02-15-2024-FR-(Final)

DEPA RTMENT OF THE TREASURY
W ASH I N G T O N , D . C .
February 15, 2024
A Message from the Secretary of the Treasury
During fiscal year 2023, the American economy continued to improve and the gains have been widely
shared: consumers have more purchasing power, businesses have been investing more, and inflation has
come down significantly. The labor market is also strong, with the unemployment rate near historic lows.
This is the result of a historically fast recovery, as well as actions to navigate adverse shocks. Over the past
year, the Biden Administration acted decisively in response to stress in the banking sector to protect
depositors and mitigate systemic risks to the financial system. The Administration continues to vigilantly
monitor potential economic spillovers from global events, including Russia’s war in Ukraine and the
conflict in the Middle East.
The Biden Administration also remains focused on growing our economy for the medium to long term. This
year, Americans are starting to see the results of the historic legislation passed in 2021 and 2022:
the Bipartisan Infrastructure Law, the CHIPS and Science Act, and the Inflation Reduction Act. Public
dollars are now crowding in private investment, with companies announcing over $600 billion in clean
energy and manufacturing investments since the start of the Biden Administration and new jobs being
created in twenty-first century industries.
To further the government’s commitment to financial transparency and accountability, the annual Financial
Report of the United States Government lays out comprehensive data and analysis on our nation’s finances.
Here, you will find information on all aspects of the government’s current financial position, as well as
information on changes in the financial position during this fiscal year, and potential future changes.
It is my duty and pleasure to present the Fiscal Year 2023 Report to the American people.
This page is intentionally blank.
Contents
A Message from the Secretary of the Treasury
Executive Summary........................................................................................... 1
Management’s Discussion and Analysis .......................................................... 12
Statement of the Comptroller General of the United States .......................... 40
Financial Statements
Introduction ....................................................................................................... 50
Statement of Net Cost ........................................................................................ 57
Statement of Operations and Changes in Net Position ...................................... 59
Reconciliations of Net Operating Cost and Budget Deficit ............................... 61
Statements of Changes in Cash Balance from Budget and Other
Activities ........................................................................................................... 62
Balance Sheets ................................................................................................... 63
Statements of Long-Term Fiscal Projections..................................................... 64
Statements of Social Insurance .......................................................................... 65
Statement of Changes in Social Insurance Amounts ......................................... 68
Notes to the Financial Statements

Note 1. Summary of Significant Accounting Policies ....................................... 70
Note 2. Cash and Other Monetary Assets .......................................................... 82
Note 3. Accounts Receivable, Net ..................................................................... 83
Note 4. Loans Receivable, Net and Loan Guarantee Liabilities ........................ 84
Note 5. Inventory and Related Property, Net .................................................... 88
Note 6. General Property, Plant, and Equipment, Net ....................................... 90
Note 7. Investments ........................................................................................... 91
Note 8. Investments in Government-Sponsored Enterprises ............................. 95
Note 9. Advances and Prepayments .................................................................. 99
Note 10. Other Assets ........................................................................................ 100
Note 11. Accounts Payable................................................................................ 102
Note 12. Federal Debt and Interest Payable ...................................................... 103
Note 13. Federal Employee and Veteran Benefits Payable ............................... 106
Note 14. Environmental and Disposal Liabilities .............................................. 116
Note 15. Benefits Due and Payable ................................................................... 118
Note 16. Insurance and Guarantee Program Liabilities ..................................... 119
Note 17. Advances from Others and Deferred Revenue.................................... 120
Note 18. Other Liabilities .................................................................................. 121
Note 19. Collections and Refunds of Federal Revenue ..................................... 123
Note 20. Commitments ...................................................................................... 126
Note 21. Contingencies ..................................................................................... 129
Note 22. Funds from Dedicated Collections...................................................... 136
Note 23. Fiduciary Activities............................................................................. 142
Note 24. Long-Term Fiscal Projections............................................................. 144
Note 25. Social Insurance .................................................................................. 150
Note 26. Stewardship Property, Plant, and Equipment...................................... 159
Note 27. Disclosure Entities and Related Parties .............................................. 160
Note 28. Public-Private Partnerships ................................................................. 166
Note 29. COVID-19 Activity ............................................................................ 167
Note 30. Subsequent Events ............................................................................. 168
Required Supplementary Information (Unaudited)

The Sustainability of Fiscal Policy .................................................................... 170
Social Insurance ................................................................................................ 181
Social Security and Medicare .......................................................................... 181
Railroad Retirement, Black Lung, and Unemployment Insurance .................. 195
Deferred Maintenance and Repairs ................................................................... 197
Other Claims for Refunds .................................................................................. 197
Tax Assessments ............................................................................................... 198
Federal Oil and Gas Resources .......................................................................... 198
Federal Natural Resources Other than Oil and Gas ........................................... 200
Land and Permanent Land Rights ..................................................................... 201
Other Information (Unaudited)

Tax Burden ........................................................................................................ 204
Tax Gap ............................................................................................................. 205
Tax Expenditures ............................................................................................... 205
Unmatched Transactions and Balances ............................................................. 207
Appendices
Appendix A: Reporting Entity ........................................................................... 208
Appendix B: Glossary of Acronyms.................................................................. 212
U.S. Government Accountability Office Independent Auditor’s Report...... 218
For a complete listing of frequently used acronyms found

throughout the Financial Report, please refer to the Glossary
of Acronyms located in Appendix B.
1 EXECUTIVE SUMMARY TO THE 2023 FINANCIAL REPORT OF THE U.S. GOVERNMENT
EXECUTIVE SUMMARY TO THE 2023 FINANCIAL REPORT OF THE U.S. GOVERNMENT 2
Executive Summary to the FY 2023

Financial Report of the United States Government
The FY 2023 Financial Report presents the U.S. government’s current financial position and condition, and
discusses key financial topics and trends. The Financial Report is produced by Treasury in coordination with
OMB, which is part of the Executive Office of the President. The table on the preceding page presents several key
indicators of the government’s financial position and condition, which are discussed in this Executive Summary
and, in greater detail, in the Financial Report. The Secretary of the Treasury, the Director of OMB, and the
Comptroller General of the U.S. at the GAO believe that the information discussed in the Financial Report is
important to all Americans.
The Financial Report addresses the government’s financial activity and results as of and for the fiscal years
ended September 30, 2023, and 2022. Note 30—Subsequent Events discusses events that occurred after the end of
the fiscal year that may affect the government’s financial position and condition.
Results in Brief
The “Nation by the Numbers” table on the preceding page and the following summarize key metrics about
the federal government’s financial position for and during FY 2023:
• The budget deficit increased by $319.7 billion (23.2 percent) to $1.7 trillion and net operating cost
decreased by $753.8 billion (18.1 percent) to $3.4 trillion.
• Net operating cost decreased due largely to significant decreases in non-cash costs (including decreases in
losses stemming from changes in assumptions affecting cost and liability estimates for the government’s
employee and veteran benefits programs (which do not affect the current year deficit) and reestimates of
long-term student loan costs).
• The government’s gross costs of $7.7 trillion, less $539.5 billion in revenues earned for goods and
services provided to the public, plus $760.6 billion in net losses from changes in assumptions yields the
government’s net cost of $7.9 trillion, a decrease of $1.2 trillion (13.3 percent) from FY 2022.
• Tax and other revenues decreased by $460.3 billion to $4.5 trillion. Deducting these revenues from net
cost yields the federal government’s “bottom line” net operating cost of $3.4 trillion referenced above.
• Comparing total government assets of $5.4 trillion (including $1.7 trillion of loans receivable, net and
$1.2 trillion of PP&E) to total liabilities of $42.9 trillion (including $26.3 trillion in federal debt and
interest payable, and $14.3 trillion of federal employee and veteran benefits payable) yields a negative net
position of $37.5 trillion.
• The Statement of Long-Term Fiscal Projections (SLTFP) shows that the present value (PV) of total non-
interest spending, over the next 75 years, under current policy, is projected to exceed the PV of total
receipts by $73.2 trillion (total federal non-interest net expenditures from the table on the previous page).
• The debt-to-GDP ratio was approximately 97 percent at the end of FY 2023. Under current policy and
based on this report’s assumptions, it is projected to reach 531 percent by 2098. The projected continuous
rise of the debt-to-GDP ratio indicates that current policy is unsustainable.
• The Statement of Social Insurance (SOSI) shows that the PV of the government’s expenditures for Social
Security and Medicare Parts A, B and D, and other social insurance programs over 75 years is projected
to exceed social insurance revenues by about $78.4 trillion, a $2.5 trillion increase over 2022 social
insurance projections.
Where We Are Now
The government’s financial position and condition have traditionally been expressed through the Budget,
focusing on surpluses, deficits, and debt. However, this primarily cash-based discussion of the government’s net
outlays (deficit) or net receipts (surplus) tells only part of the story. The government’s accrual-based net position,
(the difference between its assets and liabilities, adjusted for unmatched transactions and balances), and its
“bottom line” net operating cost (the difference between its revenues and costs) are also key financial indicators.
The following includes brief discussions of some of the diminishing effects of the pandemic on the government’s
financial results for FY 2023. Please refer to Note 29—COVID-19 Activity and other disclosures in this Financial
Report, as well as in the individual entities’ financial statements for more information.
Comparing the Budget and the Financial Report

The Budget and the Financial Report present complementary perspectives on the government’s financial
position and condition.
• The Budget is the government’s primary financial planning and control tool. It accounts for past
government receipts and spending and includes the President’s proposed receipts and spending plan.
Receipts are cash received by the U.S. government and spending is measured as outlays, or payments
made by the federal government to the public or entities outside the government. When total receipts
exceed outlays, there is a budget surplus; conversely, if total outlays exceed total receipts, there is a
budget deficit.
• The Financial Report includes the government’s costs and revenues, assets and liabilities, and other
important financial information. It compares the government’s revenues (amounts earned, but not
necessarily collected), with costs (amounts incurred, but not necessarily paid) to derive net operating cost.
Chart 1 compares the government’s budget deficit (receipts vs. outlays) and net operating cost (revenues vs.
costs) for FYs 2019 - 2023. During FY 2023:
• A $456.8 billion decrease in receipts
more than offset a $137.1 billion
decrease in outlays resulting in a
$319.7 billion (23.2 percent) increase
in the budget deficit from $1.4 trillion
to $1.7 trillion.
• Net operating cost decreased $753.8
billion or 18.1 percent from $4.2
trillion to $3.4 trillion, due mostly to a
$1.2 trillion or 13.3 percent decrease
in net cost which more than offset a
$460.3 billion or 9.3 percent decrease
in tax and other revenues.
The $1.7 trillion difference between the
budget deficit and net operating cost for FY
2023 is primarily due to accrued costs (incurred but not necessarily paid) that are included in net operating cost,
but not the budget deficit. These are primarily actuarial costs related to federal employee and veteran benefits
programs, particularly at VA, DOD, and OPM. Other sources of differences include but are not limited to
decreases in taxes receivable, increases in advances and deferred revenue received by the federal government
from others, decreases in advances and prepayments made by the federal government.
Costs and Revenues

The government’s “bottom line” net operating cost decreased $753.8 billion (18.1 percent) during FY 2023
to $3.4 trillion. It is calculated as follows:
• Starting with total gross costs of $7.7
trillion, the government subtracts
earned program revenues (e.g.,
Medicare premiums, national park
entry fees, and postal service fees) and
adjusts the balance for gains or losses
from changes in actuarial assumptions
used to estimate future federal
employee and veteran benefits
payments to derive its net cost before
taxes and other revenues of $7.9
trillion (see Chart 2), a decrease of
$1.2 trillion (13.3 percent) from FY
2022. This net decrease is the
combined effect of many offsetting
increases and decreases across the
government. For example:
o Entities administering federal employee and veteran benefits programs, including the VA, DOD, and
OPM employ a complex series of assumptions to make actuarial projections of their long-term
benefits liabilities. These assumptions include but are not limited to interest rates, beneficiary
eligibility, life expectancy, and medical cost levels. Changes in these assumptions can result in either
losses (net cost increases) or gains (net cost decreases). Across the government, these net losses from
changes in assumptions amounted to $760.6 billion in FY 2023, a loss decrease (and a corresponding
net cost decrease) of $1.4 trillion compared to FY 2022.
o In particular, VA net costs decreased $479.6 billion due largely to decreased losses from changes in
assumptions as referenced above, partially offset by an increase in costs as a result of legislation
expanding and extending eligibility for veteran’s benefits.
o DOD net costs decreased $455.6 billion due primarily to a $437.7 billion loss decrease from changes
in assumptions as referenced above. However, most of DOD’s net costs included those related to
military operations, readiness and support, procurement, personnel, and R&D.
o A $222.7 billion decrease in Treasury net costs was largely due to a decrease in costs associated with
Treasury’s pandemic relief programs, including: 1) the Coronavirus State and Local Fiscal Recovery
Funds; and 2) COVID-19 related refunds and other payments such as the EIP and advances for child
tax credits.
o Education net costs decreased $521.0 billion due largely to the combined effect of: 1) an FY 2022
cost increase of $330.9 billion due largely to a $337.3 billion loan modification stemming from the
announced broad-based student loan debt relief; and 2) an FY 2023 cost decrease of $319.9 billion
from a downward modification to reverse the broad-based student loan debt relief, as a result of the
Supreme Court’s ruling on Biden v. Nebraska. Education’s FY 2023 net costs were also impacted by:
1) $71.4 billion in upward cost reestimates of the Department’s existing loan portfolio; and 2) $115.7
billion of upward modifications related to COVID-19 administrative actions, changes to repayment
plans, and other programmatic changes.
o A $54.1 billion net cost increase at HHS primarily due to a $116.1 billion increase across the
Medicare and Medicaid benefits programs largely associated with increasing benefits payments. This
cost increase was offset by a $62.0 billion cost decrease across all other HHS segments primarily due
to decreases in COVID-19 costs.
o SSA net costs increased $138.8 billion due largely to a 2.5 percent increase in the number of OASI
beneficiaries, combined with an 8.7 percent COLA provided to beneficiaries in 2023.
o Interest costs related to federal debt securities held by the public increased by $181.5 billion due
largely to increases in outstanding debt held by the public and the average interest rates, which were
offset by a decrease in inflation adjustments.
• The government deducts tax and other revenues from net cost (with some adjustments) to derive its FY
2023 “bottom line” net operating cost
of $3.4 trillion.
o From Chart 3, total government tax
and other revenues decreased by
$460.3 billion (9.3 percent) to
about $4.5 trillion for FY 2023 due
primarily to a decline in individual
income and tax withholdings and
corporate income taxes as well as
decreased deposits of earnings
from the Federal Reserve due to
increased interest rates.
o Together, individual income tax
and tax withholdings, and
corporate income taxes accounted
for about 91.4 percent of total tax
and other revenues in FY 2023. Other revenues include Federal Reserve earnings, excise taxes, and
customs duties.
Assets and Liabilities

Chart 4 summarizes the assets and liabilities that the government reports on its Balance Sheet. As of
September 30, 2023:
• More than three-fourths of the federal
government’s total assets ($5.4
trillion) consist of: 1) $922.2 billion in
cash and monetary assets; 2) $423.0
billion in inventory and related
property; 3) $1.7 trillion in loans
receivable, net (primarily student
loans); and 4) $1.2 trillion in net
PP&E.
o Cash and monetary assets ($922.2
billion) is comprised largely of the
operating cash of the U.S.
government. Operating cash held
by Treasury increased $21.9 billion
(3.5 percent) to $638.9 billion
during FY 2023.
o Inventory and related property ($423.0 billion) includes: 1) inventory, which is tangible personal
property that is either held for sale, in the process of production for sale, or to be consumed in the
production of goods for sale or in the provision of services for a fee; 2) OM&S, or tangible personal
property to be consumed in normal operations (e.g., spare and repair parts, ammunition, and tactical
missiles); and 3) stockpiles, or strategic and critical materials held due to statutory requirements for
use in national defense, conservation, or local/national emergencies.
o Loans receivable, net ($1.7 trillion) is comprised of loans provided by multiple agencies, including
Education and SBA, to promote the nation’s welfare by making financing available to segments of the
population not served adequately by non-federal institutions or otherwise providing for certain
activities or investments. The government’s net loan portfolio increased by $261.0 billion (18.2
percent) during FY 2023. This net increase was largely due to a $214.3 billion increase in Education’s
Federal Direct Student Loans, net, primarily due to a reversal of the broad-based student loan debt
relief as a result of the Supreme Court’s ruling in Biden v. Nebraska. Additional Loans Receivable, net
increases included Treasury’s purchase of a $50 billion note issued by a trust created by FDIC in its
receivership capacity and backed by a guarantee from the FDIC in its corporate capacity. These and
other net increases were partially offset by a $49.6 billion decrease in SBA’s loan receivables, net, due
largely to write-offs of direct disaster loans. Other changes included fluctuations in loan programs for
HUD, DOT, and DFC.
o Federal government general PP&E includes many of the physical resources that are vital to the federal
government’s ongoing operations, including buildings, structures, facilities, equipment, internal use
software, and general-purpose land. DOD comprises approximately 67.4 percent of the government’s
reported general PP&E of $1.2 trillion as of September 30, 2023.
o Other significant government resources not reported on the Balance Sheet include the government’s
power to tax and set monetary policy, natural resources, and stewardship assets. Stewardship assets,
including heritage assets and stewardship land, benefit the nation (e.g., national monuments, national
parks) and are intended to be held indefinitely.
• Total liabilities ($42.9 trillion) consist mostly of: 1) $26.3 trillion in federal debt and interest payable; and
2) $14.3 trillion in federal employee and veteran benefits payable.
o Federal debt held by the public is debt held outside of the government by individuals, corporations,
state and local governments, the FR System, foreign governments, and other non-federal entities.
o The government borrows from the public (increases federal debt levels) to finance deficits. During FY
2023, federal debt held by the public increased $2.0 trillion (8.3 percent) to $26.3 trillion.
o The government also reports about $6.9 trillion of intra-governmental debt outstanding, which arises
when one part of the government borrows from another. For example, government funds (e.g., Social
Security and Medicare Trust Funds) typically must invest excess receipts, including interest earnings,
in Treasury-issued federal debt securities. Although not reflected in Chart 4, these securities are
included in the calculation of federal debt subject to the debt limit.
o Federal debt held by the public plus intra-governmental debt equals gross federal debt, which, with
some adjustments, is subject to a statutory debt ceiling (“debt limit”). Congress and the President
increased the debt limit by $2.5 trillion in December 2021 with the enactment of P.L. 117-73. In
response to delays in raising the statutory debt limit, Treasury took extraordinary measures to meet the
government’s obligations as they came due without exceeding the debt limit from January 19 through
June 2, 2023. On June 3, 2023, P.L. 118-5 was enacted, suspending the debt limit through January 1,
2025. On Monday, June 5, 2023, Treasury discontinued its use of extraordinary measures and resumed
normal debt management operations. At the end of FY 2023, debt subject to the statutory limit was
$33.1 trillion. Increasing or suspending the debt limit does not increase spending or authorize new
spending; rather, it permits the government to continue to honor pre-existing commitments (see Note
12—Federal Debt and Interest Payable).
o Federal employee and veteran benefits payable ($14.3 trillion) represents the amounts of benefits
payable by agencies that administer the government’s pension and other benefit plans for its military
and civilian employees.
See Note 29—COVID-19 Activity, as well as the referenced agencies’ FY 2023 financial statements for
additional information about the financial effects of the federal government’s response to the pandemic. See Note
30—Subsequent Events for information about events that occurred after the end of the fiscal year that may affect
the government’s financial results.
Key Economic Trends

An analysis of U.S. economic performance provides useful background when evaluating the government’s
financial statements. Over the course of FY 2023, the economy’s growth accelerated even as inflation continued
to slow. In addition, labor markets remained tight and continued to generate a substantial number of jobs but also
showed signs of very gradual easing over the course of FY 2023. These and other economic and financial
developments are discussed in greater detail in the Financial Report.
An Unsustainable Fiscal Path
An important purpose of this Financial Report is to help citizens understand current fiscal policy and the
importance and magnitude of policy reforms necessary to make it sustainable. A sustainable fiscal policy is
defined as one where the ratio of debt held by the public to GDP (the debt-to-GDP ratio) is stable or declining
over the long term. GDP measures the size of the nation’s economy in terms of the total value of all final goods
and services that are produced in a year. Considering financial results relative to GDP is a useful indicator of the
economy’s capacity to sustain the government’s many programs. This Financial Report presents data, including
debt, as a percent of GDP to help readers assess whether current fiscal policy is sustainable. The debt-to-GDP
ratio was approximately 97 percent at the end of FY 2023, which is similar to (but slightly above) the debt-to-
GDP ratio at the end of FY 2022. The long-term fiscal projections in this Financial Report are based on the same
economic and demographic assumptions that underlie the SOSI.
The current fiscal path is unsustainable. To determine if current fiscal policy is sustainable, the projections
based on the assumptions discussed in the Financial Report assume current policy will continue indefinitely. 1 The
projections are therefore neither forecasts nor predictions. Nevertheless, the projections demonstrate that policy
changes need to be enacted for the actual financial outcomes to differ from those projected.
Receipts, Spending, and the Debt

Chart 5 shows historical and current policy projections for receipts, non-interest spending by major category,
net interest, and total spending expressed
as a percent of GDP.
• The primary deficit is the
difference between non-interest
spending and receipts. The ratio
of the primary deficit to GDP is
useful for gauging long-term
fiscal sustainability.
• The primary deficit-to-GDP ratio
increased during the financial
crisis of 2008 and the COVID-19
pandemic. Spending was
elevated in 2020 and 2021 due to
funding to support economic
recovery, but increased receipts
reduced the primary deficit-to-
GDP ratio to 10.8 percent in
2021 from 13.3 percent in 2020. The primary deficit-to-GDP ratio in 2023 was 3.8 percent, increasing by
0.2 percentage points from 3.6 percent in 2022 partially due to lower receipts.
1
Current policy in the projections is based on current law, but includes extension of certain policies that expire under current law but are routinely extended
or otherwise expected to continue.
• The persistent long-term gap between projected receipts and total spending shown in Chart 5 occurs
despite the projected effects of the PPACA 2 on long-term deficits.
o Enactment of the PPACA in 2010 and the MACRA (P.L. 114-10) in 2015 established cost controls for
Medicare hospital and physician payments whose long-term effectiveness is still to be demonstrated
fully.
o There is uncertainty about the extent to which these projections can be achieved and whether the
PPACA’s provisions intended to reduce Medicare cost growth will be overridden by new legislation.
Table 1 summarizes the status and projected trends of the government’s Social Security and Medicare Trust
Funds.
The primary deficit projections in Chart 5, along with those for interest rates and GDP, determine the debt-
to-GDP ratio projections in Chart 6.
• The debt-to-GDP ratio was
approximately 97 percent at the
end of FY 2023, and under
current policy and based on this
report’s assumptions is projected
to reach 531 percent in 2098.
• The debt-to-GDP ratio rises
continuously in great part because
primary deficits lead to higher
levels of debt. The continuous
rise of the debt-to-GDP ratio
indicates that current fiscal policy
is unsustainable.
• These debt-to-GDP projections
are lower than both the 2022 and
2021 Financial Report
projections.
2
The PPACA refers to P.L. 111-148, as amended by P.L. 111-152. The PPACA expands health insurance coverage, provides health insurance subsidies for
low-income individuals and families, includes many measures designed to reduce health care cost growth, and significantly reduces Medicare payment rate
updates relative to the rates that would have occurred in the absence of the PPACA. (See Note 25 and the RSI section of the Financial Report, and the 2023
Medicare Trustees Report for additional information).
The Fiscal Gap and the Cost of Delaying Fiscal Policy Reform
• The 75-year fiscal gap is a measure of how much primary deficits must be reduced over the next 75 years
in order to make fiscal policy sustainable. That estimated fiscal gap for 2023 is 4.5 percent of GDP
(compared to 4.9 percent for 2022).
• This estimate implies that making fiscal policy sustainable over the next 75 years would require some
combination of spending reductions and receipt increases that equals 4.5 percent of GDP on average over
the next 75 years. The fiscal gap represents 23.8 percent of 75-year PV receipts and 19.8 percent of 75-
year PV non-interest spending.
• The timing of policy changes to make fiscal policy sustainable has important implications for the well-
being of future generations as is shown in Table 2.
o Table 2 shows that, if reform begins in 2034 or 2044, the estimated magnitude of primary surplus
increases necessary to close the 75-year fiscal gap is 5.3 percent and 6.5 percent of GDP, respectively.
The difference between the primary surplus increase necessary if reform begins in 2034 or 2044 and
the increase necessary if reform begins in 2024, an additional 0.8 and 2.0 percentage points,
respectively, is a measure of the additional burden policy delay would impose on future generations.
o The longer policy action to close the fiscal gap is delayed, the larger the post-reform primary surpluses
must be to achieve the target debt-to-GDP ratio at the end of the 75-year period. Future generations are
harmed by a policy delay because the higher the primary surpluses are during their lifetimes, the
greater is the difference between the taxes they pay and the programmatic spending from which they
benefit.
Conclusion
• Projections in the Financial Report indicate that the government’s debt-to-GDP ratio is projected to rise
over the 75-year projection period and beyond if current policy is kept in place. The projections in this
Financial Report show that current policy is not sustainable.
• If changes in fiscal policy are not so abrupt as to slow economic growth and those policy changes are
adopted earlier, then the required changes to revenue and/or spending will be smaller to return the
government to a sustainable fiscal path.
Reporting on Climate Change
As stated in Executive Order 14008, Tackling the Climate Crisis at Home and Abroad “the United States and
the world face a profound climate crisis…Domestic action must go hand in hand with United States international
leadership, aimed at significantly enhancing global action.” In response, the administration has enacted key
legislation and issued important policy actions. As summarized in the MD&A section of the Financial Report,
many of the 24 CFO Act agencies have leveraged their FY 2023 financial statements to discuss a wide range of
topics concerning how their agencies are responding to the climate crisis, including providing links to agency
Climate Adaptation and Resilience Plans.
Find Out More
The FY 2023 Financial Report and other information about the nation’s finances are available at:
• Treasury, https://www.fiscal.treasury.gov/fsreports/rpt/finrep/fr/fr_index.htm and
https://fiscaldata.treasury.gov/americas-finance-guide/;
• OMB’s Office of Federal Financial Management, https://www.whitehouse.gov/omb/management/office-
federal-financial-management/; and
• GAO, https://www.gao.gov/federal-financial-accountability.
The GAO audit report on the U.S. government’s consolidated financial statements can be found beginning on page 218
of the full Financial Report. GAO was unable to express an opinion (disclaimed) on these consolidated financial
statements for the reasons discussed in the audit report.

MANAGEMENT’S DISCUSSION AND ANALYSIS 12
MANAGEMENT’S DISCUSSION AND

ANALYSIS
Introduction
The FY 2023 Financial Report provides the President, Congress, and the American people with a comprehensive view
of the federal government’s financial position and condition; and discusses important financial issues and significant
conditions that may affect future operations, including the need to achieve fiscal sustainability over the long-term.
Pursuant to 31 U.S.C. § 331(e)(1), Treasury, in cooperation with OMB, must submit an audited (by GAO) financial
statement for the preceding fiscal year, covering all accounts and associated activities of the executive branch of the U.S.
government 1 to the President and Congress no later than six months after the September 30 fiscal year-end.
The Financial Report is prepared from the financial information provided by 166 federal consolidation entities (see
organizational chart on the next page and Appendix A). As it has for the past 25 years, GAO issued a disclaimer of opinion
on the accrual-based, consolidated financial statements for the fiscal years ended September 30, 2023, and 2022. GAO also
issued a disclaimer of opinion on the sustainability financial statements, which consist of the 2023 and 2022 SLTFP; the
2023, 2022, 2021, 2020, and 2019 SOSI; and the 2023 and 2022 SCSIA. A disclaimer of opinion indicates that sufficient
information was not available for the auditors to determine whether the reported financial statements were fairly presented in
accordance with GAAP. In FY 2023, 32 2 of the 40 most significant entities earned unmodified (“clean”) opinions on their
financial statements.
The FY 2023 Financial Report consists of:
• MD&A, which provides management’s perspectives on and analysis of information presented in the Financial
Report, such as financial and performance trends;
• Financial statements and the related notes to the financial statements;
• RSI and Other Information; and
• GAO’s audit report.
This Financial Report addresses the government’s financial activity and results as of and for the fiscal years ended
September 30, 2023, and 2022. Note 30—Subsequent Events discusses events that occurred after the end of the fiscal year
that may affect the government’s financial position and condition.
In addition, the Executive Summary to this Financial Report provides a quick reference to the key issues in the
Financial Report and an overview of the government's financial position and condition.
Mission & Organization

The government’s fundamental mission is derived from the Constitution: “…to form a more perfect union, establish
justice, insure domestic tranquility, provide for the common defense, promote the general welfare and secure the blessings of
liberty to ourselves and our posterity.” The government’s functions have evolved over time to include health care, income
security, veterans benefits and services, housing and transportation, security, and education. Exhibit 1 provides an overview
of how the U.S. government is organized.
1
The Government Management Reform Act of 1994 has required such reporting, covering the executive branch of the government, beginning with financial
statements prepared for FY 1997. The consolidated financial statements include the legislative and judicial branches.
2
The 32 entities include the HHS, which received disclaimers of opinion on its 2023, 2022, 2021, 2020, and 2019 SOSI and on its 2023 and 2022 SCSIA.
13 MANAGEMENT’S DISCUSSION AND ANALYSIS
Exhibit 1
THE UNITED STATES GOVERNMENT
THE CONSTITUTION
LEGISLATIVE BRANCH EXECUTIVE BRANCH JUDICIAL BRANCH

THE CONGRESS THE PRESIDENT THE SUPREME COURT
SENATE HOUSE THE VICE PRESIDENT OF THE U.S.
Architect of the Capitol EXECUTIVE OFFICE OF THE PRESIDENT
U.S. Courts of Appeals
U.S. Botanic Garden White House Office U.S. District Courts
Government Accountability Office Office of the Vice President Territorial Courts
Government Publishing Office Council of Economic Advisers U.S. Court of International Trade
Library of Congress Council on Environmental Quality U.S. Court of Federal Claims
Congressional Budget Office National Security Council Administrative Office of the U.S. Courts
U.S. Capitol Police Office of Administration Federal Judicial Center
Office of Management and Budget U.S. Sentencing Commission
Office of National Drug Control Policy
Office of Policy Development
Office of Science and Technology Policy
Office of the U.S. Trade Representative
CHIEF FINANCIAL OFFICERS ACT AGENCIES (24)
DEPARTMENT OF AGRICULTURE DEPARTMENT OF TRANSPORTATION

DEPARTMENT OF COMMERCE DEPARTMENT OF THE TREASURY
DEPARTMENT OF DEFENSE DEPARTMENT OF VETERANS AFFAIRS
DEPARTMENT OF EDUCATION ENVIRONMENTAL PROTECTION AGENCY
DEPARTMENT OF ENERGY GENERAL SERVICES ADMINISTRATION
DEPARTMENT OF HEALTH AND HUMAN SERVICES NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
DEPARTMENT OF HOMELAND SECURITY NATIONAL SCIENCE FOUNDATION
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT OFFICE OF PERSONNEL MANAGEMENT
DEPARTMENT OF THE INTERIOR SMALL BUSINESS ADMINISTRATION
DEPARTMENT OF JUSTICE SOCIAL SECURITY ADMINISTRATION
DEPARTMENT OF LABOR U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT
DEPARTMENT OF STATE U.S. NUCLEAR REGULATORY COMMISSION
SIGNIFICANT CONSOLIDATION ENTITIES (16)
EXPORT-IMPORT BANK OF THE U.S. PENSION BENEFIT GUARANTY CORPORATION

FARM CREDIT SYSTEM INSURANCE CORPORATION RAILROAD RETIREMENT BOARD
FEDERAL COMMUNICATIONS COMMISSION SECURITIES AND EXCHANGE COMMISSION
FEDERAL DEPOSIT INSURANCE CORPORATION SECURITY ASSISTANCE ACCOUNTS
GENERAL FUND OF THE U.S. GOVERNMENT SMITHSONIAN INSTITUTION
MILLENNIUM CHALLENGE CORPORATION TENNESSEE VALLEY AUTHORITY
NATIONAL CREDIT UNION ADMINISTRATION U.S. INTERNATIONAL DEVELOPMENT FINANCE CORP
NATIONAL RAILROAD RETIREMENT INVESTMENT TRUST U.S. POSTAL SERVICE
OTHER CONSOLIDATION ENTITIES LISTED IN APPENDIX A OF THIS FINANCIAL REPORT (126)

The Government’s Financial Position and Condition

This Financial Report presents the government’s financial position at the end of the fiscal year, explains how and why
the financial position changed during the year, and discusses the government’s financial condition and how it may change in
the future.
Table 1 on the previous page and the following summarize the federal government’s financial position:
• This Financial Report includes discussion and analysis of the effects that the federal government’s response to the
COVID-19 pandemic continued to have on the government’s financial position during FY 2023.
• During FY 2023, the budget deficit increased by $319.7 billion (23.2 percent) to $1.7 trillion. However, net
operating cost decreased by $753.8 billion (18.1 percent) to $3.4 trillion.
• Net operating cost decreased due largely to significant decreases in non-cash costs (including decreases in losses
stemming from changes in assumptions affecting cost and liability estimates for the government’s employee and
veteran benefits programs (which do not affect the current year deficit), and reestimates of long-term student loan
costs).
• The government’s gross costs of $7.7 trillion, less $539.5 billion in revenues earned for goods and services provided
to the public (e.g., Medicare premiums, national park entry fees, and postal service fees), plus $760.6 billion in net
losses from changes in assumptions (e.g., interest rates, inflation, disability claims rates) yields the government’s net
cost of $7.9 trillion, a decrease of $1.2 trillion or 13.3 percent compared to FY 2022.
• Total tax and other revenues decreased $460.3 billion to $4.5 trillion. Deducting these revenues from net cost results
in a “bottom line” net operating cost of $3.4 trillion for FY 2023, a decrease of $753.8 billion or 18.1 percent
compared to FY 2022.
• Comparing total FY 2023 government assets of $5.4 trillion (including $1.7 trillion of loans receivable, net and $1.2
trillion of PP&E) to total liabilities of $42.9 trillion (including $26.3 trillion in federal debt and interest payable 3,
and $14.3 trillion of federal employee and veteran benefits payable) yields a negative net position of $37.5 trillion.
• The budget deficit is primarily financed through borrowing from the public. As of September 30, 2023, debt held by
the public, excluding accrued interest, was $26.3 trillion. This amount, plus intra-governmental debt ($6.9 trillion)
equals gross federal debt, which, with some adjustments, is subject to the statutory debt limit. As of September 30,
2023, the government’s total debt subject to the debt limit was $33.1 trillion. Congress and the President increased
the debt limit by $480.0 billion in October 2021 and by $2.5 trillion in December 2021. On June 3, 2023, P.L. 118-5
was enacted, suspending the debt limit through January 1, 2025.
This Financial Report also contains information about projected impacts on the government’s future financial condition.
Under federal accounting rules, social insurance amounts as reported in both the SLTFP and in the SOSI are not considered
liabilities of the government. From Table 1:
• The SLTFP shows that the PV 4 of total non-interest spending, including Social Security, Medicare, Medicaid,
defense, and education, etc., over the next 75 years, under current policy, is projected to exceed the PV of total
receipts by $73.2 trillion (total federal non-interest net expenditures from Table 1).
• The SOSI shows that the PV of the government’s expenditures for Social Security and Medicare Parts A, B and D,
and other social insurance programs over 75 years is projected to exceed social insurance revenues 5 by about $78.4
trillion, a $2.5 trillion increase over 2022 social insurance projections.
• The Social Insurance and Total Federal Non-Interest Net Expenditures measures in Table 1 differ primarily because
total non-interest net expenditures from the SLTFP include the effects of general revenues and non-social insurance
spending, neither of which is included in the SOSI.
The government’s current financial position and long-term financial condition can be evaluated both in dollar terms and
in relation to the economy. GDP is a measure of the size of the nation’s economy in terms of the total value of all final goods
and services that are produced in a year. Considering financial results relative to GDP is a useful indicator of the economy’s
capacity to sustain the government’s many programs. For example:
• The budget deficit increased from $1.4 trillion in FY 2022 to $1.7 trillion in FY 2023. The deficit-to-GDP ratio also
increased from 5.4 percent in FY 2022 to 6.3 percent in 2023.
• The budget deficit is primarily financed through borrowing from the public. As of September 30, 2023, the $26.3
trillion in debt held by the public, excluding accrued interest, equates to 97 percent of GDP.
• The 2023 SOSI projection of $78.4 trillion net PV excess of expenditures over receipts over 75 years represents
about 4.4 percent of the PV of GDP over 75 years. The excess of total projected non-interest spending over receipts
of $73.2 trillion from the SLTFP represents 3.8 percent of GDP over 75 years. As discussed in this Financial
Report, changes in these projections can, in turn, have a significant impact on projected debt as a percent of GDP.
• To prevent the debt-to-GDP ratio from rising over the next 75 years, a combination of non-interest spending
reductions and receipts increases that amounts to 4.5 percent of GDP on average is needed (4.9 percent of GDP on
3
On the government’s Balance Sheet, federal debt and interest payable consists of Treasury securities, net of unamortized discounts and premiums, and
accrued interest payable. The “public” consists of individuals, corporations, state and local governments, FRB, foreign governments, and other entities
outside the federal government.
4
PVs recognize that a dollar paid or collected in the future is worth less than a dollar today because a dollar today could be invested and earn interest. To
calculate a PV, future amounts are thus reduced using an assumed interest rate, and those reduced amounts are summed.
5
Social Security is funded by the payroll taxes and revenue from taxation of benefits. Medicare Part A is funded by the payroll taxes, revenue from taxation
of benefits, and premiums that support those programs. Medicare Parts B and D are primarily financed by transfers from the General Fund, which are
presented, and by accounting convention, eliminated in the SOSI. For the FYs 2023 and 2022 SOSI, the amounts eliminated totaled $48.5 trillion and $47.5
trillion, respectively. In addition, the SOSI programs include DOL’s Black Lung Program, the projection period for which is 40 years.
average in the 2022 projections). The fiscal gap in the 2023 projections represents 23.8 percent of 75-year PV
receipts and 19.8 percent of 75-year PV non-interest spending.
FY 2023 Financial Statement Audit Results

For FY 2023, GAO issued a disclaimer of audit opinion on the accrual-based, government-wide financial statements, as
it has for the past 26 years, due to certain material weaknesses in internal control over financial reporting and other
limitations on the scope of its work. In addition, GAO issued a disclaimer of opinion on the sustainability financial
statements due to significant uncertainties primarily related to the achievement of projected reductions in Medicare cost
growth and certain other limitations. GAO’s audit report on page 218 of this Financial Report, discusses GAO’s findings.
In FY 2023, 19 of the 24 entities required to issue audited financial statements under the CFO Act received unmodified
audit opinions, as did 13 of 16 additional significant consolidation entities (see Table 10 and Appendix A). 6
The Government-wide Reporting Entity
This Financial Report includes the financial status and activities of the executive, legislative, and judicial branches of
the federal government. SFFAS No. 47, Reporting Entity, provides criteria for identifying organizations that are
consolidation entities, disclosure entities, and related parties. Such criteria are summarized in Note 1.A, Significant
Accounting Policies, Reporting Entity, and in Appendix A, which lists the entities included in this Financial Report by these
categories. The assets, liabilities, results of operations, and related activity for consolidation entities are consolidated in the
Fannie Mae and Freddie Mac meet the criteria for disclosure entities and, consequently, are not consolidated into the
government’s financial statements. However, the values of the investments in such entities, changes in value, and related
activity with these entities are included in the consolidated financial statements. The FR System and the SPVs are disclosure
entities and are not consolidated into the government’s financial statements. See Note 1.A and Note 27—Disclosure Entities
and Related Parties for additional information. In addition, per SFFAS No. 31, Accounting for Fiduciary Activities, fiduciary
funds are not consolidated in the government financial statements. 7
Most significant consolidation entities prepare financial statements that include financial and performance related
information, as well as Annual Performance Reports. More information may be obtained from entities’ websites indicated in
Appendix A and at https://www.performance.gov/.
The following pages contain a more detailed discussion of the government’s financial results for FY 2023, the Budget,
the economy, the debt, and a long-term perspective about fiscal sustainability, including the government’s ability to meet its
social insurance benefits obligations. The information in this Financial Report, when combined with the Budget, collectively
presents information on the government’s financial position and condition.
Accounting Differences Between the Budget and the Financial

Report
Each year, the administration issues two reports that detail the government’s financial results: the Budget and this
Financial Report. The exhibit on the following page provides the key characteristics and differences between the two
documents.
Treasury generally prepares the financial statements in this Financial Report on an accrual basis of accounting as
prescribed by GAAP for federal entities. 8 These principles are tailored to the government’s unique characteristics and
circumstances. For example, entities prepare a uniquely structured “Statement of Net Cost,” which is intended to present net
government resources used in its operations. Also, unique to government is the preparation of separate statements to
reconcile differences and articulate the relationship between the Budget and financial accounting results.
6
The 19 entities include the HHS, which received disclaimers of opinions on its 2023, 2022, 2021, 2020, and 2019 SOSI and its 2023 and 2022 SCSIA. The
13 entities include the FDIC, the NCUA, and the FCSIC, which operate on a calendar year basis (December 31 year-end). Statistic reflects 2022 audit results
for these organizations if 2023 results are not available.
7
See Note 23—Fiduciary Activities.
8
Under GAAP, most U.S. government revenues are recognized on a ‘modified cash’ basis, (see Financial Statement Note 1.B). The SOSI presents the PV of
the estimated future revenues and expenditures for scheduled benefits over the next 75 years for the Social Security, Medicare, RRP; and 25 years for the
Black Lung program. The SLTFP presents the 75-year PV of the projected future receipts and non-interest spending for the federal government.
Budget of the U.S. Government Financial Report of the U.S. Government

Prepared primarily on a “cash basis” Prepared on an “accrual basis” and “modified cash basis”
• Initiative-based and prospective: focus on • Entity-based and retrospective – prior and present
current and future initiatives planned and resources used to implement initiatives.
how resources will be used to fund them. • Revenue: Tax revenue (more than 90.0 percent of total
• Receipts (“cash in”), taxes and other revenue) recognized on modified cash basis (see Financial
collections recorded when received. Statement Note 1.B). Remainder recognized when earned,
• Outlays (“cash out”), largely recorded when but not necessarily received.
payment is made. • Costs: recognized when incurred, but not necessarily paid.
Budget Deficit vs. Net Operating Cost

Three key components of the Budget process are: 1) appropriations; 2) obligations; and 3) outlays. An appropriation is a
provision of law authorizing the expenditure of funds for a given purpose. Rescissions and cancellations are reductions in law
of budgetary resources. They are considered permanent reductions unless legislation clearly indicates that the reduction is
temporary. Once funds are appropriated by Congress, Treasury issues warrants that officially establish the amounts available
to be obligated and spent (i.e., expended or outlayed) by each agency. An agency’s obligation of funds is a binding agreement
to outlay funds for a particular purpose immediately or in the future. The budget deficit is measured as the excess of outlays,
or payments made by the government, over receipts, or cash received by the government.
Net operating cost, calculated on an accrual basis, is the excess of costs (what the government has incurred but has not
necessarily paid) over revenues (what the government has collected and expects to collect but has not necessarily received).
As shown in Chart 1, net operating cost typically exceeds the budget deficit due largely to the inclusion of cost accruals
associated with increases in estimated liabilities for the government’s postemployment benefit programs for its military and
civilian employees and veterans as well as environmental liabilities.
The government’s
primarily cash-based 9 budget
deficit increased by $319.7
billion (23.2 percent) from
approximately $1.4 trillion in
FY 2022 to about $1.7 trillion
in FY 2023 due to a $456.8
billion decrease in receipts
which more than offset a
$137.1 billion decrease in
outlays in FY 2023. The
decrease in receipts can be
attributed to lower individual
income tax receipts as capital
gains realizations fell and lower
deposits of earnings by the
Federal Reserve due to higher
interest rates. These decreases
were partially offset by higher
social insurance and retirement
receipts due to a strong labor
market boosting wages and
salaries. The decrease in outlays in part reflects the broad-based student loan debt relief, which increased outlays in FY 2022,
and the effect of the reversal of broad-based debt relief in FY 2023 as a result of the Supreme Court’s decision in Biden v.
Nebraska. It also reflects decreases due to the expiration of the expanded child tax credit as well as reductions in COVID-19
related spending, including spending by Treasury from the Coronavirus Relief Fund and by the Food and Nutrition Service
for SNAP and child nutrition programs. Outlays for some other categories of spending increased, including Social Security,
Medicare, Medicaid, and net interest. 10
9
Interest outlays on Treasury debt held by the public are recorded in the Budget when interest accrues, not when the interest payment is made. For federal
credit programs, outlays are recorded when loans are disbursed, in an amount representing the PV cost to the government, commonly referred to as credit
subsidy cost. Credit subsidy cost excludes administrative costs.
10
10/20/23 press release – Joint Statement of Janet L. Yellen, Secretary of the Treasury, and Shalanda D. Young, Director of the Office of Management and
Budget, on Budget Results for Fiscal Year 2023. Note that some amounts in this Financial Report reflect updates subsequent to publication of the press
release.
Treasury’s September 2023 MTS provides fiscal year-end receipts, spending, and deficit information for this Financial
Report. The MTS presents primarily cash-based spending, or outlays, for the fiscal year in a number of ways, including by
month, by entity, and by budget function classification. The Budget is divided into approximately 20 categories, or budget
functions, as a means of organizing federal spending by primary purpose (e.g., National Defense, Transportation, and
Health). Multiple entities may contribute to one or more budget functions, and a single budget function may be associated
with only one entity. For example, DOD, DHS, DOE, and multiple other entities administer programs that are critical to the
broader functional classification of National Defense. DOD, OPM, and many other entities also administer Income Security
programs (e.g., retirement benefits, housing, financial assistance). By comparison, the Medicare program is a budget function
category unto itself and is administered exclusively at the federal level by HHS. Federal spending information by budget
function and other categorizations may be found in the September 2023 MTS. 11
The government’s largely accrual-based net operating cost decreased by $753.8 billion (18.1 percent) to $3.4 trillion
during FY 2023. As discussed in this Financial Report, as the deficit is affected by changes in both receipts and outlays, so
too are the government’s net operating costs affected by changes in both revenues and costs.
The Reconciliation of Net Operating Cost and Budget Deficit statement articulates the relationship between the
government’s accrual-based net operating cost and the primarily cash-based budget deficit. The difference between the
government’s budget deficit and net operating cost is typically impacted by many variables. For example, from Table 2, 88
percent of the $1.7 trillion net difference for FY 2023 is attributable to a $1.5 trillion net increase in liabilities for federal
employee and veteran benefits payable (see Note 13—Federal Employee and Veteran Benefits Payable). Other differences
include: 1) a $108.1 billion increase in advances from others and deferred revenue (see Note 17—Advances from Others and
Deferred Revenue); 2) a $55.0 billion decrease in net taxes receivable (see Note 3—Accounts Receivable, Net); and 3) a
$45.4 billion decrease in advances and prepayments made by the federal government (see Note 9—Advances and
Prepayments).
The Government’s Net Position: “Where We Are”

The government’s financial position and condition have traditionally been expressed through the Budget, focusing on
surpluses, deficits, and debt. However, this primarily cash-based discussion of the government’s net outlays (deficit) or net
receipts (surplus) tells only part of the story. The government’s accrual-based net position, (the difference between its assets
and liabilities, adjusted for unmatched transactions and balances), and its “bottom line” net operating cost (the difference
between its revenues and costs) are also key financial indicators. The following includes brief discussions of some of the
diminishing effects of the pandemic on the government’s financial results for FY 2023. Please refer to Note 29—COVID-19
Activity and other disclosures in this Financial Report, as well as in the individual entities’ financial statements for more
information.
Costs and Revenues
The government’s Statement of Operations and Changes in Net Position, much like a corporation’s income statement,
shows the government’s “bottom line” and its impact on net position (i.e., assets net of liabilities, adjusted for unmatched
transactions and balances). To derive the government’s “bottom line” net operating cost, the Statement of Net Cost first
shows how much it costs to operate the federal government, recognizing expenses when incurred, regardless of when
payment is made (accrual basis). It shows the derivation of the government’s net cost or the net of: 1) gross costs, or the costs
11
Final MTS for FY 2023 through September 30, 2023 and Other Periods.
of goods produced and services rendered by the government; 2) the earned revenues generated by those goods and services
during the fiscal year; and 3) gains or losses from changes in actuarial assumptions used to estimate certain liabilities. This
amount, in turn, is offset against the government’s taxes and other revenue reported in the Statement of Operations and
Changes in Net Position to calculate the “bottom line” or net operating cost.
Table 3 shows that the government’s “bottom line” net operating cost decreased $753.8 billion (18.1 percent) during
2023 from $4.2 trillion to $3.4 trillion. This decrease is due mostly to a $1.2 trillion (13.3 percent) decrease in net costs,
which more than offset a $460.3 billion (9.3 percent) decrease in tax and other revenues over the past fiscal year as discussed
in the following.
Gross Cost and Net Cost
The FY 2023 Statement of Net Cost starts with the government’s total gross costs of $7.7 trillion, subtracts $539.5
billion in revenues earned for goods and services provided (e.g., Medicare premiums, national park entry fees, and postal
service fees), and adjusts the balance for gains or losses from changes in actuarial assumptions used to estimate certain
liabilities ($760.6 billion loss), including federal employee and veteran benefits to derive its net cost of $7.9 trillion, a $1.2
trillion (13.3 percent) decrease compared to FY 2022.
Typically, the annual change in the government’s net cost is the result of a variety of offsetting increases and decreases
across entities. Offsetting changes in federal entity net cost during FY 2023 included:
• Entities administering federal employee and veteran benefits programs employ a complex series of assumptions,
including but not limited to interest rates,
beneficiary eligibility, life expectancy, and
medical cost levels, to make actuarial
projections of their long-term benefits
liabilities. Changes in these assumptions
can result in either losses (net cost
increases) or gains (net cost decreases).
Across the government, these net losses
from changes in assumptions amounted to
$760.6 billion in FY 2023, a net loss (and
a corresponding net cost) decrease of $1.4
trillion compared to FY 2022. The primary
entities that administer programs impacted
by these assumptions – typically federal
employee pension and benefit programs –
are the VA, DOD, and OPM. All three of
these entities recorded losses from
changes in assumptions in the amounts of
$111.9 billion, $89.3 billion, and $558.8 billion, respectively. These actuarial estimates and the resulting gains or
losses from changes in assumptions can sometimes cause significant swings in total entity costs from year to year.
For example, for FY 2023, net cost decreases at OPM ($88.5 billion), DOD ($455.6 billion), and VA ($479.6
billion) were significantly impacted by the decreases in losses from assumption changes at these entities.
• A $479.6 billion decrease in VA net cost was impacted largely by a $967.7 billion decrease in losses from changes
in assumptions as referenced above, partially offset by an increase in costs as a result of legislation expanding and
extending the eligibility for veteran's benefits.
• The $455.6 billion decrease in DOD net cost is primarily due to a $437.7 billion decrease in losses from changes in
assumptions referenced above. While losses from changes in assumptions represented the largest decrease, the
majority (more than 80 percent) of DOD costs are attributable to a wide range of functions, including military
operations, readiness, and support; procurement; military personnel; and R&D.
• The $222.7 billion decrease in Treasury net costs is largely due to a decrease in costs associated with Treasury’s
pandemic relief programs. As discussed in Note 29—COVID-19 Activity, Treasury’s net costs related to COVID-19
relief efforts decreased $105.5 billion, from $164.4 billion to $58.9 billion, during FY 2023, mainly attributed to a
reduction in the estimated amount of eligible costs incurred by state and local, territorial, and tribal program
recipients of Coronavirus State and Local Fiscal Recovery Funds. In addition, Treasury gross costs reported in this
Financial Report reflect a decrease in COVID-19 related refunds and other payments, such as EIP and advances for
child tax credits, from $89.2 billion to $53.4 billion.
• A $521.0 billion decrease at
Education, due largely to the combined
effect of: 1) the announced broad-
based student loan debt relief in
continued response to the pandemic to
help borrowers at highest risk of
delinquencies or default once
payments resumed; and 2) the reversal
of the announced broad-based student
loan debt relief as a result of the
Supreme Court’s ruling in Biden v.
Nebraska. The combined effect on
Education’s net cost was: 1) an FY
2022 cost increase of $330.9 billion,
due largely to a $337.3 billon upward
cost modification to its direct loan
program stemming from the
announced broad-based relief; and 2) a
$319.9 billion downward cost
modification in FY 2023 related to the
student loan debt relief. Education’s FY 2023 costs were also impacted by: 1) a $71.4 billion upward loan reestimate
of the costs of its existing loan portfolio; and 2) $115.7 billion in upward modifications related to COVID-19
administrative actions, changes to repayment plans, and other programmatic changes.
• A $54.1 billion net cost increase at HHS was primarily due to $116.1 billion across the Medicare and Medicaid
benefit programs largely associated with increasing benefits. Notably, Medicare HI costs increased due to increases
in HI benefit expenses of $26.6 billion and contingent liability of $10.4 billion. Medicaid benefit expense increased
$19.1 billion from higher grant awards to the states due to the continuation of the COVID-19 relief, offset by $1.1
billion decrease in contingent liability expenses for the state plan amendments. HHS also experienced a $62.0 billion
decrease across all other HHS segments primarily due to decreased COVID-19 costs.
• A $138.8 billion increase at SSA, due to a 2.5 percent increase in the number of OASI beneficiaries, and the 8.7
percent COLA provided to beneficiaries in 2023. The OASI, DI, and SSI net cost increased by 12.0 percent, 6.0
percent, and 0.1 percent respectively. Total benefit expenses increased by $137.8 billion or 10.8 percent.
• A $181.5 billion increase in interest on debt held by the public primarily attributable to an increase in the
outstanding debt held by the public and an increase in the average interest rates, which were partially offset by a
decrease in inflation adjustments.
Chart 2 shows the composition of the government’s net cost for FY 2023, and Chart 3 shows the five-year trend in the
largest agency cost components. In FY 2023, approximately 87 percent of the federal government’s total net cost came from
only six agencies (HHS, VA, SSA, DOD, Treasury, USDA), and interest on the debt. The other 150-plus entities included in
the government’s FY 2023 Statement of Net Cost accounted for a combined 13 percent of the government’s total net cost for
FY 2023. HHS and SSA net costs for FY 2023 ($1.7 trillion and $1.4 trillion, respectively) are largely attributable to major
social insurance programs administered by these entities. VA net costs of $1.5 trillion support health, education and other
benefits programs for our nation’s veterans. DOD net costs of $1.0 trillion relate primarily to operations, readiness, and
support; personnel; research; procurement; and retirement and health benefits. Treasury net costs of $303.7 billion support a
broad array of programs that promote conditions for sustaining economic growth and stability, protecting the integrity of our
nation’s financial system, and effectively managing the U.S. government’s finances and resources. USDA net costs of $226.3
billion support a wide range of programs that provide effective, innovative, science-based public policy leadership in
agriculture, food and nutrition, natural resource protection and management, rural development, and related issues with a
commitment to deliver equitable and climate-smart opportunities that inspire and help America thrive.
Tax and Other Revenues

As noted earlier, tax and other revenues from the Statement of Operations and Changes in Net Position are deducted
from total net cost to derive the government’s
“bottom line” net operating cost. Chart 4 shows that
total tax and other revenue decreased by $460.3
billion or 9.3 percent to $4.5 trillion for FY 2023.
This decrease is attributable mainly to an overall
decline in income tax collections, primarily from
individuals and corporations, coupled with
decreased deposits of earnings from the Federal
Reserve due to increased interest rates. Earned
revenues from Table 3 are not considered “taxes
and other revenue” and, thus, are not shown in
Chart 4. Individual income tax and tax
withholdings and corporate income taxes accounted
for about 83.1 percent and 8.2 percent of total
revenue, respectively in FY 2023; other revenues
from Chart 4 include Federal Reserve earnings,
excise taxes, unemployment taxes, and customs
duties.
As previously shown in Table 3, the decrease in tax and other revenue was more than offset by the decrease in net cost,
yielding a $753.8 billion decrease to the government’s bottom line net operating cost to $3.4 trillion for FY 2023.
Tax Expenditures
Tax and other revenues reported reflect the effects of tax expenditures, which are special exclusions, exemptions,
deductions, tax credits, preferential tax rates, and tax deferrals that allow individuals and businesses to reduce taxes they may
otherwise owe. Tax expenditures may be viewed as alternatives to other policy instruments, such as spending or regulatory
programs. For example, the government supports college attendance through both spending programs and tax expenditures.
The government uses Pell Grants to help low- and moderate-income students afford college and allows certain funds used to
meet college expenses to grow tax free in special college savings accounts. Tax expenditures may include deductions and
exclusions which reduce the amount of income subject to tax (e.g., deductions for personal residence mortgage interest). Tax
credits, which reduce tax liability dollar for dollar for the amount of credit (e.g., child tax credit), are also considered tax
expenditures. Tax expenditures may also allow taxpayers to defer tax liability.
Receipts in the calculation of surplus or deficit, and tax revenues in the calculation of net position, reflect the effect of
tax expenditures. As discussed in more detail in the Other Information section of this Financial Report, tax expenditures will
generally lower federal government receipts although tax expenditure estimates do not necessarily equal the increase in
federal revenues (or the change in the Budget balance) that would result from repealing these special provisions.
Tax expenditures are reported annually in the Analytical Perspectives of the Budget. In addition, current and past tax
expenditure estimates and descriptions can be found at the following location from Treasury’s Office of Tax Policy:
https://home.treasury.gov/policy-issues/tax-policy/tax-expenditures.
Assets and Liabilities
The government’s net position at the end of the fiscal year is derived by netting the government’s assets against its
liabilities, as presented in the Balance Sheet (summarized in Table 4). 12 The Balance Sheet does not include the financial
value of the government’s sovereign powers to tax, regulate commerce, or set monetary policy or value of nonoperational
resources of the government, such as national and natural resources, for which the government is a steward. In addition, as is
the case with the Statement of Operations and Changes in Net Position, the Balance Sheet includes a separate presentation of
the portion of net position related to funds from dedicated collections. Moreover, the government’s exposures are broader
than the liabilities presented on the Balance Sheet. The government’s future social insurance exposures (e.g., Medicare and
Social Security) as well as other fiscal projections, commitments and contingencies, are reported in separate statements and
disclosures. This information is discussed later in this MD&A section, the financial statements, and RSI sections of this
Financial Report.
12
As shown in Table 4, the government’s Balance Sheet includes an adjustment for unmatched transactions and balances, which represent unresolved
differences in intra-governmental activity and balances between federal entities. These amounts are described in greater detail in the Other Information
section of this Financial Report.
Assets
From Table 4, as of September 30, 2023, more than three-fourths of the government’s $5.4 trillion in reported assets is
comprised of: 1) cash and other monetary assets ($922.2 billion); 2) inventory and related property, net ($423.0 billion); 3)
loans receivable, net ($1.7 trillion); and 4) net PP&E ($1.2 trillion). 13 Chart 5 compares the balances of these and other
Balance Sheet amounts as of September 30, 2023, and 2022.
Cash and other monetary assets ($922.2 billion) is comprised largely of the operating cash of the U.S. government.
Operating cash held by Treasury, which represents balances from tax collections, federal debt receipts, and other various
receipts net of cash outflows for federal debt repayments and other payments, increased $21.9 billion (3.5 percent) to $638.9
billion (see Note 2—Cash and Other Monetary Assets).
Inventory and related property is comprised of inventory; OM&S; stockpile materials; commodities; and seized,
forfeited, and foreclosed property. Inventory is tangible personal property that is either held for sale, in the process of
production for sale, or to be consumed in the production of goods for sale or in the provision of services for a fee (e.g., raw
materials, finished goods, spare and repair parts, clothing and textiles, and fuels). OM&S consists of tangible personal
property to be consumed in normal operations (e.g., spare and repair parts, ammunition, and tactical missiles). Stockpile
materials are strategic and critical materials held due to statutory requirements for use in national defense, conservation, or
local/national emergencies. Contributing agencies include DOD, DOE, Treasury, DHS, and HHS (see Note 5—Inventory and
Related Property, Net).
13
For financial reporting purposes, other than multi-use heritage assets, stewardship assets of the government are not recorded as part of PP&E. Stewardship
assets are comprised of stewardship land and heritage assets. Stewardship land primarily consists of public domain land (e.g., national parks, wildlife
refuges). Heritage assets include national monuments and historical sites that among other characteristics are of historical, natural, cultural, educational, or
artistic significance. See Note 26—Stewardship Property, Plant, and Equipment.
The federal government’s direct loans and loan guarantee programs are used to promote the nation’s welfare by making
financing available to segments of the
population not served adequately by
non-federal institutions, or otherwise
providing for certain activities or
investments. For those unable to afford
credit at the market rate, federal credit
programs provide subsidies in the form
of direct loans offered at an interest
rate lower than the market rate. For
those to whom non-federal financial
institutions are reluctant to grant credit
because of the high risk involved,
federal credit programs guarantee the
payment of these non-federal loans and
absorb the cost of defaults. For
example, Education supports
individuals engaged in education
programs through a variety of student
loan, grant and other assistance programs. USDA administers loan programs to support the nation’s farming and agriculture
community. HUD loan programs support affordable homeownership, as well as the construction and rehabilitation of housing
projects for the elderly and persons with disabilities. SBA loan programs enable the establishment and vitality of small
businesses and assist in the economic recovery of communities after disasters. Loans receivable consists primarily of direct
loans disbursed by the government, receivables related to guaranteed loans that have defaulted, and certain receivables for
guaranteed loans that the government has purchased from lenders. The federal government’s direct loan portfolio increased
by $261.0 billion (18.2 percent) to $1.7 trillion during FY 2023, with Education and SBA together accounting for more than
three-fourths of the total.
Loan guarantee programs are another form of federal lending. For those to whom non-federal financial institutions are
reluctant to grant credit because of the high risk involved, federal credit programs guarantee the payment of these non-federal
loans and absorb the cost of defaults. Significant changes to the federal government’s loans receivable, net, and loan
guarantee liabilities, as discussed in Note 4, include:
• Education has loan programs that are authorized by Title IV of the Higher Education Act of 1965. The William D.
Ford Federal Direct Loan Program (referred to as the Direct Loan Program), was established in FY 1994 and offers
four types of educational loans: Stafford, Unsubsidized Stafford, Parent Loan for Undergraduate Students, and
consolidation loans. Education’s net loans receivable for its Direct Loan Program increased from $816.6 billion to
$1.0 trillion (60.8 percent of total loans receivable, net). This increase was largely due to the reversal of the broad-
based student loan debt relief as a result of the Supreme Court’s ruling in Biden v. Nebraska. Education had
announced the broad-based relief during FY 2022 to address the financial harms of the pandemic by smoothing the
transition back to repayment and helping borrowers at highest risk of delinquencies or default once payments
resumed. In addition, all federal wage garnishments and collections actions for borrowers with federally held loans
in default were halted.
• Treasury purchased a $50 billion note issued by a trust created by FDIC in its receivership capacity and backed by a
guarantee from the FDIC in its corporate capacity.
• SBA makes loans to microloan intermediaries and provides a direct loan program that assists homeowners, renters
and businesses recover from disasters. SBA’s Disaster Assistance Loan Program makes direct loans to disaster
survivors under four categories: 1) physical disaster loans to repair or replace damaged homes and personal
property; 2) physical disaster loans to businesses of any size; 3) EIDLs to eligible small business and nonprofit
organizations without credit available elsewhere; and 4) economic injury loans to eligible small businesses affected
by essential employees called up to active duty in the military reserves. In FY 2023 SBA’s credit program
receivables decreased by $49.6 billion from FY 2022 due largely to write-offs of direct disaster loans.
• Fluctuations in loan programs for HUD, DOT, and DFC.
Federal government general PP&E includes many of the physical resources that are vital to the federal government’s
ongoing operations, including buildings, structures, facilities, equipment, internal use software, and general-purpose land.
DOD comprises approximately 67.4 percent of the government’s reported general PP&E of $1.2 trillion as of September 30,
2023. See Note 6—General Property, Plant, and Equipment, Net.
“Other” assets of $1.1 trillion in Table 4 and Chart 5 includes: 1) $319.9 billion in accounts receivable, net; 2) $252.7
billion in “Advances and Prepayments”; and 3) $240.4 billion in investments in GSEs. Treasury comprises approximately
57.7 percent of the government’s reported accounts receivable, net, mostly in the form of reported taxes receivable, which
consist of unpaid assessments due from taxpayers, unpaid taxes related to IRC section 965, and deferred payments for
employer’s share of FICA taxes pursuant to the CARES Act. Taxes receivable, net, decreased by $55.0 billion during FY
2023, primarily due to the reduction in IRC 965(h) and to payments to Treasury of the deferred employer portion of FICA
Social Security taxes. (See Note 3—Accounts Receivable, Net). Advances and Prepayments represent funds disbursed in
contemplation of the future performance of services, receipt of goods, the incurrence of expenditures, or the receipt of other
assets. The $45.4 billion decrease in this amount was largely attributable to a reduction in the estimated amount of eligible
costs incurred by state, local, territorial, and tribal governments pursuant COVID-19 legislation (See Note 9—Advances and
Prepayments). Investments in GSEs refers to actions taken by Treasury in the wake of the 2008 financial crisis to maintain
the solvency of the GSEs (Fannie Mae and Freddie Mac) so they can continue to fulfill their vital roles in the mortgage
market while the administration and Congress determine what structural changes should be made to the housing finance
system. (See Note 8—Investment in Government-Sponsored Enterprises).
Liabilities
As indicated in Table 4 and Chart 6, of the
government’s $42.9 trillion in total liabilities, the
largest liability is federal debt and interest payable,
the balance of which increased by $2.0 trillion (8.3
percent) to $26.3 trillion as of September 30, 2023.
The other major component of the
government’s liabilities is federal employee and
veteran benefits payable (i.e., the government’s
pension and other benefit plans for its military and
civilian employees), which increased $1.5 trillion
(11.8 percent) during FY 2023, to about $14.3
trillion. This total amount is comprised of $3.3
trillion in benefits payable for the current and
retired civilian workforce, and $11.1 trillion for the
military and veterans. OPM administers the largest
civilian pension plan, covering nearly 2.8 million
active employees, including the Postal Service, and
more than 2.7 million annuitants, including
survivors. The DOD military pension plan covers
about 2.1 million current military personnel (including active service, reserve, and National Guard) and approximately 2.4
million retirees and survivors.
Federal Debt
The budget surplus or deficit is the difference between total federal spending and receipts (e.g., taxes) in a given year.
The government borrows from the public (increases federal debt levels) to finance deficits. During a budget surplus (i.e.,
when receipts exceed spending), the government typically uses those excess funds to reduce the debt held by the public. The
Statement of Changes in Cash Balance from Budget and Other Activities reports how the annual budget surplus or deficit
relates to the federal
government’s borrowing and Prior to 1917, Congress approved each debt issuance. In 1917, to facilitate planning
changes in cash and other in World War I, Congress and the President established a dollar ceiling for federal
monetary assets. It also explains borrowing. With the Public Debt Act of 1941 (P.L. 77-7), Congress and the
how a budget surplus or deficit President set an overall limit of $65 billion on Treasury debt obligations that could
normally affects changes in debt be outstanding at any one time. Since then, Congress and the President have enacted
balances. a number of measures affecting the debt limit, including several in recent years.
The government’s federal Congress and the President most recently suspended the debt limit from June 3,
debt and interest payable 2023 through January 1, 2025. It is important to note that increasing or suspending
(Balance Sheet liability), which the debt limit does not increase spending or authorize new spending; rather, it
is comprised of publicly-held permits the U.S. to continue to honor pre-existing commitments to its citizens,
debt and accrued interest businesses, and investors domestically and around the world.
payable, increased $2.0 trillion
(8.3 percent) to $26.3 trillion as of September 30, 2023. It is comprised of Treasury securities, such as bills, notes, and bonds,
net of unamortized discounts and premiums issued or sold to the public; and accrued interest payable. The “public” consists
of individuals, corporations, state and local governments, FRB, foreign governments, and other entities outside the federal
government. As indicated above, budget surpluses have typically resulted in borrowing reductions, and budget deficits have
conversely yielded borrowing increases. However, the government’s debt operations are generally much more complex. Each
year, trillions of dollars of debt matures and new debt is issued to take its place. In FY 2023, new borrowings were $20.2
trillion, and repayments of maturing debt held by the public were $18.2 trillion, both increases over FY 2022. The $2.0
trillion increase in publicly held debt and accrued interest payable is largely attributable to the need to finance the
government’s operations.
In addition to debt held by the public, the government has about $6.9 trillion in intra-governmental debt outstanding,
which arises when one part of the government borrows from another. It represents debt issued by Treasury and held by
government accounts, including the Social Security ($2.8 trillion) and Medicare ($353.9 billion) Trust Funds. Intra-
governmental debt is primarily held in government trust funds in the form of special nonmarketable securities by various
parts of the government. Laws establishing government trust funds generally require excess trust fund receipts (including
interest earnings) over disbursements to be invested in these special securities. Because these amounts are both liabilities of
Treasury and assets of the government trust funds, they are eliminated as part of the consolidation process for the
government-wide financial statements (see Financial Statement Note 12). When those securities are redeemed, e.g., to pay
Social Security benefits, the government must obtain the resources necessary to reimburse the trust funds. The sum of debt
held by the public and intra-governmental debt equals gross federal debt, which (with some adjustments), is subject to a
statutory ceiling (i.e., the debt limit). Note that when intra-governmental debt decreases, debt held by the public will increase
by an equal amount (if the general account of the U.S. government is in deficit), so that there is no net effect on gross federal
debt. At the end of FY 2023, debt subject to the statutory limit was $33.1 trillion. 14
The federal debt held by the public measured as a percent of GDP (debt-to-GDP ratio) (Chart 7) compares the country’s
debt to the size of its economy, making this
measure sensitive to changes in both. Over time,
the debt-to-GDP ratio has varied widely:
• For most of the nation’s history,
through the first half of the 20th century,
the debt-to-GDP ratio has tended to
increase during wartime and decline
during peacetime.
• Chart 7 shows that wartime spending
and borrowing pushed the debt-to-GDP
ratio to an all-time high of 106 percent
in 1946, soon after the end of World
War II, but it decreased rapidly in the
post-war years.
• The ratio grew rapidly from the mid-
1970s until the early 1990s. Strong
economic growth and fundamental
fiscal decisions, including measures to
reduce the federal deficit and
implementation of binding PAYGO
rules (which require that new tax or
spending laws not add to the deficit), generated a significant decline in the debt-to-GDP ratio, from a peak of 48
percent in FYs 1993-1995, to 31 percent in 2001.
• The debt-to-GDP ratio rose significantly in 2008-2009 during the financial crisis and again in 2020-2021 during the
pandemic reflecting the government’s responses to both events and the resulting significant spending and deficit
increases, as well as the economic challenges experienced during both periods.
• During the first decade of the 21st century, PAYGO rules were allowed to lapse, significant tax cuts were
implemented, entitlements were expanded, and spending related to defense and homeland security increased. By
September 2008, the debt-to-GDP ratio was 39 percent of GDP.
• PAYGO rules were reinstated in 2010, but the extraordinary demands of the 2008 economic and financial crisis and
the consequent actions taken by the federal government, combined with slower economic growth in the wake of the
crisis, pushed the debt-to-GDP ratio up to 74 percent by the end of FY 2014.
• The extraordinary demands of the pandemic, the government’s response, and pressures on the economy contributed
to a rise in the debt-to-GDP ratio to approximately 100 percent during FY 2020 and FY 2021.
14
Beginning in FY 2021 and continuing into FY 2022 and again in FY 2023, Treasury faced two delays in raising the statutory debt limit that required it to
depart from its normal debt management procedures and to invoke legal authorities to avoid exceeding the statutory debt limit. During these periods,
extraordinary measures taken by Treasury have resulted in federal debt securities not being issued to certain federal government accounts with the securities
being restored including lost interest to the affected federal government accounts subsequent to the end of the delay period. During the first delay, Treasury
took extraordinary actions from August 2, 2021, through December 15, 2021. On October 14, 2021, P.L. 117-50 was enacted which raised the statutory debt
limit by $480.0 billion, from $28,401.5 billion to $28,881.5 billion. Even with this increase, extraordinary measures continued in order for Treasury to
manage below the debt limit. On December 16, 2021, P.L. 117-73 was enacted, increasing the debt limit by $2.5 trillion to $31.4 trillion. Due to a second
delay in raising the debt limit, Treasury began taking extraordinary actions from January 19, 2023, through June 2, 2023. On June 3, 2023, P.L. 118-5 was
enacted, suspending the debt limit through January 1, 2025. See Note 12—Federal Debt and Interest Payable.
• The debt was approximately 97 percent of GDP at the end of FY 2023. This ratio increased during FY 2023 because
debt grew faster than GDP. 15,16 From Chart 7, since 1940, the average debt-to-GDP ratio is 50 percent.
See Note 29—COVID-19 Activity, as well as the referenced agencies’ FY 2023 financial statements for additional
information about the financial effects of the federal government’s response to the pandemic. See Note 30—Subsequent
Events for information about events that occurred after the end of the fiscal year that may affect the government’s financial
results.
The Economy in FY 2023

A consideration of U.S. economic
performance provides useful context when
evaluating the government’s financial
statements. In FY 2023, the economy’s growth
accelerated and yet inflation continued to slow.
Payroll job creation remained relatively strong
even as the rebalancing of labor demand and
supply gained momentum. Personal saving
rates ended up higher over the year—though
they remained below pre-pandemic levels. In
addition, supply chains (which were stressed in
FY 2022 due to lingering effects of the
pandemic and Russia’s invasion of Ukraine)
recovered further, lessening inflationary
pressures. This significant progress on the
inflation front has supported real (inflation-
adjusted) income and wage growth.
As summarized in Table 5, the real GDP
grew by 2.9 percent over the four quarters of
FY 2023. PCE and net exports were the largest contributors to economic growth. Over the four quarters of FY 2023, growth
of PCE accelerated to 2.2 percent, after growing 1.9 percent in the previous fiscal year; net exports added 0.2 percentage
points to growth in FY 2023, stepping up from an 0.1 percentage point contribution in FY 2022. In addition, total government
consumption and investment increased in FY 2023. In the previous fiscal year, government spending had declined 0.6 percent
as pandemic-related financial support programs unwound, but public expenditures rose 4.8 percent in FY 2023—partly
reflecting higher real spending by state and local governments as well as higher federal defense expenditures. Meanwhile,
business fixed investment and inventories made positive, though smaller contributions. Business fixed investment expanded
by 4.1 percent, slowing from a gain of 5.8 percent over the previous four quarters. Inventory investment contributed 0.2
percentage points to growth in FY 2023, or one-half the 0.4 percentage point addition to growth in FY 2022, as firms built up
inventories more slowly. In addition, the drag from residential investment slowed somewhat despite rising mortgage rates:
residential investment growth dropped 11.4 percent in FY 2022, but the decline tapered to 7.2 percent in the most recent
fiscal year. Notably, the final quarter of FY 2023 saw an upturn in residential investment, after nine consecutive quarters of
decline.
Labor markets continued to generate a substantial number of jobs but also showed signs of very gradual easing over the
course of FY 2023. On average, employers added 255,000 payroll jobs per month in FY 2023, a relatively rapid pace but
about one-half the monthly average of 492,000 generated in FY 2022. Twice during FY 2023 the unemployment rate dropped
to a 54-year low of 3.4 percent but climbed to 3.8 percent by the end of the fiscal year, pushed higher by improved labor
force participation rates, including participation among older workers and women. In addition to increased labor supply,
labor demand gradually eased. From September 2022 to September 2023, the number of job openings fell from 10.9 million
to 9.4 million—still elevated but only 1.8 million above the pre-pandemic peak. Moreover, the ratio of vacancies to
unemployed persons declined by 0.4 units to 1.5 job openings per unemployed person, suggesting some loosening of
conditions but still above the 1.2 vacancies per unemployed person averaged in 2018 and 2019.
Inflation slowed markedly during FY 2023, as supply-chain disruptions receded, demand for goods and services became
more balanced, and energy and food prices eased. Nonetheless, shelter price inflation remained very high, partly offsetting
progress in reducing other components of core inflation (which excludes good and energy). The CPI rose 3.7 percent over the
12 months of FY 2023, less than half the 8.2 percent pace during the previous fiscal year. Core inflation was 4.1 percent over
the fiscal year ending September 2023, decelerating from the 6.6 percent pace during FY 2022.
15
GDP, in this context, refers to nominal GDP.
16
The increase in debt of $2.0 trillion was greater than the FY 2023 deficit of $1.7 trillion primarily because of the budgetary cost reduction relating to the
broad-based student loan debt relief reversal resulting from the Supreme Court’s determination in Biden v. Nebraska.
Although gains in nominal income and wages slowed to a more normal pace, lower inflation helped to boost purchasing
power in real terms. Real disposable personal income increased 3.8 percent over the 12 months of FY 2023, more than
recovering from the 2.3 percent decline during the previous fiscal year. Although the pace of nominal average hourly
earnings growth for production and non-supervisory workers slowed in FY 2023 to 4.4 percent, it was still relatively strong.
Combined with slower inflation, real average hourly earnings rose 0.8 percent during FY 2023, after declining 2.4 percent in
the previous fiscal year.
An Unsustainable Fiscal Path

