A Glossary of Terms Used in the Federal Budget Process 
(1-SEP-05, GAO-05-734SP).

This fifth edition of A Glossary of Terms Used in the Federal 
Budget Process replaces the 1993 Exposure Draft. It fulfills 
part of GAO's responsibility to publish standard terms, 
definitions, and classifications for the government's fiscal, 
budget, and program information. It was developed in cooperation 
with the Secretary of the Treasury and the Directors of the 
Office of Management and Budget (OMB) and the Congressional 
Budget Office (CBO). This glossary is a basic reference document 
for the Congress, federal agencies, and others interested in the 
federal budget-making process. Like previous editions, this 
revision emphasizes budget terms, but relevant economic and 
accounting terms are also defined to help the user appreciate 
the dynamics of the budget process and its relationship to other 
key activities (e.g., financial reporting). It also distinguishes 
between any differences in budgetary and nonbudgetary meanings of 
terms.
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-05-734SP					        
    ACCNO:   A38561						        
  TITLE:     A Glossary of Terms Used in the Federal Budget Process		 
     DATE:   09/01/2005 
  SUBJECT:   Funds management
	     Federal funds
	     Economic policies
             Budgeting
             Accounting systems
             Budget functions
             Budget administration
             Appropriations
             Allocation (Government accounting)	

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GAO-05-734SP


September 2005: 

A Glossary of Terms Used in the Federal Budget Process: 

Exposure Draft: 

GAO-05-734SP: 

Preface: 

Terms and Definitions: 

Appendixes: 

Appendix I: Overview of the Development and Execution of the Federal 
Budget: 

Appendix II: Federal Budget Formulation and Appropriation Processes: 

Appendix III: The Methods for Tracking Funds in the Federal Government: 

Appendix IV: Budget Functional Classification: 

Appendix V: Federal Budget Account Identification Code: 

Appendix VI: Program and Financing Schedule: 

Appendix VII: Object Classification: 

Index of Terms: 

Tables: 

Table 1: Functional Classification Structure: 

Table 2: Federal Budget Account Identification Code: 

Figures: 

Figure 1: Federal Budget Formulation Process: 

Figure 2: Federal Budget and Appropriation Process: 

Figure 3: Federal Budget Account Identification Code Digits: 

Figure 4: Example of P&F Schedule Preceded by Appropriations Language 
for National Flood Insurance Fund Account: 

Figure 5: Example of Object Classification for Department of Defense 
Program: 

Major Laws Cited: 

Antideficiency Act, codified in part at 31 U.S.C. ï¿½ï¿½ 1341, 1342, 1512- 
1514 & 1517: 

Balanced Budget and Emergency Deficit Control Act of 1985, Pub. L. No. 
99-177, title II, 99 Stat. 1037, 1038 (Dec. 12, 1985): 

Balanced Budget and Emergency Deficit Control Reaffirmation Act of 
1987, Pub. L. No. 100-119, 101 Stat. 754 (Sept. 29, 1987): 

Balanced Budget Act of 1997, Pub. L. No. 105-33, 111 Stat. 251 (Aug. 5, 
1997): 

Budget and Accounting Act of 1921, Pub. L. No. 67-13, 42 Stat. 20 (June 
10, 1921): 

Budget Enforcement Act of 1990, Pub. L. No. 101-508, title XIII, 104 
Stat. 1388, 1388-573 (Nov. 5, 1990): 

Budget Enforcement Act of 1997, Pub. L. No. 105-33, title X, 111 Stat. 
251, 677 (Aug. 5, 1997): 

Chief Financial Officers Act of 1990, Pub. L. No. 101-576, 104 Stat. 
2838 (Nov. 15, 1990): 

Congressional Budget and Impoundment Control Act of 1974, Pub. L. No. 
93-344, 88 Stat. 297 (July 12, 1974): 

Economy Act, 31 U.S.C. ï¿½ 1535: 

Federal Credit Reform Act of 1990, Pub. L. No. 101-508, title XIII, 
subtitle B, 104 Stat. 1388, 1388-609 (Nov. 5, 1990): 

Federal Financing Bank Act of 1973, Pub. L. No. 93-224, 87 Stat. 937 
(Dec. 29, 1973): 

Federal Managers' Financial Integrity Act of 1982, Pub. L. No. 97-255, 
96 Stat. 814 (Sept. 8, 1982): 

Government Management Reform Act of 1994, Pub. L. No. 103-356, 108 
Stat. 3410 (Oct. 13, 1994): 

Government Performance and Results Act of 1993, Pub. L. No. 103-62, 107 
Stat. 285 (Aug. 3, 1993): 

Line Item Veto Act, Pub. L. No. 104-130, 110 Stat. 1200 (Apr. 9, 1996): 

Reports Consolidation Act of 2000, Pub. L. No. 106-531, 114 Stat. 2537 
(Nov. 22, 2000): 

[End of section] 

Preface: 

The federal budget process is the primary means by which the President 
and Congress select among competing demands for federal funds. The 
President's budget is the Administration's proposed plan for managing 
funds, setting levels of spending, and financing the spending of the 
federal government. It is not only the President's principal policy 
statement but is also the starting point for congressional budgetary 
actions. The budget's importance makes it essential that it be 
comprehensive and clear. 

This fifth edition of A Glossary of Terms Used in the Federal Budget 
Process replaces the 1993 Exposure Draft. It fulfills part of GAO's 
responsibility (31 U.S.C. ï¿½ 1112) to publish standard terms, 
definitions, and classifications for the government's fiscal, budget, 
and program information. It was developed in cooperation with the 
Secretary of the Treasury and the Directors of the Office of Management 
and Budget (OMB) and the Congressional Budget Office (CBO). This 
glossary is a basic reference document for the Congress, federal 
agencies, and others interested in the federal budget-making process. 
Like previous editions, this revision emphasizes budget terms, but 
relevant economic and accounting terms are also defined to help the 
user appreciate the dynamics of the budget process and its relationship 
to other key activities (e.g., financial reporting). It also 
distinguishes between any differences in budgetary and nonbudgetary 
meanings of terms. 

For this edition, we reviewed all terms in the 1993 Exposure Draft and 
made additions, revisions, or deletions. We added a number of 
performance budgeting-related terms and deleted Budget Enforcement Act 
terms that are no longer relevant. 

The Glossary is by no means an exhaustive list of terms related to the 
budget. We decided to include only those commonly used terms that are 
most significant in the congressional and executive budget processes. 
Executive, legislative, and other budget experts participated in the 
selections and definitions of the Glossary terms. While every effort 
was made to resolve differences, the final selections and definitions 
were made by GAO. The Glossary can be accessed online at 
http://www.gao.gov. 

Signed by: 

David M. Walker: 
Comptroller General of the United States: 

[End of section] 

Terms and Definitions: 

A: 

Account: 

A separate financial reporting unit for budget, management, and/or 
accounting purposes. All budgetary transactions are recorded in 
accounts, but not all accounts are budgetary in nature. Some accounts 
do not directly affect the budget but are used purely for accounting 
purposes. Budget accounts are used to record all transfers within the 
budget, whereas other accounts (such as deposit fund, credit financing, 
and foreign currency accounts) are used for accounting purposes 
connected with funds that are nonbudgetary in nature. The Office of 
Management and Budget (OMB), in consultation with the Department of the 
Treasury (Treasury), assigns account identification codes reflecting 
appropriations as enacted in appropriations laws. Treasury establishes 
and maintains a system of accounts that provides the basic structure 
for the U.S. Standard General Ledger Chart of Accounts. (See also 
Accounts in the President's Budget; Accounts for Purposes Other Than 
Budget Presentation; Credit Reform Act Accounts under Federal Credit; 
Standard General Ledger Chart of Accounts.) 

Appropriation Account: 

The basic unit of an appropriation generally reflecting each unnumbered 
paragraph in an appropriation act. An appropriation account typically 
encompasses a number of activities or projects and may be subject to 
restrictions or conditions applicable to only the account, the 
appropriation act, titles within an appropriation act, other 
appropriation acts, or the government as a whole. (See also 
Appropriation Rider; Continuing Appropriation/Continuing Resolution; 
Line Item; Supplemental Appropriation.) 

Account in the President's Budget: Expenditure/Appropriation and 
Receipt Accounts Classified by Fund Types: 

Accounts used by the federal government to record outlays (expenditure 
accounts) and income (receipt accounts) primarily for budgeting or 
management information purposes but also for accounting purposes. All 
budget (and off-budget) accounts are classified as being either 
expenditure or receipt (including offsetting receipt) accounts and by 
fund group. Budget (and off-budget) transactions fall within either of 
two fund groups: (1) federal funds and (2) trust funds. 

All federal fund and trust fund accounts are included within the budget 
(that is, they are on-budget) unless they are excluded from the budget 
by law. Federal and trust funds excluded from the budget by law are 
classified as being off-budget. The term off-budget differs from the 
term nonbudgetary. Nonbudgetary refers to activities (such as the 
credit financing accounts) that do not belong in the budget under 
existing concepts, while off-budget refers to accounts that belong on- 
budget under budget concepts but that are excluded from the budget 
under terms of law. 

Federal Fund Accounts: 

Budgetary accounts composed of moneys collected and spent by the 
federal government other than those designated as trust funds. Federal 
fund accounts include general, special, public enterprise, and 
intragovernmental fund accounts. (See also Standard General Ledger 
Chart of Accounts.) 

General Fund Accounts. Accounts in the U.S. Treasury holding all 
federal money not allocated by law to any other fund account. 

General Fund Receipt Account. A receipt account credited with all 
collections that are not earmarked by law for another account for a 
specific purpose. These collections are presented in the President's 
budget as either governmental (budget) receipts or offsetting receipts. 
These include taxes, customs duties, and miscellaneous receipts. 

General Fund Expenditure Account. An appropriation account established 
to record amounts appropriated by law for the general support of 
federal government activities and the subsequent expenditure of these 
funds. It includes spending from both annual and permanent 
appropriations. 

Intragovernmental Fund Accounts. Expenditure accounts authorized by law 
to facilitate financing transactions primarily within and between 
federal agencies. 

Intragovernmental Revolving Fund Account. An appropriation account 
authorized to be credited with collections from other federal agencies' 
accounts that are earmarked to finance a continuing cycle of business- 
type operations, including working capital funds, industrial funds, 
stock funds, and supply funds. According to the Office of Management 
and Budget (OMB), collections of intragovernmental revolving fund 
accounts are derived primarily from within the government. For example, 
the franchise fund operations within several agencies provide common 
administrative services to federal agencies on a fee-for-service basis. 
(See also Working Capital Fund.) 

Management Fund Account. An account established by the Department of 
the Treasury (Treasury) that is authorized by law to credit collections 
from two or more appropriations to finance activity not involving a 
continuing cycle of business-type operations. Such accounts do not 
generally own a significant amount of assets, such as supplies, 
equipment, or loans, nor do they have a specified amount of capital 
provided--a corpus. The Navy Management Fund is an example of such an 
account. 

Consolidated Working Fund Accounts are a subset of management funds. 
These are special working funds established under the authority of 
Section 601 of the Economy Act (31 U.S.C. ï¿½ï¿½ 1535, 1536) to receive 
advance payments from other agencies or accounts. Consolidated working 
fund accounts are not used to finance the work directly but only to 
reimburse the appropriation or fund account that will finance the work 
to be performed. Amounts in consolidated working fund accounts are 
available for the same periods as those of the accounts advancing the 
funds. Consolidated working fund accounts are shown as separate 
accounts on the books of Treasury but are not separately identified in 
the President's budget. Transactions of these accounts are included in 
the presentation of the appropriation or fund account actually 
performing the service or providing the materials. 

Public Enterprise Revolving Fund Account. A type of revolving fund that 
conducts cycles of businesslike operations, mainly with the public, in 
which it charges for the sale of products or services and uses the 
proceeds to finance its spending, usually without requirement for 
annual appropriations. Most government corporations are financed by 
public enterprise funds. (See Revolving Fund.) 

Special Fund Accounts. Federal fund accounts earmarked by law for a 
specific purpose. 

Special Fund Receipt Account. A receipt account credited with 
collections that are earmarked by law but included in the federal funds 
group rather than classified as trust fund collections. These 
collections are presented in the President's budget as either 
governmental (budget) receipts or offsetting receipts. (See also 
Earmarking.) 

Special Fund Expenditure Account. An appropriation account established 
to record appropriations, obligations, and outlays financed by the 
proceeds of special fund receipts. (See also Earmarking.) 

Trust Fund Accounts: 

Accounts designated as "trust funds" by law, regardless of any other 
meaning of the term "trust fund." A trust fund account is usually 
either a receipt, an expenditure, or a revolving fund account. Except 
in rare circumstances (for example, Indian Trust Funds), a trust fund 
account imposes no fiduciary responsibility on the federal government. 
For a fuller discussion of trust funds, see Federal Trust and Other 
Earmarked Funds: Answers to Frequently Asked Questions [Hyperlink, 
http://www.gao.gov/cgi-bin/getrpt?GAO-01-199SP]. (See also Earmarking.) 

Trust Fund Expenditure Account. An appropriation account established to 
record appropriated amounts of trust fund receipts used to finance 
specific purposes or programs under a trust agreement or statute. 

Trust Fund Receipt Account. A receipt account credited with collections 
classified as trust fund collections. These collections are recorded as 
either governmental receipts or offsetting receipts. 

Trust Revolving Fund Account. A trust fund expenditure account that is 
an appropriation account authorized to be credited with collections and 
used, without further appropriation action, to carry out a cycle of 
business-type operations in accordance with statute. 

Accounts for Purposes Other Than Budget Presentation: 

Clearing Accounts: 

Accounts that temporarily hold general, special, or trust fund federal 
government collections or disbursements pending clearance to the 
applicable receipt or expenditure accounts. 

Deposit Fund Accounts: 

Nonbudgetary accounts established to account for collections that are 
either (1) held temporarily and later refunded or paid upon 
administrative or legal determination as to the proper disposition 
thereof or (2) held by the government, which acts as banker or agent 
for others, and paid out at the direction of the depositor. Examples 
include savings accounts for military personnel, state and local income 
taxes withheld from federal employees' salaries, and payroll deductions 
for the purchase of savings bonds by civilian employees of the 
government. Deposit fund balances are accounted for as liabilities of 
the federal government. These accounts are not included in the budget 
totals because the amounts are not owned by the government. Therefore, 
the budget records transactions between deposit funds and budgetary 
accounts as transactions with the public. Deposit fund balances may be 
held in the form of either invested or uninvested balances. However, 
since the cash in the accounts is used by the Department of the 
Treasury to satisfy immediate cash requirements of the government, to 
the extent that they are not invested in federal debt, changes in 
uninvested deposit fund balances are shown as a means of financing the 
deficit in the budget. 

Foreign Currency Fund Accounts: 

Accounts established in the Department of the Treasury for foreign 
currency that is acquired without payment of U.S. dollars. Examples of 
such accounts are those set up through the Agricultural Trade 
Development and Assistance Act (7 U.S.C. ï¿½ï¿½ 1691-1736g). 

Suspense Accounts: 

Combined receipt and expenditure accounts established to temporarily 
hold funds that are later refunded or paid into another government fund 
when an administrative or final determination as to the proper 
disposition is made. 

Transfer Appropriation (Allocation) Accounts: 

Accounts established to receive and disburse allocations. Such 
allocations and transfers are not adjustments to budget authority or 
balances of budget authority. Rather, the transactions and any 
adjustments therein are treated as nonexpenditure transfers at the time 
the allocations are made. The accounts carry symbols that identify the 
original appropriation from which moneys have been advanced. Transfer 
appropriation accounts are symbolized by adding the receiving agency's 
department prefix to the original appropriation or fund account symbol. 
In some cases, a bureau suffix is added to show that the transfer is 
being made to a particular bureau within the receiving department. For 
budget purposes, transactions in the transfer accounts are reported 
with the transactions in the parent accounts. For further information, 
see the Treasury Financial Manual. (See also Allocation; Nonexpenditure 
Transfer under Transfer.) 

Accounts Listed in the Standard General Ledger: 

See under Standard General Ledger (SGL) Chart of Accounts. 

Accounts Payable: 

Amounts owed by a federal agency for goods and services received from, 
progress in contract performance made by, and rents due to other 
entities. This is a proprietary (or financial) accounting term. For 
balance sheet reporting purposes, according to OMB Circular No. A-11 
"accounts payable" consists of the amount owed by the reporting entity 
for goods and services received from other entities, progress in 
contract performance made by other entities, and rents due to other 
entities. (See also Accounts Receivable; Proprietary Accounting; app. 
III.) 

Accounts Receivable: 

Amounts due from others for goods furnished and services rendered. Such 
amounts include reimbursements earned and refunds receivable. This is a 
proprietary (or financial) accounting and not a budget term. Accounts 
receivable do not constitute budget authority against which an agency 
may incur an obligation. For federal proprietary accounting, accounts 
receivable are assets that arise from specifically identifiable, 
legally enforceable claims to cash or other assets through an entity's 
established assessment processes or when goods or services are 
provided. (See also Accounts Payable; Proprietary Accounting; app. 
III.) 

Accrual Accounting: 

A system of accounting in which revenues are recorded when earned and 
expenses are recorded when goods are received or services are 
performed, even though the actual receipt of revenues and payment for 
goods or services may occur, in whole or in part, at a different time. 
(See also Cash Accounting; app. III.) 

Administrative Division or Subdivision of Funds: 

Any apportionment or other distribution of an appropriation or fund 
made pursuant to the Antideficiency Act (31 U.S.C. ï¿½ï¿½ 1511-1519). The 
appropriation may be divided or subdivided administratively within the 
limits of the apportionment (31 U.S.C. ï¿½ 1513(d)). The expenditure or 
obligation of the divided or subdivided appropriation or fund may not 
exceed the apportionment (31 U.S.C. ï¿½ 1517(a)). (See also 
Antideficiency Act; Antideficiency Act Violation; Apportionment; 
Limitation.) 

