At the request of the Office of Surface Mining Reclamation and Enforcement (OSM), the Office of Inspector General completed an inspection of the United Mine Workers of America Health and Retirement Funds (UMWAF) to review concerns expressed by OSM about increasing administrative costs. We also reviewed OSM's authority to provide programmatic oversight of the trusts related to UMWAF.
A memorandum of understanding currently exists between UMWAF and OSM that details the responsibilities of both UMWAF and OSM under the Surface Mining Control and Reclamation Act (SMCRA), which created the Abandoned Mine Lands fund to pay for the cleanup of mine lands. SMCRA requires OSM to transfer interest payments from the fund to the three trusts that support healthcare benefits. Each fiscal year, UMWAF submits a funding request that details projected costs to OSM; OSM then transfers interest earned from the fund to support the costs.
Despite OSM's concerns about increasing administrative costs, our reviewed determined that administrative costs for all three trusts are at or below the 12 percent observed in private industry. We also found that while SMCRA does not specifically provide oversight authority, the current memorandum between OSM and UMWAF allows OSM to receive and review audited financial statements and monthly unaudited statements, both provided by UMWAF. With the current memorandum expiring at the end of fiscal year 2014, OSM has an opportunity to negotiate additional oversight under any new agreement with UMWAF.
We made one recommendation to assist OSM with increasing its oversight authority of administrative costs associated with UMWAF.