An important purpose of the Financial Report is to help citizens understand current fiscal policy and the importance and
magnitude of policy reforms necessary to make it sustainable. This Financial Report includes the SLTFP and a related note
disclosure (Note 24). The Statements display the PV of 75-year projections of the federal government’s receipts and non-
interest spending 17 for FY 2023 and FY 2022.
Fiscal Sustainability
A sustainable fiscal policy is defined as one where the debt-to-GDP ratio is stable or declining over the long term. The
projections based on the assumptions in this Financial Report indicate that current policy is not sustainable. This Financial
Report presents data, including debt, as a percent of GDP to help readers assess whether current fiscal policy is sustainable.
The debt-to-GDP ratio was approximately 97 percent at the end of FY 2023, which is similar to (but slightly above) the debt-
to-GDP ratio at the end of FY 2022. The long-term fiscal projections in this Financial Report are based on the same
economic and demographic assumptions that underlie the 2023 SOSI, which is as of January 1, 2023. As discussed below, if
current policy is left unchanged and based on this Financial Report’s assumptions, the debt-to-GDP ratio is projected to
exceed 200 percent by 2047 and reach 531 percent in 2098. By comparison, under the 2022 projections, the debt-to-GDP
ratio exceeded 200 percent one year earlier in 2046 and reached 566 percent in 2097. Preventing the debt-to-GDP ratio from
rising over the next 75 years is estimated to require some combination of spending reductions and revenue increases that
amount to 4.5 percent PV of GDP over the period. While this estimate of the “75-year fiscal gap” is highly uncertain, it is
nevertheless nearly certain that current fiscal policies cannot be sustained indefinitely.
Delaying action to reduce the fiscal gap increases the magnitude of spending and/or revenue changes necessary to
stabilize the debt-to-GDP ratio as shown in Table 6 below.
The estimates of the cost of policy delay assume policy does not affect GDP or other economic variables. Delaying
fiscal adjustments for too long raises the risk that growing federal debt would increase interest rates, which would, in turn,
reduce investment and ultimately economic growth.
The projections discussed here assume current policy 18 remains unchanged, and hence, are neither forecasts nor
predictions. Nevertheless, the projections demonstrate that policy changes must be enacted to move towards fiscal
sustainability.
The Primary Deficit, Interest, and Debt
The primary deficit – the difference between non-interest spending and receipts – is the determinant of the debt-to-GDP
ratio over which the government has the greatest control (the other determinants include interest rates and growth in GDP).
Chart 8 shows receipts, non-interest spending, and the difference – the primary deficit – expressed as a share of GDP. The
primary deficit-to-GDP ratio spiked during 2009 through 2012 due to the 2008-09 financial crisis and the ensuing severe
recession, as well as the effects of the government’s response thereto. These elevated primary deficits resulted in a sharp
increase in the ratio of debt to GDP, which rose from 39 percent at the end of 2008 to 70 percent at the end of 2012. As an
economic recovery took hold, the primary deficit ratio fell, averaging 2.1 percent of GDP over 2013 through 2019. The
primary deficit-to-GDP ratio again spiked in 2020, rising to 13.3 percent of GDP in 2020, due to increased spending to
address the COVID-19 pandemic and lessen the economic impacts of stay-at-home and social distancing orders on
individuals, hard-hit industries, and small businesses. Spending remained elevated in 2021 due to additional funding to
support economic recovery, but increased receipts reduced the primary deficit-to-GDP ratio to 10.8 percent.
The primary deficit-to-GDP ratio in 2023 was 3.8 percent, increasing by 0.2 percentage points from 2022 primarily due
to lower receipts, partially offset by lower non-interest spending. The primary deficit-to-GDP ratio is projected to fall to 3.2
17
For the purposes of the SLTFP and this analysis, spending is defined in terms of outlays. In the context of federal budgeting, spending can either refer to:
1) budget authority – the authority to commit the government to make a payment; 2) obligations – binding agreements that will result in either immediate or
future payment; or 3) outlays, or actual payments made.
18
Current policy in the projections is based on current law, but includes certain adjustments, such as extension of certain policies that expire under current
law but are routinely extended or otherwise expected to continue (e.g., reauthorization of the Supplemental Nutrition Assistance Program). See Note 24 for
additional discussion of departures of current policy from current law.
percent in 2024, based on the technical assumptions in this Financial Report, and projected changes in receipts and outlays,
including an estimated decrease in Medicaid outlays as the expiration of temporary measures related to the COVID-19
pandemic winds down. After 2024, increased spending for Social Security and health programs due to the continued
retirement of the baby boom generation, is projected to result in increasing primary deficit ratios that peak at 4.4 percent of
GDP in 2043. Primary deficits as a share of GDP gradually decrease beyond that point, as aging of the population continues
at a slower pace and reach 2.8 percent of GDP in 2098, the last year of the projection period.
Trends in the primary deficit are heavily influenced by tax receipts. The receipt share of GDP was markedly depressed
in 2009 through 2012 because of the recession and tax reductions enacted as part of the ARRA and the Tax Relief,
Unemployment Insurance Reauthorization, and Job Creation Act of 2010. The share subsequently increased to nearly 18.0
percent of GDP by 2015, before falling to 16.3 percent in 2018, after enactment of the TCJA.
Receipts reached 19.6 percent of GDP
in 2022, the highest share of GDP since
2000, then fell to 16.5 percent of GDP in
2023 due to a decrease in individual income
tax receipts and lower deposits of earnings
by the Federal Reserve. Receipts are
projected to gradually increase to 18.1
percent of GDP in 2033 when corporation
income tax and other receipts stabilize as a
share of GDP. After 2033, receipts grow
slightly more rapidly than GDP over the
projection period as increases in real (i.e.,
inflation-adjusted) incomes cause more
taxpayers and a larger share of income to
fall into the higher individual income tax
brackets. 19
On the spending side, the non-interest
spending share of GDP was 20.3 percent in
2023, 2.9 percentage points below the share
of GDP in 2022, which was 23.2 percent.
The ratio of non-interest spending to GDP
is projected to fall to 20.1 percent in 2024
and then rise gradually, reaching 23.3 percent of GDP in 2076. The ratio of non-interest spending to GDP then declines to
22.7 percent in 2098, the end of the projection period. These increases are principally due to faster growth in Social Security,
Medicare, and Medicaid spending (see Chart 8). The aging of the baby boom generation, among other factors, is projected to
increase the spending shares of GDP of Social Security and Medicare by about 0.7 and 1.7 percentage points, respectively,
from 2024 to 2040. After 2040, the Social Security and Medicare spending shares of GDP continue to increase in most years,
albeit at a slower rate, due to projected increases in health care costs and population aging, before declining toward the end of
the projection period.
On a PV basis, deficit projections reported in the FY 2023 Financial Report decreased in both present-value terms and
as a percent of the current 75-year PV of GDP. As shown in the SLTFP, this year’s estimate of the 75-year PV imbalance of
receipts less non-interest spending is 3.8 percent of the current 75-year PV of GDP ($73.2 trillion), compared to 4.2 percent
($79.5 trillion) as was projected in last year’s Financial Report. As discussed in Note 24, these decreases are attributable to
the net effect of the following factors:
• Changes due to program-specific actuarial assumptions is the effect of new Social Security, Medicare, and Medicaid
program-specific actuarial assumptions, which decrease the fiscal imbalance as a share of the 75-year PV of GDP by
0.6 percentage points ($10.6 trillion). This change is primarily attributable to near-term growth rate assumptions for
Medicaid. In the 2022 projections, growth rates through 2027 followed projections in the 2018 Medicaid Actuarial
Report. Growth rates for the 2023 projections are based on NHE data and reflect the expiration of temporary
measures related to the COVID-19 pandemic.
• Changes due to updated budget data increased the fiscal imbalance by 0.4 percentage points ($7.4 trillion). This
change stems from actual budget results for FY 2023 and baseline estimates published in the FY 2024 President’s
Budget, plus adjustments to discretionary spending and receipts from legislation enacted in the FRA (P.L. 118-5). 20
This deterioration in the fiscal position is largely due to a higher 75-year PV of discretionary spending on defense
programs and mandatory spending on programs other than Social Security, Medicare, and Medicaid, and lower
19
Other possible paths for the receipts-to-GDP ratio and projected debt held by the public are shown in the “Alternative Scenarios” RSI section of this
Financial Report.
20
Legislation enacted toward the end of FY 2022 includes: An act making appropriations for Legislative Branch for the fiscal year ending September 30,
2022, and for other purposes (P.L. 117-167); PACT Act (P.L. 117-168); and an act to provide for reconciliation pursuant to title II of S.Con.Res. 14 (P.L.
117-169).
individual income taxes as a share of wages and salaries. That deterioration is partially offset by a lower 75-year PV
of spending on non-defense discretionary programs—attributable to the FRA caps—and higher other receipts.
• Changes due to economic and demographic assumptions decreased the fiscal imbalance by 0.3 percentage points
($5.0 trillion). Contributing to this improvement in the imbalance are higher wages that increase receipts and GDP
growth rates that lead to reduced spending as a percentage of GDP. The 75-year PV of GDP for this year’s
projections is $1,919.1 trillion, greater than last year’s $1,872.9 trillion.
• Change in reporting period is the effect of shifting calculations from 2023 through 2097 to 2024 through 2098 and
increased the imbalance of the 75-year PV of receipts less non-interest spending by $1.9 trillion, which has a
negligible effect on the 75-year PV of GDP.
The net effect of the changes in the table above, equal to the penultimate row in the SLTFP, shows that this year’s
estimate of the overall 75-year PV of receipts less non-interest spending is negative 3.8 percent of the 75-year PV of GDP
(negative $73.2 trillion, as compared to a GDP of $1,919.1 trillion).
One of the most important assumptions underlying the projections is that current federal policy does not change. The
projections are therefore neither forecasts nor predictions, and do not consider large infrequent events such as natural
disasters, military engagements, or economic crises. By definition, they do not build in future changes to policy. If policy
changes are enacted, perhaps in response to projections like those presented here, then actual fiscal outcomes will be different
than those projected.
Another important assumption is the future growth of health care costs. As discussed in Note 25, these future growth
rates – both for health care costs in the economy generally and for federal health care programs such as Medicare, Medicaid,
and PPACA exchange subsidies – are highly uncertain. In particular, enactment of the PPACA in 2010 and the MACRA in
2015 lowered payment rate updates for Medicare hospital and physician payments whose long-term effectiveness of which is
not yet clear. The Medicare spending projections in the long-term fiscal projections are based on the projections in the 2023
Medicare Trustees Report, which assume the PPACA and MACRA cost control measures will be effective in producing a
substantial slowdown in Medicare cost growth.
As discussed in Note 25, the Medicare projections are subject to much uncertainty about the ultimate effects of these
provisions to reduce health care cost growth. Certain features of current law may result in some challenges for the Medicare
program including physician payments, payment rate updates for most non-physician categories, and productivity
adjustments. Payment rate updates for most non-physician categories of Medicare providers are reduced by the growth in
economy-wide private nonfarm business total factor productivity although these health providers have historically achieved
lower levels of productivity growth. Should payment rates prove to be inadequate for any service, beneficiaries’ access to and
the quality of Medicare benefits would deteriorate over time, or future legislation would need to be enacted that would likely
increase program costs beyond those projected under current law. For the long-term fiscal projections, that uncertainty also
affects the projections for Medicaid and exchange subsidies, because the cost per beneficiary in these programs is assumed to
grow at the same reduced rate as Medicare cost growth per beneficiary. Other key assumptions, as discussed in greater detail
in Note 24—Long-Term Fiscal Projections, include the following:
• Medicaid spending projections start with the NHE projections which are based on recent trends in Medicaid
spending, as well as Trustees Report assumptions. NHE projections, which end in 2031, are adjusted to accord with
the actual Medicaid spending in FY 2023. After 2031, the number of beneficiaries is projected to grow at the same
rate as total population. Medicaid cost per beneficiary is assumed to grow at the same rate as Medicare benefits per
beneficiary after 2034, after a three-year phase-in to the Medicare per beneficiary growth rate over the period 2032-
2034. The most recent Social Security and Medicare Trustees Reports were released in March 2023.
• Other mandatory spending includes federal employee retirement, veterans’ disability benefits, and means-tested
entitlements other than Medicaid. Current mandatory spending components that are judged permanent under current
policy are assumed to increase by the rate of growth in nominal GDP starting in 2024, implying that such spending
will remain constant as a percent of GDP.
• Defense and non-defense discretionary spending follows the FRA caps through 2025, then grows with GDP starting
in 2026.
• Debt and interest spending is determined by projected interest rates and the level of outstanding debt held by the
public. The long-run interest rate assumptions accord with those in the 2023 Social Security Trustees Report. The
average interest rate over this year’s projection period is 4.5 percent, approximately the same as the 2022 Financial
Report. Debt at the end of each year is projected by adding that year’s deficit and other financing requirements to the
debt at the end of the previous year.
• Receipts (other than Social Security and Medicare payroll taxes) is comprised of individual income taxes, corporate
income taxes and other receipts.
o Individual income taxes were based on the share of individual income taxes of salaries and wages in the current
law baseline projection in the FY 2024 President’s Budget, and the salaries and wages projections from the
Social Security 2023 Trustees Report. That baseline accords with the tendency of effective tax rates to increase
as growth in income per capita outpaces inflation (also known as “bracket creep”) and the expiration dates of
individual income and estate and gift tax provisions of the TCJA. Individual income taxes are projected to
increase gradually from 19 percent of wages and salaries in 2024, to 29 percent of wages and salaries in 2098 as
real taxable incomes rise over time and an increasing share of total income is taxed in the higher tax brackets.
o Corporation tax receipts as a percent of GDP reflect the economic and budget assumptions used in developing
the FY 2024 President’s Budget ten-year baseline budgetary estimates through the first ten projection years,
after which they are projected to grow at the same rate as nominal GDP. Corporation tax receipts fall from 1.7
percent of GDP in 2024 to 1.2 percent of GDP in 2033, where they stay for the remainder of the projection
period.
o Other receipts, including excise taxes, estate and gift taxes, customs duties, and miscellaneous receipts, also
reflect the FY 2024 President’s Budget baseline levels as a share of GDP throughout the budget window, and
grow with GDP outside of the budget window. The ratio of other receipts, to GDP is estimated to increase from
1.1 percent in 2024 to 1.2 percent by 2027 where it remains through the projection period.
• Projections for the other categories of receipts and spending are consistent with the economic and demographic
assumptions in the Trustees Reports and include updates for actual budget results for FY 2023 or budgetary
estimates from the FY 2024 President’s Budget.
The primary deficit-to-GDP projections in Chart 8, projections for interest rates, and projections for GDP together
determine the debt-to-GDP ratio projections shown in Chart 9. That ratio was approximately 97 percent at the end of FY
2023 and under current policy is
projected to exceed the historic high of
106 percent in 2028, rise to 200 percent
by 2047 and reach 531 percent by 2098.
The change in debt held by the public
from one year to the next generally
represents the budget deficit, the
difference between total spending and
total receipts. The debt-to-GDP ratio
rises continually in great part because
primary deficits lead to higher levels of
debt, which lead to higher net interest
expenditures, and higher net interest
expenditures lead to higher debt. 21 The
continuous rise of the debt-to-GDP ratio
indicates that current policy is
unsustainable.
These debt-to-GDP projections are
lower than the corresponding
projections in both the 2022 and 2021
Financial Reports. For example, the last
year of the 75-year projection period used in the FY 2021 Financial Report is 2096. In the FY 2023 Financial Report, the
debt-to-GDP ratio for 2096 is projected to be 518 percent, which compares with 559 and 701 percent for the 2096 projection
year in the FY 2022 Financial Report and the FY 2021 Financial Report, respectively. 22
The Fiscal Gap and the Cost of Delaying Policy Reform
The 75-year fiscal gap is one measure of the degree to which current policy is unsustainable. It is the amount by which
primary surpluses over the next 75 years must, on average, rise above current-policy levels in order for the debt-to-GDP ratio
in 2098 to remain at its level in 2023. The projections show that projected primary deficits average 3.8 percent of GDP over
the next 75 years under current policy. If policies were adopted to eliminate the fiscal gap, the average primary surplus over
the next 75 years would be 0.6 percent of GDP, 4.5 percentage points higher than the projected PV of receipts less non-
interest spending shown in the financial statements. Hence, the 75-year fiscal gap is estimated to equal to 4.5 percent of GDP.
This amount is, in turn, equivalent to 23.8 percent of 75-year PV receipts and 19.8 percent of 75-year PV non-interest
spending. This estimate of the fiscal gap is 0.4 percentage points smaller than was estimated in the FY 2022 Financial Report
(4.9 percent of GDP).
In these projections, closing the fiscal gap requires running substantially positive primary surpluses, rather than simply
eliminating the primary deficit. The primary reason is that the projections assume future interest rates will exceed the growth
rate of GDP. Achieving primary balance (that is, running a primary surplus of zero) implies that the debt grows each year by
the amount of interest spending, which under these assumptions would result in debt growing faster than GDP.
21
The change in debt each year is also affected by certain transactions not included in the budget deficit, such as changes in Treasury’s cash balances and the
nonbudgetary activity of federal credit financing accounts. These transactions are assumed to hold constant at about 0.3 percent of GDP each year, with the
same effect on debt as if the primary deficit was higher by that amount.
22
See the Note 24 of the FY 2022 Financial Report of the U.S. Government for more information about changes in the long-term fiscal projections between
FYs 2022 and 2021.
Table 6 shows the

cost of delaying policy
reform to close the fiscal
gap by comparing policy
reforms that begin in three
different years. Immediate
reform would require
increasing primary
surpluses by 4.5 percent of
GDP on average between
2024 and 2098 (i.e., some
combination of reducing spending and increasing revenue by a combined 4.5 percent of GDP on average over the 75-year
projection period). Table 6 shows that delaying policy reform forces larger and more abrupt policy reforms over shorter
periods. For example, if policy reform is delayed by 10 years, closing the fiscal gap requires increasing the primary surpluses
by 5.3 percent of GDP on average between 2034 and 2098. Similarly, delaying reform by 20 years requires primary surplus
increases of 6.5 percent of GDP on average between 2044 and 2098. The differences between the required primary surplus
increases that start in 2034 and 2044 (5.3 and 6.5 percent of GDP, respectively) and that which starts in 2024 (4.5 percent of
GDP) is a measure of the additional burden that delay would impose on future generations. Future generations are harmed by
policy reform delay, because the higher the primary surplus is during their lifetimes the greater the difference is between the
taxes they pay and the programmatic spending from which they benefit.
Conclusion
The debt-to-GDP ratio is projected to rise over the 75-year projection period and beyond if current policy is unchanged,
based on this Financial Report’s assumptions, which implies that current policy is not sustainable and must ultimately
change. If policy changes are not so abrupt as to slow economic growth, then the sooner policy changes are adopted to avert
these trends, the smaller the changes to revenue and/or spending that would be required to achieve sustainability over the
long term. While the estimated magnitude of the fiscal gap is subject to a substantial amount of uncertainty, it is nevertheless
nearly certain that current fiscal policies cannot be sustained indefinitely.
These long-term fiscal projections and the topic of fiscal sustainability are discussed in further detail in Note 24 and the
RSI section of this Financial Report. The fiscal sustainability under alternative scenarios for the growth rate of health care
costs, interest rates, discretionary spending, and receipts are illustrated in the “Alternative Scenarios” section within the RSI.
Social Insurance
The long-term fiscal projections reflect government receipts and spending as a whole. The SOSI focuses on the
government’s “social insurance” programs: Social Security, Medicare, Railroad Retirement, and Black Lung.23 For these
programs, the SOSI reports: 1) the actuarial PV of all future program revenue (mainly taxes and premiums) – excluding
interest – to be received from or on behalf of current and future participants; 2) the estimated future scheduled expenditures
to be paid to or on behalf of current and future participants; and 3) the difference between 1) and 2). Amounts reported in the
SOSI and in the RSI section in this Financial Report are based on each program’s official actuarial calculations.
This year’s projections for Social Security and Medicare are based on the same economic and demographic assumptions
that underlie the 2023 Social Security and Medicare Trustees Reports and the 2023 SOSI, while comparative information
presented from last year’s report is based on the 2022 Social Security and Medicare Trustees Reports and the 2022 SOSI.
Table 7 summarizes amounts reported in the SOSI, showing that net social insurance expenditures are projected to be $78.4
trillion over 75 years as of January 1, 2023 for the open group, an increase of $2.5 trillion over net expenditures of $75.9
trillion projected in the FY 2022 Financial Report. 24 The current-law 2023 amounts reported for Medicare reflect the
physician payment levels expected under the MACRA payment rules and the PPACA-mandated reductions in other Medicare
payment rates, but not the payment reductions and/or delays that would result from trust fund depletion. 25 Similarly, current-
23
The Black Lung Benefits Act provides for monthly payments and medical benefits to coal miners totally disabled from pneumoconiosis (black lung
disease) arising from their employment in or around the nation's coal mines. See https://www.dol.gov/owcp/regs/compliance/ca_main.htm. RRB’s
projections are based on economic and demographic assumptions that underlie the 28th Actuarial Valuation of the Assets and Liabilities Under the Railroad
Retirement Acts as of December 31, 2019 with Technical Supplement and the 2023 Annual Report on the Railroad Retirement System required by Section
502 of the Railroad Retirement Solvency Act of 1983 (P.L. 98-76).
24
Closed group and open group differ by the population included in each calculation. From the SOSI, the closed group includes: 1) participants who have
attained eligibility; and 2) participants who have not attained eligibility. The open group adds future participants to the closed group. See ‘Social Insurance’
in the RSI section in this Financial Report for more information.
25
MACRA permanently replaces the Sustainable Growth Rate formula, which was used to determine payment updates under the Medicare physician fee
schedule with specified payment updates through 2025. The changes specified in MACRA also establish differential payment updates starting in 2026 based
on practitioners’ participation in eligible APM; payments are also subject to adjustments based on the quality of care provided, resource use, use of certified
electronic health records, and clinical practice improvement.
law projections for Social Security do not reflect benefit payment reductions and/or delays that would result from fund
depletion. By accounting convention, the transfers from the General Fund to Medicare Parts B and D are eliminated in the
consolidation of the SOSI at the government-wide level and as such, the General Fund transfers that are used to finance
Medicare Parts B and D are not included in Table 7. For the FYs 2023 and 2022 SOSI, the amounts eliminated totaled $48.5
trillion and $47.5 trillion, respectively. SOSI programs and amounts are included in the broader fiscal sustainability analysis
in the previous section, although on a slightly different basis (as described in Note 24).
In addition, the Medicare projections have been significantly affected by the enactment of the IRA of 2022. This
legislation has wide-ranging provisions, including those that restrain price growth and negotiate drug prices for certain Part B
and Part D drugs and that redesign the Part D benefit structure to decrease beneficiary out-of-pocket costs. The law takes
several years to implement, resulting in very different effects by year. The total effect of the IRA of 2022 is to reduce
government expenditures for Part B, to increase expenditures for Part D through 2030, and to decrease Part D expenditures
beginning in 2031.
The amounts reported in the SOSI provide perspective on the government’s long-term estimated exposures for social
insurance programs. These amounts are not considered liabilities in an accounting context. Future benefit payments will be
recognized as expenses and liabilities as they are incurred based on the continuation of the social insurance programs’
provisions contained in current law. The social insurance trust funds account for all related program income and expenses.
Medicare and Social Security taxes, premiums, and other income are credited to the funds; fund disbursements may only be
made for benefit payments and program administrative costs. Any excess revenues are invested in special nonmarketable
U.S. government securities at a market rate of interest. The trust funds represent the accumulated value, including interest, of
all prior program surpluses, and provide automatic funding authority to pay cover future benefits.
Table 8 identifies the principal

reasons for the changes in projected
social insurance amounts during 2023
and 2022.
The following briefly
summarizes the significant changes for
the current valuation (as of January 1,
2023) as disclosed in Note 25—Social
Insurance. Note 25 is compiled from
disclosures included in the financial
statements of those entities
administering these programs,
including SSA and HHS. See Note 25
for additional information.
• Change in valuation period
(affects both Social Security
and Medicare): This change
replaces a small negative net
cash flow for 2022 with a
much larger negative net cash
flow for 2097. As a result, the
PV of the estimated future net
cash flows decreased (became more negative) by $0.7 trillion and $1.3 trillion for Social Security and Medicare,
respectively.
• Changes in demographic data, assumptions, and methods (affects both Social Security and Medicare): There was
one notable change in demographic methodology. The method for projecting the age distributions of LPR new
arrival and adjustment-of-status immigrants was updated reflecting recent data showing a slightly older population
at the time of attaining LPR status than had previously been estimated. This change decreased the PV of the
estimated future net cash flows. In addition, the starting demographic values and the way these values transition to
the ultimate assumptions were changed. Projected birth rates through 2055, during the period of transition to the
ultimate level, were slightly lower than in the prior valuation. Updates to near-term mortality assumptions to better
reflect the effects of the COVID-19 pandemic led to an increase in death rates through 2024 compared to the prior
valuation. Historical population data, other-than-LPR immigration data, and marriage and divorce data were updated
since the prior valuation. Overall, changes to these assumptions caused the PV of the estimated future net cash flows
to decrease (became more negative) by $0.1 trillion and $0.1 trillion for Social Security and Medicare, respectively.
• Changes in economic data and assumptions (affects Social Security only): Several changes were made to the
ultimate economic assumptions since the last valuation period. The annual percentage change in the average OASDI
covered wage, adjusted for inflation, is assumed to average 1.14 percentage points over the last 65 years of the 75-
year projection period. This is 0.02 percentage point higher than the value assumed for the prior valuation. This
change to the wage growth assumptions increased the PV of estimated future net cash flows. In addition to these
changes in ultimate economic assumptions, the starting economic values and the way these values transition to the
ultimate assumptions were changed. The levels of GDP and labor productivity are assumed to be about 3.0 percent
lower by 2026 and for all years thereafter relative to the prior valuation. The assumed real interest rates over the first
10 years of the projection period are generally higher than those assumed for the prior valuation. The changes to the
GDP and productivity levels decreased the PV of the estimated future net cash flows, while the change to near-term
real interest increased the PV of the estimated future net cash flows. There was one notable change in economic
methodology. The method for estimating the level of OASDI taxable wages for historical years 2000-2021 was
improved by adopting a more consistent approach for estimating completed values across various types of wages.
This change increased the PV of the estimated future net cash flows. Overall, changes to economic data,
assumptions, and methods caused the PV of the estimated future net cash flows to decrease (became more negative)
by $0.8 trillion for Social Security.
• Changes in law or policy (affects both Social Security and Medicare): The monetary effect of the changes in law or
policy caused the PV of the estimated future net cash flows of Medicare to increase by $1.1 trillion; and the effect
on the PV of estimated future net cash flows of OASDI was not significant at the consolidated level. Please refer to
SSA’s and HHS’s financial statements for additional information related to the impact of the changes in law or
policy on the PV of estimated future net cash flows of the OASDI and Medicare programs.
• Changes in methodology and programmatic data (affects Social Security only). Several methodological
improvements and updates of program-specific data are included in the current valuation (beginning on January 1,
2023). The most significant are as follows: Actual disability data for 2022 and slightly lower-near term disability
incidence rate assumptions were incorporated. The sample of new beneficiaries used to project average benefits
level was updated from worker beneficiaries newly entitled in 2018 to those newly entitled in 2019. Updates were
made to the post-entitlement benefit adjustment factors. These factors are used to account for changes in benefit
levels, primarily due to differential mortality by benefit level and earnings after benefit entitlement. Overall, changes
to programmatic data and methods caused the PV of the estimated future net cash flows to decrease by $0.3 trillion
for Social Security.
• Changes in economic and healthcare assumptions (affects Medicare only): The economic assumptions used in the
Medicare projections are the same as those used for the OASDI (described above) and are prepared by the Office of
the Chief Actuary at SSA. In addition to the economic assumptions changes described above, the healthcare
assumptions are specific to the Medicare projections. Changes to these assumptions in the current valuation include
lower projected spending growth because of anticipated effect of negotiating drug prices and other price growth
constraints. Overall, these changes decreased the PV of estimated future net cash flow by $2.6 trillion for Medicare.
• Change in Projection Base (affects Medicare only): Actual income and expenditures in 2022 were different than
what was anticipated when the 2022 Medicare Trustees Report projections were prepared. For Part A and Part B
income and expenditures were lower than estimated based on experience. Part D income and expenditures were
higher than estimated based on actual experience. Actual experience of the Medicare Trust Funds between January
1, 2022, and January 1, 2023, is incorporated in the current valuation and is less than projected in the prior valuation.
Overall, the net impact of Part A, B, and D projection base change is an increase in the estimated future net cash
flows by $2.3 trillion for Medicare.
As reported in Note 25, uncertainty remains about whether the projected cost savings and productivity improvements
will be sustained in a manner consistent with the projected cost growth over time. Note 25 includes an alternative projection
to illustrate the uncertainty of projected Medicare costs. As indicated earlier, GAO disclaimed opinions on the 2023, 2022,
2021, 2020 and 2019 SOSI because of these significant uncertainties.
Costs as a percent of GDP of both Medicare and Social Security, which are analyzed annually in the Medicare and
Social Security Trustees Reports, are projected to increase substantially through the mid-2030s because: 1) the number of
beneficiaries rises rapidly as the baby-boom generation retires; and 2) the lower birth rates that have persisted since the baby
boom cause slower growth in the labor force and GDP. 26 According to the Medicare Trustees Report, spending on Medicare
is projected to rise from its current level of 3.7 percent of GDP in 2022 to 6.0 percent in 2047 and to 6.1 percent in 2097. 27 As
for Social Security, combined spending is projected to generally increase from 5.2 percent of GDP in 2023 to a peak of 6.3
percent for 2076, and then decline to 6.0 percent by 2097. The government collects and maintains funds supporting the Social
Security and Medicare programs in trust funds. A scenario in which projected funds expended exceed projected funds
received, as reported in the SOSI, will cause the balances in those trust funds to deplete over time. Table 9 summarizes
additional current status and projected trend information, including years of projected depletion, for the Medicare HI and
Social Security Trust Funds.
As previously discussed and as noted in the Trustees Reports, these programs are on a fiscally unsustainable path.
Additional information from the Trustees Reports may be found in the RSI section of this Financial Report.
26
A Summary of the 2023 Annual Social Security and Medicare Trust Fund Reports, page 8.
27
Percent of GDP amounts are expressed in gross terms (including amounts financed by premiums and state transfers).
Reporting on Climate Change

The Biden-Harris administration has deployed a whole-of-government approach to respond to the climate crisis. From
reducing climate pollution and conserving our lands, waters, and biodiversity to increasing the resilience of federal facilities
and operations to the impacts of climate change, federal entities are tackling the climate crisis. The federal government is on
a path towards CFE by 2030, a zero-emission vehicles fleet by 2035, and a net-zero building portfolio by 2045.
The $1 trillion IIJA, signed in November 2021, and the IRA, signed in August 2022, included historic climate funding.
The IIJA provides funding to protect the country against the detrimental effects of climate change, and the IRA, the largest
climate investment in U.S. history, provides tax incentives and other clean energy initiatives to reduce energy costs for
consumers and small businesses. These investments have put America on track to decrease GHG emissions by about 40
percent below 2005 levels in 2030. 28
There is also growing recognition that climate-related events and climate-related financial risks will affect the financial
position and condition of the federal government. Many CFO Act entities are engaged in a wide array of climate-related
activities and have, per federal reporting guidance, discussed their responses to the climate crisis in their FY 2023 financial
reports. The breadth of these important efforts is expansive, and the examples immediately below from financial statements
discuss both the physical impacts of climate change on entities (physical risk) and the broader challenges entities face in
transitioning to a lower-carbon economy (transition risk). Many entity climate adaptation and resiliency efforts emphasize the
federal government's physical assets and infrastructure and discuss transition risks in the context of transitioning their
infrastructure so as to reduce GHG emissions. Both of these risks are important and affect government operations in unique
ways, which will be discussed below for a select number of federal entities.
The following illustrates the wide range of federal entity efforts to mitigate the risks of climate change on federal entity
infrastructure:
• The impact of climate change on DOE and its operations and infrastructure is significant and projected to increase
with climate change. In support of the administration’s goals of net-zero GHG emissions by 2050, with power sector
GHG emissions attaining net-zero by 2035; DOE has continued to develop solar and geothermal sourced energy for
heating building space and water. DOE sites have been collaborating with their electricity provider to ensure the
availability of CFE. For example, the National Renewable Energy Laboratory, a DOE national lab, has signed the
first-ever CFE Memorandum of Agreement between DOE and Xcel Energy, committing to the delivery of 100
percent CFE by 2030 to federal entities served by the utility. In partnership with DOE, DOT has leveraged their
newly formed Joint Office of Energy and Transportation to deploy a national network of EV chargers. This supports
the President’s IIJA goal of installing 500,000 EV chargers.
• GSA is also strategically focused on increasing building resilience, reducing overall GHG emissions, improving
energy, water, and waste efficiency, and supporting the transition to CFE. In FY 2023, GSA significantly increased
the number of zero-emission vehicles across government, thereby achieving a 37.1 percent increase in miles per
gallon for vehicle replacements in the GSA leased fleet. GSA is taking steps to build a climate resilient supply chain
by inviting all major Federal Supply Schedule contractors to voluntarily measure, track, and disclose their climate-
related risks to the Carbon Disclosure Project, a not-for-profit charity, that runs the global disclosure system for
companies to measure environmental risks and opportunities.
• DOD is challenged with absorbing the recovery costs from extreme weather events typical of those fueled by
climate change, including: $1 billion to rebuild Offutt Air Force Base, Nebraska after historic floods; $3 billion to
rebuild Camp Lejeune, North Carolina after Hurricane Florence; and $5 billion to rebuild Tyndall Air Force Base,
Florida after Hurricane Michael. To address transition risk, DOD has identified reducing climate impacts to its
installations as an Agency Priority Goal and has invested $35.9 billion in facilities investments, including for
Facilities, Sustainment, Restoration and Modernization with a $3.7 billion investment for installation resiliency and
adaptation focused on military facilities to withstand harsh weather conditions.
• DOC has been actively engaged in planning efforts with the White House Council on Environmental Quality, OMB,
and DOE to identify opportunities to purchase CFE for federal use through federal contracting mechanisms directly
with facilities’ utility providers.
• SSA noted that a source of funding challenge for the agency includes the loss or replacement of facilities, fleet, and
information technology equipment resulting from climate change, as well as the health and safety costs of keeping
operations active during severe climate-related events. Its financial risk exposure mainly concerns the impact of
energy usage to cool and heat its delegated sites.
• Both State and USAID have advanced international climate programs under the auspice of the FY 2022-2026 State-
USAID Joint Strategic Plan with both entities focused on mitigating physical and transition risks. State has more
than 25,000 building assets at 287 locations overseas, with a current replacement value for these assets at $75.2
billion. For managing the risk of exposure to natural hazards of these overseas facilities, State uses a portfolio
28
https://www.energy.gov/articles/doe-projects-monumental-emissions-reduction-inflation-reduction-act
screening tool that assesses risk level for seven natural hazards: flooding, extreme heat, extreme wind, water stress,
earthquake, tsunami, and landslide.
In-line with several Biden-Harris administration executive orders, including Executive Order 14008, Tackling the
Climate Crisis at Home and Abroad, and other broad performance goals, entities have made strides towards a whole-of-
government approach to the climate crisis affecting the nation. This section summarizes some of the actionable plans that
federal entities are putting in place, and progress that they have seen. It illustrates the broader programmatic efforts that some
entities are undertaking which support the growth of America’s clean energy and clean technology industries.
• The economic impacts of positioning the global economy for a clean and sustainable future are a focus at Treasury.
Treasury’s strategic objectives include aims to promote incentives and policies to encourage the private sector’s
investment in climate-friendly projects. The IRA of 2022 is the most significant investment in climate and clean
energy in U.S. history. As tax incentives deliver most of the law’s investment, Treasury is playing a leading role in
implementing the law. The IRA of 2022 established or modified approximately 20 clean energy-related tax
incentives that will be critical in advancing the nation’s climate goals while lowering costs for consumers and
creating good-paying jobs.
• DOI is concerned about conserving and protecting its natural and cultural resources. By September 30, 2025, DOI
will assist states in reclaiming 1,150 abandoned coal mine lands; and support the plugging of 7,900 identified
orphaned oil and gas wells on state, private, tribal, and federal lands. By reducing legacy pollution with IIJA
investments, DOI is helping to improve community health and safety, create good paying jobs, and address the
climate crisis, all of which is transforming a legacy of pollution into a legacy of environmental stewardship.
• In addition to DOC’s efforts to mitigate the effects of climate change on agency operations, DOC’s financial
statements also references a $799.1 million increase in the entity’s gross costs related to National Oceanic and
Atmospheric Administration’s core mission of enhancing weather forecasting, water quality monitoring, and climate
reporting.
• To relay the importance of mitigating climate change for broader economic resiliency, HHS has discussed its efforts
at addressing the impact of climate change on the health of the American people by identifying vulnerable
communities and populations at risk from climate impacts and fostering climate adaptation and resilience for these
communities. This summer HHS launched the Heat-Related Illness Emergency Medical Services Activation
Surveillance Dashboard to help communities and officials keep people cool and safe through effective heat
mitigation strategies. And its investments into infrastructure and emergency equipment ahead of hurricane season
have ensured communities in hurricane-prone areas have continuous access to primary care services.
• In addition to the joint State-USAID effort to address physical and transition risks referenced above, USAID has
been at the fore of helping other countries phase out fossil fuels and transition to clean energy usage. The entity has
boosted renewable energy through competitive auctions in the Philippines; boosted wind farm generation in South
Africa; and secured renewable energy investment in Pakistan.
Readers are encouraged to review both the financial statements and Climate Adaptation Plans of the entities referenced
above, as well as others for additional information about efforts being employed across the federal government to address the
many risks associated with climate change.
Financial Management
Grants and Cooperative Agreements

In FY 2023, the federal government obligated approximately $1.2 trillion for grants and cooperative agreements,
according to USAspending.gov. This figure does not include obligations for other types of financial assistance, such as loans
or direct appropriations. A large portion of grant funding was provided under the Bipartisan Infrastructure Law and the IRA
of 2022 while additional funding continued to support the nation’s response to the pandemic through the ARP, the CARES
Act, and other COVID-19 funding. Improving access to key financial assistance data continues to be a priority for OMB.
In 2023, OMB undertook an initiative to update the Guidance on Grants and Agreements published in 2 CFR to reduce
the administrative burden for federal agencies and recipients, as well as to clarify the guidance and make it more accessible.
These updates will represent the most substantial changes to the guidance since its release in December 2013 and will reduce
unnecessary compliance requirements and ensure that assistance is delivered in a more effective and impactful way and to the
communities that most need it.
On August 19, 2023, OMB issued M-23-19 Establishment of the COFFA. This council created a leadership body in the
federal government for oversight and management of federal financial assistance. The COFFA launched a partnership among
federal grant-making agencies, providing a single forum to inform federal financial assistance policy, oversight, and
technology activities. The COFFA is also responsible for providing strategic direction, policy recommendations, and priority-
setting for other government-wide grant-related activities.
Payment Integrity
Preventing improper payments in the federal government continues to be a management priority. To be successful in
preventing improper payments, there must be a focus on systemic enhancements intended to make payments correctly the
first time with an emphasis on minimizing monetary loss. An improper payment is any payment that should not have been
made or that was made in an incorrect amount under statutory, contractual, administrative, or other legally applicable
requirement. The term “improper payment” consists of two main components: 1) improper payments resulting in a monetary
loss to the government; and 2) improper payments that do not result in a monetary loss to the government. Monetary loss
occurs when payments are made to the wrong recipient and/or in the wrong amount. Improper payments that do not result in
a monetary loss include under payments and payments made to the right recipient for the right amount, but the payment was
not made in accordance with statute or regulation. The federal government, through the CFO community, continues to
develop strategies to better analyze and prevent monetary loss.
Agencies with programs reporting more than $100.0 million in monetary loss provide a quarterly scorecard at
PaymentAccuracy.gov. These scorecards provide information on the actions taken and progress made on preventing improper
payments that would result in monetary loss to the federal government. Details, including FY 2023 improper payment data,
for programs with at least $100.0 million in monetary loss can also be found at PaymentAccuracy.gov. This website also
includes payment integrity information that had previously been reported in agency financial reports, such as information
about program compliance, corrective actions, and accountability mechanisms.
OMB will continue to work with agencies, the CFO Council, and other stakeholders to improve the identification of the
root causes of improper payments that result in monetary loss and to prevent improper payments from occurring.
Agency Financial Report Audits
Since the passage of the CFO Act, the federal financial community has made significant progress in financial
accounting and reporting. As shown in Table 10, for FY 2023, 19 of the 24 CFO Act agencies obtained an unmodified
opinion from the independent auditors on their financial statements. 29 In addition, 52 auditor-identified material weaknesses
were identified for FY 2023, two more than in FY 2022. Twenty-eight of these are associated with DOD. The other 24
material weaknesses are associated with non-DOD agencies. Although virtually all federal agencies have adopted and
maintained disciplined financial reporting operations, implemented effective internal controls over financial reporting, and
integrated transaction processing with accounting records, weaknesses in financial management practices continue to prevent
the government as a whole from achieving an audit opinion.
29
The 19 entities include HHS, which received an unmodified (“clean”) opinion on all statements except the SOSI and the SCSIA.
Financial Management Systems

Federal agencies improved, but continue to face challenges, in implementing financial management systems that meet
federal requirements. The number of CFO Act agencies reporting lack of substantial compliance with one or more of the
three Section 803(a) requirements of the FFMIA remained at seven in FY 2023, and the number of auditors reporting lack of
substantial compliance with one or more of the three Section 803(a) FFMIA requirements remained at eight in FY 2023.
Because of the federal government’s size and diversity, its financial management infrastructure consists of both legacy
and modernized systems and standardized and customized systems. Treasury works closely with agencies to manage systems
for collecting and disbursing the government’s cash and financing disbursements when necessary, recording and reporting on
those collections and disbursements, and reporting on all government revenues, expenses, assets, and liabilities.
Treasury was designated as the Financial Management Systems QSMO in 2020 and continues to pursue financial
management improvement strategies that have government-wide implications. These strategies include standing up a
financial management systems marketplace and developing system standards, standardized processes, system requirements,
and system interfaces. These efforts are providing a path to the decommissioning of legacy systems and migration to updated
systems, leveraging modernized technologies. In addition, agencies continue to coordinate with the Treasury QSMO to
improve their financial management and financial reporting systems as described in their financial reports, congressional
budget justifications, and performance plans. DOD continues to address its material weaknesses in financial reporting, and is
bringing its financial systems into compliance with federal financial management systems requirements, including the
FFMIA.
HHS was designated as the Grants QSMO in 2021 and continues working to modernize and streamline the
government’s vast and aging legacy grants management systems. The goal of this effort is to allow agencies to successfully
manage grants through the entire award cycle and allow grants management systems to interface with agency financial
management systems.
Internal Controls
Federal managers are responsible for developing and maintaining effective internal controls. Internal controls help to
ensure effective and efficient operations, reliable financial reporting, and compliance with applicable laws and regulations.
Safeguarding assets is a goal of each of these three objectives.
OMB Circular No. A-123 implements the requirements of 31 U.S.C. 3512 (c) and (d) (commonly known as the Federal
Managers’ Financial Integrity Act) by providing agencies a framework for assessing and managing risks strategically and
tactically. The Circular reflects GAO’s Standards for Internal Control in the Federal Government and contains multiple
appendices that address one or more of the objectives of effective internal control.
• Appendix A provides for agencies to use a risk-based approach to assess, document, test, and report on internal
controls over reporting and data integrity;
• Appendix B requires agencies to maintain internal controls that reduce the risk of fraud, waste, and error in
government charge card programs;
• Appendix C implements the requirements for effective estimation and remediation of improper payments; and
• Appendix D defines requirements for determining compliance with the FFMIA that are intended to reduce the cost,
risk, and complexity of financial system modernizations.
As noted above, the total number of reported material weaknesses for CFO Act agencies was 52 for FY 2023, two more
than in FY 2022. Effective internal controls are a challenge at the agency level and at the government-wide level, with GAO
reporting that at the government-wide level, material weaknesses resulted in ineffective internal control over financial
reporting. While progress is being made at many agencies and across the government in identifying and resolving internal
control deficiencies, additional work is needed.
Legal Compliance
Federal agencies are required to comply with a wide range of laws and regulations, including appropriations,
employment, and health and safety, among others. Responsibility for compliance rests with agency management and
compliance is addressed as part of agency financial statement audits. Agency auditors test for compliance with selected laws
and regulations related to financial reporting and certain individual agency audit reports contain instances of noncompliance.
None of these instances were material to the government-wide financial statements; however, GAO reported that its work on
compliance with laws and regulations was limited by the material weaknesses and scope limitations discussed in its report.
Conclusion
The federal government has seen significant progress in financial management since the passage of the CFO Act more
than 30 years ago, but significant challenges remain to realizing the intended financial management reforms of the act. The
issues that the federal government faces today require financial managers to improve both the efficiency and effectiveness of
financial management activities, which includes moving toward integrated government operations with standardized business
processes, systems, and data. Together with Treasury and OMB, agencies are building on tools and capabilities to improve
financial accountability and transparency.
Additional Information
This Financial Report’s Appendix contains the names and websites of the significant government agencies included in
the U.S. government’s consolidated financial statements. Details about the information in this Financial Report can be found
in these agencies’ financial statements. This Financial Report, as well as those from previous years, is also available at
Treasury, OMB, and GAO websites at:
https://www.fiscal.treasury.gov/reports-statements/; https://www.whitehouse.gov/omb/management/office-federal-financial-
management/; and https://www.gao.gov/federal-financial-accountability respectively. Other related government resources
include, but are not limited to the:
• Budget of the United States Government;
• Treasury Bulletin;
• Monthly Treasury Statement of Receipts and Outlays of the United States Government;
• Monthly Statement of the Public Debt of the United States;
• Your Guide to America’s Finances;
• Economic Report of the President; and
• Trustees Reports for the Social Security and Medicare Programs.
STATEMENT OF THE COMPTROLLER GENERAL OF THE UNITED STATES 40
February 15, 2024
The President
The President of the Senate
The Speaker of the House of Representatives
To operate as effectively and efficiently as possible, Congress, the administration, and federal
managers must have ready access to reliable and complete financial and performance information—
both for individual federal entities and for the federal government as a whole. Our report on the U.S.
government’s consolidated financial statements for fiscal years 2023 and 2022 discusses progress that
has been made but also underscores that much work remains to improve federal financial management
and that the federal government continues to face an unsustainable long-term fiscal path. 1
Our audit report on the U.S. government’s consolidated financial statements is enclosed. In summary,
we found the following:
• Certain material weaknesses 2 in internal control over financial reporting and other limitations
resulted in conditions that prevented us from expressing an opinion on the accrual-based
consolidated financial statements as of and for the fiscal years ended September 30, 2023, and
2022. 3 About 48 percent of the federal government’s reported total assets as of September 30,
2023, and approximately 15 percent of the federal government’s reported net cost for fiscal year
2023 relate to significant federal entities that received a disclaimer of opinion 4 or qualified opinion 5
1As discussed later in this report, an unsustainable long-term fiscal path is a situation where federal debt held by the public
grows faster than gross domestic product (GDP) over the long term.
2A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there
is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected
and corrected, on a timely basis. A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct,
misstatements on a timely basis.
3The accrual-based consolidated financial statements comprise the (1) Statements of Net Cost, Statements of Operations and
Changes in Net Position, Reconciliations of Net Operating Cost and Budget Deficit, and Statements of Changes in Cash
Balance from Budget and Other Activities, for the fiscal years ended September 30, 2023, and 2022; (2) Balance Sheets as of
September 30, 2023, and 2022; and (3) related notes to these financial statements. Most revenues are recorded on a modified
cash basis.
4A disclaimer of opinion arises when the auditor is unable to obtain sufficient appropriate audit evidence to provide a basis for
an audit opinion, and the auditor concludes that the possible effects on the financial statements of undetected misstatements,
if any, could be both material and pervasive and accordingly does not express an opinion on the financial statements.
5A qualified opinion arises when the auditor is able to express an opinion on the financial statements except for specific areas
where the auditor was unable to obtain sufficient appropriate evidence, and the auditor concludes that the possible effects on
the financial statements of undetected misstatements, if any, could be material but not pervasive.
41 STATEMENT OF THE COMPTROLLER GENERAL OF THE UNITED STATES
on their fiscal year 2023 financial statements or whose fiscal year 2023 financial information was
unaudited. 6
• Significant uncertainties (discussed in Note 25, Social Insurance, to the consolidated financial
statements), primarily related to the achievement of projected reductions in Medicare cost growth,
prevented us from expressing an opinion on the sustainability financial statements, which consist of
the 2023 and 2022 Statements of Long-Term Fiscal Projections; 7 the 2023, 2022, 2021, 2020, and
2019 Statements of Social Insurance; 8 and the 2023 and 2022 Statements of Changes in Social
Insurance Amounts. About $53.1 trillion, or 68 percent, of the reported total present value of future
expenditures in excess of future revenue presented in the 2023 Statement of Social Insurance
relates to the Medicare program reported in the Department of Health and Human Services’ (HHS)
2023 Statement of Social Insurance, which received a disclaimer of opinion. A material weakness in
internal control also prevented us from expressing an opinion on the 2023 and 2022 Statements of
Long-Term Fiscal Projections.
• Material weaknesses resulted in ineffective internal control over financial reporting for fiscal year
2023.
• Material weaknesses and other scope limitations, discussed above, limited tests of compliance with
selected provisions of applicable laws, regulations, contracts, and grant agreements for fiscal year
2023.
Progress in Federal Financial Management

Overall, the federal government has made significant strides in improving financial management since
key federal financial management reforms were enacted in the 1990s. Nineteen of the 24 Chief
Financial Officers Act of 1990 (CFO Act) agencies received clean opinions on their fiscal year 2023
6These entities include the following: (1) The Department of Defense received a disclaimer of opinion on its fiscal years 2023
and 2022 financial statements. (2) The Small Business Administration received a disclaimer of opinion on its fiscal years 2023
and 2022 balance sheets, and its remaining statements were unaudited. (3) The Department of Education received a
disclaimer of opinion on its fiscal year 2023 balance sheet and its remaining statements were unaudited. The department
received a disclaimer of opinion on its fiscal year 2022 financial statements. (4) The Department of Labor received a qualified
opinion on its fiscal years 2023 and 2022 financial statements. (5) The Department of Agriculture received a qualified opinion
on its fiscal year 2023 financial statements but received an unmodified opinion on its fiscal year 2022 financial statements. (6)
The Security Assistance Accounts received a disclaimer of opinion on its fiscal years 2023 and 2022 financial statements. (7)
The fiscal year 2023 Schedules of the General Fund were not audited to allow the Department of the Treasury time to continue
to implement a remediation plan to address the issues we reported as part of our disclaimer of opinion on the fiscal year 2022
Schedules of the General Fund. (8) The Railroad Retirement Board received a disclaimer of opinion on its fiscal years 2023
and 2022 financial statements.
7The 2023 and 2022 Statements of Long-Term Fiscal Projections present, for all the activities of the federal government, the
present value of projected receipts and noninterest spending under current policy without change, the relationship of these
amounts to projected gross domestic product (GDP), and changes in the present value of projected receipts and noninterest
spending from the prior year. These statements also present the fiscal gap, which is the combination of receipt increases and
noninterest spending reductions necessary to hold debt held by the public as a share of GDP at the end of the 75-year
projection period to its value at the beginning of the period. The valuation date for the Statements of Long-Term Fiscal
Projections is September 30.
8The Statements of Social Insurance present the present value of revenue and expenditures for social benefit programs,
primarily Social Security and Medicare. These statements are presented for the current year and each of the 4 preceding
years as required by U.S. generally accepted accounting principles. For the Statements of Social Insurance, the valuation date
is January 1 for the Social Security and Medicare programs, October 1 for the Railroad Retirement program, and September
30 for the Black Lung program.
financial statements, up from six CFO Act agencies that received clean audit opinions for fiscal year
1996. 9
Accounting and financial reporting standards have continued to evolve to provide greater transparency
and accountability over the federal government’s operations and financial condition, including long-term
sustainability. We have reported areas where financial management can be improved, including
standardizing and clarifying the responsibilities of chief financial officers, preparing government-wide
and agency-level financial management plans, better linking performance and cost information for
decision-making, and strengthening improper payment and fraud risk management reporting. 10
While the U.S. government’s consolidated financial statements provide a high-level summary of the
financial position, operating results, and financial condition for the federal government as a whole,
substantial benefits have been achieved as a result of agencies’ preparation and audit of financial
statements, including
• useful and necessary insight into government operations, including the agencies’ financial
conditions;
• increased federal agency accountability to Congress and citizens, including independent assurance
about the reliability of reported financial information;
• greater confidence to stakeholders (e.g., governance officials, taxpayers, consumers, and regulated
entities) that federal funds are being properly accounted for and assets are properly safeguarded;
• an assessment of the reliability and effectiveness of systems and related internal controls, including
identifying control deficiencies that could lead to fraud, waste, or abuse;
• a focus on information security;
• early warnings of financial management issues; and
• identification of noncompliance with laws and regulations, which can present challenges to agency
operations.
The preparation and audit of individual federal entities’ financial statements have also identified
numerous deficiencies, leading to corrective actions to strengthen federal entities’ internal controls,
processes, and systems. For instance, in fiscal year 2023 the Department of Housing and Urban
Development’s auditor reported a significant deficiency in internal control over financial reporting, which
was an improvement from the prior year’s reported material weakness. 11
Financial Management Challenges

Since the federal government began preparing consolidated financial statements, for fiscal year 1997,
three major impediments have continued to prevent us from rendering an opinion on the federal
government’s accrual-based consolidated financial statements: (1) serious financial management
problems at the Department of Defense (DOD), (2) the federal government’s inability to adequately
account for intragovernmental activity and balances between federal entities, and (3) weaknesses in
the federal government’s process for preparing the consolidated financial statements.
9The 19 agencies include the Department of Health and Human Services, which received an unmodified (“clean”) opinion on
all statements except the Statements of Social Insurance and the Statements of Changes in Social Insurance Amounts.
10GAO, Federal Financial Management: Substantial Progress Made since Enactment of the 1990 CFO Act; Refinements
Would Yield Added Benefits, GAO-20-566 (Washington, D.C.: Aug. 6, 2020), and Emergency Relief Funds: Significant
Improvements Are Needed to Ensure Transparency and Accountability for COVID-19 and Beyond, GAO-22-105715
(Washington, D.C.: Mar. 17, 2022).
11A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less
severe than a material weakness yet important enough to merit attention by those charged with governance.
DOD continues to take positive steps to improve its financial management but faces long-standing
issues. After many years of working toward financial statement audit readiness, DOD underwent full
financial statement audits for fiscal years 2018 through 2023. These audits resulted in disclaimers of
opinion, material weaknesses in internal control over financial reporting (28 in both fiscal years 2023
and 2022), and thousands of audit findings.
DOD leadership identified a number of financial management-related benefits from these department-
wide audits, as well as operational improvements. Specifically, DOD reported that the annual financial
statement audits (1) are vital to the department’s data transformation and business reform efforts, and
(2) provide objective, independent assessments of the department’s internal controls, financial reporting
practices, and reliability of financial information. DOD also reported that auditor findings help DOD
leadership prioritize improvements, drive efficiencies, identify issues with systems, and measure
progress in modernizing the department’s financial management capabilities. Further, DOD reported
that the audits have been a catalyst for business process and business system reform across DOD,
resulting in greater financial integrity, increased transparency, and a better supported warfighter.
Examples of recent financial management-related benefits DOD identified include:
• Obligations. Better management of budget obligations, resulting in the availability of budget funds
that could be used for more immediate mission-support and mission-critical needs. For example, for
fiscal year 2023, DOD reported that it identified and deobligated $330 million, which allowed the
department to reprogram the funds for other needs.
• Real property. Better real property management, resulting in improved real property records and
redeployment of maintenance costs.
• Inventory. Identification of several billion dollars related to (1) usable inventory that was not tracked
in the inventory system but was available for use in addressing unmet needs, (2) unneeded
inventory that resulted in freeing up storage space, and (3) inventory that was unavailable or
unusable to meet mission needs. For example, initiatives to locate untracked or excess material
identified more than $4.4 billion of material that was made available for redeployment.
• Systems. Improved accuracy of the systems inventory, consolidation and retirement of systems,
and reduction of maintenance costs for legacy systems. For example, in fiscal year 2023, DOD
retired 10 financial reporting systems.
DOD has acknowledged that achieving a clean audit opinion will take time. DOD management
prioritized certain critical areas for improvement (i.e., for fiscal year 2023, its priorities were to improve
fund balance with Treasury (FBWT), establish user access controls, and create a universe of
transactions). 12 DOD reported that it uses the number of audit findings closed and material weaknesses
downgraded or resolved from year to year to measure progress toward achieving a clean audit opinion.
For example, while FBWT remains a material weakness at the DOD-wide level, certain components
reported progress in addressing deficiencies in this area in fiscal year 2023. Specifically, the
Department of the Army Working Capital Fund and the Department of the Navy General Fund reduced
their FBWT material weaknesses to significant deficiencies, and the Department of the Air Force
General Fund remediated its FBWT material weakness.
12Fund balance with Treasury (FBWT) is the amount in an entity’s accounts with Treasury that is available for making
expenditures and paying liabilities. Universe of transactions relates to transaction-level populations supporting material
financial statement line items.
Various efforts are also under way to address the other two major impediments to rendering an opinion
on the accrual-based consolidated financial statements. In addition to Treasury’s and the Office of
Management and Budget’s (OMB) continued leadership, federal entities’ strong and sustained
commitment is critical to fully addressing these impediments.
The Department of the Treasury made progress addressing the material weakness related to the
government’s inability to adequately account for intragovernmental activity and balances between
federal entities. For example, in fiscal year 2023, Treasury was able to work with component entities to
reduce intragovernmental differences to amounts Treasury determined were immaterial to the
consolidated financial statements, although it is uncertain if this outcome can be sustained in the future
due to underlying deficiencies at component entities. Treasury also (1) continued to provide information
and assistance to significant component entities to aid in resolving their intragovernmental differences
and (2) issued additional guidance to federal entities related to accounting for intragovernmental
transactions.
Treasury has also made progress addressing the material weaknesses related to the federal
government’s process for preparing the consolidated financial statements. In recent years, Treasury’s
corrective actions have included implementing new processes for preparing the consolidated financial
statements, enhancing guidance for federal entity financial reporting, and implementing procedures to
address certain previously issued internal control deficiencies. 13
In addition to the three major impediments, certain federal entities have experienced financial
management challenges in recent years.
• The Small Business Administration (SBA), which had substantial activity related to COVID-19 relief
programs, such as the Paycheck Protection Program and the COVID-19 Economic Injury Disaster
Loan program, was unable to obtain an opinion on its fiscal years 2020 through 2023 financial
statements, after years of receiving clean opinions. SBA’s auditor reported that the urgent need for
SBA to implement COVID-19-related programs led to deficiencies in internal control processes. 14
SBA’s auditor reported several material weaknesses in internal control in fiscal years 2020 through
2023 related to these programs. These weaknesses limit the reliability of SBA’s financial reporting
and increase the risk of fraud and improper payments. Due to the continuing material weaknesses
in controls associated with the two programs that led to loans going to potentially ineligible
borrowers, we have designated Emergency Loans for Small Businesses as a high-risk area since
2021. 15
• The Department of Education, after years of receiving clean opinions, was unable to obtain an
opinion on its fiscal years 2022 and 2023 financial statements. Education’s auditor continued to
report a material weakness related to the department’s controls over the data used for estimating
13GAO, U.S. Consolidated Financial Statements: Improvements Needed in Internal Controls over Treasury and OMB
Preparation Processes, GAO-23-106707 (Washington, D.C.: Aug. 15, 2023).

14Small Business Administration, Agency Financial Report for Fiscal Year 2023 (Washington, D.C.: Nov. 15, 2023).
15For more information on GAO’s high-risk area with regards to Emergency Loans for Small Businesses, see GAO, High-Risk
Area: Emergency Loans for Small Businesses, accessed on February 7, 2024, https://www.gao.gov/highrisk/emergency-loans-
small-businesses.
the costs of its loan programs. 16 For example, for fiscal year 2023, errors existed in the underlying
data used for estimating the costs for the department’s student loan program. This weakness limits
the reliability of Education’s financial reporting.
• The Department of Labor received a qualified opinion on its fiscal years 2021 through 2023 financial
statements. Labor was unable to adequately support assumptions used for estimating remaining
obligations and benefit overpayments related to the unemployment insurance program. 17
• The Department of Agriculture received a qualified opinion on its fiscal year 2023 financial
statements related to the recognition of certain budget obligations for Supplemental Nutrition
Assistance Program benefits. 18
The material weaknesses underlying the financial management challenges discussed above (1)
hamper the federal government’s ability to reliably report a significant portion of its assets, liabilities,
costs, and other related information; (2) affect the federal government’s ability to reliably measure the
full cost, as well as the financial and nonfinancial performance, of certain programs and activities; (3)
impair the federal government’s ability to adequately safeguard significant assets and properly record
various transactions; and (4) hinder the federal government from having reliable, useful, and timely
financial information to operate effectively and efficiently. We have made a number of
recommendations to OMB, Treasury, DOD, and SBA to address these issues. 19 These entities have
taken or plan to take actions to address these recommendations.
In addition to the material weaknesses referred to above, we identified two other continuing material
weaknesses. These are the federal government’s inability to (1) determine the full extent to which
improper payments occur and reasonably assure that appropriate actions are taken to reduce them and
(2) identify and resolve information system control deficiencies and manage information security risks
on an ongoing basis. The fiscal year 2023 government-wide total of reported improper payment
estimates was $236 billion. However, this amount does not include improper payment estimates for
certain programs. For example, improper payment estimates were not reported for HHS’s Temporary
Assistance for Needy Families program. As it relates to information system controls, 13 of the 24
agencies covered by the Chief Financial Officers Act of 1990 reported material weaknesses or
significant deficiencies in information system controls.
Our audit report presents additional details concerning these material weaknesses and their effect on
the accrual-based consolidated financial statements, sustainability financial statements, and managing
federal government operations. Until the problems outlined in our audit report are adequately
addressed, they will continue to have adverse implications for the federal government and the
American people.
16Department of Education, Agency Financial Report for Fiscal Year 2023 (Washington, D.C.: Nov. 16, 2023).
17Department of Labor, Agency Financial Report for Fiscal Year 2023 (Washington, D.C.: Nov. 14, 2023).
18Department of Agriculture, Agency Financial Report for Fiscal Year 2023 (Washington, D.C.: Jan. 16, 2024).
19See GAO, High Risk Area: DOD Financial Management, accessed February 7, 2024,
https://www.gao.gov/highrisk/dod_financial_management; GAO-23-106707; and High Risk Area: Emergency Loans for Small
Businesses. Further, other auditors have made recommendations to DOD and SBA for improving their financial management.
Unsustainable Long-Term Fiscal Path

The 2023 Statement of Long-Term Fiscal Projections and related information in Note 24, Long-Term
Fiscal Projections, to the consolidated financial statements and in the unaudited Required
Supplementary Information section of the 2023 Financial Report of the United States Government
(2023 Financial Report) show that, based on current revenue and spending policies, the federal
government continues to face an unsustainable long-term fiscal path. GAO and the Congressional
Budget Office (CBO) prepare long-term federal fiscal simulations, which also continue to show federal
debt held by the public rising as a share of gross domestic product (GDP) in the long term. 20 This
situation—in which debt held by the public grows faster than GDP—means the federal government’s
long-term fiscal path is unsustainable.
GAO, CBO, and the 2023 Financial Report, although using somewhat different assumptions, all project
that debt held by the public as a share of GDP (debt-to-GDP) will surpass its historical high (106
percent in 1946) in 2028. Health care and Social Security remain key drivers of federal noninterest
spending in the long-term projections. In addition, GAO, CBO and the 2023 Financial Report project
that growing debt held by the public and increases in interest rates from recent historic lows will lead to
higher spending on net interest (primarily interest on debt held by the public).
The 2023 Financial Report provides an estimate of the magnitude of policy changes needed to achieve
a target debt-to-GDP ratio of 97 percent (the 2023 level) in 2098 (the fiscal gap). 21 Policymakers could
close the fiscal gap, achieving the target ratio, through a combination of revenue increases and
noninterest spending reductions. To illustrate the magnitude of policy changes needed, if policymakers
choose to close the fiscal gap solely through increased revenues, they would need to make policy
changes over a 75-year period (fiscal years 2024 to 2098) that increase each year’s projected revenues
by 23.8 percent. If policymakers choose to close the fiscal gap solely through reductions in noninterest
spending, they would need to make policy changes over a 75-year period (fiscal years 2024 to 2098)
that reduce each year’s projected noninterest spending by 19.8 percent. The projections show that the
longer policy changes are delayed, the more significant the magnitude of policy changes will need to be
to achieve the debt-to-GDP target.
Since 2017, we have stated that Congress should develop a fiscal plan to place the federal government
on a sustainable fiscal path and ensure that the United States remains in a strong economic position to
meet its social and security needs, as well as to preserve flexibility to address unforeseen events, such
as an economic downturn or large-scale disaster. In developing a fiscal plan, policymakers will need to
consider the entire range of federal activities, both revenue (including tax expenditures) and spending
(entitlement programs, other mandatory spending, and discretionary spending) that affect the debt. 22
In September 2020, we suggested that a long-term fiscal plan include fiscal rules and targets, such as a
debt-to-GDP target, and identified key considerations for the design, implementation, and enforcement
20For more information on GAO’s simulations, see GAO, The Nation’s Fiscal Health: Road Map Needed to Address Projected
Unsustainable Debt Levels, GAO-24-106987 (Washington, D.C.: Feb. 15, 2024). For more information on CBO’s simulations,
see Congressional Budget Office, The Budget and Economic Outlook: 2024 to 2034 (Washington, D.C.: Feb. 7, 2024).
21Fiscalgap can also be calculated using different time horizons and different target debt-to-GDP ratios. GAO projects a fiscal
gap for a 30-year period. For more information, see GAO, “Interactive Graphic: Exploring the Tough Choices for a Sustainable
Fiscal Path,” accessed February 7, 2024, https://files.gao.gov/multimedia/gao-23-106201/interactive.
22Tax expenditures, as defined by law, are provisions of the federal tax code that reduce taxpayers’ tax liability and therefore
the amount of tax revenue paid to the federal government. Examples include tax credits, deductions, exclusions, exemptions,
deferrals, and preferential tax rates. 2 U.S.C. § 622(3).
of fiscal rules and targets. 23 For example, the design should provide flexibility to address emerging
issues, such as an economic downturn or large-scale disaster. Well-designed fiscal rules and targets
can help manage debt by controlling factors like spending and revenue. GAO issues an annual report
on the fiscal health of the federal government, which provides more information on the federal
government’s unsustainable long-term fiscal path. 24
We have also previously suggested that Congress consider alternative approaches to the current debt
limit as part of any long-term fiscal plan. 25 The debt limit is a legal limit on the total amount of federal
debt that can be outstanding at one time. 26 However, it does not restrict Congress’s ability to pass
spending and revenue legislation that affects the level of debt in the future, nor does it otherwise
constrain fiscal policy. Delays in raising the debt limit could force Treasury to delay payments on
maturing securities and interest until sufficient funds are available, compromising the safety of Treasury
securities. This risk disrupts financial markets, and investors may require higher interest rates to hedge
against the increased risks.
Further, there are other risks—such as natural disasters and climate change, global or regional military
conflicts, housing finance, and public health crises—that could affect the federal government’s financial
condition in the future. These risks are not fully accounted for in the government’s long-term fiscal
projections. Some of the specific risks that could affect the federal government’s financial condition
include the following:
• Federal support of the housing finance market remains significant even though the market has
largely recovered since the 2007 to 2009 financial crisis. In 2008, the federal government placed
the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage
Corporation (Freddie Mac) under conservatorship and entered into preferred stock purchase
agreements with these government-sponsored enterprises (GSE) to help ensure their financial
stability. These agreements could affect the federal government’s financial condition. At the end of
fiscal year 2023, the federal government reported about $240 billion of investments in these GSEs,
which is net of about $70 billion in valuation losses. The reported maximum remaining contractual
commitment to these GSEs, if needed, is about $254 billion.
The ultimate role of these GSEs could affect the federal government’s financial condition and the
financial condition of certain federal entities, including the Federal Housing Administration (FHA),
which in the past expanded its lending role in distressed housing and mortgage markets. Federal
actions and strong housing market conditions have strengthened the financial condition of FHA and
23GAO, The Nation’s Fiscal Health: Effective Use of Fiscal Rules and Targets, GAO-20-561 (Washington, D.C.: Sept. 23,
2020).
24GAO-24-106987.
25GAO, Debt Limit: Market Response to Recent Impasses Underscores Need to Consider Alternative Approaches, GAO-15-
476 (Washington, D.C.: July 9, 2015).
26The debt limit is codified at 31 U.S.C. § 3101(b), as amended, and applies to federal debt issued pursuant to authority under
31 U.S.C. chapter 31. A very small amount of total federal debt is not subject to the debt limit. This amount primarily comprises
unamortized discounts on Treasury bills and Zero Coupon Treasury bonds; debt securities issued by agencies other than
Treasury, such as the Tennessee Valley Authority; and debt securities issued by the Federal Financing Bank.
these GSEs. However, risks remain that could affect their ability to absorb unexpected losses under
severely adverse conditions. 27
• Disaster costs are expected to increase as extreme weather events become more frequent and
intense because of climate change, as the U.S. Global Change Research Program and the National
Academies of Sciences, Engineering, and Medicine have observed and projected. Key sources of
exposure include supplemental appropriations to provide disaster assistance, additional losses on
federal insurance programs (e.g., crop and flood insurance), and damage to federal property that
might be affected. For example, as currently structured, the National Flood Insurance Program’s
premiums and dedicated resources are not sufficient to cover expected costs without borrowing
from Treasury. 28 As of September 30, 2023, the Federal Emergency Management Agency (FEMA),
which administers the National Flood Insurance Program, owed about $21 billion to Treasury for
money borrowed to pay claims and other expenses. We have reported that FEMA is unlikely to
collect enough in premiums in the future to repay this debt. 29
_________________________
Our audit report on the U.S. government’s consolidated financial statements would not be possible
without the commitment and professionalism of inspectors general throughout the federal government
who are responsible for annually auditing the financial statements of individual federal entities. We also
appreciate the cooperation and assistance of Treasury and OMB officials as well as the federal entities’
chief financial officers’ flexibility, adaptability, and ability to issue their financial statements on a timely
basis. We look forward to continuing to work with these individuals, the administration, and Congress to
achieve the goals and objectives of federal financial management reform.
Our audit report begins on page 218. Our guide, Understanding the Financial Report of the United
States Government, is intended to help those who seek to obtain a better understanding of the financial
report and is available on GAO’s website at https://www.gao.gov. 30
27GAO,Housing Finance System: Future Reforms Should Consider Past Plans and Vulnerabilities Highlighted by Pandemic,
GAO-22-104284 (Washington, D.C.: Jan. 13, 2022).
28We have suggested an alternative way to record insurance commitments in the budget such that the federal government’s
commitment would be more fully recognized. See GAO, Fiscal Exposures: Federal Insurance and Other Activities That
Transfer Risk or Losses to the Government, GAO-19-353 (Washington, D.C.: Mar. 27, 2019).
29GAO, Flood Insurance: FEMA's New Rate-Setting Methodology Improves Actuarial Soundness but Highlights Need for
Broader Program Reform, GAO-23-105977 (Washington, D.C.: July 31, 2023).
30GAO, Understanding the Financial Report of the United States Government, GAO-18-239SP (Washington, D.C.: Feb. 2018).
If you have any questions about our audit report, please contact me on (202) 512-5500 or Robert F.
Dacey, Chief Accountant, or Dawn B. Simpson, Director, Financial Management and Assurance, on
(202) 512-3406.
Gene L. Dodaro
Comptroller General
of the United States
cc: The Majority Leader of the Senate

The Minority Leader of the Senate
The Majority Leader of the House of Representatives
The Minority Leader of the House of Representatives
FINANCIAL STATEMENTS 50
Financial Statements
of the United States Government
for the Fiscal Years Ended September 30,
2023, and 2022
The consolidated financial statements of the U.S. government were prepared using GAAP. These statements include the
accrual-based financial statements and the sustainability financial statements, which are discussed in more detail below, and
the related notes to the consolidated financial statements. Collectively, the accrual-based financial statements, the
sustainability financial statements, and the notes represent basic information that is deemed essential for the consolidated
financial statements to be presented in conformity with GAAP.
ACCRUAL-BASED FINANCIAL STATEMENTS

The accrual-based financial statements present historical information on what the federal government owns (assets) and
owes (liabilities) at the end of the year, what came in (revenues) and what went out (net costs) during the year, and how
accrual-based net operating costs of the federal government reconcile to the budget deficit and changes in its cash balance
during the year. The following sections discuss each of the accrual-based financial statements.
Statements of Net Cost

These statements present the net cost of the government operations for FYs 2023 and 2022. Costs and earned revenues
are categorized on the Statement of Net Cost by significant entity, providing greater accountability by showing the
relationship of the entities’ net cost to the government-wide net cost. Costs and earned revenues are presented in this
Financial Report on an accrual basis, while the Budget presents outlays and receipts, generally on a cash basis. The focus of
the Budget is by entity.
The Statements of Net Cost contain the following four components:
• Gross cost—is the total cost of providing federal goods and services, excluding (gain)/loss from changes in
assumptions and before considering related exchange revenue. The gross costs are the amounts reported by each
entity, adjusted to reflect certain cost assignments made on a cause-and-effect or other reasonable basis (see
discussion below).
• Earned revenue—is exchange revenue resulting from the government providing goods and services to the public at a
price.
• (Gain)/loss from changes in assumptions—is the gain or loss from changes in long-term assumptions used to
measure the liabilities reported for federal civilian and military employee pensions, OPEB, and ORB, including
veterans’ compensation.
• Net cost—is computed by subtracting earned revenue from gross cost, adjusted by the (gain)/loss from changes in
assumptions.
Individual entity net cost amounts will differ from the entity’s financial statements primarily because of the elimination
of intra-governmental activity and the subsequent reallocation of certain costs to individual entities at the government-wide
level. While intra-governmental costs are eliminated from the face of the financial statements, the consolidated Statements of
Net Cost is intended to show the total cost for each entity, therefore, reallocations are completed at the government-wide
level to show costs more accurately at the entity level for employee benefit costs, intra-governmental buy/sell costs and
related revenues, custodial collections, and imputed costs. These reallocated costs have a net effect of zero on the Statements
of Net Cost in the Financial Report.
Because of its specific function, most of the employee benefit costs originally associated with the OPM have been
reallocated to the user entities for government-wide reporting purposes. With regard to intra-governmental buy/sell
51 FINANCIAL STATEMENTS
transactions the selling entities’ costs are reallocated to the buying entities in order to allocate the costs to the entities that
benefit from such costs.
In addition, the intra-governmental imputed costs recognized for the receipt of goods and services, financed in whole or
part by the providing entities, have been reallocated to the net cost amounts of the individual entities receiving the benefit and
subtracted from the applicable administering entities’ net cost amounts. The most significant types of imputed costs that are
recorded relate to post-retirement and health benefits, FECA, and Treasury’s Judgment Fund.
The interest on securities issued by Treasury and held by the public is reported on Treasury’s financial statements, but
because of its importance and the dollar amounts involved, it is reported separately in these statements.
Statements of Operations and Changes in Net Position

These statements report the results of government operations (net operating costs). They include non-exchange
revenues, which are generated from transactions that do not require a government entity to give value directly in exchange for
the inflow of resources. The government does not “earn” the non-exchange revenue. These are generated principally by the
government’s sovereign power to tax, levy duties, and assess fines and penalties. These statements also include the net cost
reported in the Statements of Net Cost. They further include certain adjustments and unmatched transactions and balances
that affect the net position. These statements present information for funds from dedicated collections and funds other than
those from dedicated collections. Each of these types are presented on a consolidated basis whereby transactions within each
fund type are eliminated. In order to present the activity on a government-wide basis, transactions between funds from
dedicated collections and funds other than those from dedicated collections are eliminated.
Revenue
Inflows of resources to the government that the government demands or that it receives by donations are identified as
non-exchange revenue. The inflows that it demands include individual income tax and tax withholdings, corporate income
taxes, excise taxes, unemployment taxes, custom duties, and estate and gift taxes. The non-exchange revenue is recognized
when collected and adjusted for the change in amounts receivable.
Individual income tax and tax withholdings include FICA/SECA taxes and other taxes. Excise taxes consist of taxes
collected for various items, such as airline tickets, gasoline products, distilled spirits and imported liquor, tobacco, firearms,
and other items.
Other taxes and receipts include FRBs earnings, tax related fines, penalties and interest, and railroad retirement taxes.
Miscellaneous earned revenues consist of earned revenues received from the public with virtually no associated cost.
These revenues include rents and royalties on the Outer Continental Shelf Lands resulting from the leasing and development
of mineral resources on public lands.
Intra-governmental revenue represents interest earned from the investment of surplus dedicated collections, which
finance the deficit spending of all other fund’s non-dedicated operations. These investments are recorded as intra-
governmental debt holdings and are included in Note 12—Federal Debt and Interest Payable, in the table titled Intra-
governmental Debt Holdings: Federal Debt Securities Held as Investments by Government Accounts. These interest earnings
and the associated investments are eliminated in the consolidation process.
Net Cost of Government Operations

The net cost of government operations—gross cost (including gains/losses from changes in assumptions) less earned
revenue—flows through from the Statements of Net Cost.
Intra-governmental cost represents interest expense from the investment of surplus dedicated collections, which finance
the deficit spending of all other fund’s non-dedicated operations. These investments are recorded as intra-governmental debt
holdings. The interest cost and the associated investments are eliminated in the consolidation process.
Intra-governmental Transfers
Intra-governmental transfers are transfers between funds other than those from dedicated collections and funds from
dedicated collections, such as intra-governmental interest and amounts required by statute to be transferred from the General
Fund to funds from dedicated collections. These intra-governmental transfers include appropriations, transfers, and other
financing sources. These amounts are labeled as “other changes in fund balance” in Note 22—Funds from Dedicated
Collections.
Net Operating Cost

The net operating cost equals revenue less net cost of government operations (that flows from the Statement of Net
Cost).
Net Position, Beginning of Period

The net position, beginning of period, reflects the amount reported on the prior year’s Balance Sheet as of the end of
that fiscal year.
Adjustments to beginning net position may include corrections of material errors or changes in accounting principles.
See Note 1.U—Changes in Accounting Principles and Note 1.V—Corrections of Errors for additional information.
Unmatched transactions and balances are adjustments needed to bring the change in net position into balance due
primarily to unresolved intra-governmental differences. See Note 1.T—Unmatched Transactions and Balances for additional
information.
The unmatched transactions are to make the sum of net operating costs and adjustments to beginning net position for the
year equal to the change in net position balance. The unmatched balances are included in the net position, funds other than
those from dedicated collections on the Balance Sheet.
Net Position, End of Period

The net position, end of period, reflects the amount as of the end of the fiscal year. The net position for funds from
dedicated collections is separately shown.
Reconciliations of Net Operating Cost and Budget Deficit

These statements reconcile the results of operations (net operating cost) on the Statements of Operations and Changes in
Net Position to the budget deficit (result of outlays exceeding receipts during a particular fiscal year). The premise of the
reconciliation is that accrual accounting and budgetary accounting often share much of the same transactional data. However,
some transactions differ between the two bases of accounting and are presented as reconciling items from the net operating
cost to the budget deficit.
Receipts and outlays in the Budget are measured primarily on a cash basis and differ from the accrual basis of
accounting used in the Financial Report. Refer to Note 1.B—Basis of Accounting and Revenue Recognition for additional
information on the accrual basis of accounting. These statements begin with the net results of operations (net operating cost)
and report activities where the basis of accounting for the components of net operating cost and the budget deficit differ.
Some presentations of the budget deficit make the distinction between on-budget and off-budget totals. On-budget totals
reflect the transactions of all government entities, except those excluded from the Budget by law. Off-budget totals reflect the
transactions of government entities that are excluded from the on-budget totals by law. Under current law, the off-budget
totals include the Social Security Trust Funds and USPS. The budget deficit, as presented in the Financial Report, combines
the on-budget and off-budget totals to derive consolidated totals for federal activity.
Components of Net Operating Cost Not Part of the Budget Deficit

This information includes the operating components, such as the changes in benefits payable for veterans, military and
civilian employees, environmental and disposal liabilities, and depreciation expense, not included in the budget results.
Components of the Budget Deficit Not Part of Net Operating Cost

This information includes the budget components, such as the acquisition of capital assets (that are recorded as outlays
in the budget when cash is disbursed and reflected in net operating cost through depreciation expense over the useful life of
the asset) and increases in other assets that are not included in the operating results.
Statements of Changes in Cash Balance from Budget and Other

Activities
The primary purpose of these financial statements is to report how the annual budget deficit relates to the change in the
government’s cash and other monetary assets, as well as federal debt. It explains why the budget deficit normally would not
result in an equivalent change in the government’s cash and other monetary assets.
These statements reconcile the budget deficit to the change in cash and other monetary assets during the fiscal year.
They also serve to explain how the budget deficits were financed. These statements show the adjustments for non-cash
outlays included in the Budget, and items affecting the cash balance not included in the Budget, to explain the change in cash
and other monetary assets.
The budget deficit is primarily financed through borrowings from the public. When receipts exceed outlays, the
difference is a surplus. The Budget treats borrowing and debt repayment as a means of financing, not as receipts and
outlays. The Budget records outlays for the interest on the public issues of Treasury debt securities as the interest accrues,
not when the cash is paid.
Non-cash flow amounts in the Budget related to loan financing account activity also reflect intra-governmental
transactions such as interest expense paid or interest revenue received from Treasury, entity year-end credit reform
subsidy reestimates, and the receipt of subsidy expense from program accounts. Cash flow from non-budget activities
related to loan financing account activity includes all cash flows to and from the public, including direct loan
disbursements/default payments to lenders, fees collected, principal and interest repayments, collections on defaulted
guarantee loans, and sale proceeds of foreclosed property. The Budget totals exclude the transactions of the financing
accounts because they are not a cost to the government. However, since loan financing accounts record all credit cash
flows to and from the public, they affect the means of financing a budget deficit.
Balance Sheets
The Balance Sheets show the government’s assets, liabilities, and net position. When combined with stewardship
information, this information presents a more comprehensive understanding of the government’s financial position. The net
position for funds from dedicated collections is shown separately.
Assets
Assets included on the Balance Sheets are resources of the government that remain available to meet future needs. The
most significant assets that are reported on the Balance Sheets are loans receivable, net, general PP&E, net; accounts
receivable, net; and cash and other monetary assets. There are, however, other significant resources available to the
government that extend beyond the assets presented in these Balance Sheets. Those resources include stewardship PP&E in
addition to the government’s sovereign powers to tax and set monetary policy.
Liabilities and Net Position

Liabilities are obligations of the government resulting from prior actions that will require financial resources. The most
significant liabilities reported on the Balance Sheets are federal debt and interest payable and federal employee and veteran
benefits payable. Liabilities also include environmental and disposal liabilities, benefits due and payable, loan guarantee
liabilities, as well as insurance and guarantee program liabilities.
As with reported assets, the government’s responsibilities, policy commitments, and contingencies are much broader
than these reported Balance Sheet liabilities. They include the social insurance programs reported in the SOSI and disclosed
in the unaudited RSI—Social Insurance section, fiscal long-term projections of non-interest spending reported in the SLTFP,
and a wide range of other programs under which the government provides benefits and services to the people of this nation,
as well as certain future loss contingencies.
The government has entered into contractual commitments requiring the future use of financial resources and has
unresolved contingencies where existing conditions, situations, or circumstances create uncertainty about future losses.
Commitments and contingencies that do not meet the criteria for recognition as liabilities on the Balance Sheets, but for
which there is at least a reasonable possibility that losses have been incurred, are disclosed in Note 20—Commitments and
Note 21—Contingencies.
Unmatched transactions and balances are adjustments needed to reconcile differences between assets and liabilities, that
are primarily due to unresolved intra-governmental differences. See Note 1.T—Unmatched Transactions and Balances for
additional information.
The collection of certain taxes and other revenue is credited to the corresponding funds from dedicated collections that
will use these funds to meet a particular government purpose. If the collections from taxes and other sources exceed the
payments to the beneficiaries, the excess revenue is invested in Treasury securities or deposited in the General Fund;
therefore, the trust fund balances do not represent cash. An explanation of the trust funds for social insurance is included in
Note 22—Funds from Dedicated Collections. That note also contains information about trust fund receipts, disbursements,
and assets.
Due to its sovereign power to tax and borrow, and the country’s wide economic base, the government has unique access
to financial resources through generating tax revenues and issuing federal debt securities. This provides the government with
the ability to meet present obligations and those that are anticipated from future operations and are not reflected in net
position.
The net position is the residual difference between assets and liabilities, adjusted for unmatched transactions and
balances reported in the Balance Sheet, and is the cumulative results of operations since inception. For detailed components
that comprise the net position, refer to the section “Statement of Operations and Changes in Net Position.”
SUSTAINABILITY FINANCIAL STATEMENTS

The sustainability financial statements are comprised of the SLTFP, covering all federal government programs, and the
SOSI and the SCSIA, covering social insurance programs (Social Security, Medicare, Railroad Retirement, and Black Lung
programs). The sustainability financial statements are designed to illustrate the relationship between projected receipts and
expenditures if current policy is continued over a 75-year time horizon. 1 In preparing the sustainability financial statements,
management selects assumptions and data that it believes provide a reasonable basis to illustrate whether current policy is
sustainable. Current policy is based on current law but includes several adjustments. In the SLTFP, notable adjustments to
current law are: 1) projected spending, receipts, and borrowing levels assume raising or suspending the current statutory limit
on federal debt; 2) continued discretionary appropriations are assumed throughout the projections period; 3) scheduled Social
Security and Medicare Part A benefit payments are assumed to occur beyond the projected point of trust fund depletion; and
4) many mandatory programs with expiration dates prior to the end of the 75-year projection period are assumed to be
reauthorized. In the SOSI, the one adjustment to current law is that scheduled Social Security and Medicare Part A benefit
payments are assumed to occur beyond the projected point of trust fund depletions. Assumptions underlying such
sustainability information do not consider changes in policy or all potential future events that could affect future income,
future expenditures, and, hence, sustainability. The projections do not reflect any adverse economic consequences resulting
from continuously rising debt levels. A large number of factors affect the sustainability financial statements and future events
and circumstances cannot be estimated with certainty. Therefore, even if current policy is continued, there will be differences
1
With the exception of the Black Lung program, which has a rolling 25-year projection period that begins on the September 30 valuation date each year.
between the estimates in the sustainability financial statements and actual results, and those differences may be material. The
unaudited RSI section of this Financial Report includes PV projections using different assumptions to illustrate the
sensitivity of the sustainability financial statements to changes in certain assumptions. The sustainability financial statements
are intended to help the readers understand current policy and the importance and magnitude of policy reforms necessary to
make it sustainable.
By accounting convention, General Fund transfers to Medicare Parts B and D reported in the SOSI are eliminated when
preparing the government-wide consolidated financial statements. The SOSI shows the projected General Fund transfers as
eliminations that, under current law, would be used to finance the remainder of the expenditures in excess of revenues for
Medicare Parts B and D reported in the SOSI. The SLTFP include all revenues (including general revenues) of the federal
government.
Statements of Long-Term Fiscal Projections

The SLTFP, including the corresponding Note and RSI, are intended to help readers of the government’s financial
statements assess the federal government’s financial condition and how it has changed during the year and may change in the
future. The statements and corresponding analysis are specifically designed to help readers assess whether future budgetary
resources will be sufficient to sustain public services and to meet obligations as they come due, assuming that current policy
for federal government services and taxation continues without change.
The SLTFP display the PV of 75-year projections by major category of receipts and non-interest spending. The
projections show the extent to which future receipts of the government exceed or fall short of the government’s non-interest
spending and are presented both in terms of PV dollars and in terms of PV dollars as a percent of PV GDP. The projections
reflect policies currently in place and are neither forecasts nor predictions. The projections are consistent with the projections
for Social Security and Medicare presented in the SOSI and are based on the same economic and demographic assumptions
that underlie the SOSI. The SLTFP display the fiscal gap, which is a summary measure of the change in receipts or non-
interest spending that is necessary to reach a target ratio of debt held by the public to GDP at the end of the projection period.
Note 24—Long-Term Fiscal Projections, explains the methods used to prepare the projections. Unaudited RSI further
assesses the sustainability of current fiscal policy and provides results that are based on alternative assumptions to those used
in the SLTFP.
As discussed further in Note 24, a sustainable policy is one where the debt-to-GDP ratio is stable or declining over the
long term. Because GDP measures the size of the nation’s economy in terms of the total value of all final goods and services
that are produced in a year, the debt-to-GDP ratio is a useful indicator of the economy’s capacity to support federal
government’s services.
Statements of Social Insurance and Changes in Social Insurance

Amounts
SOSI provides estimates of the status of the most significant social insurance programs: Social Security, Medicare,
Railroad Retirement, and Black Lung. 2 They are administered by SSA, HHS, RRB, and DOL, respectively. The SSA and
HHS projections are based on the intermediate economic and demographic assumptions representing the Trustees’ reasonable
estimates of likely future economic and demographic conditions, as set forth in the applicable Social Security and Medicare
Trustees Reports as well as in the financial statements of HHS and SSA. RRB’s projections are based on assumptions from
the 28th Actuarial Valuation of the Assets and Liabilities Under the Railroad Retirement Acts as of December 31, 2019, the
2023 Annual Report of the Railroad Retirement System required by Section 502 of the Railroad Retirement Solvency Act of
1983 (P.L. 98-76), as well as in RRB’s financial statements and DOL’s projections are based on assumptions disclosed in its
The SCSIA show two reconciliations: 1) change from the period beginning on January 1, 2022 to the period beginning
on January 1, 2023; and 2) change from the period beginning on January 1, 2021 to the period beginning on January 1, 2022.
It reconciles the changes (between the current valuation and the prior valuation) in the PV of estimated future revenue less
estimated future expenditures for current and future participants (the open group measure) over the next 75 years (except
2
In relation to the amounts presented in the SOSI and SCSIA, because the combined Railroad Retirement and Black Lung programs account for less than
one-quarter of 1.0 percent of the statement totals, they are not material from the government-wide perspective.
Black Lung which has a rolling 25-year projection period through September 30, 2048). The reconciliation identifies several
components of the changes that are significant and provides reasons for the changes in Note 25—Social Insurance.
United States Government

Statement of Net Cost
for the Year Ended September 30, 2023 (Gain)/Loss
from
Gross Earned Changes in Net
(In billions of dollars) Cost Revenue Subtotal Assumptions Cost
Department of Health and Human Services 1,875.6 161.2 1,714.4 (0.3) 1,714.1
Department of Veterans Affairs 902.0 5.5 896.5 558.8 1,455.3
Social Security Administration 1,433.1 0.3 1,432.8 - 1,432.8
Department of Defense 969.0 55.0 914.0 89.3 1,003.3
Interest on Treasury Securities held by the public 678.0 - 678.0 - 678.0
Department of the Treasury 357.4 53.7 303.7 - 303.7
Department of Agriculture 238.1 11.8 226.3 - 226.3
Office of Personnel Management 124.0 29.4 94.6 111.9 206.5
Department of Transportation 108.2 1.5 106.7 - 106.7
Security Assistance Accounts 109.3 6.1 103.2 - 103.2
Department of Homeland Security 111.2 15.6 95.6 1.0 96.6
Department of Energy 86.2 11.3 74.9 - 74.9
Department of Housing and Urban Development 71.4 4.1 67.3 - 67.3
Department of Justice 51.6 3.7 47.9 - 47.9
Department of Labor 45.3 - 45.3 - 45.3
Pension Benefit Guaranty Corporation 55.0 17.0 38.0 - 38.0
Agency for International Development 36.8 - 36.8 - 36.8
Department of State 41.6 6.0 35.6 (0.2) 35.4
Small Business Administration 35.5 5.2 30.3 - 30.3
Department of the Interior 29.5 3.0 26.5 - 26.5
National Aeronautics and Space Administration 24.8 0.4 24.4 - 24.4
Department of Education 50.9 32.4 18.5 - 18.5
Federal Communications Commission 18.6 0.4 18.2 - 18.2
Railroad Retirement Board 15.6 - 15.6 - 15.6
Department of Commerce 17.3 4.3 13.0 - 13.0
Environmental Protection Agency 12.3 0.4 11.9 - 11.9
Federal Deposit Insurance Corporation 21.8 11.9 9.9 - 9.9
National Science Foundation 9.0 - 9.0 - 9.0
United States Postal Service 83.8 77.0 6.8 - 6.8
Smithsonian Institution 2.0 0.5 1.5 - 1.5
Millennium Challenge Corporation 0.7 - 0.7 - 0.7
National Credit Union Administration 0.4 0.1 0.3 - 0.3
U.S. Nuclear Regulatory Commission 0.8 0.7 0.1 - 0.1
General Services Administration 0.9 1.1 (0.2) - (0.2)
Securities and Exchange Commission 2.4 2.6 (0.2) - (0.2)
United States International Development Finance
Corporation - 0.3 (0.3) - (0.3)
Farm Credit System Insurance Corporation - 0.6 (0.6) - (0.6)
Tennessee Valley Authority 11.4 12.0 (0.6) - (0.6)
Export-Import Bank of the United States (0.9) (0.2) (0.7) - (0.7)
National Railroad Retirement Investment Trust 0.1 2.8 (2.7) - (2.7)
All other entities 31.0 1.8 29.2 0.1 29.3
Total 7,661.7 539.5 7,122.2 760.6 7,882.8
The accompanying notes are an integral part of these financial statements.