Advance Appropriation: 

Budget authority provided in an appropriation act that becomes 
available 1 or more fiscal years after the fiscal year for which the 
appropriation act was enacted. For example, a fiscal year 2005 
appropriation act could provide that the budget authority for a 
specified activity would not become available until October 1, 2005 
(the start of fiscal year 2006), or later. The amount is not included 
in the budget totals of the year for which the appropriation act is 
enacted but rather in those for the fiscal year in which the amount 
will become available for obligation. In the example above, the budget 
authority would be recorded in fiscal year 2006. (For a distinction, 
see Advance Funding; Forward Funding; Multiple-Year Authority under 
Duration under Budget Authority.) 

Advance Funding: 

Budget authority provided in an appropriation act to obligate and 
disburse (outlay) in the current fiscal year funds from a succeeding 
year's appropriation. Advance funding is a means to avoid making 
supplemental requests late in the fiscal year for certain entitlement 
programs in cases where the appropriations for the current year prove 
to be insufficient. When such budget authority is used (i.e., funds 
obligated), the budget records an increase in the budget authority for 
the fiscal year in which it is used and a reduction in the budget 
authority for the following fiscal year. (For a distinction, see 
Advance Appropriation; Multiple-Year Authority under Duration under 
Budget Authority; Forward Funding.) 

Advance Payment: 

An amount paid prior to the later receipt of goods, services, or other 
assets. Advances are ordinarily made only to payees to whom an agency 
has an obligation, and they do not exceed the amount of the obligation. 

Agency: 

No one definition of this term has general, governmentwide 
applicability. "Agency" and related terms, like "executive agency" or 
"federal agency," are defined in different ways in different laws and 
regulations. For example, the provisions of the Budget and Accounting 
Act of 1921 relating to the preparation of the President's budget 
specifically define "agency" to include the District of Columbia 
government but exclude the legislative branch or the Supreme Court (31 
U.S.C. ï¿½ 1101). 

Agency Mission: 

Term used in section 1105(a)(22) of title 31 of the United States Code, 
which outlines content requirements for the President's budget 
submission to Congress. Section 1105 requires that the President's 
budget contain a statement of agency budget authority in terms of 
agency missions, but this section offers no definition. The term is 
generally accepted to refer to the purpose of the programs of the 
agency and its component organizations. In the Office of Management and 
Budget's (OMB) budget functional classification system, agency missions 
are distinguished from national needs. National needs are generally 
described as major functions, while agency missions are generally 
described in the context of subfunctions. (See also Functional 
Classification.) 

Allocation: 

For the purposes of budgeting, an allocation means a delegation, 
authorized in law, by one agency of its authority to obligate budget 
authority and outlay funds to another agency. (The appropriation or 
fund from which the allocation is made is generally referred to as the 
parent appropriation or fund.) An allocation is made when one or more 
agencies share the administration of a program for which appropriations 
are made to only one of the agencies or to the President. When an 
allocation occurs, the Department of the Treasury establishes a 
subsidiary account called a "transfer appropriation account," and the 
agency receiving the allocation may obligate up to the amount included 
in the account. The budget does not show the transfer appropriation 
account separately. Transactions involving allocation accounts appear 
in the Object Classification Schedule, with the corresponding Program 
and Financing Schedule, in the President's budget. For an illustration 
of the treatment of Object Classification--With Allocation Accounts, 
see OMB Circular No. A-11. (See also Object Classification; Transfer; 
Transfer Appropriation (Allocation) Accounts under Account for Purposes 
Other Than Budget Presentation.) 

For purposes of section 302(a) of the Congressional Budget and 
Impoundment Control Act of 1974 (2 U.S.C. ï¿½ 633(a)), an allocation is 
the distribution of spending authority and outlays to relevant 
committees based on the levels contained in a concurrent resolution on 
the budget. (See also Committee Allocation.) 

For purposes of section 302(b) of the Congressional Budget and 
Impoundment Control Act of 1974 (2 U.S.C. ï¿½ 633(b)), an allocation is 
the distribution of spending authority and outlays to relevant 
subcommittees based on the levels contained in the concurrent 
resolution on the budget. (See also Subcommittee Allocation.) 

For funds control purposes, an allocation is a further subdivision of 
an apportionment. 

Allotment: 

An authorization by either the agency head or another authorized 
employee to his/her subordinates to incur obligations within a 
specified amount. Each agency makes allotments pursuant to specific 
procedures it establishes within the general apportionment requirements 
stated in OMB Circular No. A-11. The amount allotted by an agency 
cannot exceed the amount apportioned by the Office of Management and 
Budget (OMB). An allotment is part of an agency system of 
administrative control of funds whose purpose is to keep obligations 
and expenditures from exceeding apportionments and allotments. (See 
also Administrative Division or Subdivision of Funds; Apportionment; 
Reapportionment.) 

Allowance: 

An amount included in the President's budget request or included in a 
projection in a congressional resolution on the budget to cover 
possible additional proposals, such as contingencies for programs whose 
expenditures are controllable only by statutory change and other 
requirements. As used by Congress in the concurrent resolutions on the 
budget, an allowance represents a special functional classification 
designed to include an amount to cover possible requirements. An 
allowance remains undistributed until the contingency on which it is 
based occurs; then it is distributed to the appropriate functional 
classification. For agency budgetary accounting and fund control 
purposes, an allowance is a subdivision of an allotment. For treatment 
of undistributed allowances, see function 920 in the table "Outlays by 
Function and Subfunction" in the Historical Tables of the President's 
budget. (For more details on the government accounting definition, see 
Standard General Ledger Chart of Accounts.) For federal proprietary 
accounting, an allowance also represents the estimated uncollectible 
amount of accounts receivable. 

Antideficiency Act: 

Federal law that: 

* prohibits the making of expenditures or the incurring of obligations 
in advance of an appropriation; 

* prohibits the incurring of obligations or the making of expenditures 
in excess of amounts available in appropriation or fund accounts unless 
specifically authorized by law (31 U.S.C. ï¿½ 1341(a)); 

* prohibits the acceptance of voluntary or personal services unless 
authorized by law (31 U.S.C. ï¿½ 1342); 

* requires the Office of Management and Budget (OMB), via delegation 
from the President, to apportion appropriated funds and other budgetary 
resources for all executive branch agencies (31 U.S.C. ï¿½ 1512); 

* requires a system of administrative controls within each agency (see 
31 U.S.C. ï¿½ 1514 for the administrative divisions established); 

* prohibits incurring any obligation or making any expenditure in 
excess of an apportionment or reapportionment or in excess of other 
subdivisions established pursuant to sections 1513 and 1514 of title 31 
of the United States Code (31 U.S.C. ï¿½ 1517); and: 

* specifies penalties for deficiencies (see Antideficiency Act 
Violation). 

The act permits agencies to reserve funds (that is, withhold them from 
obligation) under certain circumstances. (See also Administrative 
Division or Subdivision of Funds; Antideficiency Act Violation; 
Apportionment; Budgetary Reserves; Deferral of Budget Authority; 
Deficiency Apportionment; Deficiency Appropriation; Expenditure; Fund 
Accounting; Congressional Budget and Impoundment Control Act of 1994; 
Outlay.) 

Antideficiency Act Violation: 

Occurs when one or more of the following happens: 

* overobligation or overexpenditure of an appropriation or fund account 
(31 U.S.C. ï¿½ 1341(a)); 

* entering into a contract or making an obligation in advance of an 
appropriation, unless specifically authorized by law (31 U.S.C. ï¿½ 
1341(a)); 

* acceptance of voluntary service, unless authorized by law (31 U.S.C. 
ï¿½ 1342); or: 

* overobligation or overexpenditure of (1) an apportionment or 
reapportionment or (2) amounts permitted by the administrative control 
of funds regulations (31 U.S.C. ï¿½ 1517(a)). 

Once it has been determined that there has been a violation of the 
Antideficiency Act, the agency head must report all relevant facts and 
a statement of actions taken to the President and Congress and submit a 
copy of the report to the Comptroller General. Penalties for 
Antideficiency Act violations include administrative discipline, such 
as suspension from duty without pay or removal from office. In 
addition, an officer or employee convicted of willfully and knowingly 
violating the law shall be fined not more than $5,000, imprisoned for 
not more than 2 years, or both (31 U.S.C. ï¿½ï¿½ 1349, 1350, 1518, and 
1519). (See also Administrative Division or Subdivision of Funds; 
Antideficiency Act; Expenditure.) 

Apportionment: 

The action by which the Office of Management and Budget (OMB) 
distributes amounts available for obligation, including budgetary 
reserves established pursuant to law, in an appropriation or fund 
account. An apportionment divides amounts available for obligation by 
specific time periods (usually quarters), activities, projects, 
objects, or a combination thereof. The amounts so apportioned limit the 
amount of obligations that may be incurred. An apportionment may be 
further subdivided by an agency into allotments, suballotments, and 
allocations. In apportioning any account, some funds may be reserved to 
provide for contingencies or to effect savings made possible pursuant 
to the Antideficiency Act. Funds apportioned to establish a reserve 
must be proposed for deferral or rescission pursuant to the Impoundment 
Control Act of 1974 (2 U.S.C. ï¿½ï¿½ 681-688). 

The apportionment process is intended to (1) prevent the obligation of 
amounts available within an appropriation or fund account in a manner 
that would require deficiency or supplemental appropriations and (2) 
achieve the most effective and economical use of amounts made available 
for obligation. (See also Administrative Division or Subdivision of 
Funds; Allotment; Antideficiency Act; Appropriated Entitlement; 
Budgetary Reserves; Deferral of Budget Authority; Deficiency 
Apportionment; Deficiency Appropriation; Limitation; Reapportionment; 
Rescission; Supplemental Appropriation.) 

Appropriated Entitlement: 

An entitlement whose source of funding is in an annual appropriation 
act. However, because the entitlement is created by operation of law, 
if Congress does not appropriate the money necessary to fund the 
payments, eligible recipients may have legal recourse. Veterans' 
compensation and Medicaid are examples of such appropriated 
entitlements. (See also Entitlement Authority.) 

Appropriation Act: 

A statute, under the jurisdiction of the House and Senate Committees on 
Appropriations, that generally provides legal authority for federal 
agencies to incur obligations and to make payments out of the Treasury 
for specified purposes. An appropriation act fulfills the requirement 
of Article I, Section 9, of the U.S. Constitution, which provides that 
"no money shall be drawn from the Treasury, but in Consequence of 
Appropriations made by Law." Under the rules of both houses, an 
appropriation act should follow enactment of authorizing legislation. 
(See also Appropriations under Forms of Budget Authority under Budget 
Authority; Authorizing Legislation; Limitation.) 

Major types of appropriation acts are regular, supplemental, 
deficiency, and continuing. Regular appropriation acts are all 
appropriation acts that are not supplemental, deficiency, or 
continuing. Currently, regular annual appropriation acts that provide 
funding for the continued operation of federal departments, agencies, 
and various government activities are considered by Congress annually. 
From time to time, supplemental appropriation acts are also enacted. 
When action on regular appropriation bills is not completed before the 
beginning of the fiscal year, a continuing resolution (often referred 
to simply as "CR") may be enacted in a bill or joint resolution to 
provide funding for the affected agencies for the full year, up to a 
specified date, or until their regular appropriations are enacted. A 
deficiency appropriation act provides budget authority to cover 
obligations incurred in excess of available budget authority. (See also 
Continuing Appropriation/Continuing Resolution; Supplemental 
Appropriation; Deficiency Appropriation.) 

Appropriation Rider: 

Sometimes used to refer to (1) a provision that is not directly related 
to the appropriation to which it is attached or (2) a limitation or 
requirement in an appropriation act. (See also Limitation.) 

Asset: 

Tangible or intangible items owned by the federal government, which 
would have probable economic benefits that can be obtained or 
controlled by a federal government entity. (See also Liability.) 

Asset Sale: 

The sale of a physical or financial asset owned in whole or in part by 
the federal government to the public. Asset sales are typically large- 
dollar transactions ($50 million or more) for which advance 
notification must be provided to the Department of the Treasury. 
Revenue from the sale of assets is accounted for in the budget as 
offsetting receipts or collections. 

In general, asset sales increase current cash payments received by the 
government at the expense of a stream of future income that the 
government would otherwise receive. (See also Direct Loan under Federal 
Credit.) 

Appropriations: 

See under Forms of Budget Authority under Budget Authority. 

Authorizing Committee: 

A standing committee of the House or Senate with legislative 
jurisdiction over the establishment, continuation, and operations of 
federal programs or agencies. The jurisdiction of such committees 
extends, in addition to program legislation, to authorization of 
appropriations legislation. (Normally, authorization of appropriations 
legislation is a prerequisite for making appropriations for the given 
programs or agencies.) An authorizing committee also has jurisdiction 
in those instances where backdoor authority is provided in the 
substantive legislation. For further discussion, see the current rules 
of the House of Representatives and the Senate. (See also Authorizing 
Legislation; Backdoor Authority/Backdoor Spending; Oversight Committee; 
Spending Committee.) 

Authorizing Legislation: 

Substantive legislation, proposed by a committee of jurisdiction other 
than the House or Senate Appropriations Committees, that establishes 
and continues the operation of a federal program or agency either 
indefinitely or for a specific period or that sanctions a particular 
type of obligation or expenditure within a program. This term is used 
in two different ways: (1) to describe legislation enacting new program 
authority, that is, authorizing the program, and (2) to describe 
legislation authorizing an appropriation. 

Authorization of appropriations legislation authorizes the enactment of 
appropriations of specific amounts for specific programs and activities 
to be provided in an appropriation act. An authorization of 
appropriations is, under congressional rules, a prerequisite for such 
an appropriation. Thus, for example, a point of order may be raised in 
either house objecting to an appropriation in an appropriation act that 
is not previously authorized by law. An authorization of appropriations 
may be part of the organic legislation for the agency or program or it 
may be separate legislation. Oftentimes, the authorization of 
appropriation may be inferred from an appropriation provided in an 
appropriation act. The authorization of appropriation may specify the 
amount of budget authority to be included in the appropriation act or 
it may authorize the appropriation of "such sums as may be necessary." 
In some instances, authorizing legislation may contain an appropriation 
or provide other forms of budget authority, such as contract authority, 
borrowing authority, or entitlement authority. (See also Appropriation 
Act; Backdoor Authority/Backdoor Spending; Entitlement Authority; 
Limitation; Point of Order; Reauthorization.) 

B: 

Backdoor Authority/Backdoor Spending: 

A colloquial phrase for budget authority provided in laws other than 
appropriations acts, including contract authority and borrowing 
authority, as well as entitlement authority and the outlays that result 
from that budget authority. (See also Appropriations and Contract 
Authority under Forms of Budget Authority under Budget Authority; 
Authorizing Legislation; Entitlement Authority; Spending Committee.) 

Balanced Budget: 

A budget in which receipts equal outlays. (See also Deficit; Surplus.) 

Balanced Budget and Emergency Deficit Control Act of 1985: 

Also known as the Deficit Control Act, originally known as Gramm- 
Rudman-Hollings. Among other changes to the budget process, the law 
established "maximum deficit amounts" and a sequestration procedure to 
reduce spending if those targets were exceeded. The Deficit Control Act 
has been amended and extended several times--most significantly by the 
Budget Enforcement Act (BEA) of 1990. The sequestration and enforcement 
mechanisms expired or became ineffective at the end of fiscal year 
2002. (See also Budget Enforcement Act; Gramm-Rudman-Hollings.) 

Balanced Budget and Emergency Deficit Control Reaffirmation Act of 
1987: 

Amended the Balanced Budget and Emergency Deficit Control Act of 1985 
(Gramm-Rudman-Hollings) to extend the date for achieving the goal of a 
balanced budget until fiscal year 1993, revise sequestration 
procedures, and require the Director of the Office of Management and 
Budget (OMB) to determine whether a sequester is necessary. (See also 
Budget and Accounting Act of 1921; Budget Enforcement Act; Gramm- 
Rudman-Hollings; Sequestration.) 

Baseline: 

An estimate of spending, revenue, the deficit or surplus, and the 
public debt expected during a fiscal year under current laws and 
current policy. The baseline is a benchmark for measuring the budgetary 
effects of proposed changes in revenues and spending. It assumes that 
receipts and mandatory spending will continue or expire in the future 
as required by law and that the future funding for discretionary 
programs will equal the most recently enacted appropriation, adjusted 
for inflation. Under the Budget Enforcement Act (BEA), which will 
expire at the end of fiscal year 2006, the baseline is defined as the 
projection of current-year levels of new budget authority, outlays, 
revenues, and the surplus or deficit into the budget year and outyears 
based on laws enacted through the applicable date. (See also 
Projections.) 

CBO Baseline: 

Projected levels of governmental receipts (revenues), budget authority, 
and outlays for the budget year and subsequent fiscal years, assuming 
generally that current policies remain the same, except as directed by 
law. The baseline is described in the Congressional Budget Office's 
(CBO) annual report for the House and Senate Budget Committees, The 
Budget and Economic Outlook, which is published in January. The 
baseline, by law, includes projections for 5 years, but at the request 
of the Budget Committees, CBO has provided such projections for 10 
years. In most years the CBO baseline is revised in conjunction with 
CBO's analysis of the President's budget, which is usually issued in 
March, and again during the summer. The "March" baseline is the 
benchmark for measuring the budgetary effects of proposed legislation 
under consideration by Congress. 

Bases of Budgeting: 

Methods for calculating budget figures. Not all methods are mutually 
exclusive. For example, the federal budget includes both net and gross 
figures and reports both obligations and cash or cash equivalent 
spending. As a general rule, budget receipts and outlays are on a cash 
or cash equivalent basis; however, interest on public issues of public 
debt is recorded on an accrual basis. Under credit reform, the subsidy 
cost of both direct loans and guaranteed loans is included in the 
budget (i.e., the budget records the net present value of the estimated 
cash flows of direct loans and loan guarantees as outlays). (See also 
Capital Budget; Direct Loan and Guaranteed Loan under Federal Credit. 
For a more detailed presentation of this subject, see app. III.) 

Accrual Basis: 

The basis whereby transactions and events are recognized when they 
occur, regardless of when cash is received or paid. (See also Accrual 
Accounting.) 

