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Report to Congressional Requesters: 

June 2004: 

WILDFIRE SUPPRESSION: 

Funding Transfers Cause Project Cancellations and Delays, Strained 
Relationships, and Management Disruptions: 

[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-04-612]: 

GAO Highlights: 

Highlights of GAO-04-612, a report to congressional requesters 

Why GAO Did This Study: 

In 2003, wildfires burned roughly 4 million acres, destroyed over 5,000 
structures, took the lives of 30 firefighters, and cost over $1 billion 
to suppress. The substantial expense of fighting wildfires has exceeded 
the funds appropriated for wildfire suppression nearly every year since 
1990. To pay for wildfire suppression costs when the funds appropriated 
are insufficient, the U.S. Forest Service and the Department of the 
Interior have transferred funds from their other programs. 

GAO was asked to identify (1) the amount of funds transferred and 
reimbursed for wildfire suppression since 1999, and the programs from 
which agencies transferred funds; (2) the effects on agency programs 
from which funds were taken; and (3) alternative approaches that could 
be considered for estimating annual suppression costs and funding 
wildfire suppression.

What GAO Found: 

The Forest Service and Interior transferred over $2.7 billion from 
other agency programs to help fund wildfire suppression over the last 5 
years. On average, the Congress reimbursed agencies about 80 percent of 
the amounts transferred. Interior primarily used funds from its 
construction and land acquisition accounts. In recent years, the Forest 
Service used funds from many different programs; while before 2001, it 
transferred funds from a single reforestation program/timber sale area 
restoration trust fund. 

Transferring funds for wildfire suppression resulted in canceled and 
delayed projects, strained relationships with state and local agency 
partners, and difficulties in managing programs. These impacts affected 
numerous activities, including fuels reduction and land acquisition. 
Although transfers were intended to aid fire suppression, some projects 
that could improve agency capabilities to fight fires, such as 
purchasing additional equipment, were canceled or delayed. Further, 
agenciesí relationships with states, nonprofit groups, and communities 
were negatively impacted because agency officials could not fulfill 
commitments, such as awarding grants. Transfers also disrupted the 
agenciesí ability to manage programs, including annual and long-term 
budgeting and planning. Although the agencies took some steps to 
mitigate the impacts of transfers, the effects were widespread and will 
likely increase if transfers continue.

To better manage the wildfire suppression funding shortfall, the 
agencies should improve their methods for estimating suppression costs 
by factoring in recent changes in the costs and uncertainties of 
fighting wildfires. Also, the Congress could consider alternative 
funding approaches, such as establishing a governmentwide or agency-
specific reserve account. 

Wildfire Suppression Costs Have Exceeded Appropriations Almost Every 
Year since 1990: 

[See PDF for image]

[End of figure]

What GAO Recommends: 

GAO recommends several measures to minimize the impacts of funding 
transfers and to improve the estimates on which the agencies base their 
wildfire budgeting requests. Further, GAO is asking the Congress to 
consider alternative approaches for funding wildfire suppression.

In commenting on the draft report, Forest Service and Interior 
generally agreed with the reportís findings and recommendations.

www.gao.gov/cgi-bin/getrpt?GAO-04-612

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Barry T. Hill at (202) 
512-3841 or hillbt@gao.gov.

[End of section]

Contents: 

Letter: 

Results in Brief: 

Background: 

Agencies Transferred over $2.7 Billion from Numerous Programs to Fund 
Wildfire Suppression from 1999 through 2003; 80 Percent Was Reimbursed: 

Transfers Caused Project Cancellations and Delays, Strained 
Relationships with Agency Partners, and Created Difficulties in Program 
Management: 

Improvements for Estimating Suppression Costs and Alternatives for 
Funding Wildfire Suppression Could Be Considered: 

Conclusions: 

Recommendations for Executive Action: 

Matters for Congressional Consideration: 

Agency Comments and Our Evaluation: 

Appendixes: 

Appendix I: Scope and Methodology: 

Appendix II: Summary of Funds Transferred from and Reimbursed to Forest 
Service and Interior Programs, 1999 through 2003: 

Appendix III: Summary of Funds Made Available for Transfers, by Forest 
Service Region: 

Appendix IV: Comments from the Department of Agriculture: 

Appendix V: Comments from the Department of the Interior: 

Appendix VI: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Staff Acknowledgments: 

Tables: 

Table 1: Summary of Funds Transferred from and Reimbursed to Forest 
Service and Interior Programs, 1999 through 2003: 

Table 2: Comparison of Alternative Types of Reserve Accounts to Help 
Fund Wildfire Suppression: 

Table 3: Forest Service Regional Offices Visited by GAO: 

Table 4: Transfers to Wildfire Suppression, by Forest Service and 
Interior Program, 1999 through 2003: 

Table 5: Transfer Reimbursements to Forest Service and Interior 
Programs, 1999 through 2003: 

Table 6: Funds Made Available for Transfers to Wildfire Suppression, by 
Forest Service Washington Office and Regions, 1999 through 2003: 

Table 7: Funds Made Available for Transfers to Wildfire Suppression, by 
Forest Service Region and Program, 1999 through 2003: 

Table 8: Transfers to Wildfire Suppression, by Forest Service Washington 
Office and Regions, as a Percentage of Total Budget Authority, 2002: 

Figures: 

Figure 1: Suppression Costs Have Exceeded Suppression Appropriations in 
Most Years since 1990: 

Figure 2: Funding Transfers Delayed Replacement of a Failing 
Backcountry Bridge (Inyo National Forest, California): 

Figure 3: Property Purchased by the Forest Service Cost an Additional 
$195,000 Because of a Delay Caused by Funding Transfers (Coconino 
National Forest, Arizona): 

Figure 4: Funding Transfers Delayed Stabilization of Collapsing Road, 
Causing Sediment Runoff and Compromising Fish Habitat (Bitterroot 
National Forest, Montana): 

Figure 5: Areas with and without Subsequent Treatments to Ensure the 
Success of Reforestation Efforts (Hiawatha National Forest, Michigan): 


Figure 6: The Forest Service Directed Reimbursement Funds to High-
Priority Rehabilitation Projects after the Hayman Fire (Pike - San 
Isabel National Forests, Colorado): 

Figure 7: Actual Suppression Costs Have Frequently Exceeded Estimated 
Costs and Appropriations since 1990: 

Letter June 2, 2004: 

The Honorable Jeff Bingaman:  
Ranking Minority Member: 
Committee on Energy and Natural Resources:  
United States Senate: 

The Honorable Larry E. Craig:  
Chairman:  
The Honorable Ron Wyden:  
Ranking Minority Member:  
Subcommittee on Forests and Public Lands:  
Committee on Energy and Natural Resources: 
United States Senate: 

The Honorable Charles H. Taylor: 
Chairman: 
The Honorable Norman Dicks: 
Ranking Minority Member: 
Subcommittee on Interior and Related Agencies: 
Committee on Appropriations: 
House of Representatives: 

In 2003, wildfires burned roughly 4 million acres, destroyed over 5,000 
structures, and took the lives of 30 firefighters. While extreme, this 
past fire season does not stand out among recent ones, which have 
broken records not only in the number of acres burned but also in the 
cost of suppressing the fires. In 2000, 2002, and 2003, costs to 
suppress wildfires were well over $1 billion and reached nearly $1 
billion in 2001.[Footnote 1] The substantial expense of suppressing 
wildfires has exceeded the amount appropriated for wildfire suppression 
every year for the past 5 years. One reason for this difference is that 
suppression appropriations are based on estimates of wildfire 
suppression costs, which are difficult to make due to the inherent 
unpredictability of wildfires. The federal agencies responsible for 
wildfire management--the U.S. Forest Service in the Department of 
Agriculture and the Bureau of Indian Affairs, Bureau of Land 
Management, U.S. Fish and Wildlife Service, and National Park Service 
in the Department of the Interior--provide the bulk of the resources 
needed to suppress these fires. To pay for wildfire suppression when 
appropriated funds for suppression are insufficient, the Forest Service 
and Interior transfer funds from other programs within their respective 
agencies as permitted by law.

Seeking information on the effects of transferring funds to pay for 
wildfire suppression on other Forest Service and Interior programs, you 
asked us to identify (1) the amount of funds transferred and reimbursed 
from nonsuppression programs from 1999 through 2003, the programs 
affected, and the procedures the Forest Service and Interior followed 
when transferring and reimbursing funds; (2) the effects on the 
agencies' programs from which funds were transferred; and (3) 
alternative approaches that could be considered for estimating annual 
suppression costs and funding wildfire suppression.

In conducting our review, we contacted budget officers at Forest 
Service and Interior headquarters, as well as in the Forest Service's 
nine regions, to collect information on the amount of funds transferred 
from and reimbursed to various Forest Service and Interior 
programs.[Footnote 2] We also visited six Forest Service regional 
offices and 7 national forests and contacted an additional 14 national 
forests to examine impacts to the programs from which funds were 
transferred to support fire suppression. Where appropriate, we also met 
with officials from the four Interior agencies that are involved with 
wildfire suppression activities as well as grant recipients, a state 
forester, and representatives of nonprofit organizations. In our review 
of impacts, we focused on 2002 and 2003 because in these 2 years 
transfers for wildfire suppression involved many more programs than 
they had previously. To determine alternatives for estimating wildfire 
suppression costs, we reviewed the agencies' current estimation 
methods, compared the estimates with actual costs and discussed reasons 
for differences between them with agency officials, and identified 
alternatives for estimating suppression costs. Also, to determine 
alternative approaches for funding wildfire suppression, we reviewed 
previous GAO and Congressional Budget Office reports, as well as a 
Forest Service study related to budgeting for emergencies, and 
discussed alternative funding options with agency officials. We took 
the appropriate measures to ensure that Forest Service and Interior 
data on the amount of funds transferred and reimbursed from 1999 
through 2003 were sufficiently reliable for the purposes of our study. 
We performed our work between July 2003 and March 2004 in accordance 
with generally accepted government auditing standards. See appendix I 
for additional details on our scope and methodology.

Results in Brief: 

From 1999 through 2003, the Forest Service and Interior transferred 
over $2.7 billion from numerous programs to help fund wildfire 
suppression activities. Before 2001, the Forest Service used a single 
reforestation/timber sale area restoration trust fund as the primary 
source of transfers. Since then, however, the agency began using funds 
from numerous other programs, including its national forest system 
program that manages forests, rangelands, and recreation and wilderness 
areas, out of growing concerns about the financial viability of the 
reforestation program. Interior, on the other hand, transferred funds 
primarily from its construction and land acquisition programs. When 
transfers were necessary, both agencies relied on monthly forecasting 
models to predict the additional funds needed to support suppression 
activities for the remainder of the fire season. These forecasts, 
however, have not been very accurate and produced estimates that have 
varied by hundreds of millions of dollars from actual suppression 
costs. In deciding which programs to tap for additional firefighting 
funds, both the Forest Service and Interior primarily selected programs 
with projects that would not need all of the funds provided to them 
until subsequent years. The Congress reimbursed, on average, about 80 
percent of the funds that the agencies transferred during the 5-year 
period-nearly 100 percent of the funds transferred between 1999 and 
2001 were reimbursed; while during the last 2 years, the Forest Service 
was reimbursed about 74 percent and Interior about 81 percent. Because 
reimbursements generally were provided in years after funds were 
originally transferred, the Forest Service distributed these reimbursed 
funds to projects reflecting current priorities, which were not always 
the same projects from which the funds were transferred. Interior 
followed various strategies, such as fully reimbursing high-priority 
projects at the expense of lower priority projects or reimbursing all 
projects at the same rate.

Despite Forest Service and Interior efforts to minimize the effects on 
programs, transferring funds caused numerous project delays and 
cancellations, strained relationships with state and local agency 
partners, and disrupted program management efforts. The agencies 
canceled and delayed contracts, grants, and other activities for 
projects involving, among other things, fuels reduction, construction, 
land acquisition, and resource management. In some cases, these 
cancellations and delays increased costs and the time needed to 
complete the projects. Although the agencies transferred funds to help 
suppress wildfires, doing so actually resulted in delays of some 
projects that were intended to reduce fire risk or improve firefighting 
capabilities, such as purchasing additional firefighting equipment. 
Funding transfers also strained agency relationships with other federal 
and state agencies, nonprofit organizations, and communities because 
Forest Service and Interior officials were unable to fulfill 
commitments, such as awarding grants to communities for fuels reduction 
projects. Further, transfers disrupted the agencies' efforts to manage 
their programs, including budgeting and planning annual and long-term 
programs of work. Recently, the Forest Service and Interior took 
actions to mitigate the impacts of transfers, including awarding 
contracts early in the year to avoid the loss of program funds to 
transfers. However, these and other Forest Service actions, such as 
relying on rough estimates of salary costs and transferring funds that 
were needed for the later part of the fiscal year, resulted in some 
programs exceeding their budget allocations to meet existing contract 
obligations and essential expenses. Overall, transfers have caused 
widespread impacts that will likely increase if the agencies continue 
transferring funds to cover fire suppression costs. Although Forest 
Service and Interior officials are generally aware of these impacts, 
the agencies do not consistently track the impacts of funding transfers 
at a national level. If transfers continue to be necessary, the 
agencies could enhance their understanding of how transfers affect 
programs by tracking nationwide impacts on all programs through their 
accomplishment reporting systems.

To help mitigate the negative effects of funding transfers, 
improvements in estimating annual suppression costs and alternative 
approaches for funding wildfire suppression should be considered. To 
estimate annual suppression costs, the Forest Service and Interior use 
a 10-year average of these costs. The agencies use these estimates to 
develop annual budget requests, and the Congress uses them to make 
appropriations decisions for wildfire suppression. Although estimating 
the costs of wildfires is inherently difficult because of their 
unpredictable nature, size, and intensity, the agencies' estimates have 
been about $1.8 billion less than the actual total costs for the last 5 
years. According to agency officials, abnormal drought conditions have 
contributed to unusually severe wildfire seasons, making it even more 
difficult to estimate suppression costs. Nonetheless, the 10-year 
average may not provide accurate or timely information when 
firefighting costs change rapidly from year to year as they have 
recently. Alternative methods that more effectively account for annual 
changes in costs and that convey the uncertainties associated with 
making the estimates should be considered for improving the information 
provided to agency and congressional decision makers. Additionally, to 
further mitigate the impacts of funding transfers, alternative 
approaches could be considered for funding wildfire suppression. Two 
previously issued GAO reports and testimony from the Congressional 
Budget Office outline several alternative approaches to funding 
wildfire suppression, such as establishing a governmentwide or agency-
specific reserve account to pay for wildfire suppression activities. 
Each alternative has advantages and disadvantages with respect to, 
among other things, reducing the need to transfer funds for 
nonsuppression programs, creating incentives for agencies to contain 
suppression costs, and allowing for congressional review. In selecting 
any alternative, the Congress will need to make difficult decisions, 
taking into consideration the effect on the federal budget deficit.

We are making recommendations to the Secretaries of Agriculture and the 
Interior to take actions to help mitigate the effects of funding 
transfers, including improving the agencies' methods for estimating 
annual wildfire suppression costs and conducting formal assessments of 
how their budget and forecast models performed relative to actual 
costs. In addition, we are proposing that the Congress consider 
alternative approaches for funding wildfire suppression in order to 
help the agencies suppress wildfires without negatively impacting their 
programs. In responding to a draft of this report, the Forest Service 
and Interior generally agreed with our findings and recommendations. 
Both agencies expressed some concern with our recommendation that the 
agencies pursue alternative methods for estimating suppression costs.

Background: 

About one-third of all land in the United States is federally owned and 
consists largely of forests, grasslands, and other vegetated lands. 
Over the years, underbrush has grown substantially on these lands, and 
along with recent drought conditions and disease infestation, has 
fueled larger and more intense wildfires. Further, there has been an 
increase in the number and size of communities that border these 
areas-in what is known as the wildland urban interface. Suppressing 
wildfires that threaten these areas costs significantly more because 
protecting homes and other structures is costly. In 2000 and 2002, 
wildfires burned nearly 8.5 million and 7 million acres, respectively; 
and in 2003, wildfires burned about another 4 million acres. In both 
2000 and 2002, suppression costs were over $1.4 billion each year; in 
2003, suppression costs nearly reached that amount.

