Budget Issues: Inventory of Accounts With Spending Authority and
Permanent Appropriations, 1996 (Letter Report, 05/31/96, GAO/AIMD-96-79).

This report updates GAO's 1987 inventory of accounts with spending
authority and permanent appropriations, commonly known as "backdoor
authority." GAO provides information on such accounts and analyzes the
changes in the number and dollar amounts of accounts with backdoor
authority. It also provides information on each reported account's
status under the Balanced Budget and Emergency Deficit Control Act--that
is, whether it is subject to or exempt from sequestration or subject to
any special rules or limitations.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  AIMD-96-79
     TITLE:  Budget Issues: Inventory of Accounts With Spending 
             Authority and Permanent Appropriations, 1996
      DATE:  05/31/96
   SUBJECT:  Backdoor authority
             Appropriation accounts
             Deficit reduction
             Trust funds
             Public enterprise revolving fund accounts
             Budget functions
             Offsetting collections
             Permanent budget authority
             Budget obligations
IDENTIFIER:  Highway Trust Fund
             Foreign Military Sales Trust Fund
             Airport and Airway Trust Fund
             Defense Business Operations Fund
             CCC Fund
             Postal Service Fund
             TVA Fund
             Bonneville Power Administration Fund
             Federal Buildings Fund
             DOT Ocean Freight Differential Account
             Treasury Other Interest on the Public Debt Account
             Old Age and Survivors Insurance Trust Fund
             Hospital Insurance Trust Fund
             Supplementary Medical Insurance Trust Fund
             Social Security Disability Insurance Trust Fund
             Civil Service Retirement and Disability Fund
             RTC Revolving Fund
             Bank Insurance Fund
             BIF
             
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Cover
================================================================ COVER


Report to the Committee on the Budget, U.S.  Senate

May 1996

BUDGET ISSUES - INVENTORY OF
ACCOUNTS WITH SPENDING AUTHORITY
AND PERMANENT APPROPRIATIONS, 1996

GAO/AIMD-96-79

Spending Authority

(935147)


Abbreviations
=============================================================== ABBREV

  BEA - Budget Enforcement Act
  DOD - Department of Defense
  GAO - General Accounting Office
  GRH - Gramm-Rudman-Hollings
  OMB - Office of Management and Budget
  PAYGO - Pay-As-You-Go

Letter
=============================================================== LETTER


B-260063

May 31, 1996

The Honorable Pete V.  Domenici
Chairman
The Honorable J.  James Exon
Ranking Member
Committee on the Budget
United States Senate

In response to your request that we update our 1987 inventory of
accounts with spending authority and permanent appropriations\1
(commonly referred to as "backdoor authority"), this report provides
specific information on such accounts and analyzes the changes in the
number and dollar amounts of accounts with backdoor authority.  It
also provides the information you requested on each reported
account's status under the Balanced Budget and Emergency Deficit
Control Act of 1985 (Public
Law 99-177), as amended\2 --that is, whether it is subject to or
exempt from sequestration or subject to any special rules or
limitations.  This report also satisfies our legislative mandate to
study the provisions of law which provide the federal government with
backdoor authority. 

The Congressional Budget Act of 1974, as amended, defines spending
authority as authority provided in laws other than appropriation acts
to obligate the U.  S.  government to make payments.  More
specifically, it includes contract authority, authority to borrow,
authority to forgo the collection of proprietary offsetting receipts
(the use of monetary credits or bartering),\3 and authority to make
any other payments for which the budget authority is not provided in
advance by appropriation acts.  The latter includes, but is not
limited to, authority to make payments from offsetting collections
from nonfederal sources credited to appropriation or fund accounts. 

A permanent appropriation is an appropriation that is available as
the result of previously enacted legislation, remains so until
repealed, and does not require current appropriations action by the
Congress. 


--------------------
\1 Budget Issues:  Inventory of Accounts With Spending Authority and
Permanent Appropriations, 1987 (GAO/AFMD-87-44A, July 17, 1987). 

\2 This act is also referred to as Gramm-Rudman-Hollings (GRH).  It
was amended by the Budget Enforcement Act of 1990 and the Omnibus
Budget Reconciliation Act of 1993. 

\3 Monetary credits or bartering are used by agencies having the
authority to make purchases by giving the seller credits or something
other than money instead of issuing a check.  The holder of the
credits may apply them later to reduce an amount owed the government
in other, sometimes unrelated, transactions.  An agency's acceptance
of credits or something other than money as payment results in the
agency's forgoing the collection of offsetting receipts or
collections in an amount equal to the credit. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

The use of backdoor authority continues to be widespread and both it
and the number of accounts have increased since 1987.\4 Of the 173
departments and agencies in the President's fiscal year 1996 budget,
82 used or had authority to use spending authority or permanent
appropriations to finance all or part of their programs and
activities.  This number increased from 65 departments and agencies
in 1987.  The number of accounts with backdoor authority increased by
35 percent since 1987.  The amounts of backdoor authority used
increased nearly 10 percent (adjusted for inflation), from $1,060
billion in fiscal year 1985 to $1,165 billion in fiscal year 1994. 
This represented a small increase in the share of the federal
budget--from 58.2 percent to 59.5 percent over the 9-year period.  In
fiscal year 1994, $983 billion in permanent appropriations, $42
billion in contract authority, and $16 billion in authority to borrow
were used to finance programs and activities.  In addition, $124
billion of offsetting collections from the public was credited to
appropriation or fund accounts.  The use of backdoor authority was
concentrated in certain departments and agencies, budget functions,
and types of fund accounts. 

Five hundred and fifty-eight accounts in the President's fiscal year
1996 budget used or have been provided with backdoor authority.\5
This represents an increase of 35 percent from the 413 accounts in
1987.  This increase is primarily a function of an 85-percent
increase (from 143 to 265) in accounts having authority to use
permanent appropriations.  Sixty-one percent of spending through
permanent appropriations is by nonrevolving trust funds. 

Of the 558 budget accounts with backdoor authority, 113 accounts use
or have authority to use more than one type of backdoor authority. 
For example, 43 have both contract authority and the authority to use
offsetting collections from nonfederal sources as a means of
financing.  Twenty-nine others used permanent appropriations and may
also use offsetting collections from nonfederal sources as a means of
financing. 

