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The following are the 20 notes to the principal financial statements:

Note 1. Summary of Significant Accounting Policies

A. Reporting Entity and Basis of Consolidation

The accompanying principal financial statements present the financial activities and position of the Department of State. The Statements include all General, Special, Revolving, Trust, and Deposit funds established at the Department of the Treasury (Treasury) to account for the resources entrusted to Department management, or for which the Department acts as a fiscal agent or custodian (except fiduciary funds, see Note 18).

Included in the Department’s reporting entity as a consolidation entity is the U.S. Section of the International Boundary and Water Commission (IBWC). Treaties in 1848, 1853, and 1970 established the boundary between the United States and Mexico that extends 1,954 miles, beginning at the Gulf of Mexico, following the Rio Grande a distance of 1,255 miles and eventually ending at the Pacific Ocean below California. Established in 1889, the IBWC has responsibility for applying the boundary and water treaties between the United States and Mexico and settling differences that may arise in their application. Additionally, the following organizations are consolidated in these financial statements: International Joint Commission, International Boundary Commission, and the International Center. The Department determined there are no disclosure entities to report.

Statement of Federal Financial Accounting Standards (SFFAS) No. 47, Reporting Entity, requires disclosure of significant Related Party relationships. Large international organizations, while not controlled by the United States, are often significantly influenced by the Government as defined in SFFAS No. 47. In many cases, the United States participates in the policy discussion of the organization through the United States’ involvement on boards and counsels. Note 10, International Organizations Liability, discusses the Department’s funding, payments, and open liabilities to these organizations.

The East-West Center (EWC) is a Congressionally-authorized non-profit organization dedicated to educational and policy engagement on substantive issues between the United States and the Asia Pacific region. Established by Congress in 1960, for more than 50 years the EWC has been promoting better relations and understanding among the people and nations of the United States, Asia, and the Pacific through cooperation study, research, and dialogue. Approximately half of EWC’s annual revenues comes from the Department which received an annual appropriation of $16.7 million for EWC in 2020. The EWC Board of Governors consists of 18 members including five appointed by the Secretary of State and the Assistant Secretary of State for Educational and Cultural Affairs.

The Department receives an annual appropriation and provides monies to several International Fisheries Commissions to fund the U.S. share of operating expenses for ten international fisheries commissions including the Great Lakes Fishery Commission, International Pacific Halibut Commission, and Pacific Salmon Commission. Each commission facilitates international cooperation by conducting and coordinating scientific studies of fish stocks and other marine resources and their habitats. Many also oversee the allocation of fishing rights to their members. Amounts provided maintain voting privileges and influence in the commissions and organizations to advance the economic and conservation interests of the United States. The Department provided approximately $62 million for the year ended September 30, 2020.

B. Basis of Presentation and Accounting

The statements are prepared as required by the Chief Financial Officers (CFO) Act of 1990, as amended by the Government Management Reform Act of 1994. They are presented in accordance with the form and content requirements of the Office of Management and Budget (OMB) Circular A-136, Financial Reporting Requirements, revised.

The statements have been prepared from the Department’s books and records, and are in accordance with the Department’s Accounting Policies (the significant policies are summarized in this Note). The Department’s Accounting Policies follow U.S. generally accepted accounting principles (GAAP) for Federal entities, as prescribed by the Federal Accounting Standards Advisory Board (FASAB). FASAB’s SFFAS No. 34, The Hierarchy of Generally Accepted Accounting Principles, Including the Application of Standards Issued by the Financial Accounting Standards Board, incorporates the GAAP hierarchy into FASAB’s authoritative literature.

Throughout the financial statements and notes, certain assets, liabilities, earned revenue, and costs have been classified as intragovernmental, which is defined as transactions made between two reporting entities within the Federal Government.

Transactions are recorded on both an accrual and budgetary basis. Under the accrual method of accounting, revenues are recognized when earned and expenses are recognized when incurred without regard to receipt or payment of cash. Budgetary accounting principles, on the other hand, are designed to facilitate compliance with legal requirements and controls over the use of Federal funds.

Accounting standards require all reporting entities to disclose that accounting standards allow certain presentations and disclosures to be modified, if needed, to prevent the disclosure of classified information.

Photo showing Secretary Pompeo delivering remarks virtually to the Global Business Alliance in Washington, D.C., September 10, 2020. [Department of State]

C. Revenues and Other Financing Sources

As a component of the Government-wide reporting entity, the Department is subject to the Federal budget process, which involves appropriations that are provided annually and appropriations that are provided on a permanent basis. The financial transactions that are supported by budgetary resources, which include appropriations, are generally the same transactions reflected in agency and the Government-wide financial reports.

The reporting entity’s budgetary resources reflect past congressional action and enable the entity to incur budgetary obligations, but they do not reflect assets to the Government as a whole. Budgetary obligations are legal obligations for goods, services, or amounts to be paid based on statutory provisions. After budgetary obligations are incurred, Treasury will make disbursements to liquidate the budgetary obligations and finance those disbursements in the same way it finances all disbursements, using some combination of receipts, other inflows, and borrowing from the public if there is a budget deficit.

Department operations are financed through appropriations, reimbursement for the provision of goods or services to other Federal agencies, proceeds from the sale of property, certain consular-related and other fees, and donations. In addition, the Department collects passport, visa, and other consular fees that are not retained by the Department but are deposited directly to a Treasury account. The passport and visa fees are reported as earned revenues on the Statement of Net Cost with offsetting non-entity collections in other financing sources on the Statement of Changes in Net Position.

Congress annually enacts one-year and multi-year appropriations that provide the Department with the authority to obligate funds within the respective fiscal years for necessary expenses to carry out mandated program activities. In addition, Congress enacts appropriations that are available until expended. All appropriations are subject to congressional restrictions and most appropriations are subject to OMB apportionment. For financial statement purposes, appropriations are recorded as a financing source (i.e., Appropriations Used) and reported on the Statement of Changes in Net Position at the time they are recognized as expenditures. Appropriations expended for capitalized property and equipment are recognized when the asset is purchased.

Work performed for other Federal agencies under reimbursable agreements is financed through the account providing the service and reimbursements are recognized as revenue when earned. Deferred revenue consists of monies received for goods and services that have not yet been provided or rendered by the Department. Administrative support services at overseas posts are provided to other Federal agencies through the International Cooperative Administrative Support Services (ICASS). ICASS bills for the services it provides to agencies at overseas posts. These billings are recorded as revenue to ICASS and must cover overhead costs, operating expenses, and replacement costs for capital assets needed to carry on the operation. Proceeds from the sale of real property, vehicles, and other personal property are recognized as revenue when the proceeds are credited to the account that funded the asset. For non-capitalized property, the full amount realized is recognized as revenue. For capitalized property, gain or loss is determined by whether the proceeds received were more or less than the net book value of the asset sold. The Department retains proceeds of sale, which are available for purchase of the same or similar category of property.

The Department is authorized to collect and retain certain user fees for machine-readable visas, expedited passport processing, and fingerprint checks on immigrant visa applicants. The Department is also authorized to credit the respective appropriations with (1) fees for the use of Blair House; (2) lease payments and transfers from the International Center Chancery Fees Held in Trust to the International Center Project; (3) registration fees for the Office of Defense Trade Controls; (4) reimbursement for international litigation expenses; and (5) reimbursement for training foreign government officials at the Foreign Service Institute.

Generally, donations received in the form of cash or financial instruments are recognized as revenue at their fair value in the period received. Contributions of services are recognized if the services received (1) create or enhance non-financial assets, or (2) require specialized skills that are provided by individuals possessing those skills, which would typically need to be purchased if not donated. Works of art, historical treasures, and similar assets that are added to collections are not recognized as revenue at the time of donation because they are heritage assets. If subsequently sold, proceeds from the sale of these items are recognized in the year of sale. More information on earned revenues can be found in Note 14.

D. Allocation Transfers

Allocation transfers are legal delegations by one Federal agency of its authority to obligate budget authority and outlay funds to another agency. The Department processes allocation transfers with other Federal agencies as both a transferring (parent) agency of budget authority to a receiving (child) entity and as a receiving (child) agency of budget authority from a transferring (parent) entity. A separate fund account (allocation account) is created in the Treasury as a subset of the parent fund account for tracking and reporting purposes. Subsequent obligations and outlays incurred by the child agency are charged to this allocation account as they execute the delegated activity on behalf of the parent agency.

Generally, all financial activities related to allocation transfers (e.g., budget authority, obligations, and outlays) are reported in the financial statements of the parent agency. Transfers from the Executive Office of the President, for which the Department is the receiving agency, is an exception to this rule. Per OMB guidance, the Department reports all activity relative to these allocation transfers in its financial statements. The Department allocates funds, as the parent, to the Departments of Defense, Labor (DOL), Health and Human Services (HHS); the Peace Corps; Millennium Challenge Corporation; and the U.S. Agency for International Development (USAID). In addition, the Department receives allocation transfers, as the child, from USAID.

E. Fund Balance with Treasury and Cash and Other Monetary Assets

Fund Balance with Treasury is an asset of the Department and a liability of the General Fund. The amount is the unexpended balances of appropriation accounts, trust accounts, and revolving funds. It is available to finance authorized commitments relative to goods, services, and benefits, but it does not represent net assets to the Government as a whole. The Department does not maintain cash in commercial bank accounts for the funds reported in the Consolidated Balance Sheet, except for the Emergencies in the Diplomatic and Consular Services and the Foreign Service National Defined Contributions Retirement Fund. Treasury processes domestic cash receipts and disbursements on behalf of the Department and the Department’s accounting records are reconciled with those of Treasury on a monthly basis.

The Department operates two Financial Service Centers located in Bangkok, Thailand and Charleston, South Carolina. These provide financial support for the Department and other Federal agencies’ operations overseas. The U.S. Disbursing Officer at each Center has the delegated authority to disburse funds on behalf of the Treasury. See Notes 2 and 5.

F. Accounts and Loans Receivable

Photo showing Assistant Secretary of State for the Bureau of East Asian and Pacific Affairs Davis R. Stilwell delivering remarks to the press in Washington, D.C., September 2, 2020. [Department of State]

Accounts and Loans Receivable consist of Intragovernmental Accounts Receivable and non-Federal Accounts and Loans Receivable. Intragovernmental Accounts Receivable are amounts owed the Department principally from other Federal agencies for ICASS services, reimbursable agreements, and Working Capital Fund services. Accounts and Loans Receivable from non-Federal entities primarily consist of amounts owed the Department for civil monetary fines and penalties, Value Added Tax (VAT) reimbursements not yet received, repatriation loans due, and IBWC receivables for Mexico’s share of IBWC activities. Civil monetary fines and penalties are assessed on individuals for such infractions as violating the terms and munitions licenses, exporting unauthorized defense articles and services, and violation of manufacturing licenses agreements. VAT receivables are for taxes paid on purchases overseas in which the Department has reimbursable agreements with the country for taxes it pays. The U.S. and Mexican governments generally share the total costs of IBWC projects in proportion to their respective benefits in cases of projects for mutual control and utilization of the waters of a boundary river, unless the Governments have predetermined by treaty the division of costs according to the nature of a project.

The Department provides repatriation loans for destitute American citizens overseas whereby the Department becomes the lender of last resort. These loans provide assistance to pay for return transportation, food and lodging, and medical expenses. The borrower executes a promissory note without collateral. Consequently, the loans are made anticipating a low rate of recovery. Interest, penalties, and administrative fees are assessed if the loan becomes delinquent.

Accounts and Loans Receivable from non-Federal entities are subject to the full debt collection cycle and mechanisms, e.g., salary offset, referral to collection agents, and Treasury offset. In addition, Accounts Receivable from non-Federal entities are assessed interest, penalties, and administrative fees if they become delinquent. Interest and penalties are assessed at the Current Value of Funds Rate established by Treasury. Accounts Receivable is reduced to net realizable value by an Allowance for Uncollectible Accounts. This allowance is recorded using aging methodologies based on an analysis of past collections and write-offs. See Note 4 for more information on Accounts and Loans Receivable, Net.

G. Interest Receivable

Interest earned on investments, but not received as of September 30, is recognized as interest receivable.

H. Advances and Prepayments

Payments made in advance of the receipt of goods and services are recorded as advances or prepayments, and recognized as expenses when the related goods and services are received. Prepayments are made principally to other Federal entities or lease holders for future services. Advances are made to Department employees for official travel, salary advances to Department employees transferring to overseas assignments, and other miscellaneous prepayments and advances for future services. Advances and prepayments are reported as Other Assets on the Consolidated Balance Sheet. Typically, USAID Federal assistance results in a net advance in Other Assets. Additional information may be found in Note 7.

I. Investments

The Department has several accounts that have the authority to invest cash resources. For these accounts, the cash resources not required to meet current expenditures are invested in interest-bearing obligations of the U.S. Government. These investments consist of U.S. Treasury special issues and securities. Special issues are unique public debt obligations for purchase exclusively by the Foreign Service Retirement and Disability Fund and for which interest is computed and paid semi-annually on June 30 and December 31. They are purchased and redeemed at par, which is their carrying value on the Consolidated Balance Sheet.

Investments by the Department’s Foreign Service National Defined Contribution Fund, Gift, Israeli Arab Scholarship, Eisenhower Exchange Fellowship, Middle Eastern-Western Dialogue, and International Center accounts are in U.S. Treasury securities. Interest on these investments is paid semi-annually at various rates. These investments are reported at acquisition cost, which equals the face value net of unamortized discounts or premiums. Discounts and premiums are amortized over the life of the security using the straight-line method for Gift Funds investments, and effective interest method for the other accounts. Additional information on Investments can be found in Note 3.

