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Questions Answered by The Budget Analyst
What is a reprogramming?
What is the chronological sequence for
documents generated as part of the budget process?
How do you treat annual leave accruals
in the accounts of an agency?
Where can I find definitions of economics
terms?
How do you budget for banks?
What is a reprogramming? I would like to
get some insight on the reprogramming process.
Your question has little specifics, so I will give you a very
general description of reprogrammings:
 | An approved budget usually consists of specific amounts of money appropriated for
specific accounts. Within each account there may be additional restrictions on what the
money may be used for. [For example, $1,350 million may be appropriated for Highway
Resurfacing (the appropriation), with $550 million reserved for Winter Damaged Surfaces
and $65 million for Pork Heaven Parkway (which would be the accounts).] |
| A reprogramming is whenever funds need to be changed in ways that would violate any of
the conditions of the appropriation law. The law or the report associated with the law
usually specifies what is considered a reprogramming and the conditions under which
reprogramming may be carried out. [In the example, trying to spend $67 million on the P.
H. Parkway would involve reprogramming $2 million from elsewhere in the appropriation.]
These conditions may specify that reprogrammings up to a certain amount (say, up to
$500,000 for each activity) may be done without need to request permission for
reprogramming from the appropriations committee, but that amounts above this do require
prior permission. Even in cases when there is no need to request permission there is a
requirement to report what was done, after the fact. |
| Reprogrammings are usually done because unforeseen events require that funds be moved
between accounts or within categories in accounts. [In the example, let's assume that the
lowest bid for the P. H. Parkway came in for $66 million, and there is now a need for a $1
million contingency fund; the appropriations committee report stated that any
reprogramming over $750,000 requires prior approval from the committee. In this case, no
action can be taken until after there has been action on the part of the committee.
Approval usually takes the form of a letter, or it may even require legislation.] |
| What you probably have is a task to prepare materials to either implement a
reprogramming action already approved under the terms of the law (you may be preparing the
report to appropriations telling them what was done), or to prepare the justification for
so doing based on program requirements, or doing the paperwork to have the action shown in
the accounting system. Your organization should have procedures on what to do for the
given situation. |
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What is the chronological sequence for documents
generated as part of the budget process? (August 2000)
There are two things that you have to keep separate: The overall budget process,
which is handled by the Budget Committees in the House and Senate, and appropriations
process, which is handled by the Appropriations Committees. The two interface with what is
called the Section 302(b) allocations. I will not address the Budget process because
it is mostly ignored these days. For appropriations, the sequence is usually:
President submits budget request, broken down into the 13 appropriations. (This is what
is in the documents associated with the President's request and supplemental materials
provided by the agencies. I list them at my web site. Look for "documents.")
Sub-Committees of Appropriations Committees hold hearings (to review request). A
transcript of the hearings is kept and published, together with witness reports.
Sub-Committees markup the bill and write report. (There may be multiple versions of the
bill with time; this is the sub-committee print, and there may be more than one.)
Full Committee marks up the bills and writes report. There is a paper copy of the bill
itself and the report, sometimes with multiple versions until it is final.
Bills are referred to the floor. Debate is recorded in the Congressional Record.
OMB usually issues some statement as the Administration's position on a bill. This is
in writing.
Full House and Senate vote on bills. If passed, they go to the other chamber for
action, or, if needed, conference committees. (Usually the House goes first, but this is
not always true. This is simply a custom and there is no requirement that the House
initiate action; that requirement applies only to tax legislation.) There are 13 separate
bills.
If there is a need for a conference, then there are conference reports, etc.
If the bill passess in both chambers or the conference report passes in both chambers,
it is sent to the President for signature.
If President does not veto and signs, the bill becomes a Public Law. There are 13
separate Public Law unless they merge some of them, as in an omnibus bill. (There is
usually also a message from the President when signed, and always a message when vetoed.)
After the Public Law is enacted, it is codified into the United States Code.
You have to keep in mind to keep different fiscal years separate. This year Congress
acted on an FY 2000 supplemental which took place about the same time as the FY 2001
budget review, and in fact it was part of the Military Construction appropriation. Things
can get confusing. There is also additional room for confusion if there are
continuing resolutions. These are also public laws, but may not have hearings at all or
any reports, so they can become law directly from floor actions.
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How do you treat annual leave accruals in the accounts of
an agency?
