SEC Operations: Implications of Alternative Funding Structures

GAO studied the implications of converting the Securities and Exchange Commission (SEC) to a self-funded entity. Congress has created a range of self-funding structures, or other sources of funding, other than appropriations for the Department of the Treasury's general fund. The variations among these agencies depend on how and when Congress makes the fees available to an agency and how much flexibility Congress gives an agency in using its collected fees without further legislative action. Moving SEC to a more self-controlled funding structure has implications for two important areas. First, SEC would have more control over its own budget and funding level, which some SEC and industry officials believe may better enable SEC to address its increasing workload and some of its human capital challenges, such as its ability to recruit and retain quality staff. The second result would be a loss of checks and balances currently provided by the federal budget and appropriations processes. Moving SEC to a self-controlled funding structure would diminish congressional and executive branch oversight. On the other hand, the congressional authorizing committees would maintain or else could choose to increase their oversight of SEC. However, if Congress wanted to give SEC greater budget flexibility but still maintain some degree of control over SEC's funding level, it could place limitations on SEC's offsetting collections.