Budgeting in Relation to Totals: 

Gross Basis. Budgetary totals from which offsetting collections have 
not been deducted. In customary use, "gross" refers to the sum or total 
value of a transaction before reduction by applicable offsets. Under 
this display, totals include obligations and expenditures from 
offsetting collections and governmental receipts rather than as offsets 
to outlays. (See also Offsetting Collections and Offsetting Receipts 
under Collections.) 

Net Basis. The use of budgetary totals from which offsetting 
collections have been deducted. Under this display, budgetary totals 
include offsetting collections as offsets to obligations and outlays 
rather than as receipts. (See also Offsetting Collections under 
Collections.) 

Cash or Cash Equivalent Basis: 

The basis whereby receipts are recorded when received and expenditures 
are recorded when paid, without regard to the accounting period in 
which the receipts are earned or the costs are incurred. "Cash" 
generally refers to payment by cash, checks, or electronic funds 
transfers. "Cash equivalent" refers to the use of an instrument or 
process that creates a substitute for cash. For example, when the 
government issues a debt instrument of any kind in satisfaction of 
claims, the transaction is recorded as simultaneous outlays and 
borrowing--the outlays when the debt instrument is issued, not when it 
is redeemed. 

Obligations Basis: 

The basis whereby financial transactions involving the use of funds are 
recorded in the accounts primarily when goods and services are ordered, 
regardless of when the resources acquired are to be received or 
consumed or when cash is received or paid. (See also Liability; 
Obligation.) 

Benefit-Cost Analysis (Economics Term): 

See under Cost-Benefit Analysis. 

Biennial Budget: 

A budget covering a period of 2 years. The federal government has an 
annual budget, but there have been proposals to shift to a biennial 
budget. The 2-year period can apply to the budget presented to Congress 
by the President, to the budget resolution adopted by Congress, or to 
the frequency and period covered by appropriations acts. The Department 
of Defense Authorization Act, 1986, Pub. L. No. 99-145, required the 
Department of Defense to submit 2-year budgets beginning with the 
budgets for 1988 and 1989. However, to date, appropriations have been 
made on an annual basis. 

Budget: 

A detailed statement of anticipated revenues and expenditures during an 
accounting period. For the federal government, the term "budget" often 
refers to the President's budget submission to Congress early each 
calendar year in accordance with the Budget and Accounting Act of 1921, 
as amended, and represents proposals for congressional consideration. 
The President's budget includes requests for budget authority for 
federal programs and estimates of revenues and outlays for the upcoming 
fiscal year and, with respect to budget authority requests in some 
cases, for future fiscal years. By law, elements of the budget, such as 
the estimates for the legislative branch and the judiciary, must be 
included without review by the Office of Management and Budget (OMB) or 
approval by the President. In the context of individual federal 
agencies and their programs, the term "budget" also may be used to 
refer to their budget submissions or, in response to Congress passing 
laws providing budget authority, the agencies' plans for spending the 
funds they were provided. (See also President's Budget; app. I.) 

Budget Act: 

The common name of the Congressional Budget and Impoundment Control Act 
of 1974. (See under Congressional Budget and Impoundment Control Act of 
1974.) 

Budget Activity: 

A specific and distinguishable line of work performed by a governmental 
unit to discharge a function or subfunction for which the governmental 
unit is responsible. Activities within most accounts identify the 
purposes, projects, or types of activities financed. For example, food 
inspection is an activity performed in the discharge of the health 
function. A budget activity is presented in the Program by Activities 
section in the Program and Financing Schedule for each account in the 
President's budget. (See also Functional Classification; for a partial 
distinction, see Program, Project, or Activity.) 

Budget Amendment: 

A revision to a pending budget request that the President submits to 
Congress before Congress completes appropriations action. 

Budget and Accounting Act of 1921: 

Enhanced budgetary efficiency and aided in the performance of 
constitutional checks and balances through the budget process. It 
required the President to submit a national budget each year and 
restricted the authority of the agencies to present their own 
proposals. (See 31 U.S.C. ï¿½ï¿½ 1104, 1105.) With this centralization of 
authority for the formulation of the executive branch budget in the 
President and the newly established Bureau of the Budget (now the 
Office of Management and Budget (OMB)), Congress also took steps to 
strengthen its oversight of fiscal matters by establishing the General 
Accounting Office, renamed the Government Accountability Office (GAO) 
in 2004. 

Budget Authority: 

Authority provided by federal law to enter into financial obligations 
that will result in immediate or future outlays involving federal 
government funds. The basic forms of budget authority include (1) 
appropriations, (2) borrowing authority, (3) contract authority, and 
(4) authority to obligate and expend offsetting receipts and 
collections. Budget authority includes the credit subsidy cost for 
direct loan and loan guarantee programs, but does not include the 
underlying authority to insure or guarantee the repayment of 
indebtedness incurred by another person or government. 

Budget authority may be classified by its duration (1-year, multiple- 
year, or no-year), by the timing provided in the legislation (current 
or permanent), by the manner of determining the amount available 
(definite or indefinite), or by its availability for new obligations. 
(See also Current Level Estimate; Credit Subsidy Cost, Direct Loan, and 
Guaranteed Loan under Federal Credit; Offsetting Collections under 
Collections.) 

Forms of Budget Authority: 

Appropriations. Budget authority to incur obligations and to make 
payments from the Treasury for specified purposes. An appropriation act 
is the most common means of providing appropriations; however, 
authorizing and other legislation itself may provide appropriations. 
(See also Backdoor Authority/Backdoor Spending.) 

Appropriations do not represent cash actually set aside in the Treasury 
for purposes specified in the appropriation act; they represent amounts 
that agencies may obligate during the period of time specified in the 
respective appropriation acts. An appropriation may make funds 
available from the general fund, special funds, or trust funds. Certain 
types of appropriations are not counted as budget authority because 
they do not provide authority to incur obligations. Among these are 
appropriations to liquidate contract authority (legislation to provide 
funds to pay obligations incurred against contract authority), to 
redeem outstanding debt (legislation to provide funds for debt 
retirement), and to refund receipts. Sometimes appropriations are 
contingent upon the occurrence of some other action specified in the 
appropriation law, such as the enactment of a subsequent authorization 
or the fulfillment of some action by the executive branch. (See also 
Appropriation Act; Discretionary; Expired Budget Authority under 
Availability for New Obligations under Budget Authority; Mandatory.) 

Borrowing Authority. Budget authority enacted to permit an agency to 
borrow money and then to obligate against amounts borrowed. It may be 
definite or indefinite in nature. Usually the funds are borrowed from 
the Treasury, but in a few cases agencies borrow directly from the 
public. (See also Debt, Federal.) 

Contract Authority. Budget authority that permits an agency to incur 
obligations in advance of appropriations, including collections 
sufficient to liquidate the obligation or receipts. Contract authority 
is unfunded, and a subsequent appropriation or offsetting collection is 
needed to liquidate the obligations. The Food and Forage Act (41 U.S.C. 
ï¿½ 11) and the Price Anderson Act (42 U.S.C. ï¿½ 2210) are examples of 
such authority. (See also Backdoor Authority/Backdoor Spending.) 

Offsetting Receipts and Collections. A form of budget authority that 
permits agencies to obligate and expend the proceeds of offsetting 
receipts and collections. The Congressional Budget Act of 1974, as 
amended by the Budget Enforcement Act (BEA) of 1990, defines offsetting 
receipts and collections as negative budget authority and the 
reductions to it as positive budget authority. In the President's 
budget, the Office of Management and Budget (OMB) reports offsetting 
receipts as appropriations. 

Duration: 

One-Year Authority. Budget authority available for obligation only 
during a specific fiscal year that expires at the end of that fiscal 
year. It is also known as "fiscal year" or "annual" budget authority. 

Multiple-Year Authority (Multiyear). Budget authority available for a 
fixed period of time in excess of 1 fiscal year. This authority 
generally takes the form of 2-year, 3-year, and so forth, availability 
but may cover periods that do not coincide with the start or end of a 
fiscal year. For example, the authority may be available from July 1 of 
one fiscal year through September 30 of the following fiscal year, a 
period of 15 months. This latter type of multiple-year authority is 
sometimes referred to as "forward funding." (For a distinction, see 
Advance Appropriation; Advance Funding. See also Full Funding.) 

No-Year Authority. Budget authority that remains available for 
obligation for an indefinite period of time. A no-year appropriation is 
usually identified by language such as "to remain available until 
expended." 

Reappropriation. Legislation permitting an agency to obligate, whether 
for the same or different purposes, all or part of the unobligated 
portion of budget authority that has expired or would otherwise expire 
if not reappropriated. In the President's budget, reappropriations of 
expired balances are counted as new budget authority or balance 
transfers depending on the year for which the amounts are 
reappropriated. 

Timing of Legislative Action: 

Current Authority. Budget authority made available by Congress for the 
fiscal year or years during which the funds are available for 
obligation. 

Permanent Authority. Budget authority that is available as the result 
of previously enacted legislation and is available without further 
legislative action. For example, authority to retain and use offsetting 
receipts tends to be permanent authority. Such budget authority can be 
the result of substantive legislation or appropriation acts. 

Determination of Amount: 

Definite Authority. Budget authority that is stated as a specified sum 
at the time the authority is enacted. This type of authority, whether 
in an appropriation act or other law, includes authority stated as "not 
to exceed" a specified amount. 

Indefinite Authority. Budget authority that, at time of enactment, is 
for an unspecified amount. Indefinite budget authority may be 
appropriated as all or part of the amount of proceeds from the sale of 
financial assets, the amount necessary to cover obligations associated 
with payments, the receipts from specified sources--the exact amount of 
which is determinable only at some future date--or it may be 
appropriated as "such sums as may be necessary" for a given purpose. 

Availability for New Obligations: 

Expired Budget Authority. Budget authority that is no longer available 
to incur new obligations but is available for an additional 5 fiscal 
years for disbursement of obligations properly incurred during the 
budget authority's period of availability. Unobligated balances of 
expired budget authority remain available for 5 years to cover 
legitimate obligation adjustments or for obligations properly incurred 
during the budget authority's period of availability that the agency 
failed to record. (See 31 U.S.C. ï¿½ï¿½ 1552(a), 1553(a).) (See also 
Expired Account; Unobligated Balance under Obligational Authority; 
Warrant.) 

Unexpired Budget Authority. Budget authority that is available for 
incurring new obligations. 

Budget Enforcement Act (BEA): 

First enacted as Title XIII of the Omnibus Budget Reconciliation Act of 
1990. BEA amended the Balanced Budget and Emergency Deficit Control Act 
of 1985 and related amendments (Gramm-Rudman-Hollings) and the 
Congressional Budget and Impoundment Control Act of 1974. BEA modified 
procedures and definitions for sequestration and deficit reduction, 
reformed budgetary credit accounting, maintained the off-budget status 
of the Old-Age and Survivors Insurance and Disability Insurance Trust 
Funds, and removed Social Security trust fund receipts and outlays from 
deficit and sequestration calculations through fiscal year 1995. Public 
Law 103-66 (1993) extended the discretionary spending limits, pay-as- 
you-go (PAYGO) rules, and sequestration procedures through fiscal year 
1998. The BEA of 1997, enacted as part of the Balanced Budget Act of 
1997, further extended these budget enforcement mechanisms through 
fiscal year 2002. The BEA of 1997 also added new categories of 
discretionary spending and made technical and conforming changes to 
correct drafting errors in the BEA of 1990. 

The sequestration and enforcement mechanisms of the Balanced Budget and 
Emergency Deficit Control Act, as amended by BEA, expired or became 
ineffective, at the end of fiscal year 2002. (All BEA-specific terms 
are defined in A Glossary of Terms Used in the Federal Budget Process: 
Exposure Draft, January 1993, [Hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO/AFMD-2.1.1]) (See also Credit Reform; Direct Spending; 
Gramm-Rudman-Hollings; Mandatory; Off-Budget.) 

Budget Estimates: 

Estimates of budget authority, outlays, receipts, budget amendments, 
supplemental requests from the President, or other budget measures that 
cover the current, budget, and future years, as reflected in the 
President's budget and budget updates. (See also Budget Update.) 

Budget of the U.S. Government: 

See under President's Budget. 

Budget Receipts: 

See Governmental Receipts under Collections. 

Budget Resolution: 

See under Concurrent Resolution on the Budget. 

Budget Update: 

A revised estimate of budget authority, receipts, and outlays issued 
subsequent to the issuance of the President's budget. The President is 
required by provisions of the Congressional Budget and Impoundment 
Control Act of 1974 (see provisions of 31 U.S.C. ï¿½ï¿½ 1105(d), 1106) to 
transmit such statements to Congress by July 15 of each year; however, 
the President may also submit budget updates at other times during the 
fiscal year. (See also Budget Estimates.) 

Budget Year: 

See under Fiscal Year. 

Budgetary Accounting: 

See under Obligational Accounting. 

Budgetary Accounts: 

See under Standard General Ledger (SGL) Chart of Accounts. 

Budgetary Reserves: 

Portions of budgetary resources set aside (withheld through 
apportionment) by the Office of Management and Budget (OMB) by 
authority of the Antideficiency Act (31 U.S.C. ï¿½ 1512) solely to 
provide for contingencies or to effect savings. Such savings are made 
possible through changes in requirements or through greater efficiency 
of operations. Budgetary resources may also be set aside if 
specifically provided for by particular appropriation acts or other 
laws. 

Except as specifically provided by law, no reserves shall be 
established other than as authorized under the Antideficiency Act (31 
U.S.C. ï¿½ 1512). Reserves established are reported to Congress in 
accordance with provisions of the Impoundment Control Act of 1974 (2 
U.S.C. ï¿½ï¿½ 681-688). (See also Antideficiency Act; Apportionment; 
Deferral of Budget Authority; Rescission.) 

Budgetary Resources: 

An amount available to enter into new obligations and to liquidate 
them. Budgetary resources are made up of new budget authority 
(including direct spending authority provided in existing statute and 
obligation limitations) and unobligated balances of budget authority 
provided in previous years. (See also Budget Authority.) 

Byrd Rule: 

A rule of the Senate that allows a senator to strike extraneous 
material in, or proposed to be in, reconciliation legislation or the 
related conference report. The rule defines six provisions that are 
"extraneous," including a provision that does not produce a change in 
outlays or revenues and a provision that produces changes in outlays or 
revenues that are merely incidental to the nonbudgetary components of 
the provision. The Byrd Rule was first enacted as section 20001 of the 
Consolidated Omnibus Budget Reconciliation Act of 1985 and later 
transferred in 1990 to section 313 of the Congressional Budget Act (2 
U.S.C. ï¿½ 644). The rule is named after its primary sponsor, Senator 
Robert C. Byrd. (See also Reconciliation; Reconciliation Bill; 
Reconciliation Instruction; Reconciliation Resolution.) 

C: 

Capital: 

Has different meanings depending on the context in which it is used. 

Physical capital is land and the stock of products set aside to support 
future production and consumption. In the National Income and Product 
Accounts, private capital consists of business inventories, producers' 
durable equipment, and residential and nonresidential structures. (See 
National Income and Product Accounts.) Financial capital is funds 
raised by governments, individuals, or businesses by incurring 
liabilities such as bonds, mortgages, or stock certificates. Human 
capital is the education, training, work experience, and other 
attributes that enhance the ability of the labor force to produce goods 
and services. 

Capital assets are land, structures, equipment, intellectual property 
(e.g., software), and information technology (including information 
technology service contracts) that are used by the federal government 
and have an estimated useful life of 2 years or more. Capital assets 
may be acquired in different ways: through purchase, construction, or 
manufacturing; through a lease-purchase or other capital lease 
(regardless of whether title has passed to the federal government); 
through an operating lease for an asset with an estimated useful life 
of 2 years or more; or through exchange. 

Capital assets may or may not be recorded in an entity's balance sheet 
under federal accounting standards. Capital assets do not include 
grants to state and local governments or other entities for acquiring 
capital assets (such as National Science Foundation grants to 
universities or Department of Transportation grants to Amtrak), 
intangible assets (such as the knowledge resulting from research and 
development), or the human capital resulting from education and 
training. For more on capital assets, consult the Capital Programming 
Guide (June 1997), a supplement to OMB Circular No. A-11. 

Capital Budget: 

A budget that segregates capital investments from the operating 
budget's expenditures. In such a budget, the capital investments that 
are excluded from the operating budget do not count toward calculating 
the operating budget's surplus or deficit at the time the investment is 
made. States that use capital budgets usually include only part of 
their capital expenditures in that budget and normally finance the 
capital investment from borrowing and then charge amortization 
(interest and debt repayment) to the operating budget. 

Capital Lease: 

A lease other than a lease-purchase that transfers substantially all 
the benefits and risks of ownership to the lessee and does not meet the 
criteria of an operating lease. (See also Operating Lease.) 

Cash Accounting: 

A system of accounting in which revenues are recorded when cash is 
actually received and expenses are recorded when payment is made 
without regard to the accounting period in which the revenues were 
earned or costs were incurred. (See also Accrual Accounting; app. III.) 

Chain Price Indexes (Economics Term): 

Index calculated by linking (chaining) of price indexes based on 
changing weights to create a time series. Chain-type indexes are used 
in the Bureau of Economic Analysis National Income and Product Accounts 
(NIPA). (See also Chained Dollars; Real Dollar.) 

Chained Dollars (Economics Term): 

Dollar values calculated by taking the current dollar level of a series 
in the base period (or period from which the weights for a measurement 
series are derived) and multiplying it by the change in the chain 
quantity index number for the series (calculated using chained weights) 
since the base period. Chained-dollar estimates correctly show growth 
rates for a series, but the summed components do not equal the 
aggregate in periods other than the period from which the weights for a 
measurement series are derived. (See also Chain Price Indexes; Real 
Dollar.) 

Closed (Canceled) Account: 

An appropriation account whose balance has been canceled. Once balances 
are canceled, the amounts are not available for obligation or 
expenditure for any purpose. An account available for a definite period 
(fixed appropriation account) is canceled 5 fiscal years after the 
period of availability for obligation ends. An account available for an 
indefinite period (no-year account) is canceled if (1) the head of the 
agency concerned or the President determines that the purposes for 
which the appropriation was made have been carried out and (2) no 
disbursement has been made against the appropriation for 2 consecutive 
fiscal years. (See also Expired Account; Obligational Authority.) 

