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ANALYTICAL PERSPECTIVES BUDGET OF THE UNITED STATES GOVERNMENT Fiscal Year 2007 THE BUDGET DOCUMENTS Budget of the United States Government, Fiscal Year 2007 contains the Budget Message of the President, information on the President’s budget and management priorities, and budget overviews organized by agency. Analytical Perspectives, Budget of the United States Government, Fiscal Year 2007 contains analyses that are designed to highlight specified subject areas or provide other significant presentations of budget data that place the budget in perspective. This volume includes economic and accounting analyses; information on Federal receipts and collections; analyses of Federal spending; detailed information on Federal borrowing and debt; baseline or current services estimates; and other technical presentations. The Analytical Perspectives volume also contains a CD-ROM with several detailed tables previously published in the budget documents, including tables showing the budget by agency and account and by function, subfunction, and program. Historical Tables, Budget of the United States Government, Fiscal Year 2007 provides data on budget receipts, outlays, surpluses or deficits, Federal debt, and Federal employment over an extended time period, generally from 1940 or earlier to 2007 or 2011. To the extent feasible, the data have been adjusted to provide consistency with the 2007 Budget and to provide comparability over time. Appendix, Budget of the United States Government, Fiscal Year 2007 contains detailed information on the various appropriations and funds that constitute the budget and is designed primarily for the use of the Appropriations Committees. The Appendix contains more detailed financial information on individual programs and appropriation accounts than any of the other budget documents. It includes for each agency: the proposed text of appropriations language, budget schedules for each account, new legislative proposals, explanations of the work to be performed and the funds needed, and proposed general provisions applicable to the appropriations of entire agencies or group of agencies. Information is also provided on certain activities whose outlays are not part of the budget totals. AUTOMATED SOURCES OF BUDGET INFORMATION The information contained in these documents is available in electronic format from the following sources: Budget CD-ROM. The CD-ROM contains all of the budget documents in fully indexed PDF format along with the software required for viewing the documents. The CD-ROM also has many of the budget tables in spreadsheet format. The budget CD-ROM also contains the material on the separate Analytical Perspectives CD-ROM. Internet. All budget documents, including documents that are released at a future date, will be available for downloading in several formats from the Internet. To access these documents use the following address: www.budget.gov/budget For more information on access to electronic versions of the budget documents (except CD-ROMs), call (202) 512–1530 in the D.C. area or toll-free (888) 293–6498. To purchase the budget CD-ROM or printed documents call (202) 512–1800. GENERAL NOTES 1. All years referred to are fiscal years, unless otherwise noted. 2. Detail in this document may not add to the totals due to rounding. 3. At the time of this writing, S. 1932, the Deficit Reduction Act, was pending in the Congress. All references to spending in the Budget assume enactment of S. 1932. U.S. GOVERNMENT PRINTING OFFICE WASHINGTON 2006 For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: (202) 512–1800 Toll-Free 1–866–512–1800 Fax: (202) 512–2104 Mail: Stop SSOP, Washington, DC 20402–0001 TABLE OF CONTENTS Page List of Charts and Tables ............................................................................................. iii Introduction 1. Introduction ....................................................................................................... 3 Performance and Management Assessments 2. Budget and Performance Integration .............................................................. 9 Crosscutting Programs 3. Homeland Security Funding Analysis ............................................................. 19 4. Strengthening Federal Statistics ..................................................................... 35 5. Research and Development .............................................................................. 43 6. Federal Investment ........................................................................................... 53 7. Credit and Insurance ........................................................................................ 65 8. Aid to State and Local Governments ............................................................... 99 9. Integrating Services with Information Technology ........................................ 151 10. Federal Drug Control Funding ......................................................................... 159 11. California-Federal Bay-Delta Program Budget Crosscut (CALFED) ............ 161 Economic Assumptions and Analyses 12. Economic Assumptions ...................................................................................... 165 13. Stewardship ....................................................................................................... 175 14. National Income and Product Accounts .......................................................... 203 Budget Reform Proposals 15. Budget Reform Proposals .................................................................................. 211 Federal Borrowing and Debt 16. Federal Borrowing and Debt ............................................................................ 221 i ii TABLE OF CONTENTS—Continued Page Federal Receipts and Collections 17. Federal Receipts ................................................................................................ 237 18. User Charges and Other Collections ............................................................... 271 19. Tax Expenditures .............................................................................................. 285 Dimensions of the Budget 20. Comparison of Actual to Estimated Totals ..................................................... 331 21. Outlays to the Public, Gross and Net .............................................................. 339 22. Trust Funds and Federal Funds ...................................................................... 341 23. Off-Budget Federal Entities and Non-Budgetary Activities .......................... 347 24. Federal Employment and Compensation ........................................................ 351 Current Services Estimates 25. Current Services Estimates .............................................................................. 359 The Budget System and Concepts 26. The Budget System and Concepts ................................................................... 377 Detailed Functional Table 27. Detailed Functional Table ................................................................................ CD–ROM Federal Programs by Agency and Account 28. Federal Programs by Agency and Account ...................................................... CD–ROM LIST OF CHARTS AND TABLES iii LIST OF CHARTS AND TABLES LIST OF CHARTS Page 2–1 4–1 4–2 5–1 5–2 7–1 7–2 7–3 13–1 13–2 13–3 13–4 13–5 13–6 13–7 13–8 13–9 17–1 20–1 26–1 Program Ratings are Improving ........................................................................................................ ICSP Statistical Quality and Program Performance Dimensions, 2007 ......................................... Most Recent PART Summary Ratings for Statistical Programs ..................................................... American Competitiveness Initiative Research ................................................................................ Scores of R&D PART Assessments .................................................................................................... Fannie Mae and Freddie Mac Growth of GSE Asset Portfolios ...................................................... Fannie Mae and Freddie Mac Combined Income ............................................................................. Face Value of Federal Credit Outstanding ....................................................................................... The Financial Condition of the Federal Government and the Nation ............................................ Net Federal Liabilities ........................................................................................................................ Health Care Cost Alternatives ........................................................................................................... Alternative Discretionary Spending Assumptions ............................................................................ A Constant Revenue Share ................................................................................................................ Alternative Productivity Assumptions .............................................................................................. Alternative Fertility Assumptions ..................................................................................................... Alternative Immigration Assumptions .............................................................................................. Alternative Mortality Assumptions ................................................................................................... Major Provisions of the Tax Code Under the 2001, 2003 and 2004 Tax Cuts ............................... Illustrative Range of Budget Outcomes ............................................................................................ Relationship of Budget Authority to Outlays for 2007 .................................................................... 15 36 38 43 45 72 73 85 177 181 186 187 187 188 189 189 190 238 337 389 LIST OF TABLES Page Crosscutting Programs Homeland Security Funding Analysis: 3–1 Homeland Security Funding by Agency .................................................................................. 3–2 Homeland Security Funding by National Strategy Mission Area ......................................... 3–3 Intelligence and Warning Funding .......................................................................................... 3–4 Border and Transportation Security Funding ........................................................................ 3–5 Domestic Counterterrorism Funding ....................................................................................... 3–6 Protecting Critical Infrastructure and Key Assets Funding ................................................. 3–7 Defending Against Catastrophic Threats Funding ................................................................ 3–8 Emergency Preparedness and Response Funding .................................................................. 3–9 Discretionary Fee-Funded Homeland Security Activities by Agency ................................... 3–10 Mandatory Homeland Security Funding by Agency .............................................................. 3–11 Baseline Estimates—Total Homeland Security Funding by Agency .................................... 3–12 Homeland Security Funding by Budget Function .................................................................. 3–13 Baseline Estimates—Homeland Security Funding by Budget Function .............................. Appendix—Homeland Security Mission Funding by Agency and Budget Account ............. Strengthening Federal Statistics: 4–1 2005–2007 Budget Authority for Principal Statistical Agencies ........................................... Research and Development: 5–1 Federal Research and Development ........................................................................................ 5–2 Federal Science and Technology Budget ................................................................................. 20 21 22 23 25 26 27 29 31 31 32 33 34 CD–ROM 41 49 51 v vi ANALYTICAL PERSPECTIVES LIST OF TABLES—Continued Page 5–3 Agency Detail of Selected Interagency R&D Efforts .............................................................. Federal Investment: 6–1 Composition of Federal Investment Outlays .......................................................................... 6–2 Federal Investment Budget Authority and Outlays: Grant and Direct Federal Programs 6–3 Summary of PART Ratings and Scores for Direct Federal Investment Programs .............. 6–4 Net Stock of Federally Financed Physical Capital ................................................................. 6–5 Net Stock of Federally Financed Research and Development ............................................... 6–6 Net Stock of Federally Financed Education Capital .............................................................. Credit and Insurance: Text Tables: Summary of PART Scores ..................................................................................................... Largest 10 Claims Against the PBGC’s Single-Employer Program, 1975–2005 .............. 7–1 Estimated Future Cost of Outstanding Federal Credit Programs ........................................ 7–2 Reestimates of Credit Subsidies on Loans Disbursed Between 1992–2005 ......................... 7–3 Direct Loan Subsidy Rates, Budget Authority, and Loan Levels, 2005–2007 ..................... 7–4 Loan Guarantee Subsidy Rates, Budget Authority, and Loan Levels, 2005–2007 .............. 7–5 Summary of Federal Direct Loans and Loan Guarantees ..................................................... 7–6 Direct Loan Write-Offs and Guaranteed Loan Terminations for Defaults .......................... 7–7 Appropriations Acts Limitations on Credit Loan Levels ....................................................... 7–8 Face Value of Government-Sponsored Lending ...................................................................... 7–9 Lending and Borrowing By Government–Sponsored Enterprises (GSEs) ............................ 7–10 Direct Loan Transactions of the Federal Government ........................................................... 7–11 Guaranteed Loan Transactions of the Federal Government ................................................. Aid to State and Local Governments: 8–1 Federal Grant Outlays by Agency ........................................................................................... 8–2 Summary of PART Ratings and Scores for Grants to State and Local Governments ........ 8–3 Trends in Federal Grants to State and Local Governments ................................................. 8–4 Federal Grants to State and Local Governments—Budget Authority and Outlays ............ 8–5 Summary of Programs by Agency, Bureau, and Program ..................................................... 8–6 Summary of Programs by State ............................................................................................... 8–7 National School Lunch Program .............................................................................................. 8–8 Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) ......... 8–9 Child and Adult Care Food Program ....................................................................................... 8–10 State Administrative Matching Grants for Food Stamp Program ........................................ 8–11 Title I Grants to Local Educational Agencies ......................................................................... 8–12 Improving Teacher Quality State Grants ............................................................................... 8–13 Special Education—Grants to States ...................................................................................... 8–14 Rehabilitation Services—Vocational Rehabilitation Grants to States .................................. 8–15 State Children’s Health Insurance Program .......................................................................... 8–16 Grants to States for Medicaid .................................................................................................. 8–17 Temporary Assistance for Needy Families (TANF)—Family Assistance Grants ................ 8–18 Child Support Enforcement—Federal Share of State and Local Administrative Costs and Incentives ........................................................................................................................ 8–19 Low Income Home Energy Assistance Program ..................................................................... 8–20 Child Care and Development Block Grant ............................................................................. 8–21 Child Care and Development Fund—Mandatory ................................................................... 8–22 Child Care and Development Fund—Matching ...................................................................... 8–23 Head Start ................................................................................................................................. 8–24 Foster Care—Title IV–E ........................................................................................................... 8–25 Adoption Assistance .................................................................................................................. 8–26 Homeland Security Grant Program ......................................................................................... 8–27 Public Housing Operating Fund .............................................................................................. 52 55 56 59 62 63 64 67 81 86 87 89 90 91 92 94 95 96 CD–ROM CD–ROM 99 106 108 111 119 120 121 122 123 124 125 126 127 128 129 130 131 132 133 134 135 136 137 138 139 140 141 vii LIST OF CHARTS AND TABLES LIST OF TABLES—Continued Page 8–28 Housing Choice Vouchers ......................................................................................................... 8–29 Public Housing Capital Fund ................................................................................................... 8–30 Community Development Block Grants .................................................................................. 8–31 HOME Investment Partnerships Program ............................................................................. 8–32 Airport Improvement Program ................................................................................................ 8–33 Highway Planning and Construction ...................................................................................... 8–34 Capital Investment Grants—Fixed Guideway Modernization .............................................. 8–35 Federal Transit Formula Grants and Research ..................................................................... Integrating Services with Information Technology: 9–1 Effectiveness of Agency’s IT Management and E–Gov Processes ......................................... 9–2 Management Guidance ............................................................................................................. 9–3 Status of the Presidential E-Government Initiatives ............................................................. Federal Drug Control Funding: 10–1 Federal Drug Control Funding, FY 2005–2007 ...................................................................... California-Federal Bay-Delta Program Budget Crosscut (CALFED): Text Table: CALFED-Related Federal Funding Budget Crosscut ......................................................... CALFED Budget Crosscut Methodology ................................................................................. CALFED Federal Agency Funding—Summary by Category and Agency Breakout ........... CALFED Project Descriptions .................................................................................................. CALFED Prior Year (2005) Federal Funding ......................................................................... CALFED Fiscal Year 2007 Funding Under New and Old Authority ................................... CALFED State Agency Funding .............................................................................................. Department of the Interior Certification of Budget Numbers ............................................... Economic Assumptions and Analyses Economic Assumptions: 12–1 Economic Assumptions ............................................................................................................. 12–2 Comparison of Economic Assumptions .................................................................................... 12–3 Comparison of Economic Assumptions in the 2006 and 2007 Budgets ................................ 12–4 Adjusted Structural Balance .................................................................................................... 12–5 Sensitivity of the Budget to Economic Assumptions .............................................................. Stewardship: 13–1 Government Assets and Liabilities .......................................................................................... 13–2 Long–Run Budget Projections .................................................................................................. 13–3 Actuarial Present Values of Benefits in Excess of Future Taxes and Premiums ................ 13–4 National Wealth ........................................................................................................................ 13–5 Trends in National Wealth ....................................................................................................... 13–6 Economic and Social Indicators ............................................................................................... National Income and Product Accounts: 14–1 Federal Transactions in the National Income and Product Accounts, 1996–2007 .............. 14–2 Relationship of the Budget to the Federal Sector, NIPA’s .................................................... 14–3 Federal Receipts and Expenditures in the NIPA’s, Quarterly, 2005–2007 .......................... Budget Reform Proposals Budget Reform Proposals: 15–1 Mandatory Proposals ................................................................................................................ 15–2 Discretionary Caps and Adjustments ...................................................................................... 15–3 Transportation Category for Highways and Mass Transit Spending ................................... Federal Borrowing and Debt Federal Borrowing and Debt: 16–1 Trends in Federal Debt Held by the Public ............................................................................ 142 143 144 145 146 147 148 149 CD–ROM CD–ROM CD–ROM 159 161 CD–ROM CD–ROM CD–ROM CD–ROM CD–ROM CD–ROM CD–ROM 169 170 172 172 174 182 185 193 195 197 198 205 207 208 211 213 214 221 viii ANALYTICAL PERSPECTIVES LIST OF TABLES—Continued Page 16–2 Federal Government Financing and Debt ............................................................................... 16–3 Agency Debt ............................................................................................................................... 16–4 Debt Held by Government Accounts ....................................................................................... 16–5 Federal Funds Financing and Change in Debt Subject to Statutory Limit ......................... 16–6 Foreign Holdings of Federal Debt ............................................................................................ Federal Receipts and Collections Federal Receipts: 17–1 Receipts by Source–Summary .................................................................................................. 17–2 Effect on Receipts of Changes in the Social Security Taxable Earnings Base .................... 17–3 Effect of Proposals on Receipts ................................................................................................ 17–4 Receipts by Source .................................................................................................................... User Charges and Other Collections: 18–1 Gross Outlays, User Charges, Other Offsetting Collections and Receipts from the Public, and Net Outlays .................................................................................................................... 18–2 Total User Charge Collections ................................................................................................. 18–3 User Fee and Other User Charge Proposals .......................................................................... 18–4 Offsetting Collections and Receipts from the Public .............................................................. 18–5 Offsetting Receipts by Type ..................................................................................................... Tax Expenditures: 19–1 Estimates of Total Income Tax Expenditures ......................................................................... 19–2 Estimates of Tax Expenditures for the Corporate and Individual Income Taxes ............... 19–3 Income Tax Expenditures Ranked by Total 2007–2011 Projected Revenue Effect ............. 19–4 Present Value of Selected Tax Expenditures for Activity in Calendar Year 2005 .............. Appendix Tables: 1. Comparison of Current Tax Expenditures with Those Implied by a Comprehensive Income Tax ................................................................................................................................ 2. Comparison of Current Tax Expenditures with Those Implied by a Comprehensive Consumption Tax ......................................................................................................................... 3. Revised Tax Expenditure Estimates ....................................................................................... Dimensions of the Budget Comparison of Actual to Estimated Totals: 20–1 Comparison of Actual 2005 Receipts with the Initial Current Services Estimates ............. 20–2 Comparison of Actual 2005 Outlays with the Initial Current Services Estimates ............. 20–3 Comparison of the Actual 2005 Deficit with the Initial Current Services Estimate ........... 20–4 Comparison of Actual and Estimated Outlays for Mandatory and Related Programs Under Current Law ............................................................................................................... 20–5 Reconciliation of Final Amounts for 2005 ............................................................................... 20–6 Comparison of Actual and Estimated Surpluses or Deficits Since 1982 .............................. 20–7 Differences Between Estimated and Actual Surpluses or Deficits for Five–year Budget Estimates Since 1982 ............................................................................................................ Outlays to Public, Gross and Net: 21–1 Total Outlays, Gross and Net of Offsetting Collections and Receipts from the Public, by Agency, 2005–2007 ................................................................................................................ Trust Funds and Federal Funds: 22–1 Receipts, Outlays, and Surplus or Deficit by Fund Group .................................................... 22–2 Income, Outgo, and Balances of Trust Funds Group ............................................................. 22–3 Relationship of Total Federal Fund and Trust Fund Receipts to Unified Budget Receipts, Fiscal Year 2005 ........................................................................................................ 22–4 Income, Outgo, and Balances of Major Trust Funds .............................................................. 22–5 Income, Outgo, and Balances of Selected Federal Funds ...................................................... 223 227 229 231 233 237 237 265 268 271 274 276 281 282 287 291 296 299 327 328 328 331 332 333 334 335 336 337 339 341 343 344 CD–ROM CD–ROM ix LIST OF CHARTS AND TABLES LIST OF TABLES—Continued Page Off–Budget Federal Entities and Non–Budgetary Activities: 23–1 Comparison of Total, On–Budget, and Off–Budget Transactions ......................................... Federal Employment and Compensation: 24–1 Federal Civilian Employment in the Executive Branch ........................................................ 24–2 Total Federal Employment (As measured by total positions filled) ...................................... 24–3 Total Federal Employment (As measured by Full-Time Equivalents) ................................. 24–4 Personnel Compensation and Benefits .................................................................................... Current Service Estimates Current Service Estimates: 25–1 Baseline Category Totals .......................................................................................................... 25–2 Alternative Baseline Assumptions ........................................................................................... 25–3 Summary of Economic Assumptions ....................................................................................... 25–4 Beneficiary Projections for Major Benefit Programs .............................................................. 25–5 Impact of Regulations, Expiring Authorizations, and Other Assumptions in the Baseline 25–6 Baseline Receipts by Source ..................................................................................................... 25–7 Change in Baseline Outlay Estimates by Category ............................................................... 25–8 Current Services Outlays by Function .................................................................................... 25–9 Current Services Outlays by Agency ....................................................................................... 25–10 Current Services Budget Authority by Function .................................................................... 25–11 Current Services Budget Authority by Agency ....................................................................... 25–12 Current Services Budget Authority by Function, Category and Program ........................... 25–13 Current Services Outlays by Function, Category and Program ............................................ The Budget System and Concepts The Budget System and Concepts: 26–1 Totals for the Budget and the Federal Government .............................................................. Detailed Functional Table Detailed Functional Table: 27–1 Budget Authority and Outlays by Function, Category and Program ................................... Federal Programs by Agency and Account Federal Programs by Agency and Account: 28–1 The Budget for Fiscal Year 2007 by Agency and Account ..................................................... 347 353 354 355 356 360 361 362 363 363 369 370 371 372 373 374 CD–ROM CD–ROM 381 CD–ROM CD–ROM INTRODUCTION 1 1. INTRODUCTION Purpose of This Volume The Analytical Perspectives volume presents analyses that highlight specific subject areas or provide other significant data that place the budget in context. The volume presents crosscutting analyses of Government programs and activities from several perspectives. Presidential budgets have included separate analytical presentations of this kind for many years. The 1947 Budget and subsequent budgets included a separate section entitled ‘‘Special Analyses and Tables’’ that covered four or more topics. For the 1952 Budget, this section was expanded to ten analyses, including many subjects still covered today, such as receipts, investment, credit programs, and aid to State and local governments. With the 1967 Budget this material became a separate volume entitled ‘‘Special Analyses,’’ and included 13 chapters. The material has remained a separate volume since then, with the exception of the Budgets for 1991-1994, when all of the budget material was included in one large volume. Beginning with the 1995 Budget, the volume has been named Analytical Perspectives. The volume this year continues to reflect an interest in publishing more information on program performance, so that Executive agencies, the Congress, and the public will become increasingly informed about how well programs are performing. Better performance information can help managers improve program effectiveness, and can help Executive and Congressional policymakers improve the allocation of public resources. The performance assessment information is summarized in Chapter 2, ‘‘Performance and Management Assessments,’’ and is discussed in many other chapters, especially those in the section, ‘‘Crosscutting Programs.’’ One-page summaries of each program assessment are available at http://www.ExpectMore.gov. Again this year, several large tables are included as part of the Budget on the enclosed Analytical Perspectives CD ROM. A list of the items on the CD ROM is in the Table of Contents of this volume. Overview of the Chapters Introduction 1. Introduction. This chapter discusses each chapter briefly and highlights the emphasis on performance in a crosscutting context. Performance and Management Assessments 2. Budget and Performance Integration. This chapter summarizes the performance and management assessments that have been completed to date using the Program Assessment Rating Tool (PART). One-page summaries of the program evaluations, as well as detail on each of the assessments can be found at http:// www.ExpectMore.gov. Crosscutting Programs 3. Homeland Security Funding Analysis. This chapter discusses homeland security funding and provides information on homeland security program requirements, performance, and priorities. Additional detailed information is available on the enclosed Analytical Perspectives CD ROM. 4. Strengthening Federal Statistics. This chapter discusses the development of standards that principal statistical programs can use to assess their performance and presents highlights of their 2007 Budget proposals. 5. Research and Development. This chapter presents a crosscutting review of research and development funding in the Budget, including discussions about priorities, performance, and coordination across agencies. 6. Federal Investment. This chapter discusses spending across Federal agencies that yields long-term benefits, and presents information on physical capital, research and development, and education and training. The chapter includes material on the PART assessments related to direct Federal investment spending. There is also a section on capital stocks. 7. Credit and Insurance. This chapter provides crosscutting analyses of the roles and risks of Federal credit and insurance programs and Government-sponsored enterprises (GSEs), as well as criteria for evaluation. It covers the categories of Federal credit (housing, education, business including farm operations, and international) and insurance programs (deposit insurance, pension guarantees, disaster insurance, and insurance against security-related risks). The chapter also includes material on the new President’s Management Agenda initiative to improve credit program management. Two detailed tables, ‘‘Table 7–10. Direct Loan Transactions of the Federal Government’’ and ‘‘Table 7–11. Guaranteed Loan Transactions of the Federal Government’’, are on the enclosed Analytical Perspectives CD ROM. 8. Aid to State and Local Governments. This discussion presents crosscutting information on Federal grants to State and local governments, including highlights of Administration proposals. The chapter also includes material on the PART assessments related to grants. An Appendix to this chapter includes Stateby-State spending estimates of major grant programs. 9. Integrating Services with Information Technology. This chapter presents a crosscutting look at investments in information technology (IT). The chapter describes various aspects of the Administration’s information technology agenda, with special emphasis on the performance, efficiency, and effectiveness of the Govern- 3 4 ment’s IT investments. Three detailed tables: ‘‘Table 9–1. Effectiveness of Agency’s IT Management and EGov Processes,’’ ‘‘Table 9–2. Management Guidance,’’ and ‘‘Table 9–3. Status of Presidential E-Government Initiatives,’’ are on the enclosed Analytical Perspectives CD ROM. 10. Federal Drug Control Funding. This section presents estimated drug control funding for Federal departments and agencies. 11. California-Federal Bay-Delta Program Budget Crosscut (CALFED). This chapter presents information on Federal and State funding for the California-Federal Bay-Delta Program, in fulfillment of the reporting requirements for this program. Detailed tables on funding and project descriptions are on the enclosed Analytical Perspectives CD ROM. Economic Assumptions and Analyses 12. Economic Assumptions. This discussion reviews recent economic developments; presents the Administration’s assessment of the economic outlook, including the expected effects of macroeconomic policies; and compares the economic assumptions on which the Budget is based with the assumptions for last year’s budget and those of other forecasters. This chapter also covers topics related to the effects on the budget of changes in economic conditions and assumptions. 13. Stewardship. This chapter assesses the Government’s financial condition and sustainability in an integrated framework that includes Federal assets and liabilities; 75-year projections of the Federal budget under alternative assumptions for discretionary spending, health cost, productivity, and demographics; actuarial estimates for the shortfalls in Social Security and Medicare; a national balance sheet that shows the Federal contribution to national wealth; and a table of economic and social indicators. Together these elements serve similar analytical functions to a business’s accounting statements. 14. National Income and Product Accounts. This chapter discusses how Federal receipts and outlays fit into the framework of the National Income and Product Accounts (NIPAs) prepared by the Department of Commerce. The NIPA measures are the basis for reporting Federal transactions in the gross domestic product and for analyzing the effect of the budget on aggregate economic activity. Budget Reform Proposals 15. Budget Reform Proposals. This chapter is a brief description of the Administration’s budget reform agenda for addressing the need for responsible budgeting and other reforms. Federal Borrowing and Debt 16. Federal Borrowing and Debt. This chapter analyzes Federal borrowing and debt and explains the budget estimates. It includes sections on special topics such as the trends in debt, agency debt, investment by Government accounts, and the debt limit. ANALYTICAL PERSPECTIVES Federal Receipts and Collections 17. Federal Receipts. This discussion presents information on receipts estimates, enacted tax legislation, and the receipts proposals in the Budget. 18. User Charges and Other Collections. This chapter presents information on receipts from regulatory fees and on collections from market-oriented activities, such as the sale of stamps by the Postal Service, which are recorded as offsets to outlays rather than as Federal receipts. 19. Tax Expenditures. This discussion describes and presents estimates of tax expenditures, which are defined as revenue losses from special exemptions, credits, or other preferences in the tax code. An appendix discusses possible alternatives to the current tax expenditure baselines. This section is prepared by the Department of the Treasury. Dimensions of the Budget 20. Comparison of Actual to Estimated Totals. This chapter compares the actual receipts, outlays, and deficit for 2005 with the estimates for that year published two years ago in the 2005 Budget. It also includes a historical comparison of the differences between receipts, outlays, and the deficit as originally proposed with final outcomes. 21. Outlays to the Public, Gross and Net. This section provides information on outlays gross and net of offsetting collections and offsetting receipts by agency. Outlays are a measure of Government spending. Offsetting collections and offsetting receipts are netted against gross outlays and result primarily from the Government’s business-like activities, such as the sale of stamps by the Postal Service. 22. Trust Funds and Federal Funds. This chapter provides summary information on Federal funds and trust funds, which comprise the entire budget. For trust funds the information includes income, outgo, and balances. Two detailed tables, ‘‘Table 22–4. Income, Outgo, and Balances of Major Trust Funds’’ and ‘‘Table 22–5. Income, Outgo, and Balances of Selected Federal Funds’’ are on the enclosed Analytical Perspectives CD ROM. 23. Off-Budget Federal Entities and Non-Budgetary Activities. This chapter discusses off-budget Federal entities (Social Security and Postal Service) and non-budgetary activities (such as cash flows for credit programs, deposit funds, and regulation). 24. Federal Employment and Compensation. This chapter provides summary data on the level and recent trends in civilian and military employment, personnel compensation and benefits, and overseas staffing. Current Services Estimates 25. Current Services Estimates. This chapter presents estimates, based on rules similar to those contained in the Budget Enforcement Act (BEA), of what receipts, outlays, and the deficit would be if no changes were made to laws already enacted. It discusses the conceptual framework for these estimates and describes dif- 5 1. INTRODUCTION ferences with the BEA requirements. Two detailed tables, ‘‘Table 25–12. Current Services Budget Authority by Function, Category, and Program’’ and ‘‘Table 25–13. Current Services Outlays by Function, Category, and Program’’, are on the enclosed Analytical Perspectives CD ROM. Budget System and Concepts 26. The Budget System and Concepts. This is a basic reference to the budget process, concepts, laws, and terminology, and includes a glossary of budget terms. Other The following material appears only on the enclosed Analytical Perspectives CD ROM: • Detailed Functional Tables. Table 27–1. ‘‘Budget Authority and Outlays by Function, Category, and Program’’. • Federal Programs by Agency and Account. Table 28–1. ‘‘Federal Programs by Agency and Account’’. PERFORMANCE AND MANAGEMENT ASSESSMENTS 7 2. BUDGET AND PERFORMANCE INTEGRATION I. INTRODUCTION The American taxpayer expects the Federal Government to implement programs that will ensure the Nation’s security and provide critical services. Taxpayers deserve to have their money spent wisely to create the maximum benefit. The Executive Branch should be held accountable for program performance by the American people. For the Federal Government to be held accountable, the American people must have clear, candid information about each program’s success and failures. The Administration is providing this type of information. More importantly, in all cases, the Administration is implementing detailed plans to improve program performance. The role of the President’s Budget and Performance Integration (BPI) Initiative is to ensure that Federal dollars produce the greatest results. To accomplish this, agencies and OMB identify which programs work, which are deficient, and what can be done to improve the performance of them all. In some cases, it may be necessary to reallocate funding to more effective programs. This and other decisions about programs are ultimately made jointly by the Congress and the President, but the analysis of program performance can help the Executive and Legislative Branches make more informed decisions. To expand the use of information about program performance, OMB is launching ExpectMore.gov, a user-friendly website that provides the public with performance information about Federal programs. (Greater detail about ExpectMore.gov will be provided in a subsequent section.) The Budget and Performance Integration Initiative measures its success in two principal ways: • Improved Program Performance: Through the use of performance assessments, programs will have the information they need to improve their performance every year. The initiative requires each agency to identify opportunities to improve program management and design, and then develop and implement clear, aggressive plans to get more for tax dollars every year. • Greater Investment in Successful Programs: Overall, scarce resources need to be allocated to programs that benefit the Nation most effectively and efficiently. Program performance will not be the only factor in decisions about how much funding programs receive. However, the Congress and the President, equipped with information about program peformance can consider performance to a greater degree in their decision-making and invest primarily in programs that provide the greatest return on the investment of taxpayer dollars. If poor performing programs are unable to demonstrate improved results, then that investment may be reallocated to programs that can demonstrate greater success. Currently, the Initiative is showing great progress toward the first goal. Programs are becoming more efficient and more effective through implementation of meaningful improvement plans. Many programs are demonstrating improved results. • The Department of Veterans Affairs is reducing the time veterans wait to get medical appointments. From 2001 to 2005, the Veterans Health Administration (VHA) substantially reduced the number of new veteran enrollees unable to schedule an appointment for medical care from a high of 176,000 to 22,494. VHA remains a leader in customer satisfaction, with an inpatient satisfaction score of 84 out of 100 on the American Customer Satisfaction Index, slightly higher than the score of 79 for comparable private sector services. • To reduce fatalities from automobile accidents, the National Highway Traffic Safety Administration promoted greater seat belt use among high-risk groups such as younger drivers, rural populations, pick-up truck occupants, 8–15 year-old passengers, occasional safety belt users, and motor vehicle occupants in States with secondary safety belt use laws. As a result, nationwide seat belt use increased from 73 percent in 2001 to 82 percent in 2005, an all-time high. Agencies are also identifying the steps they will take to improve each program’s performance even more. All programs, regardless of whether they perform poorly or well, should strive to perform better each year. Progress toward the second goal of improving resource allocation is slow. Overall high performers received larger funding increases than those that did not perform as well, but in general, recommendations to reduce funding for ineffective programs or those that can not demonstrate results have been less successful. II. HOW THE BUDGET AND PERFORMANCE INTEGRATION INITIATIVE WORKS There are several aspects of the Initiative designed to maximize program performance: • Assess performance with the PART (Program Assessment Rating Tool) 9 10 ANALYTICAL PERSPECTIVES • Publish a Scorecard to hold agencies accountable for managing for results, addressing PART findings, and implementing follow-up actions • Broadcast results on a new website, ExpectMore.gov • Implement inter-agency program improvement Comprehensive Assessment by the Program Assessment Rating Tool (PART) How do we ensure programs are improving every year? First, we assess their current performance. In order to improve program outcomes, it is critical to have a good understanding of how the program is currently performing. To date, we have assessed the performance of 80 percent of all Government programs using the PART. What is the PART and How is it Used? The PART helps assess the management and performance of individual programs. With the PART, agencies and OMB evaluate a program’s purpose, design, planning, management, results, and accountability to determine its overall effectiveness. Recommendations are then made to improve program results. To reflect that Federal programs deliver goods and services using different mechanisms, the PART is customized by program type. The seven PART types are: Direct Federal, Competitive Grant, Block/Formula Grant, Research and Development, Capital Assets and Service Acquisition, Credit, and Regulatory. The PART types apply to both discretionary and mandatory programs. ExpectMore.gov also classifies each program by its specific program area (such as environment, transportation, education, etc) so we can accelerate the improved performance of programs with similar missions. Each PART includes 25 basic questions and there are additional questions tailored to different program types. The questions are divided into four sections. The first section of questions gauges whether a program has a clear purpose and is well designed to achieve its objectives. The second section evaluates strategic planning, and weighs whether the agency establishes outcome-oriented annual and long-term goals for its programs. The third section rates the management of an agency’s program, including the quality of efforts to improve efficiency. The fourth section assesses the results programs can report with accuracy and consistency. The answers to questions in each of the four sections result in a numerical score for each section from 0 to 100 (100 being the best score). Because reporting a single weighted numerical rating could suggest false precision, or draw attention away from the very areas most in need of improvement, numerical scores are combined and translated into qualitative ratings. The bands and associated ratings are as follows: Rating Range Effective ................................................................... 85–100 Moderately Effective ............................................... 70–84 Adequate ................................................................. 50–69 Ineffective ................................................................ 0–49 Regardless of overall score, programs that do not have acceptable performance measures or have not yet collected performance data generally receive a rating of ‘‘Results Not Demonstrated.’’ This rating suggests that not enough information and data are available to make an informed determination about whether a program is achieving results. PART ratings do not result in automatic decisions about funding. Clearly, over time, funding should be targeted to programs that can prove they achieve measurable results. In some cases, a PART rating of ‘‘Ineffective’’ or ‘‘Results Not Demonstrated’’ may suggest that greater funding is necessary to overcome identified shortcomings, while a funding decrease may be proposed for a program rated ‘‘Effective’’ if it is not a priority or has completed its mission. However, most of the time, an ‘‘Effective’’ rating is an indication that the program is using its funding well and that major changes are not needed. 11 2. BUDGET AND PERFORMANCE INTEGRATION Publish a Scorecard To Hold Agencies Accountable Agencies are achieving greater results with the help of the habits and discipline established through the Budget and Performance Integration Initiative (BPI). These agencies recognize that the PART can be a useful tool to drive the agencies to improved performance. The President’s Management Agenda established clear, Government-wide goals or Standards for Success (http://results.gov/agenda/standards.pdf) for several key areas, one of which is Budget and Performance Integration. Agencies have developed and are implementing detailed, aggressive action plans to achieve these goals. Most importantly, agencies are held publicly accountable for adopting these disciplines. The Standards for Success for the BPI Initiative are below: • Meets quarterly with senior agency managers to examine reports that integrate financial and performance information that covers all major responsibilities of the Department. Agency achieves planned improvements in program performance and efficiency in achieving results each year; • Develops strategic plans that contain a limited number of outcome-oriented goals and objectives. Annual budget and performance documents incorporate measures identified in the PART and focus on the information used in the senior management report described in the first criterion; • Demonstrates that it has performance appraisal and awards systems for all Senior Executive Service (SES) and managers, and more than 60 percent of the workforce, that effectively: link to agency mission, goals, and outcomes; hold employees accountable for results appropriate for their level of responsibility; differentiate between various levels of performance (i.e., multiple performance levels with at least one summary rating above Fully Successful); and provide consequences based on performance. In addition, at a beta site, there is evidence that clear expectations are communicated to employees; rating and awards data demonstrate that managers effectively planned, monitored, developed and appraised employee performance; and the site is ready to link pay to the performance appraisal systems. The agency is working to include all agency employees under such systems; • Reports the full cost of achieving performance goals accurately in budget and performance documents and can accurately estimate the marginal cost of changing performance goals; • Has at least one efficiency measure for all PARTed programs; and • Uses PART evaluations to direct program improvements, and PART ratings and performance information are used consistently to justify funding requests, management actions, and legislative proposals. Less than 10 percent of agency programs receive a Results Not Demonstrated rating for two years in a row. Each quarter, agencies received two ratings. First, they are rated on their status in achieving the overall goals for each initiative. They are then given a green, yellow or red rating to clearly announce their performance. Green status is for success in achieving each of the criteria listed earlier; yellow is for an intermediate level of performance; and red is for unsatisfactory results. Second, agency progress toward reaching the Budget and Performance Integration standards is assessed separately. This is reviewed on a case by case basis against the work plan and related time lines established for each agency. Progress is also given a color rating. Green is given when implementation is proceeding according to plans agreed upon with the agencies; Yellow for when some slippage or other issues require adjustment by the agency in order to achieve the initiative objectives on a timely basis; and Red when the Initiative is in serious jeopardy. In this case, it is unlikely to realize objectives absent significant management intervention. As of December 31, 2005, nine agencies achieved green status on the Budget and Performance Integration Initiative Scorecard. The agencies at green are: 1. Department of Energy 2. Department of Labor 3. Department of Transportation 4. Department of State 5. National Aeronautics and Space Administration 6. National Science Foundation 7. Small Business Administration 8. Social Security Administration 9. U.S. Agency for International Development The Scorecard is an effective accountability tool to ensure agencies manage the performance of their programs. Although a scorecard rating is not directly linked to any specific consequences, it is quickly understood at the highest levels of the Administration as an indicator of an agency’s strength or weakness. The Government-wide scorecard reporting on individual agency progress is published quarterly at http:// results.gov/agenda/scorecard.html. Broadcast Results on ExpectMore.gov This year, a new website, ExpectMore.gov, will provide Americans with candid information about which programs work, which do not, and what all programs are doing to get better every year. Up until now, Americans have had limited access to information on how the Federal Government performs. In many cases, the Federal Government performs well. In some cases, it performs better than the private sector. This site will contain PART summaries for all programs that have been assessed to date. The site will provide the program information a concerned citizen would need to assess a program’s performance. Each assessment includes a brief description of the program’s purpose, its overall rating, some highlights about its performance and the steps it will take to improve in 12 ANALYTICAL PERSPECTIVES the future. For those interested in more information, there are links to the detailed program assessment, as well as that program’s website and the assessment summaries of other similar programs. The detailed PART assessment includes the answer to each PART question with an explanation and supporting evidence. It also includes the performance measures for the program along with current performance information. In addition, there is an update on the status of followup actions to improve program performance. A visitor to the site may find, at least initially, programs are not performing as well as they should or program improvement plans are not sufficiently ambitious. We expect this site to change that. The website will have a variety of benefits. It will: • Increase public attention to performance; • Draw greater scrutiny to agency action (or inaction) to improve program results: —Improvement plans will be transparent —Statements about goals and achievements will be clearer; and • Create demand for better quality and more timely performance data. Implement Inter-Agency Program Improvement larly in the social services area where States and localities oftentimes award grants to local service providers. Block grants are embraced for their flexibility to meet local needs and criticized because accountability for results can be difficult when funds are allocated based on formulas and population counts rather than achievements or needs. In addition, block grants pose performance measurement challenges precisely because they can be used for a wide range of activities. The obstacles to measuring and achieving results through block grants are reflected in PART scores: they receive the second lowest average score of the seven PART types: 8 percent of block grant programs assessed to date are rated ineffective, and 45 percent are results not demonstrated. The characteristics that distinguish high performing block grant programs from low performing ones are: • Top management is committed to managing for results; The Administration continues to look for new ways to improve the performance of programs with similar purpose or design by using the PART to analyze performance across agencies (i.e., cross-cutting analysis). Cross-cutting analysis can improve coordination and communication by getting managers from multiple agencies to agree to a common set of goals and placing the focus on quantifiable results. This type of analysis breaks down barriers across the Federal, State, and local levels so all are working toward the same goal. Only topics that are expected to yield meaningful results are selected for cross-cutting analyses. This past year the Administration completed cross-cutting analyses of block grant programs, Small Business Innovation Research, and credit programs. Block Grants. One of the most common tools used by the Federal Government is the block grant, particu- 2. BUDGET AND PERFORMANCE INTEGRATION • Strong, outcome-oriented performance measures and goals are used by management and grantees; • Performance information is relevant, transparent and accessible so management and grantees can easily find out what works and replicate it • Program performance is incorporated into managers’ and employees’ performance appraisals. The goal of this cross-cutting analysis was to share best practices for block grant programs across agencies. During this past year, the BPI Initiative led a seminar where multiple agencies learned lessons about performance measurement, accountability, data collection, and reporting for block grants. All block grant programs will integrate the lessons from this work into aggressive improvement plans that ensure: • Grantees and subgrantees strive to achieve outcome-oriented goals; • Data on whether those goals are achieved are collected and made public; and • Information about proven interventions and how to implement them is shared widely. The long term impact of this work will be visible over the coming years as we monitor the ability of these programs to create better outcomes for the citizens they serve. Small Business Innovation Research (SBIR). The SBIR program sets aside 2.5 percent of Government research and development contract and grant funding for small businesses. The goal of the program is to assist small businesses in undertaking and obtaining the benefits of research and development leading to commercial products, while assisting agencies in achieving their missions. Approximately $2 billion was spent last year in SBIR programs. All Federal agencies with Research and Development budgets above $100 million per year must publish a list of technical topics that they would like to support, after which small businesses are encouraged to submit research funding proposals addressing opportunities in those areas. First, agencies provide winning companies seed funding to explore the feasibility of their projects and, if deemed promising after initial investigation, funding is provided for subsequent research and development. Awards generally are limited to less than $1 million per project. Agencies monitor the progress of the selected projects and report key data annually to the Small Business Administration. A team, consisting of agency and OMB representatives, is carrying out the following activities: • Assessing the program’s impact; • Focusing on improving program administration; • Determining if legislative reform is needed; • Developing common long-term and annual measures; and • Developing a database that tracks commercialization and sales in a consistent manner. Credit Programs. The Federal Government is one of the world’s largest lenders. At the end of 2003, the 13 Government held a financial asset portfolio of nearly $1.5 trillion, including direct loans, loan guarantees, defaulted loans, and non-credit debt owed to agencies. Many agencies lack the data, processes, or overall understanding of the credit lifecycle (origination, loan servicing/lender monitoring, liquidation, and debt collection) needed to effectively assist intended borrowers while also proactively reducing errors, risk, and cost to the Government. Some credit program PART scores reflect these fundamental inefficiencies. More information about the performance of credit programs is available in chapter 7 in this volume. The Budget and Performance Integration initiative identified the ‘‘back office’’ function of the five largest credit agencies (Agriculture, Education, Housing and Urban Development, Small Business Administration, and Veterans Administration) and Treasury as an appropriate target for analysis. The Deputy Director for Management created a Council to address improvements in these back office functions. The Federal Credit Council convened its first meeting in March 2005. In order to create accountability in credit programs, the President’s Management Agenda scorecard has been expanded to include a set of standards for credit program management. The standards include criteria for red, yellow and green status related to: • loan origination; • servicing and/or lender monitoring; and • debt collection. The first scorecard will be published subsequent to the President’s 2007 Budget, with quarterly scorecard reports describing individual agencies’ milestones for addressing weaknesses. Many agencies lack the systems and data to conduct regular analysis consistent with minimum private sector standards, resulting in larger than anticipated losses to the Government. For example, institution of early warning systems to identify high-risk borrowers and provide targeted intervention at agencies currently without such systems could reduce defaults substantially, given the size of agency portfolios. The Council is working to improve compliance with the provision of the Debt Collection Improvement Act that bars certain borrowers through increased reporting to, and use of, private credit bureaus. This permits better identification of delinquent Federal debtors and avoids extending additional credit to poor credit risks. Savings to the Government are expected to be up to $100 million per year. The Council has substantially completed the Sharing Lender Performance Data (SLPD) portal that allows comparison of private lenders’ default and delinquency rates, and other portfolio data, across agencies. This will result in better decisions to approve lender participation in programs, provide benchmarks for ranking lenders, and could provide an additional monitoring tool to reduce borrower defaults through early action. Initiatives of the Council aim to improve management functions and have the potential to reduce delinquent debt by up to $10 billion, in addition to substantial 14 ANALYTICAL PERSPECTIVES cost savings on the front end in the form of reduced administrative and subsidy cost expenses. Community and Economic Development Programs. The Federal Government spends more than $16 billion annually to support local economic and community development. In 2004, agencies and OMB participated in a crosscutting review of the 35 Federal programs that make up this effort. Based on PART analyses, input from agencies, and other program information, the team identified common problems that reduced the effectiveness of this Federal spending. They concluded that the programs, taken together, were duplicative, not well-targeted, and in many cases lacked clear goals, and a system to measure community progress and evaluate program impacts. Last year’s budget proposed to consolidate 18 of the programs (which spend about $4.8 billion) in a new Strengthening America’s Communities Initiative. For 2007, the Administration re-proposes program consolidation—this time in HUD and Commerce. The consolidation will be accompanied by three major reforms to make more effective use of these resources by: 1) better targeting funds to places that lack the means to create conditions for economic progress, 2) consolidating overlapping and/or ineffective programs into flexible grants that include rewards for community progress and results, and 3) coordinating the full set of Federal economic and community development programs within a common framework of goals, standards, and outcome measures. III. RESULTS As mentioned above, the BPI Initiative measures its success according to two measures: • Improved Program Performance; and • Greater Investment in Successful Programs There has been a good deal of success toward achieving goals of the first measure. The BPI Initiative has caused agencies to think more systematically about how they measure and improve program performance. Though there are many factors that impact program performance, it is clear that the BPI Initiative has framed the discussion around results. Agencies have developed ways to measure their efficiency so they can figure out how to do more with Americans’ tax dollars. This marks the fourth year that the PART was used to (1) assess program performance, (2) take steps to improve program performance, and (3) help link performance to budget decisions. To date, the Administration has assessed 794 programs, which represent approximately 80 percent of the Federal budget. Over the next year, the Administration will use the PART to assess the performance and management of most of the remaining Federal programs. With the help of the PART, we have improved program performance and transparency. There has been a substantial increase in the total number of programs rated either ‘‘Effective’’, ‘‘Moderately Effective’’, or ‘‘Adequate’’. This increase came from both re-assessments and newly PARTed programs. The chart below shows the percentage of programs by ratings category. 15 2. BUDGET AND PERFORMANCE INTEGRATION Chart 2-1. Program Ratings are Improving Cumulative Program Results by Rating Category (2002-2005) 100% 6% 11% 15% 15% 26% 29% 24% 26% 80% 15% 20% 60% 26% 5% 50% 28% 5% 38% 40% 4% 29% 20% 4% 24% 0% 2002 (234) Effective Moderately Effective 2003 (407) Adequate The results demonstrate that the BPI initiative is having success focusing Agencies’ attention on program performance. For example, approximately: • 1 in 7 programs has improved its PART rating; • Half of programs rated Results Not Demonstrated have improved their ratings; • 80 percent of programs have acceptable performance measures; • 40 percent have achieved their long-term goals and 60 percent have achieved their annual goals; and • 80 percent of programs have efficiency measures and about half of them have achieved their efficiency targets. Unfortunately, there has not been a similar level of accomplishment in the second measure: Greater Investment in Successful Programs. Though use of performance information has been limited, most in the Con- 2004 (607) Ineffective 2005 (794) Results not Demonstrated gress are aware of the PART. This topic was discussed extensively in a Government Accountability Office (GAO) report issued last year. GAO recommends that OMB select PART reassessments and crosscutting reviews based on factors including the relative priorities, costs, and risks associated with clusters of related programs, and reflective of congressional input. Additionally, GAO recommended OMB solicit congressional views on the performance issues and program areas most in need of review; the most useful performance data and the presentation of those data. As mentioned above, OMB is using the PART to improve the performance of similar programs in areas that are expected to yield meaningful results. OMB and agencies are also actively soliciting the views of the Congress in PART assessments, on improvement plans, and oversight efforts. IV. NEXT STEPS The BPI Initiative has identified several activities to improve its effectiveness over the coming year: Ensure Plans are Aggressive and Result in Improved Performance.—Rigorous follow-up on recommendations from the PART will accelerate improvements in the performance of Federal programs. This will ensure that the hard work done through the PART produces per- formance and management improvements. Additionally, implementation of these plans must be tracked and reported. Expand Cross-Cutting Analyses.—Use the PART to facilitate cross-cutting analysis where there is a higher return than approaching programs individually. The goal of these efforts is to increase efficiency and save 16 dollars. We want to continue to build on the success of previous cross-cuts. Congressional guidance will be a factor in choosing topics for the next group of crosscutting analyses. Maximize ExpectMore.gov Impact.—The Federal Government should be accountable to the public for its performance. This new web-based tool will provide candid information on how programs are performing and what they are doing to improve. The BPI Initiative ANALYTICAL PERSPECTIVES will work to increase the reach and impact of this valuable information to improve program performance and accountability for results. Note.—A table with summary information for all programs that have been reviewed using the Program Assessment Rating Tool (PART) is available at http:// www.whitehouse.gov/omb/budget/fy2007/sheets/ part.pdf This table provides program ratings, section scores, funding levels, and other information. CROSSCUTTING PROGRAMS 17 3. HOMELAND SECURITY FUNDING ANALYSIS Since the terrorist attacks of September 11, 2001, the Federal Government, with State, local and private sector partners, has engaged in a broad, determined effort to thwart terrorism, identifying and pursuing terrorists abroad and implementing an array of measures to secure our citizens and resources at home. The Administration has worked with the Congress to reorganize the Federal Government; acquire countermeasures to biological weapons; enhance security at our borders, transportation sites and critical infrastructures; and strengthen America’s preparedness and response capabilities in our cities and local communities. Elements of our national homeland security strategy—to prevent terrorist attacks within the United States, reduce America’s vulnerability to terrorism, and minimize the damage from attacks that may occur—involve every level of government as well as the private sector and individual citizens. Since September 11th, homeland security has continued to be a major policy focus for all levels of government, and one of the President’s highest priorities. To underscore the importance of homeland security as a crosscutting Government-wide function, section 889 of the Homeland Security Act of 2002 requires a homeland security funding analysis to be incorporated in the President’s Budget. This analysis addresses that legislative requirement. It covers the homeland security funding and activities of all Federal agencies, not only those carried out by the Department of Homeland Security (DHS), and discusses State, local, and private sector expenditures. In addition, not all activities carried out by DHS constitute homeland security funding (e.g., response to natural disasters, Coast Guard search and rescue activities), so DHS estimates in this section do not represent the entire DHS budget. Federal Expenditures The Federal spending estimates in this analysis utilize funding and programmatic information collected on the Executive Branch’s homeland security efforts. 1 Throughout the budget formulation process, the Office of Management and Budget (OMB) collects three-year funding estimates and associated programmatic information from all Federal agencies with homeland security responsibilities. These estimates do not include the efforts of the Legislative or Judicial branches. Information in this chapter is augmented by a detailed appendix of account-level funding estimates, which is available on the Analytical Perspectives CD ROM. 1 All data in the Federal expenditures section are based on the President’s policy for the 2007 Budget. Additional policy and baseline data is presented in the ‘‘Additional Tables’’ section. Due to rounding, data in this section may not add to totals in other Budget volumes. To compile this data, agencies report information using standardized definitions for homeland security. The data provided by the agencies are developed at the ‘‘activity level,’’ which is a set of like programs or projects, at a level of detail sufficient to consolidate the information to determine total Governmental spending on homeland security. To the extent possible, this analysis maintains programmatic and funding consistency with previous estimates. Some discrepancies from data reported in earlier years arise due to agencies’ improved ability to extract terrorism-related activities from host programs and refine their characterizations. As in the Budget, where appropriate, the data is also updated to reflect agency activities, Congressional action, and technical re-estimates. In addition, the Administration may refine definitions or mission area estimates over time based on additional analysis or changes in the way specific activities are characterized, aggregated, or disaggregated. For example, this year’s budget includes significant reestimates for the homeland security funding requested in two agencies’ budgets: the U.S. Coast Guard, and the Department of Defense. When changes in the way agencies estimate homeland security expenditures are made, they are reflected in all years in order to maintain consistency. In the case of the Coast Guard, the agency derives its homeland security funding estimates using an activity-based costing model to allocate its budget among its various missions. In early fiscal year 2005, the Coast Guard discovered the assumptions for this model had not been updated to reflect post-9/11 mission demands, meaning the projections derived from the model were increasingly inconsistent with actual, post-9/11 spending. After reviewing several years of post-9/11 performance data, the Coast Guard updated its modeling assumptions to better reflect its current mission execution. In addition, as part of its annual governmentwide review of homeland security activities, OMB determined that the Coast Guard was reporting both its ‘‘Drug Interdiction’’ and ‘‘International Fisheries Enforcement’’ activities as homeland security programs, which was inconsistent with the Government-wide definition of homeland security activities. As a result, these two mission activities have been dropped from the homeland security data. The revisions to the Department of Defense (DOD) homeland security funding estimates also better reflect actual spending by the Department. Previously, the DOD homeland security funding estimates were derived from an annual report issued by the DOD Comptroller’s office that identified funding spent on combating terrorism activities. Now, DOD has been able to identify discrete, homeland security-related projects, programs 19 20 ANALYTICAL PERSPECTIVES and activities within the budget accounts of the various service branches. As a result, the funding estimates are more precise and integrated with the DOD budget. The following table reflects the adjustments made for the Coast Guard and DOD re-estimates: DoD Re-Estimate ........................................................................ Coast Guard Re-Estimate ........................................................... FY 2005 Effect FY 2006 Effect 2 +7,541 –940 +7,992 –790 2 The 2006 adjustments reflect comparisons between the 2006 requested levels and the revised 2006 enacted levels. As a result, a small amount of the adjustment is attributable to differences between the 2006 Budget and the 2006 enacted funding levels, not just technical re-estimates. Table 3–1. Total funding for homeland security has grown significantly since the attacks of September 11, 2001. For 2007, the President’s Budget includes $58.3 billion for homeland security activities, a $3.4 billion (6.3 percent) increase over the 2006 level. Excluding mandatory funding and the Department of Defense, the 2007 Budget proposes a gross discretionary increase of $3 billion (8.2 percent) over the 2006 level. The Budget also proposes to increase aviation security fees to allow the Government to recover more of its core security costs of Federal aviation screening operations. Including this fee proposal, the net non-defense discretionary increase from 2006 to 2007 is 3.3 percent. HOMELAND SECURITY FUNDING BY AGENCY (Budget authority, in millions of dollars) Budget Authority 2005 Enacted 2005 Supplemental 2006 Enacted 2006 Supplemental 2007 Request Department of Agriculture ................................................................................................................................... Department of Commerce ................................................................................................................................... Department of Defense ....................................................................................................................................... Department of Education .................................................................................................................................... Department of Energy ......................................................................................................................................... Department of Health and Human Services ...................................................................................................... Department of Homeland Security ...................................................................................................................... Department of Housing and Urban Development .............................................................................................. Department of the Interior ................................................................................................................................... Department of Justice ......................................................................................................................................... Department of Labor ........................................................................................................................................... Department of State ............................................................................................................................................ Department of Transportation ............................................................................................................................. Department of the Treasury ................................................................................................................................ Department of Veterans Affairs .......................................................................................................................... Corps of Engineers ............................................................................................................................................. Environmental Protection Agency ....................................................................................................................... Executive Office of the President ....................................................................................................................... General Services Administration ......................................................................................................................... National Aeronautics and Space Administration ................................................................................................ National Science Foundation .............................................................................................................................. Office of Personnel Management ....................................................................................................................... Social Security Administration ............................................................................................................................. District of Columbia ............................................................................................................................................. Federal Communications Commission ............................................................................................................... Intelligence Community Management Account .................................................................................................. National Archives and Records Administration .................................................................................................. Nuclear Regulatory Commission ......................................................................................................................... Postal Service ...................................................................................................................................................... Securities and Exchange Commission ............................................................................................................... Smithsonian Institution ........................................................................................................................................ United States Holocaust Memorial Museum ...................................................................................................... Corporation for National and Community Service ............................................................................................. 595.9 166.7 16,107.7 23.9 1,562.0 4,229.4 23,979.9 2.0 65.0 2,690.8 56.1 824.1 219.3 101.1 249.4 89.0 106.3 29.5 65.2 220.5 342.2 3.0 154.7 15.0 1.8 72.4 17.1 59.2 503.0 5.0 75.0 8.0 17.0 ................ ................ 1,080.2 ................ ................ ................ 569.2 ................ ................ 76.1 ................ ................ ................ 0.4 ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ 563.0 181.1 16,440.4 27.5 1,705.2 4,299.1 25,499.0 1.9 55.6 2,975.4 48.3 1,107.9 181.0 115.8 308.8 72.0 129.3 20.8 98.6 212.6 344.2 2.7 176.8 13.5 2.3 56.0 18.2 79.3 .................... 5.0 83.7 7.8 20.4 .................... .................... .................... .................... .................... 0.1 176.9 .................... .................... 16.1 .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... 650.3 217.8 16,697.8 25.8 1,699.6 4,563.3 27,777.0 1.9 55.4 3,279.8 58.7 1,212.5 206.0 133.4 313.4 43.0 183.3 24.6 95.9 203.7 387.4 2.8 183.8 9.0 5.4 55.0 18.1 70.3 .................... 5.0 80.4 7.8 14.9 Total, Homeland Security Budget Authority .................................................................................................. Less Department of Defense .......................................................................................................................... 52,657.2 –16,107.7 1,725.8 –1,080.2 54,852.9 –16,440.4 193.1 .................... 58,282.9 –16,697.8 Non-Def. Homeland Security Budget Authority excluding BioShield ........................................................ Less Fee-Funded Homeland Security Programs ........................................................................................... Less Mandatory Homeland Security Programs ............................................................................................. 36,549.5 –3,444.1 –2,193.6 645.6 ................ ................ 38,412.6 –4,130.0 –2,232.0 193.1 .................... .................... 41,585.1 –6,022.0 –2,454.1 Net Non-Defense Discretionary, Homeland Security Budget Authority excluding BioShield ................ Plus BioShield ................................................................................................................................................. 30,911.8 2,508.0 645.6 ................ 32,050.6 .................... 193.1 .................... 33,109.0 .................... Net Non-Defense Discretionary, Homeland Security Budget Authority including BioShield ................. Obligations Limitations Department of Transportation Obligations Limitation ......................................................................................... 33,419.8 645.6 32,050.6 193.1 33,109.0 78.2 ................ 121.0 .................... 99.7 21 3. HOMELAND SECURITY FUNDING ANALYSIS A total of 32 agencies comprise Federal homeland security funding in 2007. Of those, five agencies—the Departments of Homeland Security (DHS), Defense (DOD), Health and Human Services (HHS), Justice (DOJ) and Energy (DOE)—account for approximately 93 percent of total Government-wide homeland security funding in 2007. The growth in Federal homeland security funding is indicative of the efforts that have been initiated to secure our Nation. However, it should be recognized that fully developing the strategic capacity to protect America is a complex effort. There is a wide range of potential threats and risks from terrorism. To optimize limited resources and minimize the potential social costs to our free and open society, homeland security activities should be prioritized based on the highest threats and risks. Homeland security represents a partnership among the Federal Government, State and local governments, the private sector, and individual citizens, each with a unique role in protecting our Nation. The National Strategy for Homeland Security provides a framework for addressing these challenges. It guides the highest priority requirements for securing the Nation. As demonstrated below, the Federal Government has used the National Strategy to guide its homeland security efforts. For this analysis, agencies categorize their funding data based on the critical mission areas defined in the National Strategy for Homeland Security: intelligence and warning, border and transportation security, domestic counterterrorism, protecting critical infrastructures and key assets, defending against catastrophic threats, and emergency preparedness and response. In all tables, classified funding controlled by the Director of National Intelligence is combined with the Department of Defense and titled ‘‘Department of Defense.’’ Table 3–2. The National Strategy is a dynamic document. It includes actions that agencies use and must build upon to measure progress. In some cases, progress may be easily measured. In others, Federal agencies, along with State and local governments and the private sector, are working together to develop measurable goals. Finally, in some areas, Federal agencies and partners must continue to develop a better understanding of risks and threats—such as the biological agents most likely to be used by a terrorist group or the highestrisk critical infrastructure targets—in order to develop benchmarks. Funding presented in this report is analyzed in the context of major ‘‘mission areas.’’ Activities in many of the mission areas are closely related. For example, information gleaned from activities in the intelligence and warning category may be utilized to inform law enforcement activities in the domestic counterterrorism category. Augmentation of pharmaceutical stockpiles categorized as emergency preparedness and response, may address agents that represent catastrophic threats. This chapter highlights some significant results from OMB’s Performance Assessment Rating Tool (PART), as well as some major performance metrics and milestones. These are not an exhaustive list of homeland security PART results, measures, or milestones; nor are they exempt from the performance measurement challenges highlighted above. However, they do illustrate the Government’s efforts to build a better framework to measure homeland security performance. The following table summarizes funding levels by the National Strategy’s mission areas; more detailed analysis is provided in subsequent mission-specific analysis sections. HOMELAND SECURITY FUNDING BY NATIONAL STRATEGY MISSION AREA (Budget authority, in millions of dollars) Agency 2005 Enacted 2005 Supplemental 2006 Enacted 2006 Supplemental 2007 Request Intelligence and Warning ........................................ Border and Transportation Security ....................... Domestic Counterterrorism ..................................... Protecting Critical Infrastructure and Key Assets .. Defending Against Catastrophic Threats ............... Emergency Preparedness and Response ............. Other ........................................................................ 349.8 16,652.3 3,974.5 17,835.9 8,146.4 5,654.5 43.8 ...................... 386.2 257.3 849.4 142.8 90.1 ...................... 428.2 18,348.6 4,548.0 17,851.7 8,639.8 4,924.3 112.4 ...................... 159.6 17.6 ...................... 0.5 15.4 ...................... 604.4 20,177.1 4,661.6 18,350.6 8,882.1 5,474.9 132.2 Total, Homeland Security Budget Authority ..... Plus BioShield ..................................................... 52,657.2 2,508.0 1,725.8 ...................... 54,852.9 .................... 193.1 ...................... 58,282.9 .................... Total, Homeland Security Budget Authority , including BioShield .......................................... 55,165.2 1,725.8 54,852.9 193.1 58,282.9 National Strategy Mission Area: Intelligence and Warning The intelligence and warning mission area covers activities to detect terrorist threats and disseminate terrorist-threat information. The category includes intel- ligence collection, risk analysis, and threat-vulnerability integration activities for preventing terrorist attacks. It also includes information sharing activities among Federal, State, and local governments, relevant private sector entities, and the public at large. It does not include most foreign intelligence collection—although 22 ANALYTICAL PERSPECTIVES the resulting intelligence may inform homeland security activities—nor does it fully capture classified intelligence activities. In 2007, funding for intelligence and warning is distributed between DHS (61 percent), primarily in the Office of Intelligence and Analysis; DOJ Table 3–3. (26 percent), primarily in the Federal Bureau of Investigation (FBI); and other Intelligence Community members (13 percent). The 2007 funding for intelligence and warning activities is 41 percent above the 2006 level. INTELLIGENCE AND WARNING FUNDING (Budget authority, in millions of dollars) Agency 2005 Enacted 2005 Supplemental 2006 Enacted 2006 Supplemental 2007 Request Department of Agriculture ....................................... Department of Homeland Security ......................... Department of Justice ............................................. Department of the Treasury ................................... Intelligence Community Management Account ...... 6.3 226.4 44.2 0.6 72.4 ...................... ...................... ...................... ...................... ...................... 6.7 323.3 41.7 0.6 56.0 ...................... ...................... ...................... ...................... ...................... 22.3 370.4 156.2 0.6 55.0 Total, Intelligence and Warning .......................... 349.8 ...................... 428.2 ...................... 604.4 The major requirements addressed in the intelligence and warning mission area include: • Unifying and enhancing intelligence and analytical capabilities to ensure officials have the information they need to prevent attacks; and • Implementing information sharing and warning mechanisms, such as the Homeland Security Advisory System, to allow Federal, State, local, and private authorities to take action to prevent attacks and protect potential targets. As established by the Intelligence Reform and Terrorism Prevention Act of 2004, the Director of National Intelligence (DNI) is ensuring that his newly established office is setting collection and analysis priorities that are consistent with the new National Intelligence Strategy. This new strategy calls for the integration of both the domestic and foreign dimensions of U.S. intelligence so that there are no gaps in our understanding of threats to the homeland. The DNI is also ensuring that information sharing takes place in an environment where access to terrorism information is matched to the roles, responsibilities, and missions of all the organizations across the intelligence community. These changes allow the intelligence community to ‘‘connect the dots’’ more effectively, develop a better integrated system for identifying and analyzing terrorist threats, and issue warnings more rapidly. The National Counterterrorism Center (NCTC) is specifically chartered to centralize U.S. Government terrorism threat analysis and ensure that all agencies receive relevant analysis and information. NCTC serves as the primary organization in the U.S. Government for analyzing and integrating all intelligence pertaining to terrorism and counterterrorism (except purely domestic terrorism) and the central and shared knowledge bank on known and suspected terrorists and international terror groups. It also ensures that agencies, as appropriate, have access to and receive the all-source intelligence support needed to execute their counterterrorism plans or perform independent, alternative analysis. NCTC is tasked to coordinate counterterrorism operations on a global basis and de- velop strategic, operational plans for the Global War on Terrorism. The DNI and the NCTC work to utilize the unique assets and capabilities of other Government agencies— some of which are reorganizing to improve these capabilities and better interface with the new intelligence structure. As such, the NCTC allocates requirements to the agencies with the assets and capabilities to address them. In addition, NCTC has formed a new core staff of analysts drawn from multiple intelligence agencies. This variety ensures that NCTC can access the Intelligence Community’s full breadth of knowledge and complement the activities of individual agencies. Despite the addition of this new permanent planning staff, NCTC will not undertake direct operations but will continue to leave mission execution with the appropriate agencies. This separation ensures that the chain of command remains intact and prevents potential bureaucratic micromanagement of counterterrorism missions. Taken together, the creation of the NCTC and recent legislation and executive orders will ensure counterterrorism assets are better allocated and more tightly coordinated to produce improved indications and warning intelligence to benefit homeland security. The 2007 request for FBI supports improvements in its intelligence infrastructure to enable the Bureau to leverage its workforce, particularly the agents, intelligence analysts, and support staff in the newly-created National Security Branch. The National Security Branch will integrate the Intelligence Directorate with the Counterterrorism and Counterintelligence Divisions to ensure that FBI activities are coordinated with other Intelligence Community agencies under the Director of National Intelligence’s leadership. Over the past four years, the FBI has developed its intelligence capabilities and improved its ability to protect the American people from threats to national security. It has built on its established capacity to collect information and enhanced its ability to analyze and disseminate intelligence. The President’s 2007 Budget supports the FBI’s priorities and its continuing transformation by providing the resources needed for its in- 23 3. HOMELAND SECURITY FUNDING ANALYSIS telligence operations and modernization of its operations. These initiatives will increase the number of secure facilities for conducting intelligence analysis; enhance intelligence collection, systems, and training; continue development of the FBI’s new case management system that will reduce paperwork and improve information sharing; and upgrade fingerprint identification systems to improve screening activities to identify potential terrorists. As a result of the Department of Homeland Security’s 2005 re-organization, a new Office of Intelligence and Analysis (OIA) was established to strengthen intelligence functions and information sharing within DHS. OIA gathers information to analyze terrorist threats to critical infrastructure, transportation systems, or other targets inside the homeland. Led by the newlycreated DHS Chief Intelligence Officer reporting directly to the Secretary, this office not only relies on its own analysts (comprised of personnel from the former Information Analysis and Infrastructure Protection Directorate), but draws on the expertise of other DHS components with information collection and analytical capabilities. For example, improved coordination and information sharing between border agents, air marshals, and intelligence analysts deepens the Department’s understanding of terrorist threats. By maintaining and expanding its partnership with the NCTC, DHS will better coordinate its activities with other members within the intelligence community and the DNI. The Office also serves as the focal point for disseminating information to states and local entities. For example, OIA is connected to homeland security directors of States and territories through the Homeland Security Information Network (HSIN). All fifty States and major urban areas are connected to HSIN, and HSIN is now being rolled out to major counties as well. National Strategy Mission Area: Border and Transportation Security This mission area covers activities to protect border and transportation systems, such as screening airport passengers, detecting dangerous materials at ports overseas and at U.S. ports-of-entry, and patrolling our coasts and the land between ports-of-entry. The majority of funding in this mission area ($18.8 billion, or 93 percent, in 2007) is in DHS, largely for the U.S. Customs and Border Protection (CBP), the Transportation Security Administration (TSA), and the Coast Table 3–4. Guard. Other DHS bureaus and other Departments, such as State and Justice, also play a significant role. The President’s 2007 request would increase funding for border and transportation security activities by 10 percent over the 2006 level. Securing our borders and transportation systems is a complex task. Security enhancements in one area may make another avenue more attractive to terrorists. Therefore, our border and transportation security strategy aims to make the U.S. borders ‘‘smarter’’—targeting resources toward the highest risks and sharing information so that frontline personnel can stay ahead of potential adversaries—while facilitating the flow of legitimate visitors and commerce. The creation of DHS, which unified the Federal Government’s major border and transportation security resources, facilitates the integration of risk targeting systems and ensures greater accountability in border and transportation security. Rather than having separate systems for managing goods, people, and agricultural products, one agency is now accountable for ensuring that there is one cohesive border management system. Since 2001, the Administration and Congress have increased funding for border security by 93 percent and immigration enforcement by 90 percent. The Administration continues to deploy new technology—from unmanned aircraft to ground sensors to infrared cameras; and has eliminated the barriers that prevented DHS from completing a 14-mile border fence running along the border south of San Diego. The 2007 Budget provides funding for 1,500 new border patrol agents and new technology, including portable imaging machines, cameras, sensors and automated targeting systems that focus on high-risk travelers and goods. This investment will support smarter and more secure borders. To ensure detention and removal of illegal aliens present in the United States, the Budget provides $2.1 billion, a $626 million increase over 2006, to support detention and removal efforts. This includes funding to expand the program to apprehend alien fugitives and to increase efforts to ensure that aliens convicted of crimes in the United States are deported directly from correctional institutions after their time is served. The Budget provides funding to add more than 6,000 new detention beds to hold illegal immigrants while they await removal. This will bring the total number of beds available to approximately 27,500. DHS will also make improvements in processing and deporting BORDER AND TRANSPORTATION SECURITY FUNDING (Budget authority, in millions of dollars) Agency Department Department Department Department Department of of of of of 2005 Enacted 2005 Supplemental 2006 Enacted 2006 Supplemental 2007 Request Agriculture ....................................... Homeland Security ......................... Justice ............................................. State ............................................... Transportation ................................. 159.1 15,628.7 34.5 778.5 51.5 ...................... 386.2 ...................... ...................... ...................... 165.3 17,078.6 30.4 1,056.6 17.7 ...................... 159.6 ...................... ...................... ...................... 164.9 18,820.9 20.5 1,152.1 18.7 Total, Border and Transportation Security ....... 16,652.3 386.2 18,348.6 159.6 20,177.1 24 aliens, cutting the time of detention for aliens in half from 30 days to 15 days. A 2003 PART found this program moderately effective because DHS Immigration and Customs Enforcement (ICE) has reorganized its operations and engaged in significant strategic and performance planning efforts to identify ambitious goals to improve program performance. DHS is leading the interagency effort to implement a coordinated approach to terrorist-related screening in immigration, law enforcement, intelligence, counterintelligence, border and transportation systems, and critical infrastructure, covering areas from information sharing to screener training. Key to the Federal Government’s screening of international visitors is the USVISIT program, which is designed to expedite the clearance of legitimate travelers while identifying and denying clearance to those who may intend harm. Through 2005, the first phases of US-VISIT were successfully deployed. US-VISIT currently collects two digital fingerprints and a digital photograph. The ability to screen visitors against criminal and terrorist information as well as confirming the identity of travelers has improved border security. However, in the future, to improve accuracy in the identification of visitors, firsttime visitors to the United States will be enrolled in the program by submitting 10 fingerprints, allowing the identification of visitors with even greater accuracy. DHS, in conjunction with the Departments of State and Justice, is in the process of implementing this multiyear project to improve screening, and the 2007 Budget includes: a $60 million increase for DHS for 10-print deployment and for interoperability with the FBI’s fingerprint system, the Integrated Automated Fingerprint Identification System (IAFIS); a $71 million increase for FBI to upgrade IAFIS; and $10 million for the Department of State to begin implementing these new security measures. In the area of aviation security, the Administration continues to enhance the multiple levels of security implemented in the wake of the September 11th attacks. The Transportation Security Administration (TSA) has made significant improvements in aviation security since 9/11 by implementing a layered, risk-based security approach. These advances include hardened cockpit doors, a greatly expanded Federal Air Marshals program, arming some pilots through the Federal Flight Deck Officers program, offering voluntary self defense training to crew members, and screening 100 percent of passenger and checked baggage. TSA will further strengthen these efforts in 2007 by requesting $4.6 billion for aviation screening operations, an increase of $74 million, which ensures sufficient resources for Transportation Security Officer staffing at our Nation’s airports. Combined with the funds provided in 2006, TSA will apply over $100 million to enhance air cargo security over the next two years. TSA will also commit over $690 million to the purchase, installation, and maintenance of baggage screening devices, including inline systems that will increase baggage throughput up to 250 percent. The Budget also provides over $80 mil- ANALYTICAL PERSPECTIVES lion for emerging technology at passenger checkpoints. This technology will enhance the detection of prohibited items, especially firearms and explosives, through the use of additional sensors such as whole body imaging, automated explosive sampling, and cast and prosthesis scanners. The Budget also proposes to cover about 70 percent of core aviation security costs through aviation security fees. The safeguarding of our seaports is critical since terrorists may seek to use them to enter the country or introduce weapons or other dangerous materials. With 95 percent of all U.S. cargo passing through the Nation’s 361 ports, a terrorist attack on a major seaport could slow the movement of goods and be economically devastating. The Maritime Transportation Security Act (MTSA) and its implementing regulations, issued by DHS in October 2003, require ports, vessels, and facilities to conduct security assessments. In 2007, the Coast Guard will continue to ensure compliance with MTSA port and vessel security standards and regulations. The 2007 Budget provides more than $2 billion for port security across DHS, primarily for Coast Guard port security activities such as Maritime Safety and Security Teams and harbor patrols. In addition, the Coast Guard’s budget funds operations to strengthen intelligence collection and surveillance capabilities in the maritime environment, both of which contribute to the broader Coast Guard effort to enhance Maritime Domain Awareness. In addition, ports are among the infrastructure assets protected through DHS Targeted Infrastructure Protection (TIP) grants, which fall under the Infrastructure Protection mission area. The State Department Bureau of Consular Affairs is the second largest contributor to border and transportation security. The State Border Security program includes visa, passport, American Citizen Services and International Adoption programs. In 2007, the State Department will work through the interagency process to achieve full and real-time interoperability between biographic and biometric screening systems for 10 fingerprint collection from foreign travelers, as part of the US-VISIT Program. In addition, the Department of State will also lead the implementation of the Western Hemisphere Travel Initiative in 2007, which mandates that all travelers within the Western Hemisphere travel with a passport or other authorized document by 2009. Under this initiative, United States citizens and foreign visitors traveling to and from the Caribbean, Bermuda, Panama, Canada or Mexico will be required to have a passport or standardized travel card that establishes the bearer’s identity and nationality to enter or re-enter the United States. The initiative will improve security at our borders by standardizing entry and exit information and increasing the ability of Government agencies to work together. In 2007, the State Department plans to increase staff to create a dedicated team focused on inter-country adoptions and preventing and resolving cases of international parental child abduction. 25 3. HOMELAND SECURITY FUNDING ANALYSIS National Strategy Counterterrorism Mission Area: Domestic Funding in the domestic counterterrorism mission area covers Federal and Federally-supported efforts to identify, thwart, and prosecute terrorists in the United States. The largest contributors to the domestic Table 3–5. counterterrorism mission are law enforcement organizations: the Department of Justice (largely for the FBI) and DHS (largely for ICE), accounting for 53 and 44 percent of funding for 2007, respectively. The President’s 2007 request would increase funding for domestic counterterrorism activities by 2.5 percent over the 2006 level. DOMESTIC COUNTERRORISM FUNDING (Budget authority, in millions of dollars) Agency 2005 Enacted 2005 Supplemental 2006 Enacted 2006 Supplemental 2007 Request Department of Homeland Security ......................... Department of Justice ............................................. Department of Transportation ................................. Department of the Treasury ................................... Social Security Administration ................................ 1,897.0 1,999.0 20.0 54.9 3.7 183.0 74.3 ...................... ...................... ...................... 2,132.8 2,325.3 21.0 64.8 4.2 2.0 15.6 ...................... ...................... ...................... 2,070.8 2,482.7 21.0 82.5 4.6 Total, Domestic Counterterrorism ...................... 3,974.5 257.3 4,548.0 17.6 4,661.6 Since the attacks of September 11th, preventing and interdicting terrorist activity within the United States has become a priority for law enforcement at all levels of government. The major requirements addressed in the domestic counterterrorism mission area include: • Developing a proactive law enforcement capability to prevent terrorist attacks; • Apprehending potential terrorists; and • Improving law enforcement cooperation and information sharing to enhance domestic counterterrorism efforts across all levels of government. The President’s 2007 Budget supports the FBI’s top strategic priority: to protect the United States from terrorist attacks. FBI continues to build its counterterrorism capabilities post-9/11. Over the past five years, FBI has shifted resources to counterterrorism from lower priority programs, hired and trained additional field investigators, and strengthened headquarters oversight of the counterterrorism program. More recently, FBI has taken a major step toward integration of counterterrorism, counterintelligence, and intelligence functions by establishing the new National Security Branch to oversee all three programs. Overall, FBI resources in the domestic counterterrorism category have increased from $0.9 billion in 2002 to $1.9 billion in 2007, with the 2007 Budget providing an increase of more than $200 million over the 2006 level. One of the largest 2007 initiatives for enhancing counterterrorism capabilities is $100 million for Sentinel, the FBI’s new automated case management system, which will streamline record-keeping and facilitate sharing of information about terrorists. By merging existing immigration and customs enforcement functions into ICE, the Department of Homeland Security created one of America’s largest law enforcement agencies. The Nation is better prepared to apprehend potential terrorists because DHS has com- bined the information and resources to identify and investigate illegal activities—such as smuggling, identity theft, and money laundering, and trafficking in dangerous materials. The 2004 PART found that the investigative arm of ICE, the Office of Investigations, has made significant progress in the integration of former customs and immigration investigators, and has started to reap the benefits of additional investigative authorities. However, the program must institute stronger financial and management controls to ensure appropriate expenditure and budgeting of resources and to hold managers and agency partners accountable for performance results. The 2007 Budget provides an increase of $127 million for these enforcement activities. National Strategy Mission Area: Protecting Critical Infrastructure and Key Assets Funding in the protecting critical infrastructure and key assets mission area captures the efforts of the U.S. Government to secure the Nation’s infrastructure, including information infrastructure, from terrorist attacks. Protecting the Nation’s key assets is a complex challenge because of the diversity of infrastructures and since it is estimated that more than 85 percent of the Nation’s key assets are privately owned. DOD reports the largest share of funding in this category for 2007 ($11.3 billion, or 62 percent), and includes programs focusing on physical security and improving the military’s ability to prevent or mitigate the consequences of attacks against departmental personnel and facilities. DHS has overall responsibility for prioritizing and executing infrastructure protection activities at a national level and accounts for $2.9 billion (16 percent) of 2007 funding. In addition, a total of 25 other agencies report funding to protect their own assets and work with States, localities, and the private sector to reduce vulnerabilities in their areas of expertise. The President’s 2007 request increases funding for activities to 26 ANALYTICAL PERSPECTIVES protect critical infrastructure and key assets by $499 million (2.8 percent) over the 2006 level. Securing America’s critical infrastructure and key assets is a complex task. The major requirements include: • Unifying disparate efforts to protect critical infrastructure across the Federal Government, and with State, local, and private stakeholders; Table 3–6. • Building and maintaining a complete and accurate assessment of America’s critical infrastructure and key assets and prioritizing protective action based on risk; • Enabling effective partnerships to protect critical infrastructure; and • Reducing threats and vulnerabilities in cyberspace. PROTECTING CRITICAL INFRASTRUCTURE AND KEY ASSETS FUNDING (Budget authority, in millions of dollars) Agency 2005 Enacted 2005 Supplemental 2006 Enacted 2006 Supplemental 2007 Request Department of Agriculture ....................................... Department of Defense .......................................... Department of Energy ............................................ Department of Health and Human Services .......... Department of Homeland Security ......................... Department of Justice ............................................. Department of Transportation ................................. Department of Veterans Affairs .............................. National Aeronautics and Space Administration .... National Science Foundation .................................. Social Security Administration ................................ Postal Service ......................................................... Other Agencies ....................................................... 150.7 10,838.2 1,456.1 168.2 2,580.9 468.8 137.0 212.8 220.5 315.2 150.6 503.0 633.9 ...................... 847.8 ...................... ...................... ...................... 1.3 ...................... ...................... ...................... ...................... ...................... ...................... 0.4 93.2 11,096.8 1,523.7 181.7 2,678.5 521.1 132.5 273.5 212.6 317.2 172.0 .................... 649.2 ...................... ...................... ...................... ...................... ...................... ...................... ...................... ...................... ...................... ...................... ...................... ...................... ...................... 46.0 11,304.3 1,503.6 188.8 2,898.0 568.3 154.0 271.2 203.7 359.4 178.5 .................... 675.0 Total, Protecting Critical Infrastructure and Key Assets ........................................................ 17,835.9 849.4 17,851.7 ...................... 18,350.6 Homeland Security Policy Directive 7 (HSPD-7), signed in December 2003, established a national policy to protect critical infrastructures and key resources from attack, ensure the delivery of essential goods and services, and maintain public safety and security. Under HSPD-7, DHS is responsible for managing Federal critical infrastructure protection efforts. To provide the overall framework to integrate various critical infrastructure protection activities, DHS has developed the interim National Infrastructure Protection Plan. Under the plan’s risk-management approach, DHS will coordinate the infrastructure protection programs of other Federal departments and agencies. Recognizing that each infrastructure sector possesses it own unique characteristics, the National Infrastructure Protection Plan designates a sector-specific agency to oversee infrastructure protection efforts for each sector. This approach enables agencies to rely on specialized expertise and long-standing relationships with industry in conducting infrastructure protection activities. With the National Infrastructure Protection Plan, sector-specific agencies are pursuing infrastructure protection efforts in concert with DHS. There are 13 critical infrastructure sectors and 9 sector-specific agencies, including DHS, to cover them. For example, the Budget provides $10 million to DHS to improve security at chemical plant sites. The Environmental Protection Agency is seeking $38 million in 2007 to expand its Water Sentinel program to four more cities. The program develops pilot systems for cost effective, early de- tection of disease, pest, or poisonous agents in drinking water systems. To protect agricultural resources, the Department of Agriculture has undertaken the responsibility to identify critical agricultural assets throughout the country. They have completed extensive physical security assessments to make sure that all agricultural physical security issues throughout the United States are in line with latest polices and regulations. The Department of Energy continues to coordinate protection activities within the energy sector. Overall, additional enhancements are being provided for 14 agencies to perform critical infrastructure protection activities that are essential to the success of the National Infrastructure Protection Plan. In addition to developing the National Infrastructure Protection Plan, DHS recently reorganized its infrastructure protection programs and created a new Preparedness Directorate in order to better focus preparedness activities on objective measures of risk and performance. The new Directorate is responsible for both physical and cyber infrastructure protection. The Office of Infrastructure Protection, located within the new Preparedness Directorate, is responsible for managing and prioritizing infrastructure protection at a national level. The Office operates the National Asset Database, which catalogues critical infrastructure and key assets. The data collected within the database is used to identify the most critical infrastructure, assess vulnerabilities, and enable DHS to develop a risk-based strategy to protect them. DHS conducts site visits and 27 3. HOMELAND SECURITY FUNDING ANALYSIS assessments at various sites each year, and has used this information to develop site security guidelines for nuclear power plants and chemical facilities. Security guidelines are also being developed for other infrastructure sectors. DHS also trains State and local officials and infrastructure owners to improve security in the areas immediately surrounding critical sites. The 2007 Budget provides $462 million for these activities in the protecting critical infrastructures and key assets mission area. In conjunction with funding for the Office of Infrastructure Protection, the Administration proposes $600 million for Targeted Infrastructure Protection (TIP) grants, which will integrate existing disparate grant programs for securing transportation assets and other critical infrastructures. Awarded through the Preparedness Directorate’s Office of Grants and Training, TIP grants and assistance will supplement State and local infrastructure protection efforts, especially detection and security investments. Cyberspace security is a key element of infrastructure protection because the internet and other computer systems link infrastructure sectors. The consequences of a cyber attack could cascade across the economy, imperiling public safety and national security. To address this threat, DHS established the National Cyber Security Division (NCSD) in 2003, in response to the President’s National Strategy to Secure Cyberspace, in order to identify, analyze and reduce cyber threats and vulnerabilities, coordinate incident response, and provide technical assistance. NCSD, now part of DHS’ Preparedness Directorate, works collaboratively with public, private, and international entities to secure cyberspace and America’s cyber assets. For example, it coordinated the response and mitigation of the Sober and Zotob computer viruses. NCSD has also established the U.S. Computer Emergency Response Team (US-CERT), which operates a cyber watch, warning, and incident response center. US-CERT supports a watch and warning capability responsible for tracking incident and trend data, ranking associated severity, and generating real-time alerts. Table 3–7. NCSD also operates a Control Systems Security Program. Today, many critical infrastructures such as pipelines, water and pumping stations, and pharmaceutical production are run by control systems. These systems make our critical infrastructure assets more automated, more productive, more efficient, and more innovative, but they also may expose many of those physical assets to cyber-related threats and vulnerabilities. NCSD works to address these weaknesses and enhance control systems security. To evaluate readiness and response programs such as the National Response Plan, NCSD conducts national cyber exercises such as Cyber Storm with public and private sector entities. These exercises test our capabilities and improve our ability to respond to an incident. To support these critical preparedness activities, the Budget includes $93 million for the NCSD in 2007. The Budget also includes an increase of $6 million for research and development on new technologies to enhance cyber security that will be conducted by the Science and Technology Directorate. National Strategy Mission Against Catastrophic Threats Area: The defending against catastrophic threats mission area covers activities to research, develop, and deploy technologies, systems, and medical measures to detect and counter the threat of chemical, biological, radiological, and nuclear (CBRN) weapons. The agencies with the most significant resources to help develop and field technologies to counter CBRN threats are DOD ($5.0 billion, or 56 percent, of the 2007 total), HHS ($2.0 billion, or 22 percent, of the 2007 total), largely for research at the National Institutes of Health, and DHS, mostly for the Directorate of Science and Technology (S&T) ($1.3 billion, or 15 percent, of the 2007 total). The President’s 2007 request would increase funding for activities to defend against catastrophic threats by 2.8 percent over the 2006 level. The major requirements addressed in this mission area include: • Preventing terrorist use of CBRN weapons through detection systems and procedures, and improving decontamination techniques; and DEFENDING AGAINST CATASTROPHIC THREATS FUNDING (Budget authority, in millions of dollars) Agency 2005 Enacted 2005 Supplemental 2006 Enacted 2006 Supplemental Department of Agriculture ....................................... Department of Commerce ...................................... Department of Defense .......................................... Department of Energy ............................................ Department of Health and Human Services .......... Department of Homeland Security ......................... Department of Justice ............................................. Department of the Treasury ................................... National Science Foundation .................................. Nuclear Regulatory Commission ............................ 222.7 73.4 4,925.4 7.5 1,901.8 936.1 33.5 .................... 27.0 19.0 ...................... ...................... 142.4 ...................... ...................... ...................... 0.5 ...................... ...................... ...................... 238.3 80.6 5,004.3 62.1 1,856.3 1,306.1 37.4 .................... 27.0 27.8 ...................... ...................... ...................... ...................... ...................... ...................... 0.5 ...................... ...................... ...................... 342.7 83.4 4,986.4 58.9 1,976.0 1,338.6 42.3 0.9 28.0 24.9 8,146.4 142.8 8,639.8 0.5 8,882.1 Total, Defending Against Catastrophic Threats Defending 2007 Request 28 • Developing countermeasures, such as vaccines and other drugs to protect the public from the threat of a CBRN attack or other public health emergency. DOD defends the nation against catastrophic threats by undertaking long-term research on chemical and biological threats and by developing strategies to counter the risk of such attacks. DOD’s efforts in maritime defense and interdiction provide early detection and response to possible CBRN threats. DOD also conducts anti-terrorism planning to defend against a potential CBRN or other terrorist attack against a military base or installment. Finally, the U.S. Northern Command, the military command responsible for homeland defense, is included in this category. To protect against a nuclear or radiological weapon entering the country, the Domestic Nuclear Detection Office (DNDO), created in 2006 within the Department of Homeland Security, will coordinate the Nation’s nuclear detection efforts. The DNDO is responsible for developing and deploying a comprehensive system to detect and report any attempt to import a nuclear explosive device or radiological material into the United States. This Office has oversight of all research and development for detection, identification, and reporting of radiological and nuclear materials. It is also responsible for establishing response protocols to ensure that the detection of a nuclear explosive device or radiological material leads to timely and effective action by military, law enforcement, emergency response, and other appropriate Government assets. The 2007 Budget includes $536 million for the DNDO, a 70-percent increase from the 2006 level. Together with the Departments of State, Energy, Defense, and Justice, the DNDO is deploying a comprehensive system to detect and report any attempt to import, assemble, or transport a nuclear device, fissile or radiological materials within the United States. In 2007, DNDO will conduct $100 million in transformational research and development aimed at enhancing our ability to detect, identify, and attribute nuclear and radiological materials. This research looks beyond current capabilities and seeks to find new scientific tools and methodologies that may prove useful in broad efforts to focus the Nation’s resources toward countering the threat of nuclear and radiological devices. The DNDO budget also includes $178 million for the deployment of both fixed and mobile radiation portal monitors at strategic points of entry throughout the country. Together with overseas non-proliferation efforts led by the Department of State, and overseas detection capabilities managed by the Department of Energy, these programs seek to create a seamless approach toward preventing terrorists anywhere in the world from acquiring, transporting, or introducing these materials into the United States. Another key element in addressing these requirements is developing and maintaining adequate countermeasures for a CBRN attack. This not only means stockpiling countermeasures that are currently avail- ANALYTICAL PERSPECTIVES able, but developing new countermeasures for agents that currently have none, and next-generation countermeasures that are safer and more effective than those that presently exist. Also, unlike an attack with conventional weapons, a CBRN attack may not be immediately apparent. Working to ensure earlier detection and characterization of an attack helps protect and save lives. The Budget continues to invest in efforts to decrease the time between an attack and implementation of Federal, State and local response protocols. The Science and Technology Directorate will expand and enhance the BioWatch environmental monitoring program, which samples and analyzes air in over 30 metropolitan areas to continually check for dangerous biological agents. The program is designed to provide early warning of a large-scale biological weapon attack, thereby allowing the distribution of life-saving treatment and preventative measures before the development of serious and widespread illnesses. The Administration continues HHS’ investment in developing medical countermeasures to CBRN threats, investing nearly $2 billion, an increase of $120 million over 2006 and $1.9 billion over the level prior to September 11th (this includes funding for programs focused on chemical and radiological and nuclear countermeasures referenced below). For 2007, the Budget includes nearly $160 million at NIH for the advanced development of medical countermeasures against threats of bioterrorism. Large investments in basic research of medical countermeasures through NIH have helped create multiple promising products to protect the public against the threat of a terrorist attack. These investments will accelerate the development of these products to help Project BioShield acquire them more quickly for inclusion in the Strategic National Stockpile. HHS will continue to improve human health surveillance with over $100 million dedicated to the BioSense program (collecting information from hospitals, emergency departments, and laboratories to identify ‘‘realtime’’ trends), increasing laboratory capacity, and augmenting the number and quality of border health and quarantine stations. FDA and USDA will also conduct surveillance to ensure the security of the food supply. Information collected from these programs will be disseminated to the National Biosurveillance Integration Center at DHS. National Strategy Mission Area: Emergency Preparedness and Response The Emergency Preparedness and Response mission area covers agency efforts to prepare for and minimize the damage from major incidents and disasters, particularly terrorist attacks that endanger lives and property or disrupt Government operations. The mission area encompasses a broad range of agency incident management activities, as well as grants and other assistance to States and localities. Response to natural disasters, including catastrophic natural events such as Hurricane Katrina, does not fall within the definition of a homeland security activity. However, in preparing for ter- 29 3. HOMELAND SECURITY FUNDING ANALYSIS rorism-related threats, many of the activities within this mission area also support preparedness for catastrophic natural disasters. Additionally, lessons learned Table 3–8. from the response to Hurricane Katrina will help to revise and strengthen catastrophic response planning. EMERGENCY PREPAREDNESS AND RESPONSE FUNDING (Budget authority, in millions of dollars) Agency 2005 Enacted 2005 Supplemental 2006 Enacted 2006 Supplemental 2007 Request Department of Defense .......................................... Department of Energy ............................................ Department of Health and Human Services .......... Department of Homeland Security ......................... Other Agencies ....................................................... 344.2 98.4 2,159.4 2,671.8 380.7 90.1 ...................... ...................... ...................... ...................... 339.4 119.4 2,261.2 1,868.9 335.5 ...................... ...................... 0.1 15.3 ...................... 407.0 137.1 2,398.5 2,147.9 384.4 Total, Emergency Preparedness and Response Plus BioShield ..................................................... 5,654.5 2,508.0 90.1 ...................... 4,924.3 .................... 15.4 ...................... 5,474.9 .................... Total, Emergency Preparedness and Response including BioShield .......................................... 8,162.5 90.1 4,924.3 15.4 5,474.9 HHS, the largest contributor ($2.4 billion, or 44 percent, in 2007), assists States, localities and hospitals to upgrade public health capacity and maintains a national stockpile of medicines and vaccines for use following an event. DHS maintains the second largest share of funding in this category ($2.1 billion, or 39 percent, for 2007), mainly for preparedness grant assistance to State and local first responders. A total of 23 other agencies include emergency preparedness and response funding. A number of agencies maintain specialized response assets that may be called upon in select circumstances, and others report only funding for their agency’s internal preparedness capability. In the President’s 2007 Budget, funding for emergency preparedness and response activities would increase by $551 billion (11 percent) over the 2006 level. The major requirements addressed in this mission area include: • Establishing measurable goals for national preparedness and ensuring that Federal funding supports these goals; • Ensuring that Federal programs to train and equip States and localities meet national preparedness goals in a coordinated and complementary manner; • Encouraging standardization and interoperability of first responder equipment, especially for communications; • Building a national training, exercise, and evaluation system; • Implementing the National Incident Management System; • Preparing health care providers for a mass casualty event; and • Augmenting America’s pharmaceutical and vaccine stockpiles. Many of the key elements of the national emergency response system are already in place. During 2004, separate Federal response plans were integrated into a single all-discipline National Response Plan. The recent release of a unified National Preparedness Goal provides a new framework for guiding Federal, State, and local investments. In order to ensure that these investments translate into improvements in preparedness, we must continue to identify capability gaps and improve response and recovery efforts at all levels of government. A related challenge is ensuring that investments in State and local preparedness are focused on building new response capabilities, and not simply supplanting normal operating expenses. DHS is leading an interagency effort to better match Federal resources with achieving national preparedness goals. From 2001 through 2006, the Federal Government has allocated $22.5 billion in State and local terrorism preparedness grant funding from the Departments of Homeland Security, Health and Human Services, and Justice, increasing spending from an annual level of approximately $350 million in 2001 to $4 billion in the 2007 request. The funding growth has been directed to Federal assistance for State and local preparedness and response activities, including equipping and training first responders and preparing the public health infrastructure for a range of terrorist threats. The Federal Government has also taken steps to rationalize and simplify the distribution of State and local assistance; better target funds based on risks, threats, vulnerability and need; and develop and implement the eight national priorities and 37 target capabilities identified in the new National Preparedness Goal. In 2005, DHS rolled-out the National Response Plan, and the Administration is currently reviewing the plan to include lessons learned from the response to Hurricane Katrina. DHS will provide grant funding to support approximately 200 terrorism preparedness exercises in 2006 and 2007, and take an active role in organizing the 2007 Top Officials (TOPOFF) exercise. The 2007 Budget continues to provide coordinated terrorism preparedness training and equipment for State and local responders across the various responder agen- 30 ANALYTICAL PERSPECTIVES cies. The 2007 request includes $2.1 billion for terrorism preparedness grants, training, and exercises to be administered by the Preparedness Directorate within DHS, and proposes to continue current progress on restructuring in the grant allocation process to better address threats and needs. The Budget also supports a range of Federal response capabilities, including providing $110 million for the Department of Energy’s Nuclear Emergency Support Team, $20 million within DHS for the Federal Emergency Management Agency’s Urban Search and Rescue teams, and other emergency response, management, and operations assets. The capabilities of these teams range from providing radiological assistance in support of State and local agencies to responding to major incidents worldwide. The Budget also includes more than $100 million in DHS and HHS to strengthen the Nation’s capabilities to respond to a mass casualty event. The Administration continues making significant investments in medical countermeasures through Project BioShield. BioShield is designed to stimulate the development of the next generation of countermeasures by allowing the Federal Government to buy critically needed vaccines and medications for biodefense as soon as experts agree they are safe and effective enough to be added to the Strategic National Stockpile. This program provides an incentive to manufacture these countermeasures. BioShield is a shared responsibility, joining the intelligence capabilities of DHS with the medical expertise of HHS. The Budget includes $594 million to maintain and augment this supply of vaccines and other countermeasures that can be made available within 12 hours in the event of a terrorist attack or other public health emergency. This includes funding for storage and maintenance of products purchased through BioShield, and nearly $50 million for the purchase of supplies under the medical surge capacity initiative. HHS has the lead role in preparing public health providers for catastrophic terrorism. For 2007, HHS will provide nearly $475 million to continue improvements for hospital infrastructure and mutual aid through the Health Resources and Services Administration, and $824 million for States through the Centers for Disease Control and Prevention for upgrades to State and local public health capacity. This investment will bring the total assistance provided by HHS to States, local governments and health care providers since 2001 to nearly $8.5 billion. Non-Federal Expenditures 3 State and local governments and private-sector firms also have devoted resources of their own to the task 3 OMB does not collect detailed homeland security expenditure data from State, local, or private entities directly. of defending against terrorist threats. Some of the additional spending has been of a one-time nature, such as investment in new security equipment and infrastructure; some additional spending has been ongoing, such as hiring more personnel, and increasing overtime for existing security personnel. In many cases, ownsource spending has supplemented the resources provided by the Federal Government. Many governments and businesses continue to place a high priority on and provide additional resources for security. On the other hand, many entities have not increased their spending. A 2004 survey conducted by the National Association of Counties found that as a result of the homeland security process of intergovernmental planning and funding, three out of four counties believed they were better prepared to respond to terrorist threats. Moreover, almost 40 percent of the surveyed counties had appropriated their own funds to assist with homeland security. Own-source resources supplemented funds provided by States and the Federal Government. However, the same survey revealed that 54 percent of counties had not used any of their own funds. 4 There is also a diversity of responses in the businesses community. A 2003 survey conducted by the Conference Board showed that just over half of the companies reported that they had permanently increased security spending post-September 11, 2001. About 15 percent of the companies surveyed had increased their security spending by 20 percent or more. Large increases in spending were especially evident in critical industries, such as transportation, energy, financial services, media and telecommunications, information technology, and healthcare. However, about onethird of the surveyed companies reported that they had not increased their security spending after September 11th. 5 Given the difficulty of obtaining survey results that are representative of the entire universe of States, localities, and businesses, it is expected that there will be a wide range of estimates on non-Federal security spending for critical infrastructure protection. Additional Tables The tables in the Federal expenditures section above present data based on the President’s policy for the 2007 Budget. The tables below present additional policy and baseline data, as directed by the Homeland Security Act of 2002. 4 Source: National Association of Counties, ‘‘Homeland Security Funding—2003 State Homeland Security Grants Programs I and II.’’ 5 Source: Conference Board, ‘‘Corporate Security Management’’ 2003. 31 3. HOMELAND SECURITY FUNDING ANALYSIS Estimates by Agency: Table 3–9. DISCRETIONARY FEE-FUNDED HOMELAND SECURITY ACTIVITIES BY AGENCY (Budget authority, in millions of dollars) 2005 Enacted Agency 2005 Supplemental 2006 Enacted 2006 Supplemental 2007 Request Department of Energy ............................................ Department of Homeland Security ......................... Department of State ............................................... General Services Administration ............................ Social Security Administration ................................ Federal Communications Commission ................... Nuclear Regulatory Commission ............................ Securities and Exchange Commission ................... 1.2 2,404.0 763.3 58.6 151.0 1.8 59.2 5.0 ...................... ...................... ...................... ...................... ...................... ...................... ...................... ...................... 1.9 2,788.0 988.4 91.8 173.4 2.3 79.3 5.0 ...................... ...................... ...................... ...................... ...................... ...................... ...................... ...................... 2.0 4,578.0 1,128.8 88.4 179.2 5.4 35.2 5.0 Total, Discretionary Homeland Security FeeFunded Activities .............................................. 3,444.1 ...................... 4,130.0 ...................... 6,022.0 Table 3–10. MANDATORY HOMELAND SECURITY FUNDING BY AGENCY (Budget authority, in millions of dollars) Agency Department Department Department Department Department Department of of of of of of 2005 Enacted 2005 Supplemental 2006 Enacted 2006 Supplemental 2007 Request Agriculture ....................................... Commerce ...................................... Energy ............................................ Health and Human Services .......... Homeland Security ......................... Labor ............................................... 131.0 12.1 11.0 14.2 2,022.7 2.6 ...................... ...................... ...................... ...................... ...................... ...................... 137.1 14.1 12.0 16.6 2,048.3 3.9 ...................... ...................... ...................... ...................... ...................... ...................... 139.1 28.7 13.0 16.6 2,248.2 8.6 Total, Homeland Security Mandatory Programs 2,193.6 ...................... 2,232.0 ...................... 2,454.1 32 ANALYTICAL PERSPECTIVES Table 3–11. BASELINE ESTIMATES—TOTAL HOMELAND SECURITY FUNDING BY AGENCY (Budget authority, in millions of dollars) Agency Department of Agriculture .............................................................................................................................. Department of Commerce .............................................................................................................................. Department of Defense .................................................................................................................................. Department of Education ............................................................................................................................... Department of Energy .................................................................................................................................... Department of Health and Human Services ................................................................................................. Department of Homeland Security* ............................................................................................................... Department of Housing and Urban Development ......................................................................................... Department of the Interior .............................................................................................................................. Department of Justice .................................................................................................................................... Department of Labor ...................................................................................................................................... Department of State ....................................................................................................................................... Department of Transportation ........................................................................................................................ Department of the Treasury ........................................................................................................................... Department of Veterans Affairs ..................................................................................................................... Corps of Engineers ......................................................................................................................................... Environmental Protection Agency .................................................................................................................. Executive Office of the President .................................................................................................................. General Services Administration .................................................................................................................... National Aeronautics and Space Administration ........................................................................................... National Science Foundation ......................................................................................................................... Office of Personnel Management .................................................................................................................. Social Security Administration ........................................................................................................................ District of Columbia ........................................................................................................................................ Federal Communications Commission ........................................................................................................... Intelligence Community Management Account ............................................................................................. National Archives and Records Administration ............................................................................................. Nuclear Regulatory Commission .................................................................................................................... Securities and Exchange Commission .......................................................................................................... Smithsonian Institution .................................................................................................................................... United States Holocaust Memorial Museum ................................................................................................. Corporation for National and Community Service ......................................................................................... 2006 Enacted* 564 181 16,441 28 1,704 4,300 25,503 2 56 2,976 48 1,107 182 117 310 72 129 21 99 213 344 3 177 14 2 56 18 79 5 83 8 20 Baseline 2007 2008 2009 2010 2011 579 200 16,857 28 1,743 4,401 26,565 2 57 3,092 53 1,131 190 120 318 74 133 21 100 218 351 3 181 14 5 57 18 82 5 87 8 20 593 1,173 17,343 29 1,770 4,508 27,449 2 61 3,205 49 1,157 197 123 326 75 136 22 104 222 359 3 185 15 5 58 19 85 5 90 8 21 609 194 17,836 29 1,809 4,612 28,291 2 62 3,320 51 1,180 205 130 334 77 141 22 104 228 367 3 189 15 5 60 19 89 5 96 8 21 623 200 18,341 30 1,848 4,715 29,152 2 66 3,437 51 1,205 212 134 340 78 144 23 108 232 374 3 194 15 5 61 20 91 5 100 9 21 639 205 18,868 30 1,889 4,825 30,046 3 68 3,561 52 1,230 222 137 349 80 148 23 109 236 383 3 196 16 5 62 20 94 6 103 9 22 Total, Homeland Security Budget Authority ............................................................................................. 54,862 56,713 59,397 60,113 61,839 63,639 Less Department of Defense ..................................................................................................................... –16,441 –16,857 –17,343 –17,836 –18,341 –18,868 Non-Defense Discretionary Homeland Security Budget Authority, excluding BioShield .................. Less Fee-Funded Homeland Security Programs ...................................................................................... Less Mandatory Homeland Security Programs ........................................................................................ 38,421 –4,127 –2,232 39,856 –4,255 –2,455 42,054 –4,350 –3,543 42,277 –4,441 –2,650 43,498 –4,537 –2,733 44,771 –4,630 –2,820 Net Non-Defense Discretionary Homeland Security Budget Authority excluding BioShield ............ Plus BioShield ............................................................................................................................................ 32,062 ................ 33,146 ................ 34,161 ................ 35,186 2,175 36,228 ................ 37,321 ................ Net Non-Defense Discretionary Homeland Security Budget Authority including BioShield ............. 32,062 33,146 34,161 37,361 36,228 37,321 Obligations Limitations Department of Transportation Obligations Limitation ................................................................................ 121 124 126 130 131 135 * FY 2006 Enacted estimates exclude supplemental appropriations. 33 3. HOMELAND SECURITY FUNDING ANALYSIS Estimates by Budget Function: Table 3–12. HOMELAND SECURITY FUNDING BY BUDGET FUNCTION (budget authority, in millions of dollars) 2005 Enacted * 2006 Enacted ** National Defense ........................................................................................................... International Affairs ........................................................................................................ General Science Space and Technology ..................................................................... Energy ............................................................................................................................ Natural Resources and the Environment ...................................................................... Agriculture ...................................................................................................................... Commerce and Housing Credit ..................................................................................... Transportation ................................................................................................................ Community and Regional Development ....................................................................... Education, Training, Employment and Social Services ................................................ Health ............................................................................................................................. Medicare ......................................................................................................................... Income Security ............................................................................................................. Social Security ............................................................................................................... Veterans Benefits and Services .................................................................................... Administration of Justice ............................................................................................... General Government ..................................................................................................... 20,581 824 619 102 288 578 649 8,109 2,759 164 4,276 8 9 151 250 14,241 778 20,771 1,107 616 124 285 541 160 8,433 2,201 168 4,347 12 11 173 310 14,784 819 20,430 1,213 655 125 316 611 193 9,632 2,722 163 4,626 14 17 179 314 16,210 862 Total, Homeland Security Budget Authority ............................................................ Less National Defense, DoD .................................................................................... 54,386 –17,186 54,862 –16,441 58,282 –16,699 Total, Homeland Security Budget Authority excluding BioShield ........................ Less Fee-Funded Homeland Security Programs ..................................................... Less Mandatory Homeland Security Programs ........................................................ 37,200 –3,444 –2,194 38,421 –4,127 –2,232 41,583 –6,019 –2,455 Net Discretionary, Homeland Security Budget Authority excluding BioShield .. Plus BioShield ........................................................................................................... 31,562 2,508 32,062 ................ 33,109 ................ Net Discretionary, Homeland Security Budget Authority including BioShield ... 34,070 32,062 33,109 Agency * FY 2005 Enacted estimates include supplemental appropriations. ** FY 2006 Enacted estimates exclude supplemental appropriations. 2007 Request 34 ANALYTICAL PERSPECTIVES Table 3–13. BASELINE ESTIMATES—HOMELAND SECURITY FUNDING BY BUDGET FUNCTION (Budget authority, in millions of dollars) Budget Authority 2006 Enacted* Baseline 2007 2008 2009 2010 2011 National Defense ............................................................................................................................................ International Affairs ......................................................................................................................................... General Science Space and Technology ...................................................................................................... Energy ............................................................................................................................................................. Natural Resources and the Environment ...................................................................................................... Agriculture ....................................................................................................................................................... Commerce and Housing Credit ..................................................................................................................... Transportation ................................................................................................................................................. Community and Regional Development ........................................................................................................ Education, Training, Employment and Social Services ................................................................................ Health* ............................................................................................................................................................ Medicare ......................................................................................................................................................... Income Security .............................................................................................................................................. Social Security ................................................................................................................................................ Veterans Benefits and Services ..................................................................................................................... Administration of Justice ................................................................................................................................ General Government ...................................................................................................................................... 20,771 1,107 616 124 285 541 160 8,433 2,201 168 4,347 12 11 173 310 14,784 819 21,303 1,131 629 129 292 555 182 8,825 2,252 172 4,450 12 16 177 318 15,438 832 21,904 1,157 643 119 301 568 1,154 9,232 2,302 178 4,558 13 11 181 326 15,898 852 22,509 1,180 658 124 310 584 174 9,501 2,352 186 4,662 14 11 185 334 16,463 866 23,132 1,205 670 126 319 597 179 9,781 2,403 191 4,767 14 12 189 340 17,029 885 23,777 1,230 685 131 327 612 185 10,077 2,454 196 4,877 15 13 191 349 17,620 900 Total, Homeland Security Budget Authority ............................................................................................. Less National Defense, DoD ..................................................................................................................... 54,862 –16,441 56,713 –16,857 59,397 –17,343 60,113 –17,836 61,839 –18,341 63,639 –18,868 Net Discretionary, Homeland Security Budget Authority, excluding BioShield .................................. Less Fee-Funded Homeland Security Programs ...................................................................................... Less Mandatory Homeland Security Programs ........................................................................................ 38,421 –4,127 –2,232 39,856 –4,255 –2,455 42,054 –4,350 –3,543 42,277 –4,441 –2,650 43,498 –4,537 –2,733 44,771 –4,630 –2,820 Net Discretionary, Homeland Security Budget Authority ....................................................................... Plus BioShield ............................................................................................................................................ 32,062 ................ 33,146 ................ 34,161 ................ 35,186 2,175 36,228 ................ 37,321 ................ Net Discretionary, Homeland Security Budget Authority, including BioShield ................................... 32,062 33,146 34,161 37,361 36,228 37,321 * FY 2006 Enacted estimates exclude supplemental appropriations. Detailed Estimates by Budget Account: An appendix of account-level funding estimates, organized by National Strategy mission area, is available on the Analytical Perspectives CD ROM. 4. STRENGTHENING FEDERAL STATISTICS Federal statistical programs produce key information to inform public and private decision makers about a range of topics of interest, including the economy, the population, agriculture, crime, education, energy, the environment, health, science, and transportation. The ability of governments, businesses, and citizens to make appropriate decisions about budgets, employment, investments, taxes, and a host of other important matters depends critically on the ready availability of relevant, accurate, and timely Federal statistics. The Federal statistical community remains on alert for opportunities to strengthen these measures of our Nation’s performance. For example, during 2005, Federal statistical agencies accelerated the release of Gross State Product by one year and released for the first time local area employee compensation by industry (BEA); published for the first time a price index for U.S. imports of goods from China (BLS); implemented the American Community Survey at its full level of three million addresses nationwide to provide detailed population data every month instead of once every 10 years (Census Bureau); presented primary information about the economic well-being of America’s farmers and farm households from the Agricultural Resource Management Survey via an easy-to-use web-based delivery tool (ERS and NASS); and undertook the first datasharing project under the Confidential Information Protection and Statistical Efficiency Act to improve under- standing of international research and development investment activities of multinational corporations (BEA, Census Bureau, and NSF’s SRS). During 2006, the Bureau of Justice Statistics will sponsor a new survey of businesses to estimate their exposure to and the consequences of computer crime, while the National Center for Health Statistics will field the National Survey of Ambulatory Surgery for the first time since 1996 to provide more comprehensive data on surgical procedures—many of which have moved from inpatient to outpatient settings. For Federal statistical programs to effectively benefit their wide range of users, the underlying data systems must be viewed as credible. In order to foster this credibility, Federal statistical programs seek to adhere to high quality standards and to maintain integrity and efficiency in the production of data. As the collectors and providers of these basic statistics, the responsible agencies act as data stewards—balancing public and private decision makers’ needs for information with legal and ethical obligations to minimize reporting burden, respect respondents’ privacy, and protect the confidentiality of the data provided to the Government. This chapter discusses the development of standards that principal statistical programs use to assess their performance and presents highlights of their 2007 budget proposals. Performance Standards Statistical programs maintain the quality of their data or information products as well as their credibility by setting high performance standards for their activities. The statistical agencies and statistical units represented on the Interagency Council on Statistical Policy (ICSP) have collaborated on developing an initial set of common performance standards for use under the Government Performance and Results Act and in completing the Administration’s Program Assessment Rating Tool (PART). Federal statistical agencies have agreed that there are six conceptual dimensions within two general areas of focus that are key to measuring and monitoring statistical programs. The first area of focus is Product Quality, encompassing the traditional dimensions of relevance, accuracy, and timeliness. The second area of focus is Program Performance, encompassing the dimensions of cost, dissemination, and mission achievement. Statistical agencies historically have focused on measuring performance in the area of product quality, especially dimensions of accuracy and timeliness that are most amenable to quantitative measurement. Rel- evance, also an accepted measure of quality, can be either a qualitative description of the usefulness of products or a quantitative measure such as a customer satisfaction score. Relevance is more difficult to measure, and the indicators that do exist are more varied. Program performance standards form the basis for evaluating effectiveness. They address questions such as: Are taxpayer dollars spent most effectively? Are products made available to those who need them? Are agencies meeting their mission requirements or making it possible for other agencies to meet their missions? The indicators available to measure program performance for statistical activities currently are less well developed. Product quality and program performance standards are designed to serve as indicators when answering specific questions in the Administration’s PART process. Chart 4–1 presents each principal Federal statistical agency’s assessment of the status of its current and planned use of indicators on the six dimensions. During the past year, four agencies (BTS, EIA, NASS, and SRS) have completed development of their last few 35 36 ANALYTICAL PERSPECTIVES indicators. With the exception of cost indicators, where three agencies (ERS, NCES, and NCHS) are still planning their measures, the ICSP agencies have now developed performance measures for all six dimensions. Use of the indicators may be for internal management, strategic planning, or annual performance reporting. The dimensions shown in the chart reflect an overall set of indicators for statistical activities, but the specific measures vary among the individual programs depend- ing on their unique characteristics and requirements. Annual performance reports and PARTs provide these specific measures, as well as additional information about performance goals and targets and whether a program is meeting, or making measurable progress toward meeting, its performance goals. The examples below illustrate different ways agencies track their performance on each dimension. Chart 4-1. ICSP Statistical Quality and Program Performance Dimensions, 2007 Dimension BEA BJS BLS BTS Census EIA ERS NASS NCES NCHS P P ORES SOI SRS Product Quality Relevance Accuracy Timeliness Program Performance P Cost Dissemination Mission Achievement Indicator Available P Indicator Planned Description of Dimensions Product Quality Relevance: Qualitative or quantitative descriptions of the degree to which products and services are useful to users and responsive to users’ needs. Accuracy: Qualitative or quantitative measure of important features of correctness, validity, and reliability of data and information products measured as degree of closeness to target values. Timeliness: Qualitative or quantitative measure of the timing of information releases. Program Performance Cost: Quantitative measure of the dollar amount used to produce data products and services. Dissemination: Qualitative or quantitative information on the availability, accessibility, and distribution of products and services. Mission Achievement: Qualitative or quantitative information about the effect of, or satisfaction with, statistical programs. Key to Statistical Agencies BEA = Bureau of Economic Analysis, Department of Commerce BJS = Bureau of Justice Statistics, Department of Justice BLS = Bureau of Labor Statistics, Department of Labor BTS = Bureau of Transportation Statistics, Department of Transportation Census = Census Bureau, Department of Commerce EIA = Energy Information Administration, Department of Energy ERS = Economic Research Service, Department of Agriculture NASS = National Agricultural Statistics Service, Department of Agriculture NCES = National Center for Education Statistics, Department of Education NCHS = National Center for Health Statistics, Department of Health and Human Services ORES = Office of Research, Evaluation, and Statistics, Social Security Administration SOI = Statistics of Income, Internal Revenue Service, Department of the Treasury SRS = Division of Science Resources Statistics, National Science Foundation 4. STRENGTHENING FEDERAL STATISTICS Product Quality: Statistical agencies agree that product quality encompasses many attributes, including (but not limited to) relevance, accuracy, and timeliness. The basic measures in this group relate to the quality of specific products, thereby providing actionable information to managers. These are ‘‘outcome-oriented’’ measures and are key to the usability of information products. Statistical agencies or units establish targets and monitor how well targets are met. In some sense, relevance relates to ‘‘doing the right things,’’ while accuracy and timeliness relate to ‘‘doing things right.’’ Relevance: Qualitative or quantitative descriptions of the degree to which products and services are useful and responsive to users’ needs. Relevance of data products and analytic reports may be monitored through a professional review process and ongoing contacts with data users. Product relevance may be indicated by customer satisfaction with product content, information from customers about product use, demonstration of product improvements, comparability with other data series, agency responses to customer suggestions for improvement, new or customized products or services, frequency of use, or responses to data requests from users (including policy makers). Through a variety of professional review activities, agencies maintain the relevance and validity of their products, and encourage data users and other stakeholders to contribute to the agencies’ data collection and dissemination programs. Striving for relevance requires monitoring to ensure that information systems anticipate change and evolve to appropriately measure our dynamic society and economy. Accuracy: Qualitative or quantitative measures of important features of correctness, validity, and reliability of data and information products measured as degree of closeness to target values. For statistical data, accuracy may be defined as the degree of closeness to the target value and measured as sampling error and various aspects of nonsampling error (e.g., response rates, size of revisions, coverage, edit performance). For analysis products, accuracy may be the quality of the reasoning, reasonableness of assumptions, and clarity of the exposition, typically measured and monitored through review processes. In addition, accuracy is assessed and improved by internal reviews, comparisons of data among different surveys, linkages of survey data to administrative records, redesigns of surveys, or expansions of sample sizes. Timeliness: Qualitative or quantitative measure of timing of information releases. Timeliness may be measured as time from the close of the reference period to the release of information, or customer satisfaction with timeliness. Timeliness may also be measured as how well agencies meet scheduled and publicized release dates, expressed as a percent of release dates met. 37 Program Performance: Statistical agencies agree that program performance encompasses balancing the dimensions of cost, dissemination, and mission accomplishment for the agency as a whole; operating efficiently and effectively; ensuring that customers receive the information they need; and serving the information needs of the Nation. Costs of products or programs may be used to develop efficiency measures. Dissemination involves making sure customers receive the information they need via the most appropriate mechanisms. Mission achievement means that the information program makes a difference. Hence, three key dimensions are being used to indicate program performance: cost (input), dissemination (output), and mission achievement (outcome). Cost: Quantitative measure of the dollar amount to produce data products or services. The development and use of financial performance measures within the Federal Government is an established goal; the intent of such measures is to determine the ‘‘true costs’’ of various programs or alternative modes of operation at the Federal level. Examples of cost data include full costs of products or programs, return on investment, dollar value of efficiencies, and ratios of cost to products distributed. Dissemination: Qualitative or quantitative information on the availability, accessibility, and distribution of products and services. Most agencies have goals to improve product accessibility, particularly through the Internet. Typical measures include: on-demand requests fulfilled, product downloads, degree of accessibility, customer satisfaction with ease of use, number of participants at user conferences, citations of agency data in the media, number of Internet user sessions, number of formats in which data are available, amount of technical support provided to data users, exhibits to inform the public about information products, issuance of newsletters describing products, usability testing of web sites, and assessing compliance with Section 508 of the Rehabilitation Act, which requires Federal agencies to make their electronic and information technology accessible to people with disabilities. Mission Achievement: Qualitative or quantitative information about the effect of, or satisfaction with, statistical programs. For Government statistical programs, this dimension responds to the question—have we achieved our objectives and met the expectations of our stakeholders? Under this dimension, statistical programs document their contributions to the goals and missions of parent departments and other agencies, the Administration, the Congress, and information users in the private sector and the general public. For statistical programs, this broad dimension involves meeting recognized societal information needs; it also addresses the linkage between statistical outputs and programmatic outcomes. 38 ANALYTICAL PERSPECTIVES However, identifying this linkage is far from straightforward. It is frequently difficult to trace the effects of information products on the public good. Such products often are necessary intermediate inputs in the creation of high visibility information whose societal benefit is clearly recognized. For example, the economic statistics produced by a variety of agencies are directly used by the Bureau of Economic Analysis in the calculation of the Gross Domestic Product (GDP), which analysts universally use to assess changes in the level of domestic economic activity. Similarly, statistics from specific surveys are directly used by the Bureau of Labor Statistics in the calculation of the Consumer Price Index (CPI), which is widely used in diverse applications, such as indexing pensions for retirees. As a result, a number of statistical agencies can claim credit for contributing to the GDP and/or the CPI and to the many uses of these information products. In addition, statistics produced by Federal agencies are used to track the performance of programs managed by their parent or other organizations related to topics such as crime, education, energy, the environment, health, science, and transportation. Moreover, beyond the direct and focused uses of statistical products, the statistical agencies and their programs serve a diverse and dispersed set of data users working on a broad range of applications. Users include government policy makers at the Federal, State, and local levels, business leaders, households, academic researchers, analysts at public policy institutes and trade groups, marketers and planners in the private sector, and many others. Information produced by statistical agencies often is combined with other information for use in the decision-making process. Thus, the relationship between program outputs and their beneficial uses and outcomes is often complex and difficult to track. Consequently, agencies use both qualitative and quantitative indicators to make this linkage as explicit as feasible. In the absence of preferred quantitative indicators, qualitative narratives can indicate how statistical agency products contribute to and evaluate progress toward important goals established for government or private programs. In particular, narratives can highlight how statistical agencies measure the Nation’s social and economic structure, and how the availability of the information influences changes in policies and programs. These narratives contribute to demonstrating mission accomplishment, particularly in response to questions in Section I of the PART, ‘‘program purpose and design.’’ Narratives may describe statistical information’s effects on measuring agency policy or change of policy, supporting research focused on policy issues, informing debate on policy issues, or providing in-house consulting support. In addition to narratives, quantitative measures may be used to reflect mission achievement. For example, customer satisfaction with the statistical agency or unit indicates if the agency or unit has met the expectations of its stakeholders. Of the 14 principal Federal statistical agencies that are members of the ICSP, nine agencies have programs that have been assessed using the PART process. Most of these agencies’ programs have received PART summary ratings of Effective or Moderately Effective, as shown in Chart 4–2. While recognizing the strength of the Energy Information Administration’s purpose and management, EIA received a rating of ‘‘Results Not Demonstrated’’ for two key reasons. As part of its 2004 strategic planning, EIA had begun to reassess its performance measures. As a result, EIA had not yet adopted new measures, nor established baselines and targets for the new measures. Also, EIA had no recurring independent evaluation of its entire program. EIA is working to establish these measures, targets, and baselines. In addition, in FY 2005 EIA initiated an independent Expert Study Team to review and assess EIA’s entire information program. This team is scheduled to provide its report to EIA in spring 2006. As additional ICSP agencies have an opportunity to undergo the PART process, the agencies plan to continue to use the results of the collaborative performance standards development effort to help maintain and extend their generally favorable assessments. Chart 4–2. Most Recent PART Summary Ratings for Statistical Programs Summary Rating Bureau of Economic Analysis Effective Bureau of Justice Statistics Effective Bureau of Labor Statistics Effective Census Bureau Current Demographic Statistics Decennial Census Intercensal Demographic Estimates Survey Sample Redesign Economic Census Current Economic Statistics/Census of Governments Effective Moderately Effective Moderately Effective Effective Effective Moderately Effective Economic Research Service Effective Energy Information Administration Results Not Demonstrated National Agricultural Statistics Service Moderately Effective National Center for Education Statistics Statistics Assessment Effective Effective National Center for Health Statistics Moderately Effective 4. 39 STRENGTHENING FEDERAL STATISTICS Highlights of 2007 Program Budget Proposals The programs that provide essential statistical information for use by governments, businesses, researchers, and the public are carried out by some 70 agencies spread across every department and several independent agencies. Approximately 40 percent of the funding for these programs provides resources for 13 agencies or units that have statistical activities as their principal mission. (Please see Table 4–1.) The remaining funding supports work in 60-plus agencies or units that carry out statistical activities in conjunction with other missions such as providing services or enforcing regulations. More comprehensive budget and program information about the Federal statistical system will be available in OMB’s annual report, Statistical Programs of the United States Government, Fiscal Year 2007, when it is published later this year. The following highlights elaborate on the Administration’s proposals to strengthen the programs of the principal Federal statistical agencies. Bureau of Economic Analysis: Funding is requested to: (1) complete BEA’s five-year program to improve the accuracy and timeliness of the National Income and Product Accounts, including acquiring and incorporating real-time data into the accounts to provide more current and reliable estimates and accelerating the release of gross state product and metropolitan personal income; (2) augment the scope of the international economic accounts by improving the comprehensiveness of international service statistics; (3) continue to update the input-output accounts and industry estimates; and (4) improve and enhance regional economic statistics. Bureau of Justice Statistics: Funding is requested to provide for BJS’s core statistical programs, including: (1) sample restoration for the National Crime Victimization Survey to support estimates of annual rates of change in most types of violent crime; (2) cybercrime statistics on the incidence, magnitude, and consequences of electronic and computer crime to households and businesses; (3) law enforcement data from over 3,000 agencies on the organization and administration of police and sheriffs’ departments; (4) nationally representative prosecution data on resources, policies, and practices of local prosecutors; (5) court and sentencing statistics, including Federal and State case processing data; and (6) data on correctional populations and facilities from Federal, State, and local governments. Bureau of Labor Statistics: Funding is requested to support program operations to measure the economy through producing, disseminating, and improving BLS economic measures, including activities to: (1) begin updating continuously the housing and geographic area samples in the Consumer Price Index (CPI), which will improve the accuracy and timeliness of the CPI; (2) continue to modernize the computing systems for monthly processing of the Producer Price Index (PPI) and U.S. Import and Export Price Indexes (IPP); and (3) expand the Business Employment Dynamics data within the Quarterly Census of Employment and Wages to cover State level measures of gross job gains and gross job losses. Bureau of Transportation Statistics: Funding is requested to: (1) conduct the Commodity Flow Survey, a major national benchmark survey of shippers; (2) release monthly trade statistics on the commodities and mode of transportation used with our largest trading partners; (3) produce a core set of economic data and indicators including the Government Transportation Financial Report, multi-factor productivity measures, the State Transit Expenditure Survey, the Transportation Services Index, and the Air Travel Price Index; (4) produce and release the National Transportation Atlas Data Base, a compendium of national geospatial transportation data; (5) provide statistics in reference reports such as the Annual Report to Congress, the Pocket Guide to Transportation, the National Transportation Statistics Report, and the Transportation Services Index; and (6) carry out a national transportation information needs assessment, a new Congressional mandate to prioritize transportation data needs and data collections, and estimate their implementation costs. Census Bureau: Funding is requested for the Census Bureau’s ongoing economic and demographic programs and for a re-engineered 2010 Census. For the Census Bureau’s economic and demographic programs, funding is requested to: (1) develop the collection instruments and processing systems for the 2007 Economic Census; (2) collect and process data in the organization phase of the Census of Governments, prepare and initiate data collection and processing in the employment phase, and collect and process data for the start of the finance phase; and (3) design a new data collection system on income and wealth dynamics that will meet the policy and operational needs of the country and replace the Survey of Income and Program Participation. For 2010 Census planning, funding is requested to continue to: (1) conduct planning, testing, and development activities to support a re-engineered 2010 Census; (2) improve the accuracy of map feature locations for an additional 690 counties; and (3) continue to conduct the American Community Survey program to provide small area demographic data on an ongoing basis rather than waiting for once-a-decade censuses. Economic Research Service: Funding is requested to: (1) implement an Agricultural and Rural Development Information System, a comprehensive data collection and research program to ensure that sufficient data will consistently be available to monitor the changing economic health and structure of the farm and rural economies and to assess the economic well-being of 40 farm and non-farm households in rural areas; and (2) extend ERS’s integrated and comprehensive data and analysis framework, the Consumer Data and Information System, to include data on the consumption of food away from home, which will improve the ability of policy officials to understand, monitor, track, and identify changes in food supply and consumption patterns. Energy Information Administration: Funding is requested to continue ongoing operations to: (1) maintain critical energy data coverage, analysis, and forecasting; (2) increase global oil and gas data and modeling capabilities through EIA’s International Oil and Gas Markets and Energy Security Initiative, which will provide the basis for an enhanced global dialogue on the development and use of these key energy resources; (3) improve data reliability and statistical accuracy through EIA’s Energy Data Quality Improvements Initiative, which will redesign key petroleum and natural gas surveys whose data drive investment and trade decisions, improve market function, and lead to efficient pricing; and (4) improve the ability to assess and forecast supply, demand, and technology trends affecting U.S. and world energy markets through the U.S. Energy Model Replacement Initiative. National Agricultural Statistics Service: Funding is requested to: (1) continue restoration and modernization of the agricultural estimates program to ensure State, regional, and national level agricultural estimates of sufficient precision, quality, and detail to meet the needs of a broad customer base; and (2) finalize preparations for data collection associated with the 2007 Census of Agriculture, including collection of data to measure coverage of the mailing list and the preparation of all materials for data collection in 2008. National Center for Education Statistics: Funding is requested to support: (1) on-going longitudinal studies, including the Early Childhood Longitudinal Study Birth and Kindergarten Cohorts and the Educational Longitudinal Study of 2002; (2) the Common Core of Data, which collects information on enrollment, completions, and finances from public elementary and secondary institutions; (3) the Integrated Postsecondary Education Data System, which collects information on enrollment, completions, and finances from postsecondary institutions; (4) the National Postsecondary Student Aid Survey, a comprehensive study that examines how students and their families pay for postsecondary education; (5) U.S. participation in international assessments that compare educational achievement in the United States with that in other countries; (6) the Schools and Staffing Survey, which provides informa- ANALYTICAL PERSPECTIVES tion on public and private schools, the principals who head these schools, and the teachers who work in them; (7) a new longitudinal study that will follow an eighth grade cohort through the year following timely high school completion, and (8) expansion of the National Assessment of Educational Progress (NAEP), the only nationally representative and continuing assessment of what American students know and can do, to produce State estimates for grade 12. National Center for Health Statistics: Funding is requested to: (1) continue data collection, analysis, and release for key national health data systems including the National Vital Statistics System, National Health Interview Survey, National Health and Nutrition Examination Survey, and National Health Care Survey; (2) continue gains in timeliness by implementing systems improvements in data collection and processing; (3) complete efforts to expand the content of surveys, particularly those addressing the health care delivery system; (4) implement the sample redesign for the National Health Interview Survey, NCHS’ largest population survey; and (5) work collaboratively with States and other agencies on upgrading the technology for collecting data from State birth and death certificates. Office of Research, Evaluation, and Statistics, SSA: Funding is requested to: (1) continue a strategic planning project to modernize ORES’ processes for developing and disseminating data from the agency’s major administrative data files for statistical purposes, (2) support outside surveys and linkage of Social Security Administration (SSA) administrative data to surveys, (3) create a new public-use file of administrative data on earnings histories and benefits for a sample of Social Security Numbers, and (4) evaluate the usefulness and confidentiality protection of a file being developed for public use that synthesizes data from the Survey of Income and Program Participation that is linked to SSA administrative records. Science Resources Statistics Division, NSF: Funding is requested to: (1) improve the relevance, accuracy, timeliness, and accessibility of SRS statistical products, including the suite of research and development surveys; (2) extend the data, tools, and knowledge needed to develop, on an internationally comparable basis, a new set of science metrics in order to evaluate reliably the returns from past research and development investments and to forecast, within tolerable margins of error, likely returns from future investments; and (3) gather additional data on postdoctorate positions to address a major gap in Science and Engineering personnel data. 4. 41 STRENGTHENING FEDERAL STATISTICS Statistics of Income Division, IRS: Funding is requested to: (1) maintain and modernize tax data collection systems, including developing interfaces with modern electronic tax return filing systems; (2) implement a databank repository for SOI and IRS population file data to more efficiently build longitudinal databases and enable sub-national estimates; (3) examine means Table 4–1. to more effectively mask individual records to minimize the possibility of identification in the Individual Public Use Sample files; and (4) modernize and expedite dissemination of data and publications, including enhancement of products and features on the www.irs.gov/ taxstats website. 2005–2007 BUDGET AUTHORITY FOR PRINCIPAL STATISTICAL AGENCIES (in millions of dollars) 2005 Actual Estimate 2006 1 2007 Bureau of Economic Analysis 2 .................................................................... 73 76 Bureau of Justice Statistics 3 ........................................................................ 47 46 60 Bureau of Labor Statistics ............................................................................ 529 537 563 Bureau of Transportation Statistics .............................................................. 26 27 27 Census ........................................................................................... Salaries and Expenses 4 ........................................................................... Periodic Censuses and Programs ............................................................ 765 216 549 822 216 606 898 204 694 Economic Research Service 5 ....................................................................... 74 75 83 Energy Information Administration ................................................................ 84 85 90 Bureau 4 National Agricultural Statistics Service 6 76 ....................................................... 128 139 153 National Center for Education Statistics ....................................................... Statistics .................................................................................................... Assessment ............................................................................................... National Assessment Governing Board ................................................... 185 91 89 5 183 90 88 5 190 93 92 5 National Center for Health Statistics 7 .......................................................... 109 109 109 Office of Research, Evaluation, and Statistics, SSA ................................... 17 19 17 Science Resources Statistics Division, NSF ................................................ 31 33 36 Statistics of Income Division, IRS ................................................................ 38 41 41 1 Reflects any recissions. figure includes $2 million for a NAPA study of off-shoring. 3 The 2005 and 2006 figures include funds for management and administrative costs that were previously displayed separately. 4 Includes Mandatory Appropriations of $20 million for each year for the Survey of Program Dynamics and collection of data related to the allocation to States of State Chidren’s Health Insurance Program funds. 5 2007 funding assumes the reallocation of $350,000 provided in 2006 for a comprehensive report on the economic development and current status of the sheep industry in the United States. Funding for that purpose will not be needed in 2007. 6 Includes funds for the periodic Census of Agriculture of $22, $29, and $37 million in 2005, 2006, and 2007, respectively. The 2007 estimate includes an increase of $7.25 million due to cyclical activities for the Census of Agriculture. 7 All funds from the Public Health Service Evaluation Fund. Administrative costs for NCHS that previously were displayed as part of the NCHS budget line are now reflected in two consolidated CDC-wide budget lines for management and administrative costs. 2 2005 5. RESEARCH AND DEVELOPMENT During the past five years the U.S. economy has shown remarkable resilience and vitality. Economic growth is now steady and strong. Incomes are rising, household net worth is at an all-time high, and unemployment is low and continues to decline. Meanwhile inflation remains in check, largely because of record sustained productivity growth—averaging a 3.4 percent annual rate for the past half-decade. Our prosperity is no accident. The U.S. economy owes its strength in large measure to its willingness to build innovation capacity through the creation and growth of a world-class science and technology research enterprise and a high-quality scientific and technical education infrastructure. The relationship between support for science and economic growth is well documented. Investments in basic research lead to knowledge breakthroughs that fuel innovation, drive productivity, grow the economy, and change the way we see the world. Economists estimate that approximately half of postWorld War II economic growth is directly due to technological progress fueled by research and development (R&D). Economic payoffs to research come in the form of process and product innovations that reduce the costs of production, lower product prices, and result in new and better products and services. Consumers ultimately benefit from less expensive, higher quality and more useful products and services, and of course from earnings accruing to innovative companies. Today’s transforming technologies and most popular consumer items have deep roots in basic and applied research. By nearly every relevant metric, the U.S. leads the world in science and technology. With only about five percent of the world’s population, the U.S. employs nearly one-third of all scientists and engineers and accounts for approximately one-third of global R&D spending (more than the rest of the G-8 nations combined), and U.S. researchers publish 35 percent of global science and engineering articles. To sustain the nation’s economic competitiveness, the President has called for a long-term vision to strengthen Federal support for the Nation’s innovation enterprise in an integrated package of investments and policies in the American Competitiveness Initiative. Chart 5-1. American Competitiveness Initiative Research Billions of dollars 20 NIST Core 18 16 American Competitiveness Initiative DOE Office of Science NSF 14 12 10 8 6 4 2 0 1994 1997 2000 2003 2006 2009 2012 2015 43 44 ANALYTICAL PERSPECTIVES I. THE AMERICAN COMPETITIVENESS INITIATIVE The centerpiece of the American Competitiveness Initiative in the President’s 2007 Budget is a strong commitment to invest in basic research areas that advance knowledge and technologies used by scientists in nearly every field. Through the American Competitiveness Initiative, President Bush plans to double, over 10 years, investment in innovation-enabling research at three Federal agencies—the National Science Foundation (NSF), the Department of Energy’s (DOE’s) Office of Science, and the Department of Commerce’s National Institute of Science and Technology (NIST) laboratories. In 2007, the first year of the American Competitiveness Initiative, President Bush proposes $10.7 billion total for these agencies, an overall funding increase of $910 million, or 9.3 percent, above 2006. To reach doubling within ten years, overall annual increases will average roughly seven percent. Research Agencies in the American Competitiveness Initiative The National Science Foundation is the primary source of support for academic research in the physical sciences, funding potentially transformative basic research in areas such as nanotechnology, advanced networking and information technology, physics, chemistry, materials science, mathematics, and engineering. It is well regarded for management of funding through a competitive, peer-reviewed process. The increase in NSF funding is expected to support as many as 500 more research grants in 2007 and 6,400 additional researchers, students, post-doctoral fellows and technicians contributing to the innovation enterprise. The Department of Energy’s Office of Science supports grants and infrastructure for a wide range of basic research related to economically significant innovations including nanotechnology, biotechnology, high-end computing and advanced networking, and energy technologies. In addition to supporting 2,600 (10 percent) more researchers in 2007 than in 2006, the initiative provides for the construction of a number of cutting-edge scientific research tools with direct implications for economically-relevant R&D, including the world’s most powerful civilian supercomputer and an x-ray light source user facility with world-leading capabilities to study materials, chemicals, and biological matter at the scale of an individual atom. The Department of Commerce’s National Institute of Standards and Technology is a high-leverage Federal research agency that supports economically significant innovations such as new materials and processes, electronics, computing and information technologies, advanced manufacturing integration, biotechnology, new energy sources such as hydrogen, and nanotechnology. NIST also plays a critical role in supporting standards development activities that are used by industry and government agencies. II. IMPROVING THE PERFORMANCE OF R&D PROGRAMS R&D is critically important for keeping our Nation economically competitive, and it will help solve the challenges we face in health, defense, energy, and the environment. Therefore, every Federal R&D dollar must be invested as effectively as possible. R&D Investment Criteria The Administration continues to improve the effectiveness of the Federal Government’s investments in R&D by applying transparent investment criteria in analyses that inform recommendations for program funding and management. R&D performance assessment must be done with care. Research often leads scientists and engineers down unpredictable pathways with unpredictable results. This outcome can require special consideration when measuring an R&D program’s performance against its initial goals. With this in mind, the Administration is improving methods for setting priorities based on expected results, and is asking agencies to apply specific criteria that programs or projects must meet to be started or contin- ued and supply clear milestones for gauging progress and improved metrics for assessing results. As directed by the President’s Management Agenda, the R&D Investment Criteria accommodate the wide range of R&D activities, from basic research to development and demonstration programs, by addressing three fundamental aspects of R&D: • Relevance—Programs must be able to articulate why they are important, relevant, and appropriate for Federal investment; • Quality—Programs must justify how funds will be allocated to ensure quality; and • Performance—Programs must be able to monitor and document how well the investments are performing. In addition, R&D projects and programs relevant to industry are expected to apply criteria to determine the appropriateness of the public investment, enable comparisons of proposed and demonstrated benefits, and provide meaningful decision points for completing or transitioning the activity to the private sector. 45 5. RESEARCH AND DEVELOPMENT As part of the President’s Management Agenda’s Budget and Performance Integration initiative, the Administration uses the Program Assessment Rating Tool (PART) to consistently assess the effectiveness of programs. A section of the PART specifically addresses the assessment of R&D program management and performance and is aligned with the R&D Investment criteria. In the last four years, agencies completed 795 PART assessments, of which 102 were for R&D programs. The results of these PART assessments may be found on the web at www.whitehouse.gov/omb/part/ . Performance assessments help policy makers identify those programs that are the most effective and worthy of funding; however, the Administration does not allocate funding levels and initiate management reforms strictly by formula or based solely on PART results. For instance, funding may be reduced for Effective programs that have achieved what they set out to do, and Ineffective programs might receive more money if it is clear it would help them become more effective. The PART provides information that leads to more informed decisions. Chart 5-2. Scores of R&D PART Assessments Number of R&D PARTs 102 Total 100 29 84 Total 80 25 41 60 31 40 20 16 9 2 3 17 13 0 2006 Effective Adequate Moderately Effective 2007 Ineffective R&D agencies will continue to integrate the R&D Criteria more meaningfully into the budget formulation process in the coming year. Based on lessons learned and other feedback from experts and stakeholders, the Results not Demonstrated Administration will continue to improve the R&D Investment Criteria and their implementation to achieve more effective management of R&D programs and better-informed budget-allocation decisions. President’s Management Agenda Initiative Research and Development Investment Criteria FY 2006, Quarter 1 Status: RED, Progress: YELLOW The initiative’s red status score reflects the limited success many agencies have had in the Government-wide implementation of the initiative. The yellow progress score indicates that the initiative maintains momentum, as more R&D agencies use the criteria to assess their programs. All of the top 13 R&D agencies are using the R&D PART to assess their programs this year. 46 ANALYTICAL PERSPECTIVES Research Earmarks The Administration strongly supports awarding research funds based on merit review through a competitive process refereed by scientists. Such a system has the best prospects for ensuring that the top research is supported. Research earmarks—in general the assignment of money during the legislative process for use by a specific organization or project—are counter to a merit-based competitive selection process. Earmarks signal to potential investigators that there is an acceptable alternative to creating quality research proposals for merit-based consideration. Such an alternative can be an ineffective use of taxpayer funds. Unfortunately, the practice of earmarking funds to colleges, universities, and other entities for specific research projects has expanded dramatically in recent years. The American Association for the Advancement of Science (AAAS) recently estimated that R&D earmarks total $2.4 billion in 2006, an increase of 13 percent over the Association’s 2005 estimate. The AAAS uses a relatively narrow definition of an R&D earmark. Other organizations have estimated even higher levels of R&D earmarking. Some argue that earmarks help spread the research money to states or institutions that would receive less research funding through other means. The Chronicle of Higher Education has reported that this is not the main role earmarks play. Often only a minor portion of academic earmark funding goes to the states with the smallest shares of Federal research funds. Some proponents of earmarking assert that earmarks provide a means of funding unique projects that would III. not be recognized by the conventional peer-review process. To address this concern, a number of research agencies have procedures and programs to reward ‘‘outof-the-box’’ thinking. Within the Department of Defense (DOD), the Defense Advanced Research Projects Agency seeks out high-risk, high-payoff scientific proposals, and program managers at the NSF set aside a share of funding for higher-risk projects in which they see high potential. Earmarks that are outside of an agency’s mission can detract from an efficient and effective Federal effort on behalf of taxpayers. For instance, the Congress directed DOD to fund research on a wide range of diseases including ovarian cancer, prostate cancer, diabetes, leukemia, and childhood cancer. Congressional adds in DOD’s budget for medical research projects totals about $900 million in 2006 alone. While research on these diseases is very important, it is generally not unique to the U.S. military and can be better selected, carried out and coordinated within civil medical research agencies, without disruption to the military mission. At the same time, intrusion of earmarks into the peer-review processes of civilian medical research agencies would have a significant detrimental impact on funding the most important and promising research. Earmarks that divert funding from a merit-based process will undermine America’s research productivity. The Administration commends Congress for taking measures to protect NSF and the National Institutes of Health from this practice, which is a practice that should be followed throughout the R&D programs. PRIORITIES FOR FEDERAL RESEARCH AND DEVELOPMENT The 2007 Budget requests $137 billion for Federal R&D funding, which targets key research investments within agencies such as NSF, the DOE’s Office of Science, and the Department of Commerce’s National Institute of Standards and Technology laboratories. (Table 5–1 provides details by agency). The ‘‘Federal Science and Technology’’ (FS&T) budget (shown in Table 5–2) highlights the creation of new knowledge and technologies more consistently and accurately than overall R&D data collection. The FS&T budget emphasizes research; does not count funding for defense development, testing, and evaluation; and totals less than half of Federal R&D spending. The 2007 Budget requests $60 billion for FS&T. Multi-Agency R&D Priorities The 2007 Budget targets important research investments that must be coordinated across multiple agencies. Three of these multi-agency initiatives— nanotechnology, information technology R&D, and climate change science—are coordinated by three separate dedicated offices to ensure unified strategic planning and implementation. The Administration is strengthening interagency coordination for other priority areas—such as improving cybersecurity. The Adminis- tration will continue to analyze other areas of critical need that could benefit in the future from improved focus and coordination among agencies. Combating Terrorism R&D: Significant advances in securing the homeland and winning the war on terror have been made over the past few years through the focused application of the Nation’s science and technology capability. Challenges remain, however, a number of which are being addressed through multi-agency research efforts that are coordinated through the National Science and Technology Council (NSTC) and other inter-agency fora. In 2005, multi-agency R&D funding efforts made significant progress towards increasing the security of the homeland. A key example is the formation of the Domestic Nuclear Detection Office (DNDO). DNDO has the primary responsibility for developing a comprehensive system to detect and mitigate any attempt to illicitly import, assemble or transport a nuclear explosive device or its components into the U.S. To accomplish this mission, DNDO coordinates and draws upon the R&D expertise of key departments and agencies. An interagency group led by the Office of Science and Technology Policy has continued to support these and other related efforts by generating a long-term nuclear secu- 5. RESEARCH AND DEVELOPMENT rity R&D vision and roadmap. In another example, interagency research programs such as the Face Recognition Grand Challenge are advancing core biometrics technologies and enhancing our understanding of the critical nexus between technical and privacy considerations. The 2007 Budget provides continued support for these and many other homeland security related research areas, including R&D aimed at: finding and applying quick and cost-effective decontamination capabilities following a biological, chemical, nuclear or radiological incident; strengthening predictive modeling capabilities to augment our ability to assess the rate of geographic spread of infectious diseases or chemical agents or predict the impact of key policy decisions on factors affecting disease transmission; enhancing the safety of the Nation’s food supply and agricultural systems through research directed at the epidemiology and ecology of emerging plant and animal diseases, and the development of more effective vaccine and diagnostic technologies; and enhancing cyber security through the Networking and Information Technology R&D program. Networking and Information Technology R&D: The Budget provides $3 billion for the multi-agency Networking and Information Technology Research and Development (NITRD) Program, which plans and coordinates agency research efforts in high-end computing systems, large-scale networking, software development, high-confidence systems, information management, cyber security, and other information technologies. The agencies involved in this program coordinate efforts to accelerate research advancement in information technology, upon which every economic sector now depends. In 2005, agencies participating in high-end computing R&D continued to make significant progress in implementing the recommendations contained in the Federal Plan for High-End Computing. The 2007 Budget provides for substantially increased activities in Leadership Class Computing by both DOE and NSF, one of the priorities contained in the Federal Plan. Relevant agencies will continue to conduct research in scalable systems software and applications to ensure that Federal investments in high-end computing achieve maximal impact. Participating agencies will broaden their R&D activities in cyber security and information assurance, continuing to emphasize interagency coordination. For example, the Interagency Working Group (IWG) that coordinates R&D on information technology infrastructure protection was incorporated as part of the NITRD program in 2005, strengthening the connection between cyber security R&D and overall infrastructure protection. After completion of the Federal Plan for Cyber Security and Information Assurance R&D, the IWG will develop a roadmap for addressing any identified R&D gaps. Reports and general information about NITRD are available at www.nitrd.gov/. Nanotechnology R&D: The Budget provides $1 billion for the multi-agency National Nanotechnology Initiative (NNI). The NNI focuses on R&D that creates 47 materials, devices, and systems that exploit the fundamentally distinct properties of matter as it is manipulated at the atomic and molecular levels. The results of NNI-supported R&D are already leading to breakthroughs in disease detection and treatment, manufacturing at the nanoscale level, environmental monitoring and protection, energy production and storage, and creating electronic devices that have even greater capabilities than those available today. Guided by the NNI, participating agencies will continue to focus on fundamental and applied research through investigator-led activities, multidisciplinary centers of excellence, education and training of nanotechnology workers, and infrastructure development, including user facilities and networks that are broadly available to researchers from across the scientific research community. In addition, agencies continue to maintain a focus on the responsible development of nanotechnology, with attention to the human and environmental health impacts, as well as ethical, legal, and other societal issues. Reports and general information about the NNI are available at www.nano.gov/. Climate Change R&D: The 2007 Budget for the Climate Change Science Program (CCSP) continues to support the implementation of the CCSP Strategic Plan, which was released in July 2003. The 13 departments and agencies that participate in CCSP coordinate preparation of the budget and program implementation. During 2007, CCSP will continue research into important scientific uncertainties and preparation of a series of Synthesis and Assessment reports. The program expects to receive input from the National Research Council under the terms of a continuing advisory agreement. CCSP will continue to track deliverables and milestones for each of its programs in order to assess overall performance. Additional detail on individual agency activities will be provided in the Administration’s 2007 edition of Our Changing Planet. Reports and general information about CCSP are available on the program’s website: www.climatescience.gov/. The Climate Change Technology Program (CCTP) continues to provide strategic direction and planning to help coordinate and prioritize activities within the portfolio of Federally funded climate change technology R&D consistent with the President’s National Climate Change Technology Initiative (NCCTI). In 2005, the CCTP published a Vision and Framework for Strategy and Planning and released a draft Strategic Plan for review by the scientific community and the public. In 2006, the CCTP will address the nearly 300 comments received and publish a final Strategic Plan. The CCTP has also identified within its portfolio a subset of NCCTI priority activities, defined as discrete R&D activities that address technological challenges, which, if solved, could advance technologies with the potential to dramatically reduce, avoid, or sequester greenhouse gas emissions. Reports and general information about the CCTP are available on the program’s website: www.climatetechnology.gov/. 48 ANALYTICAL PERSPECTIVES The CCSP and CCTP will coordinate implementation of relevant climate change provisions in the 2005 Energy Policy Act as appropriate. Hydrogen R&D: In 2005, the Hydrogen R&D Interagency Task Force led interagency coordination in hydrogen-related manufacturing and innovation, safety, codes and standards, and fundamental research on fuel cells, hydrogen production, and hydrogen storage. The Task Force established a web portal (www.hydrogen.gov) for hydrogen and fuel cell information. Additionally, the Task Force works with the International Partnership for the Hydrogen Economy, which coordinates hydrogen research among 15 nations representing two thirds of global energy consumption. DOE will continue the President’s Hydrogen Fuel Initiative to accelerate the worldwide availability and affordability of hydrogen-powered fuel cell vehicles. The initiative, which includes a 54-percent increase in targeted basic research investments in 2007, focuses on research to advance hydrogen production, storage, and infrastructure. The Initiative complements the Department’s FreedomCAR Partnership with the auto indusIV. try, which is aimed at developing viable hydrogen fuel cell vehicle technology. To keep FreedomCAR on track, it will be essential that Congress refrain from earkmarking this program. Stimulating Private Investment Along with direct spending on R&D, the Federal Government has sought to stimulate private R&D investment through incentives in the Internal Revenue Code. A long-standing credit that expired at the end of 2005 provided a 20-percent tax credit for private research and experimentation expenditures above a certain base amount. The Administration proposes extending the Research and Experimentation tax credit starting 2006 and making it permanent. The proposed extension will cost $33.4 billion over the period from 2007 to 2011. In addition, a permanent tax provision lets companies deduct, up front, the costs of certain kinds of research and experimentation, rather than capitalize these costs. Also, equipment used for research benefits from relatively rapid tax depreciation allowance. FEDERAL R&D DATA Federal R&D Funding R&D is the collection of efforts directed towards gaining greater knowledge or understanding and applying knowledge toward the production of useful materials, devices, and methods. R&D investments can be characterized as basic research, applied research, development, R&D equipment, or R&D facilities, and the Office of Management and Budget has used those or similar categories in its collection of R&D data since 1949. Basic research is defined as systematic study directed toward greater knowledge or understanding of the fundamental aspects of phenomena and of observable facts without specific applications towards processes or products in mind. Applied research is systematic study to gain knowledge or understanding necessary to determine the means by which a recognized and specific need may be met. Development is systematic application of knowledge toward the production of useful materials, devices, and systems or methods, including design, development, and improvement of prototypes and new processes to meet specific requirements. Research and development equipment includes acquisition or design and production of movable equipment, such as spectrometers, microscopes, detectors, and other instruments. Research and development facilities include the acquisition, design, and construction of, or major repairs or alterations to, all physical facilities for use in R&D activities. Facilities include land, buildings, and fixed capital equipment, regardless of whether the facilities are to be used by the Government or by a private organization, and regardless of where title to the property may rest. This category includes such fixed facilities as reactors, wind tunnels, and particle accelerators. There are over twenty Federal agencies that fund R&D in the U.S. The nature of the R&D that these agencies fund depends on the mission of each agency and on the role of R&D in accomplishing it. Table 5–1 shows agency-by-agency spending on basic and applied research, development, and R&D equipment and facilities. 49 5. RESEARCH AND DEVELOPMENT Table 5–1. FEDERAL RESEARCH AND DEVELOPMENT (Budget authority, dollar amounts in millions) 2005 Actual 2006 Estimate By Agency Defense ...................................................................................................................... Health and Human Services ..................................................................................... NASA ......................................................................................................................... Energy ........................................................................................................................ National Science Foundation .................................................................................... Agriculture .................................................................................................................. Homeland Security .................................................................................................... Commerce ................................................................................................................. Veteran Affairs ........................................................................................................... Interior ........................................................................................................................ Transportation ............................................................................................................ Environmental Protection Agency ............................................................................. Other .......................................................................................................................... 69,743 28,687 10,197 8,596 4,138 2,410 1,182 1,133 742 622 549 640 1,235 71,946 28,767 11,394 8,563 4,199 2,411 1,484 1,079 765 637 704 600 1,232 2007 Proposed Dollar Change: Percent Change: 2006 to 2007 2006 to 2007 74,234 2,288 3% 28,737 –30 0% 12,245 851 7% 9,158 595 7% 4,548 349 8% 2,012 –399 –17% 1,508 24 2% 1,065 –14 –1% 765 ...................... ........................ 600 –37 –6% 557 –147 –21% 557 –43 –7% 1,218 –14 –1% Total ...................................................................................................................... 129,874 133,781 Basic Research Defense ...................................................................................................................... Health and Human Services ..................................................................................... NASA ......................................................................................................................... Energy ........................................................................................................................ National Science Foundation .................................................................................... Agriculture .................................................................................................................. Homeland Security .................................................................................................... Commerce ................................................................................................................. Veteran Affairs ........................................................................................................... Interior ........................................................................................................................ Transportation ............................................................................................................ Environmental Protection Agency ............................................................................. Other .......................................................................................................................... 137,204 3,423 1,485 15,752 2,386 2,937 3,427 838 55 53 297 36 33 110 155 1,470 15,996 2,305 2,987 3,478 846 95 56 306 42 39 101 169 1,422 –48 –3% 16,037 41 0% 2,226 –79 –3% 3,315 328 11% 3,687 209 6% 771 –75 –9% 49 –46 –48% 87 31 55% 306 ...................... ........................ 40 –2 –5% 39 ...................... ........................ 94 –7 –7% 174 5 3% 357 3% Subtotal ................................................................................................................ 27,564 27,890 28,247 Applied Research Defense ...................................................................................................................... Health and Human Services ..................................................................................... NASA ......................................................................................................................... Energy ........................................................................................................................ National Science Foundation .................................................................................... Agriculture .................................................................................................................. Homeland Security .................................................................................................... Commerce ................................................................................................................. Veteran Affairs ........................................................................................................... Interior ........................................................................................................................ Transportation ............................................................................................................ Environmental Protection Agency ............................................................................. Other .......................................................................................................................... 4,787 12,573 1,957 2,770 332 1,124 842 813 401 533 304 415 587 5,169 12,605 1,759 2,730 319 1,157 1,093 779 414 545 392 387 591 4,478 –691 –13% 12,540 –65 –1% 1,118 –641 –36% 2,723 –7 0% 379 60 19% 974 –183 –16% 943 –150 –14% 769 –10 –1% 414 ...................... ........................ 510 –35 –6% 305 –87 –22% 359 –28 –7% 594 3 1% Subtotal ................................................................................................................ 27,438 27,940 26,106 –1,834 1% –7% Development Defense ...................................................................................................................... 63,336 65,221 68,315 3,094 5% Health and Human Services ..................................................................................... 57 37 37 ...................... ........................ NASA ......................................................................................................................... 3,494 5,174 6,755 1,581 31% Energy ........................................................................................................................ 1,759 1,804 1,990 186 10% National Science Foundation .................................................................................... ................ .................... .................... ...................... N/A Agriculture .................................................................................................................. 156 164 155 –9 –5% Homeland Security .................................................................................................... 133 195 335 140 72% Commerce ................................................................................................................. 148 118 94 –24 –20% Veteran Affairs ........................................................................................................... 44 45 45 ...................... ........................ Interior ........................................................................................................................ 50 47 47 ...................... ........................ Transportation ............................................................................................................ 194 255 194 –61 –24% Environmental Protection Agency ............................................................................. 115 112 104 –8 –7% Other .......................................................................................................................... 461 424 409 –15 –4% Subtotal ................................................................................................................ 69,947 73,596 78,480 4,884 7% Facilities and Equipment Defense ...................................................................................................................... Health and Human Services ..................................................................................... 135 305 86 129 19 123 –67 –6 –78% –5% 50 ANALYTICAL PERSPECTIVES Table 5–1. FEDERAL RESEARCH AND DEVELOPMENT—Continued (Budget authority, dollar amounts in millions) 2005 Actual 2006 Estimate 2007 Proposed Dollar Change: Percent Change: 2006 to 2007 2006 to 2007 NASA ......................................................................................................................... 2,360 2,156 2,146 –10 Energy ........................................................................................................................ 1,130 1,042 1,130 88 National Science Foundation .................................................................................... 379 402 482 80 Agriculture .................................................................................................................. 292 244 112 –132 Homeland Security .................................................................................................... 152 101 181 80 Commerce ................................................................................................................. 119 126 115 –11 Transportation ............................................................................................................ ................ .................... .................... ...................... Veterans Affairs ......................................................................................................... 3 3 3 ...................... Interior ........................................................................................................................ 18 18 19 1 Environmental Protection Agency ............................................................................. ................ .................... .................... ...................... Other .......................................................................................................................... 32 48 41 –7 Subtotal ................................................................................................................ 4,925 4,355 4,371 16 0% 8% 20% –54% 79% –9% N/A N/A 6% N/A –15% 0% 51 5. RESEARCH AND DEVELOPMENT Table 5–2. FEDERAL SCIENCE AND TECHNOLOGY BUDGET (Budget authority, dollar amounts in millions) 2005 Actual 2006 Estimate 2007 Proposed Dollar Change: 2006 to 2007 Percent Change: 2006 to 2007 By Agency National Institutes of Health 1 .................................................................................... NASA ............................................................................................................................. Science ...................................................................................................................... Aeronautics ................................................................................................................ Exploration Systems 2 ............................................................................................... Energy 3 ......................................................................................................................... Science Programs ..................................................................................................... Electricity Transmission & Distribution ..................................................................... Nuclear Energy .......................................................................................................... Energy Efficiency and Renewable Energy Resources 4 .......................................... Fossil Energy 5 .......................................................................................................... National Science Foundation ..................................................................................... Defense ......................................................................................................................... Basic Research ......................................................................................................... Applied Research ...................................................................................................... Agriculture .................................................................................................................... CSREES Research and Education 6 ........................................................................ Economic Research Service ..................................................................................... Agricultural Research Service 7 ................................................................................ Forest Service: Forest and Rangeland Research .................................................... Interior (USGS) ............................................................................................................. Commerce ..................................................................................................................... NOAA: Oceanic & Atmospheric Research ............................................................... NIST Intramural Research and Facilities ................................................................. Environmental Protection Agency 8 .......................................................................... Veterans Affairs 9 ......................................................................................................... Transportation .............................................................................................................. Highway research: Federal Highway Administration ................................................ Federal Aviation Administration: Research, Engineering, and Development .......... Education ...................................................................................................................... Special Education Research and Innovation ........................................................... National Institute on Disability and Rehabilitation Research ................................... Research, Development, and Dissemination 10 ........................................................ 28,444 8,128 5,502 962 1,664 5,642 3,600 101 393 976 572 5,472 6,273 1,485 4,788 2,111 659 74 1,102 276 935 855 404 451 780 743 542 411 131 355 83 108 164 28,410 7,680 5,254 884 1,542 5,636 3,596 136 416 896 592 5,581 6,628 1,470 5,158 2,160 675 75 1,131 279 962 938 370 568 761 765 567 430 137 342 72 107 163 28,428 7,073 5,330 724 1,019 6,155 4,102 96 559 933 465 6,020 5,900 1,422 4,478 1,921 569 83 1,001 268 945 873 338 535 816 765 598 468 130 342 72 107 163 18 –607 76 –160 –523 519 506 –40 143 37 –127 439 –728 –48 –680 –239 –106 8 –130 –11 –17 –65 –32 –33 55 .................... 31 38 –7 .................... .................... .................... .................... 0% –8% 1% –18% –34% 9% 14% –29% 34% 4% –21% 8% –11% –3% –13% –11% –16% 11% –11% –4% –2% –7% –9% –6% 7% ...................... 5% 9% –5% ...................... ...................... ...................... ...................... Total ............................................................................................................................... 60,280 60,430 59,836 –594 –1% 1 In 2006, the Department of Health and Human Services will allocate an additional $18 million to NIH for Pandemic Influenza research from the Department of Defense Emergency Supplemental Appropriations to Address Hurricanes in the Gulf of Mexico, and Pandemic Influenza Act, 2006. 2 Includes Exploration Systems Research and Technology, Human Systems Research and Technology, Innovative Partnerships, and Prometheus Nuclear Systems and Technology. 3 Data do not reflect actual transfers to Science Programs from other Department of Energy R&D programs to support the Small Business Innovation Research and the Small Business Technology Transfer programs. 4 In 2006, Congress merged the Energy Supply and Energy Conservation accounts. The amount reported under the new Energy Efficiency and Renewable Energy Resources line within this account reflects a combination of the former Energy Conservation line item (excluding Weatherization and State grants) and the Renewables line item. 5 Excludes funding for the Alaska Natural Gas Pipeline project. 6 Includes the appropriation of earnings from the Native American Endowment Fund, but not the appropriation to the Endowment’s principal. 7 Excludes building and facilities. Also excludes the transfer of $6 million from the account. 8 Science and Technology, plus superfund transfer. 9 Includes the medical care and prosthetic research appropriation and VA medical care support transfer to research. 10 Does not include funding for Regional Educational Labs. 52 ANALYTICAL PERSPECTIVES Table 5–3. AGENCY DETAIL OF SELECTED INTERAGENCY R&D EFFORTS (Budget authority, dollar amounts in millions) 2005 Actual 2006 Estimate 2007 Proposed Dollar Change: Percent Change: 2006 to 2007 2006 to 2007 Networking and Information Technology R&D Defense 1 ................................................................................................................... National Science Foundation .................................................................................... Health and Human Services 2 ................................................................................... Energy ........................................................................................................................ National Aeronautics and Space Administration ...................................................... Commerce ................................................................................................................. Environmental Protection Agency ............................................................................. 775 811 571 377 163 60 4 1,128 810 551 384 78 60 6 1,018 –110 –10% 904 94 12% 541 –10 –2% 473 89 23% 82 4 5% 65 5 8% 6 ...................... ........................ 3,017 3,089 Total ...................................................................................................................... 2,761 National Nanotechnology Initiative National Science Foundation .................................................................................... Defense 1 ................................................................................................................... Energy ........................................................................................................................ Health and Human Services 3 ................................................................................... Commerce (NIST) ..................................................................................................... National Aeronautics and Space Administration ...................................................... Environmental Protection Agency ............................................................................. Agriculture .................................................................................................................. Justice ........................................................................................................................ Homeland Security .................................................................................................... 335 352 208 168 79 45 7 3 2 1 Total ...................................................................................................................... 1,200 Climate Change Science Program National Aeronautics and Space Administration ...................................................... National Science Foundation .................................................................................... Commerce (NOAA) ................................................................................................... Energy ........................................................................................................................ Agriculture .................................................................................................................. National Institutes of Health ...................................................................................... Interior (USGS) .......................................................................................................... Environmental Protection Agency ............................................................................. Smithsonian ............................................................................................................... U.S. Agency for International Development ............................................................. Transportation ............................................................................................................ State ........................................................................................................................... 1 In 72 2% 344 373 29 8% 435 345 –90 –21% 207 258 51 25% 175 173 –2 –1% 76 86 10 13% 50 25 –25 –50% 5 9 4 80% 5 5 ...................... ........................ 1 1 0 0% 1 .................... –1 –100% 1,299 1,275 –24 –2% 1,237 1,043 1,025 198 197 205 124 163 186 127 131 126 62 62 61 57 57 57 27 27 26 20 19 17 6 6 6 6 6 6 3 2 2 1 .................... .................... –18 8 23 –5 –1 ...................... –1 –2 ...................... ...................... ...................... ...................... –2% 4% 14% –4% –2% ........................ –4% –11% ........................ ........................ ........................ ........................ Total ...................................................................................................................... 1,868 1,713 1,717 4 0% Subtotal, CCRI (included in CCSP total) ......................................................... 211 200 200 0 0% 2005, DOD reviewed its contributions to NITRD and NNI and produced a more comprehensive and accurate accounting of the Department’s funding of those activities. Accordingly, the funding levels shown in this table are larger than those shown in previous years. 2 Includes funds from offsetting collections for the Agency for Healthcare Research and Quality. 3 Includes funds from both the National Institutes of Health and National Institute of Occupational Safety and Health. 6. FEDERAL INVESTMENT Investment spending is spending that yields longterm benefits. Its purpose may be to improve the efficiency of internal Federal agency operations or to increase the Nation’s overall stock of capital for economic growth. The spending can be direct Federal spending or grants to State and local governments. It can be for physical capital, which yields a stream of services over a period of years, or for research and development or education and training, which are intangible but also increase income in the future or provide other longterm benefits. Most presentations in the Federal budget combine investment spending with spending for current use. PART I: This chapter focuses solely on Federal and federally financed investment. In this chapter, investment is discussed in the following sections: • a description of the size and composition of Federal investment spending; • a discussion of the performance of selected Federal investment programs; and • a presentation of trends in the stock of federally financed physical capital, research and development, and education. DESCRIPTION OF FEDERAL INVESTMENT For more than fifty years, the Federal budget has included a chapter on Federal investment—defined as those outlays that yield long-term benefits—separately from outlays for current use. In recent years the discussion of the composition of investment has displayed estimates of budget authority as well as outlays. The classification of spending between investment and current outlays is a matter of judgment. The budget has historically employed a relatively broad classification, encompassing physical investment, research, development, education, and training. The budget further classifies investments into those that are grants to State and local governments, such as grants for highways or education, and all other investments, called ‘‘direct Federal programs’’ in this analysis. This ‘‘direct Federal’’ category consists primarily of spending for assets owned by the Federal Government, such as defense weapons systems and general purpose office buildings, but also includes grants to private organizations and individuals for investment, such as capital grants to Amtrak or higher education loans directly to individuals. Presentations for particular purposes could adopt different definitions of investment: • To suit the purposes of a traditional balance sheet, investment might include only those physical assets owned by the Federal Government, excluding capital financed through grants and intangible assets such as research and education. • Focusing on the role of investment in improving national productivity and enhancing economic growth would exclude items such as national defense assets, the direct benefits of which enhance national security rather than economic growth. • Concern with the efficiency of Federal operations would confine the coverage to investments that reduce costs or improve the effectiveness of inter- nal Federal agency operations, such as computer systems. • A ‘‘social investment’’ perspective might broaden the coverage of investment beyond what is included in this chapter to include programs such as childhood immunization, maternal health, certain nutrition programs, and substance abuse treatment, which are designed in part to prevent more costly health problems in future years. The relatively broad definition of investment used in this section provides consistency over time—historical figures on investment outlays back to 1940 can be found in the separate Historical Tables volume. Table 6–2 at the end of this section allows disaggregation of the data to focus on those investment outlays that best suit a particular purpose. In addition to this basic issue of definition, there are two technical problems in the classification of investment data involving the treatment of grants to State and local governments and the classification of spending that could be shown in more than one category. First, for some grants to State and local governments it is the recipient jurisdiction, not the Federal Government, that ultimately determines whether the money is used to finance investment or current purposes. This analysis classifies all of the outlays in the category where the recipient jurisdictions are expected to spend most of the money. Hence, the community development block grants are classified as physical investment, although some may be spent for current purposes. General purpose fiscal assistance is classified as current spending, although some may be spent by recipient jurisdictions on physical investment. Second, some spending could be classified in more than one category of investment. For example, outlays for construction of research facilities finance the acqui- 53 54 ANALYTICAL PERSPECTIVES sition of physical assets, but they also contribute to research and development. To avoid double counting, the outlays are classified in the category that is most commonly recognized as investment. Consequently, outlays for the conduct of research and development do not include outlays for research facilities, because these outlays are included in the category for physical investment. Similarly, spending for physical investment and research and development related to education and training is included in the categories of physical assets and the conduct of research and development. When direct loans and loan guarantees are used to fund investment, the subsidy value is included as investment. The subsidies are classified according to their program purpose, such as construction or education and training. For more information about the treatment of Federal credit programs, refer to Chapter 7, ‘‘Credit and Insurance,’’ in this volume. This section presents spending for gross investment, without adjusting for depreciation. Composition of Federal Investment Outlays Major Federal Investment The composition of major Federal investment outlays is summarized in Table 6–1. They include major public physical investment, the conduct of research and development, and the conduct of education and training. Defense and nondefense investment outlays were $392.3 billion in 2005. They are estimated to increase to $425.0 billion in 2006 and are projected to decline to $415.5 billion in 2007. Major Federal investment outlays will comprise an estimated 15 percent of total Federal outlays in 2007 and 3.0 percent of the Nation’s gross domestic product. Greater detail on Federal investment is available in Table 6–2 at the end of this section. That table includes both budget authority and outlays. Physical investment. Outlays for major public physical capital investment (hereafter referred to as physical investment outlays) are estimated to be $199.3 billion in 2007. Physical investment outlays are for construction and rehabilitation, the purchase of major equipment, and the purchase or sale of land and structures. More than three-fifths of these outlays are for direct physical investment by the Federal Government, with the remainder being grants to State and local governments for physical investment. Direct physical investment outlays by the Federal Government are primarily for national defense. Defense outlays for physical investment are estimated to be $99.2 billion in 2007. Almost all of these outlays, or an estimated $90.2 billion, are for the procurement of weapons and other defense equipment, and the remainder is primarily for construction on military bases, family housing for military personnel, and Department of Energy defense facilities. Outlays for direct physical investment for nondefense purposes are estimated to be $30.3 billion in 2007. These outlays include $17.3 billion for construction and rehabilitation. This amount includes funds for water, power, and natural resources projects of the Corps of Engineers, the Bureau of Reclamation within the Department of the Interior, and the Tennessee Valley Authority; construction and rehabilitation of veterans hospitals and Indian Health Service hospitals and clinics; facilities for space and science programs; Postal Service facilities; and construction for embassy security. Outlays for the acquisition of major equipment are estimated to be $12.6 billion in 2007. The largest amounts are for the air traffic control system. Grants to State and local governments for physical investment are estimated to be $69.9 billion in 2007. More than two-thirds of these outlays, or $50.7 billion, are to assist States and localities with transportation infrastructure, primarily highways. Other major grants for physical investment fund sewage treatment plants, community and regional development, and public housing. Conduct of research and development. Outlays for the conduct of research and development are estimated to be $130.7 billion in 2007. These outlays are devoted to increasing basic scientific knowledge and promoting research and development. They increase the Nation’s security, improve the productivity of capital and labor for both public and private purposes, and enhance the quality of life. More than half of these outlays, an estimated $76.8 billion, are for national defense. Physical investment for research and development facilities and equipment is included in the physical investment category. Nondefense outlays for the conduct of research and development are estimated to be $53.9 billion in 2007. These are largely for the National Aeronautics and Space Administration, the National Science Foundation, the National Institutes of Health, and research for nuclear and non-nuclear energy programs. A more complete and detailed discussion of research and development funding appears in Chapter 5, ‘‘Research and Development,’’ in this volume. Conduct of education and training. Outlays for the conduct of education and training are estimated to be $85.5 billion in 2007. These outlays add to the stock of human capital by developing a more skilled and productive labor force. Grants to State and local governments for this category are estimated to be $52.6 billion in 2007, more than three-fifths of the total. They include education programs for the disadvantaged and individuals with disabilities, other education programs, training programs in the Department of Labor, and Head Start. Direct Federal education and training outlays are estimated to be $32.9 billion in 2007. Programs in this category are primarily aid for higher education through student financial assistance, loan subsidies, the veterans GI bill, and health training programs. The decline from 2006 to 2007 results in part from upward reestimates of $11.4 billion in 2006 in loan subsidies for loans made in earlier years. This category does not include outlays for education and training of Federal civilian and military employees. Outlays for education and training that are for physical investment and for research and development are in 6. 