May 26 29, 2015 Budget Execution 101

1 BudgetExecution 101 Jim KrottDefense Acquisition UniversityCapital and Northeast RegionHanscom AFB, 2016 American Society of Military ComptrollersProfessional Development InstituteMay 26 29 , 2015 Life CycleCostICEF iscalEnvironmentCostAnalysisEstimateAnnu alFundingIncrementalFundingMFP POM BES Funding Policies Planning, Programming,Budgeting & ExecutionPresident sBudgetCommitment ReprogrammingBudget Authority Obligation OutlayBudgetExecutionCongressionalEnactm entForce StructureModernizationOperational CapabilityReadinessSustainabilityBudgetR esolutionAuthorization &AppropriationLawsPOECCESAC SASC SBCHAC HASC HBC Requirement to CapabilityOperationalConceptCapability DocsAoACapabilities-BasedAssessmentFeedb ackCAIVRMDFullFunding (Exceptions)

2 FYDP QDR DPPG CPAAPB2 From Requirement to CapabilityBasic Budget Execution Rule The established rule is that the expenditure of public funds is proper only when authorized by Basic Budget Execution RuleCongressional Power of the Purse Derived from the Constitution No money can be paid out of the Treasury unless it has been appropriatedby an act of Congress Thus, a federal agency is dependent upon the Congress for the funding needed to carry out its mission Proper Stewardship of Use of Funding Authority Managing the fiscal affairs of government agencies: The government: Sets financial standards and enacts the laws that control the use of funding authorities The agency.

3 Provides internal controls to ensure efficiency and effectiveness of operations You, as an accountable individual, also have a major stewardship roleAccountability Agents (employees) of the government are required to maintain public confidence by providing a standard of reasonable care in safeguarding federal money and property Accountable individuals, as stewards of the taxpayers monies, are held to a higher standard of conduct Accountability equals liability = agency can collect money from a negligent accountable individual and/or can take disciplinary action Who Are Accountable Individuals? Certifying Officer -designated by agency to certify vouchers.

4 But has no public funds in personal custody Disbursing Officers -Federal employee physically disbursing public funds Contracting Officers Accountable Officials You as a Purchase Card Holder You as a Certifier of time cards or travel vouchers8 Overview Apportionment Process Monetary Concepts Life of an Appropriation Fiscal Laws Spending Plans Reprogramming Apportionment Process Monetary Concepts Life of an Appropriation Fiscal Laws Spending Plans ReprogrammingApportionment ProcessOSD Comptroller MAJCOM/PEO/SYSCOMC omptrollerCongressOMBS ervice ComptrollerPMOP rogramManagementOfficeProvides Budget AuthorityInvestment AnnualExpense QuarterlyDefer/ RescindAppropriationApportionment ProcessTypes of AppropriationsCongress produces four types of appropriations.

5 Permanent appropriations, known as direct or mandatory spending (non discretionary), , Social Security, Medicare Regular appropriations, known as discretionary spending, , agency operations, procurement, research efforts Supplemental appropriations Continuing resolutions, that provide continuing resolution authorityBridge from Congressional Action Enrolled (identical) appropriation bill passed by the House and Senate provides budgetary authority Signed into law by the President Appropriation Warrant issued by Treasury automatic, agency does not request establishes a checking account OMB Apportionment agency must request provides obligational authorityApportionment ProcessOSD Comptroller MAJCOM/PEOC omptrollerCongressOMBS ervice ComptrollerPMOP rogramManagementOfficeProvides Budget AuthorityInvestment AnnualExpense QuarterlyDefer/ RescindApportionmentAllocationSub-Alloca tionAllotmentAppropriationTechnical WithholdsAdministrative WithholdsGeneral ReductionsWithholdsGeneral ReductionsWithholdsGeneral ReductionsNow, the PMO can usethe remainingBudget AuthorityApportionment ProcessApportionment Following passage of an appropriation.

