DoD Budget: Controls Needed Over Inflation Dividends

The United States General Accounting Office (GAO) examined the Department of Defense's key management controls over excess funds that have become available to the Department because actual inflation has been less than it had estimated. In earlier reports, GAO estimated that between fiscal years...

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Bibliographic Details
Main Authors: Davis, Richard, Rabkin, Norman J, Donahue, Patrick S, O'Brien, Paul J, Dowd, Jr , James B, Scire, Martin E, Perdue Adviser, Charles W
Format: Report
Language:English
Subjects:
Administration and Management
CONGRESS
DEPARTMENT OF DEFENSE
Economics and Cost Analysis
FINANCIAL MANAGEMENT
INFLATION DIVIDENDS
INFLATION(ECONOMICS)
MANAGEMENT PLANNING AND CONTROL
MILITARY BUDGETS
Military Forces and Organizations
MONITORING
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Summary:The United States General Accounting Office (GAO) examined the Department of Defense's key management controls over excess funds that have become available to the Department because actual inflation has been less than it had estimated. In earlier reports, GAO estimated that between fiscal years 1982 and 1987 the Department realized about $55.8 billion in inflation dividends. Subsequently, the Congress reduced, transferred, or reprogrammed over $7.5 billion of these inflation dividends in fiscal years 1985 through 1987. GAO's current focus is on the Department's fiscal year 1992 inflation dividend and its fiscal year 1993 budget request. GAO provided preliminary results of its review for the Subcommittee's markup of the defense appropriations bill so that the potential reductions and recissions could be used in their evaluations. Results show that the Department has overestimated the funds needed for inflation in fiscal years 1992 and 1993 by more than $3.6 billion. Based on the latest Office of Management and Budget (0MB) economic assumptions, the Department now projects inflation dividends of $2.8 billion from fiscal year 1992 appropriations and $837 million from the funds it requested for fiscal year 1993. GAO's current and past reviews lead them to believe that if the Department were to improve monitoring of funding needs and periodically report on the impact of changing inflation rates, the Congress would have the information needed to adjust for inflation dividends such as those projected for fiscal years 1992 and 1993. Briefing Report to the Chairman, Subcommittee on Defense, Committee on Appropriations, U.S. Senate.