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Secretary of Labor Thomas E. Perez
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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:

(Dollars in thousands)

2008

2007

Direct Obligations

 

 

Category A

$4,075,613

$4,121,138

 

Category B

9,137,416

9,068,443

 

Exempt from apportionment

49,244,270

38,830,490

Total direct obligations

62,457,299

52,020,071

Reimbursable Obligations

 

 

Category A

206,345

194,918

 

Category B

2,775,832

2,689,784

Total reimbursable obligations

2,982,177

2,884,702

 

 

$65,439,476

$54,904,773




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.

(Dollars in millions)

2008

2007

Unemployment Trust Fund unavailable collections, beginning

$72,448

$63,995

 

Budget authority from current year appropriations

43,852

44,909

 

Less obligations

(46,791)

(36,456)

Excess (deficiency) of budget authority over obligations 

(2,939)

8,453

Unemployment Trust Fund unavailable collections, ending

$69,509

$72,448




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.

(Dollars in millions)

Budgetary Resources

Obligations Incurred

Net Outlays

Combined Statement of Budgetary Resources

$59,217

$54,905

$47,120

 

Pension Benefit Guaranty Corporation reported separately

19,080

4,573

457

 

Distributed offsetting receipts

-

-

795

 

Amounts in the Combined Statement of Budgetary Resources not included in the budget

(81)

(12)

(5)

 

Expired accounts

(1,412)

(79)

-

 

Other

(16)

(8)

(7)

Budget of the United States Government

$76,788

$59,379

$48,360




E.  Undelivered Orders

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

(Dollars in thousands)

2008

2007

Undelivered orders

$5,604,384

$5,678,989




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

(Dollars in thousands)

2008

2007

Resources used to finance activities

 

Budgetary resources obligated

 

 

Obligations incurred

$65,439,476

$54,904,773

 

 

Recoveries of prior year obligations

(418,195)

(220,673)

 

 

Less spending authority from offsetting collections

(6,718,139)

(6,447,616)

 

 

Obligations, net of offsetting collections and recoveries

58,303,142

48,236,484

 

Other resources

 

 

 

Imputed financing from costs absorbed by others

118,009

129,859

 

 

Transfers, net

3,191

2,469

 

 

Exchange revenue not in budget

(733,748)

(784,278)

Total resources used to finance activities

57,690,594

47,584,534

Resources used to finance items not part of the net cost of operations

 

Change in budgetary resources obligated for goods, services and benefits ordered but not yet received or provided

(139,399)

108,524

 

Resources that finance the acquisition of assets

(102,539)

(129,596)

Total resources used to finance items not part of the net cost of operations

(241,938)

(21,072)

Total resources used to finance the net cost of operations

57,448,656

47,563,462

Components of the net cost of operations that will not require or generate
resources in the current period

 

Components requiring or generating resources in other periods

 

 

Increase in annual leave liability

10,250

3,735

 

 

Increase in employee benefits liabilities

803,610

633,248

 

 

Other

(27,912)

24,250

 

Total

785,948

661,233

 

Components not requiring or generating resources

 

 

Depreciation and amortization

66,248

61,233

 

 

Revaluation of assets and liabilities

483,119

461,967

 

 

Benefit overpayments

(476,977)

(457,176)

 

Total

72,390

66,024

Total components of the net cost of operations that will not
require or generate resources in the current period

858,338

727,257

Net cost of operations

$58,306,994

$48,290,719




NOTE 20 — SOURCES AND DISPOSITIONS OF CUSTODIAL REVENUE

Custodial revenues in 2008 consisted of the following:

(Dollars in thousands)

Cash Collections

Less Refunds

Net Cash Collections and Transfers to U.S. Treasury General Fund

Increase (Decrease) in Amounts to be Collected and Transferred

Total Revenues

Civil monetary penalties

 

 

 

 

 

OSHA

$71,367

$(182)

$71,185

$1,362

$72,547

 

MSHA

56,004

-

56,004

8,083

64,087

 

EBSA

25,776

-

25,776

(5,286)

20,490

 

ESA

27,442

-

27,442

(1,305)

26,137

 

 

180,589

(182)

180,407

2,854

183,261

ETA disallowed grant costs

15,627

-

15,627

(19,392)

(3,765)

Other

1,209

-

1,209

(286)

923

 

 

$197,425

$(182)

$  197,243

$(16,824)

$180,419




Custodial revenues in 2007 consisted of the following:

(Dollars in thousands)

Cash Collections

Less Refunds

Net Cash Collections and Transfers to U.S. Treasury General Fund

Increase (Decrease) in Amounts to be Collected and Transferred

Total Revenues

Civil monetary penalties

 

 

 

 

 

OSHA

$65,660

$(233)

$65,427

$1,161

$66,588

 

MSHA

30,357

-

30,357

(1,330)

29,027

 

EBSA

24,168

-

24,168

3,511

27,679

 

ESA

11,689

-

11,689

395

12,084

 

 

131,874

(233)

131,641

3,737

135,378

ETA disallowed grant costs

4,670

-

4,670

11,377

16,047

Other

2,676

(2)

2,674

-

2,674

 

 

$139,220

$(235)

$  138,985

$15,114

$154,099




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.

