USDA FOREST SERVICE : Strategic Planning and Resource Assessment

Management's Discussion and Analysis

Forest Service’s Financial Highlights for 2003

The Forest Service annually produces a series of financial statements to summarize the financial activity and associated financial position of the agency. The principal statements include a Consolidated Balance Sheet, Statement of Net Cost, Statement of Change in Net Position, Statement of Budgetary Resources, and Statement of Financing. The agency’s goal in producing these statements is to provide relevant, reliable, and accurate financial information related to Forest Service activities. The USDA Forest Service restated its FY 2002 financial statements. The tables below reflect the restated amounts for FY 2002.

Through analysis of the agency’s September 30, 2003, and September 30, 2002, financial statements, the following key points are highlighted.

Assets

The Forest Service reports $7.3 billion in assets at the end of September 30, 2003. This represents an increase of 6 percent over fiscal year 2002 amounts. This change is attributed to an increase in Fund Balance with Treasury because of higher appropriations from Congress, some of which were received at year-end.

The three major asset categories are shown in the table below.

Exhibit 1: Assets
 

2003

2002

Difference

 

(In Millions)

Dollars

Percentages

General Property, Plant and Equipment

$3,851

$3,909

$(58)

(1)%

Fund Balance with Treasury

3,293

2,825

468

17%

Accounts Receivable, Intragovernmental and other

152

122

31

25%

 

 

 

 

 

Total of Major Categories

$7,296

$6,856

$441

6%

 

 

 

 

 

Other Asset Categories

15

32

(17)

(53)%

Grand Total Assets

$7,311

$6,888

$423

6%

General Property, Plant and Equipment (General PP&E) consists primarily of forest road surface improvements, culverts, bridges, campgrounds, administrative buildings, other structures, and equipment. The Fund Balance with Treasury consists primarily of funds derived from congressional appropriations and funds held in trust for accomplishing purposes specified by law. Finally, Accounts Receivable consists of amounts due from other Federal entities or the public as a result of the delivery of goods, or services, and specific activities performed by the Forest Service.

General PP&E includes assets acquired by the Forest Service to be used for conducting business activities, such as providing goods or services. General PP&E does not include the value of heritage assets (agency assets that are historical or significant for their natural, cultural, aesthetic, or other important attributes that are expected to be preserved indefinitely) or the value of stewardship assets (primarily land held by the agency as part of the NFS and not acquired for, or in connection with, other General PP&E). Although heritage and stewardship assets may be considered priceless, they do not have a readily identifiable financial value and are not recorded within the financial statements of the Forest Service. A more in-depth discussion of stewardship assets is presented in the Required Supplementary Stewardship Information section in this report.

Fund Balance with Treasury (Congressional Appropriations and Trust Funds) is available to the agency to pay authorized expenses and to finance purchase commitments based on apportionments by the OMB.

Liabilities and Net Position

The Forest Service reported $2.3 billion in liabilities at the end of September 30, 2003, representing probable future expenditures arising from past events. This amount represents an increase of 4 percent from September 30, 2002 amounts. The major liability amounts, unfunded leave, Federal Employees’ Compensation Act (FECA) benefits, and custodial liabilities appear in exhibit 2.

Exhibit 2: Liabilities

 

2003

2002

Difference

 

(In Millions)

Dollars

Percentages

Unfunded Leave and FECA Benefits

$634

$600

$34

6%

Custodial

104

211

(107)

(51)%

Other Liability Categories

1,583

1,416

167

12%

 

 

 

 

 

Grand Total Liabilities

$2,321

$2,227

$(94)

(4)%

Federal agencies, by law, cannot make any payments unless Congress has appropriated funds for such payments and the OMB has apportioned the funds. A portion of liabilities reported by the Forest Service September 30, 2003, however, is currently not funded by congressional appropriations. For example, the unfunded amounts needed to pay for employees’ annual leave, earned but not yet taken, and FECA benefits that have accrued to cover liabilities associated with employees’ death, disability, medical, and other approved costs that have not yet been paid. Another major category is the custodial liability funds that belong to non-Forest Service entities. The largest share of this amount is funds for payments to States. These amounts are held by the agency in special receipt accounts pending transfer to the appropriate party.

A net position of $5 billion is reported for FY 2003. This represents an increase of 7 percent over FY 2002 amounts. The change is attributed to numerous factors, including a decrease in Net Cost of Operations. Net Position represents unexpended appropriations consisting of undelivered orders, as well as unobligated funds and the cumulative results of operations, as shown in exhibit 3.

Exhibit 3: Net Position

 

2003

2002

Difference

 

(In Millions)

Dollars

Percentages

Unexpended Appropriations

$1,517

$1,762

$(245)

(14)%

Cumulative Results of Operations

3,473

2,899

574

20%

 

 

 

 

 

Total Net Position

$4,990

$4,661

$329

7%

Unexpended appropriations reflect spending authority made available by congressional appropriation that has not yet been used. Cumulative results of operations reflect the cumulative effect of financing in excess of expenditures.

Net Cost of Operations

The Forest Service’s Net Cost of Operations was $5.5 billion for each of the years ended September 30, 2003 and 2002.

Earned Revenue from the Public include such items as the sale of forest products (timber and firewood); recreational opportunities (campgrounds); mineral resources; livestock grazing; and special land use fees for power generation, resorts, and other business activities conducted on NFS lands. The Forest Service also performs reimbursable activities such as work completed for individuals and businesses cooperating with the agency, as well as work completed mainly for other Federal agencies, in accordance with the Economy Act.

The Forest Service distributes a portion of earned revenues to eligible States in accordance with existing laws. In FY 2003, approximately $387 million of FY 2002 receipts were distributed to 41 States and Puerto Rico. This represents an increase of 3 percent over FY 2002 distribution.

These payments to the States, in accordance with the Secure Rural Schools and Community Self-Determination Act of 2000, benefit public schools and roads in communities hosting national forests and pays for local forest stewardship projects.

Expenses

Forest Service program costs for the year ended September 30, 2003, are $6.5 billion before elimination entries. This represents a 5-percent increase from FY 2002. The change is attributable mostly to an increase in Intragovernmental Net Costs resulting from Forest Service’s assistance to other Federal agencies in dealing with national emergencies such as the space shuttle ( Columbia) recovery, containment of the Exotic New Castle Disease outbreak, and Hurricane Isabel.

Exhibit 3: Gross Expenses

 

2003

2002

Difference

 

(In Millions)

Dollars

Percentages

Program Costs

 

 

 

 

National Forests and Grasslands

$3,453

$3,322

$131

4%

Forest & Rangeland Management

310

250

60

24%

State & Private Forestry

388

285

103

36%

Fire & Aviation Management

1,952

2,186

(234)

(11)%

Working Capital Fund

366

254

112

44%

 

 

 

 

 

Total Program Costs

$6,469

$6,297

$172

3%

Budgetary Resources

The Forest Service had budget authority of approximately $5.9 billion in FY 2003 and $5.1 billion in FY 2002. The funding received in FY 2003 represents an increase of 15 percent over that received in FY 2002. The increase was mainly attributable to funds necessary to fight and suppress wildland fires. These are general Government funds administered by the Department of the Treasury and appropriated for the agency’s use by Congress. A portion of the appropriation, $636 million in FY 2003, was designated by Congress to repay agency funds transferred from other accounts during previous fiscal years for emergency wildland fire management requirements. The agency must routinely exercise its statutory authority to transfer from other funds available to fight wildland fires. When such transfers take place, the agency requests appropriations from Congress to repay transferred funds in order to accomplish the purpose for which the funds were first provided.