Collections: 

Amounts received by the federal government during the fiscal year. 
Collections are classified into three major categories: (1) 
governmental receipts (also called budget receipts or federal 
receipts), (2) offsetting collections, and (3) offsetting receipts. 
Governmental receipts result from the exercise of the government's 
sovereign powers. Offsetting collections and receipts result from 
businesslike transactions with the public or transactions between 
appropriated activities. Offsetting collections and offsetting receipts 
are recorded as offsets to spending. They are offsetting collections 
when the collections are authorized by law to be credited to 
expenditure accounts. Otherwise, they are deposited in receipt accounts 
and called offsetting receipts. 

For further discussion, see "Federal Receipts and Collections" in the 
Analytical Perspectives of the President's budget. (See also Account in 
the President's Budget; Off-Budget; On-Budget; Revenue.) 

Governmental Receipts: 

Collections from the public based on the government's exercise of its 
sovereign powers, including individual and corporate income taxes and 
social insurance taxes, excise taxes, duties, court fines, compulsory 
licenses, and deposits of earnings by the Federal Reserve System. Gifts 
and contributions (as distinguished from payments for services or cost- 
sharing deposits by state and local governments) are also counted as 
governmental receipts. Total governmental receipts include those 
specifically designated as off-budget by provisions of law. Total 
governmental receipts are compared with total outlays in calculating 
the budget surplus or deficit. (See also Federal Fund Accounts under 
Account in the President's Budget; Gross Basis and Net Basis under 
Budgeting in Relation to Totals under Bases of Budgeting; Off-Budget; 
On-Budget.) 

Offsetting Collections: 

Collections authorized by law to be credited to appropriation or fund 
expenditure accounts. They result from (1) businesslike transactions or 
market-oriented activities with the public, (2) intragovernmental 
transfers, and (3) collections from the public that are governmental in 
nature but required by law to be classified as offsetting. Collections 
resulting from businesslike transactions with the public and other 
government accounts are also known as reimbursements. 

Laws authorizing offsetting collections make them available for 
obligation to meet the account's purpose without further legislative 
action. However, it is not uncommon for annual appropriation acts to 
include limitations on the obligations to be financed by these 
collections. The authority to obligate and spend offsetting collections 
is a form of budget authority. The Congressional Budget Act of 1974, as 
amended by the Budget Enforcement Act (BEA) of 1990, defines offsetting 
collections as negative budget authority and the reductions to it as 
positive budget authority. 

Offsetting collections include reimbursements, transfers between 
federal and trust fund accounts, offsetting governmental collections, 
and refunds. 

Reimbursements. When authorized by law, amounts collected for materials 
or services furnished to the public or other government accounts. (For 
accounting purposes, earned reimbursements are also known as revenues.) 
These offsetting collections are netted against gross outlays in 
determining net outlays from such appropriations. (See also Unfilled 
Customer Orders.) 

Transfers between Federal and Trust Fund Accounts. Transfers of 
resources between federal and trust fund accounts are treated as 
expenditure transfers regardless of the nature of the transaction. The 
receiving account reports offsetting collections from federal sources 
(for offsetting collections) or intragovernmental receipts (for 
offsetting receipts). 

Offsetting Governmental Collections. A term used by the Office of 
Management and Budget (OMB) to designate offsetting collections from 
nonfederal sources that are governmental in nature but are required by 
law to be credited to expenditure accounts. 

Refunds. Payments returned to the government that were made in error. 
They are credited to the appropriation originally charged. (See also 
Offsetting Collections under Collections.) 

Offsetting Receipts: 

Collections that are offset against gross outlays but are not 
authorized to be credited to expenditure accounts. Offsetting receipts 
are deposited in receipt accounts. Like offsetting collections, they 
result from (1) businesslike transactions or market-oriented activities 
with the public, (2) intragovernmental transfers, and (3) collections 
from the public that are governmental in nature but required by law to 
be classified as offsetting receipts. 

Offsetting receipts are offsets to gross budget authority and outlays, 
usually at the agency or subfunction level, but some are undistributed 
and are offsets to budget authority and outlays in the aggregate. (See 
also Undistributed Offsetting Receipts.) Unlike offsetting collections, 
offsetting receipts cannot be used without being appropriated. Trust 
fund offsetting receipts are permanently appropriated and, therefore, 
can be used without subsequent annual appropriation legislation. (See 
Permanent Authority under Timing of Legislative Action under Budget 
Authority; Trust Fund Receipt Account under Trust Fund Accounts under 
Account in the President's Budget.) The Congressional Budget Act of 
1974, as amended by the Budget Enforcement Act (BEA) of 1990, defines 
offsetting receipts and collections as negative budget authority and 
the reductions to it as positive budget authority. (See also 
Earmarking; Reimbursement.) 

Proprietary Receipts from the Public. Collections from outside the 
government that are deposited in receipt accounts that arise as a 
result of the government's business-type or market-oriented activities. 
Among these are interest received, proceeds from the sale of property 
and products, charges for nonregulatory services, and rents and 
royalties. Such collections may be credited to general fund, special 
fund, or trust fund receipt accounts and are offset against budget 
authority and outlays. In most cases, such offsets are by agency and by 
subfunction, but some proprietary receipts are deducted from total 
budget authority and outlays for the government as a whole. An example 
of the latter is rents and royalties on the Outer Continental Shelf. 
(See Subfunction 953 in app. IV. See also Earmarking.) 

Intragovernmental Transfers. Collections from other federal government 
accounts, often as payment for goods or services provided. Most 
offsetting receipts from intragovernmental transfers are offset against 
budget authority and outlays of the agency or subfunction that produced 
the goods or services. However, two intragovernmental transfers are 
classified as undistributed offsetting receipts: (1) agency payments as 
employers into employee retirement trust funds and (2) interest 
received by trust funds. These offsetting receipts appear as offsets to 
budget authority and outlays for the government as a whole, rather than 
at the agency level. 

Intragovernmental transfers may be (1) intrabudgetary (on-budget), (2) 
off-budget, or (3) transfers between on-budget and off-budget accounts. 
Intrabudgetary transfers are further subdivided into three categories: 
(1) interfund transfers, where the payment is from one fund group, 
either federal or trust, to a receipt account in the other fund group; 
(2) federal intrafund transfers, where the payment and receipt both 
occur within the federal fund group; and (3) trust intrafund transfers, 
where the payment and receipt both occur within the trust fund group. 

Offsetting Governmental Receipts. A term used by the Office of 
Management and Budget (OMB) to designate receipts that are governmental 
in nature (e.g., tax receipts, regulatory fees, and compulsory user 
charges) but are required by law to be classified as offsetting. 

Combined Statement of Receipts, Outlays, and Balances of the United 
States Government: 

The Department of the Treasury's annual accounting of the (1) unified 
budget receipts activities of the federal government, which should be 
consistent with the aggregated custodial nonexchange revenues (before 
net accrual adjustment) reported in federal agencies' statements of 
custodial activity, and (2) unified budget outlays activities of the 
federal government, which should be consistent with net outlays 
reported in federal agencies' statements of budgetary resources. This 
report also provides a summary accounting of agencies' budget 
activities: appropriations, borrowings and investments, outlays, and 
balances based on the agencies' budget execution reports. (See also 
Monthly Treasury Statement.) 

Commitment: 

An administrative reservation of allotted funds, or of other funds, in 
anticipation of their obligation. For federal proprietary accounting, a 
commitment may also manifest an intent to expend assets (e.g., to 
provide government social insurance benefits). See Statement of Federal 
Financial Accounting Standards (SFFAS) No. 25, Basis for Conclusions, 
para. 8, and SFFAS No. 17, Basis for Conclusions, paras. 65 and 94. 
(See also Allotment; Loan Guarantee Commitment under Federal Credit; 
Obligation.) 

Committee Allocation: 

The distribution of total proposed new budget authority and outlays, as 
set forth in the concurrent resolution on the budget, among the 
congressional committees according to their jurisdictions. The 
allocations are set forth in the joint explanatory statement of 
managers included in the conference report on the congressional budget 
resolution. House and Senate committees receive allocations of total 
new budget authority and total outlays. House committees also receive 
allocations of total entitlement authority, and Senate committees also 
receive allocations of Social Security outlays. Allocations are 
committee specific, but not program specific. Under section 302(a) of 
the Congressional Budget and Impoundment Control Act of 1974 (2 U.S.C. 
ï¿½ 633(a)), committee allocations are limits, not simply 
recommendations. (See also Allocation; Concurrent Resolution on the 
Budget; Entitlement Authority.) 

Comparative Statement of New Budget Authority: 

A table accompanying a regular or supplemental appropriations act in 
the report of the House or Senate Appropriations Committee. It compares 
the appropriation recommended for each account in that act with the 
amount requested by the President in the budget submission and the 
amount enacted in the preceding fiscal year. In some cases, such as 
when a continuing appropriations act is considered, the statement may 
be inserted into the Congressional Record. 

Concurrent Resolution on the Budget: 

A concurrent resolution adopted by both houses of Congress as part of 
the annual budget and appropriations process, setting forth an overall 
budget plan for Congress against which individual appropriations bills, 
other appropriations, and revenue measures are to be evaluated. As a 
plan for Congress, the resolution is not presented to the President for 
signature and does not have the force of law. Pursuant to section 301 
of the Congressional Budget Act, as amended (2 U.S.C. ï¿½ 632), the 
resolution is expected to establish, for at least 5 fiscal years 
beginning on October 1 of the year of the resolution, appropriate 
levels for the following: 

* totals of new budget authority and outlays, 

* total federal revenues, 

* the surplus or deficit in the budget, 

* new budget authority and outlays for each major functional category, 

* the public debt, and: 

* outlays and revenues for Social Security insurance programs. 

The concurrent resolution generally contains budget levels for the 5 
fiscal years and may contain reconciliation instructions to specified 
committees. The concurrent resolution most recently adopted may be 
revised or affirmed before the end of the year to which it applies, as 
provided in section 304 of the Congressional Budget Act, as amended (2 
U.S.C. ï¿½ 635). (See also Congressional Budget and Impoundment Control 
Act of 1974.) 

Congressional Budget: 

The Concurrent Resolution on the Budget is oftentimes referred to as 
the Congressional Budget. (See Concurrent Resolution on the Budget.) 

Congressional Budget Act: 

Titles I-IX of the Congressional Budget and Impoundment Control Act of 
1974, as amended (2 U.S.C. ï¿½ï¿½ 601-661), are commonly referred to as the 
Congressional Budget Act. (See also Congressional Budget and 
Impoundment Control Act of 1974. For an overview of the federal budget 
process, see app. I.) 

Congressional Budget and Impoundment Control Act of 1974: 

Established a process through which Congress could systematically 
consider the total spending policy of the United States and determine 
priorities for allocating budgetary resources. The process calls for 
procedures for coordinating congressional revenue and spending 
decisions made in separate tax, appropriations, and legislative 
measures. It established the House and Senate Budget Committees, the 
Congressional Budget Office (CBO), and the procedures for congressional 
review of impoundments in the form of rescissions and deferrals 
proposed by the President. (See also Budget Enforcement Act; Deferral 
of Budget Authority; Gramm-Rudman-Hollings; Impoundment; Rescission.) 

Consolidated Budget: 

See under Unified Budget. 

Consolidated Financial Statement: 

The financial statements of a parent and its subsidiary or component 
entities, presented as if the group were a single entity. In the U.S. 
government, there is a consolidated financial statement for the federal 
government that encompasses the executive, legislative, and judicial 
branches as well as consolidated statements for agencies that encompass 
all their offices, bureaus, and activities. 

Constant Dollars (Economics Term): 

See under Real Dollar. 

Consumer Price Index (CPI) (Economics Term): 

A measure of the average change over time in the prices paid by urban 
consumers for a market basket of consumer goods and services commonly 
referred to as "inflation." Measures for two population groups are 
currently published, CPI-U and CPI-W. CPI-U is based on a market basket 
determined by expenditure patterns of all urban households, while the 
market basket for CPI-W is determined by expenditure patterns of only 
urban wage-earner and clerical-worker families. The urban wage-earner 
and clerical-worker population consists of clerical workers, sales 
workers, craft workers, operatives, service workers, and laborers. Both 
indexes are published monthly by the Bureau of Labor Statistics. The 
CPI is used to adjust for inflation, the income payments of Social 
Security beneficiaries, and payments made by other programs. In 
addition, the CPI is used to adjust certain amounts defined by the tax 
code, such as personal exemptions and the tax brackets. 

Contingent Liability: 

An existing condition, situation, or set of circumstances that poses 
the possibility of a loss to an agency that will ultimately be resolved 
when one or more events occur or fail to occur. Contingent liabilities 
may lead to outlays. Contingent liabilities may arise, for example, 
with respect to unadjudicated claims, assessments, loan guarantee 
programs, and federal insurance programs. Contingent liabilities are 
normally not covered by budget authority in advance. However, credit 
reform changed the normal budgetary treatment of loans and loan 
guarantees by establishing that for most programs, loan guarantee 
commitments cannot be made unless Congress has made appropriations of 
budget authority to cover the credit subsidy cost in advance in annual 
appropriations acts. (See also Credit Subsidy Cost under Federal 
Credit; Liability.) 

Continuing Appropriation/Continuing Resolution (often referred to 
simply as "CR"): 

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. Enacted in the 
form of a joint resolution, a continuing resolution is passed by both 
houses of Congress and signed into law by the President. A continuing 
resolution may be enacted for the full year, up to a specified date, or 
until regular appropriations are enacted. A continuing resolution 
usually specifies a maximum rate at which the obligations may be 
incurred based on levels specified in the resolution. For example, the 
resolution may state that obligations may not exceed the current rate 
or must be the lower of the amounts provided in the appropriation bills 
passed in the House or Senate. If enacted to cover the entire fiscal 
year, the resolution will usually specify amounts provided for each 
appropriation account. (See also Appropriation Act; Current Rate; Joint 
Resolution; Seasonal Rate; Supplemental Appropriation.) 

Cost: 

The price or cash value of the resources used to produce a program, 
project, or activity. This term is used in many different contexts. 
When used in connection with federal credit programs, the term means 
the estimated long-term cost to the government of a direct loan or loan 
guarantee, calculated on a net present value basis over the life of the 
loan, excluding administrative costs and any incidental effects on 
governmental receipts or outlays. (See also Credit Subsidy Cost under 
Federal Credit; Expense.) 

For federal proprietary accounting, the monetary value of resources 
used or sacrificed or the liabilities incurred to achieve an objective. 

In economic terms, it is a measure of what must be given up in order to 
obtain something, whether by purchase, exchange, or production. 
Economists generally use the concept of opportunity cost, which is the 
value of all of the things that must be forgone or given up in 
obtaining something. The opportunity cost measure may, but will not 
always, equal the money outlays used to measure accounting costs. 
Economists sometimes distinguish between the private costs of a good or 
activity to the consumer or producer and the social costs imposed on 
the community as a whole. 

Cost-Benefit Analysis (Economics Term): 

An analytic technique that compares the costs and benefits of 
investments, programs, or policy actions in order to determine which 
alternative or alternatives maximize net benefits (economic 
efficiency). Cost-benefit analysis attempts to consider all costs and 
benefits to whomever they accrue, regardless of whether they are 
reflected in market transactions. The costs and benefits included 
depend upon the scope of the analysis, although the standard federal 
analysis is national in scope. Net benefits of an alternative are 
determined by subtracting the present value of costs from the present 
value of benefits. (See also Present Value.) 

Cost Estimates: 

Under the Congressional Budget Act of 1974, estimates of the impact 
legislation under consideration by Congress would have on the federal 
budget if the legislation became law. Cost estimates are provided by 
the Congressional Budget Office (CBO) on all legislation of a public 
character reported by a congressional committee and are, typically, 
published in the report accompanying that legislation. 

Countercyclical Policy (Economics Term): 

Policy aimed at reducing the size and duration of swings in economic 
activity in order to keep economic growth closer to a pace consistent 
with low inflation and high employment. It includes monetary and fiscal 
policies affecting the level of interest rates, money supply, taxes, 
and government spending. 

Credit, Credit Reform: 

See under Federal Credit. 

Current Dollar (Economics Term): 

"In current dollars" means valued in the prices of the current year. 
The current dollar value of a good or service is its value in terms of 
prices current at the time the good or service is acquired or sold. 

Current Level Estimate: 

An estimate of the amounts of new budget authority, outlays, and 
revenues for a full fiscal year, based upon enacted law. Current level 
estimates used by Congress do not take into account the potential 
effects of pending legislation. Current level estimates include a 
tabulation comparing estimates with the aggregates approved in the most 
recent budget resolution, and they are consistent with the technical 
and economic assumptions in that resolution. This means that the 
current level is not only compared to the resolution, but the current 
level estimate's framework is consistent with the resolution. Section 
308(b) of the Congressional Budget and Impoundment Control Act of 1974, 
as amended (2 U.S.C. ï¿½ 639(b)), requires the House and Senate Budget 
Committees to make this tabulation at least once a month. The 
Congressional Budget Office (CBO) assists these committees by regularly 
submitting reports of the budgetary impact of congressional actions. 
(See also Budget Authority; Committee Allocation; Congressional Budget 
Act; Scorekeeping.) 

Current Rate: 

Used in a continuing resolution, the total amount of budget authority 
that was available for obligation for an activity during the fiscal 
year immediately prior to the one for which the continuing resolution 
is enacted. Congress often uses the "current rate" as part of a formula 
to indicate a level of spending that it desires for a program for the 
duration of the continuing resolution. The current rate does not allow 
agencies to fund new initiatives, programs, or both requested for the 
current year unless Congress specifically authorizes them to be funded. 
(See also Continuing Appropriation/Continuing Resolution; Seasonal 
Rate.) 

Current Services Estimates: 

Estimates submitted by the President of the levels of budget authority 
and outlays for the ensuing fiscal year based on the continuation of 
existing levels of service. These estimates reflect the anticipated 
costs of continuing federal programs and activities at present levels 
without policy changes. Such estimates ignore all new presidential or 
congressional initiatives, including reductions or increases that are 
not yet law. 