Statement of Net Cost
for the Year Ended September 30, 2022* (Gain)/Loss
from
Gross Earned Changes in Net
(In billions of dollars) Cost Revenue Subtotal Assumptions Cost
Department of Health and Human Services 1,812.7 154.1 1,658.6 1.4 1,660.0
Department of Veterans Affairs 413.8 5.4 408.4 1,526.5 1,934.9
Social Security Administration 1,294.3 0.3 1,294.0 - 1,294.0
Department of Defense 979.7 47.8 931.9 527.0 1,458.9
Interest on Treasury Securities held by the public 496.5 - 496.5 - 496.5
Department of the Treasury 557.7 31.3 526.4 - 526.4
Department of Agriculture 250.4 9.7 240.7 - 240.7
Office of Personnel Management 174.1 27.3 146.8 148.2 295.0
Department of Transportation 116.3 1.0 115.3 - 115.3
Security Assistance Accounts 102.1 19.3 82.8 - 82.8
Department of Homeland Security 102.3 14.7 87.6 1.2 88.8
Department of Energy 50.3 22.1 28.2 - 28.2
Department of Housing and Urban Development 28.2 1.9 26.3 - 26.3
Department of Justice 42.4 1.2 41.2 - 41.2
Department of Labor 42.3 - 42.3 - 42.3
Pension Benefit Guaranty Corporation 9.9 16.9 (7.0) - (7.0)
Agency for International Development 29.5 0.1 29.4 - 29.4
Department of State 40.0 4.8 35.2 3.4 38.6
Small Business Administration 47.8 4.3 43.5 - 43.5
Department of the Interior 28.2 2.7 25.5 - 25.5
National Aeronautics and Space Administration 22.3 0.3 22.0 - 22.0
Department of Education 595.1 55.6 539.5 - 539.5
Federal Communications Commission 16.0 0.4 15.6 - 15.6
Railroad Retirement Board 8.2 - 8.2 - 8.2
Department of Commerce 15.8 4.2 11.6 0.1 11.7
Environmental Protection Agency 9.9 0.3 9.6 - 9.6
Federal Deposit Insurance Corporation 1.9 8.2 (6.3) - (6.3)
National Science Foundation 8.2 - 8.2 - 8.2
United States Postal Service 78.7 76.2 2.5 - 2.5
Smithsonian Institution 1.7 0.1 1.6 - 1.6
Millennium Challenge Corporation 0.7 - 0.7 - 0.7
National Credit Union Administration 0.3 0.1 0.2 - 0.2
U.S. Nuclear Regulatory Commission 0.8 0.7 0.1 - 0.1
General Services Administration 0.3 0.9 (0.6) - (0.6)
Securities and Exchange Commission 2.6 2.4 0.2 - 0.2
United States International Development Finance
Corporation 0.3 0.2 0.1 - 0.1
Farm Credit System Insurance Corporation - 0.6 (0.6) - (0.6)
Tennessee Valley Authority 11.3 12.4 (1.1) - (1.1)
Export-Import Bank of the United States - 0.5 (0.5) - (0.5)
National Railroad Retirement Investment Trust 4.7 1.1 3.6 - 3.6
All other entities 23.4 2.0 21.4 0.1 21.5
Subtotal 7,420.7 531.1 6,889.6 2,207.9 9,097.5
Unmatched transactions and balances (Note 1.T) (0.6) - (0.6) - (0.6)
Total 7,420.1 531.1 6,889.0 2,207.9 9,096.9
*
Certain amounts differ from prior year reported amounts due to a change in presentation (see Financial Statement Note 1.W).

Statement of Operations and Changes in Net Position
for the Year Ended September 30, 2023 (Consolidated)
Funds other than Funds from

those from Dedicated
Dedicated Collections
Collections (Note 22) Eliminations Total
(In billions of dollars) 2023
Revenue (Note 19):

Individual income tax and tax withholdings 2,122.4 1,590.7 - 3,713.1
Corporate income taxes 368.2 - - 368.2
Excise taxes 27.4 66.3 - 93.7
Unemployment taxes 7.8 39.3 - 47.1
Customs duties 78.1 0.1 - 78.2
Estate and gift taxes 33.7 - - 33.7
Other taxes and receipts 86.6 28.7 - 115.3
Miscellaneous earned revenues 16.3 - - 16.3
Intra-governmental revenue - 106.0 (106.0) -
Total revenue 2,740.5 1,831.1 (106.0) 4,465.6
Net Cost of Government Operations:

Net cost 5,504.6 2,378.2 - 7,882.8
Intra-governmental cost 106.0 - (106.0) -
Total net cost 5,610.6 2,378.2 (106.0) 7,882.8
Intra-governmental transfers (611.0) 611.0 - -
Net operating (cost)/revenue (3,481.1) 63.9 - (3,417.2)
Net position, beginning of period (37,757.6) 3,696.4 - (34,061.2)

Adjustments to beginning net position
Changes in accounting principles (Note 1.U) (1.0) 0.2 - (0.8)
Net position, end of period (41,239.7) 3,760.5 - (37,479.2)


Statement of Operations and Changes in Net Position
for the Year Ended September 30, 2022 (Consolidated)*
Funds other than Funds from

those from Dedicated
Dedicated Collections
Collections (Note 22) Eliminations Total
Revenue (Note 19):

Individual income tax and tax withholdings 2,571.1 1,441.5 - 4,012.6
Corporate income taxes 383.2 - - 383.2
Excise taxes 34.4 58.4 - 92.8
Unemployment taxes 6.9 56.7 - 63.6
Customs duties 98.6 0.1 - 98.7
Estate and gift taxes 32.6 - - 32.6
Other taxes and receipts 182.3 16.2 - 198.5
Miscellaneous earned revenues 43.9 - - 43.9
Intra-governmental revenue - 99.8 (99.8) -
Total revenue 3,353.0 1,672.7 (99.8) 4,925.9
Net Cost of Government Operations:

Net cost 6,970.2 2,126.7 - 9,096.9
Intra-governmental cost 99.8 - (99.8) -
Total net cost 7,070.0 2,126.7 (99.8) 9,096.9
Intra-governmental transfers (667.4) 667.4 - -
Net position, beginning of period (33,368.8) 3,483.0 - (29,885.8)

Adjustments to beginning net position
Changes in accounting principles (Note 1.U) (4.3) - - (4.3)
Unmatched transactions and balances
(Note 1.T) (0.1) - - (0.1)
Net position, end of period (37,757.6) 3,696.4 - (34,061.2)
*


Reconciliations of Net Operating Cost and Budget Deficit
for the Years Ended September 30, 2023, and 2022
(In billions of dollars) 2023 2022*
Net operating cost (3,417.2) (4,171.0)

Components of net operating cost not part of the budget deficit:
Excess of accrual-basis expenses over budget outlays:
** Federal employee and veteran benefits payable:
Pension and accrued benefits 303.7 774.1
Veterans compensation and burial benefits 1,130.7 1,662.8
Post-retirement health and accrued benefits 49.5 176.3
Other benefits 31.6 15.8
Subtotal - federal employee and veteran benefits payable 1,515.5 2,629.0
** Insurance and guarantee program liabilities (5.2) (25.3)
** Environmental and disposal liabilities 19.0 13.0
** Accounts payable 9.6 (8.5)
** Benefits due and payable 37.6 14.4
** Advances from others and deferred revenue 108.1 45.2
** Other liabilities 178.1 (182.0)
Subtotal - excess of accrual-basis expenses over budget outlays 1,862.7 2,485.8
Amortized expenses not included in budget outlays:
Property, plant, and equipment depreciation expense 77.9 78.3
Other expenses that are not reported as budget outlays:
Property, plant, and equipment disposals and revaluations 9.1 15.5
Excess of accrual-basis revenue over budget receipts:
Accounts receivable, net (18.6) (20.8)
Taxes receivable, net 55.0 65.5
Other losses/(gains) and cost/(revenue) that are not budget receipts:
** Investments in government-sponsored enterprises (16.7) (2.8)
Subtotal - components of net operating cost not part of budget deficit 1,969.4 2,621.5
Components of the budget deficit that are not part of net operating cost:
Budget receipts not included in net operating cost:
Credit reform and other loan activities 24.5 (58.5)
Budget outlays not included in net operating cost:
Acquisition of capital assets (124.5) (114.4)
** Investments (0.5) 31.3
** Inventory and related property, net (16.1) (7.7)
** Advances and prepayments 45.4 71.3
** Other assets (157.7) 1.0
Subtotal - components of the budget deficit that are not part of net operating cost (228.9) (77.0)
Adjustments to beginning net position (0.8) (4.3)
Other:
Allocations of special drawing rights (4.0) 14.8
Effect of uninvested principal from the TSP's G Fund - 156.7
All other reconciling items (13.7) 83.8
Total other (17.7) 255.3
Budget deficit (1,695.2) (1,375.5)
*
**
The amounts represent the year over year net change in the Balance Sheet line items.


Statements of Changes in Cash Balance from Budget and Other Activities
for the Years Ended September 30, 2023, and 2022
(In billions of dollars) 2023 2022
Cash flow from budget activities:
Total budget receipts 4,439.3 4,896.1
Total budget outlays (6,134.5) (6,271.6)
Budget deficit (1,695.2) (1,375.5)
Adjustments for non-cash outlays included in the budget:
Non-cash flow amounts in the budget related to federal debt:
Accrued interest 407.2 311.3
Net amortization 197.4 31.9
Other 47.7 260.0
Subtotal - adjustments for non-cash flow amounts in the budget related to federal debt 652.3 603.2
Non-cash flow amounts in the budget related to loan financing account activity:
Interest revenue on uninvested funds 11.9 12.7
Interest expense on entity borrowings (45.4) (45.5)
Downward reestimates/negative subsidy payments (357.4) (55.9)
Subsidy expense/upward reestimates 191.4 542.6
Subtotal - adjustments for non-cash flow amounts in the budget related to loan
financing account activity (199.5) 453.9
Total of adjustments for non-cash outlays included in the budget 452.8 1,057.1
Cash flow from activities not included in the budget:
Cash flow from non-budget activities related to federal debt:
Interest paid (371.8) (299.2)
Subtotal - cash flow from non-budget activities related to federal debt (371.8) (299.2)
Cash flow from non-budget activities related to loan financing account activity:
Loan disbursements/default payments (219.5) (522.6)
Fees 22.1 25.4
Principal and interest repayments 91.3 87.5
Other collections on defaulted loans receivable and sale of foreclosed property 4.6 2.2
Special purpose vehicle disbursements (0.2) (4.5)
Repayments of special purpose vehicle investments 4.7 9.1
Subtotal - cash flow from non-budget activities related to loan financing account activity (97.0) (402.9)
Cash flow from financing federal debt:
Borrowings 20,196.0 17,457.5
Repayments (18,212.8) (15,701.2)
Discount/premium (285.5) (78.7)
Effect of uninvested principal from the TSP's G Fund - (156.7)
Subtotal - cash flow from financing federal debt 1,697.7 1,520.9
Total cash flow from activities not included in the budget 1,228.9 818.8
Other:
Allocations of special drawing rights 4.0 (14.8)
All other reconciling items 53.9 (82.8)
Total other 57.9 (97.6)
Change in cash and other monetary assets balance 44.4 402.8
Beginning cash and other monetary assets balance 877.8 475.0
Ending cash and other monetary assets balance 922.2 877.8


Balance Sheets
as of September 30, 2023, and 2022
Assets:
Cash and other monetary assets (Note 2) 922.2 877.8
Accounts receivable, net (Note 3) 319.9 356.3
Loans receivable, net (Note 4) 1,695.1 1,434.1
Negative loan guarantee liabilities (Note 4) 4.6 -
Inventory and related property, net (Note 5) 423.0 406.9
General property, plant and equipment, net (Note 6) 1,235.0 1,197.5
Investments (Note 7) 130.8 130.3
Investments in government-sponsored enterprises (Note 8) 240.4 223.7
Advances and prepayments (Note 9) 252.7 298.1
Other assets (Note 10) 195.4 37.7
Total assets 5,419.1 4,962.4
Stewardship property, plant, and equipment (Note 26)
Liabilities:
Accounts payable (Note 11) 124.2 114.6
Federal debt and interest payable (Note 12) 26,347.7 24,328.0
Federal employee and veteran benefits payable (Note 13) 14,327.4 12,811.9
Environmental and disposal liabilities (Note 14) 645.3 626.3
Benefits due and payable (Note 15) 325.9 288.3
Loan guarantee liabilities (Note 4) - 6.4
Insurance and guarantee program liabilities (Note 16) 99.3 104.5
Advances from others and deferred revenues (Note 17) 355.3 247.2
Other liabilities (Note 18) 673.2 495.1
Total liabilities 42,898.3 39,022.3
Commitments (Note 20) and Contingencies (Note 21)
Unmatched transactions and balances (Note 1.T) - 1.3
Net Position:
Funds from Dedicated Collections (Note 22) 3,760.5 3,696.4
Funds other than those from Dedicated Collections (41,239.7) (37,757.6)
Total net position (37,479.2) (34,061.2)
Total liabilities and net position* 5,419.1 4,962.4
*
Total liabilities and net position equals Total liabilities, Total net position and Unmatched transactions and balances.


Statements of Long-Term Fiscal Projections (Note 24)
Present Value of 75-Year Projections as of September 30, 2023, and 20221
In trillions of dollars Percent of GDP2

2023 2022 Change 2023 2022 Change
Receipts:
Social Security payroll taxes 80.8 77.8 2.9 4.2 4.2 0.1
Medicare payroll taxes 27.4 26.4 1.0 1.4 1.4 -
Individual income taxes 204.4 201.1 3.3 10.7 10.7 (0.1)
Corporation income taxes 24.3 25.0 (0.7) 1.3 1.3 (0.1)
Other receipts 23.0 20.2 2.9 1.2 1.1 0.1
Total receipts 360.0 350.6 9.3 18.8 18.7 -
Non-interest spending:
Social Security 114.2 109.0 5.3 6.0 5.8 0.1
Medicare Part A3 37.9 37.1 0.8 2.0 2.0 -
Medicare Parts B & D4 52.2 51.1 1.1 2.7 2.7 -
Medicaid 47.3 56.5 (9.2) 2.5 3.0 (0.6)
Other mandatory 62.8 53.4 9.4 3.3 2.8 0.4
Defense discretionary 59.8 56.9 2.9 3.1 3.0 0.1
Non-defense discretionary 58.9 66.2 (7.3) 3.1 3.5 (0.5)
Total non-interest spending 433.1 430.2 3.0 22.6 23.0 (0.4)
Receipts less non-interest spending (73.2) (79.5) 6.4 (3.8) (4.2) 0.4
Fiscal gap5 (4.5) (4.9) 0.4
1
75-year present value projections for 2023 are as of 9/30/2023 for FYs 2024-2098; projections for 2022 are as of 9/30/2022 for FYs
2023-2097.
2
The 75-year present value of nominal GDP, which drives the calculations above is $1,919.1 trillion starting in FY 2024, and was
$1,872.9 trillion starting in FY 2023.
3
Represents portions of Medicare supported by payroll taxes.
4
Represents portions of Medicare supported by general revenues. Consistent with the President's Budget, outlays for Parts B & D are
presented net of premiums.
5
To prevent the debt-to-GDP ratio from rising over the next 75 years, a combination of non-interest spending reductions and receipt
increases that amounts to 4.5 percent of GDP on average is needed (4.9 percent of GDP on average in 2022). See Note 24—
Long-Term Fiscal Projections.
Totals may not equal the sum of components due to rounding.


Statements of Social Insurance (Note 25)
Present Value of Long-Range (75 Years, except Black Lung) Actuarial Projections
(In trillions of dollars) 2023 2022 2021 2020 2019

Federal Old-Age, Survivors and Disability Insurance (Social
Security):11
Revenue (Contributions and Dedicated Taxes) from:
Participants who have attained eligibility age (age 62 and over) 2.2 2.0 1.8 1.7 1.5
Participants who have not attained eligibility age 42.2 40.4 37.5 35.2 33.6
Future participants 43.0 41.8 39.3 37.0 35.3
All current and future participants 87.4 84.2 78.6 73.9 70.4
Expenditures for Scheduled Future Benefits for:
Participants who have attained eligibility age (age 62 and over) (23.5) (21.6) (19.8) (18.3) (16.9)
Participants who have not attained eligibility age (71.2) (68.5) (64.9) (59.8) (55.8)
Future participants (17.9) (17.4) (16.6) (15.5) (14.5)
All current and future participants (112.6) (107.5) (101.3) (93.6) (87.2)
Present value of future expenditures in excess of future
revenue (25.2)1 (23.3)2 (22.7)3 (19.7)4 (16.8)5
Federal Hospital Insurance (Medicare Part A):11
Revenue (Contributions and Dedicated Taxes) from:
revenue (4.6)1 (5.0)2 (5.0)3 (4.8)4 (5.4)5
Federal Supplementary Medical Insurance (Medicare Part B):11
Revenue (Premiums) from:
General Fund transfers 40.9 39.5 35.5 33.1 28.8
Eliminations (40.9) (39.5) (35.5) (33.1) (28.8)
revenue (after eliminations)6 (40.9)1 (39.5)2 (35.5)3 (33.1)4 (28.8)5


Statements of Social Insurance (Note 25), continued

Federal Supplementary Medical Insurance (Medicare Part D): 11
Revenue (Premiums and State Transfers) from:

General Fund transfers 7.6 8.0 7.7 7.8 8.0
Eliminations (7.6) (8.0) (7.7) (7.8) (8.0)

revenue (after eliminations)6 (7.6)1 (8.0)2 (7.7)3 (7.8)4 (8.0)5
Other:

revenue7 (0.1) (0.1) (0.1) (0.1) (0.1)
Total present value of future expenditures in excess of future

revenue8, 9, 10 (78.4) (75.9) (71.0) (65.5) (59.1)


Statements of Social Insurance (Note 25), continued

Social Insurance Summary: 11
Participants who have attained eligibility age:

Revenue (e.g., contributions and dedicated taxes) 5.6 5.4 4.7 4.3 3.8
Expenditures for scheduled future benefits (40.0) (37.6) (34.0) (31.6) (29.1)
Present value of future expenditures in excess of
future revenue (34.4) (32.2) (29.3) (27.3) (25.3)
Participants who have not attained eligibility age:
Present value of future expenditures in excess of
future revenue (69.8) (68.4) (64.3) (59.7) (55.1)
Closed group - Total present value of future expenditures

in excess of future revenue (104.2) (100.6) (93.6) (87.0) (80.4)
Future participants:
Present value of future revenue in excess of future
expenditure 25.8 24.7 22.6 21.5 21.3
Open group - Total present value of future expenditures in

excess of future revenue (78.4) (75.9) (71.0) (65.5) (59.1)
1
The projection period for Social Security and Medicare is 1/1/2023 - 12/31/2097 and the valuation date is 1/1/2023.
2
3
4
5
6 These amounts represent the PV of the future transfers from the General Fund to the SMI Trust Funds. These future intra-governmental
are included as income in both HHS’s and the CMS’s financial statements but, by accounting convention, are not income from the
government-wide perspective of this report.
7
Includes Railroad Retirement and Black Lung.
8
These amounts do not include the PV of the financial interchange between the railroad retirement and social security systems,
which is included as income in the Railroad Retirement Financial Report, but is not included from the government-wide perspective of this
report (See discussion of RRB in the unaudited RSI section of this report).
9
Does not include interest expense accruing on the outstanding debt of the BLDTF.
10
For information on the projection periods and valuation dates for the Railroad Retirement and Black Lung programs, refer to the financial
statements of RRB and DOL, respectively.
11
Current participants for the Social Security and Medicare programs are assumed to be the closed group of individuals who are at least
15 years of age at the start of the projection period, and are participating as either taxpayers, beneficiaries, or both. Amounts shown exclude
General Fund transfers reported by CMS for Medicare's Parts B and D.


Statement of Changes in Social Insurance Amounts
for the Year Ended September 30, 2023 (Note 25)
Social Medicare Medicare

(In trillions of dollars) Security1 HI1 SMI1, 3 Other2 Total
NPV of future revenue less future expenditures

for current and future participants (open group)
over the next 75 years, beginning of the year (23.3) (5.0) (47.5) (0.1) (75.9)
Reasons for changes in the NPV during the year:
Changes in valuation period (0.7) (0.2) (1.1) - (2.0)
Changes in demographic data, assumptions, and
methods (0.1) (0.3) 0.2 - (0.2)
Changes in economic data, assumptions, and
methods (0.8) - - - (0.8)
Changes in law or policy - - 1.1 - 1.1
Changes in methodology and programmatic data (0.3) - - - (0.3)
Changes in economic and health care
assumptions - (0.3) (2.3) - (2.6)
Change in projection base - 1.2 1.1 - 2.3
Net change in open group measure (1.9) 0.4 (1.0) - (2.5)
Open group measure, end of year (25.2) (4.6) (48.5) (0.1) (78.4)
1
Amounts represent changes between valuation dates 1/1/2022 and 1/1/2023.
2
Includes Railroad Retirement changes between valuation dates 10/1/2021 and 10/1/2022 and Black Lung changes between 9/30/2022 and
9/30/2023.
3
Amounts shown exclude General Fund transfers reported by CMS for Medicare's Parts B and D.


for the Year Ended September 30, 2022 (Note 25)
Social Medicare Medicare

(In trillions of dollars) Security1 HI1 SMI1, 3 Other2 Total
NPV of future revenue less future expenditures

for current and future participants (open group)
over the next 75 years, beginning of the year (22.7) (5.0) (43.2) (0.1) (71.0)
Reasons for changes in the NPV during the year:
Changes in valuation period (0.7) (0.1) (0.9) - (1.7)
Changes in demographic data, assumptions, and
methods (0.3) - (0.5) - (0.8)
Changes in economic data, assumptions, and
methods (0.2) - - - (0.2)
Changes in law or policy - - - - -
Changes in methodology and programmatic data 0.6 - - - 0.6
Changes in economic and health care
assumptions - (1.9) (3.4) - (5.3)
Change in projection base - 2.0 0.5 - 2.5
Net change in open group measure (0.6) - (4.3) - (4.9)
Open group measure, end of year (23.3) (5.0) (47.5) (0.1) (75.9)
1
Amounts represent changes between valuation dates 1/1/2021 and 1/1/2022.
2
Includes Railroad Retirement changes between valuation dates 10/1/2020 and 10/1/2021 and Black Lung changes between 9/30/2021 and
9/30/2022.
3
Amounts shown exclude General Fund transfers reported by CMS for Medicare's Parts B and D.

NOTES TO THE FINANCIAL STATEMENTS 70

Notes to the Financial Statements
for the Fiscal Years Ended September 30,
2023, and 2022
Note 1. Summary of Significant Accounting Policies
A. Reporting Entity
The government includes the executive branch, the legislative branch, and the judicial branch. This Financial Report
includes the financial status and activities related to the operations of the government. SFFAS No. 47, Reporting Entity
provides criteria for identifying organizations that are included in the Financial Report as consolidation entities or disclosure
entities. The determination as to whether an organization is a consolidation entity or disclosure entity is based on the
assessment of the following characteristics as a whole, the organization: a) is financed through taxes and other non-exchange
revenues; b) is governed by the Congress or the President; c) imposes or may impose risks and rewards to the government;
and d) provides goods and services on a non-market basis.
Consolidation entities are organizations that are consolidated in the financial statements. For disclosure entities, data is
not consolidated in the financial statements, instead information is disclosed in the notes to the financial statements
concerning: a) the nature of the government’s relationship with the disclosure entities; b) the nature and magnitude of
relevant activity with the disclosure entities during the period and balances at the end of the period; and c) a description of
financial and non-financial risks, potential benefits and, if possible, the amount of the government’s exposure to gains and
losses from the past or future operations of the disclosure entity or entities.
SFFAS No. 47 also provides guidance for identifying related parties and in determining what information to provide
about related party relationships of such significance that it would be misleading to exclude such information.
Based on the criteria in GAAP for federal entities, the assets, liabilities, and results of operations of Fannie Mae and
Freddie Mac are not consolidated into the government's consolidated financial statements. However, the values of the
investments in such entities, changes in value, and related activity with these entities are included in the government's
consolidated financial statements. Although federal investments in Fannie Mae and Freddie Mac are significant, these entities
do not meet the GAAP criteria for consolidation entities.
Under SFFAS No. 47 criteria, Fannie Mae and Freddie Mac were owned or controlled by the government as a result of:
a) regulatory actions (such as organizations in receivership or conservatorship); or b) other government intervention actions.
Under the regulatory or other intervention actions, the relationship with the government is not expected to be permanent.
These entities are classified as disclosure entities based on their characteristics as a whole (see Note 27—Disclosure Entities
and Related Parties for additional information on these disclosure entities).
Also, under GAAP criteria, the FR System and SPVs are not consolidated into the government's consolidated financial
statements (see Note 7—Investments for additional information on SPVs and Note 27—Disclosure Entities and Related
Parties for additional information concerning the FR System).
For additional information regarding Reporting Entity, see Appendix A—Reporting Entity.
B. Basis of Accounting and Revenue Recognition

Consolidated Financial Statements
The consolidated financial statements of the government are prepared in accordance with the standards established by
FASAB. As permitted by FASAB standards, certain components of the federal government prepare their financial statements
following the standards established by FASB. Information from those components is included within the government's
consolidated financial statements without conversion to FASAB standards. Intra-governmental transactions are eliminated in
71 NOTES TO THE FINANCIAL STATEMENTS
consolidation, except as described in the Other Information–Unmatched Transactions and Balances. See Note 1.T—
Unmatched Transactions and Balances for additional information. The consolidated financial statements include accrual-
based financial statements and sustainability financial statements, which are discussed in more detail below, and the related
notes to the consolidated financial statements. Collectively, the accrual-based financial statements, the sustainability financial
statements, and the notes represent information that is deemed essential for the financial statements and notes to be presented
in conformity with GAAP.
Accounting standards allow certain presentations and disclosures to be modified, if needed, to prevent the disclosure of
classified information. Accordingly, modifications may have been made to certain presentations and disclosures.
Accrual-Based Financial Statements
The accrual-based financial statements were prepared under the following principles:
• Expenses are generally recognized when incurred.
• Non-exchange revenue, including taxes, duties, fines, and penalties, are recognized when collected and adjusted for
the change in amounts receivable (modified cash basis). Related refunds and other offsets, including those that are
measurable and legally payable, are netted against non-exchange revenue.
• Exchange (earned) revenue is recognized when the government provides goods and services to the public for a price.
Exchange revenue includes user charges such as admission to federal parks and premiums for certain federal
insurance.
The basis of accounting used for budgetary purposes, which is primarily on a cash basis (budget deficit) and follows
budgetary concepts and policies, differs from the basis of accounting used for the financial statements which follow GAAP.
See the Reconciliations of Net Operating Cost and Budget Deficit in the Financial Statements section and Note 29—COVID-
19 Activity in the notes to the financial statements.
Sustainability Financial Statements
The sustainability financial statements were prepared based on the projected PV of the estimated future revenue and
estimated future expenditures, primarily on a cash basis, for a 75-year period. The sustainability financial statements consist
of the: 1) SLTFP, covering all federal government programs and all sources of federal revenue; 2) SOSI; and 3) SCSIA.
New Standards Issued in Prior and Current Years and Implemented in Current Year
In FY 2016, the government began implementing the requirements of new standards related to the reporting for
inventory and related property, net and general PP&E. These standards are available to each reporting entity once per line
item addressed in the standard. The standards being implemented are:
• FASAB issued SFFAS No. 48, Opening Balances for Inventory, Operating Materials and Supplies, and Stockpile
Materials. SFFAS No. 48 permits a reporting entity to apply an alternative valuation method in establishing opening
balances and applies when a reporting entity is presenting financial statements, or one or more line items addressed
by this statement. SFFAS No. 48 was effective beginning in FY 2017. Early implementation was permitted. DOD
did partially implement in 2016 and select component entities have continued to implement in FY 2017 through FY
2023. DOD has not declared full implementation yet; therefore, this standard continues to be partially implemented
each year.
• FASAB issued SFFAS No. 50, Establishing Opening Balances for General Property, Plant and Equipment. SFFAS
No. 50 permits a reporting entity to apply an alternative valuation method in establishing opening balances and
applies when a reporting entity is presenting financial statements, or one or more line items addressed by this
statement. SFFAS No. 50 was effective beginning in FY 2017. Early implementation was permitted. DOD did
partially implement in 2016 and select component entities have continued to implement in FY 2017 through FY
2023. DOD has not declared full implementation yet; therefore, this standard continues to be partially implemented
each year.
In July 2021, FASAB issued SFFAS No. 59, Accounting and Reporting of Government Land. Per SFFAS No. 59,
starting in FY 2026, land and permanent land rights will no longer be capitalized, and the previously capitalized amounts will
be removed from the Balance Sheet. Also, starting in FY 2026, SFFAS No. 59 requires certain disclosures in the notes to the
financial statements, including estimated acreage of land and permanent land rights and its predominant use. For FY 2022
through FY 2025, such disclosures are required to be presented as RSI. These include:
• Estimated acres of general PP&E land and stewardship land using three predominant use sub-categories:
o Conservation and preservation land;
o Operational land; and
o Commercial use land.
• Estimated acres of land held for disposal or exchange.

New Standards Issued and Not Yet Implemented
As of September 2023, FASAB has issued the following new standards that are applicable to the Financial Report, but
are not yet implemented at the government-wide level for FY 2023:
In April 2018, FASAB issued SFFAS No. 54, Leases: An Amendment of SFFAS No. 5, Accounting for Liabilities of the
Federal Government, and SFFAS No. 6, Accounting for Property, Plant, and Equipment. SFFAS No. 54 revises the financial
reporting standards for federal lease accounting. It provides a comprehensive set of lease accounting standards to recognize
federal lease activities in the reporting entity’s financial statements and includes appropriate disclosures. This statement
requires that federal lessees recognize a lease liability and a right-to-use lease asset at the commencement of the lease term,
unless it meets any of the scope exclusions or meets the definition/criteria of short-term leases, contracts or agreements that
transfer ownership, or intra-governmental leases. A federal lessor would recognize a lease receivable and deferred revenue,
unless it meets any of the scope exclusions or meets the definition/criteria of short-term leases, contracts or agreements that
transfer ownership, or intra-governmental leases. SFFAS No. 58, Deferral of the Effective Date of SFFAS No. 54, Leases,
issued in June 2020, defers the effective date of SFFAS No. 54 to FY 2024 and early implementation is not permitted. The
following standards were issued to amend SFFAS No. 54, Leases: SFFAS No. 60, Omnibus Amendments 2021, Leases-
Related Topics, SFFAS No. 61, Omnibus Amendments 2023, Leases Related Topics II, and SFFAS No. 62, Transitional
Amendment to SFFAS 54. These amendments are effective for FY 2024.
C. Accounts Receivable, Net

Accounts receivable include the amount of taxes receivable that consist primarily of uncollected tax assessments,
penalties, and interest when taxpayers have agreed, or a court has determined, the assessments are owed. Taxes receivable do
not include unpaid assessments when taxpayers or a court have not agreed that the amounts are owed (compliance
assessments) or the government does not expect further collections due to factors such as the taxpayer’s death, bankruptcy, or
insolvency (write-offs). Taxes receivable are reported net of an allowance for the estimated portion deemed to be
uncollectible.
Other accounts receivable represent claims to cash or other assets from entities outside the government that arise from
the sale of goods or services, duties, fines, certain license fees, recoveries, or other provisions of the law. Accounts receivable
are reported net of an allowance for uncollectible amounts. An allowance is established when it is more likely than not the
receivables will not be totally collected. The allowance method varies among the entities in the government and is usually
based on past collection experience and is reestimated periodically as needed. Methods may include statistical sampling of
receivables, specific identification and intensive analysis of each case, aging methodologies, and percentage of total
receivables based on historical collection. See Note 3—Accounts Receivable, Net for additional information.
D. Loans Receivable, Net

Direct loans committed after FY 1991 are valued at their gross amounts less an allowance for the PV of the amounts not
expected to be recovered, and thus having to be subsidized is called an “allowance for subsidy.”
Direct loans obligated before FY 1992 are valued under the PV method. Under the PV method, the outstanding
principal of direct loans is reduced by an allowance equal to the difference between the outstanding principal and the PV of
the expected net cash flows. See Note 4—Loans Receivable, Net and Loan Guarantee Liabilities for additional information.
E. Loan Guarantee Liabilities

Loan guarantees committed after FY 1991 are valued at the PV of the cash outflows less the PV of the related inflows.
The estimated PV of net long-term cash outflows of an entity for subsidized costs is net of recoveries, interest supplements,
and offsetting fees. The loan guarantee liabilities present the net PV of all future cash flows from loans.
Loan guarantees committed before FY 1992 are valued under the allowance-for-loss method. The allowance for loan
losses is recognized when it is more likely than not that the direct loans will not be totally collected. The allowance of the
uncollectible amounts is reestimated each year. See Note 4—Loans Receivable, Net and Loan Guarantee Liabilities for
Generally, loan guarantees are recorded as a liability except when cash inflows are expected to exceed cash outflows on
a PV basis. This results in a negative loan guarantee that is reported as an asset on the Balance Sheet.
F. Inventory and Related Property, Net

Inventory is tangible personal property that is categorized as: 1) held for current sale; 2) held in reserve for future sale;
3) held for repair; or 4) excess, obsolete, and unserviceable. Inventory held for current sale and held in reserve for future sale
are valued by the main contributing entities at historical cost using the MAC flow assumption. Historical cost includes all
appropriate purchase, transportation, and production costs incurred to bring the items to their current condition and location.
Any abnormal costs, such as excessive handling or rework costs, are charged to operations of the period. Inventory held for
repair is accounted for by the main contributors using the allowance method which values inventory at the same value as a
serviceable item. However, an allowance for repairs contra-asset account (e.g., allowance for loss) is established to recognize
estimated repair costs in the current period operating expenses. Excess, obsolete, and unserviceable inventory is valued at its
net realizable value.
Related property includes OM&S, stockpile materials, and other miscellaneous related property. OM&S is tangible
personal property to be consumed in normal operations. Stockpile materials are strategic and critical materials being held due
to statutory requirements for use in national defense, conservation, or national emergencies. The main contributing entities
value OM&S and stockpile materials using various methods including MAC, standard price, historical cost, replacement
price, and direct method. The entities also use both the consumption method and purchase method. The consumption method
expenses OM&S when consumed, while the purchase method expenses OM&S when purchased. If OM&S are not significant
amounts, are in the hands of the end user for use in normal operations, or if it is not cost beneficial to apply the consumption
method; then the purchases method is applied.
FASAB issued additional guidance, SFFAS No. 48, Opening Balances for Inventory, Operating Materials and
Supplies, and Stockpile Materials, which permits a reporting entity to apply an alternative valuation method (e.g., deemed
cost) in establishing opening balances for inventory, OM&S, and stockpile materials. This guidance is intended to provide an
alternative valuation method when historical records and systems do not provide a basis for valuation of opening balances in
accordance with SFFAS No. 3, Accounting for Inventory and Related Property. Please refer to Note 5—Inventory and
Related Property, Net, for additional information.
G. General Property, Plant, and Equipment, Net

General PP&E consists of tangible assets (e.g., buildings, structures and facilities, furniture and fixtures, equipment, and
land) that have an estimated useful life of two or more years, are not intended for sale in the ordinary course of business and
are intended for use or available for use by the entity. General PP&E also includes internal use software, land rights, assets
acquired through capital leases, and leasehold improvements.
At the government-wide level, SFFAS No. 6, Accounting for Property, Plant, and Equipment is followed and requires
that general PP&E is recorded at cost and includes all costs incurred to bring the general PP&E to a form and location
suitable for its intended use. The main contributing entities use estimated historical cost for general PP&E. Costs to acquire
general PP&E, extend the useful life of an existing asset, or enlarge or improve its capacity are capitalized and depreciated or
amortized over the remaining useful life. Depreciation expense is recognized on all capitalized general PP&E, except land
and land rights of unlimited duration. In the case of constructed general PP&E, the asset is recorded as construction work in
process until it is placed in service, at which time the balance is transferred to a major class of general PP&E. See Note 6—
General Property, Plant, and Equipment, Net, for additional information.
FASAB issued additional guidance, SFFAS No. 50, Establishing Opening Balances for General Property, Plant, and
Equipment, which states that a reporting entity may choose one of three alternative methods for establishing an opening
balance for general PP&E. The alternative methods include using deemed cost to establish opening balances of general
PP&E, selecting between deemed cost and prospective capitalization of internal use software, and allowing an exclusion of
land and land rights from opening balances with disclosure of acreage information and expensing of future acquisitions. An
entity electing to exclude land and land rights from its general PP&E opening balances must disclose, with a reference on the
Balance Sheet to the related disclosure, the number of acres held at the beginning of each reporting period, the number of
acres added during the period, the number of acres disposed of during the period, and the number of acres held at the end of
each reporting period. Some consolidating DOD contributors used the alternative valuation methods from SFFAS No. 50
based on historical records such as expenditure data, contracts, budget information, and engineering documentation. When
applicable, DOD will continue to adopt SFFAS No. 50.
For financial reporting purposes, heritage assets (excluding multi-use heritage assets) and stewardship land are not
recorded as part of general PP&E. Since heritage assets are intended to be preserved as national treasures, it is anticipated
that they will be maintained in reasonable repair and that there will be no diminution in their usefulness over time. Many
assets are clearly heritage assets. For example, the National Park Service manages the Washington Monument, the Lincoln
Memorial and the Mall. Heritage assets that are predominantly used in general government operations are considered multi-
use heritage assets and are included in general PP&E. Stewardship land is also consistent with the treatment of heritage assets
in that much of the government’s land is held for the general welfare of the nation and is intended to be preserved and
protected. Stewardship land is land owned by the government but not acquired for or in connection with general PP&E.
Because most federal land is not directly related to general PP&E, it is deemed to be stewardship land and accordingly, it is
not reported on the Balance Sheet. Examples of stewardship land include national parks and forests. For additional
information on stewardship assets, see Note 26—Stewardship Property, Plant, and Equipment.
H. Investments
Most investments are reported at FV. FV is the estimate of the price at which an orderly transaction to sell the asset
would take place between market participants at the measurement date under current market conditions. Market or observable
inputs are used as the preferred source of values, followed by assumptions based on hypothetical transactions in absence of
market inputs. Certain investments rely on NAV as a practical expedient (i.e., priced without adjustments) to estimate their
FV. NAV is derived from the FV of the underlying investments as of the reporting date. See Note 7—Investments for
I. Investments in Government-Sponsored Enterprises

The senior preferred stock and associated warrants for the purchase of common stock in the GSEs (Fannie Mae and
Freddie Mac) are presented at their FV. SPSPAs, which Treasury entered into with each GSE when they were placed under
conservatorship, can result in payments to the GSEs when, at the end of any quarter, the FHFA, acting as the conservator,
determines that the liabilities of either GSE exceed its respective assets. Such payments result in an increase to the liquidation
preference of investment in the GSEs’ senior preferred stock, with a corresponding decrease to cash held by Treasury for
government-wide operations. In addition, the liquidation preference of investments in the GSEs will increase, based on the
quarterly earnings of the GSEs, up to the adjusted capital reserve amounts set for each GSE.
The valuation to estimate the investment’s FV incorporates forecasts, projections, and cash flow analyses. Changes in
valuation, including impairments, are deemed usual and recurring and thus are recorded as exchange transactions on the
Statement of Net Cost (as earned revenue) and investments in GSEs on the Balance Sheet. The government also records
dividends related to these investments as exchange transactions (as earned revenue) which are accrued when declared.
The potential liabilities to the GSEs, if any, are assessed annually and recorded at the gross estimated amount. For
additional information on investments in GSEs, refer to Note 8—Investments in Government-Sponsored Enterprises.
J. Federal Debt and Interest Payable

Federal debt is primarily comprised of Treasury securities, which are debt instruments issued to the public to raise
money needed to operate the federal government and pay off maturing obligations. Treasury issues these debt instruments to
the public in the form of marketable bills, notes, bonds, TIPS and FRNs, and in the form of nonmarketable securities
including Government Account Series securities, U.S. Savings Securities, and SLGS securities. The amount of the debt, or
principal, is also called the security’s face value or par value. To accurately reflect the federal debt, Treasury records
principal transactions with the public at par value at the time of the transaction. Certain Treasury securities are issued at a
discount or premium. These discounts and premiums are amortized over the term of the security using an interest method for
all long-term securities (term greater than one year) and the straight-line method for short-term securities (term of one year or
less). In addition, the principal for TIPS is adjusted daily based on the CPI for all Urban Consumers. Certain Treasury
securities also pay interest. For marketable securities, Treasury issues notes and bonds that pay semi-annual interest based on
the security’s stated interest rate. For FRNs, which accrue interest daily and pay the aggregated interest on a quarterly basis,
the interest rate is based on two components; the index rate tied to the highest accepted discount rate of the most recent 13-
week marketable bill auction and the spread rate, which is the highest accepted discount rate determined at auction when the
FRN is first offered. TIPS, on the other hand, pay a semi-annual fixed rate of interest applied to the inflation-adjusted
principal. However, for all security types accrued interest is recorded as an expense when incurred, instead of when paid. See
Note 12—Federal Debt and Interest Payable for additional information.
K. Federal Employee and Veteran Benefits Payable

Generally, federal employee and veteran benefits payable are recorded during the time employee services are rendered.
The related liabilities for defined benefit pension plans, veterans’ compensation, burial, education and training benefits, post-
retirement health benefits, and life insurance benefits, are recorded at estimated PV of future benefits, less any estimated PV
of future normal cost contributions. Normal cost is the portion of the actuarial PV of projected benefits allocated as an
expense for employee services rendered in the current year. Actuarial gains and losses (as well as prior service cost, if any)
are recognized immediately in the year they occur without amortization.
VA provides certain veterans and/or their dependents with pension benefits, based on annual eligibility reviews, if the
veteran died or was disabled for nonservice-related causes. The pension program for veterans is not accounted for as a
“federal employee pension plan” under SFFAS No. 5, Accounting for Liabilities of the Federal Government, due to
differences between its eligibility conditions and those of federal employee pensions. Therefore, a future liability for pension
benefits is not recorded. These benefits are recognized as expenses when benefits are paid rather than when employee
services are rendered.
In accordance with 38 CFR § 17.36(c), the VA makes an annual enrollment decision that identifies which veterans, by
priority, will be treated for that fiscal year based on funds appropriated, estimated collections, usage, the severity index of
enrolled veterans, and changes in cost. While VA expects to continue to provide medical care to veterans in future years, an
estimate of this amount cannot be reasonably made. These medical care expenses are recognized in the period the medical
care services are provided.
The actuarial liability for FECA benefits is recorded at estimated PV of future benefits for injuries and deaths that have
already been incurred.
Gains and losses from changes in long-term assumptions used to estimate federal employee pensions, ORB, and OPEB
liabilities are reflected separately on the Statement of Net Cost and the components of the expense related to federal
employee pension, ORB, and OPEB liabilities are disclosed in Note 13—Federal Employee and Veteran Benefits Payable as
prescribed by SFFAS No. 33, Pensions, Other Retirement Benefits, and Other Postemployment Benefits: Reporting the Gains
and Losses from Changes in Assumptions and Selecting Discount Rates and Valuation Dates. In addition, SFFAS No. 33 also
provides a standard for selecting the discount rate assumption for PV estimates of federal employee pension, ORB, and
OPEB liabilities. See Note 13—Federal Employee and Veteran Benefits Payable for additional information.
L. Environmental and Disposal Liabilities

Environmental and disposal liabilities are estimated costs for anticipated remediation, cleanup, and disposal costs
resulting from the use of the governments assets or operations. Estimated costs for environmental and disposal liabilities can
change over time because of laws and regulation updates, technology updates, inflation or deflation factors, and disposal plan
revisions. Accruals for environmental cleanup costs are the cost of removing, containing, and/or disposing of hazardous
wastes or materials that, because of quantity, concentration, or physical or chemical characteristics, may pose a substantial
present or potential hazard to human health or the environment. Cleanup costs include, but are not limited to
decontamination, decommissioning, site restoration, site monitoring, closure, and post-closure costs. PP&E recognition of an
anticipated environmental disposal liability begins when the asset is placed in service. See Note 14—Environmental and
Disposal Liabilities for additional information.
M. Benefits Due and Payable

A liability for social insurance programs (including but not limited to: Social Security, Medicare, Railroad Retirement,
Black Lung, and Unemployment) is recognized for any unpaid amounts currently due and payable to beneficiaries or service
providers as of the end of the reporting period. See Note 15—Benefits Due and Payable for additional information.
N. Insurance and Guarantee Program Liabilities

Insurance programs are authorized by law to financially compensate a designated population of beneficiaries by
accepting all or part of the risk for losses incurred as a result of an adverse event. Certain consolidation entities with
significant insurance and guarantee programs (e.g., PBGC and FDIC) apply FASB standards and are not converted to
FASAB standards in consolidation, as permitted by SFFAS No. 47.
PBGC values its liabilities at the PV of future benefits and PV of nonrecoverable future financial assistance using
assumptions derived from market-based (FV) annuity prices from insurance companies. Assumptions are selected in
accordance with PBGC’s best estimate of anticipated experience for expected retirement ages and the cost of administrative
expenses.
The PV of future benefits is the estimated liability for future pension benefits that PBGC is or will be obligated to pay
the participants of trusteed plans and the net liability for plans pending termination and trusteeship. PBGC recognizes a
single-employer program liability for trusteed or terminated plans and probable plan terminations. The liability is PBGC's
best estimate of the losses, net of plan assets, and the PV of expected recoveries (from sponsors and members of their
controlled group) for plans that are likely to terminate in the future. PBGC uses assumptions to adjust the value of those
future payments to reflect the time value of money (by discounting) and the probability of payment (by means of decrements,
such as for death or retirement). PBGC also includes anticipated expenses to settle the benefit obligation in the determination
of the PV of future benefits. Significant unobservable inputs are incorporated in the calculation of the PV of future benefits as
well. Refer to PBGC’s financial statements for additional information.
PBGC recognizes a multiemployer program liability for future financial assistance to insolvent plans and to plans
deemed probable to becoming insolvent. Projecting a future insolvency requires considering several complex factors, such as
an estimate of future cash flows, future mortality rates, and age of participants not in pay status. In general, if a terminated
plan’s assets are less than the PV of its liabilities, PBGC considers the plan a probable risk of requiring financial assistance in
the future.
FDIC records a liability for FDIC-insured institutions that are likely to fail when the liability is probable and reasonably
estimable, absent some favorable event such as obtaining additional capital or merging. The FDIC liability is derived by
applying expected failure rates and loss rates to the institutions based on supervisory ratings, balance sheet characteristics,
and projected capital levels.
PBGC's exposure to losses from plan terminations and FDIC’s exposure to losses from insured institutions that are
classified as reasonably possible are disclosed in Note 21—Contingencies.
All other insurance and guarantee programs are accounted for in the consolidated financial statements in accordance
with SFFAS No. 51, Insurance Programs.
Insurance programs exclude programs that administer direct loans and loan guarantees; qualify as social insurance; are
authorized to engage in disaster relief activities; provide grants; provide benefits or assistance based on an individual’s or a
household’s income and/or assets; assume the risk of loss arising from federal government operations; pay claims through an
administrative or judicial role for individuals or organizations who claim they have been harmed by a federal entity;
indemnify contractors, agreement partners, and other third parties for loss or damage incurred while or caused by work
performed for a federal entity; or are workers’ or occupational illness compensation programs that compensate current or
former employees (or survivors) and certain third parties for injuries and occupational diseases obtained while working for a
federal entity.
Per SFFAS No. 51, there are three categories of insurance programs: 1) exchange transaction insurance programs other
than life insurance; 2) non-exchange transaction insurance programs; and 3) life insurance programs.
For exchange transaction insurance programs other than life insurance, revenues are recognized when earned over the
insurance arrangement period and liabilities are recognized for unearned premiums, unpaid insurance claims, and for losses
on remaining coverage. Losses on remaining coverage represent estimated amounts to be paid to settle claims for the period
after year-end through the end of insurance coverage in excess of the summation of unearned premiums and premiums due
after the end of the reporting period.
For non-exchange transaction insurance programs, revenue is recognized the same as other non-exchange transaction
revenue, no unearned premium liability is recorded, and a liability is only recognized for unpaid insurance claims.
For life insurance programs, revenue is recognized when due, and liabilities are recognized for unpaid insurance claims
and future policy benefits. The liability for future policy benefits represents the expected PV of future claims to be paid to, or
on behalf of, existing policyholders, less the expected PV of future net premiums to be collected from those policyholders.
Life insurance programs are disclosed in Note 13—Federal Employee and Veteran Benefits Payable. See Note 16—Insurance
and Guarantee Program Liabilities for additional information.
O. Deferred Maintenance and Repairs

DM&R are maintenance and repairs that were not performed when they should have been or scheduled maintenance
and repairs that were delayed or postponed. Maintenance is the act of keeping fixed assets in acceptable condition, including
preventative maintenance, normal repairs, and other activities needed to preserve the assets, so they continue to provide
acceptable service and achieve their expected life. Maintenance and repairs exclude activities aimed at expanding the
capacity of assets or otherwise upgrading them to serve needs different from those originally intended. DM&R are not
expensed in the Statements of Net Cost or accrued as liabilities on the Balance Sheet. However, DM&R information is
presented in the unaudited RSI section of this report. Please see unaudited RSI—Deferred Maintenance and Repairs for
additional information including measurement methods.
P. Commitments
Commitments reflect binding agreements that may result in the future expenditure of financial resources that are not
recognized or not fully recognized on the Balance Sheet and should be disclosed. Examples of commitments include certain
long-term leases, undelivered orders, P3s, international or other agreements in support of international economic
development, or agreements in support of financial market stability. See Note 20—Commitments for additional information.
Q. Contingencies
Liabilities for contingencies are recognized on the Balance Sheet when both:
• A past transaction or event has occurred, and
• A future outflow or other sacrifice of resources is probable and measurable.
The estimated contingent liability may be a specific amount or a range of amounts. If some amount within the range is a
better estimate than any other amount within the range, then that amount is recognized. If no amount within the range is a
better estimate than any other amount, then the minimum amount in the range is recognized and the range and a description
of the nature of the contingency is disclosed.
A contingent liability is disclosed if any of the conditions for liability recognition do not meet the above criteria and
there is at least a reasonable possibility that a loss may be incurred. See Note 21—Contingencies for additional information.
R. Funds from Dedicated Collections

Generally, funds from dedicated collections are financed by specifically identified revenues, provided to the
government by non-federal sources, often supplemented by other financing sources that 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. The three required
criteria for a fund from dedicated collections are:
• A statute committing the government to use specifically identified revenues and/or other financing sources that are
originally provided to the government by a non-federal source only for designated activities, benefits, or purposes;
• Explicit authority for the fund to retain revenues and/or other financing sources not used in the current period for
future use to finance the designated activities, benefits, or purposes; and
• A requirement to account for and report on the receipt, use, and retention of the revenues and/or other financing
sources that distinguishes the fund from the government’s general revenues.
Funds from dedicated collections on the Statement of Operations and Changes in Net Position are presented on the
consolidated basis. The consolidated dedicated collections presentation eliminates balances and transactions between funds
from dedicated collections held by the entity. For additional information on funds from dedicated collections, see Note 22—
Funds from Dedicated Collections.
S. Sustainability Financial Statements

The sustainability financial statements are estimates based on economic as well as demographic assumptions presented
in Note 24—Long-Term Fiscal Projections and 25—Social Insurance. The sustainability financial statements are not
forecasts or predictions. The sustainability financial statements are designed to illustrate the relationship between receipts and
expenditures, if current policy is continued. For this purpose, the projections assume, among other things, that scheduled
social insurance benefit payments would continue after related trust funds are projected to be depleted, contrary to current
law, and that debt could continue to rise indefinitely without severe economic consequences.
SOSI and SCSIA are based on the selection of accounting policies and the application of significant accounting
estimates, some of which require management to make significant assumptions. Further, the estimates are based on current
conditions and expectations of future conditions. Actual results could differ materially from the estimated amounts. Each
statement includes information to assist in understanding the effect of changes in assumptions to the related information.
By accounting convention, General Fund transfers to Medicare Parts B and D reported in the SOSI are eliminated when
preparing the government-wide consolidated financial statements. The SOSI shows the projected General Fund transfer(s) as
eliminations that, under current law, would be used to finance the remainder of the expenditures in excess of revenues for
Medicare Parts B and D that is reported in the SOSI. The SLTFP include all revenues (including general revenues) of the
federal government.
T. Unmatched Transactions and Balances

The reconciliation of the change in net position requires that the difference between ending and beginning net position
equals the difference between revenue and cost, plus or minus prior-period adjustments. The unmatched transactions and
balances includes unmatched intra-governmental balances on the Balance Sheet and includes unmatched intra-governmental
current year transactions on the Statement of Net Cost and the Statement of Operations and Changes in Net Position to
reconcile the change in net position to ensure beginning and ending net position equals the difference between revenue and
cost, plus or minus prior-period adjustments. Unresolved intra-governmental differences (i.e., unmatched transactions and
balances) result in errors in the consolidated financial statements.
The unmatched transactions and balances are needed to balance the accrual-based financial statements. The Statement
of Net Cost, the Statement of Operations and Changes in Net Position and the Balance Sheet include specific lines for the
unmatched transactions and balances. The primary factors affecting this out of balance situation are:
• Unmatched intra-governmental transactions and balances between federal entities; and
• Errors and restatements in federal entities’ reporting.
As intra-governmental transactions and balances reduce to immaterial amounts, the corresponding individual lines in the
“Unmatched Transactions and Balances” table are adjusted to remove the differences for the fiscal year. Please refer to the
table of “Unmatched Transactions and Balances” in Other Information (Unaudited) for examples of the individual lines.
Refer to the Other Information (unaudited)—Unmatched Transactions and Balances for additional information.
U. Changes in Accounting Principles

A change in accounting principle results from either adopting a new accounting pronouncement or an entity adopting an
allowable alternative accounting principle on the basis that is preferable. Generally, as applicable, changes in accounting
principles are shown as an adjustment to beginning net position in the Statement of Operations and Changes in Net Position
of the period in which the change is implemented.
Adjustments to beginning net position in FY 2023 and FY 2022 for changes in accounting principles were ($0.8) billion
and ($4.3) billion, respectively, mostly due to DOD’s continued implementation of SFFAS No. 48, Opening Balances for
Inventory, Operating Materials and Supplies, and Stockpile Materials and SFFAS No. 50, Establishing Opening Balances
for General Property, Plant, and Equipment.
V. Corrections of Errors
Corrections of errors in financial statements result from mathematical mistakes, mistakes in the application of
accounting principles, or oversight or misuse of facts that existed at the time financial statements were prepared. When
preparing comparative financial statements, if the material error occurred in the prior period presented and the effect is
known, then the affected line items of the prior period are restated. There were no material corrections of errors identified for
fiscal years ending September 30, 2023, and 2022.
W. Changes in Presentation
Changes in presentation are done to improve clarity of the presentation of the Financial Report and include changes
since the prior year that are not the result of corrections of errors or changes in accounting principles. In FY 2023, due to a
change in presentation of the reported unmatched transactions and balances on the Statement of Net Cost, Statement of
Operations and Changes in Net Position, and Unmatched Transactions and Balances in Other Information (unaudited), the
FY 2022 Statement of Net Cost was adjusted by $.1 billion to report the associated unmatched transactions and balances that
were previously reported on the Statement of Operations and Changes in Net Position unmatched transactions and balances
line and the buy/sell costs that were previously included in the gross cost recorded on the Statement of Net Cost. They are
now reported on the standalone unmatched transaction and balances line on the Statement of Net Cost. Additionally, the
Unmatched Transactions and Balances in Other Information (unaudited) was updated to show the details of the unmatched
transactions and balances by statement. For more information refer to the Statement of Net Cost, Statement of Operations and
Changes in Net Position, Reconciliation of Net Operating Cost and Budget Deficit, and Unmatched Transactions and
Balances in Other Information (unaudited). The FY 2022 presentation was modified to conform to the FY 2023 presentation.
X. Fiduciary Activities
Fiduciary activities are the collection or receipt, as well as the management, protection, accounting, investment and
disposition by the government of cash or other assets in which non-federal individuals or entities have an ownership interest
that the government must uphold. Fiduciary cash and other fiduciary assets are not assets of the government and are not
recognized on the Balance Sheet. See Note 23—Fiduciary Activities, for additional information.
Y. Use of Estimates
The government has made certain estimates and assumptions relating to the reporting of assets, liabilities, revenues,
expenses, and the disclosure of contingent liabilities to prepare these financial statements. There are a large number of factors
that affect these assumptions and estimates, which are inherently subject to substantial uncertainty arising from the likelihood
of future changes in general economic, regulatory, and market conditions. As such, actual results will differ from these
estimates and such differences may be material.
Significant transactions subject to estimates are included in the balance of loans receivable, net, federal employee and
veteran benefits payable, investments, investments in SPVs, investments in GSEs, tax receivables, receivables from
resolution activities, loan guarantee liabilities, depreciation, other actuarial liabilities, cost and earned revenue allocations, as
well as contingencies and any related recognized liabilities.
The government recognizes the sensitivity of credit reform modeling to slight changes in some model assumptions and
uses regular review of model factors, statistical modeling, and annual reestimates to reflect the most current cost estimate of
the credit programs to the U.S. government. Federal Credit Reform Act of 1990 loan receivables and loan guarantees are
disclosed in Note 4—Loans Receivable, Net and Loan Guarantee Liabilities.
Estimates are also used to determine the FV of investments in SPVs and GSEs. The FV of the SPV preferred equity
investments is estimated based on a discounted cash flow valuation methodology, whereby the primary input is the PV of the
projected annual cash flows associated with these investments. The FV of the GSE senior preferred stock considers
forecasted cash flows to equity holders and the traded prices of the other equity securities, including the GSE’s common
stock and junior preferred stock. The value of the GSE senior preferred stock is estimated by first estimating the FV of the
total equity of each GSE (which, in addition to the GSE senior preferred stock, is comprised of other equity instruments
including common stock, common stock warrants, and junior preferred stock). The FV of the GSE total equity is based on a
discounted cash flow valuation methodology, whereby the primary input is the PV of the projected quarterly cash flows to
equity holders. The FV of the GSEs’ other equity instruments are then deducted from its total equity, with the remainder
representing the FV of the GSE senior preferred stock.
Factors impacting the FV of the GSE warrants include the nominal exercise price and the large number of potential
exercise shares, the market trading of the common stock that underlies the warrants as of September 30, the principal market,
and the market participants. Other factors impacting the FV of the GSE warrants include, the holding period risk related
directly to the assumption of the amount of time that it will take to sell the exercised shares without depressing the market.
For additional information on investments in SPVs and GSEs, see Note 7—Investments and Note 8—Investments in
Government-Sponsored Enterprises, respectively.
Treasury performs annual calculations, as of September 30, to assess the need for recording an estimated liability in
accordance with SFFAS No. 5, Accounting for Liabilities of The Federal Government, and to the government’s funding
commitment to the GSEs under the SPSPAs. For additional information on investments in GSEs and the amended SPSPAs,
see Note 8—Investments in Government-Sponsored Enterprises.
Z. Credit Risk
Credit risk is the potential, no matter how remote, for financial loss from a failure of a borrower or counterparty to
perform in accordance with underlying contractual obligations. The government takes on credit risk when it makes direct
loans or guarantees to non-federal entities, provides credits to foreign entities, or becomes exposed to institutions that engage
in financial transactions with foreign countries.
The government also takes on credit risk related to committed, but undisbursed direct loans, CARES Act Section 4003
COVID-19 credit program receivables, funding commitments to GSEs, CARES Act Section 4003 Section 13(3) funding
provided to Corporate Credit Facility LLC, MSF, MLF, TALF, and other activities. Many of these programs were developed
or provided credit support to the pandemic emergency relief programs of the Federal Reserve Board, to provide credit where
borrowers are not able to get access to credit with reasonable terms and conditions. These programs expose the government
to potential costs and losses. The extent of the risk assumed is described in more detail in the notes to the financial
statements, and where applicable, is factored into credit reform models and reflected in FV measurements.
AA. Treaties and Other International Agreements

For financial reporting purposes, treaties and other international agreements may be understood as falling into three
broad categories:
• No present or contingent obligation to provide goods, services, or financial support;
• Present obligation to provide goods, services, or financial support; or
• Contingent obligation to provide goods, services, or financial support.
The proper financial reporting of treaties and other international agreements depends on the probable future outflow or
other sacrifice of resources as a result of entering into the agreement.
In many cases, treaties and other international agreements establish frameworks that govern cooperative activities with
other countries, but leave to the discretion of the parties whether to engage in any such activities. In other cases, the
agreements may contemplate specific cooperative activities, but create no present or contingent obligations to engage in
them. Cooperative activities relevant to these treaties and other international agreements fall under the first category, which
does not result in the U.S. government incurring any financial liability. Since these treaties and other international agreements
have no financial impact, they are not reported or disclosed in this Financial Report.
Some treaties and other international agreements fall under the second category, and involve a present obligation, and
therefore result in liability recognition. Such present obligation may relate to the U.S. government providing financial and in-
kind support, including assessed contributions, voluntary contributions, grants, and other assistance to international
organizations in which it participates as a member. Examples of such agreements include those that establish international
organizations under which the U.S. government undertakes obligations to pay assessed dues to the organization; grant
agreements under which the U.S. government provides foreign assistance funds to other countries; and claims settlement
agreements under which the U.S. government agrees to pay specific sums of money to settle claims.
The last category encompasses those treaties or other international agreements which result in contingencies that may
require recognition or disclosure in the financial statements. Such contingencies may stem from commitments in a treaty or
other international agreement to provide goods, services, or financial support when a future event occurs, or from litigation,
claims, or assessments forged by other parties to the agreement. For additional information related to treaties and other
international agreements that fall under the last category, refer to Note 21—Contingencies.
AB. Public-Private Partnerships

SFFAS No. 49, Public-Private Partnerships establishes principles to ensure that disclosures about applicable P3s are
presented in the government’s notes to the financial statements. The principles guide entity financial reporting disclosure by
establishing a P3 definition and identifying risk-based characteristics that need to exist before considering the P3 arrangement
or transaction for disclosure. The standard exempts certain arrangements or transactions from the P3 disclosure requirements,
as such exempt arrangements or transactions are subject to existing disclosure requirements in other accounting standards.
The P3s that are deemed material to the consolidated financial statements and have met the criteria of SFFAS No. 49, Public-
Private Partnerships are disclosed. See Note 28—Public-Private Partnerships for additional information.
Note 2. Cash and Other Monetary Assets
Cash and Other Monetary Assets as of September 30, 2023, and 2022
Unrestricted cash:
Cash held by Treasury for government-wide operations 638.9 617.0
Other 5.9 3.7
Restricted 56.3 46.8
Total cash 701.1 667.5
International monetary assets 195.5 185.3

Gold and silver 11.1 11.1
Foreign currency 14.5 13.9
Total cash and other monetary assets 922.2 877.8
Unrestricted cash includes cash held by Treasury for government-wide operations (operating cash) and all other
unrestricted cash held by the federal entities. Operating cash represents balances from tax collections, federal debt receipts,
and other various receipts net of cash outflows for federal debt repayments and other payments. Treasury checks outstanding
are netted against operating cash until they are cleared by the FR System. Other unrestricted cash not included in Treasury’s
operating cash balance includes balances representing cash, cash equivalents, and other funds held by entities, such as
undeposited collections, deposits in transit, demand deposits, amounts held in trust, and imprest funds.
Restrictions on cash are due to the imposition on cash deposits by law, regulation, or agreement. Restricted cash is
primarily composed of cash held by the SAA, which executes Foreign Military Sales. The SAA included $46.1 billion and
$39.9 billion as of September 30, 2023, and 2022, respectively.
International monetary assets include the U.S. reserve position in the IMF and additional U.S. holdings of SDR. The
U.S. reserve position in the IMF (denominated in SDRs) had a U.S. dollar equivalent of $32.0 billion and $31.3 billion as of
September 30, 2023, and 2022, respectively. Only a portion of the U.S. financial subscription to the IMF is made in the form
of reserve assets; the remainder is provided in the form of a letter of credit. The balance available under the letter of credit
totaled $76.6 billion and $74.4 billion as of September 30, 2023, and 2022 respectively. The total amount of SDR holdings of
the U.S. (in addition to the reserve position discussed above) resulting from additional IMF allocations and purchases was the
equivalent of $163.2 billion and $153.6 billion as of September 30, 2023, and 2022, respectively. For more information
regarding the U.S. participation in the IMF and SDR, see Treasury’s financial statements and Note 27—Disclosure Entities
and Related Parties.
The gold reserves that are held by the government are partially offset by a liability for gold certificates issued by the
Secretary to the FRBs at the statutory rate. As of September 30, 2023, and 2022, gold totaling $11.0 billion per statutory
carrying value was pledged as collateral for gold certificates also valued at $11.0 billion. All the gold certificates issued are
payable to the FRBs, and a small portion of gold is in the custody of the FRBs. Additionally, the U.S. Mint holds 100,000
FTOs of gold without certificates. The amount for gold and silver listed in the above table is based on the statutory values
which are $42.2222 per FTO of gold and $1.2929 per FTO of silver. As of September 30, 2023, and 2022, the number of
FTOs of gold and silver held is 261,498,927.0 and 16,000,000.0, respectively. While gold and silver are valued on the
Balance Sheet using statutory rates, the market value of gold on the London Fixing was $1,870.50 and $1,671.75 per FTO as
of September 30, 2023, and 2022, respectively and the market value of silver was $23.08 and $19.02 per FTO as of
September 30, 2023, and 2022, respectively. Please refer to the financial statements of Treasury for additional information
regarding gold reserves and Treasury’s liability for gold.
The foreign currency is maintained by Treasury’s ESF and various U.S. federal entities as well as foreign banks.
Foreign currency is translated into U.S. dollars at the exchange rate at fiscal year-end.
Note 3. Accounts Receivable, Net
Accounts Receivable, net as of September 30, 2023, and 2022
Taxes receivable:
Taxes receivable, gross 419.4 451.4
Allowance for uncollectible amounts (228.7) (205.7)
Taxes receivable, net 190.7 245.7
Other accounts receivable:

Other accounts receivable, gross 234.6 204.5
Allowance for uncollectible amounts (105.4) (93.9)
Other accounts receivable, net 129.2 110.6
Total accounts receivable, net 319.9 356.3
Taxes receivable is listed first above due to being the significant portion of total accounts receivable, and the rest are
referred to as other accounts receivable. Other accounts receivable, gross includes related interest receivable of $4.2 billion
and $2.8 billion as of September 30, 2023, and 2022, respectively.
Treasury comprises approximately 57.7 percent of the government’s reported accounts receivable, net, as of September
30, 2023. Treasury accounts for nearly all the reported taxes receivable, which consist of receivables (taxes and associated
penalties and interest) supported by a taxpayer agreement, unpaid taxes related to IRC section 965, and deferred payments
resulting from the CARES Act. Examples of receivables supported by a taxpayer agreement are the filing of a tax return
without sufficient payment or a court ruling in favor of the IRS. Section 965(h) of the IRC requires taxpayers who are
shareholders of certain specified foreign corporations to pay a transition tax on foreign earnings as if those earnings had been
repatriated to the U.S. IRC 965(h) allows taxpayers to elect to pay their tax on an eight-year installment schedule. Pursuant to
the CARES Act, employers, through December 31, 2020, could defer payment, without penalty, of their portions of the
Social Security segment of FICA and the employer’s and employee representative’s share of the Railroad Retirement Tax.
Treasury experienced a year over year net decrease of $53.0 billion primarily due to the reduction in IRC 965(h) and to
payments to Treasury of the deferred employer portion of FICA Social Security taxes. Additionally, the $21 billion increase
to Treasury’s allowance for uncollectible amounts was largely due to an increase in delinquent taxes receivable inventory.
Pursuant to Section 13(c)(4)(G) of the Federal Deposit Insurance Act, on March 12, 2023, the Secretary of the Treasury
invoked the statutory systemic risk exception to allow the FDIC to complete its resolution of both Silicon Valley Bank, Santa
Clara, California, and Signature Bank, New York, New York, in a manner that protects uninsured depositors. Accordingly,
the FDIC imposed a special assessment on all insured depository institutions to recover the loss to the DIF arising from the
protection of uninsured depositors. This $16.3 billion receivable was a factor in the year over year increase to other accounts
receivable, gross.
The following entities are the main contributors to the government’s reported accounts receivable, net as of September
30, 2023. Refer to each entity’s financial statements for additional information:
• Treasury • DOI • DOJ
• HHS • DOL • USPS
• FDIC • PBGC • HUD
• DOD • VA • FCC
• DHS • DOE • SEC
• SSA • OPM • EPA
• USDA • TVA • FCSIC
Note 4. Loans Receivable, Net and Loan Guarantee Liabilities
Loans Receivable, net as of September 30, 2023
Subsidy
Expense
Loans Subsidy Loans (Income)
Receivable, Interest Foreclosed Cost Receivable, for the
(In billions of dollars) Gross Receivable Property Allowance Net Fiscal Year
Federal Direct Student Loans -

Education 1,336.2 83.4 - (388.7) 1,030.9 (116.5)
Disaster Assistance Loans - SBA 311.3 13.3 - (53.9) 270.7 34.4
Federal Housing Admin Loans -
HUD 61.8 25.8 0.7 (17.6) 70.7 (0.1)
Electric Loans - USDA 56.5 0.2 - 0.7 57.4 (1.3)
FDIC (acting in its capacity as
receiver)1 50.0 0.1 - - 50.1 -
Federal Family Education Loans -
Education 79.0 20.9 - (60.5) 39.4 2.3
All other programs 190.1 4.2 0.8 (19.2) 175.9 2.0
Total loans receivable 2,084.9 147.9 1.5 (539.2) 1,695.1 (79.2)
1
Treasury purchased a $50 billion note issued by a trust created by FDIC in its receivership capacity and guaranteed by FDIC in its
corporate capacity.
Loans Receivable, net as of September 30, 2022
Subsidy
Expense
Loans Subsidy Loans (Income)
Receivable, Interest Foreclosed Cost Receivable, for the
(In billions of dollars) Gross Receivable Property Allowance Net Fiscal Year
Federal Direct Student Loans -

Education 1,341.8 86.7 - (611.9) 816.6 385.4
Disaster Assistance Loans - SBA 367.0 14.8 - (61.5) 320.3 43.0
Federal Housing Admin Loans -
HUD 53.8 20.9 0.5 (14.3) 60.9 (0.1)
Electric Loans - USDA 53.9 - - (2.2) 51.7 0.7
Education 80.3 21.6 - (62.1) 39.8 10.8
All other programs 159.6 4.0 0.8 (19.6) 144.8 0.1
Total loans receivable 2,056.4 148.0 1.3 (771.6) 1,434.1 439.9
Loans Receivable
Loans receivable consists primarily of direct loans disbursed by the government, receivables related to guaranteed loans
that have defaulted, and certain receivables for guaranteed loans that the government has purchased from lenders. Direct
loans are used to promote the nation’s welfare by making financing available to segments of the population not served
adequately by non-federal institutions, or otherwise providing for certain activities or investments. For those unable to afford
credit at the market rate, federal credit programs provide subsidies in the form of direct loans offered at an interest rate lower
than the market rate.
The amount of the long-term cost of post-1991 direct loans equals the subsidy cost allowance for direct loans as of
September 30. The amount of the long-term cost of pre-1992 direct loans equals the allowance for subsidy amounts (or PV
allowance) for direct loans. The long-term cost is based on all direct loans disbursed in this fiscal year and previous years that
are outstanding as of September 30. It includes the subsidy cost of these direct loans estimated as of the time of loan
disbursement and subsequent adjustments such as modifications, reestimates, amortizations, and write-offs.
Loans receivable, net includes related interest and foreclosed property. Foreclosed property is property that is
transferred from borrowers to a federal credit program, through foreclosure or other means, in partial or full settlement of
post-1991 direct loans or as compensation for losses that the government sustained under post-1991 loan guarantees. Please
refer to the financial statements of HUD, USDA, and VA for additional information regarding foreclosed property.
The total subsidy expense/(income) is the cost recognized during the fiscal year. It consists of the subsidy
expense/(income) incurred for direct loans disbursed during the fiscal year, for modifications made during the fiscal year of
direct loans outstanding, and for upward or downward reestimates as of the end of the fiscal year. This expense/(income) is
included in the Statements of Net Cost.
The majority of loans receivable programs are provided by Education, SBA, HUD, and USDA. For additional
information regarding the direct loan programs listed in the tables above, please refer to the financial statements of the
entities.
Education has loan programs that are authorized by Title IV of the Higher Education Act of 1965. The William D. Ford
Federal Direct Loan Program (referred to as the Direct Loan Program), was established in FY 1994 and offers four types of
educational loans: Stafford, Unsubsidized Stafford, Parent Loan for Undergraduate Students, and consolidation loans. With
this program, the government makes loans directly to students and parents through participating institutions of higher
education. Education disbursed approximately $122.3 billion in direct loans to eligible borrowers in FY 2023 and
approximately $120.4 billion in FY 2022. In FY 2023, there was a $214.3 billion increase in Education’s Federal Direct Loan
program primarily due to the combination of 1) broad based debt relief announced in FY 2022 causing a decrease in the net
loans receivable reported in FY 2022; and 2) an increase in the net loans receivable balance during FY 2023 largely due to a
downward modification to reverse the inclusion of student loan debt relief as a result of the Supreme Court’s ruling on June
30, 2023. In FY 2023, there were also upward modifications of $23.3 billion related to COVID-19 administrative actions. In
addition, Education stopped all federal wage garnishments and collection actions for borrowers with federally held loans in
default. For additional information regarding the CARES Act refer to the financial statements of Education and Note 29—
COVID-19 Activity.
The SBA makes loans to microloan intermediaries and provides a direct loan program that assists homeowners, renters
and businesses recover from disasters. SBA’s Disaster Assistance Loan Program makes direct loans to disaster survivors
under four categories: physical disaster loans to repair or replace damaged homes and personal property; physical disaster
loans to businesses of any size; EIDLs to eligible small business and nonprofit organizations without credit available
elsewhere; and economic injury loans to eligible small businesses affected by essential employees called up to active duty in
the military reserves. In FY 2023, SBA’s credit program receivables saw a decrease of $49.6 billion from FY 2022 from a
decrease in direct disaster loans as a result of disaster lending activity returning to a comparable level with the pre-pandemic
period due to the EIDL program no longer approving loans for COVID-19 in FY 2023, recoupment of loans previously
dispersed, and current year write-offs.
HUD’s loans receivable balance largely comprises defaulted single-family mortgages and reverse mortgages that were
insured by FHA. In addition, HUD finances mortgages and provides loans to support construction and rehabilitation of low-
rent housing, principally for the elderly and disabled.
USDA’s Rural Development offers direct loans with unique missions to bring prosperity and opportunity to rural areas.
The Rural Housing programs provide affordable, safe, and sanitary housing and essential community facilities to rural
communities. Rural Utility programs help improve the quality of life in rural areas through a variety of loan programs for
electric energy, telecommunications, and water and environmental projects.
In FY 2023, Treasury purchased a $50 billion note guaranteed by the FDIC in its corporate capacity as deposit insurer
and regulator. FDIC as Receiver for the First Republic Bank created a trust and sold a PMN to the trust. JPMorgan had issued
the PMN to the FDIC as Receiver for the First Republic Bank in connection with the resolution of the First Republic Bank
and JPMorgan’s acquisition of certain assets and liabilities of First Republic Bank. The PMN, which matures in 2028, is full-
recourse to JPMorgan and is collateralized by a pool of mortgage loans acquired by JPMorgan through the related
receivership and sale of First Republic Bank. Cash flows from the PMN will be used to repay the principal and interest due
on the Treasury-purchased note issued by the trust. The Treasury-purchased note principal is due to Treasury from the trust
on May 4, 2028, with semi-annual interest payments at 4.445% beginning May 2024. The Treasury-purchased note is
recorded at cost ($50 billion) and considered to be fully collectable by Treasury based on the following factors: 1)
JPMorgan’s strength as a counterparty and commitment under the PMN; 2) over-collateralization of the PMN’s underlying
collateral; 3) a funded reserve account to cover shortfalls in interest owed on the Treasury-purchased note relative to the
PMN; and 4) an option to prepay the note at par prior to maturity. For information on additional receivership activity see
Note 30—Subsequent Events.
All other programs saw an increase of $31.2 billion in FY 2023 largely due to fluctuations in loan programs for HUD,
DOT, and DFC. The increase in HUD’s Other Non-Credit Reform Loans of $19.5 billion is primarily due to Ginnie Mae’s
new Home Equity Conversion Mortgage portfolio, as a result of the Reverse Mortgage Funding issuer default.
Loan Guarantee Liabilities as of September 30, 2023, and 2022
Principal
Principal Amount Amount Subsidy Expense
Loan Guarantee of Loans Under Guaranteed (Income) for the
Liabilities Guarantee by the U.S. Fiscal Year
(In billions of dollars) 2023 2022 2023 2022 2023 2022 2023 2022
Federal Housing Administration Loans