(Dollars in thousands)

Unemployment

Black Lung Disability

Other

Total

Assets

 

 

 

 

 

Intra-governmental

 

 

 

 

 

 

Funds with U.S. Treasury

$  (147,882)

$  53,064

$381,801

$286,983

 

 

Investments

73,295,222

-

77,123

73,372,345

 

 

Accounts receivable, net

 

 

 

 

 

 

 

Due from other Federal agencies

 

 

 

 

 

 

for UCX and UCFE benefits

292,981

-

-

292,981

 

Total intra-governmental

73,440,321

53,064

458,924

73,952,309

 

Accounts receivable, net

 

 

 

 

 

 

State unemployment tax

183,985

-

-

183,985

 

 

Due from reimbursable employers

473,802

-

-

473,802

 

 

Benefit overpayments

220,191

10,776

-

230,967

 

 

Other

-  

-

2

2

 

Advances

706,556

-

-

706,556

 

Other

-

-

366

366

Total assets

$75,024,855

$63,840

$459,292

$75,547,987

Liabilities

 

 

 

 

 

Intra-governmental

 

 

 

 

 

 

Accounts payable to DOL agencies

$1,176,351

$-

$-

$1,176,351

 

 

Advances from U.S. Treasury

-

10,483,557

-

10,483,557

 

 

Amounts held for the Railroad

 

 

 

 

 

 

Retirement Board

110,455

-

-

110,455

 

 

Other

-

-

7,616

7,616

 

Total intra-governmental

1,286,806

10,483,557

7,616

11,777,979

 

Accounts payable

-

-

14,683

14,683

 

Future workers' compensation benefits

-

-

53,562

53,562

 

Accrued benefits

1,628,993

19,469

-

1,648,462

 

Other

-

-

602

602

Total liabilities

2,915,799

10,503,026

76,463

13,495,288

Net position

 

 

 

 

 

Cumulative results of operations

72,109,056

(10,439,186)

382,829

62,052,699

Total liabilities and net position

$75,024,855

$63,840

$459,292

$75,547,987




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

(Dollars in thousands)

Unemployment

Black Lung Disability

Other

Total

Cost, net of earned revenues

 

 

 

 

 

Benefits

$(42,533,112)

$  (266,960)

$(8,538)

$(42,808,610)

 

Grants

-

-

(90,490)

(90,490)

 

Interest

(3,519)

(739,469)

-

(742,988)

 

Administrative and other

(414,822)

(376)

(21,769)

(436,967)

 

 

 

 

(42,951,453)

(1,006,805)

(120,797)

(44,079,055)

 

Earned revenue

711,675

-

-

711,675

 

 

 

 

(42,239,778)

(1,006,805)

(120,797)

(43,367,380)

Net financing sources

 

 

 

 

 

Taxes

37,655,181

652,650

-

38,307,831

 

Interest

3,635,617

551

3,108

3,639,276

 

Reimbursement of unemployment benefits

1,768,182

-

-

1,768,182

 

Imputed financing

-

-

195

195

 

Transfers-in

 

 

 

 

 

 

Department of Homeland Security

-

-

86,779

86,779

 

 

DOL entities

2,396

-

-

2,396

 

Transfers-out

 

 

 

 

 

 

DOL entities

(3,714,880)

(57,881)

-

(3,772,761)

 

 

 

 

39,346,496

595,320

90,082

40,031,898

 

Net results of operations

(2,893,282)

(411,485)

(30,715)

(3,335,482)

Net position, beginning of period

75,002,338

(10,027,701)

413,544

65,388,181

Net position, end of period

$72,109,056

$(10,439,186)

$382,829

$62,052,699

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.

(Dollars in thousands)

Unemployment

Black Lung Disability

Other

Total

Assets

 

 

 

 

 

Intra-governmental

 

 

 

 

 

 

Funds with U.S. Treasury

$103,124

$  40,359

$419,245

$562,728

 

 

Investments

75,804,778

-

80,061

75,884,839

 

 

Accounts receivable, net

 

 

 

 

 

 

 

Due from other Federal agencies for UCX and UCFE benefits

302,912

-

-

302,912

 

Total intra-governmental

76,210,814

40,359

499,306

76,750,479

 

Accounts receivable, net

 

 

 

 

 

 

State unemployment tax

276,072

-

-

276,072

 

 

Due from reimbursable employers

459,192

-

-

459,192

 

 

Benefit overpayments

209,807

10,056

-

219,863

 

 

Other

-  

-

2

2

 

Advances

509,848

-

379

510,227

 

Other

-

-

39

39

Total assets

$77,665,733

$50,415

$499,726

$78,215,874

Liabilities

 

 

 

 

 

Intra-governmental

 

 

 

