Is OSHA a Self-Funded Agency?
I was chatting with a fellow safety professional the other day, someone I consider a very seasoned pro, to discuss some OSHA citations a client of his received. During the course of our conversation, he made what I thought was an off-hand remark about OSHA issuing citations and penalties so they could make more money to operate on. I chuckled and said, “Thank goodness they don’t actually do that.“
Suddenly, I could tell by the look in his eye and his body language that he was taken aback; he really thought federal OSHA was a fully self-funded agency. After clarifying my position, he asked me to send him some info to back up my statement so he could review it. So, I composed an email and sent it to him the next day. Then I realized that he probably wasn’t the only person who might think this is true, so I decided to add some more meat to the info in the email and turn it into a blog post. Here it is:
Where Does OSHA Get Its Funding?
OSHA is a federally funded agency, meaning it receives its budget through congressional appropriations. Each year, the U.S. Congress determines OSHA’s funding as part of the overall federal budget. This money is allocated to cover OSHA’s enforcement efforts, workplace safety programs, training grants, and administrative costs.
For Fiscal Year (FY) 2023, OSHA’s total budget was approximately $632 million, allocated as follows:
- Federal enforcement programs: ~$250 million
- State Plan programs (which help fund OSHA-approved state-run safety agencies): ~$120 million
- Compliance assistance, training, and outreach: ~$90 million
- Whistleblower protection and legal support: ~$25 million
(Source: U.S. Department of Labor Budget Reports)
While OSHA receives all funding from the federal government, it’s important to note that not all government agencies operate the same way. Some federal agencies are self-funded, meaning they generate revenue through the services they provide, rather than relying on taxpayer dollars. These agencies include:
The Securities and Exchange Commission (SEC) – Collects fees and fines from financial market participants to help fund its enforcement and regulatory activities.
The Federal Communications Commission (FCC) – Charges licensing fees to broadcasters and telecommunications companies, which contribute to its budget.
The Consumer Financial Protection Bureau (CFPB) – Receives funding from the Federal Reserve, which itself generates revenue through various banking-related activities.
The Federal Deposit Insurance Corporation (FDIC) – Financed through insurance premiums paid by member banks, not taxpayer dollars.
In contrast, OSHA has no direct revenue stream and depends entirely on congressional appropriations to meet its budgetary needs.
OSHA’s Budget vs. Penalties Collected
In contrast to its $632 million budget, OSHA collected a total of $204 million in penalties from violations during FY 2023. While this may sound like a significant amount, it is important to note that penalties collected are not used to fund OSHA’s operations. All fines go directly to the U.S. Treasury’s general fund and do not benefit OSHA directly.
This discrepancy highlights the point that OSHA is not self-funded and has no financial incentive to issue penalties. Instead, its funding comes primarily from federal appropriations to fulfill its mission of ensuring workplace safety. In fact, even if OSHA wanted to fund itself through penalties, it clearly could not—the total penalties collected in FY 2023 amounted to less than one-third of its actual budget. This further disproves the myth that OSHA operates as a self-sustaining agency.
The Real Purpose of OSHA Penalties
OSHA’s primary goal is not to generate revenue but to ensure safe working conditions. Penalties serve as a deterrent to encourage employers to comply with safety regulations, reducing workplace injuries and fatalities.
In FY 2023, OSHA issued several significant penalties to companies that violated workplace safety standards, highlighting the consequences of non-compliance:
- A food processing company faced a $2.8 million penalty after a worker was killed while cleaning a conveyor system that had not been properly locked out.
- A manufacturing firm was fined nearly $1.9 million after an employee lost a limb due to inadequate machine guarding and failure to implement lockout/tagout procedures.
- A construction company received over $685,000 in penalties for repeated fall protection violations, despite previous citations and fatal incidents on their worksites.
- A city government was fined over $600,000 for improper handling of asbestos during a renovation project, putting workers at risk of serious health hazards.
These penalties underscore the importance of compliance with OSHA regulations. The fines are not about revenue—they are about holding employers accountable and preventing future tragedies.
What Happens If OSHA Penalties Go Unpaid?
While OSHA issues significant penalties each year, not all of them are collected. Between FY 2018 and FY 2020, OSHA classified nearly $100 million in penalties as uncollectible, with about 20% of cited employers failing to pay.
OSHA’s Debt Collection Process
When a company refuses to pay, OSHA follows a multi-step process to recover the debt:
- Payment Notices & Calls – Employers receive multiple reminders at 7, 30, and 60 days past the due date, plus follow-up phone calls.
- Debt Collection via the U.S. Treasury – If payment is still not made, the debt is referred to the Treasury Department, which can take collection actions like wage garnishment or federal payment withholding.
- Legal Action – In extreme cases, OSHA may involve the Department of Justice to recover unpaid fines.
What If a Company That Owes Money to OSHA Declares Bankruptcy?
Some companies attempt to avoid paying OSHA fines by declaring bankruptcy. OSHA must file as a creditor in the bankruptcy case, but if assets are insufficient or OSHA misses filing deadlines, the fines may go uncollected. This happened in a case involving a metal manufacturer, where OSHA never recovered penalties tied to a worker’s fatal accident due to a bankruptcy filing.
What Happens If OSHA Doesn’t Spend Its Budget?
If OSHA does not spend all of its allotted funds during a particular fiscal year, the unspent money generally does not carry over for future use by the agency. Instead, the funds are returned to the U.S. Treasury. This “use-it-or-lose-it” system means that unspent funds by the end of the fiscal year are effectively lost.
Some funds may be “obligated” (committed to specific contracts, grants, or planned expenditures) before the fiscal year ends, allowing those obligations to carry over. However, if OSHA consistently under-spends its budget over multiple years, Congress may reduce its future funding, based on the assumption that OSHA does not need as much money.
In contrast, if OSHA were to overspend or fail to manage its budget appropriately, it could face scrutiny and reductions in future appropriations.
How Are State OSHA Programs Funded?
Many states operate their own OSHA-approved workplace safety programs, known as State Plans. These state-run programs cover about half of all U.S. workers and are funded through a combination of state and federal dollars.
While no state OSHA program is fully self-funded through penalties, their funding structures vary. In general:
- Federal OSHA provides 50% of a state OSHA program’s funding through grants.
- The remaining funds come from state budgets, typically through legislative appropriations.
- Penalty revenue does NOT go directly back to the state OSHA program but instead follows state-specific budgeting rules.
Some states, like California’s Cal/OSHA, assess significant penalties, but those funds do not go directly back into Cal/OSHA’s operating budget. Instead, like federal penalties, they go into the state’s general fund or other designated accounts.
This means no OSHA program—federal or state—operates on fines alone.
The Bottom Line: OSHA IS NOT Self-Funded
The idea that OSHA funds itself through penalties is a myth. The agency operates on a federally approved budget, and all fines collected go into the U.S. Treasury’s general fund—not back into OSHA’s budget. While penalties are a crucial tool for enforcement, their true purpose is to encourage workplace safety, not to serve as a financial engine for OSHA.
If OSHA were self-funded, its penalty revenue would have to match or exceed its $632 million budget—which it doesn’t. In short, OSHA could never sustain itself solely on fines, even if it wanted to.
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