Use of specific types of backdoor authority was concentrated in some
departments.  The Social Security Administration used the largest
amount of permanent appropriations, with 33 percent of the total
permanent appropriations used in fiscal year 1994.  The Department of
the Treasury followed closely with 32 percent of total permanent
appropriations.  The Department of Transportation used 65 percent of
total contract authority in that year.  The Department of Agriculture
used 73 percent of total authority to borrow in fiscal year 1994. 
The group of Other Independent Agencies collected 70 percent of total
offsetting collections from the public in fiscal year 1994.  Of these
collections from the public, the Postal Service alone accounted for
56 percent of the total. 

Use of specific types of backdoor authority was also concentrated in
certain budget functions.  Budget function 650 (Social Security) used
$326.8 billion (33 percent) of the total permanent appropriations in
fiscal year 1994.  The Transportation budget function (400) used $27
billion (65 percent) of the total contract authority in that year. 
The Agriculture budget function (350) used $11.8 billion (73 percent)
of the total authority to borrow.  The Commerce and Housing Credit
budget function (370) collected $81.6 billion (66 percent) of the
total offsetting collections from the public in that year.\6

In addition, use of backdoor authority is largely concentrated in
specific types of accounts.  As mentioned, nonrevolving trust fund
accounts used 61 percent of total permanent appropriations in fiscal
year 1994.  Nonrevolving trust fund accounts also used 96 percent of
the total contract authority in that year.  Public enterprise fund
accounts used 99 percent of the total authority to borrow and also
collected 83 percent of the total offsetting collections from the
public in that year. 

While there is potential for future increased spending by the newly
identified accounts, recent increases in backdoor spending occurred
in accounts that existed at the time of our last report.  For
example, although 79 of the 145 additional accounts with backdoor
authority have permanent appropriations that were enacted since our
last report, that is not where the increase in spending occurred. 
The overall increase in backdoor authority used is the result of
permanent appropriations enacted more than 30 years ago. 


--------------------
\4 In this report, "use" refers to the amount of contract and
borrowing authority obligated, the amount of budget authority
utilized under a permanent appropriation, or the amount of offsetting
collections from nonfederal sources credited to an appropriation or
fund account.  For monetary credits or bartering, no amounts are
reported since such authority is not recorded in the budget. 

\5 As noted in our report, Budget Account Structure:  A Descriptive
Overview (GAO/AIMD-95-179, September 18, 1995), there are
approximately 1,300 accounts in the President's Budget for fiscal
year 1996.  This number does not include a certain number of accounts
that have no current activity.  For this study, we compared accounts
contained in the President's fiscal year 1987 budget that reports
fiscal year 1985 actual dollar amounts and accounts in the
President's fiscal year 1996 budget that reports fiscal year 1994
actual dollar amounts. 

\6 For a view on the distribution of total spending by agency and
budget function, see Budget Function Classification:  Agency Spending
and Personnel Levels for Fiscal Years 1994 and 1995
(GAO/AIMD-95-115FS, April 11, 1995) and Budget Function
Classification:  Relating Agency Spending and Personnel Levels to
Budget Functions (GAO/AIMD/GGD-95-69FS, January 30, 1995). 


   BACKGROUND
------------------------------------------------------------ Letter :2

The Balanced Budget and Emergency Deficit Control Act of 1985 amended
the Congressional Budget Act of 1974 (titles I through IX of Public
Law 93-344) to require us to study the provisions of law which
provide the federal government with spending authority and permanent
appropriations for which the budget authority is not provided in
advance by an appropriation act.\7 To fulfill this requirement, we
issued two reports in July 1987, Budget Issues:  Inventory of
Accounts With Spending Authority and Permanent Appropriations, 1987
and a companion report, Budget Issues:  The Use of Spending Authority
and Permanent Appropriations Is Widespread (GAO/AFMD-87-44, July 17,
1987).\8

The inventory report provided selected information such as account
description, the legal citation providing the spending authority or
permanent appropriation, the amounts of authority used, and reasons
given by agency officials for having the authority.  The companion
report summarized and provided general observations on the data in
the inventory report. 

In 1987, we reported that 65 federal agencies or establishments used
backdoor authority as a means of financing some of their programs or
activities.  We identified 413 accounts as having one or more types
of spending authority or permanent appropriations.  Specifically, 59
accounts had contract authority, 37 accounts had authority to borrow,
27 accounts had authority to use monetary credits or bartering, 263
accounts were authorized to make payments from offsetting collections
from nonfederal sources, and 143 accounts had permanent
appropriations, including entitlements not annually appropriated. 

Backdoor authority is authority to obligate federal funds that is not
controlled through the appropriations process.  Basically, it
represents mandatory spending that is provided and controlled
indirectly through other forms of legislation.  The Congressional
Budget Act of 1974 attempted to limit the creation of new
nonappropriated contract authority or authority to borrow.  Although
the act continues to limit the creation of these types of spending
authority, it has not stopped the expansion.  In 1987, we reported
that since 1976 (the year the act became effective), at least four
provisions of law interpreted by agencies as providing
nonappropriated contract authority and six provisions of law
interpreted by agencies as providing authority to borrow had been
enacted. 

In 1990, the Congress further attempted to limit backdoor authority
by establishing controls over changes in direct spending\9 --spending
that is generally the same as backdoor authority.  The Budget
Enforcement Act of 1990 (BEA) amended both the Congressional Budget
Act of 1974 and the Balanced Budget and Emergency Deficit Control Act
of 1985.  In addition to establishing dollar limits for total annual
appropriations, BEA contains a "pay-as-you-go" (PAYGO) provision
requiring that legislation enacted be either deficit neutral or
deficit reducing.  In other words, any legislation reducing taxes or
expanding direct spending programs must be offset by direct spending
cuts or revenue increases.  If PAYGO requirements are violated,
nonexempt direct spending programs are sequestered at the end of the
congressional session. 


--------------------
\7 The act also requires us to update our study from time to time. 

\8 The 1985 act also required us to recommend the appropriate form of
financing for activities or programs financed by such provisions of
law.  To fulfill this requirement, we issued a report in September
1989, Budget Issues:  Agency Authority to Borrow Should Be Granted
More Selectively (GAO/AFMD-89-4, September 15, 1989). 

\9 Direct spending, as defined by the Budget Enforcement Act, is
spending for entitlement authority, the Food Stamp Program, and
budget authority provided by law other than appropriation acts. 
Direct spending authority is under the control of congressional
authorizing committees, as contrasted with discretionary spending,
which is under the control of appropriations committees. 