J. Property and Equipment

Real Property

Real property assets primarily consist of facilities used for U.S. diplomatic missions abroad and capital improvements to these facilities, including unimproved land; residential and functional-use buildings such as embassy/consulate office buildings; office annexes and support facilities; and construction-in-progress. Title to these properties is held under various conditions including fee simple, restricted use, crown lease, and deed of use agreement. Some of these properties are considered historical treasures and are considered multi-use heritage assets. These items are reported on the Consolidated Balance Sheet, in Note 6 to the financial statements, and in the Heritage Assets Section.

The Department also owns several domestic real properties, including the National Foreign Affairs Training Center (Arlington, Va.); the International Center (Washington, D.C.); the Charleston Financial Services Center (S.C.); the Beltsville Information Management Center (Md.); the Florida Regional Center (Ft. Lauderdale); and consular centers in Charleston, S.C., Portsmouth, N.H., and Williamsburg, Ky. The Foreign Missions Act authorizes the Department to facilitate the secure and efficient operation in the United States of foreign missions. The Act established the Office of Foreign Missions to manage acquisitions, including leases, additions, and sales of real property by foreign missions. In certain cases, based on reciprocity, the Department owns real property in the United States that is used by foreign missions for diplomatic purposes. The IBWC owns buildings and structures related to its boundary preservation, flood control, and sanitation programs.

Buildings and structures are carried at either actual or estimated historical cost. The Department capitalizes all costs for constructing new buildings and building acquisitions regardless of cost, and all other improvements of $1 million or more. Costs incurred for constructing new facilities, major rehabilitations, or other improvements in the design or construction stage are recorded as construction-in-progress. After these projects are substantially complete, costs are transferred to Buildings and Structures or Leasehold Improvements, as appropriate. Depreciation is computed on a straight-line basis over the asset’s estimated life and begins when the property is placed into service. The estimated useful lives for real property are as follows:

Real Property Estimated Useful Life by Asset Category
Asset Category Estimated Useful Life
Land Improvements 30 years
Buildings and Structures 10 to 50 years
Assets Under Capital Lease Lease term or 30 years
Leasehold Improvements Lesser of lease term or 10 years

Personal Property

Personal property consists of several asset categories including aircraft, vehicles, security equipment, communication equipment, automated data processing (ADP) equipment, reproduction equipment, and software. The Department holds title to these assets, some of which are operated in unusual conditions, as described below.

The Department’s Bureau of International Narcotics and Law Enforcement (INL) uses aircraft to help eradicate and stop the flow of illegal drugs. To accomplish its mission, INL maintains an aircraft fleet that is one of the largest Federal, nonmilitary fleets. Most of the aircraft are under direct INL air wing management. However, a number of aircraft are managed by host-countries. The Department holds title to most of the aircraft under these programs and requires congressional notification to transfer title for any aircraft to foreign governments. INL contracts with firms to provide maintenance support depending on whether the aircraft are INL air wing managed or host-country managed. INL air wing managed aircraft are maintained to Federal Aviation Administration standards that involve routine inspection, as well as scheduled maintenance and replacements of certain parts after given hours of use. Host-country managed aircraft are maintained to host-country requirements.

The Department also maintains a large vehicle fleet that operates overseas. Many vehicles require armoring for security reasons. For some locations, large utility vehicles are used instead of conventional sedans. In addition, the Department contracts with firms to provide support in strife-torn areas, such as Iraq and Afghanistan. Contractor support includes the purchase and operation of armored vehicles. Under the terms of the contracts, the Department has title to the contractor-held vehicles.

Personal property and equipment with an acquisition cost of $25,000 or more, and a useful life of two or more years, is capitalized at cost. Additionally, all vehicles are capitalized, as well as internal use software with cost of $500,000 or more. Except for contractor-held vehicles in Iraq and Afghanistan, depreciation is calculated on a straight-line basis over the asset’s estimated life and begins when the property is placed into service. Contractor-held vehicles in Iraq and Afghanistan, due to the harsh operating conditions, are depreciated on a double-declining balance basis. The estimated useful lives for personal property are as follows:

Personal Property Estimated Useful Life by Asset Category
Asset Category Estimated Useful Life
Aircraft:  
INL air wing managed 10 years
Host-country managed 5 years
Vehicles:  
Department managed 3 to 6 years
Contractor-held in Iraq and Afghanistan 2 ½ years
Security Equipment 3 to 15 years
Communication Equipment 3 to 20 years
ADP Equipment 3 to 6 years
Reproduction Equipment 3 to 15 years
Internal Use Software Estimated useful life or 5 years

See Note 6, Property and Equipment, Net, for additional information.

Capital Leases

Leases are accounted for as capital leases if the value is $1 million or more and they meet one of the following criteria: (1) the lease transfers ownership of the property by the end of the lease term; (2) the lease contains an option to purchase the property at a bargain price; (3) the lease term is equal to or greater than 75 percent of the estimated useful life of the property; or (4) at the inception of the lease, the present value of the minimum lease payment equals or exceeds 90 percent of the fair value of the leased property. The initial recording of a lease’s value (with a corresponding liability) is the lesser of the net present value of the lease payments or the fair value of the leased property. Capital leases that meet criteria (1) or (2) are depreciated over the useful life of the asset (30 years). Capital leases that meet criteria (3) or (4) are depreciated over the term of the lease. Capital lease liabilities are amortized over the term of the lease; if the lease has an indefinite term, the term is capped at 50 years. Additional information on capital leases is disclosed in Note 11, Leases.

Stewardship Property and Equipment – Heritage Assets

Stewardship Property and Equipment, or Heritage Assets, are assets that have historical or natural significance; are of cultural, educational, or artistic importance; or have significant architectural characteristics. They are generally considered priceless and are expected to be preserved indefinitely. As such, these assets are reported in terms of physical units rather than cost or other monetary values. See Note 6.

K. Grants

The Department awards educational, cultural exchange, and refugee assistance grants to various individuals, universities, and non-profit organizations. Budgetary obligations are recorded when grants are awarded. Grant funds are disbursed in two ways: grantees draw funds commensurate with their immediate cash needs via HHS’ Payment Management System; or grantees request reimbursement for their expenditures.

L. Accounts Payable

Accounts payable represent the amounts accrued for contracts for goods and services received but unpaid at the end of the fiscal year and unreimbursed grant expenditures. In addition to accounts payables recorded through normal business activities, unbilled payables are estimated based on historical data.

M. Accrued Annual, Sick, and Other Leave

Annual leave is accrued as it is earned by Department employees, and the accrual is reduced as leave is taken. Throughout the year, the balance in the accrued annual leave liability account is adjusted to reflect current pay rates. The amount of the adjustment is recorded as an expense. Current or prior year appropriations are not available to fund annual leave earned but not taken. Funding occurs in the year the leave is taken and payment is made. Sick leave and other types of non-vested leave are expensed as taken.

N. Employee Benefit Plans

Retirement Plans: Civil Service employees participate in either the Civil Service Retirement System (CSRS) or the Federal Employees Retirement System (FERS). Members of the Foreign Service participate in either the Foreign Service Retirement and Disability System (FSRDS) or the Foreign Service Pension System (FSPS).

Employees covered under CSRS contribute 7 percent of their salary; the Department contributes 7 percent. Employees covered under CSRS also contribute 1.45 percent of their salary to Medicare insurance; the Department makes a matching contribution. On January 1, 1987, FERS went into effect pursuant to Public Law No. 99-335. Most employees hired after December 31, 1983, are automatically covered by FERS and Social Security. Employees hired prior to January 1, 1984, were allowed to join FERS or remain in CSRS. Employees participating in FERS contribute 0.8 percent or 3.1 percent (depending on date of hire) of their salary, with the Department making contributions of 13.7 percent or 11.9 percent. FERS employees also contribute 6.2 percent to Social Security and 1.45 percent to Medicare insurance. The Department makes matching contributions to both. A primary feature of FERS is that it offers a Thrift Savings Plan (TSP) into which the Department automatically contributes 1 percent of pay and matches employee contributions up to an additional 4 percent.

Foreign Service employees hired prior to January 1, 1984 participate in FSRDS, with certain exceptions. FSPS was established pursuant to Section 415 of Public Law No. 99-335, which became effective June 6, 1986. Foreign Service employees hired after December 31, 1983 participate in FSPS with certain exceptions. FSRDS employees contribute 7.25 percent of their salary; the Department contributes 7.25 percent. FSPS employees contribute 1.35 percent, 3.65 percent, or 4.95 percent of their base salary depending on their start date; the Department contributes 20.22 percent or 17.92 percent. FSRDS and FSPS employees contribute 1.45 percent of their salary to Medicare; the Department matches their contribution. FSPS employees also contribute 6.2 percent to Social Security; the Department makes a matching contribution. Similar to FERS, FSPS also offers the TSP.

Foreign Service National (FSN) employees at overseas posts who were hired prior to January 1, 1984, are covered under CSRS. FSN employees hired after that date are covered under a variety of local government plans in compliance with the host country’s laws and regulations. In cases where the host country does not mandate plans or the plans are inadequate, employees are covered by plans that conform to the prevailing practices of comparable employers.

Health Insurance: Most American employees participate in the Federal Employees Health Benefits Program (FEHBP), a voluntary program that provides protection for enrollees and eligible family members in cases of illness and/or accident. Under FEHBP, the Department contributes the employer’s share of the premium as determined by the U.S. Office of Personnel Management (OPM).

Life Insurance: Unless specifically waived, employees are covered by the Federal Employees Group Life Insurance Program (FEGLIP). FEGLIP automatically covers eligible employees for basic life insurance in amounts equivalent to an employee’s annual pay, rounded up to the next thousand dollars plus $2,000. The Department pays one-third and employees pay two-thirds of the premium. Enrollees and their family members are eligible for additional insurance coverage, but the enrollee is responsible for the cost of the additional coverage.

Other Post Employment Benefits: The Department does not report CSRS, FERS, FEHBP, or FEGLIP assets, accumulated plan benefits, or unfunded liabilities applicable to its employees; OPM reports this information. As required by SFFAS No. 5, Accounting for Liabilities of the Federal Government, the Department reports the full cost of employee benefits for the programs that OPM administers. The Department recognizes an imputed cost and imputed financing source for the annualized unfunded portion of CSRS, post-retirement health benefits, and life insurance for employees covered by these programs.

O. Future Workers’ Compensation Benefits

Photo showing Deputy Secretary of State Stephen E. Biegun meeting with Ukrainian Foreign Minister Dmytro Kuleba in Kyiv, Ukraine, August 26, 2020. [Department of State]

The Federal Employees’ Compensation Act (FECA) provides income and medical cost protection to cover Federal employees injured on the job or who have incurred a work-related occupational disease, and beneficiaries of employees whose death is attributable to job-related injury or occupational disease. The DOL administers the FECA program. DOL initially pays valid claims and bills the employing Federal agency. DOL calculates the actuarial liability for future workers’ compensation benefits and reports to each agency its share of the liability.

P. Foreign Service Retirement and Disability Fund

The Department manages the Foreign Service Retirement and Disability Fund (FSRDF). To ensure it operates on a sound financial basis, the Department retains an actuarial firm to perform a valuation to project if the Fund’s assets together with the expected future contributions are adequate to cover the value of future promised benefits. To perform this valuation the actuary projects the expected value of future benefits and the stream of expected future employer and employee contributions. The valuation serves as a basis for the determination of the needed employer contributions to the retirement fund and is based on a wide variety of economic assumptions, such as merit salary increases and demographic assumptions, such as rates of mortality. Since both the economic and demographic experience change over time, it is essential to conduct periodic reviews of the actual experience and to adjust the assumptions in the valuation, as appropriate. The Department’s actuary completes an Actuarial Experience Study approximately every five years to ensure the assumptions reflect the most recent experience and future expectations. The Department’s last study was completed in 2018. The economic assumptions changes from the experience study are different from the economic assumptions changes determined under SFFAS No. 33 Pensions, Other Retirement Benefits, and Other Postemployment Benefits. See Note 9, After-Employment Benefit Liability, for the Department’s accounting policy for FSRDF retirement-related benefits and the associated actuarial present value of projected plan benefits.

Q. Foreign Service Nationals’ After-Employment Benefits

Defined Contributions Fund (DCF): This fund provides retirement benefits for FSN employees in countries where the Department has made a public interest determination to discontinue participation in the Local Social Security System (LSSS) or deviate from other prevailing local practices. Title 22, Foreign Relations and Intercourse, Section 3968, Local Compensation Plans, provides the authority to the Department to establish such benefits as part of a total compensation plan for these employees.

Defined Benefit Plans: The Department has implemented various arrangements for defined benefit pension plans in other countries, for the benefit of some FSN employees. Some of these plans supplement the host country’s equivalent to U.S. social security, others do not. While none of these supplemental plans are mandated by the host country, some are substitutes for optional tiers of a host country’s social security system. The Department accounts for these plans under the provisions and guidance contained in International Accounting Standards (IAS) No. 19, Employee Benefits. IAS No. 19 provides a better structure for the reporting of these plans which are established in accordance with local practices in countries overseas.

Lump Sum Retirement and Severance: Under some local compensation plans, FSN employees are entitled to receive a lump-sum separation payment when they resign, retire, or otherwise separate through no fault of their own. The amount of the payment is generally based on length of service, rate of pay at the time of separation, and the type of separation.

R. International Organizations Liability

The United States is a member of the United Nations (UN) and other international organizations and supports UN peacekeeping operations. As such, the United States either contributes to voluntary funds or an assessed share of the budgets and expenses of these organizations and activities. These payments are funded through congressional appropriations to the Department. The purpose of these appropriations is to ensure continued American leadership within those organizations and activities that serve important U.S. interests. Funding by appropriations for dues assessed for certain international organizations is not received until the fiscal year following assessment. These commitments are regarded as funded only when monies are authorized and appropriated by Congress. For financial reporting purposes, the amounts assessed, pledged, and unpaid are reported as liabilities of the Department. Additional information is disclosed in Note 10.