55 FEDERAL INVESTMENT Table 6–1. COMPOSITION OF FEDERAL INVESTMENT OUTLAYS (In billions of dollars) 2005 Actual Estimate 2006 2007 Major public physical capital investment: Direct Federal: National defense ................................................................................................... Nondefense ........................................................................................................... 89.5 27.3 97.3 30.2 99.2 30.3 Subtotal, direct major public physical capital investment ............................... 116.8 127.5 129.5 Grants to State and local governments ................................................................... 60.8 65.9 69.9 Subtotal, major public physical capital investment .............................................. 177.7 193.4 199.3 Conduct of research and development: National defense ........................................................................................................ Nondefense ................................................................................................................ 70.6 49.2 75.6 51.8 76.8 53.9 Subtotal, conduct of research and development ................................................. 119.8 127.4 130.7 Conduct of education and training: Grants to State and local governments ................................................................... Direct Federal ............................................................................................................ 51.6 43.2 53.7 50.5 52.6 32.9 Subtotal, conduct of education and training ........................................................ 94.7 104.2 85.5 Total, major Federal investment outlays ..................................................... 392.3 425.0 415.5 Major Federal investment outlays: National defense ........................................................................................................ Nondefense ................................................................................................................ 160.1 232.1 172.9 252.1 176.0 239.5 Total, major Federal investment outlays .............................................................. 392.3 425.0 415.5 Miscellaneous physical investment: Commodity inventories .............................................................................................. Other physical investment (direct) ............................................................................ –0.7 2.8 –0.8 3.2 –0.2 3.3 Total, miscellaneous physical investment ............................................................ 2.1 2.4 3.1 Total, Federal investment outlays, including miscellaneous physical investment ....... 394.4 427.4 418.6 MEMORANDUM the categories for physical investment and the conduct of research and development. Miscellaneous Physical Investment In addition to the categories of major Federal investment, several miscellaneous categories of investment outlays are shown at the bottom of Table 6–1. These items, all for physical investment, are generally unrelated to improving Government operations or enhancing economic activity. Outlays for commodity inventories are primarily for the purchase or sale of agricultural products pursuant to farm price support programs. Sales are estimated to exceed purchases by $0.2 billion in 2007. Outlays for other miscellaneous physical investment are estimated to be $3.3 billion in 2007. This category includes primarily conservation programs. These are entirely direct Federal outlays. Detailed Table on Investment Spending The following table provides data on budget authority as well as outlays for major Federal investment divided according to grants to State and local governments and direct Federal spending. Miscellaneous investment is not included because it is generally unrelated to improving Government operations or enhancing economic activity. 56 ANALYTICAL PERSPECTIVES Table 6–2. FEDERAL INVESTMENT BUDGET AUTHORITY AND OUTLAYS: GRANT AND DIRECT FEDERAL PROGRAMS (in millions of dollars) Budget Authority Description 2005 Actual 2006 Estimate Outlays 2007 Estimate 2005 Actual 2006 Estimate 2007 Estimate GRANTS TO STATE AND LOCAL GOVERNMENTS Major public physical investments: Construction and rehabilitation: Transportation: Highways ............................................................................................................................. Mass transportation ............................................................................................................ Air transportation ................................................................................................................ 38,184 8,039 3,696 37,806 8,482 3,070 41,370 8,729 2,725 31,433 7,826 3,530 33,868 8,338 3,800 38,027 8,932 3,705 Subtotal, transportation .................................................................................................. 49,919 49,358 52,824 42,789 46,006 50,664 Other construction and rehabilitation: Pollution control and abatement ........................................................................................ Community and regional development .............................................................................. Housing assistance ............................................................................................................. Other construction .............................................................................................................. 2,233 6,115 6,505 496 1,880 16,779 6,203 491 1,759 3,624 5,593 291 2,021 6,399 7,687 458 1,755 8,251 7,776 621 1,706 8,157 7,435 416 Subtotal, other construction and rehabilitation .............................................................. 15,349 25,353 11,267 16,565 18,403 17,714 Subtotal, construction and rehabilitation ............................................................................ 65,268 74,711 64,091 59,354 64,409 68,378 Other physical assets .................................................................................................................. 1,567 1,422 1,369 1,494 1,502 1,504 Subtotal, major public physical capital ................................................................................... 66,835 76,133 65,460 60,848 65,911 69,882 Conduct of research and development: Agriculture .................................................................................................................................... Other ............................................................................................................................................ 273 223 277 226 245 203 274 212 268 194 270 178 Subtotal, conduct of research and development ................................................................... 496 503 448 486 462 448 Conduct of education and training: Elementary, secondary, and vocational education ..................................................................... Higher education ......................................................................................................................... Research and general education aids ........................................................................................ Training and employment ............................................................................................................ Social services ............................................................................................................................. Agriculture .................................................................................................................................... Other ............................................................................................................................................ 37,169 506 800 3,509 10,145 451 249 37,814 701 763 3,125 10,115 456 242 36,381 35 691 3,770 9,574 436 245 36,393 522 753 3,378 9,861 441 226 38,164 809 832 3,077 10,134 452 234 37,689 505 694 3,180 9,845 437 229 Subtotal, conduct of education and training .......................................................................... 52,829 53,216 51,132 51,574 53,702 52,579 Subtotal, grants for investment .............................................................................................. 120,160 129,852 117,040 112,908 120,075 122,909 DIRECT FEDERAL PROGRAMS Major public physical investment: Construction and rehabilitation: National defense: Military construction and family housing ............................................................................ Atomic energy defense activities and other ...................................................................... 8,190 527 9,172 634 8,537 676 6,150 663 7,431 585 8,309 690 Subtotal, national defense ............................................................................................. 8,717 9,806 9,213 6,813 8,016 8,999 Nondefense: International affairs ............................................................................................................. General science, space, and technology .......................................................................... Water resources projects ................................................................................................... Other natural resources and environment ......................................................................... Energy ................................................................................................................................. Postal Service ..................................................................................................................... Transportation ..................................................................................................................... Veterans hospitals and other health facilities .................................................................... Federal Prison System ....................................................................................................... GSA real property activities ............................................................................................... Other construction .............................................................................................................. 1,922 1,946 3,318 969 1,309 708 122 2,133 25 1,627 2,617 1,330 2,066 4,316 974 1,468 1,118 130 2,371 49 1,676 2,541 1,450 2,089 2,692 810 1,281 1,698 112 1,655 –116 1,556 1,989 1,436 1,799 2,749 988 1,307 678 93 1,618 260 1,407 2,538 1,276 2,161 4,040 1,021 1,435 677 194 1,851 117 1,689 2,551 1,343 2,897 3,402 935 1,296 1,103 160 1,941 123 1,882 2,207 Subtotal, nondefense ..................................................................................................... 16,696 18,039 15,216 14,873 17,012 17,289 6. 57 FEDERAL INVESTMENT Table 6–2. FEDERAL INVESTMENT BUDGET AUTHORITY AND OUTLAYS: GRANT AND DIRECT FEDERAL PROGRAMS—Continued (in millions of dollars) Budget Authority Description 2005 Actual 2006 Estimate Outlays 2007 Estimate 2005 Actual 2006 Estimate 2007 Estimate Subtotal, construction and rehabilitation ............................................................................ 25,413 27,845 24,429 21,686 25,028 26,288 Acquisition of major equipment: National defense: Department of Defense ...................................................................................................... Atomic energy defense activities ....................................................................................... 96,695 381 86,185 473 84,328 473 82,298 388 88,802 470 89,769 456 Subtotal, national defense ............................................................................................. 97,076 86,658 84,801 82,686 89,272 90,225 Nondefense: General science and basic research ................................................................................. Space flight, research, and supporting activities ............................................................... Postal Service ..................................................................................................................... Air transportation ................................................................................................................ Water transportation (Coast Guard) ................................................................................... Other transportation (railroads) .......................................................................................... Hospital and medical care for veterans ............................................................................. Law enforcement activities ................................................................................................. Department of the Treasury (fiscal operations) ................................................................. Department of Commerce (NOAA) .................................................................................... GSA general services funds .............................................................................................. Other ................................................................................................................................... 597 1,179 881 3,183 990 1,207 1,091 1,717 259 896 826 837 583 360 1,124 3,181 1,147 1,293 886 1,798 237 923 906 2,035 768 426 762 2,862 1,124 900 1,009 1,948 216 962 906 2,071 604 956 552 2,644 816 1,221 776 1,684 296 908 791 785 591 272 740 2,728 991 1,330 1,022 1,628 228 773 784 1,775 709 405 851 2,591 1,144 900 130 1,846 227 952 792 2,078 Subtotal, nondefense ..................................................................................................... 13,663 14,473 13,954 12,033 12,862 12,625 Subtotal, acquisition of major equipment .......................................................................... 110,739 101,131 98,755 94,719 102,134 102,850 Purchase or sale of land and structures: National defense ..................................................................................................................... Natural resources and environment ....................................................................................... General government ............................................................................................................... Other ........................................................................................................................................ –25 152 161 76 –28 134 168 53 –28 80 164 85 –25 232 158 53 –28 164 168 31 –28 123 164 63 Subtotal, purchase or sale of land and structures ............................................................ 364 327 301 418 335 322 Subtotal, major public physical investment ............................................................................ 136,516 129,303 123,485 116,823 127,497 129,460 Conduct of research and development: National defense: Defense military ...................................................................................................................... Atomic energy and other ........................................................................................................ 69,608 3,942 71,860 3,780 74,213 3,787 66,467 4,179 71,572 4,052 72,871 3,967 Subtotal, national defense .................................................................................................. 73,550 75,640 78,000 70,646 75,624 76,838 Nondefense: International affairs .................................................................................................................. General science, space, and technology: NASA .................................................................................................................................. National Science Foundation ............................................................................................. Department of Energy ........................................................................................................ 255 255 255 258 258 258 6,883 3,759 2,832 8,309 3,797 2,890 9,378 4,066 3,246 6,880 3,638 2,809 7,143 3,823 2,900 8,807 3,833 3,246 Subtotal, general science, space, and technology ....................................................... 13,729 15,251 16,945 13,585 14,124 16,144 Energy ..................................................................................................................................... Transportation: Department of Transportation ............................................................................................ NASA .................................................................................................................................. Other ................................................................................................................................... 1,162 1,301 1,438 1,272 1,478 1,337 507 954 17 657 929 17 509 721 13 444 834 10 706 812 12 628 802 16 Subtotal, transportation .................................................................................................. 2,640 2,904 2,681 2,560 3,008 2,783 Health: National Institutes of Health ............................................................................................... All other health ................................................................................................................... 27,445 691 27,683 710 27,712 691 26,039 707 26,634 705 27,499 686 Subtotal, health .............................................................................................................. 28,136 28,393 28,403 26,746 27,339 28,185 58 ANALYTICAL PERSPECTIVES Table 6–2. FEDERAL INVESTMENT BUDGET AUTHORITY AND OUTLAYS: GRANT AND DIRECT FEDERAL PROGRAMS—Continued (in millions of dollars) Budget Authority Description 2005 Actual 2006 Estimate Outlays 2007 Estimate 2005 Actual 2006 Estimate 2007 Estimate Agriculture ............................................................................................................................... Natural resources and environment ....................................................................................... National Institute of Standards and Technology .................................................................... Hospital and medical care for veterans ................................................................................. All other research and development ...................................................................................... 1,533 2,104 394 742 1,625 1,577 2,089 354 765 1,950 1,353 1,972 361 765 1,903 1,484 1,854 418 714 1,353 1,494 2,069 368 738 2,177 1,311 1,898 421 744 1,932 Subtotal, nondefense .......................................................................................................... 50,903 53,283 54,383 48,714 51,317 53,418 Subtotal, conduct of research and development ................................................................... 124,453 128,923 132,383 119,360 126,941 130,256 Conduct of education and training: Elementary, secondary, and vocational education ..................................................................... Higher education ......................................................................................................................... Research and general education aids ........................................................................................ Training and employment ............................................................................................................ Health ........................................................................................................................................... Veterans education, training, and rehabilitation ......................................................................... General science and basic research .......................................................................................... National defense .......................................................................................................................... International affairs ...................................................................................................................... Other ............................................................................................................................................ 1,605 1,314 1,153 31,756 45,512 22,359 1,880 1,900 1,962 1,626 328 1,366 1,555 1,365 1,030 2,833 3,339 3,292 904 898 920 8 ...................... ...................... 406 455 503 616 644 569 1,706 1,851 1,389 31,482 39,332 21,477 1,954 1,988 1,942 1,652 458 1,346 1,465 1,401 1,253 2,970 3,292 3,443 919 936 924 9 ...................... ...................... 423 421 475 584 830 649 Subtotal, conduct of education and training .......................................................................... 43,189 55,755 33,154 43,164 50,509 32,898 Subtotal, direct Federal investment ........................................................................................ 304,158 313,981 289,022 279,347 304,947 292,614 Total, Federal investment ............................................................................................................. 424,318 443,833 406,062 392,255 425,022 415,523 PART II: PERFORMANCE OF FEDERAL INVESTMENT Introduction. In recent years there has been increased emphasis on improving the performance of Government programs. This emphasis began with the Government Performance and Results Act of 1993, which requires agencies to prepare strategic plans and annual performance plans, and then report on their actual performance annually. This Administration set out to ensure that agencies worked to improve their performance, not just report on it. Beginning in the 2004 Budget, the Administration began to assess every Federal program by a method known as the Program Assessment Rating Tool, or PART. The Administration set a target of assessing all Federal programs over five years. With this budget, the fourth year of using the PART, the Administration has assessed almost 800 programs, about four-fifths of the Federal budget. The PART assesses each program in four components (purpose, planning, management, and results/accountability) and gives a score for each of the components. The scores for each component are then weighted— results/accountability carries the greatest weight—and the program is given an overall score. A program is rated Effective if it receives an overall score of 85 percent or more, Moderately Effective if the score is 70 to 84 percent, Adequate if the score is 50 to 69 percent, and Inadequate if the score is 49 percent or lower. The program may receive a rating ‘‘Results Not Demonstrated’’ if it does not have a good long-term and annual performance measure or does not have data to report on its measures. Chapter 2 of this volume discusses the PART concepts in more detail. This section summarizes the results of the PART for direct investment programs, defined to include capital assets, research and development, and education and training. Because an entire program is assessed, not just the investment portion of the program, the assessments for some programs may cover more than just the investment spending. PART assessments of programs that are grants to State and local governments are not summarized in this chapter but are summarized in Chapter 8, ‘‘Aid to State and Local Governments,’’ in this volume. This section summarizes 209 programs: • Programs for capital assets are essentially those identified in the PART system as ‘‘capital assets and service acquisition’’ (79 programs); • Programs for research and development are essentially those identified in the PART system as ‘‘research and development’’ (102 programs); and • Programs for education and training (28 programs) are primarily programs in the Department of Education that are not grants to State and local governments (e.g., Federal Pell Grants). This cat- 6. 59 FEDERAL INVESTMENT egory also includes programs in other agencies, such as the Montgomery GI Bill in the Department of Veterans Affairs, the Health Professions program in the Department of Health and Human Services, and the Job Corps program in the Department of Labor. Information on these and other programs assessed by PART is at www.ExpectMore.gov. Summary of ratings. Table 6–3 shows that the average rating for the 209 investment programs that have Table 6–3. been rated by PART was ‘‘Adequate’’. These programs had total spending of $227.5 billion in 2005. Of these programs: • 47 were rated effective ($45.0 billion); • 67 were rated moderately effective ($69.0 billion); • 46 were rated adequate ($72.4 billion); • 9 were rated ineffective ($6.7 billion); and • 40 were rated ‘‘results not demonstrated’’ ($34.3 billion). SUMMARY OF PART RATINGS AND SCORES FOR DIRECT FEDERAL INVESTMENT PROGRAMS (excludes grants to State and local governments for investment) Type of Investment Criteria Physical capital Research and development Education and training All investment programs Type of Investment Purpose .............................................................................................. Planning .............................................................................................. Management ....................................................................................... Results/Accountability ........................................................................ Average Rating 1 ................................................................................ 83% 79% 82% 55% Adequate 92% 83% 87% 60% Moderately effective 79% 73% 67% 34% Adequate 87% 80% 83% 55% Adequate Number of Programs Ratings 1 Effective .............................................................................................. Moderately Effective ........................................................................... Adequate ............................................................................................ Ineffective ........................................................................................... Results Not Demonstrated ................................................................. 16 24 18 2 19 29 41 17 3 12 2 2 11 4 9 47 67 46 9 40 Total number of investment programs rated ................................ 79 102 28 209 In millions of dollars (2005) Effective .............................................................................................. Moderately Effective ........................................................................... Adequate ............................................................................................ Ineffective ........................................................................................... Results Not Demonstrated ................................................................. $4,658 50,825 45,064 5,323 27,237 $39,839 16,516 1,737 166 2,149 $479 1,707 25,602 1,249 4,930 44,976 69,048 72,403 6,738 34,316 All investment programs that were rated in PART .......................... $133,107 $60,407 $33,967 $227,481 1 Ratings are determined by weighting the section scores a follows: Purpose (20 percent), Planning (10 percent), Management (20 percent), Results/Accountability (50 percent). The resulting weighted average is translated into a rating: Effective indicates a score of 85 percent or more; Moderately Effective, 70–84 percent; Adequate, 50–69 percent; and Ineffective, 49 percent or less. Regardless of the weighted average, a rating of Results Not Demonstrated may be given if the program does not have performance goals or has not collected data on its performance goals. Assessments of individual programs. The ratings of the ten physical capital and education and training investment programs with the largest funding are summarized here. Information on research and development is in Chapter 5, ‘‘Research and Development’’ in this volume. Capital Assets Department of Defense. Navy Shipbuilding ($13.4 billion in 2005). Rating: Adequate. This program buys new ships and overhauls existing ships. New ships are built at six privately-owned shipyards. Overhauls of existing ships are performed at both privately-owned and publicly-owned shipyards. The Navy currently has 280 ships in the fleet. The Navy conducts periodic reviews of programs at major 60 milestones of development and uses a structured reporting regime to help monitor the status of ship cost, schedule, and performance. The Navy has experienced cost increases and schedule slips on some ship construction programs, although overall performance is adequate. For example, the first Virginia Class submarine was only 89 percent complete in 2003 when the target was 92 percent. In addition, the cost of the first Virginia class submarine increased by 24 percent in 2002. Department of Defense (DoD). Air Combat Program ($13.4 billion in 2005). Rating: Moderately Effective. The purpose of this program is to enable DoD to successfully wage war in the air by developing and producing a variety of tactical fighter and strike aircraft. DoD’s individual programs within the overall air combat program are delivering aircraft at targeted rates, but in several cases, such as the F/A–22, at greater cost than projected. DoD is moving towards an assessment of the overall capabilities provided by its programs, rather than its traditional assessment of individual acquisition programs. However, until the air combat program is managed as a single program (consisting of several systems) with clear long-term goals, it will be difficult to perform such a ‘‘capabilities based’’ assessment. Department of Defense. Marine Corps/Expeditionary Warfare. ($11.9 billion in 2005). Rating: Results Not Demonstrated. Expeditionary warfare is the temporary use of Marine Corps force in foreign countries. The expeditionary warfare program consists of specific investment programs for aviation assets, amphibious ships, weapons systems, equipment, vehicles, ammunition, and research and development. The Department of Defense has not set long-term performance measures to guide program management and budgeting for expeditionary warfare. It does not have program measures that assess the most important aspects of expeditionary warfare and its strategic goals. Department of Defense. Missile Defense ($8.8 billion in 2005). Rating: Adequate. The mission of the Missile Defense Agency (MDA) is to defend the United States, deployed forces, and allies from ballistic missile attack. MDA is researching, developing and fielding a global, integrated and multi-layered Ballistic Missile Defense System (BMDS), comprising multiple sensors, interceptors and battle management capabilities. MDA’s strategic planning, resource allocation and management oversight activities are properly aligned to accomplish stated mission objectives. MDA budget requests and human resource management activities are explicitly tied to appropriate performance goals. MDA leaders regularly review and evaluate a wide array of performance data to inform and guide their decisionmaking. Tennessee Valley Authority. Tennessee Valley Authority Power ($7.8 billion in 2005). Rating: Moderately Effective. TVA is the Nation’s largest public power company. Through 158 locally owned distributors, TVA provides power to nearly 8.5 million residents of the Ten- ANALYTICAL PERSPECTIVES nessee Valley. Some of TVA’s former performance measures such as cents/KWH are no longer tracked. It is unclear how some of the new efficiency measures tracked by TVA relate to program performance. In its strategic plan, the Tennessee Valley Authority committed to a debt reduction plan that will reduce its total debt by $3–$5 billion over a ten-year to twelveyear period. TVA has since increased that debt reduction total to $7.8 billion by 2016. Department of Defense. Future Combat Systems/ Modularity Land Warfare ($7.4 billion in 2005). Rating: Moderately Effective. The Army’s complementary transformation initiatives, Modularity and the Future Combat Systems, are designed to provide regional combatant commanders and soldiers with a lighter, faster, more survivable and rapidly deployable force with which to fight and win the United States’ current and future land conflicts. Although the Future Combat Systems program is currently on schedule and on cost, the program’s long schedule, significant cost, and technological complexity put Future Combat Systems at substantial risk of cost and schedule overruns as the program moves from research and development to acquisition. Department of Energy. Environmental Management ($7.3 billion in 2005). Rating: Adequate. This program protects human health and the environment by cleaning up millions of gallons of radioactive waste, thousands of tons of spent nuclear fuel and special nuclear material, along with huge quantities of contaminated soil and water. Managers are implementing reforms that are improving program performance, which will significantly reduce environmental, safety, and health risks. For example, at the Hanford (State of Washington) site, the program continues to expedite retrieval of radioactive waste from leak-prone, single-shell tanks and transfer the waste to double-shell tanks for safer storage until treated and disposed. The program recently completed the physical cleanup of the Rocky Flats (Colorado) site more than a year ahead of schedule and below estimated costs. Most of the site will transfer to the Department of the Interior to manage as a national wildlife refuge after the Environmental Protection Agency, with concurrence by the Colorado Department of Public Health and Environment, certifies that the cleanup meets human health standards. General Services Administration. National Information Technology Solutions ($6.3 billion in 2005). Rating: Results Not Demonstrated. This program provides expert technical, acquisition, and information technology products and services to Federal clients. GSA is reviewing the organization of both the National and Regional IT Solutions programs for possible consolidation. The assessment found that the program is useful to Federal agencies that do not have in-house expertise to acquire information technology (IT) products or services. However, the program must better demonstrate the value it provides to customer agencies. The program must develop long-term outcome goals and efficiency 6. 61 FEDERAL INVESTMENT measures which are comparable to other Federal agencies or the private sector. While the program does have annual goals, it must develop annual goals which measure the savings and quality improvement that agencies achieve through use of this program. Education Department of Education. Federal Pell Grants ($12.4 billion in 2005). Rating: Adequate. This program helps ensure access to postsecondary education for undergraduate students by providing need-based grants that, in combination with other sources of student aid, help meet education costs. The program also promotes lifelong learning by encouraging low-income adults to return to school. The program has meaningful performance measures and outcome data on these measures such as the degree to which Pell Grants are targeted to low-income students. New measures such as enrollment and graduation rates among low-income and minority students PART III: have also been added. The program has met its current long-term performance goals and new measures will help track other key program goals. Department of Education. Federal Family Education Loan Program ($11.1 billion (subsidy cost) in 2005). Rating: Adequate. This program provides default insurance and interest subsidies to encourage private lenders to make postsecondary education loans to undergraduate and graduate students. The program also provides interest subsidies for eligible low-income students to cover interest accrued while in school. Overall, the assessment concluded that both this program and the William D. Ford Direct Student Loan program fulfill their purpose of ensuring that low and middle income students can afford the costs of postsecondary education. The two programs combined provide over $70 billion a year in new loans to students. While the PART found that these programs had meaningful performance measures and outcome data, it also found that both programs could be more cost efficient. FEDERALLY FINANCED CAPITAL STOCKS Federal investment spending creates a ‘‘stock’’ of capital that is available in the future for productive use. Each year, Federal investment outlays add to this stock of capital. At the same time, however, wear and tear and obsolescence reduce it. This section presents very rough measures over time of three different kinds of capital stocks financed by the Federal Government: public physical capital, research and development (R&D), and education. Federal spending for physical assets adds to the Nation’s capital stock of tangible assets, such as roads, buildings, and aircraft carriers. These assets deliver a flow of services over their lifetime. The capital depreciates as the asset ages, wears out, is accidentally damaged, or becomes obsolete. Federal spending for the conduct of research and development adds to an ‘‘intangible’’ asset, the Nation’s stock of knowledge. Spending for education adds to the stock of human capital by providing skills that help make people more productive. Although financed by the Federal Government, the research and development or education can be carried out by Federal or State government laboratories, universities and other nonprofit organizations, local governments, or private industry. Research and development covers a wide range of activities, from the investigation of subatomic particles to the exploration of outer space; it can be ‘‘basic’’ research without particular applications in mind, or it can have a highly specific practical use. Similarly, education includes a wide variety of programs, assisting people of all ages beginning with pre-school education and extending through graduate studies and adult education. Like physical assets, the capital stocks of R&D and education provide services over a number of years and depreciate as they become outdated. For this analysis, physical and R&D capital stocks are estimated using the perpetual inventory method. Each year’s Federal outlays are treated as gross investment, adding to the capital stock; depreciation reduces the capital stock. Gross investment less depreciation is net investment. The estimates of the capital stock are equal to the sum of net investment in the current and prior years. A limitation of the perpetual inventory method is that the original investment spending may not accurately measure the current value of the asset created, even after adjusting for inflation, because the value of existing capital changes over time due to changing market conditions. However, alternative methods for measuring asset value, such as direct surveys of current market worth or indirect estimation based on an expected rate of return, are especially difficult to apply to assets that do not have a private market, such as highways or weapons systems. In contrast to physical and R&D stocks, the estimate of the education stock is based on the replacement cost method. Data on the total years of education of the U.S. population are combined with data on the current cost of education and the Federal share of education spending to yield the cost of replacing the Federal share of the Nation’s stock of education. It should be stressed that these estimates are rough approximations, and provide a basis only for making broad generalizations. Errors may arise from uncertainty about the useful lives and depreciation rates of different types of assets, incomplete data for historical outlays, and imprecision in the deflators used to express costs in constant dollars. The methods used to estimate capital stocks are discussed further in the technical note at the end of Chapter 13, ‘‘Stewardship,’’ in this volume. Additional detail about these methods appeared in a methodological note in Chapter 7, ‘‘Federal Investment Spending and Capital Budgeting,’’ in the Analytical Perspectives volume of the 2004 Budget. 62 ANALYTICAL PERSPECTIVES The Stock of Physical Capital This section presents data on stocks of physical capital assets and estimates of the depreciation of these assets. Trends. Table 6–4 shows the value of the net federally financed physical capital stock since 1960, in constant fiscal year 2000 dollars. The total stock grew at Table 6–4. a 2.2 percent average annual rate from 1960 to 2005, with periods of faster growth during the late 1960s and the 1980s. The stock amounted to $2,257 billion in 2005 and is estimated to increase to $2,381 billion by 2007. In 2005, the national defense capital stock accounted for $680 billion, or 30 percent of the total, and nondefense stocks for $1,577 billion, or 70 percent of the total. NET STOCK OF FEDERALLY FINANCED PHYSICAL CAPITAL (In billions of 2000 dollars) Nondefense Fiscal Year Total National Defense Direct Federal Capital Total Nondefense Total Water and Power Capital Financed by Federal Grants Other Total Transportation Community and Regional Natural Resources Other Five year intervals: 1960 .................................................... 1965 .................................................... 1970 .................................................... 1975 .................................................... 1980 .................................................... 1985 .................................................... 1990 .................................................... 1995 .................................................... 849 937 1,101 1,137 1,258 1,462 1,740 1,882 608 589 630 545 494 572 722 714 242 348 470 592 763 890 1,018 1,168 95 123 146 166 195 222 256 297 59 74 88 102 123 136 147 157 36 49 58 64 72 86 109 141 146 225 324 426 568 668 762 871 89 158 230 282 342 397 462 534 27 32 47 76 121 146 158 168 21 22 26 42 79 100 113 123 10 13 21 25 27 26 28 46 Annual data: 2000 .................................................... 2001 .................................................... 2002 .................................................... 2003 .................................................... 2004 .................................................... 2005 .................................................... 2006 estimate ..................................... 2007 estimate ..................................... 1,979 2,023 2,078 2,138 2,199 2,257 2,321 2,381 635 631 636 646 662 680 700 717 1,345 1,391 1,442 1,492 1,536 1,577 1,621 1,664 337 351 366 380 391 400 410 420 160 163 165 166 168 168 170 171 178 188 201 213 223 231 240 249 1,007 1,040 1,076 1,112 1,146 1,178 1,211 1,244 618 640 666 690 714 737 761 786 183 186 189 193 196 198 202 205 131 132 134 135 136 138 138 139 75 81 87 94 100 105 110 114 Real stocks of defense and nondefense capital show very different trends. Nondefense stocks have grown consistently since 1970, increasing from $470 billion in 1970 to $1,577 billion in 2005. With the investments proposed in the budget, nondefense stocks are estimated to grow to $1,664 billion in 2007. During the 1970s, the nondefense capital stock grew at an average annual rate of 5.0 percent. In the 1980s, however, the growth rate slowed to 2.9 percent annually, with growth continuing at about that rate since then. Real national defense stocks began in 1970 at a relatively high level, and declined steadily throughout the decade as depreciation from investment in the Vietnam era exceeded new investment in military construction and weapons procurement. Starting in the early 1980s, a large defense buildup began to increase the stock of defense capital. By 1987, the defense stock exceeded its earlier Vietnam-era peak. In the early 1990s, however, depreciation on the increased stocks and a slower pace of defense physical capital investment began to reduce the stock from its previous levels. The increased defense investment in the last few years has reversed this decline, increasing the stock from a low of $631 billion in 2001 to $717 billion in 2007. Another trend in the Federal physical capital stocks is the shift from direct Federal assets to grant-financed assets. In 1960, 39 percent of federally financed nondefense capital was owned by the Federal Government, and 61 percent was owned by State and local governments but financed by Federal grants. Expansion in Federal grants for highways and other State and local capital, coupled with slower growth in direct Federal investment for water resources, for example, shifted the composition of the stock substantially. In 2005, 25 percent of the nondefense stock was owned by the Federal Government and 75 percent by State and local governments. The growth in the stock of physical capital financed by grants has come in several areas. The growth in the stock for transportation is largely grants for highways, including the Interstate Highway System. The growth in community and regional development stocks occurred largely following the enactment of the community development block grant in the early 1970s. The value of this capital stock has grown only slowly in 6. 63 FEDERAL INVESTMENT the past few years. The growth in the natural resources area occurred primarily because of construction grants for sewage treatment facilities. The value of this federally financed stock has increased about 40 percent since the mid-1980s. The Stock of Research and Development Capital This section presents data on the stock of research and development capital, taking into account adjustments for its depreciation. Trends. As shown in Table 6–5, the R&D capital stock financed by Federal outlays is estimated to be $1,106 billion in 2005 in constant 2000 dollars. Roughly half is the stock of basic research knowledge; the remainder is the stock of applied research and development. The nondefense stock accounted for about three-fifths of the total federally financed R&D stock in 2005. Although investment in defense R&D has exceeded that of nondefense R&D in nearly every year since 1981, the nondefense R&D stock is actually the larger of the two, because of the different emphasis on basic research and applied research and development. Defense R&D spending is heavily concentrated in applied research and development, which depreciates much more quickly Table 6–5. than basic research. The stock of applied research and development is assumed to depreciate at a ten percent geometric rate, while basic research is assumed not to depreciate at all. The defense R&D stock rose slowly during the 1970s, as gross outlays for R&D trended down in constant dollars and the stock created in the 1960s depreciated. Increased defense R&D spending from 1980 through 1990 led to a more rapid growth of the R&D stock. Subsequently, real defense R&D outlays tapered off, depreciation grew, and, as a result, the real net defense R&D stock stabilized at around $420 billion. Renewed spending for defense R&D in recent years has begun to increase the stock, and it is projected to increase to $462 billion in 2007. The growth of the nondefense R&D stock slowed from the 1970s to the 1980s, from an annual rate of 3.8 percent in the 1970s to a rate of 2.1 percent in the 1980s. Gross investment in real terms fell during much of the 1980s, and about three-fourths of new outlays went to replacing depreciated R&D. Since 1988, however, nondefense R&D outlays have been on an upward trend while depreciation has edged down. As a result, the net nondefense R&D capital stock has grown more rapidly. NET STOCK OF FEDERALLY FINANCED RESEARCH AND DEVELOPMENT 1 (In billions of 2000 dollars) National Defense Fiscal Year Total Basic Research Nondefense Applied Research and Development Total Basic Research Total Federal Applied Research and Development Total Basic Research Applied Research and Development Five year intervals: 1970 .................................................................. 1975 .................................................................. 1980 .................................................................. 1985 .................................................................. 1990 .................................................................. 1995 .................................................................. 261 276 279 321 403 423 16 21 25 30 36 43 245 256 255 291 367 380 215 262 311 339 382 461 67 97 131 174 229 294 148 165 179 165 154 167 475 538 590 659 785 884 82 118 156 204 265 336 393 421 434 455 520 547 Annual data: 2000 .................................................................. 2001 .................................................................. 2002 .................................................................. 2003 .................................................................. 2004 .................................................................. 2005 .................................................................. 2006 estimate .................................................. 2007 estimate .................................................. 423 421 420 423 430 439 451 462 48 50 52 53 54 56 57 59 375 371 368 370 375 383 394 403 543 563 587 613 640 666 692 718 368 386 406 428 450 473 495 518 175 177 181 186 190 194 197 201 966 984 1,007 1,036 1,070 1,106 1,143 1,180 416 436 458 481 505 529 553 577 549 548 549 555 565 577 591 603 1 Excludes stock of physical capital for research and development, which is included in Table 6–4. The Stock of Education Capital This section presents estimates of the stock of education capital financed by the Federal Government. As shown in Table 6–6, the federally financed education stock is estimated at $1,394 billion in 2005 in constant 2000 dollars. The vast majority of the Nation’s education stock is financed by State and local govern- ments, and by students and their families themselves. This federally financed portion of the stock represents about 3 percent of the Nation’s total education stock.1 Nearly three-quarters is for elementary and secondary education, while the remainder is for higher education. 1 For estimates of the total education stock, see table 13–4 in Chapter 13, ‘‘Stewardship.’’ 64 ANALYTICAL PERSPECTIVES The federally financed education stock has grown steadily in the last few decades, with an average annual growth rate of 5.2 percent from 1970 to 2005. Table 6–6. The expansion of the education stock is projected to continue under this budget, with the stock rising to $1,519 billion in 2007. NET STOCK OF FEDERALLY FINANCED EDUCATION CAPITAL (In billions of 2000 dollars) Fiscal Year Total Education Stock Elementary and Secondary Education Higher Education Five year intervals: 1960 ............................................................................... 1965 ............................................................................... 1970 ............................................................................... 1975 ............................................................................... 1980 ............................................................................... 1985 ............................................................................... 1990 ............................................................................... 1995 ............................................................................... 71 102 233 347 479 575 730 874 51 74 184 282 379 434 544 639 20 28 50 65 101 141 186 235 Annual data: 2000 ............................................................................... 2001 ............................................................................... 2002 ............................................................................... 2003 ............................................................................... 2004 ............................................................................... 2005 ............................................................................... 2006 estimate ................................................................ 2007 estimate ................................................................ 1,136 1,186 1,228 1,277 1,341 1,394 1,462 1,519 825 859 891 932 968 1,001 1,045 1,086 311 327 338 346 373 393 417 433 7. CREDIT AND INSURANCE Federal credit programs offer direct loans and loan guarantees to support a wide range of activities, primarily housing, education, business and community development, and exports. At the end of 2005, there were $247 billion in Federal direct loans outstanding and $1,084 billion in loan guarantees. Through its insurance programs, the Federal Government insures bank, thrift, and credit union deposits, guarantees private definedbenefit pensions, and insures against other risks such as natural disasters. The Federal Government also enhances credit availability for targeted sectors indirectly through Government-Sponsored Enterprises (GSEs)—privately owned companies and cooperatives that operate under Federal charters. GSEs increase liquidity by guaranteeing and securitizing loans, as well as by providing direct loans. In return for serving social purposes, GSEs enjoy many privileges that differ across GSEs. In general, GSEs can borrow from Treasury in amounts ranging up to $4 billion at Treasury’s discretion, GSEs’ corporate earnings are exempt from State and local income taxation, GSE securities are exempt from SEC registration, and banks and thrifts are allowed to hold GSE securities in unlimited amounts and use them to collateralize public deposits. These privileges leave many people with the impression that their securities are risk-free. GSEs, however, are not part of the Federal Government, and GSE securities are not federally guaranteed. I. By law, GSE securities carry a disclaimer of any U.S. obligation. This chapter discusses the roles of these diverse programs and assesses their effectiveness and efficiency. • The first section analyzes the roles of Federal credit and insurance programs. Federal programs can play useful roles when market imperfections prevent the private market from efficiently providing credit and insurance. Financial evolution has partly corrected many imperfections and generally weakened the justification for Federal intervention. Federal programs, however, may still be critical in some areas. • The second section examines how credit and insurance programs were gauged by the Program Assessment Rating Tool (PART) and interprets the PART results. • The third section discusses individual credit programs and GSEs classified into four sectors: housing, education, business and community development, and exports. The discussion focuses on program objectives, recent developments, performance, and future plans for each program. • In a similar format, the final section reviews Federal deposit insurance, pension guarantees, disaster insurance, and insurance against terrorism and other security-related risks. FEDERAL PROGRAMS IN CHANGING FINANCIAL MARKETS The Federal Role In most cases, private lending and insurance companies efficiently meet economic demands by allocating resources to the most productive uses. Market imperfections, however, can cause inadequate provision of credit or insurance in some sectors. Federal credit and insurance programs improve economic efficiency if they effectively fill the gaps created by market imperfections. On the other hand, Federal credit and insurance programs that have little to do with correcting market imperfections may be ineffective, or can even be counter-productive; they may simply do what the private sector would have done in their absence, or interfere with what the private sector would have done better. Federal credit and insurance programs also help disadvantaged groups. This role alone, however, may not be enough to justify credit and insurance programs. For the purpose of helping disadvantaged groups, direct subsidies are generally more effective and less distortionary. Relevant market imperfections include insufficient information, limited ability to secure resources, imperfect competition, and externalities. The presence of a market imperfection suggests a possibility that a well-designed Government program can improve on the market outcome, although it does not necessarily mean that Government intervention is desirable. Addressing a market imperfection is a complex and difficult task. Insufficient Information. Financial intermediaries may fail to allocate credit to the most deserving borrowers if there is little objective information about borrowers. Some groups of borrowers, such as start-up businesses and start-up farmers, have limited incomes and credit histories. Many creditworthy borrowers belonging to these groups may fail to obtain credit or be forced to pay excessively high interest. For very irregular events, such as natural and man-made disasters, there may not be sufficient information to estimate the probability and magnitude of the loss. This pricing difficulty may prevent insurers from covering those risks at reasonable premiums. Limited Ability to Secure Resources. The ability of private entities to absorb losses is more limited than that of the Federal Government, which has general tax- 65 66 ing authority. For some events potentially involving a very large loss concentrated in a short time period, therefore, Government insurance commanding more resources can be more credible and effective. Such events include massive bank failures and some natural and man-made disasters that can threaten the solvency of private insurers. Imperfect Competition. Competition can be imperfect in some markets because of barriers to entry or economies of scale. Imperfect competition may result in higher prices of credit and insurance in those markets. Externalities. Decisions at the individual level are not socially optimal when individuals do not capture the full benefit (positive externalities) or bear the full cost (negative externalities) of their activities. Examples of positive and negative externalities are education and pollution. The general public benefits from the high productivity and good citizenship of a well-educated person and suffers from pollution. Without Government intervention, people will engage less than socially optimal in activities that generate positive externalities and more in activities that generate negative externalities. Effects of Changing Financial Markets Financial markets have become much more efficient thanks to technological advances and financial services deregulation. By facilitating the gathering and processing of information and lowering transaction costs, technological advances have significantly contributed to improving the screening of credit and insurance applicants, enhancing liquidity, refining risk management, and spurring competition. Deregulation, represented by the Riegle-Neal Interstate Banking and Branching Act of 1997 and the Financial Services Modernization Act of 1999, has increased competition and prompted consolidation by removing geographic and industry barriers. These changes have reduced market imperfections and hence weakened the role of Federal credit and insurance programs. The private market now has more information and better technology to process it; it has better means to secure resources; and it is more competitive. As a result, the private market is more willing and able to serve a portion of the population traditionally targeted by Federal programs. The benefits of technological advances and deregulation, however, have been uneven across sectors and populations. To remain effective, therefore, Federal credit and insurance programs need to focus more narrowly on those sectors that have been less affected by financial evolution and those populations that still have difficulty in obtaining credit or insurance from private lenders. The Federal Government also needs to pay more attention to new challenges introduced by financial evolution and other economic developments. Even those changes that are beneficial overall often bring new risks and challenges. The Federal role of alleviating the information problem is generally not as important as it once was. Nowadays, lenders and insurers have easy access to large ANALYTICAL PERSPECTIVES databases, powerful computing devices, and sophisticated analytical models. This advancement in communication and information processing technology enables lenders to evaluate the risk of borrowers more objectively and accurately. As a result, creditworthy borrowers are less likely to be turned down, while highrisk borrowers are less likely to be approved for credit. The improvement, however, may be uneven across sectors. Credit scoring (an automated process that converts relevant borrower characteristics into a numerical score indicating creditworthiness), for example, is considered as a breakthrough in borrower screening. While credit scoring is widely applied to home mortgages and consumer loans, it is applied to a limited extent for small business loans and agricultural loans due to the difficulty of standardizing unique characteristics of small businesses and farmers. With technological advances, such as computer simulation, pricing catastrophe risks has become easier, but it remains much more difficult than pricing more regular events such as automobile accidents. It is still difficult for insurers to estimate the probability of a major natural disaster occuring. The difficulty may be greater for man-made disasters that lack scientific bases. Financial evolution has also alleviated resource constraints faced by private entities. Advanced financial instruments have enabled insurers to manage risks more effectively and secure needed funds more easily. Thus, it is less likely that a large potential loss discourages an insurer from offering an actuarially fair contract. Financial derivatives, such as options, swaps, and futures, have improved the market’s ability to manage and share various types of risk such as price risk, interest rate risk, credit risk, and even catastrophe-related risk. An insurer can distribute the risk of a natural or man-made catastrophe among a large number of investors through catastrophe-related derivatives. The extent of risk sharing in this way, however, is still limited because of the small size of the market for those products. Imperfect competition, one possible motivation for Government intervention, is much less likely in general, thanks to financial deregulation and improved communication and financing technology. Financial deregulation removed geographic and industry barriers to competition. As a result, major financial holding companies offer both banking and insurance products nationwide. Internet-based financial services have lowered the cost of financial transactions and reduced the importance of physical location. These developments have been particularly more beneficial to small and geographically isolated customers, as lower transaction costs make it easier to offer good prices to small customers. Securitization (pooling a certain type of asset and selling shares of the asset pool to investors) facilitates fund raising and risk management. By securitizing loans, small lenders with limited access to capital can more effectively compete with large ones. In addition, there are more financing alternatives for both commercial and individual borrowers that used to rely heavily on 67 7. CREDIT AND INSURANCE banks. Many commercial firms borrow directly in capital markets, bypassing financial intermediaries; the use of commercial paper (short-term financing instruments issued by corporations) has been particularly notable. Venture capital has become a much more important financing source for small businesses. Finance companies have gained market shares both in business and consumer financing. Problems related to externalities may persist because the price mechanisms that drive the private market ignore the value of externalities. Externalities, however, are a general market failure, rather than a financial market failure. Thus, credit and insurance programs are not necessarily the best means to address externalities, and their effectiveness should be compared with other forms of Government intervention, such as tax incentives and grants. In particular, if a credit program was initially intended to address multiple problems, including externalities, and those other problems have been alleviated, there may be a better way to address remaining externalities. Overall, the financial market has become more efficient and safer. Financial evolution and other economic developments, however, are often accompanied by new II. risks. Federal agencies need to be vigilant to identify and manage new risks to the Budget. For example, financial derivatives enable their users either to decrease or to increase risk exposure. If some beneficiaries of Federal programs use financial derivatives to take more risk, the costs of Federal programs, especially insurance programs, can rise sharply. The sheer size of some financial institutions has also created a new risk. While well-diversified institutions are generally safer, even a single failure of a large private institution or a GSE, such as Fannie Mae, Freddie Mac, and Federal Home Loan Banks, could shake the entire financial market. A more visible risk today is posed by the Pension Benefit Guaranty Corporation (PBGC) of the Department of Labor. PBGC is facing serious financial challenges due to unfavorable developments in recent years and to flaws in program structure that the Administration has proposed to remedy. Security-related risks heightened after the September 11th attacks also pose a challenge. Insurance programs covering security-related risks, such as terrorism and war, are difficult to manage because those events are highly uncertain in terms of both the frequency of occurrence and the magnitude of potential loss. PERFORMANCE OF CREDIT AND INSURANCE PROGRAMS The Program Assessment Rating Tool (PART) is a performance evaluation tool designed to be consistent across Federal programs. This section analyzes the PART score for credit and insurance programs as a group to identify the strengths and weaknesses of credit and insurance programs. PART Scores The PART evaluates programs in four areas (program purpose and design, strategic planning, program management, and program results) and assigns a numerical score (0 to 100) to each category. The overall rating (effective, moderately effective, adequate, ineffective, or results not demonstrated) is determined based on the numerical scores and the availability of reliable data. There are 30 credit programs (defined as those involving repayment obligations) and 5 insurance programs among 795 programs that have been rated by the PART. When appropriately weighted, the overall average score for credit and insurance programs is simi- lar to that for other programs (see Table ‘‘Summary of PART Scores’’). The ratings for credit and insurance programs, however, are more clustered around the middle. Most credit and insurance programs (77 percent, compared with 55 percent for other programs) are rated ‘‘adequate’’ or ‘‘moderately effective,’’ while only 2 programs (6 percent, compared with 16 percent for other programs) are rated ‘‘effective.’’ These results suggest that most credit and insurance programs meet basic standards, but need to improve. Looking across evaluation criteria, for both credit and insurance programs and other programs, the scores are high in program purpose and design and in program management, while low in program results. Relative to other programs, however, credit and insurance programs scored low in program purpose and design and high in program results. SUMMARY OF PART SCORES Purpose and Design Strategic Planning Program Management Program Results Credit and Insurance Programs Average ......................................................... Standard Deviation ........................................ 77.1 20.4 69.4 23.6 84.8 19.6 53.0 18.1 All Others Excluding Credit and Insurance Programs Average ......................................................... Standard Deviation ........................................ 86.3 19.3 73.4 25.2 81.4 18.0 47.1 26.6 68 The PART indicates that most credit and insurance programs have clear purposes (not necessarily economically justifiable purposes) and address specific needs. Many credit and insurance programs, however, fail to score high in program design. Some are duplicative of other federal programs or private sources, and some have flawed designs, such as inadequate incentive structures, limiting their effectiveness and efficiency. Regarding strategic planning, credit and insurance programs show strengths in accomplishing short-term goals. Weaknesses are found in pursuing long-term performance goals, conducting stringent performance evaluation, and tying budgets to performance outcomes. Many programs, however, have taken meaningful steps to correct their strategic planning deficiencies. In the program management category, credit and insurance programs are strong in basic financial and accounting practices, such as spending funds for intended purposes, and in collaborating with related programs. However, some programs show weaknesses in more sophisticated financial management, such as evaluating risks—a critical skill for the effective management of credit and insurance programs. Program results, the most important category of performance, are a weak area for credit and insurance programs despite a higher average score than that of other programs. In particular, many credit and insurance programs lack objectives evidences of program effectiveness and achieving results. This finding points to a strong need for results-driven management. Common Features There are some key features that distinguish credit and insurance programs from other programs. Credit and insurance programs are intended to address imperfections in financial markets. They also face various risks, such as uncertain default rates and erratic claim rates. Understanding common features in relation to the PART should help to interpret PART results and to devise adequate steps to improve performance. Program Purpose and Design. The most important role of credit and insurance programs is to serve those target populations that are not effectively served by the private sector. Financial markets, however, have been evolving to serve those populations better. Thus, to refocus programs appropriately, it is important to examine the effect of financial evolution. Lending and insurance are complex businesses involving screening applicants, financing, servicing, and monitoring. Given these complexities, the Government can significantly benefit from partnership with the private sector that combines the Government’s and private entities’ strengths. It takes a careful program design to realize the potential benefit from such partnership. In particular, the private partner’s profit should be closely tied to its contribution to the program’s effectiveness and efficiency. Without proper incentives, private entities do not perform as intended. For example, private lenders are generally better at screening borrowers, but they may not screen borrowers effectively ANALYTICAL PERSPECTIVES if the Government provides a 100-percent loan guarantee. Strategic Planning. Financial markets change rapidly, and credit and insurance programs need to adapt to new developments quickly. For example, adopting new technologies is important. Private lenders are increasingly applying advanced technologies to credit evaluation. Falling behind, Federal credit programs can be left with much riskier borrowers as private entities attract better-risk borrowers away from Federal programs. Program Management. Risk management is a critical element of credit and insurance programs. The cashflow is uncertain both for credit and insurance programs. The default rate and the claim rate can turn out to be significantly different than expected. Credit programs also face prepayment and interest rate risks. These risks must be carefully managed to ensure that the program cost stays within a reasonable range. Effective risk management requires that program managers thoroughly understand the characteristics of beneficiaries and vigilantly monitor new developments. Given these needs for accurate and timely information, collecting and processing data may be more important for credit and insurance programs than for most other programs. Program Results. The main difficulty in evaluating program performance is measuring the net outcome of the program (improvement in the intended outcome net of what would have occurred in the absence of the program). Suppose that an education program is intended to increase the number of college graduates. Although it is straightforward to measure the number of college graduates who were assisted by the program, it is difficult to tell how many of those would not have obtained a college degree without the program’s assistance. Credit and insurance programs face an additional difficulty of estimating the program cost accurately. In evaluating programs, the outcome must be weighed against the cost. In the above example, the ultimate measure of effectiveness is not the net number of college graduates produced by the program but the net number per Federal dollar spent on the program. Thus, an inaccurate cost estimation would lead to incorrect program evaluation; an underestimation (overestimation) of the cost would make the program appear unduly effective (ineffective). Results for credit and insurance programs need to be interpreted in conjunction with the accuracy of cost estimation. The net outcome of a credit or an insurance program can change quickly because it depends on the state of financial markets, which are very dynamic. The net outcome can decrease, as private entities become more willing to serve those customers whom they were reluctant to serve in the past, or it can increase if financial markets fail to function smoothly due to some temporary disturbances. Thus, the effect of financial evolution needs to be analyzed carefully. A sub-par performance by a credit program could be related to financial market developments; the program might have 69 7. CREDIT AND INSURANCE President’s Management Agenda Program Initiative: Improved Credit Management As one of the world’s largest lenders, with a portfolio of more than $1.3 trillion in outstanding direct loans and loan guarantees, the Federal Government has a great interest in efficient risk management. This need is even stronger when considered in the context of the Government’s target borrower population: those whose risk profiles prevent them from obtaining private credit on reasonable terms. Given the higher default probability and the substantial portfolio size, lax management can result in a large increase in the cost to the Government. Thus, the Government must adopt effective risk management techniques to keep defaults in check and increase recoveries when defaults do occur, while still controlling administrative costs. At the same time, the Government must ensure that it is effectively serving its intended borrowers. While these primary goals may occasionally conflict, agencies can achieve both in large part through effective risk identification, careful portfolio monitoring through information reporting, and tracking administrative costs through the credit lifecycle. The five major credit agencies (the Departments of Agriculture, Education, Housing and Urban Development, Veterans Affairs, and the Small Business Administration) and Treasury will be included in a new President’s Management Agenda initiative to improve credit program management. Agencies will be rated on their performance in the areas of loan origination, servicing and portfolio monitoring, and liquidation/debt collection. This effort will be supported by a Credit Council comprised of the Office of Management and Budget and agency representatives. The Council will identify agency and private sector best practices that can be implemented across the major credit agencies, leading to higher program and management efficiencies, budgetary savings, and improved PART scores. failed to adapt to rapid changes in financial markets; or its function might have become obsolete due to finanIII. cial evolution. The program should be restructured in the former case and discontinued in the latter case. CREDIT IN FOUR SECTORS Housing Credit Programs and GSEs The Federal Government makes direct loans, provides loan guarantees, and enhances liquidity in the housing market to promote homeownership among low and moderate-income people and to help finance rental housing for low-income people. While direct loans are largely limited to low-income borrowers, loan guarantees are offered to a much larger segment of the population, including moderate-income borrowers. Increased liquidity achieved through GSEs benefits mortgage borrowers in general. Federal Housing Administration In June 2002, the President issued America’s Homeownership Challenge to increase first-time minority homeowners by 5.5 million through 2010. During the first two and a quarter years since the goal was announced, nearly 2.5 million minority families have become homeowners. The Department of Housing and Urban Development’s (HUD’s) Federal Housing Administration (FHA) helped almost 450,000 of these firsttime minority homebuyers through its loan insurance funds, mainly the Mutual Mortgage Insurance (MMI) Fund. FHA mortgage insurance guarantees mortgage loans that provide access to homeownership for people who lack the traditional financial resources or credit history to qualify for a home mortgage in the conventional marketplace. In 2004, 77.5 percent of FHA-insured loans were to first-time homeowners, and 35.0 percent were to minority homebuyers. In 2005, FHA insured almost $58 billion in purchase and refinance mortgages for more than 478,000 households. Nearly 80 percent of these homebuyers were buying their first homes, almost 100,000 were minorities. While FHA has been a primary mortgage source for first-time and minority buyers since the 1930s, its loan volume has fallen precipitously in the past three years. This is due in part to lower interest rates that have made uninsured mortgages affordable for more families. Moreover, private lenders—aided by automated underwriting tools that allow them to measure risks more accurately—have expanded lending to people who previously would have had no option but FHA—those with few resources to pay for downpayments and/or weaker credit histories than the private sector considered safe. The development of new products and underwriting approaches has allowed private lenders to offer loans to more homebuyers. While this is a positive development when the private sector is offering favorable terms, some borrowers either end up paying too much or receiving unfair terms. As private lenders have expanded their underwriting to cover more and more buyers, changes have taken place in the composition of FHA’s business. First, the percentage of FHA-insured mortgages with initial loanto-value (LTV) ratios of 95 percent or higher has increased substantially, from 38.6 percent in 1995 to 80.7 percent in 2005. Second, the percentage of FHA loans with downpayment assistance from seller-finance non- 70 profit organizations has grown rapidly, from 0.3 percent in 1998 to 31 percent in 2005. Recent studies show that these loans are riskier than those made to borrowers who received downpayment assistance from other sources. In FY 2005, FHA’s cumulative default claim rate for its core business is projected to have risen from approximately 8 percent to 10 percent The FHA single-family mortgage program was assessed in 2005 using the PART rating tool. The assessment found that the program was meeting its statutory objective to serve underserved borrowers while maintaining an adequate capital reserve. However, the program lacked quantifiable annual and long-term performance goals that would measure FHA’s ability to achieve its statutory mission. In addition, both the PART assessment and subsequent GAO and IG reports noted that the program’s credit model does not accurately predict losses to the insurance fund, and that despite FHA efforts to deter fraud in the program, it has not demonstrated that these steps have reduced such fraud. In response to these findings, in 2006 FHA will measure its performance against goals, such as the percentage of FHA Single Family loans for first-time and minority homeowners, and performance goals for fraud detection and prevention. While FHA has taken steps to improve the accuracy of its annual actuarial review claim and prepayment estimates, it will continue to develop a credit model that more accurately and reliably predicts claims costs. Proposals for Program Reform In order to enable FHA to fulfill its mission in today’s changing marketplace, the Administration will introduce legislation that will give FHA the ability to respond to current challenges to homeownership among its traditional target borrowers: low and moderate-income first-time homebuyers. FHA has already taken steps, within its current authority, to streamline its paperwork requirements and remove impediments to its use by lenders and buyers. However, these additional tools will enable it to expand homeownership opportunities to its target borrowers on an actuarially sound basis. To remove two large barriers to homeownership— lack of savings for a downpayment and impaired credit—the Administration proposes two new FHA mortgage products. The Zero Downpayment mortgage will allow first-time buyers with a strong credit record to finance 100 percent of the home purchase price and closing costs. For borrowers with limited or weak credit histories, a second program, Payment Incentives, will initially charge a higher insurance premium and reduce premiums after a period of on-time payments. FHA’s current nearly flat premium, or fee, structure—charging uniform premiums regardless of the borrower’s risk of default as indicated by the percentage of downpayment to the loan amount or borrower credit quality—means that loans to creditworthy borrowers subsidize loans to less creditworthy borrowers. The ANALYTICAL PERSPECTIVES former may be paying proportionately too much premium, while the latter are paying too little. For 2007, FHA is proposing to introduce tiered riskbased pricing as a way to more fairly price its guarantee to individual borrowers, and at the same time eliminate the incentive for higher risk borrowers to use FHA because they are undercharged. FHA will base each borrower’s mortgage insurance premiums upon the risk that the borrower poses to the FHA mortgage insurance fund. FHA proposes to base its mortgage insurance premiums upon a borrower’s consumer credit score from Fair, Isaac, and Company (FICO), amount of downpayment, and source of downpayment (the borrower’s own resources, relatives, employer, non-profit organization or public agency). Mortgage insurance premiums will be based on FHA’s historical experience with similar borrowers. This change will decrease premiums for many of FHA’s traditional borrowers, thereby increasing their access to homeownership. This price structure has many advantages. First, unlike the subprime market, FHA would price a borrower’s risk via the mortgage insurance premium, not in the interest rate. With mortgage insurance, borrowers would pay a market rate of interest, and, as a result, would pay lower monthly payments and lower total costs than they would if they paid a higher mortgage interest rate throughout the life of the loan. Second, using this pricing structure, FHA would promote price transparency. Each borrower would know why they are paying the premium that they are being charged and would know how to lower their borrowing costs—i.e., by raising their FICO score or their downpayment, both matters under their control. Third, using risk-based pricing, FHA could annually review the performance of its programs in conjunction with the preparation of its credit subsidy estimates and could adjust its premiums as necessary to assure the financial soundness of the MMI Fund. A reformed FHA will adhere to sound management practices that include a new framework of standards and incentives tied to principles of good credit program management. At least annually, FHA will determine the volume and credit subsidy of each product it guarantees. These estimates will determine whether the credit subsidy rate will meet the target credit subsidy rate, and whether policy steps are required to ensure that it does. To ensure transparency, FHA proposes to run the MMI Fund so that it maintains a target weighted-average credit subsidy rate. To determine the target subsidy rate, FHA will perform probabilistic or scenario analyses to ensure that the reestimated subsidy rate will not exceed an agreed upon upward bound. The proposed reforms will enable FHA to better meet its objective of serving first-time and low-income home buyers by managing its risks more effectively. VA Housing Program The Department of Veterans Affairs (VA) assists veterans, members of the Selected Reserve, and active 7. CREDIT AND INSURANCE duty personnel to purchase homes as recognition of their service to the Nation. The program substitutes the Federal guarantee for the borrower’s down payment. In 2005, VA provided $23 billion in guarantees to assist 149,399 borrowers. Since the main purpose of this program is to help veterans, lending terms are more favorable than loans without a VA guarantee. In particular, VA guarantees zero down payment loans. VA provided 84,208 zero down payment loans in 2005. To help veterans retain their homes and avoid the expense and damage to their credit resulting from foreclosure, VA intervenes aggressively to reduce the likelihood of foreclosures when loans are referred to VA after missing three payments. VA’s successful actions resulted in 48.4 percent of such delinquent loans avoiding foreclosure in 2005. Rural Housing Service The U.S. Department of Agriculture’s Rural Housing Service (RHS) offers direct and guaranteed loans and grants to help very low to moderate-income rural residents buy and maintain adequate, affordable housing. The single-family guaranteed loan program guarantees up to 90 percent of a private loan for low to moderateincome (115 percent of median income or less) rural residents. The programs’ emphasis is on reducing the number of rural residents living in substandard housing. In 2005, nearly $4.2 billion in assistance was provided by RHS for homeownership loans and loan guarantees; $3.05 billion of guarantees went to 31,700 households, of which 30 percent went to very low and low-income families (with income 80 percent or less than median area income). For 2007, RHS will increase the guarantee fee on new 502 guaranteed loans to 3 percent from 2 percent. This allows the loans to be less costly for the Government without a significant additional burden to the borrowers, given that they can finance the fee as part of the loan. This will be coupled with language that will ensure that the RHS guarantee is the only Federal home loan product for which the borrower qualifies. This will ensure that the RHS home loan guarantee program is not redundant with similar home loan guarantee programs at HUD or VA. The guarantee fee for refinance loans remains 0.5 percent. Funding in 2007 is requested at $3.5 billion for purchase loans and $99 million for refinance loans. RHS programs differ from other Federal housing loan guarantee programs. RHS programs are means-tested and more accessible to low-income, rural residents. In addition, the RHS section 502 direct loans offer assistance to lower-income homeowners by reducing the interest rate down to as low as 1 percent for such borrowers. The section 502 direct program requires graduation to private credit as the borrower’s income and equity in their home increase over time. The interest rate depends on the borrower’s income. Each loan is reviewed annually to determine the interest rate that should be charged on the loan in that year based on 71 the borrower’s projected annual income. The direct program cost is balanced between interest subsidy and defaults. For 2007, RHS expects to provide $1.2 billion in loans with a subsidy rate of 10.03 percent. RHS offers multifamily housing loans and guarantees to provide rural rental housing, including farm labor housing. Direct loans are provided to construct, rehabilitate, and repair multi-family rural rental housing for very low- and low-income, elderly or handicapped residents as well as migrant farm laborers. To help achieve affordable rents, the interest rate is subsidized to 1 percent. Many very low- and low-income residents’ rents are further reduced to 30 percent of their adjusted income through rental assistance grants. For 2007, the request for rental assistance grants is for two-year contracts, down from four years, with a total finding level of $486 million. A two year contract term allows the multifamily housing direct loan program to operate efficiently. Of the total amount requested, $4 million is expected to be used to replenish funds spent for rental assistance for those affected by Hurricane Katrina. RHS will continue to propose funding and legislative changes to address the preservation issues surrounding the over 40-year old program. A long-term initiative has been developed to revitalize the 17,000-property portfolio. During 2007, $74 million will be directed to the revitalization initiative, primarily to move existing residents in properties leaving the program. No funds are requested for the direct rural rental housing program because fixing the current portfolio is the first priority. The farm labor housing combined grant and loan level will provide $55 million in 2007 for new construction as well as repair and rehabilitation. RHS also guarantees multifamily rental housing loans. RHS expects to be able to guarantee $198 million in loans for 2007. Government-Sponsored Enterprises in the Housing Market Between the years 1932–1970, Congress chartered three companies to support the national housing market. These Government-sponsored enterprises (‘‘GSEs’’) are Fannie Mae, Freddie Mac, and the Federal Home Loan Bank System. (The Federal Home Loan Bank System is comprised of 12 individual banks with shared liabilities.) Together the three enterprises currently support, in one form or another, nearly one-half of all residential mortgages outstanding in the U.S. today. These enterprises are not part of the Federal Government, nor are they fully private. The companies were chartered by Congress with a public mission, and endowed with certain benefits that give them competitive advantages when compared with fully private companies. The Administration continues to propose broad reform of the supervisory system that oversees Fannie Mae, Freddie Mac, and the Federal Home Loan Bank System. The Administration’s reform would establish a new safety and soundness regulator for the housing GSEs with powers comparable to other world-class fi- 72 ANALYTICAL PERSPECTIVES nancial regulators. Comparable authorities include the ability to put a GSE into receivership should it fail, flexible authority to set appropriate capital standards, and ability to mitigate the risks the enterprises currently pose to the financial system and economy. Systemic Risk. Systemic risk is the risk that a failure in one part of the economy could lead to additional failures in other parts of the economy—the risk that a small problem could multiply to a point where it could jeopardize the country’s economic well-being. The particular systemic risk posed by the GSEs is the risk that a miscalculation, failure of controls, or other unexpected event at one company could unsettle not only the mortgage markets but other vital parts of the economy. To understand this risk, one must understand the interdependencies among the GSEs and other market participants in the financial system. While the interrelationships of the modern financial system permit highly efficient management and dispersion of risk, these interdependencies, if not disciplined by the regulatory and market environment, may allow a failure in one place to immediately disrupt many other sectors. The GSEs are among the largest borrowers in the world. Lenders invest in GSE debt securities, and the value of their investment depends on the timely return of their money plus interest. The investors in GSE debt include thousands of banks, thousands of institutional investors such as insurance companies, pension funds, and foreign governments, and millions of individuals through mutual funds and 401k investments. Based on the prices paid by these investors, they act as if there is a legal requirement that the Federal Government guarantees GSE debt. In fact, there is no such guarantee or Federal backing. This perception by investors is reinforced by private ratings agencies in their guid- ance to investors. For example, recent guidance noted with regard to Fannie Mae and Freddie Mac, ‘‘the firms’ strategic importance to the US mortgage finance market and global capital markets implies a strong degree of Government support that underpins Moody’s Aaa senior unsecured ratings of both housing GSEs.’’ The market’s perception of GSE debt gives the GSEs a competitive advantage over other companies in the housing market, and leads to reduced market discipline. Because investors act as if there is a legal requirement for the Federal Government to back GSE debt, investors on average lend their money to the GSEs at interest rates up to 40 basis points less ($400 less per year for every $100,000 borrowed) than investors lending money to similarly rated, yet fully private, companies. In addition, investors do not demand the same financial disclosures as for fully private companies. Most of the GSEs either have failed to register their securities, or have suspended filing financial statements, with the Securities and Exchange Commission. Yet there has been no significant impact on the pricing of GSE debt securities. This lack of market discipline facilitates the growth of the GSE asset portfolios, thereby increasing systemic risk. GSE Asset Portfolios. Two of the housing GSEs— Fannie Mae and Freddie Mac—have used their funding advantage to amass large asset portfolios. Together these portfolios are funded by $1.7 trillion in debt. From 1990 through 2004, the GSEs’ competitive funding advantage enabled them to build portfolios of mortgage assets at a rate far exceeding the growth of the overall mortgage market, as shown in the graph. In 1990, the GSEs held less than five percent of outstanding mortgages in their asset portfolios. In 2004, they held 18 percent. Chart 7-1. Fannie Mae and Freddie Mac Growth of GSE Asset Portfolios As a Percentage of Residential Mortgages Outstanding 25 20 15 10 5 0 1990 1992 1994 1996 1998 Source: Office of Federal Housing Enterprise Oversight. 2000 2002 2004 73 7. CREDIT AND INSURANCE In the last decade, the principal source of income for Fannie Mae and Freddie Mac has been net interest on their portfolios. From the 1970s to the early-1990s, Freddie Mac engaged principally in the business of guaranteeing mortgage-backed securities (MBS) for purchase by others, with only a limited mortgage asset portfolio. Although Fannie Mae has always had a mort- gage asset portfolio, it was much smaller prior to the last decade. In 2003, the GSEs’ income from the MBS guarantee-business represented less than 18 percent of the interest income earned on the asset portfolios. (Income data for Fannie Mae is not available for 2004 due to the pending re-audit and restatement of Fannie Mae’s financial statements.) Chart 7-2. Fannie Mae and Freddie Mac Combined Income Dollars in billions 25 Net Interest Income 20 15 10 Guarantee Fee Income 5 0 1990 1992 1994 1996 1998 2000 2002 Source: Office of Federal Housing Enterprise Oversight. The Federal Home Loan Banks have not to date grown mortgage asset portfolios as large as Fannie Mae or Freddie Mac, but the income generated by the mortgage portfolios of the Federal Home Loan Banks has grown since the mid-1990s. Their principal business remains lending to regulated depository institutions and insurance companies engaged in residential mortgage finance. These loans, called advances, are on favorable terms because like Fannie Mae and Freddie Mac, the Federal Home Loan Banks borrow at lower costs than otherwise comparable financial institutions. The Federal Home Loan Banks’ advance business carries interest-rate risk, and the Banks must manage this risk. Thin Capital Cushions. Systemic risk is exacerbated because the GSEs are not required to hold cushions of capital comparable to the capital requirements levied on other large financial institutions. The three GSEs hold about one-half the capital held by similar, yet fully private, financial institutions. By law, Fannie Mae and Freddie Mac are permitted to borrow $97.50 for every $100 of the asset portfolio, because their capital requirement is only 2.5 percent for these assets. The Federal Home Loan Banks are required to hold about a 4 percent capital cushion, slightly better but still less than that required for commercial banks. Commercial banks must hold a 5 per- cent capital cushion to be classified as well-capitalized, and generally need additional capital to meet their riskbased capital requirements. In contrast, the risk-based capital requirements for the GSEs have not required additional capital above their minimum capital requirements. These low capital requirements combined with the funding advantage described above have enabled Fannie Mae and Freddie Mac to amass asset portfolios without raising as much capital as other financial institutions, contributing to the GSEs’ rate of growth. It also gives them a smaller capital cushion against unexpected changes in the economic environment. Although the GSEs’ mortgage investments are of relatively low default risk, other types of risk in the GSEs’ asset portfolios are substantial. Mortgage portfolios carry considerable interest-rate risk, partly because of the prepayment risk caused by the refinance option available on most mortgages that allows homeowners to prepay their mortgages at any time to take advantage of lower interest rates. This risk can be mitigated—for example, through purchase of interest-rate hedges—but the GSEs protect themselves against only some of the interest rate risk of their portfolios. Moreover, hedges are imperfect. Hedging misjudgments would occur even if the GSEs’ policy were to fully hedge the portfolio because predicting interest-rate movements and mortgage refinancing activity is difficult. As 74 GSE asset portfolios have grown in size, the GSEs’ participation in the market for hedging instruments has become dominant enough to cause interest rate spikes in the event that a GSE needs to make large and sudden adjustments to its hedging position. Systemic risk also is exacerbated because financial institutions that lend money to the GSEs may treat these investments favorably. Contrary to their other investments, banks are required to hold only a small amount of capital against the risk of decline in value or failure of the GSE investment. As noted by one rating agency in its guidance to investors, the GSEs have a competitive advantage because financial institutions have virtually no investment limits for GSE debt. Research shows that more than 60 percent of institutions in the banking industry hold as assets GSE debt in excess of half of their equity capital. Other large financial institutions have more diversified investments, carry less debt relative to their assets, and are subject to disclosure of their business and operations with the Securities and Exchange Commission. In contrast, the GSEs’ asset portfolios are highly leveraged, bear significant interest-rate risk, and have a dominant presence in the markets to hedge these risks. These factors, combined with a lack of limits on institutions lending to the GSEs, help explain the systemic risk posed by the GSEs. GSE Asset Portfolios in the Marketplace. As demonstrated above, the asset portfolios are profit-makers for Fannie Mae and Freddie Mac. In addition, the GSEs claim that their asset portfolios are necessary to maintain a liquid market for their securities and mortgage investments in general. But the market for mortgagebacked securities is robust and liquid, with $250 billion traded daily. The GSEs also claim that their asset portfolios can protect the market in the event of a decline by providing an injection of liquidity. Although the GSEs could use their funding advantage to help limit a market decline by purchasing MBS, it is not necessary for the GSEs to hold an asset portfolio of such investments prior to the decline to provide this liquidity. The GSEs also claim that by issuing debt to purchase their own mortgage-backed securities, they are attracting foreign investment in the US mortgage market that could not otherwise be gained. But there exists a healthy and growing appetite of foreign investors for mortgage-backed securities, as well as a sophisticated marketplace able to transform mortgage-backed securities into the appealing features of debt securities. In addition, the large amounts of GSE debt may compete to some degree with US Treasury securities, which has the potential to raise the cost of Federal borrowing. Finally, Fannie Mae and Freddie Mac claim that their asset portfolios expand opportunities for, and lower the cost of, lending to groups traditionally underserved by the private market. These include minority and low-income borrowers. HUD sets annual goals for the GSEs’ purchases of mortgages to underserved groups. Meeting HUD’s goals, however, does not require ANALYTICAL PERSPECTIVES the GSEs to hold these mortgages as assets. Most of these mortgages could be securitized and sold to investors, contributing to the expansion of affordable housing as well as any mortgages held by the GSEs. Mitigating Systemic Risk. The Budget proposes a new strengthened GSE regulator as an independent agency. This proposal and others currently before Congress include differing provisions with respect to the power of a new regulator to require the GSEs to limit the size of their asset portfolios, and to specify under what conditions the regulator should require such a limitation. Mitigating systemic risk requires taking action before a crisis occurs. Thus a new GSE regulator that is limited in its powers cannot properly mitigate systemic risk. When limited to consideration of the safety and soundness risk of a particular enterprise, for example, the regulator may not fully consider potential consequences to others in the mortgage markets and the larger economy. A world-class regulator for the GSEs must be equipped with the power to limit the systemic risk posed by a GSE before any safety and soundness event at a particular GSE occurs. Congress can ensure that the GSE asset portfolios do not place the US financial system at risk by instructing a new GSE regulator that asset portfolios are a significant source of systemic risk, and should be limited by the GSE regulator accordingly. This does not mean reducing the size of the mortgage market. The GSEs could still guarantee mortgage-backed securities for sale to other investors. The mortgage market will grow whether mortgages are owned by investors or by the GSEs. A new regulator with appropriate powers would reduce systemic risk by requiring the GSEs over time to dispose of certain assets, leaving only those that provide a specific public benefit, such as a pipeline for mortgage securitization and affordable housing mortgages not suitable for securitization. These public benefit assets characterize only a small percentage of GSE assets, and thus would decrease the size of the asset portfolios and effectively mitigate the systemic risk posed by the GSEs to the US economy. Education Credit Programs and GSEs The Federal Government guarantees loans through intermediary agencies and makes direct loans to students to encourage post-secondary education. The Student Loan Marketing Association (Sallie Mae), created in 1972 as a GSE to develop the secondary market for guaranteed student loans, was privatized in 2004. The Department of Education helps finance student loans through two major programs: the Federal Family Education Loan (FFEL) program and the William D. Ford Federal Direct Student Loan (Direct Loan) program. Eligible institutions of higher education may participate in one or both programs. Loans are available to students regardless of income. However, borrowers with low family incomes are eligible for loans with additional interest subsidies. For low-income borrowers, the Federal Government subsidizes loan interest costs 7. CREDIT AND INSURANCE while borrowers are in school, during a six-month grace period after graduation, and during certain deferment periods. The FFEL program provides loans through an administrative structure involving over 3,500 lenders, 35 State and private guaranty agencies, roughly 50 participants in the secondary market, and approximately 6,000 participating schools. Under FFEL, banks and other eligible lenders loan private capital to students and parents, guaranty agencies insure the loans, and the Federal Government reinsures the loans against borrower default. Lenders bear two percent of the default risk, and the Federal Government is responsible for the remainder. The Department also makes administrative payments to guaranty agencies and, at certain times, pays interest subsidies on behalf of borrowers to lenders. The William D. Ford Direct Student Loan program was authorized by the Student Loan Reform Act of 1993. Under the Direct Loan program, the Federal Government provides loan capital directly to more than 1,100 schools, which then disburse loan funds to students. The program offers a variety of flexible repayment plans including income-contingent repayment, under which annual repayment amounts vary based on the income of the borrower and payments can be made over 25 years with any residual balances forgiven. Last year, the Administration worked to improve the way the loan programs operate by eliminating unnecessary subsidies, expanding risk-sharing to reduce costs, and improving the financial stability of the guaranty agency system. In response, Congress passed reconciliation legislation which will reduce excess subsidies in FFEL and help make both the Direct Loan and FFEL programs more effective. The reforms include a reduction in the percentage of Federal guarantee provided against default in recognition of the strong repayment record for student loans today and an elimination of unnecessary and costly loan subsidy provisions that allowed some loan holders to have exorbitant financial returns on loans funded through tax-exempt securities. Business and Rural Development Credit Programs and GSEs The Federal Government guarantees small business loans to promote entrepreneurship. The Government also offers direct loans and loan guarantees to farmers who may have difficulty obtaining credit elsewhere and to rural communities that need to develop and maintain infrastructure. Two GSEs, the Farm Credit System and the Federal Agricultural Mortgage Corporation, increase liquidity in the agricultural lending market. Small Business Administration The Small Business Administration (SBA) helps entrepreneurs start, sustain, and grow small businesses. As a ‘‘gap lender’’ SBA works to supplement market lending and provide access to credit where private lenders are reluctant to do so without a Government guarantee. Additionally, SBA assists home and business- 75 owners, as well as renters, cover the uninsured costs of recovery from disasters. The 2007 Budget requests $436 million, including administrative funds, for SBA to leverage more than $28 billion in financing for small businesses and disaster victims. The 7(a) General Business Loan program will support $17.5 billion in guaranteed loans while the 504 Certified Development Company program will support $7.5 billion in guaranteed loans for fixed-asset financing. SBA will supplement the capital of Small Business Investment Companies (SBICs) with $3 billion in longterm, guaranteed loans for venture capital investments in small businesses. At the end of 2005, the outstanding balance of business loans totaled $63 billion. SBA seeks to target assistance more effectively to credit-worthy borrowers who would not be well-served by the commercial markets in the absence of a Government guarantee to cover defaults. SBA is actively encouraging financial institutions to increase lending to start-up firms, low-income entrepreneurs, and borrowers in search of financing below $150,000. SBA’s outreach for the 7(a) program has been successful. Average loan size has decreased from $232,000 in 2001 to $160,000 in 2005, while the number of small businesses served has grown from 43,000 to 89,000 during the same time period. Improving management by measuring and mitigating risks in SBA’s $63 billion business loan portfolio is one of the agency’s greatest challenges. As the agency delegates more responsibility to the private sector to administer SBA guaranteed loans, oversight functions become increasingly important. In the past few years, SBA established the Office of Lender Oversight, which is responsible for evaluating individual SBA lenders. This office employs a variety of analytical techniques to ensure sound financial management by SBA and to hold lending partners accountable for performance. These techniques include portfolio performance analysis, selected credit reviews, credit scoring to compare lenders’ performance, and industry concentration analysis. The oversight program is also developing on-site safety and soundness examinations and off-site monitoring of Small Business Lending Companies and compliance reviews of SBA lenders. To operate more efficiently, SBA has implemented an automated loan origination system for the Disaster Loan program. The system eliminates the paper intensive processes that had been used for decades by the Office of Disaster Assistance. Savings are projected at approximately $5 million per year under the new system. SBA is also transforming the way that staff perform loan management functions in both the 7(a) and 504 programs. In 2004, SBA implemented new procedures for Section 504 loan processing. Results have been positive with the average loan processing time reduced from four weeks to only a few days. In 2005, SBA streamlined its 7(a) guarantee processing function. Similarly, SBA has also centralized its loan liquidation functions for guaranteed programs resulting in a 78 percent reduction in related administrative costs. These 76 efforts have allowed the agency to reduce staffing levels while improving customer service. The 2007 Budget proposes to continue providing preferential loan terms to victims of disasters. However, in order to contain the escalating costs of the loans while matching borrowers’ assistance needs, the Budget proposes to adopt graduated interest rates for the Disaster Loan program. During the first five years after a disaster, interest rates will remain deeply subsidized, as they are currently structured, although interest rate caps would be eliminated. Thereafter, rates would graduate to those of comparable-maturity Treasury instruments. This structure would continue to provide borrowers with deep interest subsidies when they need them most—immediately after a disaster—and after five years the subsidies would be reduced for the remainder of the loan period. In addition, the 2007 Budget builds upon the success of eliminating credit subsidy requirements for the 7(a) loan program by proposing that borrowers cover the costs of administering Federal guarantees on business loans greater than $1 million. This will make these loans self-financing and reduce the need for taxpayer support by about $7 million. USDA Rural Infrastructure and Business Development Programs USDA provides grants, loans, and loan guarantees to communities for constructing facilities such as health-care clinics, day-care centers, and water systems. Direct loans are available at lower interest rates for the poorest communities. These programs have very low default rates. The cost associated with them is due primarily to subsidized interest rates that are below the prevailing Treasury rates. The program level for the Water and Wastewater (W&W) treatment facility loan and grant program in the 2007 President’s Budget is $1.4 billion. These funds are available to communities of 10,000 or fewer residents. Applicant communities must be unable to finance their needs through their own resources or with commercial credit. Priority is given based on their median household income, poverty levels, and size of service population as determined by USDA. Communities typically receive a grant/loan combination. The grant may be up to 75 percent of project costs; however, many projects are viable with 70 percent or more of the projects costs financed with a loan. The 2007 Budget reflects a significant change in the method for determining the interest rate charged on such loans, from a three-tiered structure (poverty, intermediate, and market) depending on community income to an interest rate that is 60 percent of the market rate not to exceed 5 percent. This change is expected to substantially reduce the loan repayment costs for most communities, at a lower loan to grant ratio. The community facility program is targeted to rural communities with fewer than 20,000 residents. It will have a program level of $522 million in 2007. ANALYTICAL PERSPECTIVES USDA also provides grants, direct loans, and loan guarantees to assist rural businesses, including cooperatives, and to increase employment and diversify the rural economy. In 2006, USDA proposes to provide almost $1 billion in loan guarantees to rural businesses that serve communities of 50,000 or less. USDA also provides rural business loans through the Intermediary Relending Program (IRP), which provides loan funds at a 1 percent interest rate to an intermediary, such as a State or local government agency that, in turn, provides funds for economic and community development projects in rural areas. Overall, USDA expects to retain or create over 73,000 jobs through its business programs in 2007, primarily through the Business and Industry guarantee and the IRP loan programs. Electric and Telecommunications Loans USDA’s Rural Utilities Service (RUS) programs provide loans for rural electrification, telecommunications, distance learning, telemedicine, and broadband, and also provide grants for distance learning and telemedicine (DLT). The Budget includes $3.8 billion in direct electric loans, $690 million in direct telecommunications loans, $356 million in broadband loans and $25 million in DLT grants. The budget proposes blocking the mandatory broadband funding and providing discretionary funding. The demand for loans to rural electric cooperatives has been increasing and is expected to increase further as borrowers replace many of the 40-year-old electric plants. The Rural Telephone Bank is in the process of dissolving. All stock will be redeemed during 2006 and no new loans will be provided. Loans approved in prior years, but not disbursed will still be available for borrowers at modified terms to reflect the bank’s dissolution. Loans to Farmers The Farm Service Agency (FSA) assists low-income family farmers in starting and maintaining viable farming operations. Emphasis is placed on aiding beginning and socially disadvantaged farmers. FSA offers operating loans and ownership loans, both of which may be either direct or guaranteed loans. Operating loans provide credit to farmers and ranchers for annual production expenses and purchases of livestock, machinery, and equipment. Farm ownership loans assist producers in acquiring and developing their farming or ranching operations. As a condition of eligibility for direct loans, borrowers must be unable to obtain private credit at reasonable rates and terms. As FSA is the ‘‘lender of last resort,’’ default rates on FSA direct loans are generally higher than those on private-sector loans. However, in recent years the loss rate has decreased to 3.1 percent in 2005, compared to 3.4 percent in 2004. FSA-guaranteed farm loans are made to more creditworthy borrowers who have access to private credit markets. Because the private loan originators must retain 10 percent of the risk, they exercise care in examining the repayment ability of borrowers. As a result, 7. CREDIT AND INSURANCE losses on guaranteed farm loans remain low with default rates of 0.45 percent in 2005, as compared to 0.69 percent in 2004. The subsidy rates for these programs have been fluctuating over the past several years. These fluctuations are mainly due to the interest component of the subsidy rate. In 2005, FSA provided loans and loan guarantees to approximately 26,000 family farmers totaling $3 billion. The number of loans provided by these programs has fluctuated over the past several years. The average size for farm ownership loans has been increasing. The majority of assistance provided in the operating loan program is to existing FSA farm borrowers. In the farm ownership program, new customers receive the bulk of the benefits furnished. The demand for FSA direct and guaranteed loans continues to be high due to low crop/ livestock prices and some regional production problems. In 2007, FSA proposes to make $3.4 billion in direct and guaranteed loans through discretionary programs. In addition, FSA proposes to increase fees on many of its guaranteed loan programs to reduce the cost of the program and bring the fees in line with other Federal guaranteed loan programs. To improve program effectiveness further, FSA conducted in 2005 an in-depth review of its direct loan portfolios to assess program performance, including the effectiveness of targeted assistance and the ability of borrowers to graduate to private credit. The results of this review will assist FSA in improving the delivery of its services and the economic viability of farmers and ranchers. Contingent on availability of adequate resources in 2006, FSA will conduct a similar study of its guaranteed loan program. The Farm Credit System and Farmer Mac The Farm Credit System (FCS or System) and the Federal Agricultural Mortgage Corporation (FarmerMac) are Government-Sponsored Enterprises (GSEs) that enhance credit availability for the agricultural sector. The FCS provides production, equipment, and mortgage lending to farmers and ranchers, aquatic producers, their cooperatives, related businesses, and rural homeowners, while Farmer Mac provides a secondary market for agricultural real estate and rural housing mortgages. The Farm Credit System The financial condition of the System’s banks and associations has continued to improve. The ratio of capital to assets increased to 17.1 percent at year-end 2004 from an already high level of 16.1 percent at yearend 2001. As of September 30, capital consisted of $2 billion in restricted capital held by the Farm Credit System Insurance Corporation (FCSIC) and $20.7 billion of unrestricted capital—a record level. Nonperforming loans decreased, and earnings increased, although rising short-term interest rates moderately squeezed interest margins. The examinations by the Farm Credit Administration (FCA), the FAC’s Federal regulator, also show the strong financial condition of FCS institutions. As of September 2005, all FCA insti- 77 tutions had one of the top two examination ratings (1 or 2 in a 1–5 scale). Assets grew at a brisk pace (over 7 percent annual rate) in recent years, while the number of FCS institutions decreased due to consolidation. In September 2002, there were seven banks and 104 associations; by September 2005, there were five banks and 96 associations. The FCSIC ensures the timely payment of principal and interest on FCS obligations. FCSIC manages the Insurance Fund which supplements the System’s capital and the