   OBJECTIVES, SCOPE, AND
   METHODOLOGY
------------------------------------------------------------ Letter :3

Our objectives were to (1) update the data reported in our 1987
inventory, (2) identify accounts provided with backdoor authority
between 1987 and 1996 and add them to the inventory, (3) identify
accounts reported in 1987 that no longer had such authority in fiscal
year 1996 and delete them from the inventory, (4) give the legal
citations providing backdoor authority, (5) determine whether the
accounts are subject to or exempt from sequestration or subject to
any special rules or limitations, and (6) determine the change in
accounts with backdoor authority in terms of number of accounts and
dollar amounts used or collected. 

We identified new accounts with backdoor authority by using Office of
Management and Budget (OMB) data in the GAO Budget Database\10 and by
requesting agencies to identify new accounts they thought met the
definition of backdoor authority we provided to them. 

We asked each agency to (1) update the data reported in our 1987
inventory, (2) identify accounts that no longer have backdoor
authority, and (3) identify and provide similar data on new accounts
that we or the agencies identified as having backdoor authority.  For
certain legislative branch accounts, we researched the needed data. 
Budget data for fiscal years 1985 and 1994 were obtained from the GAO
Budget Database.  We used data contained in the 1996 President's
Budget because, at the time of our analysis, the 1997 budget had not
been released. 

When necessary, we had numerous discussions with many agency
officials in attempting to obtain accurate and complete data.  If an
agency did not provide the data as requested, we have indicated this. 

We asked each agency to give us the legal citation of the agency's
spending authority or permanent appropriations for each account
identified.  We reviewed each citation to ensure its accuracy.  When
necessary, we sought clarification from agency officials.  In certain
instances, the citation could not be verified and, in appendix III,
we marked the citation with an asterisk.  In some cases, the agency's
citation did not provide the spending authority or permanent
appropriations that the agency claimed.  In other cases, the citation
supported a different type of authority (for example, permanent
appropriations instead of contract authority).  For those citations
which could not be verified, we will continue to work with the
appropriate agency and its office of general counsel to resolve the
discrepancy.  Generally, the date of enactment is reported as
provided by the agency unless a different date was readily apparent
in our legal review.  We used OMB data from the GAO Budget Database
to report the account's GRH status. 

We then compared and analyzed the new inventory data and the old
inventory in terms of the number of accounts and dollar amounts. 

Our work was conducted from July 1994 through March 1996 in
accordance with generally accepted government auditing standards. 
This work entailed contacting over 80 departments and agencies (some
of which did not ultimately have backdoor authority) and was highly
dependent on agency response time and verification of their
responses.  Our scope and methodology are described in greater detail
in appendix IV. 


--------------------
\10 The GAO Budget Database is a compilation of automated data we
obtained from the OMB budget tapes used in preparing the annual
budgets.  For this study, we compared accounts contained in the
President's fiscal year 1987 budget (which reports fiscal year 1985
actual dollar amounts) and accounts in the President's fiscal year
1996 budget (which reports fiscal year 1994 actual dollar amounts). 


   USE OF BACKDOOR AUTHORITY
   CONTINUES TO BE WIDESPREAD
------------------------------------------------------------ Letter :4

Many federal budget accounts use backdoor authority to finance their
programs and activities.  As shown in table 1, the number of accounts
having spending authority and permanent appropriations has generally
increased since 1987, with the largest increase being in accounts
with permanent appropriations.  While an increase is also shown in
the number of accounts having authority to use offsetting collections
from the public, the number of accounts having contract authority,
authority to borrow, and authority to use monetary credits has not
changed significantly. 

As table 1 shows, the number of accounts having backdoor authority
has increased.  However, it is important to note that the number of
accounts does not necessarily indicate how widespread the existence
of backdoor authority is.  This is because one provision of law
providing backdoor authority may be used by any number of accounts
and, alternatively, any number of provisions of law may have provided
backdoor authority to one account.  For example, one provision of
law, 41 U.S.C.  section 11a, provides contract authority to 31
Department of Defense--Military accounts.  By contrast, one
account--Operation and Maintenance, Army--in addition to appropriated
funds, uses offsetting collections authority provided by 22 separate
provisions of law. 



                                Table 1
                
                  Accounts Having Backdoor Authority,
                       Fiscal Years 1987 and 1996

                                               Number of     Number of
                                             accounts in   accounts in
Type of authority                                   1987        1996\a
------------------------------------------  ------------  ------------
Contract authority                                    59            57
Authority to borrow                                   37            38
Monetary credits/bartering                            27            26
Permanent appropriations                             143           265
Offsetting collections                               263           304
----------------------------------------------------------------------
Note:  The number of accounts with each type of backdoor authority in
this table differs from the numbers reported in Budget Account
Structure:  A Descriptive Overview (GAO/AIMD-95-179, September 18,
1995) for several reasons.  First, unlike that report, this table
includes accounts identified by agencies as having backdoor
authority, even if the authority was not used.  The table also
separates accounts with permanent contract authority and authority to
borrow from accounts with other permanent authority.  Further, it
includes only accounts with offsetting collections from the public,
while the 1995 report includes accounts with offsetting collections
from federal sources as well. 

\a This includes some accounts that had backdoor authority in 1987
but were not included in our 1987 report because agencies did not
report them to us. 

The real barometer of the use of backdoor authority is reflected in
the change in dollar amounts.  The use of backdoor authority to
finance programs and activities continues to be significant in dollar
terms and also has increased since 1985.  In real terms (constant
dollars), overall spending through backdoor authority has increased
nearly 10 percent.  The use of permanent appropriations as a means of
financing has increased 20.6 percent, while spending through the use
of all other types of backdoor authority has decreased.  Although the
number of accounts using offsetting collections from nonfederal
sources has increased, in real terms the use of this method of
financing has decreased 4.7 percent.  Table 2 compares spending
through the use of backdoor authority in fiscal years 1985 and 1994. 



