United States Department of Labor

	All DOL  OSEC    Advanced Search
A to Z |  Site Map |  FAQs |  Forms |  About DOL |  Contact Us |  Español

DOL Annual Report, Fiscal Year 2009
Performance and Accountability Report

Principal Financial Statements and Notes Included in This Report

The principal financial statements included in this report have been prepared in accordance with the requirements of the Chief Financial Officers Act of 1990 (P.L. 101-576), the Government Management Reform Act of 1994 and Office of Management and Budget's (OMB) Circular No. A-136, “Financial Reporting Requirements.” The responsibility for the integrity of the financial information included in these statements rests with management of the U.S. Department of Labor (DOL). The audit of DOL's principal financial statements was performed by KPMG LLP. The auditors' report accompanies the principal statements.

The Department's principal financial statements for fiscal years (FY) 2009 and 2008 consisted of the following:

• The Consolidated Balance Sheet, which presents as of September 30, 2009 and 2008 those resources owned or managed by DOL that are available to provide future economic benefits (assets); amounts owed by DOL that will require payments from those resources or future resources (liabilities); and residual amounts retained by DOL, comprising the difference (net position).
• The Consolidated Statement of Net Cost, which presents the net cost of DOL operations for the years ended September 30, 2009 and 2008. DOL's net cost of operations includes the gross costs incurred by DOL less any exchange revenue earned from DOL activities. Due to the complexity of DOL's operations, the classification of gross cost and exchange revenues by major program and suborganization is presented in Note 15 to the consolidated financial statements.
• The Consolidated Statement of Changes in Net Position, which presents the change in DOL's net position resulting from the net cost of DOL operations, budgetary financing sources other than exchange revenues, and other financing sources for the years ended September 30, 2009 and 2008.
• The Combined Statement of Budgetary Resources, which presents the budgetary resources available to DOL during FY 2009 and 2008, the status of these resources at September 30, 2009 and 2008, the change in obligated balance during FY 2009 and 2008, and net outlays of budgetary resources for the years ended September 30, 2009 and 2008.
• The Statement of Social Insurance, which presents the net present value of projected cash inflows and cash outflows of the Black Lung Disability Trust Fund as of September 30, 2009, 2008, 2007, 2006, and 2005.

---

CONSOLIDATED BALANCE SHEETS
As of September 30, 2009 and 2008
(Dollars in Thousands)

ASSETS		2009	2008
Intra-governmental
	Funds with U.S. Treasury (Notes 1-C and 2)	$14,406,751	$9,428,930
	Investments (Notes 1-D and 3)	20,111,346	73,564,675
	Accounts receivable (Notes 1-E and 4)	5,467,497	4,076,877
Total intra-governmental		39,985,594	87,070,482
Accounts receivable, net of allowance (Notes 1-E and 4)		1,353,841	976,428
Property, plant and equipment, net of accumulated depreciation (Notes 1-F and 5)		1,154,240	1,140,999
Other
	Advances (Notes 1-G and 6)	1,691,098	756,410
Total assets		$44,184,773	$89,944,319
LIABILITIES AND NET POSITION
Liabilities (Note 1-I)
Intra-governmental
	Accounts payable	$17,983	$28,782
	Debt (Notes 1-J and 8)	14,351,967	10,483,557
	Other liabilities (Note 9)	101,424	219,337
Total intra-governmental		14,471,374	10,731,676
Accounts payable		1,346,997	908,799
Accrued benefits (Notes 1-K and 10)		4,627,250	1,775,576
Future workers' compensation benefits (Notes 1-L and 11)		889,259	762,836
Other
	Energy employees occupational illness compensation benefits (Note 1-M)	8,063,563	8,099,319
	Accrued leave (Note 1-N)	107,311	111,507
	Other liabilities (Note 9)	150,442	240,849
Total liabilities		29,656,196	22,630,562
Contingencies (Note 13)
Net position (Note 1-R)
Unexpended appropriations - other funds		10,825,237	8,169,166
Cumulative results of operations
	Earmarked funds (Note 21)	4,562,666	62,052,699
	Other funds	(859,326)	(2,908,108)
Total net position		14,528,577	67,313,757
Total liabilities and net position		$44,184,773	$89,944,319

---

CONSOLIDATEDSTATEMENTS OF NET COST
For the Years Ended September 30, 2009 and 2008
(Dollars in Thousands)

				2009	2008
NETCOST OF OPERATIONS (Notes 1-S and 15)
CROSSCUTTING PROGRAMS
Income maintenance
		Gross cost		$133,351,382	$53,680,770
		Less earned revenue		(3,780,083)	(3,365,944)
			Net program cost	129,571,299	50,314,826
Employment and training
		Gross cost		7,205,646	5,703,975
		Less earned revenue		(11,439)	(12,184)
			Net program cost	7,194,207	5,691,791
Labor, employment and pension standards
		Gross cost		720,836	694,041
		Less earned revenue		(13,517)	(13,240)
			Net program cost	707,319	680,801
Worker safety and health
		Gross cost		943,808	920,563
		Less earned revenue		(2,750)	(2,837)
			Net program cost	941,058	917,726
OTHER PROGRAMS
Statistics
		Gross cost		629,399	611,049
		Less earned revenue		(8,321)	(5,275)
			Net program cost	621,078	605,774
COSTS NOT ASSIGNED TO PROGRAMS
		Gross cost		96,777	111,912
		Less earned revenue notattributed to programs		(13,247)	(15,836)
			Net cost not assigned to programs	83,530	96,076
Net cost of operations				$139,118,491	$58,306,994

---

			2009			2008
			Consolidated Earmarked Funds	Consolidated All Other Funds	Consolidated Total	Consolidated Earmarked Funds	Consolidated All Other Funds	Consolidated Total
Cumulative results of operations, beginning			$62,052,699	$(2,908,108)	$59,144,591	$65,388,181	$(2,112,853)	$63,275,328
Adjustments
	Change in accounting principle
	(Note 1-B)		-	(30,268)	(30,268)	-	-	-
Beginning balances, as adjusted			62,052,699	(2,938,376)	59,114,323	65,388,181	(2,112,853)	63,275,328
Budgetary financing sources
	(Note 1-T)
	Appropriations used		-	42,689,532	42,689,532	-	10,107,739	10,107,739
	Non-exchange revenue (Note 16)
		Employer taxes	35,954,378	-	35,954,378	38,307,831	-	38,307,831
		Interest	2,059,807	187	2,059,994	3,639,276	5,423	3,644,699
		Assessments	-	779	779	-	136,827	136,827
		Reimbursement of unemployment benefits	2,763,817	-	2,763,817	1,768,182	-	1,768,182
	Total non-exchange revenue		40,778,002	966	40,778,968	43,715,289	142,250	43,857,539
	Transfers without reimbursement (Note 17)		18,514,212	(18,414,660)	99,552	(3,683,586)	3,773,365	89,779
Other financing sources
(Note 1-U)
	Imputed financing from costs absorbed by others		170	136,483	136,653	195	117,814	118,009
	Transfers without reimbursement (Note 17)		-	2,803	2,803	-	3,191	3,191
Total financing sources			59,292,384	24,415,124	83,707,508	40,031,898	14,144,359	54,176,257
Net cost of operations			(116,782,417)	(22,336,074)	(139,118,491)	(43,367,380)	(14,939,614)	(58,306,994)
Net change			(57,490,033)	2,079,050	(55,410,983)	(3,335,482)	(795,255)	(4,130,737)
Cumulative results of operations, ending			4,562,666	(859,326)	3,703,340	62,052,699	(2,908,108)	59,144,591
Unexpended appropriations, beginning			-	8,169,166	8,169,166	-	8,207,904	8,207,904
Budgetary financing sources (Note 1-T)
	Appropriations received (Note 18-F)		-	43,475,352	43,475,352	-	10,936,004	10,936,004
	Appropriations transferred		-	2,516,238	2,516,238	-	(431,909)	(431,909)
	Appropriations not available		-	(645,987)	(645,987)	-	(435,094)	(435,094)
	Appropriations used		-	(42,689,532)	(42,689,532)	-	(10,107,739)	(10,107,739)
	Subtotal		-	2,656,071	2,656,071	-	(38,738)	(38,738)
Unexpended appropriations, ending			-	10,825,237	10,825,237	-	8,169,166	8,169,166
Net position			$4,562,666	$9,965,911	$14,528,577	$62,052,699	$5,261,058	$67,313,757