S. Contingent Liabilities

Contingent liabilities are liabilities where the existence or amount of the liability cannot be determined with certainty pending the outcome of future events. The Department recognizes contingent liabilities when the liability is probable and reasonably estimable. See Notes 8 and 12.

T. Funds from Dedicated Collections

Funds from Dedicated Collections are financed by specifically identified revenues, often supplemented by other financing sources, which remain available over time. These specifically identified revenues and other financing sources are required by statute to be used for designated activities or purposes and must be accounted for separately from the Government’s general revenues. Additional information is disclosed in Notes 3 and 13.

U. Net Position

The Department’s net position contains the following components:

Unexpended Appropriations: Unexpended appropriations is the sum of undelivered orders and unobligated balances. Undelivered orders represent the amount of obligations incurred for goods or services ordered, but not yet received. An unobligated balance is the amount available after deducting cumulative obligations from total budgetary resources. As obligations for goods or services are incurred, the available balance is reduced.

Cumulative Results of Operations: The cumulative results of operations include the accumulated difference between revenues and financing sources less expenses since inception and donations.

Net position of funds from dedicated collections is separately disclosed. See Note 13.

V. Foreign Currency

Accounting records for the Department are maintained in U.S. dollars, while a significant amount of the Department’s overseas expenditures are in foreign currencies. For accounting purposes, overseas obligations and disbursements are recorded in U.S. dollars based on the rate of exchange as of the date of the transaction. Foreign currency payments are made by the U.S. Disbursing Office.

W. Fiduciary Activities

Fiduciary activities are the collection or receipt, and the management, protection, accounting, investment, and disposition by the Federal Government of cash or other assets in which non-Federal individuals or entities have an ownership interest that the Federal Government must uphold. The Department’s fiduciary activities are not recognized on the principal financial statements, but are reported on schedules as a note to the financial statements. The Department’s fiduciary activities include receiving contributions from donors for the purpose of providing compensation for certain claims within the scope of an established agreement, investment of contributions into Treasury securities, and disbursement of contributions received within the scope of the established agreement. See Note 18.

X. Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions, and exercise judgment that affects the reported amounts of assets, liabilities, net position, and disclosure of contingent liabilities as of the date of the financial statements, and the reported amounts of revenues, financing sources, expenses, and obligations incurred during the reporting period. These estimates are based on management’s best knowledge of current events, historical experience, actions the Department may take in the future, and various other assumptions that are believed to be reasonable under the circumstances. Due to the size and complexity of many of the Department’s programs, the estimates are subject to a wide range of variables, including assumptions on future economic and financial events. Accordingly, actual results could differ from those estimates.

Y. Comparative Data

Certain 2019 amounts have been reclassified to conform to the 2020 presentation. The Consolidated Statement of Net Cost presentation has been updated to report by strategic goal for 2020 and 2019.

Note 2. Fund Balance with Treasury

Fund Balance with Treasury at September 30, 2020 and 2019, is summarized below (dollars in millions).

Status of Fund Balance with Treasury
At September 30, 2020 and 2019 (dollars in millions)
2020 2019
Unobligated Balances Available $26,536 $29,765
Unobligated Balances Unavailable 1,348 1,466
Obligated Balances not yet Disbursed 31,691 29,867
Total Unobligated and Obligated 59,575 61,098
Deposit and Receipt Funds 78 60
Total $59,653 $61,158

Note 3. Investments

Investments at September 30, 2020 and 2019, are summarized below (dollars in millions). All investments are classified as Intragovernmental Securities.

Summary of Investments
At September 30, 2020 (dollars in millions)
Net
Investment
Market
Value
Maturity
Dates
Interest Rates
Range
Interest
Receivable
Non-Marketable, Par Value:
Special Issue Securities $19,981 $19,981 2021 – 2028 0.750% – 5.125% $120
Subtotal 19,981 19,981 120
Non-Marketable, Market Based:
Israeli Arab Scholarship Fund 5 5 2021 – 2024 2.000% – 2.625%
Eisenhower Exchange Fellowship Fund 7 7 2020 – 2021 0.125% – 2.500%
Middle Eastern-Western Dialogue Fund 11 12 2020 – 2024 1.750% – 2.875%
Gift Funds, Treasury Bills 23 24 2020 – 2027 1.625% – 2.750%
International Center 12 12 2020 0.000%
Foreign Service National Defined Contribution Fund – Variable Contribution Plan 32 33 2020 – 2043 0.500% – 2.875%
Subtotal 90 93
Total Investments $20,071 $20,074 $120
Summary of Investments
At September 30, 2019 (dollars in millions)
Net
Investment
Market
Value
Maturity
Dates
Interest Rates
Range
Interest
Receivable
Non-Marketable, Par Value:
Special Issue Securities $19,318 $19,318 2020 – 2028 1.375% – 5.125% $133
Subtotal 19,318 19,318 133
Non-Marketable, Market Based:
Israeli Arab Scholarship Fund 5 5 2021 – 2024 2.000% – 2.625%
Eisenhower Exchange Fellowship Fund 8 4 2020 2.250% – 2.500%
Middle Eastern-Western Dialogue Fund 11 11 2020 – 2023 1.375% – 2.625%
Gift Funds, Treasury Bills 22 20 2019 – 2027 1.125% – 2.750%
International Center 15 15 2019 0.000%
Foreign Service National Defined Contribution Fund – Variable Contribution Plan 23 23 2020 – 2043 1.250% – 2.875%
Subtotal 84 78
Total Investments $19,402 $19,396 $133

The Department’s activities that have the authority to invest cash resources are Funds from Dedicated Collections  (see Note 13). The Federal 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 Treasury, which uses the cash for general Government purposes. Treasury securities are issued to the Department as evidence of its receipts. Treasury securities are an asset to the Department and a liability to the Treasury. Because the Department and the Treasury are both parts of the Government, these assets and liabilities offset each other from the standpoint of the Government as a whole. For this reason, they do not represent an asset or a liability in the U.S. Government-wide financial statements.

Treasury securities provide the component entity with authority to draw upon the Treasury to make future benefit payments or other expenditures. When the Department requires redemption of these securities to make expenditures, the Government finances those expenditures out of accumulated cash balances, by raising taxes or other receipts, by borrowing from the public or repaying less debt, or by curtailing other expenditures. The Government finances most expenditures in this way.

Note 4. Accounts and Loans Receivable, Net

The Department’s Accounts and Loans Receivable, Net at September 30, 2020 and 2019, are summarized below (dollars in millions). All are entity receivables.

Accounts and Loans Receivable, Net
At September 30, 2020 and 2019
(dollars in millions)
  2020 2019
Entity
Receivables
Allowance
for
Uncollectible
Net
Receivables
Entity
Receivables
Allowance
for
Uncollectible
Net
Receivables
Intragovernmental Accounts Receivable $129 $(19) $110 $148 $— $148
Non-Intragovernmental Accounts and Loans Receivable 168 (43) 125 127 (43) 84
Total Receivables $297 $(62) $235 $275 $(43) $232

The Accounts and Loans Receivable, Net of allowance for uncollectible accounts as of September 30, 2020 and 2019, is $235 million and $232 million, respectively. The allowance for uncollectible accounts are recorded using aging methodologies based on analysis of historical collections and write-offs. The allowance recognition for intragovernmental receivables does not alter the statutory requirement for the Department to collect payment.

The Intragovernmental Accounts Receivable are amounts owed to the Department from other Federal agencies for reimbursable agreements for goods and services. The Non-Intragovernmental Accounts and Loans Receivable are amounts due from non-Federal entities for value added taxes, emergency COVID-19 evacuations, IBWC receivables for Mexico’s share of activities, civil monetary fines and penalties, and repatriation loans and associated administrative fees (see Accounts and Loans Receivable in Note 1.F).

In 2020, the Department estimated $4 million in accounts receivable to be collectible for criminal restitution.

Note 5. Cash and Other Monetary Assets

The Cash and Other Monetary Assets at September 30, 2020 and 2019, are summarized below (dollars in millions). There are no restrictions on entity cash.

Cash and Other Monetary Assets
At September 30, 2020 and 2019
(dollars in millions)
  2020 2019
Entity
Assets
Non-Entity
Assets
Total Entity
Assets
Non-Entity
Assets
Total
After-Employment Benefit Assets $238 $— $238 $221 $— $221
Emergencies in the Diplomatic and Consular Service 3 3 5 5
Total $241 $— $241 $226 $— $226

Foreign Service National After-Employment Benefit Assets

The Defined Contributions Fund (FSN DCF) provides retirement benefits for FSN employees in countries where the Department has made a public interest determination to discontinue participation in the LSSS or deviate from other prevailing local practices. Title 22, Foreign Relations and Intercourse, Section 3968, Local Compensation Plans, provides the authority to the Department to establish such benefits and identifies as part of a total compensation plan for these employees. The FSN DCF finances the Defined Contribution Plan (DCP) which is administered by a third party who invests excess funds in Treasury securities on behalf of the Department. The other monetary assets reported for the FSN DCP is $238 million and $221 million as of September 30, 2020 and 2019, respectively.

Photo showing Secretary Pompeo meeting with Emirati Minister of Foreign Affairs and International Cooperation Sheikh Abdullah bin Zayed Al Nahyan and National Security Advisor Sheikh Tahnoun bin Zayed Al Nahyan in Abu Dhabi, United Arab Emirates, August 26, 2020. [Department of State]

Note 6. Property and Equipment, Net

Property and Equipment, Net balances at September 30, 2020 and 2019, are shown in the following table (dollars in millions).

Property and Equipment, Net Balances
At September 30, 2019 and 2018
(dollars in millions)
Major Classes 2020 2019
Cost Accumulated
Depreciation
Net
Value
Cost Accumulated
Depreciation
Net Value
Real Property:
Overseas —
Land and Land Improvements $2,933 $(107) $2,826 $2,868 $(104) $2,764
Buildings and Structures 25,387 (10,639) 14,748 24,852 (9,871) 14,981
Construction-in-Progress 5,343 5,343 4,200 4,200
Assets Under Capital Lease 144 (52) 92 171 (67) 104
Leasehold Improvements 684 (405) 279 662 (400) 262
Domestic —
Structures, Facilities and Leaseholds 1,502 (500) 1,002 1,606 (607) 999
Construction-in-Progress 190 190 462 462
Assets Under Capital Lease 330 (50) 280 330 (33) 297
Land and Land Improvements 380 (18) 362 123 (10) 113
Total — Real Property 36,893 (11,771) 25,122 35,274 (11,092) 24,182
Personal Property:
Aircraft 472 (387) 85 593 (428) 165
Vehicles 963 (689) 274 1,029 (671) 358
Communication Equipment 30 (22) 8 29 (21) 8
ADP Equipment 365 (272) 93 348 (228) 120
Reproduction Equipment 7 (6) 1 8 (7) 1
Security Equipment 285 (178) 107 278 (156) 122
Internal Use Software 396 (339) 57 391 (301) 90
Software-in-Development 405 405 322 322
Other Equipment 446 (293) 153 372 (161) 211
Total — Personal Property 3,369 (2,186) 1,183 3,370 (1,973) 1,397
Total Property and Equipment, Net $40,262 $(13,957) $26,305 $38,644 $(13,065) $25,579

Property and Equipment, Net activity at September 30, 2020, is shown in the following table (dollars in millions).

Property and Equipment, Net
At September 30, 2020 (dollars in millions)
2020
Balance beginning of year $25,579
Capitalized Acquisitions 2,456
Dispositions (390)
Revaluations 6
Depreciation Expense (1,346)
Ending Balance $26,305

Stewardship Property and Equipment – Heritage Assets

The Department maintains collections of art, furnishings and real property (Culturally Significant Property) that are held for public exhibition, education and official functions for visiting chiefs of State, heads of government, foreign ministers and other distinguished foreign and American guests. As the lead institution conducting American diplomacy, the Department uses this property to promote national pride and the distinct cultural diversity of American artists, as well as to recognize the historical, architectural and cultural significance of America’s holdings overseas.

There are nine separate collections of art and furnishings: the Diplomatic Reception Rooms Collection, the Art Bank Program, the Art in Embassies Program, the Cultural Heritage Collection, the Library Rare and Special Book Collection, the Secretary of State’s Register of Culturally Significant Property, the National Museum of American Diplomacy, the Blair House, and the International Boundary and Water Commission. The collections, activity of which is shown in the following table and described more fully in the Required Supplementary Information and Other Information sections of this report, consist of items that were donated or purchased using donated or appropriated funds. The Department provides protection and preservation services to maintain all Heritage Assets in the best possible condition as part of America’s history. The Department’s deferred maintenance policy within the RSI includes analysis of Heritage Assets on the Secretary of State’s Register of Culturally Significant Property list. The following table contains unaudited data as discussed in the Independent Auditor’s Report.

