Forest Service:

Effect of H.R. 4149 on Indirect Expenditures Charged to Four Funds

T-RCED-98-251: Published: Jul 28, 1998. Publicly Released: Jul 28, 1998.

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GAO discussed provisions in H.R. 4149 that would reduce indirect expenditures in managing the National Forest System, focusing on H.R. 4149's impact in: (1) increasing the visibility of indirect expenditures; (2) charging indirect expenditures to off-budget funds; and (3) whether eliminating indirect expenditures from off-budget funds would reduce overall Forest Service indirect expenditures.

GAO noted that: (1) H.R. 4149 includes several provisions that would increase the visibility of indirect expenditures, thereby addressing weaknesses GAO identified in the Forest Service's management of these expenditures during prior audit work; (2) these provisions would require the Forest Service, as part of its budget request, to estimate future indirect expenditures, compare them against expenditures in prior years, and identify how indirect expenditures would be affected by any changes being made in definition or accounting practices; (3) H.R. 4149 would have substantial impact on the Forest Service's ability to obtain funding for indirect expenditures from off-budget funds; (4) it would reduce indirect expenditures charged to off-budget funds within 90 days of its enactment and eliminate off-budget funds entirely as a funding source for indirect expenditures within the second full fiscal year; (5) on the basis of the indirect expenditures charged to four of these funds in 1997, more than $115 million in indirect expenditures would have to be eliminated within 2 years or shifted to some other funding sources; (6) although H.R. 4149 would restrict funding sources the Forest Service could use for indirect expenditures, the extent to which its provisions would actually reduce these expenditures overall is unknown; (7) H.R. 4149 provides the Forest Service with significant flexibility in how it could meet the required elimination of indirect charges from off-budget funds; (8) GAO's previous work has shown that the Forest Service has used such flexibility to comply with funding restrictions without actually reducing costs; (9) rather than making reductions, the Forest Service has redefined the costs or shifted them to another funding category; and (10) it is likely that similar redefinitions and shifting will occur in this case, given the short timeframe allowed to reduce indirect expenditures, the magnitude of the reductions required, and the difficulty of eliminating some expenditures the Forest Service places in this category, such as those for rent, utilities, and computers--all of which are common expenditures associated with Forest Service programs.

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