A question was raised by the budget officer of an independent agency
(which has been accruing annual leave on its accounts) as to the treatment of the accrual
of annual leave in the accounts of the agency. (The actual
question and its background is at the end of this response.) I answered:
| You ask an interesting question, but one that probably has no good answer. As I
understand your question, you ask if there is a problem in defunding annual leave accrual
carried in the accounts of the agency. I don't think that there is a problem as far
as requirements are concerned. But first a little background. |
| The main reason the Federal government does not fund accrued leave balances is that it
has not done so in the past. This may sound silly, but this is the way it is. The
Federal government is attempting (and has been attempting) to put all its operations into
a full cost accounting mode (this has been going on since I started working, so it has
been a long time), but it is still not there. Annual leave accrual is a relatively
small matter in Federal accounts, and for most employees it is an accounting transaction
within the same fiscal year, or within the period of a two year appropriation, with little
effect on future years. (Only a few SES members would have leave balances large
enough to be noticed in the accounts of an agency, and even then the effect would be about
$100,000 in accounts of many million.) So the accrual of these costs is not
considered a high priority item. |
| In practice, budget officers budget for these costs as part of the annual budget process
as part of the PC&B calculations for the year; likely attrition is calculated, and
funds are set aside to cover those likely to leave who have large leave balances. As a
matter of practicality, if an employee leaves suddenly the lump sum payments for leave are
usually less than the amount that is saved by the vacancy that is created. Given this
situation, there is not much of an incentive to set up requirements that would mandate
funding of accrued leave balances. (It may be desirable to properly accrue and fund
these costs, but desirability and practice are different matters. There is a reason
why budget officers lose much sleep.) |
| OMB has dictated that Federal agencies follow FASAB guidance, so whatever FASAB states
is gospel now, regardless of whatever sound, more general, accounting practices may be.
FASAB states that OMB will issue implementing guidance. And OMB's guidance
clearly states that there is no need to fund accrued leave. Although this may
present a problem in the future, someone should do an analysis of the potential actual
costs that will have to be covered. If they present a burden (for example, they may
be a large portion of future payroll costs), then perhaps the agency's leadership needs to
be briefed and it needs to adopt a policy as to how these costs will be treated by the
agency regardless of what OMB may allow to be done. |
| OMB clearly states that "Liabilities for federal employee and veterans’
benefits include the actuarial portion of these benefits. They do not include liabilities
related to ongoing continuous expenses such as employees’ accrued salary, accrued
annual leave, and the unpaid portion of employee benefits and other benefits that are
currently due, which are reported in the "Other" liabilities line item."
(Page 10 of 21, Technical Amendments to OMB Bulletin No. 97-01, Form and Content of Agency
Financial Statements, January 7, 2000, at http://www.whitehouse.gov/OMB/memoranda/m00-05.pdf,
as of May 2000.) The key here is that OMB considers these costs to be "continuous
expenses," i.e., they recur all the time, annual leave is the same as salary
payments, and are not a special item for which funding needs to be set aside. And
this language is not limited by type of funding or account. It seems to be generally
applicable to the Federal establishment, regardless as to how funded. |
| I have not done an exhaustive analysis of all relevant laws and regulations, and
Comptroller General opinions, so there may be something that contradicts what I have
stated. But based on my experience and reading the OMB guidance, what I have stated is
clear. If you want additional confirmation, you may want to call OMB itself - the
phone number is given with the January 7, 2000 Amendments. |
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The original question was (slightly edited):
Is it appropriate and acceptable for this agency, which does not receive
any appropriated funding, to unfund its annual leave accrual and maintain this accrual as
unfunded in the future? ... References I've come across in both the Implementation Guide
to SFFAS No. 7 and OMB Bulletin 97-01 relating to the section on Financing Sources Yet to
be Provided discuss only agencies funded by appropriations as following the practice of
recognizing costs when incurred but funding the costs at some future time. Specifically:
a. Implementation Guide to SFFAS No. 7 (page 41, item # 91): For
agencies funded by appropriations, the most common example is the cost of increases in
unused annual leave. Cost for this leave is incurred in the reporting period, but it is
normally funded through salary and expense appropriations in subsequent years.
b. OMB Bulletin 97-01 (page 39, paragraph 2): The costs of
the Federal Government are not always funded in the period the costs are incurred. The
example most common to agencies funded only by appropriations is the cost of increases in
unused annual leave.
Does this specifically exclude agencies that do not receive appropriated
funds from maintaining an unfunded liability?
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Where can I find definitions of economics terms?
| Try http://www.investorwords.com/. It should
provide short definitions for most of the concepts you may want to look up. If you want to
look up the factors that affect various economic measures, you should either use a
textbook in basic economics (which may exist on the web, but I have not found), or go to
the Economic Report of the President, links at my site. The Economic Report discusses
factors that affect the economy. |
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How do you Budget for Banks?
I received a question from a visitor from a country in Asia on to
budget for banks. This was my answer:
| I specialize in how the United States Federal government's agencies prepare their
budgets and how they get money to fund their operations. The guidance for these activities
is spelled out in documents accessible through the links pages at my site. (Start at Links5.htm.) Some of this guidance, as
well as general budgeting materials on my site and in books (see my references)
should be applicable to general budgeting for banks, especially for the bank's own
operations. |
| However, banks are specialized organizations, with needs to budget for matters that most
government agencies do not have to address, such as loan defaults, risk management, and
interest rate regulations. Banks are highly regulated entities, so what banks have to
provide in their overall budgets or financial reports is usually stringently controlled by
governments. I am not aware of a single web site that will help you with budgeting for
banks. Banks have to follow all the laws and regulations of the governments of the
countries they operate in, and these laws and regulations are extensive. |
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