Budget Issues

Pursuant to a legislative requirement, GAO studied federal agencies' authority to borrow from the Department of the Treasury or the public to obtain funds in advance of appropriations, focusing on: (1) agencies' use of that authority between fiscal years (FY) 1978 through 1987; (2) guidelines for future provision of such authority; and (3) the appropriateness of such authority.

GAO found that 19 federal agencies: (1) obtained a total of $353 billion from a total of 37 budget accounts with authority to borrow from FY 1978 through 1987, which constituted about 4 percent of the federal government's total budget authority for that period; (2) increased their outstanding debt with the public and Treasury from $76 billion to $195 billion from FY 1978 through 1987; and (3) frequently used new borrowings to repay old debt, borrowed more than they repaid, and repaid debt with appropriations rather than collections from program users. GAO also found that: (1) collections constituted the only meaningful reimbursement to Treasury of borrowed funds, since Treasury did not actually recover any funds when agencies repaid debts with appropriations or new borrowings; (2) although borrowing suggested that agencies would repay funds they received from Treasury, many accounts were not able to repay with their collections; (3) the legislative histories of most of 12 reviewed accounts did not indicate whether Congress considered the accounts' ability to generate sufficient revenues to repay their debts or a reason why Congress selected authority to borrow as the form of financing; (4) 8 of the 12 reviewed accounts were unlikely to repay with collections, with 2 of those accounts not receiving any collections; and (5) such forms of financing as subsidized loan programs, annual appropriations, and contingency reserves could meet the needs of accounts using borrowing authority.

Recommendations

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

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