Department of Justice:

Alternative Sources of Funding Are a Key Source of Budgetary Resources and Could Be Better Managed

GAO-15-48: Published: Feb 19, 2015. Publicly Released: Mar 23, 2015.

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What GAO Found

Alternative sources of funding—collections by the Department of Justice (DOJ) from sources such as fines, fees, and penalties—made up about 15 percent of DOJ's total budgetary resources in fiscal year 2013. Specifically, DOJ collected about $4.3 billion from seven major alternative sources of funding—including the Assets Forfeiture Fund, the Crime Victims Fund (CVF), and noncriminal fingerprint checks fees, among others—which were available to DOJ. Agency flexibility regarding the use of the seven funding sources varied with laws specifying funding purposes, amounts, and availability by, for instance, limiting obligations from a source or limiting the period in which funds may be obligated.

DOJ can improve management of two alternative sources of funding. Specifically:

  • DOJ has the authority to deposit up to 3 percent of amounts collected from civil debt collection activities in the Three Percent Fund. Collections are used to defray the costs of DOJ's civil debt collection activities. DOJ does not analyze its unobligated balances by, for example, estimating projected collections or developing future year fund reserves to conduct Three Percent Fund activities. As a result, DOJ consistently had end-of-year unobligated balances that were at least twice as large as the amount DOJ reported was required to remain in the fund at the end of the year. Moreover, DOJ asserted that the Three Percent Fund could not support more activities during the fiscal years than what had been obligated.
     
  • The Federal Bureau of Investigation's (FBI) Criminal Justice Information Services (CJIS) Division collected $396 million in fees for providing non-criminal justice fingerprint checks during fiscal year 2013. The fee is made up of a cost recovery and automation portion but the breakout between the two portions of the fee is not explicitly communicated to stakeholders. As a result, stakeholders do not have complete information for providing meaningful feedback. Additionally, CJIS sets fees, in part, based on projected volume of transactions. Actual volumes have exceeded projected volumes, resulting in CJIS bringing in more than anticipated in automation fees and contributing to an unobligated balance of $284 million at the end of fiscal year 2013. CJIS officials stated that they are aware of growing unobligated balances but have not evaluated what an appropriate amount should be. As a result, CJIS does not know if it is carrying over a suitable amount to meet future needs.

In addition, unobligated balances in the CVF grew to nearly $9 billion by the end of fiscal year 2013. Statutory provisions annually limit DOJ's ability to obligate collections in the fund. For example, during fiscal year 2013, DOJ received about $1.5 billion in deposits to the fund, from sources such as criminal fines, and had statutory authority to obligate $730 million from the fund for crime victim assistance programs. Consistent with scorekeeping guidelines used during the congressional budget process, DOJ reported funds not available for obligation as a credit or offset to its annual discretionary budget authority. From fiscal years 2009 through 2013, DOJ reported $32 billion in offsets provided primarily by the CVF. As a result, DOJ's reported net discretionary budgetary authority decreased about 36 percent from 2009 to 2013, while DOJ's actual total discretionary budget authority remained relatively constant during these years.

Why GAO Did This Study

DOJ is composed of approximately 40 components that carry out its activities and functions. The majority of DOJ’s budget authority is provided through annual appropriations, but, in some cases, DOJ has the ability to fund its programs by using money it collects through alternative sources, such as fines, fees, and penalties. The authority to use these sources may come from either permanent statutory authority or may be contained within an annual appropriations act.
 
GAO was requested to examine DOJ’s alternative sources of funds. Specifically, this report addresses (1) how much of DOJ’s total budgetary resources come from major alternative sources of funding and the key statutory characteristics that provide agency flexibility regarding these sources, and (2) any opportunities that may exist for DOJ to better manage unobligated balances for selected major alternative sources of funding. GAO reviewed DOJ budget documents and relevant laws, and interviewed DOJ officials.
 

What GAO Recommends

GAO recommends that DOJ develop a policy to analyze unobligated carryover balances of the Three Percent Fund. GAO also recommends that the FBI publish cost recovery and automation portions of fingerprint checks fees and develop a policy to analyze and determine an appropriate range for unobligated balances from automation fees. DOJ generally concurred with our recommendations, but noted concerns with developing revenue estimates for the Three Percent Fund and establishing a range of carryover balances for FBI fingerprint check fees.

For more information, contact David Maurer at (202) 512-9627 or maurerd@gao.gov.