                                Table 2
                
                 Backdoor Authority Used, Fiscal Years
                             1985 and 1994

                         (Dollars in billions)

                               FY                     FY
                             1985                   1994
                            actua                  actua       Percent
                                l  FY 1985 actual      l   change from
                            amoun    amount (1994  amoun    1985 (1994
Type of authority               t        dollars)      t      dollars)
--------------------------  -----  --------------  -----  ------------
Contract authority            $34             $46    $42          -9.4
Authority to borrow            51              68     16         -76.4
Monetary credits/              \a              \a     \a            \a
 bartering
Permanent appropriations      608             815    983          20.6
Offsetting collections         97             130    124          -4.7
----------------------------------------------------------------------
\a Data not reported in the President's Budget. 

Source:  President's Budget, Fiscal Years 1987 and 1996. 


   ACCOUNTS USING LARGEST AMOUNTS
   OF BACKDOOR AUTHORITY
------------------------------------------------------------ Letter :5

The following tables present the accounts using the largest amounts
of backdoor authority in fiscal year 1994.  As shown in table 3, the
six accounts using the largest amounts of contract authority used
$41.6 billion in fiscal year 1994.  This represented 99 percent of
total contract authority used. 



                                Table 3
                
                   Accounts Using Largest Amounts of
                  Contract Authority, Fiscal Year 1994

                         (Dollars in billions)

                                                                  Actu
                                                                    al
                                                                  amou
                              Accoun                                nt
                                   t                              used
Account name                  number  Agency        Bureau          \a
----------------------------  ------  ------------  ------------  ----
Federal-Aid Highways             69-  Department    Federal       $20.
(Highway Trust Fund)            8083  of            Highway          9
                                      Transportati  Administrati
                                      on            on

Foreign Military Sales Trust     11-  Funds         Military      13.0
Fund                            8242  Appropriated  Sales
                                      to the        Programs
                                      President

Grants-in-Aid for Airports       69-  Department    Federal        3.0
(Airport and Airway Trust       8106  of            Aviation
Fund)                                 Transportati  Administrati
                                      on            on

Defense Business Operations      97-  Department    Revolving      1.8
Fund                            4930  of Defense-   and
                                      -Military     Management
                                                    Funds

Discretionary Grants             69-  Department    Federal        1.8
                                8191  of            Transit
                                      Transportati  Administrati
                                      on            on

Trust Fund Share of Expenses     69-  Department    Federal        1.2
                                8350  of            Transit
                                      Transportati  Administrati
                                      on            on

======================================================================
Total                                                             $41.
                                                                     6
----------------------------------------------------------------------
\a Total does not add due to rounding. 

Source:  President's Budget, Fiscal Year 1996. 

Table 4 shows that the six accounts using the largest amounts of
authority to borrow used $16 billion in fiscal year 1994.  This was
99.8 percent of total authority to borrow used.



                                Table 4
                
                   Accounts Using Largest Amounts of
                 Authority to Borrow, Fiscal Year 1994

                         (Dollars in billions)

                                                                  Actu
                                                                    al
                                                                  amou
                              Accoun                                nt
                                   t                              used
Account name                  number  Agency        Bureau          \a
----------------------------  ------  ------------  ------------  ----
Commodity Credit Corporation     12-  Department    Farm Service  $11.
Fund                            4336  of            Agency           8
                                      Agriculture

Postal Service Fund              18-  Other         Postal         2.7
                                4020  Independent   Service
                                      Agencies

Tennessee Valley Authority       64-  Other         Tennessee      1.1
Fund                            4110  Independent   Valley
                                      Agencies      Authority

Bonneville Power                 89-  Department    Power          0.3
Administration Fund             4045  of Energy     Marketing
                                                    Administrati
                                                    on

Federal Buildings Fund           47-  General       Real            \b
                                4542  Services      Property
                                      Administrati  Activities
                                      on

Ocean Freight Differential       69-  Department    Maritime        \b
                                1751  of            Administrati
                                      Transportati  on
                                      on

======================================================================
Total                                                             $16.
                                                                     0
----------------------------------------------------------------------
\a Total does not add due to rounding. 

\b Less than $100 million. 

Source:  President's Budget, Fiscal Year 1996. 

The six accounts using the largest amount of permanent appropriations
used $827.6 billion in fiscal year 1994.  This represented 84 percent
of total permanent appropriations in that year.\11 Table 5 gives the
detail.



                                Table 5
                
                   Accounts Using Largest Amounts of
                 Permanent Appropriations, Fiscal Year
                                  1994

                         (Dollars in billions)

                                                                  Actu
                                                                    al
                                                                  budg
                                                                    et
                              Accoun                              auth
                                   t                              orit
Account name                  number  Agency        Bureau           y
----------------------------  ------  ------------  ------------  ----
Other Interest on the Public     20-  Department    Interest on   $296
Debt                            0550  of the        the Public      .3
                                      Treasury      Debt

Federal Old-Age and              20-  Social        Social        282.
Survivors Insurance Trust       8006  Security      Security         6
Fund                                  Administrati  Administrati
                                      on            on

Federal Hospital Insurance       20-  Department    Health Care   112.
Trust Fund                      8005  of Health     Financing        4
                                      and Human     Administrati
                                      Services      on

Federal Supplementary            20-  Department    Health Care   61.2
Medical Insurance Trust Fund    8004  of Health     Financing
                                      and Human     Administrati
                                      Services      on

Federal Disability Insurance     20-  Social        Social        38.6
Trust Fund                      8007  Security      Security
                                      Administrati  Administrati
                                      on            on

Civil Service Retirement and     24-  Office of     Office of     36.5
Disability Fund                 8135  Personnel     Personnel
                                      Management    Management

======================================================================
Total                                                             $827
                                                                    .6
----------------------------------------------------------------------
Source:  President's Budget, Fiscal Year 1996. 


The six accounts using the largest amount of offsetting collections
from nonfederal sources collected $94.5 billion in fiscal year 1994. 
This represented 76 percent of total offsetting collections from
nonfederal sources collected in that year.  Table 6 gives the detail.



