National Airspace System:

Review of FAA's Spending for Operations

RCED/OGC/AIMD-99-222R: Published: Jun 18, 1999. Publicly Released: Jun 30, 1999.

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Pursuant to a congressional request, GAO reviewed the Federal Aviation Administration's (FAA) spending from its operations account, focusing on: (1) the history of funding FAA's operations activities from the Airport and Airway Trust Fund; (2) whether FAA has data to allow a determination of whether its spending for operations is cost-efficient and cost-effective; and (3) changes that FAA could institute in its various programs, offices, and projects to reduce its spending for operations.

GAO noted that: (1) the Trust Fund was created to finance aviation infrastructure, some administrative expenses, research and development, and the maintenance and operation of the National Airspace System; (2) during the 29-year period from fiscal year (FY) 1970 through FY 1998, the Trust Fund was used to pay for operations activities in 23 fiscal years; (3) the percentage of spending for operations financed from the Trust Fund varied widely, from 0 percent to 100 percent; (4) because FAA lacks complete and timely cost accounting data and has other weaknesses in financial management, the ability to perform a valid and reliable financial accounting determination of whether the agency's spending for operations is cost-efficient and cost-effective is limited; (5) such a determination would require the ability to compare the full cost of FAA's operating activities to output measurements; (6) GAO analyzed FAA's largest operating cost--payroll--and compared the agency's annual growth in payroll spending with that of the federal government as a whole; (7) GAO found that for FY 1990 through 1997, FAA's and the federal government's spending for payroll followed generally similar patterns; (8) for FY 1998 and FY 1999, FAA's spending grew at a significantly greater rate; (9) among the factors that contributed to this difference was that a higher concentration of FAA employees work in technical or safety areas, where pay and benefits tend to be higher; (10) the average grade of FAA employees is GS-12, whereas the average grade for federal employees is GS-9; (11) during this time period, FAA added safety-related staff to its workforce to bolster the agency's mission; (12) in FY 1998, the number of safety-related staff increased by over 1,100 employees; (13) FAA estimates that the costs associated with its new pay system will require approximately $1 billion in additional funding over 5 years beginning in FY 1999; (14) GAO and the Department of Transportation's Inspector General (IG) have recommended that FAA correct weaknesses in its accounting system to accurately accumulate reliable, cost-based data; (15) the IG has recommended that FAA correct weaknesses in its underlying accounting system to produce a set of auditable financial statements; (16) FAA plans to correct these weaknesses by the end of September 1999; (17) FAA's cost accounting system is under development and is scheduled to be fully implemented by September 2001; and (18) FAA has actions under way that have reduced its operating costs.

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