Understanding the Federal
Budget Process
Tribal Self-Governance Financial Training
Session
Elizabeth Fowler
March 27, 2012
Topics Covered
• Laws, regulations, policies governing
appropriations
• Life Cycle of an Appropriation
– Budget Formulation
– Budget Execution
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Laws, Regulations, Policies
•
•
•
•
The United States Constitution
US Code Title 31 – Money and Finance
Authorizing and Appropriations legislation
GAO’s Principles of Appropriations Law
(Red Book)
• OMB Circular A-11, Preparation,
Submission, and Execution of the Budget
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Appropriation Law
• Federal funds are made available for obligation
and expenditure
 by means of appropriation acts
 subsequent administrative actions that release
appropriations to the spending agencies
• The use or “availability” of appropriations once
enacted and released is controlled by various
authorities:
– The terms of the appropriation act itself
– Authorizing legislation
– General statutory provisions that allow or prohibit
certain uses of appropriated funds
– General rules that have been developed largely through
decisions of the Comptroller General and the courts
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Appropriation Law
• Some of the key statutory directives are:
– A statute will not be construed as making an appropriation
unless it expressly so states. 31 USC 1301(d)
– Agencies may not spend, or commit themselves to spend in
advance of or in excess of appropriations. 31 USC 1341 AntiDeficiency Act
– Appropriations may be used only for their intended purpose 31
USC 1301(a) Purpose statute
– Appropriations made for a definite period of time may be used
only for expenses properly incurred during that time 31 USC
1502(a) Bona fide needs statute
– Unless authorized by law, an agency may not keep money it
receives from sources other than congressional appropriations,
but must deposit in the Treasury. 31 USC 3302(b)
Miscellaneous receipts statute
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Availability of Appropriations:
Purpose, Time, and Amount
• Whether appropriated funds are legally
available for something depends on three
conditions:
1. The purpose of the obligation or expenditure must
be authorized;
2. The obligation must occur within the time limits
applicable to the appropriation; and
3. The obligation and expenditure must be within the
amounts Congress has established
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Types of Appropriations
• Mandatory / Discretionary
• One year appropriations
– Available for obligation only during a specific
fiscal year. Known as annual appropriations
• Multiple year appropriations
– Available for a definite period of time in excess
of one fiscal year
• No year appropriations [X-year
appropriations]
– Available for obligation for an indefinite period
of time. Usually identified by appropriation
language such as “to remain available until
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expended”
Line-Item Appropriations and
Earmarks
• Congress may specifically designate, or
“earmark”, part of a more general lump-sum
appropriation for a particular object, as
either a maximum, a minimum, or both.
• Generally maximum language includes “Not
more than..”, “Not to exceed”, or “for X,
$___”
• Minimum language “Not less than…”
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OMB Circular A-11
• Prescribes policy for federal agencies
on development of budget requests
and on budget execution
• Key sections:
Section 22 – Communications with
Congress, the public, and clearance
requirements
 Section 120 – Apportionment Process

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Life Cycle of an Appropriation
Two Key Processes
• Budget Formulation
• Budget Execution
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Budget Formulation
Work on any Single Year’s Budget
takes more than 3 Years to Complete
Planning
Oct/Nov
Formulation
Jan/Feb
Present to
Congress
Feb
Execution
Oct
Sept
For FY 2012:
2009
2010
2011
2011
2012
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IHS Budget Formulation Process
Individual
Area I/T/U
Worksessions
Evaluation
Session
June
Dec-Jan
HHS Consultation
National I/T/U Budget
Worksession
Jan/Feb
March
IHS Preliminary
Budget Submission
June
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How Does IHS Determine Its Budget
Request?
Tribal Priorities
• National
Worksession consolidation of Area
recommendations
• Listening Sessions
Other Priorities
• Accountability
HHS Budget Guidance
• Includes
– direction on funding
levels for budget
request
– Administration budget
priorities
– Technical instructions,
e.g., pay raise
assumptions
IHS Budget Request to HHS
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Budget Execution
• Refers to the period of time during which the
budget authority made available by the
appropriation acts remains available for obligation
• Spending Federal funds requires the following
chain of events:
1.
2.
3.
4.
5.
6.
7.
Appropriation
Apportionment
Allotment
Allowance
Commitment
Obligation
Outlay
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Apportionment
• The apportionment process provides a set
of administrative controls over the use of
appropriations in addition to those
Congress has imposed through the
appropriations act itself.
• An apportionment divides amounts available
for obligation by specific time periods
(normally quarters), activities, projects,
objects, or a combination thereof.
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IHS Apportionments
• Three Treasury Symbols
– 75 12 0390 (Services annual funds)
– 75 X 0390 (Services X-year funds)
– 75 X 0391 (Facilities X-year funds)
• 12 Areas plus Headquarters
– Different mix of Federal and Tribal
programs
– Different mix of FY and CY contracts/
compacts
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Allotment/Allowance
• Allotment - the transfer of obligational
authority and the highest level of
administrative control below the
apportionment.
 IHS HQ issues allotments to the Area Directors
• Allowance - the transfer of obligational
authority and a level of administrative control
below an allotment.
 Area Offices issue allowances to service units, Area
programs
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Obligations & Disbursements
• Once allowances are issued, obligations and
disbursements can occur.
 Tribal Payments
 Contracts
 Grants
 Travel
 etc.
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QUESTIONS?
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