Pension Benefit Guaranty Corporation--Reimbursement for Financial Analysis Services
Highlights
The Pension Benefit Guaranty Corporation (PBGC) may not retain a reimbursement for financial analysis services associated with a request for waiver from claims arising under title IV of the Employee Retirement Income Security Act. Absent statutory authority to the contrary, amounts received by government corporations are subject to the miscellaneous receipts statute, 31 U.S.C. sect. 3302(b), and must be deposited into the general fund of the Treasury.
B-307849, Pension Benefit Guaranty Corporation--Reimbursement for Financial Analysis Services, March 1, 2007
Decision
Matter of: Pension Benefit Guaranty Corporation—Reimbursement for Financial Analysis Services
DIGEST
The Pension Benefit Guaranty Corporation (PBGC) may not retain a reimbursement for financial analysis services associated with a request for waiver from claims arising under title IV of the Employee Retirement Income Security Act. Absent statutory authority to the contrary, amounts received by government corporations are subject to the miscellaneous receipts statute, 31 U.S.C. sect. 3302(b), and must be deposited into the general fund of the Treasury.
DECISION
The General Counsel of the Pension Benefit Guaranty Corporation (PBGC) requests an advance decision, asking whether PBGC may retain a reimbursement for financial analysis services received from a major
BACKGROUND
PBGC is a wholly owned government corporation charged with protecting the pensions of American workers in single employer and multiemployer defined benefit plans. PBGC was established by the Employee Retirement Income Security Act of 1974, Pub.
(1) to encourage the continuation and maintenance of voluntary private pension plans for the benefit of their participants,
(2) to provide for the timely and uninterrupted payment of pension benefits to participants and beneficiaries . . ., and
(3) to maintain premiums established by [PBGC] . . . at the lowest level consistent with carrying out its obligations . . . .
29 U.S.C. sect. 1302(a). In discharging its duties regarding defined benefit plans, PBGC performs two distinct functions, one of insurer and one of trustee. See B-289219,
ERISA also grants PBGC the power to serve as trustee for terminated pension plans with unfunded benefit liabilities. 29 U.S.C. sect. 1322; B-286026,
Intending to divest itself of one of its subsidiaries, the MUSC determined that the value of the subsidiary would be diminished unless PBGC waived potential claims against the subsidiary arising under title IV of ERISA.[2]
PBGC noted in its most recent annual report that the agency is dealing with a growing number of high profile risks . . . that involve increasingly complex financial analyses and legal issues. Pension Benefit Guaranty Corporation: 2005 Annual Report at 5, available at www.pbgc.gov/about/annreports.html (last visited
DISCUSSION
At issue here is PBGC's authority to charge and retain a fee for financial analysis services in relation to a request for waiver from claims brought under title IV of ERISA. The miscellaneous receipts statute requires federal agencies receiving money for the government to deposit amounts collected into the general fund of the Treasury. 31 U.S.C. sect. 3302(b). PBGC argues that as a wholly owned government corporation, it is not subject to the miscellaneous receipts statute.
Although wholly owned government corporations like PBGC enjoy significant financial flexibility relative to most agencies, we have held that government corporations are subject to the miscellaneous receipts statute; exception to the requirement that collected amounts be deposited into the Treasury only applies if the government corporation has specific statutory authority permitting retention. 52 Comp. Gen. 54 (1972) (Overseas Private Investment Corporation has explicit statutory authority to deposit its revenues into its accounts and thus did not have to deposit them into the general fund of the Treasury as miscellaneous receipts); 5 Comp. Gen. 1004 (1926) (United States Shipping Board Emergency Fleet Corporation does not have statutory authority to credit interest earned on appropriated money; the interest must be deposited into the Treasury as miscellaneous receipts). An example of explicit statutory authority allowing a government corporation to keep receipts is 33 U.S.C. sect. 984(a)(10), permitting the Saint Lawrence Seaway Development Corporation to retain and reinvest toll revenues collected in the management of the seaway between Montreal and Lake Erie.
We first considered whether PBGC has specific authority to retain a reimbursement for the type of financial analysis services procured in this case. Legislation establishing PBGC's revolving funds permits broad retention of certain receipts, and section 4005 of ERISA permits PBGC to credit to its revolving funds receipts from any other operations under [title IV]. 29 U.S.C. sect. 1305(b)(1)(G). ERISA's legislative history identifies several forms of receipts, including premiums, penalties, interest, and other charges; employer liability payments; amounts borrowed from the Treasury; and interest earned by fund assets. H.R. Conf. Rep. No. 93-1280, at 5146 (1974). There is no discussion in the legislative history, however, clarifying the language, receipts from any other operations. We asked PBGC whether it believes that section 1305(b)(1)(G) permits PBGC to charge and retain a fee for financial analysis services. PBGC declined to assert such authority from the statutory language.