---

COMBINED STATEMENTS OF BUDGETARY RESOURCES
For the Years Ended September 30, 2009, and 2008
(Dollars in Thousands)

BUDGETARY RESOURCES				2009	2008
Unobligated balance, brought forward, October 1				$4,157,428	$4,311,781
Recoveries of prior year unpaid obligations				262,069	418,195
Budget authority
	Appropriations received (Note 18-F)			167,463,706	58,784,002
	Borrowing authority			14,445,717	426,000
	Spending authority from offsetting collections
		Earned
			Collected	1,860,954	2,947,436
			Change in receivables from Federal sources	5,136	(3,996)
		Change in unfilled customer orders
			Advance received	(23,131)	2,312
		Expenditure transfers from trust funds		5,348,330	3,772,387
Total budget authority				189,100,712	65,928,141
Nonexpenditure transfers, net				(1,703)	(9,750)
Temporarily not available pursuant to Public Law				(35,130)	(198,557)
Permanently not available
	Redemption of debt			(10,483,557)	-
	All other			(1,080,459)	(852,906)
Total budgetary resources				$181,919,360	$69,596,904
STATUS OF BUDGETARY RESOURCES
Obligations incurred (Note 18-A)
	Direct			$174,719,690	$62,457,299
	Reimbursable			3,075,035	2,982,177
Total obligations incurred				177,794,725	65,439,476
Unobligated balances available
	Apportioned			3,232,633	2,499,272
	Exempt from apportionment			301,633	239,399
Total unobligated balances available				3,534,266	2,738,671
Unobligated balances not available				590,369	1,418,757
Total status of budgetary resources				$181,919,360	$69,596,904
CHANGE IN OBLIGATED BALANCE
Obligated balance, net
	Unpaid obligations, brought forward, October 1			$9,363,199	$9,369,528
	Less uncollected customer payments from Federal sources,
	brought forward, October 1			(1,183,351)	(1,261,368)
Total unpaid obligated balance, net				8,179,848	8,108,160
Obligations incurred, net				177,794,725	65,439,476
Less gross outlays				(168,678,920)	(65,027,610)
Less recoveries of prior year unpaid obligations, actual				(262,069)	(418,195)
Change in uncollected customer payments from Federal sources				(1,148,424)	78,017
Obligated balance, net, end of period
	Unpaid obligations			18,216,935	9,363,199
	Less uncollected customer payments from Federal sources			(2,331,775)	(1,183,351)
Total unpaid obligated balance, net, end of period				$15,885,160	$8,179,848
NET OUTLAYS
	Gross outlays			$168,678,920	$65,027,610
	Less offsetting collections			(6,078,853)	(6,788,590)
	Less distributed offsetting receipts			(24,625,433)	(740,880)
	Net outlays			$137,974,634	$57,498,140

---

STATEMENT OF SOCIAL INSURANCE
As of September 30, 2009, 2008, 2007, 2006, and 2005
(Dollars in Thousands)

									Projection Periods Ending September 30, 2040
													Unaudited
									2009	2008	2007	2006	2005
BLACK LUNG DISABILITY BENEFIT PROGRAM (NOTE 1-W)
Actuarial present value of future benefit payments during the projection period to disabled coal miners and dependent survivors									$2,170,943	$2,139,810	$2,450,064	$2,722,801	$2,622,302
Present value of estimated future administrative costs during the projection period									984,996	827,437	831,439	848,218	845,158
Actuarial value of future benefit payments and estimated administrative costs during the projection period									3,155,939	2,967,247	3,281,503	3,571,019	3,467,460
Less the present value of estimated future excise tax income during the projection period									8,876,813	8,009,265	7,897,423	7,957,821	8,536,401
Excess of present value of estimated future excise tax income over actuarial present value of benefit payments and estimated administrative costs for the projection period									5,720,874	5,042,018	4,615,920	4,386,802	5,068,941
Trust fund net position deficit at start of projection period (Note 21)									(6,320,321)	(10,439,186)	(10,027,701)	(9,604,743)	(9,160,009)

---

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Reporting Entity

The U.S. Department of Labor (DOL or the Department), a cabinet level agency of the Executive Branch of the United States Government, was established in 1913, to promote the welfare of the wage earners of the United States. Today the Department's mission remains the same: to foster and promote the welfare of the job seekers, wage earners and retirees of the United States by improving their working conditions, advancing their opportunities for profitable employment, protecting their retirement and health care benefits, helping employers find workers, strengthening free collective bargaining, and tracking changes in employment, prices, and other economic measurements.

DOL is organized into major program agencies, which administer the various statutes and programs for which the Department is responsible. Through the execution of its congressionally approved budget, DOL conducts operations in five major Federal program areas, under four major budget functions: education, training, employment, and social services; health (occupational health and safety); income security; and national defense. DOL's major program agencies, major programs in which they operate, and the relationship of these programs to the Department's 2009 Strategic Goals are shown below.

1. Major program agencies

• Employment and Training Administration (ETA)
• Employment Standards Administration (ESA)
• Office of Job Corps
• Occupational Safety and Health Administration (OSHA)
• Bureau of Labor Statistics (BLS)
• Mine Safety and Health Administration (MSHA)
• Employee Benefits Security Administration (EBSA)
• Veterans' Employment and Training Services (VETS)
• Other Departmental Programs
• Office of the Assistant Secretary for Administration and Management
• Office of the Solicitor
• Office of the Chief Financial Officer
• Office of Inspector General
• Bureau of International Labor Affairs
• Women's Bureau
• Office of Disability Employment Policy

The Pension Benefit Guaranty Corporation (PBGC), a wholly owned Federal government corporation under the chairmanship of the Secretary of Labor, has been designated by the Office of Management and Budget (OMB) as a separate reporting entity for financial statement purposes and has been excluded from the DOL reporting entity for purposes of these consolidated financial statements.

2. Major programs

• Income maintenance — Strategic Goal 4
• Employment and training — Strategic Goals 1 and 2
• Labor, employment, and pension standards — Strategic Goals 3 and 4
• Worker safety and health — Strategic Goal 3
• Statistics — Strategic Goal 1

Note 15 shows expenses by major program agencies which correspond to the Department's strategic goals.

3. Fund accounting structure

DOL's financial activities are accounted for by Federal account symbol, utilizing individual funds and fund accounts within distinct fund types used in reporting to Treasury Financial Management Services and OMB. For financial statement purposes, funds are classified as earmarked funds, fiduciary funds and all other funds.

Earmarked funds are financed by specifically identified revenues often supplemented by other financing sources which remain available over time. These specifically identified revenues and other financing sources are required by statute to be used for designated activities, benefits, or purposes and must be accounted for separately from the Government's general revenues.