                                Table 6
                
                   Accounts Using Largest Amounts of
                Offsetting Collections, Fiscal Year 1994

                         (Dollars in billions)

                                                                  Actu
                                                                    al
                                                                  amou
                                                                    nt
                              Accoun                              coll
                                   t                              ecte
Account name                  number  Agency        Bureau           d
----------------------------  ------  ------------  ------------  ----
Postal Service Fund              18-  Other         Postal        $48.
                                4020  Independent   Service          4
                                      Agencies

RTC Revolving Fund               22-  Other         Resolution    14.1
                                4055  Independent   Trust
                                      Agencies      Corporation

Bank Insurance Fund              51-  Other         Federal       12.7
                                4064  Independent   Deposit
                                      Agencies      Insurance
                                                    Corporation

Commodity Credit Corporation     12-  Department    Farm Service   7.3
Fund                            4336  of            Agency
                                      Agriculture

Defense Business Operations      97-  Department    Revolving      6.2
Fund                            4930  of Defense-   and
                                      -Military     Management
                                                    Funds

Tennessee Valley Authority       64-  Other         Tennessee      5.8
Fund                            4110  Independent   Valley
                                      Agencies      Authority

======================================================================
Total                                                             $94.
                                                                     5
----------------------------------------------------------------------
Source:  President's Budget, Fiscal Year 1996. 

As the statistics in the six preceding tables show, the use of
backdoor authority to finance federal programs and activities
continues to be widespread.  Although spending in three categories of
backdoor authority has decreased when adjusted for inflation, the
overall use of backdoor authority has grown in real terms over the
past 9 years.  Many new federal departments and agencies have been
provided with spending authority and permanent appropriations in
advance of appropriation acts.  The appendixes to this report present
detailed tables on the numbers of accounts and amounts of backdoor
authority used. 

Appendix I provides the amounts of spending authority and permanent
appropriations used in fiscal year 1994 by agency, budget function,
and type of fund account.  Tables I.1 through I.3 show that specific
types of backdoor authority are concentrated in certain agencies,
budget functions, and fund accounts. 

Appendix II shows the spending authority and permanent appropriations
that are available for use for each account in the inventory.  It
provides a comprehensive view of the types of backdoor authority
available to each account.  This appendix is arranged by agency and
provides each account's 11-digit identification code. 

Appendix III provides detailed information on accounts using or
having authority to use spending authority or permanent
appropriations.  The figures in this appendix (III.1 through III.5)
contain legal references, amounts of backdoor authority used in
fiscal years 1985 and 1994, and other information for each account in
the inventory. 

Appendix IV provides a detailed description of our scope and
methodology.  It describes the process we used to identify accounts,
the funding practices that are not included in the inventory, and how
we obtained our data.  A glossary of terms is included at the end of
this report. 

We are sending copies of this report to all Members of the Congress
and copies will be made available to others upon request. 

If you or your staffs have any questions, please contact me at (202)
512-9573.  Major contributors to this report are listed in appendix
V. 

Paul L.  Posner
Director, Budget Issues


--------------------
\11 Excluding Other Interest on the Public Debt, the remaining 5
accounts are part of the 11 programs comprising 90 percent of total
mandatory spending in fiscal year 1993.  For further discussion, see
Budget Policy:  Issues in Capping Mandatory Spending
(GAO/AIMD-94-155, July 18, 1994). 


SPENDING AUTHORITY AND PERMANENT
APPROPRIATIONS BY AGENCY, BUDGET
FUNCTION, AND FUND TYPE
=========================================================== Appendix I



                                    Table I.1
                     
                         Spending Authority and Permanent
                      Appropriations Used by Agency, Fiscal
                                    Year 1994

                              (Dollars in thousands)

                                                                      Offsetting
                                              Monetary                collection
                                              credits/     Permanent          s,
                        Contract   Authority  barterin  appropriatio  nonfederal
Agency                 authority   to borrow       g\a            ns     sources
------------------  ------------  ----------  --------  ------------  ----------
Legislative Branch           $ 0    $ 15,673               $ 328,172    $ 96,070
The Judiciary                  0           0                 219,102      29,247
Executive Office               0           0                       0       1,029
 of the President
Funds Appropriated    12,969,580           0                   5,259      49,429
 to the President
Department of                  0  11,814,311         X     6,880,940   8,184,188
 Agriculture
Department of                  0           0                  -1,510      58,690
 Commerce
Department of                  0           0         X    39,077,182      12,899
 Defense--Civil
Department of          1,814,470           0         X       163,985   9,293,164
 Defense--
 Military
Department of                  0           0                  62,940      62,967
 Education
Department of                  0     340,383         X        24,067   3,781,337
 Energy
Department of                  0           0             175,390,994     260,577
 Health and Human
 Services
Department of                  0      25,000                  11,115     163,639
 Housing and
 Urban Development
Department of the         30,000           0         X     1,958,794     302,571
 Interior
Department of                  0           0               1,191,439     232,830
 Justice
Department of                  0           0              30,520,264   1,391,131
 Labor
Department of                  0           0         X       594,263      54,170
 State
Department of         27,030,787      50,317                  76,976      58,829
 Transportation
Department of the              0        -376             314,715,704   2,668,694
 Treasury
Department of                  0           0               2,223,622   1,340,681
 Veterans Affairs
Environmental                  0           0                       0      41,681
 Protection Agency
General Services               0      52,619                  15,467     286,836
 Administration
National                       0           0                   1,574           0
 Aeronautics and
 Space
 Administration
Office of                      0           0              49,018,072   5,136,957
 Personnel
 Management
Small Business                 0           0                       0      14,101
 Administration
Social Security                0           0             326,798,659   3,222,598
 Administration
Other Independent              0   3,783,281         X    33,349,702  87,066,617
 Agencies
================================================================================
                     $41,844,837  $16,081,20       Not  $982,626,782  $124,339,1
 Total                                     8  applicab                        49
                                                    le
--------------------------------------------------------------------------------
\a An "X" in this column indicates that this agency has at least one
account with monetary credits or bartering authority. 



                                    Table I.2
                     
                         Spending Authority and Permanent
                     Appropriations Used by Budget Function,
                                 Fiscal Year 1994

                              (Dollars in thousands)

