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The Government Manager's Guide to Appropriations Law

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This guide offers sound and easy-to-apply advice to help government managers deal with appropriated funds properly and legally. It follows the organization of the Redbook, the Government Accountability Office's 2,000+ page Principles of Federal Appropriations Law. Government purchase card holders and approvers will find this book especially helpful in understanding the common risks that arise and how to avoid violating the myriad rules and regulations involved.

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CHAPTER 1: Overview of Appropriations Law

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This chapter defines terms and concepts important to the understanding of appropriations law. Managers unfamiliar with appropriations and their use, as well as those who have a basic familiarity with these terms and concepts, will be well served to read this chapter in its entirety. It sets the stage for the more specific rules and requirements that come later in the book.

The terms federal appropriations law and federal fiscal law refer to the body of law that governs the availability and use of federal funds.1 The two terms are used synonymously.

Federal funds are made available for obligation and expenditure by means of an appropriations act (or occasionally by other legislation) and subsequent administrative actions that release appropriations to the spending agencies. The use—or availability—of appropriations once enacted and released—that is, the rules governing the purpose, amounts, manner, and timing of obligations and expenditures—is controlled by various authorities: the terms of the appropriations act itself; any authorizing legislation; organic or enabling legislation, which prescribes a function or creates a program (also called program legislation); general statutory provisions that allow or prohibit certain uses of appropriated funds; and case law that has developed over time through decisions of the comptroller general and the courts. These sources, together with provisions of the U.S. Constitution, form the basis of appropriations law.2

 

CHAPTER 2: Availability: Purpose

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Comptroller general decisions are often stated in terms of whether appropriated funds are legally available for a given obligation or expenditure. This is just another way of saying that a given item is or is not a legal expenditure. Legal availability depends on three factors:

1. The purpose of the obligation or expenditure must be authorized.

2. The obligation must occur within the time limits applicable to the appropriation.

3. The obligation and expenditure must be within the amounts Congress has established.1

These three elements—purpose, time, and amount—control availability. All three must be met for a transaction to be legal. This chapter discusses availability in terms of purpose; Chapters 3 and 4 cover time and amount.

The most fundamental definition of purpose is found in the so-called “purpose law,” at 31 U.S.C. 1301(a):

Appropriations shall be applied only to the objects for which the appropriations were made except as otherwise provided by law.2

 

CHAPTER 3: Availability: Time

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As previously noted, there are three major elements in determining the availability and proper use of government funds—purpose, time, and amount. This chapter examines the second element, time.

Congress sets time limits for most appropriations—that is, it limits the amount of time the appropriation is available to incur new obligations. After that set time has expired, the appropriation remains available for a limited time for adjustments and payments that liquidate the obligations.

Congress places time limits for obligation and expenditure of appropriations as part of exercising its power of the purse. Setting time limits for obligation helps Congress to monitor execution of the appropriations and informs its allocation of resource in subsequent appropriations. If funds were available without any time limitations, agencies might be tempted to build up a “slush fund” over time, thereby reducing the agency’s reliance on congressional appropriations.

Appropriations fall into three categories based on the duration of time in which new obligations may be created—annual, multiple year, and no year.1

 

CHAPTER 4: Availability: Amount (The Antideficiency Act)

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This chapter examines the final tenet of federal appropriations law—amount. It is in this area of fiscal law that Congress exercises its ultimate control, through the Antideficiency Act. Although purpose and time violations, which were discussed in the previous two chapters, are in conflict with federal law, they carry no specific penalties and are often correctable without consequences to the agency or its personnel. But when purpose or time violations result in an amount violation, or the agency creates an amount violation on its own, the Antideficiency Act comes into play, and penalties for violation of the act can be severe. It is through the threat of sanctions under the Antideficiency Act that Congress can fully exercise its power of the purse.

Before discussing the Antideficiency Act in detail, it is necessary to lay the groundwork by examining the relationship between an agency’s budget submission and its actual budget execution, the significance of congressional committee reports, lump-sum versus line-item appropriations, and how earmarks are handled.

 

CHAPTER 5: Obligation of Appropriations

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When people first come to work in the federal government, they often have a difficult time understanding, let alone accepting, how the government controls its spending. Unlike the private sector or state and local governments that keep track of assets, liabilities, and net worth (or net position, in the government setting), the federal government uses a separate set of accounts for budgetary control. These accounts track and control the use of budgetary authority, as well as the status of that authority, mostly by tracking and controlling obligations. The concept of obligation control is central to federal operations.