Recommendations for Executive Action

  1. Status: Open

    Comments: In February 2015, we found that the Department of Justice (DOJ) Collection Resource Allocation Board (CRAB) had taken steps to manage the Three Percent Fund, but it had not conducted analyses that would help DOJ better manage the fund, such as developing reserve estimates aligned with DOJ priorities or projecting future collections. GAO has identified leading practices among federal agencies when evaluating balances in federal accounts. Such practices emphasize the importance of regularly analyzing balances by, for example, estimating collections and determining reserve needs. Doing so helps agencies more effectively anticipate program needs and ensure the most efficient use of resources. As a result, we recommended that DOJ develop a policy and implement procedures to regularly analyze unobligated balances collection estimates in the Three Percent Fund. DOJ partially concurred with this recommendation. In response, DOJ provided us with a policy it began implementing in January 2016 to help them analyze the Three Percent Fund's unobligated balance and develop an appropriate reserve amount. For example, DOJ's policy for developing the reserve estimate now relies on more robust requests for information of DOJ debt collection activities, including government personnel, contract support, and automated litigation service requirements. By developing and implementing this policy, DOJ is better positioned to ensure the continuity of operations funded through the Three Percent Fund and to make future resource allocations. However, DOJ stated in its response to the report that it does not believe it is appropriate to estimate incoming collections for the following year. For example, DOJ does not ask litigating components for the number of cases that will be settled because the agency does not want to be perceived as inappropriately encouraging larger government civil collections. Additionally, DOJ does not calculate such estimates due to the high level of variability in the civil debt litigation cases that make it difficult to use historical information to estimate reserves. We noted in our report DOJ's concerns for developing collection estimates. However, we continue to believe that developing a policy for considering collection estimates is important. The Three Percent Fund is self-sustaining and does not receive annual appropriations. Therefore, any volatility should be managed with the best information and estimates the department can provide. Without developing collection estimates, DOJ is at risk of committing too much or too few budgetary resources from the Three Percent Fund. A lack of such a policy may lead to Three Percent balances either falling too low to efficiently manage operations or rise to unnecessarily high levels. As we have previously reported, one method DOJ could consider instead of a specific dollar estimate is to develop a range between the potential lowest and highest collection amounts based on historical trends and current collection activities. By estimating future collections, DOJ could better ensure it is able to efficiently fund as many programs as possible and best support the fund's priorities. Therefore, we consider this recommendation only partially implemented and will keep it open until DOJ develops collection estimates to aid managing the Three Percent Fund.

    Recommendation: To help ensure the efficient use of resources for the Three Percent Fund, the Attorney General should develop a policy and implement procedures to regularly analyze unobligated balances and develop collection estimates in order to determine an appropriate reserve amount and inform estimates of future funding needs.

    Agency Affected: Department of Justice

  2. Status: Open

    Comments: In fiscal year 2015, we found that the Federal Bureau of Investigation (FBI) sets its Criminal Justice Information Services (CJIS) fingerprint checks fees to collect two parts--the cost recovery portion and the automation portion, but does not provide transparency in how much is assessed for each portion of the fee. As a result, we recommended that FBI publish in the Federal Register, or other documents such as annual reports, how much is assessed for automation and cost recovery in each transaction to better communicate the cost of the service to customers and stakeholders. In July 2016, FBI published a notice in the Federal Register announcing a CJIS fingerprint checks fees rate change effective on October 1, 2016. However, the notice did not include an explanation of how much is assessed for the cost recovery or the automation portion of the fee. According to a Department of Justice (DOJ) liaison, FBI included a breakout of the revised rates in its CJIS Information Letter, which services as written notification of a rate change to state and federal stakeholders. GAO requested a copy of the CJIS Information Letter, but as of February 2017, DOJ has not provided the letter. Further, while the CJIS Information Letter might provide transparency to stakeholders on how much FBI assesses for each portion of the fee, FBI has not relayed how it intends to be transparent with customers. To fully address this recommendation, FBI needs to demonstrate that it is being transparent with stakeholders and with customers. Until it does so, this recommendation will remain open.

    Recommendation: To improve transparency and ensure the effective use of automation fees for the CJIS fingerprint checks fees, the Director of the Federal Bureau of Investigation should publish in the Federal Register, or other documents such as annual reports, how much is assessed for automation and cost recovery in each transaction to better communicate the cost of the service to customers and stakeholders.

    Agency Affected: Department of Justice: Federal Bureau of Investigation

  3. Status: Open

    Comments: In fiscal year 2015, we found that the Federal Bureau of Investigation (FBI) had a growing unobligated balance from the automation portion of its Criminal Justice Information Services (CJIS) fingerprint checks fees but did not evaluate the appropriate range of its carryover amounts, nor had it developed a policy to do so. As a result, we recommended that FBI develop a policy to analyze the unobligated balances coming from the automation portion of the fee to inform program needs, including improving methods for anticipating automation collections, and establishing a range of appropriate carryover amounts to support program needs. In September 2016, the Department of Justice (DOJ) reported that FBI is taking steps to develop and implement a multi-year investment plan that will be reviewed and updated annually, and that will address key questions from the GAO report titled "Budget Issues: Key Questions to Consider When Evaluating Balances in Federal Accounts." Additionally, the multi-year investment plan will include both an annual analysis of current and projected revenue from the automation portion of the fee, and the evaluation of the resource requirements needed to support the development of technological enhancement of fingerprint identification and criminal justice services. According to DOJ officials, the 2017 plan will be the first to include this information; however GAO has not yet received a copy of the 2017 plan. We will continue to monitor FBI's progress on this recommendation.

    Recommendation: To improve transparency and ensure the effective use of automation fees for the CJIS fingerprint checks fees, the Director of the Federal Bureau of Investigation should develop a policy to analyze the unobligated balances coming from the automation portion of the fee to inform program needs, including improving methods for anticipating automation collections, and establishing a range of appropriate carryover amounts to support program needs.

    Agency Affected: Department of Justice: Federal Bureau of Investigation

 

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