While PBGC does not cite specific statutory authority, it cites two cases issued by this Office to assert that the provisions of the miscellaneous receipts statute do not apply to PBGC: B-223146,
The 1986 decision concerned a contingent fee arrangement that PBGC wished to enter into with a private law firm. The firm agreed to represent PBGC in its capacity as trustee for terminated plans in a suit against two employers. B-223146,
In 1985, we advised the chairman of the House Select Committee on Aging of PBGC's authority to obtain investment manager services. B-217281-O.M.,
The cases cited by PBGC are buoyed by a consistent theme: when acting as a trustee of terminated pension plans, PBGC is granted broad authority to serve the interests of plan participants and beneficiaries. That rationale does not apply here. When contracting for the financial analysis at issue here, PBGC acted in its capacity as insurer of defined benefit plans, rather than trustee of terminated plans. It therefore may not sidestep the provisions of the miscellaneous receipts statute simply because it is a government corporation funded with revolving and trust funds.
Without explicit authority to charge a fee for financial analysis services, the only remaining avenue by which PBGC may seek to collect the reimbursement from the MUSC is application of the user charge statute. 31 U.S.C. sect. 9701. The user charge statute generally permits federal agencies and wholly owned government corporations[6] to charge and collect fees in exchange for the provision of services to individuals when there is no independent statutory source for the charging of a fee or where a fee statute fails to define fee-setting criteria. American Medical Ass'n v.
Federal court cases have further shaped the application of the user charge statute. User charges are permitted if there is a sufficient nexus between the agency service for which the fee is charged and the individuals who are assessed. Seafarers International
However, the user charge statute is not available to recover costs of executing an agency's statutory responsibilities. See B-272254,
Even if the user charge statute were to apply here, PBGC may not retain the amounts collected pursuant to that authority. The user charge statute provides agencies with the authority to charge fees for specific services provided to distinct beneficiaries. However, the statute does not provide any authority to retain fees. B-300826,
PBGC asserts that the financial analysis services that it procured constituted an administrative expense paid from its revolving funds. Revolving funds are appropriations, and consequently, the legal principles governing appropriations also apply to revolving funds. 63 Comp. Gen. 110, 112 (1983); B-247348,
We considered, also, whether PBGC's gift acceptance authority would permit PBGC to retain amounts proffered by the MUSC. Government corporations may be granted statutory authority to accept and retain gifts. See B-300218,
Finally, PBGC asks that we review its request for decision in light of our decision in B-306860,
Absent statutory authority permitting retention of a fee, the governing rule is the miscellaneous receipts statute, 31 U.S.C. sect. 3302(b), which requires money received for the government to be deposited into the general fund of the Treasury. B-272254,
CONCLUSION
PBGC may not credit to its appropriation a reimbursement for financial analysis services associated with a waiver request for claims under title IV of ERISA. Absent statutory authority to the contrary, amounts received by government corporations are subject to the miscellaneous receipts statute, 31 U.S.C. sect. 3302(b), and must be deposited into the general fund of the Treasury. PBGC has not identified any specific authority to charge a fee for this purpose and to retain the amount collected. Should PBGC think that the authority to charge and retain a fee like the one at issue is important to the proper functioning of the government corporation, we urge PBGC to seek that authority from Congress.
Gary L. Kepplinger
General Counsel
[1] Our practice when rendering decisions is to obtain the views of the relevant federal agency to establish a factual record and to elicit the agency's legal position on the subject matter of the request. GAO, Procedures and Practices for Legal Decisions and Opinions, GAO-06-1064SP (
[2] Title IV of ERISA concerns defined pension benefit plans and, inter alia, plan termination insurance. See 29 U.S.C. sections 1301–1461.
[3] PBGC, in fact, did not waive or release any rights under title IV.
[4] The MUSC has not yet paid the reimbursement to PBGC. Hertz Conversation.
[5] PBGC is subject to a complicated funding structure primarily involving reimbursements using trust funds to credit expenditures made from revolving funds. Hertz Conversation. PBGC's revolving funds are available for expenditure without annual appropriations as long as expenditures do not exceed available resources. 29 U.S.C. sect. 1305(b)(2); see GAO, Pension Benefit Guaranty Corporation: Statutory Limitation on Administrative Expenses Does Not Provide Meaningful Control, GAO–03-301 (
[6] In the 1982 codification of the statute, the original statutory language, Federal agency (including wholly owned Government corporations as defined in the Government Corporation Control Act of 1945), was replaced by the current language: agency (except a mixed-ownership Government corporation). Pub. L. No. 97-258, 96 Stat. 877, 1051 (