United States Department of Labor

DOL Annual Report, Fiscal Year 2008
Performance and Accountability Report

Principal Financial Statements and Notes

NOTE 18 — STATUS OF BUDGETARY RESOURCES

A.  Apportionment Categories of Obligations Incurred

Obligations incurred reported on the Combined Statement of Budgetary Resources in 2008 and 2007 consisted of the following:

B.  Permanent Indefinite Appropriations

DOL’s permanent indefinite appropriations include all trust funds, the Federal Employees’ Compensation Act Special Benefit Fund, the Panama Canal Commission Compensation Fund, the Energy Employees Occupational Illness Compensation Fund, ETA and ESA H-1B funds, and portions of State Unemployment Insurance and Employment Service Operations and Federal Unemployment Benefits and Allowances. These funds are described in Note 1-A.3.

C.  Legal Arrangements Affecting Use of Unobligated Balances

Unemployment Trust Fund receipts are reported as budget authority in the Combined Statement of Budgetary Resources. The portion of UTF receipts collected in the current year in excess of amounts needed to pay benefits and other valid obligations are precluded by law from being available for obligation. Therefore, these excess receipts are not classified as budgetary resources in the Combined Statement of Budgetary Resources. Current year excess receipts are reported as temporarily not available pursuant to Public Law. Conversely, when obligations exceed receipts in the current year, amounts are drawn from unavailable collections to meet these obligations. Cumulative excess receipts are not included in unobligated balances in the status of budgetary resources included in that Statement. All excess receipts are reported as assets of the UTF and are included in the Consolidated Balance Sheet. They will become available for obligation as needed in the future.

The cumulative amounts of excess UTF receipts are denoted as unavailable collections in the Budget of the United States Government. The cumulative amount of these excess receipts at September 30, 2008 and 2007 reclassified from unobligated balances to UTF unavailable collections is presented on the following page.

D.  Explanation of Differences between the Combined Statement of Budgetary Resources and the Budget of the United States Government

The Budget of the United States Government with actual amounts for the year ended September 30, 2008 has not been published as of the issue date of these financial statements.  This document will be available in February 2009.

A reconciliation of budgetary resources, obligations incurred and net outlays, as presented in the Combined Statement of Budgetary Resources, to amounts included in the Budget of the United States Government for the year ended September 30, 2007 is shown below.

E.  Undelivered Orders

Undelivered orders at September 30, 2008 and 2007 were as follows.

F.  Appropriations Received

The Combined Statement of Budgetary Resources discloses appropriations received of $58,784 and $56,922 million for FY 2008 and 2007, respectively. Appropriations received on the Consolidated Statement of Changes in Net Position are $10,936 and $11,007 million for FY 2008 and 2007, respectively. The differences of $47,848 and $45,915 million represent certain dedicated and earmarked receipts recognized as exchange revenue or non-exchange revenue reported on the Consolidated Statement of Net Cost or the Consolidated Statement of Changes in Net Position.

NOTE 19 — RECONCILIATION OF BUDGETARY RESOURCES OBLIGATED TO NET COST OF OPERATIONS

NOTE 20 — SOURCES AND DISPOSITIONS OF CUSTODIAL REVENUE

Custodial revenues in 2008 consisted of the following:

Custodial revenues in 2007 consisted of the following:

NOTE 21 — EARMARKED FUNDS

DOL is responsible for the operation of certain earmarked funds. Other earmarked funds include Gifts and Bequests, Panama Canal Commission Compensation Fund, and H-1B Funds. The financial position of the earmarked funds as of September 30, 2008 is shown below.

The net results of operations of the earmarked funds for the year ended September 30, 2008 is shown below.

Advances from U.S. Treasury for the Black Lung Disability Trust Fund were retired on October 7, 2008 under the refinancing agreement authorized by the enactment of the Energy Improvement and Extension Act of 2008 on October 3, 2008. (See Note 23)

The financial position of the earmarked funds as of September 30, 2007 is shown below.

The net results of operations of the earmarked funds for the year ended September 30, 2007 is shown below.

See Note 23 for the effects of the debt refinancing agreement for the Black Lung Disability Trust Fund authorized by the enactment of the Energy Improvement and Extension Act of 2008 on October 3, 2008.

