Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, June 10, 1990 TAG: 9006100144
SECTION: NATIONAL/INTERNATIONAL PAGE: A-1 EDITION: METRO
SOURCE: The Baltimore Sun
DATELINE: WASHINGTON LENGTH: Medium
They favor several different strategies to attack what they call an enormous federal "slush fund" that is ripe for fraud and abuse. But they agree their common goal is to make sure agencies - in particular, the Department of Defense - cannot spend surplus funds without Congress's approval.
"This is an open money sack," an angry Sen. David H. Pryor, D-Ark., said in the Senate chamber Thursday. "It is, in my opinion, an invitation to corruption. I certainly believe we have to act very quickly to remedy what I call an egregious situation."
The first test of congressional resolve on the issue could come early this summer, when the Senate takes up its version of the fiscal 1991 federal budget. Sen. Charles Grassley, R-Iowa, said he wants to amend the budget resolution to impose strict controls on the surplus funds and reduce them to "reasonable" levels.
Action is needed soon because agencies may be more likely to turn to their surplus accounts as pressures to cut the federal budget intensify, he said. By tapping the funds, agencies could "potentially undercut any agreement that might arise out of the current budget summit" between the White House and Congress, Grassley said.
Results of a three-month inquiry by the staff of a House subcommittee revealed that the Pentagon, the White House and more than a dozen U.S. agencies have accumulated more than $100 billion that could be used to offset future budget cuts and cover unauthorized expenditures.
The Pentagon alone has the ability to spend more than $50 billion, the largest amount of surplus appropriations maintained by a federal agency, investigators said.
The Agency for International Development, which administers foreign aid, has virtually unrestricted access to $11 billion, more than four times the size of its current operating budget, they said. A partial audit by the General Accounting Office shows that the "Executive Office of the President" has at least $4.3 billion in unspent appropriations.
"Most of the money that Congress appropriates every year is available for use for a given period of time," explained Bruce Chafin, special assistant to the House Energy and Commerce Subcommittee on Oversight and Investigations. "There is a general perception that when these appropriations expire, they are unavailable for use by the various agencies and revert to the general fund of the Treasury.
"This perception is wrong. The authority to spend appropriations never goes away, and can be used by the various agencies under certain circumstances. The level of funds available in these agencies is staggering."
Accumulating leftover funds has been permitted by a 1956 law that was intended to help agencies build a reserve against unexpected or unbilled claims by contractors, court judgments and high inflation.
"A major part of the problem is that the pertinent sections of the U.S. Code are ambiguous and open to interpretation, and if the Code is not clarified soon, we may face large, uncontrollable increases in outlays [actual spending] and the deficit," said Sen. William Roth Jr., R-Del.
Citing a potential for fraud, House investigators cited the 1988 case of William J. Burns, an AID official who was convicted in federal court of embezzling nearly $1.4 million in government funds over eight years. He had submitted false bills and travel vouchers, payable from the surplus accounts, and treated himself to a luxury home in Burtonsville, Md., a swimming pool, gazebo and five cars, investigators said.
Ironically, Burns initially had warned his superiors about the lack of controls on the accounts, but no one responded, investigators said.
Lawmakers said they hoped the size and scope of current reserves would spur more sweeping action at a time when spending needs to be harnessed.
"The slush funds are to federal agencies facing spending restrictions like a hidden flask of whiskey is to an alcoholic entering a detox clinic," Roth said.
by CNB