                                                                      Offsetting
                                              Monetary                collection
                                              credits/     Permanent          s,
                        Contract   Authority  barterin  appropriatio  nonfederal
Budget function        authority   to borrow       g\a            ns     sources
------------------  ------------  ----------  --------  ------------  ----------
National Defense      $1,814,470         $ 0         X   $12,075,506  $9,577,625
International         12,969,580           0         X       158,512   1,465,083
 Affairs
General Science,               0           0                     171           0
 Space and
 Technology
Energy                         0     340,383         X        21,552   3,479,344
Natural Resources         30,000           0         X     1,340,247     435,296
 and Environment
Agriculture                    0  11,814,311         X       717,257   8,178,910
Commerce and                   0   2,732,379              18,543,209  81,571,849
 Housing Credit
Transportation        27,030,787      50,317                  15,535     616,418
Community and                  0      -2,162                  95,257     164,063
 Regional
 Development
Education,                     0           0                 192,777      75,289
 Training,
 Employment, and
 Social Services
Health                         0           0               1,156,773   4,401,357
Medicare                       0           0             175,293,181           0
Income Security                0      25,000              94,714,093   5,757,108
Social Security                0           0             326,798,659       3,150
Veterans Benefits              0           0               2,432,681   1,340,681
 and Services
Administration of              0           0               1,814,222     336,799
 Justice
General Government             0      67,916              14,035,866   1,103,920
Net Interest                   0           0             301,779,036           0
Multifunction                  0   1,053,064         X    31,442,248   5,832,257
================================================================================
                     $41,844,837  $16,081,20       Not  $982,626,782  $124,339,1
 Total                                     8  applicab                        49
                                                    le
--------------------------------------------------------------------------------
\a An "X" in this column indicates that this budget function has at
least one account with monetary credits or bartering authority. 



                                    Table I.3
                     
                         Spending Authority and Permanent
                     Appropriations Used by Fund Type, Fiscal
                                    Year 1994

                              (Dollars in thousands)

                                                                      Offsetting
                                              Monetary                collection
                                              credits/     Permanent          s,
                        Contract   Authority  barterin  appropriatio  nonfederal
Fund type              authority   to borrow       g\a            ns     sources
------------------  ------------  ----------  --------  ------------  ----------
General                   $3,300     $50,317         X  $356,021,893  $7,794,433
Special                   30,000           0         X     4,292,109      60,518
Public enterprise              0  15,962,975         X    18,492,388  102,802,98
                                                                               3
Intragovernmental      1,811,170      67,916                       0   7,074,699
 revolving
Nonrevolving trust    40,000,367           0             603,820,392     509,350
Revolving trust                0           0                       0   6,097,166
================================================================================
                     $41,844,837  $16,081,20       Not  $982,626,782  $124,339,1
 Total                                     8  applicab                        49
                                                    le
--------------------------------------------------------------------------------
\a An "X" in this column indicates that this fund type has at least
one account with monetary credits or bartering authority. 


SPENDING AUTHORITY AND PERMANENT
APPROPRIATIONS AVAILABLE, BY
AGENCY
========================================================== Appendix II



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DETAILED INFORMATION ON ACCOUNTS
WITH SPENDING AUTHORITY AND
PERMANENT APPROPRIATIONS
========================================================= Appendix III

This appendix provides specific information on budget accounts using
or having authority to use spending authority or permanent
appropriations.  It contains legal references, fiscal year 1985 and
1994 actual amounts used, and other information for each account.  No
dollar amounts are reported for monetary credits/bartering because
data for this authority is not recorded in the President's Budget. 
This appendix and table 2 in the letter show different total amounts
used for fiscal year 1985.  Table 2 shows the amounts used for the
accounts that had backdoor authority in the 1987 President's Budget. 
This appendix shows the amounts used for accounts that still had
backdoor authority and were listed in the 1996 President's Budget. 
We used data contained in the 1996 President's Budget because, at the
time of our analysis, the 1997 budget had not been released. 

The five figures in this appendix are organized by type of backdoor
authority in the following order:  contract authority; authority to
borrow; monetary credits or bartering; permanent appropriations; and
offsetting collections from nonfederal sources credited to
appropriation or fund accounts.  The figures present each type of
backdoor authority by agency and bureau, generally in the order in
which they appear in the Budget of the United States Government,
Fiscal Year 1996--Appendix. 

EXPLANATION OF ITEMS INCLUDED IN
FIGURES


      TYPE OF AUTHORITY
----------------------------------------------------- Appendix III:0.1

Identifies the type of spending authority or permanent appropriation
which the account may use. 


      AGENCY
----------------------------------------------------- Appendix III:0.2

Refers to federal departments and establishments, including
establishments in the legislative and judicial branches, based on
categories in the Budget of the United States Government, Fiscal Year
1996--Appendix.  Most of the smaller executive branch agencies are
grouped under "Other Independent Agencies" and "Funds Appropriated to
the President."


      BUREAU
----------------------------------------------------- Appendix III:0.3

Designates principal subordinate organizational units or smaller
executive branch agencies based on categories in the Budget of the
United States Government, Fiscal Year 1996--Appendix. 


      ACCOUNT NAME
----------------------------------------------------- Appendix III:0.4

Identifies the name of an account that is shown with a program and
financing schedule in the Budget of the United States Government,
Fiscal Year 1996--Appendix. 


      ACCOUNT NUMBER
----------------------------------------------------- Appendix III:0.5

Identifies the identification code of an account that is shown with a
program and financing schedule in the Budget of the United States
Government, Fiscal Year 1996--Appendix. 


      LEGAL REFERENCE
----------------------------------------------------- Appendix III:0.6

Gives the legal citation(s) providing the spending authority or
permanent appropriation.  Where we could not verify the legal
citation submitted by the agency, we have placed an asterisk next to
the quoted citation.  For a complete discussion of our review of the
legal citations, see appendix IV, Scope and Methodology. 


      YEAR OF ENACTMENT
----------------------------------------------------- Appendix III:0.7

Refers to the calendar year in which the spending authority or
permanent appropriation was provided.  In cases where there are
multiple citations, it represents the earliest identifiable
provision. 


      GRH STATUS
----------------------------------------------------- Appendix III:0.8

Provides the account's status under the Balanced Budget and Emergency
Deficit Control Act of 1985 (also known as Gramm-Rudman-Hollings), as
amended by the Budget Enforcement Act of 1990 and 1993--that is,
whether the account is subject to or exempt from sequestration. 


         SEQUESTRABLE (SEQ.)
--------------------------------------------------- Appendix III:0.8.1

Refers to those accounts whose budgetary resources are subject to
cancellation under budget enforcement sequestration procedures. 


         SEQUESTRABLE, BUT SUBJECT
         TO 906 (SEQ/906)
--------------------------------------------------- Appendix III:0.8.2

Refers to those accounts whose budgetary resources are subject to
cancellation under budget enforcement sequestration procedures, but
the amount of the sequestration is limited by the provisions of 2
U.S.C.  section 906. 