6 An agency must request an apportionment from OMB Designed to force an agency to spread its funding over the entire year Usually provided on a quarterly basis Dollar amount based on negotiations between the agency and OMB Apportioned amounts cannot be exceeded Unused obligational authority can be carried forward each quarter into the 4th quarterExplanation of Some Typical General Reductions FFRDCs:Congress has directed DoDto cut funds from programs getting assistance from Federally Funded Research and Development Centers (FFRDCs)Consultants:Congress has directed DoDto take a specific percentage of O&M, RDT&E and Procurement accounts from programs that use consultantsBudget Cap:To meet defense Budget cap, Congress has directed DoDto reduce all RDT&E and Procurement funds in programs by a specific percentageNational Missile Defense (NMD):Congress has directed DoDto cut most research funding by a specific percentage to fund an equal increase in NMD fundingSmall Business Innovation Research (SBIR):Annually, Congress directs a specific amount of funding for SBIR but does not appropriate those funds.

7 OSD is required to reduce most research accounts to fund the SBIR programInflation:When actual inflation is lower than predicted during Budget preparation, savings are often pulled from programs and used as a source for reprogramming actions15 Overview Apportionment Process Monetary Concepts Life of an Appropriation Fiscal Laws Spending Plans Reprogramming Apportionment Process Monetary Concepts Life of an Appropriation Fiscal Laws Spending Plans ReprogrammingUse of Budget AuthorityBudgetAuthorityCredit CardSpendingLimitCommitmentVerificationo fAvailableFundsObligationSign ReceiptforPurchaseExpenditureWrite Checkto CreditCardCompanyOutlayCheck clearsyouraccountPTA-Purpose-Time-Amount AdministrativeReservationof FundsLegalReservationof Funds17 Overview

8 Apportionment Process Monetary Concepts Life of an Appropriation Fiscal Laws Spending Plans Reprogramming Apportionment Process Monetary Concepts Life of an Appropriation Fiscal Laws Spending Plans ReprogrammingYearsAppropriation Life CycleAppropriation Life by Category12345678910O&MRDT&EProcurementSh ipsMILCONMILPERSC urrent Period:Available for new obligations,obligation adjustments, expenditures, and outlaysExpired Period:Available for obligation adjustments,expenditures, and outlays, but nonew obligationsCanceled:Unavailable for obligations, obligation adjustments, expenditures, and outlays11 Appropriation Life CyclePhasing Enacted in Public Law 101-510 (5 Nov 1990)PHASE 1 PHASE 2 PHASE 3 CURRENT ACCOUNT( 1 -5 YEARS )EXPIRED ACCOUNT( 5 YEARS )CLOSED/CANCELED ACCOUNT( FOREVER )UNOBLIGATED BALANCES & UNLIQUIDATED OLIGATIONS Availablefor new obligations, increased scope on existing obligations, payments and adjustmentsAvailablefor payments and adjustments (up or down)

9 To existing obligationsNotavailable for new obligations or increased scope on existing obligationsFY, appropriation, andline item identity remain to enable charging original obligation fund citeNo longer availablefor payments or obligation adjustmentsAdjustments and payments are charged to currently available appropriation of sametype, up tolesser of 1% of currently available appropriation or unexpended balance of closed appropriation UNOBLIGATED BALANCES & UNLIQUIDATED OLIGATIONS (2) FY 08 $ Cited in Invoice Appropriation Life CycleScenario #1 -Procurement AppropriationCurrent Account Expired Account Closed AccountFY 1 FY 2 FY 3 FY 4 FY 5 FY 6 FY 7 FY 8 FY 9 +New ObligationsNo New ObligationsUse Currently Available Appropriation Obligation AdjustmentsExpenditures Accounting IdentityAdjustments and payments chargedto currently available appropriation ofsametype.

10 Up tolesser of 1% of currently available appropriation or unexpended balance of closed appropriation FY 15FY 14FY 16 Facts: (1) Time now: May 29, 2016(2) FY 10 $ Cited in Invoice Appropriation Life CycleScenario #2 -RDT&E AppropriationCurrent Acct Expired Account Closed AccountFY 1 FY 2 FY 3 FY 4 FY 5 FY 6 FY 7 FY 8 FY 9 +New ObligationsNo New ObligationsUse Currently Available Appropriation Obligation AdjustmentsExpenditures Accounting IdentityAdjustments and payments chargedto currently available appropriation ofsametype, up tolesser of 1% of currently available appropriation or unexpended balance of closed appropriation FY 16 Facts.