Heritage Assets
For the Years Ended September 30, 2019 and 2020
  Diplomatic Reception Rooms Collection Art Bank Program Art in Embassies
Program
Cultural Heritage
Collection
Library Rare & Special Book Collection Secretary of State’s Register of Culturally Significant Property National Museum of American Diplomacy Blair House International Boundary and Water Commission
Description Collectibles – Art and furnishings from the period 1750 to 1825 Collection of American works of art on paper Collectibles – American works of art Collections include fine and decorative arts and other cultural objects Collectibles – Rare books and other publications of historic value Noncollection – Buildings of historic, cultural, or architectural significance Collectibles – Historic artifacts, art and other cultural objects Collections of fine and decorative arts, furnishings, artifacts, other cultural objects, rare books and archival materials in national historic landmark buildings Monuments that mark the international boundary between the United States and Mexico, Falcon International Dam and Power Plant
Acquisition and Withdrawal Acquired through donation or purchase using donated funds. Excess items are sold. Acquired through purchase. Excess items are transferred. Acquired through purchase or donation. Excess items are sold. The program provides assessment, preservation, and restoration as needed. Acquired through donation. Acquired through purchase. Excess items are sold. Acquired through donation or transfer.  Excess items are transferred. Acquired through purchase, donation or transfer. Excess items are transferred or disposed of via public sale. The monuments were constructed to mark the international boundary. The dam and power plant were constructed by the United States and Mexico pursuant to Water Treaty of 1944.
Condition Good to excellent Poor to excellent Good to excellent Good to excellent Poor to good Poor to excellent Good to excellent Good to excellent Poor to good
Number of Assets – 9/30/2018 1,820 2,620 1,208 18,594 1,282 33 4,884 2,612 140
Acquisitions 6 27 40 95 61 4 1,020 1  
Adjustments 1   15 600     171    
Disposals 6     702 1   1 9  
Number of Assets – 9/30/2019 1,821 2,647 1,263 18,587 1,342 37 6,074 2,604 140
Acquisitions 8 13 6 93 34   142    
Adjustments 1     565       1  
Disposals 5     220 5 1   6  
Number of Assets – 9/30/2020 1,825 2,660 1,269 19,025 1,371 36 6,216 2,599 140
Photo showing Secretary Pompeo posing for a photo with U.S. Army and Navy personnel in Georgetown, Guyana, September 18, 2020. [Department of State]

Note 7. Other Assets

The Department’s Other Assets are primarily comprised of advances and prepayments as described in Note 1.H. The majority of Intragovernmental Assets are prepayments to USAID in support of the Global Health and Child Survival program and the Defense Security Cooperation Agency in support of Peacekeeping Operations and the Pakistan Counterinsurgency Capability programs. The Non-Intragovernmental Other Advances are predominantly prepayments to grantees in support of the Global Health and Child Survival program. Other Non-Intragovernmental Advances include prepayments for the Population, Refugee and Migration Assistance program and the Overseas Buildings Operations real property rent and acquisitions. The Department’s Other Assets as of September 30, 2020 and 2019, are summarized below (dollars in millions).

Other Assets
As of September 30, 2020 and 2019
(dollars in millions)
  2020 2019
Intragovernmental:    
Other Advances and Prepayments $1,847 $1,235
Non-Intragovernmental:    
Salary Advances 9 6
Travel Advances 10 15
Other Advances and Prepayments 1,226 971
Inventory 21 15
Total Other Assets $3,113 $2,242

Note 8. Other Liabilities

The Department’s Other Liabilities at September 30, 2020 and 2019, are summarized below (dollars in millions).

Other Liabilities
At September 30, 2020 and 2019
(dollars in millions)
  2020 2019
Current Non-Current Total Current Non-Current Total
Intragovernmental            
Deferred Revenue $293 $— $293 $277 $— $277
Custodial Liability 15 15 8 8
Other Liabilities 28 25 53 34 23 57
Total Intragovernmental 336 25 361 319 23 342
Federal Employees Compensation Act Benefits 98 98 91 91
Capital Lease Liability 10 39 49 12 52 64
Accrued Salaries Payable 229 229 230 230
Contingent Liability 61 61 25 25
Pension Benefits Payable 67 67 66 66
Accrued Annual Leave 536 536 418 418
Environmental Liability 52 52 54 54
Other Liabilities 480 65 545 731 60 791
Deferred Revenues 49 49 68 68
Subtotal 933 753 1,686 1,198 609 1,807
Total Other Liabilities $1,269 $778 $2,047 $1,517 $632 $2,149

Environmental Liability Associated with Asbestos Cleanup and Other

The Department has estimated both friable, $6 million, and nonfriable, $45 million, asbestos-related cleanup costs and recognized a liability and related expense for those costs that are both probable and reasonably estimable as of September 30, 2020, consistent with the current guidance in the Statement of Federal Financial Accounting Standards (SFFAS) No. 5, Accounting for Liabilities of the Federal Government; SFFAS No. 6, Accounting for Property, Plant, and Equipment, Chapter 4: Cleanup Costs; and Technical Release (TR) 2, Determining Probable and Reasonably Estimable for Environmental Liabilities in the Federal Government. The remaining $1 million in environmental liability is non-asbestos related cleanup costs for lead based paint.

Liabilities Not Covered by Budgetary Resources

The Department’s liabilities are classified as liabilities covered by budgetary resources, liabilities not covered by budgetary resources, or liabilities not requiring budgetary resources. Liabilities not covered by budgetary resources result from the receipt of goods and services, or occurrence of eligible events in the current or prior periods, for which revenue or other funds to pay the liabilities have not been made available through appropriations or current earnings of the Department. Liabilities not requiring budgetary resources are for liabilities that have not in the past required and will not in the future require the use of budgetary resources. This includes liabilities for clearing accounts, non-fiduciary deposit funds, custodial collections, and unearned revenue. The liabilities in this category at September 30, 2020 and 2019 are summarized in the Schedule of Liabilities Not Covered by Budgetary Resources (dollars in millions).

Liabilities Not Covered by Budgetary Resources
At September 30, 2020 and 2019
(dollars in millions)
  2020 2019
Intragovernmental Liabilities    
Unfunded FECA Liability $19 $19
Total Intragovernmental Liabilities 19 19
International Organizations Liability 2,259 2,318
After-Employment Benefit Liability:    
Foreign Service Retirement Actuarial Liability 4,977 3,750
Foreign Service Nationals (FSN):    
Defined Contributions Fund 273 247
Defined Benefit Plans 19 48
Lump Sum Retirement and Voluntary Severance 593 463
Total After-Employment Benefit Liability 5,862 4,508
Accrued Annual Leave 536 418
Environmental Liability 52 54
Capital Lease Liability 49 64
Contingent Liability 61 25
Other Liabilities 222 384
Total Liabilities Not Covered by Budgetary Resources 9,060 7,790
Total Liabilities Covered by Budgetary Resources 23,898 24,537
Total Liabilities Not Requiring Budgetary Resources 84 84
Total Liabilities $33,042 $32,411
Photo showing Secretary Pompeo meeting with U.S. Mining and Oil Companies in Paramaribo, Suriname, September 17, 2020. [Department of State]

Note 9. After-Employment Benefit Liability

The Department of State provides after-employment benefits to both Foreign Service Officers (FSOs) and Foreign Service Nationals (FSNs). FSOs participate in the Foreign Service Retirement and Disability pension plans. FSN employees participate in a variety of plans established by the Department in each country based upon prevailing compensation practices in the host country. The table below summarizes the liability associated with these plans (dollars in millions).

After-Employment Benefit Liability
For the Year Ended September 30, 2020 and 2019
  2020 2019
Foreign Service Officer    
Foreign Service Retirement and Disability Fund $25,014 $23,401
Foreign Service Nationals    
Defined Contributions Fund 273 247
Defined Benefit Plans 19 48
Lump Sum Retirement and Voluntary Severance 593 463
Total FSN 885 758
Total After-Employment Benefit Liability $25,899 $24,159

Details for these plans are presented as follows.

Foreign Service Retirement and Disability Fund

The FSRDF finances the operations of the FSRDS and the FSPS. The FSRDS and the FSPS are defined-benefit, single-employer plans. FSRDS was originally established in 1924; FSPS in 1986. The FSRDS is a single-benefit retirement plan. Retirees receive a monthly annuity from FSRDS for the rest of their lives. FSPS provides benefits from three sources: a basic benefit (annuity) from FSPS, Social Security, and the Thrift Savings Plan.

The Department’s financial statements present the Pension Actuarial Liability of the Foreign Service Retirement and Disability Program (the “Plan”) as the actuarial present value of projected plan benefits, as required by the SFFAS No. 33, Pensions, Other Retirement Benefits, and other Post Employment Benefits: Reporting the Gains and Losses from Changes in Assumptions and Selecting Discount Rates and Valuation Dates. The Pension Actuarial Liability represents the future periodic payments provided for current employee and retired Plan participants, less the future employee and employing Federal agency contributions, stated in current dollars.

Future periodic payments include benefits expected to be paid to (1) retired or terminated employees or their beneficiaries; (2) beneficiaries of employees who have died; and (3) present employees or their beneficiaries, including refunds of employee contributions as specified by Plan provisions. Total projected service is used to determine eligibility for retirement benefits. The value of voluntary, involuntary, and deferred retirement benefits is based on projected service and assumed salary increases. The value of benefits for disabled employees or survivors of employees is determined by multiplying the benefit the employee or survivor would receive on the date of disability or death, by a ratio of service at the valuation date to projected service at the time of disability or death.

The Pension Actuarial Liability is calculated by applying actuarial assumptions to adjust the projected plan benefits to reflect the discounted time value of money and the probability of payment (by means of decrements such as death, disability, withdrawal or retirement) between the valuation date and the expected date of payment. The Plan uses the aggregate entry age normal actuarial cost method, whereby the present value of projected benefits for each employee is allocated on a level basis (such as a constant percentage of salary) over the employee’s service between entry age and assumed exit age. The portion of the present value allocated to each year is referred to as the normal cost.

The table below presents the normal costs for 2020 and 2019.

Normal Costs for 2019 and 2018
Normal Cost: 2019 2018
FSRDS 41.07% 37.36%
FSPS 32.18% 29.78%

Actuarial assumptions are based on the presumption that the Plan will continue. If the Plan terminates, different actuarial assumptions and other factors might be applicable for determining the actuarial present value of accumulated plan benefits. The assumption changes arise in connection with the annual valuation and follow the guidelines of SFFAS No. 33. The following table presents the calculation of the combined FSRDS and FSPS Pension Actuarial Liability and the assumptions used in computing it for the year ended September 30, 2020 and 2019 (dollars in millions).

Combined FSRDS and FSPS Pension Actuarial Liability
For the Year Ended September 30, 2020 and 2019
(dollars in millions)
  2020 2019
Pension Actuarial Liability, Beginning of Year $23,401 $21,927
Pension Expense:    
Normal Cost 574 519
Interest on Pension Liability 772 742
Actuarial (Gains) or Losses:    
From Experience 316 520
From Assumption Changes    
Interest Rate 803 292
Experience Study
Other 156 387
Prior Year Service Costs
Other
Total Pension Expense 2,621 2,460
Less Payments to Beneficiaries 1,008 986
Pension Actuarial Liability, End of Year 25,014 23,401
Less: Net Assets Available for Benefits 20,037 19,651
Actuarial Pension Liability – Unfunded $4,977 $3,750
Actuarial Assumptions: 2020 2019
Rate of Return on Investments 3.10% 3.33%
Rate of Inflation 1.55% 1.50%
Salary Increase 1.80% 1.75%

Net Assets Available for Benefits at September 30, 2020 and 2019, consist of the following (dollars in millions).

Net Assets Available for Benefits
At September 30, 2020 and 2019
(dollars in millions)
  2020 2019
Fund Balance with Treasury $— $—
Accounts and Interest Receivable 141 416
Investments in U.S. Government Securities 19,981 19,318
Total Assets 20,122 19,734
Less: Liabilities Other Than Actuarial 85 83
Net Assets Available for Benefits $20,037 $19,651

Foreign Service Nationals’ After-Employment Benefit Liabilities

The Department of State operates overseas in over 180 countries and employs a significant number of local nationals, currently over 50,000, known as Foreign Service Nationals (FSNs).

FSNs hired after January 1, 1984 do not qualify for any Federal civilian benefits (and therefore cannot participate) in any of the Federal civilian pension systems (e.g., Civil Service Retirement System (CSRS), FSRDS, Thrift Savings Plan (TSP), etc.). By statute, the Department is required to establish compensation plans for FSNs in its employ in foreign countries. The plans are based upon prevailing wage and compensation practices in the locality of employment, unless the Department makes a public interest determination to do otherwise. In general, the Department follows host country (i.e., local) practices and conventions in compensating FSNs. The end result is that compensation for FSNs is often not in accord with what would otherwise be offered or required by statute and regulations for Federal civilian employees.

In each country, FSN after-employment benefits are included in the Post’s Local Compensation Plan. Depending on the local practice, the Department offers defined benefit plans, defined contribution plans, and retirement and voluntary severance lump sum payment plans. These plans are typically in addition to or in lieu of participating in the host country’s LSSS. These benefits form an important part of the Department’s total compensation and benefits program that is designed to attract and retain highly skilled and talented FSN employees.

FSN Defined Contributions Fund (FSN DCF)

The Department’s FSN DCF finances two FSN after-employment plans, the FSN Defined Contribution Plan (DCP) and the Variable Contribution Plan (VCP).

The Department’s FSN DCP and VCP provide after-employment benefits for FSN employees in countries where the Department has made a public interest determination to discontinue participation in the LSSS or deviate from other prevailing local practices. Title 22, Foreign Relations and Intercourse, Section 3968, Local Compensation Plans, provides the authority to the Department to establish such benefits and identifies as part of a total compensation plan for these employees.

The Department contributes 12 percent of each participant’s base salary to the FSN DCP. Participants are not allowed to make contributions to the Plan. The amount of after-employment benefit received by the employee is determined by the amount of the contributions made by the Department along with investment returns and administrative fees. The Department’s obligation is determined by the contributions for the period, and no actuarial assumptions are required to measure the obligation or the expense. The FSN DCP is administered by a third party who invests contributions in U.S. Treasury securities on behalf of the Department. Payroll contributions are sent to the third party administrator, while separation benefits are processed by the Department upon receipt of funds from the third party. As of September 30, 2020, approximately 13,000 FSNs in 31 countries participate in the FSN DCP.