Fiduciary activities are the collection or receipt, and the management, protection, accounting, investment and disposition by the Federal Government of cash or other assets in which non-Federal individuals or entities have an ownership interest that the Federal Government must uphold. Fiduciary cash and other assets are not assets of the Federal Government and accordingly are not recognized on the balance sheet.

Earmarked funds, fiduciary funds and all other funds are identified as follows:

Earmarked funds

The Unemployment Trust Fund was established under the authority of Section 904 of the Social Security Act of 1935, as amended, to receive, hold, invest, and disburse monies collected under the Federal Unemployment Tax Act, as well as state unemployment taxes collected by the states and transferred to the Fund, and unemployment taxes collected by the Railroad Retirement Board and transferred to the Fund.

The Black Lung Disability Trust Fund, established under Part C of the Black Lung Benefits Revenue Act, provides compensation and medical benefits to coal miners who suffer disability due to pneumoconiosis, and compensation benefits to their dependent survivors for claims filed subsequent to June 30, 1973. Claims filed from the origination of the program until June 30, 1973 are paid by the general fund Special Benefits to Disabled Coal Miners.

The Gifts and Bequests Fund uses miscellaneous funds received by gift or bequest to support various activities of the Secretary of Labor.

The Panama Canal Commission Compensation Fund was established to pay workers compensation obligations of the Panama Canal Commission under the Federal Employees' Compensation Act from funding provided by the Commission.

H-1B Funds provide demonstration grants to regional and local entities to provide technical skills training to unemployed and incumbent workers. The funds are supported by fees paid by employers applying for foreign workers under the H-1B temporary alien labor certification program authorized by the American Competitiveness and Workforce Improvement Act of 1998.

Fiduciary funds

• Trust funds

The Longshore and Harbor Workers' Compensation Act Trust Fund, established under the authority of the Longshore and Harbor Workers' Compensation Act, provides medical benefits, compensation for lost wages, and rehabilitation services for job-related injuries and diseases or death to private sector workers in certain maritime and related employment. The Act authorizes the Department to assess insurance carriers on behalf of these beneficiaries.

The District of Columbia Workmen's Compensation Act Trust Fund, established under the authority District of Columbia Workmen's Compensation Act, provides compensation and medical payments to District of Columbia employees for work-related injuries or death which occurred prior to July 26, 1982. The Act authorizes the Department to assess insurance carriers on behalf of these beneficiaries.

• Deposit fund

The Wage and Hour and Public Contracts Restitution Fund, established by the Fair Labor Standards Amendments of 1949, authorized the Department to assess employers for any unpaid minimum wages or unpaid overtime compensation owed to any employee or employees as a result of violation of labor laws and statutes and pay these wages directly to the employee or employees affected.

All other funds

• General funds

Salaries and Expenses include appropriated funds which are used to carry out the missions and functions of the Department, except where specifically provided for from other Departmental funds.

Training and Employment Services provides for a flexible, decentralized system of Federal and local programs of training and other services for the economically disadvantaged designed to lead to permanent gains in employment, through grants to states and Federal programs such as Job Corps, authorized by the Workforce Investment Act and the Job Training Partnership Act. Management and administration of Job Corps activities was transferred from the Employment and Training Administration to an autonomous office under the Secretary during FY 2006. Job Corps funding, appropriated to ETA in 2006 and 2007, was transferred to the Office of Job Corps via an allotment process.

The Office of Job Corps supports the administration and management of the Job Corps program, which helps at-risk youth who need and can benefit from intensive education and training services to become more employable, responsible, and productive citizens. The Consolidated Appropriations Act, 2008 appropriated Job Corps funding directly to the Office of Job Corps, requiring the creation of a new Federal account symbol for the Office of Job Corps. In FY 2008, Job Corps costs associated with the 2008 appropriation were reported under a new sub-organization for the Office of Job Corps at the Departmental level. Costs associated with prior year appropriations were reported under the Employment and Training Administration's Training and Employment Services where they were originally budgeted and appropriated. In FY 2009, under mandate by OMB, all outstanding Job Corps balances under prior year appropriations were transferred from ETA to the sub-organization for the Office of Job Corps at the Departmental level.

Welfare to Work Jobs provides funding for the activities of the Welfare-to-Work Grants program established by the Balanced Budget Act of 1997. The program provides formula grants to States and Federally administered competitive grants to other eligible entities to assist welfare recipients in securing lasting unsubsidized employment.

State Unemployment Insurance and Employment Service Operations includes grants to states for administering the Unemployment Compensation and Employment Service programs. Unemployment Compensation provides administrative grants to state agencies which pay unemployment benefits to eligible individuals and collect state unemployment taxes from employers. The Employment Service is a nationwide system providing no-fee employment services to individuals seeking employment and to employers seeking workers. Employment Service activities are financed by allotments to states distributed under a demographically based funding formula established under the Wagner-Peyser Act, as amended.

Payments to the Unemployment Trust Fund was initiated as a result of amendments to the Emergency Unemployment Compensation (EUC) law, which provided general fund financing to the Unemployment Trust Fund to pay emergency unemployment benefits and the administrative costs.

Advances to the Unemployment Trust Fund and Other Funds provides advances to other accounts within the Unemployment Trust Fund to pay unemployment compensation whenever the balances in these accounts prove insufficient or whenever reimbursements to certain accounts, as allowed by law, are to be made. This account also provides loans to the Black Lung Disability Trust Fund to make disability payments whenever the fund balance proves insufficient.

Federal Unemployment Benefits and Allowances provides for payment of benefits, training, job search, and relocation allowances as authorized by the Trade Act of 1974.

Community Service Employment for Older Americans provides part time work experience in community service activities to unemployed, low income persons aged 55 and over.

The Federal Employees' Compensation Act Special Benefit Fund provides wage replacement benefits and payment for medical services to covered Federal civilian employees injured on the job, employees who have incurred a work-related occupational disease, and beneficiaries of employees whose death is attributable to a job-related injury. The Fund also provides for rehabilitation of injured employees to facilitate their return to work.

The Energy Employees Occupational Illness Compensation Fund was established to adjudicate, administer, and pay claims for benefits under the Energy Employees Occupational Illness Compensation Program Act of 2000. The Act authorizes lump sum payments and the reimbursement of medical expenses to employees of the Department of Energy (DOE) or of private companies under contract with DOE, who suffer from specified diseases as a result of their work in the nuclear weapons industry. The Act also authorizes compensation to the survivors of these employees under certain circumstances. The Act was amended by the Ronald Reagan National Defense Authorization Act of 2005 to provide coverage to additional claimants.

Special Benefits for Disabled Coal Miners was established under the Federal Mine Safety and Health Act to pay benefits to coal miners disabled from pneumoconiosis and to their widows and certain other dependents. Part B of the Act assigned processing of claims filed from the origination of the program until June 30, 1973 to the Social Security Administration. Part B claims processing and payment operations were transferred to DOL effective October 1, 2003.

Federal Additional Unemployment Compensation was established under the American Recovery and Reinvestment Act of 2009 (Recovery Act) to provide a $25 weekly supplement to the unemployment compensation of eligible claimants.

The Recovery Act was enacted on February 17th, 2009. DOL's key roles in the Recovery Act effort include providing worker training for jobs and easing the burden of the recession on workers and employers by providing extended and expanded unemployment benefits and assisting and educating them regarding expanded access to continued health benefits. These efforts are funded through additional Federal account symbols, established under existing programs, including Training and Employment Services, Office of Job Corps, State Unemployment Insurance and Employment Service Operations, and Payments to the Unemployment Trust Fund.

• Revolving funds

The Working Capital Fund maintains and operates a program of centralized services in the national office and the field. The Fund is paid in advance by the agencies, bureaus, and offices for which centralized services are provided, at rates which return the full cost of operations.