With the proposed budget each year, the President must transmit current 
services estimates and the economic assumptions upon which they are 
based. Updated current services estimates are also included in the Mid- 
Session Review of the President's budget, but are not identified by 
that title and are confined to those programs that are essentially 
automatic (that is, they exclude programs controlled through annual 
appropriations). The current services data in the Mid-Session Review 
are identified as being for "mandatory and related programs under 
current law." 

The Congressional Budget Office (CBO) also prepares similar estimates. 
For a more detailed discussion of this term, see "Current Services 
Estimates" in the Analytical Perspectives of the President's budget. 
(See also Baseline; Multiyear Budget Planning.) 

Current Year: 

See under Fiscal Year. 

Cyclical Surplus/Deficit (Economics Term): 

The part of the federal budget surplus or deficit that results from 
cyclical factors rather than from underlying fiscal policy. This 
cyclical component reflects the way in which the surplus or deficit 
automatically increases or decreases during economic booms or 
recessions. 

Cyclically Adjusted Surplus or Deficit (Economics Term): 

The portion of surplus or deficit remaining after the impact of the 
business cycle has been removed. 

D: 

Daily Treasury Statement (DTS): 

See under Monthly Treasury Statement. 

Debt, Federal: 

Generally, the amount borrowed by the government from the public or 
from government accounts. Four ways that federal debt may be 
categorized for reporting purposes are (1) gross federal debt, (2) debt 
held by the public, (3) debt held by government accounts, and (4) debt 
subject to statutory debt limit. For a fuller discussion of federal 
debt, see Federal Debt: Answers to Frequently Asked Questions. An 
Update [Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-04-485SP]. 
(See also Borrowing Authority under Forms of Budget Authority under 
Budget Authority; Federal Financing Bank; Means of Financing.) 

Buyback: 

In the context of federal debt, the Department of the Treasury's 
purchases of marketable Treasury securities from the public prior to 
their maturity through competitive redemption processes (as opposed to 
redemptions prior to maturity under call provisions) are often referred 
to as "debt buybacks." The budget records buyback premiums and 
discounts as means of financing a surplus or deficit, rather than as 
outlays or offsetting collections or receipts. The buyback premium or 
discount is the difference between the reacquisition price of a 
security and its book value. (See also Means of Financing.) 

Debt Held by Government Accounts (Intragovernmental Debt): 

Federal debt owed by the federal government to itself. Most of this 
debt is held by trust funds, such as Social Security and Medicare. The 
Office of Management and Budget (OMB) contrasts it to debt held by the 
public by noting that it is not a current transaction of the government 
with the public; it is not financed by private saving and thus does not 
compete with the private sector for available funds in the credit 
market; and it does not represent an obligation to make payments to the 
public. 

Debt Held by the Public: 

That portion of the gross federal debt held outside of the federal 
government. This includes any federal debt held by individuals, 
corporations, state or local governments, the Federal Reserve System, 
and foreign governments and central banks. Debt held by government 
accounts (intragovernmental debt) is excluded from debt held by the 
public. Debt held by the public is not the same as public debt or 
Treasury debt. 

Debt Subject to Statutory Debt Limit: 

Debt guaranteed as to principal and interest by the United States. 

As defined by section 3101 of title 31 of the United States Code, the 
debt subject to the statutory debt limit includes debt issued under 
chapter 31 of that title. This includes Treasury debt except the 
securities issued by the Federal Financing Bank (FFB) under authority 
of section 9(a) of the Federal Financing Bank Act of 1973 (12 U.S.C. ï¿½ 
2888(a)) upon which there is a separate limit of $15 billion, and a 
small amount of agency debt. Agency debt that by law is not guaranteed 
as to principal and interest by the United States--for example, the 
Tennessee Valley Authority (TVA) (under authority of section 15d of the 
TVA Act of 1933, 16 U.S.C. ï¿½ 831n-4) and the United States Postal 
Service (under authority of 39 U.S.C. ï¿½ 2005(a))--is not subject to the 
ceiling imposed by section 3101, but is usually subject to its own 
ceiling. 

Gross Federal Debt: 

The total amount of federal government debt comprising debt securities 
issued by the Department of the Treasury (including securities issued 
by the Federal Financing Bank (FFB) under section 9(a) of the Federal 
Financing Bank Act of 1973 (12 U.S.C. ï¿½ 2888(a)) and other government 
agencies. Gross federal debt is the sum of debt held by the public and 
debt held by government accounts (intragovernmental debt). 

Treasury Debt/Public Debt. That portion of the gross federal debt 
issued by the Department of the Treasury to the public or to government 
accounts (including securities issued by the Federal Financing Bank 
(FFB) under section 9(a) of the Federal Financing Bank Act of 1973 (12 
U.S.C. ï¿½ 2888(a)). (See also Debt Held by Government Accounts under 
Debt, Federal.) 

Agency Debt. That portion of the gross federal debt incurred when a 
federal agency other than the Department of the Treasury (Treasury) is 
authorized by law to issue debt securities directly to the public or to 
another government account. While an agency may have authority to 
borrow directly from the public, agencies usually borrow from 
Treasury's Federal Financing Bank (FFB). Since Treasury borrowing 
required to obtain the money to lend to the agency through FFB is 
already part of the gross federal debt, to avoid double counting, 
agency borrowing from FFB is not included in the gross federal debt. In 
addition, federal fund advances from Treasury to trust funds are not 
included in the gross federal debt to avoid double counting. Debt of 
government-sponsored, privately owned enterprises, such as the Federal 
National Mortgage Association, is not included in the federal debt. 

Statutory Debt Limit: 

The ceiling on the amount of most Treasury and agency debt established 
by section 3101 of title 31 of the United States Code, sometimes 
referred to as the public debt ceiling or the public debt limit. 

Debt Service: 

Payment of interest on, and repayment of principal on, borrowed funds. 
The term may also be used to refer to payment of interest alone. (See 
also Means of Financing.) As used in the Congressional Budget Office's 
(CBO) Budget and Economic Outlook, debt service refers to a change in 
interest payments resulting from a change in estimates of the surplus 
or the deficit. 

Deeming Resolution: 

An informal term that refers to a resolution or bill passed by one or 
both houses of Congress that in the absence of a concurrent resolution, 
serves for the chamber passing it as an annual budget resolution for 
purposes of establishing enforceable budget levels for a budget cycle. 
The Congressional Budget and Impoundment Control Act of 1974 requires 
the adoption each year of a concurrent resolution on the budget. (See 
Concurrent Resolution on the Budget.) 

At a minimum, deeming resolutions provide new spending allocations to 
the appropriations committees, but they also may set new aggregate 
budget levels, provide revised spending allocations to other House and 
Senate committees, or provide for other related purposes. A deeming 
resolution may even declare that a budget resolution (in its entirety), 
passed earlier in the session by one house is deemed to have the force 
and effect as if adopted by both houses. 

Deferral of Budget Authority: 

Temporary withholding or delaying of the obligation or expenditure of 
budget authority or any other type of executive action, which 
effectively precludes the obligation or expenditure of budget 
authority. A deferral is one type of impoundment. Under the Impoundment 
Control Act of 1974 (2 U.S.C. ï¿½ 684), budget authority may only be 
deferred to provide for contingencies, to achieve savings or greater 
efficiency in the operations of the government, or as otherwise 
specifically provided by law. Budget authority may not be deferred for 
policy or any other reason. 

Deferrals may be proposed by agencies but must be communicated to 
Congress by the President in a special message. Deferred budget 
authority may be withheld without further action by Congress. Congress 
may disapprove a deferral by law. A deferral may not extend beyond the 
end of the fiscal year of the budget authority's availability. However, 
for multiyear funds, the President may re-report the deferral the next 
fiscal year. Deferred budget authority that is disapproved by Congress 
must be made available immediately. Agencies must release all other 
deferred budget authority with sufficient time remaining in the fiscal 
year to prudently obligate that budget authority before the end of the 
fiscal year. (See also Apportionment; Budgetary Reserves; Impoundment; 
Rescission.) 

Deficiency Apportionment: 

As provided for in the Antideficiency Act (31 U.S.C. ï¿½ 1515) an 
apportionment by the Office of Management and Budget (OMB) indicating 
the need for supplemental budget authority to permit payment of pay 
increases to civilian and military employees and military retirees as 
required by law. In addition, the head of an executive branch agency 
may request a deficiency apportionment if (1) a new law is enacted 
requiring unanticipated expenditures beyond administrative control or 
(2) an emergency arises involving the safety of human life or the 
protection of property. Approval for requests for such an apportionment 
does not authorize agencies to exceed available resources within an 
account. (See also Antideficiency Act; Apportionment; Deficiency 
Appropriation; Supplemental Appropriation.) 

Deficiency Appropriation: 

An appropriation made to pay obligations for which sufficient funds are 
not available. The need often results from violations of the 
Antideficiency Act. Though technically distinct from a supplemental 
appropriation, Congress has stopped passing separate deficiency 
appropriations and the distinction therefore has become obscured since 
the 1960s. 

Deficit: 

The amount by which the government's spending exceeds its revenues for 
a given period, usually a fiscal year (opposite of surplus). 

Budget Deficit: 

The amount by which the government's budget outlays exceed its budget 
receipts for a given period, usually a fiscal year. (See also Budget 
Surplus under Surplus.) 

Unified Deficit/Total Deficit: 

The amount by which the government's on-budget and off-budget outlays 
exceed the sum of its on-budget and off-budget receipts for a given 
period, usually a fiscal year. (See also Budget Surplus under Surplus; 
Off-Budget.) 

Deflation (Economics Term): 

A sustained decrease in the general price level. 

Deflator (Economics Term): 

An index used to adjust a current dollar amount to its real dollar 
counterpart, that is, to remove the effects of inflation. (See also 
Inflator.) 

Deobligation: 

An agency's cancellation or downward adjustment of previously incurred 
obligations. Deobligated funds may be reobligated within the period of 
availability of the appropriation. For example, annual appropriated 
funds may be reobligated in the fiscal year in which the funds were 
appropriated, while multiyear or no-year appropriated funds may be 
reobligated in the same or subsequent fiscal years. (See Reobligation.) 

Depreciation: 

The systematic and rational allocation of the acquisition cost of an 
asset, less its estimated salvage or residual value, over its estimated 
useful life. Depreciation reflects the use of the asset(s) during 
specific operating periods in order to match costs with related 
revenues in measuring income or determining the costs of carrying out 
program activities. 

Direct Spending: 

As defined by the Balanced Budget and Emergency Deficit Control Act of 
1985, entitlement authority, the Food Stamp Program, and budget 
authority provided by law other than appropriations acts. Direct 
spending may be temporary or permanent, definite or indefinite (as to 
amount) but it is an appropriation or other budget authority made 
available to agencies in an act other than an appropriation act. Under 
expired Budget Enforcement Act (BEA) provisions, new direct spending 
was subject to pay-as-you-go (PAYGO) requirements. (See also Balanced 
Budget and Emergency Deficit Control Act of 1985; Entitlement 
Authority; Mandatory; Pay-as-You-Go. For a distinction, see 
Discretionary.) 

Disbursements: 

Amounts paid by federal agencies, by cash or cash equivalent, during 
the fiscal year to liquidate government obligations. "Disbursement" is 
used interchangeably with the term "outlay." In budgetary usage, gross 
disbursements represent the amount of checks issued and cash or other 
payments made, less refunds received. Net disbursements represent gross 
disbursements less income collected and credited to the appropriation 
or fund account, such as amounts received for goods and services 
provided. (See also Outlay; Expenditure.) 

Discount Rate (Economics Term): 

One of the following: 

(1) The interest rate used to determine the present value of a future 
stream of receipts and outlays, or in cost-benefit analysis, of 
benefits and costs. This use of the term is completely distinct from 
that in monetary policy, and the interest rates involved are generally 
not those charged by Federal Reserve Banks. 

Discount rate policies of the three major oversight and budget 
agencies--the Government Accountability Office (GAO), the Office of 
Management and Budget (OMB), and the Congressional Budget Office (CBO)-
-are consistent with basic economic principles but vary significantly 
in their formulations for different analyses. GAO's Discount Rate 
Policy [Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO/OCE-17.1.1], 
May 1991, describes different approaches and their applications. 

In estimating net present values under credit reform, discount rate 
represents the average interest rate on marketable Treasury securities 
of similar maturity to the cash flows of the direct loan or loan 
guarantee for which the estimate is being made. (See Credit Subsidy 
Cost under Federal Credit.) 

(2) The interest rate that a commercial bank pays when it borrows from 
a Federal Reserve Bank. The discount rate is one of the tools of 
monetary policy used by the Federal Reserve System. The Federal Reserve 
customarily raises or lowers the discount rate to signal a shift toward 
restraining or easing its monetary and credit policy. (See also 
Monetary Policy.) 

Discretionary: 

A term that usually modifies either "spending," "appropriation," or 
"amount." "Discretionary spending" refers to outlays from budget 
authority that is provided in and controlled by appropriation acts. 
"Discretionary appropriation" refers to those budgetary resources that 
are provided in appropriation acts, other than those that fund 
mandatory programs. "Discretionary amount" refers to the level of 
budget authority, outlays, or other budgetary resources (other than 
those which fund mandatory programs) that are provided in, and 
controlled by, appropriation acts. (See also Appropriation Act; 
Appropriations under Forms of Budget Authority under Budget Authority; 
One-Year Authority under Duration under Budget Authority; Gramm-Rudman- 
Hollings. For a contrast, see Entitlement Authority; Mandatory.) 

E: 

Earmarking: 

Either of the following: 

(1) Dedicating collections by law for a specific purpose or program. 
Earmarked collections include trust fund receipts, special fund 
receipts, intragovernmental receipts, and offsetting collections 
credited to appropriation accounts. These collections may be classified 
as budget receipts, proprietary receipts, or reimbursements to 
appropriations. 

(2) Designating any portion of a lump-sum amount for particular 
purposes by means of legislative language. Sometimes, "earmarking" is 
colloquially used to characterize directions included in congressional 
committee reports but not in the legislation itself. (See also Special 
Fund Accounts under Federal Fund Accounts under Account in the 
President's Budget; Trust Fund Accounts under Account in the 
President's Budget; Offsetting Collections under Collections; 
Proprietary Receipts from the Public under Offsetting Receipts under 
Collections; Committee Allocation.) 

Economy Act: 

A common reference to section 1535 of title 31 of the United States 
Code that provides general authority for one agency or unit thereof to 
obtain goods and services from another agency or unit. Payment may be 
made in advance or upon the provision of the goods and services 
ordered. 

Emergency: 

A term that usually modifies "appropriation," "legislation," or 
"supplemental." Under procedures typically prescribed in concurrent 
resolutions on the budget, the House or the Senate, or their respective 
committees of jurisdiction, may designate proposed appropriations or 
other legislation as "emergency legislation" and thereby exempt any new 
budget authority, outlays, or receipts resulting from such legislation 
from specified enforcement provisions in the Congressional Budget Act, 
the concurrent resolution itself, or both. (See also Appropriations 
under Forms of Budget Authority under Budget Authority.) 

Acts appropriating funds for national or international emergencies such 
as natural disasters or urgent national security events are typically 
designated "emergency supplemental." (See also Supplemental 
Appropriation.) 

Entitlement Authority: 

Authority to make payments (including loans and grants) for which 
budget authority is not provided in advance by appropriation acts to 
any person or government if, under the provisions of the law containing 
such authority, the U.S. government is legally required to make the 
payments to persons or governments that meet the requirements 
established by law (2 U.S.C. ï¿½ 622(9)). 

Under the Budget Enforcement Act (BEA), new entitlement authority was 
defined as direct spending and was subject to the pay-as-you-go (PAYGO) 
provisions. (See also Appropriated Entitlement; Authorizing 
Legislation; Backdoor Authority/Backdoor Spending; Budget Enforcement 
Act; Mandatory; Pay-as-You-Go.) 

Expenditure: 

The actual spending of money; an outlay. 

Expense: 

Outflow or other depletion of assets or incurrences of liabilities (or 
a combination of both) during some period as a result of providing 
goods, rendering services, or carrying out other activities related to 
an entity's programs and missions, the benefits from which do not 
extend beyond the present operating period. 

Expired Account: 

An account within the Department of the Treasury to hold expired budget 
authority. The expired budget authority retains its fiscal year (or 
multiyear) identity for an additional 5 fiscal years. After the 5-year 
period has elapsed, all obligated and unobligated balances are 
canceled, the expired account is closed, and all remaining funds are 
returned to the general fund of the Treasury and are thereafter no 
longer available for any purpose. (See Expired Budget Authority under 
Availability for New Obligations under Budget Authority.) 

F: 

FACTS II: 

The Federal Agencies' Centralized Trial-Balance System, managed by the 
Department of the Treasury's Financial Management Service (FMS) for the 
Office of Management and Budget (OMB). The system gathers quarterly 
budget execution information electronically, which is used to prepare 
Reports on Budget Execution (SF-133), Year-end Closing Statements (FMS- 
2108), and portions of the actual column of the President's budget. 

Federal Accounting Standards Advisory Board (FASAB): 

Sponsored under an agreement between the Department of the Treasury, 
the Office of Management and Budget (OMB), and Government 
Accountability Office (GAO). FASAB promulgates Statements of Federal 
Financial Accounting Standards (SFFAS) after considering the financial 
and budgetary information needs of citizens, congressional oversight 
groups, executive agencies, and other users of federal financial 
information. See [Hyperlink, http://www.FASAB.gov]. (For a discussion 
of the methods for tracking funds in the federal government, see app. 
III.) 

Federal Credit: 

Defined by the Federal Credit Reform Act of 1990 (FCRA) as federal 
direct loans and federal loan guarantees. 

Administrative Expense: 

The cost that is directly related to credit program operations, 
including payments to contractors. The Federal Credit Reform Act of 
1990 (FCRA) requires that administrative expenses for both direct loans 
and loan guarantees be included in program accounts. Administrative 
expenses are not included in subsidy costs appropriations but are 
separately appropriated. 

