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2016 Financial Report of the United States Government

Notes to the Financial Statements

Note 19. Commitments

Long-Term Operating Leases as of September 30, 2016, and 2015
(In billions of dollars)
General Services Administration 23.1 23.9
U.S. Postal Service 7.4 7.1
Department of State 1.6 1.5
Department of Health and Human Services 1.0 1.1
Department of Defense 0.9 1.1
Department of Agriculture 0.6 0.5
Department of the Treasury 0.6 0.6
Agency for International Development 0.4 0.4
Department of Transportation 0.4 0.5
Securities and Exchange Commission 0.3 0.4
Other operating leases 1.9 2.3
  Total long-term operating leases 38.2 39.4

The government has entered into contractual commitments that require future use of financial resources. It has significant amounts of long-term lease obligations and undelivered orders. Undelivered orders represent the value of goods and services ordered that have not yet been received.

The government has other commitments that may require future use of financial resources. For example, the government has callable subscriptions in certain Multilateral Development Banks (MDBs), which are international financial institutions that finance economic and social development projects in middle-income developing countries. Callable capital in the MDBs serve as a supplemental pool of resources that may be redeemed and converted into ordinary paid in shares, if the MDB cannot otherwise meet certain obligations through its other available resources. MDBs are able to use callable capital as backing to obtain favorable financing terms when borrowing from international capital markets. To date, there has never been a call on this capital at any MDBs and none are anticipated.

Undelivered Orders and Other Commitments as of September 30, 2016, and 2015
(In billions of dollars)
Undelivered Orders:
Department of Defense 239.6 236.2
Defense Security Cooperation Agency 130.0 136.4
Department of Education 123.4 124.9
Department of Transportation 105.9 108.7
Department of Health and Human Services 96.1 98.9
Department of Agriculture 52.4 40.3
Department of Homeland Security 35.7 33.2
Department of Housing and Urban Development 35.1 38.1
Department of Energy 22.2 22.5
Department of State 21.6 21.0
Department of the Treasury 18.0 169.6
U.S. Agency for International Development 17.6 18.2
Department of Veterans Affairs 12.2 11.9
National Science Foundation 12.0 11.5
Federal Communications Commission 9.4 11.9
Department of the Interior 8.9 8.3
Department of Labor 8.4 9.2
All other agencies 22.7 24.0
  Total undelivered orders 971.2 1,124.8
Other Commitments:
GSE Senior Preferred Stock Purchase Agreement 258.1 258.1
U.S. Participation in the International Monetary Fund 155.1 -
Callable Capital Subscriptions for Multilateral Development Banks 120.0 112.3
Agriculture Direct Loans and Guarantees 4.9 5.0
Fuel Purchase Obligations 4.5 4.9
Power Purchase Obligations 2.8 4.3
Other Purchase Obligations 2.0 2.8
Long-term Satellite and Systems 0.9 2.3
All other commitments 1.6 15.1
  Total other commitments 549.9 404.8

Other Commitments and Risks

Undelivered Orders

The Department of the Treasury reported undelivered orders of $18.0 billion and $169.6 billion as of September 30, 2016 and 2015, respectively. This decrease was primarily due to a change in budgetary accounting and reporting policy for transactions related to the United States’ participation in International Monetary Fund (IMF). Effective October 1, 2015, in accordance with OMB guidance, Treasury changed its budgetary accounting and reporting policy for transactions related to the United States’ participation in the IMF. Under this change in policy for transactions, other than related interest earnings and cost estimates for U.S. quota and New Arrangements to Borrow adjustments, are no longer reported as budgetary resources and used in Treasury’s Combined Statement of Budgetary Resources. As a result of this change in budgetary accounting, Treasury adjusted the beginning balances of “Unobligated” and “Unpaid Obligations” on its Combined Statement of Budgetary Resources for fiscal year 2016 to remove those balances associated with IMF programs. This contributed to the significant decline in undelivered orders and the $155.1 billion increase in other commitments in fiscal year 2016.

Commitments to GSEs

At September 30, 2016 and 2015, the maximum remaining potential commitment to the GSEs for the remaining life of the SPSPAs was $258.1 billion, which was established on December 31, 2012. Refer to Note 8—Investments in Government-Sponsored Enterprises for a full description of the SPSPA agreements, related commitments, and contingent liability, if any, as well as additional information.

Terrorism Risk Insurance Program

Congress originally enacted the Terrorism Risk Insurance Act (TRIA) in November 2002 to address market disruptions resulting from terrorist attacks on September 11, 2001. Most recently, the Terrorism Risk Insurance Program Reauthorization Act of 2015 extended the Terrorism Risk Insurance Program (TRIP) until December 31, 2020. The TRIP helps to ensure available and affordable commercial property and casualty insurance for terrorism risk, and simultaneously allows private markets to stabilize. The authority to pay claims under the TRIP Program is activated when the Secretary of the Treasury (in consultation with the Secretary of the U.S. Department of Homeland Security and the U.S. Attorney General) certifies an “act of terrorism.” In the event of certification of an “act of terrorism” insurers may be eligible to receive reimbursement from the U.S. government for associated insured losses assuming an aggregate insured loss threshold (“program trigger”) has been reached once a particular insurer has satisfied its designated deductible amount. For calendar years 2016 and 2015, the program trigger amount was $120 million and $100 million, respectively. This amount will increase by $20 million annually through calendar year 2020. Insured losses above insurer deductibles will be shared between insurance companies and the U.S. government. The TRIP includes both mandatory and discretionary authority for the Department of the Treasury to recoup federal payments made under the TRIP through policyholder surcharges under certain circumstances, and contains provisions designed to manage litigation arising from or relating to a certified act of terrorism. There were no claims under the TRIP as of September 30, 2016 or 2015.

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