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 2

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 3

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 4

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 Anti- Deficiency 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 5

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 6

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 expended” 7

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…” 8

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 9

Life Cycle of an Appropriation Two Key Processes Budget Formulation Budget Execution 10

Budget Formulation 11 Formulation Present to Congress Execution Planning Work on any Single Year’s Budget takes more than 3 Years to Complete Oct/Nov Jan/Feb Feb Oct Sept For FY 2012:

IHS Budget Formulation Process 12 HHS Consultation March Evaluation Session June Individual Area I/T/U Worksessions Dec-Jan National I/T/U Budget Worksession Jan/Feb IHS Preliminary Budget Submission June

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 13 IHS Budget Request to HHS

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.Appropriation 2.Apportionment 3.Allotment 4.Allowance 5.Commitment 6.Obligation 7.Outlay 14

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. 15

IHS Apportionments Three Treasury Symbols – (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 16

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 17

Obligations & Disbursements Once allowances are issued, obligations and disbursements can occur.  Tribal Payments  Contracts  Grants  Travel  etc. 18

QUESTIONS? 19