- HUD (32.6) (39.8) 1,669.1 1,533.7 1,481.3 1,368.0 (2.2) (37.8)
Small Business Loans 7.9 25.7 165.5 187.9 140.3 163.8 (1.1) (5.0)
Education 10.9 10.4 80.6 98.6 80.6 98.6 5.3 11.2
Veterans Housing Benefit Programs 9.1 9.9 994.7 940.9 250.1 237.3 (4.5) (2.2)
All other guaranteed loan programs 0.1 0.2 189.0 195.0 172.3 178.3 (1.6) (2.3)
Total loan guarantee liabilities (4.6)1 6.4 3,098.9 2,956.1 2,124.6 2,046.0 (4.1) (36.1)
1
Loan guarantees are recorded as a liability except when cash inflows are expected to exceed cash outflows on a PV basis.
This results in a negative loan guarantee that is reported as an asset on the Balance Sheet.
Loan Guarantee Liabilities

Loan guarantee programs are also used to promote the nation’s welfare by making financing available to segments of
the population not served adequately by non-federal institutions, or otherwise providing for certain activities or investments.
For those to whom non-federal financial institutions are reluctant to grant credit because of the high risk involved, federal
credit programs guarantee the payment of these non-federal loans and absorb the cost of defaults.
The amount of the long-term cost of post-1991 loan guarantees outstanding equals the liability for loan guarantees as of
September 30. The amount of the long-term cost of pre-1992 loan guarantees equals the allowance for subsidy amounts (or
PV allowance) and the liability for loan guarantees. The long-term cost is based on all guaranteed loans disbursed in this
fiscal year and previous years that are outstanding as of September 30. It includes the subsidy cost of the loan guarantees
estimated as of the time of loan disbursement and subsequent adjustments such as modifications, reestimates, amortizations,
and write-offs.
The total subsidy expense/(income) is the cost of loan guarantees recognized during the fiscal year. It consists of the
subsidy expense/(income) incurred for guaranteed loans disbursed during the fiscal year, for modifications made during the
fiscal year of loan guarantees outstanding, and for upward or downward reestimates as of the end of the fiscal year of the cost
of loan guarantees outstanding. This expense/(income) is included in the Statements of Net Cost.
The majority of the loan guarantee programs are provided by HUD, SBA, Education and VA. For additional
information regarding the guaranteed loan programs listed in the tables above, please refer to the financial statements of the
entities.
HUD’s Office of Housing promotes equal housing opportunities. It includes FHA who provides mortgage insurance on
mortgages for single family mortgage loans made by FHA-approved lenders as well as providing mortgage insurance on
multifamily rental housing, healthcare facilities and single-family Title I manufactured housing and property improvement
loans. FHA strives to meet the needs of many first-time and minority homebuyers who, without the FHA guarantee, may find
mortgage credit to be unaffordable or simply unavailable. These programs are a critical component of FHA’s efforts to meet
the nation’s need for decent, safe, and affordable housing. FHA’s total loan guarantee subsidy expense increased by $35.7
billion in FY 2023, primarily due to a smaller downward reestimate in FY 2023 as compared to FY 2022.
The SBA provides guarantees that help small businesses obtain bank loans and licensed companies to make investments
in qualifying small businesses. Their business loan programs include the Loan Guaranty program in which the SBA
guaranties up to 90 percent of the amount of loans made by participating banks and other lending institutions to eligible small
businesses not able to obtain credit elsewhere. The CARES Act added the PPP which was designed to provide a direct
incentive for small businesses to keep their workers on the payroll. SBA’s Loan Guarantee Liabilities decreased $17.8 billion
primarily because of claim payments to lenders and miscellaneous recoveries in FY 2023, which are mostly attributable to
PPP purchase guarantee and forgiveness payments. As of September 2023, over 10.6 million applications have been
submitted requesting PPP loan forgiveness, with nearly $760.0 billion total forgiveness paid. Approximately 96 percent of
total PPP loan value has been forgiven, in full or in part.
Education has loan programs that are authorized by Title IV of the Higher Education Act of 1965. The FFEL Program
was established in FY 1965 and operates through state and private, nonprofit guaranty agencies that provided loan guarantees
on loans made by private lenders to eligible students. The Student Aid and Fiscal Responsibility Act, which was enacted as
part of the Health Care Education and Reconciliation Act of 2010 (P.L. 111-152), eliminated the authority to guarantee new
FFEL after June 30, 2010.
VA operates the following loan guarantee programs: Housing Guaranteed Loans and Loan Sale Guarantees. The Home
Loans program provides loan guarantees to veterans, service members, qualifying dependents, and limited non-veterans to
purchase homes and retain homeownership with favorable market terms.
Note 5. Inventory and Related Property, Net
Inventory and Related Property, net as of September 30, 2023, and 2022
Inventory held for current sale 77.7 76.3

Inventory held in reserve for future sale 1.0 0.9
Inventory and operating material and supplies held for repair 77.8 78.3
Inventory—excess, obsolete, and unserviceable 0.8 0.8
Operating materials and supplies held for use 168.0 163.5
Operating materials and supplies held in reserve for future use 30.4 29.7
Operating materials and supplies—excess, obsolete, and unserviceable 0.6 0.6
Stockpile materials held in reserve for future use 69.5 59.4
Stockpile materials held for sale 1.0 2.1
Other related property 6.8 5.5
Allowance for loss (10.6) (10.2)
Total inventory and related property, net 423.0 406.9
Inventory and related property, net includes inventory, OM&S, stockpile materials, forfeited property, commodities,
seized property, and foreclosed property. DOD comprises approximately 80.7 percent of the government’s inventory and
related property, net as of September 30, 2023.
Inventory is tangible personal property that is either held for sale, in the process of production for sale, or to be
consumed in the production of goods for sale or in the provision of services for a fee. Examples of inventory include raw
materials, finished goods, spare and repair parts, clothing and textiles, and fuels.
Inventory is categorized as one of the following:
• Held for current sale – includes items currently for sale or transfer to either entities outside the federal government,
or other federal entities.
• Held in reserve for future sale – includes items being held for sale or transfer to either entities outside the federal
government or other federal entities in the future.
• Held for repair – items that require servicing to make them suitable for sale or use.
• Excess, obsolete, and unserviceable – stock that exceeds the demand expected in the normal course of operations,
items that are no longer needed, and damaged items.
OM&S consists of tangible personal property to be consumed in normal operations (e.g., spare and repair parts,
ammunition, and tactical missiles) and is categorized as one of the above categories or in the additional listed category below:
• Held in reserve for future sale or use – items maintained because they are not readily available in the market or
because there is more than a remote chance that they will eventually be needed.
Stockpile materials are strategic and critical materials held due to statutory requirements for use in national defense,
conservation, or local/national emergencies. Stockpile materials are not held with the intent of selling in the ordinary course
of business and are restricted unless released by congressional action. Once authorized, the materials (e.g., ores, metals,
alloys, and medical supplies) are reclassified to held for sale. Refer to the financial statements of DOD, DOE, and HHS for
additional information regarding stockpile materials.
Other related property includes the following:
• Forfeited property consists of monetary instruments, intangible property, real property, and tangible personal
property acquired through forfeiture proceedings; property acquired by the government to satisfy a tax liability; and
unclaimed and abandoned merchandise. Please refer to the financial statements of DOJ and Treasury for additional
information regarding forfeited property.
• Goods acquired under price support and stabilization programs are referred to as commodities. Commodities are
items of commerce or trade having an exchange value. Please refer to the financial statements of USDA for
additional information regarding commodities.
• Seized property includes monetary instruments, real property, and tangible personal property of others in the actual
or constructive possession of the custodial entity. For additional information on seized property, refer to the
financial statements of DOJ and Treasury.
• Foreclosed property consists of any asset received in satisfaction of a loan receivable or as a result of payment of a
claim under a guaranteed or insured loan (excluding commodities acquired under price support programs). For
additional information on foreclosed property, see Note 4—Loans Receivable, Net and Loan Guarantee Liabilities
and refer to the financial statements of USDA, VA, and HUD.
Additional information concerning inventory and related property can be obtained from the financial statements of
DOD, DOE, Treasury, HHS, and DHS.
Note 6. General Property, Plant, and Equipment, Net
General Property, Plant, and Equipment, net as of September 30, 2023, and 2022
Accumulated Accumulated
Depreciation/ Depreciation/
Cost Amortization Net Cost Amortization Net
Buildings, structures, and facilities 754.0 448.7 305.3 720.0 421.6 298.4
Furniture, fixtures, and equipment 1,457.6 891.3 566.3 1,442.5 868.2 574.3
Construction in progress 297.8 N/A 297.8 260.4 N/A 260.4
Internal use software 69.3 43.3 26.0 66.1 40.9 25.2
Land 22.9 N/A 22.9 22.4 N/A 22.4
Other general property, plant, and equipment 36.5 19.8 16.7 35.2 18.4 16.8
Total general property, plant, and equipment,
net 2,638.1 1,403.1 1,235.0 2,546.6 1,349.1 1,197.5
Note: "N/A" indicates not applicable.
General PP&E consists of tangible assets, including land. Internal use software, land rights, assets acquired through
capital leases, and leasehold improvements are also included. DOD comprises approximately 67.4 percent of the
government’s reported general PP&E, net as of September 30, 2023. DOD continues to implement SFFAS No. 50,
Establishing Opening Balances for General Property, Plant, and Equipment which permits alternative methods in
establishing opening balances for general PP&E and has elected to exclude land and land rights. The total acreage excluded
was 23,463,823 as of September 30, 2023, and 22,958,006 as of September 30, 2022. Differences year over year are due to
DOD understating general PP&E due to asset balances that had a change in acquisition cost, change in acquisition date,
retrospective depreciation adjustments, and unrecorded asset transfers in prior years.
The following entities are the main contributors to the government’s reported general PP&E net of $1,235.0 billion as of
September 30, 2023. Please refer to each entity’s financial statements for additional information.
• DOD • DOI • VA
• DOE • USPS • TVA
• GSA • DHS • State
• DOC • USDA • DOJ
• Treasury • SSA • DOT
• HHS • NASA
Certain PP&E are multi-use heritage assets, see Note 26—Stewardship Property, Plant, and Equipment for additional
information on multi-use heritage assets. Please refer to DM&R and Land and Permanent Land Rights located in the
unaudited RSI for information concerning the estimated maintenance and repair costs related to PP&E and the federal
estimated acreage by predominant use.
Note 7. Investments
Investments as of September 30, 2023
(In billions of dollars) Level 1 Level 2 Level 3 Other Total
Pension Benefit Guaranty Corporation:

Asset backed/mortgage backed securities - 11.6 - - 11.6
Corporate bonds and other - 17.2 - - 17.2
International fixed maturity securities - 6.2 - - 6.2
Equity securities 3.5 0.1 - 9.8 13.4
Pooled funds - - - 1.3 1.3
Real estate and real estate investment trusts 1.1 - - 0.5 1.6
Other securities - 7.3 0.3 2.1 9.7
Total Pension Benefit Guaranty Corporation 4.6 42.4 0.3 13.7 61.0
National Railroad Retirement Investment Trust:

U.S. equity 7.1 - - - 7.1
Non-U.S. equity 5.5 - - - 5.5
Private equity - - - 3.6 3.6
Global fixed income 0.1 2.2 - 0.5 2.8
Global real assets 0.3 - - 2.6 2.9
Absolute return mandates - - - 0.9 0.9
Opportunistic mandates - - - 0.6 0.6
Total National Railroad Retirement Investment Trust 13.0 2.2 - 8.2 23.4
Department of the Treasury:

Investments in Special Purpose Vehicles - - 15.1 - 15.1
Other Investments 3.8 - 2.9 - 6.7
Total Department of the Treasury 3.8 - 18.0 - 21.8
Tennessee Valley Authority:

Commingled funds measured at net asset value - - - 2.1 2.1
Equity securities 1.3 - - - 1.3
Corporate debt securities - 1.4 - - 1.4
Private equity measured at net asset value - - - 2.4 2.4
Private real assets measured at net asset value - - - 1.5 1.5
Private credit measured at net asset value - - - 0.9 0.9
Other securities 0.6 1.3 0.1 0.5 2.5
Total Tennessee Valley Authority 1.9 2.7 0.1 7.4 12.1
Department of Defense - - - 9.4 9.4

Smithsonian Institution 0.5 - - 2.0 2.5
All other - - - 0.6 0.6
Total investments 23.8 47.3 18.4 41.3 130.8
Investments as of September 30, 2022
(In billions of dollars) Level 1 Level 2 Level 3 Other Total
Pension Benefit Guaranty Corporation:

Asset backed/mortgage backed securities - 9.7 - - 9.7
Corporate bonds and other - 18.3 - - 18.3
International fixed maturity securities 0.1 5.8 - - 5.9
Equity securities 2.8 - - 9.7 12.5
Pooled funds - - - 2.2 2.2
Real estate and real estate investment trusts 1.1 - - 0.4 1.5
Other securities - 4.8 0.3 2.3 7.4
Total Pension Benefit Guaranty Corporation 4.0 38.6 0.3 14.6 57.5
Department of the Treasury:

Investments in Special Purpose Vehicles - - 17.8 - 17.8
Other Investments 3.9 - 2.9 - 6.8
Total Department of the Treasury 3.9 - 20.7 - 24.6
National Railroad Retirement Investment Trust:

U.S. equity 6.4 - - - 6.4
Non-U.S. equity 4.9 - - - 4.9
Private equity - - - 3.8 3.8
Global fixed income - 2.1 - 0.5 2.6
Global real assets 0.3 - - 2.5 2.8
Absolute return mandates - - - 1.0 1.0
Opportunistic mandates - - - 0.7 0.7
Total National Railroad Retirement Investment Trust 11.6 2.1 - 8.5 22.2
Tennessee Valley Authority:

Commingled funds measured at net asset value - - - 2.4 2.4
Equity securities 1.2 - - - 1.2
Corporate debt securities - 1.4 - - 1.4
Private equity measured at net asset value - - - 1.9 1.9
Private real assets measured at net asset value - - - 1.5 1.5
Private credit measured at net asset value - - - 0.6 0.6
Other securities 0.7 1.3 0.1 0.5 2.6
Total Tennessee Valley Authority 1.9 2.7 0.1 6.9 11.6
Department of Defense - - - 11.4 11.4

Smithsonian Institution 0.5 - - 2.1 2.6
All other - - 0.1 0.3 0.4
Total investments 21.9 43.4 21.2 43.8 130.3
PBGC, NRRIT, TVA, and Smithsonian apply financial accounting and reporting standards issued by FASB and such
entities, as permitted by SFFAS No. 47, Reporting Entity are consolidated into the U.S. government’s consolidated financial
statements without conversion to accounting and reporting standards issued by FASAB. PBGC, NRRIT, and TVA also hold
investments in Treasury securities which are not included in the above tables, as such investments are eliminated in
consolidation.
PBGC insures pension benefits of participants in covered single-employer and multiemployer defined benefit pension
plans and values its financial assets at estimated FV consistent with the standards issued by FASB. PBGC’s investments are
used to pay future benefits of covered participants.
NRRIT on behalf of the RRB, manages and invests railroad retirement assets that are to be used to pay retirement
benefits to the nation’s railroad workers under the Railroad Retirement System. As an investment company, NRRIT is
subject to accounting standards for investment companies issued by FASB.
Treasury’s investments consist of foreign currency holdings invested in interest bearing securities issued or held through
foreign governments or monetary authorities, SPVs, and common stock warrants that include non-federal investment
holdings acquired pursuant to the establishment of emergency relief programs in response to the COVID-19 pandemic that
are valued at FV. Common stock warrants provide Treasury with the right to purchase shares of common stock of either
publicly or non-publicly traded air carriers.
TVA’s investments consist of amounts held in the Nuclear Decommissioning Trust, Asset Retirement Trust,
Supplemental Executive Retirement Plan, Deferred Compensation Plan, and Restoration Plan. TVA’s qualified benefit
pension plan is funded with qualified plan assets.
Certain other investments reported by DOD represent joint ventures with private developers constructing or improving
military housing on behalf of the department. Refer to Note 28—Public-Private Partnerships for additional information.
Please refer to PBGC, NRRIT, TVA, Treasury, DOD, and Smithsonian’s financial statements for additional information
on these investments and FV measurement.
Investments in Special Purpose Vehicles
The SPVs were established by FRBNY and FRBB for the purpose of making loans, purchasing debt, and other
commercial paper of eligible entities affected by COVID-19. The valuation to estimate the investment’s FV incorporates
forecasts, projections, and cash flow analyses. Changes in valuation, including impairments, are deemed usual and recurring
and thus are recorded as exchange transactions on the Statement of Net Cost and investments on the Balance Sheet. For
additional information regarding the recording of revenue and the changes in valuation refer to Treasury’s financial
statements.
Certain lending facilities were implemented through SPVs, which consist of the MSF, MLF, and TALF. The MSF
supports lending to small and medium-sized businesses that were in sound financial condition before the onset of the
COVID-19 pandemic and have good post-pandemic prospects. The MLF helps state and local governments manage cash
flow pressures while continuing to serve households and businesses in their communities. The TALF supports the flow of
credit to consumers and businesses for purposes of stabilizing the U.S. financial system. As of January 8, 2021, the SPVs
have ceased purchasing of loan participations, eligible notes, and no new credit extensions have been made. For additional
information regarding the SPVs refer to Treasury’s financial statements and to Note 27—Disclosure Entities and Related
Parties.
Fair Value Measurement
Investments are recorded at FV and have been categorized based upon a FV hierarchy, in accordance with FASB ASC
Topic 820. FV is a market-based measurement. For some assets, observable market transactions or market information might
be available. For other assets, observable market transactions and market information might not be available. However, the
objective of a FV measurement in both cases is the same—to estimate the price at which an orderly transaction to sell the
asset would take place between market participants at the measurement date under current market conditions.
When a price for an identical asset is not observable, a reporting entity measures FV using another valuation technique
that maximizes the use of relevant observable inputs and minimizes the use of unobservable inputs. Because FV is a market-
based measurement, it is measured using the assumptions that market participants would use when pricing the asset,
including assumptions about risk. As a result, a reporting entity’s intention to hold an asset is not relevant when measuring
FV.
The measurement of FV of an asset is categorized with different levels of FV hierarchy as follows:
• Level 1—Unadjusted quoted prices in active markets for identical assets that the reporting entity can access at the
measurement date.
• Level 2—Inputs other than quoted prices included with Level 1 that are based on observable market data (quoted
prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in
inactive markets), or that are either directly or indirectly observable for substantially the full term of the asset or
liability.
• Level 3—Inputs that are both unobservable and significant to the overall FV measurement.
• Other—This category contains investments in certain commingled funds and partnerships that are measured at FV
using NAV practical expedient that are not classified within the FV hierarchy and joint ventures. Please refer to
PBGC, NRRIT, TVA, and Smithsonian’s financial statements for additional information on investments priced by
NAV per share (or its equivalent) practical expedient and DOD’s financial statements for additional information
about joint ventures.
Note 8. Investments in Government-Sponsored Enterprises
Investments in GSEs as of September 30, 2023
Cumulative
Gross Valuation Fair
(In billions of dollars) Investments Gain/(Loss) Value
Fannie Mae senior preferred stock 190.4 (55.9) 134.5

Freddie Mac senior preferred stock 114.4 (12.7) 101.7
Fannie Mae warrants common stock 3.1 (0.4) 2.7
Freddie Mac warrants common stock 2.3 (0.8) 1.5
Total investments in GSEs 310.2 (69.8) 240.4
Investments in GSEs as of September 30, 2022
Cumulative
Gross Valuation Fair
(In billions of dollars) Investments Gain/(Loss) Value
Fannie Mae senior preferred stock 177.7 (62.0) 115.7

Freddie Mac senior preferred stock 106.6 (2.1) 104.5
Fannie Mae warrants common stock 3.1 (0.9) 2.2
Freddie Mac warrants common stock 2.3 (1.0) 1.3
Total investments in GSEs 289.7 (66.0) 223.7
Congress established Fannie Mae and Freddie Mac as GSEs to provide stability and increase liquidity in the secondary
mortgage market and to promote access to mortgage credit throughout the nation. A key function of the GSEs is to purchase
mortgages, package those mortgages into securities, which are subsequently sold to investors, and guarantee the timely
payment of principal and interest on these securities.
Congress passed the Housing and Economic Recovery Act of 2008 (P.L. 110-289) in July 2008 in response to the
financial crisis that year and the increasingly difficult conditions in the housing market which challenged the soundness and
profitability of the GSEs and thereby threatened to undermine the entire housing market. This Act created FHFA, with
enhanced regulatory authority over the GSEs, and provided the Secretary of the Treasury with certain authorities intended to
ensure the financial stability of the GSEs, if necessary. In September 2008, FHFA placed the GSEs under conservatorship
and Treasury invested in the GSEs by entering into a SPSPA with each GSE. These actions were taken to preserve the GSEs’
assets, ensure a sound and solvent financial condition, and mitigate systemic risks that contributed to market instability.
The purpose of such actions is to maintain the solvency of the GSEs so they can continue to fulfill their vital roles in the
mortgage market while the Administration and Congress determine what structural changes should be made to the housing
finance system. Draws under the SPSPAs would result in an increased investment in the GSEs as further discussed below.
Under SFFAS No. 47, Reporting Entity criteria, Fannie Mae and Freddie Mac were owned or controlled by the government
only as a result of: a) regulatory actions (such as organizations in receivership or conservatorship); or b) other government
intervention actions. Under the regulatory or other intervention actions, the relationship with the government was and is not
expected to be permanent. These entities are classified as disclosure entities based on their characteristics as a whole.
Accordingly, these entities are not consolidated into the government’s consolidated financial statements; however, the value
of the investments in these entities, changes in value, and related activity with these entities are included in the government’s
consolidated financial statements. The net change in valuations of the GSEs include both liquidation preference adjustments
and changes in FV, both of which are discussed below and are included on the Statement of Net Cost.
Senior Preferred Stock Purchase Agreements
In return for committing to maintain the GSEs’ solvency by making a quarterly advance of funds to each GSE in an
amount equal to any excess of the GSEs’ total liabilities over its total assets as of the end of the previous quarter, Treasury
initially received from each GSE: 1) 1,000,000 shares of non-voting variable liquidation preference senior preferred stock
with a liquidation preference value of $1,000 per share; and 2) a non-transferable warrant for the purchase, at a nominal cost,
of 79.9 percent of common stock on a fully-diluted basis. The warrants expire on September 7, 2028. Treasury was entitled to
distributions on the senior preferred stock equal to 10.0 percent per annum fixed rate dividend on the total liquidation
preference (as discussed below). This dividend structure was changed in the third amendment in August 2012 to a variable
equivalent to the GSEs’ positive net worth above a capital reserve amount. The capital reserve amount was initially set at
$3.0 billion for calendar year 2013 and, upon nearing its scheduled decline to zero, was reset at $3.0 billion in calendar year
2017. On September 27, 2019, Treasury and FHFA amended the SPSPAs to increase the capital reserve amounts of Fannie
Mae and Freddie Mac to $25.0 billion and $20.0 billion, respectively. In exchange, Treasury’s liquidation preference in each
GSE was scheduled to gradually increase quarterly up to the adjusted capital reserve amounts based on the quarterly earnings
of each GSE.
On January 14, 2021, Treasury and FHFA further amended the SPSPAs to replace the prior variable dividend with an
alternative compensation plan for Treasury that permits the GSEs to continue their recapitalization efforts, as prescribed by
the GSE capital framework finalized by FHFA in 2020. Under the amended SPSPAs, each GSE is permitted to retain capital
until the GSE has achieved its regulatory minimum capital requirement, including buffers (i.e., the capital reserve end date),
at which point its cash dividend obligations will resume along with the obligation to pay a periodic commitment fee. As
compensation to Treasury for the replacement of the variable dividend, the liquidation preference of Treasury’s senior
preferred stock in each GSE will increase by the amount of retained capital until each GSE has achieved its capital reserve
end date.
Additionally, the January 14 amendment, among other things, imposed restrictions on certain GSE business activities,
including purchases of loans backed by investment properties, second homes, and multifamily properties, and on purchases
of loans with multiple high-risk characteristics or for cash consideration. On September 14, 2021, Treasury and FHFA agreed
to suspend certain business activity restrictions added to the SPSPAs by the January 14 amendment while FHFA undertakes a
review of the extent to which these requirements are redundant or inconsistent with existing FHFA standards, policies, and
directives. The suspension will terminate six months after Treasury notifies the GSEs. As of September 30, 2023, Treasury
has not provided notice to GSEs to terminate the suspension.
For the fiscal year ended September 30, 2023, Treasury’s liquidation preference in Fannie Mae and Freddie Mac
increased by $12.6 billion and $7.9 billion, respectively. For the fiscal year ended September 30, 2022, Treasury’s liquidation
preference in Fannie Mae and Freddie Mac increased by $19.1 billion and $11.7 billion, respectively. The GSEs will not pay
a quarterly dividend until after the capital reserve end date. Treasury received no cash dividends for the fiscal years ended
September 30, 2023, and 2022, as the GSEs had not achieved their capital reserve end date as of September 30, 2023, and
their positive net worth was below the permitted capital reserve amounts as of September 30, 2023.
The SPSPAs, which have no expiration date, require that Treasury will disburse funds to either GSE if, at the end of any
quarter, the FHFA determines that the liabilities of either GSE exceed its assets. Draws from Treasury under the SPSPAs are
designed to ensure that the GSEs maintain positive net worth, with a fixed maximum amount available to each GSE under
this agreement established as of December 31, 2012 (refer to the “Contingent Liability to GSEs” section below and Note
21—Contingencies). Draws against the funding commitment of the SPSPAs do not result in the issuance of additional shares
of senior preferred stock; instead, they increase the liquidation preference of the initial 1,000,000 shares by the amount of the
draw. The combined cumulative liquidation preference totaled $305.0 billion and $284.0 billion as of September 30, 2023,
and 2022, respectively. There were no payments to the GSEs for the fiscal years ended September 30, 2023, and 2022.
Senior Preferred Stock and Warrants for Common Stock

In determining the FV of the senior preferred stock and warrants for common stock, Treasury relied on the GSEs’
public filings and press releases concerning their financial statements, as well as non-public, long-term financial forecasts,
monthly summaries, quarterly credit supplements, independent research regarding preferred stock trading, independent
research regarding the GSEs’ common stock trading on the Over-The-Counter Market, discussions with each of the GSEs
and FHFA, and other information pertinent to the valuations. Because the senior preferred stock is not publicly traded, there
is no comparable trading information available. The fair valuation of the senior preferred stock relies on significant Level 3
unobservable inputs that reflect assumptions about the expectations that market participants would use in pricing.
The FV of the senior preferred stock considers forecasted cash flows to equity holders and the traded prices of the other
equity securities, including the GSEs’ common stock and junior preferred stock. The FV of the senior preferred stock-as
measured by unobservable and observable inputs-increased as of September 30, 2023, when compared to September 30,
2022. Fannie Mae’s senior preferred stock drove this increase primarily due to higher projected cash flows and a decrease in
credit-related expenses.
Factors impacting the FV of the warrants include the nominal exercise price and the large number of potential exercise
shares, the market prices and trading volumes of the underlying common stock as of September 30, the principal market, and
the market participants. Other factors impacting the FV include, among other things, the holding period risk related directly
to the assumption of the amount of time that it will take to sell the exercised shares without depressing the market. The FV of
the warrants-as measured by observable inputs-increased at the end of FY 2023, when compared to FY 2022, primarily due
to increases in the Level 1 FV measurement of the market price of the underlying common stock of each GSE.
Estimation Factors
Treasury’s forecasts concerning the GSEs may differ from actual experience. Estimated senior preferred values and
future draw amounts will depend on numerous factors that are difficult to predict including, but not limited to, changes in
government policy with respect to the GSEs, the business cycle, inflation, home prices, unemployment rates, interest rates,
changes in housing preferences, home financing alternatives, availability of debt financing, market rates of guarantee fees,
outcomes of loan refinancings and modifications, new housing programs, and other applicable factors.
Contingent Liability to GSEs
As part of the annual process undertaken by Treasury, a series of long-term financial forecasts are prepared to assess, as
of September 30, the likelihood and magnitude of future draws to be required by the GSEs under the SPSPAs within the
forecast time horizon. Treasury used 25-year financial forecasts prepared through years 2048 and 2047 in assessing if a
contingent liability was required as of September 30, 2023, and 2022, respectively. If future payments under the SPSPAs are
deemed to be probable within the forecast horizon, and Treasury can reasonably estimate such payment, Treasury will accrue
a contingent liability to the GSEs to reflect the forecasted equity deficits of the GSEs. Treasury does not discount this accrued
contingent liability, nor take into account any of the offsetting dividends that could be received, as the dividends, if any,
would be owed directly to the General Fund. Treasury will adjust such recorded accruals in subsequent years as new
information develops or circumstances change.
Based on Treasury’s annual assessment, there were no probable future funding draws as of September 30, 2023, and
2022, and thereby no accrued contingent liability. However, as of September 30, 2023, it is reasonably possible that a period
of sustained economic and housing market volatility could potentially cause the GSEs to generate quarterly losses of
sufficient magnitude to result in future funding draws against the funding commitment. Due to challenges quantifying future
market volatility or the timing, magnitude, and likelihood of such events, Treasury could not estimate the total amount of this
reasonably possible future funding liability as of September 30, 2023, and 2022. There were no payments to the GSEs for
fiscal years ended September 30, 2023, and 2022. At September 30, 2023, and 2022, the maximum remaining contractual
commitment to the GSEs for the remaining life of the SPSPAs was $254.1 billion. Subsequent funding draws will reduce the
remaining commitments. Refer to Note 20—Commitments for a full description of other commitments and risks.
In assessing the need for an estimated contingent liability, Treasury relied on the GSEs’ public filings and press
releases, including their financial statements, monthly business summaries, and quarterly credit supplements, as well as non-
public, long-term financial forecasts, the FHFA House Price Index, discussions with each of the GSEs and FHFA, and other
information pertinent to the liability estimates. The forecasts prepared in assessing the need for an estimated contingent
liability as of September 30, 2023, include two potential scenarios, with varying assumptions regarding the continuation of
the GSEs’ new business activities, including purchasing mortgage loans and issuing new guaranteed MBS. The forecasts as
of September 30, 2023, also assumed the maintenance of the GSEs’ retained mortgage portfolios below the maximum
permitted under the amended SPSPAs.
Regulatory Environment
To date, Congress has not passed legislation nor has FHFA taken action to end the GSEs’ conservatorships. The GSEs
continue to operate under the direction of FHFA as conservator.
The Temporary Payroll Tax Cut Continuation Act of 2011 (P.L. 112-78) was funded by an increase of ten basis points
in the GSEs’ guarantee fees (referred to as “the incremental fees”) which began in April 2012 and extended by the
Infrastructure Investment and Jobs Act of 2021 (P.L. 117-58) through September 30, 2032. The incremental fees are remitted
to Treasury and not retained by the GSEs and, thus, do not affect the profitability of the GSEs. For fiscal years ended 2023
and 2022, the GSEs remitted to Treasury incremental fees totaling $6.2 billion and $5.8 billion, respectively.
Note 9. Advances and Prepayments
Advances and Prepayments as of September 30, 2023, and 2022
Department of the Treasury 171.9 225.2

Department of Health and Human Services 45.1 39.2
All other 35.7 33.7
Total advances and prepayments 252.7 298.1
Advances and prepayments are assets that represent funds disbursed in contemplation of the future performance of
services, receipt of goods, the incurrence of expenditures, or the receipt of other assets. These include advances to
contractors, grantees, Medicare providers, and state, local, territorial, and tribal governments; travel advances; and
prepayments for items such as rents, taxes, insurance, royalties, commissions, and supplies.
Until such time as the goods or services are received, contract terms are met or progress has been made, or prepaid
expenses expired these should be recorded as assets. Any amounts that are subject to a refund at the time of completion
should be transferred to accounts receivable.
Treasury had a large decrease to advances and prepayments due to additional liquidation of advances primarily paid to
state, local, territorial, and tribal governments pursuant to the COVID-19 related legislations enacted during FY 2021 and
2020.
Note 10. Other Assets
Other Assets as of September 30, 2023, and 2022
FDIC receivables from resolution activity, net 158.4 0.6

Regulatory assets 14.3 15.2
Other 22.7 21.9
Total other assets 195.4 37.7
Other assets are miscellaneous assets that are not reported elsewhere on the Balance Sheet (e.g., receivables from
resolution activity, regulatory assets, investments, and costs related to special projects).
FDIC insures the deposits of insured depository institutions and resolves failed institutions upon appointment of FDIC
as receiver. FDIC, as receiver, is responsible for managing and disposing of the assets of failed institutions in an orderly and
efficient manner. The receivables from resolutions result from payments to cover insured depositors of failed institutions,
advances to resolution entities (receiverships, conservatorships, and bridge institutions) for working capital, and
administrative expenses paid on behalf of resolution entities. Assets held by resolution entities are the main source of
repayment of FDIC’s receivables from resolution activity. Estimates are made for the valuation of the assets held by
resolution entities to compute the allowance for credit losses, including FDIC’s estimate of future payments on losses
incurred on assets sold to an acquiring institution under a shared-loss agreement. Multiple insured institutions failed
throughout FY 2023, including Silicon Valley Bank, Signature Bank of New York, First Republic Bank, and Heartland Tri-
State Bank. These failures caused the net of receivables from resolution activity to increase from $0.6 billion as of September
30, 2022, to $158.4 billion as of September 30, 2023.
The FDIC’s estimated cash recoveries are based on asset recovery rates from several sources, which may include the
following: actual or pending institution-specific asset disposition data, failed institution-specific asset valuation data,
aggregate asset valuation data on several recently failed or troubled institutions, sampled asset valuation data, and empirical
asset recovery data based on failures since 2007. Methodologies for determining the asset recovery rates incorporate
estimating future cash recoveries, net of applicable liquidation cost estimates, and discounting based on market-based risk
factors applicable to a given asset’s type and quality. The resulting estimated asset recoveries are then used to derive the
allowance for credit losses on the receivables from these resolutions. Estimated asset recoveries on assets in liquidation are
regularly evaluated during the year but remain subject to uncertainties because of potential changes in economic and market
conditions, which may cause the actual recoveries to vary significantly from current estimates. Losses on the covered assets
are shared between the acquirer of the failed institution and the FDIC, in its receivership capacity, of the failed institution
when losses occur through the sale, foreclosure, loan modification, or write-down of loans in accordance with the terms of
the shared-loss agreement. The agreements cover a seven- to eight-year period with the receiver covering 50 to 95 percent of
the losses incurred by the acquiring bank. The estimated shared-loss liability is accounted for by the receiver and is included
in the calculation of the allowance for credit losses against the corporate receivable from the resolution. The allowance for
credit losses increased from $50.0 billion as of September 30, 2022, to $67.1 billion as of September 30, 2023.
DOE and TVA record regulatory assets in accordance with FASB ASC Topic 980, Regulated Operations. The
provisions of this standard require that regulated enterprises reflect rate actions of the regulator in their financial statements,
when appropriate. These rate actions can provide reasonable assurance of the existence of an asset, reduce or eliminate the
value of an asset, or impose a liability on a regulated enterprise. In order to defer incurred costs under FASB ASC Topic 980,
a regulated entity must have the statutory authority to establish rates that recover all costs, and those rates must be charged to
and collected from customers. If rates should become market-based, FASB ASC Topic 980 would no longer be applicable,
and all the deferred costs under that standard would be expensed. DOE’s BPA is responsible for repaying Treasury for
transmission and power-generating assets owned by other entities based on this deferred cost. Other regulatory assets for
DOE include BPA’s fixed schedule of benefit payments for investor-owned utility customers, repayment of debt for
terminated nuclear projects, and deferred energy conservation measures relating to fish and wildlife. TVA’s regulatory assets
represent incurred costs that have been deferred because such costs are probable of future recovery in customer rates.
Items included in other are investments in MDB, DOC’s cost contribution to buildout/continuing enhancement of the
NPSBN, DOE’s operating non-federal generation, and derivative assets. Additional information concerning other assets can
be obtained from the financial statements of FDIC, DOE, TVA, Treasury, DOC, and OPM.
Note 11. Accounts Payable
Accounts Payable as of September 30, 2023, and 2022
Department of Defense 44.0 37.4

Security Assistance Accounts 16.9 17.5
General Services Administration 6.9 6.3
Department of Energy 6.2 5.1
Department of Agriculture 4.3 2.5
Department of Veterans Affairs 4.3 5.0
Department of Education 3.9 4.5
Department of Homeland Security 3.2 3.2
Department of State 3.1 2.9
U.S. Agency for International Development 3.1 3.1
Department of Justice 2.8 2.7
U.S. Postal Service 2.3 2.3
All other 14.6 13.7
Total accounts payable 124.2 114.6
Accounts payable includes amounts due for goods and property ordered and received, services rendered by other than
federal employees, cancelled appropriations for which the U.S. government has contractual commitments for payment, and
non-debt related interest payable.
Note 12. Federal Debt and Interest Payable
Federal Debt and Interest Payable as of September 30, 2023, and 2022 (held by the public)
Average Interest
Net Rate
(In billions of dollars) 2022 Change 2023 2023 2022
Treasury securities:
Marketable securities:
Treasury bills 3,643.7 1,615.6 5,259.3 5.4% 2.5%
Treasury notes 13,696.5 28.4 13,724.9 2.1% 1.6%
Treasury bonds 3,867.7 372.5 4,240.2 3.1% 3.0%
Treasury inflation-protected securities
(TIPS) 1,839.8 95.1 1,934.9 0.6% 0.5%
Treasury floating rate notes (FRN) 625.9 (50.4) 575.5 5.0% 3.3%
Total marketable Treasury securities 23,673.6 2,061.2 25,734.8
Nonmarketable securities 625.6 (30.3) 595.3 3.7% 2.7%

Net unamortized premiums/(discounts) (71.7) (47.0) (118.7)
Total Treasury securities, net (public) 24,227.5 1,983.9 26,211.4
Agency securities:
Tennessee Valley Authority 19.0 0.3 19.3
Total agency securities, net of unamortized
premiums and discounts 19.0 0.3 19.3
Accrued interest payable 81.5 35.5 117.0
Total federal debt and interest payable 24,328.0 2,019.7 26,347.7
Types of marketable securities:

Bills–Short-term obligations issued with a term of 1 year or less.
Notes–Medium-term obligations issued with a term of 2-10 years.
Bonds–Long-term obligations of more than 10 years.
TIPS–Term of 5 years or more.
FRN–Term of 2 years.
Federal debt held by the public consists of securities outside the government held by individuals, corporations, state or
local governments, FRBs, foreign governments, and other non-federal entities. The above table details government borrowing
primarily to finance operations and shows marketable and nonmarketable securities at face value less net unamortized
premiums and discounts including accrued interest.
Securities that represent federal debt held by the public are issued primarily by Treasury and include:
• Interest-bearing marketable securities (bills, notes, bonds, inflation-protected, and FRN).
• Interest-bearing nonmarketable securities (Government Account Series held by fiduciary and certain deposit funds,
foreign series, SLGS, domestic series, and savings bonds).
• Non-interest-bearing marketable and nonmarketable securities (matured and other).
In FY 2020, Treasury expanded its domestic series to include a new special nonmarketable Treasury security, known as
a SPV security. Treasury issued these securities to SPVs, which were established by the Federal Reserve to implement its
emergency lending facilities under Section 13(3) of the Federal Reserve Act to respond to the COVID-19 pandemic. An SPV
security is a demand deposit certificate of indebtedness for which interest accrues daily and is paid at redemption. The total
amount of SPV redemptions in FY 2023 and 2022 was $4.0 billion and $7.0 billion, including $0.5 billion and $0.1 billion in
capitalized interest, respectively. There were no new issuances of SPV securities in FY 2023 and 2022. As of September 30,
2023, and 2022, the total amount of SPV securities outstanding was $11.9 billion and $15.4 billion, respectively.
Gross federal debt, with some adjustments, is the sum of debt held by the public and intra-governmental debt holdings
(discussed on the next page) and is subject to a statutory ceiling (i.e., the debt limit). Prior to 1917, Congress approved each
debt issuance. In 1917, to facilitate planning in World War I, Congress and the President first enacted a statutory dollar
ceiling for federal borrowing. With the Public Debt Act of 1941 (P.L. 77-7), Congress and the President set an overall limit of
$65.0 billion on Treasury debt obligations that could be outstanding at any one time; since then, Congress and the President
have enacted a number of debt limit increases.
Beginning in FY 2021 and continuing into FY 2022 and again in FY 2023, Treasury faced two delays in raising the debt
limit that required it to depart from its normal debt management procedures and invoke legal authorities to avoid exceeding
the statutory debt limit. During these periods, extraordinary actions taken by Treasury resulted in federal debt securities not
being issued to certain federal government accounts with the securities being restored, including lost interest, to the affected
government accounts subsequent to the end of the delay period. During the first delay, Treasury took extraordinary actions
from August 2, 2021, through December 15, 2021. On October 14, 2021, P.L. 117-50 was enacted, which raised the statutory
debt limit by $480.0 billion, from $28,401.5 billion to $28,881.5 billion. Even with this increase, extraordinary measures
continued for Treasury to manage below the debt limit. On December 16, 2021, P.L. 117-73 was enacted, increasing the debt
limit by $2,500.0 billion, from $28,881.5 billion to $31,381.5 billion. Due to a second delay in raising the statutory debt limit,
Treasury took extraordinary actions from January 19, 2023, through June 2, 2023. On June 3, 2023, P.L. 118-5 was enacted
suspending the debt limit through January 1, 2025.
As of September 30, 2023, and 2022, outstanding debt obligations subject to the statutory debt limit was $33,070.5
billion and $30,869.3 billion, respectively. The debt subject to the limit includes Treasury securities held by the public
(shown in the above table) and intra-governmental debt holdings (shown in the following table), with some adjustments.
From FY 2022 to FY 2023, interest on Treasury securities held by the public increased from $496.5 billion to $678.0 billion.
This $181.5 billion increase primarily resulted from an increase in the outstanding debt held by the public and an increase in
the average interest rate (see table above), which were offset by a decrease in inflation adjustments.
Intra-governmental Debt Holdings: Federal Debt Securities

Held as Investments by Government Accounts as of September 30, 2023, and 2022
Net
(In billions of dollars) 2022 Change 2023
Social Security Administration, Federal Old-Age and Survivors Insurance Trust
Fund 2,723.6 (49.9) 2,673.7
Department of Defense, Military Retirement Fund 1,194.7 172.1 1,366.8
Office of Personnel Management, Civil Service Retirement and Disability Fund 1,011.7 24.9 1,036.6
Department of Defense, Medicare-Eligible Retiree Health Care Fund 322.0 32.2 354.2
Department of Health and Human Services, Federal Hospital Insurance Trust
Fund 177.4 17.0 194.4
Department of Health and Human Services, Federal Supplementary Medical
Insurance Trust Fund 168.0 (8.5) 159.5
Social Security Administration, Federal Disability Insurance Trust Fund 114.7 28.2 142.9
Department of Housing and Urban Development, FHA, Mutual Mortgage
Insurance Capital Reserve Account 119.9 13.2 133.1
Department of Transportation, Highway Trust Fund 127.5 (11.8) 115.7
Federal Deposit Insurance Corporation, Deposit Insurance Fund 125.5 (41.2) 84.3
Department of Labor, Unemployment Trust Fund 73.6 8.2 81.8
Pension Benefit Guaranty Corporation 55.6 5.6 61.2
Department of Energy, Nuclear Waste Disposal Fund 56.6 3.9 60.5
Office of Personnel Management, Employees Life Insurance Fund 51.0 1.5 52.5
Office of Personnel Management, Postal Service Retiree Health Benefits Fund 35.6 (3.6) 32.0
Office of Personnel Management, Employees Health Benefits Fund 27.3 (1.7) 25.6
U.S. Postal Service, Postal Service Fund 20.9 1.1 22.0
National Credit Union Share Insurance Fund 20.7 0.9 21.6
Department of State, Foreign Service Retirement and Disability Fund 20.7 0.4 21.1
Department of Housing and Urban Development, Guarantees of Mortgage-
Backed Securities Capital Reserve Account 18.4 2.6 21.0
Department of Transportation, Airport and Airway Trust Fund 10.8 5.8 16.6
Department of the Treasury, ESF 18.4 (3.7) 14.7
Department of the Interior, Abandoned Mine Reclamation Fund 14.4 0.3 14.7
Pension Benefit Guaranty Corporation Deposit Fund 13.7 (2.4) 11.3
Environmental Protection Agency, Hazardous Substance Superfund 9.4 1.6 11.0
Army Corps of Engineers, Harbor Maintenance Trust Fund 9.4 1.0 10.4
All other programs and funds 88.3 9.6 97.9
Subtotal 6,629.8 207.3 6,837.1
Total net unamortized premiums/(discounts) for intra-governmental 88.7 (49.8) 38.9
Total intra-governmental debt holdings, net 6,718.5 157.5 6,876.0
Intra-governmental debt holdings represent the portion of the gross federal debt held as investments by government
entities such as trust funds, revolving funds, and special funds.
Government entities that held investments in Treasury securities include trust funds that have funds from dedicated
collections. For additional information on funds from dedicated collections, see Note 22—Funds from Dedicated Collections.
These intra-governmental debt holdings are eliminated in the consolidation of these financial statements.
Note 13. Federal Employee and Veteran Benefits Payable
Federal Employee and Veteran Benefits Payable as of September 30, 2023, and 2022
Civilian Military Total Total

(In billions of dollars) 2023 2022 2023 2022 2023 2022
Pension benefits 2,756.7 2,556.0 2,616.5 2,513.5 5,373.2 5,069.5

Veterans compensation and burial benefits N/A N/A 7,095.8 5,965.1 7,095.8 5,965.1
Post-retirement health benefits 396.7 427.4 1,125.2 1,045.0 1,521.9 1,472.4
Veterans education and training benefits N/A N/A 197.5 170.0 197.5 170.0
Life insurance benefits 66.3 62.9 3.6 3.9 69.9 66.8
FECA benefits 26.7 25.9 7.1 7.1 33.8 33.0
Unfunded leave 10.4 10.3 16.8 16.6 27.2 26.9
Liability for other benefits 1.8 1.8 6.3 6.4 8.1 8.2
Total federal employee and veteran benefits
payable 3,258.6 3,084.3 11,068.8 9,727.6 14,327.4 12,811.9
The government offers its employees retirement and other benefits, as well as health and life insurance. The liabilities
for these benefits, which include both actuarial amounts and amounts due and payable to beneficiaries and health care
carriers, apply to current and former civilian and military employees. The actuarial accrued liability represents an estimate of
the PV of the cost of benefits that have accrued, determined based on future economic and demographic assumptions.
Actuarial accrued liabilities can vary widely from year to year, due to actuarial gains and losses that result from changes to
the assumptions and from experience that has differed from prior assumptions.
OPM administers the largest civilian pension and post-retirement health benefits plans. DOD and VA administer the
military pension and post-retirement health benefit plans. Other significant pension plans with more than $10.0 billion in
actuarial accrued liability include those of Foreign Service (State), TVA, and HHS’s Public Health Service Commissioned
Corps Retirement System. Please refer to the financial statements of the entities listed for additional information regarding
their pension plans and other benefits.
In accordance with SFFAS No. 33, Pension, Other Retirement Benefits, and Other Postemployment Benefits: Reporting
the Gains and Losses from Changes in Assumptions and Selecting Discount Rates and Valuation Dates, entities are required
to separately present gains and losses from changes in long-term assumptions used to estimate liabilities associated with
pensions, ORB, and OPEB on the Statement of Net Cost. SFFAS No. 33 also provides a standard for selecting the discount
rate assumption for PV estimates of federal employee pension, ORB, and OPEB liabilities. The SFFAS No. 33 standard for
selecting the discount rate assumption requires it be based on a historical average of interest rates on marketable Treasury
securities consistent with the cash flows being discounted. Additionally, SFFAS No. 33 provides a standard for selecting
the valuation date for estimates of federal employee pension, ORB, and OPEB liabilities that establishes a consistent method
for such measurements. This SFFAS No. 33 does not apply to the FECA program.
To provide a sustainable, justifiable data resource for the affected entities, Treasury developed a model and
methodology for developing these interest rates in FY 2014. 1 The model is based on the methodology used to produce the
HQM yield curve pursuant to the Pension Protection Act of 2006. As of July 2014, Treasury began releasing interest rate
yield curve data using this new Treasury’s TNC yield curve, which is derived from Treasury notes and bonds. The TNC
yield curve provides information on Treasury nominal coupon issues and the methodology extrapolates yields beyond
30 years through 100 years maturity. The TNC yield curve is used to produce a Treasury spot yield curve (a zero coupon
curve), which provides the basis for discounting future cash flows.
In addition to the benefits presented in this note, federal, civilian, and military employees and federal entities contribute
to the TSP. The TSP is administered by an independent government entity, the FRTIB, which is charged with operating the
1
Treasury’s HQM resource is available at: https://home.treasury.gov/data/treasury-coupon-issues-and-corporate-bond-yield-curves/treasury-coupon-issues.
TSP prudently and solely in the interest of the participants and their beneficiaries. Please refer to Note 23—Fiduciary
Activities for additional information on the TSP.
Pension Benefits
Change in Pension Benefits
Civilian Military Total

Actuarial accrued pension liability, beginning of

fiscal year 2,556.0 2,361.8 2,513.5 1,933.6 5,069.5 4,295.4
Pension expense:
Prior (and past) service costs from plan
amendments or new plans - - - - - -
Normal costs 64.5 55.9 62.7 38.0 127.2 93.9
Interest on liability 66.8 64.6 70.2 55.6 137.0 120.2
Actuarial (gains)/losses (from experience) 22.9 96.0 33.3 112.9 56.2 208.9
Actuarial (gains)/losses (from assumption
changes) 154.2 142.9 11.2 376.7 165.4 519.6
Other - (63.7) - 63.6 - (0.1)
Total pension expense 308.4 295.7 177.4 646.8 485.8 942.5
Less benefits paid (107.7) (101.5) (74.4) (66.9) (182.1) (168.4)
Actuarial accrued pension liability, end of fiscal
year 2,756.7 2,556.0 2,616.5 2,513.5 5,373.2 5,069.5
Significant Long-Term Economic Assumptions Used in Determining Pension

Liability and the Related Expense
Civilian Military
2023 2022 2023 2022
FERS CSRS FERS CSRS
Rate of interest 3.00% 2.40% 2.90% 2.30% 2.90% 2.80%

Rate of inflation 2.60% 2.60% 2.00% 2.00% 2.60% 2.30%
Projected salary increases 2.10% 2.10% 1.60% 1.60% 2.60% 2.30%
Cost of living adjustment 2.30% 2.60% 1.80% 2.00% 2.60% 2.30%
Civilian Employees’ Pension

OPM administers the largest civilian pension plan, which covers substantially all full-time, permanent civilian federal
employees. This plan includes two components of defined benefits, the CSRS and the FERS. The basic benefit components
of the CSRS and the FERS are financed and operated through the CSRDF, a trust fund. CSRDF monies are generated
primarily from employees’ contributions, federal entity contributions, payments from the General Fund, and interest on
investments in Treasury securities. As of September 30, 2023, USPS has accrued, but not paid OPM, $22.7 billion in CSRS
and FERS retirement benefit expenses since 2014. USPS made a partial payment of $0.6 billion and $0.5 billion in 2023 and
2022, respectively, towards the required payment for FERS amortization. In order for USPS to preserve liquidity and to
ensure the ability to fulfill its primary universal service mission was not placed at undue risk, USPS has not made all of the
required payments for FERS or CSRS amortization. The cost of each year’s payment, including defaulted payments, along
with other benefit program costs, are included in USPS’ net cost for that year in the consolidated Statements of Net Cost. The
liability is not included on the government-wide Balance Sheet due to the USPS liability being eliminated with OPM’s
corresponding receivable.
The civilian pension liability increased by $200.7 billion, primarily due to higher inflation and salary increase
assumptions.
Military Employees’ Pensions
The Military Retirement System consists of a funded, noncontributory, defined benefit plan for military personnel
(Services of Army, Navy, Air Force, Marine Corps, Space Force, and the USCG) with an entry date prior to January 1, 2018
and the BRS, generally for military personnel with an entry date on or after January 1, 2018. The defined benefit plan
includes non-disability retired pay, disability retired pay, survivor annuity programs, Concurrent Retirement and Disability
Pay, and Combat-Related Special Compensation. The Service Secretaries may approve immediate non-disability retired pay
at any age with credit of at least 20 years of active duty service. Reserve retirees must be at least 60 years old and have at
least 20 qualifying years of service before retired pay commences; however, in some cases, the age can be less than 60 if the
reservist performs certain types of active service. P.L. 110-181 and P.L. 113-291 includes provisions for a three-month
reduction in the reserve retirement age from age 60 for each aggregate of 90 days of certain active-duty service served in any
fiscal year after January 28, 2008, or in any two consecutive fiscal years after September 30, 2014. However, in no case may
the retirement age drop below age 50. There is no vesting of defined benefits before non-disabled retirement. There are
distinct non-disability benefit formulas related to four populations within the Military Retirement System: Final Pay, High-3,
Career Status Bonus/Redux, and the BRS enacted in the NDAA for FY 2016, effective January 1, 2018. The BRS is a
retirement benefit merging aspects of both a defined benefit annuity with a defined contribution account, through the TSP.
The date an individual enters the military generally determines which retirement system they would fall under and if they
have the option to select, via a one-time irrevocable election, their retirement system. Military personnel with a start date on
or after January 1, 2018 are automatically enrolled in BRS. Although all members serving as of December 31, 2017 were
grandfathered under the prior retirement system, Active Duty, National Guard and Reserve personnel meeting established
criteria may have opted into BRS during calendar year 2018. Under the BRS, retiring members are given the option to
receive a portion of their retired pay annuity in the form of a lump sum distribution. For additional information on these
benefits, see DOD’s Office of Military Compensation website https://militarypay.defense.gov.
The DOD MRF was established by P.L. 98-94 (currently 10 U.S.C. §1461-1467) and accumulates funds to finance, on
an accrual basis, the liabilities of DOD military retirement and survivor benefit programs. This fund receives income from
three sources: monthly normal cost payments from the services to pay for DOD’s portion of the current year’s service cost;
annual payments from Treasury to amortize the unfunded liability and pay for the increase in the normal cost attributable to
Concurrent Receipt (certain beneficiaries with combat-related injuries who are receiving payments from VA) per P.L. 108-
136; and investment income.
The NDAA for FY 2021, §§ 8224-8225 requires the USCG be covered by the MRF no later than the beginning of FY
2023. For additional information regarding DOD’s USCG actuarial liability, please refer to DOD’s financial statements.
DOD’s Office of the Actuary calculates the actuarial liability annually using economic and demographic assumptions
about the future (e.g., mortality and retirement rates). The $103.0 billion increase in the Military Retirement Pension liability
is primarily attributable to interest on the liability and normal cost.
The VA provides eligible veterans and/or their dependents with pension benefits if the veteran died, is over age 65 or is
totally disabled, based on annual eligibility reviews. Unlike a traditional pension program, VA pension is only available to
veterans who meet the financial means test. As such, only the amounts currently due and payable are reflected as a liability
on VA’s balance sheet, which is consistent with federal accounting standards. No actuarial liability is recognized for the NPV
of projected future benefit payments.
Veterans Compensation and Burial Benefits
Change in Veterans Compensation and Burial Benefits
Compensation Burial Total

Actuarial accrued liability, beginning of fiscal year 5,953.4 4,291.7 11.7 10.6 5,965.1 4,302.3
Current year expense:
Prior (and past) service costs from program
amendments or new programs during the
period 468.7 7.0 - - 468.7 7.0
Interest on the liability balance 167.9 126.6 0.3 0.3 168.2 126.9
Actuarial (gains)/losses (from experience) 86.3 144.6 (0.1) (0.4) 86.2 144.2
changes) 549.2 1,505.2 0.2 1.5 549.4 1,506.7
Total current year expense 1,272.1 1,783.4 0.4 1.4 1,272.5 1,784.8
Less benefits paid (141.5) (121.7) (0.3) (0.3) (141.8) (122.0)
Actuarial accrued liability, end of fiscal year 7,084.0 5,953.4 11.8 11.7 7,095.8 5,965.1
Significant Long-Term Economic Assumptions Used in Determining Veterans Compensation and

Burial Benefits as of September 30, 2023, and 2022
2023 2022
Discount Rate, Single Equivalent 2.87% 2.82%

Long-Term COLA Rate 2.40% 2.40%
The government compensates disabled veterans and their survivors. Veterans’ compensation is payable as a disability
benefit or a survivor’s benefit. Entitlement to compensation depends on the veterans’ disabilities incurred in or aggravated
during active military service, death while on duty, or death resulting from service-connected disabilities after active duty.
Eligible veterans who die or are disabled during active military service-related causes, as well as their dependents, and
dependents of service members who died during active military service, receive compensation benefits. In addition, service
members who die during active military service and veterans who separated under other than dishonorable conditions are
provided with a burial flag, headstone/marker, and grave liner for burial in a VA national cemetery or are provided a burial
flag, headstone/marker and a plot allowance for burial in a private cemetery. These benefits are provided under 38 U.S.C.,
Part 2, §2301-2308, in recognition of a veteran’s military service and are recorded as a liability in the period the requirements
are met.
Several significant actuarial assumptions were used in the valuation of compensation and burial benefits to calculate the
PV of the liability. A liability was recognized for the projected benefit payments to: 1) those beneficiaries, including veterans
and survivors, currently receiving benefit payments; 2) current veterans who are expected in the future to become
beneficiaries of the compensation program; and 3) a proportional share of those in active military service as of the valuation
date who are expected to be future veterans and to become beneficiaries of the compensation program. Future benefit
payments to survivors of those veterans in classes 1, 2, and 3 above are also incorporated into the projection.
The veterans’ compensation and burial benefits liability is developed on an actuarial basis. It is impacted by interest on
the liability balance, experience gains or losses, changes in actuarial assumptions, prior service costs, and amounts paid for
costs included in the liability balance.
The actuarial liability for compensation and burial benefits as of September 30, 2023, was $7.1 trillion, which represents
an increase of $1.1 trillion from September 30, 2022, liability of $6.0 trillion. This increase was primarily the result of
actuarial losses from assumption changes and prior (past) service costs from program amendments or new programs during
the period, which together increased the liability by $1.0 trillion.
In FY 2023, VA conducted in-depth experience studies and refined several assumptions and methods within the
compensation and burial model. These refinements led to an overall increase from assumption changes of $549.4 billion in
the compensation and burial liability as of September 30, 2023.
On August 10, 2022, the PACT Act, P.L. 117-168, was signed into law expanding and extending eligibility for VA
benefits and health care for veterans with toxic exposures and veterans of the Vietnam, Gulf War and Post-9/11 eras. The
PACT Act is the most significant expansion of benefits for toxic exposed veterans in more than 30 years. Provisions of the
PACT Act that directly impact compensation benefits include the addition of over 20 presumptive medical conditions from
exposures to burn pits and other toxins. VA reviewed the requirements for estimating the liability impact of the new law in
accordance with SFFAS No. 5, Accounting for Liabilities of the Federal Government and determined that the impact on the
compensation liability is measurable using disability compensation claims data to establish an estimate liability impact of the
PACT Act.
In FY 2023, VA assessed the impact of the PACT Act and applied certain updates to the disability compensation model.
These modifications led to an increase of $468.7 billion as prior service costs from plan amendments to the disability
compensation liability as of September 30, 2023.
Post-Retirement Health Benefits
Change in Post-Retirement Health Benefits
Civilian Military Total

Actuarial accrued post-retirement health benefits

liability, beginning of fiscal year 427.4 427.3 1,045.0 868.7 1,472.4 1,296.0
Post-Retirement health benefits expense:
Prior (and past) service costs from plan
amendments or new plans - (28.3) - - - (28.3)
Normal costs 18.6 21.3 33.7 25.4 52.3 46.7
Interest on liability 13.1 13.5 30.9 29.0 44.0 42.5
Actuarial (gains)/losses (from experience) (1.9) 0.4 (38.8) (5.6) (40.7) (5.2)
changes) (43.0) 10.2 78.3 150.2 35.3 160.4
Total post-retirement health benefits expense (13.2) 17.1 104.1 199.0 90.9 216.1
Less claims paid (17.5) (17.0) (23.9) (22.7) (41.4) (39.7)
Actuarial accrued post-retirement health benefits
liability, end of fiscal year 396.7 427.4 1,125.2 1,045.0 1,521.9 1,472.4
Significant Long-Term Economic Assumptions Used in Determining

Post-Retirement Health Benefits and the Related Expense
Civilian Military
2023 2022 2023 2022
Rate of interest 3.10% 3.10% 2.90% 2.90%

Single equivalent medical trend rate 4.90% 4.50% 4.90% 4.60%
Ultimate medical trend rate 4.00% 3.40% 4.60% 4.30%
Civilian Employees’ Post-Retirement Health Benefits

The post-retirement civilian health benefit liability is an estimate of the government’s future cost of providing post-
retirement health benefits to current employees and retirees. Although active and retired employees pay insurance premiums
under the Federal Employee Health Benefits Program, these premiums cover only a portion of the costs. The OPM actuary
applies economic and demographic assumptions to historical cost information to estimate the liability. The decrease in post-
retirement health benefit liability of $30.7 billion is primarily attributable to actuarial gains from assumption changes.
Military Employees’ Post-Retirement Health Benefits
Military retirees who are not yet eligible for Medicare (and their non-Medicare eligible dependents) are eligible for
post-retirement medical coverage provided by DOD. Depending on the benefit plan selected, retirees and their eligible
dependents may receive care from MTF on a space-available basis or from civilian providers through TRICARE. This
TRICARE coverage is available as Select (a preferred provider health plan that contracts with medical providers to create a
network of participating providers; member cost-shares are typically higher for services received out-of-network) and Prime
(a health maintenance plan that limits services to a specific network of medical personnel and facilities and usually by
requiring referral by a primary-care physician for specialty care; coverage is also available for non-referred and out-of-
network care, subject to higher cost-sharing). These post-retirement medical benefits are paid by the DOD Defense Health
Program on a pay-as-you-go basis.
Since FY 2002, DOD has provided medical coverage to Medicare-eligible retirees (and their eligible Medicare-eligible
dependents). This coverage, called TFL, is a Medicare Supplement plan which includes inpatient, outpatient and pharmacy
coverage. Enrollment in Medicare Part B is required to maintain eligibility in TFL. Retirees with TFL coverage can obtain
care from MTF on a space-available basis or from civilian providers.
10 U.S.C., Chapter 56 created the DOD MERHCF, which became operative on October 1, 2002. The purpose of this
fund is to account for and accumulate funds for the health benefit costs of Medicare-eligible military retirees, and their
dependents and survivors who are Medicare eligible. The Fund receives revenues from three sources: interest earnings on
MERHCF assets, Uniformed Services normal cost contributions, and Treasury contributions. The DOD Medicare-Eligible
Retiree Health Care Board of Actuaries (the MERHCF Board) approves the methods and assumptions used in actuarial
valuations of the MERHCF for the purpose of calculating the per capita normal cost rates (to fund the annual accrued
benefits) and determining the unfunded liability amortization payment (Treasury contribution).
The Secretary of Defense directs the Secretary of the Treasury to make DOD’s normal cost payments. The MERHCF
pays for medical costs incurred by Medicare-eligible beneficiaries at MTF and civilian providers (including payments to U.S.
Family Health Plans for grandfathered beneficiaries), plus the costs associated with claims administration.
DOD’s Office of the Actuary calculates the actuarial liabilities annually using assumptions and experience (e.g.,
mortality and retirement rates, health care costs, medical trend rates, and the discount rate) in accordance with SFFAS No.
33. Actuarial liabilities are calculated for all DOD retiree medical benefits, including both the benefits funded through the
MERHCF and the benefits for pre-Medicare retirees who are paid on a pay-as-you-go basis. Military post-retirement health
and accrued benefits payable increased $80.2 billion. The increase is primarily attributable to interest on the liability, normal
cost, and changes in assumptions.
In addition to the health care benefits the federal government provides for civilian and military retirees and their
dependents, the VA also provides medical care to veterans on an “as available” basis, subject to the limits of the annual
appropriations. For the FYs 2019 through 2023, the average medical care cost per year was $94.8 billion.
Veterans Education and Training Benefits
Change in Veterans Education and Training Benefits
Actuarial accrued liability, beginning of fiscal year 170.0 151.2

Current year expense:
Prior (and past) service costs from plan amendments or new plans 2.0 -
Interest on liability 4.0 3.7
Actuarial (gains)/losses (from experience) 24.0 7.4
Actuarial (gains)/losses (from assumption changes) 9.4 19.8
Total current year expense 39.5 30.9
Less benefits paid (11.9) (12.1)
Actuarial accrued liability, end of fiscal year 197.5 170.0
For eligible veterans and their dependents, the VA provides four education/retraining type programs:
• Post 9/11 GI Bill;
• VR&E;
• DEA; and
• Montgomery GI Bill-Active Duty.
Based on the actuarial estimates of future payments, the total liability for the four education and training programs
increased by $27.5 billion in FY 2023.
In FY 2023, VA performed updates to the Post 9/11 GI Bill, DEA, Montgomery GI Bill-Active Duty and VR&E
programs, which resulted in the liability increase of $27.5 billion with a $24.0 billion attributed to experience losses, $9.4
billion increase attributed to assumption changes, and an offset of $(11.9) billion due to amounts paid.
For additional information regarding actuarial assumptions and the four education and training type programs, please
refer to VA’s financial statements.
Life Insurance Benefits

Civilian Employees’ Life Insurance Benefits
Change in Civilian Life Insurance Benefits
Actuarial accrued life insurance benefits liability, beginning of fiscal year 62.9 60.1
Life insurance benefits expense:
New entrant expense 0.7 0.9
Interest on liability 1.7 1.7
Actuarial (gains)/losses (from experience) 0.5 (0.4)
Actuarial (gains)/losses (from assumption changes) 1.2 1.3
Total life insurance benefits expense 4.1 3.5
Less costs paid (0.7) (0.7)
Actuarial accrued life insurance benefits liability, end of fiscal year 66.3 62.9
Significant Long-Term Economic Assumptions Used in Determining Life

Insurance Benefits and the Related Expense
Civilian
2023 2022
Rate of interest 2.80% 2.80%

Rate of increase in salary 2.10% 1.60%
One of the other significant employee benefits is the FEGLI Program. Employee and annuitant contributions and
interest on investments fund a portion of this liability. The actuarial life insurance liability is the expected PV of future
benefits to pay to, or on behalf of, existing FEGLI participants, less the expected PV of future contributions to be collected
from those participants. The OPM actuary uses salary increase and interest rate yield curve assumptions that are generally
consistent with the pension liability.
As of September 30, 2023, the total amount of FEGLI insurance in-force is estimated at $800.8 billion ($669.2 billion
for employees and $108.6 billion for annuitants).
Veterans’ Life Insurance Benefits
The largest veterans’ life insurance programs consist of the following:
• National Service Life Insurance covers policyholders who served during World War II.
• Veterans’ Special Life Insurance was established in 1951 to meet the insurance needs of veterans who served during
the Korean Conflict and through the period ending January 1, 1957.
• Service-Disabled Veterans Insurance program was established in 1951 to meet the insurance needs of veterans who
received a service-connected disability rating.
Death benefit liabilities consist of reserves for permanent plan and term policies as well as policy benefits for Veterans
Mortgage Life Insurance. Disability income and waiver liabilities consist of reserves to fund the monthly payments to
disabled insureds under the Total Disability Income Provision and the policy premiums waived for qualifying disabled
veterans. Insurance dividends payable consists of dividends left on deposit with VA and dividends payable to policyholders.
Unpaid policy claims consist of insurance claims that are pending at the end of the reporting period, an estimate of claims
that have been incurred but not yet reported, and disbursements in transit. The veteran’s life insurance liability for future
policy benefits as of September 30, 2022, and 2021, was $3.6 billion and $3.9 billion, respectively. For additional
information on veteran’s life insurance liability, please refer to VA’s financial statements.
The VA supervises SGLI and Veterans Group Life Insurance programs that provide life insurance coverage to members
of the uniformed armed services, reservists, and post-Vietnam Veterans as well as their families. VA has entered into a group
policy with the Prudential Insurance Company of America to administer and provide the insurance payments under these
programs. All SGLI insureds are automatically covered under the Traumatic Injury Protection program, which provides for
insurance payments to veterans who suffer a serious traumatic injury in service.
The amount of insurance in-force is the total face amount of life insurance coverage provided by each administered and
supervised program at the end of the fiscal year. It includes any paid-up additional coverage provided under these policies.
The supervised programs’ policies and face values are not reflected in VA’s liabilities because the risk of loss on these
programs is assumed by Prudential and its reinsurers through the terms and conditions of the group policy. As a result, the
information provided for the supervised programs is for informational purposes only and is unaudited. The face value for
supervised programs as of September 30, 2022, and 2021, was $1,213.2 billion and $1,219.0 billion, respectively. The face
value for administered programs as of September 30, 2022, and 2021, was $4.8 billion and $5.3 billion, respectively.
Federal Employees’ Compensation Act Benefits

Workers’ Compensation Benefits
DOL determines both civilian and military entities’ liabilities for future workers’ compensation benefits for civilian
federal employees, as mandated by the FECA, for death, disability, medical, and miscellaneous costs for approved
compensation cases, and a component for incurred, but not reported, claims. Actuarial liability includes the non-billable and
unreimbursed costs from claims covered by Section 4016, “Eligibility for Workers’ Compensation Benefits for Federal
Employees Diagnosed with COVID-19,” of the ARP Act. However, claims for COVID-19 diagnosed after January 27, 2023,
are billable to other federal entities. In addition, the NDAA of 2023, P.L. 117-263 enacted December 23, 2022, section 5305,
“Fairness for Federal firefighters,” amended the FECA and established that certain illnesses and diseases are to be deemed to
be proximately caused by the employment in federal fire protection activities and the costs are billable to the entities that
employ federal firefighters.
The FECA liability is determined annually using historical claim data and benefit payment patterns related to injury
years to predict the future payments. The actuarial methodology provides for the effects of inflation and adjusts liability
estimates to constant dollars by applying wage inflation factors (COLA) and medical inflation factors (CPIM) to the
calculation of projected benefits. DOL selects the COLA factors and CPIM factors by averaging over five years the COLA
rates and CPIM rates, respectively. The FY 2023 methodology for averaging the COLA rates used OMB provided rates; the
FY 2023 methodology for averaging the CPIM rates used OMB‐provided rates and information obtained from the Bureau of
Labor Statistics public releases for CPI. Using averaging renders estimates that reflect trends over five years instead of
conditions that exist in one year.
The COLAs and CPIMs used in the projections for FY 2023 are listed below in the table.
DOL selects the discount rates by averaging interest rates for the current and prior four years. Using averaging renders
estimates that reflect historical trends over five years instead of conditions that exist in one year. DOL selected the interest
rate assumptions whereby projected annual payments were discounted to PV based on interest rate assumptions on the TNC
yield curve to reflect the average duration of income payments and medical payments. The average durations for income
payments and medical payments were 14.5 years and 10.3 years, respectively. Based on averaging the TNC yield curves for
the current and prior four years, the interest rate assumptions for income payments and medical payments were 2.3 percent
and 2.1 percent, respectively.
For the COLAs, CPIMs, average durations, and interest rate assumptions used in the projections for FY 2022, refer to
the FY 2022 Financial Report.
Unfunded Leave
Unfunded leave are the amounts recorded by an employer federal entity for unpaid leave earned that an employee is
entitled to upon separation and that will be funded by future years’ budgetary resources. The total unfunded leave as of
September 30, 2023, and 2022, was $27.2 billion and $26.9 billion, respectively.
Liability for Other Benefits

Liability for other benefits includes several programs. The largest program is VA’s Community Care Program, with an
estimated liability of $4.8 billion and $4.7 billion as of September 30, 2023, and 2022, respectively.
Note 14. Environmental and Disposal Liabilities
Environmental and Disposal Liabilities as of September 30, 2023, and 2022

All other entities 17.2 16.0
Total environmental and disposal liabilities 645.3 626.3
After World War II, the U.S. developed a massive industrial complex to research, produce, and test nuclear weapons
and commercial nuclear power reactors. The nuclear complex was comprised of nuclear reactors, chemical-processing
buildings, metal machining plants, laboratories, and maintenance facilities.
At all sites where these activities took place, some environmental contamination occurred. This contamination was
caused by the production, storage, and use of radioactive materials and hazardous chemicals, which resulted in contamination
of soil, surface water, or groundwater. The environmental legacy of nuclear weapons production also includes thousands of
contaminated buildings and large volumes of waste and special nuclear materials requiring treatment, stabilization, and
disposal.
Estimated cleanup costs at sites for which there are no current feasible remediation approaches are excluded from the
estimates, although applicable stewardship and monitoring costs for these sites are included. DOE has not been required
through regulation to establish remediation activities for these sites.
Estimating DOE’s environmental cleanup liability requires making assumptions about future activities and is inherently
uncertain. The future course of DOE’s environmental cleanup and disposal will depend on a number of fundamental technical
and policy choices, many of which have not been made. Some contaminated sites and facilities could be restored to a
condition suitable for any desired use or could be restored to a point where they pose no near-term health risks to the
surrounding communities. Achieving the former condition of the sites and facilities would have a higher cost which may or
may not warrant the cost or be legally required. The environmental and disposal liability estimates include contingency
estimates intended to account for the uncertainties associated with the technical cleanup scope of the program. Congressional
appropriations at lower-than anticipated levels or lack of congressional approval, unplanned delays in project completions
including potential delays due to COVID-19, unforeseen technical issues, obtaining regulatory approval, among other things,
could cause increases in life-cycle costs.
DOE’s environmental and disposal liabilities also include the estimated cleanup and post-closure responsibilities,
including surveillance and monitoring activities, soil and groundwater remediation, and disposition of excess material for
sites. DOE is responsible for the post-closure activities at many of the closure sites as well as other sites. The costs for these
post-closure activities are estimated for a period of 75 years after the balance sheet date, i.e., through 2098 in FY 2023 and
through 2097 in FY 2022. While some post-cleanup monitoring and other long-term stewardship activities post-2098 are
included in the liability, there are others DOE expects to continue beyond 2098 for which the costs cannot reasonably be
estimated.
A portion of DOE’s environmental liability at various field sites includes anticipated costs for facilities managed by
DOE’s ongoing program operations, which will ultimately require stabilization, deactivation, and decommissioning. The
estimates are largely based upon a cost-estimating model. Site specific estimates are used in lieu of the cost-estimating
model, when available. Cost estimates for ongoing program facilities are updated each year. For facilities newly
contaminated since FY 1997, cleanup costs allocated to the periods benefiting from the operations of the facilities. Facilities’
cleanup costs allocated to future periods and not included in the environmental and disposal liabilities amounted to $1.1
billion for fiscal years ending September 30, 2023, and 2022.
DOD has cleanup requirements and conducts the cleanup under DERP at active installations, Base Realignment
Closure, and Formerly Used Defense Sites. DOD has additional cleanup requirements for active installations not driven by
DERP, weapon systems programs, and chemical weapons disposal programs. The weapons system program consists of
chemical weapons disposal, nuclear powered aircraft carriers, nuclear powered submarines, and other nuclear ships. All
cleanup efforts are performed in coordination with regulatory entities, other responsible parties, and current property owners,
as applicable.
DOD follows CERCLA, SARA, RCRA or other applicable federal or state laws to clean up contamination. The
CERCLA, SARA, and RCRA require DOD to clean up contamination in coordination with regulatory entities, current
owners of property damaged by DOD, and third parties that have a partial responsibility for the environmental restoration.
Failure to comply with agreements and legal mandates puts the DOD at risk of incurring fines and penalties.
DOD utilizes an estimating methodology model which includes the use of mathematical equations to convert resources
data into cost data to project environmental cleanup cost. DOD validates the models and estimates liabilities based on data
received during preliminary assessment and site investigation.
For general PP&E placed into service after September 30, 1997, DOD expenses associated environmental cleanup costs
using two methods: physical capacity usage of the assets or systematically recognized over the useful life. DOD expensed
cleanup costs for general PP&E placed into service before October 1, 1997, unless costs are to be recovered through user
charges. As costs are recovered DOD expenses cleanup costs associated with the asset life that has passed since the general
PP&E was placed into service. DOD systematically recognizes the remaining cost over the remaining life of the asset. The
unrecognized portion of the estimated total cleanup costs associated with disposal of general PP&E was $4.7 billion and $3.9
billion for fiscal years ending September 30, 2023, and 2022, respectively.
DOD is responsible for environmental restoration and corrective action for buried chemical munitions and agents;
however, a reasonable estimate is indeterminable because the extent of the buried chemical munitions and agents is unknown.
DOD has ongoing studies for the Formerly Utilized Sites Remedial Action Program and will update its estimate as additional
information is identified. DOD may incur costs for restoration initiatives in conjunction with returning overseas DOD
facilities to host nations. DOD continues its efforts to reasonably estimate required restoration costs.
Environmental liabilities change over time because of laws and regulation updates, technology advances, inflation or
deflation factors and disposal plan revisions. DOD revised estimates resulting from previously unknown contaminants,
reestimation based on different assumptions, and other changes in project scope.
Please refer to the financial statements of the main contributing entities, DOD and DOE, for additional information
regarding environmental and disposal liabilities, including cleanup costs.
Legal contingent liabilities including contingencies related to environmental legal disputes are recognized as an other
liability on the Balance Sheet. See Note 18—Other Liabilities and Note 21—Contingencies for additional information related
to legal contingencies.
Note 15. Benefits Due and Payable
Benefits Due and Payable as of September 30, 2023, and 2022
Federal Old-Age and Survivors Insurance - SSA 111.0 98.6

Medicare Insurance (Parts A, B, and D) - HHS 106.2 85.1
Grants to states for Medicaid - HHS 52.0 54.8
Federal Disability Insurance - SSA 29.8 24.2
Unemployment Insurance - DOL 10.7 11.1
All other benefits programs 16.2 14.5
Total benefits due and payable 325.9 288.3
Benefits due and payable are amounts owed to program recipients or medical service providers as of September 30,
2023 that have not been paid. HHS had an increase in entitlement benefits of $18.3 billion or 13 percent over FY 2022 that
was due to an increase in medical services and claims incurred but not reported. Please refer to the financial statements of
SSA, HHS, and DOL for more information.
Note 16. Insurance and Guarantee Program Liabilities
Insurance and Guarantee Program Liabilities as of September 30, 2023, and 2022
Single-Employer Program - Pension Benefit Guaranty Corporation 73.9 78.3

Federal Crop Insurance - Department of Agriculture 17.3 17.3
Multiemployer Program - Pension Benefit Guaranty Corporation 2.6 2.4
Other insurance and guarantee programs 5.5 6.5
Total insurance and guarantee program liabilities 99.3 104.5
The federal government incurs liabilities related to various insurance and guarantee programs as detailed in the table
above. Note 21—Contingencies includes a discussion of contingencies and other risks related to significant insurance and
guarantee programs. Insurance information and the related liability concerning federal employee and veteran benefits are
included in Note 13—Federal Employee and Veteran Benefits Payable. Social insurance and loan guarantees are not
considered insurance programs under SFFAS No. 51, Insurance Programs, and are accounted for under SFFAS No. 17,
Accounting for Social Insurance, and SFFAS No. 2, Accounting for Direct Loans and Loan Guarantees. Loan guarantees are
disclosed in Note 4—Loans Receivable, Net and Loan Guarantee Liabilities, and social insurance information is included
primarily in the sustainability financial statements and in Note 25—Social Insurance.
Insurance and guarantee program liabilities are recognized for known losses and contingent losses to the extent that the
underlying contingency is deemed probable and a loss amount is reasonably measurable. Please see Note 21—Contingencies
for discussion on the meaning of “probable” depending on the accounting framework used by each significant consolidation
entity. PBGC, which insures defined benefit pensions, has the largest insurance and guarantee program liability.
PBGC insures pension benefits for participants in covered defined benefit pension plans. The FY 2023 decrease of $4.2
billion in PBGC’s liability for its two separate insurance programs is comprised of a decrease of $4.4 billion in the single-
employer program liability and an increase of $0.2 billion in the multiemployer program liability. As of September 30, 2023,
and 2022, PBGC had total liabilities of $88.8 billion and $90.3 billion, respectively. As of September 30, 2023, PBGC’s total
assets exceeded its total liabilities by $46.1 billion, and in FY 2022 its total assets exceeded its total liabilities by $37.6
billion.
On March 11, 2021, the ARP established the SFA program for distressed multiemployer pension plans that meet
specific eligibility criteria. The SFA program is administered by PBGC and paid in a single lump sum rather than in periodic
payments. An application under the ARP must be filed by the eligible plans no later than December 31, 2025. Unlike
PBGC’s insolvency insurance program for multiemployer plans, which is funded by insurance premiums and investment
income, the SFA program is funded by appropriations from the General Fund. The SFA program is intended to enable
eligible plans to pay benefits due through plan year 2051, and, as a result, these plans are no longer considered to be
liabilities to PBGC. PBGC projects the range of total costs for the SFA program to be between $78.6 billion and $81.9
billion, which includes the $45.6 billion paid during FY 2023 and $7.5 billion paid in FY 2022. Refer to PBGC’s financial
statements and FY 2022 Projections Report for additional information.
As of September 30, 2023, and 2022, $17.3 billion pertain to USDA’s FCIP. The FCIP is administered by the FCIC,
which provides insurance to reduce agricultural producers’ economic losses due to natural disasters.
As of September 30, 2023, and 2022, $4.1 billion and $5.8 billion, respectively, pertain to the DHS NFIP, which is
included in other insurance and guarantee programs. The NFIP insurance program liability represents an estimate based on
the loss and loss adjustment expense factors inherent to the NFIP Insurance Underwriting Operations, including trends in
claim severity and frequency. The estimate is driven primarily by the timing and severity of flooding activity in the U.S. and
can significantly vary year over year.
Note 17. Advances from Others and Deferred Revenue
Advances from Others and Deferred Revenue as of September 30, 2023, and 2022