joint and several liability of the System banks. On September 30, 2005, the assets in the Insurance Fund totaled $2.029 billion. Of that amount, $40 million was allocated to the Allocated Insurance Reserve Accounts (AIRAs). On September 20, 2005, the Insurance Fund as a percentage of adjusted insured debt was 1.87 percent in the unallocated Insurance Fund and 1.91 percent including the AIRAs. This was below the Secure Base target of 2 percent. During 2005, growth in System debt has outpaced the capitalization of the Insurance Fund that occurs through investment earnings and the accrual of premiums. In addition, the Insurance Fund paid out $231 million toward the retirement of the remaining Financial Assistance Corporation (FAC) bonds. On June 10, 2005, the FAC repaid its remaining debt obligations of $325 million and also repaid all interest advanced by the U.S. Treasury ($440 million). Over the past 12 months, the System’s loans outstanding have grown by $8.3 billion, or 8.8 percent, while over the past three years they have grown $15.3 billion, or 17.4 percent. As required by law, all borrowers are also stockholder owners of System banks and associations. As of September 30, 2005, the System has more than 461,000 stockholders. Loans to young, beginning, and small farmers and ranchers represented 12.7, 19.1, and 31.0 percent, respectively, of the total dollar volume of farm loans outstanding at the end of 2004. The percentage of loans to beginning farmers increased in 2004, while loans to young and small farmers were slightly lower. Young, beginning, and small farmers are not mutually exclusive groups, and thus, cannot be added across categories. Providing credit and related services to young, beginning, and small farmers and ranchers is a legislated mandate and a high priority for the System. The System, while continuing to record strong earnings and capital growth, remains exposed to a variety of risks associated with the agricultural sector, including concentration risk, changes in real estate values, weather-related catastrophes, possible changes to government programs, volatile commodity prices, animal and plant diseases, and uncertain prospects of off-farm employment. Farmer Mac Farmer Mac was established in 1987 to facilitate a secondary market for farm real estate and rural housing loans. The Farm Credit System Reform Act of 1996 transformed Farmer Mac from a guarantor of securities 78 ANALYTICAL PERSPECTIVES backed by loan pools into a direct purchaser of mortgages, enabling it to form pools to securitize. This change increased Farmer Mac’s ability to provide liquidity to agricultural mortgage lenders. Since then, Farmer Mac’s program activities and business have increased significantly. Farmer Mac continues to meet core capital and regulatory risk-based capital requirements. Farmer Mac’s total program activity (loans purchased and guaranteed, AgVantage bond assets, and real estate owned) as of September 30, 2005, totaled $5.1 billion. That volume represents a decrease of 7.5 percent from program activity at September 30, 2004. Farmer Mac attributes the decline to ample liquidity among rural lenders and the generally strong financial position of farmers currently. Of total program activity, $2.1 billion were on-balance sheet loans and agricultural mortgagebacked securities, and $3.0 billion were off-balance sheet obligations. Total assets were $4.3 billion at the close of the third quarter, with nonprogram investments accounting for $2.0 billion of those assets. Farmer Mac’s net income for first three quarters of 2005 was $22.4 million, an increase of $2.4 million or 11.6 percent over the same period in 2004. International Credit Programs Seven Federal agencies—the Department of Agriculture (USDA), the Department of Defense, the Department of State, the Department of the Treasury, the Agency for International Development (USAID), the Export-Import Bank, and the Overseas Private Investment Corporation (OPIC)—provide direct loans, loan guarantees, and insurance to a variety of foreign private and sovereign borrowers. These programs are intended to level the playing field for U.S. exporters, deliver robust support for U.S. manufactured goods, stabilize international financial markets, and promote sustainable development. Leveling the Playing Field Federal export credit programs counter subsidies that foreign governments, largely in Europe and Japan, provide their exporters, usually through export credit agencies (ECAs). The U.S. Government has worked since the 1970’s to constrain official credit support through a multilateral agreement in the Organization for Economic Cooperation and Development (OECD). This agreement has significantly constrained direct interest rate subsidies and tied-aid grants. Further negotiations resulted in a multilateral agreement that standardized the fees for sovereign lending across all ECAs beginning in April 1999. Fees for non-sovereign lending, however, continue to vary widely across ECAs and markets, thereby providing implicit subsidies. The Export-Import Bank attempts to ‘‘level the playing field’’ strategically and to fill gaps in the availability of private export credit. The Export-Import Bank provides export credits, in the form of direct loans or loan guarantees, to U.S. exporters who meet basic eligibility criteria and who request the Bank’s assistance. USDA’s ‘‘GSM’’ programs similarly help to level the playing field. Like programs of other agricultural exporting nations, GSM programs guarantee payment from countries and entities that want to import U.S. agricultural products but cannot easily obtain credit. The U.S. has been negotiating in the OECD the terms of agricultural export financing, the outcome of which could affect the GSM programs. Stabilizing International Financial Markets In today’s global economy, the health and prosperity of the American economy depend importantly on the stability of the global financial system and the economic health of our major trading partners. The United States can contribute to orderly exchange arrangements and a stable system of exchange rates by providing resources on a multilateral basis through the IMF (discussed in other sections of the Budget), and through financial support provided by the Exchange Stabilization Fund (ESF). The ESF may provide ‘‘bridge loans’’ to other countries in times of short-term liquidity problems and financial crises. A loan or credit may not be made for more than 6 months in any 12-month period unless the President gives Congress a written statement that unique or emergency circumstances require the loan or credit be for more than 6 months. Using Credit to Promote Sustainable Development Credit is an important tool in U.S. bilateral assistance to promote sustainable development. USAID’s Development Credit Authority (DCA) allows USAID to use a variety of credit tools to support its development activities abroad. This unit encompasses newer DCA activities, such as municipal bond guarantees for local governments in developing countries, as well as USAID’s traditional microenterprise and urban environmental credit programs. DCA provides non-sovereign loans and loan guarantees in targeted cases where credit serves more effectively than traditional grant mechanisms to achieve sustainable development. DCA is intended to mobilize host country private capital to finance sustainable development in line with USAID’s strategic objectives. Through the use of partial loan guarantees and risk sharing with the private sector, DCA stimulates private-sector lending for financially viable development projects, thereby leveraging hostcountry capital and strengthening sub-national capital markets in the developing world. While there is clear demand for DCA’s facilities in some emerging economies, the utilization rate for these facilities is still very low. OPIC also supports a mix of development, employment, and export goals by promoting U.S. direct investment in developing countries. OPIC pursues these goals through political risk insurance, direct loans, and guarantee products, which provide finance, as well as associated skills and technology transfers. These programs are intended to create more efficient financial markets, eventually encouraging the private sector to supplant 79 7. CREDIT AND INSURANCE OPIC finance in developing countries. OPIC has also created a number of investment funds that provide equity to local companies with strong development potential. international lending an agency can support with a given appropriation. For example, the Export-Import Bank will be able to provide generally higher lending levels using lower appropriations in 2007. Ongoing Coordination International credit programs are coordinated through two groups to ensure consistency in policy design and credit implementation. The Trade Promotion Coordinating Committee (TPCC) works within the Administration to develop a National Export Strategy to make the delivery of trade promotion support more effective and convenient for U.S. exporters. The Interagency Country Risk Assessment System (ICRAS) standardizes the way in which agencies budget for the cost associated with the risk of international lending. The cost of lending by the agencies is governed by proprietary U.S. Government ratings, which correspond to a set of default estimates over a given maturity. The methodology establishes assumptions about default risks in international lending using averages of international sovereign bond market data. The strength of this method is its link to the market and an annual update that adjusts the default estimates to reflect the most recent risks observed in the market. For 2007, OMB updated the default estimates using the default estimate methodology introduced in FY 2003 and the most recent market data. The 2003 default estimate methodology implemented a significant revision that uses more sophisticated financial analyses and comprehensive market data, and better isolates the expected cost of default implicit in interest rates charged by private investors to sovereign borrowers. All else being equal, this change expands the level of Adapting to Changing Market Conditions IV. Overall, officially supported finance and transfers account for a tiny fraction of international capital flows. Furthermore, the private sector is continuously adapting its size and role in emerging markets finance to changing market conditions. In response, the Administration is working to adapt international lending at Export-Import Bank and OPIC to dynamic private sector finance. The Export-Import Bank, for example, is developing a sharper focus on lending that would otherwise not occur without Federal assistance. Measures under development include reducing risks, collecting fees from program users, and improving the focus on exporters who truly cannot access private export finance. OPIC in the past has focused relatively narrowly on providing financing and insurance services to large U.S. companies investing abroad. As a result, OPIC did not devote significant resources to its mission of promoting development through mobilizing private capital. In 2003, OPIC implemented new development performance measures and goals that reflect the mandate to revitalize its core development mission. These changes at the Export-Import Bank and at OPIC will place more emphasis on correcting market imperfections as the private sector’s ability to bear emerging market risks becomes larger, more sophisticated, and more efficient. INSURANCE PROGRAMS Deposit Insurance Federal deposit insurance promotes stability in the U.S. financial system. Prior to the establishment of Federal deposit insurance, failures of some depository institutions often caused depositors to lose confidence in the banking system and rush to withdraw deposits. Such sudden withdrawals caused serious disruption to the economy. In 1933, in the midst of the Depression, the system of Federal deposit insurance was established to protect small depositors and prevent bank failures from causing widespread disruption in financial markets. The Federal deposit insurance system came under serious strain in the late 1980s and early 1990s when over 2,500 banks and thrifts failed. The Federal Government responded with a series of reforms designed to improve the safety and soundness of the banking system. These reforms, combined with more favorable economic conditions, helped to restore the health of depository institutions and the deposit insurance system. While the deposit insurance system for banks and thrifts today is generally sound and well managed, inherent weaknesses in the system prompted the President to propose reforms, including the establishment of a new combined, stronger Federal Deposit Insurance Corporation (FDIC) insurance fund and increased flexibilities for the FDIC regarding fund levels and the authority to charge premiums. These new authorities would allow the FDIC to better manage the fund and help avoid strain on financial institutions by stabilizing industry costs over time instead of having a potential for sharp premium increases when the economy may be under stress. Many of these reforms, including the merger of the insurance funds, were included in the Deficit Reduction Act of 2005, which the Budget assumes will be enacted before publication. The FDIC insures deposits in banks and savings associations (thrifts). The National Credit Union Administration (NCUA) insures deposits (shares) in most credit unions (certain credit unions are privately insured). FDIC and NCUA insure deposits up to $100,000 per account. Under the Deficit Reduction Act of 2005, the deposit insurance ceiling will be changed for various accounts, including an increase for retirement accounts of up to $250,000. Beginning in 2010, and every five years thereafter, FDIC and NCUA will have the authority to increase deposit insurance coverage limits for 80 non-retirement accounts based on inflation if the Boards determine prudent. As of September 30, 2005, FDIC insured $3.8 trillion of deposits at 8,867 commercial banks and thrifts and NCUA insured $515 billion of deposits (shares) at 8,795 credit unions. Current Industry and Insurance Fund Conditions For the quarter ending September 30, 2005, insured banks and thrifts continued to report record-high earnings, outpacing the previous quarter’s net earnings by $1.4 billion. In the year ending September 30, 2005, industry net income totaled $134 billion—a nine percent increase over the $123 billion income reported for the previous year. Despite the improving trends, some risks remain. Rising interest rates, for example, might cause stresses in certain real-estate markets and strains on banks in those regions. In 2005, no banks or thrifts failed. In comparison, during the previous year, five banks and thrifts, with combined assets of $175 million dollars, failed. As of September 30, 2005, the FDIC classified 68 institutions with $21 billion in assets as ‘‘problem institutions,’’ compared to 95 institutions with $25 billion in assets one year earlier. Under the Deficit Reduction Act, the FDIC’s Bank Insurance Fund (BIF) and its Savings Association Insurance Fund (SAIF) will be merged into the near Deposit Insurance Fund (DIF). At the end of September 2005, the SAIF reserve ratio (ratio of insurance reserves to insured deposits) stood at 1.30 percent—well above the statutory target of 1.25 percent. However, a surge in insured deposits reduced the reserve ratio of BIF to 1.25 percent as of September 2005, when the latest statistics are available. While this just meets the statutory target, it raises the likelihood that all BIF-insured institutions could be assessed premiums in 2006 because of the requirement to maintain the reserve ratio at the statutory target. Under the Deficit Reduction Act, the FDIC will have more flexibility as to when it can charge premiums. Under the Act, the FDIC is authorized to charge risk-based premiums on any member institution to manage fund reserves and can set the reserve ratio at the beginning of each year within a range between 1.15 and 1.50 percent of estimated insured deposits. When an insurance fund is expected to remain above the statutory target, the FDIC is authorized to charge deposit insurance premiums only on institutions that are not well capitalized or well managed, with a maximum premium of 27 cents per $100 of assessable deposits for the riskiest institutions. Due to the strong financial condition of the industry, less than 10 percent of banks and thrifts paid insurance premiums in 2004. During 2005, 13 Federally-insured credit unions with $148 million in assets failed (including assisted mergers). In comparison, during 2004, 22 Federally-insured credit unions with $120 million in assets failed. The National Credit Union Share Insurance Fund (NCUSIF) ended fiscal year 2005 with assets of $6.3 billion and an equity ratio of 1.27 percent, below the ANALYTICAL PERSPECTIVES NCUA-set target ratio of 1.30 percent. Each insured credit union is required to deposit and maintain an amount in the NCUSIF equal to one percent of its member share accounts in the fund. The insurance premium charge was waived again during 2005 because the ratio stayed above 1.25 percent. NCUA is required to assess a premium if the ratio falls below 1.20 percent and is authorized to do so if the ratio falls below 1.25 percent. The Federal banking regulators (the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision) continue to work on a rulemaking that would implement the ‘‘International Convergence of Capital Measurement and Capital Standards: A Revised Framework’’ (Basel II). The original Basel Capital Accord (Basel I) is an international agreement establishing a uniform capital standard across nations. It adopted a risk-based capital requirement that applies a few risk weights to broad categories of assets. The Federal banking regulators issued capital rules based on Basel I in 1989. Basel II would improve the risk-based capital requirement in several ways, including refining risk categories. U.S. regulators are considering requiring the largest banks that have complex financial structures and expertise to use an internal ratings-based approach to calculate credit risk capital requirements, and an advanced measurement approach to calculate operational risk capital requirements. The rule, if adopted, would apply to banks that hold the overwhelming majority of U.S. banking assets. The regulators are using Quantitative Impact Study 4 data recently obtained from banks likely to be covered by the rule to help develop the rulemaking, including the implementation schedule and transition provisions. Pension Guarantees The Pension Benefit Guaranty Corporation (PBGC) insures most defined-benefit pension plans sponsored by private employers. PBGC pays the benefits guaranteed by law when a company with an underfunded pension plan meets the legal criteria to transfer its obligations to the pension insurance program. PBGC’s claims exposure is the amount by which qualified benefits exceed assets in insured plans. In the near term, the risk of loss stems from financially distressed firms with underfunded plans. In the longer term, loss exposure results from the possibility that currently healthy firms become distressed and currently well-funded plans become underfunded due to inadequate contributions, poor investment results, or increased liabilities. Losses to the PBGC and benefit losses to workers and retirees are exacerbated by structural flaws in the statutory plan funding requirements and in the design of the insurance program. The pension system is replete with moral hazards that allow the buildup of unfunded pension promises even in plans with weak sponsors, where the risk of plan termination is high. At the same time, PBGC lacks the standard insurance industry safe- 81 7. CREDIT AND INSURANCE guards against moral hazards—such as underwriting standards and risk-based premiums. PBGC monitors troubled companies with underfunded plans and acts to protect the interests of the pension insurance program’s stakeholders where possible. Such protections include initiating termination of an underfunded plan in appropriate circumstances. Under its Early Warning Program, PBGC works with companies to strengthen plan funding or otherwise protect the insurance program against avoidable losses. However, PBGC’s authority to prevent undue risks to the insurance program is limited. The combination of the flawed design of the pension insurance system and adverse economic conditions has resulted in PBGC’s single-employer program incurring substantial losses from underfunded plan terminations in 2001 through 2005. The table below shows the ten largest plan termination losses to date. As a result of these losses, the program’s deficit at 2005 year-end stood at $22.8 billion, 1 compared to a $9.7 billion surplus at 2000 year-end. LARGEST 10 CLAIMS AGAINST THE PBGC’S SINGLE-EMPLOYER PROGRAM, 1975–2005 Top 10 Firms 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Fiscal Years of Plan Terminations Claims (by firm) Percent of Total Claims (1975–2005) United Airlines .................. Bethlehem Steel ............... US Airways ...................... LTV Steel* ........................ National Steel ................... Pan American Air ............ Weirton Steel ................... Trans World Airlines ........ Kemper Insurance ............ Kaiser Aluminum .............. 2005 2003 2003, 2005 2002, 2003, 2004 2003 1991, 1992 2004 2001 2005 2004 $7,093,803,951 3,654,380,116 2,861,901,511 1,959,679,993 1,161,019,567 841,082,434 690,181,783 668,377,105 566,128,387 565,812,015 22.7% 11.5% 9.0% 6.2% 3.7% 2.7% 2.2% 2.1% 1.8% 1.8% Top 10 Total ................................ All Other Total ............................. .............................. .............................. 20,062,366,861 11,646,148,178 63.3% 36.7% TOTAL ................................ .............................. $31,708,515,039 100.0% Sources: PBGC Fiscal Year Closing File (9/30/05), PBGC Case Administration System and PBGC Participant System (PRISM). Due to rounding, percentages may not add up to 100 percent. Data in this table have been calculated on a firm basis and include all plans of each firm. Values and distributions are subject to change as PBGC completes its reviews and establishes termination dates. * Does not include 1986 termination of a Republic Steel plan sponsored by LTV. Additional risk exposure remains for the future because of economic uncertainties and significant underfunding in single-employer pension plans, which, on a termination basis, exceeded $450 billion at the end of 2005, the same as a year earlier but now concentrated among larger plans. This exposure is higher than the $350 billion at the end of 2003 and $50 billion at the end of December 2000. PBGC’s exposure to ‘‘reasonably possible’’ terminations, the amount of unfunded vested benefits in pension plans sponsored by companies at greater risk of default, was $108 billion at September 30, 2005. The comparable estimates for 2004 and 2003 were $96 billion and $82 billion, respectively. Several large companies in the airline and automotive industries recently filed for bankruptcy with a potential exposure to PBGC in the billions of dollars. The smaller multiemployer program guarantees pension benefits of certain unionized plans offered by sev- eral employers in an industry. It ended 2003 with its first deficit in over 20 years, of about $261 million. The deficit stood at $335 million at the end of 2005, up from $236 million in 2004. Estimated underfunding in multiemployer plans approximated over $200 billion at year-end, up from over $150 billion and $100 billion in 2004 and 2003, respectively. The agency has sufficient liquidity to meet its obligations for a number of years; however, neither the singleemployer nor multiemployer program has the resources to satisfy fully the agency’s long-term obligations to plan participants. As of September 30, 2005, the PBGC’s single-employer and multiemployer programs together had assets of $57.6 billion to cover liabilities of $80.7 billion, a shortfall of $23.1 billion. In February 2005 the Administration proposed comprehensive reforms to strengthen funding for workers’ defined-benefit pensions; provide more accurate infor- 1 The 2005 year-end single-employer program deficit of $22.8 billion was less than the $23.3 billion deficit at the end of 2004 because increased losses from new claims were offset by new premiums, favorable liability revaluations due to increasing interest rates, and investment returns. There is no assurance that these results will continue. 82 ANALYTICAL PERSPECTIVES mation about pension liabilities and plan underfunding; and enable PBGC to meet its obligations to participants in terminated pension plans. The reforms would: • Require employers to fully fund their plans by making up their funding shortfall over a reasonable period of time and give companies added flexibility to contribute more in good economic times. • Require that funding be based on a more accurate measure of liabilities and establish appropriate funding targets based on a plan’s risk of termination. • Update the variable-rate premium to reflect the new funding targets and provide for the PBGC Board to re-examine it periodically to cover the cost of expected claims and to improve PBGC’s financial position; and adjust the flat-rate premium to reflect the growth in worker wages. • Require employers to forgo benefit increases if the sponsor is financially weak or has a significantly underfunded pension plan. • Require plans to provide timely information on the true financial health of pension plans to workers and make such information publicly available to other stakeholders. In late December 2005, the Senate approved a conference report on budget reconciliation that contains a premium increase for both the single-employer and multiemployer insurance programs; House action on the conference report is expected early in 2006. In addition, comprehensive pension bills (S. 1783 passed by the Senate on November 16, 2005, and H.R. 2830 passed by the House on December 15, 2005) are expected to be considered by a Conference Committee early in 2006. The Administration is evaluating the bills in light of its pension reform goals and is committed to pension reform that would strengthen funding requirements and restore PBGC to solvency. Disaster Insurance Flood Insurance The Federal Government provides flood insurance through the National Flood Insurance Program (NFIP), which is administered by the Federal Emergency Management Agency of the Department of Homeland Security (DHS). Flood insurance is available to homeowners and businesses in communities that have adopted and enforced appropriate flood plain management measures. Coverage is limited to buildings and their contents. In January 2006, the program had 4.7 million policies in more than 20,100 communities with $811 billion of insurance in force. Prior to the creation of the program in 1968, many factors made it cost prohibitive for private insurance companies alone to make affordable flood insurance available. In response, the NFIP was established to make affordable insurance coverage widely available. The NFIP requires building standards and other mitigation efforts to reduce losses, and operates a flood hazard mapping program to quantify the geographic risk of flooding. These efforts have made substantial progress. DHS is using three strategies to increase the number of flood insurance policies in force: lender compliance, program simplification, and expanded marketing. DHS is educating financial regulators about the mandatory flood insurance requirement for properties that are located in floodplains and have mortgages from federally regulated lenders. These strategies have resulted in policy growth of 5 percent in the last 12 months. DHS also has a multi-pronged strategy for reducing future flood damage. The NFIP offers flood mitigation assistance grants to assist flood victims to rebuild to current building codes including base flood elevations, thereby reducing future flood damage costs. In addition, two newly enacted grant programs will help reduce the number of repetitive loss properties through acquisition, relocation, or elevation, not only helping owners of highrisk property, but reducing a disproportionate drain on the National Flood Insurance Fund. As the new repetitive loss grants are implemented, FEMA will work to ensure that all of the flood mitigation grant programs are closely integrated, resulting in better coordination and communication with State and local governments. Further, through the Community Rating System, DHS adjusts premium rates to encourage community and State mitigation activities beyond those required by the NFIP. These efforts, in addition to the minimum NFIP requirements for floodplain management, save the country well over $1 billion annually in avoided flood damages. The program’s reserve account, which is a cash fund, has sometimes had expenses greater than its revenue. The program’s goal of providing affordable insurance does not permit the accumulation of large cash reserves. Currently, structures built prior to flood mapping and NFIP floodplain management requirements pay less than fully actuarial rates. These structures make up less than 25 percent of the total 4.7 million policies in force. Mostly because of the four major hurricanes in 2004, the NFIP handled 74,000 claims nationwide, resulting in payments totaling more than $2 billon, the highest loss year since the program began in 1968. All but $300 million of these payments were made with the reserve in the fund. However, this record loss year was surpassed in 2005 by a factor of more than 10 because of hurricanes Katrina, Rita, and Wilma. These three storms are expected to result in over 200,000 claims with an estimated payment totaling more than $23 billion. As a result, the Administration and Congress have worked to increase the borrowing authority to make certain that all claims could be paid. The Administration is also working with Congress to improve the NFIP based on the following principles: protecting the NFIP’s integrity by covering existing commitments; phasing out subsidized premiums in order to charge fair and actuarially sound premiums; increasing program participation incentives and improving enforcement of mandatory participation in the pro- 7. CREDIT AND INSURANCE gram; increasing risk awareness by educating property owners; and reducing future risks by implementing and enhancing mitigation measures. The catastrophic nature of the 2005 hurricane season has also triggered an examination of the program, and the Administration is working with Congress to reform the program to further mitigate the impact of flood damages and losses. Crop Insurance Subsidized Federal crop insurance administered by USDA’s Risk Management Agency (RMA) assists farmers in managing yield and revenue shortfalls due to bad weather or other natural disasters. RMA continues to evaluate and provide new products so that the Government can further reduce the need for ad-hoc disaster assistance payments to the agriculture community in bad years. The USDA crop insurance program is a cooperative effort between the Federal Government and the private insurance industry. Private insurance companies sell and service crop insurance policies. These companies rely on reinsurance provided by the Federal Government and also by the commercial reinsurance market to manage their individual risk portfolio. The Federal Government reimburses private companies for the administrative expenses associated with providing crop insurance and reinsures the private companies for excess insurance losses on all policies. The Federal Government also subsidizes premiums for farmers. The Agricultural Risk Protection Act of 2000 (ARPA) increased premium subsidy levels to encourage farmers to purchase higher and more effective levels of coverage. The 2007 Budget includes a legislative proposal that would require any farmer that receives a Federal commodity payment for his/her crop to buy crop insurance at a minimum coverage level of 50/100. This proposal is intended to ensure farmers have adequate protection in the event of a natural disaster without resorting to ad hoc disaster assistance. Additionally, the Administration’s proposal will lower the imputed premium on Catastrophic Crop Insurance (CAT) by 25 percent and charge an administrative fee on CAT equal to the greater of $100 or 25 percent of the (restated) imputed CAT premium, subject to a maximum fee of $5,000. The proposal will also reduce premium subsidies by 5 percentage points on policies with a coverage level of 70 percent or below (75 percent for Group Risk Protection (GRP)) and by 2 percentage points on policies with a coverage level of 75 percent or above (80 percent for GRP). In addition, the proposal reduces the Administrative and Operating reimbursement on all buy-up coverage by 2 percentage points and increases the net book quota share to 22 percent, but provides a ceding commission to the companies of 2 percent. These changes are expected to be in effect in 2008 and will save $140 million a year. This proposal was also included in the 2006 Budget. In addition, the 2007 Budget includes a proposal to implement a participation fee in the Federal crop insurance program. The proposed participation fee would ini- 83 tially be used to fund modernization of the existing information technology (IT) system and would supplement the annual appropriation provided by Congress. Subsequently, the fee would be shifted to maintenance and would be expected to reduce the annual appropriation. The participation fee would be charged to insurance companies participating in the Federal crop insurance program; based on a rate of about one-half cent per dollar of premium sold, the fee is expected to be sufficient to generate about $15 million annually beginning in 2008. The existing IT system is nearing the end of its useful life and recent years have seen increases in ‘‘down-time’’ resulting from system failures. Over the years, numerous changes have occurred in the Federal crop insurance program; including, the development of revenue and livestock insurance which have greatly expanded the program and taxed the IT system due to new requirements, such as daily pricing, which were not envisioned when the existing IT system was designed. These new requirements contribute to increased maintenance costs and limit RMA’s ability to comply with Congressional mandates pertaining to data reconciliation with the Farm Service Agency. The participation fee will alleviate these problems. There are various types of insurance programs. The most basic type of coverage is CAT, which compensates the farmer for losses in excess of 50 percent of the individual’s average yield at 55 percent of the expected market price. The CAT premium is entirely subsidized, and farmers pay only an administrative fee. Additional coverage is available to producers who wish to insure crops above the CAT coverage level. Premium rates for additional coverage depend on the level of coverage selected and vary from crop to crop and county to county. The additional levels of insurance coverage are more attractive to farmers due to availability of optional units, other policy provisions not available with CAT coverage, and the ability to obtain a level of protection that permits them to use crop insurance as loan collateral and to achieve greater financial security. For the ten principal crops, which account for about 80 percent of total liability, over 75 percent of eligible acres participated in the crop insurance program. For producers purchasing the additional levels of insurance, there are a wide range of yield and revenuebased insurance products available through the Federal crop insurance program. Revenue insurance programs protect against loss of revenue stemming from low prices, poor yields, or a combination of both. These programs extend traditional multi-peril crop insurance protection by adding price variability to production history. Indemnities are due when any combination of yield and price results in revenue that is less than the revenue guarantee. The price component common to these plans uses the commodity futures market for price discovery. Revenue products have gained wide acceptance among producers and have played an integral role in providing more effective risk management options for the Nation’s agricultural producers. In crop year 2005, revenue products accounted for about 54 percent of policies earning 84 ANALYTICAL PERSPECTIVES premium, 52 percent of net insured acres, and 62 percent of total program liability. USDA also continues to expand coverage. In 2005, a sugar beet stage removal pilot and a Silage Sorghum pilot were introduced. In addition, RMA made Adjusted Gross Revenue-Lite available in five additional States, and expanded Livestock Risk Protection. RMA also submitted two new risk management tools for pasture, rangeland and forage protection for consideration. It is expected in 2006 that the Livestock Gross Margin pilot program will be expanded to include cattle. RMA is also making substantial improvements to the Florida Fruit Tree pilot program to enhance coverage and make it more effective for loss due to hurricane. RMA also expanded the Group Risk Income Protection plans for cotton, wheat and grain sorghum for the 2006 crop year. RMA continues to pursue a number of avenues to increase program participation among underserved States and commodities by working on declining yield issues and looking at discount programs for good experienced producers who pose less risk. For more information and additional crop insurance program details, please reference RMA’s web site: (www.rma.usda.gov). Insurance Against Security-Related Risks Terrorism Risk Insurance On November 26, 2002, President Bush signed into law the Terrorism Risk Insurance Act of 2002. The Act was designed to address disruptions in economic activity caused by the withdrawal of many insurance companies from the marketplace for terrorism risk insurance in the aftermath of the terrorist attacks of September 11, 2001. Their withdrawal in the face of great uncertainty as to their risk exposure to future terrorist attacks led to a moratorium on many new construction projects, increasing business costs for the insurance that was available, and substantially shifting risk—from reinsurers to primary insurers, and from insurers to policyholders (e.g., investors, businesses, and property owners). Ultimately, these costs were borne by American workers and communities through decreased development and economic activity. The Act established a temporary, three-year Federal program that provided a system of shared public and private compensation for insured commercial property and casualty losses arising from acts of terrorism (as defined by the Act). Under the Act, insurance companies included in the program were required to make available to their policyholders coverage for losses from acts of terrorism. In the event of a terrorist attack on private businesses and others covered by this program, the Federal Government would cover 90 percent of the insured losses above each insurance company’s deductible (as specified in the Act). The Act also provided authority for the Department of the Treasury to recoup Federal payments via surcharges on policyholders. The Act required the Department of the Treasury to conduct a study on the effectiveness of the program and to report the results to Congress by June 30, 2005. Treasury found that the Act had achieved its goals of supporting the insurance industry during a transitional period and had stabilized the private insurance market. Extending the Act in its then-current form was likely to hinder further development of the terrorism risk insurance market by crowding out innovation and capacity building. As a result, the Administration sought significant reforms to the program. In December 2005, Congress extended the program for two years, through December 31, 2007, and the President signed it into law. The 2005 Act continues to require insurance company participants to make available terrorism risk insurance through the fifth and final year. But, the 2005 Act significantly reduces taxpayers’ exposure by excluding certain lines of insurance from Federal coverage: Commercial automobile, burglary and theft, surety, professional liability, and farm owners multiple peril are removed from the program altogether. In addition, the 2005 Act increases insurers’ deductibles from 15 percent of direct earned premiums for calendar year 2005 to 17.5 percent in 2006 and 20 percent in 2007. The extension also decreases the Federal co-payment for insured losses above the insurers’ deductibles from 90 percent of insured losses in calendar year 2005 and 2006 to 85 percent of insured losses in 2007. Finally, the new legislation increases the trigger amount for Federal payments, currently at $5 million in aggregate insured losses from an act of terrorism. After March 31, 2006, no Treasury payments can be made unless the aggregate industry insured losses exceed $50 million in calendar year 2006 or $100 million in calendar year 2007. Neither the Department of the Treasury nor any insurer will be liable for any amount exceeding the statutory annual cap of $100 billion in aggregate insured losses. Above that amount, the Act states that Congress will determine the procedures that would govern any further payments. Airline War Risk Insurance After the September 11, 2001 attacks, private insurers cancelled third-party liability war risk coverage for airlines and dramatically increased the cost of other war risk insurance. In response, the Department of Transportation (DOT) provided a one-time reimbursement to airlines for the increased cost of aviation hull and passenger liability war risk insurance under the authority provided in P.L. 107–42. DOT also offered airlines short duration third-party liability war risk insurance at subsidized rates because coverage was initially withdrawn by private insurers followed by a period of marketplace disruption. Currently, aviation war risk insurance coverage is generally available from private insurers, albeit at significantly higher costs. However, commercial insurance coverage for occurrences involving weapons of mass destruction is now being withdrawn from the market. Because of this program, airlines receive financial protection from war risk occur- 85 7. CREDIT AND INSURANCE rences and are able to meet conditions imposed by aircraft liens and leases. The Homeland Security Act of 2002 (HSA) included airline war risk insurance legislation. The HSA and subsequent authorization and appropriation acts directed the continuation of third party liability war risk insurance policies in effect on June 19, 2002 through August 31, 2006 at the premium rate in effect on June 19, 2002. The Secretary is authorized to limit the third party liability of air carriers and aircraft and aircraft engine manufacturers to $100 million, when the Secretary certifies that the loss is from an act of terrorism. The acts further required the scope of insurance coverage to include war risk hull loss and passenger and crew liability at a total policy premium not to exceed twice that charged for third party liability. Consequently, the President has issued several Presidential Determinations, the most recent on December 22, 2005, authorizing the continued provision of aviation war risk insurance through August 31, 2006 and the DOT has issued policies to conform to HSA requirements. Currently 75 air carriers are insured by DOT. Coverage for individual carriers ranges from $80 million to $4 billion per carrier with the median insurance coverage at approximately $1.8 billion per occurrence. Premiums collected by the Government are deposited into the Aviation Insurance Revolving Fund. In FY 2005, the fund earned approximately $164 million in premiums for insurance provided by DOT, and it is anticipated that $144 million in premiums will also be earned in FY 2006. No claims have been paid by the program since its expansion in 2001. At the end of 2005, the balance of the Aviation Insurance Revolving Fund available for payment of future claims was $568 million. The balance in the fund is sufficient to pay small claims, but would be inadequate to meet the coverage limits of the largest policies in force ($4 billion) or a series of large claims. The Federal Government would pay any claims by the airlines that exceed the balance in the aviation insurance revolving fund. The Administration does not support a straight extension of this program, which crowds out private sector mechanisms for managing risk. Looking forward, the Administration is committed to working with Congress to ensure that air carriers more equitably share in the risks associated with this program. Chart 7-3. Face Value of Federal Credit Outstanding Dollars in trillions 1.4 1.2 Loan Guarantees 1.0 0.8 0.6 0.4 Direct Loans 0.2 0 1970 1975 1980 1985 1990 1995 2000 2005 86 ANALYTICAL PERSPECTIVES Table 7–1. ESTIMATED FUTURE COST OF OUTSTANDING FEDERAL CREDIT PROGRAMS (In billions of dollars) Program Direct Loans: 2 Federal Student Loans .................................................................. Farm Service Agency (excl. CCC), Rural Development, Rural Housing ...................................................................................... Rural Utilities Service and Rural Telephone Bank ....................... Housing and Urban Development ................................................. Export-Import Bank ........................................................................ Public Law 480 .............................................................................. Agency for International Development .......................................... Commodity Credit Corporation ...................................................... Federal Communications Commission .......................................... Disaster Assistance ........................................................................ VA Mortgage .................................................................................. Other Direct Loan Programs ......................................................... Total Direct Loans ..................................................................... Outstanding 2004 Estimated Future Costs of 2004 Outstanding 1 Outstanding 2005 Estimated Future Costs of 2005 Outstanding 1 107 8 113 11 43 32 13 12 9 8 7 4 3 2 13 10 3 2 5 5 3 3 4 1 * 2 43 34 12 10 9 8 3 * 4 1 11 9 2 2 5 4 3 1 * 1 * 3 251 46 247 41 Guaranteed Loans: 2 FHA Mutual Mortgage Insurance Fund ......................................... VA Mortgage .................................................................................. Federal Family Education Loan Program ..................................... FHA General/Special Risk Insurance Fund .................................. Small Business ............................................................................... Export-Import Bank ........................................................................ International Assistance ................................................................. Farm Service Agency (excl. CCC), Rural Development, Rural Housing ...................................................................................... Commodity Credit Corporation ...................................................... Maritime Administration .................................................................. Air Transportation Stabilization Program ...................................... Government National Mortgage Association (GNMA) 3 ................ Other Guaranteed Loan Programs ................................................ 384 351 245 91 57 36 21 1 4 23 4 2 2 2 336 206 289 90 73 36 22 2 3 31 3 2 2 2 29 4 3 2 ........................ 8 1 * * 1 * 3 30 2 3 1 ........................ 8 1 * * 1 * 1 Total Guaranteed Loans ........................................................... 1,231 43 1,096 48 Total Federal Credit ............................................................ 1,482 89 1,343 89 * $500 million or less. 1 Direct loan future costs are the financing account allowance for subsidy cost and the liquidating account allowance for estimated uncollectible principal and interest. Loan guarantee future costs are estimated liabilities for loan guarantees. 2 Excludes loans and guarantees by deposit insurance agencies and programs not included under credit reform, such as CCC commodity price supports. Defaulted guaranteed loans which become loans receivable are accounted for as direct loans. 3 GNMA data are excluded from the totals because they are secondary guarantees on loans guaranteed by FHA, VA and RHS. 87 7. CREDIT AND INSURANCE Table 7–2. REESTIMATES OF CREDIT SUBSIDIES ON LOANS DISBURSED BETWEEN 1992–2005 1 (Budget authority and outlays, in millions of dollars) Program 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Agriculture: Agriculture credit insurance fund ................................. Farm storage facility loans ........................................... Apple loans ................................................................... Emergency boll weevil loan ......................................... Agricultural conservation .............................................. Distance learning and telemedicine ............................. Rural electrification and telecommunications loans .... Rural telephone bank ................................................... Rural housing insurance fund ...................................... Rural economic development loans ............................. Rural development loan program ................................. Rural community advancement program 2 ................... P.L. 480 ........................................................................ P.L. 480 Title I food for progress credits .................... 28 ............ ............ ............ ............ ............ 61 ............ 152 ............ 1 ............ ............ 84 2 ............ ............ ............ ............ ............ –37 ............ 46 ............ ............ ............ –37 –38 –31 ............ ............ ............ ............ ............ 84 10 –73 1 ............ 8 –1 ............ 23 ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ –39 –9 71 –1 –6 5 ............ ............ 331 ............ ............ ............ ............ ............ ............ ............ ............ * ............ ............ ............ ............ –656 ............ ............ ............ ............ ............ –17 –1 19 ............ ............ 37 –23 ............ 921 –1 –2 ............ ............ 1 –42 ............ –29 –1 –1 3 65 ............ 10 –7 1 1 ............ –1 101 –3 –435 –1 –3 –1 –348 –112 –701 –8 ............ * ............ –1 265 –7 –64 ............ ............ –84 33 –44 –147 7 * * ............ 1 143 –6 –200 –2 –3 –34 –43 ............ –2 –1 * 3 ............ ............ ............ ............ ............ ............ ............ ............ –239 ............ Commerce: Fisheries finance ........................................................... ............ ............ ............ ............ ............ ............ –19 –1 –3 ............ 1 –14 Defense: Military housing improvement fund .............................. ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ * –4 Education: Federal direct student loan program: 3 Volume reestimate ................................................... Other technical reestimate ....................................... College housing and academic facilities loans ........... ............ ............ ............ ............ 3 ............ ............ –83 ............ ............ 172 ............ 22 –383 ............ ............ –2,158 ............ –6 560 –1 ............ ............ ............ 43 3,678 ............ ............ 1,999 ............ ............ 855 ............ ............ 2,827 ............ Homeland Security: Disaster assistance ....................................................... ............ ............ ............ ............ ............ 47 36 –7 –6 * 4 * Interior: Bureau of Reclamation loans ....................................... Bureau of Indian Affairs direct loans ........................... Assistance to American Samoa ................................... ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 1 ............ 3 5 ............ 3 –1 ............ –9 –1 ............ –14 2 ............ ............ * * 17 * * 1 * 2 State Repatriation loans ......................................................... ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ –3 Transportation: High priority corridor loans ........................................... Alameda corridor loan .................................................. Transportation infrastructure finance and innovation .. Railroad rehabilitation and improvement program ...... ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ –3 ............ ............ ............ ............ ............ ............ ............ ............ –58 ............ ............ ............ ............ 18 ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ –12 ............ –5 ............ ............ 3 –14 ............ ............ –11 –11 Treasury: Community development financial institutions fund .... ............ ............ ............ ............ ............ 1 ............ ............ * –1 * –1 Veterans Affairs: Veterans housing benefit program fund ...................... Native American veteran housing ................................ Vocational Rehabilitation Loans ................................... 30 ............ ............ 76 ............ ............ –72 ............ ............ 465 ............ ............ –111 ............ ............ –52 ............ ............ –107 ............ ............ –697 ............ ............ 17 –3 * –178 * * 987 * * –47 * –1 Environmental Protection Agency: Abatement, control and compliance ............................. ............ ............ ............ ............ ............ ............ 3 –1 * –3 * * ............ ............ 13 4 1 152 –166 119 –397 –64 –41 –7 ............ ............ ............ ............ ............ ............ ............ * ............ * ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 36 ............ –4 ............ ............ –4 * –21 –47 3 –104 –7 54 Small Business Administration: Business loans .............................................................. Disaster loans ............................................................... ............ ............ ............ ............ ............ ............ ............ –193 ............ 246 ............ –398 1 –282 –2 –14 1 266 25 589 ............ 196 –16 61 Other Independent Agencies: Export-Import Bank direct loans ................................... Federal Communications Commission ......................... –16 ............ 37 ............ ............ ............ ............ 4,592 ............ 980 –177 –1,501 157 –804 117 92 –640 346 –305 380 111 732 –257 –24 14 12 –51 96 ............ –31 205 40 –36 –33 –22 –162 DIRECT LOANS: International Assistance Programs: Foreign military financing ............................................. U.S. Agency for International Development: Micro and small enterprise development ................ Overseas Private Investment Corporation: OPIC direct loans ..................................................... Debt reduction .............................................................. LOAN GUARANTEES: Agriculture: Agriculture credit insurance fund ................................. 88 ANALYTICAL PERSPECTIVES Table 7–2. REESTIMATES OF CREDIT SUBSIDIES ON LOANS DISBURSED BETWEEN 1992–2005 1—Continued (Budget authority and outlays, in millions of dollars) Program 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Agriculture resource conservation demonstration ........ Commodity Credit Corporation export guarantees ...... Rural development insurance fund .............................. Rural housing insurance fund ...................................... Rural community advancement program ..................... ............ 103 ............ 10 ............ ............ –426 ............ 7 ............ ............ 343 –3 –10 –10 ............ ............ ............ ............ ............ ............ ............ ............ 109 41 ............ ............ ............ ............ ............ 2 –1,410 ............ 152 63 ............ ............ ............ –56 17 1 –13 ............ 32 91 –1 –230 ............ 50 15 * –205 ............ 66 29 * –366 ............ ............ ............ Commerce: Fisheries finance ........................................................... Emergency steel guaranteed loans ............................. Emergency oil and gas guaranteed loans ................... ............ ............ ............ ............ ............ ............ ............ ............ ............ –2 ............ ............ ............ ............ ............ ............ ............ ............ –3 ............ * –1 ............ * 3 50 * * * * 1 3 * * –75 –1 Defense: Military housing improvement fund .............................. Defense export loan guarantee ................................... ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ –3 ............ –1 –5 –3 ............ Education: Federal family education loan program: 3 Volume reestimate ........................................................ Other technical reestimate ........................................... ............ 421 535 60 99 ............ ............ ............ –13 –140 –60 667 –42 –3,484 ............ ............ 277 –2,483 ............ –3,278 ............ 1,348 ............ 6,837 Health and Human Services: Heath center loan guarantees ..................................... Health education assistance loans .............................. ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ 3 ............ ............ ............ * ............ * –5 ............ –37 1 –33 * –18 Housing and Urban Development: Indian housing loan guarantee .................................... Title VI Indian guarantees ............................................ Community development loan guarantees .................. FHA-mutual mortgage insurance ................................. FHA-general and special risk ....................................... ............ ............ ............ ............ ............ ............ ............ ............ ............ –110 ............ ............ ............ –340 –25 ............ ............ ............ ............ 743 ............ ............ ............ 3,789 79 ............ ............ ............ ............ ............ –6 ............ ............ 2,413 –217 * ............ ............ –1,308 –403 –1 –1 ............ 1,100 77 * 1 19 5,947 352 –3 4 –10 1,979 507 –1 * –2 2,842 238 Interior: Bureau of Indian Affairs guaranteed loans .................. ............ ............ 31 ............ ............ ............ –14 –1 –2 –2 * 15 Transportation: Maritime guaranteed loans (title XI) ............................ Minority business resource center ............................... ............ ............ ............ ............ ............ ............ ............ ............ –71 ............ 30 ............ –15 ............ 187 1 27 ............ –16 * 4 * –76 ............ Treasury: Air transportation stabilization program ....................... ............ ............ ............ ............ ............ ............ ............ ............ 113 –199 292 –109 Veterans Affairs: Veterans housing benefit fund program ...................... 167 334 –706 38 492 229 –770 –163 –184 –1,515 –462 –843 ............ ............ –1 ............ ............ –7 ............ ............ ............ ............ ............ –14 ............ ............ ............ ............ ............ ............ ............ ............ ............ –1 ............ –4 ............ ............ –15 1 2 48 –3 –2 –2 –2 –3 –5 ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ –34 ............ ............ ............ ............ ............ ............ –76 ............ ............ –111 ............ ............ 188 7 International Assistance Programs: U.S. Agency for International Development: Development credit authority ................................... Micro and small enterprise development ................ Urban and environmental credit .............................. Assistance to the new independent states of the former Soviet Union ............................................. Loan Guarantees to Israel ....................................... Loan Guarantees to Egpyt ....................................... Overseas Private Investment Corporation: OPIC guaranteed loans ........................................... ............ ............ ............ ............ ............ ............ ............ 5 77 60 –212 –21 Small Business Administration: Business loans .............................................................. ............ 257 –16 –279 –545 –235 –528 –226 304 1,750 1,034 –390 Other Independent Agencies: Export-Import Bank guarantees ................................... –59 13 ............ ............ ............ –191 –1,520 –417 –2,042 –1,133 –655 –1,164 Total .................................................................................. 995 727 –832 5,642 4,518 –3,641 –6,427 –1,854 –142 3,468 6,008 9,189 * Less than $500,000. 1Excludes interest on reestimates. Additional information on credit reform subsidy rates is contained in the Federal Credit Supplement. 2Includes rural water and waste disposal, rural community facilities, and rural business and industry programs. 3Volume reestimates in mandatory programs represent a change in volume of loans disbursed in the prior years. 89 7. CREDIT AND INSURANCE Table 7–3. DIRECT LOAN SUBSIDY RATES, BUDGET AUTHORITY, AND LOAN LEVELS, 2005–2007 (In millions of dollars) 2005 Actual Agency and Program Subsidy Subsidy budget rate 1 authority 2006 Enacted Subsidy Subsidy budget rate 1 authority Loan levels 2007 Proposed Subsidy Subsidy budget rate 1 authority Loan levels Agriculture: Agricultural credit insurance fund .................................................................................... Farm storage facility loans .............................................................................................. Rural community advancement program ........................................................................ Rural electrification and telecommunications loans ........................................................ Rural telephone bank ....................................................................................................... Distance learning, telemedicine, and broadband program ............................................. Rural housing assistance grants ..................................................................................... Farm labor ........................................................................................................................ Rural housing insurance fund .......................................................................................... Rural development loan fund .......................................................................................... Rural economic development loans ................................................................................ Public law 480 title I direct credit and food for progress ............................................... 7.38 –1.43 6.81 –0.96 –1.83 2.11 46.76 47.06 14.70 46.38 18.79 57.55 69 –1 113 –47 –3 2 3 16 191 16 5 17 Commerce: Fisheries finance .............................................................................................................. –9.52 –9 91 –2.60 –5 158 –8.08 .............. Defense—Military: Defense family housing improvement fund ..................................................................... 19.23 40 208 25.34 150 592 28.40 Education: College housing and academic facilities loans ............................................................... .............. .............. Federal direct student loan program ............................................................................... 3.32 1,071 935 6.42 67 1,052 9.50 72 –0.84 –1 67 0.25 1,650 6.09 78 1,287 14.28 4,837 –0.51 –31 6,028 –0.81 175 .............. .............. .............. .............. 114 2.42 29 1,219 2.90 6 46.76 3 6 47.82 33 44.59 17 38 47.95 1,288 14.46 215 1,515 10.45 34 43.02 15 34 44.07 25 19.97 5 25 21.84 30 54.14 16 30 .............. 39 .............. .............. 31,857 2.05 599 Homeland Security: Disaster assistance direct loan ........................................................................................ .............. .............. .............. Housing and Urban Development: FHA-mutual mortgage insurance ..................................................................................... .............. .............. 5 215 757 56 .............. .............. 29,221 0.16 41 56 24,807 1,025 1.18 .............. 25 50 .............. .............. 50 1 60.14 1 1 1,200 .............. .............. .............. 138 6.18 149 130 .............. .............. 2,400 5.05 121 2,400 200 .............. .............. .............. 36.52 2 7 Veterans Affairs: Housing loans .................................................................................................................. Vocational rehabilitation program .................................................................................... –2.57 –5 1.14 .............. 165 3 64.99 0.47 95 1,008 .............. 74 184 1,287 –36 4,528 .............. .............. 9 327 .............. .............. 20 42 136 1,294 15 34 8 35 .............. .............. 1 6 Treasury: Community development financial institutions fund ........................................................ 37.47 3 5.08 19 1.59 .............. International Assistance Programs: Debt restructuring ............................................................................................................. .............. Overseas Private Investment Corporation ...................................................................... 6.56 435 .............. .............. 22 335 10.27 Small Business Administration: Disaster loans .................................................................................................................. Business loans ................................................................................................................. 163 2 7 .............. .............. .............. 384 3 2.93 17 2.00 .............. 64 .............. .............. 15 146 4.28 605 4 183 .............. 15 350 1,271 18 14.64 7.17 671 1 Export-Import Bank of the United States: Export-Import Bank loans ................................................................................................ .............. .............. .............. 34.00 17 50 34.00 17 50 N/A 2,853 51,401 N/A 1,159 38,639 Total ............................................................................................................................. 1 Additional 12.86 10.25 750 5 .............. .............. State: Repatriation loans ............................................................................................................ 69.73 1 1 Contributions to international organizations .................................................................... .............. .............. .............. Transportation: Federal-aid highways ....................................................................................................... 13.04 18 Railroad rehabilitation and improvement program .......................................................... .............. .............. 73.17 Loan levels N/A information on credit subsidy rates is contained in the Federal Credit Supplement. N/A = Not applicable. 2,121 43,467 4,587 13.18 118 900 20 .............. .............. .............. 90 ANALYTICAL PERSPECTIVES Table 7–4. LOAN GUARANTEE SUBSIDY RATES, BUDGET AUTHORITY, AND LOAN LEVELS, 2005–2007 (in millions of dollars) 2005 Actual Agency and Program Subsidy Subsidy budget rate 1 authority 2006 Enacted Loan levels Subsidy Subsidy budget rate 1 authority 2007 Proposed Loan levels Subsidy Subsidy budget rate 1 authority Loan levels Agriculture: Agricultural credit insurance fund .................................................................................... 3.27 72 2,195 2.68 77 2,880 1.10 27 2,498 Commodity Credit Corporation export loans ................................................................... 5.07 152 3,001 4.13 128 3,107 3.61 115 3,167 Rural community advancement program ........................................................................ 3.91 34 876 3.77 44 1,200 3.94 50 1,273 Rural electrification and telecommunications loans ........................................................ .............. .............. .............. 0.09 .............. 99 .............. .............. .............. Distance learning, telemedicine, and broadband program ............................................. .............. .............. .............. .............. .............. .............. 4.63 1 30 Rural housing insurance fund .......................................................................................... 1.14 36 3,142 1.21 62 5,137 0.61 23 3,762 Rural business investment ............................................................................................... .............. .............. .............. 7.72 5 65 .............. .............. .............. Renewable energy ........................................................................................................... 5.73 1 10 6.45 11 177 6.49 2 35 Defense—Military: Defense family housing improvement fund ..................................................................... 6.06 Education: Federal family education loan ......................................................................................... 11.09 Health and Human Services: Health resources and services ........................................................................................ 5.35 Housing and Urban Development: Indian housing loan guarantee fund ................................................................................ Native Hawaiian housing loan guarantees ...................................................................... Native American housing ................................................................................................. Community development loan guarantees ...................................................................... FHA-mutual mortgage insurance ..................................................................................... FHA-general and special risk .......................................................................................... Interior: Indian guaranteed loan .................................................................................................... 10 165 .............. .............. .............. .............. .............. .............. 11,130 100,405 9,839 99,649 6,125 84,287 17 3.50 1 15 .............. .............. .............. 2.58 3 2.58 .............. 10.32 1 2.30 8 –1.80 –1,044 –0.85 –169 103 2 4 337 58,017 19,652 2.42 2.42 12.26 2.20 –1.70 –1.65 2 1 1 6 –839 –282 116 2.35 6 251 36 2.35 1 43 10 11.99 2 15 276 .............. .............. .............. 2 48,594 –0.96 –845 2 86,039 2 17,165 –3.38 –247 2 7,370 85 4.75 5 6.76 5 –0.32 –74 International Assistance Programs: Loan guarantees to Israel ................................................................................................ .............. .............. Loan guarantees to Egypt ............................................................................................... .............. .............. Development credit authority ........................................................................................... 5.09 10 Overseas Private Investment Corporation ...................................................................... –3.13 –53 Small Business Administration: General business loans ................................................................................................... 0.01 3 Export-Import Bank of the United States: Export-Import Bank loans ................................................................................................ 1.09 152 22,544 1.85 .............. 3.67 7 7.64 5 –0.32 –116 112 6.45 5 87 18 1.82 .............. 18 200 3.90 8 200 65 .............. .............. .............. 36,110 –0.30 –114 37,681 750 .............. .............. 1,000 .............. .............. 1,000 1,250 .............. .............. .............. .............. .............. .............. 199 3.90 10 257 5.49 13 238 1,694 –6.28 –64 1,025 –1.88 –30 1,600 19,939 .............. .............. 27,500 .............. .............. 28,000 13,936 13,828 44 17,477 0.32 .............. 20 1.76 243 Presidio Trust: Presidio Trust ................................................................................................................... .............. .............. .............. .............. .............. .............. Total ............................................................................................................................. 7.27 1 Transportation: Minority business resource center program .................................................................... 2.08 .............. 7 Federal-aid highways ....................................................................................................... .............. .............. .............. Maritime guaranteed loans (Title XI) ............................................................................... 27.54 38 140 Veterans Affairs: Housing loans .................................................................................................................. 9.87 N/A 10,316 248,470 N/A –0.23 –218 112,519 –0.23 0.25 9,146 258,641 N/A 2 89,000 –0.27 5,186 275,091 ADDENDUM: SECONDARY GUARANTEED LOAN COMMITMENTS GNMA: Guarantees of mortgage-backed securities loan guarantee .......................................... SBA: Secondary market guarantee .......................................................................................... .............. .............. Total, secondary guaranteed loan commitments .................................................. 1 Additional N/A information on credit subsidy rates is contained in the Federal Credit Supplement. 2 Loan levels do not include standby commitment authority. N/A = Not applicable. –205 10,000 .............. .............. –218 122,519 N/A –235 2 86,000 12,000 .............. .............. 12,000 –205 101,000 N/A –235 98,000 91 7. CREDIT AND INSURANCE Table 7–5. SUMMARY OF FEDERAL DIRECT LOANS AND LOAN GUARANTEES (In billions of dollars) Actual 1998 1999 2000 2001 Estimate 2002 2003 2004 2005 2006 2007 Direct Loans: Obligations .............................................................. Disbursements ........................................................ New subsidy budget authority ................................ Reestimated subsidy budget authority 1 ................ Total subsidy budget authority ............................... 28.8 28.7 –0.8 7.3 6.5 38.4 37.7 1.6 1.0 2.6 37.1 35.5 –0.4 –4.4 –4.8 39.1 37.1 0.3 –1.8 –1.5 43.7 39.6 * 0.5 0.5 45.4 39.7 0.7 2.9 3.5 42.0 38.7 0.4 2.6 3.0 56.3 50.6 2.1 3.8 6.0 62.6 54.6 2.9 3.3 6.1 49.1 45.6 1.2 ................ 1.2 Loan guarantees: Commitments 2 ........................................................ Lender disbursements 2 .......................................... New subsidy budget authority ................................ Reestimated subsidy budget authority 1 ................ Total subsidy budget authority ............................... 218.4 199.5 3.3 –0.7 2.6 252.4 224.7 * 4.3 4.3 192.6 180.8 3.6 0.3 3.9 256.4 212.9 2.3 –7.1 –4.8 303.7 271.4 2.9 –2.4 0.5 345.9 331.3 3.8 –3.5 0.3 300.6 279.9 7.3 2.0 9.3 248.5 221.6 10.1 3.5 13.6 258.3 240.6 8.9 6.9 15.8 234.6 245.7 5.0 ................ 5.0 * Less than $50 million. 1 Includes interest on reestimate. 2 To avoid double-counting, totals exclude GNMA secondary guarantees of loans that are guaranteed by FHA, VA, and RHS, and SBA’s guarantee of 7(a) loans sold in the secondary market. 92 ANALYTICAL PERSPECTIVES Table 7–6. DIRECT LOAN WRITE-OFFS AND GUARANTEED LOAN TERMINATIONS FOR DEFAULTS In millions of dollars Agency and Program 2005 actual As a percentage of outstanding loans 1 2006 estimate 2007 estimate 2005 actual 2006 estimate 2007 estimate DIRECT LOAN WRITEOFFS Agriculture: Agricultural credit insurance fund ............................................................................................................... Commodity Credit Corporation fund ........................................................................................................... Rural community advancement program ................................................................................................... Rural development insurance fund ............................................................................................................. Rural housing insurance fund .................................................................................................................... P.L.480 ........................................................................................................................................................ Debt reduction (P.L.480) ............................................................................................................................. 132 24 4 3 90 61 4 135 .............. 4 1 113 189 .............. 135 .............. 4 1 108 .............. .............. 1.84 1.15 0.05 0.14 0.35 0.69 0.76 2.04 ................ 0.04 0.05 0.45 2.30 ................ 2.16 ................ 0.04 0.05 0.44 ................ ................ Commerce: Economic development revolving fund ....................................................................................................... 1 1 1 7.14 10.00 16.66 Education: Student financial assistance ....................................................................................................................... 6 6 6 1.85 1.85 1.85 Homeland Security: Disaster Assistant Direct Loan Program Account ..................................................................................... 127 .............. .............. 97.69 ................ ................ Housing and Urban Development: Revolving fund (liquidating programs) ........................................................................................................ Guarantees of mortgage-backed securities ............................................................................................... ................. ................. 1 36 1 27 ................. ................. 16.66 65.45 25.00 48.21 Interior: Indian direct loan ........................................................................................................................................ 4 2 1 18.18 11.76 7.14 Labor: Pension benefit guaranty corporation fund ................................................................................................ 31 87 93 ................. ................ ................ Veterans Affairs: Veterans housing benefit program ............................................................................................................. 10 7 7 0.90 0.69 0.52 International Assistance Programs: Military debt reduction ................................................................................................................................. Overseas Private Investment Corporation ................................................................................................. 7 ................. .............. 8 .............. 8 2.76 ................. ................ 1.29 ................ 1.08 Small Business Administration: Disaster loans ............................................................................................................................................. Business loans ............................................................................................................................................ 51 ................. 63 4 60 2 1.66 ................. 1.72 2.18 0.91 1.22 Other Independent Agencies: Export-Import Bank ..................................................................................................................................... Debt reduction (ExIm Bank) ....................................................................................................................... Spectrum auction program ......................................................................................................................... Tennessee Valley Authority fund ............................................................................................................... 102 38 3,346 1 33 20 .............. 1 36 .............. 418 1 1.02 3.46 77.56 1.88 0.36 1.89 ................ 2.08 0.45 ................ 96.53 1.85 Total, direct loan writeoffs .................................................................................................................. 4,042 711 909 1.84 0.32 0.38 Agriculture: Agricultural credit insurance fund ............................................................................................................... Commodity Credit Corporation export loans .............................................................................................. Rural community advancement program ................................................................................................... Rural electrification and telecommunications loans ................................................................................... Rural housing insurance fund .................................................................................................................... 61 190 87 ................. 260 58 163 101 3 275 58 181 117 3 280 0.58 4.53 1.86 ................. 1.87 0.56 6.62 2.14 0.66 1.87 0.54 6.02 2.30 0.56 1.69 Defense—Military: Procurement of ammunition, Army ............................................................................................................. Family housing improvement fund ............................................................................................................. ................. ................. 8 5 .............. 6 ................. ................. 30.76 1.23 ................ 1.50 Education: Federal family education loan .................................................................................................................... 4,724 5,527 6,320 1.92 1.91 1.88 Health and Human Services: Health education assistance loans ............................................................................................................. 23 29 26 0.95 1.69 1.82 Housing and Urban Development: Indian housing loan guarantee ................................................................................................................... Title VI Indian Federal guarantees program .............................................................................................. FHA—Mutual mortgage insurance ............................................................................................................. FHA—General and special risk .................................................................................................................. ................. ................. 6,757 1,408 4 1 6,463 2,394 4 2 6,639 1,138 ................. ................. 1.76 1.55 2.08 1.25 1.92 2.66 2.00 2.38 1.98 1.27 Interior: Indian guaranteed loan ............................................................................................................................... 3 1 1 0.89 0.31 0.30 GUARANTEED LOAN TERMINATIONS FOR DEFAULT 93 7. CREDIT AND INSURANCE Table 7–6. DIRECT LOAN WRITE-OFFS AND GUARANTEED LOAN TERMINATIONS FOR DEFAULTS—Continued In millions of dollars Agency and Program 2005 actual As a percentage of outstanding loans 1 2006 estimate 2007 estimate 2005 actual 2006 estimate 2007 estimate Transportation: Maritime guaranteed loan (Title XI) ........................................................................................................... ................. 35 35 ................. 1.12 1.15 Treasury: Air transportation stabilization program ...................................................................................................... 125 9 .............. 7.33 0.94 ................ Veterans Affairs: Veterans housing benefit program ............................................................................................................. 1,076 2,628 2,515 0.30 1.27 1.22 International Assistance Programs: Micro and small enterprise development ................................................................................................... Urban and environmental credit program .................................................................................................. Development credit authority ...................................................................................................................... Overseas Private Investment Corporation ................................................................................................. 1 33 ................. 38 1 21 1 45 1 29 2 45 1.31 1.79 ................. 0.98 7.14 1.27 0.59 1.25 9.09 1.87 0.72 1.25 Small Business Administration: General business loans .............................................................................................................................. Pollution control equipment ........................................................................................................................ 1,551 ................. 1,903 1 2,102 .............. 2.69 ................. 2.59 25.00 2.53 ................ Other Independent Agencies: Export-Import Bank ..................................................................................................................................... 182 211 253 0.50 0.58 0.64 Total, guaranteed loan terminations for default .............................................................................. 16,519 19,887 19,757 0.98 1.31 1.27 Total, direct loan writeoffs and guaranteed loan terminations ...................................................... 20,561 20,598 20,666 1.08 1.19 1.15 Agriculture: Agricultural credit insurance fund ............................................................................................................... 3 1 1 7.69 2.85 2.85 Commerce: Federal ship financing fund ........................................................................................................................ 1 .............. .............. 4.17 ................ ................ Education: Federal family education loan .................................................................................................................... 863 1,006 1,071 4.02 4.52 4.72 Housing and Urban Development: FHA—Mutual mortgage insurance ............................................................................................................. FHA—General and special risk .................................................................................................................. ................. 226 10 8 1 6 ................. 4.80 1.84 0.13 1.72 0.08 Interior: Indian guaranteed loan ............................................................................................................................... 4 2 2 25.00 15.38 18.18 Treasury: Air transportation stabilization program ...................................................................................................... ................. 102 .............. ................. 76.11 ................ International Assistance Programs: Overseas Private Investment Corporation ................................................................................................. 84 4 3 38.35 2.56 1.47 Small Business Administration: Business loans ............................................................................................................................................ Pollution control equipment ........................................................................................................................ 221 29 276 .............. 276 .............. 5.02 59.18 4.47 ................ 3.74 ................ Other Independent Agencies: Export-Import Bank ..................................................................................................................................... 51 .............. .............. 25.37 ................ ................ Total, writeoffs of loans receivable ................................................................................................... 1,482 1,409 1,360 3.64 3.53 3.22 ADDENDUM: WRITEOFFS OF DEFAULTED GUARANTEED LOANS THAT RESULT IN LOANS RECEIVABLE 1 For direct loans and loan guarantees, outstanding loans equal the start of year outstanding balance plus new disbursements. For loans receivable, outstanding loans equal start of year outstanding balance plus terminations for default resulting in loans receivable. 94 ANALYTICAL PERSPECTIVES Table 7–7. APPROPRIATIONS ACTS LIMITATIONS ON CREDIT LOAN LEVELS 1 (In millions of dollars) Agency and Program DIRECT LOAN OBLIGATIONS Agriculture: Agricultural credit insurance fund .............................................................................................. P.L. 480 direct credit ................................................................................................................. Commerce: Fisheries finance ........................................................................................................................ Education: Historically black college and university capital financing ........................................................ Homeland Security: Disaster assistance direct loans ............................................................................................... Housing and Urban Development: FHA-general and special risk .................................................................................................... FHA-mutual mortgage insurance ............................................................................................... State: Repatriation loans ...................................................................................................................... Loan for renovation of UN Headquarters ................................................................................. Treasury: Community development financial institutions fund .................................................................. Veterans Affairs: Native American loans ............................................................................................................... Vocational rehabilitation ............................................................................................................. Small Business Administration: Business loans ........................................................................................................................... 2005 Actual 2006 Actual 2007 Estimate 1,112 30 953 30 930 .................... 91 64 5 193 222 170 25 1,025 25 50 50 50 50 50 50 1 .................... 1 1,200 1 .................... 11 11 .................... 50 3 30 3 30 4 18 20 .................... 1,634 3,659 1,265 2,201 2,797 2,498 145 18 37 275 35,000 185,000 99 18 35 138 35,000 185,000 104 15 35 .................... 35,000 185,000 85 112 87 18 140 18 65 18 .................... .................... 1 .................... 3,000 .................... 2,000 .................... 700 .................... .................... 700 .................... 19,939 27,500 28,000 Total, limitations on loan guarantee commitments ........................................................ 247,858 251,483 251,457 ADDENDUM: SECONDARY GUARANTEED LOAN COMMITMENT LIMITATIONS Housing and Urban Development: Guarantees of mortgage-backed securities .............................................................................. Small Business Administration: Secondary market guarantee .................................................................................................... 200,000 200,000 100,000 10,000 12,000 12,000 Total, limitations on secondary guaranteed loan commitments .................................. 210,000 212,000 112,000 Total, limitations on direct loan obligations ................................................................... LOAN GUARANTEE COMMITMENTS Agriculture: Agricultural credit insurance fund .............................................................................................. Housing and Urban Development: Indian housing loan guarantee fund ......................................................................................... Title VI Indian federal guarantees ............................................................................................. Native Hawaiian housing loan guaranteed ............................................................................... Community development loan guarantees ............................................................................... FHA-general and special risk .................................................................................................... FHA-mutual mortgage insurance ............................................................................................... Interior: Indian loans ................................................................................................................................ Transportation: Minority business resource center ............................................................................................ Maritime guaranteed loan (Title XI) .......................................................................................... Veterans Affairs: Housing loans ............................................................................................................................ International Assistance Programs: Loan guarantees to Israel ......................................................................................................... Development credit authority ..................................................................................................... Loan guarantees to Egypt ......................................................................................................... Small Business Administration: General business loans ............................................................................................................. 1 Data represents loan level limitations enacted or proposed to be enacted in appropriation acts. For information on actual and estimated loan levels supportable by new subsidy budget authority requested, see Tables 7–3 and 7–4. 95 7. CREDIT AND INSURANCE Table 7–8. FACE VALUE OF GOVERNMENT-SPONSORED LENDING 1 (In billions of dollars) Outstanding 2004 2005 Government Sponsored Enterprises Fannie Mae 2 .................................................................................................... Freddie Mac 3 ................................................................................................... Federal Home Loan Banks 4 ........................................................................... Farm Credit System ......................................................................................... N/A 1,481 N/A 87 N/A N/A N/A 92 Total ................................................................................................................ N/A N/A N/A = Not available. 1 Net of purchases of federally guaranteed loans. 2 Financial data for Fannie Mae is not presented here because Fannie Mae announced in December 2004 that it would have to restate financial results for 2001–2004. The restatement is not likely to be completed prior to the second half of calendar year 2006. 3 While financial data for 2004 is presented here, Freddie Mac announced on November 8, 2005 that it would reduce net income for the first half of calendar year 2005 and expects to release full-year 2005 results by March 2006. 4 Financial data for the Federal Home Loan Banks are not presented here because following discussions with the Securities and Exchange Commission, six of the twelve Federal Home Loan Banks have announced their intent to restate their 2001–2004 financial statements. 96 ANALYTICAL PERSPECTIVES Table 7–9. LENDING AND BORROWING BY GOVERNMENTSPONSORED ENTERPRISES (GSEs) (In millions of dollars) Enterprise 2005 LENDING 1 Federal National Mortgage Association: 2 Portfolio programs: Net change .............................................................................................. Outstandings ............................................................................................ Mortgage-backed securities: Net change .............................................................................................. Outstandings ............................................................................................ Federal Home Loan Mortgage Corporation: 3 Portfolio programs: Net change .............................................................................................. Outstandings ............................................................................................ Mortgage-backed securities: Net change .............................................................................................. Outstandings ............................................................................................ Farm Credit System: Agricultural credit bank: Net change .............................................................................................. Outstandings ............................................................................................ Farm credit banks: Net change .............................................................................................. Outstandings ............................................................................................ Federal Agricultural Mortgage Corporation: Net change .............................................................................................. Outstandings ............................................................................................ Federal Home Loan Banks: 4 Net change .................................................................................................. Outstandings ................................................................................................ Less guaranteed loans purchased by: Federal National Mortgage Association: 2 Net change .............................................................................................. Outstandings ............................................................................................ Other: 4 Net change .............................................................................................. Outstandings ............................................................................................ N/A N/A N/A N/A N/A N/A N/A N/A 1,853 25,121 6,039 66,802 –423 5,126 N/A N/A N/A N/A N/A N/A BORROWING 1 Federal National Mortgage Association: 2 Portfolio programs: Net change .............................................................................................. Outstandings ............................................................................................ Mortgage-backed securities: Net change .............................................................................................. Outstandings ............................................................................................ Federal Home Loan Mortgage Corporation: 3 Portfolio programs: Net change .............................................................................................. Outstandings ............................................................................................ Mortgage-backed securities: Net change .............................................................................................. Outstandings ............................................................................................ Farm Credit System: Agricultural credit bank: Net change .............................................................................................. Outstandings ............................................................................................ Farm credit banks: Net change .............................................................................................. Outstandings ............................................................................................ Federal Agricultural Mortgage Corporation: Net change .............................................................................................. Outstandings ............................................................................................ Federal Home Loan Banks: 4 Net change .................................................................................................. N/A N/A N/A N/A N/A N/A N/A N/A 1,840 28,466 9,549 81,361 504 3,928 N/A 97 7. CREDIT AND INSURANCE Table 7–9. LENDING AND BORROWING BY GOVERNMENTSPONSORED ENTERPRISES (GSEs)—Continued (In millions of dollars) Enterprise Outstandings ................................................................................................ 2005 N/A DEDUCTIONS 1 Less borrowing from other GSEs: 5 Net change .................................................................................................. Outstandings ................................................................................................ Less purchase of Federal debt securities: 5 Net change .................................................................................................. Outstandings ................................................................................................ Federal National Mortgage Association: 2 Net change .................................................................................................. Outstandings ................................................................................................ Other: 5 Net change .................................................................................................. Outstandings ................................................................................................ N/A N/A N/A N/A N/A N/A N/A N/A N/A = Not available. 1 The estimates of borrowing and lending were developed by the GSEs based on certain assumptions that are subject to periodic review and revision and do not represent official GSE forecasts of future activity, nor are they reviewed by the President. The data for all years include programs of mortgage-backed securities. In cases where a GSE owns securities issued by the same GSE, including mortgage-backed securities, the borrowing and lending data for that GSE are adjusted to remove double-counting. 2 Financial data for Fannie Mae is not presented here because Fannie Mae announced in December 2004 that it would have to restate financial results for 2001–2004. The restatement is not likely to be completed prior to the second half of calendar year 2006. 3 Freddie Mac announced on November 8, 2005 that it would reduce net income for the first half of calendar year 2005 and expects to release full-year 2005 results by March 2006. 4 Financial data for the Federal Home Loan Banks are not presented here because following discussions with the Securities and Exchange Commission, six of the twelve Federal Home Loan Banks have announced their intent to restate their 2001–2004 financial statements. 5 Totals and subtotals have not been calculated because a substantial portion of the total is subject to the above-described restatements. 8. AID TO STATE AND LOCAL GOVERNMENTS 1 State and local governments have a vital constitutional responsibility to provide government services. They have the major role in providing domestic public services, such as public education, law enforcement, roads, water supply, and sewage treatment. The Federal Government contributes to that role by promoting a healthy economy. It also provides grants, loans, and tax subsidies to State and local governments. Federal grants help State and local governments finance programs covering most areas of domestic public spending, including income support, infrastructure, education, and social services. Federal grant outlays were $426.2 billion in 2005 and are estimated to be $449.3 billion in 2006 and $459.0 billion in 2007. Grant outlays to State and local governments for payments to individuals, such as Medicaid payments, are estimated to be 65 percent of total grants in 2007; grant outlays for physical capital investment, 15 percent; and grant outlays for all other purposes, largely education, training, and social services, 20 percent. Some tax expenditures also constitute Federal aid to State and local governments. Tax expenditures stem from special exclusions, exemptions, deductions, credits, deferrals, or tax rates in the Federal tax laws. The deductibility of State and local personal income and property taxes from gross income for Federal income tax purposes and the exclusion of interest on State and local public purpose bonds from Federal taxation comprise the two largest categories of tax expenditures benefiting State and local governments. These provisions, are estimated to be worth $76.9 billion in 2007. Chapter 19, ‘‘Tax Expenditures,’’ of this volume provides a detailed discussion of the measurement and definition of tax expenditures and a complete list of the estimated costs of specific tax expenditures. As discussed in that chapter, there are generally interactions among tax expenditure provisions, so that the total cost estimates only approximate the aggregate effect of these provisions. Tax expenditures that especially aid State and local governments are displayed separately at the end of Tables 19–1 and 19–2. This chapter also includes information on the performance of selected grant programs based on the Program Assessment Rating Tool. An Appendix to this chapter includes State-by-State estimates of major grant programs. Table 8–1. FEDERAL GRANT OUTLAYS BY AGENCY (In billions of dollars) Estimate 2005 Actual 2006 2007 Department of Agriculture .................................................. Department of Commerce ................................................. Department of Education ................................................... Department of Energy ........................................................ Department of Health and Human Services ..................... Department of Homeland Security .................................... Department of Housing and Urban Development ............ Department of the Interior ................................................. Department of Justice ........................................................ Department of Labor .......................................................... Department of Transportation ............................................ Department of the Treasury .............................................. Department of Veterans Affairs ......................................... Environmental Protection Agency ...................................... Other agencies ................................................................... 24.7 0.6 39.5 0.3 245.0 14.0 35.4 4.0 4.2 7.6 43.4 0.5 0.1 3.7 3.1 26.6 0.6 41.8 0.3 258.5 14.3 38.5 4.7 3.2 7.3 46.7 0.5 0.1 3.7 2.4 26.5 0.5 41.0 0.3 264.3 13.9 38.5 4.7 4.3 7.0 51.5 0.5 0.1 3.7 2.2 Total ............................................................................... 426.2 449.3 459.0 Agency Table 8–1 shows the distribution of grants by agency. Grant outlays by the Department of Health and Human Services are estimated to be $264.3 billion in 2007, 58 percent of total grant outlays. HIGHLIGHTS OF THE FEDERAL AID PROGRAM Several proposals in this budget affect Federal aid to State and local governments and the important relationships between the levels of government. Through the use of grants, the Federal Government shares with State and local governments the cost and, ultimately, the benefits of a better educated, healthier, and safer citizenry. The Administration intends to work with State and local governments to make the Federal system more efficient and effective and to improve the design, administration, and financial management of Federal grant programs. In programs where the Federal Government and State and local governments partner in the provision of services, State and local government involvement is critical to improving the performance of Federal programs. To date, the Administration has rated the effectiveness of about four fifths of all Federal programs using the Program Assessment Rating Tool (PART). On average, grant programs received lower ratings than other types of programs, which suggests the need for strengthening partnerships and accountability for achieving program outcomes. 1 Federal aid to State and local governments is defined as the provision of resources by the Federal Government to support a State or local program of governmental service to the public. The primary forms of aid are grants, (including loan subsidies), and tax expenditures. 99 100 In support of the Administration’s initiative to identify and eliminate improper payments, managers of several programs jointly administered by the Federal Government and the States, including Medicaid and the School Lunch program, are developing methodologies to estimate the extent of improper payments, identify the causes and remedy them. The passage of the Improper Payments Information Act (IPIA) of 2002 codified the goals of the President’s initiative to enhance the accuracy and integrity of Federal payments. The IPIA, and subsequent OMB implementing guidance, established a framework for agencies to (i) review every Federal program, activity, and dollar to assess risk of significant improper payments; (ii) develop a statistically valid estimate to measure the extent of improper payments in risk susceptible Federal programs; (iii) initiate process and internal control improvements to enhance the accuracy and integrity of payments; and (iv) report and assess progress on an annual basis. In 2004, all agencies began to develop and implement plans to comply with these expanded reporting requirements. As these efforts continue in 2006 and beyond, the Federal government is strengthening its position to make significant strides in identifying and eliminating improper payments. In addition, under the auspices of the Federal Financial Assistance Management Improvement Act of 1999 (PL 106–107) and the Administration’s Grant.gov and Grants Management Line of Business Initiatives, Federal grant making agencies have continued to work individually and collectively to improve and streamline the efficiency of administering grant programs and to achieve the vision of a Government-wide solution that supports end-to-end grants management activities. The goals are to promote grantee access, customer service, and agency financial and technical stewardship. Particularly, in 2005, the Federal Government has realized its objectives to: • Establish a simple, unified ‘‘storefront’’ for all customers to find and apply for grants (called FIND and APPLY). Federal departments and agencies posted 2,259 funding opportunities for discretionary Federal assistance on Grants.gov FIND and 994 of those opportunities were available for electronic application submission via Grants.gov APPLY. • Develop a business-driven, common solution for grants management to improve customer access to Federal information and support. The Grants Management Line of Business task force identified a ‘‘consortia-based’’ approach to streamlining grants management: align agency work teams (consortia) around shared business interests and process grants in a decentralized way using common business processes. • Establish a single location in the Code of Federal Regulations (Title 2 CFR) to place all the Government-wide and agency guidance regarding grants management; ANALYTICAL PERSPECTIVES • Create a Grants Policy Committee under the CFO (chief financial officer) council that will ensure the continued progress of the streamlining efforts. Highlights of grants to State and local governments are presented below. For additional information on grants, see Table 8–4 in this chapter, and discussions in the main budget volume. Homeland Security Since 2001, this Administration has provided Federal agencies with $31 billion in funding to State, local, and tribal governments to enhance their responder capabilities, including $22 billion focused on homeland security preparedness for terrorism and other catastrophic events. To improve coordination and provide additional assistance to State and local law enforcement officials, the Budget includes $4 million for additional personnel for the Department of Homeland Security’s (DHS) Law Enforcement Support Center that checks and validates immigration status inquiries for State/local law enforcement. Public safety personnel at the State, local, and tribal level are vital partners in improving the Nation’s homeland security. Over the last five years, DHS has provided $13.9 billion in grants and training to enhance the Nation’s homeland security preparedness. In addition, this budget proposes to expand a successful Federal/State partnership—the 287(g) program— which provides State/local law enforcement officials with guidance and training in immigration law. The program helps State/local law enforcement agencies identify aliens who are in prison or applying for driver’s licenses with fraudulent documents. It also assists in State investigations and aids in the detention and removal of those here illegally. Proposed funding includes $60 million to increase the number of fugitive operation teams that identify, locate, and apprehend immigration fugitives, and $10 million to hire 69 new compliance enforcement agents to ensure that visitors who enter our country legally, also leave the country when their visas expire. The President’s 2007 Budget continues this progress through multi-tiered investments. The requested funding level of $840 million for Urban Area Security Grants increases grant funding for those metropolitan regions most at risk due to their concentrations of citizens and key assets. The request for $593 million in Targeted Infrastructure Protection grants integrates disparate programs for securing transportation assets and other critical infrastructures. The Administration will work more closely with Congress to gain support for this request, which was not funded in 2006. A total of $840 million is requested for State-based grants, including $637 million for State Homeland Security Grants, $168 million for Emergency Management Performance Grants, and $35 million for Citizen Corps. The proposed reduction of $303 million from 2006 reflects PART findings on the significant funding provided over the four years, and a reprioritization towards other 8. 101 AID TO STATE AND LOCAL GOVERNMENTS DHS programs. As identified in the PART process, it has been difficult to measure the impact and results of the $6.7 billion awarded for these programs over 2002–2005. In the event of a national emergency it is crucial that first responders, State and local governments, and the Federal Government are able to communicate with each other. The 2007 Budget recognizes the importance of this goal. The Administration created SAFECOM in 2001 as a Government-wide initiative to improve interoperability, and over the last three years Federal agencies (mainly DHS) have provided over $2 billion in grants for interoperability. However, the lack of standards has hampered efforts to move forward. In 2007 DHS will set basic interoperability standards so that Federal grant dollars can be better used to ensure that our Nation’s first responders can communicate in an emergency. Natural Resources and Environment The Clean Water State Revolving Fund (SRF) provides grants to States to capitalize their municipal wastewater State revolving funds. States provide matching funds and then make loans to communities at below-market rates for wastewater infrastructure projects such as sewer rehabilitation and treatment plant expansion. Loan repayments and interest are recycled back into the program. This Budget continues to support State and tribal efforts to improve water quality though the Clean Water (SRF). In the 2004 Budget, the President proposed funding the Clean Water SRF at $850 million annually for 2004–2011, for $6.8 billion in total funding. Due to significant additional funds appropriated in 2004–2006, the 2007 Budget proposes to reduce annual funding for the Clean Water SRF to $688 million for 2007–2011. At this funding level, the Budget meets the 2004 capitalization commitment, ensuring communities have access to capital to finance their wastewater infrastructure needs. This funding level will still allow the Clean Water SRF to meet its long-term revolving level goal of $3.4 billion. The revolving level is the amount of loans available annually over the long-term after Federal capitalization ends, and an indicator of the Clean Water SRF’s financial stability The 2007 Budget supports key programs in the Commerce Department’s National Oceanic and Atmospheric Administration (NOAA) that promote stewardship of our ocean, coastal, and Great Lakes resources. The President’s U.S. Ocean Action Plan, released in December 2004, emphasized the importance of strong partnerships between Federal, State, Tribal, and local governments in effectively managing these resources. New investments and program improvements within NOAA are aimed at strengthening our knowledge and management of these resources in support of the U.S. Ocean Action Plan. For example, proposed reforms to the Coastal Zone Management Program will increase the competitiveness of grants to better target funding to support State, regional, and national priorities. Transportation Grants support State and local programs for highways, mass transit, and airports. Grant outlays to State and local governments for transportation are estimated to be $51.5 billion in 2007. In August, 2005, the President signed into law the ‘‘Safe, Accountable, Flexible, and Efficient Transportation Equity Act: A Legacy for Users’’ (SAFETEA–LU). With funding for highways, highway safety, and public transportation totaling $286 billion for 2004 through 2009, SAFETEA–LU represents the largest surface transportation investment in our Nation’s history. SAFETEA–LU addresses a variety of surface transportation issues, such as advancing highway safety, easing traffic congestion, and enhancing public transportation, as well as laying the groundwork to address future challenges. As part of SAFETEA–LU, the Department of Transportation (DOT) seeks to enhance highway safety by improving the design and condition of the highways themselves. SAFETEA–LU dedicated $5.1 billion through 2009 for highway safety programs administered by the Federal Highway Administration, including State grants aimed at eliminating hazardous roadway conditions. Specifically, SAFETEA–LU authorized a new $1.3 billion core Highway Safety Improvement Program that will distribute formula funds to all States. Other highway safety programs target particular areas of concern such as work zones, older drivers, and pedestrians. Community and Regional Development Strengthening America’s Communities Initiative. The 2007 Budget proposes to reform and improve the Federal Government’s economic development activities by consolidating duplicative programs and targeting funding to those communities most in need. To carry out these principles, the Budget proposes to implement the Strengthening America’s Communities Initiative (SACI) in the Departments of Commerce and Housing and Urban Development (HUD). This reform grew out of a cross-cutting performance review of these programs a year ago, and was further informed by the report of the Strengthening America’s Communities Advisory Committee in July 2005. The Budget would reform HUD’s Community Development Block Grant (CDBG) program by directing more of CDBG’s base funding to communities that cannot meet their own needs. In addition, bonus funds would be awarded to those who demonstrate the greatest progress in expanding ownership and opportunity for their residents. HUD programs that duplicate the purposes of CDBG—Brownfields Redevelopment grants, Rural Housing and Economic Development, and Section 108 Loan Guarantees—will be consolidated with CDBG as part of this reform. HUD’s Youthbuild program is proposed for transfer to the Department of Labor, where it can be administered more effectively. Implementing SACI in the Department of Commerce will give the Economic Development Administration 102 (EDA) a new focus on providing funding to communities who incorporate promising regional strategies to bring investment and growth into distressed areas. These projects will be multi-jurisdictional in nature, and EDA will develop new performance measures to track the results of its assistance in supporting innovation-led regional strategies. The 2007 Budget also provides funding for EDA to assist communities affected by the recent Base Realignment and Closure Commission decisions. Other Federal programs that support local development will operate with CDBG and EDA within a new broader framework of clear goals, cross-cutting community progress indicators, and common standards for the award of bonus and competitive funding. Education Grant budget authority requested for elementary, secondary, and vocational education is $36.4 billion in 2007. Leaving No Child Behind. At the center of the President’s commitment to education is his promise to ‘‘leave no child behind.’’ When President Bush launched his No Child Left Behind initiative, he said, ‘‘The Federal role in education is not to serve the system. It is to serve the children.’’ No Child Left Behind (NCLB) is making a difference for every child, in every public school. It is no longer acceptable for any child to slip through the cracks or fail to receive the challenging education he or she deserves. Schools are held accountable for ensuring that all children, including those who are disadvantaged or have a disability, become proficient in reading and math. Parents receive detailed information about the performance of their schools. Students who attend low-performing schools have the option to attend a better public school or, if their schools do not improve, to receive tutoring funded by the school district. The largest program that assists elementary and secondary education is Title I Grants to Local Educational Agencies. Title I provides funds to schools in low-income communities and is the foundation for the NCLB accountability, school improvement, and parental choice reforms. The Budget requests $12.8 billion for Title I, a $100 million increase over the 2006 level, a 45 percent increase since 2001. The entire increase will be devoted to schools in need of improvement, specifically schools that have not met their NCLB student achievement goals for at least two years. This will ensure that States and school districts are able to receive the assistance needed to improve low-performing schools. • Teachers. Well-trained, highly qualified teachers are critical to student learning. The major source of Federal support for addressing this challenge is the Improving Teacher Quality State Grants program. The Budget provides $2.9 billion for this program to support teacher training and recruitment, assists States in meeting NCLB teacher quality requirements and ensures every class is taught by a qualified teacher. Recognizing both ANALYTICAL PERSPECTIVES the importance and the challenges of finding and training qualified teachers, especially in subjects such as math and science, the Budget provides $99 million for the Teacher Incentive Fund, the same as 2006, and $25 million for the creation of an Adjunct Teacher Corps. Improving Performance for Special Education Students. On December 3, 2004, the President signed into law the Individuals with Disabilities Education Improvement Act of 2004. This Act made several changes that will help redefine how States and schools identify children with disabilities, set assessments standards, and strengthen the contents of student’s individualized education programs (IEPs). The new IDEA also adopts NCLB’s highly qualified teacher standards for those teaching core subjects, while providing flexibility for States, school districts, and new teachers of multiple subjects. Over the past year, the Department has undertaken an elaborate and thorough process to clarify the law’s provisions and to consider significant numbers of public comments before it finalizes the implementing regulations. The newly reauthorized IDEA refocuses special education programs on student outcomes and will require States to establish performance plans and implement programs to meet their performance goals. These improvements will advance the progress that has already been seen in several key areas. The 2005 Nation’s scorecard and the Department’s Office of Special Education Programs have reported the following progress: • The percentage of fourth-grade students with disabilities scoring at or above Basic in reading has increased from 22 percent in 2000 to 33 percent in 2005 and the percentage of eighth-grade students scoring at or above Basic in mathematics increased from 20 percent in 2000 to 31 percent in 2005. • The percentage of students with disabilities who graduate from high school with a regular high school diploma increased from 46 percent in 2000 to 54 percent in 2004, while the percentage of students who dropped out of school decreased from 42 percent in 2000 to 31 percent in 2005. From 2001 to 2006, funding for IDEA Grants to States increased by 67 percent, from $6.3 billion to $10.6 billion. The 2007 Budget provides an additional $100 million for States to maintain this positive trajectory and provide a high quality education to the nearly 7 million IDEA students. Training and Employment Training Workers for the Jobs of the 21st Century. The President wants to ensure that the United States meets the training challenge brought on by the growth in industries requiring high-skilled workers and has proposed initiatives and reforms intended to make the Nation’s workforce training more responsive to the needs of workers and employers in the 21st Century. The Administration and the Congress have worked together to enact three of these programs: 8. 