         EXEMPT
--------------------------------------------------- Appendix III:0.8.3

Refers to those accounts which are exempt from reduction under budget
enforcement sequestration procedures.  This category includes
accounts with activities that are specifically exempt from reduction,
activities resulting from private donations, bequests, or voluntary
contributions to the government, and activities which involve
intragovernmental funds. 


         PARTIAL EXEMPTIONS
         (PARTIAL)
--------------------------------------------------- Appendix III:0.8.4

Refers to those accounts for which certain budgetary resources
specified by law within the account are not subject to cancellation
under budget enforcement sequestration procedures.  For example, the
Tennessee Valley Authority Fund is exempt from reduction, except for
nonpower programs and activities.  The prior legal obligations of 39
budget accounts are exempt from reduction. 


         OPTIONAL EXEMPTION (OPT.)
--------------------------------------------------- Appendix III:0.8.5

Refers to the President's authority under the Budget Enforcement Act
to exempt any military personnel account from sequestration or
provide for a lower uniform percentage reduction than would otherwise
apply under budget enforcement sequester procedures. 


      SOURCE OF COLLECTIONS
----------------------------------------------------- Appendix III:0.9

Refers to the services, activities, and/or goods for which the major
portion of offsetting collections from nonfederal sources credited to
the account are received. 


      AMOUNT USED
---------------------------------------------------- Appendix III:0.10

Represents the dollar amount used for contract authority and
authority to borrow. 


      VALUE
---------------------------------------------------- Appendix III:0.11

Represents the dollar amount of monetary credits or bartering used. 


      BUDGET AUTHORITY
---------------------------------------------------- Appendix III:0.12

Represents the amount of obligations which may be incurred under a
permanent appropriation. 


      COLLECTED
---------------------------------------------------- Appendix III:0.13

Represents the dollar amount of offsetting collections from
nonfederal sources credited to the appropriation or fund account. 

   Figure III.1:  Contract
   Authority by Agency, Bureau,
   and Account

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   Figure III.2:  Authority to
   Borrow by Agency, Bureau, and
   Account

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   Figure III.3:  Monetary
   Credits/Bartering by Agency,
   Bureau, and Account

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   Figure III.4:  Permanent
   Appropriations by Agency,
   Bureau, and Account

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   Figure III.5:  Offsetting
   Collections by Agency, Bureau,
   and Account

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SCOPE AND METHODOLOGY
========================================================== Appendix IV

Accounts with backdoor authority have authority provided in laws
other than appropriation acts to obligate the United States to make
payments.  The inventory includes accounts with contract authority,
authority to borrow, and authority to use monetary credits or
bartering if budget authority has not been provided in advance in
appropriation acts.  It also includes appropriation or fund accounts
credited with offsetting collections from nonfederal sources and
accounts with permanent appropriations. 

There are other financing practices which might be considered similar
to backdoor authority because they are generally not directly
controllable in the current year's appropriations process.  Such
items include annually appropriated entitlements and accounts with
advance appropriations.  These are not in the inventory because, at
some time, such funding is considered in the appropriations process. 
Offsetting collections from federal sources and trust funds credited
to appropriation or fund accounts are not included in the inventory
because their source is either annually appropriated or is itself in
the inventory.  As agreed with Senate Budget Committee staff, the
nonbudgetary credit financing accounts are excluded from the
inventory.  The credit liquidating accounts are also excluded because
their permanent appropriations exist solely because of credit reform. 
Similarly, credit program accounts with permanent appropriations for
credit re-estimates also are not included.  Tax expenditures and tax
credits are not in the inventory because they are considered on the
revenue side of the federal budget rather than the spending side. 

We requested data on specific accounts from 81 federal agencies or
establishments.  To update accounts reported in 1987, we sent
agencies photocopies of pages from our 1987 inventory report.  We
sent questionnaires on new accounts we identified to some of the same
agencies and additional questionnaires to other agencies or
establishments.  For certain legislative branch accounts, we
researched and compiled the needed data.  We identified new accounts
using OMB data in GAO's Budget Database\1 and by requesting agencies
to identify accounts with authority to use monetary credits or
bartering or any other account they thought met the definition of
backdoor authority we provided to them.  We used the program and
financing schedule\2 line code descriptions in OMB Circular A-11 to
select codes relating to spending authority and permanent
appropriations.  Using line codes 60.00 to 69.90, we searched GAO's
Budget Database for fiscal years 1987 through 1995 and selected
accounts that used one or more types of backdoor authority in any of
those years.  We then prepared questionnaires on the selected
accounts identifying the agency, bureau, and account number. 

Financial data for fiscal years 1985 and 1994 were obtained from the
GAO Budget Database.  Fiscal year 1985 dollar amounts are reported
only for accounts that existed at that time.  No dollar amounts are
reported for monetary credits/bartering because data for this
authority is not recorded in the President's Budget.  We used data
contained in the 1996 President's Budget because, at the time of our
analysis, the 1997 budget had not been released. 

We had numerous discussions with many agency officials in attempting
to obtain accurate and complete data.  If an agency did not provide
the data as requested, we have indicated this by stating "not
provided."

We asked each agency to provide us with the legal citation of the
agency's spending authority or permanent appropriations for each
account identified.  We reviewed each citation to ensure its
accuracy.  When necessary, we sought clarification from agency
officials.  In certain instances, the citation could not be verified
and, in appendix III, we marked the citation with an asterisk.  In
some cases, the agency's citation did not provide the spending
authority or permanent appropriations that the agency claimed.  In
other cases, the citation provided supported a different type of
authority (for example, permanent appropriations instead of contract
authority).  For those citations which could not be verified, we will
continue to work with the appropriate agency and its office of
general counsel to resolve the discrepancy.  Generally, the date of
enactment is reported as provided by the agency unless a different
date was readily apparent in our legal review.  Also, some accounts
have multiple legal citations that provide backdoor authority and
some existing citations have been amended or expanded over time.  We
reported only the earliest identifiable year of enactment for the
legislation we believe authorized the backdoor authority.  To obtain
an account's GRH status including any special rules or limitations,
we used OMB data contained in the GAO Budget Database. 

We then compared and analyzed the new inventory data and the old
inventory in terms of the number of accounts and dollar amounts. 


--------------------
\1 The GAO Budget Database is a compilation of automated data we
obtained from OMB budget tapes used in preparing the annual budgets. 

\2 Each account's program and financing schedule in the Budget of the
United States Government--Appendix shows the type and amount of
budgetary resources available to finance obligations. 