Because suppression costs have exceeded appropriated funds, the 
agencies have had to transfer funds from other programs to supplement 
their suppression funds. Two years in advance of when funds are 
appropriated, the Forest Service and Interior develop budget requests 
by estimating the annual costs to suppress wildfires. Estimating these 
costs is inherently difficult because of the unpredictable nature of 
wildfires, including where they will occur, how intense they will be, 
and how quickly they will spread. As a result, these estimates, at 
times, result in funding for wildfire suppression that is insufficient 
to cover actual suppression costs. Historically, the Forest Service and 
Interior have used a 10-year rolling average of suppression 
expenditures as the foundation for their suppression budget 
requests.[Footnote 3] During each year's fire season, the Forest 
Service and Interior also develop monthly forecasts to update the 
overall suppression costs estimate and determine how much additional 
funding, if any, will be needed. When it becomes apparent that annual 
appropriated funds are insufficient to support forecasted suppression 
needs, the Forest Service and Interior are authorized to use funds from 
other programs within their agency to pay for emergency firefighting 
activities.

Agencies Transferred over $2.7 Billion from Numerous Programs to Fund 
Wildfire Suppression from 1999 through 2003; 80 Percent Was Reimbursed: 

From 1999 through 2003, the Forest Service and Interior transferred 
over $2.7 billion from various agency programs to help fund wildfire 
suppression when appropriated funds were insufficient. The Forest 
Service transferred monies from numerous programs supporting the 
breadth of its activities, while Interior transferred funds primarily 
from two programs-construction and land acquisition. To determine the 
amount of funds to transfer, the agencies used similar monthly 
forecasting models to determine suppression funding needs during the 
fire seasons. Agency officials acknowledged, however, that the models 
produced widely varying forecasts of suppression costs that 
substantially underestimated actual costs. Also, in determining the 
programs from which to transfer funds, the agencies attempted to select 
programs with projects that would not be significantly impacted by 
transfers because a portion of their funds would not be needed until 
subsequent years. Between 1999 and 2003, the Congress reimbursed the 
agencies for about 80 percent of the funds that were transferred on 
average. However, the Congress did not always reimburse the programs in 
amounts proportionate to the transfers. In addition, the Forest Service 
and Interior had some discretion in distributing the reimbursements 
among various projects, depending on their priorities at the time of 
reimbursement.

From 1999 through 2003, Agencies Transferred over $2.7 Billion from 
Numerous Programs: 

For each of the last 5 years, wildfire suppression costs have been 
substantially greater than the amount of funds appropriated for 
suppression, necessitating the Forest Service and Interior to transfer 
over $2.7 billion from other agency programs to help fund wildfire 
suppression activities. Of this amount, the Forest Service transferred 
the majority--almost $2.2 billion--while Interior transferred over $500 
million. Nearly half of the total amount was transferred in 1 year 
alone, 2002, but substantial transfers were needed for other recent 
severe fire seasons as well. For example, during the 2000 and 2003 fire 
seasons, almost $400 million and about $870 million were transferred, 
respectively. As illustrated in figure 1, suppression costs have 
exceeded suppression appropriations almost every year since 1990.

Figure 1: Suppression Costs Have Exceeded Suppression Appropriations in 
Most Years since 1990: 

[See PDF for image]

[End of figure]

To determine the amount of funds to transfer each year, the agencies 
used monthly forecasting models to estimate likely wildfire suppression 
costs during the wildfire season. Agency officials acknowledged, 
however, that the models produced forecasts of suppression costs that 
varied by hundreds of millions of dollars when compared with actual, 
year-end suppression costs. For example, in June 2003, Interior's 
forecasting model predicted that suppression costs for the year would 
exceed suppression appropriations by about $72 million. A month later, 
the model predicted costs would exceed appropriations by about $56 
million; by late August, the model predicted that costs would exceed 
appropriations by more than $100 million. By the end of the fiscal 
year, Interior had transferred over $175 million to cover actual 
suppression costs. Forest Service forecasts also were well short of 
year-end suppression costs during 2003. The agency's forecasting model 
predicted that annual suppression costs would reach nearly $800 
million, indicating that current year funds would be about $375 million 
less than projected needs. By the end of the fiscal year, however, the 
Forest Service had transferred nearly $700 million to cover suppression 
costs of over $1 billion. Both Forest Service and Interior officials 
indicated there is a high degree of uncertainty in trying to estimate 
the current year's suppression costs, primarily because weather 
conditions are difficult to predict-even over the short term. Despite 
the discrepancies between agency forecasts and actual suppression 
costs, the agencies have performed no formal assessments of their 
forecasting models' accuracy. Agency officials acknowledged that such 
assessments would be useful for monitoring and improving the 
reliability of their models and enhancing their ability to predict when 
transfers will be needed and how much to transfer. The agencies also 
acknowledged that the forecasts have not been accurate and are revising 
the models in an effort to improve the forecasts.

In deciding the programs from which to transfer funds, Interior and 
Forest Service officials primarily selected programs with projects that 
would not be significantly impacted by transfers because a portion of 
their funds would not be needed until subsequent years. Interior 
transferred funds mostly from its construction and land acquisition 
programs, with about two-thirds of the funds coming from construction. 
These two programs are used to construct and maintain facilities, 
roads, and trails on Interior lands, among other things, and to acquire 
additional public lands. In 2002 and 2003, Interior also transferred 
some funds from fire-related preparedness, postfire rehabilitation, and 
hazardous fuels reduction projects in order to support suppression 
activities. Within Interior, the National Park Service transferred 
substantially more funds than the other three agencies over the last 5 
years, transferring about 60 percent of the $540 million transferred.

Unlike Interior, the Forest Service transferred monies from numerous 
programs supporting the breadth of its activities. These programs 
included its construction; land acquisition; national forest system, 
which among other things conducts postwildfire rehabilitation and 
restoration work; and state and private forestry programs, which 
support activities such as grants to states, tribes, communities, and 
private landowners for fire management, urban forestry, and natural 
resource education as well as insect suppression. Before 2001, the 
Forest Service had transferred funds solely from its Knutson-Vandenberg 
Fund (K-V Fund), because historically this restoration program had 
large amounts of money that could not be used by the end of the fiscal 
year.[Footnote 4] Since the mid-1980s, the Forest Service has 
transferred more than $2.3 billion from this program; however, more 
than $400 million has not been reimbursed. As a result, the Forest 
Service became concerned about the viability of the K-V Fund as a 
source of transfers and in 2001 began transferring funds from other 
major Forest Service programs.

The Forest Service and Interior programs from which funds were 
transferred and the amount of funds transferred and reimbursed from 
1999 through 2003 are outlined in table 1. Additional details on these 
matters are included in appendixes II and III.

Table 1: Summary of Funds Transferred from and Reimbursed to Forest 
Service and Interior Programs, 1999 through 2003: 

Agency/Program: Forest Service/K-V Fund; 
Activity: A trust fund that collects a portion of timber sale receipts 
for reforestation in the timber sale area and for other activities, 
such as fuels reduction and habitat improvement; 
Funds: Transfer: $639,924,829; 
Funds: Reimbursement: $537,988,484; 
Percentage of funds reimbursed: 84%.

Agency/Program: Forest Service/Capital improvements and maintenance; 
Activity: Construction and maintenance of facilities, roads, and trails 
on national forest land, including fire facilities; 
Funds: Transfer: $317,320,407; 
Funds: Reimbursement: $281,911,320; 
Percentage of funds reimbursed: 89%. 

Agency/Program: Forest Service/National forest system; 
Activity: Management activities for forests, minerals and geology, 
rangeland, recreation and wilderness, wildlife and fisheries--includes 
postwildfire nonemergency rehabilitation; 
Funds: Transfer: $282,536,335; 
Funds: Reimbursement: $115,014,534; 
Percentage of funds reimbursed: 41%. 

Agency/Program: Forest Service/Land acquisition; 
Activity: Land purchases and related realty activities, such as 
appraisals, surveys, and negotiations with landowners; 
Funds: Transfer: $245,339,974; 
Funds: Reimbursement: $241,339,974; 
Percentage of funds reimbursed: 98%. 

Agency/Program: Forest Service/Working Capital Fund; 
Activity: A revolving fund that collects fees from programs for 
purchase and maintenance of vehicles--including light trucks, fire 
vehicles, and heavy equipment--as well as computers and other 
technology equipment; 
Funds: Transfer: $169,305,873; 
Funds: Reimbursement: $92,242,248; 
Percentage of funds reimbursed: 54%. 

Agency/Program: Forest Service/State and private forestry; 
Activity: Financial and technical assistance to states, tribes, 
communities, and private landowners, such as grants for fire 
management, urban forestry, and conservation education, as well as 
invasive species and insect suppression on federal, state, and private 
land; 
Funds: Transfer: $112,259,986; 
Funds: Reimbursement: $109,259,986; 
Percentage of funds reimbursed: 97%. 

Agency/Program: Forest Service/Wildland fire management; 
Activity: Preparedness (including firefighting equipment purchases, 
training, and salaries of reserve firefighters); fuels reduction; and 
postfire emergency rehabilitation and restoration. This account also 
provides funding for wildfire suppression and receives the transfers 
from the other Forest Service accounts listed in this table; 
Funds: Transfer: $81,309,076; 
Funds: Reimbursement: $60,981,807; 
Percentage of funds reimbursed: 75%. 

Agency/Program: Forest Service/Forest and range research; 
Activity: Forest and rangeland research, such as insect and disease 
studies, and fire sciences research; 
Funds: Transfer: $33,376,359; 
Funds: Reimbursement: $33,376,359; 
Percentage of funds reimbursed: 100%. 

Agency/Program: Forest Service/Other appropriations; 
Activity: Specific funds for programs such as range betterment, as well 
as economic assistance funds and some acquisitions for future land 
exchanges; 
Funds: Transfer: $287,959,245; 
Funds: Reimbursement: $247,959,245; 
Percentage of funds reimbursed: 86%. 

Subtotal; 
Funds: Transfer: $2,169,032,083; 
Funds: Reimbursement: $1,720,073,957; 
Percentage of funds reimbursed: 79%.

Agency/Program: Interior/Construction; 
Activity: Construction and maintenance of facilities, roads, and trails 
on Interior land; 
Funds: Transfer: $329,374,433; 
Funds: Reimbursement: $272,997,313; 
Percentage of funds reimbursed: 83%.

Agency/Program: Interior/Land acquisition; 
Activity: Land purchases and related realty activities, such as 
appraisals, surveys, and negotiations with landowners; 
Funds: Transfer: $184,906,505; 
Funds: Reimbursement: $159,337,629; 
Percentage of funds reimbursed: 86%. 

Agency/Program: Interior/Wildland fire management; 
Activity: Fire preparedness, fuels reduction, emergency stabilization, 
and fire facilities construction and maintenance. This account also 
provides funding for wildfire suppression and receives the transfers 
from the other Interior accounts listed in this table; 
Funds: Transfer: $24,963,248; 
Funds: Reimbursement: $23,013,248; 
Percentage of funds reimbursed: 92%. 

Subtotal; 
Funds: Transfer: $539,244,186; 
Funds: Reimbursement: $455,348,190; 
Percentage of funds reimbursed: 84%.

Agency/Program: Total; 
Funds: Transfer: $2,708,276,270; 
Funds: Reimbursement: $2,175,422,147; 
Percentage of funds reimbursed: 80%. 

Sources: Forest Service and Interior financial data.

Note: This table highlights selected fire-related activities that are 
typically funded by each program, as appropriate.

[A] Includes the Bureau of Indian Affairs, Bureau of Land Management, 
Fish and Wildlife Service, and National Park Service.

[End of table]

The Congress Reimbursed Agencies for about 80 Percent of the Funds 
Transferred: 

Over the last 5 years, the Congress reimbursed, on average, about 80 
percent of the funds that the Forest Service and Interior transferred 
for wildfire suppression expenses. Although the agencies received 
nearly full reimbursement for funds transferred in 2000 and 2001, the 
Forest Service and Interior were reimbursed about 74 percent and about 
81 percent, respectively, of the funds transferred in 2002 and 
2003.[Footnote 5] For these later 2 years, individual Forest Service 
programs were reimbursed at varying rates. For example, the Congress 
reimbursed the Forest Service's state and private forestry program for 
nearly 100 percent and its national forest system program for 40 
percent of the funds transferred in 2002. In contrast, the Congress 
reimbursed Interior's construction and land acquisition programs at 
about 81 percent each.

Congressional appropriators and Office of Management and Budget (OMB) 
officials worked with Forest Service and Interior officials to 
determine the amount of funds to reimburse to the numerous agency 
programs impacted by funding transfers in order to help the agencies 
meet their current program needs. For example, according to Forest 
Service officials, state and private forestry projects, such as 
community assistance grants and forest legacy project grants, were 
important priorities when the Forest Service received reimbursements in 
2003 for funds transferred in 2002. As a result, the state and private 
forestry program received full reimbursement. In contrast, the national 
forest system had a large amount of funds transferred in 2002 that was 
dedicated for the salaries of staff diverted from their normal duties 
to fight wildfires. OMB officials indicated that since these employees 
had been paid--albeit out of the wildfire suppression account--the 
transferred salaries required no reimbursement. Therefore, the national 
forest system program was reimbursed for a much smaller amount--about 
40 percent.

When the Forest Service and Interior received less than full 
reimbursement for funds transferred in 2002 and 2003, the agencies used 
different procedures to distribute the reimbursed funds within their 
programs. Forest Service officials distributed the funds to projects 
reflecting current priorities within individual programs, which were 
not necessarily the same projects from which funds were 
transferred.[Footnote 6] For example, Forest Service officials in 
California targeted the funds to projects within the San Bernardino 
National Forest to help address the increased wildfire risk created by 
insect infestation, even though no funds had been transferred from 
these projects. Similarly, officials in Colorado directed the 
reimbursed funds to high-priority rehabilitation efforts in the 
aftermath of the Hayman fire that had occurred in the Pike-San Isabel 
National Forest in June 2002. In contrast to the Forest Service's 
approach, Interior reimbursed funds solely to projects from which funds 
were transferred; however, the four agencies within Interior did this 
in varying ways.[Footnote 7] For example, the Fish and Wildlife Service 
fully repaid its high-priority construction projects for transfers made 
in 2002, although it did not repay lower priority construction projects 
that also transferred funds, such as the restoration of a visitors 
center. The Bureau of Indian Affairs, on the other hand, fully repaid 
all projects from which funds were transferred in 2002, except one--a 
school renovation project that agency officials believed could be 
delayed pending future additional funding. In contrast, the Bureau of 
Land Management repaid all construction projects at the same 
percentage, while the National Park Service repaid construction 
projects at widely varying amounts depending on their perceived 
priorities.[Footnote 8]

Table 1 provides information on the amount of funds reimbursed to the 
various Forest Service and Interior programs. Additional details on 
reimbursements are provided in appendix II.

Transfers Caused Project Cancellations and Delays, Strained 
Relationships with Agency Partners, and Created Difficulties in Program 
Management: 

The Forest Service and Interior canceled or delayed numerous projects, 
failed to fulfill certain commitments to partners, and faced 
difficulties in managing their programs when funds were transferred for 
fire suppression. The agencies canceled or delayed contracts, grants, 
and other activities, which in some cases increased the costs and time 
needed to complete projects. Further, agency relationships with state 
agencies, nonprofit organizations, and communities became strained when 
the agencies could not fulfill commitments, such as awarding grants on 
time. In addition, transfers disrupted agency efforts to effectively 
manage programs, causing planned activities to go unfunded and, in some 
cases, causing program funds to be depleted or overspent. If transfers 
continue, the impacts on projects, relationships, and program 
management will likely continue and increase. Although Forest Service 
and Interior local units generally are aware of these impacts, the 
agencies have no systems in place to track the impacts at a national 
level. (Dollars noted in the remaining text of this section are not 
adjusted for inflation.): 

Numerous Projects Were Delayed or Canceled: 

Projects in a variety of Forest Service and Interior programs were 
delayed or canceled as a result of funding transfers, thereby affecting 
agency firefighting capabilities, construction and land acquisition 
goals, state and community programs, and other resource management 
programs. Furthermore, officials often had to duplicate their efforts 
because of transfers, which prolonged delays and added costs. For 
example, officials had to revise budgets and construction plans, update 
cost estimates, and rewrite land acquisition documents when delays 
caused them to become outdated, all of which further compounded project 
delays. In some cases, preparation of such documents added substantial 
costs. For example, appraisal and legal fees for certain land 
acquisition efforts added thousands of dollars to project costs. In 
addition, when delays were prolonged, supply costs increased, land 
prices rose, and impacts to natural resources spread, which also 
increased projects' costs.[Footnote 9]

Projects Related to Firefighting Capabilities: 

Although funding transfers were intended to aid fire suppression, in 
some cases, the Forest Service and Interior delayed projects that were 
intended to reduce fire risk or improve agency firefighting 
capabilities. Following are examples of such projects: 

* Fuels reduction projects, New Mexico: In 2003, $191,000 was 
transferred from three fuels reduction projects covering 480 acres of 
Forest Service land in the wildland urban interface. All three thinning 
projects were near communities, affecting about 325 homes. The projects 
are scheduled to be completed in 2004.