• Miscellaneous receipt and clearing accounts

Miscellaneous receipt accounts hold non-entity receipts and accounts receivable from DOL activities which by law cannot be deposited into funds under DOL control. The U.S. Department of the Treasury (Treasury) automatically transfers all cash balances in these receipt accounts to the general fund of the Treasury at the end of each fiscal year.

Clearing accounts hold monies which belong to DOL, but for which a specific receipt account has not been determined.

• Deposit funds

Deposit funds account for monies held temporarily by DOL until ownership is determined, or monies held by DOL as an agent for others.

4. Inter-departmental relationships

DOL and Treasury are jointly responsible for the operations of the Unemployment Trust Fund and the Black Lung Disability Trust Fund. DOL is responsible for the administrative oversight and policy direction of the programs financed by these trust funds. Treasury acts as custodian over monies deposited into the funds and also invests amounts in excess of disbursing requirements in Treasury securities on behalf of DOL. DOL consolidates the financial results of the Unemployment Trust Fund and the Black Lung Disability Trust Fund into these financial statements.

B. Basis of Accounting and Presentation

These consolidated financial statements present the financial position, net cost of operations, changes in net position and budgetary resources of the U.S. Department of Labor, and estimated and actuarial projections for the Department's Black Lung social insurance program, in accordance with U.S. generally accepted accounting principles and the form and content requirements of OMB Circular No. A 136, “Financial Reporting Requirements.” Except as described in the following paragraphs, they have been prepared from the books and records of DOL, and include the accounts of all funds under the control of the DOL reporting entity. All inter-fund balances and transactions have been eliminated, except in the Statement of Budgetary Resources. OMB Circular No. A-136 requires that the Statement of Budgetary Resources be presented on a combined basis.

DOL is a party to allocation transfers with other Federal agencies as both a transferring (parent) entity and a receiving (child) entity. Allocation transfers are legal delegations by one department of its authority to obligate budget authority and outlay funds to another department. A separate fund account (allocation account) is created in the U.S. Treasury as a subset of the parent fund account for tracking and reporting purposes. All allocation transfers of balances are credited to this account, and subsequent obligations and outlays incurred by the child entity are charged to this allocation account as they execute the delegated activity on behalf of the parent entity.

OMB Circular No. A-136 requires the parent to report all budgetary and proprietary activity in its financial statements. DOL allocates appropriations to the Department of Agriculture and the Department of Interior to provide funds for youth training programs. Accordingly, all activity for these allocation accounts is included in the DOL financial statements for FY 2009 and FY 2008. Appropriations have been allocated to DOL from the Environmental Protection Agency, the State Department and the Agency for International Development. These amounts have not been included in the DOL financial statements for FY 2009 or FY 2008, as they are reported by those other agencies.

Effective in FY 2009, paragraphs 83-87 of Statement of Federal Financial Accounting Standards (SFFAS) 7 ("dedicated collections") have been rescinded per paragraph 34 of SFFAS 31, "Accounting for Fiduciary Activities.” Fiduciary activities are the collection or receipt, and the management, protection, accounting, investment and disposition by the Federal Government of cash or other assets in which non-Federal individuals or entities have an ownership interest that the Federal Government must uphold. Fiduciary cash and other assets are not assets of the Federal Government. Fiduciary activities are no longer recognized on the proprietary financial statements, but are required to be reported in the notes to the financial statements. (See Note 22) The effect of removing the funds which account for these fiduciary activities from the proprietary financial statements on beginning cumulative results of operations is reflected as a change in accounting principle on the Consolidated Statement of Changes in Net Position.

U.S. generally accepted accounting principles encompass both accrual and budgetary transactions. Under accrual accounting, revenues are recognized when earned, and expenses are recognized when a liability is incurred. Budgetary accounting facilitates compliance with legal constraints on, and controls over, the use of federal funds. These consolidated financial statements are different from the financial reports, also prepared by DOL pursuant to OMB directives, used to monitor DOL's use of budgetary resources.

Throughout these financial statements, intra-governmental assets, liabilities, earned revenue, and costs have been classified according to the type of entity with whom the transactions were made. Intra-governmental assets and liabilities are those from or to other federal entities. Intra-governmental earned revenue represents collections or accruals of revenue from other federal entities, and intra-governmental costs are payments or accruals to other federal entities.

C. Funds with U.S. Treasury

DOL's cash receipts and disbursements are processed by the U.S. Treasury. Funds with U.S. Treasury represent obligated and unobligated balances available to finance allowable expenditures and restricted balances, including amounts related to expired authority and amounts not available for use by DOL. (See Note 2)

D. Investments

The Federal Government does not set aside assets to pay future benefits or other expenditures associated with DOL's earmarked funds. The cash receipts collected from the public for earmarked funds are deposited in the U.S. Treasury, which uses the cash for general Government purposes. Interest earning Treasury securities are issued to DOL's earmarked funds as evidence of the receipts. These Treasury securities are assets to DOL and liabilities to the U.S. Treasury. Because DOL and the U.S. Treasury are both parts of the Government, these assets and liabilities offset each other from the standpoint of the Government as a whole. For this reason, they do not represent an asset or a liability in the U.S. Government-wide financial statements. Treasury securities provide DOL with authority to draw upon the U.S. Treasury to make future benefit payments or other expenditures. When DOL requires redemption of these securities to make expenditures, the Government finances those expenditures out of accumulated cash balances, by raising taxes or other receipts, by borrowing from the public or repaying less debt, or by curtailing other expenditures. This is the same way that the Government finances all other expenditures.

Balances held in the Unemployment Trust Fund are invested in non-marketable, special issue Treasury securities (certificates of indebtedness and bonds) available for purchase exclusively by Federal government agencies and
trust funds. Special issues are purchased and redeemed at face value (cost), which is equivalent to their net carrying value on the Consolidated Balance Sheet. Interest rates and maturity dates vary. Balances held in the Panama Canal Commission Compensation Fund are invested in marketable Treasury securities. These investments are stated at amortized costs that equal to their net carrying value on the Consolidated Balance Sheet. Discounts and premiums are amortized using the effective interest method. Interest rates and maturity dates vary. Management expects to hold these marketable securities until maturity; therefore, no provision is made in the financial statements for unrealized gains or losses. Balances held in the Energy Employees Occupational Illness Compensation Fund are invested in non-marketable Treasury one day certificates. In FY 2008, balances held in the Longshore and Harbor Workers' Compensation Act Trust Fund and the District of Columbia Workmen's Compensation Act Trust Fund were invested in non-marketable Treasury one day certificates. (See Note 3)

E. Accounts Receivable, Net of Allowance

Accounts receivable consists of intra-governmental amounts due to DOL, as well as amounts due from the public.

1. Intra-governmental accounts receivable

The Federal Employees Compensation (FEC) account within the Unemployment Trust Fund provides unemployment insurance to eligible Federal workers (UCFE) and ex-service members (UCX). DOL recognizes as accounts receivable amounts due from other Federal agencies for unreimbursed UCFE and UCX benefits. DOL's Federal Employees' Compensation Act (FECA) Special Benefit Fund provides workers' compensation benefits to eligible Federal workers on behalf of other Federal agencies. DOL recognizes as accounts receivable amounts due from other Federal agencies to the Special Benefit Fund for unreimbursed FECA benefits.

DOL also has receivables from other Federal agencies for work performed on their behalf under various reimbursable agreements.

2. Accounts receivable due from the public

DOL recognizes as accounts receivable State unemployment taxes due from covered employers and reimbursements of benefits paid on behalf of reimbursable employers. Also recognized as accounts receivable are benefit overpayments made by DOL to individuals not entitled to receive the benefit.