103 AID TO STATE AND LOCAL GOVERNMENTS • High Growth Job Training Initiative. In 2002, the Administration began this initiative as a pilot to prepare workers for the jobs being created in high growth industries. Through 2005, $256 million in State and local grants went to 130 partnerships of training providers, employers, and the workforce system. In December 2004, legislation was enacted to permanently authorize the program and finance it through fees that employers pay when they submit visa applications for high skilled foreign workers to work in the United States. The 2007 Budget provides $125 million for this program, which will train an estimated 50,000 U.S. workers and help meet American industries’ need for qualified, skilled employees. • Community-Based Job Training Grants. The 2007 Budget continues the President’s commitment to this initiative, which he introduced in the 2005 Budget. Community and technical colleges, working in conjunction with local industries, are a powerful economic development tool. They are accessible to many workers and job seekers who need the education and skills training to improve employment and earnings. In addition, these colleges are well positioned to respond to local employers and help train workers for jobs that are available in their community and region. In October 2005, the Department awarded the first 70 competitive grants, totaling $125 million, through this Presidential initiative. The 2007 Budget provides $150 million, $26 million (21 percent) more than 2006 funding, to train an estimated 60,000 workers. • Community-based Job Training Grants. The 2007 Budget continues the President’s commitment to the Community College Initiative (CCI), first introduced in the 2005 Budget. Community and technical colleges, working in conjunction with local industries, are a powerful economic development tool. They are easily accessible to many workers and job seekers and provide education and skills training aimed at expanding opportunities for their students. In addition, these colleges are well positioned to respond to local employers and help train workers for jobs that are available in their community and region. In October 2005, the Department awarded the first 70 competitive grants, totaling $125 million, through this Presidential initiative. The 2007 Budget provides $150 million, $26 million (21 percent) more than 2006 funding, to train an estimated 60,000 workers. Social Services Head Start. The Budget supports reauthorization of Head Start and provides $6.8 billion in budget authority for 2007, enough to serve more than 900,000 children. Child Welfare Program Option. This Budget seeks legislation to introduce an option for all States so they can choose an alternative system for foster care. Flexible financing will allow States to design programs with a stronger emphasis on child-abuse prevention, family support, and increased flexibility in providing services. Health Medicaid and the State Children’s Health Insurance Program (SCHIP). In 2007, Federal Medicaid funding is estimated to be $199 billion. Medicaid is an open-ended means-tested entitlement program that is financed jointly by the Federal Government and States. Medicaid provides health coverage and services to nearly 53 million low-income children, pregnant women, elderly persons, and disabled individuals during the year. SCHIP was established in 1997 to make available approximately $40 billion over 10 years for States to provide health-care coverage to low-income, uninsured children who did not qualify for Medicaid. Since the beginning of the Administration, total enrollment in SCHIP has grown by an estimated 1.5 million children, to a total of approximately 6.1 million in 2004. Current law rules for distributing SCHIP funds can lead to shortfall in some States. The 2007 Budget will seek authority to target SCHIP funds more efficiently to States with the most need. • Transitional Medical Assistance The Deficit Reduction Act enhances services for former welfare recipients by extending Transitional Medical Assistance (TMA) through December 31, 2006. This program provides coverage for former welfare recipients entering the workforce, and the Administration proposes extending the program through September 30, 2007. • Cover the Kids. The 2007 Budget proposes Cover the Kids, a national outreach campaign. This initiative will provide $100 million in grants annually to enroll additional Medicaid- and SCHIP-eligible children by combining the resources of the Federal Government, States, schools, and community organizations. • Grants to States for the Chronically Ill. Chronically ill individuals often struggle to secure health insurance coverage. The 2007 Budget proposes to create a competitive grant program whereby States compete to receive funds to implement innovative policies to promote insurance among the chronically ill. For this effort, $500 million would be available annually. • Health Insurance Portability and Accountability Act (HIPAA). Since enacted in 1996, HIPAA has increased the continuity, portability, and accessibility of health insurance. To ensure that Medicaid and SCHIP beneficiaries receive the benefits of HIPAA coverage, the Administration proposes two legislative changes: 1) Eligibility for a Medicaid/ SCHIP Employer-Sponsored Insurance (ESI) Program would be a qualifying event allowing families to enroll in ESI immediately through special enrollment; and 2) Require SCHIP programs to issue certificates of creditable coverage promoting portable health coverage by verifying the period 104 ANALYTICAL PERSPECTIVES of time an individual was covered by a specific health insurance policy. • Health Centers. Locally run Health Centers deliver high-quality, affordable primary and preventive health care to nearly 14 million patients at 3,700 sites across the United States annually. Health Centers focus on providing care to lowincome individuals and those without health insurance. Patients are charged for services based on their ability to pay. An assessment of the program found that it is effective in reducing hospitalization rates and treating the uninsured. Approximately 86 percent of Health Center patients are at or below 200 percent of the Federal poverty line. Since the President began his commitment to expand services through Health Centers, 777 Health Center sites have been established or expanded and 3.7 million more people per year are being served. An estimated 120 new and expanded sites will be created in 2006. The 2007 Budget continues this record of progress and will complete the President’s commitment to create 1,200 new or expanded Health Center sites. More than 1.2 million additional individuals will receive health care in 2007 through more than 300 new or expanded sites in rural areas and underserved urban neighborhoods. Included in the President’s commitment is the goal to create a Health Center in every poor county in America that lacks a Health Center and can support one. Of the new sites created in 2007, 80 will be in high-poverty counties that lack a Health Center. Faith-based and community programs will also be encouraged to compete for these grants. Income Security Food and Nutrition Assistance. As part of its diverse array of programs, the United States Department of Agriculture (USDA) delivers programs that help those in need. The Special Supplemental Nutrition Program for Women, Infants and Children, more commonly known as WIC, serves the nutritional needs of low-income pregnant and post partum women, infants and children up to their fifth birthday. The Budget provides $5.2 billion for WIC services in 2006, full funding for all those estimated to be eligible and seeking services. Housing Assistance. Grant outlays for housing assistance are estimated to be $31.4 billion in 2007. Ending Chronic Homelessness. The Administration remains committed to the goal of ending chronic homelessness. Chronically homeless individuals who live on the streets and in shelters for long periods comprise less than 10 percent of the homeless population, yet consume over half of emergency homeless services. Many of this group have an addiction and/or suffer from a disabling physical or mental condition. As a result, they are homeless for extended periods of time or experience multiple episodes of homelessness. Hous- ing this population will free Federal, State, and local emergency resources for families and individuals who need shorter-term assistance. Through efforts of the U.S. Interagency Council on Homelessness, the Administration’s initiative to end chronic homelessness has gained traction in communities large and small across the country. Fifty-three States and territories have established interagency councils on homelessness, and over 200 cities and counties have established 10-year plans to end chronic homelessness. Federal interagency efforts to end chronic homelessness continue with the Departments of Health and Human Services (HHS), Veterans Affairs, and Labor participating actively. This budget proposes a $135 million increase for HUD’s Homeless Assistance grants, which received an Effective Rating in this year’s PART assessment due to a good program design and strong performance measures. The increase will help continue the work of the Samaritan Initiative that has integrated the efforts of State, local, private and other Federal programs to create and run 50,000 new units of supportive housing across the country for the chronically homeless. Up to $200 million is available for the Samaritan Initiative within the Homeless Assistance Grants annual competition. Temporary Assistance for Needy Families (TANF). This program provides grants to States for programs that assist needy families with children. Since the reformed welfare program was created in 1996, the number of welfare recipients has continued to decrease, and employment and earnings among the target population have increased. This is reflected in the PART evaluation, where the program received a rating of Moderately Effective, because it was able to demonstrate the program’s impact with performance measures and independent evaluations. The program’s recent reauthorization maintains the funding level, strengthens work requirements to maximize self-sufficiency, and supports healthy marriage and family formation. Administration of Justice This Budget includes $1.9 billion for State and local assistance programs, including Project Safe Neighborhoods, the DNA Initiative, USA Freedom Corps, the Regional Information Sharing System (RISS), Methamphetamine Lab Cleanup, and other initiatives. These and other Department of Justice (DOJ) programs enhance the capability of State and local governments to reduce crime in our communities, reduce domestic violence, assist victims of crime, and reduce our vulnerability to terrorism. Today, violent crime is at its lowest rate in at least three decades, decreasing 2.2 percent in 2004. The Project Safe Neighborhoods (PSN) initiative, announced by the President and the Attorney General in 2001, has helped bring together Federal, State, and local resources to help stamp out firearms-related crime in our communities. Beginning in 2007, PSN will become a 8. 105 AID TO STATE AND LOCAL GOVERNMENTS more robust strategy that targets not just illegal gun crime, but also the violent gangs that plague some of our communities. Since 2001, the Administration has dedicated over $1.5 billion in Federal resources to PSN, including grants to State and local task forces through the Office of Justice Programs (OJP), increased Federal prosecutors in U.S. Attorneys Offices, and agents and training within the Bureau of Alcohol, Tobacco, and Firearms (ATF). For 2007, the Budget requests $395 million for PSN, an increase of $154 million, or 64 percent, over the 2006 enacted level. The program increase will: • Provide $59 million in grant assistance for State and local prosecution of criminal misuse of firearms and illegal gang activity; • Increase funding for States to update criminal history records, which are needed to deter illegal fire- arms purchases, by $29 million—almost four times the 2005 enacted level; • Make available $15 million in technical assistance to State and local law enforcement to assist in combating gangs; and • Permit the deployment of ATF Violent Crime Impact Teams to 15 additional cities to assist States/ localities in combating violence. Other Functions Discussions of these and other Federal aid programs can be found in the main budget volume and elsewhere. As noted earlier, a detailed listing of budget authority and outlays for all grants to State and local governments is in Table 8–4 in this chapter. PERFORMANCE OF GRANTS TO STATE AND LOCAL GOVERNMENTS The Administration is committed to measuring and improving the performance of Government programs. The Congress mandated in the Government Performance and Results Act of 1993 that performance plans be developed and that the agencies report annual progress against these plans. In addition, this Administration began in the 2004 Budget to assess every Federal program over a five year period using the Program Assessment Rating Tool, or PART. With this budget, the fourth year of using the PART, the Administration has evaluated about four-fifths of the programs of the Federal Government. The PART assesses each program on four components (purpose, planning, management, and results/accountability) and gives a score for each of the components. The scores for each component are then weighted— results/accountability carries the greatest weight—and the program is given an overall score. A program is rated effective if it receives an overall score of 85 percent or more, Moderately Effective if the score is 70 to 84 percent, Adequate if the score is 50 to 69 percent, and Inadequate if the score is 49 percent or lower. The program is given a rating Results Not Demonstrated if the program does not have good performance measures or lacks data for existing measures. Chapter 2 of this volume discusses the PART in more detail. As shown in Table 8–2, 211 of the programs that have been assessed are primarily grants to State and local governments. Of these 211, 86 programs, or 41 percent of all grant programs assessed, received a rating of Results Not Demonstrated. This is higher than for all programs, in which 31 percent were given this rating. The higher percent of grants that have this rating might be explained in part because of the breadth of purpose of some grants, lack of agreement among grantees and Federal parties on the purpose and performance measures, and therefore lack of focused planning to achieve common goals. Table 8–2 also shows that the average rating for the 211 grant programs was Adequate. These programs had total spending of $209.8 billion in 2005. Of these 211 programs: The ratings of the largest four of these 211 grant programs are summarized here. More complete summaries of these and other programs can be found at ExpectMore.gov. • Department of Transportation: Highway Infrastructure ($32.1 billion in 2005). Rating: Moderately Effective. This program has been successful in improving highway safety and maintaining mobility—traffic-related fatalities per 100 million vehicle miles traveled have decreased from 1.51 in 2001 to an estimated 1.43 in 2005. But the program does not have adequate measures to demonstrate improved efficiency or cost effectiveness. For example, the program does not measure project cost and schedule performance. It also does not hold program managers or States accountable for cost, schedule, or performance results because oversight of State management of Federal highway dollars is lacking. The Administration is preparing a plan for improving program and project oversight of States, directing more resources to comprehensive evaluation activities (particularly at the State project level), and devising efficiency measures to show that program delivery is costeffective. • Department of Housing and Urban Development (HUD): Housing Vouchers ($14.8 billion in 2005). Rating: Moderately Effective. A variety of studies show housing vouchers to be a cost-effective means of delivering decent, safe and sanitary housing for low-income families. Housing subsidies provide access in most cases to better housing, often in better neighborhoods. The new funding structure simplifies the program and allocates tenant-based assistance on a budget, rather than unit basis, assuring that resources for housing assist- 106 ANALYTICAL PERSPECTIVES Table 8–2. SUMMARY OF PART RATINGS AND SCORES FOR GRANTS TO STATE AND LOCAL GOVERNMENTS Average Scores Components All grant programs (211 programs) Purpose .............................................................................................. Planning .............................................................................................. Management ....................................................................................... Results/Accountability ........................................................................ Average rating 1 .................................................................................. 82% 60% 74% 31% Adequate Number of grant programs Rating 1 Programs excluding grants rated ‘‘results not demonstrated’’ (86 programs) 86% 77% 80% 44% Adequate 2005 Program Level (in millions) Effective .............................................................................................. Moderately effective ........................................................................... Adequate ............................................................................................ Ineffective ........................................................................................... Results not demonstrated .................................................................. 6 41 62 16 86 17,800 99,444 40,100 10,716 41,712 Total number of grant programs rated .............................................. 211 209,772 1 Weighted as follows: Purpose (20%), Planning (10%), Management (20%), Results/Accountability (50%). The rating of effective indicates a score of 85 percent or more; moderately effective, 70–85 percent; adequate, 50–70 percent; and ineffective, 49 percent or less. ance are fully utilized. The Administration will continue to work with Congress to streamline the program, giving more flexibility to Public Housing Agencies to administer the program to better address local needs and market conditions. • Department of Education: IDEA Special Education Grants to States ($10.6 billion for 2005). Rating: Adequate. This program has made some progress in improving student achievements. Between 2000 and 2005, the percentage of students with disabilities scoring at or above Basic on the National Assessment of Educational Progress (the Nation’s Report Card) grew from 22% to 33% for 4th grade reading and from 20% to 31% for 8th grade mathematics. Also, more students with disabilities are staying in school. An independent evaluation is needed to provide information on the relationship between outcomes for children with disabilities and the program. While performance on the Nation’s Report Card has improved, drop-out rates have declined, and graduation rates have increased, there is little information on the program’s role in relation to these outcomes. • Department of Agriculture: National School Lunch ($7.0 billion in 2005). Rating: Results Not Demonstrated. This program provides funds to States for lunches served to children in schools. This program is generally well designed and has a clear purpose, however, the program does not have a reliable measure of the level of erroneous payments it makes. While the assessment was based largely on existing measures, these measures do not adequately demonstrate results. USDA is tak- ing steps to improve the programs’s performance measures. Block Grants. One of the most common tools used by the Federal Government is the block grant, particularly in the social services area where States and localities are the service providers. Block grants are embraced for their flexibility to meet local needs and criticized because accountability for results can be difficult when funds are allocated based on formulas and population rather than achievements or needs. In addition, block grants pose performance measurement challenges precisely because they can be used for a wide range of activities. The obstacles to measuring and achieving results through block grants are reflected in PART scores: they receive the second lowest average score of the seven PART types, 8 percent of block grant programs assessed to date were rated ineffective, and 39 percent were rated ‘‘results not demonstrated.’’ Nonetheless, the PART shows that some Federal block grant programs are achieving results better than others, effectively combining the flexibility that localities need with the results that taxpayers deserve. In the coming year, the Administration will apply the lessons learned from the effective block grants to several of those performing inadequately. This project will identify the methods used to manage highly rated block grant programs and adapt and implement those practices in large, low-scoring programs. Each of the programs targeted for improvement will develop an action plan and implementation timeline that will be tracked quarterly. The targeted programs will be re-analyzed through the PART in one to two years to assess whether implementing the block grant ‘‘best practices’’ results in improved performance. 8. 107 AID TO STATE AND LOCAL GOVERNMENTS HISTORICAL PERSPECTIVES In recent decades, Federal aid to State and local governments has become a major factor in the financing of certain government functions. The rudiments of the present system date back to the Civil War. The Morrill Act, passed in 1862, established the land grant colleges and instituted certain federally-required standards for States that received the grants, as is characteristic of the present grant programs. Federal aid was later initiated for agriculture, highways, vocational education and rehabilitation, forestry, and public health. In the depression years, Federal aid was extended to meet in- come security and other social welfare needs. However, Federal grants did not become a significant factor in Federal Government expenditures until after World War II. Table 8–3 displays trends in Federal grants to State and local governments since 1960. Section A shows Federal grants by function. Functions with a substantial amount of grants are shown separately. Grants for the national defense, energy, social security, and the veterans benefits and services functions are combined in the ‘‘other functions’’ line in the table. 108 ANALYTICAL PERSPECTIVES Table 8–3. TRENDS IN FEDERAL GRANTS TO STATE AND LOCAL GOVERNMENTS (Outlays; in billions of dollars) Actual 1960 1965 1970 A. Distribution of grants by function: Natural resources and environment .............................................................................. 0.1 0.2 Agriculture ...................................................................................................................... 0.2 0.5 Transportation ................................................................................................................ 3.0 4.1 Community and regional development ......................................................................... 0.1 0.6 Education, training, employment, and social services ................................................. 0.5 1.1 Health ............................................................................................................................. 0.2 0.6 Income security .............................................................................................................. 2.6 3.5 Administration of Justice ............................................................................................... ............ ............ General government ...................................................................................................... 0.2 0.2 Other .............................................................................................................................. * 0.1 1975 1980 1985 Estimate 1990 1995 2000 2005 2006 2007 0.4 0.6 4.6 1.8 6.4 3.8 5.8 0.0 0.5 0.1 2.4 0.4 5.9 2.8 12.1 8.8 9.4 0.7 7.1 0.2 5.4 0.6 13.0 6.5 21.9 15.8 18.5 0.5 8.6 0.7 4.1 2.4 17.0 5.2 17.1 24.5 27.9 0.1 6.8 0.8 3.7 1.3 19.2 5.0 21.8 43.9 36.8 0.6 2.3 0.8 4.0 0.8 25.8 7.2 30.9 93.6 58.4 1.2 2.3 0.8 4.6 0.7 32.2 8.7 36.7 124.8 68.7 5.3 2.1 0.9 5.9 0.9 43.4 20.2 57.2 197.8 90.9 4.8 4.4 0.8 5.8 0.8 46.7 22.3 60.3 210.6 93.7 3.7 4.4 0.8 5.9 0.7 51.5 21.8 57.9 216.5 95.0 4.7 4.1 0.9 Total ........................................................................................................................... 7.0 10.9 24.1 49.8 91.4 105.9 135.3 225.0 284.7 426.2 449.3 459.0 B. Distribution of grants by BEA category: Discretionary .................................................................................................................. Mandatory ...................................................................................................................... N/A N/A 2.9 8.0 10.2 13.9 21.0 28.8 53.3 38.1 55.5 50.4 63.3 72.0 94.0 131.0 116.7 168.0 181.9 244.3 187.9 261.4 191.3 267.8 Total ........................................................................................................................... 7.0 10.9 24.1 49.8 91.4 105.9 135.3 225.0 284.7 426.2 449.3 459.0 C. Composition: Current dollars: Payments for individuals 1 ......................................................................................... Physical capital 1 ....................................................................................................... Other grants .............................................................................................................. 2.5 3.3 1.2 3.7 5.0 2.2 8.7 7.1 8.3 16.8 10.9 22.2 32.6 22.6 36.2 50.1 24.9 30.9 77.3 27.2 30.9 144.4 39.6 41.0 182.6 48.7 53.4 273.5 60.8 91.9 287.6 65.9 95.7 296.3 69.9 92.8 Total ...................................................................................................................... 7.0 10.9 24.1 49.8 91.4 105.9 135.3 225.0 284.7 426.2 449.3 459.0 Percentage of total grants: Payments for individuals 1 ......................................................................................... Physical capital 1 ....................................................................................................... Other grants .............................................................................................................. 35.3% 47.3% 17.4% 34.1% 45.7% 20.2% 36.2% 29.3% 34.5% 33.6% 21.9% 44.5% 35.7% 24.7% 39.6% 47.3% 23.5% 29.2% 57.1% 20.1% 22.8% 64.2% 17.6% 18.2% 64.1% 17.1% 18.8% 64.2% 14.3% 21.6% 64.0% 14.7% 21.3% 64.5% 15.2% 20.2% Total ...................................................................................................................... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Constant (FY 2000) dollars: Payments for individuals 1 ......................................................................................... Physical capital 1 ....................................................................................................... Other grants .............................................................................................................. 12.0 17.0 10.0 16.9 24.2 15.6 33.5 27.2 44.6 48.0 26.0 83.8 63.9 38.9 89.9 75.0 34.2 53.9 96.6 32.6 42.9 157.6 43.3 47.0 182.6 48.7 53.4 244.8 53.7 75.5 248.7 55.5 75.0 250.1 56.8 70.2 Total ...................................................................................................................... 39.0 56.7 105.3 157.7 192.6 163.1 172.1 247.9 284.7 374.0 379.2 377.1 D. Total grants as a percent of: Federal outlays: Total ........................................................................................................................... Domestic programs 2 ................................................................................................. State and local expenditures ........................................................................................ Gross domestic product ................................................................................................ 7.6% 18.0% 14.8% 1.4% 9.2% 18.3% 15.5% 1.6% 12.3% 23.2% 20.1% 2.4% 15.0% 21.7% 24.0% 3.2% 15.5% 22.2% 27.4% 3.4% 11.2% 18.2% 22.0% 2.6% 10.8% 17.1% 18.9% 2.4% 14.8% 21.6% 22.8% 3.1% 15.9% 22.0% 22.1% 2.9% 17.2% 23.3% 24.4% 3.5% 16.6% 22.7% N/A 3.4% 16.6% 22.7% N/A 3.3% E. As a share of total State and local gross investments: Federal capital grants .................................................................................................... State and local own-source financing ........................................................................... 24.6% 75.4% 25.5% 74.5% 25.4% 74.6% 26.0% 74.0% 35.4% 64.6% 30.2% 69.8% 21.9% 78.1% 26.0% 74.0% 21.9% 78.1% 21.2% 78.8% N/A N/A N/A N/A Total ........................................................................................................................... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% N/A N/A N/A = Not available. * 50 million or less. 1 Grants that are both payments for individuals and capital investment are shown under capital investment. 2 Excludes national defense, international affairs, net interest, and undistributed offsetting receipts Federal grants for transportation increased to $3.0 billion, or 43 percent of all Federal grants, in 1960 after initiation of aid to States to build the Interstate Highway System in the late 1950s. By 1970 there had been significant increases in the relative amounts for education, training, employment, social services, and health (largely Medicaid). In the early and mid-1970s, major new grants were created for natural resources and environment (con- struction of sewage treatment plants), community and regional development (community development block grants), and general government (general revenue sharing). Since the late 1970s changes in the relative amounts among functions reflect steady growth of grants for health (Medicaid) and income security. The functions with the largest amount of grants are health; income security; education, training, employment, and social 8. 109 AID TO STATE AND LOCAL GOVERNMENTS services; and transportation, with combined estimated grant outlays of $374.0 billion, or more than 90 percent of total grant outlays in 2005. The increase in total outlays for grants overall since 1990 has been driven by increases in grants for health, which have increased more than four-fold from $43.9 billion in 1990 to $197.8 billion in 2005. The income security; education, training, employment, and social services; and transportation functions also increased substantially, but at a slower rate than the increase for health. Section B of the Table shows the distribution of grants divided into mandatory and discretionary spending. Funding required for grant programs classified as mandatory is determined in authorizing legislation. Funding levels for mandatory programs can only be changed by changing eligibility criteria or benefit formulas established in law and are usually not limited by the annual appropriations process. Outlays for mandatory grant programs were $244.3 billion in 2005. The three largest mandatory grant programs are Medicaid, with outlays of $199.3 billion in 2007, Temporary Assistance for Needy Families, $17.4 billion, and child nutrition programs, $13.2 billion. The funding level for discretionary grant programs is determined annually through appropriations acts. Outlays for discretionary grant programs were $181.9 billion in 2005. Table 8–4 at the end of this chapter identifies discretionary and mandatory grant programs separately. For more information on the Budget Enforcement Act and these categories, see Chapter 26, ‘‘The Budget System and Concepts’’ in this volume. Section C of Table 8–3 shows the composition of grants divided into three major categories: payments for individuals, grants for physical capital, and other grants. 2 Grant outlays for payments for individuals, which are mainly entitlement programs in which the Federal Government and the States share the costs, have grown significantly as a percent of total grants. They increased from 57 percent of the total in 1990 to 64 percent of the total in 2005. These grants are distributed through State or local governments to provide cash or in-kind benefits that constitute income transfers to individuals or families. The major grant in this category is Medicaid. Temporary Assistance for Needy Families, Food Stamps administration, child nutrition programs, and housing assistance are also large grants in this category. Grants for physical capital assist States and localities with construction and other physical capital activities. The major capital grants are for highways, but there are also grants for airports, mass transit, sewage treatment plant construction, community development, and other facilities. Grants for physical capital were almost half of total grants in 1960, shortly after grants began for construction of the Interstate Highway System. The relative share of these outlays has declined, as payments for individuals have grown. In 2005, grants for physical capital were $60.8 billion, 14 percent of total grants. The other grants are primarily for education, training, employment, and social services. These grants were 22 percent of total grants in 2005. Section C of Table 8–3 also shows these three categories in constant dollars. In constant 2000 dollars, total grants increased from $172.1 billion in 1990 to an estimated $374.0 billion in 2005, an average increase of 5.3 percent per year. During this same period, grants for payments to individuals increased an average of 6.4 percent per year; grants for physical capital an average of 3.4 percent per year, and other grants an average of 3.8 percent per year. In contrast to these increases, outlays for total grants in constant 2000 dollars decreased during the 1980s, from $192.6 billion in 1980 to $172.1 billion in 1990. Section D of this table shows grants as a percentage of Federal outlays, State and local expenditures, and gross domestic product. Grants have increased as a percentage of total Federal outlays from 11 percent in 1990 to 17 percent in 2005. Grants as a percentage of domestic programs were 23 percent in 2005. As a percentage of total State and local expenditures, grants have increased from 19 percent in 1990 to 24 percent in 2005. Section E shows the relative contribution of physical capital grants in assisting States and localities with gross investment. Federal capital grants are estimated to be 21 percent of State and local gross investment in 2005. OTHER INFORMATION ON FEDERAL AID TO STATE AND LOCAL GOVERNMENTS Additional information regarding aid to State and local governments can be found elsewhere in this budget and in other documents. Major public physical capital investment programs providing Federal grants to State and local governments are identified in Chapter 6, ‘‘Federal Investment.’’ Data for summary and detailed grants to State and local governments can be found in many sections of 2 Certain housing grants are classified in the budget as both payments for individuals and physical capital spending. In the text and tables in this section, these grants are included in the category for physical capital spending. a separate budget volume entitled Historical Tables. Section 12 of that document is devoted exclusively to grants to State and local governments. Additional information on grants can be found in Section 6 (Composition of Federal Government Outlays); Section 9 (Federal Government Outlays for Investment: Major Physical Capital, Research and Development, and Education and Training); Section 11 (Federal Government Payments 110 ANALYTICAL PERSPECTIVES for Individuals); and Section 15 (Total (Federal and State and Local) Government Finances). In addition to these sources, a number of other sources of information are available that use slightly different concepts of grants, provide State-by-State information, provide information on how to apply for Federal aid, or display information about audits. The Bureau of the Census in the Department of Commerce provides data on public finances, including Federal aid to State and local governments. The Bureau’s major reports and databases on grant-making include: Federal Aid to States, a report on Federal spending by State for grants for the most recently completed fiscal year. The Consolidated Federal Funds Report is an annual document that shows the distribution of Federal spending by State and county areas and by local governmental jurisdictions. The Federal Assistance Awards Data System (FAADS) provides computerized information about current grant funding. Data on all direct assistance awards are provided quarterly to the States and to the Congress. The Federal Audit Clearinghouse maintains an online database (http://harvester.census.gov/sac) that provides access to summary information about audits conducted under OMB Circular A–133, ‘‘Audits to States, Local Governments, and Non-Profit Organizations.’’ Information is available for each audited entity, including the amount of Federal money expended by program and whether there were audit findings. The Bureau of Economic Analysis, also in the Department of Commerce, publishes the monthly Survey of Current Business, which provides data on the national income and product accounts (NIPA), a broad statistical concept encompassing the entire economy. These accounts include data on Federal grants to State and local governments. Data using the NIPA concepts appear in this volume in Chapter 14, ‘‘National Income and Product Accounts.’’ The Catalog of Federal Domestic Assistance is a primary reference source for communities wishing to apply for grants and other domestic assistance. The Catalog is prepared by the General Services Administration with data collected by the Office of Management and Budget. It contains a detailed listing of grant and other assistance programs; discussions of eligibility criteria, application procedures, and estimated obligations; and related information. The Catalog is available on the Internet at http://www.cfda.gov. DETAILED FEDERAL AID TABLE Table 8–4, ‘‘Federal Grants to State and Local Governments-Budget Authority and Outlays,’’ provides detailed budget authority and outlay data for grants, in- cluding proposed legislation. This table displays discretionary and mandatory grant programs separately. 8. 111 AID TO STATE AND LOCAL GOVERNMENTS Table 8–4. FEDERAL GRANTS TO STATE AND LOCAL GOVERNMENTS—BUDGET AUTHORITY AND OUTLAYS (in millions of dollars) Budget Authority Function, Category, Agency and Program NATIONAL DEFENSE Discretionary: Department of Defense—Military: Research, Development, Test, and Evaluation: Research, development, test, and evaluation, Army ........................................................ 2005 Actual 2006 Estimate 3 Outlays 2007 Estimate 2 2005 Actual 2 2006 Estimate 2007 Estimate 2 1 1 ENERGY Discretionary: Department of Energy: Energy Programs: Energy conservation ........................................................................................................... 272 ...................... ...................... 271 Energy supply and conservation ........................................................................................ .................... 279 213 .................... 150 125 41 215 Total, discretionary ........................................................................................................... 272 279 213 271 275 256 Mandatory: Tennessee Valley Authority fund ................................................................................................ 365 375 422 365 375 422 Total, energy ................................................................................................................. 637 654 635 636 650 678 NATURAL RESOURCES AND ENVIRONMENT Discretionary: Department of Agriculture: Farm Service Agency: Grassroots source water protection program .................................................................... .................... 4 ...................... .................... Natural Resources Conservation Service: Watershed rehabilitation program ...................................................................................... 4 5 2 2 Resource conservation and development .......................................................................... .................... ...................... ...................... 1 Watershed and flood prevention operations ...................................................................... 120 105 ...................... 61 Forest Service: State and private forestry ................................................................................................... 345 311 221 321 Management of national forest lands for subsistence uses ............................................. 6 5 5 6 Department of Commerce: National Oceanic and Atmospheric Administration: Operations, research, and facilities .................................................................................... 108 90 90 57 Pacific coastal salmon recovery ......................................................................................... 88 67 67 77 Procurement, acquisition and construction ........................................................................ 110 104 14 110 Department of the Interior: Office of Surface Mining Reclamation and Enforcement: Regulation and technology ................................................................................................. 58 59 60 57 Abandoned mine reclamation fund .................................................................................... 168 167 167 185 Bureau of Reclamation: Bureau of Reclamation loan subsidy ................................................................................. 21 2 ...................... 21 United States Fish and Wildlife Service: State and tribal wildlife grants ........................................................................................... 69 67 75 61 Cooperative endangered species conservation fund ........................................................ 81 81 80 56 Landowner incentive program ............................................................................................ 22 22 25 10 National Park Service: Urban park and recreation fund ......................................................................................... .................... ...................... ...................... 17 National recreation and preservation ................................................................................. 61 54 33 60 Land acquisition and State assistance .............................................................................. 91 29 1 80 Historic preservation fund ................................................................................................... 72 72 72 64 Environmental Protection Agency: State and tribal assistance grants ..................................................................................... 3,575 3,148 2,797 3,583 Hazardous substance superfund ........................................................................................ 119 59 42 92 Leaking underground storage tank trust fund ................................................................... 59 68 60 59 4 ...................... 2 1 138 1 1 100 369 5 347 5 43 80 104 42 81 14 58 166 59 163 2 ...................... 64 81 14 73 80 18 16 56 78 74 10 41 75 74 3,569 57 65 3,511 114 56 Total, discretionary ........................................................................................................... 5,177 4,519 3,811 4,980 5,046 4,865 Mandatory: Department of the Interior: Bureau of Land Management: Miscellaneous permanent payment accounts .................................................................... Minerals Management Service: National forests fund, Payment to States .......................................................................... Leases of lands acquired for flood control, navigation, and allied purposes .................. 250 157 154 250 159 154 8 5 8 3 7 3 8 5 8 3 7 3 112 ANALYTICAL PERSPECTIVES Table 8–4. FEDERAL GRANTS TO STATE AND LOCAL GOVERNMENTS—BUDGET AUTHORITY AND OUTLAYS—Continued (in millions of dollars) Budget Authority Function, Category, Agency and Program 2005 Actual 2006 Estimate Outlays 2007 Estimate 2005 Actual 2006 Estimate 2007 Estimate Coastal impact assistance .................................................................................................. .................... ...................... 250 .................... ...................... 250 United States Fish and Wildlife Service: Federal aid in wildlife restoration ....................................................................................... 251 264 277 243 239 244 Cooperative endangered species conservation fund ........................................................ 35 39 43 35 39 43 Sport fish restoration .......................................................................................................... 339 364 424 331 346 374 Departmental Management: Everglades restoration account .......................................................................................... .................... ...................... ...................... 1 1 ...................... Department of the Treasury: Financial Management Service: Payment to terrestrial wildlife habitat restoration trust fund ............................................. 5 5 5 5 5 5 Total, mandatory ............................................................................................................... 893 840 1,163 878 800 1,080 Total, natural resources and environment ............................................................... 6,070 5,359 4,974 5,858 5,846 5,945 AGRICULTURE Discretionary: Department of Agriculture: Cooperative State Research, Education, and Extension Service: Extension activities ............................................................................................................. Outreach for socially disadvantaged farmers .................................................................... Research and education activities ..................................................................................... Integrated activities ............................................................................................................. Agricultural Marketing Service: Payments to States and possessions ............................................................................... Farm Service Agency: State mediation grants ....................................................................................................... 451 6 243 26 456 6 241 25 436 7 237 7 440 5 241 23 452 6 240 24 437 7 240 22 10 11 1 7 3 8 4 4 4 4 4 4 Total, discretionary ........................................................................................................... 740 743 692 720 729 718 Mandatory: Department of Agriculture: Office of the Secretary: Fund for rural America ....................................................................................................... .................... ...................... ...................... Farm Service Agency: Commodity Credit Corporation fund .................................................................................. 209 69 29 4 1 ...................... 209 69 29 Total, mandatory ............................................................................................................... 209 69 29 213 70 29 Total, agriculture .......................................................................................................... 949 812 721 933 799 747 2 23 12 2 15 .................... ...................... 15 17 23 12 17 .................... ...................... ...................... 3,530 3,800 3,705 ...................... .................... ...................... 1 ...................... 113 ...................... 30,915 ...................... 208 ...................... 230 743 1 145 32,639 195 196 1,128 1 130 36,481 147 180 COMMERCE AND HOUSING CREDIT Mandatory: Department of Commerce: National Oceanic and Atmospheric Administration: Promote and develop fishery products and research pertaining to American fisheries .. 13 12 National Telecommunications and Information Administration: Digital television transition and public safety fund ............................................................ .................... ...................... Total, commerce and housing credit ........................................................................ TRANSPORTATION Discretionary: Department of Transportation: Federal Aviation Administration: Grants-in-aid for airports (Airport and airway trust fund) .................................................. Federal Highway Administration: Emergency relief program .................................................................................................. State infrastructure banks .................................................................................................. Appalachian development highway system ....................................................................... Federal-aid highways .......................................................................................................... Miscellaneous appropriations ............................................................................................. Miscellaneous highway trust funds .................................................................................... Federal Motor Carrier Safety Administration: National motor carrier safety program ............................................................................... Motor carrier safety ............................................................................................................ 13 .................... .................... 80 .................... –2 34 12 2,750 ...................... 20 ...................... ...................... ...................... 168 ...................... ...................... .................... ...................... ...................... 73 ...................... ...................... .................... 73 ...................... 8. 113 AID TO STATE AND LOCAL GOVERNMENTS Table 8–4. FEDERAL GRANTS TO STATE AND LOCAL GOVERNMENTS—BUDGET AUTHORITY AND OUTLAYS—Continued (in millions of dollars) Budget Authority Function, Category, Agency and Program Motor Carrier Safety Grants ............................................................................................... National Highway Traffic Safety Administration: Highway traffic safety grants .............................................................................................. Federal Railroad Administration: Alaska railroad rehabilitation .............................................................................................. Federal Transit Administration: Job access and reverse commute grants ......................................................................... Interstate transfer grants-transit ......................................................................................... Washington Metropolitan Area Transit Authority ............................................................... Formula grants .................................................................................................................... Capital investment grants ................................................................................................... Research and university research centers ........................................................................ Discretionary grants (Highway trust fund, mass transit account) ..................................... Formula and bus grants ..................................................................................................... Pipeline and Hazardous Materials Safety Administration: Pipeline safety .................................................................................................................... United States-Canada Alaska Rail Commission: Contribution to United States-Canada Alaska Rail Commission ...................................... 2005 Actual 2006 Estimate Outlays 2007 Estimate 2005 Actual 2006 Estimate .................... 279 298 .................... 211 556 566 10 ...................... 25 125 .................... .................... 4,871 3,363 11 .................... .................... ...................... ...................... ...................... 85 1,487 ...................... ...................... 6,910 19 20 2007 Estimate 78 285 205 371 497 35 21 6 ...................... 99 121 95 ...................... 1 ...................... ...................... ...................... .................... 3 2 ...................... 4,521 3,453 2,416 1,466 3,374 3,803 3,233 ...................... .................... ...................... ...................... ...................... 119 90 67 7,263 .................... 958 3,119 21 19 .................... ...................... ...................... 2 9,614 43,372 20 23 2 ...................... Total, discretionary ........................................................................................................... 8,978 12,117 46,712 51,515 Mandatory: Department of Transportation: Federal Aviation Administration: Grants-in-aid for airports (Airport and airway trust fund) .................................................. Federal Highway Administration: Federal-aid highways .......................................................................................................... Right-of-way revolving fund liquidating account ................................................................ 3,696 3,070 38,121 –2 35,100 41,423 .................... ...................... ...................... –11 ...................... –2 –11 ...................... Total, mandatory ............................................................................................................... 41,815 38,159 44,148 –2 Total, transportation .................................................................................................... 50,793 50,276 53,762 43,370 46,701 51,515 814 704 714 14 14 10 332 361 339 2,116 1,185 1,407 278 2,097 547 132 39 10,069 222 66 11,831 3 20 10,718 4,985 2 4 12 48 6,906 2 5 12 45 6,787 2 5 11 43 133 139 150 150 7 65 9 146 26 71 12 146 7 75 8 2,725 .................... ...................... ...................... COMMUNITY AND REGIONAL DEVELOPMENT Discretionary: Department of Agriculture: Rural Development: Rural community advancement program ........................................................................... 726 632 529 Rural Utilities Service: Distance learning, telemedicine, and broadband program ............................................... 16 16 11 Department of Commerce: Economic Development Administration: Economic development assistance programs ................................................................... 256 250 297 Department of Homeland Security: Preparedness: State and local programs ................................................................................................... 2,775 2,315 2,457 Firefighter assistance grants .............................................................................................. 715 648 293 Federal Emergency Management Agency: Operating Expenses ........................................................................................................... .................... ...................... ...................... Mitigation grants ................................................................................................................. .................... ...................... ...................... Disaster Relief .................................................................................................................... 58,163 –21,920 1,650 Department of Housing and Urban Development: Community Planning and Development: Community development fund ............................................................................................ 4,852 15,678 2,676 Urban development action grants ...................................................................................... .................... ...................... ...................... Community development loan guarantees subsidy ........................................................... 7 4 ...................... Brownfields redevelopment ................................................................................................ 24 ...................... ...................... Empowerment zones/enterprise communities/renewal communities ................................ 10 ...................... ...................... Office of Lead Hazard Control and Healthy Homes: Lead hazard reduction ........................................................................................................ 167 150 115 Department of the Interior: Bureau of Indian Affairs: Operation of Indian programs ............................................................................................ 146 144 150 Indian guaranteed loan subsidy ......................................................................................... 9 26 6 Appalachian Regional Commission ............................................................................................ 58 57 59 Delta regional authority ............................................................................................................... 4 12 4 –11 ...................... 114 ANALYTICAL PERSPECTIVES Table 8–4. FEDERAL GRANTS TO STATE AND LOCAL GOVERNMENTS—BUDGET AUTHORITY AND OUTLAYS—Continued (in millions of dollars) Budget Authority Function, Category, Agency and Program 2005 Actual 2006 Estimate Outlays 2007 Estimate 2005 Actual 2006 Estimate 2007 Estimate Denali Commission ...................................................................................................................... 67 50 3 49 49 84 Total, discretionary ........................................................................................................... 67,995 –1,938 8,250 20,165 22,296 21,766 Mandatory: Department of Housing and Urban Development: Community Planning and Development: Community development loan guarantees subsidy ........................................................... 2 3 ...................... 2 Total, community and regional development ........................................................... 67,997 EDUCATION, TRAINING, EMPLOYMENT, AND SOCIAL SERVICES Discretionary: Department of Commerce: National Telecommunications and Information Administration: Public telecommunications facilities, planning and construction ....................................... Information infrastructure grants ........................................................................................ Department of Education: Office of Elementary and Secondary Education: Reading excellence ............................................................................................................ Indian education ................................................................................................................. Impact aid ........................................................................................................................... Chicago litigation settlement .............................................................................................. Education reform ................................................................................................................ Education for the disadvantaged ....................................................................................... School improvement programs .......................................................................................... Office of Innovation and Improvement: Innovation and improvement .............................................................................................. Office of Safe and Drug-Free Schools: Safe schools and citizenship education ............................................................................ Office of English Language Acquisition: English language acquisition .............................................................................................. Office of Special Education and Rehabilitative Services: Special education ............................................................................................................... Rehabilitation services and disability research .................................................................. American Printing House for the Blind .............................................................................. Office of Vocational and Adult Education: Vocational and adult education .......................................................................................... Office of Postsecondary Education: Higher education ................................................................................................................. Office of Federal Student Aid: Student financial assistance ............................................................................................... Institute of Education Sciences: Institute of education sciences ........................................................................................... Hurricane Education Recovery: Hurricane education recovery ............................................................................................ Department of Health and Human Services: Administration for Children and Families: Promoting safe and stable families ................................................................................... Children and families services programs .......................................................................... Administration on Aging: Aging services programs .................................................................................................... Department of the Interior: Bureau of Indian Affairs: Operation of Indian programs ............................................................................................ Department of Labor: Employment and Training Administration: Training and employment services .................................................................................... Community service employment for older Americans ....................................................... State unemployment insurance and employment service operations .............................. Unemployment trust fund ................................................................................................... Corporation for National and Community Service: Domestic volunteer service programs, operating expenses ............................................. National and community service programs, operating expenses ..................................... Corporation for Public Broadcasting: Corporation for Public Broadcasting .................................................................................. –1,935 3 ...................... 8,250 20,167 22,299 21,766 22 20 ...................... .................... ...................... ...................... 24 21 34 14 25 8 .................... ...................... ...................... 115 115 115 1,236 1,224 1,224 .................... ...................... ...................... .................... ...................... ...................... 14,797 14,434 16,423 5,469 5,110 4,831 40 19 ...................... 117 119 114 1,249 1,339 1,224 1 ...................... ...................... 32 58 ...................... 14,539 14,812 15,653 6,569 5,808 5,200 550 648 688 230 731 665 821 692 250 363 800 757 617 629 629 582 732 575 11,466 135 17 11,439 127 18 10,709 90 18 10,661 146 17 10,416 186 22 11,312 104 18 1,974 1,967 1,355 1,930 2,003 1,903 414 403 ...................... 436 502 418 66 65 ...................... 60 74 52 25 25 11 19 27 1,600 ...................... .................... 1,460 140 394 8,685 446 8,566 446 7,879 399 8,490 406 8,514 434 8,175 1,370 1,345 1,318 1,379 1,337 1,328 116 116 116 117 111 111 3,509 97 141 1,061 3,125 94 123 961 3,770 388 25 232 3,372 97 137 469 3,077 97 146 989 3,180 388 112 232 116 271 105 277 105 258 109 235 142 271 115 375 466 460 347 466 460 347 .................... 55 8. 115 AID TO STATE AND LOCAL GOVERNMENTS Table 8–4. FEDERAL GRANTS TO STATE AND LOCAL GOVERNMENTS—BUDGET AUTHORITY AND OUTLAYS—Continued (in millions of dollars) Budget Authority Function, Category, Agency and Program 2005 Actual 2006 Estimate Outlays 2007 Estimate 2005 Actual 2006 Estimate 2007 Estimate District of Columbia: District of Columbia General and Special Payments: Federal payment for resident tuition support .................................................................... Federal payment for school improvement ......................................................................... National Endowment for the Arts: grants and administration .................................................... Institute of Museum and Library Services: Office of Museum and Library Services: grants and administration ................................ 26 40 40 33 40 40 35 41 40 26 40 37 33 40 39 35 41 41 269 238 249 239 314 279 Total, discretionary ........................................................................................................... 54,325 54,485 51,636 52,640 55,124 53,388 Mandatory: Department of Education: Office of Special Education and Rehabilitative Services: Rehabilitation services and disability research .................................................................. 2,636 2,720 2,837 2,535 2,730 2,797 Department of Health and Human Services: Administration for Children and Families: Social services block grant ................................................................................................ 1,700 2,250 1,200 1,822 2,224 1,402 Department of Labor: Employment and Training Administration: Welfare to work jobs .......................................................................................................... .................... ...................... ...................... 6 ...................... ...................... Federal unemployment benefits and allowances .............................................................. 259 259 260 244 259 260 Foreign labor certification processing ................................................................................ .................... ...................... 3 .................... ...................... 3 Total, mandatory ............................................................................................................... 4,595 5,229 4,300 4,607 5,213 4,462 Total, education, training, employment, and social services ................................ 58,920 59,714 55,936 57,247 60,337 57,850 44 44 45 38 43 45 3,888 3,332 3,843 3,227 3,707 3,772 2,733 4,040 4,107 2,782 3,331 4,049 2,338 2,315 2,266 3,203 2,326 2,302 1,535 109 583 122 8 114 1,451 105 398 85 6 86 101 101 91 101 101 101 8 8 8 8 8 8 Total, discretionary ........................................................................................................... 10,756 10,545 10,482 10,915 9,999 10,369 Mandatory: Department of Health and Human Services: Centers for Medicare and Medicaid Services: Grants to States for medicaid ............................................................................................ State children’s health insurance fund .............................................................................. State grants and demonstrations ....................................................................................... 177,540 4,082 536 215,471 4,365 2,527 200,698 5,040 1,309 181,720 5,129 84 192,334 5,775 2,472 199,287 5,948 847 Total, mandatory ............................................................................................................... 182,158 222,363 207,047 186,933 200,581 206,082 Total, health .................................................................................................................. 192,914 232,908 217,529 197,848 210,580 216,451 INCOME SECURITY Discretionary: Department of Agriculture: Food and Nutrition Service: Commodity assistance program ......................................................................................... 178 189 71 177 182 82 HEALTH Discretionary: Department of Agriculture: Food Safety and Inspection Service: Salaries and expenses ....................................................................................................... Department of Health and Human Services: Health Resources and Services Administration: Health resources and services ........................................................................................... Centers for Disease Control and Prevention: Disease control, research, and training ............................................................................. Substance Abuse and Mental Health Services Administration: Substance abuse and mental health services .................................................................. Departmental Management: Public health and social services emergency fund ........................................................... General departmental management ................................................................................... Department of Labor: Occupational Safety and Health Administration: Salaries and expenses ....................................................................................................... Mine Safety and Health Administration: Salaries and expenses ....................................................................................................... 116 ANALYTICAL PERSPECTIVES Table 8–4. FEDERAL GRANTS TO STATE AND LOCAL GOVERNMENTS—BUDGET AUTHORITY AND OUTLAYS—Continued (in millions of dollars) Budget Authority Function, Category, Agency and Program 2005 Actual 2006 Estimate Outlays 2007 Estimate 2005 Actual 2006 Estimate Special supplemental nutrition program for women, infants, and children (WIC) ........... 5,235 5,173 5,200 4,985 Department of Health and Human Services: Administration for Children and Families: Low income home energy assistance ............................................................................... 2,182 2,161 1,782 2,095 Refugee and entrant assistance ........................................................................................ 301 387 432 419 Payments to States for the child care and development block grant .............................. 2,076 2,055 2,055 2,110 Department of Homeland Security: Federal Emergency Management Agency: Emergency food and shelter .............................................................................................. 153 151 151 153 Department of Housing and Urban Development: Public and Indian Housing Programs: Public housing operating fund ........................................................................................... 2,437 3,564 3,564 3,572 Drug elimination grants for low-income housing ............................................................... –21 ...................... ...................... 6 Revitalization of severely distressed public housing (HOPE VI) ...................................... 143 99 –99 695 Native Hawaiian Housing Block Grant .............................................................................. .................... 9 6 .................... Tenant based rental assistance ......................................................................................... 10,600 15,808 15,920 10,031 Project-based rental assistance ......................................................................................... 848 806 908 345 Public housing capital fund ................................................................................................ 2,579 2,439 2,178 3,153 Prevention of resident displacement .................................................................................. .................... ...................... ...................... –79 Native American housing block grant ................................................................................ 601 624 626 684 Housing certificate fund ...................................................................................................... 2,169 –2,050 –2,000 7,280 Community Planning and Development: Homeless assistance grants .............................................................................................. 1,230 1,327 1,536 1,282 Home investment partnership program .............................................................................. 1,900 1,757 1,917 1,718 Housing opportunities for persons with AIDS ................................................................... 282 286 300 280 Rural housing and economic development ....................................................................... 24 17 ...................... 24 Housing Programs: Homeownership and opportunity for people everywhere grants (HOPE grants) ............. –3 ...................... ...................... 3 Housing for persons with disabilities ................................................................................. 238 237 119 307 Housing for the elderly ....................................................................................................... 741 735 546 902 Department of Labor: Employment and Training Administration: Unemployment trust fund ................................................................................................... 2,674 2,558 2,650 3,198 Total, discretionary ........................................................................................................... 36,567 38,332 Mandatory: Department of Agriculture: Agricultural Marketing Service: Funds for strengthening markets, income, and supply (section 32) ................................ 722 1,130 Food and Nutrition Service: Food stamp program .......................................................................................................... 4,452 4,590 Commodity assistance program ......................................................................................... 15 15 Child nutrition programs ..................................................................................................... 11,752 12,533 Department of Health and Human Services: Administration for Children and Families: Payments to States for child support enforcement and family support programs .......... 4,074 3,322 Low income home energy assistance ............................................................................... .................... ...................... Contingency fund ................................................................................................................ 1,958 ...................... Payments to States for foster care and adoption assistance .......................................... 6,806 6,708 Child care entitlement to States ........................................................................................ 3,708 1,926 Temporary assistance for needy families .......................................................................... 22,348 11,988 2007 Estimate 5,198 5,200 2,170 449 2,034 1,867 497 2,056 151 151 3,545 3,564 6 2 651 594 1 3 15,434 16,024 782 852 3,112 2,865 79 ...................... 716 702 2,439 2,163 1,332 1,774 284 23 1,388 1,822 289 22 3 258 875 3 260 875 2,608 2,679 37,862 43,340 44,106 43,960 1,187 826 1,416 887 4,738 15 13,489 4,385 15 11,726 4,561 15 12,717 4,718 15 13,156 3,960 3,982 3,903 1,000 .................... ...................... 232 43 131 6,973 6,427 6,603 2,917 2,784 2,868 17,158 17,357 17,406 4,112 771 105 6,906 2,909 17,471 Total, mandatory ............................................................................................................... 55,835 42,212 51,669 47,545 49,620 51,050 Total, income security ................................................................................................. 92,402 80,544 89,531 90,885 93,726 95,010 SOCIAL SECURITY Mandatory: Social Security Administration: Federal disability insurance trust fund ............................................................................... 12 64 54 2 38 59 8. 117 AID TO STATE AND LOCAL GOVERNMENTS Table 8–4. FEDERAL GRANTS TO STATE AND LOCAL GOVERNMENTS—BUDGET AUTHORITY AND OUTLAYS—Continued (in millions of dollars) Budget Authority Function, Category, Agency and Program 2005 Actual 2006 Estimate Outlays 2007 Estimate 2005 Actual 2006 Estimate 2007 Estimate VETERANS BENEFITS AND SERVICES Discretionary: Department of Veterans Affairs: Construction: Grants for construction of State extended care facilities .................................................. Grants for the construction of State veterans cemeteries ................................................ 104 32 85 32 85 32 97 21 92 23 92 27 Total, veterans benefits and services ....................................................................... 136 117 117 118 115 119 ADMINISTRATION OF JUSTICE Discretionary: Department of Health and Human Services: Administration for Children and Families: Violent crime reduction programs ...................................................................................... .................... ...................... ...................... 1 ...................... ...................... Department of Homeland Security: Preparedness: State and local programs ................................................................................................... 495 400 ...................... 221 223 272 Department of Housing and Urban Development: Fair Housing and Equal Opportunity: Fair housing activities ......................................................................................................... 46 46 45 47 46 46 Department of Justice: Legal Activities and U.S. Marshals: Assets forfeiture fund ......................................................................................................... 21 21 21 23 21 21 Office of Justice Programs: Justice assistance ............................................................................................................... 145 119 770 284 60 1,048 State and local law enforcement assistance ..................................................................... 1,163 1,094 ...................... 1,523 905 1,120 Juvenile justice programs ................................................................................................... 325 268 ...................... 343 204 354 Community oriented policing services ............................................................................... 499 386 –26 931 667 336 Violence against women prevention and prosecution programs ...................................... 370 368 333 233 502 491 Crime victims fund .............................................................................................................. .................... –19 ...................... .................... –11 –6 Equal Employment Opportunity Commission: Salaries and expenses ....................................................................................................... 33 31 28 30 24 43 Federal Drug Control Programs: High-intensity drug trafficking areas program .................................................................... 196 225 ...................... 187 170 ...................... State Justice Institute: salaries and expenses ........................................................................... 3 4 ...................... 2 5 ...................... Total, discretionary ........................................................................................................... 3,296 2,943 1,171 3,825 2,816 3,725 313 263 300 306 258 270 589 569 589 572 587 648 81 75 75 81 75 75 Total, mandatory ............................................................................................................... 983 907 964 959 920 993 Total, administration of justice .................................................................................. 4,279 3,850 2,135 4,784 3,736 4,718 2 5 5 14 14 13 227 235 200 54 3 58 1 61 1 Mandatory: Department of Justice: Legal Activities and U.S. Marshals: Assets forfeiture fund ......................................................................................................... Office of Justice Programs: Crime victims fund .............................................................................................................. Department of the Treasury: Departmental Offices: Treasury forfeiture fund ...................................................................................................... GENERAL GOVERNMENT Discretionary: Department of Health and Human Services: Administration for Children and Families: Disabled voter services ...................................................................................................... .................... ...................... ...................... Department of the Interior: United States Fish and Wildlife Service: National wildlife refuge fund ............................................................................................... 14 14 11 Departmental Management: Payments in lieu of taxes .................................................................................................. 227 233 198 Insular Affairs: Assistance to territories ...................................................................................................... 48 49 47 Trust Territory of the Pacific Islands ................................................................................. .................... ...................... ...................... 118 ANALYTICAL PERSPECTIVES Table 8–4. FEDERAL GRANTS TO STATE AND LOCAL GOVERNMENTS—BUDGET AUTHORITY AND OUTLAYS—Continued (in millions of dollars) Budget Authority Function, Category, Agency and Program 2005 Actual 2006 Estimate Outlays 2007 Estimate 2005 Actual District of Columbia: District of Columbia Courts: Federal payment to the District of Columbia courts ......................................................... 189 217 197 Defender services in District of Columbia courts .............................................................. 38 45 43 District of Columbia General and Special Payments: Federal support for economic development and management reforms in the District ... 69 52 58 Election Assistance Commission: Election reform programs ................................................................................................... .................... ...................... ...................... Total, discretionary ........................................................................................................... 585 Mandatory: Department of Agriculture: Forest Service: Forest Service permanent appropriations .......................................................................... 438 Department of Energy: Energy Programs: Payments to States under Federal Power Act .................................................................. 3 Department of Homeland Security: Security, Enforcement, and Investigations: Refunds, transfers, and expenses of operation, Puerto Rico .......................................... 100 Department of the Interior: Bureau of Land Management: Miscellaneous permanent payment accounts .................................................................... 106 Minerals Management Service: Mineral leasing and associated payments ........................................................................ 1,621 Geothermal lease revenues, payment to counties ............................................................ .................... United States Fish and Wildlife Service: National wildlife refuge fund ............................................................................................... 12 Insular Affairs: Assistance to territories ...................................................................................................... 28 Payments to the United States territories, fiscal assistance ............................................ 145 Department of the Treasury: Alcohol and Tobacco Tax and Trade Bureau: Internal revenue collections for Puerto Rico ..................................................................... 421 Corps of Engineers-Civil Works: Permanent appropriations .................................................................................................. 9 2006 Estimate 2007 Estimate 159 37 214 45 199 43 70 52 58 980 67 ...................... 610 554 1,546 691 580 421 491 403 469 491 3 3 3 3 3 98 98 89 138 98 109 100 106 104 100 2,397 2,221 1,621 3 ...................... .................... 2,397 2,221 3 ...................... 6 7 7 10 6 28 144 28 144 22 143 29 143 28 143 441 457 421 441 457 9 9 9 9 9 Total, mandatory ............................................................................................................... 2,883 3,659 3,558 2,824 3,746 3,556 Total, general government .......................................................................................... 3,468 4,269 4,112 4,370 4,437 4,136 Total, Grants ............................................................................................................. Discretionary .......................................................................................................... Mandatory .............................................................................................................. 478,593 188,830 289,763 436,646 122,754 313,892 437,775 124,404 313,371 426,243 181,894 244,349 449,277 187,910 261,367 459,012 191,262 267,750 APPENDIX: SELECTED GRANT DATA BY STATE This Appendix displays State-by-State spending for the selected grant programs to State and local governments shown in the following table, ‘‘Summary of Programs by Agency and Bureau.’’ The programs selected here cover more than 80 percent of total grant spending. The first summary table shows the obligations for each program. The second summary table, ‘‘Summary of Programs by State,’’ shows the amounts for each State for these programs. The individual program tables display obligations for each program on a State- by-State basis, consistent with the estimates in this budget. Each table reports the following information: • The Federal agency that administers the program. • The program title and number as contained in the Catalog of Federal Domestic Assistance. • The budget account number from which the program is funded. • Actual 2005 obligations by State, Federal territory, and Indian tribes in thousands of dollars. Undistributed obligations shown at the bottom of each page are generally project funds that are not 8. 119 AID TO STATE AND LOCAL GOVERNMENTS distributed by formula, or programs for which State-by-State data are not available. • Estimates of 2006 obligations by State from previous budget authority, from new budget authority, and total obligations. • Estimates of 2007 obligations by State, which are also based on the 2007 budget request, unless otherwise noted. • The percentage share of 2007 estimated program funds distributed to each State. Table 8–5. SUMMARY OF PROGRAMS BY AGENCY, BUREAU, AND PROGRAM (obligations in millions of dollars) Agency, Bureau, and Program Department of Agriculture, Food and Nutrition Service National School Lunch Program (10.555) ...................................................................................................................... Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) (10.557) ...................................... Child and Adult Care Food Program (10.558) .............................................................................................................. State Administrative Matching Grants for Food Stamp Program (10.561) ................................................................... Department of Education, Office of Elementary and Secondary Education Title I Grants to Local Educational Agencies (84.010) ................................................................................................. Improving Teacher Quality State Grants (84.367) ......................................................................................................... Department of Education, Office of Special Education and Rehabilitative Services Special Education—Grants to States (84.027) .............................................................................................................. Rehabilitation Services—Vocational Rehabilitation Grants to States (84.126) ............................................................. Department of Health and Human Services, Centers for Medicare and Medicaid Services State Children’s Health Insurance Program (93.767) .................................................................................................... Grants to States for Medicaid (93.778) ......................................................................................................................... Department of Health and Human Services, Administration for Children and Families Temporary Assistance for Needy Families (TANF)—Family Assistance Grants (93.558a) ......................................... Child Support Enforcement—Federal Share of State and Local Administrative Costs and Incentives (93.563) ....... Low Income Home Energy Assistance Program (93.568a) .......................................................................................... Child Care and Development Block Grant (93.575) ...................................................................................................... Child Care and Development Fund—Mandatory (93.596a) .......................................................................................... Child Care and Development Fund—Matching (93.596b) ............................................................................................ Head Start (93.600) ........................................................................................................................................................ Foster Care—Title IV–E (93.658) ................................................................................................................................... Adoption Assistance (93.659) ......................................................................................................................................... Department of Homeland Security, Departmental Management Homeland Security Grant Program (97.067) ................................................................................................................. Department of Housing and Urban Development, Public and Indian Housing Programs Public Housing Operating Fund (14.850) ...................................................................................................................... Housing Choice Vouchers (14.871) ............................................................................................................................... Public Housing Capital Fund (14.872) ........................................................................................................................... Department of Housing and Urban Development, Community Planning and Development Community Development Block Grants (14.218, 14.219, 14.228) ................................................................................ HOME Investment Partnerships Program (14.239) ....................................................................................................... Department of Transportation, Federal Aviation Administration Airport Improvement Program (20.106) .......................................................................................................................... Department of Transportation, Federal Highway Administration Highway Planning and Construction (20.205) ............................................................................................................... Department of Transportation, Federal Transit Administration Capital Investment Grants—Fixed Guideway Modernization (Section 5309) (20.500) ................................................ Federal Transit Formula Grants and Research (Section 5307) (20.507) ..................................................................... Total ................................................................................................................................................................................... * $500,000 or less FY 2005 (actual) Estimated FY 2006 obligations from: Previous authority New authority FY 2007 (estimated) Total 7,038 36 5,193 194 2,134 .................. 2,388 .................. 7,421 5,205 2,156 2,510 7,458 5,399 2,156 2,510 7,832 5,361 2,272 2,608 12,740 .................. 2,917 .................. 12,713 2,887 12,713 2,887 12,713 2,887 10,590 .................. 2,636 .................. 10,583 2,720 10,583 2,720 10,683 2,837 4,082 .................. 193,198 .................. 4,365 215,564 4,365 215,564 5,040 201,829 .................. .................. .................. .................. .................. .................. .................. .................. .................. 17,191 4,069 1,980 2,062 1,240 1,677 6,876 4,633 1,883 17,191 4,069 1,980 2,062 1,240 1,677 6,876 4,633 1,883 17,271 4,071 2,032 2,062 1,240 1,677 6,786 4,786 2,047 2,519 .................. 413 413 276 1 85 322 3,564 15,808 2,117 3,565 15,893 2,439 3,564 15,840 2,178 4,702 .................. 1,900 .................. 4,178 1,757 4,178 1,757 3,032 1,917 3,673 * 3,514 3,515 2,750 33,189 .................. 37,946 37,946 39,922 17,284 4,083 1,885 2,083 1,235 1,491 6,842 4,371 1,712 2,440 13,856 2,555 1,033 4,692 233 1,353 1,111 3,543 1,344 4,897 1,730 6,150 354,461 2,224 381,688 383,912 373,392 120 ANALYTICAL PERSPECTIVES Table 8–6. Summary of Programs by State (obligations in millions of dollars) Programs distributed in all years State or Territory All programs FY 2005 (actual) FY 2005 (actual) Alabama ..................................................................................................................... Alaska ......................................................................................................................... Arizona ....................................................................................................................... Arkansas ..................................................................................................................... California .................................................................................................................... Colorado ..................................................................................................................... Connecticut ................................................................................................................. Delaware .................................................................................................................... District of Columbia ................................................................................................... Florida ......................................................................................................................... Georgia ....................................................................................................................... Hawaii ......................................................................................................................... Idaho ........................................................................................................................... Illinois .......................................................................................................................... Indiana ........................................................................................................................ Iowa ............................................................................................................................ Kansas ........................................................................................................................ Kentucky ..................................................................................................................... Louisiana .................................................................................................................... Maine .......................................................................................................................... Maryland ..................................................................................................................... Massachusetts ............................................................................................................ Michigan ..................................................................................................................... Minnesota ................................................................................................................... Mississippi .................................................................................................................. Missouri ...................................................................................................................... Montana ...................................................................................................................... Nebraska .................................................................................................................... Nevada ....................................................................................................................... New Hampshire ......................................................................................................... New Jersey ................................................................................................................ New Mexico ............................................................................................................... New York ................................................................................................................... North Carolina ............................................................................................................ North Dakota .............................................................................................................. Ohio ............................................................................................................................ Oklahoma ................................................................................................................... Oregon ........................................................................................................................ Pennsylvania .............................................................................................................. Rhode Island .............................................................................................................. South Carolina ........................................................................................................... South Dakota ............................................................................................................. Tennessee .................................................................................................................. Texas .......................................................................................................................... Utah ............................................................................................................................ Vermont ...................................................................................................................... Virginia ........................................................................................................................ Washington ................................................................................................................. West Virginia .............................................................................................................. Wisconsin ................................................................................................................... Wyoming ..................................................................................................................... American Samoa ....................................................................................................... Guam .......................................................................................................................... Northern Mariana Islands .......................................................................................... Puerto Rico ................................................................................................................ Freely Associated States ........................................................................................... Virgin Islands ............................................................................................................. Indian Tribes .............................................................................................................. 5,220 1,634 6,617 3,818 43,965 3,375 4,064 910 1,910 16,266 9,014 1,387 1,465 12,902 6,476 2,951 2,561 5,251 6,600 2,197 5,163 8,589 10,355 5,493 4,532 7,045 1,263 1,893 1,652 1,243 8,694 3,018 38,313 9,657 935 13,734 4,047 3,682 15,561 1,697 4,918 1,010 8,086 22,347 2,107 1,019 5,269 6,213 2,960 5,547 675 131 129 72 2,269 7 139 942 Total, programs distributed by State in all years ........................................... 348,989 348,989 MEMORANDUM:. Not distributed by State in all years 1 ................................................................... 5,472 Total, including undistributed ................................................................................ 354,461 * $500,000 or less or 0.005 percent or less. 1 The sum of programs not distributed by State in all years. FY 2007 (estimated) FY 2007 Percentage of distributed total Estimated FY 2006 obligations from: Previous authority New authority 5,220 31 1,634 4 6,617 40 3,818 8 43,965 273 3,375 9 4,064 72 910 6 1,910 22 16,266 81 9,014 63 1,387 5 1,465 3 12,902 86 6,476 27 2,951 7 2,561 10 5,251 14 6,600 28 2,197 6 5,163 52 8,589 103 10,355 27 5,493 52 4,532 13 7,045 23 1,263 4 1,893 5 1,652 22 1,243 9 8,694 50 3,018 10 38,313 527 9,657 47 935 3 13,734 53 4,047 11 3,682 11 15,561 58 1,697 9 4,918 22 1,010 4 8,086 30 22,347 116 2,107 5 1,019 2 5,269 34 6,213 32 2,960 5 5,547 22 675 1 131 * 129 1 72 * 2,269 64 7 .................... 139 1 942 2 Total 5,205 1,747 7,116 3,768 42,195 3,456 4,230 945 1,765 16,095 8,945 1,409 1,536 12,612 6,886 3,049 2,653 5,541 6,868 2,120 5,285 8,788 10,051 5,102 4,733 7,000 1,265 1,923 1,692 1,244 9,036 3,061 40,079 10,238 906 13,959 4,185 3,734 16,266 1,743 4,821 1,097 7,859 22,884 2,139 1,051 5,462 6,200 2,856 5,396 696 63 135 67 2,352 7 149 1,046 5,236 1,751 7,156 3,776 42,467 3,464 4,302 951 1,787 16,176 9,008 1,415 1,540 12,699 6,913 3,056 2,663 5,555 6,897 2,125 5,337 8,892 10,078 5,154 4,746 7,023 1,269 1,927 1,714 1,253 9,086 3,070 40,606 10,285 908 14,011 4,197 3,745 16,324 1,752 4,843 1,101 7,890 23,000 2,144 1,053 5,495 6,232 2,861 5,418 697 64 135 67 2,417 7 150 1,048 5,383 1,849 7,631 4,016 43,293 3,572 4,368 985 1,934 17,041 9,355 1,422 1,729 13,205 7,318 3,119 2,755 5,647 6,949 2,245 5,537 8,217 10,210 5,783 4,876 7,581 1,289 1,994 1,759 1,271 9,509 3,142 41,817 10,800 921 14,301 4,424 3,767 16,846 1,790 4,972 1,097 8,114 23,782 2,252 1,080 5,744 6,414 3,045 5,600 713 61 135 58 2,455 8 149 1,079 1.47 0.50 2.08 1.10 11.82 0.97 1.19 0.27 0.53 4.65 2.55 0.39 0.47 3.60 2.00 0.85 0.75 1.54 1.90 0.61 1.51 2.24 2.79 1.58 1.33 2.07 0.35 0.54 0.48 0.35 2.60 0.86 11.41 2.95 0.25 3.90 1.21 1.03 4.60 0.49 1.36 0.30 2.21 6.49 0.61 0.29 1.57 1.75 0.83 1.53 0.19 0.02 0.04 0.02 0.67 * 0.04 0.29 2,224 352,709 354,933 366,411 100.00 5,472 * 28,979 28,979 6,982 N/A 354,461 2,224 381,688 383,912 373,392 N/A Department of Agriculture, Food and Nutrition Service Table 8–7. 12–3539–0–1–605 National School Lunch Program (10.555) (obligations in thousands of dollars) Estimated FY 2006 obligations from: State or Territory FY 2005 Actual Previous authority New authority Total FY 2007 (estimated) FY 2007 Percentage of distributed total Alabama ........................................................................................... Alaska .............................................................................................. Arizona ............................................................................................. Arkansas .......................................................................................... California .......................................................................................... Colorado .......................................................................................... Connecticut ...................................................................................... Delaware .......................................................................................... District of Columbia ......................................................................... Florida .............................................................................................. Georgia ............................................................................................ Hawaii .............................................................................................. Idaho ................................................................................................ Illinois ............................................................................................... Indiana ............................................................................................. Iowa ................................................................................................. Kansas ............................................................................................. Kentucky .......................................................................................... Louisiana ......................................................................................... Maine ............................................................................................... Maryland .......................................................................................... Massachusetts ................................................................................. Michigan .......................................................................................... Minnesota ........................................................................................ Mississippi ....................................................................................... Missouri ........................................................................................... Montana ........................................................................................... Nebraska ......................................................................................... Nevada ............................................................................................ New Hampshire ............................................................................... New Jersey ...................................................................................... New Mexico ..................................................................................... New York ......................................................................................... North Carolina ................................................................................. North Dakota ................................................................................... Ohio ................................................................................................. Oklahoma ........................................................................................ Oregon ............................................................................................. Pennsylvania ................................................................................... Rhode Island ................................................................................... South Carolina ................................................................................. South Dakota ................................................................................... Tennessee ....................................................................................... Texas ............................................................................................... Utah ................................................................................................. Vermont ........................................................................................... Virginia ............................................................................................. Washington ...................................................................................... West Virginia ................................................................................... Wisconsin ........................................................................................ Wyoming .......................................................................................... American Samoa ............................................................................. Guam ............................................................................................... Northern Mariana Islands ................................................................ Puerto Rico ...................................................................................... Freely Associated States ................................................................ Virgin Islands ................................................................................... Indian Tribes .................................................................................... Undistributed .................................................................................... DOD/AF/USMC/Navy ...................................................................... 134,787 19,883 155,099 82,294 938,538 69,284 57,336 15,349 15,133 415,135 281,878 27,974 32,429 275,770 125,964 58,528 59,847 116,788 154,746 21,083 90,348 96,675 179,314 88,925 112,324 129,621 16,183 38,145 44,884 14,267 139,282 61,754 456,276 207,768 11,706 203,843 99,840 68,891 213,753 20,067 124,966 18,128 150,573 784,132 55,301 9,249 133,381 115,403 44,807 93,623 9,080 ...................... 4,753 ...................... 108,322 ...................... 4,353 ...................... 24,558 5,399 699 103 804 427 4,866 359 297 80 78 2,152 1,461 145 168 1,429 653 303 310 605 802 109 468 501 929 461 582 672 84 198 233 74 722 320 2,365 1,077 61 1,057 518 357 1,108 104 648 94 780 4,064 287 48 691 598 232 485 47 ........................ 25 ........................ 561 ........................ 23 ........................ ........................ 28 142,629 21,040 164,123 87,082 993,142 73,315 60,672 16,242 16,013 439,288 298,278 29,602 34,316 291,815 133,293 61,933 63,329 123,583 163,749 22,310 95,605 102,300 189,747 94,099 118,859 137,163 17,125 40,364 47,495 15,097 147,386 65,347 482,823 219,856 12,387 215,703 105,649 72,899 226,190 21,235 132,237 19,183 159,334 829,754 58,519 9,787 141,141 122,117 47,414 99,070 9,608 ...................... 5,030 ...................... 114,624 ...................... 4,606 ...................... ...................... 5,713 143,328 21,143 164,927 87,509 998,008 73,674 60,969 16,322 16,091 441,440 299,739 29,747 34,484 293,244 133,946 62,236 63,639 124,188 164,551 22,419 96,073 102,801 190,676 94,560 119,441 137,835 17,209 40,562 47,728 15,171 148,108 65,667 485,188 220,933 12,448 216,760 106,167 73,256 227,298 21,339 132,885 19,277 160,114 833,818 58,806 9,835 141,832 122,715 47,646 99,555 9,655 ...................... 5,055 ...................... 115,185 ...................... 4,629 ...................... ...................... 5,741 150,530 22,205 173,215 91,906 1,048,162 77,376 64,033 17,142 16,901 463,624 314,802 31,241 36,217 307,980 140,677 65,364 66,837 130,429 172,821 23,546 100,901 107,967 200,258 99,312 125,444 144,761 18,073 42,600 50,127 15,933 155,550 68,967 509,570 232,036 13,073 227,652 111,501 76,938 238,720 22,411 139,562 20,245 168,160 875,720 61,760 10,329 148,960 128,882 50,041 104,558 10,141 ...................... 5,308 ...................... 120,974 ...................... 4,861 ...................... ...................... 6,030 1.92 0.28 2.21 1.17 13.38 0.99 0.82 0.22 0.22 5.92 4.02 0.40 0.46 3.93 1.80 0.83 0.85 1.67 2.21 0.30 1.29 1.38 2.56 1.27 1.60 1.85 0.23 0.54 0.64 0.20 1.99 0.88 6.51 2.96 0.17 2.91 1.42 0.98 3.05 0.29 1.78 0.26 2.15 11.18 0.79 0.13 1.90 1.65 0.64 1.33 0.13 .................... 0.07 .................... 1.54 .................... 0.06 .................... .................... 0.08 Total ................................................................................................. 7,037,739 36,352 7,421,220 7,457,572 7,832,333 1 100.00 1 Excludes undistributed obligations. 121 Department of Agriculture, Food and Nutrition Service Table 8–8. 12–3510–0–1–605 Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) (10.557) (obligations in thousands of dollars) Estimated FY 2006 obligations from: State or Territory FY 2005 Actual Previous authority New authority Total FY 2007 (estimated) FY 2007 Percentage of distributed total Alabama ........................................................................................... Alaska .............................................................................................. Arizona ............................................................................................. Arkansas .......................................................................................... California .......................................................................................... Colorado .......................................................................................... Connecticut ...................................................................................... Delaware .......................................................................................... District of Columbia ......................................................................... Florida .............................................................................................. Georgia ............................................................................................ Hawaii .............................................................................................. Idaho ................................................................................................ Illinois ............................................................................................... Indiana ............................................................................................. Iowa ................................................................................................. Kansas ............................................................................................. Kentucky .......................................................................................... Louisiana ......................................................................................... Maine ............................................................................................... Maryland .......................................................................................... Massachusetts ................................................................................. Michigan .......................................................................................... Minnesota ........................................................................................ Mississippi ....................................................................................... Missouri ........................................................................................... Montana ........................................................................................... Nebraska ......................................................................................... Nevada ............................................................................................ New Hampshire ............................................................................... New Jersey ...................................................................................... New Mexico ..................................................................................... New York ......................................................................................... North Carolina ................................................................................. North Dakota ................................................................................... Ohio ................................................................................................. Oklahoma ........................................................................................ Oregon ............................................................................................. Pennsylvania ................................................................................... Rhode Island ................................................................................... South Carolina ................................................................................. South Dakota ................................................................................... Tennessee ....................................................................................... Texas ............................................................................................... Utah ................................................................................................. Vermont ........................................................................................... Virginia ............................................................................................. Washington ...................................................................................... West Virginia ................................................................................... Wisconsin ........................................................................................ Wyoming .......................................................................................... American Samoa ............................................................................. Guam ............................................................................................... Northern Mariana Islands ................................................................ Puerto Rico ...................................................................................... Freely Associated States ................................................................ Virgin Islands ................................................................................... Indian Tribes .................................................................................... Undistributed .................................................................................... 84,542 22,447 100,062 56,952 876,412 52,566 36,301 11,498 14,575 242,460 159,952 29,954 21,450 185,439 78,351 41,404 38,280 78,227 106,994 12,290 61,538 69,304 136,164 73,038 66,548 76,108 14,414 24,614 28,694 10,257 94,715 37,911 348,973 144,750 9,647 161,697 52,953 64,981 141,328 14,669 67,680 12,844 104,841 496,564 35,336 11,657 81,775 112,217 33,175 67,796 6,686 6,381 6,622 ...................... 179,575 ...................... 5,324 49,692 31,906 3,176 843 3,759 2,140 32,928 1,975 1,364 432 548 9,109 6,009 1,125 806 6,967 2,944 1,556 1,438 2,939 4,020 462 2,312 2,604 5,116 2,744 2,500 2,859 542 925 1,078 385 3,558 1,424 13,111 5,438 362 6,075 1,989 2,441 5,310 551 2,543 483 3,939 18,656 1,328 438 3,072 4,216 1,246 2,547 251 240 249 ........................ 6,747 ........................ 200 1,867 ........................ 84,470 22,428 99,977 56,904 875,666 52,521 36,270 11,488 14,563 242,254 159,816 29,929 21,432 185,281 78,284 41,369 38,247 78,161 106,903 12,280 61,486 69,245 136,048 72,976 66,491 76,043 14,402 24,593 28,670 10,248 94,635 37,879 348,677 144,627 9,639 161,560 52,908 64,926 141,208 14,657 67,623 12,833 104,752 496,142 35,306 11,647 81,706 112,122 33,147 67,738 6,680 6,376 6,616 ...................... 179,422 ...................... 5,319 49,650 48,510 87,646 23,271 103,736 59,044 908,594 54,496 37,634 11,920 15,111 251,363 165,825 31,054 22,238 192,248 81,228 42,925 39,685 81,100 110,923 12,742 63,798 71,849 141,164 75,720 68,991 78,902 14,944 25,518 29,748 10,633 98,193 39,303 361,788 150,065 10,001 167,635 54,897 67,367 146,518 15,208 70,166 13,316 108,691 514,798 36,634 12,085 84,778 116,338 34,393 70,285 6,931 6,616 6,865 ...................... 186,169 ...................... 5,519 51,517 48,510 87,347 23,192 103,382 58,841 905,484 54,310 37,505 11,879 15,059 250,504 165,259 30,948 22,162 191,591 80,950 42,778 39,550 80,822 110,544 12,698 63,580 71,603 140,681 75,461 68,756 78,633 14,892 25,431 29,646 10,597 97,857 39,169 360,550 149,552 9,967 167,061 54,710 67,137 146,017 15,156 69,925 13,270 108,319 513,038 36,508 12,044 84,488 115,940 34,276 70,045 6,908 6,593 6,842 ...................... 185,533 ...................... 5,501 51,341 29,000 1.64 0.43 1.94 1.10 16.98 1.02 0.70 0.22 0.28 4.70 3.10 0.58 0.42 3.59 1.52 0.80 0.74 1.52 2.07 0.24 1.19 1.34 2.64 1.42 1.29 1.47 0.28 0.48 0.56 0.20 1.84 0.73 6.76 2.80 0.19 3.13 1.03 1.26 2.74 0.28 1.31 0.25 2.03 9.62 0.68 0.23 1.58 2.17 0.64 1.31 0.13 0.12 0.13 .................... 3.48 .................... 0.10 0.96 .................... Total ................................................................................................. 1 5,192,530 193,886 5,204,750 5,398,636 5,360,832 2 100.00 1 Excludes 2 Excludes $10 million in FY 2005 for Farmers’ Market; beginning in FY 2005 the Farmers’ Market Program is funded in the Commodity Assistance Program. undistributed obligations. 122 Department of Agriculture, Food and Nutrition Service Table 8–9. 