Working Capital Funds

Three Agency Perspectives Gao ID: AIMD-94-121 May 20, 1994

This report provides information on the budgetary approaches used by some agencies to finance administrative services. GAO provides the perspectives of officials from the Departments of Labor and Justice and the General Services Administration on (1) current budgetary practices supporting the delivery of administrative services and (2) the potential effect of proposals to establish franchise and innovation funds contained in H.R. 3400, the Government Reform and Savings Act of 1993, which would establish franchise funds and innovation funds in executive branch agencies where such funds do not exist.

GAO found that: (1) officials from the three agencies stated that their current working capital funds (WCF) give managers considerable control and flexibility in providing administrative services; (2) these agencies have taken the initiative to request additional authority when obstacles prevent them from providing centralized services; (3) in some cases, Congress has expanded the agencies' authority by broadening the funds' statutory purposes, providing new sources of funding, and allowing accumulation of additional reserves; (4) the agency officials believe that the fund proposals in H.R. 3400 provide marginal incentives to improve administrative service delivery, but they do not address the most significant obstacles to effective funds management; and (5) the agency officials also believe that the proposed requirement for competitive administrative services is unnecessary, that competition is only one incentive for reducing WCF costs, and WCF will achieve greater efficiency and cost reductions because of the downsizing of the federal government, management reform efforts, and fewer available resources.

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