The previous chapter described how violations of the Antideficiency Act can be incurred by obligating in advance or in excess of an appropriation or apportionment. What happens when an agency’s accounting records show it to be overobligated? Does it automatically begin its Antideficiency Act violation report? Of course not. The first thing to do is determine whether a violation actually occurred. One of the steps in that investigation is to examine recorded obligations to see if they are recorded at the right amount and if all the recorded obligations are, in fact, really obligations. To perform that task, one must understand the nature of obligations and know, for various commodities and transactions, what constitutes an obligation, what its proper amount is, and when it exists.

 

CHAPTER 6: Intragovernmental Transactions

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Although most financial transactions conducted by the federal government are with external parties, a significant number are intragovernmental or interagency transactions—that is, within or between government agencies. Special rules apply for the use of government funds when engaging in such transactions. The two broad categories of interagency transactions are reimbursements and revolving funds. This chapter explores the acquisition of goods or services through the process of reimbursable orders and revolving fund activities.

In 1932, as part of a package of measures designed to reduce government spending and help the nation fight its way out of the Great Depression, Congress enacted the first governmentwide statutory authority for federal agencies to provide work, services, or materials to other federal agencies on a reimbursable basis.1 That was the origin of the Economy Act. Prior to it, despite the obvious advantages of interagency dealings, agencies’ hands were tied by the purpose law and the miscellaneous receipts statute. The purpose law limits the use of appropriations to the purposes intended by Congress. Therefore, an agency could not use its appropriation to do work to benefit another agency. Further, even if an agency did have statutory language allowing the use of its appropriation for another agency, the miscellaneous receipts statute mandated that any reimbursement collected must be deposited in Treasury. Before the legislative relief provided by the Economy Act, the whole concept of reimbursable work as we know it today did not exist.

 

CHAPTER 7: Continuing Resolutions

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It is increasingly common that Congress does not enact appropriations bills before October 1 of each year. To avoid government shutdowns caused by a funding gap, Congress uses continuing resolutions to keep the government running. This chapter describes continuing resolutions and the rules and restrictions that go with them.

The GAO defines a continuing resolution as

An appropriation act that provides budget authority for federal agencies, specific activities, or both to continue in operation when Congress and the President have not completed action on the regular appropriation acts by the beginning of the fiscal year.1

Continuing resolutions are temporary appropriations acts intended to be stopgap measures to keep existing federal programs functioning after the expiration of previous budget authority and until regular appropriations are enacted.

Continuing resolutions have been used for well over 100 years. At one time, they were called temporary resolutions, and in the early 1960s the term continuing resolution came into widespread use.2 They are also extremely common. In 31 of the fiscal years between 1977 and 2011, action was not completed on a majority of the appropriations bills by the start of the fiscal year. In ten of those years, none of the bills were finished by October 1. Fiscal year 2001 set a record with 21 continuing resolutions.3

 

CHAPTER 8: Accountability and Liability of Individuals

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The idea that a person entrusted with money is accountable for it is a common notion. If a cashier in a retail store comes up short at the end of the day, it’s likely that he or she will have to make up the shortage from personal funds. The government operates on the same principle. This chapter examines the accountability, liability, and relief from liability of accountable officers—government employees who are involved in the handling of funds or who have specific responsibilities in the payment process.

Accountable officers include officials such as certifying officers, disbursing officers, departmental accountable officials (in DoD only), and other employees who by virtue of their employment have custody of government funds.1 It is important to note that GAO has ruled that accountable officer status and pecuniary liability (the requirement to personally repay lost funds) may be imposed only through statute.2 An agency does not have the authority to confer the status to anyone not so designated in statute.

 

APPENDIX I:

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In general, an agency may not use appropriated funds to purchase items considered personal expenses, such as food, without specific authority (B-301184, Jan. 15, 2004).

The decision tree below identifies the statutory authority and limited exceptions that may permit an agency to provide food to employees at their duty stations:

1. All training must comply with the Government Employees Training Act definition of training in 5 U.S.C. 4101(4).

2. Food may be provided to nonfederal personnel whose participation is essential to accomplish required simulation antiterrorism training and the food is necessary to ensure realism of exercise (B-317423, March 9, 2009).

3. Criteria used in determining whether an agency may pay for food for an employee attending a nongovernmental meeting or conference:

Meals and refreshments are incidental to the meeting or conference,

Attendance at the meal or when refreshments are provided is important to ensure the employees’ full participation in the meeting or conference, and

 

APPENDIX II:

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Adapt this generic checklist to fit your organization’s requirements. Use it in conjunction with your annual review of internal controls as required by OMB Circular A-123.

 

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