All other 31.9 28.9
Total advances from others and deferred revenue 355.3 247.2
Advances from others and deferred revenue consists of payments received in advance of performance of activities for
which revenue has not been earned and other deferred revenue or income received but not yet earned not otherwise classified
as advances or repayments. Some examples include deferred project revenue funded in advance, funds received in advance
under the terms of a settlement agreement, prepaid postage, and unearned fees, assessments, and surcharges.
SAA advances from others represent liabilities for collections received to cover future expenses or acquisition of assets
and are related to contracts authorizing progress payments based on cost as defined in the Federal Acquisition Regulation. In
accordance with contract terms, specific rights to the contractors’ work vest when a specific type of contract financing
payment is made. Due to the probability the contractors will complete their efforts and deliver satisfactory products, and
because the amount of potential future payments is estimable, the SAA has recognized a contingent liability for estimated
future payments which are conditional pending delivery and government acceptance. SAA had a large increase of $102.8
billion over the previous fiscal year due to increases in cash collections received from foreign partners.
The DOE’s Nuclear Waste Fund collects revenues from owners or generators of high-level radioactive waste and SNF
to pay their share of disposal costs. These revenues are recognized as a financing source as costs are incurred, and revenues
that exceed the expenses are considered deferred revenue.
Note 18. Other Liabilities
Other Liabilities as of September 30, 2023, and 2022
Other liabilities with related budgetary obligations 202.0 55.8

Allocation of special drawing rights 151.0 147.0
Other liabilities without related budgetary obligations 83.9 94.6
Actuarial liabilities for Treasury-managed benefit programs 76.6 56.7
Contingent liabilities 67.6 51.6
Liability for non-fiduciary deposit funds and undeposited collections 22.4 19.6
Other miscellaneous liabilities 69.7 69.8
Total other liabilities 673.2 495.1
Other liabilities are the amounts owed to the public and are not reported elsewhere in the Balance Sheet.
• Other liabilities with related budgetary obligations are amounts of liabilities for which there is a related budgetary
obligation. Grant accruals, subsidies, and unpaid obligations related to assistance programs are all part of this
category. Substantial contributors to this category are DOT, HHS, DOD, and USDA. A sharp year over year
increase occurred due to the failures of First Republic Bank, Silicon Valley Bank, and Signature Bank. The FDIC
recorded liabilities totaling $138.0 billion to resolution entities representing the agreed-upon value of assets
transferred from the receiverships, at the time of failure, to the acquiring institutions for use in funding the deposits
assumed by the acquiring institutions. The DIF satisfies these liabilities by sending cash directly to a receivership to
pay claims, liabilities, and other expenses of the receiverships or by offsetting receivables from resolutions when a
receivership declares a dividend.
• Allocation of SDR is the amount of corresponding liability representing the value of the reserve assets allocated by
the IMF to meet global needs to supplement existing reserve assets. SDR derive their quality as reserve assets from
the undertakings of the members to accept them in exchange for “freely useable” currencies (the U.S. dollar,
European euro, Chinese renminbi, Japanese yen, and British pound sterling). Treasury is the sole contributor. For
additional information, refer to Note 27—Disclosure Entities and Related Parties.
• Other liabilities without related budgetary obligations represent those unfunded liabilities for which congressional
action is needed before budgetary resources can be provided. The largest contributions to this category are HUD’s
Home Equity Conversion Mortgage-Backed Security Obligations, at FV, and DOE’s contractor-sponsored pension
plans and other post-retirement benefits.
• Actuarial liabilities for Treasury-managed benefit programs are the amounts recorded by Treasury for actuarial
liabilities of future benefit payments to be paid from programs such as the D.C. Federal Pension Fund and the D.C.
Judicial Retirement Fund. The only contributors are DOL and Treasury.
• Contingent liabilities are amounts that are recognized as a result of a past event where a future outflow or sacrifice
of resource is probable and measurable. These consist of a wide variety of administrative proceedings, legal actions,
and tort claims which may ultimately result in settlements or decisions adverse to the federal government. DOE and
HHS are the top contributors. For additional information, refer to Note 21—Contingencies.
• Liability for non-fiduciary deposit funds and undeposited collections is the amount offsetting undeposited
collections and collections deposited in non-fiduciary deposit funds awaiting disposition. The most substantial
contributions are from DOJ’s seized cash and monetary instruments, SEC’s liability for disgorgement and penalties
from securities law violators, and DOD.
• Other miscellaneous liabilities are the liabilities not otherwise classified above. Many entities reported relatively
small amounts.
The following entities are the main contributors to the government’s reported other liabilities as of September 30, 2023.
Refer to each entity’s financial statements for additional information:
• Treasury • HUD • USDA
• FDIC • DOJ • Education
• DOL • DOT • DOI
• DOE • PBGC • SEC
• HHS • USPS • State
• DOD • DHS
Note 19. Collections and Refunds of Federal Revenue
Collections of Federal Tax Revenue for the Year Ended September 30, 2023
Federal Tax Year to Which Collections Relate

Tax
Revenue Prior
(In billions of dollars) Collections 2023 2022 2021 Years
Individual income tax and tax withholdings 4,112.0 2,546.8 1,414.1 69.6 81.5
Corporate income taxes 457.0 270.3 155.5 4.9 26.3
Excise taxes 97.1 75.4 21.1 0.2 0.4
Unemployment taxes 47.3 39.0 8.1 - 0.2
Customs duties 85.1 78.0 7.1 - -
Estate and gift taxes 35.4 1.3 29.9 2.1 2.1
Railroad retirement taxes 7.2 5.4 1.6 - 0.2
Fines, penalties, interest, and other revenue 5.5 5.4 0.1 - -
Subtotal 4,846.6 3,021.6 1,637.5 76.8 110.7
Less: amounts collected for non-federal entities (0.4)
Total 4,846.2
Treasury is the government’s principal revenue-collecting entity. Collections of individual income and tax withholdings
include FICA/SECA and individual income taxes. These taxes are characterized as non-exchange revenue.
Excise taxes, also characterized as non-exchange revenue, consist of taxes collected for various items, such as airline
tickets, gasoline products, distilled spirits and imported liquor, tobacco, firearms, and others.
Tax and other revenues reported reflect the effects of tax expenditures, which are special exclusions, exemptions,
deductions, tax credits, preferential tax rates, and tax deferrals that allow individuals and businesses to reduce taxes they may
otherwise owe. The Budget Act (P.L. 93-344) requires that a list of tax expenditures be included in the annual Budget. Tax
expenditures may be viewed as alternatives to other policy instruments, such as spending or regulatory programs. For
example, the government supports college attendance through both spending programs and tax expenditures. The government
uses Pell Grants to help low- and moderate-income students afford college and allows certain funds used to meet college
expenses to grow tax free in special college savings accounts.
Tax expenditures include deductions and exclusions, which reduce the amount of income subject to tax. Examples are
the deduction for mortgage interest on personal residences and the exclusion of interest on state and local bonds. Tax
expenditures also include tax credits, which reduce tax liability dollar for dollar for the amount of credit. For example, the
child tax credit reduces liability by $2,000 per child for taxpayers eligible to use it fully. Other credits are targeted at business
activity, such as credits for producing electricity from renewable energy or the research and experimentation credit, which
encourages businesses in the U.S. to increase investment in research activities. In addition, tax expenditures include some
provisions that allow taxpayers to defer tax liability. Examples include provisions that allow immediate expensing or
accelerated depreciation of certain capital investments, and others that allow taxpayers to defer their tax liability, such as the
deferral of recognition of income on contributions to and income accrued within qualified retirement plans.
The total revenues reported in the Statement of Operations and Changes in Net Position and the related information
reported in this note, do not include explicit line items for tax expenditures, but the total revenue amounts and budget results
reflect the effect of these expenditures. Tax expenditures are discussed in this note, the unaudited MD&A, and in the
unaudited Other Information section of the Financial Report.
Federal Tax Refunds Disbursed and Other Payments for the Year Ended September 30, 2023
Tax Year to Which Refunds Relate

Refunds Prior
(In billions of dollars) Disbursed 2023 2022 2021 Years
Individual income tax and tax withholdings 611.0 100.0 302.6 160.6 47.8
Other taxes, fines, and penalties 11.7 4.9 3.2 1.5 2.1
Total 666.6 109.3 314.5 173.1 69.7
Reconciliation of Tax Collections to Revenue for the Year Ended September 30, 2023, and 2022
Total collections of federal tax revenue 4,846.2 5,091.8

Refunds of federal taxes and other payments (666.6) (649.1)
Individual and other tax credits 239.8 338.3
Federal Insurance Contributions Act - Tax (18.6) (20.7)
Federal Reserve earnings 0.6 106.7
Change in taxes receivable (55.0) (65.5)
Nontax-related fines and penalties reported by entities 102.9 80.5
Nontax-related earned revenue 16.3 43.9
Consolidated revenue per the Statement of Operations and Changes
in Net Position 4,465.6 4,925.9
Consolidated revenue in the Statement of Operations and Changes in Net Position is presented on a modified cash basis,
net of tax refunds, and includes other non-tax related revenue. Refunds of federal taxes and other payments and individual
and other tax credits in FY 2023 and FY 2022 include the CARES Act, CAA, 2021 and ARP stimulus disbursements of $2.0
billion and $13.1 billion, respectively, to eligible taxpayers. Individual and other tax credits amounts are included in gross
cost in the Statements of Net Cost. Refer to Note 3—Accounts Receivable, Net for further explanation of line changes in
taxes receivable. The FICA – tax paid by federal entities is included in the individual income and tax withholdings line in the
Collections of Federal Tax Revenue; however, it is not reported on the Statement of Operations and Changes in Net Position
as these collections are intra-governmental revenue and eliminated in consolidation. The table above reconciles federal tax
collections to total revenue.
Collections of Federal Tax Revenue for the Year Ended September 30, 2022
Federal Tax Year to Which Collections Relate

Tax
Revenue Prior
(In billions of dollars) Collections 2022 2021 2020 Years
Individual income tax and tax withholdings 4,308.1 2,495.6 1,680.0 99.5 33.0
Excise taxes 95.3 74.8 20.1 - 0.4
Unemployment taxes 63.8 49.8 13.8 - 0.2
Customs duties 104.7 97.9 6.8 - -
Estate and gift taxes 33.4 2.3 25.9 1.8 3.4
Railroad retirement taxes 6.1 4.4 1.3 0.4 -
Fines, penalties, interest and other revenue 5.0 4.9 0.1 - -
Subtotal 5,092.2 3,023.7 1,904.6 105.1 58.8
Less: amounts collected for non-federal entities (0.4)
Total 5,091.8
Federal Tax Refunds Disbursed and Other Payments for the Year Ended September 30, 2022
Tax Year to Which Refunds Relate

Refunds Prior
(In billions of dollars) Disbursed 2022 2021 2020 Years
Individual income tax and tax withholdings 583.3 85.8 418.5 15.4 63.6
Other taxes, fines, and penalties 10.1 4.0 2.0 2.4 1.7
Total 649.1 94.2 432.8 50.7 71.4
Note 20. Commitments
Long-Term Operating Leases as of September 30, 2023, and 2022
General Services Administration 29.3 28.5

Department of Veterans Affairs 7.1 6.0
Other operating leases 2.9 3.6
Total long-term operating leases 42.2 42.2
The government has entered into contractual commitments that require future use of financial resources. It has
significant amounts of long-term lease obligations. Long-term operating leases in this note refer to those leases in which
federal entities do not assume the risks of ownership of the underlying general PP&E, and payments are expensed over the
lease term. The lease liabilities and assets arising from operating leases for FASB-reporting entities who have implemented
FASB ASC 842, Leases, are recorded on the Balance Sheet in other liabilities and PP&E, respectively, and thus are not
included in this Commitments note.
Undelivered Orders and Other Commitments as of September 30, 2023, and 2022
Undelivered Orders - Unpaid:

Department of Education 211.0 262.4
Department of Transportation 176.4 166.7
Department of Housing and Urban Development 101.1 92.6
Department of Homeland Security 98.9 95.4
Department of Agriculture 95.0 83.1
Environmental Protection Agency 36.8 27.4
U.S. Agency for International Development 24.8 24.8
All other entities 191.3 184.1
Total undelivered orders - unpaid 1,830.0 1,771.4
Other Commitments:
GSE Senior Preferred Stock Purchase Agreements 254.1 254.1
U.S. participation in the International Monetary Fund 151.0 146.4
Callable capital subscriptions for Multilateral Development Banks 130.2 127.9
All other commitments 19.2 20.8
Total other commitments 554.5 549.2
Undelivered Orders and Other Commitments

Undelivered Orders - Unpaid
Undelivered orders, included in this note disclosure, represent the value of goods and services ordered that have not yet
been received and that have not been prepaid. As of September 30, 2023, and 2022, the total reported unpaid undelivered
orders were $1,830.0 billion and $1,771.4 billion, respectively. In FY 2023, Education had a $51.4 billion decrease that was
primarily due to a decrease in unpaid obligations from COVID-19 appropriations, as a result of payments during FY 2023.
DOD had a $46.5 billion increase that was primarily due to an overall increase in funding from the CAA, 2023.
GSE Senior Preferred Stock Purchase Agreements
As of September 30, 2023, and 2022, the maximum remaining potential commitment to the GSEs for the remaining life
of the SPSPAs was $254.1 billion, which was established on December 31, 2012. Refer to Note 8—Investments in
Government-Sponsored Enterprises for a full description of the SPSPAs related commitments and contingent liability, if any,
as well as additional information.
U.S. Participation in the International Monetary Fund

The government participates in the IMF through a quota subscription and certain borrowing arrangements that
supplement IMF resources. As of September 30, 2023, and 2022, the financial commitment under the U.S. quota and
borrowing arrangements was $151.0 billion and $146.4 billion, respectively. Refer to Note 2—Cash and Other Monetary
Assets and Note 27—Disclosure Entities and Related Parties for additional information regarding the U.S. participation in the
IMF.
Callable Capital Subscriptions for Multilateral Development Banks
The government has callable subscriptions in certain MDB, which are international financial institutions that finance
economic and social development projects in developing countries. Callable capital in the MDB serves as a supplemental
pool of resources that may be redeemed and converted into ordinary paid in shares, if the MDB cannot otherwise meet certain
obligations through its other available resources. MDB are able to use callable capital as backing to obtain favorable
financing terms when borrowing from international capital markets. To date, there has never been a call on this capital at any
MDB and none is anticipated. As of September 30, 2023, and 2022, the capital commitment to MDB was $130.2 billion and
$127.9 billion, respectively.
Note 21. Contingencies

Loss contingencies are existing conditions, situations, or sets of circumstances involving uncertainty as to possible loss
to an entity. The uncertainty will ultimately be resolved when one or more future events occur or fail to occur. The
government is subject to loss contingencies related to:
• Legal and environmental and disposal;
• Insurance and guarantees; and
• Other Contingencies.
The government is involved in various litigation, including administrative proceedings, legal actions, and tort claims,
which may ultimately result in settlements or decisions adverse to the government. In addition, the government is subject to
loss contingencies for a variety of environmental cleanup costs for the storage and disposal of hazardous material as well as
the operations and closures of facilities at which environmental contamination may be present. Refer to the Legal
Contingencies and Environmental and Disposal Contingencies section of this note for additional information.
The government provides insurance and guarantees via a variety of programs. At the time an insurance policy or
guarantee is issued, a contingency arises. The contingency is the risk of loss assumed by the insurer, that is, the risk of loss
from events that may occur during the term of the policy. For additional information, refer to the Insurance and Guarantees
sections of this note.
Other contingencies include those related to the government’s establishment of construction budgets without receiving
appropriations from Congress for such projects, appeals of Medicaid audit and program disallowances by the states, potential
draws by GSEs, and whistleblower awards. The government is also a party to treaties and other international agreements.
These treaties and other international agreements address various issues including, but not limited to, trade, commerce,
security, and law enforcement that may involve financial obligations or give rise to possible exposure to losses. Estimated
potential losses for legal claims related to treaties and international agreements are included in the Legal Contingencies and
Environmental and Disposal Contingencies section of this note. For additional information on the government’s other loss
contingencies, refer to the Other Contingencies section of this note.
Financial Treatment of Loss Contingencies
The reporting of loss contingencies depends on the likelihood that a future event or events will confirm the loss or
impairment of an asset or the incurrence of a liability and the likelihood of loss can range from probable to remote. SFFAS
No. 5, Accounting for Liabilities of the Federal Government, identifies the probability classifications used to assess the range
for the likelihood of loss as probable, reasonably possible, and remote. Loss contingencies where a past event or exchange
transaction has occurred, and where a future outflow or other sacrifice of resources is assessed as probable and measurable,
are accrued in the financial statements. Loss contingencies that are assessed to be at least reasonably possible are disclosed in
this note, and loss contingencies that are assessed as remote are neither reported in the financial statements, nor disclosed in
the notes. Federal entities account for loss contingencies based on the likelihood of loss and measurability criteria provided in
the following table. 2
2
In addition, a third condition must be met to be a loss contingency: a past event or an exchange transaction must occur.
Likelihood of future Loss amount or range

Loss amount can be Loss range can be
outflow or sacrifice of cannot be reasonably
reasonably measured reasonably measured
resources measured
Accrue liability of best
estimate or minimum Disclose nature of
Probable Accrue the liability.
amount in loss range if contingency and include
Future confirming Report on Balance Sheet
there is no best estimate, a statement that an
event(s) is(are) more and Statement of Net
and disclose nature of estimate cannot be
likely than not to occur. 3 Cost.
contingency and range of made.
estimated liability.
Reasonably possible
Disclose nature of
Possibility of future
Disclose nature of Disclose nature of contingency and include
confirming event(s)
contingency and contingency and a statement that an
occurring is more than
estimated amount. estimated loss range. estimate cannot be
remote but less than
made.
probable.
Remote
Possibility of future
No action is required. No action is required. No action is required.
event(s) occurring is
slight.
Loss contingencies arise in the normal course of operations and their ultimate disposition is unknown. Based on
information currently available, however, it is management’s opinion that the expected outcome of these matters, individually
or in the aggregate, will not have a material adverse effect on the financial statements, except for the litigation and insurance
described in the following sections, which could have a material adverse effect on the financial statements.
Certain significant consolidation entities apply financial accounting and reporting standards issued by FASB, and such
entities, as permitted by SFFAS No. 47, Reporting Entity, are consolidated into the U.S. government’s consolidated financial
statements without conversion to financial and reporting standards issued by FASAB. 4 Generally, under FASAB standards, a
contingency is considered “probable” if the future event or events are more likely than not to occur. Under FASB standards, a
contingency is considered “probable” if the future event or events are likely to occur. “Likely to occur” is considered to be
more certain than “more likely than not to occur.” Under both accounting frameworks, a contingency is considered
“reasonably possible” if occurrence of the future event or events is more likely than remote, but less likely than “probable”
(“probable” as defined within each corresponding accounting framework).
3
For pending or threatened litigation and unasserted claims, the future confirming event or events are considered “probable” if such events are likely to
occur.
4
Significant consolidation entities that apply FASB standards without conversion to FASAB standards are FCSIC, FDIC, NRRIT, PBGC, Smithsonian,
TVA, and USPS.
Legal Contingencies and Environmental and Disposal Contingencies
Legal Contingencies and Environmental and Disposal Contingencies as of September 30, 2023, and
2022
2023 2022
Estimated Range of Loss Estimated Range of Loss
for Certain Cases 2 for Certain Cases 2
Accrued Accrued
(In billions of dollars) Liabilities 1 Lower End Upper End Liabilities 1 Lower End Upper End
Probable 55.9 55.4 66.3 41.1 40.6 43.6

Reasonably possible N/A 10.6 107.4 N/A 17.2 44.5
1
Accrued liabilities are recorded and presented in other liabilities on the Balance Sheet.
2
Does not reflect the total range of loss; many cases assessed as reasonably possible of an unfavorable outcome did not include
estimated losses that could be determined.
Management and legal counsel have determined that it is “probable” that some legal actions, litigation, tort claims, and
environmental and disposal contingencies will result in a loss to the government and the loss amounts are reasonably
measurable. The estimated liabilities for “probable” cases against the government are $55.9 billion and $41.1 billion as of
September 30, 2023, and 2022, respectively, and are included in “Other Liabilities” on the Balance Sheet. For example, the
U.S. Supreme Court 2012 decision in Salazar v. Ramah Navajo Chapter, and subsequent cases related to contract support
costs have resulted in increased claims against the Indian Health Service, which is a component within HHS. As a result of
this decision, many tribes have filed claims. Some claims have been paid and others have been asserted but not yet settled. It
is expected that some tribes will file additional claims for prior years. The estimated amount recorded for contract support
costs is $6.4 billion in FY 2023 and $6.1 billion in FY 2022.
There are also administrative claims and legal actions pending where adverse decisions are considered by management
and legal counsel as “reasonably possible” with an estimate of potential loss or a range of potential loss. The estimated
potential losses reported for such claims and actions range from $10.6 billion to $107.4 billion as of September 30, 2023, and
from $17.2 billion to $44.5 billion as of September 30, 2022.
The estimated upper range of potential loss for probable and reasonably possible claims and actions increased $22.7
billion, and $62.9 billion, respectively in FY 2023. The increase is primarily due to new cases, a change in the likelihood of
loss, along with the net change in the amount of potential loss, and legal cases that are no longer pending.
In accordance with the NWPA, DOE entered into more than 69 standard contracts with utilities in which, in return for
payment of fees into the Nuclear Waste Fund, DOE agreed to begin disposal of SNF by January 31, 1998. Because DOE has
no facility available to receive SNF under the NWPA, it has been unable to begin disposal of the utilities’ SNF as required by
the contracts. Significant litigation claiming damages for partial breach of contract has ensued as a result of this delay. Based
on settlement estimates, the total liability estimate as of September 30, 2023 is in a range between $44.7 billion and $51.6
billion. After deducting the cumulative amount paid of $10.6 billion as of September 30, 2023 under settlements, and as a
result of final judgments, the remaining accrued liability is estimated to be approximately $34.1 billion, compared to
approximately $31.0 billion as of September 30, 2022.
A number of class action and/or multiple plaintiff tort suits have been filed against current and former DOE contractors
in which the plaintiffs seek damages for alleged exposures to radioactive and/or toxic substances as a result of the historic
operations of DOE’s nuclear facilities. Collectively, in these cases, damages of $1.2 billion are currently sought.
Numerous litigation cases are pending where the outcome is uncertain or it is reasonably possible that a loss has been
incurred and where estimates cannot be made. There are other litigation cases where the plaintiffs have not made claims for
specific dollar amounts, but the settlement may be significant. The ultimate resolution of these legal actions for which the
potential loss could not be determined may materially affect the U.S. government’s financial position or operating results.
A number of cases were filed in the U.S. Court of Federal Claims and U.S. District Courts in which the plaintiffs allege,
among other things, that the U.S. government took their property, breached contractual rights of preferred and common
stockholders, and breached fiduciary duties when the third amendments to the SPSPAs between Treasury and each GSE were
executed in August 2012 (please refer to Note 8—Investments in Government-Sponsored Enterprises). In the U.S. Court of
Federal Claims, the plaintiffs seek just compensation and other damages from the U.S. government. With respect to certain
cases pending before the U.S. Court of Federal Claims, the U.S. government’s motion to dismiss was granted with respect to
certain claims and denied with respect to certain other claims. The U.S. Court of Appeals for the Federal Circuit dismissed all
of the claims. Certain plaintiffs filed petitions for a writ of certiorari with the Supreme Court, which were denied. While most
of the cases brought before the U.S. Court of Federal Claims have been dismissed, some are still pending. In the U.S. District
Courts, the plaintiffs seek to set aside the third amendments to the SPSPAs as well as damages, and in some cases an
injunction that results in changes to Treasury’s liquidation preference, or that converts Treasury’s GSE senior preferred stock
to common stock. Following the Supreme Court’s decision in June 2021, the Court left open the possibility that the plaintiffs
may be entitled to retrospective relief if the unconstitutional provision inflicted “compensable harm”. The Fifth and Eighth
Circuit Courts of Appeals remanded cases to the U.S. District Court for the Southern District of Texas and the U.S. District
Court for the District of Minnesota, where plaintiffs filed amended complaints alleging that the unconstitutional provision
inflicted “compensable harm”. In the Southern District of Texas litigation, plaintiffs also added claims that FHFA’s funding
structure violates the Appropriations Clause of the U.S. Constitution. The U.S. District Court for the Southern District of
Texas dismissed the amended complaint, and the Fifth Circuit Court of Appeals affirmed the dismissal. The U.S. District
Court for the District of Minnesota also dismissed the amended complaint, and that case is now again pending at the Eighth
Circuit Court of Appeals. The Sixth Circuit Court of Appeals remanded a case to the U.S. District Court for the Western
District of Michigan to determine if the unconstitutional provision inflicted “compensable harm,” while rejecting claims that
an FHFA director had been serving in violation of the Appointments Clause of the U.S. Constitution. The plaintiffs filed a
petition for a writ of certiorari with the Supreme Court regarding the Appointments Clause claim, which was denied. On
remand, plaintiffs are seeking to amend their complaint to add claims that FHFA’s funding structure violates the
Appropriations Clause of the U.S. Constitution. A case in the Eastern District of Pennsylvania remains in litigation, and a
motion to dismiss is pending. Treasury is unable to determine the likelihood of an unfavorable outcome or an estimate of
potential loss in these cases at this time.
Insurance and Guarantees
As discussed in Note 1.N—Insurance and Guarantee Program Liabilities, certain consolidation entities with significant
insurance and guarantee programs apply FASB standards, while other insurance programs are accounted for in the
consolidated financial statements pursuant to FASAB standards. Please refer to Note 16—Insurance and Guarantee Program
Liabilities for insurance and guarantee liabilities and Note 13—Federal Employee and Veteran Benefits Payable for insurance
related to federal employee and veteran benefits.
Entities Reporting under FASB
PBGC, FCSIC, and FDIC are the main contributing consolidation entities with significant insurance or guarantee
programs that apply FASB standards. Insurance in-force estimates and a discussion of PBGC’s coverage are disclosed to
provide an understanding of the magnitude of the programs. Current conditions indicate it is extremely unlikely that losses
equal to the maximum risk exposure described below would be incurred.
PBGC insures pension benefits for participants in covered defined benefit pension plans. Under current law, PBGC's
liabilities may be paid only from PBGC's assets. Accordingly, PBGC's liabilities are not backed by the full faith of the U.S.
government. As of September 30, 2023, PBGC's single-employer and multiemployer pension insurance programs had $130.9
billion and $4.0 billion in total assets, respectively. In FY 2022, PBGC reported pension insurance program total assets for
single-employer and multiemployer of $124.4 billion and $3.5 billion, respectively.
PBGC operates two separate pension insurance programs: a single-employer program and a multiemployer program.
The single-employer program covered about 20.6 million people (excluding those in plans that PBGC has trusteed) in FY
2023, down from about 22.3 million people in FY 2022, and the maximum guaranteed annual benefit for participants who are
in a plan that terminated in FY 2023 and commence benefits at age 65 is $81,000. The maximum guaranteed benefit for
single-employer plan participants is determined by the year the retiree’s plan terminated (if the plan terminated during the
plan sponsor’s bankruptcy, the year the sponsor entered bankruptcy) and the participant’s age at the later of the date the
sponsor entered bankruptcy or the date the participant begins collecting benefits. The number of covered ongoing plans at the
end of FY 2023 was about 23,500.
The multiemployer program covers about 11.0 million participants in about 1,360 insured plans and the maximum
annual benefit is $12,870 to a participant who worked for 30 years in jobs covered by the plan. The maximum benefit for
multiemployer plan participants varies with covered service and would be lower if the participant worked less than 30 years
and higher if the participant worked more than 30 years. On March 11, 2021, the President signed into law the ARP. The
ARP established a new multiemployer SFA program resulting in a new source of financing from the General Fund. PBGC
receives appropriated SFA funds to disburse to multiemployer plans that meet certain criteria. Unlike traditional financial
assistance where PBGC provides assistance to the multiemployer plans in the form of a loan, the new special financial
assistance will be provided via a transfer of funds with no obligation of repayment. The SFA program is expected to enable
PBGC to satisfy long-term multiemployer obligations by providing SFA to currently insolvent and probable plans. PBGC’s
FY 2022 Projection Report shows that the multiemployer program is likely to remain solvent for more than 40 years.
FCSIC insures the timely payment of principal and interest on Systemwide Debt Securities. Systemwide Debt Securities
are the general unsecured joint and several obligations of the FCSB. Systemwide Debt Securities are not obligations of and
are not guaranteed by the U.S. government. As stated in the Farm Credit Quarterly Information Statement of the Farm Credit
System, outstanding Systemwide Debt Securities reported by the FCSB totaled $401.9 billion and $377.2 billion as of
September 30, 2023, and 2022 respectively. The insurance provided by FCSIC is also not an obligation of and is not
guaranteed by the U.S. government. Under current law, if FCSIC does not have sufficient funds to pay unpaid principal and
interest on insured Systemwide Debt Securities, the FCSB will be required to make payments under joint and several
liability. As of September 30, 2023, and 2022, FCSIC reported an Insurance Fund balance of $7.2 billion and $6.5 billion,
respectively.
FDIC insures bank and savings association deposits, which exposes FDIC to various risks. FDIC has estimated total
insured deposits of $10,592.6 billion and $9,926.3 billion as of September 30, 2023, and 2022 respectively, for the DIF.
As described below, the government also has insurance and guarantee contingencies for PBGC and FDIC that are
reasonably possible in the amount of $26.4 billion and $54.5 billion as of September 30, 2023, and 2022, respectively.
PBGC reported $26.1 billion and $54.2 billion as of September 30, 2023, and 2022, respectively, for the estimated
aggregate unfunded vested benefits exposure to PBGC for private-sector single-employer and multiemployer defined benefit
pension plans that are classified with a reasonably possible exposure to loss. As of September 30, 2023, PBGC’s estimate of
its single-employer reasonably possible exposure decreased to $25.7 billion. The $26.3 billion decrease from the reasonably
possible exposure of $52.0 billion as of September 30, 2022, is primarily due to the significant increase in the interest factors
used for valuing liabilities as of the measurement date. 5 In FY 2023, PBGC estimated that it is reasonably possible that
multiemployer plans may require future assistance in the amount of $0.4 billion, a $1.8 billion decrease from the $2.2 billion
in FY 2022. The primary reason for the decrease in exposure was a net decrease in the number of plans classified as
reasonably possible.
FDIC reported $0.3 billion as of September 30, 2023, and 2022 for reasonably possible losses to the DIF for additional
risks identified in the financial services industry should potentially vulnerable insured institutions ultimately fail. Actual
losses, if any, will largely depend on future economic and market conditions.
Entities Reporting under FASAB
The total amount of coverage provided by an insurer as of the end of the reporting period is referred to as insurance in-
force. Insurance in-force represents the total amount of unexpired insurance arrangements for the corresponding program as
of a given date. Insurance in-force is presented to provide the reader with a better understanding of the unexpired insurance
arrangements that are not considered a liability. It is extremely unlikely that losses equal to the maximum risk exposure
would be incurred. The table below shows the estimate of insurance in-force for consolidation entities with significant
insurance programs that apply FASAB standards in accordance with SFFAS No. 51, Insurance Programs.
Insurance In-force as of September 30, 2023, and 2022
Ginnie Mae - HUD ........................................................................................................................ 2,472.8 2,284.5

National Credit Union Share Insurance Fund - NCUA ................................................................. 1,700.0 1,700.0
National Flood Insurance Program - DHS .................................................................................... 1,281.9 1,286.2
Federal Crop Insurance - USDA .................................................................................................. 206.1 193.2
Ginnie Mae insures MBS and commitments, which exposes Ginnie Mae to various risks. Ginnie Mae’s MBS program
guarantees the timely payment of principal and interest on securities backed by pools of mortgage loans insured by FHA,
Public and Indian Housing, and Rural Housing Service, or guaranteed by the VA. Accordingly, Ginnie Mae’s credit risk
5
The estimate of the reasonably possible exposure to the loss for the single-employer plans was determined using a measurement date of December 31,
2022.
related to outstanding MBS is greatly mitigated by guarantees discussed in Note 4—Loans Receivable, Net and Loan
Guarantee Liabilities.
NCUA operates and manages the NCUSIF, insuring the deposits of over 138.8 million account holders in all federal
credit unions and the majority of state-chartered credit unions. NCUSIF insures the balance of each members’ accounts,
dollar-for-dollar, up to at least the standard maximum share insurance amount of $250,000.
NFIP, managed by FEMA, is considered an exchange transaction insurance program and pays claims to policy holders
who experience flood damage due to flooding within the NFIP rules and regulations. FEMA is authorized to secure
reinsurance coverage from private reinsurance and capital markets to maintain the financial ability of the program to pay
claims from major flooding events.
FEMA, a component of DHS, is authorized to borrow from Treasury up to $30.4 billion to fund the payment of flood
insurance claims and claims-related expenses of the NFIP. Amounts borrowed at any time are not predetermined, and
authority is used only as needed to pay existing obligations for claims and expenses. Insurance premiums collected are used
to pay insurance claims and to repay borrowings. As of September 30, 2023, and 2022, FEMA had drawn from Treasury
$20.5 billion, leaving $9.9 billion available to be borrowed. Premiums collected by FEMA are not expected to be sufficient to
cover the debt repayments. Given the current premium rate structure, FEMA is not expected to be able to generate sufficient
resources from premiums to pay its debt in full.
The FCIP, administered by USDA’s FCIC, is considered a short-duration exchange transaction insurance program. The
crop insurance policies insure against unexpected declines in yield and/or price due to natural causes. There were
approximately 1.2 million crop insurance policies in force for crop years 2023, and 2022. The insurance policies are
structured as a contract between approved insurance providers and producers, with the FCIC providing reinsurance to
approved insurance providers. Crop insurance policies automatically renew each year unless producers cancel them by a
published annual deadline. FCIC may request the Secretary of Agriculture to provide borrowing authority funds of the
Commodity Credit Corporation if at any time the amounts in the insurance fund are insufficient to allow FCIC to carry out its
duties. Even though the authority exists, FCIC did not request Commodity Credit Corporation funds in the reporting period.
USDA has a permanent indefinite appropriation for the crop insurance program used to cover premium subsidy, delivery
expenses, losses in excess of premiums, and research and delivery costs. FCIC has no outstanding borrowing as of September
30, 2023.
Please refer to the financial statements of the main contributing entities, HUD, NCUA, DHS, and USDA for additional
information.
Congress originally enacted the Terrorism Risk Insurance Act in November 2002, to address market disruptions
resulting from terrorist attacks on September 11, 2001. Most recently, the Terrorism Risk Insurance Program
Reauthorization Act of 2019 extended TRIP until December 31, 2027. The TRIP helps to ensure available and affordable
commercial property and casualty insurance for terrorism risk, and simultaneously allows private markets to stabilize. The
authority to pay claims under TRIP is activated when the Secretary of the Treasury (in consultation with the Secretary of the
DHS and the U.S. Attorney General) certifies an “act of terrorism.” In the event of certification of an “act of terrorism”
insurers may be eligible to receive reimbursement from the U.S. government for associated insured losses assuming an
aggregate insured loss threshold (“Program Trigger”) has been reached once a particular insurer has satisfied its designated
deductible amount. For calendar years 2023 and 2022, the Program Trigger amount was $200.0 million. Insurance companies
and the U.S. government will share insured losses above insurer deductibles. TRIP includes both mandatory and
discretionary authority for Treasury to recoup federal payments made under TRIP through policyholder surcharges under
certain circumstances, and contains provisions designed to manage litigation arising from or relating to a certified “act of
terrorism.” There were no claims under TRIP as of September 30, 2023 or 2022.
Other Contingencies
DOT, HHS, and Treasury reported the following other contingencies:
FHWA has a reasonably possible contingency due to their authority to approve projects using advance construction
under 23 U.S.C. § 115(a) and 23 CFR 630.701-630.709. FHWA does not guarantee the ultimate funding to the states for
these “advance construction” projects and, accordingly, does not obligate any funds for these projects. The state may submit
a written request to FHWA that a project be converted to a regular federal aid project at any time provided that sufficient
federal aid funds and obligation authority are available. As of September 30, 2023, and 2022, FHWA has $75.4 billion and
$69.3 billion, respectively, of advanced construction authorizations that could be converted to federal obligations subject to
the availability of funds. These authorizations have not been recognized in the DOT consolidated financial statements.
Contingent liabilities have been accrued as a result of Medicaid audit and program disallowances that are currently
being appealed by the states. The Medicaid amounts are $8.2 billion and $7.0 billion for fiscal years ending September 30,
2023, and 2022, respectively. The states could return the funds through payments to HHS, or HHS could recoup the funds by
reducing future grant awards to the states. Conversely, if the appeals are decided in favor of the states, HHS will be required
to pay these amounts. In addition, certain amounts for payment have been deferred under the Medicaid program when there is
reasonable doubt as to the legitimacy of expenditures claimed by a state. There are also outstanding reviews of the state
expenditures in which a final determination has not been made.
Treasury has a contingency for future draws by the GSEs. There were no probable future draws accrued as of
September 30, 2023, and 2022, and the total amount of reasonably possible future draws is not estimable as of September 30,
2023. Refer to Note 8—Investments in Government-Sponsored Enterprises for additional information.
Note 22. Funds from Dedicated Collections
Funds from Dedicated Collections as of September 30, 2023
Federal Federal Federal

Old-Age and Disability Medicare All Other Total Funds Total Funds
Survivors Insurance Insurance Funds from from Funds from from
Insurance Trust Trust Funds Dedicated Dedicated Dedicated Dedicated
Trust Fund Fund (Part A, B, D) Collections Collections Collections Collections
(In billions of dollars) (Combined) (Combined) (Combined) (Combined) (Combined)1 Eliminations (Consolidated)2
Assets:
Cash and other monetary
assets
- - - 180.6 180.6 - 180.6
Accounts receivable, net 2.3 2.8 24.6 24.7 54.4 - 54.4
Loans receivable, net - - - 21.4 21.4 - 21.4

Inventory and related
property, net
- - - 3.5 3.5 - 3.5
General property, plant and
equipment, net
- - 0.4 40.4 40.8 - 40.8
Investments - - - 27.3 27.3 - 27.3

Advances and
prepayments
- - 45.1 11.3 56.4 - 56.4
Other assets3 - - - 18.5 18.5 - 18.5

Investments in Treasury
securities, net of
unamortized
2,673.8 142.9 353.9 391.5 3,562.1 - 3,562.1
premiums/discounts
Other federal assets 15.8 1.0 400.8 332.0 749.6 (247.6) 502.0
Total assets 2,691.9 146.7 824.8 1,051.2 4,714.6 (247.6) 4,467.0
Liabilities and net

position:
Accounts payable - - 0.2 6.2 6.4 - 6.4
Federal employee and
veteran benefits payable
- - - 6.1 6.1 - 6.1
Environmental and disposal
liabilities
- - - 26.0 26.0 - 26.0
Benefits due and payable 111.0 29.8 106.3 10.1 257.2 - 257.2
Insurance and guarantee
program liabilities
- - - 5.2 5.2 - 5.2
Advances from others and
deferred revenues
- - 1.8 70.7 72.5 - 72.5
Other liabilities3 - - 10.4 219.7 230.1 - 230.1
Federal liabilities 6.7 0.8 130.7 212.4 350.6 (247.6) 103.0
Total liabilities 117.7 30.6 249.4 556.4 954.1 (247.6) 706.5

Funds from Dedicated Collections as of September 30, 2023, continued

Net position:
Total net position 2,574.2 116.1 575.4 494.8 3,760.5 - 3,760.5
Total liabilities and net
position
2,691.9 146.7 824.8 1,051.2 4,714.6 (247.6) 4,467.0
Change in net position:4

Net position, beginning of
period
2,636.2 93.2 499.4 467.6 3,696.4 - 3,696.4
Adjustments to beginning
net position
Changes in accounting
principles
- - - 0.2 0.2 - 0.2
Beginning net position,
adjusted
2,636.2 93.2 499.4 467.8 3,696.6 - 3,696.6
Individual income taxes and
tax withholdings
1,039.0 176.5 375.1 0.1 1,590.7 - 1,590.7
Other taxes and
miscellaneous earned - - 0.4 134.0 134.4 - 134.4
revenue
Other changes in fund
balance (e.g., 41.0 (1.7) 564.8 6.9 611.0 - 611.0
appropriations, transfers)
Federal non-exchange
revenue
62.7 3.5 - 39.8 106.0 - 106.0
Total financing sources 1,142.7 178.3 940.3 180.8 2,442.1 - 2,442.1

Program gross costs and
non-program expenses 1,204.7 155.4 1,006.0 261.0 2,627.1 (0.9) 2,626.2
Less: program revenue - - (141.7) (107.2) (248.9) 0.9 (248.0)
Net cost 1,204.7 155.4 864.3 153.8 2,378.2 - 2,378.2
Ending net position 2,574.2 116.1 575.4 494.8 3,760.5 - 3,760.5
1
The combined presentation does not eliminate intra-entity balances or transactions between funds from dedicated collections held by the
entity.
2
The consolidated dedicated collections presentation eliminates balances and transactions between funds from dedicated collections
held by the entity, but does not eliminate balances or transactions between funds from dedicated collections and funds from other than
dedicated collections.
3
Other assets and other liabilities include multiple line items on the Balance Sheet.
4
By law, certain expenses (costs), revenues, and other financing sources related to the administration of the above funds are not charged
to the funds and are therefore financed and/or credited to other sources.
Funds from Dedicated Collections as of September 30, 2022

Assets:
Cash and other monetary
assets
- - - 167.8 167.8 - 167.8
Accounts receivable, net 2.1 2.9 25.6 26.0 56.6 - 56.6
Loans receivable, net - - - 2.0 2.0 - 2.0

Inventory and related
property, net
- - - 2.4 2.4 - 2.4
General property, plant and
equipment, net
- - 0.5 37.8 38.3 - 38.3
Investments - - - 26.2 26.2 - 26.2

Advances and
prepayments
- - 39.0 10.3 49.3 - 49.3
Other assets3 - - - 18.9 18.9 - 18.9

Investments in Treasury
securities, net of
unamortized
2,723.6 114.7 345.4 379.9 3,563.6 - 3,563.6
premiums/discounts
Other federal assets 15.6 0.7 284.0 323.7 624.0 (205.2) 418.8
Total assets 2,741.3 118.3 694.5 995.0 4,549.1 (205.2) 4,343.9
Liabilities and net

position:
Accounts payable - - 0.1 4.8 4.9 - 4.9
Federal employee and
veteran benefits payable
- - - 6.5 6.5 - 6.5
Environmental and disposal
liabilities
- - - 26.1 26.1 - 26.1
Benefits due and payable 98.7 24.2 85.1 10.2 218.2 - 218.2
Insurance and guarantee
program liabilities
- - - 9.6 9.6 - 9.6
Advances from others and
deferred revenues
- - 1.3 66.4 67.7 - 67.7
Other liabilities3 - - - 190.1 190.1 - 190.1
Federal liabilities 6.4 0.9 108.6 213.7 329.6 (205.2) 124.4
Total liabilities 105.1 25.1 195.1 527.4 852.7 (205.2) 647.5

Funds from Dedicated Collections as of September 30, 2022, continued

Net position:
Total net position 2,636.2 93.2 499.4 467.6 3,696.4 - 3,696.4
Total liabilities and net
position
2,741.3 118.3 694.5 995.0 4,549.1 (205.2) 4,343.9
Change in net position:4

Net position, beginning of
period
2,681.0 80.5 409.9 311.6 3,483.0 - 3,483.0
Adjustments to beginning
net position
Beginning net position,
adjusted
2,681.0 80.5 409.9 311.6 3,483.0 - 3,483.0
Individual income taxes and
tax withholdings
929.0 157.8 354.7 - 1,441.5 - 1,441.5
Other taxes and
miscellaneous earned - - (0.8) 132.2 131.4 - 131.4
revenue
Other changes in fund
balance (e.g., 37.9 (1.2) 504.4 126.3 667.4 - 667.4
appropriations, transfers)
Federal non-exchange
revenue
64.1 2.7 - 33.0 99.8 - 99.8
Total financing sources 1,031.0 159.3 858.3 291.5 2,340.1 - 2,340.1

Program gross costs and
non-program expenses 1,075.8 146.6 905.7 227.3 2,355.4 (0.8) 2,354.6
Less: program revenue - - (136.9) (91.8) (228.7) 0.8 (227.9)
Net cost 1,075.8 146.6 768.8 135.5 2,126.7 - 2,126.7
Ending net position 2,636.2 93.2 499.4 467.6 3,696.4 - 3,696.4
1
The combined presentation does not eliminate intra-entity balances or transactions between funds from dedicated collections held by the
entity.
2
The consolidated dedicated collections presentation eliminates balances and transactions between funds from dedicated collections
held by the entity, but does not eliminate balances or transactions between funds from dedicated collections and funds from other than
dedicated collections.
3
Other assets and other liabilities include multiple line items on the Balance Sheet.
4
By law, certain expenses (costs), revenues, and other financing sources related to the administration of the above funds are not charged
to the funds and are therefore financed and/or credited to other sources.
Generally, funds from dedicated collections are financed by specifically identified revenues, often supplemented by
other financing sources, provided to the government by non-federal 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. Funds from dedicated
collections generally include trust funds, public enterprise revolving funds (not including credit reform financing funds), and
special funds. Funds from dedicated collections specifically exclude any fund established to account for pensions, ORB,
OPEB, or other benefits provided for federal employees (civilian and military). In the Budget, the term “trust fund” means
only that the law requires a particular fund to be accounted for separately, used only for a specified purpose, and designated
as a trust fund. A change in law may change the future receipts and the terms under which the fund’s resources are spent. In
the private sector, trust fund refers to funds of one party held and managed by a second party (the trustee) in a fiduciary
capacity. The activity of funds from dedicated collections differs from fiduciary activities primarily in that assets within
funds from dedicated collections are government-owned. For additional information related to fiduciary activities, see Note
23—Fiduciary Activities.
Public enterprise revolving funds include expenditure accounts authorized by law to be credited with offsetting
collections, mostly from the public, that are generated by and dedicated to finance a continuing cycle of business-type
operations. Some of the financing for these funds may be from appropriations.
Special funds are federal funds dedicated by law for a specific purpose. Special funds include the special fund receipt
account and the special fund expenditure account.
Total assets represent the unexpended balance from all sources of receipts and amounts due to the funds from dedicated
collections, regardless of source, including related governmental transactions. These are transactions between two different
entities within the government or intradepartmental (for example, monies received by one entity of the government from
another entity of the government).
The federal assets are comprised of fund balances with Treasury, investments in Treasury securities—including
unamortized amounts, and other assets that include the related accrued interest receivable on federal investments. These
amounts were excluded in preparing the principal financial statements. The non-federal assets include activity with
individuals and organizations outside of the government.
Most of the assets within funds from dedicated collections are invested in intra-governmental debt holdings. The
government does not set aside assets to pay future benefits or other expenditures associated with funds from dedicated
collections. The cash receipts collected from the public for funds from dedicated collections are deposited in the General
Fund, which uses the cash for general government purposes. Treasury securities are issued to federal entities as evidence of
its receipts. Treasury securities are an asset to the federal entities and a liability to Treasury and, therefore, they do not
represent an asset or a liability in the Financial Report. These securities require redemption if a fund’s disbursements exceeds
its receipts. Redeeming these securities will increase the government’s financing needs and require more borrowing from the
public (or less repayment of debt), or will result in higher taxes than otherwise would have been needed, or less spending on
other programs than otherwise would have occurred, or some combination thereof. See Note 12—Federal Debt and Interest
Payable for additional information related to the investments in federal debt securities.
Below is a description of the major funds from dedicated collections, which also identifies the government entities that
administer each particular fund. For additional information regarding funds from dedicated collections, please refer to the
financial statements of the corresponding administering entities. For additional information on the benefits due and payable
liability associated with certain funds from dedicated collections, see Note 15—Benefits Due and Payable.
Federal Old-Age and Survivors Insurance Trust Fund

The OASI Trust Fund, administered by SSA, provides retirement and survivors benefits to qualified workers and their
families.
Payroll and self-employment taxes primarily fund the OASI Trust Fund. Interest earnings on Treasury securities, federal
entities’ payments for the Social Security benefits earned by military and federal civilian employees, and Treasury payments for
a portion of income taxes collected on Social Security benefits provide the fund with additional income. The law establishing the
OASI Trust Fund and authorizing the depositing of amounts to the credit of the fund is set forth in 42 U.S.C. § 401.
Federal Disability Insurance Trust Fund

The DI Trust Fund, administered by SSA, provides assistance and protection against the loss of earnings due to a wage
earner’s disability in form of monetary payments.
Like the OASI Trust Fund, payroll taxes primarily fund the DI Trust Fund. The fund also receives income from interest
earnings on Treasury securities, federal entities’ payments for the Social Security benefits earned by military and federal
civilian employees, and Treasury payments for a portion of income taxes collected on Social Security benefits. The law
establishing the DI Trust Fund and authorizing the depositing of amounts to the credit of the fund is set forth in 42 U.S.C. §
401.
Federal Medicare Insurance Trust Funds

(Medicare Parts A, B and D)
The HI Trust Fund, administered by HHS, finances Medicare Part A. This program funds the cost of inpatient hospital
and related care for individuals age 65 or older who meet certain insured status requirements and individuals younger than
age 65 with certain disabilities.
The HI Trust Fund is financed primarily by payroll taxes, including those paid by federal entities. It also receives
income from interest earnings on Treasury securities, a portion of income taxes collected on Social Security benefits,
premiums paid by, or on behalf of, aged uninsured beneficiaries, and receipts from fraud and abuse control activities. Section
1817 of the Social Security Act established the Medicare Hospital Trust Fund.
The SMI Trust Fund, administered by HHS, finances the Medicare Part B and the Medicare Prescription Drug Benefit
Program (Medicare Part D). These programs provide SMI benefits for enrolled eligible participants to cover physician and
outpatient services not covered by Medicare Part A and to obtain qualified prescription drug coverage, respectively. Medicare
Part B financing is not based on payroll taxes; it is primarily based on monthly premiums, income from the General Fund,
and interest earnings on Treasury securities. The Medicare SMI Trust Fund was established by Section 1841 of the Social
Security Act.
Medicare Part D was created by the Medicare Modernization Act of 2003 (P.L. 108-173). Medicare Part D financing is
similar to Part B; it is primarily based on monthly premiums and income from the General Fund, not on payroll taxes. The
fund also receives transfers from states.
All Other Funds from Dedicated Collections

The government is responsible for the management of numerous funds from dedicated collections that serve a wide
variety of purposes. The funds from dedicated collections presented on an individual basis in the above tables represent the
majority of the government’s net position attributable to funds from dedicated collections. All other activity attributable to
funds from dedicated collections is aggregated in accordance with SFFAS No. 27, Identifying and Reporting Funds from
Dedicated Collections, as amended by SFFAS No. 43, Funds from Dedicated Collections: Amending Statement of Federal
Financial Accounting Standards 27, Identifying and Reporting Earmarked Funds. The majority entities with funds from
dedicated collections within the “all other” aggregate, include the following:
• DOT • DOD • DOJ
• DOC • RRB • EPA
• DOI • DOE
• Treasury • HUD
In accordance with SFFAS No. 43, any funds established to account for pension, other retirement, or OPEB to civilian
or military personnel are excluded from the reporting requirements related to funds from dedicated collections.
Note 23. Fiduciary Activities

Fiduciary activities are the collection or receipt, and the management, protection, accounting, investment and
disposition by the government of cash or other assets in which non-federal individuals or entities have an ownership interest
that the government must uphold. Fiduciary cash and other assets are not assets of the government and are not recognized on
the consolidated Balance Sheet. The government’s fiduciary activities include the TSP, which is administered by the FRTIB,
and the Indian Tribal and individual Indian Trust Funds, which are administered by the DOI.
Schedule of Fiduciary Net Assets as of September 30, 2023, and 2022
Thrift Savings Plan 794.7 726.0

Department of the Interior 9.0 8.5
All other 5.6 5.4
Total fiduciary net assets 809.3 739.9
In accordance with the requirements of SFFAS No. 31, Accounting for Fiduciary Activities, fiduciary investments in
Treasury securities and fund balance with Treasury held by fiduciary funds are to be recognized on the Balance Sheet as
federal debt and interest payable and a liability for fiduciary fund balance with Treasury, respectively.
As of September 30, 2023, total fiduciary investments in Treasury securities and in non-Treasury securities are $296.8 billion
and $496.5 billion, respectively. As of September 30, 2022, total fiduciary investments in Treasury securities and in non-
Treasury securities were $318.4 billion and $406.3 billion, respectively. Refer to Note 12—Federal Debt and Interest Payable
for more information on Treasury securities.
As of September 30, 2023, and 2022, the total fiduciary fund balance with Treasury is $1.7 billion and $1.7 billion,
respectively. A liability for this fiduciary fund balance with Treasury is reflected as other miscellaneous liabilities in Note
18—Other Liabilities.
As of September 30, 2023, and 2022, collectively, the fiduciary investments in Treasury securities and fiduciary fund
balance with Treasury held by all government entities represent $5.1 billion and $4.8 billion, respectively, of unrestricted
cash included within cash held by Treasury for government-wide operations shown in Note 2—Cash and Other Monetary
Assets.
Thrift Savings Plan

The TSF maintains and holds in trust the assets of the TSP. The TSP is administered by an independent government
entity, the FRTIB, which is charged with operating the TSP prudently and solely in the interest of the participants and their
beneficiaries.
The TSP is a retirement savings and investment plan for federal employees and members of the uniformed services. It
was authorized by the Congress in the Federal Employees’ Retirement System Act of 1986. The plan provides federal
employees and members of the uniformed services with a savings and tax benefit similar to what many private sector
employers offer their employees under 401(k) plans. This includes two fixed income funds, three stock funds and ten
lifecycle funds. Effective June 1, 2022, Accenture Federal Services, as part of its recordkeeping services contract, provides a
Mutual Fund Window that offers participants who meet certain eligibility criteria access to mutual funds. The plan was
primarily designed to be a key part of the retirement package (along with a basic annuity benefit and Social Security) for
employees who are covered by FERS.
As of September 30, 2023, and 2022, the TSP held $794.7 billion and $726.0 billion, respectively, in net assets, which
included $293.4 billion and $315.4 billion, respectively, of nonmarketable Treasury securities. The TSF combines the net
assets of the TSP and the FRTIB in its financial statements. Only the TSP net assets of the TSF financial statements are
disclosed in this note. The most recent audited financial statements for the TSF are as of December 31, 2022, and 2021. For
additional information about FRTIB, the TSP and the investment options of the TSP, please refer to the FRTIB website at
https://www.frtib.gov.
Department of Interior–Indian Trust Funds

As stated above, DOI has responsibility for the assets held in trust on behalf of American Indian Tribes and individuals.
DOI maintains accounts for Tribal and Other Trust Funds (including the Alaska Native Escrow Fund) and IIM Trust Funds in
accordance with the American Indian Trust Fund Management Reform Act of 1994. The fiduciary balances that have
accumulated in these funds have resulted from land use agreements, royalties on natural resource depletion, other proceeds
derived directly from trust resources, judgment awards, settlements of claims, and investment income. DOI maintains
separate financial statements for these trust funds, which are prepared using a cash or modified cash basis of accounting, a
comprehensive basis of accounting other than GAAP. The independent auditors’ reports on the Tribal and Other Trust Funds
were qualified as it was not practical to extend audit procedures sufficiently to satisfy themselves as to the fairness of the
trust fund balances. The IIM Trust Funds received an unmodified opinion from the auditors. As of September 30, 2023, and
2022, the DOI held $9.0 billion and $8.5 billion, respectively, in net assets. For additional information related to these assets,
please refer to the DOI website at https://www.doi.gov.
All Other Entities with Fiduciary Activities

The government is responsible for the management of other fiduciary net assets on behalf of various non-federal
entities. The entities presented individually in the table on the previous page represent the vast majority of the government’s
fiduciary net assets. All other component entities with fiduciary net assets are aggregated in accordance with SFFAS No. 31.
As of September 30, 2023, and 2022, including TSP and DOI, there are a total of 21 federal entities with fiduciary activities
at a grand total of 62 and 68 fiduciary funds, respectively. SBA and DOD are the largest entities relating to the fiduciary
activities of the remaining entities within the “all other” aggregate balance. As of September 30, 2023, “all other” fiduciary
net assets were $5.6 billion, compared to $5.4 billion as of September 30, 2022.
Note 24. Long-Term Fiscal Projections

The SLTFP is prepared pursuant to SFFAS No. 36, Comprehensive Long-Term Projections for the U.S. Government.
The financial statements, Note 24, and unaudited RSI provide information to aid readers of the Financial Report in assessing
whether current policies for federal spending and taxation can be sustained and the extent to which the cost of public services
received by current taxpayers will be shifted to future taxpayers. This assessment requires prospective information about
receipts and spending, the resulting debt, and how these amounts relate to the size of the economy. A sustainable policy is
defined as one where the ratio of federal debt held by the public to GDP (the debt-to-GDP ratio) is ultimately stable or
declining. The Financial Report does not address the sustainability of state and local government fiscal policy.
The projections and analysis presented here are extrapolations based on an array of assumptions described in detail
below. A fundamental assumption is that current federal policy will not change. This assumption is made so as to inform the
question of whether current fiscal policy is sustainable and, if it is not sustainable, the magnitude of needed reforms to make
fiscal policy sustainable. The projections are therefore neither forecasts nor predictions. If policy changes are implemented,
perhaps in response to projections like those presented here, then actual financial outcomes will be different than those
projected. The methods and assumptions underlying the projections are subject to continuing refinement.
The projections focus on future cash flows, and do not reflect either the accrual basis or the modified-cash basis of
accounting. These cash-based projections reflect receipts or spending at the time cash is received or when a payment is made
by the government. In contrast, accrual-based projections would reflect amounts in the time period in which income is earned
or when an expense or obligation is incurred. The cash basis accounting underlying the long-term fiscal projections is
consistent with methods used to prepare the SOSI and the generally cash-based federal budget.
The SLTFP displays the PV of 75-year projections for various categories of the federal government’s receipts and non-
interest spending. 6 The projections for FYs 2023 and 2022 are expressed in PV dollars and as a percent of the PV of GDP 7 as
of September 30, 2023 and September 30, 2022, respectively. The PV of a future amount, for example $1.0 billion in October
2098, is the amount of money that if invested on September 30, 2023 in an account earning the government borrowing rate
would have a value of $1.0 billion in October 2098. 8
The PV of a receipt or spending category over 75 years is the sum of the annual PV amounts. When expressing a receipt
or spending category over 75 years as a percent of GDP, the PV dollar amount is divided by the PV of GDP over 75 years.
Measuring receipts and spending as a percent of GDP is a useful indicator of the economy’s capacity to sustain federal
government programs.
Fiscal Projections
Receipt categories in the long-term fiscal projections include individual and corporation income taxes, Social Security
and Medicare payroll taxes, and a residual category of “other receipts.” Non-interest spending categories include
discretionary spending that is funded through annual appropriations, such as spending for national security, and mandatory
(entitlement) spending that is generally funded with permanent or multi-year appropriations, such as spending for Social
Security and Medicare. This year’s long-term fiscal projections for Social Security and Medicare are based on the same
economic and demographic assumptions that underlie the 2023 SOSI, which is as of January 1, 2023. Accordingly, the
economic and demographic assumptions used in the long-term fiscal projections are not adjusted for the more current near-
term economic information after the time assumptions were set in December 2022. Projections for the other categories of
receipts and spending are consistent with the economic and demographic assumptions in the Trustees Reports and include
updates for actual budget results for FY 2023 or budgetary estimates from the President’s FY 2024 Budget. 9 Where possible,
those budget totals are adjusted before spending is projected to remove outlays for programs or activities that are judged to be
temporary, such as spending related to the COVID-19 pandemic and economic recovery.
The projections assume the continuance of current policy, which builds off current law, but can be different than current
law in cases where lawmakers have in the past periodically changed the law in a consistent way. The specific assumptions
that depart from current law and are used for the current policy basis of these projections are explained below.
6
For the purposes of this analysis, spending is defined in terms of outlays. In the context of federal budgeting, spending can either refer to budget authority –
the authority to commit the government to make a payment; to obligations – binding agreements that will result in payments, either immediately or in the
future; or to outlays – actual payments made.
7
GDP is a standard measure of the overall size of the economy and represents the total market value of all final goods and services produced domestically
during a given period of time. The components of GDP are: private sector consumption and investment, government consumption and investment, and net
exports (exports less imports). Equivalently, GDP is a measure of the gross income generated from domestic production over the same time period.
8
PVs recognize that a dollar paid or collected in the future is worth less than a dollar today because a dollar today could be invested and earn interest. To
calculate a PV, future amounts are thus reduced using an assumed interest rate, and those reduced amounts are summed.
9
Social Security and Medicare Trustees Reports can be found at https://www.ssa.gov/OACT/TR/.
The projections shown in the SLTFP are made over a 75-year time frame, consistent with the time frame featured in the
Social Security and Medicare Trustees Reports. However, these projections are for fiscal years starting on October 1, whereas
the Trustees Reports feature calendar-year projections. Using fiscal years allows the projections to start from the actual
budget results from FYs 2023 and 2022.
This year’s estimate of the 75-year PV imbalance of receipts less non-interest spending is 3.8 percent of the current 75-
year PV of GDP, compared to 4.2 percent as was projected in last year’s Financial Report. 10 The above table reports the
effects of various factors on the updated projections.
• The largest factor affecting the projections is the effect of new Social Security, Medicare, and Medicaid program-
specific actuarial assumptions, which decrease the fiscal imbalance as a share of the 75-year PV of GDP by 0.6
percentage points ($10.6 trillion). 11 The change is primarily attributable to near-term growth rate assumptions for
Medicaid. In the 2022 projections, growth rates through 2027 followed projections in the 2018 Medicaid Actuarial
Report. 12 Growth rates for the 2023 projections are based on the NHE data and reflect the expiration of temporary
measures related to the COVID-19 pandemic.
• The second largest factor affecting the projections—increasing the imbalance as a share of the 75-year PV of GDP
by 0.4 percentage points ($7.4 trillion)—is due to actual budget results for FY 2023 and baseline estimates published
in the FY 2024 President’s Budget, plus adjustments to discretionary spending enacted in the FRA (P.L. 118-5).
This deterioration in the fiscal position is largely due to a higher 75-year PV of discretionary spending on defense
programs and mandatory spending on programs other than Social Security, Medicare, and Medicaid, and lower
individual income taxes as a share of wages and salaries. That deterioration is partially offset by a lower 75-year PV
of spending on non-defense discretionary programs—attributable to the FRA caps—and higher other receipts.
• The next largest factor affecting the projections is the update of economic and demographic assumptions that
decreases the fiscal imbalance by 0.3 percentage points ($5.0 trillion). Contributing to this improvement in the
imbalance are higher wages that increase receipts and GDP growth rates that lead to reduced spending as a
percentage of GDP. The 75-year PV of GDP for this year’s projections is $1,919.1 trillion, greater than last year's
$1,872.9 trillion.
• The fourth largest factor affecting the projected imbalance is the change in reporting period—the effect of shifting
calculations from 2023 through 2097 to 2024 through 2098. The update increases the imbalance of the 75-year PV
10
The fiscal imbalances reported in the long-term fiscal projections do not include the initial level of publicly held debt, which was $26.2 trillion in 2023 and
$24.3 trillion in 2022, and, therefore, they do not by themselves answer the question of how large fiscal reforms must be to make fiscal policy sustainable.
See “Sustainability and the Fiscal Gap” for additional discussion. More information on the projections in last year’s Financial Report can be found in Note
24 to the financial statements here: https://fiscal.treasury.gov/reports-statements/#.
11
For more information on Social Security and Medicare actuarial estimates, refer to Note 25—Social Insurance.
12
Christopher J. Truffer, Kathryn E. Rennie, Lindsey Wilson, and Eric T. Eckstein II, 2018 Actuarial Report on the Financial Outlook for Medicaid, Office
of the Actuary, CMS, and HHS.
of receipts less non-interest spending by $1.9 trillion, which has a negligible effect as a share of the 75-year PV of
GDP.
The net effect of the changes in the table above, equal to the penultimate row in the SLTFP, shows that this year’s
estimate of the overall 75-year PV of receipts less non-interest spending is negative 3.8 percent of the 75-year PV of GDP
(negative $73.2 trillion, as compared to a GDP of $1,919.1 trillion). This imbalance can be broken down by funding source.
Spending projections exceeded receipts by 2.2 percent of GDP (about $42.2 trillion) among programs funded by the
government’s general revenues, and there is an imbalance of 1.6 percent of GDP (about $30.9 trillion) 13 for the combination
of Social Security (OASDI) and Medicare Part A, which under current law are funded with payroll taxes and not in any
material respect with general revenues. 14, 15 By comparison, the FY 2022 projections showed that programs funded by the
government’s general revenues had an excess of spending over receipts of 2.7 percent of GDP ($50.2 trillion) while the
payroll tax-funded programs had an imbalance of spending over receipts of 1.6 percent of GDP ($29.4 trillion).
Sustainability and the Fiscal Gap
This Financial Report presents data, including debt, as a percent of GDP to help readers assess whether current fiscal
policy is sustainable. The debt-to-GDP ratio was approximately 97 percent at the end of FY 2023. As discussed further in the
unaudited RSI, the projections based on this Financial Report’s assumptions indicate that current policy is not sustainable. If
current policy is left unchanged, the projections show the debt-to-GDP ratio will be approximately 100 percent in 2024, rise
to 200 percent by 2047 and reach 531 percent in 2098. Moreover, if the trends that underlie the 75-year projections were to
continue, the debt-to-GDP ratio would continue to rise beyond the 75-year window.
The fiscal gap measures how much the primary surplus (receipts less non-interest spending) must increase in order for
fiscal policy to achieve a target debt-to-GDP ratio in a particular future year. In these projections, the fiscal gap is estimated
over a 75-year period, from 2024 to 2098, and the target debt-to-GDP ratio is equal to the ratio at the beginning of the
projection period, in this case the estimated debt-to-GDP ratio at the end of FY 2023. The target year is the last year of the
75-year period (2098).
The 75-year fiscal gap under current policy is estimated at 4.5 percent of GDP, which is 23.8 percent of the 75-year PV
of projected receipts and 19.8 percent of the 75-year PV of non-interest spending. This estimate of the fiscal gap is 0.4
percentage points smaller than was estimated in 2022 (4.9 percent of GDP).
The projections show that projected primary deficits average 3.8 percent of GDP over the next 75 years under current
policy. If policies were put in place that would close the fiscal gap, the average primary surplus over the next 75 years would
be 0.6 percent of GDP, 4.5 percentage points higher than the projected PV of receipts less non-interest spending shown in the
SLTFP. In these projections, closing the fiscal gap requires running a substantially positive level of primary surplus, rather
than simply eliminating the primary deficit. The primary reason is that the projections assume future interest rates will exceed
the growth rate of GDP. Achieving primary balance (that is, running a primary surplus of zero) implies that the debt held by
the public grows each year by the amount of interest spending, which under these assumptions would result in debt growing
faster than GDP.
13
The 75-year PV imbalance for Social Security and Medicare Part A of $30.9 trillion is comprised of several line items from the SLTFP – Social Security
outlays net of Social Security payroll taxes ($33.5 trillion) and Medicare Part A outlays net of Medicare payroll taxes ($10.4 trillion) – as well as
subcomponents of these programs not presented separately in the statement. These subcomponents include Social Security and Medicare Part A
administrative costs that are classified as non-defense discretionary spending ($0.6 trillion) and Social Security and Medicare Part A income other than
payroll taxes: taxation of benefits (-$6.4 trillion), federal employer share (-$1.5 trillion), and other income (-$5.8 trillion).
14
Social Security and Medicare Part A expenditures can exceed payroll tax revenues in any given year to the extent that there are sufficient balances in the
respective trust funds; these balances derive from past excesses of payroll tax revenues over expenditures and interest earned on those balances and represent
the amount the General Fund owes the respective trust fund programs. When spending does exceed payroll tax revenues, as has occurred each year since
2008 for Medicare Part A and 2010 for Social Security, the excess spending is financed first with interest due from the General Fund and secondly with a
drawdown of the trust fund balance; in either case, the spending is ultimately supported by general revenues or borrowing. Under current law, benefits for
Social Security and Medicare Part A can be paid only to the extent that there are sufficient balances in the respective trust funds. In order for the long-term
fiscal projections to reflect the full size of these programs’ commitments to pay future benefits, the projections assume that all scheduled benefits will be
financed with borrowing to the extent necessary after the trust funds are depleted.
15
The fiscal imbalances reported in the long-term fiscal projections are limited to future outlays and receipts. They do not include the initial level of
publicly-held debt, $26.2 trillion in 2023 and $24.3 trillion in 2022, and therefore they do not by themselves answer the question of how large fiscal reforms
must be to make fiscal policy sustainable, or how those reforms divide between reforms to Social Security and Medicare Part A and to other programs. Other
things equal, past cash flows (primarily surpluses) for Social Security and Medicare Part A reduced federal debt at the end of 2023 by $3.0 trillion (the trust
fund balances at that time); the contribution of other programs to federal debt at the end of 2023 was therefore $29.2 trillion. Similarly, because the $30.9
trillion imbalance between outlays and receipts over the next 75 years for Social Security and Medicare Part A does not take account of the Social Security
and Medicare Part A trust fund balances, it overstates the magnitude of reforms necessary to make Social Security and Medicare Part A solvent over 75
years by $3.0 trillion. The $3.0 trillion combined Social Security and Medicare Part A trust fund balance represents a claim on future general revenues.
Assumptions Used and Relationship to Other Financial Statements

A fundamental assumption underlying the projections is that current federal policy (defined below) does not change.
The projections are therefore neither forecasts nor predictions, and do not consider large infrequent events such as natural
disasters, military engagements, or economic crises. By definition, they do not build in future changes to policy. If policy
changes are enacted, perhaps in response to projections like those presented here, then actual fiscal outcomes will be different
than those projected.
Even if policy does not change, actual spending and receipts could differ materially from those projected here. Long-
range projections are inherently uncertain and are necessarily based on simplifying assumptions. For example, one key
simplifying assumption is that interest rates paid on debt held by the public remain unchanged, regardless of the amount of
debt outstanding. To the contrary, it is likely that future interest rates would increase if the debt-to-GDP ratio rises as shown
in these projections. To help illustrate this uncertainty, projections that assume higher and lower interest rates are presented in
the “Alternative Scenarios” discussion in the unaudited RSI section of this Financial Report.
As is true for prior long-term fiscal projections for the Financial Report, the assumptions for GDP, interest rates, and
other economic and demographic variables underlying this year’s projections are the same assumptions that underlie the most
recent Social Security and Medicare Trustees Report projections, adjusted for historical revisions that occur annually. These
assumptions differ from those in the President’s Budget because they extend for 75 years, rather than 25 years. Additionally,
they assume extension of current policy whereas the economic assumptions in the President’s Budget assume full
implementation of policy proposals reflected in the Budget. 16 The use of discount factors consistent with the Social Security
Trustees rate allows for consistent PV calculations over 75 years between the SLTFP and the SOSI.
The following bullets summarize the key assumptions used for the categories of receipts and spending presented in the
SLTFP and the disclosures:
• Social Security: Projected Social Security (OASDI) spending excludes administrative expenses, which are
classified as discretionary spending, and is based on the projected spending in the 2023 Social Security Trustees
Report for benefits and for the Railroad Retirement interchange. The projections of Social Security payroll taxes and
Social Security spending are based on future spending and payroll taxes projected in the 2023 Social Security
Trustees Report, adjusted for presentational differences and converted to a fiscal year basis. More information about
the assumptions for Social Security cost growth can be found in Note 25 and the unaudited RSI discussion of Social
Insurance.
• Medicare: Projected Medicare spending also excludes administrative expenses, which are classified as discretionary
spending, and is based on projected spending from the 2023 Medicare Trustees Report. The projections here make
some adjustments to the Trustees Report projections. Medicare Part B and D premiums, as well as state
contributions to Part D, are subtracted from gross spending in measuring Part B and Part D spending, just as they are
subtracted from gross cost to yield net cost in the financial statements. 17 Here, as in the federal budget, premiums are
treated as “negative spending” rather than receipts since they represent payment for a service rather than payments
obtained through the government’s sovereign power to tax. This is similar to the financial statement treatment of
premiums as “earned” revenue as distinct from all other sources of revenue, such as taxes. The projections are based
on Medicare spending in the Medicare Trustees Report, adjusted for presentational differences and converted to a
fiscal year basis. Medicare Part A payroll taxes are projected similarly. More information about the assumptions for
Medicare cost growth can be found in Note 25 and the unaudited RSI discussion of Social Insurance. As discussed
in Note 25, there is uncertainty about whether the reductions in health care cost growth assumed in the Medicare
Trustees Report will be fully achieved. Note 25 illustrates this uncertainty by presenting an illustrative alternative
scenario.
• Medicaid: The Medicaid spending projections start with NHE projections prepared by CMS’s Office of the
Actuary, which were released in June 2023. 18, 19 These projections are based on recent trends in Medicaid spending
and the demographic, economic, and health cost growth assumptions in the Medicare Trustees Report. The NHE
projections, which end in 2031, are adjusted to accord with the actual Medicaid spending in FY 2023. After 2031,
16
See the FY 2024 President’s Budget, Analytical Perspectives Volume, Chapter 3 “Long-Term Budget Outlook.”
17
Medicare Part B and D premiums and state contributions to Part D are subtracted from the Part B and D spending displayed in the SLTFP. The total 75-
year PV of these subtractions is $20.1 trillion, or 1.0 percent of GDP.
18
This represents an update to the model’s assumptions and methodology. In the 2022 Financial Report, Medicaid projections began with the projections
from the 2018 Medicaid Actuarial Report prepared by the CMS’s Office of Actuary, and those projections were similarly adjusted to account for actual
spending in the most recently completed fiscal year. Actual Medicaid spending in FY 2022 included temporary spending increases due to changes in
enrollment and other temporary measures related to the COVID-19 pandemic. Spending associated with those temporary measures could not be identified
and excluded from budget totals before Medicaid outlays were projected, adding uncertainty to the 2022 long-term fiscal projections.
19
NHE data are available at https://www.cms.gov/data-research/statistics-trends-and-reports/national-health-expenditure-data.
the number of beneficiaries is projected to grow at the same rate as total population. Medicaid cost per beneficiary is
assumed to grow at the same rate as Medicare benefits per beneficiary after 2034, after a three-year phase-in to the
Medicare per beneficiary growth rate over the period 2032-2034. Between 1987 and 2017, the average annual
growth rates of spending per beneficiary for Medicaid and Medicare were within 0.3 percentage point of each other.
Projections of Medicaid spending are subject to added uncertainty related to: 1) assumed reductions in health care
cost growth discussed above in the context of Medicare; 2) the projected size of the Medicaid enrolled population,
which depends on a variety of factors, including future state actions regarding the PPACA Medicaid expansion; and
3) any continued effects of the COVID-19 pandemic.
• Other Mandatory Spending: Other mandatory spending includes federal employee retirement, veterans’ disability
benefits, and means-tested entitlements other than Medicaid. Current mandatory spending components that are
judged permanent under current policy are assumed to increase by the rate of growth in nominal GDP starting in
2024, implying that such spending will remain constant as a percent of GDP. 20, 21 Projected spending for insurance
exchange subsidies starting in 2024 grows with growth in the non-elderly population and with the NHE projected
per enrollee cost growth for other private health insurance for the NHE projection period (through 2031 for the FY
2023 projections), and with growth in per enrollee health care costs as projected for the Medicare program after that
period. As discussed in Note 25, there is uncertainty about whether the reductions in health care cost growth
projected in the Medicare Trustees Report will be fully achieved. Projected exchange subsidy spending as a percent
of GDP remains below the failsafe provision in the PPACA that limits the federal share of spending to 0.504 percent
of GDP.
• Defense and Non-defense Discretionary Spending: Discretionary spending through 2025 follows the caps enacted
in the FRA, then grows with GDP starting in 2026. To illustrate sensitivity to different assumptions, PV calculations
under alternative discretionary growth scenarios are presented in the unaudited “Alternative Scenarios” RSI section.
• Receipts (Other than Social Security and Medicare Payroll Taxes): Individual income taxes are based on the
share of salaries and wages in the current law baseline projection in the FY 2024 President’s Budget, and the salaries
and wages projections in the Social Security 2023 Trustees Report. That baseline accords with the tendency of
effective tax rates to increase as growth in income per capita outpaces inflation (also known as “bracket creep”) and
the expiration dates of individual income and estate and gift tax provisions of TCJA. Individual income taxes
increase gradually from 19 percent of wages and salaries in 2024 to 29 percent of wages and salaries in 2098 as real
taxable incomes rise over time and an increasing share of total income is taxed in the higher tax brackets. Through
the first 10 years of the projections, corporation tax receipts as a percent of GDP reflect the economic and budget
assumptions used in developing the FY 2024 President’s Budget 10-year baseline budgetary estimates. After this
time, corporation tax receipts grow at the same rate as nominal GDP. Other receipts also reflect the FY 2024
President’s Budget baseline levels as a share of GDP throughout the budget window, and grow with GDP outside of
the budget window. Corporation tax receipts fall from 1.7 percent of GDP in 2024 to 1.2 percent of GDP in 2033,
where they stay for the remainder of the projection period. The ratio of other receipts, including excise taxes, estate
and gift taxes, customs duties, and miscellaneous receipts, to GDP is estimated to increase from 1.1 percent in 2024
to 1.2 percent by 2027 where it remains through the projection period. To illustrate uncertainty, PV calculations
under higher and lower receipts growth scenarios are presented in the “Alternative Scenarios” section.
• Debt and Interest Spending: Interest spending is determined by projected interest rates and the level of outstanding
debt held by the public. The long-run interest rate assumptions accord with those in the 2023 Social Security
Trustees Report. 22 The average interest rate over this year’s projection period is 4.5 percent, approximately the same
as the 2022 Financial Report. These rates are also used to convert future cash flows to PVs as of the start of FY
2024. Debt at the end of each year is projected by adding that year’s deficit and other financing requirements to the
debt at the end of the previous year.
Departures of Current Policy from Current Law
The long-term fiscal projections are made on the basis of current policy, which in some cases is assumed to be different
from current law. The notable differences between current policy that underlies the projections and current law are: 1)
20
Other mandatory spending in 2023 from legislation enacted in response to the COVID-19 pandemic is considered temporary and is not assumed to
increase with nominal GDP. Such spending is identified using Disaster Emergency Fund Code attributes in budget execution data for the following: the
Families First Coronavirus Response Act (P.L. 116-127); the CARES Act (P.L. 116-136); the Paycheck Protection Program and Health Care Enhancement
Act (P.L. 116-139); the CAA, 2021 (P.L. 116-260, Division N); and the ARP (P.L. 117-2). Spending data for COVID-19 response legislation are available
on USAspending.gov.
21
This assumed growth rate for other mandatory programs after 2024 is slightly higher than the average growth rate in the most recent OMB and
Congressional Budget Office 10-year budget baselines.
22
As indicated in the more detailed discussion of Social Insurance in Note 25 to the financial statements.
projected spending, receipts, and borrowing levels assume raising or suspending the current statutory limit on federal debt; 2)
continued discretionary appropriations are assumed throughout the projection period; 3) scheduled Social Security and
Medicare Part A benefit payments are assumed to occur beyond the projected point of trust fund depletion; and 4) many
mandatory programs with expiration dates prior to the end of the 75-year projection period are assumed to be reauthorized.
As is true in the Medicare Trustees Report and in the SOSI, the projections incorporate programmatic changes already
scheduled in law, such as the PPACA productivity adjustment for non-physician Medicare services and the expiration of
certain physician bonus payments in 2025.
Note 25. Social Insurance

SOSI presents the projected actuarial PV of the estimated future revenue and estimated future expenditures of the Social
Security, Medicare, Railroad Retirement, and Black Lung social insurance programs which are administered by the SSA,
HHS, RRB, and DOL, respectively. Social Security and Medicare projections are based on current law and the Social
Security and Medicare trustees intermediate set of assumptions, except that the projections assume full Social Security and
Medicare Part A benefits are paid after fund depletion contrary to current law.
Contributions consist of: payroll, income, and excise taxes, premiums from, and state transfers on behalf of,
participants in Medicare, and miscellaneous reimbursements from the General Fund. Generally, beneficiaries finance the
remainder of Parts B and D costs via monthly premiums to these programs. With the introduction of Part D drug coverage,
Medicaid is no longer the primary payer of drug costs for full-benefit dually eligible beneficiaries of Medicare and Medicaid.
For those beneficiaries, states are subject to a contribution requirement and must pay a portion of their estimated foregone
drug costs into the Part D account (referred to as state transfers). By accounting convention, the General Fund transfers are
eliminated in the consolidation of the SOSI at the government-wide level. These General Fund transfers that are used to
finance Medicare Parts B and D are also shown as eliminations on these calculations. For the FYs 2023 and 2022, the
amounts eliminated totaled $48.5 trillion and $47.5 trillion, respectively.
The SOSI also includes projected general revenues that, under current law, would be used to finance the remainder of
the expenditures in excess of revenues for Medicare Parts B and D that is reported in the SOSI. Expenditures include benefit
payments scheduled under current law and administrative expenses. Current Social Security and Medicare Part A law
provides for full benefit payments only to the extent that there are sufficient balances in the trust funds. Social insurance
programs utilize “trust funds” to account for dedicated collections held for later use to accomplish the program’s purpose.
Expenditures reflect full benefit payments even after the point at which trust fund asset reserves are projected to be depleted.
Refer to the unaudited RSI–Social Insurance section and SSA’s, HHS’s, RRB’s, and DOL’s financial statements for
additional information on Social Security, Medicare, Railroad Retirement, and Black Lung program financing.
The estimates in the consolidated SOSI of the open group measures are for persons who are participants or eventually
will participate in the programs as contributors (workers) or beneficiaries (retired workers, survivors, dependents, and
disabled) during the 75-year projection period. The closed group comprises only current participants which are those who
have attained age 15 at the start of the projection period. Actuarial PV of estimated future income (excluding interest) and
estimated future expenditures for the Social Security and Medicare social insurance programs are presented for three different
groups of participants: 1) current participants who have not yet attained eligibility age; 2) current participants who have
attained eligibility age; and 3) new entrants, who are expected to become participants in the future. Current participants in the
Social Security and Medicare programs are the closed group of taxpayers and/or beneficiaries who are aged at least 15 years
at the start of the projection period. Future participants for Social Security and Medicare include those born during the
projection period and individuals below age 15 as of January 1 of the valuation year. Railroad Retirement’s future
participants are the projected new entrants as of October 1 of the valuation year.
The trust fund balances as of the valuation date for the respective programs, including interest earned, are shown in the
table below. 23 The PV of estimated future expenditures in excess of estimated future revenue are calculated by subtracting the
actuarial PV of future scheduled contributions as well as dedicated tax income by and on behalf of current and future
participants from the actuarial PV of the future scheduled benefit payments to them or on their behalf. To determine a
program’s funding shortfall over any given period of time, the starting trust fund balance is subtracted from the PV of
expenditures in excess of revenues over the period. The portion of each trust fund not required to pay benefits and
administrative costs is invested, on a daily basis, in interest-bearing obligations of the U.S. government. The Social Security Act
authorizes the issuance by Treasury of special nonmarketable, intra-governmental debt obligations for purchase exclusively by
the trust funds. Although the special issues cannot be bought or sold in the open market, they are redeemable at any time at face
value and thus bear no risk of fluctuation in principal value due to changes in market yield rates. Interest on the bonds is credited
to the trust funds and becomes an asset to the funds and a liability to the General Fund. These Treasury securities and related
interest are eliminated in consolidation at the government-wide level. For additional information, see Note 22—Funds from
Dedicated Collections.
23
Trust fund balances for the Railroad Retirement and Black Lung programs are not included, as these balances are less than $50.0 billion.
Social Insurance Programs Trust Fund Balances1
Social Security 2.8 2.9 2.9 2.9 2.9

Medicare 0.4 0.4 0.3 0.3 0.3
1
As of the valuation date of the respective programs.
Medicare – Illustrative Alternative Scenario

The financial projections for the Medicare program reflect substantial, but very uncertain, cost savings deriving from
current-law provisions that lowered increases in Medicare payment rates to most categories of health care providers. Certain
features of current law may result in some challenges for the Medicare program including physician payments, payment rate
updates for most non-physician categories, and productivity adjustments. Payment rate updates for most non-physician
categories of Medicare providers are reduced by the growth in economy-wide private nonfarm business total factor
productivity although these health providers have historically achieved lower levels of productivity growth. Should payment
rates prove to be inadequate for any service, beneficiaries’ access to and the quality of Medicare benefits would deteriorate
over time, or future legislation would need to be enacted that would likely increase program costs beyond those projected
under current law. Please refer to the unaudited RSI—Social Insurance and HHS financial statements for additional
information.
The illustrative alternative scenario projections below help to illustrate and quantify the magnitude of the potential cost
understatement under current law. The difference between current-law and illustrative alternative scenario projections is
substantial for Parts A and B. The illustrative alternative scenario projections for Parts A and B illustrate the impact that
would occur if the payment updates that are affected by the productivity adjustments were to gradually transition from
current law to the payment updates assumed for private health plans, the physician updates transition to the Medicare
Economic Index, and the bonuses paid to qualified physicians in advance APM did not expire. The extent to which actual
future Part A and Part B costs exceed the projected amounts due to changes to the productivity adjustments and physician
updates depends on what specific changes might be legislated and whether Congress would pass further provisions to help
offset such costs. This alternative was developed for illustrative purposes only and the calculations have not been audited.
Medicare Present Values (Unaudited)
2023 Consolidated Illustrative

SOSI Alternative
(In trillions of dollars) Current Law Scenario 1, 2
Income:
Part A 31.3 31.3
Part B 3 15.7 17.9
Part D 4 3.0 3.0
Total income 50.0 52.2
Expenditures:
Part A 35.9 42.3
Part B 56.6 64.5
Part D 10.6 10.6
Total expenditures 103.1 117.4
Income less expenditures:

Part A (4.6) (11.0)
Part B (40.9) (46.6)
Part D (7.6) (7.6)
Excess of expenditures over income (53.1) (65.2)
1
These amounts are not presented in the current fiscal year Trustees Report.
2
A set of illustrative alternative Medicare projections has been prepared under a hypothetical modification to current law. No
endorsement of the illustrative alternative by the Trustees, CMS, or the Office of the Actuary should be inferred.
3
Excludes $40.9 trillion and $46.6 trillion of general revenue contributions from the 2023 Consolidated SOSI Current Law projection and
the Illustrative Alternative Scenario's projection, respectively; i.e., to reflect Part B income on a consolidated government-wide basis.
4
Excludes $7.6 trillion of general revenue contributions from both the 2023 Consolidated SOSI Current Law projection and the Illustrative
Alternative Scenario's projection; i.e., to reflect Part D income on a consolidated government-wide basis.
Demographic and Economic Assumptions
Social Security and Medicare – Demographic and Economic Assumptions and Summary Measures
Demographic Assumptions
2023 2030 2040 2050 2060 2070 2080 2090 210013
Total Fertility Rate 1
1.7 1.9 2.0 2.0 2.0 2.0 2.0 2.0 2.0
Age-Sex Adjusted Death Rate2 798.0 738.4 679.9 627.3 580.7 539.4 502.7 469.9 440.6
Net Annual Immigration3 2,030 1,348 1,291 1,258 1,241 1,228 1,220 1,216 1,214
Period Life Expectancy at Birth - Male4 76.1 77.1 78.1 79.2 80.2 81.1 82.0 82.9 83.6
Period Life Expectancy at Birth - Female4 81.2 82.1 83.0 83.8 84.7 85.4 86.1 86.8 87.4
Economic Assumptions (percent change)

2023 2030 2040 2050 2060 2070 2080 2090 210013
Real Wage Growth 5
0.2 1.6 1.2 1.1 1.1 1.1 1.1 1.1 1.1
Wages6 4.2 4.0 3.6 3.5 3.6 3.6 3.6 3.6 3.6
CPI7 4.0 2.4 2.4 2.4 2.4 2.4 2.4 2.4 2.4
Real GDP8 0.7 2.0 1.9 2.0 2.0 1.9 2.0 2.1 2.0
Total Employment9 0.2 0.4 0.3 0.4 0.4 0.3 0.4 0.5 0.4
Avg. Annual Interest Rate (percent)10 3.5 4.6 4.7 4.7 4.7 4.7 4.7 4.7 4.7
Real Interest Rate (percent)11 (1.0) 2.0 2.3 2.3 2.3 2.3 2.3 2.3 -
Per Beneficiary Cost - HI12 5.3 14 5.0 4.2 3.4 3.3 3.4 3.5 3.5 -
Per Beneficiary Cost - SMI Part B12 7.8 14, 15 5.5 4.9 3.7 3.8 3.5 3.7 3.7 -
Per Beneficiary Cost - SMI Part D12 2.5 15 1.7 3.6 4.1 4.0 3.8 3.9 4.0 -
1
Average number of children per woman.
2
The age-sex-adjusted death rate per 100,000 that would occur in the enumerated population as of April 1, 2010, if that population were
to experience the death rates by age and sex observed in, or assumed for, the selected year.
3
Includes legal immigration, net of emigration, as well as other, non-legal, immigration per thousand of persons.
4
Summary measure of average number of years expected prior to death for a person born on January 1 in that year, using the
mortality rates for that year over the course of his or her remaining life. (Social Security)
5
Difference between percentage increases in wages and the CPI.
6
Average annual wage in covered employment.
7
CPI represents a measure of the average change in prices over time in a fixed group of goods and services.
8
Total dollar value of all goods and services produced in the U.S., adjusted to remove the impact of assumed inflation growth.
9
Summary measure of average weekly U.S. civilian employment and U.S. Armed Forces. (Social Security)
10
The average of the nominal interest rates, compounded semi-annually, for special public-debt obligations issuable monthly.
11
Average rate of interest earned on new trust fund securities, above and beyond rate of inflation. (Medicare)
12
These increases reflect the overall impact of more detailed assumptions that are made for each of the different type of services provided
by the Medicare program. These assumptions include changes in the payment rates, utilization, and intensity of each type
of services. (Medicare)
13
The valuation period used for the 2023 Statement of Social Insurance extends to 2097. (Social Security) Medicare did not report
assumptions for 2100.
14
Reflects the updated expectations for healthcare spending following the COVID-19 pandemic.
15
Reflects IRA of 2022.
The Boards of Trustees 24 of the Social Security and Medicare Trust Funds provide in their annual reports to Congress
short-range (10-year) and long-range (75-year) actuarial estimates of each trust fund. Significant uncertainty surrounds the
estimates, especially for a period as long as 75 years. To illustrate the range of uncertainty, the Trustees use three alternative
24
The boards are composed of six members. Four members serve by virtue of their positions in the federal government: the Secretary of the Treasury, who is
the Managing Trustee; the Secretary of Labor; the Secretary of HHS; and the Commissioner of Social Security. The President appoints and the Senate
confirms the other two members to serve as public representatives. These two positions are currently vacant.
scenarios (low-cost, intermediate, and high-cost) that use specific assumptions. These assumptions include fertility rates,
rates of change in mortality, LPR and other than LPR immigration levels, emigration levels, changes in real GDP, changes in
the CPI, changes in average real wages, unemployment rates, trust fund real yield rates, and disability incidence and recovery
rates. The assumptions used for the most recent set of projections shown above in the Social Security and Medicare
demographic and economic assumption table are generally referred to as the “intermediate assumptions,” and reflect the
Trustees reasonable estimate of expected future experience. For additional information on Social Security and Medicare
demographic and economic assumptions, refer to SSA’s and HHS’s financial statements.
The RRB’s estimated future revenues and expenditures reflected in the SOSI are based on various economic, employment,
and other actuarial assumptions, and assume that the program will continue as presently constructed. For further details on
actuarial assumptions related to the program and how these assumptions affect amounts presented on the SOSI and SCSIA,
consult the Technical Supplement to the 28th Actuarial Valuation of the Assets and Liabilities Under the Railroad Retirement
Acts as of December 31, 2019, the 2023 Annual Report of the Railroad Retirement System required by Section 502 of the
Railroad Retirement Solvency Act of 1983 (P.L. 98-76), and RRB’s financial statements.
The BLDBP significant assumptions used in the projections are the coal excise tax revenue estimates, the tax rate
structure, the number of beneficiaries, life expectancy, federal civilian pay raises, medical cost inflation, and the interest rates
used to discount future cash flows.