Cohort: 

All direct loans or loan guarantees of a program for which a subsidy 
appropriation is provided for a given fiscal year, even when 
disbursements occur in subsequent fiscal years. For direct loans and 
loan guarantees that receive multiyear or no-year appropriations, the 
cohort is defined by the year of obligation. Pre-1992 direct loans that 
are modified will constitute a single cohort. Likewise, pre-1992 loan 
guarantees that are modified constitute a cohort. (See also Direct Loan 
and Guaranteed Loan under Federal Credit.) 

Credit Reestimates: 

Recalculation of the estimated cost to the government of a group of 
direct loans or loan guarantees. After new direct loans or loan 
guarantees are made, the Federal Credit Reform Act of 1990 (FCRA) 
requires periodic revisions of the subsidy cost estimate of a cohort 
(or risk category) based on information about the actual performance, 
estimated changes in future cash flows of the cohort, or both. 
Reestimates must generally be made annually (with an associated 
recalculation of applicable cumulative interest), as long as any loans 
in the cohort are outstanding. These reestimates represent additional 
costs or savings to the government and are recorded in the budget. An 
upward reestimate indicates that insufficient funds had been paid to 
the financing account, so the increase (plus interest on reestimates) 
is paid from the program account to the financing account to make it 
whole. Permanent indefinite budget authority is available for this 
purpose. A downward reestimate indicates that too much subsidy had been 
paid to the financing account. The excess identified in a downward 
reestimate (plus interest) may be credited directly to the program 
account as offsetting collections for programs classified as mandatory 
or to a downward reestimate receipt account for programs classified as 
discretionary. 

Credit Reform: 

The method of controlling and accounting for credit programs in the 
federal budget after fiscal year 1991. The Federal Credit Reform Act of 
1990 (FCRA) added title V to the Congressional Budget Act of 1974. It 
requires that the credit subsidy cost be financed from new budget 
authority and be recorded as budget outlays at the time the direct or 
guaranteed loans are disbursed. In turn, it authorizes the creation of 
nonbudgetary financing accounts to receive this subsidy cost payment. 
Agencies must have appropriations for the subsidy cost before they can 
enter into direct loan obligations or loan guarantee commitments. (See 
also Credit Subsidy Cost, Direct Loan Obligation, Discount Rate, and 
Loan Guarantee Commitment under Federal Credit; Present Value.) 

Risk Category. Subdivisions of a cohort of direct loans or loan 
guarantees that are relatively homogeneous in cost, given the facts 
known at the time of obligation or commitment. Risk categories will 
group within a cohort all direct loans or loan guarantees that share 
characteristics that predict defaults and other costs. They may be 
defined by characteristics or combinations of characteristics of the 
loan, the project financed, the borrower, or a combination of these. 

Statistical evidence must be presented, based on historical analysis of 
program data or comparable credit data, concerning the likely costs of 
defaults, other deviations from contract, or other costs that are 
expected to be associated with the loans in that category. 

Credit Reform Act Accounts: 

Credit Program Account. A budget account that receives and obligates 
appropriations to cover the subsidy cost (on a net present value basis) 
of a direct loan or loan guarantee and disburses the subsidy cost to 
the financing account. Usually, a separate amount is also appropriated 
in the program account for administrative expenses that are directly 
related to credit program operations. (See also Present Value.) 

Financing Account. A nonbudgetary account (or accounts) associated with 
each credit program account that holds balances, receives the subsidy 
cost payment from the credit program account, and includes all other 
cash flows to and from the government resulting from direct loan 
obligations or loan guarantee commitments made on or after October 1, 
1991. It disburses loans, collects repayments and fees, makes claim 
payments, holds balances, borrows from the Department of the Treasury, 
earns or pays interest, and receives the subsidy cost payment from the 
credit program account. 

Liquidating Account. A budget account that includes all cash flows to 
and from the government resulting from direct loan obligations or loan 
guarantee commitments made prior to October 1, 1991. The Federal Credit 
Reform Act of 1990 (FCRA) requires that such accounts be shown in the 
budget on a cash basis. Agencies are required to transfer end-of-year 
unobligated balances in these accounts to the general fund as soon as 
practicable after the close of the fiscal year. 

Negative Subsidy Receipt Account. A budget account for the receipt of 
amounts paid from the financing account when there is a negative 
subsidy for the original estimate. In most cases, the receipt account 
is a general fund receipt account and amounts are not earmarked for the 
credit program. They are available for appropriation only in the sense 
that all general fund receipts are available for appropriation. 
Separate downward reestimate receipt accounts are used to record 
amounts paid from the financing account for downward reestimates. 

Credit Subsidy Cost: 

The estimated long-term cost to the government of a direct loan or loan 
guarantee, calculated on a net present value basis and excluding 
administrative costs. 

In estimating the net present value, for loans made, guaranteed, or 
modified in fiscal year 2001 and after, the cash flow estimated for 
each year (or other time period) is discounted using the interest rate 
on a marketable zero-coupon Treasury security with the same maturity 
from the date of disbursement as that cash flow. For loans made or 
guaranteed prior to fiscal year 2001, the discount rate is the average 
interest rate on marketable Treasury securities of similar maturity to 
the direct loan or loan guarantee for which the estimate is being made. 
The rate at which interest will be paid on the amounts borrowed or held 
as an uninvested balance by a financing account for a particular cohort 
is the same as the financial discount rate for a cohort, the 
disbursement-weighted average discount rate (for cohorts before 2001) 
or a single effective rate (for cohorts 2001 and after) derived from 
this collection of interest rates. (See also Credit Reform, Direct 
Loan, and Guaranteed Loan under Federal Credit; Present Value; 
Subsidy.) 

Direct Loan Subsidy Cost. The estimated long-term cost to the 
government of a direct loan, excluding administrative costs. 
Specifically, the subsidy cost of a direct loan is the net present 
value, at the time when the direct loan is disbursed from the financing 
account, of the estimated loan disbursements, repayments of principal, 
payments of interest, recoveries or proceeds of asset sales, and other 
payments by or to the government over the life of the loan. These 
estimated cash flows include the effects of estimated defaults, 
prepayments, fees, penalties, and expected actions by the government 
and the borrower within the terms of the loan contract. 

Guaranteed Loan Subsidy Cost. The estimated long-term cost to the 
government of a loan guarantee, excluding administrative costs. The 
Federal Credit Reform Act of 1990 (FCRA) specifies that the credit 
subsidy cost of a loan guarantee is the net present value, at the time 
a guaranteed loan is disbursed by the lender, of the following cash 
flows: (1) estimated payments by the government to cover defaults, 
delinquencies, interest subsidies, or other payments and (2) the 
estimated payments to the government, including origination and other 
fees, penalties, and recoveries. 

Direct Loan: 

A disbursement of funds by the government to a nonfederal borrower 
under a contract that requires the repayment of such funds either with 
or without interest. The term includes the purchase of or the 
participation in a loan made by a lender; financing arrangements that 
defer payment for more than 90 days, including the sale of a government 
asset on credit terms; and loans financed by the Federal Financing Bank 
(FFB) pursuant to agency loan guarantee authority. It does not include 
the acquisition of federally guaranteed loans in satisfaction of 
default or other price support loans of the Commodity Credit 
Corporation. Under credit reform, the budget records the credit subsidy 
cost of direct loans as outlays. The subsidies are paid to the direct 
loan financing accounts, which, in turn, make the loans to the public. 
For more information, see Credit and Insurance and accompanying tables 
in the President's budget. (See also Asset Sale; Credit Reform, Credit 
Subsidy Cost, Direct Loan Obligation, and Guaranteed Loan under Federal 
Credit.) 

Direct Loan Obligation: 

A binding agreement by a federal agency to make a direct loan when the 
borrower fulfills specified conditions. 

Under credit reform, direct loan obligations are composed of 
obligations for both the credit subsidy cost and the unsubsidized 
amounts of the loan. When an agency enters into a direct loan 
obligation, it obligates itself to pay the credit subsidy cost to the 
direct loan financing account, and the financing account is committed 
to make the loan to the borrower. Only the credit subsidy cost is 
recorded as a budgetary obligation. (See also Direct Loan under Federal 
Credit.) 

Guaranteed Loan: 

A nonfederal loan to which a federal guarantee is attached. The loan 
principal is recorded as a guaranteed loan regardless of whether the 
federal guarantee is full or partial. For the purposes of the Federal 
Credit Reform Act of 1990 (FCRA), a loan guarantee is defined as any 
guarantee, insurance, or other pledge with respect to the payment of 
all or a part of the principal or interest on any debt obligation of a 
nonfederal borrower to a nonfederal lender, but does not include the 
insurance of deposits, shares, or other withdrawable accounts in 
financial institutions. Under credit reform, the budget records the 
credit subsidy cost of guaranteed loans as outlays. The subsidies are 
paid to the guaranteed loan financing accounts, which hold these 
uninvested funds to serve as a reserve against future loan defaults or 
other payments to lenders. (See also Credit Reform, Direct Loan, and 
Loan Guarantee Commitment under Federal Credit.) 

Loan Guarantee Commitment: 

A binding agreement by a federal agency to make a loan guarantee when 
specified conditions are fulfilled by the borrower, the lender, or any 
other party to the guarantee agreement. (See also Commitment; Credit 
Reform and Guaranteed Loan under Federal Credit.) 

Federal Credit Reform Act (FCRA): 

See under Federal Credit. 

Federal Financing Bank (FFB): 

A government corporation created by the Federal Financing Bank Act of 
1973 under the general supervision of the Secretary of the Treasury. 
FFB was established to (1) finance federal and federally assisted 
borrowings in ways that least disrupt private markets, (2) coordinate 
such borrowing programs with the government's overall fiscal policy, 
and (3) reduce the costs of such borrowing from the public. 

FFB provides financial assistance to or on behalf of federal agencies 
by (1) making direct loans to federal agencies to help them fund their 
programs, (2) purchasing loan assets from federal agencies, and (3) 
making direct loans to nonfederal borrowers (including foreign 
governments) that are secured by federal agency guarantees against risk 
of default by borrowers on loan principal and interest payments. FFB 
obtains funds by borrowing from the Department of the Treasury. For 
more information, see [Hyperlink, http://www.treas.gov/ffb/]. 

Feeder Account: 

Appropriation and revolving fund accounts whose resources are available 
only for transfer to other specified appropriation or revolving fund 
accounts. 

Financial Accounting: 

See under Proprietary Accounting. 

Financial Statements: 

A document that describes an entity's financial activity and status for 
a specified period. Under federal law and applicable accounting 
standards, the financial statements for a federal agency usually 
include a balance sheet, statement of net cost, statement of changes in 
net position, statement of budgetary resources, and statement of 
financing. 

Fiscal Policy (Economics Term): 

Federal government policies with respect to taxes and spending that 
affect the level, composition, and distribution of national income and 
output. The budget process is a major vehicle for determining and 
implementing federal fiscal policy. Many summary indicators of fiscal 
policy exist. Some, such as the budget surplus or deficit, are narrowly 
budgetary. Others attempt to reflect aspects of how fiscal policy 
affects the economy. 

Fiscal Year: 

Any yearly accounting period, regardless of its relationship to a 
calendar year. The fiscal year for the federal government begins on 
October 1 of each year and ends on September 30 of the following year; 
it is designated by the calendar year in which it ends. For example, 
fiscal year 1990 began October 1, 1989, and ended September 30, 1990. 
(Prior to fiscal year 1977, the federal fiscal year began on July 1 and 
ended on June 30. The 3-month period, July 1, 1976, to September 30, 
1976, between fiscal years 1976 and 1977 is called the transition 
quarter ("TQ").) (For a more detailed description of the budget 
process, see app. I.) 

Budget Year: 

A term used in the budget formulation process to refer to the fiscal 
year for which the budget is being considered, that is, with respect to 
a session of Congress, the fiscal year of the government that starts on 
October 1 of the calendar year in which that session of Congress 
begins. 

Current Year: 

A term used in the budget formulation process to refer to the fiscal 
year immediately preceding the budget year under consideration. 

Outyear: 

In the Concurrent Resolution on the Budget, or in the President's 
budget submission, any fiscal year (or years) beyond the budget year 
for which projections are made. 

Prior Year: 

The fiscal year immediately preceding the current year. 

Program Year: 

Describes the authorized operating period of a particular program. The 
term is usually used to distinguish the program's operating period from 
the federal government's fiscal year. For example, a program year may 
begin on July 1 of a year and end on June 30 of the following year. 
Thus, program year 2003 began on July 1, 2003, and ended on June 30, 
2004. 

Fixed Appropriation Account: 

An account in which appropriations are available for obligation for a 
definite period. A fixed appropriation account can receive 
appropriations available for obligation for 1 year (an annual account) 
or for a specified number of years (a multiyear account). (For a 
distinction, see No-Year Authority under Duration under Budget 
Authority.) 

Forward Funding: 

Budget authority that is made available for obligation beginning in the 
last quarter of the fiscal year for the financing of ongoing activities 
(usually grant programs) during the next fiscal year. This funding is 
used mostly for education programs, so that obligations for grants can 
be made prior to the beginning of the next school year. (For a 
distinction, see Advance Appropriation; Advance Funding; Multiple-Year 
Authority under Duration under Budget Authority.) 

Franchise Fund: 

A type of intragovernmental revolving fund that operates as a self- 
supporting entrepreneurial entity to provide common administrative 
services benefiting other federal entities. These funds function 
entirely from the fees charged for the services they provide consistent 
with their statutory authority. (See also Intragovermental Revolving 
Fund Account under Intragovernmental Fund Account under Federal Fund 
Accounts under Account in the President's Budget.) 

FTE (Full-Time Equivalent): 

Reflects the total number of regular straight-time hours (i.e., not 
including overtime or holiday hours) worked by employees divided by the 
number of compensable hours applicable to each fiscal year. Annual 
leave, sick leave, and compensatory time off and other approved leave 
categories are considered to be "hours worked" for purposes of defining 
FTE employment. 

Full Funding: 

The provision of budgetary resources to cover the total estimated cost 
of a program or project at the time it is undertaken (regardless of 
when the funds will actually be obligated). Full funding generally 
pertains to the acquisition of capital assets, such as the construction 
of Navy ships or buildings to house federal agencies. (For a 
distinction, see Incremental Funding. See also Multiple-Year Authority 
under Duration under Budget Authority; Multiyear Budget Planning.) 

The term full funding can sometimes refer to the appropriation of the 
total amount authorized by law. A program is said to be "fully funded" 
when the appropriation equals the authorized level or when 
appropriations are sufficient to cover service for all eligible persons 
or organizations. 

Functional Classification: 

A system of classifying budget authority, outlays, receipts, and tax 
expenditures according to the national needs being addressed. Each 
concurrent resolution on the budget allocates budget authority and 
outlays among the various functions. 

Each budget account appears in the single budget function (for example, 
national defense or health) that best reflects its major purpose, an 
important national need. A function may be divided into two or more 
subfunctions, depending upon the complexity of the national need 
addressed. (See also Budget Activity.) 

(For a presentation of the functional classification for the fiscal 
2006 budget, see app. IV. For a distinction, see Object Classification. 
See also Agency Mission; Budget Activity; Subfunction.) 

Fund Accounting: 

Commonly used to refer to the administrative system of funds control 
that each agency establishes to ensure compliance with federal fiscal 
laws. The statutory basis for fund accounting is found primarily in the 
requirement of the Antideficiency Act that the head of each agency 
prescribe, by regulation, a system of funds control (31 U.S.C. ï¿½ 
1514(a)). (See also Antideficiency Act.) 

G: 

GDP (Gross Domestic Product) (Economics Term): 

The value of all final goods and services produced within the borders 
of a country such as the United States in a given period, whether 
produced by residents or nonresidents. The components of GDP are 
personal consumption expenditures, gross private domestic investment, 
net exports of goods and services, and government consumption 
expenditures and gross investment. That value is conceptually equal to 
the sum of incomes generated within the borders of the country in the 
same time period. (See also GNP; National Income and Product Accounts.) 

GDP Price Index (Economics Term): 

A measure of the price level for the whole economy covering the prices 
of goods and services produced in a country such as the United States. 

Generational Accounting: 

Estimates who pays for all that the government buys. Generational 
accounts estimate the real (inflation-adjusted) net taxes to be paid by 
the average member of each generation (today's newborns, 1-year-olds, 
and so on). They also estimate the net taxes of the average member of 
the representative future generation (those not yet born). The accounts 
project government purchases and net taxes of current generations and 
calculate their present values. 

Generational accounts do not try to estimate who benefits from what the 
government buys, only who pays for it with their net taxes. They do not 
try to predict the actual course of policy. Generational accounts act 
as a gauge, not a predictor or goal. They do not try to say how policy 
will actually evolve. And they cannot say what distributions are fair; 
that is a matter of policy, not analysis. The accounts serve only as a 
norm by which to evaluate prevailing policy and compare alternative 
policies. 

GNP (Gross National Product) (Economics Term): 

The value of all final goods and services produced by labor and capital 
supplied by residents of a country such as the United States in a given 
period, whether or not the residents are located within the country. 
That value is conceptually equal to the sum of incomes accruing to 
residents of the country in the same time period. GNP differs from GDP 
in that GNP includes net receipts of income from the rest of the world 
while GDP excludes them. (See also GDP; National Income and Product 
Accounts.) 

Government Performance and Results Act (GPRA): 

The Government Performance and Results Act of 1993. GPRA, also known as 
the Results Act, intends to improve the efficiency and effectiveness of 
federal programs by requiring federal agencies to develop strategic 
plans, annual performance plans, and annual program performance 
reports. 

Government-Sponsored Enterprise (GSE): 

A privately owned and operated federally chartered financial 
institution that facilitates the flow of investment funds to specific 
economic sectors. GSEs, acting as financial intermediaries, provide 
these sectors access to national capital markets. The activities of 
GSEs are not included in the federal budget's totals because they are 
classified as private entities. However, because of their relationship 
to the government, detailed statements of financial operations and 
conditions are presented as supplementary information in the budget 
document. For the purposes of the Congressional Budget Act of 1974, as 
amended (2 U.S.C. ï¿½ 622(8)), an entity must meet certain criteria to 
qualify as a GSE. (For distinctions, see Mixed-Ownership Government 
Corporation; Off-Budget; Wholly-Owned Government Corporation.) 

GPRA: 

See under Government Performance and Results Act. 

