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General and special funds-Continued

ALLOCATIONS RECEIVED FROM OTHER ACCOUNTS

Note.- Obligations incurred under allocations from other accounts are included in the schedules of the parent appropriations as follows: Office of Emergency Planning:

"Emergency supplies and equipment."

"Emergency preparedness functions of Federal agencies." Health, Education, and Welfare:

Office of Education. "Payments to school districts."
Public Health Service:

"National Cancer Institute."

"Civil defense medical stockpile activities." Defense Military. “Civil defense.'

and services necessary to the comfort and well-being of veterans in hospitals and domiciliaries operated by the Veterans Administration (38 U.S.C. 4201-08).

Budget program. Sales are expected to be $45,712 thousand in 1963 and $47,157 thousand in 1964. Operating costs will increase primarily as a result of Federal minimum wage legislation and increased pay costs pursuant to Public Law 87-793.

Financing. Operations are financed from current revenues. "The Congress originally appropriated a total of $4,965 thousand to establish and operate the Service. Funds in excess of the needs of the Service totaling $6,900 thousand have been paid to the Treasury as of June 30, 1962.

Operating results and financial condition. Operating revenue is expected to be sufficient to cover operating expenses. Funds at the close of the fiscal year in excess of the needs of the Service for the ensuing fiscal year will be paid to the Treasury.

Revenue, Expense, and Retained Earnings (in thousands of dollars)

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31,149 10,734 1,631

31,898 11,258 1,738

32,708 11,922 1,830

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43,514

47,157 46,973

44,894

44,726 44,014

46,460

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Total operating costs, funded.. Capital outlay: Sales program: Purchase of equipment..

Total program costs, funded.. Change in selected resources :

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Net operating income, sales program.. Nonoperating income or loss (-):

Proceeds from sale of equipment.
Net book value of assets sold (--)-

Net loss ( - ) from sale of equipment. Miscellaneous revenue.

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37 134

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134

Net income for the year.
Analysis of retained earnings:

Retained earnings, start of year.
Payment of earnings (-)--

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44,897

11,004

- 35

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Total revenues and other receipts. Unobligated balance brought forward. Capital transfer: Payment of earnings (-)-Unobligated balance carried forward (-)-

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Financing applied to program.

44,644

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1 Balances of selected resources are identified on the statement of financial

condition.

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Assets:

Treasury balance.

Accounts receivable..
Selected assets: 1

Commodities for sale....-
Prepaid expenses and other assets-
Fixed assets, net.

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Obligations (from program and financing).
Increase (-) in gross unpaid obligations.

Gross expenditures..---
Revenues and other receipts (from program

and financing) --Increase (-) in accounts receivable, net..

Applicable receipts..--

3,280 3,419

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Budget expenditures.

-353

-341

-8

362 364

364

364 11,004 11,779 12,144 12,413 11.366 | 12,143 12,508 12,777

The Veterans Canteen Service was established by Congress in 1946 to furnish at reasonable prices merchandise

1 The changes in these items are reflected on the program and financing schedule.

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Unpaid undelivered orders 1

1,209 1,141 1,141 1,141 Financing: Unobligated balance

2,283 2,501 2,625 2,465 New obligational authority (authorization to Invested capital and earnings

7,874 8,501 8,742 9,171

expend from public debt receipts): Current.

350,000 Total Government equity-11,366 12,143 12,508 12,777 Permanent..

150,000 200,000 150,000

Revenues and other receipts: 1 The changes in these items are reflected on the program and financing schedule. Repayment of loans to veterans.

70,579 77,725 82,235 Repayment of vendee loans.

375 400 400 Object Classification in thousands of dollars)

Sale of loans.--

19,488 18,000 18,000 Sale of properties.

293 300 300 1962 1963 1964 Interest on loans.

61,821 69,500 75,000 actual estimate estimate Rental and other revenue..