* National Park Service fire facilities projects, nationwide: In 2002, 
about $3.4 million was transferred from 13 fire facilities projects at 
10 different parks. The projects-including construction of facilities 
for fire equipment storage; a crew dormitory; and fire engine storage 
buildings, among others-were delayed for several months. Four of these 
projects--in Big Bend National Park (Texas); Yellowstone National Park 
(Idaho, Montana, and Wyoming); Sequoia and Kings Canyon National Parks 
(California); and Shenandoah National Park (Virginia)-were again 
delayed in 2003 when about $1.9 million was transferred.

* Forest Service fire facilities projects, California: In 2003, the 
Forest Service deferred construction of two engine bays, one fire 
station, and three fire barracks in California because of funding 
transfers. Consequently, fire crews at one forest must live in housing 
that, according to agency officials, is substandard and has required 
recurring maintenance to address roof leaks, plumbing malfunctions, and 
electrical failures caused by rodents damaging the wires. Additionally, 
officials told us that such conditions make it difficult to recruit and 
retain fire crews.

* Wildfire management courses, southern region: In 2003, the Forest 
Service canceled two required training courses for officials who 
approve wildfire management decisions and expenses. About 80 officials 
who represent national forests in at least 12 states had planned to 
attend. One course emphasized cost containment, and the other covered a 
wide range of fire management issues, including safety. Both courses 
were rescheduled and held in 2004.

* Fire research projects, Montana: When funds were transferred in 2002, 
the LANDFIRE project--a multiagency effort to collect comprehensive 
data on fire risk--was delayed about 3 months, the collection of data 
critical for modeling fire behavior was delayed about 6 months, and 
data on smoke levels were lost because an instrument was not purchased 
in time to use it during the 2002 fire season. In addition, temporary 
staff were released early in 2002, further reducing the amount of 
research that could be performed.

Construction and Land Acquisition Projects: 

Agency officials also targeted construction and land acquisition 
programs for funding transfers because these projects are often funded 
one year, with the expectation that the project will be implemented--
and the funds spent--over several years. Consequently, these programs 
often have large unused fund balances, and transfers can sometimes be 
made with minimal impact as long as the funds are reimbursed before 
they are needed. Accordingly, some officials, especially in the 
Interior agencies, told us that impacts to projects had been relatively 
limited. Nevertheless, many construction and land acquisition projects 
were delayed or canceled, particularly in the Forest Service.

Some construction projects that were delayed due to funding transfers 
were delayed for 1 year or more because of seasonal requirements, even 
when funds were reimbursed after only a few months. For example, a 
project to replace three backcountry bridges at the Inyo National 
Forest in California was planned for late summer when stream flows 
would be low and conditions would be safe for workers. According to a 
Forest Service official, the project was important for public safety 
because one bridge was completely washed out and the other two bridges 
were at risk of failing while people were crossing them. Figure 2 shows 
one of these bridges before--when handrails were sagging or missing and 
support logs were decaying-and after it was replaced. Project funds 
were transferred in 2002, so the project was deferred to late summer 
2003; however, funds were once again transferred, and the project was 
not completed until 2004.

Figure 2: Funding Transfers Delayed Replacement of a Failing 
Backcountry Bridge (Inyo National Forest, California): 

[See PDF for image]

[End of figure]

Top (left and right): Deteriorating bridge was at risk of failing while 
people crossed it. Bottom: New bridge was completed after multiple 
delays that were caused by funding transfers.

In other cases, additional adverse effects resulted when projects with 
seasonal requirements were delayed. For example, according to a Forest 
Service official, a popular campground in Arizona may be closed during 
the 2004 operating season while improvements are made because seasonal 
requirements combined with fire transfers resulted in extended delays. 
In 2003, $450,000 was transferred from this project, delaying it 2 
months into the winter. Because of the weather construction crews could 
not work on the project, thus it was delayed several additional months. 
Further, this campground was already closed during the 2003 operating 
season because funding transfers in 2002 had delayed planned 
improvements.

In some cases, construction projects that were initially delayed were 
canceled when supply costs rose and the Forest Service no longer had 
sufficient funds to pay for the projects. For example, a 2003 project 
to rehabilitate a historic residence at the Sierra National Forest in 
California was delayed when funds were transferred for wildfire 
suppression. According to an agency official, the project, which would 
have converted the residence into a public information facility, was 
intended to attract tourists and help diversify the local economy in an 
area where a 1994 lumber mill closure contributed to a deteriorating 
economy. The lowest bid that the Forest Service received for the 
project was about $186,000. However, before the funds were reimbursed, 
the contractor-citing a 300 percent increase in lumber prices-rescinded 
the bid and estimated the new cost of the project at $280,000, an 
increase of nearly $100,000. Consequently, the Forest Service canceled 
the project and resubmitted it in its 2005 budget, with a higher cost 
estimate.

Land acquisition costs can also increase when projects are delayed. For 
example, figure 3 shows a portion of a 65-acre property in Arizona that 
the Forest Service intended to purchase for approximately $3.2 million 
in 2002, but had to defer due to funding transfers. About a year later, 
the Forest Service purchased the property, but the value had increased, 
costing about $195,000 more than it had a year earlier. A nonprofit 
organization also incurred additional costs of about $3,000 because it 
paid for the updated appraisal.

Figure 3: Property Purchased by the Forest Service Cost an Additional 
$195,000 Because of a Delay Caused by Funding Transfers (Coconino 
National Forest, Arizona): 

[See PDF for image]

[End of figure]

In addition, the agencies sometimes risked losing the opportunity to 
purchase land when funds were transferred from land acquisition 
programs. For example, in 2003, the Fish and Wildlife Service planned 
to purchase property in Alabama that contains habitat for the gopher 
tortoise, which is a species of concern in Alabama. However, because of 
funding transfers and only partial reimbursement, the service no longer 
had sufficient funds. Agency officials were concerned that the property 
would be sold privately. To prevent a sale to private owners, a 
nonprofit organization agreed to buy the property and hold it until the 
Fish and Wildlife Service could purchase it from them.

Grants to States and Communities: 

When funds were transferred for fire suppression, many Forest Service 
grants were delayed or canceled, which affected states, communities, 
nonprofit organizations, and others. Examples of such projects are 
discussed below: 

* Urban and community forestry grants in seven states, southern region: 
The Forest Service did not fund eight urban and community forestry 
grants totaling $993,000 due to 2003 funding transfers. State forestry 
departments planned to "subgrant" about 80 percent of the funds to 
local communities for more than 75 projects, such as planting trees, 
developing local land use plans, and holding several workshops and 
conferences on topics such as urban forestry.

* Community assistance grant, New Mexico: A 2002 grant to a small 
business owner was delayed about 6 months because of funding transfers. 
The business processes small-diameter wood to make signs and other 
marketable products, and the grant would have paid for a wood chipper 
essential to the process. When the grant was delayed, the business 
owner could not purchase the chipper and process the wood. As a result, 
he closed his business for a year, laid off some staff, and reported 
estimated revenue losses of millions of dollars.

* Watershed education grant, New Mexico: A 2003 economic action grant 
for $32,000 was canceled and will not be funded. The grant would have 
paid for a nonprofit organization to conduct an education project about 
sustainable grazing in a severely degraded watershed where the intended 
audience included ranchers, community members, public officials, and 
others. The nonprofit organization reported investing about $5,250 in 
preparation for the project.

Resource Management Projects: 

When resource management projects were delayed and canceled, natural 
resources were affected (e.g., soils eroded, insects infested forests, 
and encroaching plants spread and threatened newly planted trees). 
Further, prolonged delays sometimes compounded these effects because 
additional time allowed the damage to spread. For example, at the 
Lincoln National Forest in New Mexico, a project to repair a washout in 
a road was deferred when funds were transferred in 2002. During a 2-
year delay that was partially caused by funding transfers, the washout 
grew dramatically. Consequently, a more significant structure is now 
needed to prevent erosion, which will result in additional costs of 
between $9,000 and $15,000, according to an agency official. 
Additionally, at the White River National Forest in Colorado in 2003, 
$111,000 was transferred from a project to remove about 150 acres of 
trees infested with spruce beetle-thereby deferring the project. As a 
result, the infestation grew to about 230 acres, killing additional 
trees and raising the cost of the project about $24,000 more than 
previously estimated, according to an agency official. Further, there 
is a chance that the beetle population will spread to the point where 
it cannot be contained at any cost and where tree mortality will 
increase dramatically--affecting up to 6,000 acres. If this further 
infestation occurs, an agency official said the project would be 
canceled.

According to an official at the Bitterroot National Forest in Montana, 
a project to stabilize 9 miles of a dirt road was delayed when about 
$1.2 million was transferred in 2002. As shown in figure 4, the road 
was collapsing. As a result, sediment was running into a creek, 
jeopardizing the habitat of two species of fish, one of which is a 
threatened species. Two years after the transfer, $430,000 was 
reimbursed to the project, and officials expect to stabilize about 2 of 
the 9 miles of road. Because of the prolonged delay, however, 
additional sediment has run into the stream and further compromised the 
fish habitat. Furthermore, agency officials do not expect to receive 
any additional reimbursement to complete the remaining stabilization, 
and they are concerned about the increasing sedimentation and 
continuing decline of the fish habitat.

Figure 4: Funding Transfers Delayed Stabilization of Collapsing Road, 
Causing Sediment Runoff and Compromising Fish Habitat (Bitterroot 
National Forest, Montana): 

[See PDF for image]

[End of figure]

In addition, sometimes canceling one project affects the success of 
others. For example, at the Hiawatha National Forest in Michigan, a 
project intended to ensure the success of reforestation efforts--by 
removing encroaching plants--will be canceled in 2004. The encroaching 
plants are crowding newly planted trees, as shown in the photograph on 
the left in figure 5, and threatening their survival, according to 
agency officials. As a result, one official estimated that 20 to 25 
percent of the newly planted trees will die, and that it will cost 
about $24,000 to remove the dead trees and reforest the area. In 
contrast, the photograph on the right shows a site where young trees 
were protected by removing encroaching plants, and, consequently, the 
trees survived.

Figure 5: Areas with and without Subsequent Treatments to Ensure the 
Success of Reforestation Efforts (Hiawatha National Forest, Michigan): 

[See PDF for image]

Left: Encroaching plants in reforested area, threatening newly planted 
trees. Right: A successful reforestation project, in which subsequent 
treatments to remove encroaching "weed trees" were completed, 
protecting the newly planted trees.

[End of figure]

Examples such as these were widespread in the six regions we visited. 
For example, because of funding transfers in 2002 and 2003, the Forest 
Service's northern region deferred reforestation on 5,900 acres, weed 
control on 74,000 acres, maintenance on 1,500 miles of road, 
replacement of 150 culverts to improve fish habitat, repair of five 
damaged bridges, and award of 11 stewardship contracts.[Footnote 10]

Agency Relationships with Partners Were Strained: 

When the Forest Service and Interior transferred funds for fire 
suppression, they sometimes failed to fulfill commitments to partners, 
which caused relationships to be strained. Federal agencies rely on 
partnerships and other forms of collaboration with each other, state 
and local governments, nonprofit organizations, and others to 
accomplish their work. For example, federal land acquisitions are often 
facilitated by nonprofit organizations and involve private landowners, 
agency recreation programs depend on volunteers, and some research 
projects are joint efforts between the Forest Service and Interior and 
may involve university participants as well. In addition, communities, 
state forestry programs, and others depend on federal grant programs 
for financial support. When funds were transferred for fire 
suppression, not only were federal programs impacted, but nonprofit 
organizations, states, and communities were also affected.

In transferring funds from land acquisition programs, agency 
relationships with nonprofit organizations were affected. Nonprofit 
organizations often facilitate agency land acquisitions by negotiating 
with landowners and by sometimes purchasing the land, then selling it 
to the agency. When agencies delayed land acquisitions, nonprofit 
organizations sometimes incurred interest costs of thousands of dollars 
on loans they took out for the purchase of the land. These costs were 
generally absorbed by the nonprofit organization and not passed on to 
the federal agencies. For example, one organization bought a parcel of 
land in South Carolina with the intent of selling it to the Forest 
Service in 2002; however, the funds to purchase the land were 
transferred for wildfire suppression. The Forest Service eventually 
purchased the land in 2003, but in the meantime, the nonprofit 
organization had incurred about $300,000 in interest costs. One 
nonprofit organization reported that 22 land acquisition projects were 
delayed in 2002, and 21 projects in 2003, due to transfers. A 
representative from the organization said that if funds are again 
transferred in 2004, the organization will view this practice as a 
trend, rather than an anomaly, and will likely invest its funds 
elsewhere rather than work with the Forest Service and Interior.

Agency relationships with landowners were affected as well. For 
example, the Forest Service has been working for several years with 
state officials and others to obtain a conservation easement in Hawaii. 
According to a Forest Service official, it "has been a major effort to 
build a high enough level of trust with the private landowner." The 
official is concerned that transfers--which depleted the necessary 
funds for this project in both 2002 and 2003--may jeopardize their 
relationship with the landowner, who may choose to develop the property 
rather than wait for the Forest Service to secure the necessary funds. 
If the land is developed, an important habitat for two endangered bird 
species will be lost.

Community groups and volunteer or nonprofit organizations also invest 
considerable time and money to prepare projects and grant proposals. 
When the Forest Service and Interior did not fulfill their commitments, 
some of these investments were lost. For example, a 2002 Collaborative 
Forest Restoration Program grant in New Mexico would have paid for 
thinning treatments to be conducted by a local workforce, with the 
resulting wood chips to be processed into marketable products. A 
nonprofit organization that was a partner in the project conducted a 
$30,000 training program to prepare the local workforce. However, the 
grant was delayed for about 6 months because of 2002 funding transfers, 
and when funds became available, the trainees were employed elsewhere 
and unavailable. Another example involves a nonprofit organization that 
works collaboratively with communities and Forest Service and Interior 
agencies to design and implement large-scale fire restoration projects 
across the country. The collaborative teams collectively review the 
outcomes of projects, such as controlled burns, and share their 
knowledge and experience with one another. Of the 30 projects that were 
to receive federal funding, 12 have been delayed as a result of funding 
transfers. According to a representative of this organization, the 
practice of transferring funds for wildfire suppression "hurts the 
credibility of agencies," and has led two of the project teams to not 
apply for further funding because of the uncertainty caused by the 
possibility of transfers.

The fire transfers also affect state forestry departments, which depend 
on Forest Service grants to support their programs. In recent years, 
state budgets have been strained, making it difficult for state 
governments to compensate for the loss of federal funding. When the 
Forest Service began transferring funds for fire suppression in 2002, 
some states were concerned about the viability of their forestry 
programs. For example, Forest Service grants supply nearly 60 percent 
of Nebraska's annual State Forest Service budget, without which the 
state would have to significantly reduce its operation--including 
laying off staff. According to the Nebraska State Forester, when funds 
were transferred in 2002, the state had already spent over $1 million 
beyond its existing budget because it anticipated receiving a Forest 
Service grant. After a period of uncertainty, the grant was awarded. 
However, the State Forester said that, partly as a result of ongoing 
budget uncertainties, one staff member left the agency and two 
candidates declined job offers, leaving another position vacant.

States were also affected when, in 2003, $50 million was transferred 
from the 5-year, $100 million Forest Land Enhancement Program, and only 
$10 million was reimbursed. This program, which is managed by states, 
helps private landowners improve the health of their forestlands 
through activities such as timber improvement, wildlife habitat 
management, and fuels reduction. The $100 million was intended to last 
for 5 years. In the first year, the Forest Service allocated $20 
million to the states, leaving an $80 million balance in the program. 
When only $10 million of the $50 million transfer was reimbursed, the 
program was left with a balance of $40 million--or half of the expected 
budget--for the remaining 4 years. Foresters are concerned about the 
viability of the program, which provides an economically feasible 
alternative to landowners who might otherwise sell their land for 
development. Further, foresters believe that by preventing development 
of such land, the program helps avoid habitat fragmentation, which was 
identified by the Forest Service Chief as one of the four largest 
threats to the nation's forests. Nonetheless, with so much of the 
program's budget lost to funding transfers and its viability in 
question, agency officials did not expect to receive any funding for 
the program in 2004 and did not request any funding for 2005. According 
to agency officials, the Forest Service will not be able to continue 
the program unless the Congress appropriates funds for fiscal year 2005 
or subsequent years of the authorization period.

