1. FINANCIAL MANAGEMENT SCHOOL
FISCAL LAW
“Show where Congress says you can,
not where Congress says you can’t”
Supreme Court Ruling on Budget Authority
SHOW SLIDE 1: Fiscal Law
SECTION I. : Identify the Principles of Fiscal Law
ADMINISTRATIVE DATA
All Courses Including This Lesson
Course Number Version Course Title
01 Planning Programming Budget & Execution Course (PPBE)
Task(s) Task Number Individual
Taught (*) or
Academic Hours
The academic hours required to teach this lesson are as follows:
Resident
Hours/Methods
Academic Hours/Method
0.1 hrs Introduction/Conference Discussion
3.8 hrs Conference Discussion
0.1 hrs Summary
4.0 hrs Total Time
Test Lesson Number
Testing (to include test review)
Hours -0 hrs
Lesson Number -
Prerequisite Lesson(s)
Lesson Number
Lesson Title
Identify the Principles of Fiscal Law
Security Level: Unclassified
Requirements: There are no clearance or access requirements for the lesson.
Foreign Disclosure Restrictions
FD5. This product/publication has been reviewed by the product developers in coordination with the Fort Jackson Soldier Support Institute foreign disclosure authority. This product is releasable to students from all requesting foreign countries without restrictions.
Instructor Requirements
Must meet physical qualifications IAW AR
Materials Required
Instructor Materials:
Lesson plan slides and Fiscal Law Summary Sheet
Student Materials:
Fiscal Law Summary Sheet
Classroom, Training Area, and Range Requirements
General Purpose Classroom - 25 Seats
Instructional Guidance
Note: Before presenting this lesson, instructors must thoroughly prepare by studying this lesson and identified reference material.
Also, provide the students with situational awareness of the Operational Environment (OE) variables and actors.
Proponent Lesson Plan Approvals
Name Rank Position Date
Harris, Norman CTR Writer/Developer xx-xxx-xxxx
Bonig, Reid GS-12 Chief - FMITD xx-xxx-xxxx
Davis, Bobby LTC FM-DOT xx-xxx-xxxx
Zellars, Eric COL Commandant xx-xxx-xxxx
Motivator: As Resource Managers, we must understand the rules, regulations, and laws that govern the use of taxpayer’s dollars
Knowing the fiscal laws pertaining to appropriated dollars enable us to avoid funding violations and, or find a way to legally support commanders
The motto of fiscal lawyers and the Supreme Court is to show where Congress says you can, not where you can’t
Our job is to interpret law when those “gray area” questions/issues arise
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2. Terminal Learning Objective
Action:
Conditions:
Standard:
Identify the Principles of Fiscal Law.
Given a summary sheet and slides.
With 80% accuracy:
Verify the types of appropriations, purpose, time, and amount rules; Define funding threshold levels; Define Bona Fide Need Rule; Identify budget problems regarding fiscal law; and Verify the anti-deficiency act.
SHOW SLIDE 2: TERMINAL LEARNING OBJECTIVE
Note: State the TLO
Action: Identify the Principles of Fiscal Law
Conditions: Given a summary sheet and slides
Standards: Verify the types of appropriations, purpose, time, and amount rules; Define funding threshold levels; Define Bona Fide Need Rule; Identify budget problems regarding fiscal law; and Verify the anti-deficiency act
Note: Click on the underlined “Fiscal Law”` hyperlink if you'd like to view the, 2014 FISCAL LAW DESKBOOK
Safety Requirements:  Everyone is responsible for safety. A thorough risk assessment must be completed prior to every mission or operation.
Risk Assessment Level: Low
Environmental Considerations: NOTE: It is the responsibility of all Soldiers and DA civilians to protect the environment from damage.
Environmental protection is not just the law but the right thing to do. It is a continual process and starts with deliberate planning. Always be alert to ways to protect our environment during training and missions. In doing so you will contribute to the sustainment of our training resources while protecting people and the environment from harmful effects.