1,316 1,200 1,300 11 Personnel compensation:

Total revenues and other receipts. ---- 153,871 167, 125 177,235 Permanent positions.-

9,351 9,945 10,607 Positions other than permanent.

695
676

656 Unobligated balance brought forward: Other personnel compensation.

46 50 57
Cash.

139,387 49,747

95,504 Excess of annual leave earned over an

Authorization to expend from public debt renual leave taken... 118 138 144 ceipts...

300,000 300,000

Unobligated balance transferred to "Loan guarTotal personnel compensation.... 10,210 10,809 11,464 anty revolving fund" (annual appropria12 Personnel benefits.--

753 792 844

tion acts) (cash): 21 Travel and transportation of persons.

102 102 102 Capital (borrowings from Treasury) (74 Stat. 23 Rent, communications, and utilities.

674 681 683
532 and 76 Stat. 8).

-105,718 24 Printing and reproduction.

49
46
46 Retained earnings (72 Stat. 1203).

-101,153 25 Other services.

251 246 266 Unobligated balance carried forward: 26 Supplies and materials.

31,475 32,218 33,055
Cash...

–49,747 -95,504 -135,284 31 Equipment.-

823 720 982 Authorization to expend from public debt re-
ceipts...

- 300,000 -300,000 --300,000 Total costs...

44,337 45,614 47,442
Unobligated balance lapsing (72 Stat. 1214).

-19,488 -18,000 Change in selected resources.

307
97

Financing applied to program... 236,640 301,880 269, 455 Total obligations.-

44,644 45,711 47, 442

Note.-The above statement excludes the following exchanges of non working capital assets: The settlement of defaulted veterans loans by acquisition of property

(1962, $5,224 thousand; 1963, $4,250 thousand; 1964, $4,250 thousand): The settlePersonnel Summary

ment of vendee loans by acquisition of real property (1962, $219 thousand; 1963. $274 thousand; 1964, $297 thousand): The acquisition of vendee loans in exchange for real property (1962, $3,472 thousand; 1963, $4,254 thousand; 1964, $4,323

thousand). Total number of permanent positions..

2,612 2,622 2,631 Full-time equivalent of other positions...

283 283 283

1 Balances of selected resources are identified on the statement of financial con

dition. Average number of all employees...

2,875 2,892 2,905 Number of employees at end of year

3,172 3,182 3,191 Summary of Sources and Application of Funds (in thousands of dollars) Average GS grade..

6.7

6.9 6.9
Average GS salary.
$6,315 $6,769 $6,880

1962
1963

1964 Average salary of ungraded positions. $3,369 $3,570 $3,769

actual estimate estimate

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Program by activities:
Capital outlay:

1. Direct loans to veterans.-
2. Vendee loans made..
3. Real property acquired.

Total capital outlay-
Change in selected resources

Total capital outlay obligations Operating costs, funded: 4. Interest on borrowings... 5. Operating expenses, general... 6. Property management and selling ex

penses. Total operating costs, funded-obliga

tions....

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Loans are made to veterans for the purchase, construction, or improvement of homes, including farm residence in specified areas where mortgage loans made by private lenders and guaranteed by the Veterans Administration cannot be secured (38 U.S.C. 1811 as amended).

Budget program-1. Direct loans to veterans. Under existing legislation, authority to make or to enter into commitments to make loans expires July 25, 1967, for World War II veterans, and January 31, 1975, for Korean conflict veterans. The amount of loans outstanding will reach $1.6 billion in 1964. A summary of loan activity follows (dollars in thousands):

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804

1962 actual

1964

estimate

estimate

.

1961 actual

1962 actual

1963 eslimate

eslimate

Public enterprise funds-Continued

proceeds of loan sales in the preceding fiscal year. In DIRECT LOANS TO VETERANS AND RESERVES REVOLVING

addition, the proceeds of loan repayments and loan sales FUND-Continued

are available for making loans. Of the total funds to be

made available from borrowings and program operations, 1962 actual 1963 estimate 1964 estimate Number of loan commitments

18,159

it is expected that $228 million will be disbursed in 1963

23,500 19,676 Number of loan disbursements and in

and $216 million in 1964. Expenses incident to closing process.