The SCSIA reconciles the change (between the current valuation and the prior valuation) in the PV of estimated future
revenue less estimated future expenditures for current and future participants (the open group measure) over the next 75 years
(except Black Lung which has a rolling 25-year projection period through September 30, 2048). The reconciliation identifies
several components of the changes that are significant and provides reasons for the changes. The following disclosures relate
to the SCSIA including the reasons for the components of the changes in the open group measure during the reporting period
from the end of the previous reporting period for the government’s social insurance programs.
All estimates relating to the Social Security and Medicare Programs in the SCSIA represent values that are incremental
to the prior change. In general, an increase in the PV of net cash flows represents a positive change (improving financing),
while a decrease in the PV of net cash flows represents a negative change (worsening financing). For additional information
regarding the estimates used to prepare the SCSIA, see SSA’s, HHS’s, RRB’s, and DOL’s financial statements.
Assumptions Used for the Components of the Changes
The PV included in the SCSIA are for the current and prior years and are based on various economic as well as
demographic assumptions used for the intermediate assumptions in the Social Security and Medicare Trustees Report for
these years. The Social Security and Medicare – Demographic and Economic Assumptions table summarizes these
assumptions for the current year. This year’s SOSI projections for Social Security and Medicare, which are as of January 1,
2023, are based on the same demographic and economic assumptions that underlie the 2023 Social Security and Medicare
Trustees Report. The 2023 SOSI projections are not adjusted for the more current near-term economic information after the
time assumptions were set in December 2022.
PV as of January 1, 2022 and January 1, 2021 are calculated using interest rates from the intermediate assumption of the
2022 and 2021 Trustees Reports, respectively. All other PV in this part of the SCSIA are calculated as a PV as of January 1,
2023 and January 1, 2022 respectively.
For the period beginning on January 1, 2022 to the period beginning on January 1, 2023 (current year) and period
beginning on January 1, 2021 to the period beginning on January 1, 2022 (prior year) estimates of the PV of Social Security
and Medicare changes in social insurance amounts due to changing the valuation period, projection base, demographic data
and assumptions, methods, and law are presented using the interest rates under the intermediate assumption of the 2022 and
2021 Trustees Report respectively. Since interest rates are an economic estimate and all estimates in the table are incremental
to the prior change, the estimates of the PV of changes in economic and health care assumptions and all other PV in this part
of the SCSIA are calculated using the interest rates under the intermediate assumptions of the 2023 and 2022 Trustees
Reports, respectively.
Changes in Valuation Period
From the period beginning on January 1, 2022 to the period beginning on January 1, 2023
The effect on the 75-year PV of changing the valuation period from the prior valuation period (2022-2096) to the
current valuation period (2023-2097) is measured by using the assumptions for the prior valuation and extending them to
cover the current valuation. Changing the valuation period removes a small negative estimated net cash flow for 2022,
replaces it with much larger negative estimated cash flow for 2097, and measures the PV as of January 1, 2023, one year
later. As a result, the PV of the estimated future net cash flows decrease by $0.7 trillion and $1.3 trillion for Social Security
and Medicare, respectively.
The effect on the 75-year PV of changing the valuation period from the prior valuation period (2021-2095) to the
current valuation period (2022-2096) is measured by using the assumptions for the prior valuation and extending them to
cover the current valuation. Changing the valuation period removes a small negative estimated net cash flow for 2021,
replaces it with a much larger negative estimated net cash flow for 2096, and measures the PV as of January 1, 2022, one
year later. As a result, the PV of the estimated future net cash flows decreased by $0.7 trillion and $1.0 trillion for Social
Security and Medicare, respectively.
Changes in Demographic Data, Assumptions, and Methods
For the current valuation (beginning on January 1, 2023), the ultimate demographic assumptions are the same as those
for the prior valuation. However, the starting demographic values and the way these values transition to the ultimate
assumptions were changed.
• Projected birth rates through 2055, during the period of transition to the ultimate level, were slightly lower than in
the prior valuation.
• Updates to near-term mortality assumptions to better reflect the effects of the COVID-19 pandemic led to an
increase in death rates through 2024 compared to the prior valuation.
• Historical population data, other-than-lawful permanent resident immigration data, and marriage and divorce data
were updated since the prior valuation.
There was one notable change in demographic methodology. The method for projecting the age distributions of LPR
new arrival and adjustment-of-status immigrants was updated reflecting recent data showing a slightly older population at the
time of attaining LPR status than had previously been estimated. This change decreased PV of the estimated future net cash
flows.
Overall, changes in demographic data, assumptions, and methods caused the PV of the estimated future net cash flows
to decrease by $0.1 trillion for Social Security and Medicare, respectively.
For the current valuation (beginning on January 1, 2022), the ultimate demographic assumptions are the same as those
for the prior valuation. However, the starting demographic values and the way these values transition to the ultimate
assumptions were changed.
• Final birth rate data for calendar year 2020 indicated slightly lower birth rates than were assumed in the prior
valuation.
• Near-term LPR immigration data were updated since the prior valuation; near-term LPR immigration assumptions
were also updated to better reflect the expected effects of the recovery from the pandemic.
• Historical population data and other-than-LPR immigration data were updated since the prior valuation.
There was one notable change in demographic methodology. An improvement was made to put more emphasis on
recent mortality data by increasing the weights for the most recent years in the regressions used to calculate the starting rates
of improvement and starting death rates. This change decreased the PV of the estimated future net cash flows.
Overall, changes in demographic data, assumptions, and methods caused the PV of the estimated future net cash flows
to decrease by $0.3 trillion and $0.5 trillion for Social Security and Medicare, respectively.
Changes in Economic Data, Assumptions, and Methods (Social Security Only)
For the current valuation (beginning of January 1, 2023), there was one change to the ultimate economic assumptions.
• The annual percentage change in the average OASDI covered wage, adjusted for inflation, is assumed to average
1.14 percentage points over the last 65 years of the 75-year projection period. This is 0.02 percentage point higher
than the value assumed for the prior valuation.
This change to the wage growth assumptions increased the PV of estimated future net cash flows. In addition to this
change, the starting economic values, and the way these values transition to the ultimate assumptions were changed. The
most significant changes are identified below.
• The levels of GDP and labor productivity are assumed to be about 3.0 percent lower by 2026 and for all years
thereafter relative to the prior valuation.
• The assumed real interest rates over the first 10 years of the projection period are generally higher than those
assumed for the prior valuation.
The changes to the GDP and productivity levels decreased the PV of the estimated future net cash flows, while the
change to near-term real interest increased the PV of the estimated future net cash flows.
There was one notable change in economic methodology. The method for estimating the level of OASDI taxable wages
for historical year 2000-21 was improved by adopting a more consistent approach for estimating completed values across
various types of wages. This change increased the PV of the estimated future net cash flows. Overall, changes to economic
data, assumptions and methods caused the PV of the estimated future net cash flows to decrease by $0.8 trillion for Social
Security.
For the current valuation (beginning on January 1, 2022), the ultimate economic assumptions are the same as those for
the prior valuation. However, the starting economic values and the way these values transition to the ultimate assumptions
were changed. The most significant are identified below.
• Near-term real interest rates are assumed to be slightly higher on average than those for the prior valuation.
• Economic starting values and near-term growth assumptions were updated to reflect the stronger-than-expected
recovery from the pandemic-induced recession.
• The level of potential GDP for years 2021 and later is assumed to be about 1.1 percent higher than the level in the
prior valuation, reflecting the strong recovery and the expectation of a permanent level shift in total economy labor
productivity.
The changes to near-term real interest rates and the resulting effects on PV calculations decreased the PV of the
estimated future net cash flows, while changes to starting values and near-term economic growth assumptions and the level
shift in the assumptions for potential GDP increased the PV of the estimated future net cash flows.
There were no additional notable changes in economic methodology. Overall, changes to economic data, assumptions,
and methods caused the PV of the estimated future net cash flows to decrease by $0.2 trillion for Social Security.
Changes in Law or Policy
For Social Security, between prior valuation (beginning on January 1, 2022) and the current valuation (beginning
January 1, 2023, no notable changes in law or policy are expected to have a significant effect on the long-range cost of
OASDI program.
Most of the provisions enacted as part of the Medicare legislation since prior valuation date had little or no impact on
the program. The following provisions did have a financial impact.
• The Postal Service Reform Act of 2022 (P.L. 117-108, enacted on April 6, 2022) included one provision that affects
Parts B and D of the SMI program.
• The IRA of 2022 (P.L. 117-169, enacted on August 16, 2022) included provisions that affect the SMI programs.
• The Continuing Appropriations and Ukraine Supplemental Appropriations Act, 2023 (P.L. 117-180, enacted on
September 30, 2022) included provisions that affect the HI and SMI programs.
• The Further Continuing Appropriations and Extensions Act, 2023 (P.L. 117-229, enacted on December 16, 2022)
included provisions that affect the HI and SMI programs.
• The CAA, 2023 (P.L. 117-328, enacted on December 29, 2022) included provisions that affect the HI and SMI
programs.
Overall, the changes to these laws, regulations, and policies caused the PV of the estimated future net cash flow to
increase by $1.1 trillion for Medicare.
The monetary effect of the changes in law or policy on the PV of estimated future net cash flows of the OASDI and
Medicare programs was not significant at the consolidated level. Please refer to SSA’s and HHS’s financial statements for
additional information related to the impact of the changes in law or policy on the PV of estimated future net cash flows of
the OASDI and Medicare programs.
Changes in Methodology and Programmatic Data (Social Security Only)

Several methodological improvements and updates of program-specific data are included in the current valuation
(beginning on January 1, 2023). The most significant are identified below.
• Actual disability data for 2022 and slightly lower-near term disability incidence rate assumptions were incorporated.
• The current valuation uses a 10.0 percent sample of all newly entitled worker beneficiaries in 2019 to project
average benefit levels of retired-worker and disabled-worker beneficiaries.
• Updates were made to the post-entitlement benefit adjustment factors. These factors are used to account for changes
in benefit levels, primarily due to differential mortality by benefit level and earnings after benefit entitlement.
Overall, changes to programmatic data and methods caused the PV of estimated future net cash flows to decrease by
$0.3 trillion for Social Security.
Several methodological improvements and updates of program-specific data are included in the current valuation
(beginning on January 1, 2022). The most significant are identified below.
• The ultimate disability incidence rate was lowered from 5.0 per thousand exposed in the prior valuation to 4.8 in the
current valuation.
• The current valuation is updated using a 10.0 percent sample of all newly entitled worker beneficiaries in 2018 to
project average benefit levels of retired-worker and disabled-worker beneficiaries.
• Recent data and estimates provided by the Office of Tax Analysis at Treasury indicate higher near-term and ultimate
levels of revenue from taxation of OASDI benefits than projected in the prior valuation.
• Updates were made to the post-entitlement benefit adjustment factors. These factors are used to account for changes
in benefit levels, primarily due to differential mortality by benefit level and earnings after benefit entitlement.
Overall, changes to programmatic data and methods caused the PV of the estimated future net cash flows to increase by
$0.6 trillion for Social Security.
Changes in Economic and Health Care Assumptions (Medicare Only)
The economic assumptions used in the Medicare projections are the same as those used for the Social Security program
shown above while the health care assumption are specific to the Medicare projections. The following health care
assumptions were changes in the current valuation.
• Lower projected spending growth because of anticipated effect of negotiating drug prices and other price growth
constraints.
Overall, these changes decrease the PV of the estimated future net cash flow by $2.6 trillion for Medicare.
The economic assumptions used in the Medicare projections are the same as those for the Social Security programs
shown above while the health care assumptions are specific to the Medicare projections. The following health care
assumptions were changed in the current valuation.
• High projected spending growth for outpatient hospital services and for physician-administered drugs.
• Slower price growth and higher direct and indirect remuneration.
Overall, these changes decreased the PV of estimated future net cash flow by $5.3 trillion for Medicare.
Change in Projection Base (Medicare Only)
Actual income and expenditures in 2022 were different from what was anticipated when the 2022 Trustees Report
projections were prepared. For Part A and Part B income and expenditures were lower than estimated based on experience.
Part D income and expenditures were higher than estimated based on actual experience. Actual experience of the Medicare
Trust Funds between January 1, 2022, and January 1, 2023, is incorporated in the current valuation and is less than projected
in the prior valuation. Overall, the net impact of Part A, B, and D projection base change is an increase in the estimated future
net cash flows by $2.3 trillion for Medicare.
Actual income and expenditures in 2021 were different from what was anticipated when the 2021 Trustees Report
projections were prepared. For Part A, income was higher, and expenditures were lower than anticipated in 2021 based on
actual expenditures. Part B income and expenditures were lower than estimated based on actual experience. Part D income
and expenditures were higher than estimated based on actual experience. Actual experience of the Medicare Trust Funds
between January 1, 2021 and January 1, 2022 is incorporated in the current valuation and is more than projected in the prior
valuation. Overall, the net impact of Part A, B, and D projection base change is an increase in the estimated future net cash
flows by $2.5 trillion for Medicare.
Note 26. Stewardship Property, Plant, and Equipment

Stewardship PP&E consists of items whose physical properties resemble those of general PP&E traditionally capitalized
in financial statements. However, stewardship PP&E differs from general PP&E in that their values may be indeterminable or
may have little meaning (e.g., museum collections, monuments, assets acquired in the formation of the nation) or that
allocating the cost of such assets to accounting periods that benefit from the ownership of such assets is meaningless.
Stewardship PP&E includes stewardship land (land not acquired for or in connection with general PP&E) and heritage assets
(e.g., federal monuments and memorials and historically or culturally significant property).
Stewardship land is land and land rights owned by the federal government intended to be held indefinitely. The majority
of stewardship land was acquired by the government during the first century of the nation’s existence. Examples of
stewardship land include land reserved, managed, planned, used, or acquired for forests and parks, recreation and
conservation, wildlife and grazing, historical landmarks, multiple purpose ancillary revenue generating activities, and/or
buffer zones. “Land” is defined as the solid part of the surface of the earth. Excluded from the definition are the natural
resources (that is, depletable resources, such as mineral deposits and petroleum; renewable resources, such as timber; and the
outer-continental shelf resources) related to land.
Additional information concerning stewardship land, such as entity stewardship policies, physical units by major
categories, and the condition of stewardship land, can be obtained from the financial statements of DHS, DOC, DOD, DOE,
DOI, DOT, EPA, HHS, TVA, USDA, and VA. Please refer to Land and Permanent Land Rights located in the unaudited RSI
for information concerning the federal estimated acreage.
Heritage assets are government-owned assets that have one or more of the following characteristics: historical or natural
significance; cultural, educational, or artistic importance; or significant architectural characteristics. Entities provide
protection and preservation services to maintain all heritage assets in the best possible condition as part of America’s history.
Examples of heritage assets include the Declaration of Independence, the U.S. Constitution, and the Bill of Rights preserved
by the National Archives. Heritage assets are classified into two categories: collection and non-collection. Collection type
heritage assets include objects gathered and maintained for exhibition, for example, museum collections, art collections, and
library collections. Non-collection type heritage assets include parks, memorials, monuments, and buildings. In some cases,
heritage assets may serve two purposes: a heritage function and general government operations. In those cases, the heritage
asset should be considered a multi-use heritage asset if the predominant use of the asset is in general government operations
(e.g., the main Treasury building used as an office building). The cost of acquisition, improvement, reconstruction, or
renovation of multi-use heritage assets is capitalized as general PP&E and depreciated over its estimated useful life.
Additional information concerning other significant heritage assets, multi-use heritage assets, component federal entity
stewardship policies for heritage assets, physical units by major categories of heritage assets, and the condition of heritage
assets, can be obtained from the financial statements of DHS, DOC, DOD, DOE, DOI, DOT, GSA, NASA, State, Treasury,
USDA, and VA. Please refer to DM&R located in the unaudited RSI for information concerning estimated maintenance and
repair costs.
Note 27. Disclosure Entities and Related Parties

SFFAS No. 47, Reporting Entity provides criteria for identifying organizations that are consolidation entities, disclosure
entities, and related parties, and how such organizations are reported within the Financial Report. For consolidation entities,
the assets, liabilities, results of operations, and related activity are consolidated into the government’s financial statements.
For disclosure entities and related parties, balances and transactions with such entities are included in the financial statements
and certain information about their relationship with the federal government is disclosed in the notes to the consolidated
financial statements. Disclosure entities and related parties are important to the Financial Report but are not consolidated into
the government’s financial statements.
Disclosure Entities
Disclosure entities are organizations similar to consolidation entities in that they are either: a) in the Budget; b) majority
owned by the government; c) controlled by the government; or d) would be misleading to exclude. Disclosure entities have a
greater degree of autonomy with the government than consolidation entities. In addition, organizations may be owned or
controlled by the government as a result: of a) regulatory actions (such as organizations in receivership or conservatorship);
or b) other government intervention actions. Under such regulatory or other intervention actions, if the relationship with the
government is not expected to be permanent, such entities generally would be classified as disclosure entities based on their
characteristics taken as a whole.
Based on the criteria in GAAP for federal entities, the disclosure entities in the Financial Report are FR System, SPVs,
Fannie Mae, Freddie Mac, and National Railroad Passenger Corporation (more commonly referred to as Amtrak). In
addition, there are additional disclosure entities reported by component reporting entities that do not meet the qualitative or
quantitative criteria in SFFAS No. 47 to be reported in the Financial Report.
Federal Reserve System
Congress, under the Federal Reserve Act, created the FR System. The FR System includes the Federal Reserve Board,
the FRB, and FOMC. Collectively, the FR System serves as the nation’s central bank and is responsible for formulating and
conducting monetary policy, issuing and distributing currency (Federal Reserve Notes), supervising and regulating financial
institutions, providing nationwide payment systems (including large-dollar transfers of funds, Automated Clearing House
operations, and check collections), providing certain financial services to federal entities and fiscal principals, and serving as
the U.S. government’s bank. Monetary policy includes actions undertaken by the FR System that influence the availability
and cost of money and credit as a means of helping to promote national economic goals. The FR System also conducts
operations in foreign markets in order to counter disorderly conditions in exchange markets or to meet other needs specified
by the FOMC to carry out its central bank responsibilities. The FR System is considered an independent central bank, and the
executive branch of the government does not ratify its decisions.
The 12 FRB are chartered under the Federal Reserve Act, which requires each member bank to own the capital stock of
its FRB. Each FRB has a board of directors that exercises supervision and control of each FRB, with three members
appointed by the Federal Reserve Board, and six board members elected by their member banks. The FRB participate in
formulating and conducting monetary policy, distributing currency and coin, and serving as the government’s fiscal agent, as
well as the fiscal agent for other fiscal principals. Fiscal principals, generally speaking, relate to banks, credit unions, and
savings and loan institutions. Additionally, the FRB provide short-term loans to depository institutions and loans to
participants in programs or facilities with broad-based eligibility in unusual and crucial circumstances when approved by the
Federal Reserve Board and the Secretary of the Treasury.
The government interacts with FRB in a variety of ways, including the following:
• The FRB serve as the government’s fiscal agent and depositary, executing banking and other financial transactions
on the government’s behalf. The government reimburses the FRB for these services, the cost of which is included on
the Statements of Net Cost;
• The FRB hold Treasury and other federal securities in the FRBs’ SOMA for the purpose of conducting monetary
policy (see Note 12—Federal Debt and Interest Payable);
• The FRB hold gold certificates issued by the government in which the certificates are collateralized by gold (see
Note 2—Cash and Other Monetary Assets);
• The FRB hold SDR certificates issued by the government which are collateralized by SDR (see Note 2—Cash and
Other Monetary Assets); and
• The FRB are required by Federal Reserve Board policy to transfer their excess earnings to the government, which
are included in Other Taxes and Receipts on the Statements of Operations and Changes in Net Position.
• Federal Reserve System Structure

The Federal Reserve Board is an independent organization governed by seven members who are appointed by the
President and confirmed by the Senate. The full term of a Federal Reserve Board member is 14 years, and the
appointments are staggered so that one term expires on January 31 of each even-numbered year. The Federal Reserve
Board has a number of supervisory and regulatory responsibilities for institutions including, among others, state-
chartered banks that are members of the FR System, bank holding companies, and savings and loan holding companies.
In addition, the Federal Reserve Board has general supervisory responsibilities for the 12 FRB, and issues currency
(Federal Reserve Notes) to the FRB for distribution.
The FOMC is comprised of the seven Federal Reserve Board members and five of the 12 FRB presidents, and is
charged with formulating and conducting monetary policy primarily through open market operations (the purchase and
sale of certain securities in the open market), the principal tool of national monetary policy. These operations affect the
amount of reserve balances available to depository institutions, thereby influencing overall monetary and credit
conditions.
• Federal Reserve Monetary Policy Action
Monetary policy comprises the Federal Reserve's actions and communications to promote maximum employment,
stable prices, and moderate long-term interest rates; the economic goals the Congress has instructed the Federal Reserve
to pursue.
During FY 2023, Consumer price inflation, as measured by the 12-month change in the price index for PCE was
4.4 percent in April 2023, down from its peak of 7.0 percent in June 2022, but still well above the FOMC 2.0 percent
objective.
In the beginning of FY 2023, in response to high inflation, the FOMC continued to increase interest rates and
reduce its securities holdings. In November 2022, the FOMC decided to raise the target range for the federal funds rate
by 0.75 percent to 3.75 percent to 4.0 percent. In December 2022, considering the cumulative tightening of monetary
policy and the lags with which monetary policy affects economic activity and inflation, the FOMC slowed the pace of
policy tightening. The FOMC decided to raise the target range for the federal funds rate to 4.25 percent to 4.50 percent
in December 2022. By March 2023, the FOMC decided to raise the target range for the federal funds rate to 4.75
percent to 5.0 percent. In May 2023, the FOMC decided to raise the target range for the federal funds rate to 5.0 percent
to 5.25 percent. In July 2023, the FOMC continued to raise the target range for the federal funds rate reaching 5.25
percent to 5.50 percent.
The FOMC began reducing its securities holdings in June 2022 and, since then, has continued to implement its
plan for significantly reducing the size of the Federal Reserve's balance sheet in a predictable manner. Since September
2022, principal payments from securities held in the SOMA have been reinvested only to the extent that they exceeded
monthly caps of $60.0 billion per month for Treasury securities and $35.0 billion per month for agency mortgage-
backed securities. The FRB balance sheet developments may be obtained at https://www.federalreserve.gov/balance-
sheet.
• Federal Reserve System Assets, Liabilities, Revenues, Expenses, Gains, and Losses
The FRB hold Treasury and other securities in the SOMA for the purpose of conducting monetary policy. As of
September 30, 2023, Treasury securities held by the FRB totaled $2,786.7 billion, which excludes $2,139.0 billion in
Treasury securities used in overnight reverse repurchase transactions. As of September 30, 2022, Treasury securities
held by the FRB totaled $2,731.1 billion, which excludes $2,908.0 billion in Treasury securities used in overnight
reverse repurchase transactions. Such securities are included in federal debt and interest payable (see Note 12—Federal
Debt and Interest Payable). For fiscal years ended September 30, 2023, and 2022, Treasury incurred interest cost
relating to the FRB’s Treasury holdings amounting to $105.1 billion and $114.7 billion, respectively, which is included
in interest on Treasury securities held by the public on the Statement of Net Cost. Unrestricted Cash held on deposit at
the FRB as of September 30, 2023, and 2022, was $638.9 billion and $617.0 billion, respectively, and are included in
cash and other monetary assets. In addition, restricted cash as of September 30, 2023, and 2022, was $56.3 billion and
$46.8 billion, respectively; a significant portion is held on deposit at the FRB (see Note 2—Cash and Other Monetary
Assets). The outstanding SDR certificates issued by the government to the Federal Reserve, valued at $5.2 billion as of
September 30, 2023, and 2022, are reported under Other Liabilities on the government’s Balance Sheet (see Note 18—
Other Liabilities).
Treasury securities are generally subject to the same market condition as other financial instruments. In the open
market, the FRB purchase and sell Treasury securities as a mechanism for controlling the money supply.
Financial and other information concerning the FR System, including financial statements for the Federal Reserve
Board and the FRB, may be obtained at https://federalreserve.gov.
• FRB Residual Earnings Transferred to the Government

FRB generate income from interest earned on securities, reimbursable services provided to federal entities, and the
provision of priced services to depository institutions, as specified by the Monetary Control Act of 1980. Although the
FRB generate earnings from carrying out open market operations (via the earnings on securities held in the SOMA
account), their execution of these operations is for the purpose of accomplishing monetary policy rather than generating
earnings. Each FRB is required by Federal Reserve Board policy to transfer to the government its residual (or excess)
earnings, after providing for the cost of operations, payment of dividends, and surplus funds not to exceed an FRB’s
allocated portion of an aggregate of $6.8 billion for all FRB. These residual earnings may vary due to, among other
things, changes in the SOMA balance levels that may occur in conducting monetary policy. If an FRB’s earnings for the
year are not sufficient to provide for the cost of operations, payment of dividends, or allocated portion of $6.8 billion
aggregate surplus funds limitation, an FRB will suspend its payments to the government until such earnings become
sufficient. These funds are part of restricted cash at the Federal Reserve (see Note 2—Cash and Other Monetary
Assets). The FRB residual earnings of $0.6 billion and $106.7 billion for fiscal years ended September 30, 2023, and
2022, respectively, are reported as other taxes and receipts on the Statements of Operations and Changes in Net
Position. Accounts receivable, net, includes a receivable for FRB’s residual earnings which represents the earnings due
to the General Fund as of September 30, but not collected by the General Fund until after the end of the month (see
Note 3—Accounts Receivable, Net).
Special Purpose Vehicles
In response to the COVID-19 pandemic, Treasury holds equity investments in SPVs established by the Federal Reserve
Board for the purpose of enhancing the liquidity of the U.S. financial system. Involvement in these programs represents non-
permanent intervention activities designed to help mitigate the economic impacts of the pandemic. Accordingly, the
government’s equity interests in these SPVs meet the SFFAS No. 47 criteria for classifying our SPV investments as
disclosure entities. These entities are not consolidated as part of the government’s consolidated financial statements;
however, the value of the investments in the SPVs, changes in value, and related activity with the SPVs are included in the
government’s consolidated financial statements (see Note 7—Investments).
Fannie Mae and Freddie Mac
In 2008, during the financial crisis, the government placed Fannie Mae and Freddie Mac under conservatorship to help
ensure their financial stability. These entities meet the criteria in SFFAS No. 47, for disclosure entities as both: a)
“receiverships and conservatorships,”; and b) as entities wherein “federal government intervention actions resulted in control
or ownership” with intervention actions not expected to be permanent. Accordingly, these entities are not consolidated into
the government's consolidated financial statements. However, the values of the investments in such entities, changes in value,
and related activity with these entities are included in the government's consolidated financial statements (see Note 8—
Investments in Government-Sponsored Enterprises for additional information).
Amtrak
Amtrak was incorporated in 1971 pursuant to the Rail Passenger Service Act of 1970 and is authorized to operate a
nationwide system of passenger rail transportation. Amtrak is a private, for-profit corporation under 49 U.S.C. § 24301 and
D.C. law. It is not a department, entity, or instrumentality of the government. Amtrak’s classification as a disclosure entity is
attributable to being: a) listed in the Budget; b) financed mostly by sources other than taxes; and c) governed by an
independent Board of Directors, which is comprised of 10 directors. The Secretary of Transportation, who is a director by
statute, and eight of the other Amtrak directors, are appointed by the President with the advice and consent of the U.S.
Senate. The President of Amtrak also is a board member and is appointed by the board. Amtrak does not take actions on
behalf of the government but benefits the national economy by providing a transportation option in 46 states and the D.C.
The government (through the DOT) owns 100.0 percent of Amtrak’s preferred stock (109,396,994 shares of $100.00
par value). Each share of preferred stock is convertible into ten shares of common stock. The common stockholders have
voting rights for “amendments to Amtrak’s Articles of Incorporation proposed by the Board of Directors and for certain other
extraordinary events.” Although Section 4.02(g) of the Amtrak Articles of Incorporation allow for the conversion of preferred
stock to common stock, current government administrative policy is to not convert its holdings without congressional
authorization. Section 4.02(g) of the Amtrak Articles of Incorporation does not limit the timing of conversion or require any
preapprovals. Conversion is effective the business day following receipt of written notice of the holder’s election to convert.
The government does not recognize the Amtrak preferred stock in its financial statements because, under the corporation’s
current financial structure, the preferred shares do not have a liquidation preference over the common shares, the preferred
shares do not have any voting rights, and dividends are neither declared nor in arrears.
In addition to the purchase/ownership of the Amtrak preferred stock, the government has provided funding to Amtrak,
since 1972, primarily through grants and loans. Amtrak receives grants from the government that cover a portion of the
corporation’s annual operating expenses and capital investments. Funding provided to Amtrak through grant agreements are
included in the Budget and the DOT financial statements. For the fiscal year ended September 30, 2023, the net cost amount
related to grants was $2.9 billion, and total budgetary outlays were $3.2 billion. For the fiscal year ended September 30,
2022, the net cost amount related to grants was $3.2 billion, and total budgetary outlays were $2.3 billion.
The government (through the DOT) has possession of two long-term notes with Amtrak. The first note is for $4.0
billion and matures in 2975 and, the second note is for $1.1 billion and matures in 2082 with renewable 99-year terms.
Interest is not accruing on these notes as long as the current financial structure of Amtrak remains unchanged. If the financial
structure of Amtrak changes, both principal and accrued interest are due and payable. The government does not recognize the
long-term notes in its financial statements since the notes, with maturity dates of 2975 and 2082, are considered fully
uncollectible due to the lengthy terms, Amtrak’s history of operating losses, and ability to generate funds for repayment.
Amtrak’s ability to continue to operate in its current form is dependent upon the continued receipt of subsidies from the
government.
Financial statements and other information (including loans) concerning Amtrak may be obtained at
https://www.amtrak.com/reports-documents and https://www.transportation.gov/fy23-afr.
Related Parties
Related parties exist if the existing relationship, or one party to the existing relationship, has the ability to exercise
significant influence over the party’s policy decisions. Related parties do not meet the principles for inclusion, but are
reported in the Financial Report if they maintain relationships of such significance that it would be misleading to exclude.
Based on the criteria in SFFAS No. 47, the related parties reported in the Financial Report are FHLBanks, IMF,
Multilateral Banks, and PEFCO. In addition, there are additional related parties reported by component reporting entities that
do not meet the criteria to be reported in the Financial Report.
Federal Home Loan Banks
The government is empowered with supervisory and regulatory oversight of the 11 FHLBanks. The government is
responsible for ensuring that each regulated entity operates in a safe and sound manner, including maintenance of adequate
capital and internal control, and carries out its housing and community development finance missions. Each FHLBank
operates as a separate federally chartered corporation with its own board of directors, management, and employees. The
FHLBanks are GSEs that were organized under the Federal Home Loan Bank Act of 1932, to serve the public by enhancing
the availability of credit for residential mortgages and targeted community development. They are financial cooperatives that
provide a readily available, competitively-priced source of funds to their member institutions. The FHLBanks are not
government entities and do not receive financial support from taxpayers. The government does not guarantee, directly or
indirectly, the debt securities or other obligations of FHLBanks.
By law, in the event of certain adverse circumstances, Treasury is authorized to purchase up to $4.0 billion of
obligations of the FHLBanks. This authority may be exercised only if alternative means cannot be effectively employed to
permit the FHLBanks to continue to supply reasonable amounts of funds to the mortgage market, and the ability to supply
such funds is substantially impaired because of monetary stringency and a high level of interest rates. Any funds borrowed
from Treasury shall be repaid by the FHLBanks at the earliest practicable date. Treasury has not used such authority. Also, in
accordance with the Government Corporations Control Act, Treasury prescribes certain terms concerning the FHLBanks
issuance of obligations to the public. Financial and other information concerning FHLBanks including financial statements
may be obtained at http://www.fhlbanks.com/.
International Monetary Fund and Multilateral Development Banks
The IMF’s primary purpose is to ensure the stability of the international monetary system—the system of exchange
rates and international payments that enables countries to transact with each other. Member countries provide resources for
IMF loans through their subscription quotas (quotas). The IMF also has additional pools of resources that can be used in the
event of a crisis that requires lending beyond the level available from quota resources: 1) the NAB; 2) bilateral borrowing
arrangements; and 3) additional allocation of SDRs. Participation in the IMF works like an exchange of monetary assets.
Quotas are the principal component of the IMF’s financial resources and are denominated in SDR. The size of each
member’s quota is based broadly on its relative position in the world economy. The U.S. holds the largest quota of any IMF
member. Since 2016, U.S. quota in the IMF has been about SDR 83 billion. The equivalent dollar value of the quota total
U.S. as of September 30, 2023, and 2022, was approximately $108.9 billion and approximately $106.0 billion, respectively.
The government has funded a portion of U.S. quota to the IMF for lending, represented by U.S. reserve position at the IMF,
while the remainder of the U.S. quota is represented by a letter of credit on which the IMF can draw as needed for lending.
The U.S. reserve position was approximately $32.0 billion as of September 30, 2023, and approximately $31.3 billion as of
September 30, 2022, with the remaining undrawn letter of credit representing the balance (see Note 2—Cash and Other
Monetary Assets and Note 20—Commitments). The government’s quota serves as the key determinant for its 16.5 percent
share of voting rights in various IMF decisions. Since certain key IMF decisions require approval by at least 85.0 percent of
the voting power, the government (represented by the Secretary of the Treasury) holds a substantial voice in the IMF and
exercises significant influence over IMF policies, including veto power over major IMF decisions.
Some IMF members also supplement the IMF’s resources through the NAB and bilateral borrowing agreements.
Through the NAB, the U.S. and other participating members make additional resources available to the IMF if required to
cope with or forestall an impairment of the international monetary system. In accordance with the CARES Act, effective
January 1, 2021, U.S. participation in the NAB increased by SDR 28.2 billion. Accordingly, the government's participation in
the NAB as of September 30, 2023, and 2022, was SDR 56.4 billion respectively, which is equivalent to $74.2 billion and
$72.2 billion, respectively. When the government transfers funds to the IMF under the NAB, it receives a liquid and interest-
bearing claim on the IMF. As of September 30, 2023, and 2022, loans outstanding to the IMF from the government under the
NAB stood at $0.1 billion and $0.5 billion, respectively. These loans were reported under Loans Receivable, Net on the
Balance Sheet. The NAB is not currently activated, and the U.S. has veto power over its activation, as well as over most
changes to its terms or size. The government does not have a bilateral borrowing agreement with the IMF, though it exercises
indirect control over their activation, since NAB activation is a prerequisite for the IMF to draw on its bilateral borrowing
arrangements.
As of September 30, 2023, and 2022, the government's total undrawn financial commitment to the IMF was $151.0
billion and $146.4 billion, respectively, which is composed of the quota related letter of credit and the undrawn portion of the
NAB (see Note 20—Commitments).
Under the IMF Articles of Agreement, the IMF may allocate SDRs to member countries in proportion to their IMF
quotas. SDR allocations are an international reserve asset created by the IMF to supplement its member countries’ official
reserves. In FY 2021, the IMF approved a historic allocation of SDRs of $650.0 billion to further support the COVID-19
recovery. This was the largest allocation in the IMF’s history, which substantially boosted the reserves and liquidity of the
IMF’s member countries, without adding to their debt burdens. The U.S. received an additional 79.5 billion SDRs valued at
$112.8 billion as a part of this historic allocation. The SDR allocation creates an asset and a liability on the Balance Sheet but
does not increase the IMF’s available lending resources. The SDR asset as of September 30, 2023, and 2022, amounted to
$163.2 billion and $153.6 billion, respectively, and includes the SDR allocation as well as purchased SDR (see Note 2—Cash
and Other Monetary Assets). The SDR liability as of September 30, 2023, and 2022, amounted to $151.0 billion and $147.0
billion, respectively (see Note 18—Other Liabilities).
The value of the SDR is based on a weighted average of the U.S. dollar, euro, Chinese renminbi, Japanese yen, and
pound sterling. More information on the SDR valuation can be found at https://www.imf.org.
Historically, IMF has never experienced a default by a borrowing country. The government, which is not directly
exposed to borrowers from the IMF, has never experienced a loss of value on its IMF quota or an instance of non-repayment,
and it is not likely that the government will experience future losses as a result of its additional commitments.
Additionally, the government invests in and provides funding to the MDBs to support poverty reduction and promote
sustainable economic growth in developing countries. The MDBs provide financial and technical support by means of
strengthening institutions, providing assistance that addresses the root causes of instability in fragile and conflict-affected
countries, responding to global crisis, and fostering economic growth and entrepreneurship. The government’s participation
in the MDBs is in the form of financial contributions used to ensure the effectiveness and impact of the MDBs’ global
development agenda. The U.S. has voting power in each of the MDBs to which it contributes, ranging from approximately
6.0 percent to 50.0 percent (see Note 10—Other Assets and Note 20—Commitments for additional information).
Private Export Funding Corporation
The financial statements reflect the results of agreements with PEFCO. PEFCO, is owned by a consortium of private-
sector banks, industrial companies, and financial services institutions. It makes and purchases from private sector lenders,
medium-term and long-term fixed-rate, and variable-rate loans guaranteed by EXIM Bank to foreign borrowers to purchase
U.S. made equipment “export loans.”
EXIM Bank’s credit and guarantee agreement with PEFCO provides that EXIM Bank will guarantee the due and
punctual payment of interest on PEFCO’s secured debt obligations which EXIM Bank has approved, and it grants to EXIM
Bank a broad measure of supervision over certain of PEFCO's major financial management decisions, including the right to
have representatives be present in all meetings of PEFCO’s Board of Directors, advisory board, and exporters’ council, and
to review PEFCO’s financials and other records. However, EXIM Bank does not have voting rights and does not influence
normal operations. In September 2020, the EXIM Board of Directors unanimously voted to renew its agreement with PEFCO
for 25 years.
PEFCO has an agreement with EXIM Bank which provides that EXIM Bank will generally provide PEFCO with an
unconditional guarantee covering the due and punctual payment of principal and interest on export loans PEFCO makes and
purchases. PEFCO’s guarantees on the export loans plus the guarantees on the secured debt obligations aggregating to
$1,891.0 million at September 30, 2023 and $2,228.6 million at September 30, 2022, are included by EXIM Bank in the total
for guarantee, insurance and undisbursed loans and the allowance related to these transactions is included in the Loan
Guarantee Liabilities on the Balance Sheets.
EXIM Bank received fees totaling $22.4 million in FY 2023 and $29.1 million in FY 2022 for the agreements, which
are included in Earned Revenue on the Statements of Net Cost.
Note 28. Public-Private Partnerships

The government enters into various collaborative relationships with private sector entities in which the goals, structures,
governance, roles and responsibilities are mutually determined to produce a risk-sharing arrangement. These relationships are
referred to as P3s, in accordance with SFFAS No. 49, Public-Private Partnerships: Disclosure Requirements. Although there
are inherent financial risks to the federal government in these types of complex, risk-sharing arrangements, P3s by nature are
used to manage certain risks, and federal entities take steps to mitigate risks of loss to the government and continue to
evaluate the risks associated with these arrangements. P3 arrangements that federal entities identified are related to energy
savings, broadband network and communication projects, and housing and building rehabilitation projects. While many of
the government’s relationships may be referred to as a P3, only those meeting the disclosure requirements outlined in SFFAS
No. 49 are disclosed.
FirstNet was created to develop, deploy, and enhance wireless broadband communications for first responders; to give
21st century communication tools to help save lives; and to keep U.S. communities and responders safe. This network must
be designed to be reliable, functional, safe, and secure, and to provide optimal levels of operational capability at all times.
The NPSBN is being built out, deployed, operated, and maintained under a 25-year contract awarded by FirstNet to AT&T in
March 2017. The service will cover all 50 U.S. states, five territories, and D.C., including rural communities and tribal
nations. Under the terms of the contract, total receipts for DOC over the life of the contract are $18.0 billion based on annual
payments AT&T is required to make. FirstNet oversees and monitors the contract with AT&T to ensure it delivers on the
requirements associated with deploying, operating, and maintaining the NPSBN through various mechanisms, including
subscriber adoption targets, successful milestone completion, disincentives, and other mechanisms outlined in the contract.
Additionally, DOC is required to make payments to AT&T for success-based payment milestones under firm-fixed price
buildout and continuing enhancement Task Orders.
DOD identified MHPI agreements as P3s requiring disclosure. The MHPI agreements are with private sector entities
established as LLCs or LPs. These MHPI project LLC and LP entities with Private Partners serve as the project’s managing
members and have direct managerial control allowing DOD to work with the private sector to build, renovate, and sustain
military housing by obtaining private capital to leverage government dollars. By engaging MHPI agreements, DOD benefits
through use of private industry expertise and tools, improving the condition of military housing more expediently and
efficiently than the traditional military construction process would allow. Private Partners serve as the majority managing
member ensuring performance objectives are met over the expected life of the agreement. Military departments generally
serve as the minority member and enter a long-term ground lease (generally 50 years), and convey the associated real
property assets (buildings, structures, facilities, and utilities) to the MHPI project LLC or LP. The contractual terms and
termination clauses vary by agreement. The DOD’s involvement in the operations and management of the MHPI LLC or LP
is governed by evaluating the percentage of ownership interest and analyzing ownership control indicators, which determine
the level of influence over the partnership. The DOD provides funding to the LLC or LP through:
• Equity Investments - Provision of cash and transfer of real property ownership (land, housing units, and other
structures) to a project and, in return, the DOD receives a portion of that project’s profits and losses. If the
investment is sold, the DOD receives compensation. Refer to Note 7—Investments for more information.
• Government Direct Loans - Provision of cash to a project with the expectation of future payment;
• Government Loan Guarantees - Agreement to pay a percentage of the outstanding balance on a non-government
loan in the event of nonpayment by the project;
• Differential Lease Payments - Provision of monthly payments to a project above the Basic Allowance for Housing
paid by the military personnel.
DOD continues to assess agreements using criteria from SFFAS No. 49 to determine if there are additional P3s to
disclose. DOD will report these agreements as soon as these assessments are complete.
The consolidated amounts the government received and paid in FY 2023 were $0.3 billion and $14.7 billion,
respectively. The estimated amounts to be received and paid in the aggregate over the expected life of the P3s is $22.7 billion
and $23.8 billion, respectively. Please refer to the financial statements of DOC, DOD and GSA for additional information.
Note 29. COVID-19 Activity

The global spread of COVID-19 over the past several years resulted in a severe global health and economic crisis. From
March 2020 until the expiration of the federal Public Health Emergency on May 11, 2023, the COVID-19 pandemic caused
widespread disruption to the American economy. In FY 2020 and 2021, Congress took steps to limit the damage the
pandemic caused in the U.S. by passing several key statutes, including the CARES Act, the CAA, and the ARP. The relief
funding these legislative Acts provided helped reduce the financial burden on individuals, and their families, minimized
business and employment losses and enhance the liquidity of the U.S. financial system. In addition to the FY 2022 and FY
2021 rescission pursuant to the IIJA and the CAA, respectively on June 3, 2023, Congress passed the FRA of 2023 which
rescinded certain unobligated funds that were provided by these legislative acts.
The COVID-19 related legislation provided supplemental appropriations totaling $4.6 trillion for federal entities to
respond to COVID-19 since the beginning of the pandemic and includes enacted rescissions, returns of unused permanent
and indefinite authority and obligation adjustments. Significant impacts of these programs on the government’s FY 2023 and
2022 Balance Sheet and financial results are discussed below. For additional information regarding COVID-19 relief efforts
please refer to Treasury, HHS, and Education’s financial statements.
Treasury’s COVID-19 programs established under the legislative acts enacted in response to the pandemic include
taxpayer support programs through EIPs and tax credits, programs directed through state, local, territorial, and tribal
government to support job retention, renter and homeowners’ assistance, capital projects, and small business initiatives.
Support for the American industry and financial markets was provided to assist with business losses incurred as a result of
COVID-19 through the use of payroll support, loans, and purchasing debt and commercial paper to support key U.S. financial
markets. Additional support was provided to American small businesses through Community Development Financial
Institutions. Treasury’s net costs related to COVID-19 relief efforts were $58.9 billion and $164.4 billion for fiscal years
ending September 30, 2023, and 2022, respectively, and do not include costs related to EIPs and tax credits. The decrease in
Treasury’s COVID-19 net costs is mainly due to the reduction in expense recognition of support to state, local, territorial, and
tribal programs.
The government invested in SPVs for the purpose of enhancing the liquidity of the U.S. financial system. As of
September 30, 2023, and 2022, Treasury had $15.1 billion and $17.8 billion, respectively, of equity investments in SPVs
established through the FRBNY and FRBB. The SPVs were established by the FRBNY and FRBB in 2020 to make loans and
purchase debt and other commercial paper of eligible entities affected by COVID-19. Treasury’s funds remaining in the
SPVs funded under the CARES Act cannot be used for further lending, asset purchase, or extensions of credit.
HHS received funding to support, prevent, prepare for, and respond to COVID-19, both domestically and
internationally, by providing expense reimbursements to assist eligible healthcare providers, advance research, development,
manufacturing, production and purchase of COVID-19 vaccines, testing and related supplies, financial support to childcare
providers, support for contract tracing, and mitigation activities. HHS’s net cost of operations other than CMS decreased by
$62.0 billion primarily due to the Public Health and Social Services Emergency Fund. HHS’s outlays related to COVID-19
activity totaled $60.6 billion and $130.1 billion in FY 2023 and FY 2022, respectively. HHS’s rescission related to the
COVID-19 appropriations that funded several programs totaled $10.3 billion as of September 30, 2023. Remaining amounts
are being used to support R&D for next generation COVID-19 vaccines, strengthening the pharmaceutical supply chain, and
addressing healthcare workforce shortages.
Education’s COVID-19 appropriations provided funding for a variety of programs administered primarily through grant
programs. The COVID-19 relief legislation and administrative actions also provided support for student loan borrowers
primarily by temporarily suspending nearly all federal loan payments. Additional broad-based debt was announced in FY
2022 to address the financial harms of the pandemic. However, the effect of the debt relief was reversed by the Supreme
Court’s ruling as of June 30, 2023. COVID-19 loan modifications are a component of subsidy expense, which increased the
overall loan receivable balances and Education’s net cost decreased by $236.7 billion due to the loan modifications,
reestimates (subsidy expense), and grant expenses. The significant financial statements impact of these programs can be
found within Note 4—Loans Receivable, Net and Loan Guarantee Liabilities. Education’s direct outlays related to COVID-
19 activity totaled $66.1 billion and $80.2 billion in FY 2023 and FY 2022, respectively.
Note 30. Subsequent Events
Additional Notes Purchased by Treasury

Similar to the transaction that is described in Note 4—Loans Receivable, Net and Loan Guarantee Liabilities, in January
2024, Treasury purchased four additional notes in connection with Silicon Valley Bridge Bank, N.A. for a total of $43.3
billion, guaranteed by the FDIC in its corporate capacity as deposit insurer and regulator.

REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED) 170

Required Supplementary Information
(Unaudited) For the Fiscal Years Ended
September 30, 2023, and 2022
The Sustainability of Fiscal Policy
One of the important purposes of the Financial Report is to help citizens and policymakers assess whether current fiscal
policy is sustainable and, if it is not, the urgency and magnitude of policy reforms necessary to make fiscal policy
sustainable. A sustainable policy is defined as one where the ratio of debt held by the public to GDP (the debt-to-GDP ratio)
is ultimately stable or declining.
As discussed below, the projections based on this Financial Report’s assumptions indicate that current policy is not
sustainable. The debt-to-GDP ratio was approximately 97 percent at the end of 2023, which is similar to (but slightly above)
the debt-to-GDP ratio at the end of FY 2022. If current policy is left unchanged, the projections show the debt-to-GDP ratio
will be approximately 100 percent in 2024, exceed 200 percent by 2047 and reach 531 percent in 2098. For comparison,
under the 2022 projections, the debt-to-GDP ratio exceeded 200 percent one year earlier in 2046 and reached 566 percent in
2097.
These conclusions are rooted in the projected trends in receipts, spending, and deficits in the context of current law and
policy, although, as described in the following pages, there is considerable uncertainty surrounding these projections. The
projections are on the basis of policies currently in place and are neither forecasts nor predictions. Changes in policy –
including investments in infrastructure efforts to mitigate the impact of climate change and enhancements to caregiving
services to build a more resilient and sustainable economy – could have a significant effect on eventual fiscal outcomes.
171 REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED)
Current Policy Projections for Primary Deficits

A key determinant of growth in the debt-to-GDP ratio and hence fiscal sustainability is the ratio of the primary deficit to
GDP. The primary deficit is the difference between non-interest spending and receipts, and the primary deficit-to-GDP ratio
is the primary deficit expressed as a percent of GDP. As shown in Chart 1, the primary deficit-to-GDP ratio spiked during
2009 through 2012 due to the 2008-09 financial crisis and the ensuing severe recession, and rose again in 2020 due to the
COVID-19 pandemic. Increased spending and temporary tax reductions enacted to stimulate the economy and support
recovery contributed to elevated primary deficits, resulting in sharp increases in the ratio of debt to GDP. The debt-to-GDP
ratio rose from 39 percent at the end of 2008 to 70 percent at the end of 2012 and then from 79 percent at the end of 2019 to
approximately 100 percent at the end of 2020.
The primary deficit-to-GDP ratio in 2023 was 3.8 percent, increasing by 0.2 percentage points from 2022, partially due
to lower receipts. The primary deficit-to-GDP ratio is projected to fall to 3.2 percent in 2024, based on the technical
assumptions in this Financial Report and projected changes in receipts and outlays, including an estimated decrease in
Medicaid outlays following the expiration of temporary measures related to the COVID-19 pandemic. After 2024, increased
spending for Social Security and health programs due in part to the continued retirement of the baby boom generation, is
projected to result in increasing primary deficits that peak at 4.4 percent of GDP in 2043. Primary deficits as a share of GDP
gradually decrease beyond that point as the aging of the population continues at a slower pace, and reach 2.8 percent in 2098,
the last year of the projection period.
Trends in the primary deficit are heavily influenced by tax receipts. The receipt share of GDP was markedly depressed
in 2009 through 2012 because of the recession and tax reductions enacted as part of the ARRA and the Tax Relief,
Unemployment Insurance Reauthorization, and Job Creation Act of 2010. The share subsequently increased to nearly 18.0
percent of GDP by 2015 before falling to 16.3 percent in 2018, after enactment of the TCJA. Receipts reached 19.6 percent of
GDP in 2022—the highest share of GDP since 2000—then fell to 16.5 percent of GDP in 2023 due to a decrease in
Individual income tax receipts and lower deposits of earning by the Federal Reserve. Receipts are projected to gradually
increase and equal 18.1 percent of GDP in 2033 when corporation income tax and other receipts stabilize as a share of GDP.
After 2033, receipts grow slightly more rapidly than GDP over the projection period as increases in real (i.e., inflation-
adjusted) incomes cause more taxpayers and a larger share of income to fall into the higher individual income tax brackets.
Other possible paths for the receipts-to-GDP ratio and the implications for projected debt held by the public are analyzed in
the “Alternative Scenarios” section.
On the spending side, the non-interest spending share of GDP was 20.3 percent in 2023, 2.9 percentage points below the
share of GDP in 2022, which was 23.2 percent. The ratio of non-interest spending to GDP is projected to fall to 20.1 percent
in 2024 and then rise gradually, reaching 23.3 percent of GDP in 2076. The ratio of non-interest spending to GDP then
declines to 22.7 percent in 2098, the end of the projection period. These increases are principally due to faster growth in
Social Security, Medicare, and Medicaid spending (see Chart 1). The aging of the baby boom generation, among other
factors, is projected to increase the Social Security and Medicare spending shares of GDP by about 0.7 percentage points and
1.7 percentage points, respectively, from 2024 to 2040. After 2040, the Social Security and Medicare spending shares of
GDP continue to increase in most years, albeit at a slower rate, due to projected increases in health care costs and population
aging, before declining toward the end of the projection period.
Current Policy Projections for Debt and Interest Payments
The primary deficit projections in Chart 1, along with projections for interest rates and GDP, determine the projections
for the debt-to-GDP ratio shown in Chart 2. That ratio was approximately 97 percent at the end of FY 2023, and under
current policy and based on this Financial Report’s assumptions is projected to reach 531 percent in 2098. The continuous
rise of the debt-to-GDP ratio indicates that current policy under this Financial Report’s assumptions is unsustainable.
As a general approximation, the change in debt held by the public from one year to the next is the budget deficit, the
difference between total receipts and total spending. 1 Total spending is non-interest spending plus interest spending. Chart 3
shows that the rapid rise in total spending and the unified deficit (total receipts less total spending) is almost entirely due to
projected net interest, which results from the growing debt. As a percent of GDP, interest spending was 2.4 percent in 2023,
and under current policy is projected to reach 5.3 percent in 2034, 15.0 percent in 2068, and 24.0 percent in 2098.
1
The change in debt each year is also affected by certain transactions not included in the budget deficit, such as changes in Treasury’s cash balances and the
non-budgetary activity of federal credit financing accounts. These transactions are assumed to hold constant at about 0.3 percent of GDP each year, with the
same effect on debt as if the primary deficit was higher by that amount.
Another way of viewing the change in the financial outlook in this year’s Financial Report relative to previous years’
Financial Reports is in terms of the projected debt-to-GDP ratio in 2096, the last year of the 75-year projection period used in
the FY 2021 Financial Report. This ratio is projected based on this Financial Report’s assumptions to reach 518 percent in
the FY 2023 projections, which compares with 559 percent projected in the FY 2022 projections and 701 percent projected in
the FY 2021 projections. 2
The Cost of Delay in Closing the 75-Year Fiscal Gap
The longer policy action to close the fiscal gap 3 is delayed, the larger the post-reform primary surpluses must be to
achieve the target debt-to-GDP ratio at the end of the 75-year period. This can be illustrated by varying the years in which
reforms closing the fiscal gap are initiated while holding the target ratio of debt to GDP in 2098 equal to the 2023 ratio. Three
timeframes for reforms are considered, each one beginning in a different year, and each one increasing the primary surplus
relative to current policy by a fixed percent of GDP starting in the reform year. The analysis shows that the longer policy
action is delayed, the larger the post-reform primary surplus must be to bring the debt-to-GDP ratio in 2098 equal to its level
in 2023. Future generations are burdened by delays in policy changes because delay necessitates higher primary surpluses
during their lifetimes, and those higher primary surpluses must be achieved through some combination of lower spending and
higher revenue.
As previously shown in Chart 1, under current policy, primary deficits occur throughout the projection period. Table 1
shows primary surplus changes necessary to make the debt-to-GDP ratio in 2098 equal to its level in 2023 under each of the
2
For additional information on changes from the 2021 projections, see the unaudited RSI in the 2022 Financial Report.
3
The fiscal gap reflects how much the primary surplus (receipts less non-interest spending) must increase to maintain the debt-to-GDP ratio at the 2023
level. See Note 24 for a more complete discussion of the fiscal gap.
three timeframes. If reform begins in 2024, then it is sufficient to raise the primary surplus share of GDP by 4.5 percentage
points in every year between 2024 and 2098 in order for the debt-to-GDP ratio in 2098 to equal its level in 2023. This policy
raises the average 2024-2098 primary surplus-to-GDP ratio from -3.8 percent to +0.6 percent.
In contrast to a reform that begins immediately, if reform begins in 2034 or 2044, then the primary surpluses must be
raised by 5.3 percent and 6.5 percent of GDP, respectively, in order for the debt-to-GDP ratio in 2098 to equal its level at the
end of 2023. The difference between the primary surplus increase necessary if reform begins in 2034 or 2044 and the increase
necessary if reform begins in 2024, an additional 0.8 and 2.0 percentage points, respectively, is a measure of the additional
burden policy delay would impose on future generations. The costs of delay are due to the additional debt that accumulates
between the end of 2023 and the year reform is initiated, in comparison to the scenario in which reform begins immediately.
Alternative Scenarios
The long-run projections are highly uncertain. This section illustrates this inherent uncertainty by presenting alternative
scenarios for the growth rate of health care costs, interest rates, discretionary spending, and receipts. (Not considered here are
the effects of alternative assumptions for long-run trends in birth rates, mortality, and immigration, among other factors.)
The population is aging rapidly and will continue to do so over the next several decades, which puts pressure on
programs such as Social Security, Medicare, and Medicaid. A shift in projected fertility, mortality, or immigration rates could
have important effects on the long-run projections. Higher-than-projected immigration, fertility, or mortality rates would
improve the long-term fiscal outlook. Conversely, lower-than-projected immigration, fertility, or mortality rates would result
in deterioration in the long-term fiscal outlook.
Effect of Changes in Health Care Cost Growth
One of the most important assumptions underlying the projections is the future growth of health care costs. These future
growth rates – both for health care costs in the economy generally and for federal health care programs such as Medicare,
Medicaid, and PPACA exchange subsidies – are highly uncertain. In particular, PPACA in 2010 and MACRA in 2015
lowered increases in payment rates for Medicare hospital and physician payments. The Medicare spending projections in the
long-term fiscal projections are based on the projections in the 2023 Medicare Trustees Report, which assume the PPACA
and MACRA payment rates will be effective in producing a substantial slowdown in Medicare input cost growth. As
discussed in Note 25—Social Insurance, the Medicare projections are subject to much uncertainty about the ultimate effects
of these provisions to reduce health care cost growth. For the long-term fiscal projections, that uncertainty also affects the
projections for Medicaid and exchange subsidies, because the cost per beneficiary in these programs grows at the same
reduced rate as Medicare cost growth per beneficiary.
As an illustration of the dramatic effect of variations in health care cost growth rates, Table 2 shows the effect on the
size of reforms necessary to close the fiscal gap under per capita health care cost growth rates that are one percentage point
higher or two percentage points higher than the growth rates in the base projection, as well as the effect of delaying closure of
the fiscal gap. 4 As indicated earlier, if reform is initiated in 2024, eliminating the fiscal gap requires that the 2024-2098
primary surplus increase by an average of 4.5 percent of GDP in the base case. However, that figure increases to 8.0 percent
of GDP if per capita health cost growth is assumed to be 1.0 percentage point higher, and 14.2 percent of GDP if per capita
4
The base case health cost growth rates are derived from the projections in the 2023 Medicare Trustees Report. These projections are summarized and
discussed in Note 25 and the “Medicare Projections” section of the unaudited RSI for the SOSI.
health cost growth is 2.0 percentage points higher. The cost of delaying reform is also increased if health care cost growth is
higher because debt accumulates more rapidly during the period of inaction. For example, the lower part of Table 2 shows
that delaying reform initiation from 2024 to 2034 requires that 2034-2098 primary surpluses be higher by an average of 0.8
percent of GDP in the base case, 1.4 percent of GDP if per capita health cost growth is 1.0 percentage point higher, and 2.6
percent of GDP if per capita health cost growth is 2.0 percentage points higher. The dramatic deterioration of the long-run
fiscal outlook caused by higher health care cost growth shows the critical importance of managing health care cost growth.
Effects of Changes in Interest Rates

A higher debt-to-GDP ratio is likely to increase the interest rate on government debt, making it costlier for the
government to service its debt than if the debt-to-GDP ratio were lower. Table 3 displays the effect of several alternative
scenarios using different nominal interest rates than assumed in the base case on the size of reforms to close the fiscal gap as
well as the effect of delaying closure of the fiscal gap. If reform is initiated in 2024, eliminating the fiscal gap requires that
the 2024-2098 primary surplus increase by an average of 4.5 percent of GDP in the base case, 6.1 percent of GDP if the
interest rate is 2.0 percentage points higher in every year, and 5.3 percent of GDP if the interest rate is 1.0 percentage point
higher in every year. The required increase in the 2024-2098 primary surplus decreases to an average of 3.6 percent of GDP
if the interest rate is 1.0 percentage point lower in every year and 2.6 percent of GDP if the interest rate is 2.0 percentage
points lower in every year. The cost of delaying reform is also increased if interest rates are higher, due to the fact that
interest paid on debt accumulates more rapidly during the period of inaction. For example, the lower part of Table 3 shows
that delaying reform initiation from 2024 to 2034 requires that 2034-2098 primary surpluses be higher by an average of 0.8
percent of GDP in the base case, 2.0 percent of GDP if the interest rate is 2.0 percentage points higher in every year, and 1.3
percent of GDP if the interest rate is 1.0 percentage point higher in every year. The required increase in the 2034-2098
primary surplus is higher by an average of 0.5 percent of GDP if the interest rate is 1.0 percentage point lower in every year
and 0.2 percent of GDP if the interest rate is 2.0 percentage points lower in every year.
Effects of Changes in Discretionary Spending Growth

The rate of growth of discretionary spending has a large impact on long-term fiscal sustainability. The current base
projection for discretionary spending assumes that spending stays within statutory caps for 2024 and 2025 under the FRA
then grows with nominal GDP starting in 2026. Under the base projection, discretionary spending is approximately 6.2
percent of GDP each year over the projection period. The implications of an alternative scenario are shown in Table 4. In the
alternative scenario, discretionary spending grows with inflation and population beginning in 2026 so as to hold discretionary
spending constant on a real per capita basis. (This growth rate assumption is slower than growth with GDP but is still higher
than the standard 10-year budget baseline assumption, which assumes that discretionary spending grows with inflation but
not with population.) As shown in Table 4, if discretionary spending grows with nominal GDP, eliminating the fiscal gap
requires that the 2024-2098 primary surplus increase by an average of 4.5 percent of GDP. If discretionary spending grows
with inflation and population, the fiscal gap is 2.2 percent of GDP. The cost of delaying reform is greater when discretionary
spending levels are higher. Initiating reforms in 2034 requires that the primary surplus increase by an average of 0.8 percent
of GDP per year in the base case and by an average of 0.4 percent of GDP if discretionary levels grow with inflation and
population. If delayed until 2044, the primary surplus must increase by an average of 2.0 percent of GDP in the base case and
by an average of 1.0 percent of GDP when spending grows with inflation and population.
Effects of Changes in Individual Income Receipt Growth

The growth rate of receipts, specifically individual income taxes, is another key determinant of long-term sustainability.
The base projections assume growth in individual income taxes over time to account primarily for the slow shift of
individuals into higher tax brackets due to real wage growth (“real bracket creep”). This assumption approximates the long-
term historical growth in individual income taxes relative to wages and salaries and is consistent with current policy without
change, as future legislation would be required to prevent real bracket creep. As an illustration of the effect of variations in
individual income tax growth, Table 5 shows the effect on the size of reforms necessary to close the fiscal gap and the effect
of delaying closure of the fiscal gap if long-term receipt growth as a share of wages and salaries is 0.1 percentage point
higher than the base case, as well as 0.1 percentage point lower than the base case. If reform is initiated in 2024, eliminating
the fiscal gap requires that the 2024-2098 primary surplus increase by an average of 4.5 percent of GDP in the base case, 3.4
percent of GDP if receipt growth is 0.1 percentage point higher, and 5.6 percent of GDP if receipt growth is 0.1 percentage
point lower. The cost of delaying reform is also affected if receipt growth assumptions change, much as was the case in the
previous alternative scenarios.
Fiscal Projections in Context

In this Financial Report, a sustainable fiscal policy is defined as one where the federal debt-to-GDP ratio is stable or
declining over the projection period. However, this definition does not indicate what a sustainable debt-to-GDP ratio might
be. Any particular debt ratio is not the ultimate goal of fiscal policy. Rather, the goals of fiscal policy are many. They include
financing public goods, such as infrastructure and government services; promoting a strong and growing economy; and
managing the debt so that it is not a burden on future generations. These goals are interrelated, and readers should consider
how policies intended to affect one might depend on or affect another.
This Financial Report shows that current policy under this Financial Report’s assumptions is not sustainable. In
evaluating policies that could make policy sustainable, note that debt may play roles in both facilitating and hindering a
healthy economy. For example, government deficit spending supports demand and allows the economy to emerge from
recessions more quickly. Debt may also be a cost-effective means of financing capital investment that promotes future
economic growth, which may in turn make future debt levels more manageable. However, economic theory also suggests that
high levels of debt may contribute to higher interest rates, leading to lower private investment and a smaller capital stock that
the economy can use to grow. Unfortunately, it is unclear what debt-to-GDP ratio would be sufficiently high to produce these
negative outcomes, or whether the key concern is the level of debt per se, or a trend that shows debt increasing over time.
While several empirical studies have attempted to discern a definite relationship between debt and economic growth
from the past experience of countries, the evidence is mixed. One study suggested that debt-to-GDP ratios in excess of 90
percent had significant negative consequences for real GDP growth across advanced countries. 5 Real GDP growth is
generally lower by about 1 percent when the countries’ debt-to-GDP ratios are above 90 percent relative to the times when
they are below 90 percent. 6 However, after removing sample countries with very high indebtedness – those with debt-to-GDP
ratios of more than 120 percent – and very low indebtedness – those with debt-to-GDP ratios of less than 30 percent – the
negative relationship between growth and debt is difficult to determine. Another study reports that differences in average
GDP growth in countries with debt-to-GDP ratios between 30-60 percent, 60-90 percent, and 90-120 percent cannot be
statistically distinguished. 7 Some countries with high debt-to-GDP ratios have been observed to experience lower-than-
average growth, while other countries with similarly high debt-to-GDP ratios have continued to enjoy robust growth.
Analogously, low debt-to-GDP ratios are no guarantee of strong economic growth. Moreover, the direction of causality is
5
Reinhart, Carmen M., Vincent R. Reinhart and Kenneth S. Rogoff. 2012. “Public Debt Overhangs: Advanced-Economy Episodes Since 1800.” Journal of
Economic Perspectives, 26(3):69.86.
6
Errata: “Growth in a Time of Debt,” Carmen M. Reinhart and Kenneth S. Rogoff. Harvard University, 2013.
7
Herndon, Thomas, Michael Ash, and Robert Pollard, “Does High Public Debt Consistently Stifle Economic Growth? A Critique of Reinhart and Rogoff,”
Cambridge Journal of Economics, 2013.
unclear. High debt may undermine growth through increased interest rates and lower business confidence, or low growth may
contribute to high debt by depressing tax revenues and increasing deficit spending on social safety net programs.
Nevertheless, to put the current and projected debt-to-GDP ratios in context, it is instructive to examine how the U.S.
experience compares with that of other countries. The U.S. government’s debt as a percent of GDP is relatively large
compared with central government debt of other countries, but far from the largest among developed countries. Based on
historical data as reported by the IMF for 29 advanced economies, the debt-to-GDP ratio in 2019 ranged from 5.8 percent of
GDP to 194.8 percent of GDP. 8 The U.S. is not included in this set of statistics, which underscores the difficulty in
calculating debt ratios under consistent definitions, but the 2023 debt-to-GDP ratio for the U.S. government was
approximately 97 percent. Despite using consistent definitions where available, these debt measures are not strictly
comparable due to differences in the share of government debt that is debt of the central government, how government
responsibilities are shared between central and local governments, how current policies compare with the past policies that
determine the current level of debt, and how robustly each economy grows.
The historical experience of the U.S. may also provide some perspective. As Chart 4 shows, the debt-to-GDP ratio was
highest in the 1940s, following the debt buildup during World War II. In the projections in this Financial Report, the U.S.
would reach the previous peak debt ratio in 2028. However, the origins of current and future federal debt are quite different
from the wartime debt of the 1940s, which limits the pertinence of past experience.
As the cross-country and historical comparisons suggest, there is a very imperfect relationship between the current level
of central government debt and the sustainability of overall government policy. Past accrual of debt is certainly important, but
current policies and their implications for future debt accumulation and future growth are as well.
8
Government Finance Statistics Yearbook, Main Aggregates and Balances, available at https://data.imf.org. Data are for D1 debt liabilities for the central
government, excluding social security funds, for Advanced Economies. While more current data are available, the recent pandemic has substantially
distorted debt-to-GDP ratios. Pre-pandemic levels likely provide a better basis of comparison.
Conclusion
The projections in this Financial Report indicate that if policy remains unchanged, the debt-to-GDP ratio will steadily
increase throughout the projection period and beyond, which implies current policy under this Financial Report’s
assumptions is not sustainable and must ultimately change. Subject to the important caveat that policy changes are not so
abrupt that they slow economic growth, the sooner policies are put in place to avert these trends, the smaller are the
adjustments necessary to return the nation to a sustainable fiscal path, and the lower the burden of the debt will be to future
generations.
Social Insurance
The social insurance programs consisting of Social Security, Medicare, Railroad Retirement, Black Lung, and UI were
developed to provide income security and health care coverage to citizens under specific circumstances as a responsibility of
the government. Because taxpayers rely on these programs in their long-term planning, social insurance program information
should indicate whether the current statutory provisions of the programs can be sustained, and more generally what effect
these provisions likely have on the government’s financial condition. The resources needed to run these programs are raised
through taxes and fees. Eligibility for benefits depends in part on earnings and time worked by the individuals. Social
Security benefits are generally redistributed intentionally toward lower-wage workers (i.e., benefits are progressive). In
addition, each social insurance program has a uniform set of eligibility events and schedules that apply to all participants.
RSI material is generally drawn from the 2023 Annual Reports of the Boards of Trustees, which represents the official
government evaluation of the financial and actuarial status of the Social Security and Medicare Trust Funds. Unless
otherwise noted, all data are for calendar years, all projections are based on current law and the Trustees intermediate set of
assumptions. A significant exception is that the projections disregard benefit payment reductions that would result from the
projected depletion of the OASDI and HI Trust Funds. Under current law, benefit payments would be reduced to levels that
could be covered by incoming tax and premium revenues when the trust fund balances have been depleted.
Social Security and Medicare

Social Security
The OASI and DI Trust Funds were established on January 1, 1940 and August 1, 1956 respectively as separate
accounts in Treasury. The OASI fund pays cash retirement benefits to eligible retirees and their eligible dependents and
survivors, and the much smaller DI fund pays cash benefits to eligible individuals who are unable to work because of medical
conditions and certain family members of such eligible individuals. All financial operations of the OASI and DI Programs are
handled through these respective funds. The two funds are often referred to as the combined OASDI Trust Funds or “Social
Security.” At the end of calendar year 2022, Social Security benefits were paid to approximately 66 million beneficiaries.
The events that trigger benefit payments are quite different however, both trust funds have the same dedicated financing
structure: taxes paid by workers, their employers, and individuals with self-employment income, based on work covered by
the Social Security Program. Currently, employers and employees each pay 6.2 percent of taxable earnings, and the self-
employed pay 12.4 percent of taxable earnings. Payroll taxes are levied on wages and net earnings from self-employment up
to a specified maximum annual amount, referred to as maximum taxable earnings ($160,200.00 in 2023), that increases each
year with economy-wide average wages.
Legislation passed in 1984 subjected up to half of Social Security benefits to income tax and allocated the revenue to
the OASDI Trust Funds. In 1993 legislation increased the potentially taxed portion of benefits to 85.0 percent and allocated
the additional revenue to the Medicare’s HI Trust Fund.
Medicare
The Medicare Program, created in 1965, has two separate trust funds: the HI Trust Fund (otherwise known as Medicare
Part A) and the SMI Trust Funds (which consists of the Medicare Part B and Part D 9 accounts). HI helps pay for inpatient
hospital skilled nursing facility, home health, and hospice. SMI helps pay for hospital outpatient services, physician services,
and assorted other services and products through Part B and for prescription drugs through Part D.
Though the events that trigger benefit payments are similar, HI and SMI have different dedicated financing structures.
Similar to Social Security, HI is financed primarily by payroll contributions. Currently, employers and employees each pay
1.45 percent of earnings, while self-employed workers pay 2.9 percent of their net earnings. SMI is financed primarily by
direct transfers from the General Fund. Additional financing sources include premiums paid by beneficiaries and, for Part D
state transfers.
9
Medicare legislation in 2003 created the new Part D account in the Medicare Part B and D Trust Fund to track the finances of a new prescription drug
benefit that began in 2006. As is the case for Medicare Part B, a little less than three-quarters of revenues to the Part D account will come from future
transfers from the General Fund. Consequently, the nature of the relationship between the Medicare Part B and D Trust Fund and the Budget described
below is largely unaffected by the presence of the Part D account though the magnitude will be greater.
Social Security, Medicare, and Government-wide Finances