The Department records expense for contributions to the FSN DCP when the employee renders service to the Department, coinciding with the cash contributions to the FSN DCP. Total contributions by the Department in 2020 and 2019 were $30.0 million and $28.9 million, respectively. Total liability reported for the FSN DCP is $240 million and $223 million as of September 30, 2020 and 2019, respectively.

The FSN VCP reported employee and employer contributions of $10.2 million and $8.1 million as of September 30, 2020 and 2019, respectively. The total liability reported for the FSN VCP is $33 million and $24 million as of September 30, 2020 and 2019, respectively.

Local Defined Contribution Plans

In 50 countries, the Department has implemented various local arrangements, primarily with third party providers, for defined contribution plans for the benefit of FSNs. Total contributions to these plans by the Department in 2020 and 2019 were $28 million and $25 million, respectively.

Defined Benefit Plans

In 12 countries, involving over 3,600 FSNs, the Department has implemented various arrangements for defined benefit pension plans for the benefit of FSNs. Some of these plans supplement the host country’s equivalent to U.S. social security, others do not. While none of these supplemental plans are mandated by the host country, some are substitutes for optional tiers of a host country’s social security system. Such arrangements include (but are not limited to) conventional defined benefit plans with assets held in the name of trustees of the plan who engage plan administrators, investment advisors and actuaries, and plans offered by insurance companies at predetermined rates or with annual adjustments to premiums. The Department deposits funds under various fiduciary-type arrangements, purchases annuities under group insurance contracts or provides reserves to these plans. Benefits under the defined benefit plans are typically based either on years of service and/or the employee’s compensation (generally during a fixed number of years immediately before retirement). The range of assumptions that are used for the defined benefit plans reflect the different economic and regulatory environments within the various countries.

As discussed in Note 1.Q, the Department accounts for these plans under guidance contained in International Accounting Standards (IAS) No. 19, Employee Benefits. In accordance with IAS No. 19, the Department reported the net defined benefit liability of $19 million and $48 million as of September 30, 2020 and 2019, respectively. There was a decrease of $29 million in 2020 and a decrease of $42 million in 2019.

The material FSN defined benefit plans include plans in Germany and the United Kingdom (UK) which represent 78 percent of total assets, 78 percent of total projected benefit obligations, and 86 percent of the net defined benefit liability as of September 30, 2020. The Germany Plan’s most recent evaluation report, dated August 6, 2020, is as of July 1, 2020. The UK Plan’s most recent evaluation, dated August 20, 2020, is as of April 5, 2019.

For the Germany Plan the change in the net defined benefit liability was an increase of $0.4 million in 2020 and a increase of $0.2 million in 2019, while for the UK plan the change was a decrease of $23 million in 2020 and a decrease of $36 million in 2019.

For Germany, the increase in the net defined benefit liability in 2020 was primarily due to actuarial losses on experience. The increase in 2019 was primarily due to actuarial losses on assumption changes; primarily the discount rate.

For the UK Plan in 2020, the decrease in the net defined benefit liability was primarily due to a lump-sum contribution to fund the deficit. The decrease in 2019 was primarily due to a combination of investments outperforming expected rates of return and a favorable change in the currency exchange rate since 2018.

The tables below show the changes in the projected benefit obligation and plan assets during 2020 and 2019 for the Germany and UK plans (dollars in millions).

Change in Benefit Obligations for the Germany and UK Plans
At September 30, 2020 and 2019
(dollars in millions)
Change in Benefit Obligations: 2020 2019
Benefit obligations beginning of year $415 $439
Service Cost 7 6
Interest Cost 31 29
Other 9 (59)
Benefit obligations end of year $462 $415
Change in Plan Assets for the Germany and UK Plans
At September 30, 2020 and 2019
(dollars in millions)
Change in Plan Assets: 2020 2019
Fair value of plan assets beginning of year $376 $364
Return on plan assets 25 24
Contributions less Benefits Paid 23 7
Other 21 (19)
Fair value of plan assets end of year 445 376
Net Defined Benefit Liability $17 $39

The table below shows the allocation of the plan assets by category during 2020 and 2019 for the German and UK plans.

Allocation of Plan Assets by Category for the Germany and UK Plans
At September 30, 2020 and 2019
(dollars in millions)
2020 2019
Insurance Policies 32% 34%
Equity Securities 41% 40%
Money Market and Cash 4% 4%
Debt Securities 23% 22%
Total 100% 100%

The principal actuarial assumptions used for 2020 and 2019 for the Germany and UK plans are presented below:

Principal Actuarial Assumptions for the Germany and UK Plans
Actuarial Assumptions: 2020 2019
Discount Rate 2.75% – 4.60% 2.75% – 4.60%
Salary Increase Rate 2.25% – 4.10% 2.25% – 4.10%
Pension Increase Rate 1.75% – 3.10% 1.75% – 3.10%

Retirement and Voluntary Severance Lump Sum Payments

In 74 countries, FSN employees are provided a lump-sum separation payment when they resign, retire, or otherwise separate through no fault of their own. The amount of the payment is generally based on length of service, rate of pay at the time of separation, and the type of separation. As of September 30, 2020, approximately 24,000 FSNs participate in such plans.

The cost method used for the valuation of the liabilities associated with these plans is the Projected Unit Credit actuarial cost method. The participant’s benefit is first determined using both their projected service and salary at the retirement date. The projected benefit is then multiplied by the ratio of current service to projected service at retirement in order to determine an allocated benefit. The Projected Benefit Obligation (PBO) for the entire plan is calculated as the sum of the individual PBO amounts for each active member. Further, this calculation requires certain actuarial assumptions be made, such as voluntary withdraws, assumed retirement age, death and disability, as well as economic assumptions. For economic assumptions, available market data was scarce for many of the countries where eligible posts are located. Due to the lack of creditable global market data, an approach consistent with that used for the September 30, 2020, FSRDF valuations under SFFAS No. 33 was adopted. Using this approach, the economic assumptions used for the Retirement and Voluntary Severance Lump Sum Payment liability as of September 30, 2020 and 2019, are:

Economic Assumptions Used for the Lump Sum Retirement and Voluntary Severance Liability
As of September 30, 2020 and 2019
  2020 2019
Discount Rate 2.74% 2.78%
Rate of inflation 1.69% 1.73%
Salary Increase 4.86% 4.45%

Based upon the projection, the total liability reported for the Retirement and Voluntary Severance Lump Sum Payment is $593 million and $463 million as of September 30, 2020 and 2019, respectively, as shown below (dollars in millions):

Lump Sum Retirement and Voluntary Severance Liability
As of September 30, 2020 and 2019
(dollars in millions)
  2020 2019
Retirement $200 $154
Voluntary Severance 393 309
Total $593 $463

The September 30, 2020 total PBO of $593.1 million represents a $130.0 million increase compared to the September 30, 2019 total PBO of $463.1 million. Changes to the discount rate, merit salary increase, and inflation assumptions increased total PBO by about $72 million. Changes to the withdrawal and retirement assumptions further increased total PBO by about $25 million.

The table below shows the changes in the projected benefit obligation during 2020 and 2019 (dollars in millions):

Changes in Benefit Obligations During 2020 and 2019
(dollars in millions)
Changes in Benefit Obligations: 2020 2019
Benefit obligations beginning of year $463 $397
Normal Cost 36 30
Benefit Payments (33) (28)
Interest Cost 13 12
Actuarial (gain) loss on assumptions 97 40
Actuarial (gain) loss due to experience 17 10
Other 2
Benefit obligations end of year $593 $463

Note 10. International Organizations Liability

The Department’s Bureau of International Organization Affairs (IO) is responsible for the administration, development, and implementation of the United States’ policies in the United Nations (UN), international organizations, and UN peacekeeping operations. The United States contributes either to voluntary funds or an assessed share of the budgets and expenses of these organizations and activities. These missions are supported through Congressional appropriation to the Department’s Contributions to International Organizations (CIO), Contributions for International Peacekeeping Activities (CIPA), and International Organizations and Programs (IO&P) accounts.

A liability is established for assessments received and unpaid and for pledges made and accepted by an international organization. Congress has mandated withholding the payments of dues because of policy restrictions or caps on the percentage of the organization’s operating costs financed by the United States. Without authorization from Congress, the Department cannot pay certain assessed amounts. The amounts of mandated withholdings that will likely not be authorized to be paid in the future do not appear as liabilities on the Balance Sheet of the Department.

Amounts presented in the table represent amounts that are paid through the CIO, CIPA, and IO&P accounts and administered by IO. Payables to international organizations by the Department that are funded through other appropriations are included in Accounts Payable to the extent such payables exist at September 30, 2020 and 2019.

The IO Liability decrease of $1.3 billion is largely attributed to timing differences in payments for CIPA and IO&P. Specifically, at the end of FY 2019 $1.1 billion of the ending IO liability was obligated for FY 2019 assessments which were subsequently paid in FY 2020.

Further information about the Department’s mission to the UN is at usun.state.gov. Details of the IO Liability follow (dollars in millions):

International Organizations Liability
As of September 30, 2020 and 2019
(dollars in millions)
  2020 2019
Regular Membership Assessments Payable to UN $1,090 $1,055
Dues Payable to UN Peacekeeping Missions 1,221 2,121
International Organizations Liability 935 1,310
Total Owed to International Organizations 3,246 4,486
Less Amounts Mandated to be Withheld and not likely to be Paid 728 683
International Organizations Liability $2,518 $3,803
Funded Amounts $259 $1,485
Unfunded Amounts 2,259 2,318
Total International Organizations Liability $2,518 $3,803

Note 11. Leases

The Department is committed to over 10,000 leases, which cover office and functional properties, and residential units for diplomatic missions. The majority of these leases are short-term operating leases. In most cases, management expects that the leases will be renewed or replaced by other leases. Personnel from other U.S. Government agencies occupy some of the leased facilities (both residential and non-residential). These agencies reimburse the Department for the use of the properties. Reimbursements are received for approximately $95.8 million of the lease costs.

Capital Leases

The Department has various leases for real property that meet the criteria as a capital lease in accordance with SFFAS No. 6, Accounting for Property, Plant, and Equipment. Assets that meet the definition of a capital lease and their related lease liability are initially recorded at the present value of the future minimum lease payments or fair market value, whichever is lower. In general, capital leases are depreciated over the estimated useful life or lease terms depending upon which capitalization criteria the capital lease meets at inception. The related liability is amortized over the term of the lease, which can result in a different value in the asset versus the liability.

The following is a summary of Net Assets under Capital Leases and Future Minimum Lease Payments as of September 30, 2020 and 2019 (dollars in millions). Lease liabilities are not covered by budgetary resources.

Net Assets under Capital Leases
As of September 30, 2020 and 2019
(dollars in millions)
Net Assets under Capital Leases: 2020 2019
Federal    
Buildings $330 $330
Accumulated Depreciation (50) (33)
Total Federal 280 297
Non-Federal    
Buildings 144 171
Accumulated Depreciation (52) (67)
Total Non-Federal 92 104
Net Assets under Capital Leases $372 $401

Future Minimum Lease Payments:

Future Minimum Lease Payments
As of September 30, 2020
(dollars in millions)
Fiscal Year Non-Federal Lease Payments
2021 $10
2022 10
2023 7
2024 4
2025 4
2026 and thereafter 59
Total Minimum Lease Payments 94
Less: Amount Representing Interest (45)
Liabilities under Capital Leases $49
Future Minimum Lease Payments
As of September 30, 2019
(dollars in millions)
Fiscal Year Non-Federal Lease Payments
2020 $12
2021 11
2022 11
2023 8
2024 5
2025 and thereafter 86
Total Minimum Lease Payments 133
Less: Amount Representing Interest (69)
Liabilities under Capital Leases $64
Photo showing the Blair House Garden Room that welcomes diplomatic guests for dining, meetings, and special events throughout the year. [Department of State]

Operating Leases

The Department leases real property under operating leases. These leases are non-Federal and expire in various years. Future minimum lease payments under operating leases have remaining terms in excess of one year as of September 30, 2020 and 2019 for each of the next 5 years and in aggregate are as follows (dollars in millions):

Operating Leases
Year Ended September 30, 2020
(dollars in millions)
  Non-Federal Lease Payments
2021 $449
2022 328
2023 206
2024 128
2025 66
2026 and thereafter 184
Total Minimum Future Lease Payments $1,361
Operating Leases
Year Ended September 30, 2019
(dollars in millions)
  Non-Federal Lease Payments
2020 $431
2021 329
2022 227
2023 136
2024 76
2025 and thereafter 172
Total Minimum Future Lease Payments $1,371

Note 12. Contingencies and Commitments

Contingencies

The Department is a party in various material legal matters (litigation, claims, assessments, including pending or threatened litigation, unasserted claims, and claims that may derive from treaties or international agreements) brought against it. We periodically review these matters pending against us. As a result of these reviews, we classify and adjust our contingent liability when we think it is probable that there will be an unfavorable outcome and when a reasonable estimate of the amount can be made.

Additionally, as part of our continuing evaluation of estimates required in the preparation of our financial statements, we evaluated the materiality of cases determined to have either a probable or reasonably possible chance of an adverse outcome. As a result of these reviews, the Department believes that claims considered probable could result in estimable losses of $62 to $263 million and reasonably possible claims could result in potential estimable losses of $0 to $60 million if the outcomes were unfavorable to the Department. The probable cases involve claims related to residential construction, security contracts, Equal Employment Opportunity Commission claims, and international claims made against the United States. The reasonably possible cases involve contract disputes, claims related to embassy construction, sale of Unites States real property overseas dispute, and international claims made against the United States being litigated by the Department.