19,699 21,500 20,000 loans are paid by the veteran, foreclosure expenses are Amount of loan commitments (obligated)

met from interest income, and administrative expenses $190,852 $249, 105 $212,500 Disbursements on loans closed and in

are borne by the appropriation for General operating process.

$207,038 $228,000 $216,000 expenses, Veterans Administration. Average per loan closed and in

Operating results and financial condition.—Retained process.

$10,510 $10,600 $10,800 earnings will amount to $37.2 million by June 30, 1964. Repayment of loans (includes exchange of noncash assets)

Transfers of $101.2 million in retained earnings (72 Stat. $75,699 $81,825 $86,340 Sale of loans $19,488 $18,000 $18,000

1203) and $105.7 million in capital (74 Stat. 532) were Losses on loans.

$177
$175

$175

made to the Loan guaranty revolving fund during 1962. Net loan disbursements.

$111,674 $128.000 $111,485 Loans outstanding end of year:

Revenue, Expense, and Retained Earnings (in thousands of dollars) Number

175,909 190,609 203,609 Amount. $1,333,612 $1,461,612 $1,573,097

1963 2. Vendee loans made.-Resale of real property acquired through foreclosure or voluntary conveyance normally Revenue involves a cash down payment by the purchaser and the

63,136 70,700 76,300 Expense

45,912 52,892 57,067 creation of a new mortgage loan to be held by the Veterans Administration. The noncash portions of these trans

Net operating income.

17,224 17,808 19,233 actions are excluded from the program and financing Nonoperating income: schedule above; but they are included in the following Proceeds from sales of properties: activity summary (in thousands of dollars):

Cash proceeds.

293 300 300 Other

3,471 4,404 4,473 1964 Net book value of properties sold (-).

-3,694 -4,629 -4,698 Amount of properties sold. 2,371 3,879 4,704 4,773 Net gain from sale of properties..

70
75

75 Amount of vendee loans acquired.

2,160 3,477 4.259. 4,328 Amount of vendee loans repaid.. 405 594 674 697 Net income for the year

17,294 17,883 19,308

Analysis of retained earnings: 3. Real property acquired.-- Properties are acquired Retained earnings, start of year.

83.859

17,883 through foreclosures and voluntary conveyance in de

Transfer to “Loan guaranty revolving fund" faulted loans. This involves primarily an exchange of

(72 Stat. 1203).

-101,153 noncash assets, with relatively small cash outlay. The Retained earnings, end of year.

17,883 37,191 noncash portion of these transactions are excluded from the program and financing schedule above and the statement of sources and application of funds; but they are

Financial Condition (in thousands of dollars) included in the following activity summary in thousands of dollars):

actual actual estimate Amount of properties acquired..

3,176 5,506 4,594 4,622

Assets: 4. Interest-on borrowings.Payments to the Treasury

Treasury balance..

221,639 121,995 190,843 Accounts receivable, net

1,608

2,768 increase as the principal amount of notes held by the Loans receivable net: Treasury increases with additional borrowings. Out of Direct loans to veterans..

1,221,937 1,333,612 1.461,612 1,573, 102 the total earned revenue through June 30, 1962, approxi

Vendee loans..

6,714 2,592 13,175 mately 63% was used to pay interest expensé on bor

Real property owned.

2,117 3,563 3,564

Real property in process of acrowings.

quiring title..

201 451 5. Operating expenses, general.-Includes a variety of miscellaneous expenses incident to closing and servicing

Total assets

1,454,216 1,471,981 (1,672, 464 1,827. 192* loans. Costs will increase in proportion to the increase

Liabilities: in the number of loans outstanding.

Current.