DOL recognizes as accounts receivable amounts due from the public for fines and penalties levied against employers by OSHA, MSHA, ESA, and EBSA; for amounts due for backwages assessed against employers by ESA; and for amounts due from grantees and contractors for grant and contract costs disallowed by ETA.

3. Allowance for doubtful accounts

Accounts receivable due from the public are stated net of an allowance for uncollectible accounts. The allowance is estimated based on an aging of account balances, past collection experience, and an analysis of outstanding accounts at year-end. Intra-governmental accounts receivable are considered fully collectible. (See Note 4)

F. Property, Plant and Equipment, Net of Accumulated Depreciation

The majority of DOL's property, plant and equipment (PP&E) is general purpose PP&E held by Job Corps centers owned and operated by DOL through a network of contractors. Internal use software is considered general purpose PP&E.

DOL's capitalization thresholds are displayed in the following table.

Property classification	Prior to FY 1996	FY 1996 through FY 2001	FY 2002 and thereafter	Useful life
Equipment — WCF	> $5,000	> $5,000	>= $50,000	>= 2 years
Equipment — Non WCF	> $5,000	> $25,000	>= $50,000	>= 2 years
Real Property Purchases or Improvements	> $5,000	> $25,000	> $500,000	>= 2 years
Leasehold Improvements	> $5,000	> $25,000	> $500,000	>= 2 years
Internal Use Software — WCF	> $5,000	> $5,000	> $300,000	>= 2 years
Internal Use Software — Non WCF	> $5,000	> $300,000	> $300,000	>= 2 years

PP&E purchases and additions are stated at cost. Normal repairs and maintenance are charged to expense as incurred. PP&E are depreciated over their estimated useful lives using the straight — line method of depreciation.

Job Corps center construction costs are capitalized as construction-in-progress until completed. Upon completion they are reclassified as structures or facilities and depreciated over their estimated useful lives. Leasehold improvements made at Job Corps centers and DOL facilities leased from the General Services Administration are recorded at cost and amortized over the remaining life of the lease or the useful life of the improvements, whichever is shorter, using the straight-line method of amortization. DOL operating leases have one year terms with multiple option years. The leases are cancelable by the government upon appropriate notice as specified in the lease agreements. Historically, these leases have not been canceled, and DOL has no intention to cancel these leases in the near term.

Internal use software development costs are capitalized as software development in progress until the development stage has been completed and successfully tested. Upon completion and testing, software development-in-progress costs are reclassified as internal use software and amortized over their estimated useful lives.

The table below shows the major classes of DOL's depreciable PP&E, and the depreciation periods used for each major classification. (See Note 5)

	Years
Structures, facilities and improvements	20 ‑ 50
Furniture and equipment	2 ‑ 36
Internal use software	2 - 15

G. Advances

DOL advances consist primarily of payments made to State employment security agencies (SESAs), and to grantees and contractors to provide for future DOL program expenditures. These advance payments are recorded by DOL as an asset, which is reduced when actual expenditures or the accrual of unreported expenditures are recorded by DOL. (See Note 6)

H. Non-entity Assets

Assets held by DOL which are not available to DOL for obligation are considered non-entity assets. DOL holds non-entity assets for the Railroad Retirement Board and for transfer to the U.S. Treasury. (See Note 7)

I. Liabilities

Liabilities represent probable amounts to be paid by DOL as a result of past transactions, and are recognized when incurred, regardless of whether there are budgetary resources available to pay them. However, the liquidation of these liabilities will consume budgetary resources and cannot be made until available resources have been obligated. For financial reporting purposes, DOL's liabilities are classified as covered or not covered by budgetary resources.

Liabilities are classified as covered by budgetary resources if budgetary resources are available. Liabilities are also considered covered by budgetary resources if they are to be funded by permanent indefinite appropriations, which have been enacted and signed into law and are available for use as of the balance sheet date, provided that the resources may be apportioned by OMB without further action by the Congress and without a contingency having to be met first. Liabilities are classified as not covered by budgetary resources if budgetary resources are not available. These classifications differ from budgetary reporting, which categorizes liabilities as obligated, consuming budgetary resources, or unobligated, not consuming budgetary resources. Unobligated liabilities include those covered liabilities for which available budgetary resources have not been obligated, as well as liabilities not covered for which budgetary resources are not available. (See Notes 11 and 12)

J. Debt

DOL's debt consisted of the following:

1. Black Lung Disability Trust Fund borrowings from U.S. Treasury

Repayable advances outstanding as of September 30, 2008 were retired on October 7, 2008 under the refinancing agreement authorized by the enactment of the Energy Improvement and Extension Act of 2008 (P.L. 110-343, section 113) on October 3, 2008. The Act gave authority to the Black Lung Disability Trust Fund to issue new obligations to the Secretary of Treasury and gave authority to the Secretary of Treasury to purchase the new obligations. However, as the Act did not provide Treasury with an appropriated funding for the purchase, the refinancing could not be effected as a sale and purchase and was therefore treated by Treasury as a loan through Treasury's Federal Borrowings Program.

These borrowings from Treasury's Bureau of Public Debt were structured with provisions identical to the zero-coupon bonds that were to be the original obligations issued by the Trust Fund. The borrowings repayment provisions are structured as 32 discounted instruments with sequential annual September 30th maturities over the 32-year period 2009 through 2040 and bear interest rates ranging from 1.412% to 4.556%. Interest on each instrument accrues until its September 30th maturity date or the instrument is prepaid, whichever occurs first. These repayments will be funded by coal excise taxes. In the event that the Trust Fund cannot repay a discounted instrument when it matures, cannot make benefit payments, or cannot make other authorized expenditures, the Act authorizes the issuance of one-year discounted instruments to finance these activities. There were no additional borrowings in FY 2009.

The Act authorized restructuring of the Trust Fund debt by the repayment of the market value of outstanding repayable advances with the proceeds of the borrowings described above and a one-time appropriation. Pursuant to the refinancing, the market value of the outstanding repayable Advances from U.S. Treasury plus accrued interest was $12.994 billion. The total value of the new borrowings was $6.496 billion. The one-time appropriation amount was $6.498 billion. The Trust Fund recognized a loss of $2.496 billion for the difference between the market value of the outstanding advances of $12.994 billion as determined by Treasury and the carrying value of the outstanding advances and accrued interest of $10.498 billion.

2. Black Lung Disability Trust Fund advances from U.S. Treasury

Prior to October 3, 2008, the Benefits Revenue Act provided for repayable advances to DOL's Black Lung Disability Trust Fund when fund resources are not adequate to meet fund obligations. Budget authority is derived from the Black Lung Disability Trust Fund's indefinite authority to borrow. Repayable advances were provided through transfers from the Advances to the Unemployment Trust Fund and Other Funds appropriation, to the extent of borrowings under the authority. Advances were payable with interest rate equal to the current average market yield on outstanding marketable obligations of the United States with remaining periods to maturity comparable to the anticipated period during which the advance will be outstanding. Advances made prior to 1982 carried rates of interest equal to the average rate borne by all marketable interest-bearing obligations of the United States then forming a part of the public debt. Outstanding advances bore interest rates ranging from 4.250% to 13.875% at September 30, 2008.