Certain legal matters to which the Department is a party are administered and, in some instances, litigated and paid by other U.S. Government agencies. Generally, amounts to be paid under any decision, settlement, or award pertaining to these legal matters are funded from the Judgment Fund.

Payments made by the Judgment Fund for cases covered under the Contract Disputes Act and Notification and Federal Employees Antidiscrimination and Retaliation Act of 2002 on behalf of the Department totaled $5 million and $63 million as of September 30, 2020 and 2019, respectively.

As a part of our continuing evaluation of estimates required for the preparation of our financial statements, we recognize settlements of claims and lawsuits and revised other estimates in our contingent liabilities. Management and the Legal Advisor believe we have made adequate provision for the amounts that may become due under the suits, claims, and proceedings we have discussed here.

In addition, the Department is responsible for environmental cleanup costs associated with asbestos and lead based paint. A liability is recognized for those costs that are both probable and reasonably estimable (see Note 8, Other Liabilities, for additional information). The following tables show each type of contingency, the likelihood of future events occurring, and the potential estimable range of losses at September 30, 2020 and 2019 (dollars in millions).

Contingencies at September 30, 2020
(dollars in millions)
  Accrued
Liabilities
Estimated Range of Loss
Lower End Upper End
Legal Contingencies:      
Probable $61 $62 $263
Reasonably Possible $— $— $60
Environmental Contingencies:      
Probable $52 $52 $52
Reasonably Possible $— $— $—
Contingencies at September 30, 2019
(dollars in millions)
  Accrued
Liabilities
Estimated Range of Loss
Lower End Upper End
Legal Contingencies:      
Probable $25 $25 $795
Reasonably Possible $— $— $60
Environmental Contingencies:      
Probable $54 $54 $54
Reasonably Possible $— $— $—

Commitments

In addition to the future lease commitments discussed in Note 11, Leases, the Department is committed under obligations for goods and services which have been ordered but not yet received at fiscal year end; these are termed undelivered orders (see Note 15, Combined Statement of Budgetary Resources).

Rewards Programs: Under 22 U.S.C. 2708, the Department has the authority to operate rewards programs that are critical to combating international terrorism, narcotics trafficking, war crimes, and transnational organized crime. The Rewards for Justice (RFJ) is a 21st Century national security tool that is leveraged by the White House, the Department of State, and interagency partners throughout the U.S. Government. In 2020, RFJ became an office commensurate with its level of increased responsibilities. RFJ’s traditional mission since the 1980’s, counterterrorism, was dramatically expanded by Congress in 2017 to include countering malicious cyber activity and Democratic People’s Republic of Korea sanctions violators, essentially tripling the size of RFJ’s mandate and scope of the program. See further details at www.rewardsforjustice.net. The Narcotics Rewards Program has the authority to offer rewards for information leading to the arrest or conviction in any country of persons committing major foreign violations of U.S. narcotics laws or the killing or kidnapping of U.S. narcotics law enforcement officers or their family members. The War Crimes Rewards Program offers rewards for information leading to the arrest, transfer, or conviction of persons indicted by a judge of the International Criminal Tribunal for the former Yugoslavia, the International Criminal Tribunal for Rwanda, or the Special Court of Sierra Leone for serious violations of international humanitarian law. The Transnational Organized Crime Rewards Program offers rewards for information leading to the arrest or conviction of significant members of transnational criminal organizations involved in activities that threaten national security, such as human trafficking, and trafficking in arms or other illicit goods.

Pending reward offers under the four programs total $1.3 billion. Under the programs, we have paid out $354 million since 2003. Reward payments are funded from Diplomatic and Consular Programs prior year expired, unobligated balances using available transfer authorities as necessary. Management and the Legal Advisor believe there is adequate funding for the amounts that may become due under the Rewards Program.

Note 13. Funds from Dedicated Collections

The Department administers 10 Funds from Dedicated Collections as listed below. They are presented in accordance with SFFAS No. 43, Funds from Dedicated Collections: Amending Statement of Federal Financial Accounting Standards 27, Identifying and Reporting Earmarked Funds. There are no intra-departmental transactions between the various funds from dedicated collections.

Consular and Border Security Programs
Treasury Fund Symbol Description Statute
19X5713 Consular and Border Security Programs Public Law No. 115-31
All Other Funds
Treasury Fund Symbol Description Statute
19X5515 H-1B and L Fraud Prevention and Detection 118 Stat. 3357
19X8166 American Studies Endowment Fund 108 Stat. 425
19X8167 Trust Funds 22 U.S.C. 1479
19X8271 Israeli Arab Scholarship Programs 105 Stat. 696, 697
19X8272 Eastern Europe Student Exchange Endowment Fund 105 Stat. 699
19X8813 Center for Middle Eastern-Western Dialogue Trust Fund 118 Stat. 84
19X8821 Unconditional Gift Fund 22 U.S.C. 809, 1046
19X8822 Conditional Gift Fund 22 U.S.C. 809, 1046
95X8276 Eisenhower Exchange Fellowship Program Trust Fund Public Law No. 101-454

The Consular and Border Security Programs fund (CBSP) uses consular fee and surcharge revenue collected from the public to fund CBSP programs and activities, consistent with applicable statutory authorities. These fees and surcharges include Machine Readable Visa fees, Western Hemisphere Travel Initiative surcharges, Passport Security surcharges, Immigrant Visa Security surcharges, Diversity Visa Lottery fees, and Affidavit of Support fees. The CBSP fund is the largest dedicated collections program managed by the Department and is presented in a separate column in the table on the following page.

In 2018 and prior years, these fees and surcharges were credited in the Diplomatic and Consular Programs fund as spending authority from offsetting collections. The Consolidated Appropriations Act of FY 2017 (Public Law No. 115-31) enacted a new stand-alone fund beginning in 2019 to display fee-funded consular programs independent of the larger Diplomatic Programs (formerly Diplomatic and Consular Programs) fund. In 2020, unobligated balances totaling $73 million related to the fees and surcharges were transferred from the former fund to the CBSP. Additionally, $273 million was received in direct appropriations from the former fund related to the Coronavirus Preparedness and Response Supplemental Appropriations (CARES) Act (see Note 19, COVID-19 Activity). This change enables the Department to provide greater transparency and accountability in financial reporting on these fees and surcharges, facilitate budget estimates for these fees and surcharges, and more easily make the information available to users of budget information and other stakeholders.

The table below displays the dedicated collection amounts on a combined basis as of September 30, 2020 and 2019 (dollars in millions).

Dedicated Collection Amounts
As of September 30, 2020 and 2019
(dollars in millions)
  2020 2019
  Consular
and Border
Security
Programs
All Other
Funds from
Dedicated
Collections
Total
Funds from
Dedicated
Collections
Consular
and Border
Security
Programs
All Other
Funds from
Dedicated
Collections
Total
Funds from
Dedicated
Collections
Balance Sheet as of September 30            
Assets:            
Intragovernmental Assets:            
Fund Balance with Treasury $2,003 $239 $2,242 $2,703 $212 $2,915
Investments 46 46 46 46
Other Assets 93 1 94 45 1 46
Total Intragovernmental Assets 2,096 286 2,382 2,748 259 3,007
Accounts and Loans Receivable, Net 1 1
Property and Equipment, Net 9 107 116 107 107
Other Assets 8 (1) 7 14 (1) 13
Total Assets $2,114 $392 $2,506 $2,762 $365 $3,127
LIABILITIES            
Intragovernmental Liabilities:            
Accounts Payable $49 $— $49 $19 $— $19
Other Liabilities 26 26 20 20
Total Intragovernmental Liabilities 75 75 39 39
Accounts Payable 128 128 68 68
Other Liabilities 101 2 103 85 2 87
Total Liabilities 304 2 306 192 2 194
Net Position:            
Unexpended Appropriations 83 83
Cumulative Results of Operations 1,727 390 2,117 2,570 363 2,933
Total Net Position 1,810 390 2,200 2,570 363 2,933
Total Liabilities and Net Position $2,114 $392 $2,506 $2,762 $365 $3,127
Statement of Net Cost for the Year Ended September 30            
Gross Program Costs $3,169 $79 $3,248 $2,379 $62 $2,441
Less: Earned Revenues 2,011 1 2,012 3,492 3,492
Net Program Costs 1,158 78 1,236 (1,113) 62 (1,051)
Net Cost of Operations $1,158 $78 $1,236 $(1,113) $62 $(1,051)
Statement of Changes in Net Position for the Year Ended September 30            
Net Position Beginning of Period $2,570 $363 $2,933 $— $353 $353
Budgetary Financing Sources:            
Appropriations Used 190 190
Donations 62 62 18 18
Transfers in(out) without Reimbursement 73 42 115 1,408 52 1,460
Other Financing Sources:            
Donations 1 1
Imputed Financing from Costs Absorbed by Others 52 1 53 49 1 50
Total Financing Sources 315 105 420 1,457 72 1,529
Net Cost of Operations (1,158) (78) (1,236) 1,113 (62) 1,051
Change in Net Position (843) 27 (816) 2,570 10 2,580
Total Cumulative Results of Operations 1,727 390 2,117 2,570 363 2,933
Net Position $1,810 $390 2,200 $2,570 $363 $2,933

The table below summarizes the combined Funds from Dedicated Collections and all Other Funds, less intra-departmental eliminations to arrive at the consolidated net position totals as presented on the Balance Sheet.

Consolidated Net Position
As of September 30, 2020 and 2019
(dollars in millions)
  2020 2019
  Total
Combined
Less: Intra-
Departmental
Eliminations
Total
Consolidated
Total
Combined
Less: Intra-
Departmental
Eliminations
Total
Consolidated
Consolidating Net Position:            
Unexpended Appropriations – Funds from Dedicated Collections $83 $273 $(190) $— $— $—
Unexpended Appropriations – Other Funds 46,834 (273) 47,107 46,623 46,623
Cumulative Results of Operations – Funds from Dedicated Collections 2,117 (655) 2,772 2,933 965 1,968
Cumulative Results of Operations – Other Funds 27,662 655 27,007 27,005 (965) 27,970
Total Net Position $76,696 $— $76,696 $76,561 $76,561
Photo showing Special Representative for Iran Brian Hook meeting with His Highness Prime Minister Sheikh Sabah Al-Khaled Al-Sabah in Kuwait City, Kuwait, July 27, 2020. [Department of State]

Note 14. Statement of Net Cost

The Consolidated Statement of Net Cost reports the Department’s gross cost and net cost by strategic goal. The net cost of operations is the gross (i.e., total) cost incurred by the Department, less any exchange (i.e., earned) revenue.

The Consolidating Schedule of Net Cost categorizes costs and revenues by major program and responsibility segment. A responsibility segment is the component that carries out a mission or major line of activity, and whose managers report directly to top management. For the Department, a Bureau (e.g., Bureau of African Affairs) is considered a responsibility segment. For presentation purposes, Bureaus have been summarized and reported at the Under Secretary level (e.g., Under Secretary for Political Affairs).

Consolidating Schedule of Net Cost
For the Year Ended September 30, 2020
(dollars in millions)
STRATEGIC GOAL Under Secretary for Intra-Departmental
Eliminations
Total
Arms
Control, Int’l
Security
Management-
Consular
Affairs
Civilian
Security,
Democracy
and Human
Rights
Economic Growth, Energy and Environment Political Affairs Public Diplomacy and Public Affairs
SG1: Protect America’s Security at Home and Abroad
Total Cost $487 $2,181 $1,408 $21 $3,245 $292 $(80) $7,554
Earned Revenue (29) (1,697) (9) (174) (4) 49 (1,864)
Net Program Costs 458 484 1,399 21 3,071 288 (31) 5,690
SG2: Renew America’s Competitive Advantage for Sustained Economic Growth and Job Creation
Total Cost 27 36 17 63 1,833 167 (30) 2,113
Earned Revenue (4) (27) 1 (81) (2) 21 (92)
Net Program Costs 23 9 18 63 1,752 165 (9) 2,021
SG3: Promote American Leadership through Balanced Engagement
Total Cost 165 22 12,834 16 1,491 203 (22) 14,709
Earned Revenue (9) (16) (2) (54) (2) 15 (68)
Net Program Costs 156 6 12,832 16 1,437 201 (7) 14,641
SG4: Ensure Effectiveness and Accountability to the American Taxpayer
Total Cost 189 1,382 145 67 16,687 607 (5,116) 13,961
Earned Revenue (31) (6,393) 5 (3,333) (5) 5,028 (4,729)
Net Program Costs 158 (5,011) 150 67 13,354 602 (88) 9,232
Actuarial Loss on Pension Assumption Changes 10 76 8 4 924 34 1,056
Net Program Costs 168 (4,935) 158 71 14,278 636 (88) 10,288
Cost Not Assigned to Programs
Total Cost 14 8 4 (27) (1)
Earned Revenue (1) (28) 27 (2)
Net Costs (1) 14 (20) 4 (3)
Total Cost 878 3,697 14,426 171 24,188 1,307 (5,275) 39,392
Total Revenue (74) (8,133) (5) (3,670) (13) 5,140 (6,755)
Total Net Cost $804 $(4,436) $14,421 $171 $20,518 $1,294 $(135) $32,637

Certain 2019 amounts in the Consolidated Statement of Net Cost have been reclassified to conform to the 2020 presentation.

The presentation of program results by strategic goals is based on the Department’s current Strategic Plan, established pursuant to the Government Performance and Results Act (GPRA) of 1993 and the GPRA Modernization Act of 2010. The Department’s strategic goals and strategic priorities are defined in Management‘s Discussion and Analysis section of this report.

