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Budget Issues: Budgeting for Inflation in Civilian Agencies

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Report Type Reports and Testimonies
Report Date Oct. 1, 1999
Report No. AIMD-00-14
Subject
Summary:

In recent years, the Defense Department (DOD) has seen increases in purchasing power--called inflation dividends--that occur when inflation is lower than had been projected at the time funds were requested. DOD has used those savings to fund a larger program without requesting or receiving additional resources. In light of the military's experience, the question of whether civilian agencies should also identify the effect of lower inflation on their funding requirements has been raised. This report describes how inflation is now treated in budgeting for DOD and civilian discretionary nonpay activities. GAO developed case studies for three civilian agencies: the Bureau of Land Management, the Office of Environmental Management in the Department of Energy, and NASA. GAO also reviewed its earlier work on inflation changes in both civilian agencies and DOD and questioned DOD about how it budgets for inflation.

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