Oversight of Annual Fund Transfer for Miner Benefits Needs Improvement

As part of its mission, the Office of Surface Mining Reclamation and Enforcement (OSMRE) distributes Federal funds intended for the welfare of retired mine workers and their dependents. Each year, OSMRE transfers millions of dollars drawn from two Government sources—the interest account of the Abandoned Mine Land Reclamation Fund and the U.S. Treasury’s General Fund—to the United Mine Workers of America Health and Retirement Funds (UMWAF). From 2011 through 2015, OSMRE transferred $961.3 million in funds to UMWAF to provide benefits for retired miners and their families. 

 

Our audit objectives were to determine whether OSMRE has administered the transfer of funds to UMWAF consistent with the Federal Coal Industry Retiree Health Benefit Act of 1992 (Coal Act), and to what extent OSMRE has provided oversight to ensure that UMWAF managed the transferred funds in accordance with regulations and statutes.

 

We found that OSMRE has provided minimal oversight of UMWAF’s federally supported health benefit plans, leaving the Federal Government without sufficient insight into how UMWAF has been using the transferred funds. As a result, OSMRE has not ensured that UMWAF managed the federally supported health benefit plans in accordance with regulations and statutes. 

 

Federal regulations and statutes do not explicitly provide a mechanism for oversight by OSMRE. In addition, OSMRE personnel do not have experience with health benefit plans, leaving a large knowledge gap at all levels. Despite these limitations, OSMRE has continued to fund the annual transfer requests to UMWAF without obtaining and validating the necessary information and supporting documentation from UMWAF. 

 

Without adequate oversight and guidance from the Federal Government, UMWAF made decisions on how to spend the funds transferred through OSMRE without considering the impact on the Federal Government, which is responsible for a majority of the costs for providing these benefits. As a result, OSMRE certified the annual fund transfers without requiring UMWAF to provide appropriate supporting documentation. Specifically, we found that OSMRE—

 

• did not verify beneficiary enrollments and assignments;

• used unreconciled information to support the fund transfers;

• received inadequate documentation to support administrative expenses; 

• did not require UMWAF to report delinquent operators to the IRS;

• did not require UMWAF to apply residual funds to shortfalls; and

• did not require UMWAF to remit interest earned on Federal funds.

 

OSMRE’s inadequate oversight has allowed too many decisions to reside with UMWAF, rather than the Federal Government. We made 21 recommendations to assist OSMRE in improving its oversight to ensure that UMWAF administers federally funded benefits in accordance with regulations and statutes. In response to our draft report, OSMRE concurred with 10 recommendations, did not concur with 5 recommendations, and did not specify whether it concurred with 6 recommendations. We referred the recommendations to the Office of Policy, Management and Budget for resolution and implementation tracking.