Gramm-Rudman-Hollings (GRH): 

The popular name of the Balanced Budget and Emergency Deficit Control 
Act of 1985, so named for the Senate sponsors: Senators Phil Gramm, 
Warren Rudman, and Ernest F. Hollings. The act, a mechanism for 
reducing the federal deficit, set declining deficit targets for the 
federal government and established an automatic enforcement mechanism 
called sequestration. GRH has been amended several times, most 
significantly by the Budget Enforcement Act of 1990 (BEA) and the 
Balanced Budget Act of 1997. (See also Budget Enforcement Act; 
Discretionary; Limitation; Mandatory; Sequestration.) 

Grant: 

A federal financial assistance award making payment in cash or in kind 
for a specified purpose. The federal government is not expected to have 
substantial involvement with the state or local government or other 
recipient while the contemplated activity is being performed. The term 
"grant" is used broadly and may include a grant to nongovernmental 
recipients as well as one to a state or local government, while the 
term "grant-in-aid" is commonly used to refer only to a grant to a 
state or local government. (For a more detailed description, see the 
Federal Grant and Cooperative Agreement Act of 1977, 31 U.S.C. ï¿½ï¿½ 6301- 
6308.) The two major forms of federal grants-in-aid are block and 
categorical. 

Block grants are given primarily to general purpose governmental units 
in accordance with a statutory formula. Such grants can be used for a 
variety of activities within a broad functional area. Examples of 
federal block grant programs are the Omnibus Crime Control and Safe 
Streets Act of 1968, the Housing and Community Development Act of 1974, 
and the grants to states for social services under title XX of the 
Social Security Act. 

Categorical grants can be used only for specific programs or for 
narrowly defined activities. They may be formula or project grants. 
Formula grants allocate federal funds to states or their subdivisions 
in accordance with a distribution formula prescribed by law or 
administrative regulation. Project grants provide federal funding for 
fixed or known periods for specific projects or the delivery of 
specific services or products. 

I: 

Identification Code: 

Each appropriation or fund account in the President's budget carries an 
11-digit code that identifies (1) the agency, (2) the account, (3) the 
nature or timing of the transmittal to Congress (for example, regular 
budget cycle or supplemental), (4) the type of fund, and (5) the 
account's functional and subfunctional classifications. (For a detailed 
explanation of the account identification code, see app. V.) 

Implicit Price Deflator (Economics Term): 

Weighted averages of the most detailed price indexes used in estimating 
real output. Before 1995, implicit price deflators were calculated as 
the ratio of current-to constant-dollar output multiplied by 100. Since 
1995, implicit price deflators have been calculated as the ratio of 
current-to chained-dollar output multiplied by 100. For all but the 
most recent estimates, the implicit price deflators are identical to 
the chain-type price indexes because the weights used to aggregate the 
detailed prices for the two measures are the same. Implicit price 
deflators are used in the National Income and Product Accounts (NIPA). 
(See also Chain Price Indexes; Chained Dollars.) 

Impoundment: 

Any action or inaction by an officer or employee of the federal 
government that precludes obligation or expenditure of budget 
authority. There are two types of impoundments: deferrals and proposed 
rescissions. Not all delays in obligating funds are deferrals. 
Sometimes obligation delays are due to legitimate programmatic reasons 
or the result of outside forces not under the agency's control; for 
example, an agency administering a grant program receives no grant 
applications so no grants can be made. (See also Congressional Budget 
and Impoundment Control Act of 1974; Deferral of Budget Authority; 
Rescission.) 

Incremental Funding: 

The provision or recording of budgetary resources for a program or 
project based on obligations estimated to be incurred within a fiscal 
year when such budgetary resources are provided for only part of the 
estimated cost of the acquisition. (For a distinction, see Full 
Funding.) 

Inflation (Economics Term): 

A rise in the general price level. 

Inflator (Economics Term): 

An index used to express a current dollar amount in prices of another 
period. 

Internal Control: 

An integral component of an organization's management that provides 
reasonable assurance that the following objectives are being achieved: 
(1) effectiveness and efficiency of operations, (2) reliability of 
financial reporting, and (3) compliance with applicable laws and 
regulations. Safeguarding of assets is a subset of all three of these 
objectives. 

J: 

Joint Resolution: 

A form of legislation (designated with S.J. Res. or H.J. Res.) that is 
either: 

(1) A congressional action typically used in dealing with matters such 
as a single appropriation for a specific purpose, increasing the 
statutory limit on the public debt, or continuing appropriations. There 
is no real difference between a bill and a joint resolution; both 
require a majority vote and become law in the same manner, that is, by 
bicameral enactment and signature of the President. 

(2) A congressional action used to propose amendments to the 
Constitution. Adoption of a joint resolution to propose a 
constitutional amendment requires a two-thirds majority vote by both 
the Senate and the House and is not presented to the President for 
approval. A proposed amendment becomes effective only when ratified by 
three-fourths of the states. 

(See also Continuing Appropriation/Continuing Resolution. For a 
distinction, see Concurrent Resolution on the Budget.) 

Justification: 

The documents an agency submits to the appropriations committees in 
support of its budget request. The Office of Management and Budget 
(OMB) prescribes justification materials, which typically explain 
changes between the current appropriation and the amounts requested for 
the next fiscal year. 

L: 

Lease-Purchase: 

An agreement between a lessor and lessee in which the lessee agrees to 
lease a building or other property for a specified length of time and 
then takes title to the building or other property at the end of the 
lease period. (See also Capital Lease; Operating Lease.) 

Liability: 

Defined differently for obligational (or budgetary) and proprietary (or 
financial) accounting purposes (see app. III). 

Obligational (or budgetary) accounting, designed to ensure compliance 
with fiscal laws, is based on the concept of legal liability. A legal 
liability is a claim that may be legally enforced against the 
government. It may be created in a variety of ways, such as by signing 
a contract, grant, or cooperative agreement or by operation of law. 
(See also Obligation.) 

Proprietary (or financial) accounting, designed to generate data for 
financial statement purposes, is based on the concept of accounting 
liability. For federal financial accounting purposes, a liability is a 
probable future outflow or other sacrifice of resources as a result of 
past transactions or events. Generally, liabilities are thought of as 
amounts owed for items or services received, assets acquired, 
construction performed (regardless of whether invoices have been 
received), an amount received but not yet earned, or other expenses 
incurred. (See also Contingent Liability.) 

Life-Cycle Costs: 

The overall estimated cost, both government and contractor, for a 
particular program alternative over the time period corresponding to 
the life of the program, including direct and indirect initial costs 
plus any periodic or continuing costs of operation and maintenance. 

Limitation: 

A restriction on the amount, purpose, or period of availability of 
budget authority. While limitations are most often established through 
appropriations acts, they may also be established through authorization 
legislation. Limitations may be placed on the availability of funds for 
program levels, administrative expenses, direct loan obligations, loan 
guarantee commitments, or other purposes. (See also Administrative 
Division or Subdivision of Funds; Apportionment; Appropriation Act; 
Appropriation Rider; Authorizing Legislation; Duration under Budget 
Authority.) 

Line Item: 

In executive budgeting, a particular expenditure, such as program, 
subprogram, or object class. For purposes of the concurrent budget 
resolution, it usually refers to assumptions about particular programs 
or accounts implicit but not explicit in the budget resolution. In 
appropriation acts, it usually refers to an individual account or part 
of an account for which a specific amount is available. (See also Line 
Item Veto; Obligated Balance under Obligational Authority; 
Appropriation Rider.) 

Line Item Veto: 

A phrase used to describe an executive power to veto or "cross out" 
only certain parts of legislation while allowing the rest of the 
legislation to become law. At the federal level, legislation granting 
the President a line item veto has been declared unconstitutional. The 
line item veto exists at the state level because their constitutions 
grant the power to the governors in forms that vary from state to 
state. Some states only permit line item vetoes in bills appropriating 
money. 

Several legislative initiatives have been introduced in Congress over 
the years to give the President expanded or enhanced rescission or line 
item veto authority. In 1996 the Line Item Veto Act was enacted 
authorizing the President, after signing a bill into law, to cancel in 
whole any dollar amount of discretionary budget authority, any item of 
new direct spending, or any limited tax benefit if the President made 
certain determinations. In 1998, the United States Supreme Court in 
Clinton v. City of New York, 524 U.S. 417 (1998), held that the Line 
Item Veto Act violated the Presentment Clause, article 1, section 7, of 
the U.S. Constitution. Under that clause, the President must accept or 
veto in its entirety any bill passed by Congress. Granting the 
President line item veto authority would require a constitutional 
amendment. See also "Account" in the Department of the Treasury's 
Annual Report Appendix. (See also Discretionary; Enhanced Rescission 
and Expedited Rescission under Rescission; Line Item; Mandatory; 
Separate Enrollment.) 

Liquidating Appropriation: 

An appropriation to pay obligations incurred pursuant to substantive 
legislation, usually contract authority. A liquidating appropriation is 
not recorded as budget authority. 

Lockbox: 

In the budget context, any of several legislative mechanisms that 
attempt to isolate, or "lock away," funds of the federal government for 
purposes such as reducing federal spending, preserving surpluses, or 
protecting the solvency of trust funds. 

M: 

Mandatory: 

A term that usually modifies either "spending" or "amount." "Mandatory 
spending," also known as "direct spending," refers to budget authority 
that is provided in laws other than appropriation acts and the outlays 
that result from such budget authority. Mandatory spending includes 
entitlement authority (for example, the Food Stamp, Medicare, and 
veterans' pension programs), payment of interest on the public debt, 
and nonentitlements such as payments to states from Forest Service 
receipts. By defining eligibility and setting the benefit or payment 
rules, Congress controls spending for these programs indirectly rather 
than directly through appropriations acts. "Mandatory amount" refers to 
the level of budget authority, outlays, or other budgetary resources 
that are controlled by laws other than appropriations acts. Budget 
authority provided in annual appropriations acts for certain programs 
is treated as mandatory because the authorizing legislation entitles 
beneficiaries to receive payment or otherwise obligates the government 
to make payment. (See also Appropriated Entitlement; Appropriations 
under Forms of Budget Authority under Budget Authority; Multiple-Year 
Authority and No-Year Authority under Duration under Budget Authority; 
Committee Allocation; Direct Spending Authority; Discretionary; 
Entitlement Authority; Gramm-Rudman-Hollings.) 

Mark-Up: 

Meetings where congressional committees work on language of bills or 
resolutions. For example, at Budget Committee mark-ups, the House and 
Senate Budget Committees work on the language and numbers contained in 
budget resolutions and legislation affecting the congressional budget 
process. 

Means of Financing: 

Ways in which a budget deficit is financed or a budget surplus is used. 
A budget deficit may be financed by the Department of the Treasury 
(Treasury) (or agency) borrowing, by reducing Treasury cash balances, 
by the sale of gold, by seigniorage, by net cash flows resulting from 
transactions in credit financing accounts, by allowing certain unpaid 
liabilities to increase, or by other similar transactions. It is 
customary to separate total means of financing into "change in debt 
held by the public" (the government's debt, which is the primary means 
of financing) and "other means of financing" (seigniorage, change in 
cash balances, transactions of credit financing accounts, etc.) (See 
also Debt, Federal; Debt Service; Financing Account under Credit Reform 
Accounts under Federal Credit; Seigniorage.) 

Mid-Session Review of the Budget: 

A supplemental summary and update of the budget that the President 
submitted to Congress in January or February of that year. Section 1106 
of title 31 of the United States Code requires the mid-session review 
to contain revised estimates of budget receipts, outlays, and budget 
authority and other summary information and that it be issued by July 
15 of each year. (See also Budget Update.) 

Mixed-Ownership Government Corporation: 

An enterprise or business activity designated by the Government 
Corporation Control Act (31 U.S.C. ï¿½ 9101) or some other statute as a 
mixed-ownership government corporation. The fiscal activities of some 
mixed-ownership government corporations appear in the budget. The 
Federal Deposit Insurance Corporation (FDIC) is an example of such a 
corporation. (For distinctions, see Government-Sponsored Enterprise; 
Off-Budget; Wholly-Owned Government Corporation.) 

Monetary Policy (Economics Term): 

A policy affecting the money supply, interest rates, and credit 
availability that is intended to achieve maximum sustainable output and 
employment and to promote stable prices (interpreted as a low-inflation 
environment in practice). Monetary policy is directed by the Federal 
Reserve System. It functions by influencing the cost and availability 
of bank reserves through (1) open-market operations (the purchase and 
sale of securities, primarily Treasury securities), (2) changes in the 
ratio of reserves to deposits that commercial banks are required to 
maintain, (3) changes in the discount rate, and (4) changes in the 
federal fund rate. (See also Discount Rate; Fiscal Policy.) 

Money Supply (Economics Term): 

Anything that is generally accepted in payment for goods and services 
or in the repayment of debt. Narrow definitions of the money supply 
include currency and checking accounts, while broader definitions 
include other types of assets, such as savings deposits and money 
market mutual funds. 

Monthly Treasury Statement (MTS): 

A summary statement prepared from agency accounting reports and issued 
by the Department of the Treasury (Treasury). The MTS presents the 
receipts, outlays, resulting budget surplus or deficit, and federal 
debt for the month and the fiscal year to date and a comparison of 
those figures to those of the same period in the previous year. 
Treasury also issues the Daily Treasury Statement (DTS), which is 
published every working day of the federal government. It provides data 
on Treasury's cash and debt operations. 

Multiyear Budget Planning: 

A process--such as the one used to develop the President's budget and 
the congressional budget resolution--designed to ensure that the longer 
range consequences of budget decisions are identified and reflected in 
the budget totals. The President's (or executive) budget includes 
multiyear planning estimates for budget authority, outlays, and 
receipts for 4 years beyond the budget year. As of the date of this 
glossary, the congressional budget resolution provided budget totals 
for the budget year and, at least, each of the 4 succeeding fiscal 
years. This process provides a structure for the review and analysis of 
long-term program and tax policy choices. 

The Office of Management and Budget (OMB) planning estimates are either 
presidential policy or current services estimates. Presidential policy 
estimates represent projections or extrapolations of likely outcomes 
based upon current law and enunciated administration policy. In some 
cases, outyear presidential policy estimates represent outyear policy 
rather than an extrapolation from budget-year policy. Current services 
estimates represent projections of possible outcomes based on the 
continuation of existing levels of service without policy changes. (See 
also Current Services Estimates; Full Funding; Outyear under Fiscal 
Year; Projections.) 

N: 

National Income and Product Accounts (NIPA) (Economics Term): 

The comprehensive set of accounts prepared and published by the 
Department of Commerce that measures the total value of goods and 
services (gross domestic product, or GDP) produced by the U.S. economy 
and the total income earned in producing that output. 

Net Present Value (Economics Term): 

The present value of the estimated future cash inflows minus the 
present value of the cash outflows. 

Nominal Dollar (Economics Term): 

See under Current Dollar. 

Nonbudgetary: 

A term used to refer to transactions of the government that do not 
belong within the budget. Nonbudgetary transactions (such as deposit 
funds, direct loan and loan guarantee financing accounts, and 
seigniorage) do not belong in the budget because they do not represent 
net budget authority or outlays, but rather are means of financing. 
This contrasts with "off-budget," which refers to activities that are 
budgetary in nature but are required by law to be excluded from the 
budget. (See Off-Budget; Means of Financing.) 

O: 

Object Classification: 

A uniform classification identifying the obligations of the federal 
government by the types of goods or services purchased (such as 
personnel compensation, supplies and materials, and equipment) without 
regard to the agency involved or the purpose of the programs for which 
they are used. If the obligations are in a single object classification 
category, the classification is identified in the Program and Financing 
Schedule in the President's budget. For the activities distributed 
among two or more object classification categories, the budget has a 
separate object classification schedule to show the distribution of the 
obligations by object classification. See also Explanation of Estimates 
in the "Detailed Budget Estimates" section of the President's budget. 
General instructions are provided in OMB Circular No. A-11, revised. 
(See also Allocation. For a distinction, see Functional 
Classification.) 

Obligation: 

A definite commitment that creates a legal liability of the government 
for the payment of goods and services ordered or received, or a legal 
duty on the part of the United States that could mature into a legal 
liability by virtue of actions on the part of the other party beyond 
the control of the United States. Payment may be made immediately or in 
the future. An agency incurs an obligation, for example, when it places 
an order, signs a contract, awards a grant, purchases a service, or 
takes other actions that require the government to make payments to the 
public or from one government account to another. The standards for the 
proper reporting of obligations are found in section 1501(a) of title 
31 of the United States Code. See also OMB Circular No. A-11. 

Obligation Limitation: 

See under Limitation. 

Obligational Accounting: 

The accounting systems, processes, and people involved in collecting 
financial information necessary to control, monitor, and report on all 
funds made available to federal entities by legislation, including 
permanent, indefinite appropriations as well as appropriations enacted 
in annual and supplemental appropriations laws that may be available 
for one or multiple fiscal years. It is through obligational accounting 
that agencies ensure compliance with fiscal laws, including the 
Antideficiency Act and statutes related to the purpose and period of 
availability of appropriations. Obligational accounting rests on the 
central concepts of the "obligation" and "disbursement" of public 
funds, as those terms are defined in this glossary. The Antideficiency 
Act, codified in part at sections 1341, 1514, and 1517, and the 
provisions of section 1501 (commonly referred to as the recording 
statute) of the United States Code provide the fundamental components 
of obligational accounting. Obligational accounting is sometimes also 
referred to as "fund control accounting," "appropriation accounting," 
and "budgetary accounting." (For a discussion of the method for 
tracking funds in the federal government, see app. III. See also 
Administrative Division or Subdivision of Funds; Antideficiency Act; 
Apportionment; Disbursements; Obligation.) 

Obligational Authority: 

The sum of (1) budget authority enacted for a given fiscal year, (2) 
unobligated balances of amounts that have not expired brought forward 
from prior years, (3) amounts of offsetting collections to be credited 
and available to specific funds or accounts during that year, and (4) 
budget authority transferred from other funds or accounts. The balance 
of obligational authority is an amount carried over from one year to 
the next if the budget authority is available for obligation in the 
next fiscal year. Not all obligational authority that becomes available 
in a fiscal year is obligated and paid out in that same year. Balances 
are described as (1) obligated, (2) unobligated, or (3) unexpended. 