Evaluation: Students will take a comprehensive test at the end of Week 1. Students must score 80% or higher and International officers must score 70% or higher.
Fiscal Law
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3. FINANCIAL MANAGEMENT SCHOOL
Overview (1 of 2)
Congress has the power of the purse. “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law” (U.S. Constitution, Art 1, Section 9, CL 7)
Budget/Contract Authority - Legal authority to enter into obligations which will result in immediate or future outlays of government funds (2 USC & 622 (2))
Appropriation Act is an authorization to incur obligations and make payments out of the Treasury for specified purposes
SHOW SLIDE 3: Overview (1 of 2)
Bullet 1 - Congress has the power to tax and appropriate dollars for the Treasury.
Bullet 2 - Congress is the only one that can provide legal authority for the Federal Government to incur obligations/outlays
We cannot incur obligations until Congress passes a Continuing Resolution Authority and/or the President has signed the Budget Bill
Must have authority to incur an obligation
Bullet 3 - Funding from Congress
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4. FINANCIAL MANAGEMENT SCHOOL
Overview (2 of 2)
Authorization Act defines reasons for use of funds
Treasury Warrant provides fiscal resources to OMB
OMB formally subdivides funding to agencies through apportionment, allotment, or allocation
Funding Authorization Document provides activities authority to legally obligate government funds
SHOW SLIDE 4: Overview (2 of 2)
Bullet 1 - Tells purpose of funds and #’s
Bullet 2 - Need warrant to draw on Treasury
Bullet 3
Bullet A key point here is that just because the President signs the appropriations bill into law, it doesn’t mean you have obligation authority until you have a Funding Authorization Document.
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5. Types of Appropriations
Operation and Maintenance (O&M) Annual - Day to day operations
Military Personnel, Army (MPA) Annual - Soldier pay and entitlements
Procurement – 2031 thru years - Purchase of various high value items such as weapons, ammunition, missiles, etc
Military Construction Army (MILCON) years - New or continuing construction
Research, Development, Test & Evaluation (RDT&E) years - Future system’s RDT&E
SHOW SLIDE 5: Types of Appropriations
We have roughly 156 different types of Appropriations
- A few of the more popular ones you’ll see
Bullet ‘s 1 / 2 / 3 / 4 / 5
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6. FINANCIAL MANAGEMENT SCHOOL
Appropriations Law
Key Principles
Three tests as to the lawful availability of funds (PTA)
Purpose (31 USC 1301)
Time (31 USC 1502)
Amount (31 USC
1342/1517)
SHOW SLIDE 6: Appropriations Law - Key Principles
Whenever you are unsure about an appropriation or a budget issue:
Test using Purpose, Time, and Amount.
Purpose - What can you spend the money on
- For example, OMA dollars are used for operations and maintenance and not for buying tanks.
Time - When can you obligate the money
Amount - How much money can we obligate on this item
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7. FINANCIAL MANAGEMENT SCHOOL
Appropriated Funds
Limitations
Proper purpose of expenditure
Within appropriation life (time limit)
Within amount established by Congress
SHOW SLIDE 7: Appropriated Funds Limitations
This slide further defines the 3 part test.