40,279 47,621 6. Property management and selling expenses. The costs of maintaining and selling properties acquired

Government equity: through foreclosure is expected to increase slightly with

Interest-bearing capital: the increase in the number of loans outstanding

1.180.078 1,330,078 1,424,360 1,604,872 Borrowings from Treasury, net. 150,000

200,000 Financing-Loans are made primarily with funds

Transferred to "Loan guaranty borrowed from the Treasury. Borrowing authority in revolving fund” (borrowings the amount of $1,833 million was authorized through

from Treasury) (74 Stat.
532 and 76 Stat. 8).

-105,718
June 30, 1962. Additional borrowing authority of $200
million in 1963 and $150 million in 1964 has been author-
ized. Present plans provide for utilization of the entire

Retained earnings, end of year...

1,330,078 1.424,360 1,604,872 1,736,872

83,859 authorization in both 1963 and 1964. Treasury borrowings subsequent to June 30, 1962, will be reduced by the Total Government equity... 1,413,937 1,424; 360 1,622,755 1,774,063

1961

1962

1963

1961 actual

1962 actual

1963 eslimate

1964 estimale

1964 estimate

230,213

3,200

2,870

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1964 estimate

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LOAN GUARANTY REVOLVING FUND During the current fiscal year, the Loan guaranty revolving fund shall be available for expenses, [but not to exceed $220,545,000,] for property acquisitions and other loan guaranty and insurance operations under Chapter 37, title 38, United States Code, except administrative expenses, as authorized by section 1824 of such title: Provided, That the retained earnings of the Direct loans to veterans and reserves revolving fund shall be available[, during the current fiscal year,] for transfer to said Loan guaranty revolving fund in such amounts as may be necessary to provide for the foregoing expenses. (Independent Ofices Appropriation Act, 1963.)

Program and Financing (in thousands of dollars)

244,081

83,015

263,390

244,965

-1,915

620

-705

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1964 estimate

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The Loan guaranty revolving fund was established at the beginning of 1962 by 74 Stat. 533, in order that the revenues obtained from principal payments on vendee

accounts and acquired loans, income from interest pay184,000 ments on such assets, and miscellaneous income, such as 16,850 from the rental of properties, could be used to defray 1,500

expenses for paying claims, acquiring, managing and 7,805

selling properties. 210.155 155 Budget program. -— The activities indicated in tables i

and 2 below represent the numbers of each asset acquired

on a check issued basis.
26, 460
9,625

1. Real property acquired.-Private lenders who have

acquired property as a result of foreclosure on defaulted 36,085 guaranteed or insured loans may elect to convey that

property to the Veterans Administration. The table 246, 240

below reflects this activity and excludes the amount of indebtedness established against the veteran:

6. Sales expense

14,601
6,830

22,150
9,625

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Total operating costs, funded...
Total program costs, funded-obliga-

tions.
Limitation under existing legislation..
Proposed increase in limitation..

234,552

311,603

220,545
91.058

1962 actual 1963 eslimate 1964 estimele

Limitation...

311,603

Financing:

Properties acquired:

Number of properties acquired.
Average cost per acquisition.
Total cost (in thousands).

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Revenues and other receipts:

Loan and other repayments.
Sale of loans...
Sale of properties.
Collection of claims receivable (veterans

indebtedness).
Interest, rental and other revenue.

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1962

1963

1964

Revenue.

Public enterprise funds-Continued

anticipated in the 1963 budget and the costs of these will LOAN GUARANTY REVOLVING FUND-Continued

exceed previous estimates by about $91 million. A re

quest will be submitted to revise the limitation on expenses of indebtedness established against the veteran after the and provide supplemental financing for this fund under claim has been settled:

separate transmittal for 1963.
1962 actual 1963 estimate 1964 estimate
Claims paid:
Number of claims paid...

Revenue, Expenses, and Retained Earnings (in thousands of dollars)
16,403 22,450 16.850
Average cost per payment..

$855 $1,000 $1,000
Total cost (in thousands)
$14,026 $22,450 $16,850

actual estimate estimate
3. Loans acquired.-Guaranteed or insured loans in a
default status may be purchased by the Administrator to

24,684 23,840 28,800 Expenses.