Since the costs incurred by the Under Secretary for Management and the Secretariat are primarily support costs, these costs were distributed to the other Under Secretaries to show the full costs under the responsibility segments that have direct control over the Department’s programs. One exception within the Under Secretary for Management is the Bureau of Consular Affairs, which is responsible for the Achieving Consular Excellence program. As a result, these costs were not allocated and continue to be reported as the Under Secretary for Management.

The Under Secretary for Management/Secretariat costs (except for the Bureau of Consular Affairs) were allocated to the other Department responsibility segments based on the percentage of total costs by organization for each program. The allocation of these costs to the other Under Secretaries and to the Bureau of Consular Affairs in 2020 and 2019 was as follows (dollars in millions):

Under Secretary for Management/Secretariat Costs Allocated to Other Under Secretaries
(dollars in millions)
Under Secretary 2020 2019
Political Affairs $16,040 $16,359
Management (Consular Affairs) 596 5,774
Public Diplomacy and Public Affairs 542 1,649
Arms Control, International Security Affairs 350 221
Civilian Security, Democracy and Human Rights 9,089 1,180
Economic Growth, Energy and Environment 85 49
Total $26,702 $25,232

Inter-Entity Costs and Imputed Financing: Full cost includes the costs of goods or services received from other Federal entities (referred to as inter-entity costs) regardless if the Department reimburses that entity. To measure the full cost of activities, SFFAS No. 4, Managerial Cost Accounting, and SFFAS No. 55, Amending Inter-entity Cost Provisions, require that total costs of programs include costs that are paid by other U.S. Government entities, if material.

As provided by SFFAS No. 4, OMB issued a Memorandum in April 1998, entitled “Technical Guidance on the Implementation of Managerial Cost Accounting Standards for the Government.” In that Memorandum, OMB established that reporting entities should recognize inter-entity costs for (1) employees’ pension benefits; (2) health insurance, life insurance, and other benefits for retired employees; (3) other post-retirement benefits for retired, terminated and inactive employees, including severance payments, training and counseling, continued health care, and unemployment and workers’ compensation under the Federal Employees’ Compensation Act; and (4) payments made in litigation proceedings.

The Department recognizes an imputed financing source on the Statement of Changes in Net Position for the value of inter-entity costs paid by other U.S. Government entities. This consists of all inter-entity amounts as reported below, except for the Federal Workers’ Compensation Benefits (FWCB). For FWCB, the Department recognizes its share of the change in the actuarial liability for FWCB as determined by the Department of Labor (DOL). The Department reimburses DOL for FWCB paid to current and former Department employees. Unreimbursed costs of goods and services other than those identified above are not included in our financial statements.

The following inter-entity costs and imputed financing sources were recognized in the Statement of Net Cost and Statement of Changes in Net Position, for the years ended September 30, 2020 and 2019 (dollars in millions):

Inter-Entity Costs
For the Years Ended September 30, 2020 and 2019
(dollars in millions)
Inter-Entity Cost 2020 2019
Other Post-Employment Benefits:    
Civil Service Retirement Program $7 $62
Federal Employees Health Benefits Program 178 153
Federal Employees Group Life Insurance Program 1 1
Litigation funded by Treasury Judgment Fund
Subtotal – Imputed Financing Source 186 216
Future Workers’ Compensation Benefits 17 17
Total Inter-Entity Costs $203 $233

Intra-departmental Eliminations: Intra-departmental eliminations of cost and revenue were recorded against the program that provided the service. Therefore, the full program cost was reported by leaving the reporting of cost with the program that received the service.

Earned Revenues

Earned revenues occur when the Department provides goods or services to the public or another Federal entity. Earned revenues are reported regardless of whether the Department is permitted to retain all or part of the revenue. Specifically, the Department collects, but does not retain passport, visa, and certain other consular fees.

Earned revenues for the years ended September 30, 2020 and 2019, consist of the following (dollars in millions):

Earned Revenues
For the Years Ended September 30, 2020 and 2019
(dollars in millions)
Program 2020 2019
Total
Prior to
Eliminations
Intra-Departmental
Eliminations
Total Total
Prior to
Eliminations
Intra-Departmental
Eliminations
Total
Consular Fees:
Passport, Visa and Other Consular Fees $504 $504 $707 $— $707
Machine Readable Visa 916 916 1,894 1,894
Expedited Passport 133 133 270 270
Passport, Visa and Other Surcharges 1,029 1,029 1,568 1,568
Fingerprint
Processing, Diversity Lottery, and Affadavit of Support
65 65 19 19
Subtotal – Consular Fees 2,647 2,647 4,458 4,458
FSRDF 1,394 779 615 1,382 739 643
ICASS 3,620 2,576 1,044 3,575 2,508 1,067
Other Reimbursable Agreements 2,766 521 2,245 2,590 242 2,348
Working Capital Fund 1,338 1,177 161 1,282 1,089 193
Other 130 87 43 98 58 40
Total $11,895 $5,140 $6,755 $13,385 $4,636 $8,749

Pricing Policies

Generally, a Federal agency may not earn revenue from outside sources unless it obtains specific statutory authority. Accordingly, the pricing policy for any earned revenue depends on the revenue’s nature, and the statutory authority under which the Department is allowed to earn and retain (or not retain) the revenue. Earned revenue that the Department is not authorized to retain is deposited into the Treasury’s General Fund.

The FSRDF finances the operations of the FSRDS and the FSPS. The FSRDF receives revenue from employee/employer contributions, a U.S. Government contribution, and interest on investments. By law, FSRDS participants contribute 7.25 percent of their base salary, and each employing agency contributes 7.25 percent; FSPS participants contribute 1.35 percent, 3.65 percent, or 4.95 percent of their base salary depending on their start date and each employing agency contributes 20.22 percent or 17.92 percent. Employing agencies report employee/employer contributions biweekly. Total employee/employer contributions for 2020 and 2019 were $416 million and $404 million, respectively.

The FSRDF also receives a U.S. Government contribution to finance (1) FSRDS benefits not funded by employee/employer contributions; (2) interest on FSRDS unfunded liability; (3) FSRDS disbursements attributable to military service; and (4) FSPS supplemental liability payment. The U.S. Government contributions for 2020 and 2019 were $456 million and $425 million, respectively. FSRDF cash resources are invested in special non-marketable securities issued by the Treasury. Total interest earned on these investments for 2020 and 2019 were $522 million and $552 million, respectively.

Consular Fees are established primarily on a cost recovery basis and are determined by periodic cost studies. Certain fees, such as the machine readable Border Crossing Cards, are determined statutorily. Reimbursable Agreements with Federal agencies are established and billed on a cost-recovery basis. ICASS billings are computed on a cost recovery basis; billings are calculated to cover all operating, overhead, and replacement costs of capital assets, based on budget submissions, budget updates, and other factors. In addition to services covered under ICASS, the Department provides administrative support to other agencies overseas for which the Department does not charge. Areas of support primarily include buildings and facilities, diplomatic security (other than the local guard program), overseas employment, communications, diplomatic pouch, receptionist and selected information management activities. The Department receives direct appropriations to provide this support.

Note 15. Combined Statement of Budgetary Resources

The Combined Statement of Budgetary Resources reports information on how budgetary resources were made available and their status as of and for the years ended September 30, 2020 and 2019. Intra-departmental transactions have not been eliminated in the amounts presented.

The Budgetary Resources section presents the total budgetary resources available to the Department. For the years ended September 30, 2020 and 2019, the Department received approximately $77.1 billion and $74.9 billion in budgetary resources, respectively, primarily consisting of the following:

Budgetary Resources Received
For the Years Ended September 30, 2020 and 2019
(dollars in billions)
Source of Budgetary Resources 2020 2019
Budget Authority:    
Direct or related appropriations $33.0 $31.5
Authority financed from Trust Funds 3.4 4.3
Spending authority from providing goods and services 8.0 8.0
Unobligated balance from prior year budget authority, net 32.7 31.1
Total Budgetary Resources $77.1 $74.9
Unobligated Balance from Prior Year Budget Authority, Net
For the Years Ended September 30, 2020 and 2019
(dollars in billions)
  2020 2019
Unobligated Balance – End of Prior Year $31.1 $29.3
Transfers In/(Out) Prior Year Authority (0.1) 0.1
Recoveries of Prior Year Paid Obligations 0.2 0.2
Recoveries of Prior Year Unpaid Obligations 1.6 1.9
Funds Returned to Treasury (0.1) (0.4)
Unobligated balance from prior year budget authority, net $32.7 $31.1

Status of Undelivered Orders

Undelivered Orders (UDO) represents the amount of goods and/or services ordered, which have not been actually or constructively received. This amount includes any orders which may have been prepaid or advanced but for which delivery or performance has not yet occurred.

The amount of budgetary resources obligated for UDO for all activities as of September 30, 2020 and 2019, was approximately $31.9 billion and $27.8 billion, respectively. This includes amounts of $3.0 billion for September 30, 2020 and $2.7 billion for September 30, 2019, pertaining to revolving funds, trust funds, and substantial commercial activities. Of the budgetary resources obligated for UDO for all activities as of September 30, 2020, $28.6 billion is for undelivered, unpaid orders and $3.3 billion is for undelivered, paid orders. The amounts for both Federal and Non-Federal undelivered orders at September 30, 2020 are as follows:

Undelivered Orders at September 30, 2020
(dollars in millions)
  Federal Non-Federal Total
Paid $2,089 $1,235 $3,324
Unpaid 118 28,413 28,531
Total $2,207 $29,648 $31,855

Permanent Indefinite Appropriations

A permanent indefinite appropriation is open-ended as to both its period of availability (amount of time the agency has to spend the funds) and its amount. The Department received permanent indefinite appropriations of $297 million and $266 million for 2020 and 2019, respectively.

The permanent indefinite appropriation provides payments to the FSRDF to finance the interest on the unfunded pension liability for the year, Foreign Service Pension System, and disbursements attributable to liability from military service.

Reconciliation of the Combined Statement of Budgetary Resources to the Budget of the United States Government

The reconciliation of the Combined Statement of Budgetary Resources and the actual amounts reported in the Budget of the U.S. Government (Budget) as of September 30, 2019 is presented in the table below. Since these financial statements are published before the Budget, this reconciliation is based on the 2019 Combined Statement of Budgetary Resources because actual amounts for 2019 are in the most recently published Budget (i.e., 2021). The Budget with actual numbers for September 30, 2020 will be published in the 2022 Budget and available in early February 2021. The Department of State’s Budget Appendix includes this information and is available on OMB’s website (http://www.whitehouse.gov/omb/budget).

As shown in the table below, Expired Funds are not included in the Budget of the United States. Additionally, the International Assistance Program, included in these financial statements, is reported separately in the Budget of the United States. Other differences represent financial statement adjustments, timing differences, and other immaterial differences between amounts reported in the Department’s Combined SBR and the Budget of the United States.

Statement of Budgetary Resources vs. Budget of the United States Government
For the Fiscal Year Ended September 30, 2019
(dollars in millions)
  Budgetary
Resources
Obligations
Incurred
Distributed
Offsetting
Receipts
Net
Outlays
Combined Statement of Budgetary Resources (SBR) $74,929 $43,642 $3,831 $29,454
Distributed Offsetting Receipts (3,831) 3,831
Funds not Reported in the Budget:        
Expired Funds (1,091)
Undelivered Orders Adjustment (285)
Other and Rounding errors (8) (3) (2)
Budget of the United States $73,545 $43,639 $— $33,283

Note 16. Custodial Activity

The Department administers certain custodial activities associated with the collection of non-exchange revenues. The revenues consist of interest, penalties and handling fees on accounts receivable; fines, civil penalties and forfeitures; and other miscellaneous receipts. The Department does not retain the amounts collected. Accordingly, these amounts are not reported as financial or budgetary resources for the Department. At the end of each fiscal year, the accounts close and the balances are deposited and recorded directly to the General Fund of the Treasury. The custodial revenue amounts are considered immaterial and incidental to the Department’s mission. In 2020 and 2019, the Department collected $16 million and $25 million, respectively, in custodial revenues that were transferred to Treasury.

Note 17. Reconciliation of Net Cost to Net Outlays

The reconciliation of the net cost of operations to the budgetary outlays is required by SFFAS No. 53, Budget and Accrual Reconciliation, amended SFFAS No. 7, Accounting for Revenue and Other Financing Sources and Concepts for Reconciling Budgetary and Financial Accounting and SFFAS No. 24, Selected Standards for the Consolidated Financial Report of the United States Government, and rescinded SFFAS No. 22, Change in Certain Requirements for Reconciling Obligations and Net Cost of Operations. Budgetary accounting used to prepare the Statement of Budgetary Resources and proprietary accounting used to prepare the other principal financial statements are complementary, but both types of information about assets, liabilities, net cost of operations and the timing of their recognition are different. The reconciliation of net outlays and net cost clarifies the relationship between budgetary and financial accounting information. The reconciliation starts with the net cost of operations as reported on the Statement of Net Cost and adjusted by components of net cost that are not part of net outlays. The first section of the reconciliation below presents components of net cost that are not part of net outlays. Common components can include depreciation, imputed costs, or changes in assets and liabilities. The second section adjusts the budget outlays that are not part of net operating cost. Components of budget outlays that are not part of net operating cost include acquisition of capital assets, inventory, and others assets.