Bullet 1 - Right reason to spend
Bullet 2 - Is the appropriation unexpired, expired, or closed also Bona Fide Need
Bullet 3 - Also do we have enough
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8. FINANCIAL MANAGEMENT SCHOOL
Appropriations Law
Key Principles
Appropriations shall be applied only to the objects for which the appropriations were made except as otherwise provided by law (31 U.S.C. 1301(a))
SHOW SLIDE 8: Purpose Statute (1 of 2)
Reading the comic strip, Dilbert’s boss used the furniture pot of money to hire someone. We can’t do that
Misappropriation of funds
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9. FINANCIAL MANAGEMENT SCHOOL
Purpose Statute
Appropriation provides the dollars
Authorization and Legal History clarify the appropriation
Three Part Test - Used to validate Purpose Statute
Expenditure must be for the specific purpose or necessary and incident to proper execution of general purpose of appropriation
Must not be prohibited by law
Can not be provided for within the scope of another appropriation
SHOW SLIDE 9: Purpose Statute (2 of 2)
Bullet 1- Appropriation give funding
Bullet 2 - Provide intent
We have a 3 part test to further evaluate purpose:
Sub-bullet 1 - The purpose intended by Congress
Sub-bullet 2 - No illegal activities
Sub-bullet 3 - You can’t use two appropriations for the same purpose
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10. Unexpired, Expired or Closed
Time Statute
Unexpired, Expired or Closed
Congress sets time limits by appropriation
President starts clock when he signs appropriation act
Obligation must occur within the appropriate period
Fiscal year of the appropriation designated by 1 Oct XX to 30 Sep XX
Adjustments to appropriation can be made up to 5 years after appropriation moves to expired stage
SHOW SLIDE 10: Time Statute
Bullet 1 Congress can make appropriations last 1, 2, 3, or 5 years
Sometimes they may even establish “no year” appropriations which means funding is available until Congress decides to stop funding.
Bullet 2
Bullet 3 - Obligations must be initiated in the Unexpired time frame
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11. FINANCIAL MANAGEMENT SCHOOL
Amount Statue
Items <$250,000 (O&M)
Items >$250,000 (Procurement)
Minor construction projects < $1,000,000 (O&M)
Maintenance and repair >$1,000,000 (O&M)
Projects >$1,500,000 (MILCON)
SHOW SLIDE 11: Amount Statue
Congress does give us some leeway when it comes to using appropriations for other purposes and it is based on amount
Example is the investment threshold
Bullet 1 - Usually items costing <$250,000 and not designated for centralized management and asset control are considered “expenses” and are funded with O&M funds
Bullet 2 - Investment items are those that cost >$250,000 and/or are designated for centralized management and asset control.
There isn’t an increase in funding, just permission to use funds for other than the intended purpose
Bullet 3 - Minor construction projects costing < $750,000 can be funded with O&M
For building something
Bullet 4 - Maintenance and repair, not construction, may exceed the $750,000 threshold
Maintenance does not alter, improve, or change a permanent structure - it preserves the facility for its intended purpose
Approved by DA
Bullet 5 - Dollar threshold is raised to $1,500,000 if the project is to resolve a condition that threatens life, health or safety.
Specific lump sum approved by Congress
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12. FINANCIAL MANAGEMENT SCHOOL
Bona Fide Need Rule
“only for payments or expenses properly incurred during the period of availability, or to complete contracts properly made during the period of availability”
Focus on timing of the obligation and current need of the agency
Spend current year dollars for current year needs
Supplies must be needs of period or consumed in period
- Exceptions are Inventory Stockage level, Delivery or Lead time
SHOW SLIDE 12: Bona Fide Need Rule
We often find ourselves wondering which FY funds to use or sometimes our requirements cross fiscal years
Thus, we have a dilemma - which year’s funding do I use
The Bona Fide Need rule is a great tool to solve this dilemma
Quote
Bullet 1 - When do you need this product or service?