Agencies' Management Efforts Were Disrupted: 

When funds were transferred for fire suppression, the agencies' efforts 
to manage their programs--including budgeting and planning for annual 
and long-term programs of work--were disrupted. Some programs, such as 
the Forest Service K-V and Working Capital Funds, are managed like 
savings accounts, accumulating funds over multiple years to be spent 
according to a specific schedule for activities such as forest 
improvement and vehicle maintenance and replacement. When transfers 
were made from these programs without subsequent reimbursement, 
agencies had to begin accumulating the funds again or cancel the 
planned expenses. For other programs, such as construction and land 
acquisition, transfers interfered with agency and congressional 
priorities. In some cases, Forest Service programs went into deficit 
because transfers disrupted planned budgets and officials overspent 
program funds in order to pay for essential expenses. Actions taken by 
the agencies may have mitigated some of these impacts, but compounded 
others.

Program Funding Shortfalls: 

Funding transfers have left the Forest Service with insufficient funds 
to pay for all of the K-V projects it planned at the time the funds 
were collected. Over the past 5 years, about $640 million has been 
transferred from the K-V Fund for wildfire suppression, while only $540 
million has been reimbursed. Moreover, transfers have been made from 
the K-V Fund for decades with only partial reimbursement. Since the 
mid-1980s, about $2.3 billion has been transferred from the K-V Fund, 
and only $1.9 billion has been reimbursed. According to agency 
officials, there have been sufficient funds to fully implement the K-V 
reforestation projects in any given year. However, there have not 
always been sufficient funds over the years to implement other programs 
that rely on the K-V Fund. For example, before reimbursements were 
received for 2003 transfers, Forest Service officials said they would 
only be able to fund about $60 million of $96 million in K-V projects 
for 2004 dealing with activities such as habitat improvement. Even 
though reimbursements for 2003 transfers were later received, Forest 
Service officials indicated that many of the habitat improvement 
projects that had been deferred to absorb the shortfall will not be 
accomplished in 2004 due to the shortened period of work. Faced with 
unpredictable information about funding transfers and reimbursements, 
it has been difficult for the Forest Service to reliably estimate how 
much will be deposited into and withdrawn from the K-V Fund and, 
therefore, to effectively manage the fund and the programs it supports.

Similarly, transferring funds from the Working Capital Fund disrupted 
the Forest Service's efforts to carry out long-term expense planning, 
making it difficult for agency officials to effectively manage 
programs. For example, the Forest Service no longer has enough funds to 
pay for its planned vehicle and computer replacements because of 
funding transfers. Each program that uses vehicles or computers 
allocates a portion of its budget to pay monthly charges into the 
Working Capital Fund, which accrues these deposits over a period of 
years to spend on vehicle and computer purchases and maintenance. 
Vehicles and computers are then maintained as needed and replaced 
according to a schedule designed to maximize cost effectiveness. In 
2002 and 2003, however, some of the funds that agency officials had 
been accumulating for years were transferred and no longer available 
for maintenance and planned replacements. As a result, maintenance and 
replacement schedules were disrupted, and purchases had to be delayed. 
For example, in 2002, the Forest Service postponed planned purchases of 
fire engines, helitack trucks, fire crew carriers, and patrol rigs when 
funds were transferred in California. Since more than 90 percent of 
these transfers were not reimbursed, agency officials had to either 
continue using older vehicles or reduce their fleet size and will have 
to make additional payments to accrue enough savings for the planned 
purchases.

Changes in Project Priorities: 

Forest Service efforts to prioritize projects were also disrupted. In 
an attempt to avoid project delays and cancellations after having lost 
funds to transfers in 2002, agency officials awarded contracts and 
grants earlier in the year in 2003. Although such efforts mitigated 
some impacts of funding transfers, they also interfered with agency 
attempts to implement high-priority projects. When officials expected 
funds to be transferred, they implemented projects that could be 
completed quickly and early in the year, although they were not 
necessarily their highest priority projects. On the other hand, the 
Forest Service was able to implement some of its high-priority projects 
later by redirecting reimbursements to them. For example, in 
California, agency officials targeted funds to the San Bernardino 
National Forest, where insect infestation had caused widespread tree 
mortality and elevated fire risk. In Colorado, officials directed 
reimbursements to high-priority rehabilitation efforts in the aftermath 
of the Hayman fire, shown in figure 6.

Figure 6: The Forest Service Directed Reimbursement Funds to High-
Priority Rehabilitation Projects after the Hayman Fire (Pike - San 
Isabel National Forests, Colorado): 

[See PDF for image]

Left: Straw bails, used to prevent erosion of soil, "exploding" in the 
air over the Hayman burn area. Right: A Hayman rehabilitation team 
member sprays grass seed and fertilizer to help stabilize soil and 
prevent mudslides.

[End of figure]

The redirection of funds was authorized by the Congress and may have 
helped preserve agency priorities. However, under some programs, such 
as construction and land acquisition, appropriations committee reports 
direct the agencies to fund specific projects (which agency officials 
refer to as "congressionally directed" projects).[Footnote 11] In some 
cases, officials paid for congressionally directed projects by shifting 
funds from projects that the committee reports had not specifically 
identified, or projects that were less expensive than anticipated, and 
therefore had "savings." However, one National Park Service official 
expressed concern about these unfunded projects, suggesting that if 
transfers continue without complete reimbursement, the construction 
program may no longer have sufficient funds to pay for all 
congressionally directed projects, even though funds were already 
appropriated for them.

Program Funding Deficits: 

Funding transfers also disrupted annual budgeting efforts, contributing 
to numerous individual Forest Service programs going into deficit in 
2003 when agency officials overspent funds internally set aside for the 
programs. Forest Service officials attributed the deficits in part to 
actions they took to execute the transfer of funds--specifically, the 
combination of spending early and transferring late. In 2002, the fire 
season began unusually early, and the Forest Service ordered an 
agencywide spending freeze on all nonessential expenses beginning in 
early July. By doing so, the Forest Service ensured that enough funds 
were available to pay for suppression costs. However, at the end of the 
fiscal year, there were substantial funds left in some programs, and 
officials believed that more projects could have been completed. In an 
effort to avoid this situation and to complete more projects while 
still providing for suppression costs in 2003, the Forest Service did 
not start transferring funds until mid-August and, even then, did not 
order a spending freeze. In addition, agency officials focused on 
spending money earlier in the year, so that they could complete more 
projects before funds were transferred for suppression. After funds 
were transferred, some programs had nearly depleted their financial 
resources. Nevertheless, agency officials said they continued spending 
in a number of cases because they had made commitments to contractors 
or others, or because expenses such as vehicle maintenance were 
essential. At year-end, some programs were in deficit. For example, all 
11 forests in the Forest Service's southwestern region ended 2003 with 
deficits in at least 30 percent of the programs from which transfers 
were made. Seven of the 11 forests had deficits in 50 percent or more 
of these programs.[Footnote 12]

Another factor that contributed to 2003 program deficits was that the 
Forest Service used unreliable estimates to determine the amount of 
money available for transfers. Specifically, when the Forest Service 
made transfers in 2003, its headquarters officials estimated the 
minimum balance necessary for each program by projecting salary needs 
for the remainder of the fiscal year and adding a small amount for 
contingencies. The estimate was based on two pay periods in July, and, 
in most cases, headquarters transferred all of the balance above this 
estimated amount. However, headquarters officials made this transfer 
without adequately consulting the regions or local forest units to 
obtain information on their specific salary needs for the remainder of 
the fiscal year. As such, in some cases, the salary estimates were 
understated because some staff were on suppression duty during the two 
pay periods and the suppression program was paying their salaries. 
Consequently, when these staff returned from suppression duty before 
the end of the fiscal year, the balance remaining was not always 
sufficient to cover their salary costs. According to headquarters 
officials, they used rough salary estimates because suppression program 
funds were nearly depleted and they needed to make transfers 
immediately, leaving inadequate time for forest-level officials--who 
have access to detailed payroll information--to estimate salary costs. 
Nevertheless, officials in the Washington Office directed regional and 
forest-level officials to ensure that all full-time staff continued to 
be paid in full. In order to do so, in some cases, staff worked in 
alternate programs so that they could be paid through those programs. 
In other cases, agency officials continued to draw salaries from 
depleted programs, and, as a result, the programs went into deficit. 
Further, to avoid this situation, some officials said their managers 
encouraged them to go on fire suppression detail where there was a 
need, so that their salaries would be paid from the suppression 
program. Forest Service officials indicated they used the following 
year's appropriation to replenish the programs that went into deficit; 
however, this practice reduced the amount of funds available for that 
year's program of work.

Finally, if transfers to pay for wildfire suppression continue, project 
cancellations and delays, strained relationships, and management 
difficulties will likely continue and be compounded. According to 
agency officials, some impacts have yet to become apparent. For 
example, some projects are funded in one year with the expectation that 
the funds will be spent over several years as the project is 
implemented. For such projects, the impacts of transfers may only 
become apparent as the project nears its completion. Additionally, when 
projects are deferred to the next year, agency officials often must use 
resources originally dedicated to other projects. The result is a 
domino effect: deferring one year's projects displaces the next year's 
projects, which must in turn be deferred to the following year. 
Furthermore, because of 2003 program deficits, the impacts of funding 
transfers will continue into 2004. For programs that were in deficit at 
the end of 2003, officials had to first pay off the deficit at the 
beginning of 2004, effectively reducing their annual budget and the 
number of projects they will be able to fund.

If funding transfers continue, the agencies and the Congress will 
repeatedly confront difficult decisions in determining how much funding 
to transfer from which programs and how much to reimburse. In making 
such decisions, the Forest Service and Interior have attempted to 
minimize impacts to programs and projects, but neither agency 
systematically tracks such impacts at a national level. To identify the 
impacts of funding transfers on its programs in 2003, Forest Service 
officials collected some information about impacts from regional 
offices. However, the information was neither consistent nor 
comprehensive because not every region provided it, and those that did, 
provided it in different forms with varying degrees of detail. 
Enhancing their understanding of how funding transfers affect programs 
could improve the ability of the agencies and the Congress to minimize 
negative impacts to programs and projects.

In 2003, the Forest Service added a feature to its accomplishment 
reporting system to track the impacts of funding transfers. The feature 
allows agency officials to identify which national performance goals 
are affected by transfers and to what extent. For example, officials 
can identify how many acres of land were not acquired because of 
funding transfers. However, there are several agency programs that do 
not use this system to track their accomplishments. If more programs 
used this system and tracked accomplishment shortfalls caused by 
funding transfers, the Forest Service and the Congress would have more 
comprehensive information and could make more informed decisions about 
wildfire suppression funding, transfers, and reimbursements. Interior 
similarly could refine its existing accomplishment tracking systems to 
collect nationwide information about the impacts of transfers on their 
programs. Because accomplishment information is compiled at the end of 
the fiscal year, it would be of limited value in determining potential 
effects of current year transfers before they are made. Nevertheless, 
nationwide information on impacts from prior years could help agency 
officials and the Congress make informed decisions about current year 
transfers and reimbursements.

Improvements for Estimating Suppression Costs and Alternatives for 
Funding Wildfire Suppression Could Be Considered: 

To help mitigate the negative impacts of funding transfers, the Forest 
Service and Interior should improve their method for estimating annual 
suppression costs and the Congress could consider alternative 
approaches for funding wildfire suppression. The agencies' use of a 10-
year average of wildfire suppression costs to estimate and budget for 
annual suppression costs has substantially underestimated actual costs 
during the last several years. While uncertainties about the number of 
wildfires and their location, size, and intensity make it difficult to 
estimate wildfire suppression costs, alternative methods that more 
effectively account for these uncertainties and annual changes in 
firefighting costs should be considered for improving the information 
provided to agency and congressional decision makers. Additionally, to 
further mitigate the impacts of funding transfers, the Congress could 
consider several alternative approaches to funding wildfire 
suppression, such as establishing a governmentwide or agency-specific 
reserve account dedicated to funding wildfire suppression activities. 
Each alternative has advantages and disadvantages with respect to, 
among other things, reducing the need to transfer funds, creating 
incentives for agencies to contain suppression costs, and allowing for 
congressional review. Thus, selecting any alternative would require the 
Congress to make difficult decisions, including taking into 
consideration the effect on the federal budget deficit.

Annual Wildfire Suppression Budgets and Appropriation Decisions Have 
Been Based on Cost Estimates That Have Significantly Understated Actual 
Costs: 

For the past several years, the Forest Service, Interior, and the 
Congress have made annual wildfire suppression budget and 
appropriations decisions based on estimates of suppression costs that 
frequently have substantially understated actual costs. In developing 
their annual suppression budgets, the Forest Service and Interior use a 
10-year average of suppression costs to estimate annual suppression 
costs. The agencies calculate this estimate up to 2 years in advance of 
when suppression funds are actually needed. The Congress also uses this 
estimate in deciding how much to appropriate for wildfire suppression 
activities. However, since 1990, these annual estimates frequently have 
understated actual suppression costs by hundreds of millions of 
dollars, as illustrated in figure 7. In fact, over the last 5 years, 
the estimates have understated actual suppression costs by about $1.8 
billion. This shortfall in funding to cover actual suppression costs 
has occurred, in part, because the agencies and the Congress developed 
annual budget requests and made appropriation decisions for suppression 
activities on the basis of these estimates. In funding suppression 
activities based on these estimates, the Congress was able to fund, and 
the agencies were able to address, other program priorities without 
negatively affecting the federal budget deficit. However, in doing so, 
the agencies have had insufficient funds to pay for all suppression 
activities in recent years because of the increase in the number and 
intensity of wildfires and the costs to suppress them. As a result, the 
agencies have had to transfer hundreds of millions of dollars from 
other programs.

Figure 7: Actual Suppression Costs Have Frequently Exceeded Estimated 
Costs and Appropriations since 1990: 

[See PDF for image]

Note: The suppression cost estimate, which is based on a 10-year 
average of suppression costs, is lagged 2 years to be consistent with 
the suppression appropriations.

[End of figure]

Improvements in Estimating Suppression Costs Should Be Considered: 

Alternative methods should be considered for improving the suppression 
cost estimates that are provided to agency and congressional decision 
makers for use in estimating and funding wildfire suppression costs. 
Agency officials acknowledged that the 10-year average has 
substantially understated actual suppression costs in recent years. 
Although agency officials indicated they have considered alternative 
methods for improving the forecasts, they believe that the 10-year 
average is a reasonable and inexpensive way to estimate wildfire 
suppression costs. However, the usefulness of a 10-year average is 
limited when actual costs change rapidly from year to year, as they 
have recently. Furthermore, because the average is presented as a 
"point estimate" of likely costs instead of in conjunction with a range 
of cost estimates reflecting the uncertainties of wildfires, it may 
convey an unwarranted sense of precision to decision makers. For 
example, as shown in figure 7, recent actual suppression costs have 
been higher than earlier levels. Agency officials believe that recent 
abnormal drought conditions have contributed to unusually large and 
catastrophic wildfires that are much more expensive to suppress than 
typical fires prevalent for most of the previous 10 years. In addition, 
over the last few years, the cost of fighting wildfires in the wildland 
urban interface has risen significantly due to the number of homes 
built in these areas and the increased resources needed to protect them 
from wildfires. Also, costs related to the use of aircraft to fight 
wildfires, especially insurance rates, have increased significantly 
since September 11, 2001. Alternative methods that more effectively 
account for annual changes in expenditures and that convey the 
uncertainties associated with making the forecasts should be considered 
for improving the information provided to agency and congressional 
decision makers. For example, an estimate based on a weighted 10-year 
average, in which more weight in the average is given to recent 
expenditures relative to older ones, may be more effective in 
accounting for annual changes in expenditures.[Footnote 13] This 
information could provide agency and congressional decision makers with 
more useful data to develop budget requests and fund suppression 
activities at a level that reduces the need for funding transfers and 
subsequent reimbursements. However, in doing so, higher estimated costs 
for suppression could result, at least in the near term. In this 
context, the Congress would have to make difficult decisions about 
whether to increase funding for wildfire suppression to more closely 
reflect estimated costs, and, if so, whether to reduce appropriations 
to other government programs in order to avoid adding to the federal 
budget deficit.