12–3539–0–1–605 Child and Adult Care Food Program (10.558) (obligations in thousands of dollars) Estimated FY 2006 obligations from: State or Territory FY 2005 Actual Previous authority New authority Total FY 2007 (estimated) FY 2007 Percentage of distributed total Alabama ........................................................................................... Alaska .............................................................................................. Arizona ............................................................................................. Arkansas .......................................................................................... California .......................................................................................... Colorado .......................................................................................... Connecticut ...................................................................................... Delaware .......................................................................................... District of Columbia ......................................................................... Florida .............................................................................................. Georgia ............................................................................................ Hawaii .............................................................................................. Idaho ................................................................................................ Illinois ............................................................................................... Indiana ............................................................................................. Iowa ................................................................................................. Kansas ............................................................................................. Kentucky .......................................................................................... Louisiana ......................................................................................... Maine ............................................................................................... Maryland .......................................................................................... Massachusetts ................................................................................. Michigan .......................................................................................... Minnesota ........................................................................................ Mississippi ....................................................................................... Missouri ........................................................................................... Montana ........................................................................................... Nebraska ......................................................................................... Nevada ............................................................................................ New Hampshire ............................................................................... New Jersey ...................................................................................... New Mexico ..................................................................................... New York ......................................................................................... North Carolina ................................................................................. North Dakota ................................................................................... Ohio ................................................................................................. Oklahoma ........................................................................................ Oregon ............................................................................................. Pennsylvania ................................................................................... Rhode Island ................................................................................... South Carolina ................................................................................. South Dakota ................................................................................... Tennessee ....................................................................................... Texas ............................................................................................... Utah ................................................................................................. Vermont ........................................................................................... Virginia ............................................................................................. Washington ...................................................................................... West Virginia ................................................................................... Wisconsin ........................................................................................ Wyoming .......................................................................................... American Samoa ............................................................................. Guam ............................................................................................... Northern Mariana Islands ................................................................ Puerto Rico ...................................................................................... Freely Associated States ................................................................ Virgin Islands ................................................................................... Indian Tribes .................................................................................... Undistributed .................................................................................... 33,102 7,283 44,097 26,405 241,325 19,804 10,033 9,230 3,323 107,809 76,915 49 4,787 4,705 29,152 19,733 29,864 25,027 52,130 9,177 33,573 43,140 50,280 55,451 25,064 36,786 8,817 22,813 3,833 2,723 47,865 35,637 146,616 73,753 8,870 57,555 48,912 22,405 52,857 6,424 22,937 6,311 39,729 168,742 19,537 3,931 28,329 37,743 14,926 34,149 4,744 ...................... 49 ...................... 20,565 ...................... 625 ...................... 194,777 ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ 36,802 8,097 49,026 29,356 268,303 22,018 11,154 10,262 3,694 119,859 85,512 54 5,322 5,231 32,410 21,939 33,202 27,824 57,957 10,203 37,326 47,962 55,900 61,649 27,866 40,898 9,803 25,363 4,261 3,027 53,215 39,620 163,004 81,997 9,861 63,988 54,379 24,909 58,765 7,142 25,501 7,016 44,170 187,603 21,721 4,370 31,495 41,962 16,594 37,966 5,274 ...................... 54 ...................... 22,864 ...................... 695 ...................... ...................... 36,802 8,097 49,026 29,356 268,303 22,018 11,154 10,262 3,694 119,859 85,512 54 5,322 5,231 32,410 21,939 33,202 27,824 57,957 10,203 37,326 47,962 55,900 61,649 27,866 40,898 9,803 25,363 4,261 3,027 53,215 39,620 163,004 81,997 9,861 63,988 54,379 24,909 58,765 7,142 25,501 7,016 44,170 187,603 21,721 4,370 31,495 41,962 16,594 37,966 5,274 ...................... 54 ...................... 22,864 ...................... 695 ...................... ...................... 38,775 8,531 51,654 30,930 282,684 23,198 11,752 10,812 3,892 126,285 90,097 57 5,607 5,511 34,148 23,115 34,982 29,316 61,064 10,750 39,327 50,533 58,897 64,954 29,359 43,090 10,328 26,723 4,490 3,190 56,068 41,744 171,743 86,393 10,390 67,419 57,294 26,245 61,916 7,525 26,868 7,393 46,538 197,661 22,885 4,605 33,184 44,211 17,484 40,001 5,557 ...................... 57 ...................... 24,089 ...................... 732 ...................... ...................... 1.71 0.38 2.27 1.36 12.44 1.02 0.52 0.48 0.17 5.56 3.97 * 0.25 0.24 1.50 1.02 1.54 1.29 2.69 0.47 1.73 2.22 2.59 2.86 1.29 1.90 0.45 1.18 0.20 0.14 2.47 1.84 7.56 3.80 0.46 2.97 2.52 1.16 2.73 0.33 1.18 0.33 2.05 8.70 1.01 0.20 1.46 1.95 0.77 1.76 0.24 .................... * .................... 1.06 .................... 0.03 .................... .................... Total ................................................................................................. 2,134,418 ........................ 2,156,445 2,156,445 2,272,053 1 100.00 * $500 or less or 0.005 percent or less. 1 Excludes undistributed obligations. 123 Department of Agriculture, Food and Nutrition Service Table 8–10. 12–3505–0–1–605 State Administrative Matching Grants for Food Stamp Program (10.561) (obligations in thousands of dollars) Estimated FY 2006 obligations from: State or Territory FY 2005 Actual Previous authority New authority Total FY 2007 (estimated) FY 2007 Percentage of distributed total Alabama ........................................................................................... Alaska .............................................................................................. Arizona ............................................................................................. Arkansas .......................................................................................... California .......................................................................................... Colorado .......................................................................................... Connecticut ...................................................................................... Delaware .......................................................................................... District of Columbia ......................................................................... Florida .............................................................................................. Georgia ............................................................................................ Hawaii .............................................................................................. Idaho ................................................................................................ Illinois ............................................................................................... Indiana ............................................................................................. Iowa ................................................................................................. Kansas ............................................................................................. Kentucky .......................................................................................... Louisiana ......................................................................................... Maine ............................................................................................... Maryland .......................................................................................... Massachusetts ................................................................................. Michigan .......................................................................................... Minnesota ........................................................................................ Mississippi ....................................................................................... Missouri ........................................................................................... Montana ........................................................................................... Nebraska ......................................................................................... Nevada ............................................................................................ New Hampshire ............................................................................... New Jersey ...................................................................................... New Mexico ..................................................................................... New York ......................................................................................... North Carolina ................................................................................. North Dakota ................................................................................... Ohio ................................................................................................. Oklahoma ........................................................................................ Oregon ............................................................................................. Pennsylvania ................................................................................... Rhode Island ................................................................................... South Carolina ................................................................................. South Dakota ................................................................................... Tennessee ....................................................................................... Texas ............................................................................................... Utah ................................................................................................. Vermont ........................................................................................... Virginia ............................................................................................. Washington ...................................................................................... West Virginia ................................................................................... Wisconsin ........................................................................................ Wyoming .......................................................................................... American Samoa ............................................................................. Guam ............................................................................................... Northern Mariana Islands ................................................................ Puerto Rico ...................................................................................... Freely Associated States ................................................................ Virgin Islands ................................................................................... Indian Tribes .................................................................................... Undistributed .................................................................................... 27,878 8,564 34,648 23,592 352,407 21,499 19,341 8,324 11,552 70,735 56,833 9,528 7,942 83,271 37,716 15,347 14,194 29,436 45,856 10,295 33,498 33,562 89,828 37,933 24,805 35,676 7,200 15,135 11,852 4,674 87,679 19,858 254,629 60,586 5,293 97,553 36,592 40,663 133,381 6,924 19,667 6,756 37,475 144,477 19,759 5,866 71,864 43,307 12,743 31,532 4,015 ...................... 2,611 ...................... ...................... ...................... 4,124 ...................... 57,744 ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ 30,025 9,224 37,317 25,409 379,554 23,156 20,831 8,965 12,442 76,184 61,211 10,262 8,554 89,685 40,622 16,530 15,287 31,703 49,388 11,088 36,079 36,148 96,748 40,855 26,716 38,425 7,755 16,300 12,765 5,034 94,433 21,388 274,244 65,254 5,701 105,067 39,411 43,796 143,655 7,457 21,182 7,276 40,361 155,606 21,281 6,318 77,400 46,644 13,725 33,961 4,324 ...................... 2,812 ...................... ...................... ...................... 4,442 ...................... ...................... 30,025 9,224 37,317 25,409 379,554 23,156 20,831 8,965 12,442 76,184 61,211 10,262 8,554 89,685 40,622 16,530 15,287 31,703 49,388 11,088 36,079 36,148 96,748 40,855 26,716 38,425 7,755 16,300 12,765 5,034 94,433 21,388 274,244 65,254 5,701 105,067 39,411 43,796 143,655 7,457 21,182 7,276 40,361 155,606 21,281 6,318 77,400 46,644 13,725 33,961 4,324 ...................... 2,812 ...................... ...................... ...................... 4,442 ...................... ...................... 31,198 9,584 38,774 26,401 394,372 24,060 21,644 9,315 12,928 79,158 63,601 10,663 8,888 93,187 42,208 17,175 15,884 32,941 51,317 11,521 37,487 37,559 100,525 42,450 27,759 39,925 8,058 16,937 13,264 5,230 98,120 22,223 284,951 67,801 5,924 109,170 40,950 45,506 149,264 7,748 22,009 7,561 41,937 161,682 22,112 6,564 80,422 48,465 14,261 35,287 4,493 ...................... 2,922 ...................... ...................... ...................... 4,615 ...................... ...................... 1.20 0.37 1.49 1.01 15.12 0.92 0.83 0.36 0.50 3.04 2.44 0.41 0.34 3.57 1.62 0.66 0.61 1.26 1.97 0.44 1.44 1.44 3.85 1.63 1.06 1.53 0.31 0.65 0.51 0.20 3.76 0.85 10.93 2.60 0.23 4.19 1.57 1.74 5.72 0.30 0.84 0.29 1.61 6.20 0.85 0.25 3.08 1.86 0.55 1.35 0.17 .................... 0.11 .................... .................... .................... 0.18 .................... .................... Total ................................................................................................. 2,388,219 ........................ 2,510,000 2,510,000 2,608,000 1 100.00 1 Excludes undistributed obligations. 124 Department of Education, Office of Elementary and Secondary Education Table 8–11. 91–0900–0–1–501 Title I Grants to Local Educational Agencies (84.010) (obligations in thousands of dollars) Estimated FY 2006 obligations from: State or Territory FY 2005 Actual Previous authority New authority Total FY 2007 (estimated) FY 2007 Percentage of distributed total Alabama ........................................................................................... Alaska .............................................................................................. Arizona ............................................................................................. Arkansas .......................................................................................... California .......................................................................................... Colorado .......................................................................................... Connecticut ...................................................................................... Delaware .......................................................................................... District of Columbia ......................................................................... Florida .............................................................................................. Georgia ............................................................................................ Hawaii .............................................................................................. Idaho ................................................................................................ Illinois ............................................................................................... Indiana ............................................................................................. Iowa ................................................................................................. Kansas ............................................................................................. Kentucky .......................................................................................... Louisiana ......................................................................................... Maine ............................................................................................... Maryland .......................................................................................... Massachusetts ................................................................................. Michigan .......................................................................................... Minnesota ........................................................................................ Mississippi ....................................................................................... Missouri ........................................................................................... Montana ........................................................................................... Nebraska ......................................................................................... Nevada ............................................................................................ New Hampshire ............................................................................... New Jersey ...................................................................................... New Mexico ..................................................................................... New York ......................................................................................... North Carolina ................................................................................. North Dakota ................................................................................... Ohio ................................................................................................. Oklahoma ........................................................................................ Oregon ............................................................................................. Pennsylvania ................................................................................... Rhode Island ................................................................................... South Carolina ................................................................................. South Dakota ................................................................................... Tennessee ....................................................................................... Texas ............................................................................................... Utah ................................................................................................. Vermont ........................................................................................... Virginia ............................................................................................. Washington ...................................................................................... West Virginia ................................................................................... Wisconsin ........................................................................................ Wyoming .......................................................................................... American Samoa ............................................................................. Guam ............................................................................................... Northern Mariana Islands ................................................................ Puerto Rico ...................................................................................... Freely Associated States ................................................................ Virgin Islands ................................................................................... Indian Tribes .................................................................................... Undistributed .................................................................................... 195,054 33,685 248,947 124,833 1,776,543 123,503 107,511 33,822 50,359 607,927 406,582 47,544 42,239 538,323 174,454 64,155 80,552 187,313 277,695 48,565 170,957 230,007 433,983 108,585 167,139 196,404 41,675 51,488 69,528 32,329 271,634 109,532 1,226,676 287,644 32,197 386,302 140,102 124,395 477,867 47,969 177,393 36,186 202,693 1,176,358 55,472 29,138 216,518 177,055 103,626 161,967 29,849 8,462 7,546 3,660 466,497 ...................... 11,371 91,322 8,436 ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ 198,408 33,200 260,093 125,330 1,727,346 128,605 100,236 33,787 48,488 646,510 409,989 46,395 42,326 540,737 184,162 64,828 81,847 185,138 283,517 45,582 172,568 207,508 426,977 108,433 169,980 188,574 41,016 50,553 75,587 31,019 263,753 112,238 1,212,980 290,669 30,085 410,139 140,391 129,583 483,636 47,125 176,983 36,401 205,355 1,182,231 54,315 28,341 208,467 176,438 99,697 154,835 29,417 8,494 10,290 3,477 450,773 ...................... 11,413 88,423 8,437 198,408 33,200 260,093 125,330 1,727,346 128,605 100,236 33,787 48,488 646,510 409,989 46,395 42,326 540,737 184,162 64,828 81,847 185,138 283,517 45,582 172,568 207,508 426,977 108,433 169,980 188,574 41,016 50,553 75,587 31,019 263,753 112,238 1,212,980 290,669 30,085 410,139 140,391 129,583 483,636 47,125 176,983 36,401 205,355 1,182,231 54,315 28,341 208,467 176,438 99,697 154,835 29,417 8,494 10,290 3,477 450,773 ...................... 11,413 88,423 8,437 198,102 33,200 259,834 124,804 1,722,351 127,708 97,875 33,787 48,836 650,547 410,329 46,619 42,278 540,925 183,611 63,922 80,974 184,508 281,330 45,026 172,966 198,938 422,648 106,334 167,476 186,345 40,421 50,158 76,167 31,019 259,882 112,158 1,214,244 291,990 30,085 410,668 139,547 129,689 482,903 47,359 177,572 36,401 206,815 1,175,444 54,297 28,341 207,331 175,468 99,807 152,418 29,417 8,506 10,305 3,303 491,718 ...................... 11,430 88,553 8,437 1.56 0.26 2.05 0.98 13.56 1.01 0.77 0.27 0.38 5.12 3.23 0.37 0.33 4.26 1.45 0.50 0.64 1.45 2.21 0.35 1.36 1.57 3.33 0.84 1.32 1.47 0.32 0.39 0.60 0.24 2.05 0.88 9.56 2.30 0.24 3.23 1.10 1.02 3.80 0.37 1.40 0.29 1.63 9.25 0.43 0.22 1.63 1.38 0.79 1.20 0.23 0.07 0.08 0.03 3.87 .................... 0.09 0.70 .................... Total ................................................................................................. 12,739,571 ........................ 12,713,125 12,713,125 12,713,125 1 100.00 1 Excludes undistributed obligations. 125 Department of Education, Office of Elementary and Secondary Education Table 8–12. 91–1000–0–1–501 Improving Teacher Quality State Grants (84.367) (obligations in thousands of dollars) Estimated FY 2006 obligations from: State or Territory FY 2005 Actual Previous authority New authority Total FY 2007 (estimated) FY 2007 Percentage of distributed total Alabama ........................................................................................... Alaska .............................................................................................. Arizona ............................................................................................. Arkansas .......................................................................................... California .......................................................................................... Colorado .......................................................................................... Connecticut ...................................................................................... Delaware .......................................................................................... District of Columbia ......................................................................... Florida .............................................................................................. Georgia ............................................................................................ Hawaii .............................................................................................. Idaho ................................................................................................ Illinois ............................................................................................... Indiana ............................................................................................. Iowa ................................................................................................. Kansas ............................................................................................. Kentucky .......................................................................................... Louisiana ......................................................................................... Maine ............................................................................................... Maryland .......................................................................................... Massachusetts ................................................................................. Michigan .......................................................................................... Minnesota ........................................................................................ Mississippi ....................................................................................... Missouri ........................................................................................... Montana ........................................................................................... Nebraska ......................................................................................... Nevada ............................................................................................ New Hampshire ............................................................................... New Jersey ...................................................................................... New Mexico ..................................................................................... New York ......................................................................................... North Carolina ................................................................................. North Dakota ................................................................................... Ohio ................................................................................................. Oklahoma ........................................................................................ Oregon ............................................................................................. Pennsylvania ................................................................................... Rhode Island ................................................................................... South Carolina ................................................................................. South Dakota ................................................................................... Tennessee ....................................................................................... Texas ............................................................................................... Utah ................................................................................................. Vermont ........................................................................................... Virginia ............................................................................................. Washington ...................................................................................... West Virginia ................................................................................... Wisconsin ........................................................................................ Wyoming .......................................................................................... American Samoa ............................................................................. Guam ............................................................................................... Northern Mariana Islands ................................................................ Puerto Rico ...................................................................................... Freely Associated States ................................................................ Virgin Islands ................................................................................... Indian Tribes .................................................................................... Undistributed .................................................................................... 46,517 13,895 48,398 28,501 339,448 32,606 26,675 13,895 13,895 134,548 77,412 13,895 13,895 117,385 48,235 21,805 22,378 44,720 65,092 13,895 41,626 51,823 109,399 37,961 42,379 49,753 13,895 14,172 15,155 13,895 65,255 23,280 230,522 65,338 13,895 103,930 33,660 28,216 114,170 13,895 37,140 13,895 49,645 241,231 18,732 13,895 52,737 47,513 23,784 45,630 13,895 3,456 5,105 1,628 95,590 ...................... 4,322 14,510 14,583 ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ 46,132 13,752 48,188 28,192 335,691 32,304 26,178 13,752 13,752 134,570 77,180 13,752 13,752 116,337 47,979 21,619 22,209 44,216 64,342 13,752 41,268 50,523 108,474 37,553 41,914 49,109 13,752 14,029 15,213 13,752 64,447 23,009 228,758 64,879 13,752 103,550 33,337 28,263 112,903 13,752 36,820 13,752 49,207 239,610 18,489 13,752 51,696 47,063 23,523 44,998 13,752 3,416 5,057 1,611 91,729 ...................... 4,281 14,365 14,437 46,132 13,752 48,188 28,192 335,691 32,304 26,178 13,752 13,752 134,570 77,180 13,752 13,752 116,337 47,979 21,619 22,209 44,216 64,342 13,752 41,268 50,523 108,474 37,553 41,914 49,109 13,752 14,029 15,213 13,752 64,447 23,009 228,758 64,879 13,752 103,550 33,337 28,263 112,903 13,752 36,820 13,752 49,207 239,610 18,489 13,752 51,696 47,063 23,523 44,998 13,752 3,416 5,057 1,611 91,729 ...................... 4,281 14,365 14,437 46,132 13,752 48,188 28,192 335,691 32,304 26,178 13,752 13,752 134,570 77,180 13,752 13,752 116,337 47,979 21,619 22,209 44,216 64,342 13,752 41,268 50,523 108,474 37,553 41,914 49,109 13,752 14,029 15,213 13,752 64,447 23,009 228,758 64,879 13,752 103,550 33,337 28,263 112,903 13,752 36,820 13,752 49,207 239,610 18,489 13,752 51,696 47,063 23,523 44,998 13,752 3,416 5,057 1,611 91,729 ...................... 4,281 14,365 14,437 1.61 0.48 1.68 0.98 11.68 1.12 0.91 0.48 0.48 4.68 2.69 0.48 0.48 4.05 1.67 0.75 0.77 1.54 2.24 0.48 1.44 1.76 3.78 1.31 1.46 1.71 0.48 0.49 0.53 0.48 2.24 0.80 7.96 2.26 0.48 3.60 1.16 0.98 3.93 0.48 1.28 0.48 1.71 8.34 0.64 0.48 1.80 1.64 0.82 1.57 0.48 0.12 0.18 0.06 3.19 .................... 0.15 0.50 .................... Total ................................................................................................. 2,916,605 ........................ 2,887,439 2,887,439 2,887,439 1 100.00 1 Excludes undistributed obligations. 126 Department of Education, Office of Special Education and Rehabilitative Services Table 8–13. 91–0300–0–1–501 Special Education—Grants to States (84.027) (obligations in thousands of dollars) Estimated FY 2006 obligations from: State or Territory FY 2005 Actual Previous authority New authority Total FY 2007 (estimated) FY 2007 Percentage of distributed total Alabama ........................................................................................... Alaska .............................................................................................. Arizona ............................................................................................. Arkansas .......................................................................................... California .......................................................................................... Colorado .......................................................................................... Connecticut ...................................................................................... Delaware .......................................................................................... District of Columbia ......................................................................... Florida .............................................................................................. Georgia ............................................................................................ Hawaii .............................................................................................. Idaho ................................................................................................ Illinois ............................................................................................... Indiana ............................................................................................. Iowa ................................................................................................. Kansas ............................................................................................. Kentucky .......................................................................................... Louisiana ......................................................................................... Maine ............................................................................................... Maryland .......................................................................................... Massachusetts ................................................................................. Michigan .......................................................................................... Minnesota ........................................................................................ Mississippi ....................................................................................... Missouri ........................................................................................... Montana ........................................................................................... Nebraska ......................................................................................... Nevada ............................................................................................ New Hampshire ............................................................................... New Jersey ...................................................................................... New Mexico ..................................................................................... New York ......................................................................................... North Carolina ................................................................................. North Dakota ................................................................................... Ohio ................................................................................................. Oklahoma ........................................................................................ Oregon ............................................................................................. Pennsylvania ................................................................................... Rhode Island ................................................................................... South Carolina ................................................................................. South Dakota ................................................................................... Tennessee ....................................................................................... Texas ............................................................................................... Utah ................................................................................................. Vermont ........................................................................................... Virginia ............................................................................................. Washington ...................................................................................... West Virginia ................................................................................... Wisconsin ........................................................................................ Wyoming .......................................................................................... American Samoa ............................................................................. Guam ............................................................................................... Northern Mariana Islands ................................................................ Puerto Rico ...................................................................................... Freely Associated States ................................................................ Virgin Islands ................................................................................... Indian Tribes .................................................................................... Undistributed .................................................................................... 167,865 32,499 162,563 103,546 1,132,573 137,681 122,729 29,785 14,976 581,254 285,784 36,854 50,109 467,485 236,054 112,690 98,645 145,703 174,760 50,509 184,824 262,025 369,788 175,222 109,859 209,676 33,928 68,924 61,135 43,805 333,645 84,127 700,725 288,837 24,185 404,055 136,539 119,052 394,307 40,365 161,682 28,811 215,277 889,556 98,468 23,319 259,999 204,329 70,101 192,169 24,464 6,125 13,580 4,654 99,371 6,579 8,631 83,546 10,000 ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ 167,635 32,452 162,328 103,400 1,130,940 137,481 122,567 29,742 14,954 580,457 285,369 36,801 50,036 466,850 235,740 112,542 98,509 145,505 174,506 50,442 184,574 261,681 369,262 174,985 109,703 209,400 33,879 68,834 61,046 43,748 333,206 84,016 699,789 288,431 24,150 403,485 136,350 118,887 393,753 40,312 161,465 28,769 214,982 888,269 98,327 23,285 259,641 204,037 70,009 191,909 24,428 6,122 13,575 4,652 99,227 6,579 8,628 86,306 15,000 167,635 32,452 162,328 103,400 1,130,940 137,481 122,567 29,742 14,954 580,457 285,369 36,801 50,036 466,850 235,740 112,542 98,509 145,505 174,506 50,442 184,574 261,681 369,262 174,985 109,703 209,400 33,879 68,834 61,046 43,748 333,206 84,016 699,789 288,431 24,150 403,485 136,350 118,887 393,753 40,312 161,465 28,769 214,982 888,269 98,327 23,285 259,641 204,037 70,009 191,909 24,428 6,122 13,575 4,652 99,227 6,579 8,628 86,306 15,000 169,060 33,245 164,291 104,280 1,140,558 138,651 123,609 30,469 15,320 585,393 287,796 37,114 50,462 470,820 237,745 113,499 99,347 146,743 175,990 50,871 186,143 263,906 372,402 176,473 110,635 211,180 34,238 69,419 61,566 44,120 336,040 84,730 705,740 290,884 24,740 406,916 137,510 119,898 397,102 40,655 162,838 29,472 216,811 895,823 99,163 23,854 261,849 205,772 70,604 193,541 25,026 6,180 13,704 4,696 101,653 6,579 8,710 87,122 20,000 1.59 0.31 1.54 0.98 10.70 1.30 1.16 0.29 0.14 5.49 2.70 0.35 0.47 4.42 2.23 1.06 0.93 1.38 1.65 0.48 1.75 2.47 3.49 1.66 1.04 1.98 0.32 0.65 0.58 0.41 3.15 0.79 6.62 2.73 0.23 3.82 1.29 1.12 3.72 0.38 1.53 0.28 2.03 8.40 0.93 0.22 2.46 1.93 0.66 1.82 0.23 0.06 0.13 0.04 0.95 0.06 0.08 0.82 .................... Total ................................................................................................. 10,589,746 ........................ 10,582,961 10,582,961 10,682,961 1 100.00 1 Excludes undistributed obligations. 127 Department of Education, Office of Special Education and Rehabilitative Services Table 8–14. 91–0301–0–1–506 Rehabilitation Services—Vocational Rehabilitation Grants to States (84.126) (obligations in thousands of dollars) Estimated FY 2006 obligations from: State or Territory FY 2005 Actual Previous authority New authority Total FY 2007 (estimated) FY 2007 Percentage of distributed total Alabama ........................................................................................... Alaska .............................................................................................. Arizona ............................................................................................. Arkansas .......................................................................................... California .......................................................................................... Colorado .......................................................................................... Connecticut ...................................................................................... Delaware .......................................................................................... District of Columbia ......................................................................... Florida .............................................................................................. Georgia ............................................................................................ Hawaii .............................................................................................. Idaho ................................................................................................ Illinois ............................................................................................... Indiana ............................................................................................. Iowa ................................................................................................. Kansas ............................................................................................. Kentucky .......................................................................................... Louisiana ......................................................................................... Maine ............................................................................................... Maryland .......................................................................................... Massachusetts ................................................................................. Michigan .......................................................................................... Minnesota ........................................................................................ Mississippi ....................................................................................... Missouri ........................................................................................... Montana ........................................................................................... Nebraska ......................................................................................... Nevada ............................................................................................ New Hampshire ............................................................................... New Jersey ...................................................................................... New Mexico ..................................................................................... New York ......................................................................................... North Carolina ................................................................................. North Dakota ................................................................................... Ohio ................................................................................................. Oklahoma ........................................................................................ Oregon ............................................................................................. Pennsylvania ................................................................................... Rhode Island ................................................................................... South Carolina ................................................................................. South Dakota ................................................................................... Tennessee ....................................................................................... Texas ............................................................................................... Utah ................................................................................................. Vermont ........................................................................................... Virginia ............................................................................................. Washington ...................................................................................... West Virginia ................................................................................... Wisconsin ........................................................................................ Wyoming .......................................................................................... American Samoa ............................................................................. Guam ............................................................................................... Northern Mariana Islands ................................................................ Puerto Rico ...................................................................................... Freely Associated States ................................................................ Virgin Islands ................................................................................... Indian Tribes .................................................................................... Undistributed .................................................................................... 55,446 8,679 40,862 33,730 248,655 28,244 18,830 8,679 11,990 139,316 77,939 10,447 14,210 95,138 61,488 29,620 25,388 48,288 56,120 14,505 37,913 43,585 89,235 40,308 46,410 56,855 10,436 16,502 13,581 9,803 52,365 21,645 135,944 82,554 8,679 111,587 39,104 31,884 115,158 9,895 44,867 8,679 60,699 196,031 24,527 8,679 58,599 44,933 24,172 52,012 7,567 66,280 868 1,000 2,052 ...................... 1,861 32,000 ...................... ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ 54,409 8,957 52,642 34,285 259,966 32,548 19,238 8,957 11,898 145,570 81,909 10,749 14,602 100,013 63,749 30,428 25,966 49,003 54,442 14,385 37,563 43,959 91,954 41,739 39,560 58,690 10,456 16,870 16,595 10,173 52,405 21,362 141,341 86,186 8,957 114,494 39,002 33,265 117,718 9,972 47,450 8,957 62,257 201,770 25,154 8,957 59,719 46,564 24,014 52,854 8,957 891 2,704 1,055 67,984 ...................... 1,903 33,024 ...................... 54,409 8,957 52,642 34,285 259,966 32,548 19,238 8,957 11,898 145,570 81,909 10,749 14,602 100,013 63,749 30,428 25,966 49,003 54,442 14,385 37,563 43,959 91,954 41,739 39,560 58,690 10,456 16,870 16,595 10,173 52,405 21,362 141,341 86,186 8,957 114,494 39,002 33,265 117,718 9,972 47,450 8,957 62,257 201,770 25,154 8,957 59,719 46,564 24,014 52,854 8,957 891 2,704 1,055 67,984 ...................... 1,903 33,024 ...................... 56,445 9,342 56,407 35,708 271,453 34,105 19,871 9,342 12,182 154,109 86,685 11,255 15,465 103,911 66,226 31,581 26,963 50,877 56,315 14,885 39,069 45,164 95,240 43,338 41,031 61,039 10,907 17,540 17,844 10,574 54,175 22,360 146,134 90,329 9,342 118,397 40,565 34,855 121,735 10,276 49,595 9,342 64,866 212,142 26,821 9,342 62,457 48,831 24,796 54,832 9,342 924 2,831 1,126 70,460 ...................... 1,965 34,444 ...................... 1.99 0.33 1.99 1.26 9.57 1.20 0.70 0.33 0.43 5.43 3.06 0.40 0.55 3.66 2.33 1.11 0.95 1.79 1.98 0.52 1.38 1.59 3.36 1.53 1.45 2.15 0.38 0.62 0.63 0.37 1.91 0.79 5.15 3.18 0.33 4.17 1.43 1.23 4.29 0.36 1.75 0.33 2.29 7.48 0.95 0.33 2.20 1.72 0.87 1.93 0.33 0.03 0.10 0.04 2.48 .................... 0.07 1.21 .................... Total ................................................................................................. 2,635,845 ........................ 2,720,192 2,720,192 2,837,160 1 100.00 1 Excludes undistributed obligations. 128 Department of Health and Human Services, Centers for Medicare and Medicaid Services Table 8–15. 75–0515–0–1–551 State Children’s Health Insurance Program (93.767) (obligations in thousands of dollars) Estimated FY 2006 obligations from: State or Territory FY 2005 Actual Previous authority New authority Total FY 2007 (estimated) FY 2007 Percentage of distributed total Alabama ........................................................................................... Alaska .............................................................................................. Arizona ............................................................................................. Arkansas .......................................................................................... California .......................................................................................... Colorado .......................................................................................... Connecticut ...................................................................................... Delaware .......................................................................................... District of Columbia ......................................................................... Florida .............................................................................................. Georgia ............................................................................................ Hawaii .............................................................................................. Idaho ................................................................................................ Illinois ............................................................................................... Indiana ............................................................................................. Iowa ................................................................................................. Kansas ............................................................................................. Kentucky .......................................................................................... Louisiana ......................................................................................... Maine ............................................................................................... Maryland .......................................................................................... Massachusetts ................................................................................. Michigan .......................................................................................... Minnesota ........................................................................................ Mississippi ....................................................................................... Missouri ........................................................................................... Montana ........................................................................................... Nebraska ......................................................................................... Nevada ............................................................................................ New Hampshire ............................................................................... New Jersey ...................................................................................... New Mexico ..................................................................................... New York ......................................................................................... North Carolina ................................................................................. North Dakota ................................................................................... Ohio ................................................................................................. Oklahoma ........................................................................................ Oregon ............................................................................................. Pennsylvania ................................................................................... Rhode Island ................................................................................... South Carolina ................................................................................. South Dakota ................................................................................... Tennessee ....................................................................................... Texas ............................................................................................... Utah ................................................................................................. Vermont ........................................................................................... Virginia ............................................................................................. Washington ...................................................................................... West Virginia ................................................................................... Wisconsin ........................................................................................ Wyoming .......................................................................................... American Samoa ............................................................................. Guam ............................................................................................... Northern Mariana Islands ................................................................ Puerto Rico ...................................................................................... Freely Associated States ................................................................ Virgin Islands ................................................................................... Indian Tribes .................................................................................... Undistributed .................................................................................... Adjustments ..................................................................................... 68,041 9,020 106,473 48,662 667,444 57,951 36,561 9,046 9,635 249,247 130,915 12,404 20,748 164,936 73,422 28,266 28,479 54,061 77,478 12,462 48,349 59,401 111,346 38,615 48,165 53,958 12,284 17,096 40,387 9,273 84,735 42,157 270,142 110,255 6,385 125,842 57,371 47,255 130,964 9,355 54,306 7,887 78,905 449,972 31,699 4,903 76,255 64,705 24,423 51,870 6,364 510 1,488 468 38,953 ...................... 1,106 ...................... ...................... ...................... ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ 64,182 9,100 107,366 43,796 646,682 57,951 34,535 9,045 9,557 249,330 129,458 12,404 20,611 169,198 73,000 26,987 27,490 57,764 77,133 11,928 48,708 59,401 117,165 39,377 49,916 56,290 12,558 16,848 41,896 9,193 89,476 42,157 272,452 110,255 6,346 124,632 57,371 46,887 134,097 9,781 55,545 7,828 80,407 454,742 32,208 4,818 72,303 64,706 23,350 55,764 5,881 510 1,488 468 38,953 ...................... 1,106 ...................... ...................... 283,000 64,182 9,100 107,366 43,796 646,682 57,951 34,535 9,045 9,557 249,330 129,458 12,404 20,611 169,198 73,000 26,987 27,490 57,764 77,133 11,928 48,708 59,401 117,165 39,377 49,916 56,290 12,558 16,848 41,896 9,193 89,476 42,157 272,452 110,255 6,346 124,632 57,371 46,887 134,097 9,781 55,545 7,828 80,407 454,742 32,208 4,818 72,303 64,706 23,350 55,764 5,881 510 1,488 468 38,953 ...................... 1,106 ...................... ...................... 283,000 79,239 11,235 132,554 53,961 798,393 71,545 42,636 11,167 11,799 307,822 159,828 15,314 25,446 208,892 90,126 33,318 33,939 71,316 95,228 14,727 60,135 73,335 144,652 48,613 61,626 69,495 15,504 20,800 51,729 11,349 110,467 52,045 336,369 136,117 7,835 153,871 70,828 57,886 165,556 12,076 68,576 9,665 99,270 561,423 39,764 5,948 89,265 79,883 28,827 68,846 7,261 630 1,837 577 48,090 ...................... 1,365 ...................... ...................... ...................... 1.57 0.22 2.63 1.07 15.84 1.42 0.85 0.22 0.23 6.11 3.17 0.30 0.50 4.14 1.79 0.66 0.67 1.42 1.89 0.29 1.19 1.46 2.87 0.96 1.22 1.38 0.31 0.41 1.03 0.23 2.19 1.03 6.67 2.70 0.16 3.05 1.41 1.15 3.28 0.24 1.36 0.19 1.97 11.14 0.79 0.12 1.77 1.58 0.57 1.37 0.14 0.01 0.04 0.01 0.95 .................... 0.03 .................... .................... .................... Total ................................................................................................. 4,082,400 ........................ 4,365,400 4,365,400 5,040,000 1 100.00 1 Excludes undistributed obligations. 129 Department of Health and Human Services, Centers for Medicare and Medicaid Services Table 8–16. 75–0512–0–1–551 Grants to States for Medicaid (93.778) (obligations in thousands of dollars) Estimated FY 2006 obligations from: State or Territory FY 2005 Actual Previous authority New authority Total FY 2007 (estimated) FY 2007 Percentage of distributed total Alabama ........................................................................................... Alaska .............................................................................................. Arizona ............................................................................................. Arkansas .......................................................................................... California .......................................................................................... Colorado .......................................................................................... Connecticut ...................................................................................... Delaware .......................................................................................... District of Columbia ......................................................................... Florida .............................................................................................. Georgia ............................................................................................ Hawaii .............................................................................................. Idaho ................................................................................................ Illinois ............................................................................................... Indiana ............................................................................................. Iowa ................................................................................................. Kansas ............................................................................................. Kentucky .......................................................................................... Louisiana ......................................................................................... Maine ............................................................................................... Maryland .......................................................................................... Massachusetts ................................................................................. Michigan .......................................................................................... Minnesota ........................................................................................ Mississippi ....................................................................................... Missouri ........................................................................................... Montana ........................................................................................... Nebraska ......................................................................................... Nevada ............................................................................................ New Hampshire ............................................................................... New Jersey ...................................................................................... New Mexico ..................................................................................... New York ......................................................................................... North Carolina ................................................................................. North Dakota ................................................................................... Ohio ................................................................................................. Oklahoma ........................................................................................ Oregon ............................................................................................. Pennsylvania ................................................................................... Rhode Island ................................................................................... South Carolina ................................................................................. South Dakota ................................................................................... Tennessee ....................................................................................... Texas ............................................................................................... Utah ................................................................................................. Vermont ........................................................................................... Virginia ............................................................................................. Washington ...................................................................................... West Virginia ................................................................................... Wisconsin ........................................................................................ Wyoming .......................................................................................... American Samoa ............................................................................. Guam ............................................................................................... Northern Mariana Islands ................................................................ Puerto Rico ...................................................................................... Freely Associated States ................................................................ Virgin Islands ................................................................................... Indian Tribes .................................................................................... Undistributed .................................................................................... Survey & Certification ..................................................................... Fraud Control Units ......................................................................... Vaccines for Children ...................................................................... Medicare Part B Transfer ............................................................... Medicare Part D Transfer ............................................................... Incurred But Not Reported ............................................................. Adjustments ..................................................................................... 2,843,720 681,336 4,092,137 2,436,921 22,102,201 1,516,864 2,127,062 483,462 951,829 8,595,175 4,450,437 630,044 774,672 6,433,637 3,771,102 1,625,436 1,334,905 3,158,289 3,944,520 1,540,332 2,606,399 4,919,734 5,398,062 3,235,118 2,834,870 4,304,509 562,936 1,021,497 727,428 684,576 4,517,358 1,862,351 24,343,119 5,892,636 384,432 7,788,132 2,100,680 1,949,333 8,911,662 1,021,498 3,043,808 461,802 5,382,360 11,226,479 1,070,165 561,348 2,469,787 3,242,853 1,703,864 3,049,323 252,616 3,950 6,650 2,383 219,600 ...................... 6,886 ...................... ...................... 175,165 145,186 1,503,127 242,289 72,800 ...................... ¥204,908 ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ 2,814,065 751,683 4,535,708 2,316,051 20,444,000 1,565,218 2,224,219 489,958 995,382 8,871,987 4,406,404 652,681 835,324 5,872,990 4,062,626 1,679,021 1,387,558 3,286,278 4,100,822 1,423,030 2,677,410 5,050,256 5,065,730 2,706,072 3,009,721 4,228,353 545,126 1,021,008 742,806 671,674 4,717,615 1,841,021 25,447,882 6,397,389 361,666 7,996,238 2,359,041 1,968,634 9,540,882 1,047,514 2,952,684 517,223 5,115,714 11,610,127 1,085,901 562,851 2,478,575 3,279,893 1,698,661 2,861,788 257,742 4,277 7,699 2,542 255,888 ...................... 7,790 ...................... ...................... 252,000 161,600 1,957,963 300,000 19,800 22,910,109 ¥2,848,198 2,814,065 751,683 4,535,708 2,316,051 20,444,000 1,565,218 2,224,219 489,958 995,382 8,871,987 4,406,404 652,681 835,324 5,872,990 4,062,626 1,679,021 1,387,558 3,286,278 4,100,822 1,423,030 2,677,410 5,050,256 5,065,730 2,706,072 3,009,721 4,228,353 545,126 1,021,008 742,806 671,674 4,717,615 1,841,021 25,447,882 6,397,389 361,666 7,996,238 2,359,041 1,968,634 9,540,882 1,047,514 2,952,684 517,223 5,115,714 11,610,127 1,085,901 562,851 2,478,575 3,279,893 1,698,661 2,861,788 257,742 4,277 7,699 2,542 255,888 ...................... 7,790 ...................... ...................... 252,000 161,600 1,957,963 300,000 19,800 22,910,109 ¥2,848,198 2,958,233 847,012 4,954,401 2,521,112 20,619,586 1,616,666 2,260,633 513,632 1,073,495 9,558,614 4,640,267 644,960 1,008,225 6,132,957 4,403,014 1,715,427 1,453,968 3,335,932 4,264,518 1,533,565 2,805,031 4,291,914 5,091,493 3,316,311 3,152,946 4,722,273 553,995 1,069,464 780,076 688,117 4,891,224 1,881,313 26,401,883 6,830,984 364,165 8,150,893 2,538,406 1,933,710 9,847,693 1,074,794 3,042,411 504,594 5,275,831 12,188,121 1,158,024 581,766 2,636,931 3,366,081 1,856,759 2,985,037 265,258 4,489 7,857 2,663 274,051 ...................... 8,270 ...................... ...................... 256,900 174,800 2,006,445 350,000 18,000 2,016,090 ¥3,594,045 1.47 0.42 2.45 1.25 10.22 0.80 1.12 0.25 0.53 4.74 2.30 0.32 0.50 3.04 2.18 0.85 0.72 1.65 2.11 0.76 1.39 2.13 2.52 1.64 1.56 2.34 0.27 0.53 0.39 0.34 2.42 0.93 13.08 3.38 0.18 4.04 1.26 0.96 4.88 0.53 1.51 0.25 2.61 6.04 0.57 0.29 1.31 1.67 0.92 1.48 0.13 * * * 0.14 .................... * .................... .................... 0.13 0.09 0.99 0.17 0.01 1.00 ¥1.78 Total ................................................................................................. 193,197,944 ........................ 215,563,672 215,563,672 201,829,235 1 100.00 * $500 or less or 0.005 percent or less. 1 Excludes undistributed obligations. 130 Department of Health and Human Services, Administration for Children and Families Table 8–17. 75–1552–0–1–609 Temporary Assistance for Needy Families (TANF)—Family Assistance Grants (93.558a) (obligations in thousands of dollars) Estimated FY 2006 obligations from: State or Territory FY 2005 Actual Previous authority New authority Total FY 2007 (estimated) FY 2007 Percentage of distributed total Alabama ........................................................................................... Alaska .............................................................................................. Arizona ............................................................................................. Arkansas .......................................................................................... California .......................................................................................... Colorado .......................................................................................... Connecticut ...................................................................................... Delaware .......................................................................................... District of Columbia ......................................................................... Florida .............................................................................................. Georgia ............................................................................................ Hawaii .............................................................................................. Idaho ................................................................................................ Illinois ............................................................................................... Indiana ............................................................................................. Iowa ................................................................................................. Kansas ............................................................................................. Kentucky .......................................................................................... Louisiana ......................................................................................... Maine ............................................................................................... Maryland .......................................................................................... Massachusetts ................................................................................. Michigan .......................................................................................... Minnesota ........................................................................................ Mississippi ....................................................................................... Missouri ........................................................................................... Montana ........................................................................................... Nebraska ......................................................................................... Nevada ............................................................................................ New Hampshire ............................................................................... New Jersey ...................................................................................... New Mexico ..................................................................................... New York ......................................................................................... North Carolina ................................................................................. North Dakota ................................................................................... Ohio ................................................................................................. Oklahoma ........................................................................................ Oregon ............................................................................................. Pennsylvania ................................................................................... Rhode Island ................................................................................... South Carolina ................................................................................. South Dakota ................................................................................... Tennessee ....................................................................................... Texas ............................................................................................... Utah ................................................................................................. Vermont ........................................................................................... Virginia ............................................................................................. Washington ...................................................................................... West Virginia ................................................................................... Wisconsin ........................................................................................ Wyoming .......................................................................................... American Samoa ............................................................................. Guam ............................................................................................... Northern Mariana Islands ................................................................ Puerto Rico ...................................................................................... Freely Associated States ................................................................ Virgin Islands ................................................................................... Indian Tribes .................................................................................... Undistributed .................................................................................... Tribal New Program ........................................................................ Responsible Fatherhood ................................................................. Family Formation Match ................................................................. Contingency Fund (CF) Usage 1 .................................................... Territories Matching Fund ............................................................... 122,626 61,574 226,417 65,788 3,693,923 149,626 266,788 33,319 117,529 622,746 372,028 99,247 33,911 585,809 214,244 137,828 102,062 181,288 218,345 81,154 229,098 468,576 780,507 278,697 114,974 227,904 43,511 57,769 47,386 40,447 404,554 115,237 2,487,312 338,350 27,720 742,647 153,797 167,915 724,155 97,883 124,960 21,721 260,941 544,850 112,996 48,472 166,199 392,665 110,318 320,915 19,203 ...................... 3,209 ...................... 71,563 ...................... 2,847 141,096 ...................... 7,558 ...................... ...................... ...................... ...................... ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ 104,408 54,837 226,131 62,951 3,671,818 149,626 266,788 32,291 92,610 622,746 368,025 98,905 33,911 585,057 206,799 131,525 101,931 181,288 180,999 78,121 229,098 459,371 775,353 263,434 95,803 217,052 39,172 57,769 47,647 38,521 404,035 117,131 2,442,931 338,350 26,400 727,968 147,594 166,799 719,499 95,022 99,968 21,280 213,089 538,965 84,314 47,353 158,285 382,854 110,176 314,499 18,501 ...................... 3,389 ...................... 71,563 ...................... 2,847 159,120 ...................... 7,633 150,000 ...................... 132,076 15,000 104,408 54,837 226,131 62,951 3,671,818 149,626 266,788 32,291 92,610 622,746 368,025 98,905 33,911 585,057 206,799 131,525 101,931 181,288 180,999 78,121 229,098 459,371 775,353 263,434 95,803 217,052 39,172 57,769 47,647 38,521 404,035 117,131 2,442,931 338,350 26,400 727,968 147,594 166,799 719,499 95,022 99,968 21,280 213,089 538,965 84,314 47,353 158,285 382,854 110,176 314,499 18,501 ...................... 3,389 ...................... 71,563 ...................... 2,847 159,120 ...................... 7,633 150,000 ...................... 132,076 15,000 104,408 54,837 226,131 62,951 3,671,815 149,626 266,788 32,291 92,610 622,746 368,025 98,905 33,911 585,057 206,799 131,525 101,931 181,288 180,999 78,121 229,098 459,371 775,353 263,434 95,803 217,052 39,172 57,769 47,647 38,521 404,035 117,131 2,442,931 338,350 26,400 727,968 147,594 166,799 719,499 95,022 99,968 21,280 213,089 538,965 84,314 47,353 158,285 382,854 110,176 314,499 18,501 ...................... 3,389 ...................... 71,563 ...................... 2,847 159,120 ...................... 7,633 150,000 100,000 112,076 15,000 0.60 0.32 1.31 0.36 21.26 0.87 1.54 0.19 0.54 3.61 2.13 0.57 0.20 3.39 1.20 0.76 0.59 1.05 1.05 0.45 1.33 2.66 4.49 1.53 0.55 1.26 0.23 0.33 0.28 0.22 2.34 0.68 14.15 1.96 0.15 4.22 0.85 0.97 4.17 0.55 0.58 0.12 1.23 3.12 0.49 0.27 0.92 2.22 0.64 1.82 0.11 .................... 0.02 .................... 0.41 .................... 0.02 0.92 .................... 0.04 0.87 0.58 0.65 0.09 Total 2 ............................................................................................... 17,284,204 ........................ 17,190,628 17,190,628 17,270,625 3 100.00 1 Unobligated contingency fund balances were $1,958 million in FY 2005, and are estimated to be $1,900 million in FY 2006, and $2,000 million in FY 2007. State Family Assistance Grants, and Supplemental Population Grants, Grants to Tribes, and Contingency Fund. FY 2005 also includes High Performance Bonus, Illegitimacy Bonus, and Federal Loans for Hurricane Katrina. 3 Excludes undistributed obligations. 2 Includes 131 Department of Health and Human Services, Administration for Children and Families Table 8–18. 75–1501–0–1–609 Child Support Enforcement—Federal Share of State and Local Administrative Costs and Incentives (93.563) (obligations in thousands of dollars) Estimated FY 2006 obligations from: State or Territory FY 2005 Actual Previous authority New authority Total FY 2007 (estimated) FY 2007 Percentage of distributed total Alabama ........................................................................................... Alaska .............................................................................................. Arizona ............................................................................................. Arkansas .......................................................................................... California .......................................................................................... Colorado .......................................................................................... Connecticut ...................................................................................... Delaware .......................................................................................... District of Columbia ......................................................................... Florida .............................................................................................. Georgia ............................................................................................ Hawaii .............................................................................................. Idaho ................................................................................................ Illinois ............................................................................................... Indiana ............................................................................................. Iowa ................................................................................................. Kansas ............................................................................................. Kentucky .......................................................................................... Louisiana ......................................................................................... Maine ............................................................................................... Maryland .......................................................................................... Massachusetts ................................................................................. Michigan .......................................................................................... Minnesota ........................................................................................ Mississippi ....................................................................................... Missouri ........................................................................................... Montana ........................................................................................... Nebraska ......................................................................................... Nevada ............................................................................................ New Hampshire ............................................................................... New Jersey ...................................................................................... New Mexico ..................................................................................... New York ......................................................................................... North Carolina ................................................................................. North Dakota ................................................................................... Ohio ................................................................................................. Oklahoma ........................................................................................ Oregon ............................................................................................. Pennsylvania ................................................................................... Rhode Island ................................................................................... South Carolina ................................................................................. South Dakota ................................................................................... Tennessee ....................................................................................... Texas ............................................................................................... Utah ................................................................................................. Vermont ........................................................................................... Virginia ............................................................................................. Washington ...................................................................................... West Virginia ................................................................................... Wisconsin ........................................................................................ Wyoming .......................................................................................... American Samoa ............................................................................. Guam ............................................................................................... Northern Mariana Islands ................................................................ Puerto Rico ...................................................................................... Freely Associated States ................................................................ Virgin Islands ................................................................................... Indian Tribes .................................................................................... Undistributed .................................................................................... 46,524 14,223 46,439 32,708 868,224 48,576 54,585 16,105 7,674 192,972 79,003 11,893 32,741 123,578 64,292 31,878 48,567 31,647 61,396 11,214 93,157 103,527 135,871 93,256 34,895 54,558 12,241 36,168 32,015 26,728 124,433 53,534 192,598 72,550 40,644 208,668 34,715 65,136 128,630 1,707 32,326 53,220 55,849 180,975 41,113 40,728 66,200 72,643 20,852 78,932 6,041 ...................... 6,902 ...................... 33,169 ...................... 12,769 12,502 ...................... ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ 46,313 14,159 46,228 32,560 864,276 48,355 54,337 16,032 7,639 192,096 78,644 11,839 32,592 123,017 64,000 31,733 48,347 31,503 61,117 11,163 92,734 103,057 135,254 92,832 34,736 54,310 12,185 36,004 31,869 26,606 123,868 53,291 191,723 72,220 40,459 207,719 34,558 64,841 128,046 1,700 32,179 52,979 55,595 180,153 40,926 40,543 65,899 72,313 20,758 78,574 6,014 ...................... 6,870 ...................... 33,018 ...................... 12,711 17,000 ...................... 46,313 14,159 46,228 32,560 864,276 48,355 54,337 16,032 7,639 192,096 78,644 11,839 32,592 123,017 64,000 31,733 48,347 31,503 61,117 11,163 92,734 103,057 135,254 92,832 34,736 54,310 12,185 36,004 31,869 26,606 123,868 53,291 191,723 72,220 40,459 207,719 34,558 64,841 128,046 1,700 32,179 52,979 55,595 180,153 40,926 40,543 65,899 72,313 20,758 78,574 6,014 ...................... 6,870 ...................... 33,018 ...................... 12,711 17,000 ...................... 46,183 14,119 46,099 32,469 861,861 48,220 54,185 15,987 7,618 191,558 78,424 11,806 32,501 122,673 63,821 31,644 48,211 31,415 60,946 11,131 92,475 102,769 134,876 92,573 34,639 54,158 12,151 35,903 31,780 26,532 123,521 53,142 191,187 72,018 40,346 207,138 34,461 64,659 127,688 1,695 32,089 52,830 55,440 179,649 40,812 40,430 65,715 72,110 20,700 78,354 5,997 ...................... 6,851 ...................... 32,927 ...................... 12,676 30,000 ...................... 1.13 0.35 1.13 0.80 21.17 1.18 1.33 0.39 0.19 4.71 1.93 0.29 0.80 3.01 1.57 0.78 1.18 0.77 1.50 0.27 2.27 2.52 3.31 2.27 0.85 1.33 0.30 0.88 0.78 0.65 3.03 1.31 4.70 1.77 0.99 5.09 0.85 1.59 3.14 0.04 0.79 1.30 1.36 4.41 1.00 0.99 1.61 1.77 0.51 1.92 0.15 .................... 0.17 .................... 0.81 .................... 0.31 0.74 .................... Total ................................................................................................. 4,083,491 ........................ 4,069,494 4,069,494 4,071,162 1 100.00 1 Excludes undistributed obligations. 132 Department of Health and Human Services, Administration for Children and Families Table 8–19. 75–1502–0–1–609 Low Income Home Energy Assistance Program (93.568a) (obligations in thousands of dollars) Estimated FY 2006 obligations from: State or Territory FY 2005 Actual Previous authority New authority Total FY 2007 (estimated) FY 2007 Percentage of distributed total Alabama ........................................................................................... Alaska .............................................................................................. Arizona ............................................................................................. Arkansas .......................................................................................... California .......................................................................................... Colorado .......................................................................................... Connecticut ...................................................................................... Delaware .......................................................................................... District of Columbia ......................................................................... Florida .............................................................................................. Georgia ............................................................................................ Hawaii .............................................................................................. Idaho ................................................................................................ Illinois ............................................................................................... Indiana ............................................................................................. Iowa ................................................................................................. Kansas ............................................................................................. Kentucky .......................................................................................... Louisiana ......................................................................................... Maine ............................................................................................... Maryland .......................................................................................... Massachusetts ................................................................................. Michigan .......................................................................................... Minnesota ........................................................................................ Mississippi ....................................................................................... Missouri ........................................................................................... Montana ........................................................................................... Nebraska ......................................................................................... Nevada ............................................................................................ New Hampshire ............................................................................... New Jersey ...................................................................................... New Mexico ..................................................................................... New York ......................................................................................... North Carolina ................................................................................. North Dakota ................................................................................... Ohio ................................................................................................. Oklahoma ........................................................................................ Oregon ............................................................................................. Pennsylvania ................................................................................... Rhode Island ................................................................................... South Carolina ................................................................................. South Dakota ................................................................................... Tennessee ....................................................................................... Texas ............................................................................................... Utah ................................................................................................. Vermont ........................................................................................... Virginia ............................................................................................. Washington ...................................................................................... West Virginia ................................................................................... Wisconsin ........................................................................................ Wyoming .......................................................................................... American Samoa ............................................................................. Guam ............................................................................................... Northern Mariana Islands ................................................................ Puerto Rico ...................................................................................... Freely Associated States ................................................................ Virgin Islands ................................................................................... Indian Tribes .................................................................................... Undistributed .................................................................................... Discretionary Funds ........................................................................ Technical Assistance ....................................................................... Lapse ............................................................................................... 15,851 6,928 7,084 12,172 84,940 29,812 38,923 5,166 6,045 25,233 19,956 2,010 11,074 107,733 48,770 34,570 15,864 25,384 16,308 24,295 29,803 77,829 101,670 73,689 13,650 43,033 11,584 17,093 3,623 14,737 72,100 8,841 235,610 34,547 12,108 95,306 13,371 22,718 126,771 12,780 12,669 9,903 25,714 41,991 13,581 11,046 36,304 36,495 16,799 66,331 5,341 42 91 32 2,264 ...................... 86 19,552 ...................... 27,280 297 ¥3 ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ 16,664 7,440 7,448 12,796 89,287 31,342 40,920 5,431 6,355 26,527 20,979 2,113 11,642 113,259 51,274 36,343 16,678 26,686 17,144 25,541 31,332 81,820 106,792 77,469 14,350 45,240 12,178 17,970 3,809 15,493 75,798 9,392 247,980 36,319 12,174 100,195 14,008 23,880 133,273 13,435 13,318 10,410 27,033 44,144 14,285 11,613 38,166 38,367 17,660 69,733 5,626 44 96 33 2,381 ...................... 91 20,702 ...................... 27,225 297 ...................... 16,664 7,440 7,448 12,796 89,287 31,342 40,920 5,431 6,355 26,527 20,979 2,113 11,642 113,259 51,274 36,343 16,678 26,686 17,144 25,541 31,332 81,820 106,792 77,469 14,350 45,240 12,178 17,970 3,809 15,493 75,798 9,392 247,980 36,319 12,174 100,195 14,008 23,880 133,273 13,435 13,318 10,410 27,033 44,144 14,285 11,613 38,166 38,367 17,660 69,733 5,626 44 96 33 2,381 ...................... 91 20,702 ...................... 27,225 297 ...................... 17,635 7,525 7,882 13,542 94,490 31,704 41,392 5,748 6,428 28,073 22,202 2,137 11,776 119,296 51,865 36,762 17,651 28,241 18,143 25,835 33,158 82,764 108,028 78,363 15,186 47,877 12,319 18,177 4,031 15,672 76,672 9,501 250,841 38,435 12,315 101,350 14,826 24,158 134,810 13,590 14,095 10,531 28,608 46,717 14,452 11,747 40,390 38,810 18,690 70,538 5,693 45 98 34 2,444 ...................... 93 21,093 ...................... 27,225 297 ...................... 0.87 0.37 0.39 0.67 4.65 1.56 2.04 0.28 0.32 1.38 1.09 0.11 0.58 5.87 2.55 1.81 0.87 1.39 0.89 1.27 1.63 4.07 5.32 3.86 0.75 2.36 0.61 0.89 0.20 0.77 3.77 0.47 12.34 1.89 0.61 4.99 0.73 1.19 6.63 0.67 0.69 0.52 1.41 2.30 0.71 0.58 1.99 1.91 0.92 3.47 0.28 * * * 0.12 .................... * 1.04 .................... 1.34 0.01 .................... Total ................................................................................................. 1,884,796 ........................ 1,980,000 1,980,000 2,032,000 1 100.00 * $500 or less or 0.005 percent or less. 1 Excludes undistributed obligations. 133 Department of Health and Human Services, Administration for Children and Families Table 8–20. 75–1515–0–1–609 Child Care and Development Block Grant (93.575) (obligations in thousands of dollars) Estimated FY 2006 obligations from: State or Territory FY 2005 Actual Previous authority New authority Total FY 2007 (estimated) FY 2007 Percentage of distributed total Alabama ........................................................................................... Alaska .............................................................................................. Arizona ............................................................................................. Arkansas .......................................................................................... California .......................................................................................... Colorado .......................................................................................... Connecticut ...................................................................................... Delaware .......................................................................................... District of Columbia ......................................................................... Florida .............................................................................................. Georgia ............................................................................................ Hawaii .............................................................................................. Idaho ................................................................................................ Illinois ............................................................................................... Indiana ............................................................................................. Iowa ................................................................................................. Kansas ............................................................................................. Kentucky .......................................................................................... Louisiana ......................................................................................... Maine ............................................................................................... Maryland .......................................................................................... Massachusetts ................................................................................. Michigan .......................................................................................... Minnesota ........................................................................................ Mississippi ....................................................................................... Missouri ........................................................................................... Montana ........................................................................................... Nebraska ......................................................................................... Nevada ............................................................................................ New Hampshire ............................................................................... New Jersey ...................................................................................... New Mexico ..................................................................................... New York ......................................................................................... North Carolina ................................................................................. North Dakota ................................................................................... Ohio ................................................................................................. Oklahoma ........................................................................................ Oregon ............................................................................................. Pennsylvania ................................................................................... Rhode Island ................................................................................... South Carolina ................................................................................. South Dakota ................................................................................... Tennessee ....................................................................................... Texas ............................................................................................... Utah ................................................................................................. Vermont ........................................................................................... Virginia ............................................................................................. Washington ...................................................................................... West Virginia ................................................................................... Wisconsin ........................................................................................ Wyoming .......................................................................................... American Samoa ............................................................................. Guam ............................................................................................... Northern Mariana Islands ................................................................ Puerto Rico ...................................................................................... Freely Associated States ................................................................ Virgin Islands ................................................................................... Indian Tribes .................................................................................... Undistributed .................................................................................... Technical Assistance ....................................................................... Research Set-Aside ........................................................................ Child Care Aware ............................................................................ 41,574 4,059 49,265 25,161 229,313 23,440 14,528 4,605 3,279 113,701 74,993 8,440 11,593 78,276 41,626 18,473 19,030 36,066 48,102 6,964 27,004 26,245 59,474 25,914 33,165 39,484 5,878 12,008 13,304 4,892 37,391 18,814 109,665 65,039 4,027 68,800 31,773 22,331 62,848 5,964 37,591 5,875 45,486 210,972 22,446 2,994 40,274 33,571 14,289 30,374 2,886 2,515 4,191 1,594 41,463 ...................... 2,115 41,658 ...................... 5,207 9,920 992 ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ 40,569 4,032 49,980 24,687 229,046 23,742 14,308 4,527 3,097 114,859 75,707 8,102 11,588 75,972 41,415 18,222 18,827 35,447 47,004 6,854 26,273 25,617 58,727 25,804 32,286 38,888 5,701 11,888 13,532 4,724 36,875 18,524 107,494 65,054 3,833 67,685 31,240 22,325 62,762 5,811 37,056 5,726 45,109 210,983 22,359 2,946 39,834 33,006 13,682 29,783 2,803 2,681 4,064 1,700 38,255 ...................... 1,866 41,242 ...................... 5,155 9,821 982 40,569 4,032 49,980 24,687 229,046 23,742 14,308 4,527 3,097 114,859 75,707 8,102 11,588 75,972 41,415 18,222 18,827 35,447 47,004 6,854 26,273 25,617 58,727 25,804 32,286 38,888 5,701 11,888 13,532 4,724 36,875 18,524 107,494 65,054 3,833 67,685 31,240 22,325 62,762 5,811 37,056 5,726 45,109 210,983 22,359 2,946 39,834 33,006 13,682 29,783 2,803 2,681 4,064 1,700 38,255 ...................... 1,866 41,242 ...................... 5,155 9,821 982 40,569 4,032 49,980 24,687 229,046 23,742 14,308 4,527 3,097 114,859 75,707 8,102 11,588 75,972 41,415 18,222 18,827 35,447 47,004 6,854 26,273 25,617 58,727 25,804 32,286 38,888 5,701 11,888 13,532 4,724 36,875 18,524 107,494 65,054 3,833 67,685 31,240 22,325 62,762 5,811 37,056 5,726 45,109 210,983 22,359 2,946 39,834 33,006 13,682 29,783 2,803 2,681 4,064 1,700 38,255 ...................... 1,866 41,242 ...................... 5,155 9,821 982 1.97 0.20 2.42 1.20 11.11 1.15 0.69 0.22 0.15 5.57 3.67 0.39 0.56 3.68 2.01 0.88 0.91 1.72 2.28 0.33 1.27 1.24 2.85 1.25 1.57 1.89 0.28 0.58 0.66 0.23 1.79 0.90 5.21 3.15 0.19 3.28 1.51 1.08 3.04 0.28 1.80 0.28 2.19 10.23 1.08 0.14 1.93 1.60 0.66 1.44 0.14 0.13 0.20 0.08 1.86 .................... 0.09 2.00 .................... 0.25 0.48 0.05 Total ................................................................................................. 2,082,921 ........................ 2,062,081 2,062,081 2,062,081 1 100.00 1 Excludes undistributed obligations. 134 Department of Health and Human Services, Administration for Children and Families Table 8–21. 75–1550–0–1–609 Child Care and Development Fund—Mandatory (93.596a) (obligations in thousands of dollars) Estimated FY 2006 obligations from: State or Territory FY 2005 Actual Previous authority New authority Total FY 2007 (estimated) FY 2007 Percentage of distributed total Alabama ........................................................................................... Alaska .............................................................................................. Arizona ............................................................................................. Arkansas .......................................................................................... California .......................................................................................... Colorado .......................................................................................... Connecticut ...................................................................................... Delaware .......................................................................................... District of Columbia ......................................................................... Florida .............................................................................................. Georgia ............................................................................................ Hawaii .............................................................................................. Idaho ................................................................................................ Illinois ............................................................................................... Indiana ............................................................................................. Iowa ................................................................................................. Kansas ............................................................................................. Kentucky .......................................................................................... Louisiana ......................................................................................... Maine ............................................................................................... Maryland .......................................................................................... Massachusetts ................................................................................. Michigan .......................................................................................... Minnesota ........................................................................................ Mississippi ....................................................................................... Missouri ........................................................................................... Montana ........................................................................................... Nebraska ......................................................................................... Nevada ............................................................................................ New Hampshire ............................................................................... New Jersey ...................................................................................... New Mexico ..................................................................................... New York ......................................................................................... North Carolina ................................................................................. North Dakota ................................................................................... Ohio ................................................................................................. Oklahoma ........................................................................................ Oregon ............................................................................................. Pennsylvania ................................................................................... Rhode Island ................................................................................... South Carolina ................................................................................. South Dakota ................................................................................... Tennessee ....................................................................................... Texas ............................................................................................... Utah ................................................................................................. Vermont ........................................................................................... Virginia ............................................................................................. Washington ...................................................................................... West Virginia ................................................................................... Wisconsin ........................................................................................ Wyoming .......................................................................................... American Samoa ............................................................................. Guam ............................................................................................... Northern Mariana Islands ................................................................ Puerto Rico ...................................................................................... Freely Associated States ................................................................ Virgin Islands ................................................................................... Indian Tribes .................................................................................... Undistributed .................................................................................... Technical Assistance ....................................................................... 16,442 3,545 19,827 5,300 85,593 10,174 18,738 5,179 4,567 43,027 36,548 4,972 2,868 56,874 26,182 8,508 9,812 16,702 13,865 3,019 23,301 44,973 32,082 23,368 6,293 24,669 3,191 10,595 2,580 4,582 26,374 8,308 101,981 69,639 2,506 70,125 24,910 19,409 55,337 6,634 9,867 1,711 37,702 59,844 12,592 3,945 21,329 41,883 8,727 24,511 2,815 ...................... ...................... ...................... ...................... ...................... ...................... 54,340 ...................... 3,532 ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ 16,442 3,545 19,827 5,300 85,593 10,174 18,738 5,179 4,567 43,027 36,548 4,972 2,868 56,874 26,182 8,508 9,812 16,702 13,865 3,019 23,301 44,973 32,082 23,368 6,293 24,669 3,191 10,595 2,580 4,582 26,374 8,308 101,981 69,639 2,506 70,125 24,910 19,409 55,337 6,634 9,867 1,711 37,702 59,844 12,592 3,945 21,329 41,883 8,727 24,511 2,815 ...................... ...................... ...................... ...................... ...................... ...................... 58,340 ...................... 3,792 16,442 3,545 19,827 5,300 85,593 10,174 18,738 5,179 4,567 43,027 36,548 4,972 2,868 56,874 26,182 8,508 9,812 16,702 13,865 3,019 23,301 44,973 32,082 23,368 6,293 24,669 3,191 10,595 2,580 4,582 26,374 8,308 101,981 69,639 2,506 70,125 24,910 19,409 55,337 6,634 9,867 1,711 37,702 59,844 12,592 3,945 21,329 41,883 8,727 24,511 2,815 ...................... ...................... ...................... ...................... ...................... ...................... 58,340 ...................... 3,792 16,442 3,545 19,827 5,300 85,593 10,174 18,738 5,179 4,567 43,027 36,548 4,972 2,868 56,874 26,182 8,508 9,812 16,702 13,865 3,019 23,301 44,973 32,082 23,368 6,293 24,669 3,191 10,595 2,580 4,582 26,374 8,308 101,981 69,639 2,506 70,125 24,910 19,409 55,337 6,634 9,867 1,711 37,702 59,844 12,592 3,945 21,329 41,883 8,727 24,511 2,815 ...................... ...................... ...................... ...................... ...................... ...................... 58,340 ...................... 3,792 1.33 0.29 1.60 0.43 6.90 0.82 1.51 0.42 0.37 3.47 2.95 0.40 0.23 4.59 2.11 0.69 0.79 1.35 1.12 0.24 1.88 3.63 2.59 1.89 0.51 1.99 0.26 0.85 0.21 0.37 2.13 0.67 8.23 5.62 0.20 5.66 2.01 1.57 4.46 0.54 0.80 0.14 3.04 4.83 1.02 0.32 1.72 3.38 0.70 1.98 0.23 .................... .................... .................... .................... .................... .................... 4.71 .................... 0.31 Total ................................................................................................. 1,235,397 ........................ 1,239,657 1,239,657 1,239,657 1 100.00 1 Excludes undistributed obligations. 135 Department of Health and Human Services, Administration for Children and Families Table 8–22. 75–1550–0–1–609 Child Care and Development Fund—Matching (93.596b) (obligations in thousands of dollars) Estimated FY 2006 obligations from: State or Territory FY 2005 Actual Previous authority New authority Total FY 2007 (estimated) FY 2007 Percentage of distributed total Alabama ........................................................................................... Alaska .............................................................................................. Arizona ............................................................................................. Arkansas .......................................................................................... California .......................................................................................... Colorado .......................................................................................... Connecticut ...................................................................................... Delaware .......................................................................................... District of Columbia ......................................................................... Florida .............................................................................................. Georgia ............................................................................................ Hawaii .............................................................................................. Idaho ................................................................................................ Illinois ............................................................................................... Indiana ............................................................................................. Iowa ................................................................................................. Kansas ............................................................................................. Kentucky .......................................................................................... Louisiana ......................................................................................... Maine ............................................................................................... Maryland .......................................................................................... Massachusetts ................................................................................. Michigan .......................................................................................... Minnesota ........................................................................................ Mississippi ....................................................................................... Missouri ........................................................................................... Montana ........................................................................................... Nebraska ......................................................................................... Nevada ............................................................................................ New Hampshire ............................................................................... New Jersey ...................................................................................... New Mexico ..................................................................................... New York ......................................................................................... North Carolina ................................................................................. North Dakota ................................................................................... Ohio ................................................................................................. Oklahoma ........................................................................................ Oregon ............................................................................................. Pennsylvania ................................................................................... Rhode Island ................................................................................... South Carolina ................................................................................. South Dakota ................................................................................... Tennessee ....................................................................................... Texas ............................................................................................... Utah ................................................................................................. Vermont ........................................................................................... Virginia ............................................................................................. Washington ...................................................................................... West Virginia ................................................................................... Wisconsin ........................................................................................ Wyoming .......................................................................................... American Samoa ............................................................................. Guam ............................................................................................... Northern Mariana Islands ................................................................ Puerto Rico ...................................................................................... Freely Associated States ................................................................ Virgin Islands ................................................................................... Indian Tribes .................................................................................... Undistributed .................................................................................... Technical Assistance ....................................................................... 22,358 3,821 30,878 13,716 196,682 23,697 17,909 3,888 2,436 79,163 47,211 6,126 7,521 67,355 32,759 14,021 14,013 19,025 23,873 5,359 28,034 29,913 51,750 25,061 15,583 28,243 4,209 8,882 12,083 6,123 43,941 10,091 94,784 43,067 2,875 58,693 17,777 17,378 57,297 4,856 19,968 3,882 28,869 126,491 9,822 2,699 36,138 30,471 7,781 26,659 2,350 ...................... ...................... ...................... ...................... ...................... ...................... ...................... ...................... 3,260 ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ 24,871 4,196 36,179 15,435 221,032 27,294 18,908 4,413 2,622 90,962 54,150 6,906 8,507 74,544 36,639 15,300 15,576 22,416 26,556 6,089 31,566 33,216 56,925 27,892 17,143 31,256 4,539 9,900 14,123 6,673 49,344 11,102 104,120 48,955 3,066 62,770 19,683 19,321 62,964 5,458 23,232 4,282 31,806 146,323 17,634 2,880 41,242 33,507 8,633 29,114 2,578 ...................... ...................... ...................... ...................... ...................... ...................... ...................... ...................... 3,501 24,871 4,196 36,179 15,435 221,032 27,294 18,908 4,413 2,622 90,962 54,150 6,906 8,507 74,544 36,639 15,300 15,576 22,416 26,556 6,089 31,566 33,216 56,925 27,892 17,143 31,256 4,539 9,900 14,123 6,673 49,344 11,102 104,120 48,955 3,066 62,770 19,683 19,321 62,964 5,458 23,232 4,282 31,806 146,323 17,634 2,880 41,242 33,507 8,633 29,114 2,578 ...................... ...................... ...................... ...................... ...................... ...................... ...................... ...................... 3,501 24,871 4,196 36,179 15,435 221,032 27,294 18,908 4,413 2,622 90,962 54,150 6,906 8,507 74,544 36,639 15,300 15,576 22,416 26,556 6,089 31,566 33,216 56,925 27,892 17,143 31,256 4,539 9,900 14,123 6,673 49,344 11,102 104,120 48,955 3,066 62,770 19,683 19,321 62,964 5,458 23,232 4,282 31,806 146,323 17,634 2,880 41,242 33,507 8,633 29,114 2,578 ...................... ...................... ...................... ...................... ...................... ...................... ...................... ...................... 3,501 1.48 0.25 2.16 0.92 13.18 1.63 1.13 0.26 0.16 5.42 3.23 0.41 0.51 4.44 2.18 0.91 0.93 1.34 1.58 0.36 1.88 1.98 3.39 1.66 1.02 1.86 0.27 0.59 0.84 0.40 2.94 0.66 6.21 2.92 0.18 3.74 1.17 1.15 3.75 0.33 1.39 0.26 1.90 8.72 1.05 0.17 2.46 2.00 0.51 1.74 0.15 .................... .................... .................... .................... .................... .................... .................... .................... 0.21 Total ................................................................................................. 1 1,490,841 ........................ 1,677,343 1,677,343 1,677,343 2 100.00 1 Includes 2 Excludes reappropriated funds from prior years. undistributed obligations. 136 Department of Health and Human Services, Administration for Children and Families Table 8–23. 