Figure 1—Social Security, Medicare, and Government-wide Finances
M
SMI
E Premiums and SMI Trust
A State Transfers Fund E
N Account X
S Other
General P
Government Surplus Government
Transfers Borrowed
Interest
Expenditures, E
O Credited
N
Net Interest
F Income Taxes, D
Benefit Taxes, Other
Other Revenues, I
F Government
T
Borrowing from Accounts
I the Public U
N Surplus
Borrowed R
Benefit
A Interest
Taxes
E
N Credited HI, OASDI, SMI
S
C Benefits
HI, OASDI
I Payroll Taxes and Trust Fund
N HI Accounts
G Premiums
• Other Government Transfers: Intra-governmental transfers to the Medicare SMI Trust Fund from other government
accounts.
• Surplus Borrowed: Program revenue loaned to the General Fund and treated as if it borrowed the money from the
public.
• Interest Credited: Interest earned when the excess of program revenue over expenses is loaned to the General Fund
becoming a future obligation to the General Fund.
The current and future financial status of the separate Social Security and Medicare Trust Funds is the focus of the
Social Security and Medicare Trustees Reports, a focus that may appropriately be referred to as the “trust fund perspective.”
In contrast, the government primarily uses the budget concept, appropriately referred to as the “budget perspective” or the
“government-wide perspective” as the framework for budgetary analysis and presentation. It represents a comprehensive
display of all federal activities, regardless of fund type or on- and off-budget status and has a broader focus than the trust
fund perspective. Social Security and Medicare are among the largest expenditure categories of the Budget. This section
describes the important relationship between the trust fund perspective and the government-wide perspective.
Figure 1 is a simplified depiction of the interaction of the Social Security and Medicare Trust Funds with the rest of the
Budget. 10 The boxes on the left show sources of funding, those in the middle represent the trust funds and other government
accounts, including the General Fund into which that funding flows, and the boxes on the right show simplified expenditure
categories. The figure is intended to illustrate how the various sources of program revenue flow through the Budget to
beneficiaries. The general approach is to group revenues and expenditures that are linked specifically to Social Security
and/or Medicare separately from those for other government programs.
Each of the trust funds has its own sources and types of revenue. With the exception of General Fund transfers to
Medicare Parts B and D, each of these revenue sources represents revenue from the public that is dedicated specifically for
the respective trust fund and cannot be used for other purposes. In contrast, personal and corporate income taxes as well as
other revenue go into General Fund and are drawn down for any government program for which Congress has approved
spending. 11 The Medicare SMI Trust Fund is shown separately from the Social Security OASDI Trust Funds and the
Medicare HI Trust Fund to highlight the unique financing of Medicare Parts B and D. Currently, Medicare Parts B and D are
10
The Budget encompasses all government financing and is synonymous with a government-wide perspective.
11
Other programs also have dedicated revenues in the form of taxes and fees (and other forms of receipt) and there are a large number of dedicated trust
funds in the Budget.
the only programs that are funded through transfers from the General Fund. The transfers are automatic and; their size
depends on program expenses, not on how much revenue comes into Treasury. If General Fund revenues become insufficient
to cover both the mandated transfer to Medicare Parts B and D and expenditures on other general government programs,
Treasury needs to borrow to make up the difference. In the longer run, if transfers to Medicare Parts B and D increase beyond
growth in general revenues is as projected, then Congress must either raise taxes, cut other government spending, reduce
Medicare Parts B and D benefits, or borrow even more.
Intra-governmental transfers (surplus) is a form of “borrowing/lending” between the government accounts. How loans
from the trust funds to the General Fund and later repayments of those loans affect tax income and expenditures of the
General Fund is uncertain. Two extreme cases encompass the possibilities. At one extreme, each dollar the trust funds loan to
the General Fund might reduce borrowing from the public by a dollar at the time the loan is extended, in which case the
General Fund could repay all trust fund loans by borrowing from the public without raising the level of public debt above the
level that would have occurred in the absence of the loans. At the other extreme, the trust fund loans result in additional
largess (i.e., higher spending and/or lower taxes) in General Fund programs at the time the loans are extended, but ultimately
that additional largess is financed with additional austerity (i.e., lower spending and/or higher taxes). The actual impact of
trust fund loans to the General Fund and their repayment on General Fund programs is at one of these two extremes or
somewhere in between.
Actual dollar amounts roughly corresponding to the flows presented in Figure 1 are shown in the following table for FY
2023. From the government-wide perspective, only revenues received from the public and state transfers less expenditures
made to the public are important for the final balance. From the trust fund perspective which is captured in the bottom section
of each of the three trust fund columns, revenue also includes amounts transferred from the General Fund and interest earned
from the lending/borrowing activity between the General Fund and the trust funds. Transfers to the SMI Program from the
General Fund are obligated under current law and therefore, appropriately viewed as revenue from the trust fund perspective.
Revenues and Expenditures for Medicare and Social Security Trust Funds and the Total Federal
Budget for the Fiscal Year ended September 30, 2023
Trust Funds
(In billions of dollars) HI SMI OASDI Total All Other Total1
Payroll taxes and other public revenues:

Payroll and benefit taxes 397.5 - 1,266.3 1,663.8 - 1,663.8
Premiums 6.1 150.3 - 156.4 - 156.4
Other taxes and fees - 17.9 - 17.9 2,600.9 2,618.8
Total 403.6 168.2 1,266.3 1,838.1 2,600.9 4,439.0
Total expenditures to the public2 396.3 621.5 1,354.6 2,372.4 3,761.6 6,134.0
Net results for budget perspective3 7.3 (453.3) (88.3) (534.3) (1,160.7) (1,695.0)
Revenues from other government accounts:
Transfers 1.2 439.0 - 440.2 (440.2)
Interest credits 5.3 4.4 66.7 76.4 (76.4)
Total 6.5 443.4 66.7 516.6 (516.6)
Net results for trust fund perspective3 13.8 (9.9) (21.6) (17.7) N/A N/A
1
This column is the sum of the preceding two columns and shows data for the total Budget. The figure $1,695.0 billion was
the total federal deficit in FY 2023.
2
The OASDI figure includes $5.6 billion transferred to the RRB for benefit program payments and is therefore an expenditure to the
public.
3
Net results are computed as revenues less expenditures.
Transfers and interest credits received by the trust funds appear as a negative entry under “all other” and the column is offset when
summed for the total Budget.
Medicare Part A: From the government-wide perspective, the difference between expenditures made to the public and
revenues was $7.3 billion. From the trust fund perspective, after revenues from transfers and interest from the General Fund,
revenues exceeded expenditures by $13.8 billion.
Medicare Parts B and D: From the government-wide perspective, the difference between expenditures made to the
public and revenues was $453.3 billion resulting in a net draw on the overall budget balance. From the trust fund perspective,
after revenues from transfers and interest from the General Fund, revenues exceeded expenditures by $9.9 billion.
Social Security: From the government-wide perspective, the difference between expenditures made to the public and
revenues was $88.3 billion. From the trust fund perspective, after revenues from transfers and interest from the General Fund,
expenditures exceeded revenues by $21.6 billion.
Cash Flow Projections
Economic and Demographic Assumptions. The Boards of Trustees of the OASDI and Medicare Trust Funds provide in
their annual reports to Congress short-range (10-year) and long-range (75-year) actuarial estimates of each trust fund.
Because of their inherent uncertainty in estimating 75 years into the future, the boards use three alternative sets of economic
and demographic assumptions to show a range of possibilities. The economic and demographic assumptions used for the
most recent set of intermediate projections for Social Security and Medicare are shown in the demographic and economic
assumption section of Note 25—Social Insurance.
Worker-to-Beneficiary Ratio. For the most part, current workers’ pay for current benefits. The relatively smaller number
of persons born after the baby boom will therefore finance the retirement of the baby boom generation. Chart 1 shows the
estimated number of covered workers per OASDI beneficiary using the Trustees intermediate assumptions. Covered workers
are persons having earnings creditable for OASDI purposes based on wages in covered employment or income from covered
self-employment. The estimated number of workers per beneficiary declines from 2.8 in 2022 to 2.1 in 2097. A similar
demographic pattern confronts the Medicare Program. In 2022 every HI beneficiary had about 2.9 workers to pay for his or
her benefit and continues to decline until there are only 2.2 workers per beneficiary by 2097.
Chart 1—Number of Covered Workers per OASDI Beneficiary

2017-2097
Social Security Projections

Income and Expenditures as a Percent of Taxable Payroll. Chart 2 shows annual non-interest income and expenditures
expressed as percentages of taxable payroll. Estimated cost continues to exceed income excluding interest in years 2023
through 2034. Estimated cost increases through about 2078, declines slowly in years 2079-2096, and then increases slightly
in 2097. The estimated income at the end of the 75-year period is sufficient to cover 74.0 percent of the estimated cost.
In any year, to meet all OASDI cost on a timely basis, the combined OASI and DI Trust Funds will need to redeem
Treasury securities. This redemption differs from the situation of prior years when the combined OASI and DI Trust Funds
had been net lenders to the General Fund. Because the program lacks the authority to borrow to continue paying benefits,
benefit payments would be limited to the available noninterest income.
Solvency could be achieved by: 1) increasing revenue equivalent to an immediate and permanent payroll tax rate
increase of 3.44 percentage points; or by 2) reducing scheduled benefits by an amount equivalent to an immediate and
permanent reduction of about 21.3 percent applied to all current and future beneficiaries, or about 25.4 percent if the
reductions were applied only to newly entitled beneficiaries. Alternatively, some combination of tax increases and benefit
reductions could be adopted.
Chart 2—OASDI Income (Excluding Interest) and Expenditures

as a Percent of Taxable Payroll
2017-2097
Income and Expenditures as a Percent of GDP. Chart 3 shows estimated annual non-interest income and expenditures,
expressed as a percent of GDP. Analyzing these cash flows in terms of percentage of the estimated GDP, which represents
the total value of goods and services produced in the U.S., provides a measure of the cost of the OASDI program in relation
to the size of the national economy that must finance it.
In calendar year 2022, OASDI cost was about $1.2 trillion, which was about 4.9 percent of GDP. The cost of the
program (based on current law) rises to a peak of 6.3 percent of GDP in 2076, then declines to 6.0 percent by 2097. The
increase from 2022 to 2040 is projected to occur as baby boomers continue to become eligible for OASDI benefits, lower
birth rates result in fewer workers per beneficiary, and beneficiaries continue to live longer.
Chart 3—OASDI Income (Excluding Interest) and Expenditures

as a Percent of GDP
2017-2097
Medicare Projections
Medicare Legislation. The projections presented here are based on current law, certain features of which may result in
some challenges for the Medicare program. In 2010 the PPACA was signed into law and contains the most significant
changes to health care coverage since the Social Security Act. The PPACA provided funding for the establishment of a Center
for Medicare and Medicaid Innovation to test innovative payment and service delivery models to reduce program
expenditures while preserving or enhancing the quality of care furnished to individuals. In addition, the Medicare projections
have been significantly affected by the enactment of the enactment of the IRA of 2022. This legislation has wide-ranging
provisions, including those that restrain price growth and negotiate drug prices for certain Part B and Part D drugs and that
redesign the Part D benefit structure to decrease beneficiary out-of-pocket costs. The law takes several years to implement,
resulting in very different effects by year. The total effect of the IRA of 2022 is to reduce government expenditures for Part
B, to increase expenditures for Part D through 2030, and to decrease Part D expenditures beginning in 2031.
Incorporated in these projections is the sequestration of non-salary Medicare expenditures as required by the following
laws:
• Budget Control Act of 2011 (P.L. 112-25, enacted on August 2, 2011), as amended by the American Taxpayer Relief
Act of 2012 (P.L. 112-240, enacted on January 2, 2013);
• Continuing Appropriations Resolution, 2014 (P.L. 113-67, enacted on December 26, 2013);
• Sections 1 and 3 of P.L. 113-82, enacted on February 15, 2014;
• Protecting Access to Medicare Act of 2014 (P.L. 113-93, enacted on April 1, 2014);
• BBA of 2015 (P.L. 114-74, enacted on November 2, 2015);
• BBA of 2018 (P.L. 115-123, enacted on February 9, 2018);
• BBA of 2019 (P.L. 116-37, enacted on August 2, 2019);
• The CARES Act (P.L. 116-136, enacted on March 27, 2020);
• The CAA, 2021 (P.L. 116-260, enacted on December 27, 2020);
• An Act to Prevent Across-the-Board Direct Spending Cuts, and for Other Purposes (P.L. 117-7, enacted on April 14,
2021);
• IIJA (P.L. 117-58, enacted on November 15, 2021);
• The Protecting Medicare and American Farmers from Sequester Cuts Act (P.L. 117-71, enacted on December 10,
2021); and
• The CAA, 2023 (P.L. 117-328, enacted on December 29, 2022).
The sequestration reduces benefit payments by 2.0 percent from April 1, 2013 through April 30, 2020, by 1.0 percent
from April 1, 2022 through June 30, 2022, by 2.0 percent from July 1, 2022 through September 30, 2032. Because of
sequestration, non-salary administrative expenses are reduced by an estimated 5.0 to 7.0 percent from March 1, 2013 through
September 30, 2032, excluding May 1, 2020 through March 31, 2022 when it was suspended.
The financial projections for the Medicare program reflect substantial, but very uncertain, cost savings deriving from
current law provisions that lower increases in Medicare payment rates to most categories of health care providers, but such
adjustments would probably not be viable indefinitely without fundamental change in the current delivery system. In view of
the factors described above, it is important to note that Medicare’s actual future costs are highly uncertain for reasons apart
from the inherent challenges in projecting health care cost growth over time. For additional information refer to the
“Medicare – Illustrative Alternative Scenario” section of Note 25—Social Insurance and HHS’s financial statements.
Changes in Projection Methods. The long-range cost growth rates must be modified to reflect demographic impacts. In
the 2021 report, these impacts reflected the changing distribution of Medicare enrollment by age and sex, and the
beneficiary’s proximity to death, which is referred to as a TTD adjustment. The TTD adjustment reflects the fact that the
closer an individual is to death, the higher his or her health care spending is.
Total Medicare. Chart 4 shows expenditures and current-law non-interest revenue sources for HI and SMI combined as
a percent of GDP. Under the PPACA, beginning in 2013 the HI Trust Fund receives an additional 0.9 percent tax on earnings
in excess of $250,000 for joint tax return filers and $200,000 for individual tax return filers. As a result of this provision, it is
projected that payroll taxes will grow slightly faster than GDP. Beginning in 2022, HI revenue from income taxes on Social
Security benefits will gradually increase as a share of GDP as the share of benefits subject to such taxes increase. General
revenues are projected to gradually increase from 43.0 percent of Medicare financing in 2022 to about 49.0 percent in 2040,
stabilizing thereafter. SMI premiums will also grow in proportion to general revenue transfers, placing a growing burden on
beneficiaries. Medicare Part B and D general revenues equal 1.7 percent of GDP in 2022 and will increase to an estimated 3.0
percent in 2097 under current law.
Chart 4—Total Medicare (HI and SMI) Expenditures and Non-interest Income
as a Percent of GDP
2017-2097
Medicare, Part A Income and Expenditures as a Percent of Taxable Payroll. Chart 5 illustrates Medicare Part A income
(excluding interest) and expenditures as a percentage of taxable payroll. The standard HI payroll tax rate is not scheduled to
change in the future under current law and payroll tax income as a percentage of taxable payroll is estimated to remain
constant at 2.9 percent. Income from taxation of Social Security benefits will also increase faster than taxable payroll because
the income thresholds determining taxable benefits are not indexed for price inflation. Since these income thresholds are not
indexed, over time an increasing proportion of workers and their earnings will become subject to the additional HI tax rate.
In 2023 and beyond, as indicated in Chart 5, the cost rate is projected to rise, primarily due to the continued retirements
of those in the baby boom generation and partly due to an acceleration of health services cost growth. This cost rate increase
is moderated by the accumulating effect of the productivity adjustments to provider price updates, which are estimated to
reduce annual HI per capita cost growth by an average of 0.5 percent through 2032 and 1.0 percent thereafter.
Chart 5—Medicare Part A Income (Excluding Interest) and Expenditures

as a Percent of Taxable Payroll
2017-2097
Medicare, Part A Income and Expenditures as a Percent of GDP. Chart 6 shows estimated annual Medicare Part A non-
interest income and expenditures, expressed as a percent of GDP. This measure provides an idea of the relative financial
resources that will be necessary to pay for Medicare Part A services. In 2022, the expenditures were $342.7 billion, which
was 1.3 percent of GDP. This percentage is projected to increase steadily until about 2046 and then remain fairly level
throughout the rest of the 75-year period, as the accumulated effects of the price update reductions are realized.
Chart 6—Medicare Part A Income (Excluding Interest) and Expenditures

as a Percent of GDP
2017-2097
Medicare Part B and Part D Premium as well as State Transfer Income and Expenditures as a Percent of GDP. Chart 7
shows expenditures for the Part B and D Program expressed as a percent of GDP. It is important to examine the projected rise
in expenditures and the implications for beneficiary premiums and General Fund transfers.
In 2022, SMI expenditures were $562.4 billion, or about 2.2 percent of GDP. Under current law, they would grow to
about 3.9 percent of GDP within 25 years and to 4.2 percent by the end of the projection period. To match the faster growth
rates for SMI expenditures, beneficiary premiums, along with general revenue contributions, would increase more rapidly
than GDP over time but at a slower rate compared to the last 10 years. Average per beneficiary costs for Part B and Part D
benefits are projected to increase after 2022 by about 4.2 percent annually. The associated beneficiary premiums—and
General Fund transfers would increase by approximately the same rate. The special state payments to the Part D account are
set by law at a declining portion of the states’ forgone Medicaid expenditures attributable to the Medicare drug benefit.
Chart 7—Medicare Part B and Part D Premium and State Transfer

Income and Expenditures as a Percent of GDP
2017-2097
Social Security and Medicare Sensitivity Analysis

Projections of the future financial status of the Social Insurance programs depend on many demographic and economic
assumptions. The estimates presented here are based on the assumption that the programs will continue under current law
except that the full amount of Social Security and Medicare HI scheduled benefits are paid after trust fund depletion contrary
to current law. Income will depend on how these factors affect the size and composition of the working population and the
level and distribution of wages and earnings. Similarly, the cost will depend on how these factors affect the size and
composition of the beneficiary population and the general level of benefits.
Because actual experience is likely to differ from the estimated or assumed values of these factors, this section is
included to illustrate the sensitivity of the long-range projections to changes in assumptions by analyzing key assumptions:
average annual reduction in death rates for Social Security, average annual growth in health costs for Medicare, total fertility
rate, real-wage differential, CPI change, net immigration, and real interest rate.
For this analysis, the intermediate assumptions are used as the reference point, and each selected assumption is varied
individually. The variation used for each individual assumption reflects the levels used for that assumption in the low-cost
and high-cost projections. For example, when analyzing sensitivity with respect to variation in real wages, income, and
expenditure projections using the intermediate assumptions are compared to the outcome when projections are done by
changing only the real wage assumption to either low-cost or high-cost alternatives.
The following tables show the PV of the estimated excess of Social Security and Medicare cost over income for the 75-
year period, using various assumptions, which are shown in parentheses. The low-cost alternative is characterized by
assumptions that improve the financial status of the program (relative to the intermediate assumption) such as slower
improvement in mortality (beneficiaries die younger). In contrast, assumptions under the high-cost alternative worsen the
financial outlook. All PV are calculated as of January 1, 2023 and are based on estimates of income and cost during the 75-
year projection period 2023-2097. Refer to SSA’s and HHS’s unaudited RSI—Social Insurance section for additional
information on the Social Insurance programs sensitivity analysis.
Present Values of Estimated OASDI Expenditures in Excess of Income Under Various Assumptions,
2023-2097
(Dollar values in trillions; values of assumptions shown in parentheses)
Financing Shortfall Range
Assumption Low Intermediate High
Average annual reduction in death rates1 20.5 25.2 30.9

(0.3) (0.7) (1.2)
Total fertility rate2 22.9 25.2 28.6

(2.2) (2.0) (1.7)
Real-wage growth1 20.7 25.2 28.2

(1.7) (1.1) (0.5)
CPI change 24.6 25.2 25.9

(3.0) (2.4) (1.8)
Net immigration2 23.6 25.2 26.8

(1,683)3 (1,245)3 (829)3
Real interest rate 21.5 25.2 30.0

(2.8) (2.3) (1.8)
1
The amounts shown represent averages from 2032 to 2097 of the 75-year projection period.
2
The amounts shown represent averages from 2033 to 2097 of the 75-year projection period.
3
Per thousands of persons.
Source: SSA
The decrease and increase discussed below represent how much the low and high alternatives differ from the
intermediate alternative shown in the table above over the 75-year projection period.
• The average annual reduction in death rates: If people die at younger ages Social Security income relative to cost
would decrease by $4.7 trillion; if people live longer the shortfall would increase by $5.7 trillion.
• Total fertility rate: Higher rates of fertility increase the ratio of workers to beneficiaries, all else equal. If there are
more workers compared to beneficiaries Social Security income relative to cost would decrease by $2.3 trillion; if
there are fewer workers compared to beneficiaries the shortfall would increase by $3.4 trillion.
• Real-wage growth: Higher real wage growth results in faster income growth relative to expenditure growth; if real-
wage growth is higher Social Security income relative to cost would decrease by $4.5 trillion; if real-wage growth is
lower the shortfall would increase by $3.0 trillion.
• CPI change: If the ultimate annual increase in the CPI percentage is higher Social Security income relative to cost
would decrease by $0.6 trillion; if the ultimate annual increase in the CPI percentage is lower shortfall would
increase by $0.7 trillion.
• Net immigration: If there is a larger increase in immigration levels then Social Security income relative to cost
would decrease by $1.6 trillion; if there is a smaller increase in immigration levels the shortfall would increase by
$1.6 trillion.
• Real interest rate: If the ultimate real interest rate is higher, then Social Security income relative to cost would
decrease by $3.7 trillion; if the ultimate annual real interest rate is lower, then the shortfall would increase by $4.8
trillion.
Present Values of Estimated Medicare Part A Expenditures in Excess of Income Under Various
Assumptions, 2023-2097
(Dollar values in trillions; values of assumptions shown in parentheses)
Financing Shortfall Range
Assumption Low Intermediate High
Average annual growth in health costs (5.6)1 4.6 21.0

(2.7) (3.7) (4.7)
Total fertility rate 3.8 4.6 5.8

(2.2) (2.0) (1.7)
Real wage growth 0.9 4.6 7.2

(1.7) (1.1) (0.5)
CPI change 3.4 4.6 6.2

(3.0) (2.4) (1.8)
Net immigration 4.0 4.6 5.3

(1,732)2 (1,277)2 (845)2
Real interest rate 4.0 4.6 5.4

(2.8) (2.3) (1.8)
1
Average annual growth in health cost is projected to be negative for 2023.
2
Per thousands of persons.
Source: Centers for Medicare & Medicaid Services
The decrease and increase discussed below represent how much the low and high alternatives differ from the
intermediate alternative shown in the table above over the 75-year projection period.
• Average annual growth in health care costs: The financial status of the HI Trust Fund is extremely sensitive to the
growth rates for health care service costs. Slower growth rates will produce a lower aggregate cost of providing
covered health care services. If a slower growth rate is attained Medicare Part A income relative to cost would
decrease by $10.2 trillion; if the growth rate is higher the shortfall would increase by $16.4 trillion.
• Total fertility rate: Higher rates of fertility increase the ratio of workers to beneficiaries, all else equal. If there are
more workers compared to beneficiaries Medicare Part A income relative to cost would decrease by $0.8 trillion; if
there are fewer workers compared to beneficiaries, the shortfall would increase by $1.2 trillion.
• Real-wage growth: Faster real-wage growth results in smaller HI cash flow deficits. If real-wage growth is higher
Medicare Part A income relative to cost would decrease by $3.7 trillion; if real wage growth is lower, the shortfall
would increase by $2.6 trillion.
• CPI change: If the ultimate annual increase in the CPI percentage is higher Medicare Part A income relative to cost
would decrease by $1.2 trillion; if the ultimate annual increase in the CPI percentage is lower the shortfall would
increase by $1.6 trillion.
• Net immigration: If there is a larger increase in immigration levels then Medicare Part A income relative to cost
would decrease by $0.6 trillion; if there is a smaller increase in immigration levels the shortfall would increase by
$0.7 trillion.
• Real interest rate: If the ultimate real interest rate is higher, Medicare Part A income relative to cost would decrease
by $0.6 trillion; if the ultimate real interest rate is lower, then the shortfall would increase by $0.8 trillion.
Present Values of Estimated Medicare Parts B and D Future Expenditures Less Premium Income
and State Transfers Under Three Health Care Cost Growth Assumptions, 2023-2097
Medicare Program1 Government-wide Resources Needed

Low Intermediate High
(in trillions of dollars) 2.7 3.7 4.7
Part B 29.1 40.9 59.4
Part D 5.4 7.6 11.1
1
Annual growth rate is the aggregate cost of providing covered health care services to beneficiaries. The low and high scenarios
assume that costs increase 1.0 percent slower or faster, respectively, than the intermediate assumption.
Source: Centers for Medicare & Medicaid Services
The table above shows the effects of various assumptions about the growth in health care costs on the PV of estimated
Part B and D expenditures in excess of income in the terms of government-wide resources needed due to the financing
mechanism (General Fund transfers) for Medicare Parts B and D. As with Part A, net Part B and D expenditures are very
sensitive to the health care cost growth assumption. If a slower growth rate is attained government-wide resources needed for
Part B would decrease by $11.8 trillion and Part D by $2.2 trillion; if the growth rate is higher, government-wide resources
needed would increase to $18.5 trillion for Part B and to $3.5 trillion for Part D.
Sustainability of Social Security and Medicare
75-Year Horizon
According to the 2023 Medicare Trustees Report, the HI Trust Fund is projected to remain solvent until 2031 and,
according to the 2023 Social Security Trustees Report, the OASI Trust Fund is projected to have sufficient reserves to pay
full benefits on time until 2033 while the DI Trust Fund is not projected to be depleted within the projection period. In each
case, some trust fund interest income and balances accumulated during prior years are needed to pay benefits. This leads to a
repayment of loans made to the General Fund by the trust funds. The General Fund will pay back the trust funds and then the
monies will be paid out to beneficiaries. Moreover, under current law, General Fund transfers to the SMI Trust Fund will
occur into the indefinite future and will continue to grow with the growth in health care expenditures.
The potential magnitude of future financial obligations under these three social insurance programs is, therefore,
important from a budget perspective as well as for understanding generally the growing resource demands of the programs on
the economy. From the 75-year budget perspective, the PV of the additional resources that would be necessary to meet
projected expenditures, for the three programs combined, is $78.4 trillion. To put this figure in perspective, it would represent
4.4 percent of the PV of projected GDP over the same period ($1,766.0 trillion). These resource needs would be in addition
to the payroll taxes, benefit taxes, and premium payments. Asset redemptions and Medicare Part B and D general revenue
transfers represent formal budget commitments, but no provision exists for covering the Medicare Part A and Social Security
Trust Fund deficits once assets are depleted.
The table below shows the magnitudes of the primary expenditures and sources of financing for the three trust funds
computed on an open-group basis for the next 75 years and expressed in PV terms. The data are consistent with the SOSI
included in the principal financial statements.
From the government-wide perspective, the PV of the total resources needed for the Social Security and Medicare
Programs over and above current-law funding sources (payroll taxes, benefit taxes, and premium payments from the public)
is $78.4 trillion. From the trust fund perspective, which counts the trust funds ($3.2 trillion) and the general revenue transfers
to the SMI Program ($48.5 trillion) as dedicated funding sources, additional resources needed to fund the programs are $26.6
trillion.
Present Values of Costs Less Revenues of 75-Year Open Group Obligations HI, SMI, and OASDI as of
January 1, 2023
SMI
(In trillions of dollars) HI Part B Part D OASDI Total
Revenues from the public:
Taxes 30.9 - - 87.4 118.3
Premiums and state transfers 0.4 15.7 3.0 - 19.1
Total 31.3 15.7 3.0 87.4 137.4
Total costs to the public 35.9 56.6 10.6 112.6 215.7
Net results - budget perspective1 4.6 40.9 7.6 25.2 78.3
Revenues from other government accounts - 40.9 7.6 - 48.5

Trust fund balances as of 1/1/2023 0.2 0.2 - 2.8 3.2
Net results - trust fund perspective1 4.4 (0.2) - 22.4 26.6
1 Net results are computed as costs less revenues and trust fund balances. Negative values are indicative of surpluses.
Source: 2023 OASDI Trustees Reports and Centers for Medicare & Medicaid Services
Infinite Horizon
The 75-year horizon is consistent with the primary focus of the Social Security and Medicare Trustees Reports. Experts
have noted that limiting the projections to 75 years understates the magnitude of the long-range unfunded obligations because
summary measures (such as the actuarial balance and open-group unfunded obligations) reflect the full amount of taxes paid
by the next two or three generations of workers, but not the full amount of their benefits. One approach to addressing the
limitation of 75-year summary measures is to extend the projections horizon indefinitely, so that the overall results reflect the
projected costs and revenues after the first 75 years. The open-group infinite horizon net obligation is the PV of all expected
future program outlays less the PV of all expected future program tax and premium revenues. Such a measure is provided in
the following table for the three trust funds represented above.
From the Budget or government-wide perspective, the values in line 1 plus the values in line 4 are summed in the last
line of the table and represent the value of resources needed to finance each of the programs into the infinite future. The total
resources needed for all the programs sums to $175.3 trillion in PV terms. This need can be satisfied only through increased
borrowing, higher taxes, reduced program spending, or some combination.
The second line shows the value of the trust fund at the beginning of 2023. For the HI and OASDI Programs this
represents the extent the programs are funded from the trust fund perspective. From that perspective, when the trust fund is
subtracted, an additional $66.0 trillion is needed to sustain the Social Security program into the infinite future, while the
Medicare Part A program reflects a projected surplus of $15.3 trillion over the infinite horizon. As described above, from the
trust fund perspective, the SMI Program is fully funded; from a government-wide basis, the substantial gap that exists
between premiums, state transfer revenue, and program expenditures in the Part B and D Program ($99.3 trillion and $22.1
trillion, respectively) represents future general revenue obligations of the Budget.
In comparison to the analogous 75-year number in the table above, extending the calculations beyond 2097, captures the
full lifetime benefits, plus taxes and premiums of all current and future participants. The shorter horizon understates the total
financial needs by capturing relatively more of the revenues from current and future workers and not capturing all the
benefits that are scheduled to be paid to them.
Present Values of Costs Less Tax, Premium and State Transfer Revenue Through the Infinite Horizon,
HI, SMI, OASDI as of January 1, 2023
SMI
(In trillions of dollars) HI Part B Part D OASDI Total
Present value of future costs less future taxes,
premiums, and state transfers for current participants 14.6 33.6 5.9 51.3 105.4
Less current trust fund balance 0.2 0.2 - 2.8 3.2
Equals net obligations for past and current participants 14.4 33.4 5.9 48.5 102.2
Plus net obligations for future participants (29.7) 65.9 16.2 17.5 69.9
Equals net obligations through the infinite future for
all participants (15.3) 99.3 22.1 66.0 172.1
Present values of future costs less the present
values of future income over the infinite horizon (15.1) 99.5 22.1 68.8 175.3
Source: 2023 OASDI and Medicare Trustees Reports

Railroad Retirement, Black Lung, and Unemployment Insurance

Railroad Retirement
The RRB was created in the 1930s to establish a retirement benefit program for the nation’s railroad workers. The RRB
and the SSA share jurisdiction over the payment of retirement and survivor benefits. Railroad retirement pays full retirement
annuities at age 60 to railroad workers with 30 years of service and disability annuities based on total or occupational
disability. It also pays annuities to certain beneficiaries of deceased railroad workers.
Payroll taxes paid by railroad employers and their employees provide a primary source of income for the Railroad
Retirement and Survivors’ Benefit Program. Other sources of program income include: the RRB-SSA-CMS Financial
Interchanges with the Social Security and Medicare Trust Funds, federal income taxes on railroad retirement benefits,
appropriations, and earnings on investments.
Revenues in excess of benefit payments are invested to provide additional trust fund income. Legislation enacted in
2001 allowed for Railroad Retirement Account funds transferred to the NRRIT to be invested in non-governmental assets, as
well as in governmental securities.
Since its inception, NRRIT has received $21.3 billion from RRB and returned $33.2 billion. During FY 2023, the
NRRIT made net transfers of $1.4 billion to the RRB to pay retirement benefits. Administrative expenses of the trust are paid
out of trust assets. The balance as of September 30, 2023, and 2022, of non-federal securities and investments of the NRRIT
are disclosed in Note 7—Investments.
Black Lung
The Federal Coal Mine Health and Safety Act of 1969 created the BLDBP to provide compensation, medical, and
survivor benefits for eligible coal miners who are totally disabled due to pneumoconiosis (Black Lung Disease) arising out of
their coal mine employment and the BLDTF provides benefit payments 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 domestic sale
of coal, as are the program’s administrative costs. These taxes are collected by the IRS and transferred to the BLDTF.
P.L. 110-343, Division B-Energy Improvement and Extension Act of 2008, enacted on October 3, 2008, among other
things, restructured the BLDTF debt by refinancing the outstanding high interest rate repayable advances with low interest
rate discounted debt instruments similar in form to zero-coupon bonds, plus a one-time appropriation. This Act also allowed
that any subsequent debt issued by the BLDTF may be used to make benefit payments, other authorized expenditures, or to
repay debt and interest from the initial refinancing.
Unemployment Insurance
The UI Program was created in 1935 to provide income assistance to unemployed workers who lose their jobs generally
through no fault of their own and are unemployed due to a lack of suitable work. The program protects workers during
temporary periods of unemployment through the provision of unemployment compensation benefits. The program is
administered through a unique system of federal and state partnerships established in federal law but executed through
conforming state laws by state officials. The federal government provides broad policy guidance and program direction
through the oversight of DOL, while program details are established through individual state UI statutes, administered
through state UI entities.
The UI Program is financed through the collection of federal and state unemployment taxes levied on subject employers
and deposited in the UTF and federal appropriations. The fund was established to account for the receipt, investment, and
disbursement of unemployment taxes. Federal unemployment taxes are used to pay for the administrative costs of the UI
Program, including grants to each state to cover the costs of state UI operations and the federal share of extended UI benefits.
Federal unemployment taxes are also used to fund an account within the UTF to make advances to state UI accounts when a
state’s UI account balance has been exhausted and the state is unable to make benefit payments.
Cash Flow Projections
Railroad Retirement Income and Expenditures. Railroad retirement cash flow projections are based on the intermediate
set of assumptions used in the RRB’s actuarial valuation of the program. Estimated railroad retirement annual revenue
exceeds annual expenditures in the years 2036 through 2040 and 2043 through 2097. Without investment income, however,
annual expenditures are greater than annual revenue throughout the entire period.
Sensitivity Analysis. The projections of the future financial status of the RRP depend on many economic and
demographic assumptions. For additional information on the sensitivity of the long-range projections of the RRP and how the
projections are impacted by changes in certain key assumptions, refer to RRB’s financial statements.
Black Lung Projected Cash Inflows and Outflows, in Constant Dollars, for the Open Group. The significant
assumptions used in the projections show that cash inflows from excise taxes will exceed cash outflows for benefit payments
and administrative expenses only for the first four years in the projection period. For FYs 2028 through 2040, the cash
outflows for benefit payments and administrative expenses are projected to exceed cash inflows from excise taxes.
Sensitivity Analysis. For the projected cash inflows and outflows with sensitivity analysis, in constant dollars for the
open group, the significant assumption for medical cost inflation was increased while other significant assumptions were left
unchanged. For additional information on the sensitivity of the projections of the BLDBP and how the projections are
impacted by changes in assumptions, refer to DOL’s financial statements.
Unemployment Insurance Projected Cash Inflows and Outflows, in Constant Dollars, Under Expected Economic
Conditions. The significant assumptions used in the cash flow projections of the UTF show total cash inflow exceeds total
cash outflow in all years in the projection period.
Sensitivity Analysis. The effect on the accumulated UTF assets of projected total cash inflows and cash outflows of the
UTF, in constant dollars, over the ten-year period ending September 30, 2033, are demonstrated in two sensitivity analyses.
Each sensitivity analysis uses an open group, which includes current and future participants in the UI Program. Sensitivity
Analysis I assumes higher rates of unemployment and Sensitivity Analysis II assumes even higher rates of unemployment. In
Sensitivity Analysis I, there is a net cash inflow in FY 2024, net cash outflows in FYs 2025 and 2026, and then net cash
inflows again in FYs 2027 through 2033. In Sensitivity Analysis II, net cash outflows are projected in FYs 2024 through
2028, but inflows exceed outflows in FYs 2029 through 2033; net cash inflows are reestablished in FY 2029 and peak in FY
2033 with a decrease in unemployment rate in FY 2033. For additional information on the sensitivity of the projections of the
UI Program, refer to DOL’s financial statements.
Sustainability
Sustainability of Railroad Retirement from a trust fund perspective, when the trust fund balance ($24.9 billion) and the
financial interchange and transfers ($104.5 billion) are included, the combined balance of the NRRIT, the Railroad
Retirement Account, and the Social Security Equivalent Benefit Account show a slight surplus ($1.4 billion). For additional
information related to the sustainability of the RRP, refer to RRB’s financial statements.
On September 30, 2023, total liabilities of the BLDTF exceeded assets by nearly $6.4 billion. This net position deficit
represents the accumulated shortfall of excise taxes necessary to meet benefit payments, administrative costs, and interest
expense incurred prior to and subsequent to the debt refinancing pursuant to P.L. 110-343. Prior to the enactment of P.L. 110-
343, this shortfall was funded by repayable advances to the BLDTF, which were repayable with interest. Pursuant to P.L.
110-343, any shortfall will be financed with debt instruments similar in form to zero-coupon bonds, with a maturity date of
one year and bear interest at Treasury’s 1-year rate.
The ability of the UI Program to meet a participant’s future benefit payment needs depends on the availability of
accumulated taxes and earnings within the UTF. The effect of projected benefit payments on the accumulated net assets of
the UTF is measured, under an open group scenario, which includes current and future participants in the UI Program. As of
September 30, 2023, total assets within the UTF exceeded total liabilities by nearly $54.4 billion. At the present time there is
a surplus; any surplus of tax revenues and earnings on these revenues over benefit payment expenses is available to finance
benefit payments in future periods when tax revenues may be insufficient.
For additional information related to the sustainability of the RRP, BLDBP, and UI refer to RRB’s and DOL’s financial
statements.
Unemployment Trust Fund Solvency
Each state’s accumulated UTF net assets or reserve balance should provide a defined level of benefit payments over a
defined period. To be minimally solvent, a state’s reserve balance should provide for one year’s projected benefit payment
needs based on the highest levels of benefit payments experienced by the state over the last 20 years. A ratio of 1.00 or
greater indicates that the state UTF account balance is minimally solvent. States below this level are vulnerable to exhausting
their funds in a recession. States exhausting their reserve balance must borrow funds from either FUA or the private markets
to make benefit payments. FUA and Extended Unemployment Compensation Account outstanding advances were $23.0
billion and $8.5 billion, respectively, as of September 30, 2023.
The results of DOL’s state by state analysis indicate 36 state UTF accounts and the accounts of the D.C., Puerto Rico,
and the Virgin Islands were below the minimal solvency ratio of 1.00 at September 30, 2023.
Deferred Maintenance and Repairs

DM&R result from maintenance not being performed on a timely basis and is the estimated cost to bring government-
owned PP&E to an acceptable condition. DM&R exclude the cost of expanding the capacity of assets or upgrading them to
serve needs different from those originally intended. The consequences of not performing regular maintenance and repairs
could include increased safety hazards, poor service to the public, higher costs in the future, and inefficient operations.
Estimated DM&R costs are not accrued in the Statements of Net Cost or recognized as a liability on the Balance Sheets.
The amounts presented for DM&R are allowed to be measured using one of the following three methods:
• Condition assessment surveys which are periodic inspections of government-owned property to determine the
current condition and estimated cost to bring the property to an acceptable condition.
• Life-cycle cost forecast that is an acquisition or procurement technique that considers operation, maintenance, and
other costs in addition to the acquisition cost of assets.
• Any other method of choice that is similar to the condition assessment survey or life-cycle costing methods.
The table below of DM&R is presented as a single estimate in accordance with SFFAS No. 42, Deferred Maintenance
and Repairs: Amending Statements of Federal Financial Accounting Standards 6, 14, 29, and 32. These amounts were all
measured using the condition assessment survey method. Please refer to the individual financial statements of DOD, DOI,
VA, DOE, USDA, NASA, HHS, GSA, DHS, State, and DOT for additional information on DM&R.
Deferred Maintenance and Repairs as of September 30, 2023, and 2022
Asset category:
General property, plant, and equipment 250.3 186.8
Heritage assets 32.0 28.1
Stewardship land 1.0 0.8
Total deferred maintenance and repairs 283.3 215.7
Other Claims for Refunds

Other claims for refunds are claims filed for which specific administrative actions such as review by the courts are
required before payments can be made and unasserted claims for refund by taxpayers or importers that may or may not
become payable depending upon the resolution of subsequent events. As stated in SFFAS No. 7, Accounting for Revenue and
Other Financing Sources and Concepts for Reconciling Budgetary and Financial Accounting, unasserted claims for refund
such as unfiled claims for refunds or drawbacks for which no claim has been filed, are not known, therefore estimates are not
able to be determined, and are not recognized on the Balance Sheet. Claims filed for refunds where required administrative
actions are not yet complete as of the close of the reporting period may not be known however, the refunds, may be
reasonably estimable.
Management has estimated amounts that may be paid out as other claims for tax refunds. This estimate represents an
amount (principal and interest) that may be paid for claims pending judicial review by the federal courts or, internally, by
appeals. The total estimated payout (including principal and interest) for claims pending judicial review by the federal courts
is $1.1 billion and $2.1 billion for FYs 2023 and 2022, respectively. For those under appeal, the estimated payout is $1.3
billion for both FYs 2023 and 2022, respectively. To the extent judgments against the government for these claims prompt
other similarly situated taxpayers to file similar refund claims, these amounts could become significantly greater.
Tax Assessments
The government is authorized and required to make inquiries, determinations, and assessments of all taxes that have not
been duly paid. Unpaid assessments result from taxpayers filing returns without sufficient payment, as well as enforcement
programs such as examination, under-reporter, substitute for return, and combined annual wage reporting. Under federal
accounting standards, unpaid assessments are categorized as taxes receivable if taxpayers agree or a court has determined the
assessments are owed. If neither of these conditions are met, the unpaid assessments are categorized as compliance
assessments. Assessments with little or no future collection potential are called write-offs. Although compliance assessments
and write-offs are not considered receivables under federal accounting standards, they represent legally enforceable claims of
the government. There is, however, a significant difference in the collection potential between compliance assessments and
receivables.
Compliance assessments and pre-assessment work in process are $97.7 billion and $90.9 billion for FYs 2023 and 2022,
respectively. The amount of allowance for uncollectible amounts pertaining to compliance assessments cannot be reasonably
estimated, and thus the net realizable value of the pre-assessment work-in-process cannot be determined. The amount of
assessments that entities have statutory authority to collect at the end of the period but that have been written off and
excluded from accounts receivable are $76.6 billion and $77.3 billion for FYs 2023 and 2022, respectively.
Federal Oil and Gas Resources

The DOI is responsible for managing the nation’s oil and natural gas resources and the mineral revenues on federal
lands, both onshore and on the Outer Continental Shelf. This management process can be broken down into six essential
analysis components: pre-leasing, post-leasing and pre-production, production and post-production, revenue collection, fund
disbursement, and compliance.
Federal Oil and Gas Resources as of September 30, 2023, and 2022
Offshore Onshore Total

Oil and lease condensate 33.3 34.7 29.4 29.1 62.7 63.8
Natural gas, wet after lease separation 1.8 2.0 14.2 22.4 16.0 24.4
Total 35.1 36.7 43.6 51.5 78.7 88.2
The above table presents the estimated PV of future federal royalty receipts on estimated proved reserves 12 as of
September 30, 2023, and 2022. The federal government’s estimated petroleum royalties have as their basis the DOE’s EIA
estimates of proved reserves. The EIA provides such estimates directly for federal offshore areas and they are adjusted to
extract the federal subset of onshore proved reserves. The federal proved reserves were then further adjusted to correspond
with the effective date of the actual production for calendar year 2021, the most recently published EIA proved reserves
report and then are projected, separately for oil and natural gas, over time to simulate a schedule of when the reserves would
be produced. Future royalties are then calculated from these production streams by applying future price estimates by the
OMB, production growth estimates from the EIA’s 2023 Annual Energy Outlook, and effective royalty rates. The valuation
method used for gas captures royalties from three products–dry gas, wet gas, and natural gas liquids–which collectively are
reported as natural gas, wet after lease separation. The PV of these royalties are then determined by discounting the revenue
12
Per the EIA, lease condensate is a mixture consisting primarily of pentanes and heavier hydrocarbons which is recovered as a liquid from natural gas in
lease separation facilities. This category excludes natural gas plant liquids, such as butane and propane, which are recovered at downstream natural gas
processing plants or facilities. Also, per the EIA, natural gas, wet after lease separation, is the volume of natural gas remaining after removal of lease
condensate in lease and/or field separation facilities, if any, and after exclusion of nonhydrocarbon gases where they occur in sufficient quantity to render the
gas unmarketable. Natural gas liquids may be recovered from volume of natural gas, wet after lease separation, and at natural gas processing plants
(https://www.eia.gov/dnav/ng/TblDefs/ng_prod_deep_tbldef2.asp).
stream back to the effective date at a public discount rate assumed to be equal to the OMB’s estimates of future 30-year
Treasury bill rates for offshore, and a weighted average of the U.S. Treasury yield curve from trading dates for the most
recently completed fiscal year for onshore. The 30-year rate was chosen because this maturity life most closely approximates
the productive lives of the proved reserves estimates.
Estimated Federal Oil and Gas Petroleum Royalties (Proved Reserves)

as of September 30, 2023, and 2022
Average Purchase Average Royalty

Quantity (In millions) Price ($) Rate (%)
Petroleum Category 2023 2022 2023 2022 2023 2022
Oil and lease condensate (Bbl):

Offshore 4,434.0 4,142.4 78.52 92.74 13.45 13.29
Onshore 4,645.3 2,946.7 78.40 93.43 12.33 12.38
Total 9,079.3 7,089.1
Natural gas, wet after lease separation

(Mcf):
Offshore 4,203.1 3,911.4 5.16 6.92 11.19 12.41
Onshore 43,543.2 37,663.1 5.70 6.96 11.00 11.22
Total 47,746.3 41,574.5
Bbl = barrels
Mcf = 1,000 cubic feet
The table above provides the estimated quantity, a weighted average purchase price, and a weighted average royalty rate
by category of estimated federal petroleum royalties at the end of FYs 2023 and 2022. 13 The estimated quantities, average
purchase prices and royalty rates vary by region; the above table reflects an overall weighted average purchase price and
royalty rate, and is not presented on a regional basis, but is instead calculated based on regional averages. The prices and
royalty rates are based upon historical (or estimated) averages, excluding prior-period adjustments, if any, and are affected by
such factors as accounting adjustments and transportation allowances, resulting in effective average prices and royalty rates.
Prices are valued at the lease rather than at the market center and differ from those used to compute the asset estimated PV,
which are forecasted and discounted based upon OMB economic assumptions. For additional details on federal oil and gas
resources, refer to the financial statements of DOI. In addition to the oil and gas resources discussed above, the federal
government also owns oil and gas resources that are not currently under lease.
13
Gulf of Mexico proved reserves are royalty-bearing volumes. In the Gulf of Mexico, an additional 503.5 million Bbl for FY 2023 and 522.5 million Bbl
for FY 2022 of proved oil reserves, and 426.2 million Mcf for FY 2023 and 412 million Mcf for FY 2022 of proved gas reserves are not reflected in these
totals as they are estimated to be producible royalty-free under various royalty relief provisions. The NPV of the royalty value of the royalty-free proved
reserves volumes in the Gulf of Mexico is estimated to be $3.8 billion for FY 2023 and $4.6 billion for FY 2022.
Federal Natural Resources Other than Oil and Gas
Federal Natural Resources Other than Oil and Gas as of September 30, 2023, and 2022
Coal royalties 8.5 9.5

Total 8.5 9.5
The ONRR within DOI is responsible for the management and collection of revenues associated with federal coal leases
which are managed by the BLM within DOI. The ONRR achieves optimal value by ensuring that all natural resource
revenues are efficiently and accurately collected as well as disbursed to recipients in a timely manner by performing audit and
revenue compliance activities.
The Mineral Leasing Act of 1920, as amended, and the Mineral Leasing Act for Acquired Lands of 1947, as amended,
gives DOI the responsibility for coal leasing on approximately 700 million acres of federal mineral estate which includes 570
million of acres where coal development is allowed. The surface estate of these lands may be under the control of BLM, the
U.S. Forest Service (within USDA), private or state landowners, or other federal entities.
Public lands are available for coal leasing after the lands have been evaluated through a multiple-use planning process.
DOI receives coal leasing revenues from a bonus paid at the time of the lease, an annual rent payment of $3.0 per acre, and
royalties paid on the value of the coal after it has been mined. The royalty rate for surface-mining methods is 12.5 percent
and is 8.0 percent for underground mining, and the BLM can approve reduced royalty rates based on maximum economic
recovery. Regulations that govern BLM’s coal leasing program are contained in Title 43, Groups 3000 and 3400 of the CFR.
The above table presents the estimated PV of future federal coal royalty receipts on estimated recoverable reserves as of
September 30, 2023, and 2022. The federal government’s estimated coal royalties have as their basis the DOI’s BLM
estimates of recoverable reserves. The federal recoverable reserves are then further adjusted to correspond with the effective
date of the analysis and then are projected over time to simulate a schedule of when the reserves would be produced. Future
royalties are then calculated by applying future price estimates and effective royalty rates, adjusted for transportation
allowances and other allowable deductions. The PV of these royalties are then determined by discounting the revenue stream
back to the effective date at a public discount rate assumed to be equal to the OMB’s estimates of future 30-year Treasury bill
rates. The 30-year rate was chosen because this maturity life most closely approximates the productive lives of the
recoverable reserves estimates.
In addition to the coal resources discussed above, the federal government has other natural resources under lease
contract whereby the lessee is required to pay royalties on the sale of the natural resource. These natural resources include
soda ash, potash (including muriates of potash and langbeinite phosphate), lead concentrate, copper concentrate, and zinc
concentrate. Soda ash and potash have the largest estimated PV of future royalties. The federal government also owns coal
resources and certain other natural resources that are not currently under lease. For additional details on federal natural
resources-other than oil and gas, refer to the financial statements of DOI.
Land and Permanent Land Rights
Estimated Acreage by Predominant Use as of September 30, 2023, and 2022
Property, Property,
Plant, & Plant, &
Equipment Stewardship Total Land1 Equipment Stewardship Total Land1
(In thousands of acres) 2023 2022
Commercial Use 205 192,406 192,611 55 192,810 192,865

Conservation and Preservation2 291 1,082,998 1,083,289 263 1,081,832 1,082,095
Operational 30,299 20,608 50,907 36,414 12,886 49,300
Total 30,795 1,296,012 1,326,807 36,732 1,287,528 1,324,260
Acreage held for disposal or

exchange 8 12
1
Estimated acreage includes land and permanent land rights. Acreage of temporary land rights (those for a specified period of time or a
limited duration) are not included pursuant to SFFAS No. 59, paragraphs 4 and 5.
2
Department of Interior's U.S. Fish and Wildlife Service manages 670,980 thousand acres of submerged lands in marine national
monuments primarily for the benefit of fish and wildlife.
SFFAS No. 59, Accounting and Reporting of Government Land requires that the estimated acres of land and permanent
land rights of general PP&E land and stewardship land be presented as unaudited RSI for FYs 2022 through 2025. The
estimated acreage will transition to note disclosures in FY 2026.
As defined in SFFAS No. 59, general PP&E land is land used within the ordinary course of business to support the
mission of the federal government and includes land acquired for or in connection with other general PP&E. General PP&E
land excludes withdrawn public lands or land restricted for conservation, preservation, historical, or other like restrictions.
Such land is categorized as stewardship land. Stewardship land includes both public domain and acquired land and land
rights owned by the federal government intended to be held indefinitely and the majority was acquired by the government
during the first century of the nation’s existence. Land rights are interests and privileges held by the entity in land owned by
others, such as leaseholds, easements, water and waterpower rights, diversion rights, submersion rights, rights-of-way,
mineral rights, and other like interests in land. General PP&E land rights and stewardship land rights that are for an
unspecified period of time or unlimited duration are considered permanent land rights and are included in the estimated
acreage table above. Land rights that are only for a specified period of time or a limited duration are considered temporary
land rights. All temporary land rights will continue to be recorded under general PP&E and depreciated over their time period
after SFFAS No. 59 implementation.
All land and permanent land rights are reported in estimated acres using three predominant use categories including
commercial use, conservation and preservation, and operational. The reporting of estimated acres of land held for disposal or
exchange is also required. Commercial use land includes land or land rights that are predominantly used to generate inflows
of resources from non-federal third parties, usually through special use permits, right-of-way grants, and leases. Examples of
commercial use land are concession arrangements, grants for specific projects, and sales or land exchanges. Conservation and
preservation land includes land or land rights that are predominantly used for the conservation of natural resources and
preservation of buildings, objects, and landscapes. Examples of conservation and preservation land are national parks,
geological resource sites, and wildlife and plant life refuges. Within the conservation and preservation reported acres, DOI’s
U.S. Fish and Wildlife Service manages 670,980 thousand acres of submerged lands in marine national monuments primarily
for the benefit of fish and wildlife. Operational land includes land or land rights predominantly used for general or
administrative purposes. Examples of operational land include land used for military, scientific, and nuclear functions.
Additional information concerning the estimated acres of land and permanent land rights can be obtained from the
financial statements of DOD, DOI, and USDA. Please refer to Note 6—General Property, Plant, and Equipment, Net and
Note 26—Stewardship Property, Plant, and Equipment for additional information concerning general PP&E land and
stewardship land.

OTHER INFORMATION (UNAUDITED) 204

Other Information (Unaudited) for the
Years Ended September 30, 2023, and 2022
Tax Burden
The IRC provides for progressive tax rates, whereby higher earned income is generally subject to higher tax rates. The
following tables present the latest available information on income tax and related income, deductions, and credit for
individuals by income level, and for corporations by size of assets.
Individual Income Tax Liability for Tax Year 2021
Average Average
Total Adjusted Income Income
Number of Adjusted Income Gross Income Tax per Tax as a
Taxable Gross Income Tax per Return Return Percentage
Returns (In millions (In millions (In whole (In whole of Adjusted
Adjusted Gross Income (In thousands) of dollars) of dollars) dollars) dollars) Gross Income
Under $15,000 30,714 160,421 535 5,223 17 0.3%

$15,000 under $30,000 27,410 610,846 12,033 22,286 439 2.0%
$30,000 under $50,000 28,926 1,135,403 50,662 39,252 1,751 4.5%
$50,000 under $100,000 37,547 2,681,108 200,702 71,407 5,345 7.5%
$100,000 under $200,000 24,180 3,318,595 367,380 137,245 15,194 11.1%
$200,000 under $500,000 3,728 828,814 123,563 222,321 33,145 14.9%
$500,000 or more 7,888 6,117,860 1,421,518 775,591 180,213 23.2%
Total 160,393 14,853,047 2,176,393
205 OTHER INFORMATION (UNAUDITED)
Corporate Income Tax Liability for Tax Year 2020
Percentage of
Income Subject Total Income Tax Income Tax After
Total Assets to Tax After Credits Credits to
(In thousands of dollars) (In millions of dollars) (In millions of dollars) Taxable Income
Zero assets 21,064 4,439 21.1%

$1 under $500 6,908 1,426 20.6%
$500 under $1,000 4,364 886 20.3%
$1,000 under $5,000 21,444 4,312 20.1%
$5,000 under $10,000 13,079 2,640 20.2%
$10,000 under $25,000 19,851 3,900 19.6%
$25,000 under $50,000 17,342 3,389 19.5%
$50,000 under $100,000 19,750 3,854 19.5%
$100,000 under $250,000 33,865 6,584 19.4%
$250,000 under $500,000 32,033 6,189 19.3%
$500,000 under $2,500,000 117,758 21,388 18.2%
$2,500,000 or more 1,472,847 217,604 14.8%
Total 1,780,305 276,611
Tax Gap
The gross tax gap is the difference between the amount of tax imposed by law and what taxpayers actually pay on time
and/or timely. The tax gap provides an estimate of the level of overall noncompliance compliance during the relevant tax
periods. Tax gap estimates provide periodic appraisals about the nature and extent of noncompliance for use in formulating
tax administration strategies. Given the complexity of the tax system and available data, a single approach cannot be used for
estimating all the components of the tax gap. The most recent estimates covering the tax year 2014-2016 timeframe were
released in FY 2023. In October 2023, the tax gap projections were issued for tax year 2020 and 2021. The tax gap
projections for tax years 2020 and 2021 assume compliance behavior that has not changed since the 2014-2016 tax gap
estimates.
The gross tax gap is the amount of a tax liability that is not paid voluntarily and on time. The projected gross tax gap
increased to $688.0 billion in tax year 2021. The gross tax gap is comprised of three components: non-filing, underreporting,
and underpayment. The projected gross tax gap for each of these components is $77.0 billion, $542.0 billion, and $68.0
billion, respectively. The gross tax gap projections are also segmented by type of tax: individual income tax, corporation
income tax, employment tax, and estate and excise tax. The projected gross tax gap for each of these types of tax is $520.0
billion, $45.0 billion, $118.0 billion, and $4.0 billion, respectively.
The net tax gap is the gross tax gap less tax that subsequently will be paid either late through voluntary payments or
collected through IRS administrative and enforcement activities and is the portion of the gross tax gap that will not be paid. It
is projected that $63.0 billion of the gross tax gap will eventually be paid resulting in a net tax gap of $625.0 billion. The net
tax gap projections are also segmented by type of tax: individual income tax, corporation income tax, employment tax, and
estate and excise tax. The projected net tax gap for each of these types of tax is $475.0 billion, $37.0 billion, $112.0 billion,
and $1.0 billion, respectively. 1 For additional information on the tax gap, refer to Treasury’s financial statements.
Tax Expenditures
As discussed in greater detail in Note 19—Collections and Refunds of Federal Revenue, tax and other revenues reported
reflect the effects of tax expenditures, which are special exclusions, exemptions, deductions, tax credits, preferential tax rates,
and tax deferrals that allow individuals and businesses to reduce taxes they may otherwise owe.
1
Individual amounts may not add to totals due to rounding.
OTHER INFORMATION (UNAUDITED) 206
Tax expenditures are estimated using data from previous years and the economic forecast from the FY 2023 Midsession
Review as reported in the FY 2024 Budget. The largest tax expenditures in FY 2023 are the following (and see the table
below):
• The exclusion from workers’ taxable income of employers’ contributions for health care, health insurance
premiums, and premiums for long-term care insurance;
• The exclusion of contributions to and the earnings of employer defined benefit and defined contribution pension
funds (minus pension benefits that are included in taxable income);
• Imputed rental income forms part of the total value of goods and services produced in a country. But unlike returns
from other investments, the return on homeownership “imputed rent” is excluded from taxable income. In contrast,
landlords must count as income the rent they receive, and renters may not deduct the rent they pay. A homeowner is
effectively both landlord and renter, but the tax code treats homeowners the same as renters while ignoring their
simultaneous role as their own landlords and exempting potential rent they would have paid themselves;
• Preferential tax rates on long-term capital gains; and
• In taxable years 2022 through 2025, a taxpayer may claim a $2,000 per child partially refundable child tax credit. In
2023, up to $1,600 per child of unclaimed credit due to insufficient tax liability may be refundable; a taxpayer may
claim a refund for 15 percent of earnings in excess of a $2,500 floor, up to the lesser of the amount of unused credit
or $1,600 per child. A taxpayer may also claim a nonrefundable credit of $500 for each qualifying child not eligible
for the $2,000 credit.
Largest Income Tax Expenditures
Exclusion of employer contributions for medical insurance premiums & health care 237.4
Defined benefit & defined contribution pension funds 185.1
Exclusion of net imputed rental income 133.7
Preferential tax rates on long-term capital gains 118.3
Child tax credit 67.5
Generally, identifying and measuring a tax expenditure requires defining a baseline tax system against which identified
tax provisions are exceptions. The tax expenditures prepared for the Budget are estimated relative to a simplified
comprehensive income tax, which defines income as the sum of consumption and the change in net wealth in a given period
of time. Tax expenditure estimates do not necessarily equal the increase in federal revenues (or the change in the Budget
balance) that would result from repealing these special provisions, for the following reasons:
• Eliminating a tax expenditure may have incentive effects that alter economic behavior, which can affect the resulting
magnitudes of the activity or of other tax provisions or government programs. For example, if capital gains were
taxed at ordinary rates, capital gain realizations would be expected to decline, resulting in lower tax receipts. Such
behavioral effects are not reflected in the estimates.
• Tax expenditures are interdependent even without incentive effects. Repeal of a tax expenditure provision can
increase or decrease the tax revenue effect of other provisions. For example, even if behavior does not change,
repeal of an itemized deduction could increase revenue costs from other deductions as some taxpayers move into
higher tax brackets. Alternatively, an itemized deduction repeal could lower the revenue foregone from other
deductions if taxpayers choose to claim the standard deduction over itemizing. Similarly, if two provisions were
repealed simultaneously, the tax liability increase could be greater or less than the sum of the two separate tax
expenditures, because each is estimated assuming that the other remains in force.
• Repeal effects may depend on concurrent tax rate changes. Lowering or raising tax rates can decrease or increase the
estimated revenues from a particular provision. A $10,000 charitable contributions deduction is worth $3,500 in
corporate tax revenues at a 35.0 percent tax rate, but only $2,100 at a 21.0 percent tax rate.
A more comprehensive ranking, including rankings over a 10-year period, and descriptions of tax expenditures can be
found at the following location from Treasury’s Office of Tax Policy: https://home.treasury.gov/policy-issues/tax-policy/tax-
expenditures.
207 OTHER INFORMATION (UNAUDITED)
Unmatched Transactions and Balances
Unmatched Transactions and Balances as of September 30, 2023, and 2022
(In millions of dollars) 2023 2022
Statement of Net Cost:

Buy/sell cost/revenue - 603.5
Benefit program revenue/cost - 309.6
Non-reciprocating - (357.0)
- 556.1
Statement of Operations and Changes in Net Position:
Non-reciprocating - (1,630.2)
Custodial and non-entity collections transferred out/in - 586.8
Accrual amounts collected/transferred in - (83.9)
Other - 1,000.9
- (126.4)
Balance Sheet:
Accounts payable/receivable - 270.2
Advances from/to others & deferred credits/prepayments - (778.8)
Non-reciprocating - (205.6)
Other - (576.4)
- (1,290.6)
Unmatched transactions and balances, net - (860.9)
( ) Parentheses indicate a decrease to Net Position.
The unmatched transactions and balances are needed to balance the accrual-based financial statements. The Statement
of Net Cost, the Statement of Operations and Changes in Net Position and the Balance Sheet include a line for the unmatched
transactions and balances. Transactions and balances between federal entities must be eliminated in consolidation to calculate
the financial position of the government. The amounts included in the table represent intra-governmental activity and
balances that differed between federal entity trading partners and often totaled significantly more in the absolute than the net
amounts shown. The table also reflects other consolidating adjustments and other adjustments that contributed to the
unmatched transactions and balances amount. The adjustments were added to, or subtracted from, gross cost in the Statement
of Net Cost and other liabilities in the Balance Sheet in the year they were recorded. Unresolved intra-governmental
differences (i.e., unmatched transactions and balances) result in errors in the consolidated financial statements.
Unmatched transactions and balances between federal entities impact not only in the period in which differences
originate but also in the periods where differences are resolved. As a result, it would not be proper to conclude that increases
or decreases in the unmatched amounts shown in the “Unmatched Transactions and Balances” table reflect improvements or
deteriorations in the government’s ability to resolve intra-governmental transactions. The federal community considers the
identification and accurate reporting of intra-governmental activity a priority.
Due to the change in presentation of the reported unmatched transactions and balances on the Statement of Net Cost,
Statement of Operations and Changes in Net Position, and Unmatched Transactions and Balances in Other Information
(unaudited), the FY 2022 Statement of Net Cost was adjusted by $0.1 billion to report the associated unmatched transactions
and balances that were previously reported on the Statement of Operations and Changes in Net Position unmatched
transactions and balances line and the buy/sell costs that were previously included in the gross cost recorded on the Statement
of Net Cost. They are now reported on the standalone unmatched transaction and balances line on the Statement of Net Cost.
Additionally, the Unmatched Transactions and Balances table was updated to show the details of the unmatched transactions
and balances by statement.
The unmatched transactions and balances, net reflects the combined impact that each statement line has on the overall
net position of the Financial Report.
APPENDIX A 208
Appendix A: Reporting Entity

This appendix lists the entities (consolidation entities, disclosure entities, or related parties) included in the U.S.
government’s Financial Report. SFFAS No. 47, Reporting Entity, provides guidance for identifying entities that are
consolidation entities, disclosure entities, and related parties.
The Financial Report includes all organizations meeting the inclusion principles of: a) budgeted for by elected officials
of the government; b) owned by the government; and c) controlled by the government with risk of loss or expectation of
benefits. In addition, the Financial Report includes organizations where it would be misleading to exclude even though the
organization does not meet any of the three inclusion principles. If an organization meets the inclusion principles, a
determination of consolidation or disclosure is made.
SFFAS No. 47 identifies consolidation entities as organizations that are consolidated in the financial statements based
on the assessment of the following characteristics as a whole, the organization: a) is financed through taxes and other non-
exchange revenues; b) is governed by the Congress or the President; c) imposes or may impose risks and rewards to the
government; and d) provides goods and services on a non-market basis. It also includes organizations that would result in
misleading or incomplete financial statements, if excluded.
Disclosure entities are entities with which the federal government has relationships that meet the inclusion criteria in
SFFAS No. 47, but are afforded a greater degree of autonomy than consolidation entities. These entities may maintain a
separate legal identity, have a governance structure that vests most decision-making authorities in a governing body to
insulate the organization from political influence, and/or have relative financial independence. Other organizations that are
owned or controlled by the government as a result of regulatory actions, or other government intervention actions are,
generally, deemed to be disclosure entities if the relationship with the government is not expected to be permanent.
Related parties exist if the existing relationship, or one party to the existing relationship, has the ability to exercise
significant influence over the other party’s policy decisions. Related parties do not meet the principles for inclusion, but are
reported in the Financial Report, if they maintain relationships of such significance that it would be misleading to exclude.
1. Consolidation Entities included in the Financial Report:
There are a total of 166 entities that meet the consolidation criteria, and as such are included in the Financial Report.
The lists below describe three groups of consolidation entities that comprise the consolidated government-wide reporting
entity for the Financial Report and include entities from all three branches of government.
Twenty-Four Chief Financial Officer Act Consolidation Entities
Department of Agriculture Department of Labor
www.usda.gov www.dol.gov
Department of Commerce Department of State
www.doc.gov www.state.gov
Department of Defense Department of Transportation
www.defense.gov www.dot.gov
Department of Education Department of the Treasury
www.ed.gov www.treasury.gov
Department of Energy Department of Veterans Affairs
www.energy.gov www.va.gov
Department of Health and Human Services Environmental Protection Agency
www.hhs.gov www.epa.gov
Department of Homeland Security General Services Administration
www.dhs.gov www.gsa.gov
Department of Housing and Urban Development National Aeronautics and Space Administration
www.hud.gov www.nasa.gov
Department of the Interior National Science Foundation
www.doi.gov www.nsf.gov
Department of Justice Office of Personnel Management
www.usdoj.gov www.opm.gov
Small Business Administration U.S. Agency for International Development
www.sba.gov www.usaid.gov
Social Security Administration U.S. Nuclear Regulatory Commission
www.ssa.gov www.nrc.gov
209 APPENDIX A
Sixteen Additional Significant Consolidation Entities

Export-Import Bank of the U.S. Pension Benefit Guaranty Corporation
www.exim.gov www.pbgc.gov
Farm Credit System Insurance Corporation Railroad Retirement Board
www.fcsic.gov www.rrb.gov
Federal Communications Commission Securities and Exchange Commission
www.fcc.gov www.sec.gov
Federal Deposit Insurance Corporation Security Assistance Accounts
www.fdic.gov www.dsca.mil
General Fund of the U.S. Government Smithsonian Institution
www.fiscal.treasury.gov/general-fund www.si.edu
Millennium Challenge Corporation Tennessee Valley Authority
www.mcc.gov www.tva.com
National Credit Union Administration U.S. International Development Finance Corporation
www.ncua.gov www.dfc.gov
National Railroad Retirement Investment Trust U.S. Postal Service
www.rrb.gov www.usps.com
One Hundred Twenty-six Additional Consolidation Entities

400 Years of African-American History Committee for Purchase from People Who Are Blind or
Commission Severely Disabled
Access Board Commodity Futures Trading Commission
Administrative Conference of the U.S. Congressional Budget Office
Advisory Council on Historic Preservation Congressional-Executive Commission on the People’s
African Development Foundation Republic of China
Alyce Spotted Bear and Walter Soboleff Consumer Product Safety Commission
Commission on Native Children Corporation for National and Community Service
American Battle Monuments Commission Council of the Inspectors General on Integrity and
Appalachian Regional Commission Efficiency
Architect of the Capitol Court of Appeals for Veterans Claims
Armed Forces Retirement Home Court Services and Offender Supervision Agency for DC
Barry Goldwater Scholarship and Excellence in DC Courts
Education Foundation DC Courts–Defender Services
Bureau of Consumer Financial Protection Defense Nuclear Facilities Safety Board
Central Intelligence Agency Delta Regional Authority
Chemical Safety and Hazard Investigation Board Denali Commission
Christopher Columbus Fellowship Foundation Dwight D. Eisenhower Memorial Commission
Civil Rights Cold Case Records Review Board Election Assistance Commission
Commission for the Preservation of America’s Environmental Dispute Resolution Fund
Heritage Abroad Equal Employment Opportunity Commission
Commission of Fine Arts Executive Office of the President
Commission on Civil Rights Farm Credit Administration
Commission on Combating Synthetic Opioid Federal Election Commission
Trafficking Federal Financial Institutions Examination Council
Commission on International Religious Freedom Federal Housing Finance Agency
Commission on Security and Cooperation in Europe Federal Labor Relations Authority
Commission on the State of U.S. Olympics Federal Maritime Commission
and Paralympics Federal Mediation and Conciliation Service
APPENDIX A 210
Federal Mine Safety and Health Review Commission National Transportation Safety Board
Federal Permitting Improvement Steering Council Neighborhood Reinvestment Corporation
Federal Trade Commission Northern Border Regional Commission
Government Accountability Office Nuclear Waste Technical Review Board
Government Publishing Office Occupational Safety and Health Review Commission
Gulf Coast Ecosystem Restoration Council Office of Congressional Workplace Rights
Harry S. Truman Scholarship Foundation Office of Government Ethics
House of Representatives Office of Navajo and Hopi Indian Relocation
Institute of Museum and Library Services Office of Nuclear Waste Negotiator*
Intelligence Community Management Account Office of Special Counsel
Inter-American Foundation Open World Leadership Center
International Trade Commission Patient Centered Outcomes Research Trust Fund
James Madison Memorial Fellowship Foundation Peace Corps
Japan-U.S. Friendship Commission Presidio Trust
John C. Stennis Center for Public Service Privacy and Civil Liberties Oversight Board
Training and Development Public Buildings Reform Board
John F. Kennedy Center for the Performing Arts Public Defender Service for the DC
Judiciary Selective Service System
Library of Congress Senate Commission on Art
Marine Mammal Commission Southeast Crescent Regional Commission
Medicaid and Children’s Health Insurance Program Southwest Border Regional Commission
Payment and Access Commission St. Lawrence Seaway Development Corporation
Medicare Payment Advisory Commission State Justice Institute
Merit Systems Protection Board Surface Transportation Board
Military Compensation and Retirement Modernization Thrift Savings Fund
Commission* U.S. Agency for Global Media
Morris K. Udall and Stewart L. Udall U.S. Capitol Police
Foundation U.S. Capitol Preservation Commission
National Archives and Records Administration U.S. China Economic and Security Review Commission
National Capital Planning Commission U.S. Holocaust Memorial Museum
National Commission on Military Aviation Safety U.S. Institute of Peace
National Commission on Military, National and Public U.S. Interagency Council on Homelessness
Service U.S. Semiquincentennial Commission
National Council on Disability U.S. Senate
National Endowment for the Arts U.S. Tax Court
National Endowment for the Humanities U.S. Trade and Development Agency
National Gallery of Art Vietnam Education Foundation
National Labor Relations Board Western Hemisphere Drug Policy Commission
National Mediation Board Women’s Suffrage Centennial Commission
National Railroad Passenger Corporation, Office of the Woodrow Wilson International Center for Scholars
Inspector General WWI Centennial Commission
National Security Commission on Artificial Intelligence
*These entities are no longer active and have either returned all remaining fund balances to Treasury during FY 2023 or have
remaining fund balances pending final return to Treasury as of September 30, 2023.
211 APPENDIX A
2. Disclosure Entities and Related Parties of the Financial Report

The entities included below, after considering various factors including quantitative and qualitative materiality, meet the
criteria of SFFAS No. 47 to be reported as disclosure entities or related parties in the Financial Report. Information about the
government’s relationship with these entities is disclosed in Note 27—Disclosure Entities and Related Parties. Additionally,
component entities have also identified additional disclosure entities and related parties that do not meet the qualitative or
quantitative criteria in SFFAS No. 47 to be reported in the Financial Report and are not included in the entities below. The
component entity of each disclosure entity is provided in the brackets below. Refer to the financial statements of the
component entities for more information on additional disclosure entities and related parties.
Disclosure Entities
Amtrak (National Railroad Passenger Service Corp) [DOT]
Federal Home Loan Mortgage Corporation (Freddie Mac) [Treasury]/[FHFA]
Federal National Mortgage Association (Fannie Mae) [Treasury]/[FHFA]
Federal Reserve System [Treasury]
Special Purpose Vehicles [Treasury]
Related Parties
Federal Home Loan Banks [FHFA]
International Monetary Fund and Multilateral Development Banks [Treasury]
Private Export Funding Corporation [EXIM]
APPENDIX B 212
Appendix B: Glossary of Acronyms

This is the current list of acronyms used in the Financial Report.
APM Alternative Payment Models

ARP American Rescue Plan Act of 2021
ASC Accounting Standards Codification
AT&T American Telephone & Telegraph Company
BBA Bipartisan Budget Act
Bbl Barrels
BLDBP Black Lung Disability Benefit Program
BLDTF Black Lung Disability Trust Fund
BLM Bureau of Land Management
BPA Bonneville Power Administration
BRS Blended Retirement System
Budget Budget of the U.S. Government
CAA Consolidated Appropriations Act
CARES Act Coronavirus Aid, Relief and Economic Security Act
CERCLA Comprehensive Environmental Response, Compensation, and Liability Act
CFE Carbon Pollution-Free Electricity
CFO Chief Financial Officers
CFO Act Chief Financial Officers Act of 1990
CFR Code of Federal Regulations
CMS Centers for Medicare & Medicaid Services
COFFA Council of Federal Financial Assistance
COLA Cost of Living Adjustments
COVID-19 Coronavirus Disease 2019
CPI Consumer Price Index
CPIM Consumer Price Index–Medical
CSRDF Civil Service Retirement and Disability Fund
CSRS Civil Service Retirement System
D.C. District of Columbia
DERP Defense Environmental Restoration Program
DFC United States International Development Finance Corporation
DHS Department of Homeland Security
DI Disability Insurance
DIF Deposit Insurance Fund
DM&R Deferred Maintenance and Repairs
DOC Department of Commerce
DOD Department of Defense
DOE Department of Energy
DOI Department of the Interior
DOJ Department of Justice
DOL Department of Labor
213 APPENDIX B
DOT Department of Transportation

Education Department of Education
EIA Energy Information Administration
EIDL Economic Injury Disaster Loan
EIP Economic Impact Payment
EPA Environmental Protection Agency
ESF Exchange Stabilization Fund
EV Electric Vehicle
EXIM Bank Export-Import Bank of the U.S.
Fannie Mae Federal National Mortgage Association
FASAB Federal Accounting Standards Advisory Board
FASB Financial Accounting Standards Board
FCC Federal Communications Commission
FCIC Federal Crop Insurance Corporation
FCIP Federal Crop Insurance Program
FCSB Farm Credit System Banks
FCSIC Farm Credit System Insurance Corporation
FDIC Federal Deposit Insurance Corporation
FECA Federal Employees’ Compensation Act
Federal Reserve Act Federal Reserve Act of 1913
Federal Reserve Board Federal Reserve Board of Governors
FEGLI Federal Employees’ Group Life Insurance
FEMA Federal Emergency Management Agency
FERS Federal Employees’ Retirement System
FFEL Federal Family Education Loan
FFMIA Federal Financial Management Improvement Act of 1996
FHA Federal Housing Administration
FHFA Federal Housing Finance Agency
FHLBanks Federal Home Loan Banks
FHWA Federal Highway Administration
FICA Federal Insurance Contribution Act
Financial Report Financial Report of the U.S. Government
FirstNet First Responder Network Authority
FOMC Federal Open Market Committee
FRA Fiscal Responsibility Act of 2023
FR System Federal Reserve System
FRB Federal Reserve Banks
FRBB Federal Reserve Bank of Boston
FRBNY Federal Reserve Bank of New York
Freddie Mac Federal Home Loan Mortgage Corporation
FRN Floating Rate Notes
FRTIB Federal Retirement Thrift Investment Board
FTO Fine Troy Ounce
FUA Federal Unemployment Account
APPENDIX B 214
FV Fair Value
FY Fiscal Year
GAAP U.S. Generally Accepted Accounting Principles
GAO U.S. Government Accountability Office
GDP Gross Domestic Product
General Fund General Fund of the U.S. Government
GHG Greenhouse Gases
Ginnie Mae Government National Mortgage Association
GSA General Services Administration
GSE Government-Sponsored Enterprise
HHS Department of Health and Human Services
HI Hospital Insurance
HQM High Quality Market
HUD Department of Housing and Urban Development
IIJA Infrastructure Investment and Jobs Act
IIM Individual Indian Monies
IMF International Monetary Fund
IRA Inflation Reduction Act
IRC Internal Revenue Code
IRS Internal Revenue Service
JPMorgan JP Morgan Chase Bank
LLC Limited Liability Company
LP Limited Partnership
LPR Lawful Permanent Resident
MAC Moving Average Cost
MACRA Medicare Access and Children’s Health Insurance Program Reauthorization Act of 2015
MBS Mortgage-Backed Securities
Mcf One Thousand Cubic Feet
MD&A Management Discussion & Analysis
MDB Multilateral Development Banks
MERHCF Medicare Eligible Retiree Health Care Fund
MHPI Military Housing Privatization Initiative
MLF Municipal Liquidity Facility LLC
MRF Military Retirement Fund
MSF Main Street Facilities LLC
MTF Military Treatment Facilities
MTS Monthly Treasury Statement
NAB New Arrangements to Borrow
NASA National Aeronautics and Space Administration
NAV Net Asset Value
NCUA National Credit Union Administration
NCUSIF The National Credit Union Share Insurance Fund
NDAA National Defense Authorization Act
NFIP National Flood Insurance Program
NHE National Health Expenditure
NPSBN Nationwide Public Safety Broadband Network
NPV Net Present Value
215 APPENDIX B
NRRIT National Railroad Retirement Investment Trust

NWPA Nuclear Waste Policy Act of 1982
OASDI Old-Age, Survivors, and Disability Insurance
OASI Old-Age and Survivors Insurance
OM&S Operating Materials and Supplies
OMB Office of Management and Budget
ONRR Office of Natural Resources Revenue
OPEB Other Postemployment Benefits
OPM Office of Personnel Management
ORB Other Retirement Benefits
P3s Public-Private Partnerships
PACT Act Sergeant First Class Heath Robinson Honoring Our Promise to Address Comprehensive Toxics Act
of 2022
PAYGO Pay As You Go
PBGC Pension Benefit Guaranty Corporation
PCE Personal Consumption Expenditures
PEFCO Private Export Funding Corporation
P.L. Public Law
PMN Purchase Money Note
PPACA Patient Protection and Affordable Care Act
PP&E Property, Plant, and Equipment
PPP Paycheck Protection Program
PV Present Value
QSMO Quality Service Management Office
R&D Research and Development
RCRA Resource Conservation and Recovery Act
RRB Railroad Retirement Board
RRP Railroad Retirement Program
RSI Required Supplementary Information
SAA Security Assistance Accounts
SARA Superfund Amendments and Reauthorization Act of 1986
SBA Small Business Administration
SCSIA Statements of Changes in Social Insurance Amounts
SDR Special Drawing Rights
SEC Securities and Exchange Commission
SECA Self-Employment Contributions Act
SFA Special Financial Assistance
SFFAS Statement of Federal Financial Accounting Standards
SGLI Service Members Group Life Insurance
SLGS State and Local Government Series
SLTFP Statements of Long-Term Fiscal Projections
SMI Supplementary Medical Insurance
Smithsonian Smithsonian Institution
SNF Spent Nuclear Fuel
SOMA System Open Market Account
APPENDIX B 216
SOSI Statements of Social Insurance

SPSPA Senior Preferred Stock Purchase Agreement
SPV Special Purpose Vehicle
SSA Social Security Administration
State Department of State
TALF Term Asset Backed Securities II LLC
TCJA Tax Cuts and Jobs Act of 2017
TFL TRICARE for Life
TIPS Treasury Inflation-Protected Securities
TNC Yield Curve for Treasury Nominal Coupon Issues
Treasury Department of the Treasury
TRIP Terrorism Risk Insurance Program
TSF Thrift Savings Fund
TSP Thrift Savings Plan
TSP’s G Fund Thrift Savings Plan’s Government Securities Investment Fund
TTD Time-to-Death
TVA Tennessee Valley Authority
UI Unemployment Insurance
U.S. United States
USAID U.S. Agency for International Development
U.S.C. United States Code
USCG United States Coast Guard
USDA U.S. Department of Agriculture
USPS United States Postal Service
UTF Unemployment Trust Fund
VA Department of Veterans Affairs
VR&E Vocational Rehabilitation and Employment
217 APPENDIX B