Alternative Wildfire Funding Approaches Merit Further Consideration: 

In addition to the agencies refining their estimates of suppression 
costs, the Congress also could consider alternative funding approaches 
to further mitigate the effects of funding transfers on agency programs 
and reduce the need to provide supplemental appropriations. For 
example, the Congress might consider creating an emergency reserve 
account that is governmentwide or agency-specific, and that provides a 
specific amount of funds when the reserve is created or allows for as 
much funding as is necessary. Each alternative has advantages and 
disadvantages related to influencing the need for transferring funds, 
creating incentives for the agencies to contain suppression costs, and 
allowing for congressional review. We previously issued two reports, 
and the Congressional Budget Office issued testimony, that presented 
various alternatives for funding wildfire suppression and other 
emergency needs.[Footnote 14] Some of the alternatives presented in 
these reports and testimony are summarized in table 2 and described 
below: 

Table 2: Comparison of Alternative Types of Reserve Accounts to Help 
Fund Wildfire Suppression: 

Governmentwide reserve account: Current year funds; 
Definition: A certain amount of funding would be available for various 
emergencies for 1 year; 
Advantages: Pooling resources would allow for fluctuations in funding 
needs; Annual opportunity for congressional review; 
Disadvantages: Transfers may still be necessary; Supplemental 
appropriations may add to the federal budget deficit if funding for 
other agency or other government programs is not cut; May create 
incentive to spend entire fund before year- end; Less incentive to 
contain suppression costs; 
 
Governmentwide reserve account: No-Year funds; 
Definition: A certain amount of funding would be available for various 
emergencies over multiple years; 
Advantages: Pooling resources would allow for fluctuations in funding 
needs; Annual opportunity for congressional review; No incentive to 
spend entire fund before year-end;
Disadvantages: Transfers may still be necessary; Supplemental 
appropriations may add to the federal budget deficit if funding for 
other agency or other government programs is not cut; Less incentive to 
contain suppression costs; 
 
Agency-Specific reserve account: Permanent indefinite appropriation; 
Definition: As much funding as needed would always be available for 
fire suppression; 
Advantages: No need to transfer funds; 
Disadvantages: Federal budget deficit could increase if funding for 
other agency or other government programs is not cut; Less incentive to 
contain suppression costs; No opportunity for annual congressional 
review; 
 
Agency-Specific reserve account: Current indefinite appropriation; 
Definition: As much funding as needed would be available for fire 
suppression for 1 year; 
Advantages: No need to transfer funds; Annual opportunity for 
congressional review; 
Disadvantages: Federal budget deficit could increase if suppression 
costs exceeded budget estimates; Less incentive to contain suppression 
costs; 
 
Agency-Specific reserve account: Definite appropriation; 
Definition: A specific amount of funding would be available for fire 
suppression for a specific time period, such as 1 year. 
Advantages: Federal budget deficit would not increase if funding for 
other agency or other government programs was cut; Inherent incentive 
to contain suppression costs; Annual opportunity for congressional 
review. 
Disadvantages: Transfers may still be necessary; Supplemental 
appropriations may add to the federal budget deficit if funding for 
other agency or other government programs is not cut. 

Sources: GAO and GAO analysis of Congressional Budget Office data.

[End of table]

Reserve accounts provide early recognition that there will likely be a 
demand on federal resources for natural disasters-thus providing 
greater transparency in the budget process. The greater the amount of 
funds in the reserve account, the less likely agencies would need to 
transfer funds from other programs. Reducing the need to transfer funds 
would mitigate the need for supplemental appropriations that have added 
hundreds of millions of dollars to the federal budget deficit. However, 
the greater the amount of funds in the reserve account, the more 
difficult it would be for the Congress to limit total government 
spending. On the other hand, if the Congress limited the amount of 
funds appropriated for wildfire suppression, including the amount in 
the reserve account, there would be a greater chance that the agencies 
would need to transfer funds, and the Congress would need to reimburse 
the transfers through supplemental appropriations. The amount and 
accessibility of funds in the reserve account also may affect the 
agencies' incentives to contain the costs of suppression activities. 
However, the effect of such incentives would likely be limited, given 
that many unpredictable and uncontrollable factors affect the costs of 
fire suppression activities.

Governmentwide Reserve Account: 

The Congress could create a governmentwide reserve account into which 
funds normally appropriated to agencies having responsibility for 
addressing unforeseen situations and emergencies would be appropriated. 
These agencies would include not only the Forest Service and Interior, 
but also the Federal Emergency Management Agency and the Department of 
Defense, among others. Combining the emergency funds of all these 
agencies into one account might alleviate the need for supplemental 
appropriations, because in any given year an increase in spending for 
one agency may be offset by a lower than usual spending by another 
agency. Without supplemental appropriations, there would be no increase 
in the budget deficit. A possible disadvantage of using a 
governmentwide reserve that is funded annually is that it could produce 
the expectation that the entire fund should be spent each year and, as 
the year progresses, claims on the fund might increase. Similarly, a 
governmentwide reserve might not provide incentives for agencies to 
contain the costs of wildfire suppression.

A governmentwide reserve account could be created using funds 
designated as no-year money, so that funds not spent in a given year 
remain in the account for use in following years. Under such an 
account, there would be no incentive to spend the entire fund each 
year. To further control the use of the reserve account, the agencies' 
access to the fund could be tied to specific criteria. Criteria could 
parallel those previously offered by OMB in designating funds as an 
emergency requirement; namely, that the emergency (1) require a 
necessary expenditure-an essential or vital expenditure, not one that 
is merely useful or beneficial; (2) occur suddenly-quickly coming into 
being, not building up over time; (3) be urgent-a pressing and 
compelling need requiring immediate action; (4) be unforeseen-not 
predictable or anticipated as a coming need; and (5) not be 
permanent-the need to fund is temporary. Nevertheless, whether the 
funds are designated as no-year or not, additional funding could still 
be needed at year-end. If so, the agencies would need to transfer funds 
from other program accounts, and the Congress would have to choose 
between providing supplemental appropriations to reimburse the funding 
transfers--which would add to the federal budget deficit--or providing 
no reimbursements. In such cases, even if the agencies did need to 
transfer funds, the amount transferred would be less than it would have 
been without the reserve.

Agency-Specific Reserve Accounts: 

Another approach for funding wildfire suppression activities cited in 
one of our earlier reports is to establish agency-specific reserve 
accounts for those agencies that regularly respond to federal 
emergencies and require those agencies to satisfy criteria similar to 
the OMB criteria previously described, before the funds are released. 
Agency-specific reserve accounts could be funded through a permanent, 
indefinite appropriation, which would provide as much funding as needed 
for specific purposes and would always be available for those purposes 
without any further action by the Congress. A permanent, indefinite 
appropriation would eliminate the need to transfer funds from other 
programs and to provide supplemental appropriations to reimburse 
funding transfers. A disadvantage of an indefinite appropriation is 
that if actual expenditures exceed the estimates, the federal budget 
deficit will be greater than anticipated. A disadvantage of a permanent 
appropriation is that it would lessen the opportunity for the Congress 
to regularly review the efficiency and effectiveness of fire 
suppression activities, because such reviews are typically conducted 
during the annual appropriations process.

Alternatively, funding for agency-specific reserve accounts could be 
provided through a current, indefinite appropriation, which provides as 
much funding as needed for the current fiscal year. Funding wildfire 
suppression using a current, indefinite appropriation would allow the 
Congress to periodically review suppression activities through the 
annual appropriations process since the Congress would appropriate 
reserve funds each year. However, an indefinite appropriation could 
still result in higher than estimated costs and a higher than 
anticipated federal budget deficit. Additionally, any indefinite 
appropriation would have no inherent incentives for the agencies to 
contain suppression costs because the funding level would be unlimited.

Agency-specific reserve accounts also could be funded by a definite 
appropriation with a specific amount of funds, not to be exceeded in a 
given year. With such limits, there would be an incentive for the 
agencies to contain suppression costs. As with a current, indefinite 
appropriation, the Congress could review suppression activities each 
year during its annual appropriations process. This alternative also 
could avoid increasing the federal budget deficit if appropriations to 
other agency program accounts were reduced by an amount corresponding 
to the amount in the reserve. However, should suppression costs be 
higher than the amount provided in the reserve account for the current 
year, a decision would need to be made on whether to transfer funds 
from other agency programs and, if so, whether to reimburse the funding 
transfers with a supplemental appropriation that would increase the 
federal budget deficit.

Recently, the Senate Committee on the Budget has proposed an option for 
funding wildfire suppression activities in its resolution on the budget 
for fiscal year 2005. The resolution would provide for a reserve 
account funded through a definite appropriation of up to $500 million 
in additional annual funding for fiscal years 2004 through 
2006.[Footnote 15] The funds in the account would be available to the 
Forest Service and Interior for fire suppression activities only if (1) 
the agencies are initially appropriated funds equal to or greater than 
the 10-year average of wildfire suppression costs and (2) the initial 
appropriations are insufficient to cover actual costs. Such an 
alternative would add to the federal budget deficit, unless the $500 
million was reduced from other Forest Service, Interior, or other 
governmentwide programs when the Congress initially develops the 
federal budget. Further, if the funds in this account were sufficient 
to pay for all wildfire suppression activities above the 10-year 
average of suppression costs, there would be no need for the Forest 
Service or Interior to transfer funds from other program accounts. Had 
there been a $500 million reserve account available for wildfire 
suppression over the last 5 years, transfers would still have been 
necessary, but to a lesser extent, because suppression costs greatly 
exceeded the 10-year average in the extensive fire seasons in 2002 and 
2003.

Other Funding Options: 

During our visits with agency officials, we also discussed various 
other ideas for acquiring additional revenues to help pay for wildfire 
suppression. One idea was to charge fees for visitors, and state, 
local, and private entities that use federal land and resources, or to 
people who own property adjacent to federal forest land. For example, 
agencies could place a surcharge on existing user fees at national 
forests, parks, and other federal lands and use the additional revenue 
to help fund wildfire suppression. Another idea was to establish a 
special fund, similar to the K-V Fund, whose revenues would be 
dedicated to wildfire suppression. Revenues accruing to such a fund 
could come from fees charged for state, local, or private use of 
federal lands and its resources. Still another option was to levy a 
stipend on property owners' federal tax for living in the wildland 
urban interface. Some other, more unconventional methods for mitigating 
the federal share of wildfire suppression costs also were discussed, 
such as allowing private companies to "sponsor" fire suppression 
efforts by providing funding as a measure of corporate goodwill to the 
local community. The advantage of all of these options would be to 
reduce the federal government's burden to pay for fire suppression. 
Because the Forest Service and Interior do not have the authority to 
increase funding for suppression over the amount provided in 
appropriations, any of these options would require congressional 
action. Further, all of these options could strain agency relations 
with the public and others.

Conclusions: 

Wildfires burn millions of acres of federal land every year, and the 
Forest Service and Interior spend billions of dollars suppressing them. 
In doing so, the agencies must balance the goal of protecting lives, 
property, and resources against the goal of containing costs. 
Transferring funds from other agency programs has helped fund needed 
wildfire suppression activities but not without a cost. These transfers 
have had widespread negative effects on Forest Service and Interior 
programs, projects, relationships, and management. In addition, the 
subsequent repayment of transfers with supplemental appropriations has 
added hundreds of millions of dollars to the federal budget deficit. 
These effects are likely to increase should funding transfers continue 
to be necessary in the future.

Notwithstanding the uncertainties and difficulty of accurately 
estimating wildfire suppression costs, there are a number of factors 
that exacerbate the problem of transferring funds to help suppress 
wildfires. First, the methodology the agencies use to estimate 
suppression costs and determine their budgets is flawed because it does 
not adequately account for recent increases in the costs to suppress 
wildfires. Without this information, the Congress may have insufficient 
information to make prudent funding decisions. Second, the estimates 
generated by the monthly forecasting models have been inaccurate and 
did not provide a sound basis for deciding if, and to what extent, 
funding transfers were needed. Third, the agencies have inadequate 
information to understand the effects that transfers are having on 
their programs. As such, they are not well positioned to report the 
impacts to the Congress or make informed decisions about future 
transfers. Finally, the Forest Service's method for estimating salary 
costs for the remainder of the fiscal year without adequately 
consulting with local forest units is problematic. Consequently, Forest 
Service headquarters officials do not have sufficiently accurate data 
to make transfer decisions and preclude agency programs from going into 
deficit.

Because of the difficulty of accurately estimating suppression costs 
and the budget implications of providing additional funding for 
suppression, it is likely that suppression funding shortfalls will 
continue in the future. To minimize the budgetary implications, the 
intended goal should be to achieve an appropriate balance between the 
shortfall and the impacts that transfers will have on agency programs. 
Despite the best efforts to achieve this balance, there will be times 
when the size of the shortfall will create problems and impacts to 
important programs. Currently, there is no budgeting or funding 
mechanism that can help mitigate these impacts. Consequently, the 
agencies are forced to make difficult decisions to fund wildfire 
suppression at the expense of meeting other important programmatic 
goals.

Recommendations for Executive Action: 

To help minimize the impacts of wildfire funding transfers on other 
agency programs and to improve the agencies' budget estimates for 
wildfire suppression costs, we are recommending that the Secretaries of 
Agriculture and the Interior direct the Forest Service and Interior 
agencies to work together to: 

* improve their methods for estimating annual wildfire suppression 
costs by more effectively accounting for annual changes in costs and 
the uncertainties associated with wildfires in making these estimates, 
so that funding needs for wildfire suppression can be predicted with 
greater accuracy;

* annually conduct a formal assessment of how the agencies' methods for 
estimating annual suppression costs and their monthly forecasting 
models performed in estimating wildfire suppression costs relative to 
actual costs, to determine if additional improvements are needed; and: 

* consistently track accomplishment shortfalls caused by funding 
transfers across all programs and include this information in annual 
accomplishment reports to provide agency decision makers and the 
Congress with better information for making wildfire suppression 
transfer and funding decisions.

In addition, to more accurately determine the amount of funds available 
to transfer for wildfire suppression, we recommend that the Secretary 
of Agriculture direct the Chief of the Forest Service to estimate 
remaining salary needs for the fiscal year by consulting with local 
forest officials to obtain more current, specific payroll information, 
so that the risk of programs going into deficit can be reduced.

Matters for Congressional Consideration: 

To reduce the potential need for the Forest Service and Interior to 
rely on transferring funds from other programs to pay for wildfire 
suppression on public lands, the Congress could consider alternative 
funding approaches for wildfire suppression, such as, but not limited 
to, establishing a governmentwide or agency-specific emergency reserve 
account.

Agency Comments and Our Evaluation: 

We provided a draft of this report to the Secretaries of Agriculture 
and the Interior for review and comment. In responding, the Forest 
Service generally concurred with our findings and recommendations, and 
Interior concurred with our findings, but both agencies expressed 
concerns about our recommendation that they pursue alternative methods 
for estimating suppression costs. Both the Forest Service and Interior 
provided written comments, which are included in appendixes IV and V, 
respectively.

Concerning our recommendation that the agencies improve their methods 
for estimating annual wildfire suppression costs, Interior commented 
that the current method--relying on the 10-year average of suppression 
costs--has proved to be "a reasonable and durable basis for suppression 
budgeting." In support of this point, they noted that between 1995 and 
1998, their actual suppression costs were below the 10-year average in 
three seasons. While we do not dispute this fact, we disagree that 
using the 10-year average has been "a reasonable and durable basis" for 
budgeting for suppression costs. As noted in our report, since 1990, 
the agencies' reliance on the 10-year average has frequently resulted 
in annual budget estimates well below actual suppression costs. For 
Interior, the 10-year average was below actual costs in 8 of the 14 
years since 1990; for the two agencies together, the 10-year average 
was below actual costs in 11 of the 14 years. Further, in the years 
when the average has understated actual costs, the difference has 
frequently been significant. Over the last 5 years, the 10-year average 
has understated the two agencies' actual suppression costs by a total 
of about $1.8 billion.

The Forest Service, in commenting on the use of the 10-year average, 
recognized the weaknesses associated with using the average to estimate 
annual wildfire suppression costs and noted the agency has looked into 
other methods that could more accurately predict future suppression 
costs. Some of the methods considered included using a 5-year average 
and inflating the historical costs to current dollar values. The Forest 
Service also noted that agency officials have discussed various 
modeling methods with researchers who said they could design a very 
expensive, complex model that would be more accurate than the 10-year 
average. We support the Forest Service for taking this initial step and 
encourage the agency to continue its efforts to identify and implement 
a cost-effective method for improving their estimates of annual 
suppression costs. As noted in our report, alternative methods that 
more effectively account for annual changes in expenditures and that 
convey the uncertainties associated with making the forecasts should be 
considered.