3. Unemployment Trust Fund advances from U.S. Treasury

The repayable advances outstanding as of September 30, 2009 are borrowings from the General Fund of the U.S. Treasury pursuant to the authority of section 1203 of the Social Security Act (42 USC 1323) and appropriated through P.L. 111-8 (123 Stat. 754) and P.L. 111-46 (123 Stat. 1970) to fund Title XII loans to states for unemployment benefits. These repayable advances bear an interest rate of 3.375% and were computed as the average interest rate, as of the end of the calendar month preceding the issuance date of the advance, for all interest bearing obligations of the United States then forming the public debt, to the nearest lower one-eighth of 1 percent. Interest on the repayable advances is due on September 30th of each year. Advances will be repaid by transfers from the Unemployment Trust Fund to the General Fund of the Treasury when the Secretary of the Treasury, in consultation with the Secretary of Labor, has determined that the balance in the Unemployment Trust Fund is adequate to allow repayment.

K. Accrued Benefits

The financial statements include a liability for unemployment, workers' compensation, and disability benefits due and payable from various DOL funds, as discussed below. (See Note 10)

1. Unemployment benefits payable

The Unemployment Trust Fund provides benefits to unemployed workers who meet State and Federal eligibility requirements. Regular and extended unemployment benefits are paid from State accounts within the Unemployment Trust Fund, financed primarily by a State unemployment tax on employer payrolls. Fifty percent of the cost of extended unemployment benefits is paid from the Extended Unemployment Compensation Account (EUCA) within the Unemployment Trust Fund, financed by a Federal unemployment tax on employer payrolls. However, the Recovery Act has provided for a 100% Federal funding of extended benefits through December 2009. Emergency unemployment benefits, 2008, authorized by the Supplemental Appropriations Act, 2008, are paid from EUCA and are financed by Federal unemployment taxes and general fund appropriations. This emergency program has been extended to May 2010 by the Recovery Act, which also provided additional general fund appropriations. Emergency benefits were paid in prior years under the Temporary Extended Unemployment Compensation Act and the Emergency Unemployment Compensation Act. Unemployment benefits to unemployed Federal workers are paid from the Federal Employment Compensation Account within the Unemployment Trust Fund. These benefit costs are reimbursed by the responsible Federal agency. The Recovery Act also provided for Federal Additional Unemployment Compensation, which is a $25 weekly supplement to the unemployment compensation of eligible claimants. This supplement is 100% funded from Federal general revenues and is payable to individuals who are otherwise entitled under state law to receive any type of unemployment compensation discussed above through December 2009. A liability is recognized for unpaid unemployment benefits applicable to the current period and for benefits paid by states that have not been reimbursed by the fund. DOL also recognizes a liability for Federal employees' unemployment benefits to the extent of unpaid benefits for existing claims filed during the current period, payable in the subsequent period.

2. Federal employees disability and 10(h) benefits payable

The Federal Employees' Compensation Act Special Benefit Fund provides income and medical cost protection to covered Federal civilian employees injured on the job, employees who have incurred a work-related occupational disease and beneficiaries of employees whose death is attributable to a job-related injury or occupational disease. The fund is reimbursed by other Federal agencies for the FECA benefit payments made on behalf of their workers. The fund assumes the liability for unreimbursed (non-chargeable) FECA benefits. The fund also provides 50% of the annual cost-of-living adjustments for pre-1972 compensation cases under the authority of Section 10(h) of the Longshore and Harbor Workers' Compensation Act and the District of Columbia Workmen's Compensation Act. A liability for FECA benefits payable by the Special Benefit Fund to the employees of DOL and other Federal agencies and for 10(h) benefits is accrued to the extent of unpaid benefits applicable to the current period.

3. Black lung disability benefits payable

The Black Lung Disability Trust Fund and Special Benefits for Disabled Coal Miners provide compensation and medical benefits for eligible coal miners who are disabled due to pneumoconiosis (black lung disease). DOL recognizes a liability for disability benefits to the extent of unpaid benefits applicable to the current period.

4. Energy employees occupational illness compensation benefits payable

The Energy Employees Occupational Illness Compensation Fund provides benefits to eligible current or former employees of the Department of Energy (DOE) and its contractors suffering from designated illnesses incurred as a result of their work with DOE. Benefits are also paid to certain survivors of those employees and contractors, as well as to certain beneficiaries of the Radiation Exposure Compensation Act (RECA). DOL recognizes a liability for disability benefits to the extent of unpaid benefits applicable to the current period.

L. Future Workers' Compensation Benefits

The financial statements include an actuarial liability for future workers' compensation benefits payable by DOL to its employees, to employees of the Panama Canal Commission and to enrollees of the Job Corps, as well as benefits not chargeable to other Federal agencies, which must be paid by DOL's Federal Employees' Compensation Act Special Benefit Fund. The liability includes the expected payments for death, disability, medical, and miscellaneous costs for approved compensation cases, as well as a component for incurred but not reported claims. The liability is determined using historical benefit payment patterns related to injury years to predict the ultimate payments.

The actuarial methodology provides for the effects of inflation and adjusts historical payments to current year constant dollars by applying wage inflation factors (cost of living adjustments or COLAs) and medical inflation factors (consumer price index-medical or CPIMs) to the calculation of projected benefits. The COLAs and CPIMs used in the projections for FY 2009 and FY 2008 were as follows:

	COLA		CPIM
FY	2009	2008	2009	2008
2009	N/A	3.87%	N/A	4.01%
2010	0.47%	2.73%	3.42%	3.86%
2011	1.40%	2.20%	3.29%	3.87%
2012	1.50%	2.23%	3.48%	3.93%
2013	1.80%	2.30%	3.71%	3.93%
2014+	2.00%	2.30%	3.71%	3.93%

Projected annual payments were discounted to present value based on OMB's interest rate assumptions for ten year Treasury notes. For 2009, interest rate assumptions were 4.223% in year one and 4.715% in year two and thereafter. For 2008, interest rate assumptions were 4.368% in year one and 4.77% in year two and thereafter. (See Note 11)

M. Energy Employees Occupational Illness Compensation Benefits

The Energy Employees Occupational Illness Compensation Fund, established under the authority of the Energy Employees Occupational Illness Compensation Program Act of 2000 (EEOICPA), provides benefits to eligible current or former employees of DOE and its contractors, or to certain survivors of those employees and contractors, as well as benefits to certain beneficiaries of the Radiation Exposure Compensation Act (RECA). DOL is responsible for adjudicating and administering claims filed under the EEOICPA. Effective July 31, 2001, compensation of $150,000 and payment of medical expenses from the date a claim is filed are available to covered individuals suffering from designated illnesses incurred as a result of their work with DOE. Prior to October 2004, compensation of $50,000 and payment of medical expenses from the date a claim is filed are available to individuals eligible for compensation under RECA. As a result of the October 2004 changes, new RECA cases are paid the full $150,000 under EEOICPA.

The Ronald Reagan National Defense Authorization Act of 2005 amended EEOICPA to include Subtitle E — Contractor Employee Compensation. This amendment replaces Part D of the EEOICPA, which provided assistance from DOE in obtaining state workers' compensation benefits. The new program grants workers' compensation benefits to covered employees and their families for illness and death arising from exposure to toxic substances at a DOE facility. The amendment also makes it possible for uranium workers as defined under Section 5 of RECA to receive compensation under Part E for illnesses due to toxic substance exposure at a uranium mine or mill covered under that Act. These claims were formerly paid by the Department of Justice (DOJ).

DOL has recognized an $8.064 billion and $8.099 billion actuarial liability for estimated future benefits payable by DOL at September 30, 2009 and 2008, respectively, to eligible individuals under the EEOICPA. At September 30, 2009, the undiscounted liability is $12.759 billion discounted to a present value liability of $8.064 billion based on an interest rate of 4.715% projected over a 51 year period. At September 30, 2008, the undiscounted liability is $13.066 billion discounted to a present value liability of $8.099 billion based on an interest rate 4.770% projected over a 52 year period. The estimated liability includes the expected lump sum and estimated medical payments for approved compensation cases and cases filed pending approval, as well as claims incurred but not yet filed. The actuarial projection methodology provided an estimate of the ultimate number of reported cases as a result of estimating future claims from the historical patterns of reported claims and subsequent claim approval rates. Medical payments were derived by estimating an average benefit award per living employee claimant.