NOTE 22 — DEDICATED COLLECTIONS

The Department administers four trust funds that receive dedicated collections. Statement of Federal Financial Accounting Standards 27, Identifying and Reporting Earmarked Funds, became effective in FY 2006. This standard affected former standards dealing with dedicated collections, and as a result, the Unemployment Trust Fund and the Black Lung Disability Trust Fund were classified as earmarked funds. The financial position of the two remaining trust funds as of September 30, 2008 is shown below.

The net results of operations of each trust fund for the year ended September 30, 2008 is shown below.

The net results of operations of each trust fund for the year ended September 30, 2007 is shown below.

The net results of operations of each trust fund for the year ended September 30, 2007 is shown below.

NOTE 23 — SUBSEQUENT EVENTS

P.L. 110-343, Division B--Energy Improvement and Extension Act of 2008, was enacted on October 3, 2008. Section 113 of the Act allowed for the temporary increase in coal excise tax rates to continue an additional five years beyond the current statutory limit and restructuring of trust fund debt by the repayment of the market value of outstanding repayable advances with the proceeds of obligations issued by the Black Lung Disability Trust Fund to the U.S. Treasury and a one-time appropriation.

Temporary Increase in Coal Excise Tax Rates. In accordance with Internal Revenue Code section 4121, the coal excise tax rates were set to decrease from $1.10 per ton for coal from underground mines and $0.55 per ton for coal from surface mines (not to exceed 4.4 percent of sales) to $0.50 per ton for coal from underground mines and $0.25 per ton for coal from surface mines (not to exceed 2 percent of sales) on January 1, 2014. P.L. 110-343 extended the temporary increase in coal excise tax rates an additional five years from January 1, 2014 to December 31, 2018. The higher excise tax rates will continue until the earlier of December 31, 2018 or the first December 31 after 2007 in which there exist no (1) balance of repayable advances described in section 9501 of the Internal Revenue Code and (2) unpaid interest on the advances. Treasury has interpreted repayable advances to mean any obligations of the Trust Fund to Treasury.

Issuance of Obligations by the Black Lung Disability Trust Fund. P.L. 110-343 gave authority to the Black Lung Disability Trust Fund to issue obligations to the Secretary of Treasury and gave authority to the Secretary of Treasury to purchase the obligations. The proceeds from issuance of these obligations were used to effect the refinancing of the Black Lung Disability Trust Fund. The proceeds from issuance of obligations subsequent to the refinancing may be used to make benefit payments, other authorized expenditures, or to repay obligations and interest from the initial refinancing.

Restructuring of Trust Fund Debt. P.L. 110-343 provided that the refinancing date occur two days after its enactment. Treasury has interpreted this to mean two business days after enactment. Effective October 7, 2008, the Black Lung Disability Trust Fund repaid the market value of the outstanding repayable Advances from U.S. Treasury plus accrued interest, by transferring to the Treasury general fund (1) obligations whose denominations, rate, and maturity were prescribed by the Secretary of the Treasury and (2) the one-time appropriation amount, which was the difference between the proceeds received from issuance of the obligations described above and the market value of the outstanding advances payable.

The effect of the refinancing was to eliminate high interest rate Advances from U.S. Treasury and replace them with zero coupon bonds bearing interest rates between 1.412% and 4.556%. Pursuant to the refinancing, the market value of the outstanding repayable Advances from U.S. Treasury plus accrued interest was $12.994 billion. The total par value of the zero coupon bonds is $11.424 billion and the total proceeds to the Black Lung Disability Trust Fund were $6.496 billion. The one-time appropriation amount was $6.498 billion. The Trust Fund recognized a loss of $2.496 billion for the difference between the market value of the outstanding advances of $12.994 billion as determined by Treasury and the carrying value of the outstanding advances and accrued interest of $10.498 billion.

Effect of Restructuring of Trust Fund Debt on the Statement of Social Insurance.  This restructuring resulted in an actuarial present value of future excise tax income during the projection period of $9.293 billion as of October 7, 2008 and an actuarial present value of the par value of the zero coupon bonds coming due during the projection period of $6.326 billion as of October 7, 2008.  This, with an actuarial present value of $2.967 billion for expenses, results in a fund balance of zero at the end of the projection period.