Overview of Executive Budget Process:
- At any given time, Federal departments and agencies are working on the budgets for three fiscal years. For example, in July 2020, agencies are implementing the FY 2020 budget, justifying to Congress their requests for the FY 2021 budget, and developing their requests for the FY 2022 budget which will be submitted to Congress in February of 2019 (or later in the case of a new Administration).
- The U.S. Constitution vests Congress with the power to raise revenue and borrow money and provides in Article I, Section 9, that “No Money shall be drawn from the Treasury , but in Consequence of Appropriations made by Law; and a regular Statement and Account of the Receipts and Expenditures of all Public Money shall be published from time to time.” The timing and content of the executive budget is the result of statutes enacted by Congress.
- The executive budget process consists of three main phases:
- preparation of the President’s budget proposals,
- submission and justification of the President’s budget proposals, and
- execution of appropriations and other budgetary legislation.
- In practice, development of the President’s budget proposal begins approximately 18 months prior to the start of the fiscal year to which it applies. Executive agencies submit their requests and justification materials to OMB for examination and review. After final decisions have been made by the President, the budget proposal is compiled by OMB. Under current law, the President must submit the budget proposal to Congress no later than the first Monday in February.
- Once the President has submitted the budget, OMB and agency officials explain and justify the request to Congress. Early in the congressional budget process, often in the week following the submission of the President’s budget, the OMB director and other cabinet officials typically deliver testimony regarding the President’s broad budgetary objectives before congressional committees. In addition, agencies submit written budget justifications of their requests to Congress and testify before the authorizing committees and appropriations subcommittees of jurisdiction. The President’s budget, though not legally binding, provides Congress with recommended spending levels for programs, projects, and activities that are funded through appropriations and other budgetary legislation.
- Funds provided in appropriations and other budgetary legislation are not immediately available for obligation or expenditure. With certain exceptions, the Antideficiency Act requires that funds be apportioned (or divided), often by fiscal quarter, prior to obligation or expenditure. Agencies then allocate those funds to programs, projects, and activities.
- Congress has recognized the need to permit agencies some flexibility during budget execution, and it has provided agencies with limited authority to make spending adjustments. For example, Congress may provide agencies with limited authority to transfer funds from one appropriations account to another, or from one purpose to another within an appropriations account (i.e., reprogramming).
- Under the Impoundment Control Act (ICA) of 1974, the President may temporarily withhold appropriated funds (deferrals) or propose to Congress permanent cancellations of budget authority (rescissions).
- OMB and agencies have established procedures for implementing a shutdown of government operations in the event that full-year or stop-gap appropriations in a “continuing resolution” are not enacted by the start of the fiscal year. OMB and agencies may also be subject to additional procedures in the event of a statutorily prescribed sequestration.
- An apportionment is an OMB-approved plan to use budgetary resources (31 U.S.C. 1513(b); Executive Order 11541). It typically limits the obligations that may be incurred for a specified time, for example, a 3-month period of time.
- It may also place limitations on the use of other resources, such as the number of employees (‘FTEs”) or property.
- An apportionment is legally binding, and obligations and expenditures (disbursements) that exceed an apportionment are a violation of, and are subject to, reporting under, the Antideficiency Act (31 U.S.C. 1517(a)(1), (b)).
- The Antideficiency Act prohibits Federal employees from obligating or disbursing amounts in excess of an appropriation, an apportionment (or in its absence), an allotment, a suballotment or any other subdivisions of funds that are identified in an agency’s administrative control of funds.
- Amounts are identified in an apportionment: by time, by program, project, or activity.
- Pursuant to the Impoundment Control Act, apportionments may also set aside all or a portion of the amounts available for obligation.
- Amounts deferred through the apportionment process are those portions of the total amounts available for obligation that are set aside temporarily until later in the fiscal year.
- Amounts proposed to be rescinded by the President are temporarily withheld for not more than 45 days of session pending the enactment of a rescission bill canceling the budget authority.
- How is an apportionment executed?
- The top of the apportionment shows the name and account number…and often includes other descriptive information, e.g., agency name, bureau name, budget account name and number.
- The apportionment includes two sections: Budgetary Resources and Application of Budgetary Resources.
- The Budgetary Resources section shows all budgetary resources.
- The Application of Budgetary Resources shows apportioned amounts, which are limits that restrict how much an agency can obligate, when it can obligate, and what projects, programs, and activities it can obligate for.
- For detailed information on apportionments, see section 120 of OMB circular A-11 (Preparation, Submission, and Execution of the Budget).