 

 

 

Accounts payable to DOL agencies

$1,242,806

$-

$-

$1,242,806

 

 

Advances from U.S. Treasury

-

10,057,557

-

10,057,557

 

 

Amounts held for the Railroad

 

 

 

 

 

 

Retirement Board

108,990

-

-

108,990

 

 

Other

-

-

7,857

7,857

 

Total intra-governmental

1,351,796

10,057,557

7,857

11,417,210

 

Accounts payable

-

-

26,041

26,041

 

Future workers' compensation benefits

-

-

51,629

51,629

 

Accrued benefits

1,311,599

20,559

-

1,332,158

 

Other

-

-

655

655

Total liabilities

2,663,395

10,078,116

86,182

12,827,693

Net position

 

 

 

 

 

Cumulative results of operations

75,002,338

(10,027,701)

413,544

65,388,181

Total liabilities and net position

$77,665,733

$50,415

$499,726

$78,215,874




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

(Dollars in thousands)

Unemployment

Black Lung Disability

Other

Total

Cost, net of earned revenues

 

 

 

 

 

Benefits

$(32,325,084)

$  (285,632)

$(3,139)

$(32,613,855)

 

Grants

-

-

(103,179)

(103,179)

 

Interest

(3,772)

(717,214)

-

(720,986)

 

Administrative and other

(446,430)

(593)

(19,615)

(466,638)

 

 

 

 

(32,775,286)

(1,003,439)

(125,933)

(33,904,658)

 

Earned revenue

723,914

-

-

723,914

 

 

 

 

(32,051,372)

(1,003,439)

(125,933)

(33,180,744)

Net financing sources

 

 

 

 

 

Taxes

39,271,749

639,197

-

39,910,946

 

Interest

3,344,577

463

3,537

3,348,577

 

Reimbursement of unemployment benefits

1,632,863

-

-

1,632,863

 

Imputed financing

-

-

253

253

 

Transfers-in

 

 

 

 

 

 

Department of Homeland Security

-

-

193,355

193,355

 

Transfers-out

 

 

 

 

 

 

DOL entities

(3,604,321)

(59,179)

-

(3,663,500)

 

 

 

 

40,644,868

580,481

197,145

41,422,494

 

Net results of operations

8,593,496

(422,958)

71,212

8,241,750

Net position, beginning of period

66,408,842

(9,604,743)

342,332

57,146,431

Net position, end of period

$75,002,338

$(10,027,701)

$413,544

$65,388,181

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.

(Dollars in thousands)

Longshore and Harbor Workers' Compensation Act

District of Columbia Workmen's Compensation Act

Assets

 

 

Intra-governmental

 

 

 

Funds with U.S. Treasury

$735

$439

 

 

Investments

61,905

5,160

 

 

Interest receivable from investments

-

-

 

Total intra-governmental

62,640

5,599

 

Other accounts receivable, net

7,971

191

Total assets

$70,611

$5,790

Liabilities

 

 

Accrued benefits

$4,571

$345

 

Other

38,796

2,423

Total liabilities

43,367

2,768

Net position

 

 

Cumulative results of operations

27,244

3,022

Total liabilities and net position

$70,611

$5,790




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

(Dollars in thousands)

Longshore and Harbor Workers' Compensation Act

District of Columbia Workmen's Compensation Act

Cost, net of earned revenues

 

Benefits

$(130,085)

$(10,158)

Net financing sources

 

Interest

1,044

127

 

Assessments

127,418

8,920

 

Transfers-out

 

 

 

DOL entities

(2,022)

-

 

 

 

126,440

9,047

 

Net results of operations

(3,645)

(1,111)

Net position, beginning of period

30,889

4,133

Net position, end of period

$27,244

$3,022




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

(Dollars in thousands)

Longshore and Harbor Workers' Compensation Act

District of Columbia Workmen's Compensation Act

Assets

 

 

Intra-governmental

 

 

 

Funds with U.S. Treasury

$154

$75

 

 

Investments

69,979

6,585

 

 

Interest receivable from investments

16

1

 

Total intra-governmental

70,149

6,661

 

Other accounts receivable, net

3,803

327

Total assets

$73,952

$6,988

Liabilities

 

 

Accrued benefits

$3,655

$298

 

Other

39,408

2,557

Total liabilities

43,063

2,855

Net position

 

 

Cumulative results of operations

30,889

4,133

Total liabilities and net position

$73,952

$6,988




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

(Dollars in thousands)

Longshore and Harbor Workers' Compensation Act

District of Columbia Workmen's Compensation Act

Cost, net of earned revenues

 

Benefits

$(129,040)

$(9,819)

Net financing sources

 

Interest

2,077

250

 

Assessments

128,934

11,264

 

Transfers-out

 

 

 

DOL entities

(2,042)

-

 

 

 

128,969

11,514

 

Net results of operations

(71)

1,695

Net position, beginning of period

30,960

2,438

Net position, end of period

$30,889

$4,133



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.

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