update, GAO-05-207 (Washington, D.C.:
January 2005).
[12] GAO, 21st Century Challenges: Reexamining the Base of the Federal
Government, GAO-05-325SP (Washington, D.C.: February 2005).
[13] GAO, National Airspace System: Initiatives to Reduce Flight Delays
and Enhance Capacity Are Ongoing but Challenges Remain, GAO-05-755T
(Washington, D.C.: May 26, 2005).
[14] GAO, Airport and Airway Trust Fund: Preliminary Observations on
Past, Present, and Future, GAO-05-657T (Washington, D.C.: May 4, 2005).
[15] GAO, Air Traffic Control: FAA Needs to Ensure Better Coordination
When Approving Air Traffic Control Systems, GAO-05-11 (Washington,
D.C.: Nov. 17, 2004).
[16] GAO, Air Traffic Control: FAA's Acquisition Management Has
Improved, but Policies and Oversight Need Strengthening to Help Ensure
Results, GAO-05-23 (Washington, D.C.: Nov. 12, 2004).
[17] GAO, Aviation Safety: FAA Needs to Strengthen the Management of
Its Designee Programs, GAO-05-40 (Washington, D.C.: Oct. 8, 2004).
[18] GAO, National Airspace System: FAA Has Made Progress but Continues
to Face Challenges in Acquiring Major Traffic Control Systems, GAO-05-
331 (Washington, D.C.: June 10, 2005).
[19] Top Management Challenges: Department of Transportation, November
15, 2005, PT-2006-007.
[20] GAO, Program Evaluation: Improving the Flow of Program Information
to the Congress, GAO/PEMD-95-1 (Washington, D.C.: Jan. 30, 1995) and
GAO, Managing For Results: Views on Ensuring the Usefulness of Agency
Performance Information to Congress, GAO/GGD-00-35 (Washington, D.C.:
January 2000).
[21] GAO, Understanding the Primary Components of the Annual Financial
Report of the United States Government, GAO-05-958SP (Washington, D.C.:
September 2005).
[22] The FAA PAR for fiscal year 2005 presents a line of business
called aviation safety in place of regulation and certification.
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