U.S. GOVERNMENT ACCOUNTABILITY OFFICE INDEPENDENT AUDITOR’S REPORT 218
Independent Auditor’s Report
The President
The President of the Senate
The Speaker of the House of Representatives
In our audits of the U.S. government’s consolidated financial statements as of and for the fiscal years
ended September 30, 2023, and 2022, we found the following:
• Certain material weaknesses 1 in internal control over financial reporting and other limitations on the
scope of our work resulted in conditions that continued to prevent us from expressing an opinion on
the accompanying accrual-based consolidated financial statements as of and for the fiscal years
ended September 30, 2023, and 2022. 2
• Significant uncertainties (discussed in Note 25, Social Insurance, to the consolidated financial
statements), primarily related to the achievement of projected reductions in Medicare cost growth,
prevented us from expressing an opinion on the accompanying sustainability financial statements, 3
which consist of the 2023 and 2022 Statements of Long-Term Fiscal Projections; 4 the 2023, 2022,
2021, 2020, and 2019 Statements of Social Insurance; 5 and the 2023 and 2022 Statements of
1A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there
is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected
and corrected, on a timely basis. A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct,
misstatements on a timely basis.
2The accrual-based consolidated financial statements comprise the (1) Statements of Net Cost, Statements of Operations and
Changes in Net Position, Reconciliations of Net Operating Cost and Budget Deficit, and Statements of Changes in Cash
Balance from Budget and Other Activities, for the fiscal years ended September 30, 2023, and 2022; (2) Balance Sheets as of
September 30, 2023, and 2022; and (3) related notes to these financial statements. Most revenues are recorded on a modified
cash basis. We previously reported that certain material weaknesses and, for some years, other limitations on the scope of our
work prevented us from expressing an opinion on the accrual-based consolidated financial statements of the U.S. government
for fiscal years 1997 through 2022.
3We have previously reported that significant uncertainties prevented us from expressing an opinion on the sustainability
financial statements (Statements of Social Insurance for fiscal years 2010 through 2022 and Statements of Long-Term Fiscal
Projections for fiscal years 2015 through 2022). The Statements of Social Insurance were first presented for fiscal year 2006,
and the Statements of Long-Term Fiscal Projections were first presented for fiscal year 2015.
4The 2023 and 2022 Statements of Long-Term Fiscal Projections present, for all the activities of the federal government, the present
value of projected receipts and noninterest spending under current policy without change, the relationship of these amounts to
projected gross domestic product (GDP), and changes in the present value of projected receipts and noninterest spending from the
prior year. These statements also present the fiscal gap, which shows the combination of receipt increases and noninterest spending
reductions necessary to hold debt held by the public as a share of GDP at the end of the 75-year projection period to its value at the
beginning of the period. The valuation date for the Statements of Long-Term Fiscal Projections is September 30.
5The Statements of Social Insurance present the present value of revenue and expenditures for social benefit programs,
primarily Social Security and Medicare. These statements are presented for the current year and each of the 4 preceding
years as required by U.S. generally accepted accounting principles. For the Statements of Social Insurance, the valuation date
is January 1 for the Social Security and Medicare programs, October 1 for the Railroad Retirement program, and September
30 for the Black Lung program.
219 U.S. GOVERNMENT ACCOUNTABILITY OFFICE INDEPENDENT AUDITOR’S REPORT
Changes in Social Insurance Amounts. A material weakness in internal control also prevented us
from expressing an opinion on the 2023 and 2022 Statements of Long-Term Fiscal Projections.
• Material weaknesses resulted in ineffective internal control over financial reporting for fiscal year
2023.
• Material weaknesses and other scope limitations, discussed above, limited tests of compliance with
selected provisions of applicable laws, regulations, contracts, and grant agreements for fiscal year
2023.
This audit report discusses the following in more detail.
• Our report on the accompanying consolidated financial statements, which includes (1) two
emphasis of matters—long-term fiscal challenges and equity investments in the Federal National
Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie
Mac); (2) an other matter regarding Chief Financial Officers Act of 1990 (CFO Act) agency financial
management systems; and (3) a section on required supplementary information (RSI) included with
the consolidated financial statements. 6
• Our report on internal control over financial reporting.
• Our report on compliance with laws, regulations, contracts, and grant agreements.
• The Department of the Treasury’s and the Office of Management and Budget’s (OMB) comments
on a draft of this audit report.
Appendix I discusses our audit objectives, scope, and methodology.
Report on the Consolidated Financial Statements
Disclaimers of Opinion
The Secretary of the Treasury, in coordination with the Director of OMB, is required to annually submit
audited financial statements for the U.S. government to the President and Congress. GAO is required
to audit these statements. The consolidated financial statements consist of the
• accrual-based consolidated financial statements, comprising the (1) Statements of Net Cost,
Statements of Operations and Changes in Net Position, Reconciliations of Net Operating Cost and
Budget Deficit, and Statements of Changes in Cash Balance from Budget and Other Activities, for
the fiscal years ended September 30, 2023, and 2022; (2) Balance Sheets as of September 30,
2023, and 2022; and (3) related notes to these financial statements, and
• sustainability financial statements, comprising the 2023 and 2022 Statements of Long-Term Fiscal
Projections; the 2023, 2022, 2021, 2020, and 2019 Statements of Social Insurance; the 2023 and
2022 Statements of Changes in Social Insurance Amounts; and related notes to the financial
statements.
6The RSI consists of Management’s Discussion and Analysis and information in the Required Supplementary Information
section of the Fiscal Year 2023 Financial Report of the United States Government, which are included with the consolidated
Accrual-Based Consolidated Financial Statements
Because of the significance of the related matters described in the Basis for Disclaimers of Opinion
section below, we were not able to obtain sufficient appropriate audit evidence to provide a basis for
an audit opinion on the accompanying accrual-based consolidated financial statements.
Accordingly, we do not express an opinion on the accrual-based consolidated financial statements.
Because of the significance of the related matters described in the Basis for Disclaimers of Opinion
section below, we were not able to obtain sufficient appropriate audit evidence to provide a basis for
an audit opinion on the accompanying sustainability financial statements. Accordingly, we do not
express an opinion on the sustainability financial statements.
We considered the limitations on the scope of our work regarding the accrual-based consolidated
financial statements and the sustainability financial statements in forming our conclusions. We
performed sufficient audit work to provide this report on the consolidated financial statements. We
performed our work in accordance with U.S. generally accepted government auditing standards.
Basis for Disclaimers of Opinion
Accrual-Based Consolidated Financial Statements
The federal government is not able to demonstrate the reliability of significant portions of the
accompanying accrual-based consolidated financial statements as of and for the fiscal years ended
September 30, 2023, and 2022, principally because of limitations related to certain material
weaknesses in internal control over financial reporting and other limitations affecting the reliability of
these financial statements and the scope of our work. 7 As a result of these limitations, readers are
cautioned that amounts reported in the accrual-based consolidated financial statements and related
notes may not be reliable.
The federal government did not maintain adequate systems or have sufficient appropriate evidence to
support certain material information reported in the accompanying accrual-based consolidated financial
statements. The underlying material weaknesses in internal control, which generally have existed for
years, contributed to our disclaimer of opinion on the accrual-based consolidated financial statements.
Specifically, these weaknesses concerned the federal government’s inability to
• satisfactorily determine that property, plant, and equipment and inventories and related property,
primarily held by the Department of Defense (DOD), were properly reported in the accrual-based
consolidated financial statements;
7Such limitations include the following: (1) The Department of Defense received a disclaimer of opinion on its fiscal years 2023
and 2022 financial statements. (2) The Small Business Administration received a disclaimer of opinion on its fiscal years 2023
and 2022 balance sheets, and its remaining statements were unaudited. (3) The Department of Education received a
disclaimer of opinion on its fiscal year 2023 balance sheet, and its remaining statements were unaudited. The department
received a disclaimer of opinion on its fiscal year 2022 financial statements. (4) The Department of Labor received a qualified
opinion on its fiscal years 2023 and 2022 financial statements. (5) The Department of Agriculture received a qualified opinion
on its fiscal year 2023 financial statements but received an unmodified opinion on its fiscal year 2022 financial statements. (6)
The Security Assistance Accounts received a disclaimer of opinion on its fiscal years 2023 and 2022 financial statements. (7)
The fiscal year 2023 Schedules of the General Fund were not audited to allow Treasury time to continue to implement a
remediation plan to address the issues we reported as part of our disclaimer of opinion on the fiscal year 2022 Schedules of
the General Fund. (8) The Railroad Retirement Board received a disclaimer of opinion on its fiscal years 2023 and 2022
• reasonably estimate the value of loans receivable and loan guarantees, most notably at the Small
Business Administration (SBA) and Department of Education;
• reasonably estimate or adequately support amounts reported for certain liabilities, such as
environmental and disposal liabilities, or determine whether commitments and contingencies were
complete and properly reported;
• support significant portions of the reported total net cost of operations, most notably related to DOD,
SBA, and Education, and adequately reconcile disbursement activity at certain federal entities;
• adequately account for intragovernmental activity and balances between federal entities;
• reasonably assure that the consolidated financial statements are (1) consistent with the underlying
audited entities’ financial statements, (2) properly balanced, and (3) in accordance with U.S.
generally accepted accounting principles; and
• reasonably assure that the information in the (1) Reconciliations of Net Operating Cost and Budget
Deficit and (2) Statements of Changes in Cash Balance from Budget and Other Activities is
complete, properly supported, and consistent with the underlying information in the audited entities’
financial statements and other financial data.
These material weaknesses continued to (1) hamper the federal government’s ability to reliably report a
significant portion of its assets, liabilities, costs, and other related information; (2) affect the federal
government’s ability to reliably measure the full cost, as well as the financial and nonfinancial
performance, of certain programs and activities; (3) impair the federal government’s ability to
adequately safeguard significant assets and properly record various transactions; and (4) hinder the
federal government from having reliable, useful, and timely financial information to operate effectively
and efficiently. Because of these material weaknesses and other limitations on the scope of our work
discussed below, additional issues may exist that were not identified and could affect the accrual-based
consolidated financial statements. Appendix II describes these material weaknesses in more detail and
highlights the primary effects of these material weaknesses on the accompanying accrual-based
consolidated financial statements, the sustainability financial statements, and the management of
federal government operations.
In addition, the federal government did not adequately account for and report on the Special Financial
Assistance (SFA) program established by the American Rescue Plan Act of 2021. 8 The SFA program
provides payments to eligible multiemployer pension plans to enable them to pay benefits at plan levels
through 2051. Plans are not required to repay amounts received from the SFA program, which is
funded by appropriations from the General Fund of the U.S. Government. 9
8Pub. L. No. 117-2, title IX, subtitle H, § 9704, 135 Stat. 4, 190-99 (Mar. 11, 2021), classified at 29 U.S.C. §§ 1305(i), 1432.
9The General Fund is a component of Treasury’s central accounting function. It is a stand-alone reporting entity that comprises
the activities fundamental to funding the federal government (e.g., issued budget authority, cash activity, and debt financing
activities).
As of September 30, 2022, the estimated mean of total SFA program payments projected to be made
to eligible multiemployer pension plans was $79.7 billion. 10 Fiscal year 2021 liabilities and net costs
were reduced by $60 billion, representing the previously recorded multiemployer plan liability related to
those plans expected to be eligible to receive SFA program payments. However, while the cost and
liability reduction assumed that the SFA program payments would be made, the federal government did
not recognize the liabilities and costs related to the estimated SFA program payments to those plans in
the fiscal year 2021 consolidated financial statements. Rather, in fiscal years 2023 and 2022, the
federal government recorded SFA costs of $45.6 billion and $7.6 billion, respectively, based on
approved SFA program applications, leaving about $26.5 billion of unrecognized costs as of September
30, 2023.
Significant uncertainties (discussed in Note 25, Social Insurance, to the consolidated financial
statements), which primarily relate to the achievement of projected reductions in Medicare cost growth,
affect the sustainability financial statements. In addition, the material weakness related to the
Reconciliations of Net Operating Cost and Budget Deficit and the Statements of Changes in Cash
Balance from Budget and Other Activities hampers the federal government’s ability to demonstrate the
reliability of historical budget information used for certain key inputs to the 2023 and 2022 Statements
of Long-Term Fiscal Projections.
As a result of these significant uncertainties and this material weakness, readers are cautioned that
amounts reported in the 2023 and 2022 Statements of Long-Term Fiscal Projections; the 2023, 2022,
2021, 2020, and 2019 Statements of Social Insurance; the 2023 and 2022 Statements of Changes in
Social Insurance Amounts; and related notes to these financial statements may not fairly present, in all
material respects, the sustainability information for those years in accordance with U.S. generally
accepted accounting principles.
These significant uncertainties primarily arise from the following:
• Medicare projections in the 2023 and 2022 Statements of Long-Term Fiscal Projections and the
2023, 2022, 2021, 2020, and 2019 Statements of Social Insurance were based on benefit formulas
under current law and included a significant reduction in Medicare payment rate updates for
productivity improvements for most categories of Medicare providers, 11 based on full
implementation
10See Pension Benefit Guaranty Corporation, FY 2022 Projections Report (Sept. 2022), accessed on February 7, 2024,
https://www.pbgc.gov/sites/default/files/documents/fy-2022-projections-report.pdf.
11Under the Patient Protection and Affordable Care Act’s productivity adjustment provisions, productivity improvements are
designed to result in lower overall Medicare spending because of smaller annual increases in the Medicare payment rates paid
to many health care providers. This is often referred to as a reduction in Medicare payment rate updates. The health care
provider categories affected include inpatient and outpatient hospital services, skilled nursing facilities, home health care,
ambulance, ambulatory surgical centers, durable medical equipment, and prosthetics.
of the provisions of the Patient Protection and Affordable Care Act, as amended (PPACA), 12 and
physician payment updates specified by the Medicare Access and CHIP Reauthorization Act of
2015 (MACRA). 13
Management has noted that certain features of current law may result in some challenges for the
Medicare program, including physician payments, payment rate updates for most nonphysician
categories, and productivity adjustments. 14 For example, the financial projections under current law
presented in the 2023, 2022, 2021, 2020, and 2019 Statements of Social Insurance reflect
substantial, but very uncertain, cost savings deriving from current-law provisions that lower
increases in Medicare payment rates to most categories of health care providers. Without
fundamental change in the current delivery system, these adjustments would probably not be viable
indefinitely. Should payment rates prove to be inadequate for any service, beneficiaries’ access to
and the quality of Medicare benefits would deteriorate over time, or future legislation would need to
be enacted that would likely increase program costs beyond those projected under current law.
The extent to which actual future costs exceed the amounts projected under current law because of
changes to the scheduled reductions in Medicare payment rate updates for productivity adjustments
and specified physician payment updates depends on both the specific changes that might be
enacted and whether enacted legislation would include further provisions to help offset such costs.
Consequently, there are significant uncertainties concerning the achievement of these projected
reductions in Medicare payment rate updates.
• Management has developed an illustrative alternative projection intended to provide additional

context regarding the long-term sustainability of the Medicare program and to illustrate and quantify
the potential understatement in the Statement of Social Insurance projections. The present value of
future estimated expenditures in excess of future estimated revenue for Medicare, included in the
illustrative alternative projection in Note 25, Social Insurance, exceeds the $53.1 trillion estimate in
the 2023 Statement of Social Insurance by $12.1 trillion.
• Management noted that these significant uncertainties about projected reductions in health care
cost growth also affect the projected Medicare and Medicaid costs reported in the 2023 and 2022
Statements of Long-Term Fiscal Projections.
Projections of Medicare costs are sensitive to assumptions about future policy decisions and consumer,
employer, and health care provider behavioral responses as policy, incentives, and the health care
sector change over time. Such secondary effects are not fully reflected in the sustainability financial
statements but could be expected to influence the excess cost growth rate used in the projections. 15
Key drivers of uncertainty about the excess cost growth rate include the future development and
deployment of medical technology, the evolution of personal income, the cost and availability of
insurance, and federal policy changes. As discussed in the RSI section of the 2023 Financial Report of
12Pub. L. No. 111-148, 124 Stat. 119 (Mar. 23, 2010), as amended by the Health Care and Education Reconciliation Act of
2010, Pub. L. No. 111-152, 124 Stat. 1029 (Mar. 30, 2010). In this report, references to PPACA include any amendments
made by the Health Care and Education Reconciliation Act of 2010.
13Pub. L. No. 114-10, title I, § 101, 129 Stat. 87, 89 (Apr. 16, 2015). MACRA included many provisions that affect Medicare,
including the repeal of the sustainable growth rate formula for calculating annual updates to Medicare reimbursement payment
rates to physicians and certain nonphysician medical providers, and established an alternative set of annual updates. See id.
14Management, as used in this audit report, refers to the management of the federal government.
15The excess cost growth rate is the increase in health care spending per person relative to the growth of GDP per person
after removing the effects of demographic changes on health care spending.

the United States Government (2023 Financial Report), the projections are very sensitive to changes in
the health care cost growth assumption.
As discussed in Note 24, Long-Term Fiscal Projections, and Note 25, Social Insurance, to the
consolidated financial statements, the sustainability financial statements are based on management’s
assumptions. These sustainability financial statements present the present value of the U.S.
government’s estimated future receipts and spending using a projection period sufficient to illustrate
long-term sustainability. 16 The sustainability financial statements are intended to aid users in assessing
whether future resources will likely be sufficient to sustain public services and to meet obligations as
they come due.
In preparing the sustainability financial statements, management selects assumptions and data that it
believes provide a reasonable basis to illustrate whether current policy is sustainable. As discussed in
the 2023 Financial Report, current policy is based on current law but includes several adjustments. In
the Statements of Long-Term Fiscal Projections, notable adjustments to current law include
• projected spending, receipts, and borrowing levels assume raising or suspending the current
statutory limit on federal debt;
• continued discretionary appropriations are assumed throughout the projection period;
• scheduled Social Security and Medicare Hospital Insurance (Part A) benefit payments are assumed
to occur beyond the projected point of trust fund depletion; and
• many mandatory programs with expiration dates prior to the end of the 75-year projection period
are assumed to be reauthorized.
In the Statements of Social Insurance, the one adjustment to current law is that scheduled Social
Security and Medicare Part A benefit payments are assumed to occur beyond the projected point of
depletion of the trust funds. Assumptions underlying such sustainability information do not consider
changes in policy or all potential future events that could affect future revenue and expenditures and,
hence, sustainability. Also, the projections assume that debt could continuously rise without severe
economic consequences. The RSI section of the 2023 Financial Report includes unaudited information
on how changes in various assumptions would affect the Statements of Long-Term Fiscal Projections
and Statements of Social Insurance. The projections in the sustainability financial statements are not
forecasts or predictions.
The 2023 sustainability financial statements are based on the economic assumptions that underlie the
2023 Social Security Trustees’ Report. Those assumptions include the Trustees’ best estimates of the
residual effects of the COVID-19 pandemic on the economy.
As discussed in the unaudited RSI section of the 2023 Financial Report, the combined Social Security
trust funds are projected to be depleted in 2034. 17 Further, based on the achievement of the cost
growth reductions discussed above, the Medicare Part A trust fund is projected to be depleted in 2031.
After depletion, the trust funds would be unable to pay the full amount of scheduled benefits. For Social
16The projection period used in the Statements of Long-Term Fiscal Projections is 75 years. The projection period for the
Statements of Social Insurance is 75 years for the Social Security, Medicare, and Railroad Retirement social insurance
programs and 25 years for the Black Lung program.
17The projected depletion date for the combined Social Security trust funds is hypothetical and often used for simplicity to
illustrate the solvency of the Social Security program by combining the separate Federal Old-Age and Survivors Insurance
trust fund and the Federal Disability Insurance trust fund. For the Federal Old-Age and Survivors Insurance trust fund, future
revenues were projected to be sufficient to pay 77 percent of scheduled benefits in 2033, the year of projected trust fund
depletion, decreasing to 71 percent in 2097. For the Federal Disability Insurance trust fund, asset reserves are not projected to
become depleted during the 75-year period ending in 2097.
Security, future revenues were projected to be sufficient to pay 80 percent of scheduled benefits in
2034, the year of projected combined trust funds depletion, decreasing to 74 percent of scheduled
benefits in 2097. For Medicare Part A, future revenues were projected to be sufficient to pay 89 percent
of scheduled benefits in 2031, the year of projected trust fund depletion, declining to 81 percent by
2047, and then increasing to 96 percent of scheduled benefits in 2097.
Because of the large number of factors that affect the sustainability financial statements and the fact
that future events and circumstances cannot be projected with certainty, even if current policy is
continued, there will be differences between the projections in the sustainability financial statements
and the actual results, and those differences may be material.
Other Limitations on the Scope of Our Work
For fiscal years 2023 and 2022, there were other limitations on the scope of our work, in addition to the
material weaknesses and significant uncertainties noted above, that contributed to our disclaimers of
opinion on the consolidated financial statements. Such limitations primarily relate to obtaining adequate
representations from management regarding the financial statements. Treasury and OMB depend on
representations from certain federal entities to provide their representations to us regarding the U.S.
government’s consolidated financial statements. Treasury and OMB were unable to provide us with
adequate representations regarding the accrual-based consolidated financial statements for fiscal years
2023 and 2022, primarily because certain federal entities were not able to provide them sufficient
representations.
Emphasis of Matters
The following matters deserve emphasis to put the information in the consolidated financial statements
and the Management’s Discussion and Analysis section of the 2023 Financial Report into context. Our
disclaimers of opinion are not modified with respect to these matters.
Long-Term Fiscal Challenges
The 2023 Statement of Long-Term Fiscal Projections and related information in Note 24, Long-Term
Fiscal Projections, to the consolidated financial statements and the unaudited RSI section of the 2023
Financial Report show that based on current revenue and spending policies, the federal government
continues to face an unsustainable long-term fiscal path. At the end of fiscal year 2023, debt held by
the public was approximately 97 percent of gross domestic product (GDP). The projections in the 2023
Financial Report show that debt held by the public will reach its historical high of 106 percent of GDP in
2028 and will grow faster than the economy over the long term. For the 2023 projections, debt held by
the public as a share of GDP (debt-to-GDP) at the end of the 75-year projection period is projected to
be 531 percent. Annual budget deficits are projected to continue throughout the 75-year projection
period. Over the long term, the imbalance between spending and revenue that is built into current policy
and law is projected to lead to continued growth of debt-to-GDP. This situation—in which debt held by
the public grows faster than GDP—means that the federal government’s long-term fiscal path is
unsustainable.
Under the 2023 Financial Report projections, spending for major health and retirement programs will
increase more rapidly than GDP in the coming decades, in part because of an aging population and
projected continued increases in health care costs. These projections for Social Security and Medicare
are based on the same assumptions underlying the information presented in the Statement of Social
Insurance and assume that the provisions enacted in PPACA, designed to slow the growth of Medicare
costs, are sustained and remain in effect throughout the projection period. The projections also reflect
the effects of MACRA, which, among other things, revised the methodology for determining physician
payment rates. If, however, the Medicare cost containment measures and physician payment rate
methodology are not sustained over the long term—concerns expressed by the Trustees of the
Medicare trust funds, the Centers for Medicare & Medicaid Services’ Chief Actuary, the Congressional
Budget Office (CBO), and others—spending on federal health care programs will grow more rapidly
than assumed in the projections.
In addition, based on the 2023 Financial Report projections, spending on net interest (primarily interest
on debt held by the public) will surpass Social Security spending and become the largest category of
spending in 2036. Net interest is projected to increase from 2.4 percent of GDP in fiscal year 2023 to
5.3 percent of GDP in fiscal year 2034 (about 19 percent of 2034 projected total spending), and to 24.0
percent of GDP in fiscal year 2098 (about 51 percent of 2098 projected total spending).
GAO and CBO also prepare long-term federal fiscal simulations, which continue to show debt-to-GDP
rising in the long term. 18 GAO, CBO, and the 2023 Financial Report all project that debt-to-GDP will
surpass its historical high (106 percent in 1946) in 2028. Each of these projections uses somewhat
different assumptions, but their overall conclusions are the same: based on current revenue and
spending policies, the federal government’s long-term fiscal path is unsustainable.
Further, these projections do not fully account for other risks—such as natural disasters and climate
change, global or regional military conflicts, housing finance, and public health crises—that could affect
the federal government’s financial condition in the future. These risks, also known as fiscal exposures,
place additional pressure on the federal budget. They result in responsibilities, programs, and activities
that may legally commit or create expectations for future federal spending based on current policy, past
practices, or other factors. A more complete understanding of fiscal exposures can help policymakers
anticipate changes in future spending and can enhance oversight of federal resources.
The 2023 Financial Report provides an estimate of the magnitude of policy changes needed to achieve
a target debt-to-GDP ratio of 97 percent (the 2023 level) in 2098 (the fiscal gap). 19 Policymakers could
close the fiscal gap, achieving the target ratio, through a combination of revenue increases and
noninterest spending reductions. To illustrate the magnitude of policy changes needed, if policymakers
choose to close the fiscal gap solely through increased revenues, they would need to make policy
changes over a 75-year period (fiscal years 2024 to 2098) that increase each year’s projected revenues
by 23.8 percent. If policymakers choose to close the fiscal gap solely through reductions in noninterest
spending, they would need to make policy changes over a 75-year period (fiscal years 2024 to 2098)
that reduce each year’s projected noninterest spending by 19.8 percent. The projections show that the
longer policy changes are delayed, the more significant the magnitude of policy changes will need to be
to achieve the debt-to-GDP target.
Equity Investments in Fannie Mae and Freddie Mac
As discussed in Note 8, Investments in Government-Sponsored Enterprises, and Note 20,

Commitments, to the consolidated financial statements, in 2008, during the financial crisis, the federal
government placed Fannie Mae and Freddie Mac under federal conservatorship and entered into
preferred stock purchase agreements with these government-sponsored enterprises (GSE) to help
18For more information on GAO’s simulations, see America's Fiscal Future, accessed on February 7, 2024,
https://www.gao.gov/americas-fiscal-future. For more information on CBO’s simulations, see Congressional Budget Office, The
Budget and Economic Outlook: 2024 to 2034 (Washington, D.C.: Feb. 7, 2024).
19Fiscalgap can also be calculated using different time horizons and different target debt-to-GDP ratios. GAO projects a fiscal
gap for a 30-year period. For more information, see GAO, “Interactive Graphic: Exploring the Tough Choices for a Sustainable
Fiscal Path,” accessed February 7, 2024, https://files.gao.gov/multimedia/gao-23-106201/interactive.
ensure their financial stability. The agreements with these GSEs could affect the federal government’s
financial condition. As of September 30, 2023, the federal government reported about $240 billion of
investments in these GSEs, which is net of about $70 billion in valuation losses. The reported maximum
remaining contractual commitment to these GSEs, if needed, is $254.1 billion.
In valuing these equity investments, management considered and selected assumptions and data that
it believed provided a reasonable basis for the estimated values reported in the accrual-based
consolidated financial statements. However, as discussed in Note 1, Summary of Significant
Accounting Policies, to the consolidated financial statements, there are many factors affecting these
assumptions and estimates that are inherently subject to substantial uncertainty arising from the
likelihood of future changes in general economic, regulatory, and market conditions. As such, there will
be differences between the estimated values as of September 30, 2023, and the actual results, and
such differences may be material.
Also, as discussed in Note 1, Summary of Significant Accounting Policies, to the consolidated financial
statements, the assets, liabilities, and results of operations of Fannie Mae and Freddie Mac are not
consolidated into the U.S. government’s consolidated financial statements. Treasury and OMB have
determined that these entities do not meet the criteria for consolidation. 20 The ultimate role of these
GSEs could affect the federal government’s financial condition and the financial condition of certain
federal entities, including the Federal Housing Administration (FHA), which in the past expanded its
lending role in distressed housing and mortgage markets. In addition, as discussed in Note 21,
Contingencies, to the consolidated financial statements, the Government National Mortgage
Association (Ginnie Mae) guarantees the performance of about $2.5 trillion in securities backed by
federally insured mortgages—$1.3 trillion of which were insured by FHA and $1.2 trillion by other
federal entities, such as the Department of Veterans Affairs.
Other Matter
CFO Act Agency Financial Management Systems
The federal government’s ability to efficiently and effectively manage and oversee its day-to-day
operations and programs relies heavily on the ability of entity financial management systems to
produce complete, reliable, timely, and consistent financial information for use by executive branch
agencies and Congress. 21 The Federal Financial Management Improvement Act of 1996 (FFMIA) was
designed to lead to system improvements that would result in CFO Act agency managers routinely
having access to reliable, useful, and timely financial information with which to measure performance
and increase accountability throughout the year.
The 24 CFO Act agencies are responsible for implementing and maintaining financial management
systems that comply substantially with FFMIA requirements. FFMIA also requires auditors, as part of
the 24 CFO Act agencies’ financial statement audits, to report whether those agencies’ financial
20For additional information on the GSE preferred stock purchase agreements and valuation of the investment in the GSEs,
see Note 8, Investments in Government-Sponsored Enterprises, to the consolidated financial statements. For additional
information on the criteria used to determine which federal entities are included in the reporting entity for the consolidated
financial statements, as well as the reasons for not including certain entities, such as Fannie Mae and Freddie Mac, see app.
A of the 2023 Financial Report.
21The Federal Financial Management Improvement Act of 1996, which is reprinted in 31 U.S.C. § 3512 note, defines “financial
management systems” to include the financial systems and the financial portions of mixed systems necessary to support
financial management, including automated and manual processes, procedures, controls, data, hardware, software, and
support personnel dedicated to the operation and maintenance of system functions.
management systems comply substantially with (1) federal financial management systems
requirements, (2) applicable federal accounting standards, and (3) the federal government’s U.S.
Standard General Ledger at the transaction level.
For both fiscal years 2023 and 2022, auditors for eight of the 24 CFO Act agencies reported that the
agencies’ financial management systems did not comply substantially with one or more of the three
FFMIA requirements. Agency management at the 24 CFO Act agencies also annually report on FFMIA
compliance. For both fiscal years 2023 and 2022, agency management for seven of the 24 CFO Act
agencies reported that their agencies’ financial management systems did not comply substantially with
one or more of the three FFMIA requirements. Based on agency financial reports, differences in the
assessments of substantial compliance between the auditors and agency management reflect
differences in management’s and auditors’ views regarding the effect of reported deficiencies on
agency financial management systems.
Long-standing financial management systems weaknesses at several large CFO Act agencies, along
with the size and complexity of the federal government, continue to present a formidable management
challenge in providing accountability and contribute significantly to certain material weaknesses and
other limitations discussed in this audit report.
Responsibilities of Management for the Consolidated Financial Statements
Management of the federal government is responsible for (1) the preparation and fair presentation of
the consolidated financial statements in accordance with U.S. generally accepted accounting principles;
(2) preparing, measuring, and presenting the RSI in accordance with U.S. generally accepted
accounting principles; and (3) designing, implementing, and maintaining effective internal control
relevant to the preparation and fair presentation of financial statements that are free from material
misstatement, whether due to fraud or error.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our responsibility is to conduct an audit of the consolidated financial statements in accordance with
U.S. generally accepted government auditing standards and to issue an auditor’s report. However,
because of the matters described in the Basis for Disclaimers of Opinion section of our report, we were
not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on the
consolidated financial statements.
We are required to be independent with respect to the U.S. government’s consolidated financial
statements and to meet our other ethical responsibilities, in accordance with the relevant ethical
requirements relating to our audit.
Required Supplementary Information
U.S. generally accepted accounting principles issued by the Federal Accounting Standards Advisory
Board (FASAB) require that the RSI be presented in the 2023 Financial Report to supplement the
financial statements. Such information is the responsibility of management and, although the RSI is not
a part of the financial statements, is required by FASAB, which considers this information to be an
essential part of financial reporting for placing the financial statements in appropriate operational,
economic, or historical context. We were unable to apply certain limited procedures to the RSI in
accordance with U.S. generally accepted government auditing standards because of the material
weaknesses and other scope limitations discussed in this audit report. We did not audit and do not
express an opinion or provide any assurance on the RSI.
Readers are cautioned that the material weaknesses, significant uncertainties, and other scope
limitations discussed in this audit report may affect the reliability of certain information contained in the
RSI that is taken from the same data sources as the accrual-based consolidated financial statements
and the sustainability financial statements.
Report on Internal Control over Financial Reporting
In connection with our audits of the U.S. government’s consolidated financial statements, we
considered the federal government’s internal control over financial reporting, consistent with our
auditor’s responsibilities discussed below.
Results of Our Consideration of Internal Control over Financial Reporting
Our consideration of internal control was for the limited purpose described below, and was not
designed to identify all deficiencies in internal control that might be material weaknesses or significant
deficiencies or to express an opinion on the effectiveness of the U.S. government’s internal control over
financial reporting. Given this limitation and other limitations discussed in this audit report, material
weaknesses or significant deficiencies may exist that have not been identified. 22
The material weaknesses discussed in this audit report resulted in ineffective internal control over
financial reporting. Consequently, the federal government’s internal control did not provide reasonable
assurance that a material misstatement of the consolidated financial statements would be prevented, or
detected and corrected, on a timely basis.
In addition to the material weaknesses that contributed to our disclaimers of opinion on the accrual-
based consolidated financial statements and the sustainability financial statements, which were
discussed previously, we found two other continuing material weaknesses in internal control, related to
the federal government’s inability to
• determine the full extent to which improper payments occur and reasonably assure that appropriate
actions are taken to reduce them and
• identify and resolve information system control deficiencies and manage information security risks
on an ongoing basis.
These other material weaknesses are discussed in more detail in appendix III, including the primary
effects of the material weaknesses on the accrual-based consolidated financial statements and on the
management of federal government operations.
We also found three significant deficiencies in internal controls related to the following:
• taxes receivable,
• federal grants management, and
• Medicare social insurance information.
These significant deficiencies are discussed in more detail in appendix IV.
Further, individual federal entity financial statement audit reports identified additional control
deficiencies that the entities’ auditors reported as either material weaknesses or significant deficiencies
22Asignificant deficiency is a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less
severe than a material weakness yet important enough to merit attention by those charged with governance.
at the individual entity level. We do not consider these additional deficiencies to represent material
weaknesses or significant deficiencies with respect to the U.S. government’s consolidated financial
statements.
Basis for Results of Our Consideration of Internal Control over Financial Reporting
We performed our procedures related to the federal government’s internal control over financial
reporting in accordance with U.S. generally accepted government auditing standards.
Responsibilities of Management for Internal Control over Financial Reporting
Management of the federal government is responsible for designing, implementing, and maintaining
effective internal control over financial reporting relevant to the preparation and fair presentation of
financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibilities for Internal Control over Financial Reporting
In planning and performing our audit of the U.S. government’s consolidated financial statements as of
and for the fiscal year ended September 30, 2023, in accordance with U.S. generally accepted
government auditing standards, we considered internal control relevant to the financial statement audit
in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of internal control over financial reporting. Accordingly, we
do not express an opinion on the effectiveness of the federal government’s internal control over
financial reporting. We are required to report significant deficiencies or material weaknesses identified
during our audit. We did not consider all internal controls relevant to operating objectives, such as those
controls relevant to preparing performance information and ensuring efficient operations.
Definition and Inherent Limitations of Internal Control over Financial Reporting
An entity’s internal control over financial reporting is a process effected by those charged with
governance, management, and other personnel, the objectives of which are to provide reasonable
assurance that (1) transactions are properly recorded, processed, and summarized to permit the
preparation of financial statements in accordance with U.S. generally accepted accounting principles,
and assets are safeguarded against loss from unauthorized acquisition, use, or disposition, and (2)
transactions are executed in accordance with provisions of applicable laws (including those governing
the use of budget authority), regulations, contracts, and grant agreements, noncompliance with which
could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent, or detect
and correct, misstatements due to fraud or error.
Intended Purpose of Report on Internal Control over Financial Reporting
The purpose of this report is solely to describe the scope of our consideration of the federal
government’s internal control over financial reporting and the results of our procedures, and not to
provide an opinion on the effectiveness of the federal government’s internal control over financial
reporting. This report is an integral part of an audit performed in accordance with U.S. generally
accepted government auditing standards in considering internal control over financial reporting.
Accordingly, this report on internal control over financial reporting is not suitable for any other purpose.
Report on Compliance with Laws, Regulations, Contracts, and Grant Agreements
In connection with our audits of the U.S. government’s consolidated financial statements, we tested
compliance with selected provisions of applicable laws, regulations, contracts, and grant agreements
consistent with our auditor’s responsibilities discussed below.
Results of Our Tests for Compliance with Laws, Regulations, Contracts, and Grant Agreements
Our tests for compliance with selected provisions of applicable laws, regulations, contracts, and grant
agreements were limited by certain material weaknesses and other scope limitations discussed in this
audit report. The objective of our tests was not to provide an opinion on compliance with laws,
regulations, contracts, and grant agreements applicable to the federal government. Accordingly, we do
not express such an opinion. U.S. generally accepted government auditing standards require auditors
to report on entities’ compliance with selected provisions of applicable laws, regulations, contracts, and
grant agreements. Certain significant component entity audit reports contain instances of
noncompliance. None of these instances were deemed to be reportable noncompliance with regard to
the accompanying U.S. government’s consolidated financial statements.
Basis for Results of Our Tests for Compliance with Laws, Regulations, Contracts, and Grant
Agreements
We performed our tests of compliance in accordance with U.S. generally accepted government auditing
standards. Our responsibilities under those standards are further described in the Auditor’s
Responsibilities for Tests of Compliance with Laws, Regulations, Contracts, and Grant Agreements
section below.
Responsibilities of Management for Compliance with Laws, Regulations, Contracts, and Grant
Agreements
Management of the federal government is responsible for the federal government’s compliance with
laws, regulations, contracts, and grant agreements.
Auditor’s Responsibilities for Tests of Compliance with Laws, Regulations, Contracts, and Grant
Agreements
Our responsibility is to test compliance with selected provisions of laws, regulations, contracts, and
grant agreements applicable to the federal government that have a direct effect the determination of
material amounts and disclosures in the U.S. government’s consolidated financial statements, and to
perform certain other limited procedures. Accordingly, we did not test compliance with all laws,
regulations, contracts, and grant agreements applicable to the federal government. We caution that,
because of the limitations discussed above and the scope of our procedures, noncompliance may
occur and not be detected by these tests.
Intended Purpose of Report on Compliance with Laws, Regulations, Contracts, and Grant Agreements
The purpose of this report is solely to describe the scope of our testing of compliance with selected
provisions of applicable laws, regulations, contracts, and grant agreements, and the results of that
testing, and not to provide an opinion on compliance. This report is an integral part of an audit
performed in accordance with U.S. generally accepted government auditing standards in considering
compliance. Accordingly, this report on compliance with laws, regulations, contracts, and grant
agreements is not suitable for any other purpose.
Agency Comments
We provided a draft of this audit report to Treasury and OMB officials, who provided technical
comments that we have incorporated as appropriate. Treasury and OMB officials expressed their
continuing commitment to addressing the problems this report outlines.
Robert F. Dacey
Chief Accountant
U.S. Government Accountability Office
February 7, 2024
Appendix I
Objectives, Scope, and Methodology
Our objectives were to audit the U.S. government’s consolidated financial statements, consisting of the
accrual-based consolidated financial statements and sustainability financial statements. The accrual-
based consolidated financial statements consist of the (1) Statements of Net Cost, Statements of
Operations and Changes in Net Position, Reconciliations of Net Operating Cost and Budget Deficit, and
Statements of Changes in Cash Balance from Budget and Other Activities, for the fiscal years ended
September 30, 2023, and 2022; (2) Balance Sheets as of September 30, 2023, and 2022; and (3)
related notes to these financial statements. The sustainability financial statements consist of the 2023
and 2022 Statements of Long-Term Fiscal Projections; the 2023, 2022, 2021, 2020, and 2019
Statements of Social Insurance; the 2023 and 2022 Statements of Changes in Social Insurance
Amounts; and related notes to these financial statements. Our objectives also included reporting on
internal control over financial reporting and on compliance with selected provisions of applicable laws,
regulations, contracts, and grant agreements.
The Chief Financial Officers Act of 1990 (CFO Act), as expanded by the Government Management
Reform Act of 1994 (GMRA), requires the inspectors general of the 24 CFO Act agencies to be
responsible for annual audits of agency-wide financial statements that these agencies prepare. 23
GMRA also requires GAO to be responsible for the audit of the U.S. government’s consolidated
financial statements. 24 The Accountability of Tax Dollars Act of 2002 requires most other executive
branch entities to prepare financial statements annually and have them audited. 25 The Office of
Management and Budget and the Department of the Treasury have identified 40 federal entities that
are significant to the U.S. government’s fiscal year 2023 consolidated financial statements, including
the 24 CFO Act agencies. 26 We consider these 40 entities to be significant component entities for
purposes of our audit of the consolidated financial statements.
For the significant component entities audited by inspectors general or independent public accountants,
we performed our work in coordination and cooperation with them to achieve our respective audit
objectives. Our audit approach regarding the accrual-based consolidated financial statements primarily
focused on determining the current status of the material weaknesses that contributed to our disclaimer
of opinion on the accrual-based consolidated financial statements and the other material weaknesses
affecting internal control that were included in our audit report on the consolidated financial statements
for fiscal year 2022. 27 We also separately audited the financial statements of certain component
entities, and parts of a significant component entity, including the following.
2331U.S.C. § 3521(e). GMRA authorized the Office of Management and Budget to designate agency components that also
must report financial statements and have them audited. See 31 U.S.C. § 3515(c).
2431 U.S.C. § 331(e)(2).
2531 U.S.C. § 3515.
26See app. A of the Fiscal Year 2022 Financial Report of the United States Government for a list of the 40 entities.
27GAO, Financial Audit: FY 2022 and FY 2021 Consolidated Financial Statements of the U.S. Government, GAO-23-105837
(Washington, D.C.: Feb. 16, 2023).
• We audited and expressed an unmodified opinion on the Internal Revenue Service’s (IRS) financial
statements as of and for the fiscal years ended September 30, 2023, and 2022. 28 In fiscal years
2023 and 2022, IRS collected taxes of about $4.7 trillion (2023) and $4.9 trillion (2022) and paid
refunds and other payments to taxpayers of about $659 billion (2023) and $642 billion (2022). We
also reported that although internal controls could be improved, IRS maintained, in all material
respects, effective internal control over financial reporting as of September 30, 2023. In addition, we
reported that we found no reportable noncompliance for fiscal year 2023 with provisions of
applicable laws, regulations, contracts, and grant agreements we tested.
• We audited and expressed an unmodified opinion on the Schedules of Federal Debt managed by
Treasury’s Bureau of the Fiscal Service for the fiscal years ended September 30, 2023, and 2022. 29
For these fiscal years, the schedules reported (1) federal debt held by the public of about $26.3
trillion (2023) and $24.3 trillion (2022), 30 (2) intragovernmental debt holdings of about $6.8 trillion
(2023) and $6.6 trillion (2022), 31 and (3) interest on federal debt held by the public of about $678
billion (2023) and $497 billion (2022). We also reported that Fiscal Service maintained, in all
material respects, effective internal control over financial reporting relevant to the Schedule of
Federal Debt as of September 30, 2023. In addition, we reported that we found no reportable
noncompliance for fiscal year 2023 with provisions of applicable laws, regulations, contracts, and
grant agreements we tested related to the Schedule of Federal Debt.
• We audited and expressed unmodified opinions on the U.S. Securities and Exchange
Commission’s (SEC) and its Investor Protection Fund’s (IPF) financial statements as of and for the
fiscal years ended September 30, 2023, and 2022. 32 We also reported that SEC maintained, in all
material respects, effective internal control over financial reporting for both the entity as a whole and
IPF as of September 30, 2023. In addition, we reported that we found no reportable noncompliance
for either SEC or IPF for fiscal year 2023 with provisions of applicable laws, regulations, contracts,
and grant agreements we tested.
• We audited and expressed an unmodified opinion on the Federal Housing Finance Agency’s
(FHFA) financial statements as of and for the fiscal years ended September 30, 2023, and 2022. 33
We also reported that although controls could be improved, FHFA maintained, in all material
respects, effective internal control over financial reporting as of September 30, 2023. In addition, we
28GAO, Financial Audit: IRS’s FY 2023 and FY 2022 Financial Statements, GAO-24-106472 (Washington, D.C.: Nov. 9, 2023).
29GAO, Financial Audit: Bureau of the Fiscal Service’s FY 2023 and FY 2022 Schedules of Federal Debt, GAO-24-106340
(Washington, D.C.: Nov. 9, 2023).
30Debt held by the public on the Schedules of Federal Debt represents federal debt that Treasury issued and that is held by
investors outside of the federal government, including individuals, corporations, state or local governments, the Federal
Reserve, and foreign governments.
31Intragovernmental debt holdings represent federal debt that Treasury owes to federal government accounts, primarily federal
trust funds, such as those established for Social Security and Medicare.
32GAO, Financial Audit: Securities and Exchange Commission’s FY 2023 and FY 2022 Financial Statements, GAO-24-106578
33GAO, Financial Audit: Federal Housing Finance Agency’s FY 2023 and FY 2022 Financial Statements, GAO-24-106668
reported that we found no reportable noncompliance for fiscal year 2023 with provisions of
applicable laws, regulations, contracts, and grant agreements we tested.
• We audited and expressed an unmodified opinion on the Office of Financial Stability’s (OFS)
financial statements for the Troubled Asset Relief Program (TARP) as of and for the fiscal years
ended September 30, 2023, and 2022. 34 We also reported that OFS maintained, in all material
respects, effective internal control over financial reporting for TARP as of September 30, 2023. In
addition, we reported that we found no reportable noncompliance for fiscal year 2023 with
provisions of applicable laws, regulations, contracts, and grant agreements we tested. This was our
15th and final financial statement audit of TARP. As of September 30, 2023, all TARP programs
have closed, and there are no remaining troubled assets held by OFS.
• We audited and expressed an unmodified opinion on the Consumer Financial Protection Bureau’s
(CFPB) financial statements as of and for the fiscal years ended September 30, 2023, and 2022. 35
We also reported that CFPB maintained, in all material respects, effective internal control over
financial reporting as of September 30, 2023. In addition, we reported that we found no reportable
noncompliance for fiscal year 2023 with provisions of applicable laws, regulations, contracts, and
grant agreements we tested.
• We audited and expressed a disclaimer of opinion on the Schedules of the General Fund of the
U.S. Government as of and for the fiscal year ended September 30, 2022. 36 Underlying scope
limitations, which were the basis for our disclaimer of opinion on the Schedules of the General
Fund, related to readily (1) identifying and tracing General Fund transactions to determine whether
they were complete and properly recorded in the correct general ledger accounts and line items
within the Schedules of the General Fund and (2) providing documentation to support the account
attributes assigned to Treasury Account Symbols that determine how transactions are reported in
the Schedules of the General Fund. The Schedules of the General Fund as of and for the fiscal
year ended September 30, 2023, were not audited to allow Treasury time to develop and implement
a remediation plan to address the issues we identified as part of our audit of the fiscal year 2022
Schedules of the General Fund.
We performed work related to Treasury’s processes and controls used to prepare the consolidated
We considered the significant entities’ fiscal years 2023 and 2022 financial statements and the related
auditors’ reports that the inspectors general or independent public accountants prepared. We did not
audit, and we do not express an opinion on, any of these individual federal entity financial statements.
We considered the disclaimers of opinion that the Department of Defense (DOD) Office of Inspector
General (OIG) issued on DOD’s department-wide financial statements as of and for the fiscal years
34GAO, Financial Audit: Office of Financial Stability’s (Troubled Asset Relief Program) FY 2023 and FY 2022 Financial
Statements, GAO-24-106814 (Washington, D.C.: Nov. 9, 2023).

35GAO, Financial Audit: Consumer Financial Protection Bureau’s FY 2023 and FY 2022 Financial Statements, GAO-24-
106737 (Washington, D.C.: Nov. 15, 2023).
36The General Fund of the U.S. Government is a component of Treasury’s central accounting function. It is a stand-alone
reporting entity that comprises the activities fundamental to funding the federal government (e.g., issued budget authority,
cash activity, and debt financing activities). See GAO, Financial Audit: Bureau of the Fiscal Service’s FY 2022 Schedules of
the General Fund, GAO-23-104786 (Washington, D.C.: Mar. 30, 2023).
ended September 30, 2023, and 2022. 37 The disclaimers of opinion were partially based on the
disclaimers of opinion for multiple DOD components, including the Army, Navy, Air Force, Defense
Health Program, Defense Logistics Agency, U.S. Special Operations Command, and U.S.
Transportation Command. DOD OIG also reported material weaknesses in internal control over
financial reporting (28 in both fiscal year 2023 and fiscal year 2022), including those related to (1)
property, plant, and equipment; (2) inventory and related property; (3) environmental and disposal
liabilities; (4) disbursement activity; (5) intragovernmental transactions; and (6) information system
controls.
We considered the disclaimers of opinion that the Small Business Administration’s (SBA) auditor issued
on SBA’s balance sheets as of September 30, 2023, and 2022 (its remaining statements were
unaudited). 38 The disclaimers of opinion were based on SBA’s inability to provide adequate evidential
matter in support of a significant number of transactions and account balances related to COVID-19
relief programs, such as the Paycheck Protection Program and the COVID-19 Economic Injury Disaster
Loan program, because of inadequate processes and controls. SBA’s auditor also reported six material
weaknesses in internal control over financial reporting in fiscal years 2023 and 2022, largely because of
deficiencies related to COVID-19 relief programs.
We considered the disclaimers of opinion that the Department of Education’s auditor issued on the
department’s balance sheet as of September 30, 2023 (its remaining statements were unaudited), and
its financial statements as of and for the fiscal year ended September 30, 2022. 39 The disclaimers of
opinion were based on Education’s inability to provide adequate evidential matter to support certain key
assumptions used to estimate the cost of its student loan programs. Education’s auditor reported a
material weakness in internal control over financial reporting in fiscal years 2023 and 2022 related to
loans receivable and loan guarantees.
Our audit approach for the 2023 and 2022 Statements of Long-Term Fiscal Projections focused
primarily on determining whether the information relating to the Statements of Social Insurance is
properly reflected therein and testing the methodology used, as well as evaluating key assumptions.
We also evaluated whether the internal control deficiencies related to the accrual-based consolidated
financial statements affected certain key inputs used in generating the projections.
Because of the significance of the amounts presented in the Statements of Social Insurance and
Statements of Changes in Social Insurance Amounts related to the Social Security Administration
(SSA) and the Department of Health and Human Services (HHS), our audit approach regarding these
statements focused primarily on reviewing audit work performed with respect to these two federal
entities. For each federal entity preparing a Statement of Social Insurance and Statement of Changes
in Social Insurance Amounts, 40 we considered the entity’s 2023, 2022, 2021, 2020, and 2019
Statements of Social Insurance and the 2023 and 2022 Statements of Changes in Social Insurance
Amounts, as well as the related auditor’s reports that the inspectors general or independent public
accountants prepared. This included considering the disclaimers of opinion that HHS’s auditor issued
37Department of Defense, United States Department of Defense Agency Financial Report for Fiscal Year 2023 (Arlington, Va.:
Nov. 15, 2023).
Small Business Administration, Agency Financial Report for Fiscal Year 2023 (Washington, D.C.: Nov. 15, 2023), and
38
Agency Financial Report for Fiscal Year 2022 (Washington, D.C.: Nov. 15, 2022).
39Department of Education, Agency Financial Report for Fiscal Year 2023 (Washington, D.C.; Nov. 16, 2023), and Agency
Financial Report for Fiscal Year 2022 (Washington, D.C.; Jan. 23, 2023).
40These entities are SSA, HHS, the Railroad Retirement Board, and the Department of Labor.
on the department’s 2023, 2022, 2021, 2020, and 2019 Statements of Social Insurance and 2023 and
2022 Statements of Changes in Social Insurance Amounts.
We performed sufficient audit work to provide our reports on (1) the consolidated financial statements;
(2) internal control over financial reporting; and (3) compliance with selected provisions of applicable
laws, regulations, contracts, and grant agreements. We considered the limitations on the scope of our
work regarding the accrual-based consolidated financial statements and the sustainability financial
statements in forming our conclusions. We performed our work in accordance with U.S. generally
accepted government auditing standards.
Appendix II
Material Weaknesses Contributing to Our Disclaimer of Opinion on the Accrual-Based

Consolidated Financial Statements
This appendix describes material weaknesses that contributed to our disclaimer of opinion on the U.S.
government’s accrual-based consolidated financial statements and highlights the primary effects of
these material weaknesses on the accompanying accrual-based consolidated financial statements, the
sustainability financial statements, and the management of federal government operations. 41 The
federal government did not have sufficient appropriate evidence to support information reported in the
accompanying accrual-based consolidated financial statements, as described below.
Property, Plant, and Equipment and Inventories and Related Property
The federal government could not satisfactorily determine that property, plant, and equipment (PP&E)
and inventories and related property were properly reported in the accrual-based consolidated financial
statements. Most of the PP&E and inventories and related property are the responsibility of the
Department of Defense (DOD). As in past years, DOD did not maintain adequate systems or have
sufficient records to provide reliable information on these assets. Certain other entities’ auditors
reported continued deficiencies in internal control procedures and processes related to PP&E.
Deficiencies in internal control over PP&E and inventories and related property could affect the federal
government’s ability to fully know the assets it owns, including their location and condition. They can
also affect the government’s ability to effectively (1) safeguard assets from physical deterioration, theft,
or loss; (2) account for acquisitions and disposals of such assets and reliably report asset balances; (3)
ensure that these assets are available for use when needed; (4) prevent unnecessary storage and
maintenance costs or purchase of assets already on hand; and (5) determine the full costs of programs
that use these assets.
Loans Receivable and Loan Guarantees
The federal government could not reasonably estimate or adequately support amounts of loans
receivable and loan guarantees, most notably at the Small Business Administration (SBA) and
Department of Education. The auditor of SBA, which had substantial activity related to the COVID-19
pandemic response, reported internal control deficiencies related to SBA’s implementation of provisions
in the CARES Act and related COVID-19 relief laws. SBA’s auditor reported several material
weaknesses in internal control related to the Paycheck Protection Program (PPP) and COVID-19
Economic Injury Disaster Loan program. In addition, the auditor reported that SBA did not properly
design and implement effective entity-level controls, such as risk assessment and monitoring controls
that produce reliable and accurate financial reporting.
The auditor of Education continued to report a material weakness related to the department’s controls
over the data used for estimating the costs of its loan and loan guarantee programs. For example,
Education did not design and implement sufficient controls over the relevance and reliability of certain
data used to develop key assumptions in its estimate of the student loan program costs. In addition, an
internal control deficiency related to loan guarantees continued to exist at the Department of Veterans
Affairs.
41The material weakness related to the Reconciliations of Budget Deficit to Net Operating Cost and Changes in Cash Balance
also contributed to our disclaimer of opinion on the 2023 and 2022 Statements of Long-Term Fiscal Projections.
These deficiencies, and the complexities associated with accounting and reporting for loan and loan
guarantee programs, significantly increase the risk that misstatements in federal entity and
government-wide financial statements could occur and go undetected. Further, these deficiencies can
adversely affect the entities’ ability to support annual budget requests for these programs, make future
budgetary decisions, manage program costs, and measure the performance of lending activities.
Liabilities and Commitments and Contingencies
The federal government could not reasonably estimate or adequately support amounts reported for
certain liabilities. For example, DOD’s auditor was not able to substantiate the completeness and
accuracy of DOD’s environmental and disposal liabilities. In addition, DOD’s auditor reported that DOD
could not support a significant amount of its estimated military postretirement health benefits liabilities
included in federal employee and veteran benefits payable. These unsupported amounts relate to the
cost of direct health care that DOD-managed military treatment facilities provided. In addition, auditors
reported internal control deficiencies at several other federal entities that related to material liabilities.
Further, the federal government could not determine whether commitments and contingencies,
including any related to treaties and other international agreements, were complete and properly
reported.
Problems in accounting for liabilities could affect the federal government’s ability to determine the full
cost of the federal government’s current operations and the extent of its liabilities. Also, deficiencies in
internal control related to estimating environmental and disposal liabilities could result in improperly
stated liabilities. They also could adversely affect the federal government’s ability to determine priorities
for cleanup and disposal activities and to appropriately consider future budgetary resources needed to
carry out these activities. In addition, to the extent disclosures of commitments and contingencies are
incomplete or incorrect, reliable information is not available about the extent of the federal
government’s obligations.
Cost of Government Operations and Disbursement Activity
Reported net cost was affected by the other material weaknesses that contributed to our disclaimer of
opinion on the accrual-based consolidated financial statements. As a result, the federal government
was unable to support significant portions of the reported total net cost of operations, most notably
those related to DOD, SBA, and Education.
With respect to disbursements, auditors of DOD and certain other federal entities reported (1)
continuing control deficiencies in reconciling disbursement activity between federal entities’ and the
Department of the Treasury’s records of disbursements and (2) unsupported federal entity adjustments,
which could also affect the balance sheet.
Unreliable cost information affects the federal government’s ability to control and reduce costs, assess
performance, evaluate programs, and set fees to recover costs where required or authorized.
Improperly recorded disbursements could result in misstatements in the financial statements and in
certain data that federal entities provide for inclusion in the President’s Budget concerning obligations
and outlays.
Intragovernmental Activity and Balances
Significant progress has been made over the past several years, but the federal government continues
to be unable to adequately account for intragovernmental activity and balances between federal
entities. Federal entities are responsible for properly accounting for and reporting their
intragovernmental activity and balances in their entity financial statements. When preparing the
consolidated financial statements, intragovernmental activity and balances between federal entities
should be in agreement and must be subtracted out, or eliminated, from the financial statements. If the
two federal entities engaged in an intragovernmental transaction do not both record the same
intragovernmental transaction in the same year and for the same amount, the intragovernmental
transactions will not be in agreement and, if not properly resolved, would result in misstatements (i.e.,
differences or unmatched amounts) in the consolidated financial statements.
The Office of Management and Budget (OMB) and Treasury have issued guidance directing
component entities to reconcile intragovernmental activity and balances with their trading partners and
resolve identified differences. In addition, the guidance directs the chief financial officers (CFO) of
significant component entities to report to Treasury, their respective inspectors general, and GAO on
the extent and results of their intragovernmental activity and balance reconciliation efforts as of the end
of the fiscal year.
To support this process during fiscal year 2023, Treasury continued to provide information and
assistance to significant component entities to aid in resolving their intragovernmental differences.
Treasury also issued additional guidance to entities for specific types of trading partner transactions. In
addition, Treasury’s quarterly scorecard process highlights differences needing the entities’ attention, 42
identifies differences that need to be resolved through a formal dispute resolution process, 43 and
reinforces the entities’ responsibilities to resolve intragovernmental differences. Treasury continued to
identify and monitor systemic root causes of intragovernmental differences and related corrective action
plans. Treasury determines intragovernmental differences by comparing summarized
intragovernmental balances that each component entity reports. In fiscal year 2023, Treasury was able
to work with component entities to reduce intragovernmental differences to amounts Treasury
determined were immaterial to the consolidated financial statements. Treasury recorded an adjustment
to remove the remaining differences with an offsetting adjustment to net cost.
While progress was made, auditors for several significant component entities continued to report that
the entities did not have effective processes for reconciling intragovernmental activity and balances with
their trading partners. 44 In fiscal year 2023, auditors reported that several component entities could not
accurately identify all intragovernmental transactions and were unable to fully reconcile
intragovernmental transactions with their trading partners. For example, DOD’s auditor reported that
DOD, which has a substantial amount of intragovernmental activity and balances, did not have
accounting systems that were able to capture the trading partner data required to eliminate
intradepartmental and intragovernmental transactions, which resulted in a risk of material
misstatements. In addition, other material weaknesses reported by DOD’s auditor could contribute to
this material weakness. Such weaknesses could result in material misstatements in the component
entities’ intragovernmental balances reported to Treasury.
42Treasury produces a quarterly scorecard for each significant entity, as well as any other component entity reporting
significant intragovernmental balances or differences, that reports various aspects of each entity’s intragovernmental
differences with its trading partners, including the composition of the differences by trading partner and category. Pursuant to
Treasury guidance, entities are expected to resolve, with their respective trading partners, the differences identified in their
scorecards.
43When an entity and its respective trading partner cannot resolve an intragovernmental difference, Treasury guidance directs
the entity to request that Treasury resolve the dispute. Treasury will review the dispute and issue a decision on how to resolve
the difference, which the entities must follow.
44Key entities contributing to the material weakness for intragovernmental activity and balances include the Department of
Defense, Department of Veterans Affairs, Department of State, and Security Assistance Accounts.
These internal control deficiencies over intragovernmental activity and balances at the component
entities could result in material misstatements in the accrual-based consolidated financial statements
due to (1) unresolved differences in component entity intragovernmental activity and balances at the
transaction level and (2) misstatements in the summarized intragovernmental information reported to
Treasury. Also, intragovernmental differences in the summarized intragovernmental information
reported to Treasury could result in the need for Treasury to record material unmatched transactions
and balances to balance the consolidated financial statements. Addressing these deficiencies remain a
difficult challenge and will require federal entities’ strong and sustained commitment to resolving
differences with their trading partners timely, as well as Treasury’s and OMB’s continued strong
leadership.
Preparation of Consolidated Financial Statements
Treasury, in coordination with OMB, implemented corrective actions in recent years related to
deficiencies in the preparation of the consolidated financial statements. Corrective actions included
improving systems and implementing new processes for preparing the consolidated financial
statements, enhancing guidance for collecting data from component entities, and implementing
procedures to address certain previously issued internal control deficiencies. 45 However, the federal
government’s systems, controls, and procedures were not adequate to reasonably assure that the
consolidated financial statements are consistent with the underlying audited entity financial statements,
properly balanced, and in accordance with U.S. generally accepted accounting principles (U.S. GAAP).
During our fiscal year 2023 audit, deficiencies in the preparation of the consolidated financial
statements included the following.
• For fiscal year 2023, auditors reported internal control deficiencies at several component entities
related to their entity-level controls, including the control environment, risk assessment, information
and communication, and monitoring components of internal control, that could affect Treasury’s
ability to obtain reliable financial information from federal entities for consolidation. For example,
DOD and SBA reported material weaknesses in entity-level controls.
• For fiscal year 2023, auditors reported internal control deficiencies at several component entities
related to the entities’ financial reporting processes that could affect information included in the
consolidated financial statements. For example, DOD could not demonstrate that its financial
statements were consistent with underlying records.
• While Treasury, working with component entities, was able to reduce intragovernmental differences
in fiscal year 2023 to an immaterial amount based on component entities reported data, the
intragovernmental material weakness discussed above continued to impair Treasury’s ability to
properly balance the consolidated financial statements. Intragovernmental differences in the
summarized intragovernmental information reported to Treasury could result in the need for
Treasury to record material unmatched transactions and balances to balance the consolidated
• Over the past several years, Treasury has taken significant actions to work toward reporting and
disclosing financial information in the consolidated financial statements in accordance with U.S.
GAAP. For example, Treasury has developed and improved U.S. GAAP compliance operating
procedures and checklists. Also, Treasury, along with the Department of State, issued guidance to
45In August 2023, we reported on the status of the issues we identified to Treasury and OMB and provided recommendations
for corrective action. See GAO, U.S. Consolidated Financial Statements: Improvements Needed in Internal Controls over
Treasury and OMB Preparation Processes, GAO-23-106707 (Washington, D.C.: Aug. 15, 2023).
federal entities and formed a working group that is implementing a multiphase methodology to
review treaties and other international agreements for potential contingencies.
However, Treasury’s reporting of certain financial information required by U.S. GAAP continues to
be impaired. Because of certain control deficiencies noted in this audit report, Treasury cannot
determine if the disclosures in the consolidated financial statements are in accordance with U.S.
GAAP. In addition, Treasury did not have adequate policies and procedures to reasonably assure
appropriate accounting and reporting for significant, unusual transactions or events, such as the
Special Financial Assistance (SFA) program established by the American Rescue Plan Act of
2021. 46 Further, Treasury’s ability to report information in accordance with U.S. GAAP will also
remain impaired until federal entities can provide Treasury with the complete and reliable
information required to be reported in the consolidated financial statements.
In fiscal year 2023, Treasury continued to take corrective actions intended to resolve internal control
deficiencies in the processes used to prepare the consolidated financial statements. For example,
Treasury enhanced procedures for (1) considering the impact of amounts and information not obtained
from significant component entities’ audited financial statements on the reliability of the consolidated
financial statements and (2) reviewing significant component entity data submissions. In addition,
Treasury and OMB continued to enhance guidance for component entity financial reporting.
However, until these deficiencies have been fully addressed, the federal government’s ability to
reasonably assure that the consolidated financial statements are consistent with the underlying audited
federal component entities’ financial statements, properly balanced, and in accordance with U.S. GAAP
will be impaired. It is important that Treasury (1) continues to improve its systems and processes and
(2) remains committed to maintaining the progress that has been made in this area and building on that
progress to make needed improvements that fully address the magnitude of the financial reporting
challenges it faces. Resolving the remaining internal control deficiencies continues to be a difficult
challenge and will require a strong and sustained commitment from Treasury, OMB, and federal
entities.
Reconciliations of Budget Deficit to Net Operating Cost and Changes in Cash Balance
The Reconciliations of Net Operating Cost and Budget Deficit and the Statements of Changes in Cash
Balance from Budget and Other Activities (Reconciliation Statements) reconcile (1) the accrual-based
net operating cost to the primarily cash-based budget deficit and (2) the budget deficit to changes in
cash balances. The budget deficit is calculated by subtracting actual budget outlays (outlays) from
actual budget receipts (receipts). 47 The outlays and receipts are key inputs to the Statements of Long-
Term Fiscal Projections.
Treasury continued to develop its process for preparing the Reconciliation Statements. One of the two
Schedules of the General Fund of the U.S. Government provides information supporting the
46Pub. L. No. 117-2, § 9704, 135 Stat. 4, 190-99 (Mar. 11, 2021), classified at 29 U.S.C. §§ 1305(i), 1432. The American
Rescue Plan Act of 2021 established the SFA program to provide payments to eligible multiemployer pension plans to enable
them to pay benefits at plan levels through 2051.
47The budget deficit, receipts, and outlays amounts are reported in Treasury’s Monthly Treasury Statement and the President’s
Budget.
Statements of Changes in Cash Balance from Budget and Other Activities. 48 Treasury continued to
coordinate with federal entities on the implementation of newly developed transaction codes designed
to improve the accounting for and reporting of General Fund transactions and balances that Treasury
uses to compute the budget deficit reported in the Reconciliation Statements.
However, as of the end of fiscal year 2023, Treasury’s processes and procedures for preparing the
Reconciliation Statements were not effective in (1) identifying and reporting all the items in the
Reconciliation Statements, (2) properly supporting amounts used in calculating the budget deficit, and
(3) reasonably assuring that the information in these statements was fully consistent with the underlying
information in the significant component entities’ audited financial statements and other financial data.
For example, as reported in our disclaimer of opinion on the fiscal year 2022 Schedules of the General
Fund, Treasury was unable to readily provide sufficient appropriate evidence to support certain
information reported in the Schedules of the General Fund. 49 Such limitations primarily related to readily
identifying and tracing transactions to determine whether they were complete and properly recorded in
the Schedules of the General Fund. Specifically, certain amounts are netted and recorded at a
summarized level, thus preventing Treasury from readily obtaining the necessary details, at the
transaction level, to support financial reporting for certain line items in the Statements of Changes in
Cash Balance from Budget and Other Activities.
In addition, in fiscal year 2023, as in prior years, we noted that several entities’ auditors reported
internal control deficiencies related to monitoring, accounting, reconciliation, and reporting of budgetary
transactions, including deficiencies related to federal entities’ budget and accrual reconciliations. 50
These control deficiencies could affect the reporting and calculation of the net outlay amounts in the
entities’ Statements of Budgetary Resources. Such deficiencies may also affect the entities’ ability to
report reliable budgetary information to Treasury and OMB and may affect the budget deficit reported in
the Reconciliation Statements. Treasury also reports the budget deficit in its Combined Statement of
Receipts, Outlays, and Balances and in other federal government publications. 51
These internal control deficiencies related to the Reconciliation Statements could result in
misstatements that are material to the accrual-based consolidated financial statements. Resolving
these deficiencies continues to be a difficult challenge and will require a strong and sustained
commitment from Treasury, OMB, and federal entities.
48The General Fund is a component of Treasury’s central accounting function. It is a stand-alone reporting entity that
comprises the activities fundamental to funding the federal government (e.g., issued budget authority, cash activity, and debt
financing activities).
49GAO, Financial Audit: Bureau of the Fiscal Service’s FY 2022 Schedules of the General Fund, GAO-23-104786
(Washington, D.C.: Mar. 30, 2023). The fiscal year 2023 Schedules of the General Fund were not audited to allow Treasury
time to continue to implement a remediation plan to address the issues we reported as part of our disclaimer of opinion on the
fiscal year 2022 Schedules of the General Fund.
50Statement of Federal Financial Accounting Standards (SFFAS) 53, Budget and Accrual Reconciliation: Amending SFFAS 7,
and 24, and Rescinding SFFAS 22, became effective for periods beginning after September 30, 2018, and provides for the
budget and accrual reconciliation to replace the statement of financing. The reconciliation explains the relationship between an
entity’s net outlays on a budgetary basis and its net cost of operations during the period.
51Treasury’s Combined Statement of Receipts, Outlays, and Balances presents budget results and cash-related assets and
liabilities of the federal government with supporting details. According to Treasury, this report is the recognized official
publication of receipts and outlays of the federal government based on entity reporting.
Appendix III
Other Material Weaknesses
Material weaknesses in internal control discussed in this audit report resulted in ineffective controls
over financial reporting. In addition to the material weaknesses discussed in appendix II that contributed
to our disclaimer of opinion on the U.S. government’s accrual-based consolidated financial statements,
we found two other continuing material weaknesses in internal control. This appendix describes these
weaknesses and highlights their primary effects on the accrual-based consolidated financial statements
and on the management of federal government operations.
Improper Payments
We have reported improper payments—payments that should not have been made or that were made
in an incorrect amount—as a material deficiency or material weakness in internal control in our audit
reports on the U.S. government’s consolidated financial statements since fiscal year 1997. 52 The
federal government is unable to determine the full extent to which improper payments occur and
reasonably assure that appropriate actions are taken to reduce them. Reducing improper payments is
critical to safeguarding federal funds. The Payment Integrity Information Act of 2019 (PIIA) 53 requires
federal executive agencies 54 to do the following:
1. Review all programs and activities.

2. Identify those that may be susceptible to significant improper payments.
3. Estimate the annual amount of improper payments for those programs and activities identified as
susceptible to significant improper payments.
4. Implement actions to reduce improper payments and set reduction targets with respect to the risk-
susceptible programs and activities.
5. Report on the results of addressing the foregoing requirements. 55
Fourteen agencies reported improper payment estimates totaling about $236 billion for fiscal year 2023,
based on improper payment estimates reported individually for 71 federal programs or activities on
www.PaymentAccuracy.gov. 56 Most of the estimate was concentrated in the following areas:
Department of Health and Human Services’ (HHS) Medicare, consisting of three programs ($51.2
52Under the Payment Integrity Information Act of 2019 (PIIA), Pub. L. No. 116-117, 134 Stat. 113 (Mar. 2, 2020), an improper
payment is defined as any payment that should not have been made or that was made in an incorrect amount (including
overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements. It
includes any payment to an ineligible recipient, any payment for an ineligible good or service, any duplicate payment, any
payment for a good or service not received (except for such payments where authorized by law), and any payment that does
not account for credit for applicable discounts. See 31 U.S.C. § 3351(4). PIIA also provides that when an executive agency’s
review is unable to discern whether a payment was proper as a result of insufficient or lack of documentation, this payment
must also be included in the improper payment estimate. 31 U.S.C. § 3352(c)(2).
53PIIA, codified at 31 U.S.C. §§ 3351-58.
54ForPIIA purposes, executive agency means a department, an agency, or an instrumentality in the executive branch of the
United States government. 31 U.S.C. § 102.
55See 31 U.S.C. § 3352.
56An official U.S. government website managed by Office of Management and Budget (OMB), www.PaymentAccuracy.gov
contains, among other things, information about current and historical rates and amounts of estimated improper payments.
billion); 57 HHS’s Medicaid ($50.3 billion); and Department of Labor’s Unemployment Insurance –
Federal Pandemic Unemployment Assistance ($43.6 billion).
The fiscal year 2023 government-wide total of reported estimated improper payments, among programs
and activities that reported estimates, decreased by about $11 billion from the fiscal year 2022
estimated total of about $247 billion. The specific programs and activities included in the government-
wide total of reported improper payment estimates may change from year to year. While increases in
estimated improper payments were reported for several programs and activities, these were more than
offset by decreases for certain other programs and activities. For example, HHS reported a decrease of
about $30 billion in estimated improper payments for Medicaid in fiscal year 2023. According to HHS,
this decrease was due to (1) certain flexibilities afforded to states during the COVID-19 pandemic, such
as postponed eligibility determinations and reduced requirements around provider enrollment or
revalidations, and (2) improved state compliance with Medicaid requirements.
It is important to note that reported improper payment estimates include overpayments,

underpayments, and payments for which the agency could not find sufficient documentation. Estimates
may also be based on payment data and sampling drawn from periods that do not coincide with the
fiscal year for which the estimates are reported. Federal agencies reported about 74 percent of the
government-wide estimate as overpayments.
The $236 billion of reported improper payment estimates for fiscal year 2023 does not include
estimates of certain risk-susceptible programs. For example, HHS’s Temporary Assistance for Needy
Families program did not have an estimate of improper payments for fiscal year 2023.
While all fraudulent payments are considered improper, not all improper payments are due to fraud. 58
Also, the improper payment estimation process is not designed to detect or measure the amount of
fraud that may exist. For example, improper payment estimates may not fully incorporate fraud that
involves sophisticated fraud schemes, collusion, document falsification, or false statements (e.g.,
especially where an agency relies on an applicant’s self-certification for eligibility of payments).
Although challenging to develop, specific estimates of fraud in a program can provide valuable
information for improving fraud risk management. PIIA includes certain requirements related to fraud
risk management. 59
If an agency’s inspector general determines that the entity is not in compliance with certain criteria
listed in PIIA, such as maintaining an estimated improper payment rate of less than 10 percent for all
risk-susceptible programs and activities, that agency must submit a plan to Congress describing the
actions it will take to come into compliance. For fiscal year 2023, agencies reported estimated improper
payment rates of 10 percent or greater for 16 risk-susceptible programs and activities, 60 which
collectively account for about 46 percent of the government-wide total of reported estimated improper
payments. Additionally, the Office of Management and Budget (OMB) reported that 25 percent of
agencies were not in compliance with PIIA criteria for fiscal year 2022, the latest year for the inspector
general compliance reports.
57The Medicare program consists of the Fee-For-Service, Part C, and Part D programs.
58GAO, Improper Payments and Fraud: How They Are Related but Different, GAO-24-106608 (Washington, D.C.: Dec. 7,
2023).
59See 31 U.S.C. § 3357.
60The improper payment rate reflects the estimated improper payments as a percentage of total annual outlays.
Further, agency auditors continued to report internal control deficiencies over financial reporting in their
fiscal year 2023 financial statement audit reports, such as financial system limitations and information
system control weaknesses. Such deficiencies could significantly increase the risk that improper
payments may occur and not be detected promptly.
The fiscal year 2023 President’s Budget included program integrity proposals at multiple agencies
aimed at reducing improper payments. 61 Also, efforts continue to implement PIIA requirements to better
identify and prevent improper payments, waste, fraud, and abuse, as well as to recover overpayments.
In addition, the statutory Do Not Pay initiative under PIIA requires agencies to review prepayment and
pre-award procedures and ensure a thorough review of available databases to determine program or
award eligibility before the release of any federal funds. PIIA also directs OMB to annually identify a list
of high-priority federal programs for greater levels of oversight and review and requires each agency
responsible for administering one of these high-priority programs to submit a program report to its
inspector general annually and make the report available to the public. 62
Until the federal government has implemented effective processes to determine the full extent to which
improper payments occur and has taken appropriate actions across agencies, programs, and activities
to effectively reduce improper payments, it will not have reasonable assurance that the use of federal
funds is adequately safeguarded.
Information System Controls
We have reported information security (controls in information systems) as a government-wide material

weakness since fiscal year 1997. 63 During our fiscal year 2023 audit, we found that serious and
widespread information system control deficiencies continued to place the federal government at risk of
inadvertent or deliberate misuse of federal assets, unauthorized modification or destruction of financial
information, inappropriate disclosure of sensitive information, and disruption of critical operations.
Thirteen of the 24 agencies covered by the Chief Financial Officers Act of 1990 reported material
weaknesses or significant deficiencies in information system controls. Specifically, auditors identified
control deficiencies related to (1) security management; (2) access to computer data, equipment, and
facilities; (3) changes to and configuration of information system resources; (4) segregation of
incompatible duties; and (5) contingency planning.
Most of the significant component entities that reported information system controls as a material
weakness or significant deficiency for fiscal year 2023 identified weaknesses related to security
management, access controls, configuration management, or combinations thereof. Security
management is the foundation of a security-control structure and reflects senior management’s
commitment to addressing security risks. Security management programs should provide a framework
and continuous cycle of activity for managing risk, developing and implementing effective security
policies, assigning responsibilities, and monitoring the adequacy of the entity’s information system
controls. Without a well-designed security management program, information system controls may be
61Office of Management and Budget, Budget of the United States Government, Fiscal Year 2023 (Washington, D.C.: Mar. 28,
2022).
62OMB has designated high-priority programs as those programs and activities with improper payment monetary loss (also
known as overpayments) estimates that exceed $100 million annually.
63Wehave also designated information security as a government-wide high-risk area since 1997. For more information, see
GAO, High-Risk Series: Efforts Made to Achieve Progress Need to Be Maintained and Expanded to Fully Address All Areas,
GAO-23-106203 (Washington, D.C.: Apr. 20, 2023).
inadequate; responsibilities may be unclear, misunderstood, or improperly implemented; and controls

may be inconsistently applied. In addition, such conditions may lead to insufficient protection of
sensitive or critical resources, improper or unauthorized changes to information systems, and
disproportionately low expenditures for controls over high-risk resources.
The emergence of increasingly sophisticated threats and the frequency of incidents underscores the
continuing and urgent need for effective information system controls. 64 In May 2023, OMB stated that
federal agencies reported 30,659 information security incidents 65 to the Department of Homeland
Security in fiscal year 2022. 66 In addition, OMB reported three major incidents, all involving personally
identifiable information, at the Departments of Agriculture, Education, and the Treasury. In March and
July 2023, the White House issued its National Cybersecurity Strategy and accompanying
implementation plan, respectively, to describe the administration’s plan for addressing the nation’s long-
standing cybersecurity challenges—including those pertaining to updating federal incident response
plans and processes. 67
Until federal entities strengthen security management programs and resolve reported information
system control deficiencies, the federal government will continue to be at increased risk of inadvertent
or deliberate misuse of federal assets, unauthorized modification or destruction of financial information,
inappropriate disclosure of sensitive information, and disruption of critical operations.
64See,for example, GAO, Cybersecurity: Federal Agencies Made Progress, but Need to Fully Implement Incident Response
Requirements, GAO-24-105658 (Washington, D.C.: Dec. 4, 2023).
65
A security (or cyber) incident is a security breach of an information system and information.
66Office
of Management and Budget, Federal Information Security Modernization Act of 2014 Annual Report Fiscal Year 2022
(Washington, D.C.: May 1, 2023).
67The White House, National Cybersecurity Strategy (Washington, D.C.: March 2023), and National Cybersecurity Strategy
Implementation Plan (Washington, D.C.: July 2023).

Appendix IV
Significant Deficiencies
In addition to the material weaknesses discussed in appendixes II and III, we found three significant
deficiencies in the federal government’s internal control related to maintaining effective internal controls
at certain federal entities, as described below.
Taxes Receivable
During fiscal year 2023, a significant deficiency continued to affect the federal government’s ability to
manage its taxes receivable effectively. While the Department of the Treasury’s Internal Revenue
Service (IRS) made necessary and appropriate adjustments derived from a statistical estimation
process to correct its financial statements, IRS’s underlying records did not always reflect the correct
amount of taxes owed to the federal government because of financial system limitations and other
control deficiencies that led to errors in taxpayers’ accounts. Such inaccurate tax records impair
management’s ability to effectively manage taxes receivable throughout the year and place an undue
burden on taxpayers, who may be compelled to respond to IRS inquiries caused by errors in taxpayer
accounts.
Federal Grants Management
In fiscal year 2023, several federal entities’ auditors continued to identify internal control deficiencies
related to grants management. 68 Reported deficiencies primarily related to accounting for grants,
monitoring of grant activities, and estimating grant accruals. These internal control deficiencies could
adversely affect the federal government’s ability to provide reliable financial statements as well as
reasonable assurance that grants are awarded properly, recipients are eligible, and federal grant funds
are used as intended.
Medicare Social Insurance Information
In fiscal year 2023, auditors for the Department of Health and Human Services (HHS) continued to
identify internal control deficiencies in certain controls related to the sufficiency of the review of
methodologies and related calculations and estimates that HHS used to prepare its Statement of Social
Insurance for the Medicare program. Specifically, HHS’s auditor identified formula errors in certain
spreadsheets used to prepare the Statement of Social Insurance that HHS’s monitoring and review
function did not detect. Such control deficiencies could result in misstatements to the Statement of
Social Insurance.
68Keyentities contributing to the significant deficiency for federal grants management include the Small Business
Administration, Department of Health and Human Services, and Department of Housing and Urban Development.

02-15-2024-FR-(Final)

Uploaded by

Copyright:

Available Formats

02-15-2024-FR-(Final)

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

02-15-2024-FR-(Final)

Uploaded by

Copyright:

Available Formats

DEPA RTMENT OF THE TREASURY

February 15, 2024

A Message from the Secretary of the Treasury

Notes to the Financial Statements

Required Supplementary Information (Unaudited)

Other Information (Unaudited)

U.S. Government Accountability Office Independent Auditor’s Report...... 218

For a complete listing of frequently used acronyms found

Executive Summary to the FY 2023

Where We Are Now

Comparing the Budget and the Financial Report

Costs and Revenues

Assets and Liabilities

Key Economic Trends

An Unsustainable Fiscal Path

Receipts, Spending, and the Debt

Reporting on Climate Change

Find Out More

This page is intentionally blank.

MANAGEMENT’S DISCUSSION AND

Mission & Organization

LEGISLATIVE BRANCH EXECUTIVE BRANCH JUDICIAL BRANCH

CHIEF FINANCIAL OFFICERS ACT AGENCIES (24)

DEPARTMENT OF AGRICULTURE DEPARTMENT OF TRANSPORTATION

SIGNIFICANT CONSOLIDATION ENTITIES (16)

EXPORT-IMPORT BANK OF THE U.S. PENSION BENEFIT GUARANTY CORPORATION

OTHER CONSOLIDATION ENTITIES LISTED IN APPENDIX A OF THIS FINANCIAL REPORT (126)

The Government’s Financial Position and Condition

FY 2023 Financial Statement Audit Results

Accounting Differences Between the Budget and the Financial

Budget of the U.S. Government Financial Report of the U.S. Government

Budget Deficit vs. Net Operating Cost

The Government’s Net Position: “Where We Are”

Tax and Other Revenues

The Economy in FY 2023

An Unsustainable Fiscal Path

Table 6 shows the

Table 8 identifies the principal

Reporting on Climate Change

Grants and Cooperative Agreements

Financial Management Systems

February 15, 2024

Progress in Federal Financial Management

Financial Management Challenges

Preparation Processes, GAO-23-106707 (Washington, D.C.: Aug. 15, 2023).

Unsustainable Long-Term Fiscal Path

cc: The Majority Leader of the Senate

ACCRUAL-BASED FINANCIAL STATEMENTS

Statements of Net Cost

Statements of Operations and Changes in Net Position

Net Cost of Government Operations

Net Operating Cost

Net Position, Beginning of Period

Net Position, End of Period

Reconciliations of Net Operating Cost and Budget Deficit

Components of Net Operating Cost Not Part of the Budget Deficit

Components of the Budget Deficit Not Part of Net Operating Cost

Statements of Changes in Cash Balance from Budget and Other

Liabilities and Net Position

SUSTAINABILITY FINANCIAL STATEMENTS