24,347 36,497 41,085 avoid foreclosure when it is felt that temporary forbearance will allow the veteran borrowers to cure the default: Net operating income or loss

337 -12,657 -12,285
1962 actual 1963 estimate 1964 estimate Nonoperating income:
Loans acquired:

Proceeds from sales of properties:
Number of loans acquired.

119
150
145
Cash proceeds.

7,145 8,500 9,240
Average cost per payment.
$10,277 $10,300 $10,300
Other..

137,369 171,000 176,000 Total cost (in thousands). $1,223 $1,545 $1,500

Net book value of properties sold (-). - 137,337 -170,500 -173,240 4. Repurchase of loans sold.-Pursuant to VA Regula Net gain from sale of properties.

7,177 9,000 12,000 tion 4600, dated March 22, 1962, the Administrator may

Net income or loss (-) for year...--sell mortgage loans, which have been created incident to

7,514 -3,657 -285 the sale of VA acquired properties, with full recourse.

Analysis of deficit:

Deficit (--), assumed at inception of fund... -12,978
Estimated amounts of $10 million in 1963 and $7.8 Deficit (-), start of year.

-5,464 -9,121
million in 1964 are provided for that contingency.
5. Property management expense. --The cost of owner-

Deficit (-), end of year..

-5,464 -9,121 -9,406 ship of acquired properties includes local real estate taxes, services performed by management brokers and mainte

Financial Condition (in thousands of dollars) nance of the property in a saleable condition:

1961 actual

1962 actual

1963

1964 estimate estimate

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INIVERSITY OF MICHIGAN

199.630 289, 277 327,927

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Property management expense:
Average number of properties.

13,884 21,100 25,200
Cost per property...

$1,052 $1,050 $1,050
Total cost (in thousands).

$14,601 $22,150 $26, 460
6. Sales expense.—This item consists principally of
brokers fees and advertising cost incident to the sale of
acquired properties :

1962 actual 1963 eslimate 1964 eslim ale
Sales expense:
Number of sales.

13,476 17,500 17,500
Cost per sale.

$507 $550

$550
Total cost (in thousands).

$6,830 $9,625 $9.625
Financing.--Revenue and receipts consist principally
of interest income and repayments on mortgage loans
made incident to the sale of real property acquired as a
result of foreclosure on guaranteed loans. It will be
several years before interest income and principal repay-
ments are sufficient to offset program costs, and make tħe
fund self-sustaining. In the meantime, it will be neces-
sary to obtain funds from other sources.
during 1963 and 1964, it is estimated that $59 million
and $34 million, respectively, will be required to be
transferred from the Readjustment benefits appropriation
(74 Stat. 533). Also, in 1963 and 1964 an estimated
$150 million and $147 million vendee loans will be sold to
private investors.

Proposed language change, 1963.- A language change
will be proposed to remove the

limitation of $221 million
included in the Independent Offices Appropriation Act,
1963, for expenses involved in property acquisition and
other loan guarantee expenses under chapter 37, title 38,
· United States Code.

Current estimates indicate that the number of guaran-
teed and insured claim payments and properties that
private lenders will elect to convey to the Veterans Ad.
ministration, all uncontrollable, will exceed the totals

In this respect,

Government equity:
Non-interest-bearing capital:
Assumption of assets, net, at inception

of fund.
Start of year
Transferred from "Direct loans to vet-

erans and reserves revolving fund"

(cash):
Capital (borrowings from Treasury)

(74 Stat. 532 and 76 Stat. 8).
Retained earnings (72 Stat. 1203)-
Payment from “Readjustment benefits"

appropriation...

105,718 101,153

59,275 34,000

End of year.
Deficit (-), end of year.

728,206 787, 481 821, 481 -5,464 -9,121 -9,406

Total Government equity--

722,742 778,360 812,075

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