Spending Authority Recordings in Certain Revolving Funds Impair Congressional Budget Control

Program administrators use budget authority to borrow amounts from Treasury or non-Treasury sources to finance their revolving fund loan programs. In some cases, this authority represents authorized net borrowings (gross borrowings less repayments) rather than authorized gross borrowings. As a consequence of this procedure, a program's gross borrowings in a fiscal year can easily exceed its recorded borrowing authority for the year. This gap between authority recorded in the budget and total borrowings can increase in succeeding years as recordings of borrowing authority are used for several cycles of borrowings, rolled over. For the fiscal years 1932-79, total actual borrowings from Treasury were an amount almost twice the amount of recorded authorizations. Programs in 22 accounts spanning 12 Federal departments and agencies had followed this procedure in 1979. These programs had outstanding borrowings from Treasury totaling about $96 billion.

GAO believes that Congress' budgetary control suffers when budget authority recordings for revolving fund loan program express authorized net borrowings. Net-based recordings of borrowing authority do not disclose the full amount, which they should, of obligational authority made available through authorized borrowings. Use of net-based borrowing authority amounts lessens budgetary consistency, complicating the budgetary process and making it more difficult for Congress to set priorities and make comparisons among programs. The budget authority recordings and totals for programs financed with appropriations represent gross, not net, funds. There are several programs in the budget in which borrowing authority recordings represent authorized gross borrowings, not net. Congress' budgetary control is weakened when agencies conduct several cycles of borrowings in the absence of new congressional authorizations. Conversion to gross-based borrowing authority in revolving fund loan programs would result in budget authority recordings that express more fully the obligational authority made available through borrowings. Such gross recordings still might not fully express total obligational authority made available. Total obligational authority in the revolving fund programs also includes the collections made available through the cycle of program operations and assorted financing mechanisms. Budget authority recordings in these cases should encompass the authority to obligate funds whatever their source, including collections from program operations.

Recommendations

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

Director: Kenneth W. Hunter Team: General Accounting Office: Program Analysis Division Phone: (202) 275-4649