The Forest Service also noted that our report does not address the 
potential consequences associated with not making the funding 
transfers. These negative impacts could include (1) not having adequate 
personnel and equipment, (2) an increase in the number of acres burned, 
and (3) an increase in the loss of homes and other property. While we 
believe that such impacts could result if funding transfers did not 
occur, the objective of our report is to identify the effects on Forest 
Service and Interior programs from which funds were actually 
transferred.

In addition, Interior noted that shifting funds from one program to 
another within the wildland fire management account does not constitute 
a transfer, and, as such, we were incorrect in saying that Interior 
transferred funds from wildland fire programs. However, as noted in 
footnote 2, for ease of explanation throughout the report, we use the 
word "transfer" to refer both to the transfer of funds from one 
appropriation account to another and to the reprogramming of funds 
between programs within a single appropriation account. In either 
situation, the program from which the funds were taken is affected.

The agencies also provided other comments and technical clarifications 
on the draft that we incorporated into the report where appropriate.

As arranged with your offices, unless you publicly announce its 
contents earlier, we plan no further distribution of this report until 
30 days after the date of this letter. At that time, we will send 
copies of this report to the Chairman, Senate Committee on Energy and 
Natural Resources; the Chairman and Ranking Minority Member, House 
Committee on Resources; the Chairman and Ranking Minority Member, 
Subcommittee on Forests and Forest Health, House Committee on 
Resources; and other interested congressional committees. We will also 
send copies of this report to the Secretary of Agriculture; the 
Secretary of the Interior; the Chief of the Forest Service; the 
Directors of the Bureau of Land Management, the National Park Service, 
and the Fish and Wildlife Service; the Acting Director, Bureau of 
Indian Affairs; the Director, Office of Management and Budget; and 
other interested parties. We will make copies available to others upon 
request. In addition, this report will be available at no charge on 
GAO's Web site at [Hyperlink, http://www.gao.gov].

If you or your staff have any questions about this report, please 
contact me at (202) 512-3841. Key contributors to this report are 
listed in appendix VI.

Signed by: 

Barry T. Hill: 
Director, Natural Resources and Environment: 

[End of section]

Appendixes: 

Appendix I: Scope and Methodology: 

To determine the amount and the programs from which the U.S. Forest 
Service and the Department of the Interior transferred funds from 1999 
through 2003, we collected data from the agencies' headquarters on 
funds transferred and reimbursed by agency, program, and year. We 
identified the procedures the agencies follow when transferring and 
reimbursing funds by obtaining and reviewing agency strategy and 
planning documents and discussing the procedures actually used with 
agency officials in headquarters, regional offices, and local units. We 
also interviewed agency officials about the internal controls they use 
to carry out these procedures. In addition, we contacted budget 
officers at the Forest Service's nine regional offices and obtained 
information on the amounts transferred and reimbursed to their units. 
Where appropriate, we also met with officials from the Interior 
agencies that are involved with wildfire suppression activities--the 
Bureau of Indian Affairs, Bureau of Land Management, U.S. Fish and 
Wildlife Service, and National Park Service. We interviewed budget 
officers in Forest Service and Interior headquarters about the 
financial systems they use to ensure the accuracy of the amount of 
funds transferred and reimbursed. We also interviewed Office of 
Management and Budget (OMB) officials to obtain their views on the 
reliability and completeness of the data they receive from each agency, 
as well as the adequacy of the agencies' internal procedures to 
generate and track these data. Although we relied primarily on agency 
data, we compared these data with budget documents that corroborated 
the amounts transferred and reimbursed, where possible. We took 
appropriate measures to ensure that the Forest Service and Interior 
data on the amount of funds transferred and reimbursed and on actual 
suppression costs were sufficiently reliable for our purposes, and that 
the internal procedures at the Forest Service and Interior were 
sufficient to generate these data. In addition, we used the Gross 
Domestic Product Price Index to adjust dollars for inflation.

To identify the impacts on agency programs from which funds were 
transferred, we interviewed Forest Service and Interior headquarters 
officials with responsibility for the affected programs. We also 
visited six Forest Service regional offices; 7 national forests, and 
contacted an additional 14 national forests; and visited seven Interior 
field offices. Although we did not visit all Forest Service regions, we 
chose a nonprobability sample of regions that reflected a range of 
funds transferred as well as the geographic diversity of program 
impacts (see table 3).[Footnote 16]

Table 3: Forest Service Regional Offices Visited by GAO: 

Forest Service region: Region 1; 
Geographic area: Montana, North Dakota, Northeastern Washington, 
Northern Idaho, and South Dakota; 
Funds transferred, 1999-2003: $71,337,000.

Forest Service region: Region 2; 
Geographic area: Colorado, Kansas, Nebraska, South Dakota, and Wyoming; 
Funds transferred, 1999-2003: $46,102,000.

Forest Service region: Region 3; 
Geographic area: Arizona, New Mexico, Oklahoma panhandle, and Texas 
panhandle; 
Funds transferred, 1999-2003: $73,794,000.

Forest Service region: Region 5; 
Geographic area: California, Hawaii, and U.S. Pacific Islands; 
Funds transferred, 1999-2003: $94,440,000.

Forest Service region: Region 8; 
Geographic area: Alabama, Arkansas, Florida, Georgia, Kentucky, 
Louisiana, Mississippi, North Carolina, Oklahoma, South Carolina, 
Tennessee, Texas, and Virginia; 
Funds transferred, 1999-2003: $90,860,000.

Forest Service region: Region 9; 
Geographic area: Connecticut, Delaware, Illinois, Indiana, Iowa, Maine, 
Maryland, Massachusetts, Michigan, Minnesota, Missouri, New Hampshire, 
New Jersey, New York, Ohio, Pennsylvania, Rhode Island, Vermont, West 
Virginia, and Wisconsin; 
Funds transferred, 1999-2003: $57,000,000. 

Sources: For geographic information, [Hyperlink, http://www.fs.fed.us] 
www.fs.fed.us. For funds transferred, GAO analysis of Forest Service 
financial data.

[End of table]

Where appropriate, we also met with Interior field offices, grant 
recipients, a state forester, and representatives of nonprofit 
organizations who were collocated in the Forest Service regions 
visited. In addition, we contacted national forests officials in each 
region we visited and obtained detailed information regarding the 
specific impacts to their programs and projects. We interviewed 
representatives of impacted programs in both regional and national 
forest offices. We collected documents that listed the projects 
deferred or canceled due to transfers; obtained information on the cost 
of the impact to some affected projects; and--in some instances--
conducted site visits to affected project locations. In our review of 
impacts, we focused on fiscal years 2002 and 2003 because in these 2 
fiscal years transfers for wildfire suppression involved many more 
programs than they did previously.

In reviewing the agencies' methods for estimating suppression costs, we 
discussed the details of each method with agency officials responsible 
for developing the estimates. We reviewed the agencies' current 
estimation methodology, compared the estimates with actual costs and 
discussed the reasons for differences between them with agency 
officials, and identified alternatives for estimating suppression 
costs. In reviewing alternative approaches for funding wildfire 
suppression, we reviewed previous GAO and Congressional Budget Office 
reports,[Footnote 17] as well as a Forest Service study related to 
budgeting for emergencies, and discussed alternative funding options 
with agency officials. We also obtained the views of OMB officials on 
other appropriation approaches for funding wildfire suppression. In 
addition, we analyzed Forest Service and Interior budget documents, 
congressional appropriations documents, and agency suppression cost 
forecasting models.

We performed our work between July 2003 and March 2004 in accordance 
with generally accepted government auditing standards.

[End of section]

Appendix II: Summary of Funds Transferred from and Reimbursed to Forest 
Service and Interior Programs, 1999 through 2003: 

These tables summarize the amount of funds transferred from and 
reimbursed to Forest Service and Interior programs from 1999 through 
2003. Table 4 summarizes the funds transferred from major Forest 
Service programs and from the construction and land acquisition 
programs, as well as various fire programs, within Interior's four 
agencies that have responsibility for wildfire suppression activities. 
Table 5 summarizes the amount of funds reimbursed to these programs 
over the 5-year period. The information presented in the tables was 
obtained from Forest Service and Interior budget documents.

Table 4: Transfers to Wildfire Suppression, by Forest Service and 
Interior Program, 1999 through 2003: 

Agency/Program: Forest Service/K-V Fund; 
Year: 1999: $0; 
Year: 2000: $292,156,240; 
Year: 2001: $20,686,802; 
Year: 2002: $172,781,787; 
Year: 2003: $154,000,000; 
Program total: $639,624,829.

Agency/Program: Forest Service/Capital improvements and maintenance; 
Year: 1999: $0; 
Year: 2000: $0; 
Year: 2001: $52,751,345; 
Year: 2002: $159,569,062; 
Year: 2003: $105,000,000; 
Program total: $317,320,407.

Agency/Program: Forest Service/National forest system; 
Year: 1999: $0; 
Year: 2000: $0; 
Year: 2001: $0; 
Year: 2002: $157,536,335; 
Year: 2003: $125,000,000; 
Program total: $282,536,335.

Agency/Program: Forest Service/Land acquisition/Land and Water 
Conservation Fund; 
Year: 1999: $0; 
Year: 2000: $0; 
Year: 2001: $0; 
Year: 2002: $145,339,974; 
Year: 2003: $100,000,000; 
Program total: $245,339,974.

Agency/Program: Forest Service/Working Capital Fund; 
Year: 1999: $0; 
Year: 2000: $0; 
Year: 2001: $52,751,345; 
Year: 2002: $96,554,528; 
Year: 2003: $20,000,000; 
Program total: $169,305,873.

Agency/Program: Forest Service/State and private forestry; 
Year: 1999: $0; 
Year: 2000: $0; 
Year: 2001: $0; 
Year: 2002: $78,259,986; 
Year: 2003: $34,000,000; 
Program total: $112,259,986.

Agency/Program: Forest Service/Wildland fire management; 
Year: 1999: $0; 
Year: 2000: $0; 
Year: 2001: $0; 
Year: 2002: $81,309,076; 
Year: 2003: $0; 
Program total: $81,309,076.

Agency/Program: Forest Service/Forest and range research; 
Year: 1999: $0; 
Year: 2000: $0; 
Year: 2001: $0; 
Year: 2002: $23,376,359; 
Year: 2003: $10,000,000; 
Program total: $33,376,359.

Agency/Program: Forest Service/Other appropriations[A]; 
Year: 1999: $0; 
Year: 2000: $0; 
Year: 2001: $40,339,264; 
Year: 2002: $100,619,982; 
Year: 2003: $147,000,000; 
Program total: $287,959,245.

Subtotal; 
Year: 1999: $0; 
Year: 2000: $292,156,240; 
Year: 2001: $166,528,755; 
Year: 2002: $1,015,347,088; 
Year: 2003: $695,000,000; 
Program total: $2,169,032,084.

Agency/Program: Bureau of Indian Affairs/Construction; 
Year: 1999: $0; 
Year: 2000: $0; 
Year: 2001: $0; 
Year: 2002: $37,605,448; 
Year: 2003: $43,400,000; 
Program total: $81,005,448.

Agency/Program: Bureau of Indian Affairs/Land acquisition; 
Year: 1999: $0; 
Year: 2000: $0; 
Year: 2001: $0; 
Year: 2002: $0; 
Year: 2003: $0; 
Program total: $0.

Agency/Program: Bureau of Indian Affairs/Fire programs; 
Year: 1999: $0; 
Year: 2000: $0; 
Year: 2001: $0; 
Year: 2002: $5,531,050; 
Year: 2003: $500,000; 
Program total: $6,031,050.

Agency/Program: Bureau of Land Management/Construction; 
Year: 1999: $0; 
Year: 2000: $2,041,918; 
Year: 2001: $0; 
Year: 2002: $5,081,817; 
Year: 2003: $4,300,000; 
Program total: $11,423,735.

Agency/Program: Bureau of Land Management/Land acquisition; 
Year: 1999: $0; 
Year: 2000: $2,011,220; 
Year: 2001: $0; 
Year: 2002: $6,098,181; 
Year: 2003: $4,200,000; 
Program total: $12,309,401.

Agency/Program: Bureau of Land Management/Fire programs; 
Year: 1999: $0; 
Year: 2000: $0; 
Year: 2001: $0; 
Year: 2002: $3,750,381; 
Year: 2003: $6,500,000; 
Program total: $10,250,381.

Agency/Program: Fish and Wildlife Service/Construction; 
Year: 1999: $0; 
Year: 2000: $20,145,020; 
Year: 2001: $0; 
Year: 2002: $17,278,179; 
Year: 2003: $14,600,000; 
Program total: $52,023,198.

Agency/Program: Fish and Wildlife Service/Land acquisition; 
Year: 1999: $0; 
Year: 2000: $6,890,018; 
Year: 2001: $0; 
Year: 2002: $19,310,906; 
Year: 2003: $13,900,000; 
Program total: $40,100,924.

Agency/Program: Fish and Wildlife Service/Fire programs; 
Year: 1999: $0; 
Year: 2000: $0; 
Year: 2001: $0; 
Year: 2002: $0; 
Year: 2003: $1,000,000; 
Program total: $1,000,000.

Agency/Program: National Park Service/Construction; 
Year: 1999: $0; 
Year: 2000: $24,367,524; 
Year: 2001: $0; 
Year: 2002: $96,554,528; 
Year: 2003: $64,000,000; 
Program total: $184,922,052.

Agency/Program: National Park Service/Land acquisition; 
Year: 1999: $0; 
Year: 2000: $50,398,010; 
Year: 2001: $0; 
Year: 2002: $61,998,171; 
Year: 2003: $20,100,000; 
Program total: $132,496,180.

Agency/Program: National Park Service/Fire programs; 
Year: 1999: $0; 
Year: 2000: $0; 
Year: 2001: $0; 
Year: 2002: $5,081,817; 
Year: 2003: $2,600,000; 
Program total: $7,681,817.

Subtotal; 
Year: 1999: $0; 
Year: 2000: $105,853,710; 
Year: 2001: $0; 
Year: 2002: $258,290,477; 
Year: 2003: $175,100,000; 
Program total: $539,244,186.

Total; 
Year: 1999: $0; 
Year: 2000: $398,009,950; 
Year: 2001: $166,528,755; 
Year: 2002: $1,273,637,565; 
Year: 2003: $870,100,000; 
Program total: $2,708,276,270.

Sources: Forest Service and Interior Financial Data.

Note: Funds listed are in 2003 dollars.

[A] Other appropriations include the forest land enhancement, brush 
disposal, timber salvage sale, forest restoration and improvements, and 
recreation fee demonstration programs.

[End of table]

Table 5: Transfer Reimbursements to Forest Service and Interior 
Programs, 1999 through 2003: 

Agency/Program: Forest Service/K-V Fund; 
Year: 1999: $0; 
Year: 2000: $292,156,240; 
Year: 2001: $20,686,802; 
Year: 2002: $71,145,442; 
Year: 2003: $154,000,000; 
Program total: $537,988,484.

Agency/Program: Forest Service/Capital improvements and maintenance; 
Year: 1999: $0; 
Year: 2000: $0; 
Year: 2001: $52,751,345; 
Year: 2002: $134,159,976; 
Year: 2003: $95,000,000; 
Program total: $281,911,320.

Agency/Program: Forest Service/National forest system; 
Year: 1999: $0; 
Year: 2000: $0; 
Year: 2001: $0; 
Year: 2002: $63,014,534; 
Year: 2003: $52,000,000; 
Program total: $115,014,534.

Agency/Program: Forest Service/Land acquisition; 
Year: 1999: $0; 
Year: 2000: $0; 
Year: 2001: $0; 
Year: 2002: $145,339,974; 
Year: 2003: $96,000,000; 
Program total: $241,339,974.

Agency/Program: Forest Service/Working Capital Fund; 
Year: 1999: $0; 
Year: 2000: $0; 
Year: 2001: $52,751,345; 
Year: 2002: $30,490,904; 
Year: 2003: $9,000,000; 
Program total: $92,242,248.

Agency/Program: Forest Service/State and private forestry; 
Year: 1999: $0; 
Year: 2000: $0; 
Year: 2001: $0; 
Year: 2002: $78,259,986; 
Year: 2003: $31,000,000; 
Program total: $109,259,986.

Agency/Program: Forest Service/Wildland fire management; 
Year: 1999: $0; 
Year: 2000: $0; 
Year: 2001: $0; 
Year: 2002: $60,981,807; 
Year: 2003: $0; 
Program total: $60,981,807.

Agency/Program: Forest Service/Forest and range research; 
Year: 1999: $0; 
Year: 2000: $0; 
Year: 2001: $0; 
Year: 2002: $23,376,359; 
Year: 2003: $10,000,000; 
Program total: $33,376,359.