Bullet 2 - Not future year needs
Bullet 3 - We must consume or use the items in question during the FY
Exception bullet - You have to order it now to use it next FY. In many cases, you may order the part and not receive it until the next FY
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13. FINANCIAL MANAGEMENT SCHOOL
Common Problems
Clothing
Generally considered a personal expense
Exceptions:
If not an ordinary purchase (cold weather gear)
Essential to successful completion of work
- Tuxedoes for Secret Service
- Suits for SOF on mission
Need for hazardous duty
- Safety shoes
Used as a Award/Reward
- T shirts/Hats for sports event winner (< 5% of participants)
SHOW SLIDE 13: Common Problems - Clothing
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14. FINANCIAL MANAGEMENT SCHOOL
Common Problems
Food (1 of 3)
May not use appropriated funds for meals for government workers at duty station
Generally a personal expense - Paid salary - buy own food
Exceptions:
Light refreshments at government sponsored conferences for those attendees in a travel status and/or facility rental includes cost of food
gao-ada pdf
Award Ceremonies can have “light refreshments”
- Not for a Military Personnel Award Ceremony
SHOW SLIDE 14: Common Problems - Food (1 of 3)
Food
Bullet 1 - Why
Bullet 2 - Military get food allowance
Some exceptions for all personnel:
Sub-bullet 1 - This is how most people get around it
Sub-bullet 2 - Must be for Civilian award ceremonies
- Non-military personnel (Col leaving - so have refreshments at the award ceremony - NO GO)
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15. FINANCIAL MANAGEMENT SCHOOL
Common Problems
Food (2 of 3)
Exceptions cond’t:
Training when necessary to achieve training objective
- not for convenience
Ethnic or cultural awareness training
Civilian award/reward meal ($20 limit)
Bottled water may be procured when a building’s water supply is deemed unwholesome or unpotable
ADA bottle water pdf
SHOW SLIDE 15: Common Problems - Food (2 of 3)
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16. FINANCIAL MANAGEMENT SCHOOL
Common Problems
Food (3 of 3)
Meals expenses allowed (Civilian’s Only):
Meals are incidental to the meeting
Employee attendance at the meal is necessary for full participation in meeting
Can’t take meals elsewhere and achieve full participation
Not a routine business meeting
SHOW SLIDE 16: Common Problems – Food (3 of 3)
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17. FINANCIAL MANAGEMENT SCHOOL
Common Problems
General (1 of 2)
Decorations - When consistent with the work related objectives, placed in common area, and not for personal use, i.e., X-mas cards are a no go
Business Cards - Only allowed for those that regularly deal with public or outside organizations, i.e., recruiters, contractors, investigators
Entertainment - For equal opportunity/ethnic programs
Unit T-shirts - Not allowed
Mementos - Not allowed
Cell phones - Can reimburse for official phone call charges
SHOW SLIDE 17: Common Problems – General (1 of 2)
Here is a laundry list of headaches where commanders, civilians, and soldiers argue that we should fund these requirements
Bullet 1 - Ex Christmas tree in hall not in office
Bullet’s 2 / 3
Bullet 4 - Unless used as an award (Unit 5K run where anyone can compete)
Bullet 5 - Can’t use OMA, must use Commander representation funds - $300 ceiling / gift
Bullet 6 - Cover the cost of the call, not the phone or service
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18. FINANCIAL MANAGEMENT SCHOOL
Common Problems
General (2 of 2)
Fines and Penalties - Can reimburse for fines directly associated with official duties, i.e., contempt fine by court not testifying due to regulations/agency instructions
- Parking tickets not covered
Licenses and Certificates - Can pay if duties directly benefit the government or State or local law requires position to have it
CDFM: interpretation of U.S.C. 5757, 1112 does allow for test reimbursement for civilians
Awards/Rewards - May be given
Unit Coins - Can buy coins for awards issued to individual on a one time basis for significant accomplishment or competition
SHOW SLIDE 18: Common Problems – General (2 of 2)
Bullet 1 - Must be “line of duty”
Bullet 2 - CDFM is covered by the GI Bill for soldiers, Civilians can be reimbursed
Bullet 3 - Awards/Rewards to civilians only - ex: Buy lunch for guy when he leaves out of O & M - $20 limit
Sub-Bullet - Issued to individual once
- Can’t issue every time you do something good
- Defeats the reward system/intent and is considered “coin collecting”
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19. Unauthorized Commitment
Common Problems
Unauthorized Commitment
Only an authorized individual with a warrant can procure for the government
If any unauthorized person enters into an agreement to purchase goods or services for the government and the government accepts the goods or services, the agreement must be ratified for payment to occur
Ratification is the act
of making the agreement
good
- Must be performed by
a Contracting Officer after
a legal review
SHOW SLIDE 19: Common Problems – Unauthorized Commitment
Unauthorized commitment ‘s are headaches - Basically, someone at the installation is committing the government to procure something when no authority exists for them to do it
Bullets 1 / 2 / 3
When we find out, you must report the incident to the Directorate of Contracting to avoid Prompt Payment Act situations - must be ratified
Contracting Officer works deal - Usually we keep the items and make the soldier pay for it
Ex’s: A sergeant promising Wal-Mart that the post will buy 4,000 bed sheets is an unauthorized obligation
Ordering books in the mail for OPD - send them back
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20. FINANCIAL MANAGEMENT SCHOOL
Antideficiency Act
Prohibits government employees from:
- Making or authorizing expenditures or obligations:
- In excess of amount available in appropriation, apportionment, or allotment
- In advance of an appropriation, apportionment or allotment in violation of the Bona Fide Needs rule
- Accepting voluntary services
wrong appropriation gao-ada pdf
- Using military vehicles for personal use
I.E. - TMP vehicles used for domicile to duty transportation
SHOW SLIDE 20: Antideficiency Act
No one has ever been convicted criminally for violating the Ant deficiency Act
- However, it is a career ender with the Admin punishments!