Reconciliation of Net Cost to Net Outlays
For the Years Ended September 30, 2020 and 2019
(dollars in millions)
  2020 2019
  Intragovernmental With the Public Total Total

Net Cost
$(1,088) $33,725 $32,637 $29,709
Components of Net Cost that are not Part of Net Outlays:        
Property, Plant, and Equipment Depreciation (1,346) (1,346) (1,228)
Property, Plant, and Equipment gain/(loss) on Disposal & Revaluation (280) (280) (137)
Year-end Credit Reform Subsidy Re-estimates (1) (1) (1)
Other 1,104 625 1,729 1,897
Increase/(decrease) in Assets:        
Accounts Receivable (19) 40 21 (352)
Loans Receivable 5 5
Other Assets 629 252 881 (126)
(Increase)/decrease in Liabilities:        
Accounts Payable (49) 1,018 969 126
Salaries and Benefits 258 2 260 (297)
Environmental and Disposal Liabilities 2 2 41
Other Liabilities (4) (1,579) (1,583) (2,455)
Other Financing Sources:        
Transfers out(in) Without Reimbursement 14 14 (1)
Total Components of Net Cost that are not Part of Net Outlays 1,933 (1,262) 671 (2,533)
Components of Net Outlays that are not Part of Net Cost:        
Acquisition of Capital Assets 2,386 2,386 2,637
Other 1,986 1,986 3,472
Total Components of Net Outlays that are not Part of Net Cost 4,372 4,372 6,109
Net Outlays $845 $36,835 $37,680 $33,285

Note 18. Fiduciary Activities

The Resolution of the Iraqi Claims deposit fund 19X6038, Libyan Claims deposit fund 19X6224, the Saudi Arabia Claims deposit fund 19X6225, the France Holocaust Deportation Claims deposit fund 19X6226, and the Belgium Pension Claims Settlement deposit fund 19X6227 are presented in accordance with SFFAS No. 31, Accounting for Fiduciary Activities, and OMB Circular A-136, Financial Reporting Requirements, revised. These deposit funds were authorized by claims settlement agreements between the United States of America and the Governments of Iraq, Libya, Saudi Arabia, France, and Belgium. The agreements authorized the Department to collect contributions from donors for the purpose of providing compensation for certain claims within the scope of the agreements, investment of contributions into Treasury securities, and disbursement of contributions received in accordance with the agreements. As specified in the agreements, donors could include governments, institutions, entities, corporations, associations, and individuals. The Department manages these funds in a fiduciary capacity and does not have ownership rights against its contributions and investments; the assets and activities summarized in the schedules below do not appear in the financial statements. The Department’s fiduciary activities are disclosed in this footnote. 

Schedule of Fiduciary Activity
As of September 30, 2020 and 2019
(dollars in millions)
  2020 2019
19X6038 19X6224 19X6225 19X6226 19X6227 Total 19X6038 19X6224 19X6225 19X6226 19X6227 Total
Fiduciary Net Assets, Beginning of Year $— $— $73 $3 $— $76 $103 $— $69 $32 $1 $205
Contributions 15 15 33 33
Investment Earnings 1 1
Disbursements to and on behalf of beneficiaries (80) (1) (81) (104) (29) (29) (1) (163)
Increases/(Decreases) in Fiduciary Net Assets (65) (1) (66) (103) 4 (29) (1) (129)
Fiduciary Net Assets, End of Year $— $— $8 $2 $— $10 $— $— $73 $3 $— $76
Fiduciary Net Assets
As of September 30, 2020 and 2019
(dollars in millions)
Fiduciary Assets 2020 2019
19X6038 19X6224 19X6225 19X6226 19X6227 Total 19X6038 19X6224 19X6225 19X6226 19X6227 Total
Cash & Cash Equivalents                        
Fund Balance with Treasury $— $— $8 $2 $— $10 $— $— $73 $3 $— $76
Total Fiduciary Net Assets $— $— $8 $2 $— $10 $— $— $73 $3 $— $76

Note 19. COVID-19 Activity

The Department’s budgetary resources to prevent, prepare for, and respond to the coronavirus pandemic consist of appropriations from the Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020 (Public Law No. 116-123) and the Coronavirus Aid, Relief, and Economic Security Act, 2020 (Public Law No. 116-136). The Department received $699 million and $674 million from Public Law No. 116-123 and Public Law No. 116-136, respectively, for maintaining consular operations, reimbursement of evacuation expenses, and emergency preparedness for Diplomatic Programs and to prevent, prepare for, and respond to coronavirus for Global Health and Migration and Refugee Assistance Programs. Total budgetary resources, the status of resources, outlays, and net cost at September 30, 2020 are summarized below (dollars in millions).

Total Budgetary Resources, Status of Resources, Outlays, and Net Cost
at September 30, 2020
Budgetary Resources Diplomatic
Programs
Consular and Border Security Programs Global Health Programs Migration and Refugee Assistance Education and Cultural Exchange Total
Appropriations $588 $— $435 $350 $— $1,373
Transfers, net (278) 273 5
Total Budgetary Resources $310 $273 $435 $350 $5 $1,373
Status of Budgetary Resources            
New obligations $273 $197 $336 $350 $5 $1,161
Unobligated, unexpired accounts 37 76 99 212
Total Budgetary Resources $310 $273 $435 $350 $5 $1,373
Outlays, Net:            
Outlays, net (total) $134 $190 $106 $302 $3 $735
Agency outlays, net $134 $190 $106 $302 $3 $735
Net Cost            
Total Net Cost $135 $191 $139 $302 $3 $770
Photo showing Secretary Pompeo meeting with Slovenian President Borut Pahor in Ljubljana, Slovenia, August 13, 2020. [Department of State]

Note 20. Reclassification of Balance Sheet, Statement of Net Cost, and Statement of Changes in Net Position

To prepare the Financial Report of the U.S. Government (FR), the Department of the Treasury requires agencies to submit an adjusted trial balance, which is a listing of amounts by U.S. Standard General Ledger account that appear in the financial statements. Treasury uses the trial balance information reported in the Government-wide Treasury Account Symbol Adjusted Trial Balance System (GTAS) to develop a Reclassified Balance Sheet, Reclassified Statement of Net Cost, and a Reclassified Statement of Changes in Net Position for each agency, which are accessed using GTAS. Treasury eliminates all intragovernmental balances from the reclassified statements and aggregates lines with the same title to develop the FR statements. This note shows the Department of State’s financial statements and the U.S. Government-wide reclassified statements prior to elimination of intragovernmental balances and prior to aggregation of repeated FR line items.

The Department’s Balance Sheet in Relation to the
U.S. Government-wide Reclassified Balance Sheet

As of September 30, 2020
2020 Balance Sheet 2020 Government-wide Reclassified Balance Sheet
Financial Statement Line Amounts Dedicated Collections Combined All Other Amounts (with Eliminations Eliminations Between Dedicated and All Other Amounts Reclassified Financial Statement Line
ASSETS           ASSETS
Intragovernmental Assets           Intragovernmental Assets
Fund Balance with Treasury $59,653 $2,242 $57,411   $59,653 Fund Balance with Treasury
Investments, Net 20,071 46 20,025   20,071 Federal Investments
Interest Receivable 120   120   120 Interest Receivable – Investments
Accounts Receivable, Net 110   107   107 Accounts Receivable
      5 (2) 3 Benefit Program Contributions Receivable
Other Assets 1,847 94 1,839 (86) 1,847 Advances to Others and Prepayments
Total Intragovernmental Assets 81,801 2,382 79,507 (88) 81,801 Total Intragovernmental Assets
Cash and Other Monetary Assets 241   241   241 Cash and Other Monetary Assets
Accounts and Loans Receivable, Net 125 1 118   119 Accounts and Taxes Receivable, Net
      6   6 Loans Receivable, Net
Property and Equipment, Net 26,305 116 26,189   26,305 Property, Plant, and Equipment, Net
      21   21 Inventory and Related Property, Net
Other Assets 1,266 7 1,238   1,245 Other Assets
Total Non-Federal Assets 27,937 124 27,813   27,937 Total Non-Federal Assets
Total Assets $109,738 $2,506 $107,320 $(88) $109,738 Total Assets
LIABILITIES           LIABILITIES
Intragovernmental Liabilities           Intragovernmental Liabilities
Accounts Payable $151 $49 $102   $151 Accounts Payable
Other Liabilities 361          
      5   5 Loans Payable
      21   21 Liability to General Fund for Custodial and Other Non-Entity Assets
    7 372 (86) 293 Advances from Others and Deferred Credits
    19 25 (2) 42 Benefit Program Contributions Payable
Total Intragovernmental Liabilities 512 75 525 (88) 512 Total Intragovernmental Liabilities
Accounts Payable 2,427 128 2,556   2,684 Accounts Payable
After-Employment Benefit Liability 25,899 76 26,614   26,690 Federal Employee and Veteran Benefits Payable
      52   52 Environmental and Disposal Liabilities
International Organizations Liability 2,518          
Other Liabilities 1,686 27 3,077   3,104 Other Liabilities
Total Non-Federal Liabilities 32,530 231 32,299   32,530 Total Non-Federal Liabilities
Total Liabilities $33,042 $306 $32,824 $(88) $33,042 Total Liabilities
NET POSITION           NET POSITION
Unexpended Appropriations – Funds from Dedicated Collections (190) 83   (273) (190) Unexpended Appropriations – Funds from Dedicated Collections
Cumulative Results of Operations – Funds from Dedicated Collections 2,772 2,117   655 2,772 Cumulative Results of Operations – Funds from Dedicated Collections
Unexpended Appropriations – Other Funds 47,107   46,834 273 47,107 Unexpended Appropriations – Other Funds
Cumulative Results of Operations – Other Funds 27,007   27,662 (655) 27,007 Cumulative Results of Operations – Other Funds
Total Net Position 76,696 2,200 74,496 76,696 Total Net Position
Total Liabilities & Net Position $109,738 $2,506 $107,320 $(88) $109,738 Total Liabilities & Net Position

 

The Department’s Statement of Net Cost in Relation to the
U.S. Government-wide Reclassified Statement of Net Cost

For the Year Ended September 30, 2020
2020 Statement of Net Cost 2020 Government-wide Reclassified
Statement of Net Cost
Financial Statement Line Amounts Dedicated Collections Combined All Other Amounts (with Eliminations Eliminations Between Dedicated and All Other Amounts Reclassified Financial Statement Line
            Non-Federal Costs
Cost and Loss on Assumption Changes $39,392 $1,906 $33,488   $35,394 Non-Federal Gross Cost
      1,056   1,056 Loss on Changes in Actuarial Assumptions (Non-Federal)
    1,906 34,544   36,450 Total Non-Federal Costs
            Intragovernmental Costs
    144 370 (50) 464 Benefit Program Costs
    53 151 (18) 186 Imputed Costs
    1,105 1,629 (680) 2,054 Buy/Sell Costs
    40 198   238 Other Expenses (without Reciprocals)
    1,342 2,348 (748) 2,942 Total Intragovernmental Costs
Total Costs and Loss on Assumption Changes 39,392 3,248 36,892 (748) 39,392 Total Reclassified Gross Costs
Earned Revenue 6,755 1,990 796   2,786 Non-Federal Earned Revenue
            Intragovernmental Earned Revenue
    21 4,042 (680) 3,383 Buy/Sell Revenue
      113 (50) 63 Benefit Program Revenue
    1 522   523 Federal Securities Interest Revenue Including Associated Gains/Losses (Exchange)
    22 4,677 (730) 3,969 Total Intragovernmental Earned Revenue
Total Earned Revenue 6,755 2,012 5,473 (730) 6,755 Total Reclassified Earned Revenue
Net Cost $32,637 $1,236 $31,419 $(18) $32,637 Net Cost

 

The Department’s Statement of Changes in Net Position in Relation to the
U.S. Government-wide Reclassified Statement of Changes in Net Position
For the Year Ended September 30, 2020
2020 Statement of Changes in Net Position 2020 Government-wide Reclassified
Statement of Changes in Net Position
Financial Statement Line Amounts Dedicated Collections Combined All Other Amounts (with Eliminations Eliminations Between Dedicated and All Other Amounts Reclassified Financial Statement Line
Cumulative Results of Operations         $76,561 Net Position, Beginning of Period
Beginning Balance $29,938 $2,933 $27,005      
Unexpended Appropriations            
Beginning Balances 46,623   46,623      
Net Position, Beginning of Period 76,561 2,933 73,628   76,561 Net Position, Beginning of Period – Adjusted
Budgetary Financing Sources           Budgetary Financing Sources
Appropriations Received 33,457   33,068   33,068 Appropriations Received as Adjusted
Rescissions and Canceling Funds (389)          
Appropriations Transferred in(out) (71) 346 38 (346) 38 Non-Expenditure Transfers-In of Unexpended Appropriations and Financing Sources
      (455) 346 (109) Non-Expenditure Transfers-Out of Unexpended Appropriations and Financing Sources
Appropriations Used (32,703) (190) (32,513)   (32,703) Appropriations Used (Federal)
Budgetary Financing Sources           Budgetary Financing Sources
Appropriations Used 32,703 190 32,513   32,703 Appropriations Expended
Non-exchange Revenue            
Donations 62 62     62 Other Taxes and Receipts – Non-Federal Other
Transfers in(out) without Reimbursement 30 45     45 Appropriation of Unavailable Special/Trust Fund Receipts Transfers-In
    (3)     (3) Appropriation of Unavailable Special/Trust Fund Receipts Transfers-Out
      (12)   (12) Expenditure Transfers-Out of Financing Sources
Other Financing Sources           Other Financing Sources
Donations           Other Taxes and Receipts – Non-Federal Other
Transfers in(out) without Reimbursement 33   61   61 Transfers-In without Reimbursement
      (28)   (28) Transfers-Out without Reimbursement
Inputed Financing from Costs Absorbed by Others 186 53 151 (18) 186 Imputed Financing Sources
Non-entity Collections (536)   (536)   (536) Non-Entity Custodial Collections Transferred to the General Fund
Net Cost of Operations (32,637) (1,236) (31,419) 18 (32,637) Net Cost of Operations
Net Position $76,696 $2,200 $74,496 $— $76,696 Net Position – Ending Balance

U.S. Department of State

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