Budget Issues:

Trust Funds and Their Relationship to the Federal Budget

AFMD-88-55: Published: Sep 30, 1988. Publicly Released: Nov 4, 1988.

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Pursuant to a congressional request, GAO reviewed the budget status of trust funds, specifically: (1) what distinguishes trust fund receipts from other receipts in the federal government's accounts; (2) whether the government should use trust fund balances to finance programs and deficits in non-trust-fund parts of the budget; (3) how trust funds should be treated for budget purposes; and (4) identifying on-budget and off-budget trust funds, along with the receipts, outlays, and balances of each for the most recently completed fiscal year (FY).

GAO found that: (1) trust fund receipts are legally dedicated to financing accounts that are, in general, statutorily designated as trust funds; (2) most trust fund balances are not cash set aside in the Treasury or bank accounts, but are invested in Treasury securities; and (3) the current unified budget masks the effect of trust fund surpluses upon the budget's totals because it focuses on a single surplus or deficit total. GAO also found that, in FY 1987: (1) the 165 on-budget and two off-budget trust funds had gross receipts of $465 billion and gross outlays of $392 billion; (2) the trust funds' accumulated balances totaled $450 billion; and (3) the two off-budget trust funds accounted for about half of all trust fund receipts and outlays.

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