- Letter of reprimand
- Suspension without pay
- Removal from office
Bullet 1
Sub-bullet’s 1 / 2 / 3
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21. FINANCIAL MANAGEMENT SCHOOL
Antideficiency Act
Close Calls
Officials may avoid ADA violations if:
- Proper funds were available at the time of the erroneous obligation, i.e., OMA obligated for a MILCON project and where MILCON funds were available
- Proper funds were available continuously from the time of the erroneous obligation; and
- Proper funds were available for the agency to correct the erroneous obligation, i.e., ACOM or HQDA can cover it
SHOW SLIDE 21: Antideficiency Act - Close calls
Lets say a mistake has occurred - is there a way to avoid an ADA violation?
Here are a couple of pointers to avoid an ADA violation: (These are all and / or)
Bullet 1 - See if the installation had proper funding and it was available at the time of erroneous obligation - Did you have enough OPA?
Bullet 2 - Did you even have OPA on a FAD? If so, determine if funds were continuously available - If not on FAD - screwed
Or If you Obligate the money will you have enough or did you have other obligations present
Bullet 3 - Can higher HQ’s bail you out?
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22. FINANCIAL MANAGEMENT SCHOOL
Resources
Fiscal Law Course - one week in Charlottesville, VA
Satellite VTC - timeframe varies
Web Site -
Fiscal Law Deskbook download on web
SHOW SLIDE 22: Resources
Here is a listing of references for you to keep updated and/or research issues that arise at work
The United States Army Judge Advocate General School, Contract and Fiscal Law Division, located in Charlottesville, Virginia, offers a one week fiscal law course three times a year — in addition to a distance learning fiscal law course broadcast via satellite from Maxwell AFB.
The Web Site listed is the link to The Comptrollers Accreditation and Fiscal Law Course that meets the mandatory training requirements for the Army's Comptroller Accreditation Program for CP11 and FA45 personnel and satisfies the requirement for fiscal law training as set out in the 2 June 2006 memo from the Assistant Secretary of the Army for Financial Management & Comptroller. It must be completed within 60 days of your enrollment.
I highly suggest you download the Fiscal Law Desk book from the JAG web site
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23. Check On Learning
Q. Whenever you are unsure about an appropriation or a budget issue, what three key rules to apply?
Q. How long is RDTE in the “unexpired” state?
True / False. According to the Bona Fide Needs Rule we can fund supplies needed this year with prior year dollars
Q. Explain the unexpired state; expired state; and unexpired state for funding
Q. What does the ACOM need to do before the installation (subordinate unit) can obligate money?
Check on Learning
CHECK ON LEARNING 23

24. Terminal Learning Objective
Action:
Conditions:
Standard:
Identify the Principles of Fiscal Law.
Given a summary sheet and slides.
With 80% accuracy:
Verify the types of appropriations, purpose, time, and amount rules; Define funding threshold levels; Define Bona Fide Need Rule; Identify budget problems regarding fiscal law; and Verify the anti-deficiency act.
SHOW SLIDE 23: Terminal Learning Objective
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