Forest Service Reforestation Funding:

Financial Sources, Uses, and Condition of Knutson-Vandenberg Fund

RCED-96-15: Published: Jun 21, 1996. Publicly Released: Jul 2, 1996.

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Pursuant to a congressional request, GAO reviewed the Forest Service's Knutson-Vandenberg (K-V) Trust Fund, focusing on: (1) how the Service obtains and uses reforestation funds; and (2) the trust fund's ability to fund all planned projects.

GAO found that: (1) the K-V Trust Fund, which is funded from timber sales receipts, provides over 70 percent of the Forest Service's total funding for reforestation and appropriations and the Reforestation Trust Fund provide the other 30 percent; (2) in fiscal year (FY) 1994, the Service obligated over $163 million for reforestation activities, but program support costs accounted for about 6 percent of these funds; (3) as of September 30, 1995, the K-V fund had an unobligated balance of about $338 million; (4) the K-V fund will not be able to provide the approximately $942 million needed for planned reforestation projects, since the Service transferred $420 million from the K-V fund for emergency firefighting during the 1990s and there is no legal obligation to restore these funds; (5) the Department of Agriculture (USDA) did not request supplemental appropriations to restore these funds until March 1996, but the Forest Service continued to operate the reforestation program as if the funds had never been transferred; (6) the Forest Service has not informed Congress of the funding shortfall or planned how to reallocate the remaining funds to the highest-priority projects; (7) the Service lacks reliable financial management information and effective controls to ensure that K-V expenditures do not exceed collections on individual sale areas; and (8) the Service's main accounting systems are not able to provide sale-specific information on expenditures.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The Department of Agriculture has partially implemented the recommendation. It has made changes in the Forest Service's justifications for the K-V trust fund furnished to the congressional appropriations committees. In fiscal years 1998 and 1999, the justifications include the status of the K-V trust fund and the current balance owed to the K-V trust fund for prior years borrowing for fighting wildland fires. However, the Department said that it will not prepare a listing of projects detailing precisely what will and will not be accomplished at each sale area if there are not sufficient funds available to completed all of the planned K-V projects.

    Recommendation: To provide Congress with the information it needs to consider any future requests for appropriations to restore previously transferred funds, the Secretary of Agriculture should report to Congress on the financial status of the K-V fund and the amount and type of K-V projects that will not be completed if the funds transferred to the Emergency Forest Service Firefighting Fund are not restored.

    Agency Affected: Department of Agriculture

  2. Status: Closed - Not Implemented

    Comments: The Department of Agriculture has not requested restoration of the funds transferred for firefighting purposes, the Congress has not restored the borrowed funds to the K-V trust fund, and the Department did not direct the Chief of the Forest Service to revise the list of planned projects by the end of fiscal year 1997.

    Recommendation: To help ensure that the most critical planned projects can be completed within existing fund limits, the Secretary of Agriculture should direct the Chief, Forest Service, in the event that the Administration decides not to forward to Congress the USDA request for restoration of the funds transferred for firefighting purposes, or Congress decides not to restore these funds during the FY 1997 budget considerations, to revise by the end of FY 1997 the list of planned K-V projects to take into account the actual balance in the K-V fund.

    Agency Affected: Department of Agriculture

  3. Status: Closed - Not Implemented

    Comments: The Department stated that it will not ask the Forest Service to perform an analysis of alternatives to obtain the financial data necessary to ensure that the K-V trust fund expenditures in one sale area would be limited to the amounts collected from that area. The Department believed that the precise accounting systems and administrative controls required to comply with the K-V Act are properly within the realm of the Forest Service.

    Recommendation: To help ensure that the most critical planned projects can be completed within existing fund limits, the Secretary of Agriculture should direct the Chief, Forest Service, to perform, in consultation with the Chief Financial Officer, an analysis of alternatives (including the costs and benefits of each alternative) to obtain the financial data necessary to ensure that K-V Trust Fund expenditures in one sale area would be limited to the amounts collected from that area, as required by the K-V act.

    Agency Affected: Department of Agriculture

  4. Status: Closed - Implemented

    Comments: As a result of GAO's recommendation, the Forest Service formed the K-V Indirect Costs and Accounting Methods Task Force. The Task Force developed a series of alternative recommendations and issued its report in November 1997. The Forest Service selected one of the alternatives that utilizes information on the Sale Area Improvement Plan--KV Plan-- and a modified version of the KV Plan Profile to estimate planned expenditures for both direct and indirect costs for use in the budget planning process. This system should allow the Forest Service to use only amounts on support costs collected on the timber sales. The Forest Service is incorporating this interim directive into its Renewable Resource Uses of K-V Handbook, FSH 2409.19.

    Recommendation: To help ensure that the most critical planned projects can be completed within existing fund limits, the Secretary of Agriculture should direct the Chief, Forest Service, to require all organization levels to use a standardized national methodology for assessing and withholding the support costs for the K-V program that will limit the expenditures for program support to the amounts collected for such purposes.

    Agency Affected: Department of Agriculture

 

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