SECTION 7: Trust Fund

7.01.  Overview

The Department of Transportation has accounting and reporting responsibility for trust funds within the Operating Administrations (OA). This trust fund policy supplements OMB Circular A‑11 Preparation, Submission and Execution of the Budget, OMB Bulletin 01-09 Form and Content of Agency Financial Statements www.whitehouse.gov/omb, Treasury Financial Manual USSGL which includes the Federal Trust Fund Accounting Guide (8 scenarios), other approved scenarios for accounting for all types of budget authority and transfers and the most current S2 series that contains the SGL crosswalks to the financial statements www.fms.treas.gov/ussgl.

This policy documents each type of trust fund within the Department, provides the applicable accounting models to be followed in the Delphi accounting system, and defines additional accounting model and financial statement information that is not included in Treasury and OMB guidance.

Trust funds are managed at Federal Highway Administration (FHWA), National Highway Transportation Safety Administration (NHTSA), Federal Motor Carriers Safety Administration (FMCSA), Office of the Secretary of Transportation (OST), Federal Aviation Administration (FAA), Research and Special Programs Administration (RSPA), Federal Transit Authority (FTA), Maritime Administration (MARAD) and Federal Railroad Administration (FRA). A complete list of active trust funds at the Department of Transportation can be found in the FAST  Book (Federal Account Symbols and Titles) at www.fms.treas.gov/FAST Book.

7.02.  Audit Requirements

Audits of trust funds are conducted independently of each other prior to consolidation and audit of financial statements at the Department level. Independent auditors at FHWA and all of the other OAs using highway trust funds issue an opinion on the consolidated highway and non-highway trust fund financial statements reporting as an entity. Independent auditors at FAA issue an opinion on trust funds included in the consolidated statements of the FAA as an entity. The OIG issues an opinion on the Department-wide consolidated financial statements which includes all other trust funds within the jurisdiction of the other OAs, the FHWA entity statements and the FAA entity statements.

7.03.  Trust Fund Types

Trust funds are designated by law for carrying out a specific purpose or program in accordance with the stated terms. Funding is received from earmarked receipts, offsetting collections or allocation transfers which can only be used for that specific purpose. Types of trust fund accounts within the OAs jurisdiction are explained in the following table.

7.04.  Funding Sources

Trust funds operate under various types of authority and have different funding sources. This section provides an overview of the Department’s sources of funding. The following chart shows each OA’s fund symbols, source of funding and accounting scenario.

General descriptions of the various sources of funding are included in this section.

The Department of Treasury manages investment portfolios for trust funds through the Bureau of Public Debt (BPD). The Airport and Airway Trust Fund (AATF) is the funding source for FAA’s three capital investment funds: Facilities and Equipment; Airport Improvement Program; and Research, Engineering and Development, and a portion of the Operations appropriation. It is funded from aviation excise taxes and interest earned by the fund. The Federal Aid to Highways fund, commonly called the Highway Trust Fund (HTF), is used to construct highways and mass transit systems. It is funded by taxes collected by the Internal Revenue Service (IRS). These taxes are collected for investment  by BPD. BPD issues financial statements on investment activity for all of its managed funds. FAA and FHWA incorporate the audited BPD financial statement information into their financial statements for reporting purposes. Both of these funds have contract authority. This type of authority permits the OA to incur obligations in advance of appropriations needed to pay for those obligations. Congress appropriates funds from the AATF and the HTF to liquidate the contract authority. The cash is drawn down from the investment account at BPD as needed to pay invoices using a SF-1151 Non expenditure Transfer Authorization document. The trust funds managed by Treasury are located under the Department of Treasury, agency identifier 20, in the FAST Book.

Congress allocates a portion of the AATF and HTF funds in the form of appropriated funding to other trust funds for specific purposes designated by law, including appropriating funds for liquidating contract authority. There are many trust funds receiving allocations of appropriated funding via 1151 transfer from FAA and FHWA. The AATF transfers funds to trust funds within FAA and to Office of the Secretary of Transportation (OST). The HTF transfers funding to other trust funds within FHWA and other OAs including BTS, NHTSA, FTA, FRA, and FMCSA. Trust funds are also transferred to other types of fund accounts using expenditure transfers. There is one trust fund that receives appropriated funding from the Oil Spill Liability Trust Fund managed by the U.S. Coast Guard. The HTF also funds one miscellaneous trust fund that is available for multiple long term projects. These are listed in the FAST Book under Department of Transportation’s agency identifier 69.

Another funding source for the HTF comes from allocations from other Federal agency trust funds. These are designated with the other agency’s two digit identifier in the Treasury Appropriation Fund Symbol (TAFS). They are listed in the FAST Book under the other agency’s two digit identifier. Allocations delegate obligation authority up to the amount stated in the transfer appropriation account. The allocation transfers authorized by law are allowed when the recipient is acting as the agent for the allocating agency.

There is one active trust revolving fund that conducts business-like activity and is funded by contract authority.