MAJOR CONTRIBUTORS TO THIS REPORT
=========================================================== Appendix V

ACCOUNTING AND INFORMATION
MANAGEMENT DIVISION, WASHINGTON,
D.C. 

Christine E.  Bonham, Assistant Director
Trina V.  Lewis, Evaluator-in-Charge
Deborah A.  Colantonio, Senior Evaluator
Robert M.  Sexton, Senior Evaluator
Warren C.  Underwood, Senior Evaluator
Joseph G.  Heisler, Evaluator
Carol M.  Henn, Evaluator
Elizabeth A.  McClarin, Evaluator
John W.  Mingus, Evaluator
James F.  Loschiavo, Social Science Analyst

OFFICE OF THE GENERAL COUNSEL

Carlos E.  Diz, Attorney


GLOSSARY
=========================================================== Appendix 0


      ADVANCE APPROPRIATION
------------------------------------------------------- Appendix 0:0.1

Budget authority provided in an appropriation act that is first
available in a fiscal year beyond the fiscal year for which the
appropriation act is enacted. 


      ACCOUNT
------------------------------------------------------- Appendix 0:0.2

A budgeting unit that records budgetary resources for obligation and
outlay and is shown in the Budget of the United States Government,
Fiscal Year 1996--Appendix. 


      APPROPRIATION ACT
------------------------------------------------------- Appendix 0:0.3

A statute, under the jurisdiction of the House and Senate Committees
on Appropriations, that authorizes federal agencies to incur
obligations and to make payments out of the Treasury for specified
purposes. 


      AUTHORITY TO BORROW
------------------------------------------------------- Appendix 0:0.4

The statutory authority that permits a federal agency to incur
obligations and make payments out of borrowed monies.  This does not
include the Treasury's authority to borrow from the public or other
sources under chapter 31 of title 31 U.S.  Code. 


      BUDGET AUTHORITY
------------------------------------------------------- Appendix 0:0.5

Authority provided by law to enter into obligations that will result
in immediate or future outlays involving federal government funds. 
Budget authority, however, does not include authority to insure or
guarantee the repayment of indebtedness incurred by another person or
government.  The basic forms of budget authority are appropriations,
authority to borrow, contract authority, and authority to expend
offsetting collections. 


      CONSTANT DOLLAR
------------------------------------------------------- Appendix 0:0.6

A dollar value adjusted for changes in prices. 


      CONTRACT AUTHORITY
------------------------------------------------------- Appendix 0:0.7

The statutory authority that permits obligations to be incurred in
advance of appropriations or in anticipation of receipts to be
credited to a revolving fund or other account. 


      CURRENT BUDGET AUTHORITY
------------------------------------------------------- Appendix 0:0.8

Budget authority enacted by the Congress in or immediately preceding
the fiscal year in which it becomes available. 


      CURRENT DOLLAR
------------------------------------------------------- Appendix 0:0.9

The dollar amount at the time the authority was provided or used. 


      FUND TYPE
------------------------------------------------------ Appendix 0:0.10

The extent of restriction or earmarking within accounts.  The six
fund types discussed in this report follow. 


         GENERAL FUNDS
---------------------------------------------------- Appendix 0:0.10.1

Accounts containing resources to be expended for the general support
of the federal government.  They include spending from both annual
and permanent appropriations. 


         INTRAGOVERNMENTAL FUNDS
---------------------------------------------------- Appendix 0:0.10.2

Expenditure accounts authorized by law to facilitate financing
transactions primarily within and between federal agencies on a
revolving fund basis. 


         PUBLIC ENTERPRISE FUNDS
---------------------------------------------------- Appendix 0:0.10.3

Accounts authorized by law to be credited with offsetting
collections, primarily from the public, that are generated by and
earmarked to finance a continuing cycle of business-type operations. 


         SPECIAL FUNDS
---------------------------------------------------- Appendix 0:0.10.4

Accounts whose resources are earmarked by law for specific purposes. 


         TRUST FUNDS
---------------------------------------------------- Appendix 0:0.10.5

Accounts designated by law as "trust funds" and earmarked for
specific purposes and programs according to the terms of the trust
agreement or statute. 


         TRUST REVOLVING FUNDS
---------------------------------------------------- Appendix 0:0.10.6

Trust fund expenditure accounts that are appropriation accounts
authorized to be credited with collections and used to carry out a
cycle of business-type operations in accordance with statute. 


      MONETARY CREDITS OR
      BARTERING
------------------------------------------------------ Appendix 0:0.11

The authority to make purchases by giving the seller credits or
something other than money instead of issuing a check.  The holder of
the credits may apply them later to reduce an amount owed the
government in other, sometimes unrelated, transactions.  An agency's
acceptance of credits or something other than money as payment
results in the agency forgoing the collection of offsetting receipts
or collections in an amount equal to the credit. 


      OFFSETTING COLLECTIONS FROM
      NONFEDERAL SOURCES
------------------------------------------------------ Appendix 0:0.12

Collections from sources outside the federal government that are
credited to appropriation or fund accounts.  They include such things
as user fees, loan repayments, and proceeds from sales. 


      PERMANENT APPROPRIATION
------------------------------------------------------ Appendix 0:0.13

An appropriation that becomes available as a result of previously
enacted legislation and does not require current action by the
Congress. 


      PROPRIETARY OFFSETTING
      RECEIPTS
------------------------------------------------------ Appendix 0:0.14

Collections from the public credited to general fund, special fund,
or trust fund receipt accounts, as a result of the government's
business-type or market-oriented activities.  Among these are loan
repayments, interest, sale of property and products, charges for
nonregulatory services, and rents and royalties.  Such collections
are not counted as budget receipts and are offset against total
budget authority and outlays by agency and function. 


      SPENDING AUTHORITY
------------------------------------------------------ Appendix 0:0.15

As defined by the Congressional Budget Act of 1974, as amended, a
collective designation for authority provided in laws other than
appropriation acts to obligate the government to make payments.  It
includes contract authority, authority to borrow, and entitlement
authority for which the budget authority is not provided in advance
by appropriation acts.  It also includes authority to forgo the
collection of proprietary offsetting receipts (the use of monetary
credits) and to make any other payments for which the budget
authority is not provided in advance by appropriation acts.  The
latter includes, but is not limited to, authority to make payments
from offsetting collections credited to appropriation or fund
accounts. 


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