	Background

The federal government receives amounts from numerous sources in  addition to tax revenues, including user fees, fines, penalties, and  intragovernmental fees. In 2013, we identified six key fee design decisions related to how fees are  set, used, and reviewed that, in the aggregate, enable Congress to  design fees that strike its desired balance between agency flexibility and  congressional control. Four of the six key design decisions relate to how  the fee collections are used and in 2015 we reported that they are  applicable to fines and penalties (see figure 1). Congress determines the availability of collections by defining the extent  to which an agency may use (i.e., obligate and spend) them, including the  availability of the funds, the period of time the collections are available for  obligation, the purposes for which they may be used, and the amount of  collections that are available to the agency. Design Options Related to Agency’s Access to and Use of Its Collections

Our design guides can help Congress consider the implications and  tradeoffs of various design alternatives. Requiring an appropriation to make the funds available to an agency  increases opportunities for congressional oversight on a regular basis. Dedicated Collections Available without Further Congressional Action

Legislation authorizing a fee, fine, or penalty may give the agency  authority to use collections without additional congressional action. We  refer to the legal authorities that provide agencies with permanent  authority to both collect and obligate funds from sources such as fees,  fines, and penalties as “permanent funding authorities.” Agencies with  these permanent funding authorities have varying degrees of autonomy,  depending in part on the extent to which the statute limits when, how  much, and for what purpose funds may be obligated. Even when an agency has a permanent authority to use collections,  collections remain subject to congressional oversight at any point in time  and Congress can place limitations on obligations for any given year. For  example,
U.S. Department of Justice’s (DOJ) Crime Victims Fund (CVF) Fines and  Penalties: Criminal fines and penalties collected from offenders,  among other sources, are deposited in the CVF and can be used  without further appropriation to fund victims’ assistance programs and  directly compensate crime victims. Collections with a Combination of Different Authorities

In some cases, Congress has provided agencies with permanent  authority to use a portion of collections and designated other portions of  the collections for another use or to be deposited to the Treasury as  miscellaneous receipts. Principles of Federal Appropriations Law, Third Edition, Volume II. GAO-17-44. This is a work of the U.S. government and is not subject to copyright protection in the  United States.
Why GAO Did This Study

Congress exercises its constitutional power of the purse by appropriating funds and prescribing conditions governing their use. Through annual appropriations and other laws that constitute permanent appropriations, Congress provides agencies with authority to incur obligations for specified purposes. The federal government receives funds from a variety of sources, including tax revenues, fees, fines, penalties, and settlements. Collections from fees, fines, penalties, and settlements involve billions of dollars and fund a wide variety of programs.
The design and structure—and corresponding agency flexibility and congressional control—of these statutory authorities can vary widely. In many cases, Congress has provided agencies with permanent authority to collect and obligate funds from fees, fines, and penalties without further congressional action. This authority is a form of appropriations and is subject to the fiscal laws governing appropriated funds. In addition, annual appropriation acts may limit the availability of those funds for obligation. Given the nation's fiscal condition, it is critical that every funding source and spending decision be carefully considered and applied to its best use.
This testimony provides an overview of key design decisions related to the use of federal collections outlined in prior GAO reports, with examples of specific fees, fines, and penalties from GAO reports issued between September 2005 and November 2016.

What GAO Found

GAO's prior work has identified four key design decisions related to how fee, fine, and penalty collections are used that help Congress balance agency flexibility and congressional control.
One of these key design decisions is the congressional action that triggers the use of collections. The table below outlines the range of structures that establish an agency's use of collections and examples of fees, fines, and penalties for each structure.
Source: GAO analysis of applicable laws ǀ G AO-17-268T
As GAO has previously reported, these designs involve different tradeoffs and implications. For example, requiring collections to be annually appropriated before an agency can use the collections increases opportunities for congressional oversight on a regular basis. Conversely, if Congress grants an agency authority to use collections without further congressional action, the agency may be able to respond more quickly to customers or changing conditions. Even when an agency has the permanent authority to use collections, the funds remain subject to congressional oversight at any point in time and Congress can place limitations on obligations for any given year.