Implementing FY1986: Reductions: Balanced Budget and Emergency Deficit Control Act of 1985

In response to your request of April 17, 1986, the General Accounting Office (GAO) has reviewed the implementation in selected accounts of the changes specified in my January 21, 1986, report under the Balance Budget and Emergency Deficit Control Act of 1985 (Public Law 99-177). Our finding are summarized in the body of this letter; appendixes II through IV contain additional information about many of the specific accounts of interest to you. The objectives, scope, and methodology of our work are discussed in appendix V. Your request focused primarily on the application of the exemptions and special rules contained in sections 255 and 256 of the act, the pattern of reductions in certain grant programs to the states, and how reductions were achieved in those entitlement programs not having special rules. We found no significant problems in the way that the President's February 1,1986, order was implemented with respect to the special rules contained in section 256. We are aware, however, of two suits challenging the way that order dealt with various provisions of section 255. We found, despite numerous variations, that the reductions in the grant programs and those in most of the entitlement programs not having special rules were implemented in accordance with the act. In several cases, however, we found that sequestrations in special fund entitlement accounts were incorrectly made by reducing payments from fiscal 1985 budgetary resources.