75–1536–0–1–506 Head Start (93.600) (obligations in thousands of dollars) Estimated FY 2006 obligations from: State or Territory FY 2005 Actual Previous authority New authority Total FY 2007 (estimated) FY 2007 Percentage of distributed total Alabama ........................................................................................... Alaska .............................................................................................. Arizona ............................................................................................. Arkansas .......................................................................................... California .......................................................................................... Colorado .......................................................................................... Connecticut ...................................................................................... Delaware .......................................................................................... District of Columbia ......................................................................... Florida .............................................................................................. Georgia ............................................................................................ Hawaii .............................................................................................. Idaho ................................................................................................ Illinois ............................................................................................... Indiana ............................................................................................. Iowa ................................................................................................. Kansas ............................................................................................. Kentucky .......................................................................................... Louisiana ......................................................................................... Maine ............................................................................................... Maryland .......................................................................................... Massachusetts ................................................................................. Michigan .......................................................................................... Minnesota ........................................................................................ Mississippi ....................................................................................... Missouri ........................................................................................... Montana ........................................................................................... Nebraska ......................................................................................... Nevada ............................................................................................ New Hampshire ............................................................................... New Jersey ...................................................................................... New Mexico ..................................................................................... New York ......................................................................................... North Carolina ................................................................................. North Dakota ................................................................................... Ohio ................................................................................................. Oklahoma ........................................................................................ Oregon ............................................................................................. Pennsylvania ................................................................................... Rhode Island ................................................................................... South Carolina ................................................................................. South Dakota ................................................................................... Tennessee ....................................................................................... Texas ............................................................................................... Utah ................................................................................................. Vermont ........................................................................................... Virginia ............................................................................................. Washington ...................................................................................... West Virginia ................................................................................... Wisconsin ........................................................................................ Wyoming .......................................................................................... American Samoa ............................................................................. Guam ............................................................................................... Northern Mariana Islands ................................................................ Puerto Rico ...................................................................................... Freely Associated States ................................................................ Virgin Islands ................................................................................... Indian Tribes .................................................................................... Undistributed .................................................................................... Palau ................................................................................................ Migrant Program .............................................................................. Unallocated Expansion .................................................................... Technical Assistance ....................................................................... Research, Development, & Education ........................................... Program Support ............................................................................. Hurricane Relief ............................................................................... 106,345 12,439 103,225 64,355 829,441 68,157 51,760 13,201 25,041 262,433 168,059 22,825 22,753 270,041 95,943 51,412 50,791 107,558 145,513 27,537 77,826 108,061 233,924 71,811 161,258 118,674 20,893 35,962 24,215 13,350 128,669 52,160 432,037 140,898 17,129 246,237 80,833 59,311 227,563 21,956 82,282 18,775 119,022 477,434 37,664 13,523 98,833 100,094 50,508 90,635 12,338 2,144 2,158 1,660 248,652 ...................... 7,976 186,937 ...................... 1,330 285,729 ...................... 174,078 20,000 38,980 ...................... ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ 105,446 12,334 102,352 63,810 822,424 67,580 51,322 13,089 24,829 260,213 166,637 22,632 22,561 267,757 95,132 50,977 50,361 106,648 144,282 27,304 77,168 107,147 231,945 71,204 159,894 117,670 20,716 35,658 24,010 13,237 127,581 51,719 428,382 139,706 16,984 244,154 80,150 58,809 225,638 21,771 81,586 18,616 118,015 473,394 37,345 13,409 97,997 99,248 50,081 89,869 12,234 2,126 2,140 1,646 246,548 ...................... 7,908 185,355 ...................... 1,319 283,312 ...................... 172,644 20,000 39,746 90,000 105,446 12,334 102,352 63,810 822,424 67,580 51,322 13,089 24,829 260,213 166,637 22,632 22,561 267,757 95,132 50,977 50,361 106,648 144,282 27,304 77,168 107,147 231,945 71,204 159,894 117,670 20,716 35,658 24,010 13,237 127,581 51,719 428,382 139,706 16,984 244,154 80,150 58,809 225,638 21,771 81,586 18,616 118,015 473,394 37,345 13,409 97,997 99,248 50,081 89,869 12,234 2,126 2,140 1,646 246,548 ...................... 7,908 185,355 ...................... 1,319 283,312 ...................... 172,644 20,000 39,746 1 90,000 105,446 12,334 102,352 63,810 822,424 67,580 51,322 13,089 24,829 260,213 166,637 22,632 22,561 267,757 95,132 50,977 50,361 106,648 144,282 27,304 77,168 107,147 231,945 71,204 159,894 117,670 20,716 35,658 24,010 13,237 127,581 51,719 428,382 139,706 16,984 244,154 80,150 58,809 225,638 21,771 81,586 18,616 118,015 473,394 37,345 13,409 97,997 99,248 50,081 89,869 12,234 2,126 2,140 1,646 246,548 ...................... 7,908 185,355 ...................... 1,319 283,312 66,830 105,814 20,000 39,746 ...................... 1.55 0.18 1.51 0.94 12.12 1.00 0.76 0.19 0.37 3.83 2.46 0.33 0.33 3.95 1.40 0.75 0.74 1.57 2.13 0.40 1.14 1.58 3.42 1.05 2.36 1.73 0.31 0.53 0.35 0.20 1.88 0.76 6.31 2.06 0.25 3.60 1.18 0.87 3.33 0.32 1.20 0.27 1.74 6.98 0.55 0.20 1.44 1.46 0.74 1.32 0.18 0.03 0.03 0.02 3.63 .................... 0.12 2.73 .................... 0.02 4.18 0.98 1.56 0.29 0.59 .................... Total ................................................................................................. 6,842,348 ........................ 6,875,771 6,875,771 6,785,771 2 100.00 1 Hurricane 2 Excludes relief funding will be distributed by State once grantee needs are determined. undistributed obligations. 137 Department of Health and Human Services, Administration for Children and Families Table 8–24. 75–1545–0–1–506 Foster Care—Title IV–E (93.658) (obligations in thousands of dollars) Estimated FY 2006 obligations from: State or Territory FY 2005 Actual Previous authority New authority Total FY 2007 (estimated) FY 2007 Percentage of distributed total Alabama ........................................................................................... Alaska .............................................................................................. Arizona ............................................................................................. Arkansas .......................................................................................... California .......................................................................................... Colorado .......................................................................................... Connecticut ...................................................................................... Delaware .......................................................................................... District of Columbia ......................................................................... Florida .............................................................................................. Georgia ............................................................................................ Hawaii .............................................................................................. Idaho ................................................................................................ Illinois ............................................................................................... Indiana ............................................................................................. Iowa ................................................................................................. Kansas ............................................................................................. Kentucky .......................................................................................... Louisiana ......................................................................................... Maine ............................................................................................... Maryland .......................................................................................... Massachusetts ................................................................................. Michigan .......................................................................................... Minnesota ........................................................................................ Mississippi ....................................................................................... Missouri ........................................................................................... Montana ........................................................................................... Nebraska ......................................................................................... Nevada ............................................................................................ New Hampshire ............................................................................... New Jersey ...................................................................................... New Mexico ..................................................................................... New York ......................................................................................... North Carolina ................................................................................. North Dakota ................................................................................... Ohio ................................................................................................. Oklahoma ........................................................................................ Oregon ............................................................................................. Pennsylvania ................................................................................... Rhode Island ................................................................................... South Carolina ................................................................................. South Dakota ................................................................................... Tennessee ....................................................................................... Texas ............................................................................................... Utah ................................................................................................. Vermont ........................................................................................... Virginia ............................................................................................. Washington ...................................................................................... West Virginia ................................................................................... Wisconsin ........................................................................................ Wyoming .......................................................................................... American Samoa ............................................................................. Guam ............................................................................................... Northern Mariana Islands ................................................................ Puerto Rico ...................................................................................... Freely Associated States ................................................................ Virgin Islands ................................................................................... Indian Tribes .................................................................................... Undistributed .................................................................................... Technical Assistance ....................................................................... New Program Option ...................................................................... 22,753 19,542 79,927 31,437 1,081,925 51,711 85,176 4,937 21,347 136,809 68,401 23,912 8,413 255,717 61,678 23,354 32,145 50,856 63,977 3,259 130,274 44,908 117,123 70,957 6,409 52,873 11,472 24,763 24,286 18,111 53,540 15,928 451,539 63,943 10,566 227,479 34,348 50,486 310,370 10,942 10,220 4,284 26,606 215,896 23,566 10,296 41,596 77,033 22,428 62,793 1,188 ...................... ...................... ...................... 1,462 ...................... ...................... ...................... ...................... 16,237 ...................... ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ 24,116 20,713 84,717 33,321 1,146,754 54,810 90,280 5,233 22,626 145,006 72,500 25,345 8,917 271,040 65,374 24,753 34,071 53,904 67,811 3,454 138,080 47,599 124,141 75,209 6,793 56,041 12,159 26,247 25,741 19,196 56,749 16,882 478,596 67,775 11,199 241,110 36,406 53,511 328,967 11,598 10,833 4,541 28,200 228,833 24,978 10,913 44,089 81,649 23,772 66,555 1,259 ...................... ...................... ...................... 1,550 ...................... ...................... ...................... ...................... 17,084 ...................... 24,116 20,713 84,717 33,321 1,146,754 54,810 90,280 5,233 22,626 145,006 72,500 25,345 8,917 271,040 65,374 24,753 34,071 53,904 67,811 3,454 138,080 47,599 124,141 75,209 6,793 56,041 12,159 26,247 25,741 19,196 56,749 16,882 478,596 67,775 11,199 241,110 36,406 53,511 328,967 11,598 10,833 4,541 28,200 228,833 24,978 10,913 44,089 81,649 23,772 66,555 1,259 ...................... ...................... ...................... 1,550 ...................... ...................... ...................... ...................... 17,084 ...................... 24,789 21,291 87,080 34,250 1,178,747 56,339 92,799 5,379 23,257 149,052 74,522 26,052 9,165 278,601 67,198 25,444 35,022 55,408 69,703 3,551 141,933 48,927 127,605 77,307 6,983 57,604 12,499 26,979 26,459 19,732 58,332 17,353 491,949 69,666 11,512 247,836 37,422 55,004 338,145 11,922 11,135 4,668 28,987 235,217 25,675 11,217 45,319 83,927 24,435 68,412 1,295 ...................... ...................... ...................... 1,593 ...................... ...................... ...................... ...................... 16,302 25,000 0.52 0.44 1.82 0.72 24.63 1.18 1.94 0.11 0.49 3.11 1.56 0.54 0.19 5.82 1.40 0.53 0.73 1.16 1.46 0.07 2.97 1.02 2.67 1.62 0.15 1.20 0.26 0.56 0.55 0.41 1.22 0.36 10.28 1.46 0.24 5.18 0.78 1.15 7.07 0.25 0.23 0.10 0.61 4.91 0.54 0.23 0.95 1.75 0.51 1.43 0.03 .................... .................... .................... 0.03 .................... .................... .................... .................... 0.34 0.52 Total ................................................................................................. 4,371,198 ........................ 1 4,633,000 4,633,000 4,786,000 2 100.00 1 Assumes 2 Excludes a lapse of $52 million. undistributed obligations. 138 Department of Health and Human Services, Administration for Children and Families Table 8–25. 75–1545–0–1–506 Adoption Assistance (93.659) (obligations in thousands of dollars) Estimated FY 2006 obligations from: State or Territory FY 2005 Actual Previous authority New authority Total FY 2007 (estimated) FY 2007 Percentage of distributed total Alabama ........................................................................................... Alaska .............................................................................................. Arizona ............................................................................................. Arkansas .......................................................................................... California .......................................................................................... Colorado .......................................................................................... Connecticut ...................................................................................... Delaware .......................................................................................... District of Columbia ......................................................................... Florida .............................................................................................. Georgia ............................................................................................ Hawaii .............................................................................................. Idaho ................................................................................................ Illinois ............................................................................................... Indiana ............................................................................................. Iowa ................................................................................................. Kansas ............................................................................................. Kentucky .......................................................................................... Louisiana ......................................................................................... Maine ............................................................................................... Maryland .......................................................................................... Massachusetts ................................................................................. Michigan .......................................................................................... Minnesota ........................................................................................ Mississippi ....................................................................................... Missouri ........................................................................................... Montana ........................................................................................... Nebraska ......................................................................................... Nevada ............................................................................................ New Hampshire ............................................................................... New Jersey ...................................................................................... New Mexico ..................................................................................... New York ......................................................................................... North Carolina ................................................................................. North Dakota ................................................................................... Ohio ................................................................................................. Oklahoma ........................................................................................ Oregon ............................................................................................. Pennsylvania ................................................................................... Rhode Island ................................................................................... South Carolina ................................................................................. South Dakota ................................................................................... Tennessee ....................................................................................... Texas ............................................................................................... Utah ................................................................................................. Vermont ........................................................................................... Virginia ............................................................................................. Washington ...................................................................................... West Virginia ................................................................................... Wisconsin ........................................................................................ Wyoming .......................................................................................... American Samoa ............................................................................. Guam ............................................................................................... Northern Mariana Islands ................................................................ Puerto Rico ...................................................................................... Freely Associated States ................................................................ Virgin Islands ................................................................................... Indian Tribes .................................................................................... Undistributed .................................................................................... 6,920 7,673 25,983 10,298 291,225 21,145 21,855 1,702 7,887 51,241 33,749 9,537 2,967 83,122 32,325 32,654 9,059 22,584 12,887 13,380 19,300 31,544 102,888 22,519 4,129 28,645 4,267 8,557 8,564 4,186 30,055 11,318 219,823 27,887 3,083 145,842 19,944 28,968 75,182 9,216 11,700 2,567 18,161 55,048 6,800 7,880 15,235 29,941 12,722 46,937 547 ...................... ...................... ...................... 477 ...................... ...................... ...................... ...................... ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ 7,611 8,439 28,576 11,326 320,285 23,256 24,036 1,872 8,674 56,355 37,118 10,489 3,263 91,418 35,551 35,913 9,963 24,838 14,173 14,715 21,227 34,692 113,156 24,766 4,542 31,504 4,692 9,411 9,419 4,604 33,055 12,448 241,762 30,670 3,391 160,397 21,935 31,860 82,685 10,136 12,868 2,823 19,974 60,542 7,478 8,667 16,755 32,929 13,992 51,622 602 ...................... ...................... ...................... 525 ...................... ...................... ...................... ...................... 7,611 8,439 28,576 11,326 320,285 23,256 24,036 1,872 8,674 56,355 37,118 10,489 3,263 91,418 35,551 35,913 9,963 24,838 14,173 14,715 21,227 34,692 113,156 24,766 4,542 31,504 4,692 9,411 9,419 4,604 33,055 12,448 241,762 30,670 3,391 160,397 21,935 31,860 82,685 10,136 12,868 2,823 19,974 60,542 7,478 8,667 16,755 32,929 13,992 51,622 602 ...................... ...................... ...................... 525 ...................... ...................... ...................... ...................... 8,274 9,174 31,065 12,312 348,182 25,281 26,129 2,035 9,430 61,264 40,351 11,402 3,548 99,380 38,647 39,041 10,830 27,002 15,407 15,997 23,075 37,714 123,012 26,923 4,937 34,248 5,101 10,231 10,240 5,005 35,934 13,532 262,818 33,341 3,686 174,367 23,845 34,634 89,886 11,019 13,989 3,069 21,713 65,815 8,130 9,421 18,214 35,797 15,211 56,118 654 ...................... ...................... ...................... 570 ...................... ...................... ...................... ...................... 0.40 0.45 1.52 0.60 17.01 1.24 1.28 0.10 0.46 2.99 1.97 0.56 0.17 4.85 1.89 1.91 0.53 1.32 0.75 0.78 1.13 1.84 6.01 1.32 0.24 1.67 0.25 0.50 0.50 0.24 1.76 0.66 12.84 1.63 0.18 8.52 1.16 1.69 4.39 0.54 0.68 0.15 1.06 3.22 0.40 0.46 0.89 1.75 0.74 2.74 0.03 .................... .................... .................... 0.03 .................... .................... .................... .................... Total ................................................................................................. 1,712,125 ........................ 1,883,000 1,883,000 2,047,000 1 100.00 1 Excludes undistributed obligations. 139 Department of Homeland Security, Departmental Management Table 8–26. 70–0560–0–1–453 Homeland Security Grant Program (97.067) (obligations in thousands of dollars) Estimated FY 2006 obligations from: State or Territory FY 2005 Actual Previous authority New authority Total FY 2007 (estimated) FY 2007 Percentage of distributed total Alabama ........................................................................................... Alaska .............................................................................................. Arizona ............................................................................................. Arkansas .......................................................................................... California .......................................................................................... Colorado .......................................................................................... Connecticut ...................................................................................... Delaware .......................................................................................... District of Columbia ......................................................................... Florida .............................................................................................. Georgia ............................................................................................ Hawaii .............................................................................................. Idaho ................................................................................................ Illinois ............................................................................................... Indiana ............................................................................................. Iowa ................................................................................................. Kansas ............................................................................................. Kentucky .......................................................................................... Louisiana ......................................................................................... Maine ............................................................................................... Maryland .......................................................................................... Massachusetts ................................................................................. Michigan .......................................................................................... Minnesota ........................................................................................ Mississippi ....................................................................................... Missouri ........................................................................................... Montana ........................................................................................... Nebraska ......................................................................................... Nevada ............................................................................................ New Hampshire ............................................................................... New Jersey ...................................................................................... New Mexico ..................................................................................... New York ......................................................................................... North Carolina ................................................................................. North Dakota ................................................................................... Ohio ................................................................................................. Oklahoma ........................................................................................ Oregon ............................................................................................. Pennsylvania ................................................................................... Rhode Island ................................................................................... South Carolina ................................................................................. South Dakota ................................................................................... Tennessee ....................................................................................... Texas ............................................................................................... Utah ................................................................................................. Vermont ........................................................................................... Virginia ............................................................................................. Washington ...................................................................................... West Virginia ................................................................................... Wisconsin ........................................................................................ Wyoming .......................................................................................... American Samoa ............................................................................. Guam ............................................................................................... Northern Mariana Islands ................................................................ Puerto Rico ...................................................................................... Freely Associated States ................................................................ Virgin Islands ................................................................................... Indian Tribes .................................................................................... Undistributed .................................................................................... Marshall Island ................................................................................ Federated States of Micronesia ..................................................... 28,153 14,879 41,705 21,561 282,622 36,799 24,080 14,984 96,144 101,285 54,918 23,130 16,805 102,593 38,996 22,291 21,784 31,419 42,670 16,609 42,250 62,436 64,075 35,311 22,081 46,952 15,318 23,656 28,386 16,776 60,811 18,727 298,351 46,381 14,376 77,823 29,974 34,820 87,671 16,074 26,284 14,809 32,605 138,570 20,308 14,326 38,185 45,330 18,289 37,251 13,934 4,279 4,706 4,333 25,169 ...................... 4,612 ...................... ...................... 50 50 ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ 8,090 7,476 8,143 7,325 12,553 7,862 7,353 7,019 7,007 9,294 7,799 7,267 7,041 7,708 7,691 7,332 7,556 7,611 8,089 7,037 7,433 7,928 8,071 7,648 7,330 7,673 7,022 7,518 7,311 7,269 7,785 7,060 8,886 8,248 7,011 8,819 7,587 7,358 7,927 7,260 7,382 7,016 8,144 10,882 7,313 7,010 8,670 7,924 7,056 7,663 7,006 2,331 2,335 2,331 7,136 ...................... 2,333 ...................... ...................... ...................... ...................... 8,090 7,476 8,143 7,325 12,553 7,862 7,353 7,019 7,007 9,294 7,799 7,267 7,041 7,708 7,691 7,332 7,556 7,611 8,089 7,037 7,433 7,928 8,071 7,648 7,330 7,673 7,022 7,518 7,311 7,269 7,785 7,060 8,886 8,248 7,011 8,819 7,587 7,358 7,927 7,260 7,382 7,016 8,144 10,882 7,313 7,010 8,670 7,924 7,056 7,663 7,006 2,331 2,335 2,331 7,136 ...................... 2,333 ...................... ...................... ...................... ...................... 5,093 4,829 5,187 4,973 7,235 5,101 5,022 4,841 4,822 5,991 5,400 4,871 4,881 5,650 5,210 4,985 4,970 5,067 5,091 4,874 5,164 5,218 5,471 5,132 4,982 5,178 4,848 4,904 4,948 4,873 5,376 4,915 6,090 5,373 4,827 5,562 5,025 5,031 5,627 4,857 5,073 4,837 5,189 6,335 4,952 4,827 5,298 5,211 4,908 5,160 4,819 1,599 1,605 1,599 5,050 1,602 ...................... ...................... ...................... ...................... ...................... 1.85 1.75 1.88 1.80 2.63 1.85 1.82 1.76 1.75 2.17 1.96 1.77 1.77 2.05 1.89 1.81 1.80 1.84 1.85 1.77 1.87 1.89 1.99 1.86 1.81 1.88 1.76 1.78 1.80 1.77 1.95 1.78 2.21 1.95 1.75 2.02 1.82 1.83 2.04 1.76 1.84 1.76 1.88 2.30 1.80 1.75 1.92 1.89 1.78 1.87 1.75 0.58 0.58 0.58 1.83 0.58 .................... .................... .................... .................... .................... Total ................................................................................................. 2,518,763 ........................ 412,929 1 412,929 1 275,560 2 100.00 1 FY 2006–2007 amounts do not include funds subject to risk and threat analysis. undistributed obligations. 2 Excludes 140 Department of Housing and Urban Development, Public and Indian Housing Programs Table 8–27. 86–0163–0–1–604 Public Housing Operating Fund (14.850) (obligations in thousands of dollars) Estimated FY 2006 obligations from: State or Territory FY 2005 Actual Previous authority New authority Total FY 2007 (estimated) FY 2007 Percentage of distributed total Alabama ........................................................................................... Alaska .............................................................................................. Arizona ............................................................................................. Arkansas .......................................................................................... California .......................................................................................... Colorado .......................................................................................... Connecticut ...................................................................................... Delaware .......................................................................................... District of Columbia ......................................................................... Florida .............................................................................................. Georgia ............................................................................................ Hawaii .............................................................................................. Idaho ................................................................................................ Illinois ............................................................................................... Indiana ............................................................................................. Iowa ................................................................................................. Kansas ............................................................................................. Kentucky .......................................................................................... Louisiana ......................................................................................... Maine ............................................................................................... Maryland .......................................................................................... Massachusetts ................................................................................. Michigan .......................................................................................... Minnesota ........................................................................................ Mississippi ....................................................................................... Missouri ........................................................................................... Montana ........................................................................................... Nebraska ......................................................................................... Nevada ............................................................................................ New Hampshire ............................................................................... New Jersey ...................................................................................... New Mexico ..................................................................................... New York ......................................................................................... North Carolina ................................................................................. North Dakota ................................................................................... Ohio ................................................................................................. Oklahoma ........................................................................................ Oregon ............................................................................................. Pennsylvania ................................................................................... Rhode Island ................................................................................... South Carolina ................................................................................. South Dakota ................................................................................... Tennessee ....................................................................................... Texas ............................................................................................... Utah ................................................................................................. Vermont ........................................................................................... Virginia ............................................................................................. Washington ...................................................................................... West Virginia ................................................................................... Wisconsin ........................................................................................ Wyoming .......................................................................................... American Samoa ............................................................................. Guam ............................................................................................... Northern Mariana Islands ................................................................ Puerto Rico ...................................................................................... Freely Associated States ................................................................ Virgin Islands ................................................................................... Indian Tribes .................................................................................... Undistributed .................................................................................... Other (DOJ Anti-Drug) .................................................................... Voluntary Graduation Bonus ........................................................... Asset-Based Management Trust Fund ........................................... 69,609 4,062 14,454 8,084 67,763 15,558 25,101 6,636 10,833 49,078 65,101 5,459 536 207,929 28,815 3,168 11,984 31,176 20,204 4,998 35,262 74,499 28,478 19,788 16,627 21,037 2,504 9,549 4,743 3,373 108,603 4,155 783,859 58,751 1,932 116,812 17,534 9,363 174,721 13,758 15,877 1,581 44,403 72,547 2,033 1,519 29,736 14,358 9,939 16,299 849 ...................... 795 ...................... 48,324 ...................... 17,698 ...................... ...................... 7,936 ...................... ...................... 35 2 7 4 34 8 13 3 5 25 33 3 * 104 14 2 6 16 10 3 18 37 14 10 8 11 1 5 2 2 54 2 393 29 1 59 9 5 92 7 8 1 22 36 1 1 15 7 5 8 ........................ ........................ ........................ ........................ 24 ........................ 9 ........................ ........................ ........................ ........................ ........................ 102,015 5,953 21,183 11,847 99,310 22,801 36,787 9,725 15,876 71,926 95,409 8,000 786 304,730 42,230 4,643 17,563 45,690 29,610 7,325 51,678 109,182 41,736 29,000 24,368 30,831 3,670 13,995 6,951 4,943 159,163 6,089 1,148,783 86,102 2,831 171,194 25,697 13,722 256,062 20,163 23,269 2,317 65,075 106,321 2,979 2,226 43,580 21,042 14,566 23,887 1,244 ...................... 1,165 ...................... 70,823 ...................... 25,937 ...................... ...................... ...................... ...................... ...................... 102,050 5,955 21,190 11,851 99,344 22,809 36,800 9,728 15,881 71,951 95,442 8,003 786 304,834 42,244 4,645 17,569 45,706 29,620 7,328 51,696 109,219 41,750 29,010 24,376 30,842 3,671 14,000 6,953 4,945 159,217 6,091 1,149,176 86,131 2,832 171,253 25,706 13,727 256,154 20,170 23,277 2,318 65,097 106,357 2,980 2,227 43,595 21,049 14,571 23,895 1,244 ...................... 1,165 ...................... 70,847 ...................... 25,946 ...................... ...................... ...................... ...................... ...................... 101,562 5,927 21,089 11,795 98,869 22,700 36,623 9,682 15,806 71,607 94,985 7,965 782 303,376 42,042 4,622 17,485 45,487 29,478 7,292 51,448 108,697 41,550 28,871 24,259 30,694 3,653 13,932 6,920 4,921 158,456 6,062 1,143,678 85,720 2,819 170,433 25,583 13,661 254,924 20,073 23,165 2,307 64,786 105,849 2,966 2,216 43,386 20,949 14,501 23,781 1,239 ...................... 1,160 ...................... 70,506 ...................... 25,821 ...................... ...................... ...................... 9,900 5,940 2.85 0.17 0.59 0.33 2.77 0.64 1.03 0.27 0.44 2.01 2.67 0.22 0.02 8.51 1.18 0.13 0.49 1.28 0.83 0.20 1.44 3.05 1.17 0.81 0.68 0.86 0.10 0.39 0.19 0.14 4.45 0.17 32.09 2.41 0.08 4.78 0.72 0.38 7.15 0.56 0.65 0.06 1.82 2.97 0.08 0.06 1.22 0.59 0.41 0.67 0.03 .................... 0.03 .................... 1.98 .................... 0.72 .................... .................... .................... 0.28 0.17 Total ................................................................................................. 2,439,790 1,223 3,564,000 3,565,223 1 3,564,000 2 100.00 * $500 or less or 0.005 percent or less. 1 FY 2007 amounts are not yet updated for the new allocation formula. 2 Excludes undistributed obligations. 141 Department of Housing and Urban Development, Public and Indian Housing Programs Table 8–28. 86–0302–0–1–604 Housing Choice Vouchers (14.871) (obligations in thousands of dollars) Estimated FY 2006 obligations from: State or Territory FY 2005 Actual Previous authority New authority Total FY 2007 (estimated) FY 2007 Percentage of distributed total Alabama ........................................................................................... Alaska .............................................................................................. Arizona ............................................................................................. Arkansas .......................................................................................... California .......................................................................................... Colorado .......................................................................................... Connecticut ...................................................................................... Delaware .......................................................................................... District of Columbia ......................................................................... Florida .............................................................................................. Georgia ............................................................................................ Hawaii .............................................................................................. Idaho ................................................................................................ Illinois ............................................................................................... Indiana ............................................................................................. Iowa ................................................................................................. Kansas ............................................................................................. Kentucky .......................................................................................... Louisiana ......................................................................................... Maine ............................................................................................... Maryland .......................................................................................... Massachusetts ................................................................................. Michigan .......................................................................................... Minnesota ........................................................................................ Mississippi ....................................................................................... Missouri ........................................................................................... Montana ........................................................................................... Nebraska ......................................................................................... Nevada ............................................................................................ New Hampshire ............................................................................... New Jersey ...................................................................................... New Mexico ..................................................................................... New York ......................................................................................... North Carolina ................................................................................. North Dakota ................................................................................... Ohio ................................................................................................. Oklahoma ........................................................................................ Oregon ............................................................................................. Pennsylvania ................................................................................... Rhode Island ................................................................................... South Carolina ................................................................................. South Dakota ................................................................................... Tennessee ....................................................................................... Texas ............................................................................................... Utah ................................................................................................. Vermont ........................................................................................... Virginia ............................................................................................. Washington ...................................................................................... West Virginia ................................................................................... Wisconsin ........................................................................................ Wyoming .......................................................................................... American Samoa ............................................................................. Guam ............................................................................................... Northern Mariana Islands ................................................................ Puerto Rico ...................................................................................... Freely Associated States ................................................................ Virgin Islands ................................................................................... Indian Tribes .................................................................................... Undistributed .................................................................................... Working Capital Fund ..................................................................... 129,016 25,905 126,567 84,758 2,571,281 193,845 268,862 28,199 111,670 590,349 348,668 76,791 30,308 738,154 177,226 82,419 51,279 136,423 178,439 64,095 299,542 681,814 265,488 190,938 80,470 197,304 25,817 52,601 85,337 61,718 523,844 64,499 1,637,494 277,232 26,316 453,837 108,644 167,470 433,626 56,500 109,364 23,040 152,464 829,384 54,680 32,141 284,111 291,261 53,468 125,070 9,204 ...................... 28,377 2,885 144,836 ...................... 8,208 ...................... ...................... 2,881 787 158 772 517 15,693 1,183 1,641 172 682 3,603 2,128 469 185 4,505 1,082 503 313 833 1,089 391 1,828 4,161 1,620 1,165 491 1,204 158 321 521 377 3,197 394 9,994 1,692 161 2,770 663 1,022 2,646 345 667 141 931 5,062 334 196 1,734 1,778 326 763 56 ........................ 173 18 884 ........................ 50 ........................ ........................ ........................ 182,564 28,820 140,809 94,296 2,860,615 215,658 299,116 31,373 124,235 695,808 387,902 85,432 33,718 821,215 197,168 91,693 57,049 151,774 354,638 71,307 333,248 758,535 295,362 212,423 128,555 219,506 28,722 58,520 94,940 68,663 582,790 71,757 1,821,753 308,428 29,277 504,905 120,870 186,314 482,420 62,858 121,670 25,633 169,620 1,039,800 60,833 35,758 316,081 324,035 59,485 139,143 10,240 ...................... 31,571 3,209 161,134 ...................... 9,132 ...................... ...................... 5,841 183,351 28,978 141,581 94,813 2,876,308 216,841 300,757 31,545 124,917 699,411 390,030 85,901 33,903 825,720 198,250 92,196 57,362 152,607 355,727 71,698 335,076 762,697 296,983 213,589 129,046 220,710 28,880 58,841 95,460 69,040 585,987 72,151 1,831,747 310,120 29,438 507,674 121,533 187,336 485,067 63,203 122,338 25,773 170,550 1,044,862 61,167 35,954 317,815 325,812 59,811 139,906 10,296 ...................... 31,744 3,227 162,018 ...................... 9,182 ...................... ...................... 5,841 147,504 29,609 144,664 96,877 2,938,939 221,562 307,306 32,232 127,637 674,760 398,523 87,771 34,642 843,699 202,567 94,204 58,611 155,930 203,953 73,259 342,372 779,304 303,449 218,239 91,976 225,516 29,509 60,122 97,539 70,543 598,747 73,722 1,871,633 316,873 30,078 518,729 124,179 191,416 495,629 64,579 125,002 26,334 174,264 947,974 62,499 36,737 324,735 332,907 61,113 142,953 10,520 ...................... 32,435 3,297 165,546 ...................... 9,382 ...................... ...................... 5,900 0.93 0.19 0.91 0.61 18.55 1.40 1.94 0.20 0.81 4.26 2.52 0.55 0.22 5.33 1.28 0.59 0.37 0.98 1.29 0.46 2.16 4.92 1.92 1.38 0.58 1.42 0.19 0.38 0.62 0.45 3.78 0.47 11.82 2.00 0.19 3.27 0.78 1.21 3.13 0.41 0.79 0.17 1.10 5.98 0.39 0.23 2.05 2.10 0.39 0.90 0.07 .................... 0.20 0.02 1.05 .................... 0.06 .................... .................... 0.04 Total ................................................................................................. 13,856,120 84,548 15,808,219 15,892,767 15,840,000 1 100.00 1 Excludes undistributed obligations. 142 Department of Housing and Urban Development, Public and Indian Housing Programs Table 8–29. 86–0304–0–1–604 Public Housing Capital Fund (14.872) (obligations in thousands of dollars) Estimated FY 2006 obligations from: State or Territory FY 2005 Actual Previous authority New authority Total FY 2007 (estimated) FY 2007 Percentage of distributed total Alabama ........................................................................................... Alaska .............................................................................................. Arizona ............................................................................................. Arkansas .......................................................................................... California .......................................................................................... Colorado .......................................................................................... Connecticut ...................................................................................... Delaware .......................................................................................... District of Columbia ......................................................................... Florida .............................................................................................. Georgia ............................................................................................ Hawaii .............................................................................................. Idaho ................................................................................................ Illinois ............................................................................................... Indiana ............................................................................................. Iowa ................................................................................................. Kansas ............................................................................................. Kentucky .......................................................................................... Louisiana ......................................................................................... Maine ............................................................................................... Maryland .......................................................................................... Massachusetts ................................................................................. Michigan .......................................................................................... Minnesota ........................................................................................ Mississippi ....................................................................................... Missouri ........................................................................................... Montana ........................................................................................... Nebraska ......................................................................................... Nevada ............................................................................................ New Hampshire ............................................................................... New Jersey ...................................................................................... New Mexico ..................................................................................... New York ......................................................................................... North Carolina ................................................................................. North Dakota ................................................................................... Ohio ................................................................................................. Oklahoma ........................................................................................ Oregon ............................................................................................. Pennsylvania ................................................................................... Rhode Island ................................................................................... South Carolina ................................................................................. South Dakota ................................................................................... Tennessee ....................................................................................... Texas ............................................................................................... Utah ................................................................................................. Vermont ........................................................................................... Virginia ............................................................................................. Washington ...................................................................................... West Virginia ................................................................................... Wisconsin ........................................................................................ Wyoming .......................................................................................... American Samoa ............................................................................. Guam ............................................................................................... Northern Mariana Islands ................................................................ Puerto Rico ...................................................................................... Freely Associated States ................................................................ Virgin Islands ................................................................................... Indian Tribes .................................................................................... Undistributed .................................................................................... 73,621 2,941 22,892 11,250 103,240 14,877 33,302 5,552 34,120 104,184 93,165 13,579 1,176 186,371 32,631 6,253 13,200 44,791 55,422 7,097 51,847 67,474 49,159 37,083 24,708 35,759 3,798 10,283 7,869 6,143 90,751 8,101 434,906 63,667 8,347 104,575 20,454 11,825 180,156 16,344 28,782 2,210 64,118 100,123 3,440 2,529 42,766 33,673 10,747 21,635 1,116 ...................... 2,033 ...................... 144,504 ...................... 4,833 ...................... ...................... 9,277 371 2,885 1,418 13,009 1,875 4,196 700 4,299 13,128 11,739 1,711 148 23,484 4,112 788 1,663 5,644 6,984 894 6,533 8,502 6,194 4,673 3,113 4,506 479 1,296 992 774 11,435 1,021 54,801 8,023 1,052 13,177 2,577 1,490 22,701 2,059 3,627 278 8,079 12,616 433 319 5,389 4,243 1,354 2,726 141 ........................ 256 ........................ 18,209 ........................ 609 ........................ ........................ 60,989 2,436 18,964 9,320 85,526 12,324 27,588 4,599 28,266 86,308 77,180 11,249 974 154,393 27,032 5,180 10,935 37,106 45,913 5,879 42,951 55,897 40,724 30,720 20,469 29,623 3,146 8,519 6,519 5,089 75,180 6,711 360,285 52,743 6,915 86,632 16,944 9,796 149,245 13,540 23,844 1,831 53,117 82,944 2,850 2,095 35,428 27,895 8,903 17,923 925 ...................... 1,684 ...................... 119,710 ...................... 4,004 ...................... ...................... 70,266 2,807 21,849 10,738 98,535 14,199 31,784 5,299 32,565 99,436 88,919 12,960 1,122 177,877 31,144 5,968 12,598 42,750 52,897 6,773 49,484 64,399 46,918 35,393 23,582 34,129 3,625 9,815 7,511 5,863 86,615 7,732 415,086 60,766 7,967 99,809 19,521 11,286 171,946 15,599 27,471 2,109 61,196 95,560 3,283 2,414 40,817 32,138 10,257 20,649 1,066 ...................... 1,940 ...................... 137,919 ...................... 4,613 ...................... ...................... 62,748 2,507 19,511 9,588 87,992 12,680 28,383 4,732 29,081 88,797 79,405 11,573 1,002 158,845 27,812 5,329 11,250 38,176 47,236 6,049 44,189 57,508 41,898 31,606 21,059 30,478 3,237 8,764 6,707 5,236 77,348 6,905 370,673 54,264 7,114 89,130 17,433 10,079 153,548 13,930 24,531 1,884 54,648 85,335 2,932 2,155 36,450 28,700 9,160 18,440 951 ...................... 1,733 ...................... 123,160 ...................... 4,119 ...................... ...................... 2.88 0.12 0.90 0.44 4.04 0.58 1.30 0.22 1.34 4.08 3.65 0.53 0.05 7.29 1.28 0.24 0.52 1.75 2.17 0.28 2.03 2.64 1.92 1.45 0.97 1.40 0.15 0.40 0.31 0.24 3.55 0.32 17.02 2.49 0.33 4.09 0.80 0.46 7.05 0.64 1.13 0.09 2.51 3.92 0.13 0.10 1.67 1.32 0.42 0.85 0.04 .................... 0.08 .................... 5.65 .................... 0.19 .................... .................... Total ................................................................................................. 2,555,422 322,002 2,116,962 2,438,964 2,178,000 1 100.00 1 Excludes undistributed obligations. 143 Department of Housing and Urban Development, Community Planning and Development Table 8–30. 86–0162–0–1–451 Community Development Block Grants (14.218, 14.219, 14.228) (obligations in thousands of dollars) Estimated FY 2006 obligations from: State or Territory FY 2005 Actual Previous authority New authority Total FY 2007 (estimated) FY 2007 Percentage of distributed total Alabama ........................................................................................... Alaska .............................................................................................. Arizona ............................................................................................. Arkansas .......................................................................................... California .......................................................................................... Colorado .......................................................................................... Connecticut ...................................................................................... Delaware .......................................................................................... District of Columbia ......................................................................... Florida .............................................................................................. Georgia ............................................................................................ Hawaii .............................................................................................. Idaho ................................................................................................ Illinois ............................................................................................... Indiana ............................................................................................. Iowa ................................................................................................. Kansas ............................................................................................. Kentucky .......................................................................................... Louisiana ......................................................................................... Maine ............................................................................................... Maryland .......................................................................................... Massachusetts ................................................................................. Michigan .......................................................................................... Minnesota ........................................................................................ Mississippi ....................................................................................... Missouri ........................................................................................... Montana ........................................................................................... Nebraska ......................................................................................... Nevada ............................................................................................ New Hampshire ............................................................................... New Jersey ...................................................................................... New Mexico ..................................................................................... New York ......................................................................................... North Carolina ................................................................................. North Dakota ................................................................................... Ohio ................................................................................................. Oklahoma ........................................................................................ Oregon ............................................................................................. Pennsylvania ................................................................................... Rhode Island ................................................................................... South Carolina ................................................................................. South Dakota ................................................................................... Tennessee ....................................................................................... Texas ............................................................................................... Utah ................................................................................................. Vermont ........................................................................................... Virginia ............................................................................................. Washington ...................................................................................... West Virginia ................................................................................... Wisconsin ........................................................................................ Wyoming .......................................................................................... American Samoa ............................................................................. Guam ............................................................................................... Northern Mariana Islands ................................................................ Puerto Rico ...................................................................................... Freely Associated States ................................................................ Virgin Islands ................................................................................... Indian Tribes .................................................................................... Undistributed .................................................................................... Set-asides ........................................................................................ 55,121 5,268 60,444 30,657 525,106 42,709 46,571 8,078 21,317 179,685 92,696 17,081 13,486 196,215 78,262 45,885 31,114 50,977 69,448 22,219 62,822 123,017 147,609 64,979 39,235 76,153 10,236 21,740 22,414 14,703 112,983 23,425 393,506 79,305 7,093 181,179 33,883 40,835 248,858 19,164 43,346 8,889 55,911 285,549 22,837 9,267 68,542 68,791 28,057 74,409 4,703 1,020 2,757 1,233 124,111 ...................... 1,934 ...................... ...................... 584,947 ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ 49,685 4,748 54,643 27,646 472,940 38,552 41,989 7,265 19,274 162,226 83,679 15,360 12,190 177,014 70,667 41,409 28,065 45,900 62,597 20,034 56,184 111,089 132,829 58,533 35,358 68,149 9,234 19,561 20,330 13,274 101,729 21,139 353,271 71,585 6,388 163,276 30,491 36,899 223,899 17,247 39,107 8,021 50,415 258,899 20,633 8,366 61,716 62,092 25,271 67,184 4,232 1,018 2,751 1,230 111,704 ...................... 1,930 ...................... ...................... 466,884 49,685 4,748 54,643 27,646 472,940 38,552 41,989 7,265 19,274 162,226 83,679 15,360 12,190 177,014 70,667 41,409 28,065 45,900 62,597 20,034 56,184 111,089 132,829 58,533 35,358 68,149 9,234 19,561 20,330 13,274 101,729 21,139 353,271 71,585 6,388 163,276 30,491 36,899 223,899 17,247 39,107 8,021 50,415 258,899 20,633 8,366 61,716 62,092 25,271 67,184 4,232 1,018 2,751 1,230 111,704 ...................... 1,930 ...................... ...................... 466,884 39,808 3,804 43,780 22,150 378,922 30,888 33,642 5,820 15,442 129,976 67,044 12,307 9,767 141,825 56,619 33,177 22,485 36,776 50,153 16,051 45,015 89,005 106,423 46,897 28,329 54,601 7,398 15,673 16,289 10,635 81,506 16,937 283,042 57,354 5,118 130,817 24,429 29,564 179,389 13,818 31,333 6,427 40,392 207,431 16,531 6,703 49,447 49,748 20,247 53,828 3,390 1,018 2,751 1,230 89,498 ...................... 1,930 ...................... ...................... 1 57,420 1.31 0.13 1.44 0.73 12.50 1.02 1.11 0.19 0.51 4.29 2.21 0.41 0.32 4.68 1.87 1.09 0.74 1.21 1.65 0.53 1.48 2.94 3.51 1.55 0.93 1.80 0.24 0.52 0.54 0.35 2.69 0.56 9.34 1.89 0.17 4.31 0.81 0.98 5.92 0.46 1.03 0.21 1.33 6.84 0.55 0.22 1.63 1.64 0.67 1.78 0.11 0.03 0.09 0.04 2.95 .................... 0.06 .................... .................... 1.89 Total 2 ............................................................................................... 4,701,782 ........................ 4,177,800 4,177,800 3 3,032,000 4 100.00 1 FY 2007 funds are the Indian Community Development Block Grant Program. Entitlement Grants, Small Cities Program, and State’s Program. set-aside (to be determined) will be proposed to be used for bonus funds. 4 Excludes undistributed obligations. 2 Includes 3A 144 Department of Housing and Urban Development, Community Planning and Development Table 8–31. 86–0205–0–1–604 HOME Investment Partnerships Program (14.239) (obligations in thousands of dollars) Estimated FY 2006 obligations from: State or Territory FY 2005 Actual Previous authority New authority Total FY 2007 (estimated) FY 2007 Percentage of distributed total Alabama ........................................................................................... Alaska .............................................................................................. Arizona ............................................................................................. Arkansas .......................................................................................... California .......................................................................................... Colorado .......................................................................................... Connecticut ...................................................................................... Delaware .......................................................................................... District of Columbia ......................................................................... Florida .............................................................................................. Georgia ............................................................................................ Hawaii .............................................................................................. Idaho ................................................................................................ Illinois ............................................................................................... Indiana ............................................................................................. Iowa ................................................................................................. Kansas ............................................................................................. Kentucky .......................................................................................... Louisiana ......................................................................................... Maine ............................................................................................... Maryland .......................................................................................... Massachusetts ................................................................................. Michigan .......................................................................................... Minnesota ........................................................................................ Mississippi ....................................................................................... Missouri ........................................................................................... Montana ........................................................................................... Nebraska ......................................................................................... Nevada ............................................................................................ New Hampshire ............................................................................... New Jersey ...................................................................................... New Mexico ..................................................................................... New York ......................................................................................... North Carolina ................................................................................. North Dakota ................................................................................... Ohio ................................................................................................. Oklahoma ........................................................................................ Oregon ............................................................................................. Pennsylvania ................................................................................... Rhode Island ................................................................................... South Carolina ................................................................................. South Dakota ................................................................................... Tennessee ....................................................................................... Texas ............................................................................................... Utah ................................................................................................. Vermont ........................................................................................... Virginia ............................................................................................. Washington ...................................................................................... West Virginia ................................................................................... Wisconsin ........................................................................................ Wyoming .......................................................................................... American Samoa ............................................................................. Guam ............................................................................................... Northern Mariana Islands ................................................................ Puerto Rico ...................................................................................... Freely Associated States ................................................................ Virgin Islands ................................................................................... Indian Tribes .................................................................................... Undistributed .................................................................................... Technical Assistance & Working Capital Fund Transfer ............... 25,868 4,184 26,613 16,328 266,522 22,855 21,295 5,088 9,220 82,937 44,160 7,832 7,057 77,508 31,171 15,438 13,886 25,487 31,906 8,609 26,065 48,900 52,668 23,348 17,575 31,684 6,330 9,339 12,252 6,655 50,417 11,231 207,164 41,507 3,696 68,637 20,927 22,326 77,375 9,720 20,436 4,385 31,778 121,892 9,601 4,343 35,105 35,284 13,388 29,261 3,586 337 1,393 642 33,722 ...................... 1,245 ...................... ...................... 1 61,504 ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ 24,131 4,056 24,694 15,203 247,356 21,080 19,726 4,905 8,661 77,411 41,133 7,410 6,575 71,877 28,930 14,313 12,840 23,670 29,558 7,994 24,023 45,036 48,574 21,620 16,393 29,469 5,891 8,609 11,491 6,173 46,523 10,480 192,144 38,254 3,595 63,613 19,385 20,709 71,430 9,044 18,797 4,058 29,468 112,372 8,872 4,051 32,504 32,641 12,473 26,918 3,543 315 1,303 600 31,722 ...................... 1,164 ...................... ...................... 52,470 24,131 4,056 24,694 15,203 247,356 21,080 19,726 4,905 8,661 77,411 41,133 7,410 6,575 71,877 28,930 14,313 12,840 23,670 29,558 7,994 24,023 45,036 48,574 21,620 16,393 29,469 5,891 8,609 11,491 6,173 46,523 10,480 192,144 38,254 3,595 63,613 19,385 20,709 71,430 9,044 18,797 4,058 29,468 112,372 8,872 4,051 32,504 32,641 12,473 26,918 3,543 315 1,303 600 31,722 ...................... 1,164 ...................... ...................... 1 52,470 26,968 4,515 27,714 16,989 275,030 23,777 22,098 5,435 9,622 86,754 46,167 8,310 7,337 80,390 32,514 16,048 14,456 26,436 32,861 8,904 27,091 50,278 54,337 24,309 18,216 33,060 6,567 9,727 12,883 6,919 51,975 11,661 212,808 43,037 4,048 71,298 21,708 23,211 79,631 10,105 21,069 4,560 33,048 125,977 9,956 4,503 36,532 36,703 13,800 30,326 3,929 339 1,399 645 34,049 ...................... 1,250 ...................... ...................... 13,365 1.41 0.24 1.45 0.89 14.35 1.24 1.15 0.28 0.50 4.53 2.41 0.43 0.38 4.19 1.70 0.84 0.75 1.38 1.71 0.46 1.41 2.62 2.84 1.27 0.95 1.72 0.34 0.51 0.67 0.36 2.71 0.61 11.10 2.25 0.21 3.72 1.13 1.21 4.15 0.53 1.10 0.24 1.72 6.57 0.52 0.23 1.91 1.91 0.72 1.58 0.21 0.02 0.07 0.03 1.78 .................... 0.07 .................... .................... 0.70 Total ................................................................................................. 1,899,680 ........................ 1,757,250 1,757,250 1,916,640 2 100.00 1 FY 2005–2006 also include Housing Counseling. undistributed obligations. 2 Excludes 145 Department of Transportation, Federal Aviation Administration Table 8–32. 69–8106–0–7–402 Airport Improvement Program (20.106) (obligations in thousands of dollars) Estimated FY 2006 obligations from: State or Territory FY 2005 Actual 1 60,134 Previous authority New authority Total FY 2007 (estimated) FY 2007 Percentage of distributed total Alabama ........................................................................................... Alaska .............................................................................................. Arizona ............................................................................................. Arkansas .......................................................................................... California .......................................................................................... Colorado .......................................................................................... Connecticut ...................................................................................... Delaware .......................................................................................... District of Columbia ......................................................................... Florida .............................................................................................. Georgia ............................................................................................ Hawaii .............................................................................................. Idaho ................................................................................................ Illinois ............................................................................................... Indiana ............................................................................................. Iowa ................................................................................................. Kansas ............................................................................................. Kentucky .......................................................................................... Louisiana ......................................................................................... Maine ............................................................................................... Maryland .......................................................................................... Massachusetts ................................................................................. Michigan .......................................................................................... Minnesota ........................................................................................ Mississippi ....................................................................................... Missouri ........................................................................................... Montana ........................................................................................... Nebraska ......................................................................................... Nevada ............................................................................................ New Hampshire ............................................................................... New Jersey ...................................................................................... New Mexico ..................................................................................... New York ......................................................................................... North Carolina ................................................................................. North Dakota ................................................................................... Ohio ................................................................................................. Oklahoma ........................................................................................ Oregon ............................................................................................. Pennsylvania ................................................................................... Rhode Island ................................................................................... South Carolina ................................................................................. South Dakota ................................................................................... Tennessee ....................................................................................... Texas ............................................................................................... Utah ................................................................................................. Vermont ........................................................................................... Virginia ............................................................................................. Washington ...................................................................................... West Virginia ................................................................................... Wisconsin ........................................................................................ Wyoming .......................................................................................... American Samoa ............................................................................. Guam ............................................................................................... Northern Mariana Islands ................................................................ Puerto Rico ...................................................................................... Freely Associated States ................................................................ Virgin Islands ................................................................................... Indian Tribes .................................................................................... Undistributed 3 ................................................................................. 202,937 82,367 44,763 289,846 92,572 4,973 6,762 295 1 195,112 100,842 56,025 29,724 124,207 79,772 53,385 32,134 1 92,178 75,970 18,866 63,440 52,064 104,508 78,707 1 46,774 88,149 41,360 25,742 64,025 21,541 49,216 17,245 145,934 1 76,021 24,313 87,351 44,896 39,212 108,755 20,271 35,556 23,668 69,104 234,264 34,148 11,215 49,021 90,653 29,635 2 60,946 25,245 13,080 10,487 41,864 1 9,465 ...................... 5,266 ...................... 87,294 ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ 19 ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ 56,089 195,153 79,208 43,046 278,728 89,021 4,782 6,503 284 165,834 96,974 53,876 28,583 119,442 76,712 51,337 30,902 88,535 73,056 18,142 61,006 50,067 100,499 75,688 44,887 84,768 39,774 24,755 61,569 20,715 47,328 16,584 140,337 73,018 23,380 84,000 43,174 37,708 104,584 19,494 34,192 22,760 66,453 225,278 32,838 10,784 47,141 87,176 28,498 58,500 24,276 12,580 10,083 40,260 8,890 ...................... 5,064 ...................... 90,185 56,089 195,153 79,208 43,046 278,728 89,021 4,782 6,503 284 165,843 96,974 53,876 28,583 119,442 76,712 51,337 30,902 88,535 73,056 18,142 61,006 50,067 100,499 75,688 44,887 84,768 39,774 24,755 61,569 20,715 47,328 16,584 140,337 73,018 23,380 84,000 43,174 37,708 104,584 19,494 34,192 22,760 66,453 225,278 32,838 10,784 47,141 87,176 28,498 58,500 24,276 12,580 10,083 40,260 8,890 ...................... 5,064 ...................... 90,185 43,359 150,862 61,232 33,277 215,470 68,818 3,697 5,027 219 128,198 74,965 41,648 22,096 92,335 59,302 39,686 23,888 68,442 56,475 14,025 47,161 38,704 77,691 58,511 34,700 65,530 30,747 19,137 47,596 16,013 36,587 12,820 108,487 56,446 18,074 64,936 33,376 29,150 80,848 15,070 26,432 17,594 51,441 174,151 25,385 8,337 36,442 67,391 22,031 45,224 18,767 9,725 7,796 31,123 6,800 ...................... 3,915 ...................... 102,841 1.64 5.70 2.31 1.26 8.14 2.60 0.14 0.19 0.01 4.84 2.83 1.57 0.83 3.49 2.24 1.50 0.90 2.59 2.13 0.53 1.78 1.46 2.93 2.21 1.31 2.48 1.16 0.72 1.80 0.60 1.38 0.48 4.10 2.13 0.68 2.45 1.26 1.10 3.05 0.57 1.00 0.66 1.94 6.58 0.96 0.31 1.38 2.55 0.83 1.71 0.71 0.37 0.29 1.18 0.26 .................... 0.15 .................... .................... Total ................................................................................................. 3,673,299 9 3,514,500 3,514,509 2,750,000 4 100.00 1 Includes 2 Includes 3 Includes Emergency Assistance to Airports. Emergency Response Fund. Personnel and Related Expenses, Small Community Air Service, Airport Technology Research, Airport Cooperative Research Program, and Reim- bursable. 4 Excludes undistributed obligations. 146 Department of Transportation, Federal Highway Administration Table 8–33. 69–8083–0–7–401 Highway Planning and Construction (20.205) (obligations in thousands of dollars) Estimated FY 2006 obligations from: State or Territory FY 2005 Actual Previous authority New authority Total FY 2007 (estimated) FY 2007 Percentage of distributed total Alabama ........................................................................................... Alaska .............................................................................................. Arizona ............................................................................................. Arkansas .......................................................................................... California .......................................................................................... Colorado .......................................................................................... Connecticut ...................................................................................... Delaware .......................................................................................... District of Columbia ......................................................................... Florida .............................................................................................. Georgia ............................................................................................ Hawaii .............................................................................................. Idaho ................................................................................................ Illinois ............................................................................................... Indiana ............................................................................................. Iowa ................................................................................................. Kansas ............................................................................................. Kentucky .......................................................................................... Louisiana ......................................................................................... Maine ............................................................................................... Maryland .......................................................................................... Massachusetts ................................................................................. Michigan .......................................................................................... Minnesota ........................................................................................ Mississippi ....................................................................................... Missouri ........................................................................................... Montana ........................................................................................... Nebraska ......................................................................................... Nevada ............................................................................................ New Hampshire ............................................................................... New Jersey ...................................................................................... New Mexico ..................................................................................... New York ......................................................................................... North Carolina ................................................................................. North Dakota ................................................................................... Ohio ................................................................................................. Oklahoma ........................................................................................ Oregon ............................................................................................. Pennsylvania ................................................................................... Rhode Island ................................................................................... South Carolina ................................................................................. South Dakota ................................................................................... Tennessee ....................................................................................... Texas ............................................................................................... Utah ................................................................................................. Vermont ........................................................................................... Virginia ............................................................................................. Washington ...................................................................................... West Virginia ................................................................................... Wisconsin ........................................................................................ Wyoming .......................................................................................... American Samoa ............................................................................. Guam ............................................................................................... Northern Mariana Islands ................................................................ Puerto Rico ...................................................................................... Freely Associated States ................................................................ Virgin Islands ................................................................................... Indian Tribes .................................................................................... Undistributed .................................................................................... 688,151 379,930 540,183 360,297 2,540,025 389,444 446,224 116,614 126,557 2,074,154 1,140,079 144,447 241,246 911,457 699,623 327,902 334,078 436,127 519,391 138,605 500,382 550,905 962,760 410,684 404,222 716,104 312,358 216,152 220,871 148,345 775,572 268,265 1,508,471 866,620 216,396 1,176,520 583,217 315,794 1,352,520 157,430 524,970 203,701 646,151 2,596,328 217,735 121,771 682,875 549,341 465,122 573,737 200,808 12,231 11,688 2,815 92,857 ...................... 19,539 214,663 1,834,875 ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ 669,352 424,964 597,599 431,045 2,965,512 436,620 469,815 144,321 143,545 1,585,130 1,150,152 163,516 254,107 1,149,882 808,852 381,718 371,469 584,869 520,984 182,853 536,232 584,796 1,014,325 553,222 407,797 782,232 337,213 258,345 240,325 162,975 867,850 318,988 1,627,004 927,654 217,464 1,185,678 470,578 385,992 1,588,241 187,912 529,987 236,477 725,080 2,643,137 260,767 160,240 855,897 570,316 370,003 652,997 220,725 11,765 11,011 1,407 83,700 ...................... 22,889 292,868 4,205,307 669,352 424,964 597,599 431,045 2,965,512 436,620 469,815 144,321 143,545 1,585,130 1,150,152 163,516 254,107 1,149,882 808,852 381,718 371,469 584,869 520,984 182,853 536,232 584,796 1,014,325 553,222 407,797 782,232 337,213 258,345 240,325 162,975 867,850 318,988 1,627,004 927,654 217,464 1,185,678 470,578 385,992 1,588,241 187,912 529,987 236,477 725,080 2,643,137 260,767 160,240 855,897 570,316 370,003 652,997 220,725 11,765 11,011 1,407 83,700 ...................... 22,889 292,868 4,205,307 704,215 447,098 628,725 453,495 3,119,968 459,361 494,285 151,838 151,022 1,667,690 1,210,057 172,032 267,341 1,209,773 850,981 401,599 390,817 615,331 548,119 192,376 564,162 615,254 1,067,155 582,037 429,036 822,973 354,776 271,802 252,841 171,464 913,051 335,602 1,711,744 975,972 228,791 1,247,433 495,087 406,095 1,670,962 197,700 557,592 248,793 762,845 2,780,802 274,348 168,586 900,475 600,020 389,275 687,007 232,221 12,378 11,584 1,481 88,060 ...................... 24,081 308,122 4,424,336 1.98 1.26 1.77 1.28 8.79 1.29 1.39 0.43 0.43 4.70 3.41 0.48 0.75 3.41 2.40 1.13 1.10 1.73 1.54 0.54 1.59 1.73 3.01 1.64 1.21 2.32 1.00 0.77 0.71 0.48 2.57 0.95 4.82 2.75 0.64 3.51 1.39 1.14 4.71 0.56 1.57 0.70 2.15 7.83 0.77 0.47 2.54 1.69 1.10 1.94 0.65 0.03 0.03 * 0.25 .................... 0.07 0.87 .................... Total ................................................................................................. 33,189,330 ........................ 1 37,945,701 1 37,945,701 39,922,066 2 100.00 * $500 or less or 0.005 percent or less. 1 Distribution of estimated FY 2006 obligations from previous and new authority was not available at the time of publication. 2 Excludes undistributed obligations. 147 Department of Transportation, Federal Transit Administration Table 8–34. 69–1134–0–1–401 Capital Investment Grants—Fixed Guideway Modernization (Section 5309) (20.500) (obligations in thousands of dollars) Estimated FY 2006 obligations from: State or Territory FY 2005 Actual Previous authority New authority Total FY 2007 (estimated) FY 2007 Percentage of distributed total Alabama ........................................................................................... Alaska .............................................................................................. Arizona ............................................................................................. Arkansas .......................................................................................... California .......................................................................................... Colorado .......................................................................................... Connecticut ...................................................................................... Delaware .......................................................................................... District of Columbia ......................................................................... Florida .............................................................................................. Georgia ............................................................................................ Hawaii .............................................................................................. Idaho ................................................................................................ Illinois ............................................................................................... Indiana ............................................................................................. Iowa ................................................................................................. Kansas ............................................................................................. Kentucky .......................................................................................... Louisiana ......................................................................................... Maine ............................................................................................... Maryland .......................................................................................... Massachusetts ................................................................................. Michigan .......................................................................................... Minnesota ........................................................................................ Mississippi ....................................................................................... Missouri ........................................................................................... Montana ........................................................................................... Nebraska ......................................................................................... Nevada ............................................................................................ New Hampshire ............................................................................... New Jersey ...................................................................................... New Mexico ..................................................................................... New York ......................................................................................... North Carolina ................................................................................. North Dakota ................................................................................... Ohio ................................................................................................. Oklahoma ........................................................................................ Oregon ............................................................................................. Pennsylvania ................................................................................... Rhode Island ................................................................................... South Carolina ................................................................................. South Dakota ................................................................................... Tennessee ....................................................................................... Texas ............................................................................................... Utah ................................................................................................. Vermont ........................................................................................... Virginia ............................................................................................. Washington ...................................................................................... West Virginia ................................................................................... Wisconsin ........................................................................................ Wyoming .......................................................................................... American Samoa ............................................................................. Guam ............................................................................................... Northern Mariana Islands ................................................................ Puerto Rico ...................................................................................... Freely Associated States ................................................................ Virgin Islands ................................................................................... Indian Tribes .................................................................................... Undistributed .................................................................................... Oversight ......................................................................................... ...................... 2,458 2,300 ...................... 203,822 2,747 11,854 ...................... 58,419 8,776 12,680 1,920 ...................... 105,849 5,696 ...................... ...................... ...................... 4,831 ...................... 35,514 58,108 ...................... ...................... ...................... 26 ...................... ...................... ...................... ...................... 92,631 ...................... 237,809 ...................... ...................... 20,992 ...................... 3,953 123,693 4,500 ...................... ...................... 211 5,031 ...................... ...................... ...................... 28,009 ...................... 708 ...................... ...................... ...................... ...................... ...................... ...................... ...................... ...................... ...................... ...................... ........................ ........................ 1,144 ........................ 8,059 529 23,454 ........................ 2,599 6,950 9,367 733 ........................ 14,819 349 ........................ ........................ ........................ 534 ........................ 24,401 41,392 450 5,988 ........................ 1,996 ........................ ........................ ........................ ........................ 454 ........................ 64,194 ........................ ........................ 3,756 ........................ * 1,223 648 ........................ ........................ 35 14,708 ........................ ........................ 1,578 1,409 475 125 ........................ ........................ ........................ ........................ 1,452 ........................ ........................ ........................ ........................ ........................ ...................... 12,021 2,236 ...................... 144,541 3,166 34,628 ...................... 50,573 18,480 25,613 1,077 ...................... 117,342 7,698 ...................... ...................... ...................... 2,625 ...................... 25,541 67,271 300 5,867 ...................... 4,055 ...................... ...................... ...................... ...................... 90,475 ...................... 323,304 ...................... ...................... 15,394 ...................... 4,080 85,988 66 ...................... ...................... 302 12,516 ...................... ...................... 16,507 21,601 964 960 ...................... ...................... ...................... ...................... 2,029 ...................... ...................... ...................... ...................... 13,910 ...................... 12,021 3,380 ...................... 152,600 3,694 58,082 ...................... 53,172 25,430 34,980 1,810 ...................... 132,160 8,047 ...................... ...................... ...................... 3,158 ...................... 49,942 108,663 749 11,855 ...................... 6,051 ...................... ...................... ...................... ...................... 90,929 ...................... 387,498 ...................... ...................... 19,150 ...................... 4,080 87,211 714 ...................... ...................... 337 27,224 ...................... ...................... 18,085 23,009 1,439 1,085 ...................... ...................... ...................... ...................... 3,481 ...................... ...................... ...................... ...................... 13,910 ...................... 19,788 3,603 ...................... 229,773 5,120 53,168 ...................... 81,608 29,766 41,274 1,743 ...................... 181,367 11,959 ...................... ...................... ...................... 4,029 ...................... 40,152 104,274 477 9,433 ...................... 6,520 ...................... ...................... ...................... ...................... 139,597 ...................... 500,563 ...................... ...................... 23,826 ...................... 6,581 131,872 105 ...................... ...................... 493 20,286 ...................... ...................... 26,621 34,743 1,550 1,551 ...................... ...................... ...................... ...................... 3,259 ...................... ...................... ...................... ...................... 14,480 .................... 1.14 0.21 .................... 13.28 0.30 3.07 .................... 4.72 1.72 2.39 0.10 .................... 10.49 0.69 .................... .................... .................... 0.23 .................... 2.32 6.03 0.03 0.55 .................... 0.38 .................... .................... .................... .................... 8.07 .................... 28.94 .................... .................... 1.38 .................... 0.38 7.62 0.01 .................... .................... 0.03 1.17 .................... .................... 1.54 2.01 0.09 0.09 .................... .................... .................... .................... 0.19 .................... .................... .................... .................... 0.84 Total 1 ............................................................................................... 1,032,539 232,819 1,111,129 1,343,948 1,729,579 2 100.00 * $500 or less or 0.005 percent or less. 1 Includes funding from the Formula and Bus Grants Program (69X8350). 2 Excludes undistributed obligations. 148 Department of Transportation, Federal Transit Administration Table 8–35. 69–8350–0–7–401 Federal Transit Formula Grants and Research (Section 5307) (20.507) (obligations in thousands of dollars) Estimated FY 2006 obligations from: State or Territory FY 2005 Actual Previous authority New authority Total FY 2007 (estimated) FY 2007 Percentage of distributed total Alabama ........................................................................................... Alaska .............................................................................................. Arizona ............................................................................................. Arkansas .......................................................................................... California .......................................................................................... Colorado .......................................................................................... Connecticut ...................................................................................... Delaware .......................................................................................... District of Columbia ......................................................................... Florida .............................................................................................. Georgia ............................................................................................ Hawaii .............................................................................................. Idaho ................................................................................................ Illinois ............................................................................................... Indiana ............................................................................................. Iowa ................................................................................................. Kansas ............................................................................................. Kentucky .......................................................................................... Louisiana ......................................................................................... Maine ............................................................................................... Maryland .......................................................................................... Massachusetts ................................................................................. Michigan .......................................................................................... Minnesota ........................................................................................ Mississippi ....................................................................................... Missouri ........................................................................................... Montana ........................................................................................... Nebraska ......................................................................................... Nevada ............................................................................................ New Hampshire ............................................................................... New Jersey ...................................................................................... New Mexico ..................................................................................... New York ......................................................................................... North Carolina ................................................................................. North Dakota ................................................................................... Ohio ................................................................................................. Oklahoma ........................................................................................ Oregon ............................................................................................. Pennsylvania ................................................................................... Rhode Island ................................................................................... South Carolina ................................................................................. South Dakota ................................................................................... Tennessee ....................................................................................... Texas ............................................................................................... Utah ................................................................................................. Vermont ........................................................................................... Virginia ............................................................................................. Washington ...................................................................................... West Virginia ................................................................................... Wisconsin ........................................................................................ Wyoming .......................................................................................... American Samoa ............................................................................. Guam ............................................................................................... Northern Mariana Islands ................................................................ Puerto Rico ...................................................................................... Freely Associated States ................................................................ Virgin Islands ................................................................................... Indian Tribes .................................................................................... Undistributed .................................................................................... Oversight ......................................................................................... 31,705 20,064 77,143 14,373 1,077,836 77,559 49,278 6,853 148,699 210,007 156,782 33,017 7,897 256,828 49,637 24,486 17,212 23,671 42,416 6,716 79,302 124,682 98,059 55,900 12,479 64,247 5,996 21,812 21,190 4,806 213,290 10,260 226,661 77,258 6,312 142,336 29,996 85,687 320,453 20,398 17,613 4,122 48,902 275,902 33,122 8,640 67,316 151,031 11,544 79,951 3,664 224 1,029 988 16,840 ...................... 916 ...................... ...................... 17,168 17,231 2,443 30,237 3,052 197,915 2,905 41,172 4,283 13,654 45,680 32,133 1,314 1,882 35,175 17,990 4,276 6,425 4,183 14,833 3,674 16,925 46,213 12,260 36,792 6,343 11,866 2,645 1,980 18,910 7,493 30,578 6,455 382,305 31,002 877 25,644 5,690 5,629 24,718 5,538 14,143 2,553 16,506 60,444 3,002 1,060 21,091 20,133 1,388 15,225 676 128 82 ........................ 36,568 ........................ ........................ ........................ ........................ ........................ 27,067 21,480 50,810 16,244 515,647 47,193 52,384 9,285 53,233 164,678 73,665 22,368 10,259 191,617 44,454 20,420 16,954 27,022 35,615 7,993 82,910 132,145 76,383 47,237 15,442 44,278 9,637 12,565 23,488 7,869 213,338 15,184 486,575 53,946 6,520 94,076 22,126 38,719 144,712 14,611 24,378 7,352 38,700 202,736 28,434 3,969 58,249 87,578 11,116 45,825 5,358 334 758 742 40,112 ...................... 850 ...................... ...................... 36,631 44,298 23,924 81,047 19,296 713,562 50,098 93,556 13,568 66,887 210,358 105,798 23,682 12,141 226,792 62,444 24,696 23,379 31,205 50,448 11,667 99,835 178,358 88,643 84,029 21,786 56,144 12,282 14,546 42,398 15,363 243,916 21,640 868,881 84,948 7,397 119,720 27,816 44,347 169,430 20,149 38,521 9,905 55,205 263,180 31,436 5,029 79,340 107,711 12,504 61,049 6,034 462 840 742 76,680 ...................... 850 ...................... ...................... 36,631 48,537 37,393 86,304 25,520 909,190 82,169 93,242 15,832 99,628 285,272 125,130 39,217 16,100 335,918 74,743 34,161 28,075 44,088 60,741 13,236 145,809 234,907 128,067 80,692 22,869 76,924 13,204 20,066 39,249 12,264 384,322 25,386 866,407 89,215 9,815 159,393 38,159 66,489 253,189 25,222 38,856 10,247 68,457 350,610 49,062 5,873 99,903 156,017 17,872 80,589 7,780 430 926 1,185 66,662 ...................... 1,367 ...................... ...................... 47,832 0.79 0.61 1.40 0.41 14.78 1.34 1.52 0.26 1.62 4.64 2.03 0.64 0.26 5.46 1.22 0.56 0.46 0.72 0.99 0.22 2.37 3.82 2.08 1.31 0.37 1.25 0.21 0.33 0.64 0.20 6.25 0.41 14.09 1.45 0.16 2.59 0.62 1.08 4.12 0.41 0.63 0.17 1.11 5.70 0.80 0.10 1.62 2.54 0.29 1.31 0.13 0.01 0.02 0.02 1.08 .................... 0.02 .................... .................... 0.78 Total 1 ............................................................................................... 4,692,274 1,353,317 3,543,274 4,896,591 6,149,810 2 100.00 1 Includes Elderly and Persons with Disabilities (CFDA 20.513), Job Access and Reverse Commute (CFDA 20.516), Metropolitan Planning (CFDA 20.505), Rural Transportation Assistance Program (CFDA 20.509), State Planning and Research (CFDA 20.515), Formula Program for Non-Urbanized Areas (CFDA 20.509), and New Freedom Initiative. 2 Excludes undistributed obligations. 149 9. INTEGRATING SERVICES WITH INFORMATION TECHNOLOGY This year, the President is proposing to spend about $64 billion for Information Technology (IT) and associated support services to deliver results for the American people, providing timely and accurate information to citizens and Government decision makers while ensuring security and privacy. As one of the largest users and acquirers of data, information and supporting technology systems in the world, the United States Government will continue its efforts to strengthen our capabilities in managing technology and information in order to be the world’s leader in information technology. Departments and agencies are determined to build upon past success including their experience with enterprise architecture and to apply new principles and methods such as earned value management (EVM) to achieve greater savings, better results and improved customer service levels. ACHIEVING RESULTS The Federal Government continues to deliver results through the adoption of electronic government management principles and best practices for the implementation of information technology. Departments and agencies are focused on: • Improving service levels to citizens and Government decision makers; • Making better purchasing decisions; • Securing our systems and data; and • Reducing duplication and related costs. With these goals in mind, the Federal departments and agencies are fulfilling the goals of the ClingerCohen Act of 1996. This Act also requires the Director of the Office of Management and Budget (OMB) to submit an annual report to the Congress on the results we are achieving from Federal IT spending. This Budget chapter and Table 9–1, ‘‘Effectiveness of Agency’s IT Management and E-Gov Processes,’’ included on the CD–ROM, fulfill the statutory reporting requirement. Other management guidance provided to Federal departments and agencies is included on Table 9–2, ‘‘Management Guidance,’’ and is available at www.whitehouse.gov/OMB/memoranda. Government Performance.—The Federal Government has shown improvement over the last year in achieving the goals specifically included in the President’s Management Agenda, the Expanded Electronic Government initiative. For example, each IT investment must have specific performance targets tied to a specific significant benefits for our citizens and performance must be defined, valued and delivered in terms of measurable outcomes. The Federal departments and agencies continue to improve in their efforts to guarantee success and results for the taxpayer. The Administration continues to monitor the performance of its IT investments. With the release of the FY 2006 President’s Budget, there were 342 major projects representing about $15 billion on the ‘‘Management Watch List,’’ i.e., those project justifications needing improvement in performance measurement, earned value management or system se- curity. Before the start of the fiscal year, agencies were directed to remedy the shortfalls identified prior to expending funds. The agencies have worked to correct the weaknesses or have put measures in place to monitor the progress of the project. If a project is still on the ‘‘Management Watch List,’’ agencies must describe their plans to manage or mitigate risk before undertaking or continuing that project. As of September 30, 2005, 84 percent of the agencies (21 of 25) had acceptable FY 2006 business cases. As a result, from last year’s ‘‘Management Watch List,’’ only 19 business cases, valued in FY 2006 at $314.5 million from four agencies remain. As of the printing of this budget, 263 of 857 projects valued at $9.9 billion are on the ‘‘Management Watch List.’’ These projects still need to address performance measures, implementation of earned value management, security or other issues before obligating funding in FY 2007. The Report on Information Technology (IT) Spending for the Federal Government (Exhibit 53) located at www.whitehouse.gov/OMB, provides details of the Administration’s proposed 2007 IT investments. Related documents on IT security and Electronic Government (E-Government) will also be available at www.whitehouse.gov/OMB and will be published by March 1, 2006. Since the Administration’s guidance on capital assets has not changed from FY 2005 through FY 2007, investments were studied for trends and potential duplications across Government entities. At about $64 billion, the 2007 Federal IT portfolio represents nearly a 3 percent increase over the FY 2006 President’s Budget (see July 2005, Update to the Report on Information Technology (IT) Spending for the Federal Government (Exhibit 53) located at www.whitehouse.gov/OMB.) The following represents the highlights: Major IT Investments .......................... Not Well Planned and Managed 2 ...... Well Planned and Managed ............... FY 2005 FY 2006 FY 2007 1,130 745 385 1,087 358 682 857 263 594 Percent 1 Change –21% –27% –13% 151 152 ANALYTICAL PERSPECTIVES FY 2005 FY 2006 FY 2007 (Value in millions) Major IT Investments .......................... $32,341 $40,979 Not Well Planned and Managed 2 ...... $23,863 $16,218 Well Planned and Managed ............... $8,478 $24,761 $36,999 $9,938 $27,061 Percent 1 Change –10% –39% 9% 1 Change from FY 2006 to FY 2007. investments on Management Watch List as well as those rated Unacceptable. 1 Reflects In reviewing the overall IT portfolio, the trend of decreasing major IT investments is attributed to departments’ and agencies’ efforts to better manage their Capital Planning and Investment Control (CPIC) process in conformance with their enterprise architectures. Although the trend may indicate a problem, the maturing CPIC processes provide for greater oversight and evaluation of the investments achieving and/or addressing intended results by departments’ and agencies’ Chief Information Officers. This oversight and understanding allows for changes in the IT portfolio to address mission priorities, consolidation and elimination of redundant investments. The Administration continues its oversight to ensure the American taxpayer’s dollars are being invested wisely. This oversight includes analysis of overlapping or duplicative IT investments as well as high risk projects. Avoiding duplication is one of the four principal criteria agencies must report on high risk projects as included in OMB’s Memorandum M–05–23, ‘‘Improving Information Technology Project Planning and Execution,’’ dated August 4, 2005. The other three criteria are: • establishing and validating baselines with clear goals; • managing and measuring projects to within 10% of baseline goals using earned value management; and • having a qualified project manager. Agencies work with OMB to identify high-risk projects (those requiring special attention from oversight authorities and the highest level of agency management) and report on them quarterly to OMB. As a result, oversight authorities and agency management now have data on how these projects are performing at least quarterly to ensure improved execution and performance. OMB is working with the agencies to implement corrective actions in cases where a project did not meet one or more of the four principal criteria. When duplication across Federal agencies has been identified, the Administration has an ongoing process, through inter-agency taskforces, to bring together the appropriate agencies and help them to consider broadbased approaches to promote inter-agency data sharing and cooperation in building common solutions, rather than maintaining separate investments. Upon migration to common, Government-wide solutions, agencies will shut down redundant systems which will not only save money but also free-up resources for agencies to better focus on achieving their missions. These interagency taskforces focus on the agency Lines of Business (LoB) rather than a specific technology or investment. In FY 2006, there was significant progress made on six LoB efforts. These are: • Case Management • Federal Health Architecture • Financial Management • Human Resources Management • Grants Management • Information System Security Case Management.—The Department of Justice with the Department of Homeland Security developed the business and architectural solution for sharing investigative case management information. The work will continue this year under the leadership of the Department of Justice to ensure the solution is applicable Government-wide to improve the effectiveness and efficiency of sharing information for law enforcement, investigation and civil and criminal litigation case management. Federal Health Architecture (FHA).—The Department of Health and Human Services (HHS) continues to work through the Office of the National Coordinator for Health Information Technology (ONCHIT). In October 2005, the American Health Information Community (AHIC) was established by the Secretary of HHS. The AHIC comprises representation from the private sector, industry, State and local government, and the Federal Government, and will advise the Secretary of HHS on health information technology issues. A total of $5.5 billion for health information technology is being requested for FY07, a slight increase from the FY2006 request of $5.4 billion. Throughout the coming year, the Administration will continue to focus on the improvement of the quality and efficiency of health care by ensuring the appropriate steps are taken to eventually enable Federal health information technology systems to share health information amongst Federal agencies, with the private sector, and with other governmental entities. Specifically, the Administration will focus on the areas of standards implementation, additional standards development and harmonization, alignment of agency investments, and increased interoperability. Financial Management (FM) and Human Resources Management (HR).—As part of the FY 2006 budget process, OMB designated the following agencies as LoB service provider candidates, capable of entering into competitions for servicing interested Federal agencies: • FM: GSA, Interior, Treasury, and Transportation • HR: USDA, Interior, Treasury, HHS, and DOD This year, these departments and agencies will focus on agency migrations and on fulfilling the promise of service providers to realize economies of scale and improved service delivery to customer agencies. Agencies will continue to use their existing legacy systems for the remainder of their system life cycle. At the point when an agency needs to replace or upgrade their HR or FM system, they will migrate to service providers. Although there were additional requests by departments and agencies to become cross-agency service pro- 9. INTEGRATING SERVICES WITH INFORMATION TECHNOLOGY viders, the Administration has not expanded the list of potential providers beyond the original service providers selected last year. Grants Management.—Currently, more than 900 programs in over 26 grant-making agencies provide $526 billion annually in Federal financial assistance. The evolution of grants management processes and systems has largely happened in a decentralized manner resulting in highly stove-piped operations. The cross-agency team identified a ‘‘consortia-based’’ approach to implementation and developed a process for forming consortia and agencies participating in consortia as members. The consortia approach aligns agency work teams (consortia) around shared business interests. Each consortium provides planning, leadership, business, and program direction with the goal of defining a common solution to meet its members’ needs. The target operating model states the grants management community will process grants in a decentralized way using common business processes supported by shared technical support services and estimates savings of more than $2.4 billion can be expected between FY 2008 through FY 2015 through this consortia approach. To realize these benefits and cost savings, the Administration asked the taskforce for recommendations for agencies with the skills and capabilities to function as a Consortium Provider. The recommendations were evaluated similarly to the financial management and human resources cross-agency service providers assessing past performance, current capabilities and ability to operate a customer-focused organization. On the basis of the review, the following agencies were designated as eligible to be grants management consortia providers: • Department of Education • Department of Health and Human Services • National Science Foundation This year, the consortia providers will develop the infrastructure and capabilities necessary to cross-service other agencies including fee-for-service models with performance metrics. Information Systems Security.—The cross-agency taskforce analyzed commonly used IT security processes and controls in an effort to identify the extent to which consolidation opportunities existed in the Federal Government. Their analysis indicated more than 25 percent ($1.4 billion) of the overall funds ($4.5 billion in FY 2006 up from $4.2 billion in FY 2005) go towards implementing four common processes—training, reporting, incident response and evaluating and selecting security products and services. The taskforce identified common solutions to be shared across Government and developed a joint business case outlining a general concept of operations with overall milestones and budget estimates. The Administration asked all agencies to submit proposals to either become a service provider for other agencies, or migrate to another agency from which they would acquire expert security services. Upon reviewing the proposals, the Administration will select the service providers for training and reporting during FY 2006 in conjunction with the Department of Homeland Secu- 153 rity, who is continuing to serve as the program manager for this effort and will work with those agencies proposing to become service centers to bring greater clarity to their proposals. The taskforce will continue to explore the establishment of security centers of excellence in areas of incident response and evaluating and selecting products and processes. With this President’s Budget, the Administration plans to establish the following new LoBs: • IT Infrastructure.—to further refine the opportunities for IT infrastructure consolidation and optimization and develop Government-wide common solutions. The LoB taskforce will define specific common performance measures for service levels and costs, identify best practices and develop guidance for transition plans within agencies and/or across agencies for activities such as IPv6. Consolidation and optimization of IT infrastructure represents a significant opportunity for future cost savings. Based on industry benchmarks and analysis of agencies’ FY07 IT budget submissions, the Federal Government could potentially save between 16 percent and 27 percent annually on its IT infrastructure budget and between $18 billion and $29 billion over 10 years by taking a more coordinated approach to spending on commodity IT infrastructure, such as help desks, data centers, and telecommunications. IT infrastructure consolidation and optimization case studies also demonstrate agencies could improve IT service levels and, when relieved of the burden of managing these non-core functions, can concentrate more on mission priorities and results. • Geospatial.—to identify opportunities for optimizing and consolidating Federal geospatial-related investments to reduce the cost of Government and improve services to citizens through business performance improvements. The LoB taskforce will analyze cost benefits, alternatives and risks, define roles and responsibilities, expected outcomes, performance measures, milestones, and timelines. The Federal Geographic Data Committee will continue to develop the National Spatial Data Infrastructure and full implementation will require Federal agencies to play a critical role; therefore, the establishment of the Geospatial LoB will ensure sustainable business model for Federal partners to establish a sustainable business model for Federal partners to collaborate on geospatial-related activities and investments. • Budgeting.—to build toward a ‘‘budget of the future’’ employing standards and technologies for electronic information exchange to link budget, execution, performance, and financial information throughout all phases of the annual budget formulation and execution cycle. As first outlined in the FY 2004 Report to Congress on Implementation of the E-Government Act of 2002, the LoB taskforce will identify opportunities for common 154 ANALYTICAL PERSPECTIVES solutions and automated tools to enhance agency and central budget processes. It will also: —Promote integration and standardize information exchange between budget formulation, execution, financial management, and performance measurement systems and activities across Government; —Institutionalize Budget and Performance Integration, including aligning programs and their outputs and outcomes with budget levels and actual costs; and —Provide Government with enhanced capabilities for analyzing budget, performance, and financial information. The Administration continues to leverage Government buying power while reducing redundant purchases through the SmartBUY program. Launched in June 2003, the SmartBUY program continues to provide increased cost avoidance savings to Federal agencies through new and existing agreements with commercial software providers. In FY 2005, the Federal Government signed a SmartBUY agreement with Oracle Inc. which provides a mandatory contract vehicle for all agencies purchasing Oracle database and database with security software products. The Federal Government has achieved avoidance of $174.8 million in the first six months of the contract alone. The SmartBUY Office continues to manage four agreements. The Administration anticipates the establishment of a new agreement in Spring 2006 with Antivirus software developers and will continue to identify and develop new agreements throughout the year. Government IT Workforce.—Qualified Federal IT Project Managers with skilled interdisciplinary teams are the first line of defense against the cost overruns, schedule slippages, poor performance, and weakened security which threaten agencies’ ability to deliver efficient and effective services to citizens. On April 15, 2005, the Administration requested agencies to develop and submit to OMB plans for closing important IT skill and competency gaps. (Memorandum to the President’s Management Council from Deputy Director for Management, ‘‘Human Capital Planning for the IT Workforce’’) The Chief Information Officers (CIO) Council identified IT Project Management, IT Architecture (Enterprise and Solutions), and IT Security as job activities important at the Federal level due to their direct contribution to fulfilling the E-Government element of the President’s Management Agenda. Agency plans were submitted to OMB on August 30, 2005. The following chart highlights the current and planned staffing as submitted to OMB: IT IT IT IT # of Positions on Board FY 2006 # of Positions to be Filled Project Management ............................................... Security .................................................................... Architecture (Enterprise) .......................................... Architecture (Solutions) ........................................... 4,618.95 9,030.40 1,168.67 941.70 599.95 488.47 179.80 148.03 Total ......................................................................... 15,759.72 1,416.25 Across all job areas, the most frequently occurring skill and competency gaps were: • Federal/OMB Enterprise Architecture—Activities related to the business-based framework developed by OMB for Government-wide improvement; • Risk Management—Knowledge of methods and tools used for risk assessment and mitigation of risk; • Standards—Knowledge of standards which are either compliant with or derived from established standards or guidelines; • Process Design—Activities related to the strategic establishment of the flow of information, control or materials from one activity to another; • Systems Analysis and Design.—Activities related to the design, specification, feasibility, cost, and implementation of a computer system for business. Knowledge of the development and implementation process, metrics and tools for analysis, design and project management, quality factors and post evaluation techniques. Although agencies are reporting gaps in the Enterprise Architecture (EA) job areas, a review of agency EA’s indicates much progress has been made in EA Government-wide compensating for this skill gap through contractor support services. This is evidenced by all agencies having an effective EA (average evaluation of the EA section of the FY 2007 Business cases is 3.33 of 5) as assessed by OMB. While agencies reported on their Exhibit 53’s more than 70% of major IT investments as having a qualified project manager, there continue to be gaps in project management capabilities. In many cases, a project manager supports multiple investments, diminishing their effectiveness. Across the FY 2007 Business Cases, the average evaluation of the Project Management section is 3.21 (with a ‘‘3’’ defined as much work remains in order for Project Management to manage the risk of this project). Agencies are addressing Project Management issues in several ways including additional training, mentoring, development of Communities of Practice, skills incentive programs, efforts to increase retention of staff, and increased recruiting efforts. Agency plans indicate in FY 2006 an overwhelming majority of these positions present a Medium or High risk to the agency of not being able to accomplish mission objectives (such as delivering critical functionality on schedule and within budget). Given competing budgetary priorities, the Administration will focus IT staffing efforts on job areas not demonstrating adequate results. As such, the agencies will, within agencies’ funding levels, prioritize the hiring of IT Project Management positions rather than EA positions where possible. This prioritization of staffing allows agencies to make efficient use of resources while improving the quality of agency Project Management. Going forward, the Administration will measure agency progress in further strengthening IT management—both in terms of hiring progress as well as train- 9. INTEGRATING SERVICES WITH INFORMATION TECHNOLOGY ing, mentoring, development of skills incentive programs, etc.—on a quarterly basis to inform PMA Scorecard decisions and reflected in the Human Capital Scorecard requirement. Other initiatives sponsored or organized by the Office of Personnel Management, the General Services Administration, and the CIO Council further strengthen the Federal information technology workforce and ensure agencies can achieve their mission. An IT Quarterly Forum convenes to discuss and share promising practices regarding information technology initiatives. A partnership between CIO University and seven universities graduated over 600 students trained in Federal information technology management. Finally, the Scholarship for Service (Cyber Corps) Program provides more than 300 student scholarships and paid internships working on information security at agencies. Securing Government Systems.—The Federal Government continues to improve the identification and resolution of long-standing, serious, and pervasive IT security problems. Agencies report quarterly on their efforts to address IT security weaknesses against key IT security performance measures. The 2005 agency Federal Information Security Management Act (FISMA) reports reveal increased attention and progress in the area of system certification and accreditation. In FY 2005, the percentage of certified and accredited systems rose from 77 percent to 85 percent. In addition, overall quality of the certification and accreditation processes at agencies increased, with over two-thirds of the agencies having a process in place rated as ‘‘satisfactory’’ or better by the Inspector General (IG). To complement the certification and accreditation process, over 75 percent of agencies can demonstrate they have an effective process in place for identifying and correcting weaknesses. Several agencies have made outstanding progress in FY 2005. For example, the Department of Defense moved from 58 percent to 82 percent of systems certified and accredited and the Department of Veterans Affairs improved from 14 percent to 100 percent. The overall security status and progress in percentage of systems, from FY 2002 to FY 2005, is as follows: Effective Security and Privacy Controls (C&A) ........... Tested Contingency Plans ........................................... Total Systems reported ................................................ FY 2002 FY 2003 FY 2004 FY 2005 47% 35% 7,957 62% 48% 7,998 77% 57% 8,623 85% 60% 10,289 The number of agencies where the IG has verified the process exists to remediate IT security weaknesses (POA&M): FY 2002 ........................................................................ FY 2003 ........................................................................ FY 2004 ........................................................................ FY 2005 ........................................................................ N/A (was not required in until FY 2003) 12 18 19 While notable progress in resolving IT security weaknesses has been made, challenges remain and new threats and vulnerabilities continue to materialize. Additional information and detail concerning the Federal 155 Government’s IT security program and agency IT security performance can be found in OMB’s Annual Report to Congress on IT Security. The next such report will be issued by March 1, 2006 and will be made available on OMB’s website. Initiative to Secure Federal Information Systems and Facilities.—Inconsistent agency approaches to facility security and computer security are inefficient and costly, and increase risks to the Federal Government. On August 27, 2004 the President signed Homeland Security Presidential Directive (HSPD) 12, ‘‘Policy for a Common Identification Standard for Federal Employees and Contractors,’’ which requires agencies to implement a mandatory, Government-wide standard for secure and reliable forms of identification for Federal employees and contractors. HSPD–12 requires a complex deployment on an accelerated time table. During FY 2006–FY 2008, agencies are required to complete issuance of these IDs to all applicable employees and contractors and install infrastructure to use them. Protecting Privacy.—OMB instituted several important measures for privacy management this fiscal year. On February 11, 2005, OMB’s Memorandum M–05–08, ‘‘Designation of Senior Agency Officials for Privacy,’’ requesting each executive department and agency to identify a Senior Agency Official for Privacy to assume overall responsibility and accountability for ensuring the agency’s compliance with privacy law and policy. The Administration requested the Senior Agency Officials for Privacy across Government to assume responsibility for coordinating their agencies’ responses on the FISMA privacy template. Finally, privacy has been added to the ‘‘maintaining green’’ criteria of the Expanded Electronic Government element of the President’s Management Agenda. Making Government Accessible to All.—The efficient, effective, and appropriately consistent use of Federal agency public websites is important to promote a more citizen centered Government. Federal agency public websites are information resources funded by the Federal Government and operated by an agency, contractor, or other organization on behalf of the agency. They present Government information or provide services to the public or a specific non-Federal user group and support the proper performance of an agency function. Cost-effective and consistent access to and dissemination of Government information is essential to promote a more citizen-centered Government. The Administration’s recent guidance identifies procedures to organize and categorize information and make it searchable across agencies to improve public access and dissemination, discusses using the Federal Enterprise Architecture Data Reference Model (DRM), and reminds agencies of the breadth of their existing responsibilities primarily related to information access and dissemination. Agencies are managing innovative information dissemination programs for their own agency information and services. While agencies remain ultimately responsible for disseminating their own information, they are working collaboratively to provide access to the public 156 ANALYTICAL PERSPECTIVES and are taking advantage of a variety of dissemination channels. Consequently, Federal information is disseminated by Federal agencies as well as diverse nonfederal parties, including State and local government agencies, for-profit organizations, and educational and other notfor-profit organizations such as libraries and community centers. These dissemination channels also aid the public in accessing Federal information and services by providing the skills, knowledge, and training for citizens to access various information resources (see http://www.whitehouse.gov/omb/inforeg/section— 213—report—04-2005.pdf). The Federal Government continues to ensure electronic information technology is accessible to people with disabilities as required by Section 508 of the Rehabilitation Act of 1973. The creation of the Buy Acces- sible Wizard, a web-based application developed by the General Services Administration, helps agencies determine relevance, applicability, and compliance to Section 508 when managing electronic and information technology products and services. The application helps Federal program managers to consistently and correctly apply the Federal Acquisition Regulation to their market research. In April 2005, the Civilian Agency Acquisition Council and the Defense Agency Acquisition Council published a final rule requiring micro purchase to comply with the requirements of Section 508. Micro purchases were previously exempt from these requirements to give agencies time to update purchase card training modules on the 508 requirements and implement necessary training. Free on-line training is available at http://www.section508.gov. SUCCESSFULLY USING ELECTRONIC GOVERNMENT The departments and agencies continue to seek to leverage information technologies to make Government services available to the citizen while ensuring security of those systems, the privacy of the citizen information and the prudent use of taxpayer money. E-Government is about providing direct and measurable results supporting departments’ and agencies’ mission and goals. For departments and agencies, the benefits must far outweigh the cost of implementation. In the coming months, the Presidential E-Government initiatives graduate from development and implementation phases to mature service offerings supported by service fees. Increased agency adoption and customer utilization will become the primary measures of success. The expanded availability of Government information and the utilization of an increased percentage of transactions between the Federal Government and citizens will be measured, where appropriate. Examples of how the tenets of E-Government are helping to deliver services to the citizen and make the Government more effective include: The Department of Interior (DOI) has the responsibility to manage federally owned resources, protect the environment, prevent, detect, and investigate criminal activity and manage visitor use and protection programs. The Incident Management Analysis and Reporting System (IMARS) provides a Department-wide information collection, analysis, and reporting system for incident information, which are defined as any occurrence requiring documentation. Currently, it is not possible to query and analyze incidents across multiple National Park Service (NPS) parks or other DOI Bureaus. The new system aggregates and disseminates incident information, improving DOI’s ability to prevent, detect, and investigate criminal activity, and thereby aid in protecting the public, as well as natural and cultural resources. The system also helps DOI to prioritize protection efforts and complete reports required to evaluate agency programs and services. An advisory council insures the requirements of DOI bureaus are included. The Council includes representatives from non-law enforcement subject areas, as well as the NPS, the Bureau of Reclamation, Fish and Wildlife Service, the Bureau of Indian Affairs, and the Bureau of Land Management. The system will also interface with criminal information sharing networks at other Federal, State, and local governments. Information on the system is accessible to those who are disabled, and resources are available to answer questions or provide assistance when necessary. Services and information disseminated by the system can also be provided in alternative media as well. The timeliness and number of successfully adjudicated cases, as well as the number of illegal incidents leading to damage or loss to Federal or private property located on DOI lands or areas of interest are key performance indicators demonstrating the impact of the system on agency programs and services. The system will reduce operational costs by replacing and integrating isolated law enforcement efforts into a centralized and common infrastructure, and eliminate the need for duplicative technologies and training. The Department of Education has improved mission critical internal processes by developing an online emonitoring system to provide grant monitoring functionality for Department staff. The system allows all Department users, across multiple agencies, access to essential grant management information. The application enhances the Department’s ability to effectively manage grants by improving the efficiency of the Department’s grant processing. For example, the system allows users to analyze budget and financial summary data over the lifecycle of the grant, as well as monitor, track, and report grant status and trends. The system also aids in grants processing by allowing users to reassign grants for review and receive notice of inadequate and excessive grant drawdown. While the initiative is designed to assist Department employees in monitoring recipients of Department grants, and is not used by external partners, it does 9. INTEGRATING SERVICES WITH INFORMATION TECHNOLOGY improve the Department’s interaction and communication with external partners and grantees. For example, the system allows users to log email, phone or mail communications of any given grant, as well as print mailing labels and send bulk emails to aid in information dissemination. Performance agreements of applicable Department employees required use of the system, reinforcing the importance of the initiative. The system has been implemented in one program office, and there are plans to roll out the tool to other Department program offices over the next year. The system will be evaluated to assess performance and impact on improving the agency mission, and the Department is establishing performance measures (includ- 157 ing cost savings and avoidance) based on baseline data collected this year. The Administration continues the focus of the department and agency specific services towards citizen-centered services. Overall funding for the President’s EGovernment initiatives has reduced annually since FY 2004 as the initiatives have met their milestones and have become incorporated into the daily operations of Federal departments and agencies. This reduction has come as result of moving the initiatives to fee-for-service models where appropriate, thereby eliminating the need for agency contributions. Chapter 9, Table 9–3, ‘‘Status of the Presidential E-Government Initiatives,’’ included on the CD–ROM, provides an update for each project. LOOKING AHEAD—MORE RESULTS Current Federal Government initiatives inclusive of the President’s E-Government initiatives augmented by the current analysis of the LoBs will increase the requirement for departments and agencies to facilitate a change from a ‘‘closed’’ agency technical architecture to an interoperable Federal architecture. In order for the departments and agencies to overcome technical limitations arising from this need to interoperate and support emerging requirements and technologies, the Administration set June 2008 as the date by which all agencies’ infrastructure (network backbones) must be using IPv6 and agency networks must interface with this infrastructure. In August 2005, OMB issued guidance to agencies in Memorandum M–05–22, ‘‘Transition Planning to Internet Protocol Version 6 (IPv6),’’ to ensure an orderly and secure transition from Internet Protocol Version 4 (IPv4) to Version 6 (IPv6). Since the Internet Protocol is core to an agency’s IT infrastructure, beginning in February 2006, the Administration will use the Enterprise Architecture Assessment Framework to evaluate agency IPv6 transition planning and progress, IP device inventory completeness, and impact analysis thoroughness. The August 2005 memorandum discussed a series of actions agencies must take by specific dates. For instance, by November 15, 2005, agencies were to: (1) assign an official to lead and coordinate agency planning and (2) complete an inventory of existing routers, switches, and hardware firewalls. To date, 23 (of 24) large agencies have provided the requested information and 38 (of 107) small agencies. Additionally, the President’s National Strategy to Secure Cyberspace directed the Secretary of Commerce to form a taskforce to examine the most recent iteration of the Internet Protocol, IP version 6 (IPv6). The President charged the taskforce with considering a variety of IPv6-related issues, ‘‘including the appropriate role of government, international interoperability, security in transition, and costs and benefits.’’ The taskforce, co-chaired by the Administrator of the National Telecommunications and Information Administration (NTIA) and the Director of the National Institute of Standards and Technology (NIST), prepared a report discussing the benefits and impacts of IPv6. This report was published in January 2006. The Administration will continue to use the Federal Enterprise Architecture data for business analysis to focus our efforts to direct information technology investments to improve service delivery to citizens and other entities. The Administration will continue to improve performance and achieve results by continuing our efforts in linking IT investments to program performance as demonstrated by the analytical tool called the Program Assessment Rating Tool (PART). In 2007 and beyond, the Federal Government will continue to identify IT opportunities for collaboration and consolidation while improving services. Although the Federal Government continues to improve, much more work is needed to better serve the citizen. Through the PMA, the Clinger-Cohen Act, the E-Government Act, FISMA, budget guidance and other management tools, the Federal Government has the ability to be the best manager, innovator and user of information, services and information systems in the world. The President’s E-Government initiatives will have graduated from development and implementation phases to mature service offerings supported by service fees. The future is to ensure reliability, security and continuity of services to the point where the services are thought of as utilities just like electricity and water. This service and results oriented approach will ensure the future Government IT investments will leverage existing capabilities to their maximum potential and will provide cost-effective and customer-centered services. 10. FEDERAL DRUG CONTROL FUNDING Table 10–1. Federal Drug Control Funding, FY 2005–2007 1 (Budget authority, in millions of dollars) Department/Agency 2005 Enacted 2006 Estimate 2007 Request Department of Defense .......................................................................................... 1,147.8 936.1 926.9 Department of Education ...................................................................................... 590.5 490.9 165.9 Department of Health and Human Services: National Institute on Drug Abuse ........................................................................ Substance Abuse and Mental Health Services Administration .......................... 1,006.4 2,490.5 1,000.0 2,442.5 994.8 2,411.1 Total HHS ............................................................................................................ 3,496.9 3,442.5 3,405.9 Department of Homeland Security: Customs and Border Protection .......................................................................... Immigration and Customs Enforcement .............................................................. U.S. Coast Guard ................................................................................................ 1,429.0 361.5 871.9 1,591.0 436.5 1,032.4 1,796.5 477.9 1,030.1 Total DHS ............................................................................................................ 2,662.4 3,059.9 3,304.6 Department of Justice: Bureau of Prisons ................................................................................................ Drug Enforcement Administration ........................................................................ Interagency Crime and Drug Enforcement ......................................................... Office of Justice Programs .................................................................................. 48.6 1,793.0 553.5 281.1 49.1 1,876.6 483.2 237.4 51.0 1,948.6 706.1 248.7 Total Department of Justice ............................................................................. 2,676.2 2,646.3 2,954.3 ONDCP: Counterdrug Technology Assessment Center .................................................... Operations ............................................................................................................ High Intensity Drug Trafficking Area Program 2 ................................................. Other Federal Drug Control Programs ............................................................... 41.7 26.8 226.5 212.0 29.7 26.6 224.7 193.0 9.6 23.3 .................... 212.2 Total ONDCP ...................................................................................................... 507.0 474.0 245.1 Department of State: Bureau of International Narcotics and Law Enforcement Affairs ....................... 1,163.1 1,028.2 1,166.7 Department of Treasury: Internal Revenue Service .................................................................................... .................... 55.0 55.6 Department of Veterans Affairs: Veterans Health Administration ........................................................................... 396.1 412.6 428.3 ............................................................................... 2.2 1.0 2.5 Total Federal Drug Budget ................................................................................... 12,642.3 12,546.6 12,665.8 Other Presidential Priorities 3 1 Detail may not add due to rounding. in FY 2007, the High Intensity Drug Trafficking Area Program is transferred to Justice and incorporated into the Interagency Crime and Drug Enforcement account. 3 Includes the Small Business Administration’s Drug-Free Workplace grants and the National Highway Traffic Safety Administration’s Drug Impaired Driving program. 2 Beginning 159 11. CALIFORNIA–FEDERAL BAY–DELTA PROGRAM BUDGET CROSSCUT (CALFED) The California-Federal Bay-Delta program (also known as CALFED) is a cooperative effort of the Federal Government, the State of California, local Governments, and water users, to proactively address the water management and aquatic ecosystem needs of California’s Central Valley. This valley, one of the most productive agricultural regions of the world, is drained by the Sacramento River in the north, and the San Joaquin River in the south. The two rivers meet southwest of Sacramento, forming the Sacramento-San Joaquin Delta, and drain west into San Francisco Bay. The extensive development of the area’s water resources has significantly boosted agricultural production, but has also adversely affected the region’s ecosystems. CALFED participants recognized the need to provide a safe, clean, reliable source of water for multiple uses, while at the same time restoring or maintaining the ecosystems of the area and protecting against floods. This recognition resulted in the 1994 Bay-Delta Accord, which laid the foundation for the CALFED program. CALFED’s adaptive management approach to water resources development and management seeks to balance achievement among the program’s four objectives: Water Supply Reliability, Levee System Integrity, Water Quality, and Ecosystem Restoration. The program integrates science and moni- toring into program management to track progress toward achieving those goals. The parties signed a Record of Decision in 2000, spelling out the different program components and goals. In 2004, the President signed the Calfed Bay-Delta Authorization Act (P.L. 108–361) into law. This Act, authorizing funding and activities for the CALFED program through 2010, provides new programmatic authority for participating agencies, authorizes $395 million to be appropriated for the Federal share of CALFED activities, and specifies criteria for program cost-shares and achieving balanced implementation of CALFED program components. Federal agencies contributing to CALFED goals include: the Department of the Interior’s Bureau of Reclamation, Fish and Wildlife Service, and U.S. Geological Survey; the Department of Agriculture’s Natural Resources Conservation Service; the U.S. Army Corps of Engineers; the Department of Commerce’s National Oceanic and Atmospheric Administration; and the Environmental Protection Agency. The Budget includes a crosscut of Federal funding by each of the CALFED agencies, fulfilling the reporting requirements of P.L. 108–361. Detailed tables are included on the CD–ROM included with the Analytical Perspectives, as well as an explanation of budget crosscut methodology. CALFED–RELATED FEDERAL FUNDING BUDGET CROSSCUT Federal Fiscal Years 1998–2007 (Dollars in millions) 1998 1 1999 1 2000 1 2001 1 Bureau of Reclamation ............................................... Corps of Engineers ..................................................... Natural Resources Conservation Service .................. National Oceanic and Atmospheric Administration ... Geological Survey ....................................................... Fish & Wildlife Service ............................................... Environmental Protection Agency .............................. $149.627 $100.686 ................ $0.300 $3.158 $0.941 $3.204 $107.063 $103.341 $14.543 $0.375 $3.158 $1.143 $3.049 $130.503 $93.786 $12.845 $0.450 $4.319 $3.647 $57.262 $79.030 $54.192 $16.945 $0.550 $5.366 $18.230 $53.375 Total ........................................................................ $257.916 $232.672 $302.812 $227.688 2002 1 2003 1 2004 1 2005 1 2006 2 2007 3 $126.775 $58.227 $39.078 $0.575 $5.039 $5.605 $54.255 $83.403 $70.624 $38.998 $0.775 $5.039 $11.189 $20.693 $78.929 $65.070 $48.745 $0.775 $4.910 $13.684 $1.502 $81.104 $50.763 $36.393 $0.775 $4.867 $2.018 $96.661 $95.786 $93.819 $35.000 $0.375 $2.066 $3.787 ................ $83.973 $75.700 $35.000 $0.775 $4.919 $2.063 ................ $289.554 $230.721 $213.615 $272.581 $230.833 $202.430 1 1998–2005 totals reflect actual obligations. totals reflect estimates based on enacted levels. 3 2007 totals reflect amounts requested in the President’s Budget. 2 2006 161 ECONOMIC ASSUMPTIONS AND ANALYSES 163 12. ECONOMIC ASSUMPTIONS By the end of 2005 the U.S. economy had entered its fifth year of expansion, exhibiting a sustained solid pace of economic growth, with low rates of unemployment and underlying inflation, rising payroll jobs, high homeownership rates, strong business investment, and a record level of real household wealth. This robust performance of the economy stands in marked contrast to the economic slowdown and recession of 2000–2001 followed by the slow recovery in 2002–2003.1 The sluggish performance during those years resulted from a number of unanticipated shocks, including sharp declines in stock market valuations beginning in 2000; falling manufacturing production and business investment; and corporate accounting scandals. The terrorist attacks of September 11, 2001 were a further shock aimed at the heart of the U.S. economy and government. The renewed solid economic performance since mid-2003 is a testament to the resilience of the U.S. economy and the adoption of successful pro-growth policies, including tax relief, Federal Reserve monetary policy actions, and ongoing efforts to promote liberalized international trade and investment in innovative technologies. The performance of the economy over the past year provided further evidence for the robust nature of the expansion in the face of additional shocks. The economy continued its solid performance despite high energy prices and the substantial damage and disruptions from the worst hurricane season on record. Hurricanes Katrina, Rita, and Wilma resulted in significant loss of life, destruction of property and productive assets, disruption of local Gulf Coast populations and living conditions, and sharp increases in energy prices. Even so, during the very quarter of the year when the hurricanes hit, the economy still registered growth in real gross domestic product (GDP) in excess of 4 percent at an annual rate. And by the final quarter of the year, most economic indicators that had shown shortlived adverse effects had returned to their pre-stormseason paths. As we move into 2006 and look forward to future years, the Administration and other public and private forecasters expect the expansion to continue for the foreseeable future, with sustained non-inflationary real growth, and the economy providing a solid foundation for the Federal budget outlook. Recent Economic Performance At the time of the preparation of the 2007 Budget, real GDP in the U.S. economy has been increasing for 16 consecutive quarters, with the latest 10 consecutive quarters showing average growth rates of 4.1 percent 1 Economic performance is discussed in terms of calendar years. Budget figures are in terms of fiscal years. and no quarter during the period growing slower than 3.3 percent. Over the 4 quarters of 2005, the economy was on track to register real GDP growth at about a 3.5 percent pace, following the 3.8 percent growth rate during 2004 and the 4.0 percent rate of 2003. By virtually all signs, the expansion has entered a selfreinforcing phase, with growth widespread across various components and sectors. Increases in employment and ongoing strong gains in the efficiency of the U.S. workforce—that is, high growth in labor productivity—have combined to generate the sustained solid growth in real output. • In labor markets, nonfarm payroll employment has increased by 4.6 million jobs since the postrecession low in May 2003, with 2 million of those job gains occurring during 2005—or about a 1.5 percent increase in payroll employment in the past year alone. • Reflecting the improving labor situation, the unemployment rate declined to 4.9 percent in December 2005, down from a post-recession high of 6.3 percent in June 2003. • Labor productivity gains—the increase in output per hour of labor—have been remarkably strong in recent years, providing a substantial boost to growth in real GDP. For example, output per hour in the nonfarm business sector was on track to rise by about 2.5 percent during 2005, following an increase of 2.6 percent during 2004 and an especially robust increase of 5.0 percent during 2003. • The recent productivity gains reinforce the stronger trend productivity performance of the past decade. Since 1995, labor productivity in the nonfarm business sector has increased at about a 2.9 percent annual rate, compared to a 1.4 percent annual rate of gain in the period from 1973 to 1995. Stronger growth in labor productivity is a fundamental building block for the longer-term performance of the economy and represents the essential basis for increasing standards of living for American workers and families. At times in the past, after the economy had grown at a relatively strong pace with declining unemployment for an extended period—such as we have seen recently—there was an increase in inflationary pressures. That was the repeated experience in the 1960s and 1970s and early 1980s. Since 2003, however, strong gains in labor productivity have helped to keep the underlying rate of inflation low by historical standards despite the generally robust economic performance. Strong gains in productivity reduce production costs and keep down the pressures on output prices. 165 166 Although rising productivity growth when supported by responsible monetary policy can keep inflation under control in the long run, other factors can affect the short-run behavior of prices and inflation: • Primary commodity prices generally have been on a strong upward trend over the past 4 years reflecting increased demand associated with the stronger U.S. and international economies, and some depreciation of the U.S. dollar over this period. • Energy prices—notably crude oil and natural gas prices—have increased sharply over the past 4 years. For example, the benchmark price for West Texas Intermediate crude oil increased from just under $20 a barrel in December 2001 to about $65 a barrel in August 2005. Over the same period, the national average retail gasoline price rose from $1.09 a gallon to more than $2.60 a gallon. • The destruction of oil and natural gas facilities and the shutdown of gasoline refineries along the coast of the Gulf of Mexico from Hurricanes Katrina and Rita contributed to further volatility and increases in energy prices during August and September 2005. Crude oil prices initially rose sharply, with West Texas Intermediate crude oil reaching nearly $70 a barrel in early September, before falling back to hover around $60 a barrel over the final 2 months of the year. Gasoline prices initially rose above $3 a gallon and stayed near that level until beginning a gradual decline in mid-October, falling to about $2.25 by the end of the year. • The rise in energy and gasoline prices contributed to a slight increase in the ‘‘headline’’ rate of inflation during 2005: the consumer price index (CPI) rose 3.4 percent during 2005 (December to December), up from a 3.3 percent rate during 2004. • Even so, abstracting from volatile food and energy items shows that ‘‘core’’ CPI inflation was 2.2 percent during 2005, a very low rate by historical standards. The price index for personal consumption expenditures excluding food and energy items from the National Income and Product Accounts (NIPAs)—which uses a method of calculation that eliminates one source of upward bias that exists in the CPI measures—was on track for an increase of less than 2 percent during 2005. The key point to recognize is that, despite rising commodity and energy prices that have led to a temporary increase and heightened volatility in the overall rate of inflation, underlying inflation remains subdued and inflation expectations do not appear to be adversely affecting business or household decisions. Indicators of real economic activity provide additional evidence for the strong, sustained growth performance of the U.S. economy in recent years and during 2005, and illustrate the broad-based nature of the expansion: • Through the first 3 quarters of 2005, real consumer spending increased at a 3.6 percent annual ANALYTICAL PERSPECTIVES rate, following increases at a 3.8 percent rate during both 2003 and 2004. In the fourth quarter, consumption spending slowed down, mainly because of a sharp drop in motor vehicle sales in the fall. Real consumption gains resumed in the last 2 months of the quarter, however, coinciding with a rebound in consumer confidence following temporary declines in sentiment following Hurricanes Katrina and Rita, and consumption spending does not appear to have suffered a permanent shock. • Manufacturing activity and private investment spending have been strong in recent years, rebounding from the 2000–2001 slowdown and recession. Manufacturing industrial production rose 2.8 percent during 2005, and has increased at more than a 4.5 percent annual rate over the past 21⁄2 years. Real business equipment and software spending rose at a 10 percent annual rate through the first 3 quarters of 2005 and has increased at an 11 percent annual rate over the past 21⁄4 years. • Housing market activity continues to show its best sustained performance in more than a quarter century. There were 2.1 million housing starts in 2005, following 1.95 million starts in 2004. Over the past 2 years, the national homeownership rate continued to run near record levels of about 69 percent. According to the National Association of Realtors, the median price of existing homes increased 13 percent over the most recent 12-month period. The housing boom is expected to moderate in 2006 and beyond, but without sharp declines in national housing prices or residential investment. • Increasing housing wealth and higher stock market valuations have boosted real household wealth to record levels. At the end of the third quarter of 2005, household wealth reached $51 trillion— or 5 times the level of annual personal income— up 7.6 percent over the prior last quarters after adjusting for inflation. The real value of household real estate assets increased by 11 percent, and the real value of household holdings of corporate equities, mutual funds, and pension funds rose by 6 percent during the last 4 quarters. In general, economic performance during 2005 and the data and information from the past several years confirm that the U.S. economy is fundamentally strong, supporting the outlook for continued expansion with non-inflationary real growth. Policy Background The fiscal and monetary policies of the past 5 years have successfully contributed to the current good economic performance. The general fiscal policy outlook— as presented in the President’s Budget—continues to be consistent with the outlook for sustained expansion in the U.S. economy for the foreseeable future. 12. ECONOMIC ASSUMPTIONS The resilience of the U.S. economy in 2005 despite the economic and social disruptions caused by the hurricanes echoed the economic recovery from the variety of shocks that hit the economy over the 2000–2003 period. Looking back, timely tax relief and reductions in interest rates promoted a rebound from the economic slowdown, helping our Nation overcome the adverse effects from these shocks, which included the bursting of the stock market bubble of the late 1990s; the terrorist attacks of September 11, 2001; problems with corporate malfeasance; and the uncertainty associated with an international war on terrorism and military conflicts in Afghanistan and Iraq. Those policies continue to provide a solid foundation for current and future economic performance. Policy Actions Fiscal Policy: Beginning in 2001, the Administration proposed, and Congress enacted, significant tax relief designed to overcome the shocks and recession—promoting recovery in the growth of output, income, and jobs—and to provide a strong basis for continued economic expansion in the long term. • The Economic Growth and Tax Relief and Reconciliation Act of 2001 lowered marginal income tax rates; reduced the marriage tax penalty; and created a new, lower 10 percent tax bracket, among other changes. In July 2001, near the low point of the 2001 recession, taxpayers began receiving rebate checks reflecting their lower liability with the new 10 percent bracket; lower withholding schedules also went into effect at that time. • The Job Creation and Worker Assistance Act of 2002 permitted immediate depreciation of 30 percent of the value of qualified new capital assets put in place during the three years ending September 11, 2004. Accelerated depreciation provided an incentive for firms to invest. For a limited time, more of a qualified investment could be written-off for tax purposes, thereby lowering the cost of capital and providing an incentive for firms to speed up their capital spending. The Act also extended unemployment insurance benefits to workers who had exhausted their normal benefits. • The Jobs and Growth Tax Relief Reconciliation Act of 2003 lowered income tax rates, reduced the marriage penalty, raised the child tax credit, and raised the exemption amount for the individual Alternative Minimum Tax. The Act reduced tax rates on dividend income and capital gains, reducing distortions in the tax code from the double taxation of corporate earnings. To stimulate business capital spending further, the Act raised the percentage of an asset’s value that could be expensed immediately from 30 to 50 percent and lengthened the window of opportunity for businesses to take advantage of this benefit from September 11, 2004 to the end of the year. The Act also raised the maximum amount that a small 167 business could expense from $25,000 per year to $100,000. • The Working Families Tax Relief Act of 2004 extended parts of the President’s tax relief plan that were scheduled to expire at the end of 2004 and reinstated several expired or expiring business-related tax incentives. In doing so, the Act protected taxpayers from several scheduled tax increases. The Act also provided tax relief to certain military personnel with families, and simplified the tax code for many families by creating a uniform definition of a qualifying child for tax purposes. Efforts continue to preserve the favorable tax environment the President and the Congress have created. Maintaining a relatively low tax environment in the United States is a central element of the Administration’s economic and budget policies. The Administration’s budget proposals, including sustained lower taxes and significant spending restraint, will reduce the Federal budget deficit in coming years as a share of GDP, so that publicly held debt is projected to remain relatively stable, and eventually to decline, relative to the size of the economy. Monetary Policy and Interest Rates: As we enter 2006, Federal Reserve monetary policy continues to be oriented toward promoting sustained non-inflationary, real growth in the U.S. economy. Looking back, from early 2001 through mid-2003 monetary policy was focused on overcoming negative shocks and restoring stronger real growth. The Federal Reserve lowered the target Federal funds rate—a key interbank overnight interest rate—13 times, from 61⁄2 percent to 1 percent. That low rate was maintained until June 2004 when the Federal Reserve began to increase the funds rate gradually, reflecting the accumulating evidence of improved economic performance and the outlook for sustained future growth. By December 2005, the Federal Reserve had raised the funds rate to 41⁄4 percent. In its statement accompanying the December increase, the Federal Reserve stated that ‘‘some further measured policy firming is likely to be needed to keep the risks to the attainment of both sustainable economic growth and price stability roughly in balance.’’ The Administration forecast for the 3-month Treasury bill rate, presented below, is consistent with market expectations reflecting the outlook for ‘‘further measured policy firming.’’ Longer-term interest rates, notably the yield on 10year Treasury notes, remained low by historical standards during 2005. The 10-year rate traded as low as 3.9 percent and as high as 4.6 percent during the year, but it ended the year at just under 4.4 percent, not much different from where it began the year. With the increases in the Federal funds rate during the year to 41⁄4 percent, the low 10-year Treasury yield at the end of the year produced a very flat structure of interest rates across short- to long-term maturities. The low levels of longer-term interest rates—including those for corporate securities and for residential mortgages— 168 ANALYTICAL PERSPECTIVES have been key factors promoting the strong gains in business and residential investment. Challenges Even though the general outlook is for continued healthy expansion for the U.S. economy, a number of challenges remain, including: • The strong performance of residential construction and the increases in housing prices and wealth of recent years have introduced concerns about the future performance of housing markets and the implications for general economic activity should the housing boom end precipitously. Most analysts anticipate that an orderly transition will occur to a more moderate pace of housing activity with stabilizing prices. Although risks remain, the general expectation is that household consumption spending and overall economic performance will not be significantly affected if the housing adjustment is moderate and gradual. • The U.S. continues to run mounting international trade and current account deficits, and concerns persist about their sustainability. These international deficits are largely the result of the persistant strength of the U.S. economy relative to our foreign trading partners. Most forecasters expect that the pressures tending to raise international deficits will alleviate somewhat going forward reflecting changes in key determinants, including expected improvements in the growth rates of foreign economies. The general expectation is that the U.S. trade position will gradually improve in coming years, consistent with the outlook for ongoing sustained expansion in the U.S. economy. • Strong consumption spending in recent years has resulted in a low measured rate of personal saving. The increases in household wealth from higher housing and stock market valuations, and the associated increases in consumption, can account for much of the lower saving rate. An orderly transition in residential housing markets, if coupled with ongoing solid corporate equity valuations and rising real incomes, will not dampen consumption spending. • The Federal budget outlook presents potential challenges. During 2005, the worst hurricane season on record resulted in additional costs for the Federal Government for rebuilding and disaster relief efforts. Other special costs continue, including for the international War on Terror and ongoing efforts in Afghanistan and Iraq. The shortterm increases in the budget deficit require further efforts for fiscal discipline. Over the next five years, the Administration’s budget proposals call for reduction in the Federal budget deficit as a share of GDP, and the publicly held debt is projected to remain relatively stable, and then to decline, relative to the size of the economy. Those patterns for the deficit and the debt are consistent with a sustainable fiscal policy that will coincide with continued expansion. Beyond the five-year budget horizon, the effects of demographic changes and rising health care costs on entitlement programs make the long-term outlook for the deficit and the debt more problematic, as discussed in Chapter 13 of this volume, ‘‘Stewardship.’’ Although these factors represent potential risks and challenges, the current outlook continues to be one of a gradual and orderly transition that will support the ongoing expansion in the U.S. economy. Economic Projections The Administration’s economic projections, based on information available as of mid-November 2005, are summarized in Table 12–1. These assumptions are close to those of the Congressional Budget Office and the consensus of private-sector forecasters, as described in more detail below and shown in Table 12–2. In brief, the assumptions call for a continuation of the recent trends of strong, sustained growth; solid jobs growth; low inflation; and, even allowing for a projected rise in the next few years, relatively low interest rates. Real GDP, Potential GDP, and Unemployment Rate: Real GDP, which is estimated to have increased 3.6 percent in 2005 on a year-over-year basis, is projected to increase 3.4 percent this year. During the next few years, both actual and potential growth are likely to continue to moderate further to about 3.1 percent. As a result, the unemployment rate, fluctuating narrowly around 5.0 percent for the last nine months of 2005, is projected to remain at that level. That rate is the center of the range that is thought to be consistent with stable inflation. The main sources of growth in demand in coming years are likely to be business capital spending, net exports, and to a lesser extent, consumer spending. The contributions to overall growth from residential investment and the government sector are expected to be small at best. For the private business sector of the economy, potential growth is approximately equal to the sum of the trend rates of growth of the labor force and of productivity. Potential growth of total GDP (including government sectors) is projected to be about 31⁄4 percent over the next two years, trending down to 3.1 percent after 2008, primarily because of an assumed slowing in labor force growth. The labor force is projected to grow about 1.3 percent per year through 2007 on average, slowing to about 0.9 percent yearly on average during 2008–2011 as increasing numbers of baby boomers enter retirement. Trend productivity growth in the nonfarm business sector 2 is assumed to be 2.6 percent per year. The 2.6 percent trend pace is noticeably below the average since the business cycle peak in the first quarter of 2001 (3.6 percent per year). It is, however, close to 2 The nonfarm business sector accounts for about three-fourths of the value of GDP, with households, institutions and government accounting for the remainder. The nonfarm business sector serves as the standard metric for productivity because of its reliable measurement. 169 12. ECONOMIC ASSUMPTIONS Table 12–1. ECONOMIC ASSUMPTIONS 1 (Calendar years; dollar amounts in billions) Projections Actual 2004 2005 2006 2007 2008 2009 2010 2011 11,734 10,756 109.1 12,482 11,139 112.1 13,210 11,514 114.7 13,949 11,896 117.3 14,713 12,284 119.8 15,493 12,669 122.3 16,310 13,062 124.9 17,177 13,467 127.5 6.8 3.8 2.9 6.4 3.5 2.8 5.6 3.4 2.2 5.6 3.3 2.2 5.4 3.2 2.1 5.3 3.1 2.1 5.3 3.1 2.1 5.3 3.1 2.2 7.0 4.2 2.6 6.4 3.6 2.7 5.8 3.4 2.4 5.6 3.3 2.2 5.5 3.3 2.1 5.3 3.1 2.1 5.3 3.1 2.1 5.3 3.1 2.1 Incomes, billions of current dollars: Corporate profits before tax ........................................... Wages and salaries ........................................................ Other taxable income 2 ................................................... 1,059 5,389 2,420 1,425 5,745 2,495 1,506 6,095 2,618 1,497 6,459 2,717 1,516 6,843 2,877 1,495 7,229 2,974 1,497 7,613 3,105 1,500 8,028 3,231 Consumer Price Index: 3 Level (1982–84=100), annual average .......................... Percent change, fourth quarter over fourth quarter ...... Percent change, year over year .................................... 188.9 3.4 2.7 195.3 3.8 3.4 201.1 2.4 3.0 205.9 2.4 2.4 210.9 2.4 2.4 215.9 2.4 2.4 221.1 2.4 2.4 226.6 2.5 2.5 Unemployment rate, civilian, percent: Fourth quarter level ........................................................ Annual average ............................................................... 5.4 5.5 5.0 5.1 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 Federal pay raises, January, percent: Military 4 ........................................................................... Civilian 5 .......................................................................... 4.15 4.1 3.5 3.5 3.1 3.1 2.2 2.2 NA NA NA NA NA NA NA NA Interest rates, percent: 91-day Treasury bills 6 .................................................... 10-year Treasury notes .................................................. 1.4 4.3 3.2 4.3 4.2 5.0 4.2 5.3 4.3 5.5 4.3 5.6 4.3 5.6 4.3 5.6 Gross Domestic Product (GDP): Levels, dollar amounts in billions: Current dollars ................................................................ Real, chained (2000) dollars .......................................... Chained price index (2000=100), annual average ........ Percent change, fourth quarter over fourth quarter: Current dollars ................................................................ Real, chained (2000) dollars .......................................... Chained price index (2000=100) .................................... Percent change, year over year: Current dollars ................................................................ Real, chained (2000) dollars .......................................... Chained price index (2000=100) .................................... NA = Not Available. 1 Based on information available as of November 15, 2005. 2 Dividends, rent, interest, and proprietors’ income components of personal income. 3 Seasonally adjusted CPI for all urban consumers. 4 Percentages apply to basic pay only; 2004 figure is average of various rank- and longevity-specific adjustments; percentages to be proposed for years after 2007 have not yet been determined. 5 Overall average increase, including locality and special pay adjustments. Percentages to be proposed for years after 2007 have not yet been determined. 6 Average rate, secondary market (bank discount basis). the pace during 1996–2000 (2.5 percent) and not far from the average since the official productivity series began in 1947 (2.3 percent). Inflation: Inflation increased in 2005, in large part because of surging energy prices. With the recent easing of these prices, inflation is likely to be lower in 2006. On a year-over-year basis, the CPI is projected to increase 3.0 percent this year with the increase moderating to 2.4 to 2.5 percent a year through 2011. This inflation rate is lower than the average during each decade of the 1970s, 1980s, and 1990s. The GDP price index is projected to increase 2.2 or 2.1 percent in each year through 2011, slightly less than the CPI, which is the usual pattern. The forecast of low inflation reflects the current very low core inflation rate, modest inflationary expectations, the downward pressure on wages and prices due to both domestic and global competition, and the Federal Reserve’s focus on measured policy firming so as to avoid an over-heated economy. Interest Rates: Interest rates are projected to rise, as is the usual case during an expansion. The 3-month Treasury bill rate, which was 4.0 percent at the end of December, is expected to increase to 4.3 percent by 2008. The yield on the 10-year Treasury note, 4.3 percent at the end of last year, is projected to increase to 5.6 percent by 2009. The forecast rates are historically low: the projected averages for 3-month and 10-year Treasuries during 2006–2016 are lower than the averages for these instruments during each decade of the 1970s, 1980s, and 1990s. The relatively low projected yields are due largely to the relatively low projected inflation rate. Adjusted for inflation, the projected real interest rates are close to their historical averages. Income Shares: The share of labor compensation in GDP is projected to rise from its low level in 2005, while the share of corporate profits is projected to decline from the unusually high levels of 2005 and those anticipated for 2006. In recent years, growth of labor 170 ANALYTICAL PERSPECTIVES compensation adjusted for inflation has lagged the growth of productivity. During the projection period, however, labor compensation is expected to catch up, which would raise the labor share in GDP back to about its historical average. Among the components of labor compensation, the wage share in GDP is expected to rise from its recent low level while the share of supplements to wages and salaries is expected to remain at around the high level reached in 2005. The supplement share in GDP has risen because of rapidly growing health insurance contributions paid by employers and sharply higher employer ‘‘catch-up’’ contributions to defined-benefit pension plans. Corporate profits before tax jumped sharply as a share of GDP in 2005 primarily because of the end of the accelerated depreciation permitted by the 2002 and 2003 tax acts. Accelerated depreciation lowered profits before tax compared with what they otherwise would have been in 2003 and 2004 by allowing firms to write off more of their investment sooner. After 2004, however, corporate profits before tax will be higher than normal both because new investment will not qualify for the temporary acceleration and because the Table 12–2. remaining depreciation permitted on investment that used this provision will be less. Among the other income components, the share of personal interest income in GDP is projected to decline reflecting the low nominal interest rates of recent years. The remaining shares of the tax base (dividends, rental income, and proprietors’ income) are projected to remain relatively stable at around their 2005 levels. Comparison with CBO and Private-Sector Forecasts In addition to the Administration, the Congressional Budget Office (CBO) and many private-sector forecasters also make economic projections. CBO develops its projections to aid Congress in formulating budget policy. In the executive branch, this function is performed jointly by the Treasury, the Council of Economic Advisers, and the Office of Management and Budget. Private-sector forecasts are often used by businesses for long-term planning. Table 12–2 compares the 2007 Budget assumptions with projections by CBO and by the Blue Chip Consensus, an average of about 50 private-sector forecasts. COMPARISON OF ECONOMIC ASSUMPTIONS (Calendar years) Projections GDP (billions of current dollars): 2007 Budget ...................................................................................................................................... CBO January ..................................................................................................................................... Blue Chip Consensus January 2 ....................................................................................................... 2006 2007 2008 2009 2010 2011 13,210 13,263 13,237 13,949 13,960 13,939 14,713 14,696 14,703 15,493 15,455 15,505 16,310 16,208 16,372 17,177 16,954 17,280 Average, 2006–11 Real GDP (chain-weighted): 1 2007 Budget ...................................................................................................................................... CBO January ..................................................................................................................................... Blue Chip Consensus January 2 ....................................................................................................... 3.4 3.6 3.4 3.3 3.4 3.1 3.3 3.4 3.2 3.1 3.3 3.1 3.1 3.0 3.3 3.1 2.8 3.2 3.2 3.3 3.2 Chain-weighted GDP Price Index: 1 2007 Budget ...................................................................................................................................... CBO January ..................................................................................................................................... Blue Chip Consensus January 2 ....................................................................................................... 2.4 2.4 2.4 2.2 1.8 2.1 2.1 1.8 2.3 2.1 1.8 2.2 2.1 1.8 2.3 2.1 1.8 2.2 2.2 1.9 2.3 Consumer Price Index (all-urban): 1 2007 Budget ...................................................................................................................................... CBO January ..................................................................................................................................... Blue Chip Consensus January 2 ....................................................................................................... 3.0 2.8 2.9 2.4 2.1 2.4 2.4 2.2 2.5 2.4 2.2 2.5 2.4 2.2 2.4 2.5 2.2 2.5 2.5 2.3 2.5 Unemployment rate: 3 2007 Budget ...................................................................................................................................... CBO January ..................................................................................................................................... Blue Chip Consensus January 2 ....................................................................................................... 5.0 5.0 4.9 5.0 5.0 4.9 5.0 5.1 4.9 5.0 5.2 4.9 5.0 5.2 5.0 5.0 5.2 4.9 5.0 5.1 4.9 Interest rates: 3 91-day Treasury bills: 2007 Budget .................................................................................................................................. CBO January ................................................................................................................................ Blue Chip Consensus January 2 ................................................................................................... 4.2 4.5 4.5 4.2 4.5 4.5 4.3 4.4 4.4 4.3 4.4 4.3 4.3 4.4 4.4 4.3 4.4 4.4 4.3 4.4 4.4 10-year Treasury notes: 3 2007 Budget .................................................................................................................................. CBO January ................................................................................................................................ Blue Chip Consensus January 2 ................................................................................................... 5.0 5.1 4.9 5.3 5.2 5.0 5.5 5.2 5.3 5.6 5.2 5.3 5.6 5.2 5.4 5.6 5.2 5.4 5.4 5.2 5.2 Sources: Congressional Budget Office; Blue Chip Economic Indicators, Aspen Publishers, Inc. 1 Year-over-year percent change. 2 January 2006 Blue Chip Consensus forecast for 2006 and 2007; Blue Chip October 2005 long-run extension for 2008–2011. 3 Annual averages, percent. 171 12. ECONOMIC ASSUMPTIONS The three sets of economic assumptions are based on different underlying assumptions concerning economic policies. The Administration forecast generally assumes that the President’s Budget proposals will be enacted. In contrast, the CBO baseline projection assumes that current law as of the time the estimates are made remains unchanged. Despite their differing policy assumptions, the three sets of economic projections, shown in Table 12–2, are very close. The similarity of the Budget economic projection to both the CBO baseline projection and the Consensus forecast underscores the conservative nature of the Administration forecast. For real GDP, the Administration, CBO, and the Blue Chip Consensus anticipate solid growth this year. The Administration projects 3.4 percent growth on a yearover-year basis, the same as the private sector consensus and slightly below CBO’s forecast. For calendar year 2007, the Administration, at 3.3 percent, is between the consensus (at 3.1 percent), and CBO’s 3.4 percent. Thereafter, the Administration’s projection is very close to the consensus growth rate but below CBO’s through 2009. Over the six-year span as a whole, the Administration, CBO and the private sector consensus all project 3.2 or 3.3 percent average annual growth rates. All three forecasts anticipate continued low inflation in the range of 1.8 to 2.4 percent as measured by the GDP price index; and, after 2006, between 2.2 and 2.5 percent as measured by the CPI, with CBO lower than the Administration and the private sector consensus, which are close to each other. The three unemployment rate projections are also similar with a projected rate near 5 percent throughout the forecast. All three project slightly rising interest rates during the next few years, with the Administration’s long term rates slightly above the Blue Chip’s and CBO’s slightly below, and the short term rate forecasts nearly identical. Changes in Economic Assumptions The economic assumptions underlying this Budget are similar to those of the 2006 Budget, as shown in Table 12–3. Real GDP growth is now expected to be 3.4 percent in 2006 on a year-over-year basis compared to 3.5 percent forecast in last year’s Budget, and to moderate gradually to 3.1 percent in the outyears. Consequently, the levels of real GDP projected this year are little changed from those of the 2006 Budget when allowance is made for the Commerce Department’s historical revisions to the National Income and Product Accounts released in July 2005. The level of nominal GDP is now projected to be higher than in the 2006 Budget because of a faster-than-expected rise in the GDP price index last year and slightly higher projected GDP inflation in the coming years. The unemployment rate projection is virtually identical to last year’s. Where the 2006 Budget had the rate level at 5.1 percent in future years, the rate is now projected to remain at the relatively low average of 5.0 percent recorded for the last nine months of 2005. Interest rates are expected to trend upward, as before. The 3-month Treasury bill rate is now projected to rise to 4.3 percent by 2008, where before it reached that level only in 2011; and the yield on the 10-year Treasury note is expected to rise only to 5.6 percent, not 5.7 percent. Structural and Cyclical Balances When the economy is operating below potential, the unemployment rate exceeds the long-run sustainable average consistent with price stability. As a result, receipts are lower than they would be if resources were more fully employed, and outlays for unemploymentsensitive programs (such as unemployment compensation and food stamps) are higher; the deficit is larger (or the surplus is smaller) than would be the case if the unemployment rate were at its sustainable longrun average. The portion of the deficit (or surplus) that can be traced to this factor can be called the cyclical component. The portion that would remain if the unemployment rate was at its long-run value is then called the structural deficit (or structural surplus). Historically, the structural balance has often provided a clearer understanding of the stance of fiscal policy than has the unadjusted budget balance which includes a cyclical component. In the typical post-World War II business cycle, the structural balance has provided a clearer gauge of the surplus or deficit that would persist in the long run with the economy operating at the sustainable level of unemployment. Conventional estimates of the structural balance are based on the historical relationship between changes in the unemployment rate and real GDP growth on the one hand, and receipts and outlays on the other. For various reasons, these estimated relationships do not take into account all of the cyclical changes in the economy. One example of a cyclical phenomenon not captured in these estimates was the sharply rising stock market during the second half of the 1990s. It boosted capital gains-related receipts and pulled down the deficit. The subsequent fall in the stock market reduced receipts and added to the deficit. Some of this rise and fall was cyclical in nature. It is not possible, however, to estimate the cyclical component of the stock market accurately, and for that reason, all of the stock market’s contribution to receipts is counted in the structural balance. Other factors unique to the current economic cycle provide other examples of less-than-complete cyclical adjustment. The extraordinary fall-off in labor force participation, from 67.1 percent of the U.S. population in 1997–2000 to 66.0 percent in 2004–2005, appears to be at least partly cyclical in nature, and most forecasters are assuming some rebound in labor force participation as the expansion continues. Since the official unemployment rate does not include workers who have left the labor force, the conventional measures of potential GDP, incomes, and Government receipts understate the extent to which potential work hours have been 172 ANALYTICAL PERSPECTIVES Table 12–3. COMPARISON OF ECONOMIC ASSUMPTIONS IN THE 2006 AND 2007 BUDGETS (Calendar years; dollar amounts in billions) 2005 Nominal GDP: 2006 Budget assumptions 1 .................................................................................... 2007 Budget assumptions ...................................................................................... Real GDP (2000 dollars): 2006 Budget assumptions 1 .................................................................................... 2007 Budget assumptions ...................................................................................... Real GDP (percent change): 2 2006 Budget assumptions ...................................................................................... 2007 Budget assumptions ...................................................................................... GDP price index (percent change): 2 2006 Budget assumptions ...................................................................................... 2007 Budget assumptions ...................................................................................... Consumer Price Index (percent change): 2 2006 Budget assumptions ...................................................................................... 2007 Budget assumptions ...................................................................................... Civilian unemployment rate (percent): 3 2006 Budget assumptions ...................................................................................... 2007 Budget assumptions ...................................................................................... 91-day Treasury bill rate (percent): 3 2006 Budget assumptions ...................................................................................... 2007 Budget assumptions ...................................................................................... 10-year Treasury note rate (percent): 3 2006 Budget assumptions ...................................................................................... 2007 Budget assumptions ...................................................................................... 1 Adjusted 2006 2007 2008 2009 2010 2011 12,401 12,482 13,093 13,210 13,808 13,949 14,548 14,713 15,318 15,493 16,124 16,310 16,976 17,177 11,149 11,139 11,540 11,514 11,922 11,896 12,303 12,284 12,688 12,669 13,081 13,062 13,487 13,467 3.6 3.6 3.5 3.4 3.3 3.3 3.2 3.3 3.1 3.1 3.1 3.1 3.1 3.1 2.0 2.7 2.0 2.4 2.1 2.2 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.0 3.4 2.3 3.0 2.4 2.4 2.4 2.4 2.4 2.4 2.4 2.4 2.5 2.5 5.3 5.1 5.2 5.0 5.1 5.0 5.1 5.0 5.1 5.0 5.1 5.0 5.1 5.0 2.7 3.2 3.5 4.2 3.8 4.2 4.0 4.3 4.1 4.3 4.2 4.3 4.3 4.3 4.6 4.3 5.2 5.0 5.4 5.3 5.5 5.5 5.6 5.6 5.6 5.6 5.7 5.6 for July 2005 NIPA revisions. 2 Year-over-year. 3 Calendar year average. under-utilized in the current expansion to date because of the decline in labor force participation. A third example is the fall-off in the wage and salary share of GDP, from 49.2 percent in 2000 to 45.6 percent in the second quarter of 2004. Again, this change is widely suspected to be partly cyclical. Since Federal taxes depend heavily on wage and salary income, the larger-than-predicted decline in the wage share of GDP suggests that the true cyclical component of the deficit is understated for this reason as well. There are also lags in the collection of tax revenue that can delay the impact of cyclical effects beyond the year in which they occur. The result is that even after the unemployment rate has fallen, receipts may Table 12–4. remain cyclically depressed for some time until these lagged effects have dissipated. For all these reasons, the current estimates of the cyclical deficit are probably understated. The current unemployment gap is believed to be zero, and the Administration forecasts that it will remain so, but in the broader sense discussed above, the cyclical gap in receipts is likely to still be large and only slowly shrinking. During fiscal years 2000 and 2001, the unemployment rate appears to have been lower than could be sustained in the long run. Therefore, as shown in Table 12–4, in those years the structural surplus was smaller than the actual surplus, which was enlarged by the boost to receipts and the reduction in outlays associated with the low level of unemployment. ADJUSTED STRUCTURAL BALANCE (In billions of dollars) 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Unadjusted surplus or deficit (–) ...................................... Cyclical component ....................................................... 236.2 134.6 128.2 80.8 –157.8 –47.0 –377.6 –91.4 –412.7 –51.6 –318.3 –19.3 –423.2 –5.0 –354.2 –0.8 –223.3 ............ –207.6 ............ –182.7 ............ –204.9 ............ Structural surplus or deficit (–) ......................................... Deposit insurance outlays ............................................ 101.6 3.1 47.5 1.6 –110.8 1.0 –286.2 1.4 –361.2 2.0 –299.0 1.4 –418.2 1.3 –353.4 1.8 –223.3 1.8 –207.6 1.7 –182.7 2.8 –204.9 3.7 Adjusted structural surplus or deficit (–) .......................... 104.7 49.0 –109.8 –284.8 –359.2 –297.6 –416.9 –351.6 –221.5 –205.8 –179.9 –201.2 NOTE: The NAIRU is assumed to be 5.0 percent 173 12. ECONOMIC ASSUMPTIONS Sensitivity of the Budget to Economic Assumptions Both receipts and outlays are affected by changes in economic conditions. This sensitivity complicates budget planning because errors in economic assumptions lead to errors in the budget projections. It is therefore useful to examine the implications of possible changes in economic assumptions. Many of the budgetary effects of such changes are fairly predictable, and a set of rules of thumb embodying these relationships can aid in estimating how changes in the economic assumptions would alter outlays, receipts, and the surplus or deficit. These rules of thumb should be understood as suggesting orders of magnitude; they ignore a long list of secondary effects that are not captured in the estimates. Economic variables that affect the budget do not usually change independently of one another. Output and employment tend to move together in the short run: a high rate of real GDP growth is generally associated with a declining rate of unemployment, while slow or negative growth is usually accompanied by rising unemployment. In the long run, however, changes in the average rate of growth of real GDP are mainly due to changes in the rates of growth of productivity and the labor force, and are not necessarily associated with changes in the average rate of unemployment. Inflation and interest rates are also closely interrelated: a higher expected rate of inflation increases interest rates, while lower expected inflation reduces interest rates. Changes in real GDP growth or inflation have a much greater cumulative effect on the budget over time if they are sustained for several years than if they last for only one year. Highlights of the budgetary effects of the above rules of thumb are shown in Table 12–5. For real growth and employment: • As shown in the first block, if in 2006 for one year only, real GDP growth is lower by one percentage point and the unemployment rate permanently rises by one-half percentage point relative to the budget assumptions, the fiscal year 2006 deficit is estimated to increase by $15.8 billion; receipts in 2006 would be lower by $12.6 billion, and outlays would be higher by $3.2 billion, primarily for unemployment-sensitive programs. In fiscal year 2007, the estimated receipts shortfall would grow further to $26.6 billion, and outlays would increase by $8.9 billion relative to the base, even though the growth rate in calendar year 2007 equaled the rate originally assumed. This is because the level of real (and nominal) GDP and taxable incomes would be permanently lower, and unemployment permanently higher. The budget effects (including growing interest costs associated with larger deficits) would continue to grow slightly in each successive year. During 2006–2011, the cumulative increase in the budget deficit is estimated to be $236 billion. • The budgetary effects are much larger if the real growth rate is permanently reduced by one per- • • • • centage point and the unemployment rate is unchanged, as shown in the second block. This scenario might occur if trend productivity were permanently lowered. In this example, during 2006–2011, the cumulative increase in the budget deficit is estimated to be $662 billion. The third block shows the effect of a one percentage point higher rate of inflation and one percentage point higher interest rates during calendar year 2006 only. In subsequent years, the price level and nominal GDP would be one percent higher than in the base case, but interest rates and future inflation rates are assumed to return to their base levels. In 2006 and 2007, outlays would be above the base by $11.2 billion and $19.3 billion, respectively, due in part to lagged cost-ofliving adjustments. Receipts would rise by only $16.6 billion in 2006, due to the temporary effect of higher interest rates on financial corporations’ profits and taxes, but then would rise by $44.4 billion above the base in 2007 due to the sustained effects of inflation on the tax base, resulting in a $25.1 billion improvement in the 2007 budget balance. In subsequent years, the amounts added to receipts would continue to be larger than the additions to outlays. During 2006–2011, cumulative budget deficits would be $123 billion smaller than in the base case. In the fourth block example, the rate of inflation and the level of interest rates are higher by one percentage point in all years. As a result, the price level and nominal GDP rise by a cumulatively growing percentage above their base levels. In this case, the effects on receipts and outlays mount steadily in successive years, adding $362 billion to outlays over 2006–2011 and $783 billion to receipts, for a net decrease in the 2006–2011 deficits of $421 billion. The outlay effects of a one percentage point increase in interest rates alone are shown in the fifth block. The receipts portion of this rule-ofthumb is due to the Federal Reserve’s deposit of earnings on its securities portfolio and the effect of interest rate changes on financial corporations’ profits (and taxes). The sixth block shows that a sustained one percentage point increase in the GDP price index and in CPI inflation decrease cumulative deficits by a substantial $429 billion during 2006–2011. This large effect is because the receipts from a higher tax base exceed the combination of higher outlays from mandatory cost-of-living adjustments and lower receipts from CPI indexation of tax brackets. The separate effects of higher inflation and higher interest rates in the fifth and sixth blocks do not sum to the effects for simultaneous changes in both in the fourth block. This occurs largely because the gains in budget receipts due to higher inflation result in higher debt service savings when interest rates are assumed to be higher as 174 ANALYTICAL PERSPECTIVES well (the combined case) than when interest rates are assumed to be unchanged (the separate case). The last entry in the table shows rules of thumb for the added interest cost associated with changes in the budget deficit. Table 12–5. The effects of changes in economic assumptions in the opposite direction are approximately symmetric to those shown in the table. The impact of a one percentage point lower rate of inflation or higher real growth would have about the same magnitude as the effects shown in the table, but with the opposite sign. SENSITIVITY OF THE BUDGET TO ECONOMIC ASSUMPTIONS (Fiscal years; in billions of dollars) Budget effect Real Growth and Employment Budgetary effects of 1 percent lower real GDP growth: (1) For calendar year 2006 only: 1 Receipts ....................................................................................................................................... Outlays ........................................................................................................................................ 2006 2007 2008 2009 2010 2011 Total of Effects, 2006–2011 –12.6 3.2 –26.6 8.9 –30.2 9.8 –32.1 11.9 –34.2 14.0 –36.3 16.2 –172.1 64.0 Increase in deficit (–) ............................................................................................................. (2) Sustained during 2006–2011, with no change in unemployment: Receipts ....................................................................................................................................... Outlays ........................................................................................................................................ –15.8 –35.5 –39.9 –44.0 –48.3 –52.5 –236.0 –12.8 0.2 –41.8 1.0 –77.7 3.3 –117.3 7.3 –161.5 12.0 –209.8 17.8 –620.8 41.5 Increase in deficit (–) ............................................................................................................. Inflation and Interest Rates Budgetary effects of 1 percentage point higher rate of: (3) Inflation and interest rates during calendar year 2006 only: Receipts ....................................................................................................................................... Outlays ........................................................................................................................................ –12.9 –42.8 –80.9 –124.5 –173.5 –227.6 –662.3 16.6 11.2 44.4 19.3 40.2 14.6 32.8 13.3 35.0 12.9 37.1 12.3 206.1 83.5 Decrease in deficit (+) ............................................................................................................ (4) Inflation and interest rates, sustained during 2006–2011: Receipts ....................................................................................................................................... Outlays ........................................................................................................................................ 5.4 25.1 25.7 19.6 22.1 24.8 122.6 16.6 11.7 65.2 35.2 111.6 54.0 151.6 70.4 194.6 86.9 243.3 103.8 783.0 361.9 Decrease in deficit (+) ............................................................................................................ (5) Interest rates only, sustained during 2006–2011: Receipts ....................................................................................................................................... Outlays ........................................................................................................................................ 4.9 30.0 57.7 81.3 107.7 139.5 421.0 3.9 8.6 24.1 24.4 36.5 34.2 38.9 40.3 39.2 45.4 40.6 49.7 183.3 202.8 Increase in deficit (–) ............................................................................................................. (6) Inflation only, sustained during 2006–2011: Receipts ....................................................................................................................................... Outlays ........................................................................................................................................ –4.7 –0.3 2.2 –1.4 –6.2 –9.2 –19.5 12.6 3.1 41.0 11.1 74.9 20.5 112.4 31.6 154.9 44.2 202.2 58.3 598.2 168.8 Decrease in deficit (+) ............................................................................................................ Interest Cost of Higher Federal Borrowing (7) Outlay effect of $100 billion increase in borrowing in 2006 ........................................................ 9.5 29.9 54.4 80.8 110.8 143.9 429.4 2.2 4.6 4.9 5.2 5.5 5.8 28.2 1 The unemployment rate is assumed to be 0.5 percentage point higher per 1.0 percent shortfall in the level of real GDP. 13. STEWARDSHIP Introduction The budget is an essential tool for allocating resources within the Federal Government and between the public and private sectors, but current outlays, receipts, and the deficit give at best a partial picture of the Government’s financial condition. Indeed, changes in the annual budget deficit or surplus can be misleading. For example, the temporary shift from annual deficits to surpluses in the late 1990s did nothing to correct the long-term fiscal deficiencies in the major entitlement programs, which are the major source of the long-run shortfall in Federal finances. This would have been more apparent at the time if greater attention had been focused on long-term measures such as those presented in this chapter. As important as the current budget surplus or deficit is, other indicators are also needed to judge the Government’s fiscal condition. For the Federal Government, unfortunately, there is no single number that corresponds to a business’s bottom line. The Government is judged by how its actions affect the country’s security and well-being, and that cannot easily be summed up with a single statistic. Also, even though its financial condition is important, the Government is not expected to earn a profit. Its financial status is best evaluated using a broad range of data and several complementary perspectives. This chapter presents a framework for such analysis. Because there are serious limitations on the available data and the future is uncertain, this chapter’s findings should be interpreted with caution; its conclusions are subject to future revision. The chapter consists of four parts: • Part I explains how the separate pieces of analysis link together. Chart 13–1 is a schematic diagram showing the linkages. • Part II presents estimates of the Government’s assets and liabilities, which are shown in Table 13–1. This table is similar to a business balance sheet, but for that reason it cannot reveal some of the Government’s unique financial features and needs to be supplemented by the information in Parts III and IV. • Part III shows possible long-run paths for the Federal budget. These projections vary depending on alternative economic and demographic assumptions. The projections are summarized in Table 13–2 and in a related set of charts. Table 13–3 shows present value estimates of the funding shortfall in Social Security and Medicare. Together these data indicate the scope of the Government’s future responsibilities and the resources it will have available to discharge them under current law and policy. In particular, they show the looming long-run fiscal challenge posed by the Federal entitlement programs. • Part IV returns the focus to the present. It presents information on national economic and social conditions. The private economy is the ultimate source of the Government’s resources. Table 13–4 gives a summary of total national wealth, while highlighting the Federal investments that have contributed to that wealth. Table 13–5 shows trends in wealth and Table 13–6 presents a small sample of statistical indicators. PART I—A FRAMEWORK TO EVALUATE FEDERAL FINANCES No single framework can encompass all of the factors that affect the financial condition of the Federal Government, but the framework presented here is reasonably comprehensive and it offers a useful way to examine the financial implications of Federal policies. This framework includes balance-sheet information, but it also includes long-run projections of the entire budget showing where future fiscal strains are most likely to appear. It includes measures of national wealth, which support future income and tax receipts, and an array of economic and social indicators showing potential pressure points that may require future policy responses. The Government’s legally binding obligations—its liabilities—consist in the first place of Treasury debt. Other liabilities include the pensions and medical benefits owed to retired Federal employees and veterans. These employee obligations are a form of deferred compensation; they have counterparts in the business world, and would appear as liabilities on a business balance sheet. Accrued obligations for Government insurance policies and the estimated present value of failed loan guarantees and deposit insurance claims are also analogous to private liabilities. These Government liabilities are discussed further in Part II along with the Government’s assets. The liabilities and assets are collected in Table 13–1. The liabilities shown in Table 13–1 are only a subset of the Government’s overall financial responsibilities. Indeed, the full extent of the Government’s fiscal exposure through programmatic commitments dwarfs the outstanding total of all acknowledged Federal liabilities. The commitments to Social Security and Medicare alone amount to many times the value of Federal debt held by the public. 175 176 In addition to Social Security and Medicare, the Government has a broad range of programs that dispense cash and other benefits to individual recipients. A few examples of such programs are Medicaid, food stamps, veterans’ pensions and health care. The Government also provides a wide range of public services that must be financed through the tax system. It is true that specific programs may be modified or even ended at any time by the Congress and the President, and changes in the laws governing these programs are a regular part of the legislative cycle. For this reason, these programmatic commitments do not constitute ‘‘liabilities’’ in a legal or accounting sense, and they would not appear on a balance sheet. They are Federal responsibilities, however, and will have a claim on budgetary resources for the foreseeable future. All of the Government’s existing programs are reflected in the long-run budget projections in Part III. It would be misleading to leave out any of these programmatic commitments in projecting future claims on the Government or in calculating the Government’s long-run fiscal balance. The Federal Government has many assets. These include financial assets, such as loans and mortgages which have been acquired through various credit programs. They also include the plant and equipment used to produce Government services. The Government also owns a substantial amount of land. Such assets would normally be shown on a balance sheet. The Government also has resources in addition to those that might be expected to appear on a balance sheet. These additional resources include most importantly the Government’s sovereign power to tax. Because of its unique responsibilities and resources, the most revealing way to analyze the future strains on the Government’s fiscal position is to make a longrun projection of the entire Federal budget. Part III of this chapter presents a set of such projections under different assumptions about policy and future economic and demographic conditions. Over long periods of time, the spending of the Government must be financed by the taxes and other receipts it collects. Although the Government can borrow for temporary periods, it must pay interest on any such borrowing, which adds to future spending. In the long run, a solvent Government must pay for its spending out of its receipts. The projections in Part III show that under an extension of the estimates in this Budget, long-run balance in this sense is not achieved, mostly because projected spending for Social Security, Medicare, and Medicaid grow faster than the revenue available to pay for them. The long-run budget projections and the table of assets and liabilities are silent on the question of whether the public is receiving value for its tax dollars or whether Federal assets are being used effectively. Information on those points requires performance measures for Government programs supplemented by appropriate information about conditions in the economy and society. Recent changes in budgeting practices have contributed to the goal of providing more information about Govern- ANALYTICAL PERSPECTIVES ment programs and will permit a closer alignment of the cost of programs with performance measures. These changes have been described in detail in previous Budgets. They are reviewed in chapter 2 of this volume, and in the accompanying material that describes results obtained with the Program Assessment Rating Tool (PART). This Stewardship chapter complements the detailed exploration of Government performance with an assessment of the overall impact of Federal policy as reflected in general measures of economic and social well-being, shown in Table 13–6. Relationship with FASAB Objectives The framework presented here meets the stewardship objective for Federal financial reporting recommended by the Federal Accounting Standards Advisory Board (FASAB) and adopted for use by the Federal Government in September 1993. 1 Federal financial reporting should assist report users in assessing the impact on the country of the government’s operations and investments for the period and how, as a result, the government’s and the Nation’s financial conditions have changed and may change in the future. Federal financial reporting should provide information that helps the reader to determine: 3a. Whether the government’s financial position improved or deteriorated over the period. 3b. Whether future budgetary resources will likely be sufficient to sustain public services and to meet obligations as they come due. 3c. Whether government operations have contributed to the nation’s current and future well-being. The presentation here is an experimental approach for meeting this objective at the Government-wide level. It is intended to meet the broad interests of economists and others in evaluating trends over time, including both past and future trends. The annual Financial Report of the United States Government presents related information, but from a different perspective. The Financial Report includes a balance sheet. The assets and liabilities on that balance sheet are all based on transactions and other events that have already occurred. A similar table can be found in Part II of this chapter but based on different data and methods of valuation. The Financial Report also includes a statement of social insurance that reviews a substantial body of information on the condition and sustainability of the Government’s social insurance programs. The Report, however, does not extend that review to the condition or sustainability of the Government as a whole, which is a main focus of this chapter, and it does not try to relate the Government’s assets and liabilities to private wealth or broader economic and social conditions. Connecting the Dots: The presentation that follows is constructed around a series of tables and charts. The schematic diagram, Chart 13–1, shows how the different pieces fit together. The tables and charts should be viewed as an ensemble, the main elements 1 Statement of Federal Financial Accounting Concepts, Number 1, Objectives of Federal Financial Reporting, September 2, 1993. Other objectives are budgetary integrity, operating performance, and systems and controls. . 177 13. STEWARDSHIP of which are grouped in two broad categories—assets/ resources and liabilities/responsibilities. • The left-hand side of Chart 13–1 shows the full range of Federal resources, including assets the Government owns, tax receipts it can expect to collect given current and proposed law, and national wealth, including the trained skills of the national work force, that provide the base for Government revenues. • The right-hand side reveals the full range of Federal obligations and responsibilities, beginning with the Government’s acknowledged liabilities from past actions, such as the debt held by the public, and including future budget outlays needed to maintain present policies and trends. This column ends with a set of indicators highlighting areas where Government activity affects society or the economy. Chart 13-1. The Financial Condition of the Federal Government and the Nation Assets/Resources Liabilities/Responsibilities Federal Assets Federal Liabilities Financial Assets Monetary Assets Mortgages and Other Loans Other Financial Assets Less Expected Loan Losses Physical Assets Financial Liabilities Debt Held by the Public Federal Governmental Assets and Liabilities (Table 13-1) Fixed Reproducible Capital Defense Nondefense Federal Retiree Pension and Health Insurance Liabilities Inventories Miscellaneous Non-reproducible Capital Land Mineral Rights Resources/Receipts Projected Receipts Net Balance Long-Run Federal Budget Projections (Table 13-2) Actuarial Deficiencies in Social Security and Medicare (Table 13-3) Federally Owned Physical Assets National Wealth (Tables 13-4 and 13-5) Privately Owned Physical Assets Education Capital Federal Contribution R&D Capital Federal Contribution Responsibilities/Outlays Projected Outlays Surplus/Deficit Actuarial Deficiencies in Social Security and Medicare National Needs/Conditions National Assets/Resources State & Local Govt. Physical Assets Federal Contribution Guarantees and Insurance Deposit Insurance Pension Benefit Guarantees Loan Guarantees Other Insurance Social Indicators (Table 13-6) Indicators of economic, social, educational, and environmental conditions 178 ANALYTICAL PERSPECTIVES QUESTIONS AND ANSWERS ABOUT THE GOVERNMENT’S STEWARDSHIP 1. According to Table 13–1, the Government’s liabilities exceed its assets. No business could operate in such a fashion. Why does the Government not manage its finances more like a business? The Federal Government has different objectives from a business firm. The goal of every business is to earn a profit, and as a general rule the Federal Government properly leaves activities at which a profit could be earned to the private sector. For the vast bulk of the Federal Government’s operations, it would be difficult or impossible to charge prices that would even cover all its expenses. The Government undertakes these activities not to improve its balance sheet, but to benefit the Nation. For example, the Government invests in education and research, but it earns no direct return from these investments. People are enriched by these investments, but the returns do not show up as an increase in Government assets rather as an increase in the general state of knowledge and in the capacity of the country’s citizens to earn a living and lead a fuller life. Business investment motives are quite different; business invests to earn a profit for itself, not others, and if its investments are successful, their value will be reflected in its balance sheet. Because the Federal Government’s objectives are different, its balance sheet behaves differently, and should be interpreted differently. 2. Table 13–1 seems to imply that the Government is insolvent. Is it? No. Just as the Federal Government’s responsibilities are different from those of private business, so are its resources. Government solvency must be evaluated in different terms. What Table 13–1 shows is that those Federal obligations that are most comparable to the liabilities of a business corporation exceed the estimated value of the assets actually owned by the Federal Government. The Government, however, has access to other resources through its sovereign powers. These powers, which include taxation, will allow the Government to meet its present obligations and those that are anticipated from future operations even though the Government’s current assets are less than its current liabilities. Private financial markets clearly recognize this reality. The Federal Government’s implicit credit rating is among the best in the world; lenders are willing to lend it money at interest rates substantially below those charged to private borrowers. This would not be true if the Government were really insolvent or likely to become so. Where governments totter on the brink of insolvency, lenders are either unwilling to lend them money, or do so only in return for a substantial interest premium. 179 13. STEWARDSHIP QUESTIONS AND ANSWERS ABOUT THE GOVERNMENT’S STEWARDSHIP 3. 4. Why are Social Security and Medicare not shown as Government liabilities in Table 13–1? Future Social Security and Medicare benefits may be considered as promises or responsibilities of the Federal Government, but these benefits are not a liability in a legal or accounting sense. The Government has unilaterally decreased as well as increased these benefits in the past, and future reforms could alter them again. These benefits are reflected in this presentation of the Government’s finances, but they are shown elsewhere than in Table 13–1. They appear in two ways: as part of the overall budget projections in Table 13–2, and in the actuarial deficiency estimates in Table 13–3. Other Federal programs make similar promises to those of Social Security and Medicare—Medicaid, for example. Few have suggested counting future benefits expected under these programs as Federal liabilities, yet it would be difficult to justify a different accounting treatment for them if Social Security or Medicare were to be classified as a liability. There is no bright line dividing Social Security and Medicare from other programs that promise benefits to people, and all the Government programs that do so should be accounted for similarly. Also, if Social Security and Medicare benefits were treated as liabilities, then payroll tax receipts earmarked to finance those benefits ought to be treated as assets. This treatment would be essential to gauge the size of the future claim. Tax receipts, however, are not generally considered to be Government assets, and for good reason: the Government does not own the wealth on which future taxes depend. Including taxes on the balance sheet would be wrong for this reason, but without counting taxes the balance sheet would overstate the drain on net assets from Social Security and Medicare benefits. Furthermore, treating taxes for Social Security or Medicare differently from other taxes would be highly questionable. Finally, under Generally Accepted Accounting Principles (GAAP), Social Security is not considered to be a liability, so not counting it as such in this chapter is consistent with accounting standards. Why doesn’t the Federal Government follow normal business practice in its bookkeeping? The Government is not a business, and accounting standards designed to illuminate how much a business earns and how much equity it has could provide misleading information if applied naively to the Government. The Government does not have a ‘‘bottom line’’ comparable to that of a business corporation, but the Federal Accounting Standards Advisory Board (FASAB) has developed, and the Government has adopted, a conceptual accounting framework that reflects the Government’s distinct functions and answers many of the questions for which Government should be accountable. This framework addresses budgetary integrity, operating performance, stewardship, and systems and controls. FASAB has also developed, and the Government has adopted, a full set of accounting standards. Federal agencies now issue audited financial reports that follow these standards and an audited Government-wide financial report is issued as well. In short, the Federal Government does follow generally accepted accounting principles (GAAP) just as businesses and State and local governments do, although the relevant principles differ depending on the circumstances. This chapter is intended to address the ‘‘stewardship objective’’—assessing the interrelated condition of the Federal Government and the Nation. The data in this chapter illuminate the trade-offs and connections between making the Federal Government ‘‘better off’’ and making the Nation ‘‘better off.’’ 180 ANALYTICAL PERSPECTIVES QUESTIONS AND ANSWERS ABOUT THE GOVERNMENT’S STEWARDSHIP 5. When the baby boom generation retires, the deficit could become much larger than it ever was before. How is this reflected in the current evaluation of the Government’s financial condition? The aging of the population will become dramatically evident when the baby boomers begin to retire, and this demographic transition poses serious long-term problems for Federal entitlement programs and the budget. Both the long-range budget projections shown in this chapter and the actuarial projections prepared for Social Security and Medicare indicate how serious the problem is. It is clear from this information that reforms are needed in these programs to meet the longterm challenges. 6. Does it make sense for the Government to finance needed capital by borrowing, which would permit a deficit in the budget, so long as the borrowing did not exceed the amount spent on investments? This rule might not permit much extra borrowing. Even if the Government financed new capital by borrowing, it would need to pay off the debt incurred in this way as the capital was used up. Only the net investment the Government does after subtracting capital consumption would be financed with a net increase in borrowing. As discussed in Chapter 6, recently Federal net investment in physical capital has not been very large and occasionally it has even been negative, so little if any deficit spending would have been justified by this borrowing-for-investment criterion, at least in recent years. The Federal Government also funds substantial amounts of physical capital that it does not own, such as highways and research facilities, and it funds investment in intangible ‘‘capital’’ such as education and training and the conduct of research and development. A private business would never borrow to spend on assets that would be owned by someone else. However, such spending is today a principal function of the Federal Government. It is not clear whether this type of capital investment would fall under the borrowing-for-investment criterion, even though they are an important part of national wealth. There is another difficulty with the logic of borrowing to invest. Businesses expect investments to earn a return large enough to cover their cost. In contrast, the Federal Government does not generally expect to receive a direct payoff from its investments, whether or not it owns them. In this sense, investments are no different from other Government expenditures, and the fact that they provide services over a longer period of time is no justification for excluding them when calculating the surplus or deficit. Finally, the Federal Government pursues policies that support the overall economic well-being of the Nation and its security interests. For such reasons, the Government may deem it desirable to run a budget surplus, even if this means paying for its own investments from current receipts, and there will be other times when it is necessary to run a deficit, even one that exceeds Government net investment. Considerations in addition to the size of Federal investment must be weighed in choosing the right level of the surplus or deficit. 181 13. STEWARDSHIP PART II—THE FEDERAL GOVERNMENT’S ASSETS AND LIABILITIES Table 13–1 takes a backward look at the Government’s assets and liabilities summarizing what the Government owes as a result of its past operations netted against the value of what it owns. The table gives some perspective by showing these net asset figures for a number of years beginning in 1960. To ensure comparability across time, the assets and liabilities are measured in terms of constant FY 2005 dollars and the balance is also shown as a ratio to GDP. Govern- ment liabilities have exceeded the value of assets (see chart 13–2) over this entire period, but, in the late 1970s, a speculative run-up in the prices of oil and other real assets temporarily boosted the value of Federal holdings. When those prices subsequently declined, real Federal asset values declined and only recently have they regained the level they had reached in the mid-1980s. Chart 13-2. Net Federal Liabilities Percent of GDP 55 50 45 40 35 30 25 20 Currently, the total real value of Federal assets is estimated to be 77 percent greater than it was in 1960. Meanwhile, Federal liabilities have increased by 244 percent in real terms. The decline in the Federal net asset position has been partly due to persistent Federal budget deficits that have boosted debt held by the public most years since 1960. Other factors have also been important such as large increases in health benefits promised for Federal retirees and the sharp rise in veterans’ disability compensation. The relatively slow growth in Federal asset values also helped reduce the net asset position. The shift from budget deficits to budget surpluses in the late 1990s temporarily checked the decline in Federal net assets. Currently, the net excess of liabilities over assets is about $5.7 trillion or about $19,000 per capita. As a ratio to GDP, the excess of liabilities over assets reached a peak of 52 percent in 1993; it declined to 38 percent in 2000; it rose to 46 percent in 2003; and it has declined slightly since then to around 45 percent of GDP at the end of 2005. The average since 1960 has been 36 percent (see
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