OPM Revolving Fund

Congress has raised concerns that the tuition charged to federal agencies for some training courses appeared to unnecessarily exceed the Office of Personnel Management's course production costs. GAO sought to determine (1) how tuition charges are set; (2) whether the tuitions of individual courses are reasonably related to their costs; and (3) how excess tuition income, if any, has been used. A lack of documentation on how tuitions are set hampered GAO's ability to answer the first objective. The training activity of OPM's revolving fund has run a deficit. OPM recognizes this problem and has developed a new policy to set prices for training courses so the training activity would recover all direct and indirect costs, document pricing methods, and reduce the differences in pricing practices. These corrective measures should resolve the problems GAO cited in its review.

GAO found that: (1) it could not evaluate OPM tuition-setting methods because OPM set the tuition for many courses long ago and did not retain the documentation; (2) OPM is supposed to adjust tuition charges to recover projected cost increases or decreases per course, but OPM uses across-the-board adjustments on a nonannual basis; (3) the OPM accounting system makes it difficult to verify revolving fund costs; (4) OPM does not allocate indirect costs to individual training courses, but it allocates indirect costs proportionally to a course's direct costs; (5) course revenues vary from 25 percent to 257 percent; (6) OPM officials state that the income from some courses offset the losses from other necessary courses; (7) before fiscal year (FY) 1989, the OPM training activity as a whole generated net income, but it incurred annual losses that resulted in a cumulative deficit of $7.7 million by FY 1992; and (8) OPM has developed a new training course pricing policy to ensure that prices would cover all direct and indirect costs, pricing methods would be documented, and differences in pricing practices would be reduced.