The Decline in the Timber Harvests, Timber Receipts, and Returns to the Treasury

For fiscal years 1990 through 1996, the key indicators of the timber program—harvested volumes, timber receipts, and amounts available for return to the Treasury—decreased dramatically. Actions Taken by the Forest Service to Maintain a Positive NFF Balance in Fiscal Year 1996

In fiscal year 1996, the Forest Service was faced with having insufficient funds available in the NFF to make its payments to the states—including the spotted owl guarantee—and to meet its other required obligations. However, even with this additional money, a shortfall of $17.8 million still remained in the NFF. The Forest Service’s next action was to request the appropriation of about $135 million for the 1996 payments for the spotted owl guarantee authorized by the Omnibus Budget and Reconciliation Act of 1993 (P.L. Forest Service Transferred $56.1 Million to the NFF

The Forest Service’s first analysis—performed in May 1996—of the estimated receipts for fiscal year 1996 showed that the NFF’s anticipated receipts were dangerously low. Instead, on August 27, 1996, the Forest Service instructed its regions to transfer the funds to the NFF that had been originally intended for deposit in the Salvage Sale Fund and Knutson-Vandenberg Fund for the remainder of the fiscal year to make up for the shortfall. Five weeks later, on November 7, 1996, the Forest Service resubmitted its request to the Treasury for a new General Fund expenditure account entitled “Payments to the States, Northern Spotted Owl Guarantee, Forest Service.” According to a Forest Service official, this delay in resubmitting the request to Treasury resulted from higher-priority tasks of year-end closings. Forest Service officials told us that they will return this amount to the Treasury; however, as of August 12, 1997, the Forest Service still retained the money in the NFF. Unauthorized Use of the NFF to Make Spotted Owl Guarantee Payments in Fiscal Years 1994 and 1995

The Forest Service used the NFF in fiscal years 1994 and 1995 for the required spotted owl guarantee payments to certain counties in California, Oregon, and Washington. This was an unauthorized use of the fund. In the short term, the regions were asked to implement a series of distribution priorities for timber sale receipts to ensure that funds are available to make the payments to the states and to meet other obligations, as well as to support critical elements of the reforestation and salvage sale programs. The guidance also required that each region initiate a sale review process within the region to ensure that the trust funds and timber sale accounts are being managed in accordance with these priorities. The task force was charged with developing a national policy on the management of receipts and trust funds so that sufficient receipts would be available in the NFF to make the payments to the states along with meeting the Forest Service’s other mandatory obligations. The National Forest Fund and Its Distributions, Fiscal Years 1990 Through 1996

The National Forest Fund (NFF)—an indefinite appropriation—was established pursuant to the Act of March 4, 1907 (P.L. The Forest Service’s appropriations acts for fiscal years 1991 through 1993 provided for payments to California, Oregon, and Washington, for counties that had lost portions of the 25-percent payments to the states because of the listing of the northern spotted owl as a threatened species.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed the Forest Service's use of its National Forest Fund, focusing on: (1) the timber harvest volumes, the timber receipts for fiscal years (FY) 1990 through 1996, and the timber sale funds returned to the Treasury from the National Forest Fund; (2) the actions taken by the Forest Service toward the end of FY 1996 to cover the shortfall in the National Forest Fund; (3) whether the Forest Service has been using the proper funding source for the spotted owl guarantee payment; and (4) the Forest Service's plans for FY 1997 to ensure that the National Forest Fund has sufficient funds to make the payments to the states.

What GAO Found

GAO noted that: (1) GAO's analysis of timber sales activities in FY 1990 through 1996 showed that the key indicators of the timber program--harvested volumes, timber receipts, and amounts available for return to the U.S. Treasury--have dramatically decreased; (2) in FY 1996, the forest service was faced with having insufficient funds available in the National Forest Fund to make the required payments to the states--including the legislatively required payment to compensate certain counties in California, Oregon, and Washington for the listing of the northern spotted owl as a threatened species (spotted owl guarantee)--and to meet its other required obligations; (3) in August and September 1996, the Forest Service transferred to the National Forest Fund a total of $56.1 million in timber sale receipts originally intended for deposit in other specific Forest Service funds; (4) however, even with this adjustment, a shortfall of $17.8 million remained; (5) in mid-September, the Forest Service requested that the Treasury make available $135 million appropriated under the Omnibus Budget Reconciliation Act of 1993, for the 1996 payment of the spotted owl guarantee; (6) the Forest Service received approval for the appropriation on November 26, 1996; (7) as of August 12, 1997, the National Forest Fund had a balance of about $116 million for FY 1996 activities; (8) the Forest Service plans to return this amount to the Treasury's General Fund; (9) the Forest Service used the National Forest Fund in FY 1994 and 1995 to make the spotted owl guarantee payments to certain counties in California, Oregon, and Washington; (10) this was an unauthorized use of the fund; (11) instead, the Forest Service was required to use the spotted owl guarantee appropriation specifically enacted for this purpose; (12) on January 29, 1997, the Forest Service: (a) provided initial guidance to its regions on the priority for the distributions of receipts to ensure that funds are available to make payments to the states and to meet other obligations; and (b) required the regions to initiate a review process to ensure that the receipts were managed in accordance with these priorities; (13) in May 1997, the Forest Service established a National Task Force for Trust Funds and Payments to the States; and (14) the task force was charged with developing a national policy for the management of receipts and trust funds so that there would be sufficient receipts available in the National Forest Fund to make the payments to the states and to meet other mandatory obligations.