N. Accrued Leave

A liability for annual and compensatory leave is accrued as leave is earned and paid when leave is taken. The balance of leave earned but not taken will be paid from future funding sources. Sick leave and other types of non-vested leave are expensed as taken.

O. Employee Health and Life Insurance Benefits

DOL employees are eligible to participate in the contributory Federal Employees Health Benefit Program (FEHBP) and the Federal Employees Group Life Insurance Program (FEGLIP). DOL matches the employee contributions to each program to pay for current benefits. During 2009, DOL's contributions to the FEHBP and FEGLIP were $82.5 and $2.2 million, respectively. During 2008, DOL's contributions to the FEHBP and FEGLIP were $79.6 and $2.1 million, respectively. These contributions are recognized as current operating expenses.

P. Other Retirement Benefits

DOL employees eligible to participate in the FEHBP and the FEGLIP may continue to participate in these programs after their retirement. DOL recognizes a current operating expense for the future cost of these other retirement benefits (ORB) at the time the employee's services are rendered. This ORB expense must be financed by OPM. Using cost factors supplied by OPM, DOL recorded ORB imputed costs and imputed financing sources of $97.5 million in 2009 and $81.1 million in 2008.

Q. Employee Pension Benefits

DOL employees participate in either the Civil Service Retirement System (CSRS) or the Federal Employees' Retirement System (FERS). For employees participating in CSRS, 7.0% of their gross earnings is withheld and transferred to the Civil Service Retirement and Disability Fund. DOL contributes an additional 7.0% of the employee gross earnings to the Civil Service Retirement and Disability Fund. For employees participating in FERS, DOL withholds 0.8% of gross earnings and makes an 11.2% employer contribution. This total is transferred to the Federal Employees' Retirement Fund. The CSRS and FERS retirement funds are administered by the OPM. DOL contributions to the CSRS and FERS are recognized as current operating expenses. FERS participants are also covered under the Federal Insurance Contribution Act (FICA) and are subject to withholdings. DOL makes matching FICA contributions, recognized as operating expenses. DOL's matching contributions were $78.5 million in 2009 and $74.5 million in 2008.

The Thrift Savings Plan (TSP) is a defined contribution retirement savings and investment plan for employees covered by either CSRS or FERS. CSRS participants may contribute up to $15,500 of their gross pay to the TSP during calendar year 2009, but there is no departmental matching contribution. FERS participants may contribute up to $15,500 of their gross pay to the TSP during calendar year 2009. CSRS and FERS contribution limits were the same during calendar year 2008. For employees covered under FERS, DOL contributes 1% of the employees' gross pay to the TSP. DOL also matches employees' contributions dollar-for-dollar on the first 3% of pay contributed each pay
period and 50 cents on the dollar for the next 2% of pay contributed. DOL contributions to the TSP are recognized as current operating expenses. Employee and employer contributions to the TSP are transferred to the Federal Retirement Thrift Investment Board.

DOL recognizes the full cost of providing future CSRS and FERS pension benefits to covered employees at the time the employees' services are rendered. The pension expense recognized in the financial statements equals the service cost for covered DOL employees, less amounts contributed by these employees. Service cost represents the actuarial present value of benefits attributed to services rendered by covered employees during the accounting period.

The measurement of service cost requires the use of actuarial cost methods to determine the percentage of the employees' basic compensation sufficient to fund their projected pension benefit. These percentages (cost factors) are provided by OPM, and applied by DOL to the basic annual compensation of covered employees to arrive at the amount of total pension expense to be recognized in DOL's financial statements.

The excess of total pension expense over the amount contributed by the Department and by DOL's employees represents the amount of pension expense which must be financed directly by OPM. DOL recognized an imputed cost and an imputed financing source equal to the excess amount. DOL does not recognize in its financial statements FERS or CSRS assets, accumulated plan benefits or unfunded liabilities, if any, applicable to its employees. (See Note 14)

R. Net Position

DOL's net position consists of the following:

1. Unexpended appropriations

Unexpended appropriations include the unobligated balances and undelivered orders of DOL's appropriated funds. Unobligated balances associated with appropriations that expire at the end of the fiscal year remain available for obligation adjustments, but not new obligations, until those appropriations are closed, five years after the appropriations expire. Unexpired multi-year and no-year appropriations remain available to DOL for obligation in future periods.

2. Cumulative results of operations

Cumulative results of operations include the accumulated historical difference between expenses consuming budgetary resources and financing sources providing budgetary resources in DOL's trust, revolving and special funds; liabilities not consuming budgetary resources net of assets not providing budgetary resources; and DOL's net investment in capitalized assets.

S. Net Cost of Operations

1. Operating costs

Full operating costs are comprised of all direct costs consumed by the program and those indirect costs which can be reasonably assigned or allocated to the program. Full costs are reduced by exchange (earned) revenues to arrive at net program cost. The full and net operating costs of DOL's major programs are presented in the Consolidated Statements of Net Cost, and are also reported by sub-organization in Note 15 to the financial statements.

2. Earned revenue

Earned revenues arise from exchange transactions which occur through the provision of goods and services for a price, and are deducted from the full cost of DOL's major programs to arrive at net program cost. Earned revenues are recognized by DOL to the extent reimbursements are payable from other Federal agencies and from the public, as a result of costs incurred or services performed on their behalf. Major sources of DOL's earned revenue include reimbursements to the Federal Employees' Compensation Act Special Benefit Fund from Federal agencies for the costs of disability compensation and medical care provided to or accrued on behalf of their employees, and reimbursements to the Unemployment Trust Fund from Federal agencies for the cost of unemployment benefits provided to or accrued on behalf of their former employees.

T. Budgetary Financing Sources

Budgetary financing sources other than earned revenues provide funding for the Department's net cost of operations and are reported on the Consolidated Statement of Changes in Net Position. These financing sources include appropriations received, less appropriations transferred and not available, non-exchange revenue, and transfers without reimbursement, as discussed below:

1. Appropriations received, appropriations transferred and appropriations not available

DOL receives financing sources through congressional appropriations to support its operations. A financing source is recognized for these appropriated funds received, less appropriations transferred or not available through rescission or cancellation.

2. Non-exchange revenue

Non-exchange revenues arise primarily from the Federal government's power to demand payments from the public. Non-exchange revenues are recognized by DOL on the Consolidated Statement of Changes in Net Position for the transfer of employer and excise taxes from the entities collecting these taxes and for interest from investments, as discussed below. (See Note 16)

• Employer taxes

Employer tax revenues are recognized on a modified cash basis, to the extent of cash transferred by the collecting entity to DOL, plus the change in inter-entity balances between the collecting entity and DOL. Inter-entity balances represent revenue received by the collecting entity, net amounts due to the collecting entity and adjustments made to previous transactions by the collecting entity which have not been transferred to DOL.

Federal and state unemployment taxes represent non-exchange revenues collected from employers based on wages paid to employees in covered employment. Federal unemployment taxes are collected by the Internal Revenue Service and transferred to designated accounts within the Unemployment Trust Fund. State unemployment taxes are collected by each State and deposited in separate State accounts within the Unemployment Trust Fund. Federal unemployment taxes are used to pay the Federal share of extended unemployment benefits and to provide for Federal and State administrative expenses related to the operation of the unemployment insurance program. State unemployment taxes are restricted in their use to the payment of unemployment benefits.

