Case Study

Federal Credit Reform Support Services at the USDA’s Farm Service Agency

Challenge: The Budget Division at the U.S. Department of Agriculture (USDA) Farm Service Agency (FSA) oversees the credit subsidy calculation and budget responsibility for more than 20 direct loans and loan guarantee credit programs. The FSA Budget Division needs comprehensive federal credit reform support services for a portfolio of direct loans and loan guarantees that exceed $90 billion, including support for credit subsidy calculation for budget formulation and annual re-estimate purposes, cash flow modeling, maintenance of cash flow models, re-estimate analysis, federal credit and technical advisory, and federal credit training.

Solution: In a multi-year engagement with FSA that started in 2007, Summit designed, constructed, and currently operates the FSA Budget Division’s credit subsidy cash flow models. Summit led the design, development, and maintenance of all cash flow models for FSA’s credit subsidy calculation. Some of these programs include the Agricultural Credit Insurance Funds (ACIF), Storage Facility Loans (SFL), General Sales Manager (GSM), and Public Law 480 (PL480) programs. For each of these programs, Summit takes unique, proprietary program data and juxtaposes it with macroeconomic trends to econometrically forecast loan performance for inclusion in the President’s budget. Working with Budget and Loan Program Office, our team estimates the loan assumptions to be used in the credit subsidy model, updates the credit subsidy models, and supports FSA throughout the Office of Management and Budget (OMB) approval process. These models were subsequently reviewed and audited by OMB, USDA’s Office of the Inspector General, and external audit teams. During re-estimate and budget formulation periods, Summit provides on-site technical support and analyses to assist FSA Budget Division staff in completing and reviewing credit subsidy calculations.