HTF trust funds labeled as special record paying and collecting transfers processed through IPAC for Federal entities and receipts from the public for purposes specified by law.  

Some trust funds are grant programs that make funds available for use by the States for long-term building and renovation projects.

7.05.  Federal lands

The Federal lands highway program is funded by both the public and other Federal agencies in three different ways.

Other Federal agencies fund the program directly from their appropriated funds (non-trust funds). For these sources of funding, the other agency’s TAFS is used directly by the program office for posting expenses related to the project. New TAFS are set up at Treasury by adding Transportation’s identifier 69 to the beginning of the fund and attaching a point account after the fund, i.e., 69-14-1121.05.

Funding provided by States and foreign governments comes in the form of receipts which are deposited directly to the Federal lands designated fund 69X8054. Additional Federal funding comes in the form of IPAC receipts. This funding is used to cover expenses incurred by Federal lands projects.

Finally, reimbursable agreements from States and counties are implemented to provide funding for work performed. The expenses are accumulated and periodically billed to the various States and counties. All receipts are then deposited into the 69X8083 Federal Aid to Highways (HTF) fund.

7.06.  Obligation Limitations

For some trust funds, the amount of obligations which can be incurred under contract authority is subject to limitation for the current year. The obligation limitation temporarily reduces the amount of budgetary resources available for that year. Normally, the limitation amount becomes available as a budgetary resource at the end of the limitation period (i.e., at the beginning of the next fiscal year). But because current year obligations are first recorded against current year budget authority up to the amount subject to the current year limitation, the prior year limitation amount is normally not available in the next year and is subsequently rescinded. Obligation limitations are reported as resources temporarily unavailable pursuant to public law during the first three quarters of the year. At fourth quarter, they are reported as unobligated balances unavailable.

7.07.  Transfer Activity

A transfer moves budget authority (resources) from one budget account to another. This means that funding from one TAFS is given to another TAFS for an intended purpose. Transfers between funds are authorized in the annual budget or by specific legislative authority. Transfer activity is recorded as an expenditure transaction or a nonexpenditure transaction. An expenditure transfer records an outlay of funds and a nonexpenditure transfer does not.

All transfers between trust funds must be processed as nonexpenditure transfers using the 1151 transfer document. All transfers between trust funds and general funds are completed on the SF 224 as expenditure transfers.

Inactive trust funds which have had no activity for at least two fiscal years or have zero balances must be evaluated. When it has been determined that the project is completed and that there is no longer any funding available, each OA must take steps to inactivate the fund and return any unexpended balance to the general fund following Treasury’s guidelines.

7.08.  Trust Fund Accounting Models

The accounting models illustrate all accounting transactions that are needed to fund various types of trust funds. Most trust funds within DOT follow Treasury’s published Scenario numbers I, VI, VII and VIII. In addition to showing the scenarios as they are used by DOT OAs, they also explain departures from these scenarios. Trust funds within DOT are subject to apportionment. Budget execution is not included in these models.

Scenario I illustrates the basic accounting entries for expenditure trust funds receiving public funds. Within MARAD, funds are donated to the Gifts and Bequests trust fund by cadet alumnae for specific expenses. Funds are provided to the Special Studies, Services and Projects trust fund by public entities requiring assistance in various research projects. Funds are deposited directly to the expenditure account and immediately available for obligation. No transfers of any type are recorded.

Scenario I

Scenario VI illustrates nonexpenditure transfers for the receiving fund. In this case, the receiving fund is obtaining budget authority from a Treasury managed trust fund such as the Airport and Airway Trust Fund, Oil Spill Liability Trust Fund or the Highway Trust Fund that is appropriated (not contract authority).

Scenario VI

Scenario VII illustrates the liquidation of contract authority funding from Treasury-managed investment funds (BPD).

Scenario VII

Scenario VIII illustrates the transfer of contract authority between two trust funds. The Highway Trust Fund (HTF) has authority to transfer contract authority to other funds within DOT OAs to be used for the specific purposes for which the original funding was intended. HTF records the contract authority and the appropriations to liquidate the contract authority, then draws down funds when disbursements need to be made. HTF also transfers contract authority and appropriations to the recipients (other trust funds). This model illustrates the HTF contract authority, draw-downs, and transfer-out entries.

Scenario VIII

The table below illustrates the recipient’s entries to record contract authority allocated from HTF, appropriations and the transfer-in of funding to pay for obligations.

7.09.  Special Trust Funds

These funds are designated by HTF as special funds due to the nature of the business that is being transacted. These funds receive direct funding from Federal and non-Federal sources that resembles reimbursable authority. IPAC receipts fund special funds in the form of advances from Federal agencies. Other advance receipts in the form of checks or ACH transfers fund special funds from non-Federal sources. These advance receipts are not apportioned through OMB as reimbursable agreement authority. Upon receipt, they are internally apportioned to the allotment level. Revenue is recognized and advances are liquidated when payment of obligations is made.

The following table illustrates the accounting model for special trust funds.

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