• Interest

The Unemployment Trust Fund, the Panama Canal Commission Compensation Fund, and the Energy Employees Occupational Illness Compensation Fund receive interest on fund investments. The Unemployment Trust Fund receives interest from states that had accounts with loans payable to the Federal unemployment account at the end of the prior fiscal year. Interest is also earned on Federal funds in the possession of non-Federal entities. Interest is recognized as non-exchange revenue when earned.

• Assessments

Assessments consist of penalties levied against employers by ESA for regulatory violations. In FY 2008, assessments levied on insurance companies and self-insured employers by the Longshore and Harbor Workers' Compensation Act Trust Fund and District of Columbia Workmen's Compensation Act Trust Fund were also included. Assessments are recognized as non-exchange revenues when earned.

• Reimbursement of unemployment benefits

The Unemployment Trust Fund receives reimbursements from state and local government entities and non-profit organizations for the cost of unemployment benefits provided to or accrued on behalf of their employees. These reimbursements are recognized as other non-exchange revenue when earned.

3. Transfers without reimbursement

Transfers recognized as budgetary financing sources by DOL include transfers from the Department of Homeland Security H-1B Nonimmigrant Petitioner Account to H-1B Funds in ETA and ESA. Also included are transfers from the Longshore and Harbor Workers' Compensation Act Trust Fund for administrative costs and transfers from various DOL general fund unexpended appropriation accounts to the Working Capital Fund's cumulative results of operations. There are also transfers between DOL entities, primarily for the administration of the unemployment insurance program, Recovery Act appropriations for extended unemployment benefits and a one-time appropriation for restructuring of the Black Lung Disability Trust Fund debt. (See Note 17)

U. Other Financing Sources

Other financing sources include items that do not represent budgetary resources.

1. Imputed financing

A financing source is imputed by DOL to provide for pension and other retirement benefit expenses recognized by DOL but financed by OPM. (See Notes 1-P and Q)

2. Transfers without reimbursement

Transfers recognized as other financing sources by DOL include the transfers of property from the General Services Administration. (See Note 17)

V. Custodial Activity

DOL collects and transfers to the general fund of the U.S. Treasury custodial non-exchange revenues for penalties levied against employers by OSHA, MSHA, ESA, and EBSA for regulatory violations; for ETA disallowed grant costs assessed against canceled appropriations; and for FECA administrative costs assessed against government corporations in excess of amounts reserved to finance capital improvements in the Federal Employees' Compensation Act Special Benefit Fund. These collections are not available to the agencies for obligation or expenditure. Penalties and other assessments are recognized as custodial revenues when collected or subject to collection. (See Notes 1-B and 20)

W. Significant Assumptions Used in the Statement of Social Insurance

The Black Lung Disability Benefit Program provides for compensation, medical and survivor benefits for eligible coal miners who are disabled due to pneumoconiosis (black lung disease) arising out of their coal mine employment. The Black Lung Disability Trust Fund (BLDTF) provides benefit payments to eligible coal miners disabled by pneumoconiosis when no responsible mine operator can be assigned the liability.

Black lung disability benefit payments are funded by excise taxes from coal mine operators based on the sale of coal, as are the fund's administrative costs. These taxes are collected by the Internal Revenue Service and transferred to the BLDTF, which was established under the authority of the Black Lung Benefits Revenue Act, and administered by the U.S. Department of the Treasury. Prior to October 3, 2008, the Black Lung Benefits Revenue Act provided for repayable advances to the BLDTF from the General Fund of the Treasury, in the event that BLDTF resources were not adequate to meet program obligations.

P.L. 110-343, Division B--Energy Improvement and Extension Act of 2008, enacted on October 3, 2008, in section 113, (1) allowed for the temporary increase in coal excise tax rates to continue an additional five years beyond the current statutory limit and (2) restructured the BLDTF debt by refinancing the outstanding high interest rate repayable advances with the proceeds from issuing low interest rate discounted debt instruments similar in form to zero-coupon bonds, plus a one-time appropriation. The Act also allowed that any debt issued by the BLDTF subsequent to the refinancing may be used to make benefit payments, other authorized expenditures, or to repay debt and interest from the initial refinancing. All debt issued by the BLDTF was effected as borrowing from the Bureau of Public Debt. (See Notes 1J and 8)

DOL changed the presentation of the statements of social insurance to remove estimated interest payments from the statements. DOL also revised its fiscal years 2005 through 2008 consolidated financial statements to conform to this fiscal year 2009 presentation. The change was made to reflect only the financial statement line items required by SFFAS 17, “Accounting for Social Insurance.”

The significant assumptions used in the projections for the Statement of Social Insurance are the number of beneficiaries, life expectancy, coal excise tax revenue estimates, the tax rate structure, Federal civilian pay raises and medical cost inflation.

The Office of Tax Analysis of the Department of the Treasury provides estimates of future receipts of the black lung excise tax. Its estimates are based on projections of future coal production and sale prices prepared by the Energy Information Agency of the Department of Energy. The Department of Treasury's Office of Tax Analysis provides the first eleven years of tax receipt estimates. The remaining years are estimated using a growth rate based on both historical tax receipts and the Department of Treasury's estimated tax receipts. The higher coal excise tax rate structure is $1.10 per ton of underground-mined coal and $0.55 per ton of surface-mined coal sold, with a cap of 4.4% of sales price. Based on Treasury's interpretation of the Act, the higher excise tax rates will continue until the earlier of December 31, 2018 or the first December 31 after 2008 in which there exist no (1) balance of repayable debt described in section 9501 of the Internal Revenue Code and (2) unpaid interest on the debt. Starting in 2019, the tax rates revert to $0.50 per ton of underground-mined coal and $0.25 per ton surface-mine coal sold, and a limit of 2.0% of sales price. Although section 9501 of the Internal Revenue Code uses the terminology "advance," the Treasury has interpreted this to mean any debt owed by the BLDTF to the Bureau of the Public Debt.

The beneficiary population data is updated from information supplied by the program. The beneficiary population is a nearly closed universe in which attrition by death exceeds new entrants by a ratio of more than ten to one. Projections for new participants are included in the overall projections and are considered immaterial. Social Security Administration life tables are used to project the life expectancies of the beneficiary population. The Office of Management and Budget supplies assumptions for future monthly benefit rate increases based on increases in the Federal pay scale and future medical cost inflation based on increases in the consumer price index-medical, which are used to calculate future benefit costs. During the current projection period, the future benefit rate increases 4.6% in 2010 and 3.6% in each year thereafter and medical cost increases 3.4% in 2010, and ranges from 3.3% to 3.8% thereafter. Estimates for administrative costs for the first 11 years of the projection are supplied by DOL's Budget Office, based on current year enacted amounts, while later years are based on the number of projected beneficiaries.

The projection period ends September 30, 2040, because the primary purpose of the BLDTF, which was established in 1978, is to compensate the victims of coal mine dust exposures which occurred prior to 1970. By the end of FY 2040, not only the disabled miners and their widows in that class, but also virtually all of their eligible dependent disabled adult children will be deceased. All of the current year projections are discounted using an interest rate of 4.25%. This rate is for Treasury loans to government agencies for loans up to 30 years. Thirty years is the maximum period for which Treasury publishes rates for loans to government agencies and approximates the projection period.

X. Tax Exempt Status

As an agency of the Federal government, the Department is exempt from all taxes imposed by any governing body whether it is a Federal, state, commonwealth, local, or foreign government.

Y. Use of Estimates

The preparation of financial statements requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.