More Flexibility Needed in Setting Revenue Sharing Adjustment Reserves

Under the Revenue Sharing Act, the Secretary of the Treasury makes adjustments for under or overpayments discovered after funds have been allocated to participating state governments. To ensure that funds remain available to make these adjustments, the Secretary has established reserve accounts by withholding up to the maximum allowable 0.5 percent of entitlements. GAO reviewed the size of the Revenue Sharing adjustment reserve fund to determine if the Secretary has withheld only the funds necessary to cover expected claims.