Forest Service Trust Funds May Get Axed

Critics call them the Swiss bank accounts of the Forest Service--funds containing $400 million that the agency spends each year with no oversight from Congress or the public.

The money comes from four dedicated trust funds set up by Congress decades ago to pay for maintaining roads, planting trees and removing dead timber and brush in national forests.

They’re different from most Forest Service accounts because the money is automatically collected at field offices each year, mainly from timber companies that log federal land, and is then spent without annual approval from Congress.

Critics say that while much of the money has been appropriately spent, forest managers have used tens of millions of dollars from the funds to pay for overhead costs such as administrative salaries, office supplies and travel budgets.

“The taxpayers are just basically getting ripped off,” said John Bowman of the watchdog group Taxpayers for Common Sense. “There is misuse and mismanagement.”

Members of Congress from both political parties criticize the Forest Service for poor accounting of its trust-fund spending.

“We’re concerned about it,” said Rep. Ralph Regula, R-Ohio, who chairs the interior subcommittee of the House Appropriations Committee. “They’ve been scooping off a pretty large number from the top . . . for administration.”

The General Accounting Office, Congress’ investigative arm, found last year that from 1993 to 1997, Forest Service use of the funds for overhead costs increased from 16% to 27% of the total.

So the Forest Service is taking corrective action. Officials are implementing better accounting procedures and trying to reduce the amount of trust-fund money spent on overhead.

Agency officials are also considering a more drastic step: They may ask Congress to end the accounts’ trust-fund status and make them part of the regular annual budget appropriation.

That would allow Congress to examine the programs yearly and decide whether to fund them.

“We don’t need to hide what we do,” said Chris Wood, a top aide to Forest Service Chief Mike Dombeck. “We think we can make a case for the activities listed in those funds.”

Still, Wood cautioned that the agency may opt for more internal reforms. Forest Service officials worry that the programs--considered essential--might be scrapped if funding decisions are left to Congress.

Here’s a rundown on the trust funds and their 1998 funding:

* Replanting fund, $190 million, set up in 1930 to pay for replanting trees in areas that have been logged.

* Timber salvage sale fund, $151 million, begun in 1976 to pay for removal of dead, insect-infested and diseased trees.

* Brush disposal fund, $23 million, started in 1916 to pay for the disposal of brush and other debris from logged areas.

* Roads and trails fund, $50 million, set up in 1913 to help pay for maintenance of roads and trails. This account gets money not just from timber receipts, but from 10% of all revenue generated by national forests, including hiking fees and campground revenues.

Environmentalists cheer the possibility of an end to the accounts’ trust-fund status.

Since three of the four funds are financed by logging receipts, they argue that the system provides a “perverse incentive” for forest managers to log more.

“Paying for fish and wildlife programs from logging money is like selling cigarettes to pay for lung cancer research,” said Amelia Jenkins of Forest Service Employees for Environmental Ethics in Washington, D.C.

Regula said he would consider any proposal to put the trust funds “on budget.”

But some Capitol Hill Republicans are skeptical. They say Congress can improve oversight of the programs without taking control of them. And they agree with Wood that the programs could be at risk if they are on budget.

Moving the funds on budget also would cost the public more, because the programs would then be financed from taxpayer dollars rather than proceeds from timber sales, said Mark Rey, a staffer for the Senate Energy and Natural Resources Committee.

It was unclear what would become of the timber sale fees that now go into the funds if the programs were placed on budget. Rey suggests the fees--which are earmarked for the funds--might no longer be collected if the funds are scrapped.

The four funds make up more than 10% of the Forest Service’s annual spending, about $3.4 billion this year, and have been an island of stability in an era of declining funding for the agency.

From 1988 to 1997, when logging in federal forests fell from about 12 billion board feet a year to 3.4 billion board feet, the share of proceeds going to the three logging-dependent funds remained roughly unchanged at $361 million per year, although logging revenues going to Treasury decreased, Wood said. He had not done a similar analysis for the roads and trails fund.

So while the U.S. Treasury was getting less revenue from logging, bureaucrats administering programs in the field found a relatively stable funding source in the trust funds, environmentalists say.

“We’re not talking pocket change here,” Michael Francis of the Wilderness Society said of the trust funds. “When a forest manager needs cash, he turns to a timber sale.”

Robert Lynn, the Forest Service’s then-acting director of forest management, told Dombeck in a memo last fall that the trust funds are essential at a time of declining timber sales and stagnant funding from Congress.

“The pressure that is being exerted on the trust funds to finance organizations is a symptom of a much larger problem,” said Lynn, who has since retired. “We are simply not receiving sufficient amounts . . . to fully fund our organization and the fixed costs associated with it.”

Congress, worried that the Forest Service was using too much of the trust fund money for overhead, passed appropriations bill language last year that caps use of the funds for overhead at 20%. The language also requires the Forest Service to report projected overhead costs for each trust fund.

Agency officials are also cleaning up what has been considered a terrible accounting system.

“I can’t defend how the money is spent because we can’t always track where it goes,” Wood said of the trust funds. “We have these accounting systems that are flat broke.”

The Forest Service is trying to bring them up to snuff, adding 130 new positions in financial management and business operations.

The GAO in January placed Forest Service financial management on its “high risk” list of programs vulnerable to fraud, waste and abuse--a list compiled at the start of each new Congress since 1992.

But even the GAO acknowledges things are getting better.

“They have a ways to go, but they are improving,” said Linda Calbom, GAO director in charge of accounting issues for the Agriculture Department, parent agency for the Forest Service.