Agency/Program: Forest Service/Other appropriations[A]; 
Year: 1999: $0; 
Year: 2000: $0; 
Year: 2001: $40,339,264; 
Year: 2002: $100,619,982; 
Year: 2003: $107,000,000; 
Program total: $247,959,245.

Subtotal; 
Year: 1999: $0; 
Year: 2000: $292,156,240; 
Year: 2001: $166,528,755; 
Year: 2002: $707,388,962; 
Year: 2003: $554,000,000; 
Program total: $1,720,073,957.

Agency/Program: Bureau of Indian Affairs/Construction; 
Year: 1999: $0; 
Year: 2000: $0; 
Year: 2001: $0; 
Year: 2002: $29,614,290; 
Year: 2003: $35,457,800; 
Program total: $65,072,090.

Agency/Program: Bureau of Indian Affairs/Land acquisition; 
Year: 1999: $0; 
Year: 2000: $0; 
Year: 2001: $0; 
Year: 2002: $0; 
Year: 2003: $0; 
Program total: $0 .

Agency/Program: Bureau of Indian Affairs/Fire programs; 
Year: 1999: $0; 
Year: 2000: $0; 
Year: 2001: $0; 
Year: 2002: $5,531,050; 
Year: 2003: $408,000; 
Program total: $5,939,050.

Agency/Program: Bureau of Land Management/Construction; 
Year: 1999: $0; 
Year: 2000: $2,037,684; 
Year: 2001: $0; 
Year: 2002: $4,002,439; 
Year: 2003: $3,513,100; 
Program total: $9,553,223.

Agency/Program: Bureau of Land Management/Land acquisition; 
Year: 1999: $0; 
Year: 2000: $2,006,986; 
Year: 2001: $0; 
Year: 2002: $4,802,317; 
Year: 2003: $3,431,400; 
Program total: $10,240,704.

Agency/Program: Bureau of Land Management/Fire programs; 
Year: 1999: $0; 
Year: 2000: $0; 
Year: 2001: $0; 
Year: 2002: $3,750,381; 
Year: 2003: $5,304,000; 
Program total: $9,054,381.

Agency/Program: Fish and Wildlife Service/Construction; 
Year: 1999: $0; 
Year: 2000: $20,145,020; 
Year: 2001: $0; 
Year: 2002: $13,606,566; 
Year: 2003: $11,928,200; 
Program total: $45,679,785.

Agency/Program: Fish and Wildlife Service/Land acquisition; 
Year: 1999: $0; 
Year: 2000: $6,890,018; 
Year: 2001: $0; 
Year: 2002: $15,207,338; 
Year: 2003: $11,356,300; 
Program total: $33,453,656.

Agency/Program: Fish and Wildlife Service/Fire programs; 
Year: 1999: $0; 
Year: 2000: $0; 
Year: 2001: $0; 
Year: 2002: $0; 
Year: 2003: $816,000; 
Program total: $816,000.

Agency/Program: National Park Service/Construction; 
Year: 1999: $0; 
Year: 2000: $24,367,524; 
Year: 2001: $0; 
Year: 2002: $76,036,691; 
Year: 2003: $52,288,000; 
Program total: $152,692,215.

Agency/Program: National Park Service/Land acquisition; 
Year: 1999: $0; 
Year: 2000: $50,398,010; 
Year: 2001: $0; 
Year: 2002: $48,823,559; 
Year: 2003: $16,421,700; 
Program total: $115,643,269.

Agency/Program: National Park Service/Fire programs; 
Year: 1999: $0; 
Year: 2000: $0; 
Year: 2001: $0; 
Year: 2002: $5,081,817; 
Year: 2003: $2,122,000; 
Program total: $7,203,817.

Subtotal; 
Year: 1999: $0; 
Year: 2000: $105,845,242; 
Year: 2001: $0; 
Year: 2002: $206,456,449; 
Year: 2003: $143,046,500; 
Program total: $455,348,190.

Total; 
Year: 1999: $0; 
Year: 2000: $398,001,482; 
Year: 2001: $166,528,755; 
Year: 2002: $913,845,411; 
Year: 2003: $697,046,500; 
Program total: $2,175,422,147.

Sources: Forest Service and Interior financial data.

Notes: 

Funds generally were reimbursed in the fiscal year following the year 
in which the funds were transferred. In this table, however, we listed 
reimbursements in the year in which the funds were transferred.

Funds listed are in 2003 dollars.

[A] Other appropriations include the forest land enhancement, brush 
disposal, timber salvage sale, forest restoration and improvements, and 
recreation fee demonstration programs.

[End of table]

[End of section]

Appendix III: Summary of Funds Made Available for Transfers, by Forest 
Service Region: 

These tables include information on funds made available for transfers, 
by Forest Service region. Table 6 summarizes information on funds made 
available for transfers by region for each year from 1999 through 2003. 
Table 7 summarizes information on funds made available for transfers by 
major Forest Service program and by region, aggregated over the 5-year 
period. Table 8 summarizes information on funds made available for 
transfers as a percentage of overall budget authority for each Forest 
Service region and by major program for 2002.

Table 6: Funds Made Available for Transfers to Wildfire Suppression, by 
Forest Service Washington Office and Regions, 1999 through 2003: 

Dollars in thousands.

Forest Service[A]: 

Washington Office[B]; 
Year: 1999: $0; 
Year: 2000: $292,156; 
Year: 2001: $118,046; 
Year: 2002: $531,347; 
Year: 2003: $489,265; 
Total: $1,430,814.

Region 1; 
Year: 1999: $0; 
Year: 2000: $0; 
Year: 2001: $1,150; 
Year: 2002: $56,692; 
Year: 2003: $13,495; 
Total: 71,337.

Region 2; 
Year: 1999: $0; 
Year: 2000: $0; 
Year: 2001: $3,103; 
Year: 2002: $28,994; 
Year: 2003: $14,005; 
Total: $46,102.

Region 3; 
Year: 1999: $0; 
Year: 2000: $0; 
Year: 2001: $2,374; 
Year: 2002: $56,051; 
Year: 2003: $15,369; 
Total: $73,794.

Region 4; 
Year: 1999: $0; 
Year: 2000: $0; 
Year: 2001: $0; 
Year: 2002: $50,632; 
Year: 2003: $17,295; 
Total: $67,927.

Region 5; 
Year: 1999: $0; 
Year: 2000: $0; 
Year: 2001: $8,627; 
Year: 2002: $60,441; 
Year: 2003: $25,372; 
Total: $94,440.

Region 6; 
Year: 1999: $0; 
Year: 2000: $0; 
Year: 2001: $8,975; 
Year: 2002: $52,664; 
Year: 2003: $31,874; 
Total: $93,512.

Region 8; 
Year: 1999: $0; 
Year: 2000: $0; 
Year: 2001: $9,345; 
Year: 2002: $40,761; 
Year: 2003: $40,754; 
Total: $90,860.

Region 9; 
Year: 1999: $0; 
Year: 2000: $0; 
Year: 2001: $5,181; 
Year: 2002: $40,213; 
Year: 2003: $11,606; 
Total: $57,000.

Region 10; 
Year: 1999: $0; 
Year: 2000: $0; 
Year: 2001: $3,381; 
Year: 2002: $24,743; 
Year: 2003: $13,371; 
Total: $41,495.

Labs and research units[C]; 
Year: 1999: $0; 
Year: 2000: $0; 
Year: 2001: $6,346; 
Year: 2002: $88,944; 
Year: 2003: $31,630; 
Total: $126,920.

Total; 
Year: 1999: $0; 
Year: 2000: $292,156; 
Year: 2001: $166,529; 
Year: 2002: $1,031,481; 
Year: 2003: $704,035; 
Total: $2,194,202.

Sources: Forest Service and Interior financial data.

Notes: 

Funds listed are in 2003 dollars.

Forest Service regions made available slightly more funds than were 
actually used for fire suppression. The data for each region reflect 
the funds the regions made available for transfers. The funds that were 
made available for transfers, but not used for wildfire suppression, 
were kept in the wildfire suppression account and carried over into the 
following fiscal year.

[A] There is no region 7 in the Forest Service.

[B] Transfers from the Washington Office come from programs such as the 
K-V Fund and land acquisition, whose funds are managed initially at the 
Washington Office.

[C] Funds also were made available from research units and labs, such 
as the north central forest experiment station and the northeastern 
forest experiment station, the pacific northwest, pacific southwest, 
rocky mountain, and southern research stations; 
the forest products laboratory; 
the international institute for tropical forestry; 
and the northeastern area state and private forestry.

[End of table]
 

Table 7: Funds Made Available for Transfers to Wildfire Suppression, by 
Forest Service Region and Program, 1999 through 2003: 

Dollars in thousands.

Forest Service: 

Washington Office; 
K-V Fund: $639,625; 
Capital improvements and maintenance: $6,651; 
National forest system: $62,708; 
Land acquisition: $242,664; 
Working Capital Fund: $169,306; 
State and private forestry: $10,393; 
Wildland fire management: $10,215; 
Forest range research: $1,293; 
Other[A]: $287,959; 
Total: $1,430,814.

Region 1; 
K-V Fund: $0; 
Capital improvements and maintenance: $15,387; 
National forest system: $40,086; 
Land acquisition: $114; 
Working Capital Fund: $0; 
State and private forestry: $3,733; 
Wildland fire management: $12,011; 
Forest range research: $5; 
Other[A]: $0; 
Total: $71,337.

Region 2; 
K-V Fund: $0; 
Capital improvements and maintenance: $19,327; 
National forest system: $18,182; 
Land acquisition: $299; 
Working Capital Fund: $0; 
State and private forestry: $2,429; 
Wildland fire management: $5,852; 
Forest range research: $13; 
Other[A]: $0; 
Total: $46,102.

Region 3; 
K-V Fund: $0; 
Capital improvements and maintenance: $21,251; 
National forest system: $28,054; 
Land acquisition: $0; 
Working Capital Fund: $0; 
State and private forestry: $5,042; 
Wildland fire management: $19,427; 
Forest range research: $20; 
Other[A]: $0; 
Total: $73,794.

Region 4; 
K-V Fund: $0; 
Capital improvements and maintenance: $19,472; 
National forest system: $37,239; 
Land acquisition: $46; 
Working Capital Fund: $0; 
State and private forestry: $4,680; 
Wildland fire management: $6,379; 
Forest range research: $112; 
Other[A]: $0; 
Total: $67,927.

Region 5; 
K-V Fund: $0; 
Capital improvements and maintenance: $43,212; 
National forest system: $24,302; 
Land acquisition: $27; 
Working Capital Fund: $0; 
State and private forestry: $8,323; 
Wildland fire management: $18,576; 
Forest range research: $0; 
Other[A]: $0; 
Total: $94,440.

Region 6; 
K-V Fund: $0; 
Capital improvements and maintenance: $56,686; 
National forest system: $17,843; 
Land acquisition: $76; 
Working Capital Fund: $0; 
State and private forestry: $9,281; 
Wildland fire management: $9,621; 
Forest range research: $5; 
Other[A]: $0; 
Total: $93,512.

Region 8; 
K-V Fund: $0; 
Capital improvements and maintenance: $59,575; 
National forest system: $16,371; 
Land acquisition: $2,114; 
Working Capital Fund: $0; 
State and private forestry: $11,667; 
Wildland fire management: $1,118; 
Forest range research: $15; 
Other[A]: $0; 
Total: $90,860.

Region 9; 
K-V Fund: $0; 
Capital improvements and maintenance: $33,079; 
National forest system: $19,998; 
Land acquisition: $0; 
Working Capital Fund: $0; 
State and private forestry: $173; 
Wildland fire management: $3,751; 
Forest range research: $0; 
Other[A]: $0; 
Total: $57,000.

Region 10; 
K-V Fund: $0; 
Capital improvements and maintenance: $18,552; 
National forest system: $17,507; 
Land acquisition: $0; 
Working Capital Fund: $0; 
State and private forestry: $4,671; 
Wildland fire management: $746; 
Forest range research: $19; 
Other[A]: $0; 
Total: $41,495.

Labs, research stations, and other units[B]; 
K-V Fund: $0; 
Capital improvements and maintenance: $34,127; 
National forest system: $4,654; 
Land acquisition: $0; 
Working Capital Fund: $0; 
State and private forestry: $53,841; 
Wildland fire management: $1,886; 
Forest range research: $32,411; 
Other[A]: $0; 
Total: $126,920.

Total; 
K-V Fund: $639,625; 
Capital improvements and maintenance: $327,319; 
National forest system: $286,943; 
Land acquisition: $245,340; 
Working Capital Fund: $169,306; 
State and private forestry: $114,232; 
Wildland fire management: $89,583; 
Forest range research: $33,894; 
Other[A]: $287,959; 
Total: $2,194,202.

Source: Forest Service financial data.

Note: Funds are listed in 2003 dollars.

[A] Other appropriations include the forest land enhancement, brush 
disposal, timber salvage sale, forest restoration and improvements, and 
recreation fee demonstration programs.

[B] Funds also were made available from research units and labs, such 
as the north central forest experiment station and the northeastern 
forest experiment station, the pacific northwest, pacific southwest, 
rocky mountain, and southern research stations; 
the forest products laboratory; 
the international institute for tropical forestry; 
and the northeastern area state and private forestry.

[End of table]

Table 8: Transfers to Wildfire Suppression, by Forest Service 
Washington Office and Regions, as a Percentage of Total Budget 
Authority, 2002: 

Forest Service: Washington Office; 
K-V Fund: 37.9%; 
Capital improvements and maintenance: 24.2%; 
National forest system: 9.8%; 
Land acquisition: 52.6%; 
Working Capital Fund: 71.5%; 
State and private forestry: 18.8%; 
Wildland fire management: 5.5%; 
Forest range research: 7.8%; 
Other: 35.9%; 
Total: 18.1%.

Forest Service: Region 1; 
K-V Fund: 0%; 
Capital improvements and maintenance: 15.7%; 
National forest system: 19.6%; 
Land acquisition: 6.8%; 
Working Capital Fund: 0%; 
State and private forestry: 11.4%; 
Wildland fire management: 14.2%; 
Forest range research: 6.4%; 
Other: 0%; 
Total: 15.0%. 

Forest Service: Region 2; 
K-V Fund: 0%; 
Capital improvements and maintenance: 18.7%; 
National forest system: 8.5%; 
Land acquisition: 6.7%; 
Working Capital Fund: 0%; 
State and private forestry: 10.0%; 
Wildland fire management: 10.3%; 
Forest range research: 93.3%; 
Other: 0%; 
Total: 10.9%. 

Forest Service: Region 3; 
K-V Fund: 0%; 
Capital improvements and maintenance: 21.1%; 
National forest system: 16.5%; 
Land acquisition: 0%; 
Working Capital Fund: 0%; 
State and private forestry: 27.1%; 
Wildland fire management: 15.9%; 
Forest range research: 96.3%; 
Other: 0%; 
Total: 16.7%. 

Forest Service: Region 4; 
K-V Fund: 0%; 
Capital improvements and maintenance: 20.9%; 
National forest system: 16.7%; 
Land acquisition: 1.1%; 
Working Capital Fund: 0%; 
State and private forestry: 24.7%; 
Wildland fire management: 7.6%; 
Forest range research: 95.7%; 
Other: 0%; 
Total: 13.7%. 

Forest Service: Region 5; 
K-V Fund: 0%; 
Capital improvements and maintenance: 24.1%; 
National forest system: 8.5%; 
Land acquisition: 0.1%; 
Working Capital Fund: 0%; 
State and private forestry: 19.3%; 
Wildland fire management: 6.7%; 
Forest range research: 0%; 
Other: 0%; 
Total: 8.9%. 

Forest Service: Region 6; 
K-V Fund: 0%; 
Capital improvements and maintenance: 45.4%; 
National forest system: 5.5%; 
Land acquisition: 0.3%; 
Working Capital Fund: 0%; 
State and private forestry: 30.3%; 
Wildland fire management: 44.9%; 
Forest range research: 93.7%; 
Other: 0%; 
Total: 16.5%. 

Forest Service: Region 8; 
K-V Fund: 0%; 
Capital improvements and maintenance: 22.9%; 
National forest system: 6.7%; 
Land acquisition: 12.5%; 
Working Capital Fund: 0%; 
State and private forestry: 7.2%; 
Wildland fire management: 3.5%; 
Forest range research: 16.9%; 
Other: 0%; 
Total: 9.5%. 

Forest Service: Region 9; 
K-V Fund: 0%; 
Capital improvements and maintenance: 36.1%; 
National forest system: 11.3%; 
Land acquisition: 0%; 
Working Capital Fund: 0%; 
State and private forestry: 0%; 
Wildland fire management: 11.1%; 
Forest range research: 0%; 
Other: 0%; 
Total: 13.3%. 

Forest Service: Region 10; 
K-V Fund: 0%; 
Capital improvements and maintenance: 19.5%; 
National forest system: 13.1%; 
Land acquisition: 0%; 
Working Capital Fund: 0%; 
State and private forestry: 17.4%; 
Wildland fire management: 18.4%; 
Forest range research: 100%; 
Other: 0%; 
Total: 15.5%. 

Source: GAO analysis of Forest Service financial data.

Note: Total budget authority includes the allocation for the current 
year plus carryover from the previous fiscal year. 

[End of table]

[End of section]

Appendix IV: Comments from the Department of Agriculture: 

United States Department of Agriculture: 
Forest Service
Washington Office: 
14TH & Independence SW 
P.O. Box 96090 
Washington, DC 20090-6090:

File Code: 1310/5130 
Date: MAY 18 2004:

Mr. Barry T. Hill:

Director, Natural Resources and Environment:
U.S. General Accounting Office:
441 G Street, N.W. 
Washington, DC 20548:

Dear Mr. Hill:

Thank you for the opportunity to review and comment on the U.S. General 
Accounting Office (GAO) draft report,"Wildfire Suppression: Funding 
Transfers Cause Project Cancellations, Strained Relationships, and 
Management Disruptions (GAO-04-612)." The Agency generally concurs with 
the findings and recommendations presented in the report. The enclosed 
comments are intended to clarify a few areas of the report.

If you have any questions, please contact Sandy Coleman, Agency Audit 
Liaison, at (703) 605-4940.

Sincerely,

Signed for 

Dale N. Bosworth: 
Chief:

Enclosure:

cc: Sandra Cantler, Hank Kashdan, Ted Beauvais:

Forest Service Comments on GAO Audit Report,"Funding Transfers Cause 
Project Cancellations, Strained Relationships, and Management 
Disruptions (GAO-04612)"

General Comments:

1. The Forest Service agrees that improving fire suppression cost 
estimates would be beneficial in terms of both budget planning and 
reducing the impacts on other important Agency programs. However, 
ultimately the best strategy for reducing the impacts on other programs 
is to reduce fire suppression costs through continued aggressive fuel 
reduction activities and maintaining a strong initial attack force.

2. While GAO's report adequately portrays the negative impacts funding 
transfers have on the programs that the money is taken from, it does 
not address the potential consequences associated with not making these 
transfers. The negative impacts could include: (1) not having adequate 
personnel or equipment to address the fires as they occur, (2) an 
increase in the number of acres burned, and (3) an increase in the loss 
of homes and other property-all of which could lead to a further 
increase in suppression expenditures. Additional impacts could include 
a decrease in fire-fighter safety and long-term economic consequences 
to rural communities.

Specific comments:

Page 3, 1st paragraph: Change"single reforestation program" to"single 
reforestation/timber sale area restoration trust fund." The K-V fund 
is more than just reforestation.

Page 4: The discussion hints that there were"program deficits" which 
is true but can be misleading. External parties would be inclined to 
criticize the Agency as a result of this discussion. The Forest Service 
concurs with GAO that specific Unit deficits occurred; however, a 
deficit did not occur at the Agency-level. The discussion should note 
that"no violations of the Anti-Deficiency Act occurred."

Page 9, top of the page: Although no formal assessments have been 
performed, the Agency is implementing a new model in an effort to 
improve forecasting. This should be acknowledged in the report.

Page 12, 1st paragraph: Add"Forest Legacy" to the sentence as follows: 
"...such as community assistance and Forest Legacy project 
grants..." This acknowledges the program in the report and gives credit 
for restoring those funds.

Page 25, 1ST paragraph, last sentence: Change the sentence to read,"As 
of April 2004, the Forest Service will not be able to continue the 
program unless Congress appropriates funds for FY 2005 or subsequent 
years of the authorization period"

Page 26, 1st paragraph: The paragraph discusses insufficient funds in 
the K-V Fund. However, due to fire repayments and reconciliations, 
there is sufficient cash to fully implement the planned FY 2004 and FY 
2005 programs of work. These repayments and reconciliations had not 
occurred when GAO performed their field work. The paragraph should be 
replaced as follows:

Funding transfers have left the Forest Service with insufficient funds 
to pay for all of the K-V projects it planned at the time the funds 
were collected Over the past S years, about $640 million has been 
transferred from the K-V fund for wildfire suppression, while only $540 
million has been reimbursed Moreover, transfers have been made from the 
K-V fund for decades with only partial reimbursement. Since the mid-
1980s, about $2.3 billion has been transferred from the K-V fund and 
only $1.9 billion has been reimbursed While there has always been 
sufficient cash in the K-V fund to fully implement the planned K-V 
program of work in any given year, faced with unpredictable information 
about funding transfers and reimbursements, it has been difficult for 
the Forest Service to reliably estimate how much will be deposited into 
and withdrawn from the K-V fund and therefore to effectively manage the 
fund and the program it supports.

Page 29: The discussion hints that there were"program deficits" which 
is true but can be misleading. As a result of this discussion, many 
external parties would be inclined to criticize the Agency. The Forest 
Service concurs with GAO that specific Unit deficits occurred; however, 
a deficit did not occur at the Agency level. Footnote #15 is not 
sufficient. The discussion (and footnote) should note that"no 
violations of the Anti-Deficiency Act occurred."

Page 33, bottom of page: The paragraph states that"Agency officials 
... believe the 10-year average is the best available method for 
estimating wildfire suppression costs." In fact, Agency officials have 
recognized the weaknesses associated with using the 10-year average for 
some time and have looked into other methods that could more accurately 
predict future suppression costs. Proposals have included continued use 
of the 10-year average, using a 5-year average or inflating the 
historical costs to current dollar values to more accurately predict 
future suppression costs. In addition, Agency officials have also 
discussed various modeling methods with researchers who have said that 
they can design a model that would be more accurate than the 10-year 
average. However, this would require developing a very expensive, 
complex model.

Page 47, Appendix II, Table 4: Change"LW&CF' to"L&WCF (Land and Water 
Conservation Fund)."

Page 47, Appendix II, Table 4, footnote 21: Change `federal land 
enhancement" to"Forest Land Enhancement."

Page 50, Appendix III, Table 6, footnote 27: Include in the list 
"Northeastern Area State and Private Forestry."

Page 51, Appendix III, Table 7, footnote 31: Include in the list 
"Northeastern Area State and Private Forestry," considering they are 
the major source of State and Private Forestry funds for the $53.841 
million. 

[End of section]

Appendix V: Comments from the Department of the Interior: 

United States Department of the Interior:
OFFICE OF THE ASSISTANT SECRETARY:
POLICY, MANAGEMENT AND BUDGET
Washington, DC 20240:

MAY 12 2004:

Barry T. Hill, Director:

Natural Resources and Environment: 
United States General Accounting Office: 
441 G Street, N. W.

Washington, DC 20548:

Dear Director Hill:

Thank you for giving us the opportunity to review the draft report, 
Wildfire Suppression: Funding Transfers Cause Project Cancellations, 
Strained Relationships, and Management Disruptions (GAO-04-612). The 
report is well-researched and well-prepared and appropriately focuses 
on the impacts to agency programs resulting from the transfers of funds 
to pay for wildfire suppression activities. We agree with the 
fundamental premise of the report that there are multiple negative 
impacts that result from moving funds from approved projects and 
purposes to emergency wildland fire response. The report also correctly 
notes that predicting wildland fire suppression costs is inherently 
difficult because of the unpredictable nature of wildfires.

The Department of the Interior does not dispute the findings of the GAO 
study. However in summarizing these impacts, careful attention should 
be given to distinguishing between the Department of the Interior and 
the U.S. Forest Service to avoid giving the impression that the methods 
of borrowing funds for fire suppression, and the resulting impacts to 
non-fire programs, are the same for both agencies. The subtle caveats 
and distinctions buried in the report may be insufficient to dispel 
more prominent and blanket statements made at other places in the 
report. For example, at the bottom of page three in the Results in 
Brief section of the report, GAO states: "Both agencies cancelled and 
delayed contracts, grants, and other activities for projects involving, 
among other things, fuels reduction, construction, land acquisition, 
and resource management." The Department of the Interior has limited 
its fire borrowings to construction and land acquisition accounts and 
relatively small amounts from within the Wildland Fire Management 
account. It has not borrowed from resource management or other 
operating accounts that would disrupt or impede on-the-ground 
activities such as park and refuge operations, resource protection, or 
BIA school operations. Similarly, the clarification on page six of the 
report that Interior transferred funds "primarily" from two programs, 
construction and land acquisition, is incorrect. The Department 
transferred funds only from these accounts. Even when Interior has 
shifted funds within the Wildland Fire Management account to 
suppression, most of these funds have been redirected from the fire 
facilities and maintenance budget, which like the other Interior 
construction accounts, has significant carryover balances.

As noted in the report, the inherent uncertainty of predicting fire 
costs has been problematic during the fire season. To compensate for 
this uncertainty, the Department deliberately borrows funds in 
conservative increments to avoid excessive borrowing that could be more 
disruptive to the construction and land acquisition programs. 
Incremental borrowing, considered alone, should not be interpreted as 
evidence of poor forecasting.

One of the major recommendations in the report is that the agencies 
"Improve their methods for estimating annual wildfire suppression costs 
by more effectively accounting for annual changes in costs and the 
uncertainties associated with wildfires in making estimates, so that 
funding needs for wildfire suppression can be predicted with greater 
accuracy..." The Department concurs with GAO that the program's methods 
for forecasting suppression costs during the course of the fire season 
are not highly accurate in predicting future fire activity and 
suppression costs. In recognition of this, Interior has contracted with 
the Forest Service's Intermountain Research Station to develop a new 
statistical forecasting system designed to improve the agency's ability 
to predict the potential costs for suppression operations each year. 
The model will consider historical costs and fire season severity, 
comparing the predicted fire season conditions with those of the past. 
It will then project probabilities for costs for the approaching fire 
season. The model data will be updated with the actual occurrences as 
the season progresses, improving the reliability of the projections. It 
will be used for the first time during the 2004 western fire season.

The GAO recommends that alternative methods should be considered for 
improving the annual suppression cost estimates that are used in 
formulating agency budget requests and Congressional appropriations. 
The Department recognizes that predicting future fire activity and 
suppression costs is inherently difficult. Given these uncertainties, 
the Department believes that the use of the 10-year suppression cost 
average has proved to be a reasonable and durable basis for suppression 
budgeting. Although suppression costs have exceeded the 10-year average 
in the past several fire seasons, looking back historically there have 
been years in which suppression costs were below the average. For 
example, during the four fire seasons from 1995 to 1998 costs were 
below the average in three seasons.

Our final comment is in response to the suggestion that a government-
wide reserve account might see an increase in spending for one agency 
offset by a lower than usual spending by another agency. In recent 
years, the costs for both agencies have tended to move in tandem. As 
most of the suppression costs are incurred in a relatively small 
percentage of large fires each year, the costs are borne by all of the 
agencies who send firefighters and equipment. As a rule, each agency 
helps fight large fires on lands managed by the other. Consequently, 
the costs tend to rise and fall proportionately for both. Therefore, it 
is unlikely that one agency would be able to offset the costs of the 
other.

In closing, I would like to express my appreciation for a balanced and 
through examination of the issues surrounding wildland fire 
suppression funding. The Department of the Interior will use this 
report as a point of reference as we deal with fire management funding 
issues in the future.

Sincerely,

Signed by: 

P. Lynn Scarlett: 
Assistant Secretary: 
Policy, Management and Budget: 
[End of section]

Appendix VI: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

David P. Bixler (202) 512-7201: 

Staff Acknowledgments: 

In addition to the individual named above, Nathan Anderson, Paul 
Bollea, Christine Bonham, Christine Colburn, John Delicath, Timothy 
Guinane, and Richard Johnson made key contributions to this report.

(360360): 

FOOTNOTES

[1] Unless otherwise noted, all dollars stated are in constant 2003 
dollars.

[2] For ease of explanation, in this report we use the word "transfer" 
to refer both to transfers and reprogramming of funds by the Forest 
Service and Interior. "Transfer" is a legal term referring to the 
movement of money between one appropriations account and another and is 
prohibited unless specifically authorized by law. "Reprogramming" 
refers to the movement of funds between programs within a single 
appropriation account and is generally authorized. The Forest Service 
and Interior are authorized to transfer funds from other programs to 
fund wildfire suppression. 

[3] The agencies calculate a simple rolling or moving average by 
computing the average annual expenditure over a 10-year period and 
updating it each year using expenditures from the most recent 10 years. 
Each year's value receives equal weight in the average. The moving 
average is generally considered to be a lagging indicator of current 
costs. 

[4] The Knutson-Vandenberg Act of 1930 (16 U.S.C. 576-576b) established 
a special trust fund to collect a portion of timber sale receipts to 
pay for reforesting the area from which the timber was cut. The act was 
amended in 1976 to allow the Forest Service to use these funds for 
other activities, such as creating wildlife habitat or improving 
recreation facilities on the sale-area lands. For each timber sale 
area, Forest Service officials prepare a plan, usually covering 5 
years, detailing the amount of funds they expect to collect and the 
reforestation or habitat improvement projects they plan to implement 
with those funds. Because the plans cover 5 years of work, there is 
typically a large balance in the fund at the end of the fiscal year 
that is designated for future projects and that can be transferred for 
fire suppression without affecting current-year projects. 

[5] In 1999, the agencies did not transfer any funds for wildfire 
suppression. According to Forest Service documents, in 1999, the 
Congress reimbursed the K-V Fund for $100 million, which were 
reimbursements for transfers made prior to 1999. For the purposes of 
this report, we list reimbursements in the year that funds were 
transferred. 

[6] Reimbursements were generally not redistributed in the capital 
improvements and maintenance program because most of these projects' 
budgets were greater than $250,000 and, by law, cannot be redistributed 
by the agency.

[7] According to a Bureau of Land Management official, however, land 
acquisition projects for each bureau were reimbursed at the same 
percentage.

[8] In the National Park Service's construction program, the service 
also reduced the budgets of all projects by about 1.5 percent to help 
cover the shortfall between fiscal year 2002 transfers and 
reimbursements. 

[9] Social costs, such as the effect of project delays on recreational 
activities, have not been estimated.

[10] Stewardship contracting involves the use of any of several 
contracting authorities that were first authorized for use by the 
Forest Service on a pilot basis in 1999. Goals of stewardship contracts 
include road and trail maintenance, watershed restoration, and 
prescribed burning and thinning to improve forest health.

[11] Although an agency's decision to ignore committee report language 
"may expose it to grave political consequences," such language does not 
by itself establish legal requirements that agencies must follow. See 
Lincoln v. Vigil, 508 U.S. 182, 192-93 (1993).

[12] Although some Forest Service programs within appropriation 
accounts were in deficit, the Forest Service did not obligate or expend 
money in excess of the total amounts available in its appropriations 
accounts, and no violations of the Anti-Deficiency Act occurred.

[13] In addition, regression analysis could be used to develop costs 
estimates and upper and lower confidence limits to provide information 
on the uncertainty associated with the cost estimates.

[14] U.S. General Accounting Office, Budgeting for Emergencies: State 
Practices and Federal Implications, GAO/AIMD-99-250 (Washington, D.C.: 
Sept. 30, 1999), and Budget Issues: Funding Alternatives for Fire-
Fighting Activities at USDA and Interior, GAO/AFMD-91-45 (Washington, 
D.C.: Apr. 4, 1991); and Congressional Budget Office, Budgeting for 
Emergency Spending (Washington, D.C.: June 23, 1998). 

[15] Of the $500 million, $400 million would be available to the Forest 
Service, and $100 million would be available to Interior.

[16] Results from nonprobability samples cannot be used to make 
inferences about a population. This is because in a nonprobability 
sample, some elements of the population being studied have no chance or 
an unknown chance of being selected as part of the sample.

[17] U.S. General Accounting Office, Budgeting for Emergencies: State 
Practices and Federal Implications, GAO/AIMD-99-250 (Washington, D.C.: 
Sept. 30, 1999), and Budget Issues: Funding Alternatives for Fire-
Fighting Activities at USDA and Interior, GAO/AFMD-91-45 (Washington, 
D.C.: Apr. 4, 1991); and Congressional Budget Office, Budgeting for 
Emergency Spending (Washington, D.C.: June 23, 1998).

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