Obligated Balance: 

The amount of obligations already incurred for which payment has not 
yet been made. Technically, the obligated balance is the unliquidated 
obligations. Budget authority that is available for a fixed period 
expires at the end of its period of availability, but the obligated 
balance of the budget authority remains available to liquidate 
obligations for 5 additional fiscal years. At the end of the fifth 
fiscal year, the account is closed and any remaining balance is 
canceled. Budget authority available for an indefinite period may be 
canceled, and its account closed if (1) it is specifically rescinded by 
law or (2) the head of the agency concerned or the President determines 
that the purposes for which the appropriation was made have been 
carried out and disbursements have not been made from the appropriation 
for 2 consecutive years. (See also Duration under Budget Authority; 
Fixed Appropriation Account.) 

Unobligated Balance: 

The portion of obligational authority that has not yet been obligated. 
For an appropriation account that is available for a fixed period, the 
budget authority expires after the period of availability ends but its 
unobligated balance remains available for 5 additional fiscal years for 
recording and adjusting obligations properly chargeable to the 
appropriations period of availability. For example, an expired, 
unobligated balance remains available until the account is closed to 
record previously unrecorded obligations or to make upward adjustments 
in previously underrecorded obligations, such as contract modifications 
properly within scope of the original contract. At the end of the fifth 
fiscal year, the account is closed and any remaining balance is 
canceled. For a no-year account, the unobligated balance is carried 
forward indefinitely until (1) specifically rescinded by law or (2) the 
head of the agency concerned or the President determines that the 
purposes for which the appropriation was made have been carried out and 
disbursements have not been made from the appropriation for 2 
consecutive years. (See also Duration under Budget Authority; Expired 
Account; Expired Budget Authority under Availability for New 
Obligations under Budget Authority; Fixed Appropriation Account.) 

Unexpended Balance: 

The sum of the obligated and unobligated balances. 

Off-Budget: 

Those budgetary accounts (either federal or trust funds) designated by 
law as excluded from budget totals. As of the date of this glossary, 
the revenues and outlays of the two Social Security trust funds (the 
Old-Age and Survivors Insurance Trust Fund and the Disability Insurance 
Trust Fund) and the transactions of the Postal Service are the only off-
budget accounts. The budget documents routinely report the on- budget 
and off-budget amounts separately and then add them together to arrive 
at the consolidated government totals. (See also Nonbudgetary; On-
Budget; Outlay; Trust Fund Expenditure Account under Trust Fund 
Accounts under Account in the President's Budget; Unified Budget.) 

OMB Circular No. A-11: 

Document that provides detailed guidance to executive departments and 
establishments by the Office of Management and Budget (OMB) for 
preparing and submitting the President's budget and executing the 
budget. 

On-Budget: 

All budgetary accounts other than those designated by law as off- 
budget. (See also Off-Budget.) 

Operating Budget: 

A detailed projection of all estimated income and expenses during a 
given future period. 

Operating Lease: 

An agreement conveying the right to use property for a limited time in 
exchange for periodic payments. Operating lease criteria are ownership 
of the asset remains with lessor, the lease does not contain a bargain- 
price purchase option, the lease term does not exceed 75 percent of the 
estimated economic life of the asset, the present value of the minimum 
lease payments over the life of the lease does not exceed 90 percent of 
the fair market value of the asset at the beginning of the lease term, 
the asset is a general purpose asset rather than being for a special 
purpose of the government and is not built to the unique specification 
of the government as lessee, and there is a private sector market for 
the asset. (See also Capital Lease.) 

Outlay: 

The issuance of checks, disbursement of cash, or electronic transfer of 
funds made to liquidate a federal obligation. Outlays also occur when 
interest on the Treasury debt held by the public accrues and when the 
government issues bonds, notes, debentures, monetary credits, or other 
cash-equivalent instruments in order to liquidate obligations. Also, 
under credit reform, the credit subsidy cost is recorded as an outlay 
when a direct or guaranteed loan is disbursed. An outlay is not 
recorded for repayment of debt principal, disbursements to the public 
by federal credit programs for direct loan obligations and loan 
guarantee commitments made in fiscal year 1992 or later, disbursements 
from deposit funds, and refunds of receipts that result from 
overpayments. 

Outlays during a fiscal year may be for payment of obligations incurred 
in prior years (prior-year obligations) or in the same year. Outlays, 
therefore, flow in part from unexpended balances of prior-year 
budgetary resources and in part from budgetary resources provided for 
the year in which the money is spent. 

Outlays are stated both gross and net of offsetting collections. (See 
Offsetting Collections under Collections.) Total government outlays 
include outlays of off-budget federal entities. (See also Expenditure; 
Expense.) 

Outyear: 

See under Fiscal Year. 

Oversight Committee: 

The congressional committee charged with general oversight of an 
agency's or program's operations. In most cases, the oversight 
committee for an agency or program is also its authorizing committee. 
The Senate Committee on Homeland Security and Governmental Affairs and 
the House Committee on Government Reform also have general oversight on 
budget and accounting measures other than appropriations, except as 
provided in the Congressional Budget Act of 1974. (See also Authorizing 
Committee.) 

P: 

Pay-as-You-Go (PAYGO): 

A budgetary enforcement mechanism originally set forth in the Budget 
Enforcement Act (BEA), which effectively expired at the end of fiscal 
year 2002. Under this mechanism, proposed changes in, or new permanent, 
law were expected to be deficit neutral in the aggregate in the fiscal 
year of enactment or in a period of years. PAYGO was intended to 
control growth in direct spending and tax legislation. The Senate, in 
the concurrent resolution on the budget, has established an internal 
rule enforcing a requirement that direct spending or receipts 
legislation under consideration in the Senate be deficit neutral over 
certain periods of time. This Senate PAYGO rule is enforced by points 
of order. (See also Point of Order; Sequestration.) 

Performance Budgeting: 

Generally understood to refer to the infusion of performance 
information into the resource allocation process used to develop budget 
proposals or to execute an agreed-upon budget. Also known as results- 
based budgeting. (See Government Performance and Results Act.) 

Agency Mission Statement: 

Defines the basic purpose, major functions, and operations of the 
agency. (See Strategic Plan under Performance Budgeting.) 

Outcome Measure: 

An assessment of the result, effect, or consequence that will occur 
from carrying out a program or activity compared to its intended 
purpose. 

Output Goal: 

A description of the level of activity or effort that will be produced 
or provided over a period or by a specified date, including a 
description of the characteristics and attributes (e.g., timeliness) 
established as standards in the course of conducting the activity or 
effort. 

Output Measure: 

The level of activity or effort of a program (i.e., the products and 
services delivered) over a period that can be expressed quantitatively 
or qualitatively. 

Performance and Accountability Report (PAR): 

Provides financial and performance information that enables Congress, 
the President, and the public to assess the performance of an 
organization relative to its mission and for management to be 
accountable for its actions and resources. The Office of Management and 
Budget (OMB) provides guidance on the contents of the PARs, which 
integrate the reporting requirements of several laws, including (1) the 
Chief Financial Officers Act of 1990, (2) the Federal Managers' 
Financial Integrity Act of 1982, (3) the Government Management Reform 
Act of 1994, (4) the Government Performance and Results Act (GPRA) of 
1993, and (5) the Reports Consolidation Act of 2000. 

Performance Budget: 

A presentation that links strategic goals with related long-term and 
annual performance goals and with the costs of specific activities that 
contribute to the achievement of those goals. 

Performance Goal: 

A target level of performance expressed as a tangible, measurable 
objective, against which actual achievement can be compared, including 
a goal expressed as a quantitative standard, value, or rate. 

Performance Measure/Performance Indicator: 

A particular value or characteristic used to measure output, outcome, 
or efficiency of an organization or program. Performance measures are 
associated with performance goals in the annual performance plan. 

Performance Plan: 

A plan that covers each program activity set forth in an agency's 
budget. It establishes performance goals to define the level of 
performance to be achieved by a program activity; expresses such goals 
in an objective, quantifiable, and measurable form; briefly describes 
the operational processes, skills, technology, and resources required 
to meet the performance goals; establishes performance indicators to be 
used in measuring or assessing the relevant outputs, service levels, 
and outcomes of each program activity; provides a basis for comparing 
actual program results with the established performance goals; and 
describes the means to be used to verify and validate measured values. 

Performance Report: 

A report that sets forth the performance indicators established in the 
agency performance plan under the Government Performance and Results 
Act (GPRA) of 1993, along with the actual program performance achieved 
compared with the performance goals expressed in the plan for that 
fiscal year. 

Program Activity: 

A specific activity or project as listed in the program and financing 
schedules of the President's budget. 

Strategic Goal/Strategic Objective: 

A statement of aim or purpose included in a strategic plan (required 
under the Government Performance and Results Act (GPRA) of 1993) that 
defines how an agency will carry out a major segment of its mission 
over a certain period. The goal is expressed in a manner that allows a 
future assessment to be made of whether the goal was or is being 
achieved. In a performance budget/performance plan, strategic goals 
should be used to group multiple program outcome goals; the program 
outcome goals should relate to and in the aggregate be sufficient to 
influence the strategic goals or objectives and their performance 
measures. 

Strategic Plan: 

Federal agency plan containing the organization's comprehensive mission 
statement, general goals and objectives, description of how the goals 
and objectives are to be achieved, description of how performance goals 
are related to the general goals and objectives, identification of key 
external factors, and description of program evaluations used to 
establish the general goals and objectives. Strategic plans must cover 
a period of not less than 5 years and must be updated and revised at 
least every 3 years. 

Performance Measurement: 

The ongoing monitoring and reporting of program accomplishments, 
particularly progress toward preestablished goals. It is typically 
conducted by program or agency management. 

Performance measures may address the type or level of program 
activities conducted (process), the direct products and services 
delivered by a program (outputs), or the results of those products and 
services (outcomes). 

A program may be any activity, project, function, or policy that has an 
identifiable purpose or set of objectives. (See also Performance 
Budgeting; Government Performance and Results Act.) 

Point of Order: 

An objection raised on the House or Senate floor or in committees to an 
action being taken as contrary to that body's rules. In the House, for 
example, a point of order may be raised under Rule XXI objecting to an 
appropriation in an appropriation bill that was not previously 
authorized by law. 

Many of the rules established in the Congressional Budget Act and 
related rules preclude the consideration of legislation that would 
violate totals in the budget resolutions, spending limits, or committee 
allocations. These rules are typically enforced through points of 
order. Points of order may be waived by a majority vote in the House. 
In the Senate, only points of order under the Budget Act may be waived 
(not points of order against actions that violate the Senate's standing 
rules), but the waiver generally requires a three-fifths vote. (See 
also Concurrent Resolution on the Budget; Congressional Budget Act.) 

Present Value (Economics Term): 

The worth of a future stream of returns or costs in terms of money paid 
immediately (or at some designated date). (Differs from Net Present 
Value.) A dollar available at some date in the future is worth less 
than a dollar available today because the latter could be invested at 
interest in the interim. In calculating present value, prevailing 
interest rates provide the basis for converting future amounts into 
their "money now" equivalents. (See also Discount Rate; Net Present 
Value.) 

President's Budget: 

The document sent to Congress by the President in January or February 
of each year, as required by law (31 U.S.C. ï¿½ 1105), requesting new 
budget authority for federal programs and estimating federal revenues 
and outlays for the upcoming fiscal year and 4 subsequent outyears. 
Although the title of the document is Budget of the U.S. Government, it 
represents proposals for congressional consideration. (See also Budget; 
app. I.) 

Program: 

Generally, an organized set of activities directed toward a common 
purpose or goal that an agency undertakes or proposes to carry out its 
responsibilities. Because the term has many uses in practice, it does 
not have a well-defined, standard meaning in the legislative process. 
It is used to describe an agency's mission, functions, activities, 
services, projects, and processes. (See also Program, Project, or 
Activity.) 

Program Account: 

See under Credit Program Account under Credit Reform Act Accounts under 
Federal Credit. 

Program and Financing Schedule: 

A schedule published in the President's budget "Detailed Budget 
Estimates" presenting budget data by each appropriation or fund 
account. The schedule consists of eight sections: (1) obligations by 
program activity; (2) budgetary resources available for obligation; (3) 
new budget authority (gross), detail; (4) change in obligated balances; 
(5) outlays (gross), detail; (6) offsets to gross budget authority and 
outlays; (7) net budget authority and outlays; (8) and memorandum (non 
add) entries. (For a detailed discussion of the program and financing 
schedule, see app. VI. See also Account in the President's Budget.) 

Program Evaluation: 

An individual systematic study conducted periodically or on an ad hoc 
basis to assess how well a program is working. It is often conducted by 
experts external to the program, either inside or outside the agency, 
as well as by program managers. A program evaluation typically examines 
achievement of program objectives in the context of other aspects of 
program performance or in the context in which it occurs. (See also 
Performance Budgeting; Performance and Accountability Report under 
Performance Budgeting; Government Performance and Results Act.) 

Program, Project, or Activity (PPA): 

An element within a budget account. For annually appropriated accounts, 
the Office of Management and Budget (OMB) and agencies identify PPAs by 
reference to committee reports and budget justifications; for permanent 
appropriations, OMB and agencies identify PPAs by the program and 
financing schedules that the President provides in the "Detailed Budget 
Estimates" in the budget submission for the relevant fiscal year. 
Program activity structures are intended to provide a meaningful 
representation of the operations financed by a specific budget account-
-usually by project, activity, or organization. 

Projections: 

Estimates of budget authority, outlays, receipts, or other budget 
amounts extending several years into the future. Projections are 
generally intended to indicate the budgetary implications of existing 
or proposed programs and legislation. Projections may include 
alternative program and policy strategies and ranges of possible budget 
amounts. Projections are not firm estimates of what will occur in 
future years, nor are they intended to be recommendations for future 
budget decisions. 

The statutory basis for preparing and submitting projections is spelled 
out (1) for the President in section 201(a) of the Budget and 
Accounting Act (31 U.S.C. ï¿½ 1105) and (2) for Congress and the 
Congressional Budget Office (CBO) in sections 202, 308, and 402 of the 
Congressional Budget and Impoundment Control Act (2 U.S.C. ï¿½ï¿½ 601, 639, 
and 653). (See also Baseline; Budget Estimates; Multiyear Budget 
Planning.) 

Proprietary Accounting: 

Involves federal entities recording and accumulating financial 
information on transactions and balances for purposes of reporting both 
internally to management and externally in an entity's financial 
statements. "Proprietary accounting" is also referred to as "financial 
accounting" and is usually based on generally accepted accounting 
principles (GAAP), which follow established conventions, such as the 
recognition of the depreciation of capital assets over time as 
expenses, instead of recognition on the basis of strict association 
with the obligation or expenditure of appropriated funds. Most federal 
entities are subject to proprietary accounting standards promulgated 
through the Federal Accounting Standards Advisory Board (FASAB). (For a 
discussion of the methods for tracking funds in the federal government, 
see app. III. See also Federal Accounting Standards Advisory Board.) 

Proprietary Accounts: 

See under Standard General Ledger (SGL) Chart of Accounts. 

Public-Private Partnership: 

An arrangement between a public agency (federal, state, or local) and a 
for-profit corporation. Each sector (public and private) contributes 
skills and assets in delivering a service or facility for the use of 
the general public or the parties to the partnership. 

R: 

Real Dollar (Economics Term): 

A dollar value adjusted to remove the effects of inflation by dividing 
the nominal value (also called the current dollar value) by the 
appropriate price index. The resulting amount can be labeled real or 
inflation adjusted. Real dollar values can reflect a measure of 
purchasing power, such as real income, or a measure of quantity, such 
as real GDP. Real dollar is frequently called constant dollar when 
referring to measures of purchasing power. 

Real Economic Growth (Economics Term): 

The increase in GDP, adjusted for inflation. 

Real Interest Rate: 

A measure of an interest rate adjusted to remove the effects of 
expected general inflation. 

Real Measures (Economics Term): 

Measures of interest rates and prices for specific commodities adjusted 
to remove the effects of general inflation (i.e., real interest rates 
and real prices). 

Reapportionment: 

A revision of a previous apportionment of budgetary resources for an 
appropriation or fund account. The Office of Management and Budget 
(OMB) reapportions just as it apportions. Agencies usually submit 
requests for reapportionment to OMB as soon as a change becomes 
necessary due to changes in amounts available, program requirements, or 
cost factors. For exceptions, see OMB Circular No. A-11, sec. 120. This 
approved revision would ordinarily cover the same period, project, or 
activity covered in the original apportionment. (See also Allotment; 
Apportionment.) 

Reauthorization: 

Legislation that renews an expiring or expired authorization that was 
in effect for a fixed period, with or without substantive change. (See 
also Authorizing Legislation.) 

Receipts: 

See under Governmental Receipts under Collections. 

Recession (Economics Term): 

A pervasive, substantial decline in overall business activity that is 
of at least several months' duration. The National Bureau of Economic 
Research identifies recessions on the basis of several indicators. As a 
rule of thumb, recessions are commonly identified by a decline in real 
GDP for at least two consecutive quarters. 

Reconciliation: 

A process Congress uses to reconcile amounts determined by tax, 
spending, credit, and debt legislation for a given fiscal year with 
levels set in the concurrent resolution on the budget for the year. 
Section 310 of the Congressional Budget and Impoundment Control Act of 
1974 (2 U.S.C. ï¿½ 641) provides that the resolution may direct 
committees to determine and recommend changes to laws and pending 
legislation as required to conform to the resolution's totals for 
budget authority, revenues, and the public debt. Such changes are 
incorporated into either a reconciliation resolution or a 
reconciliation bill. (See also Concurrent Resolution on the Budget; 
Congressional Budget Act.) 

Reconciliation Bill: 

A bill reported pursuant to reconciliation instructions in a 
congressional budget resolution proposing changes in laws that if 
enacted, would achieve the budgetary goals set forth in the budget 
resolution. (See also Congressional Budget Act.) 

Reconciliation Instruction: 

A provision in a concurrent budget resolution directing one or more 
committees to report (or submit to the House and Senate Budget 
Committees) legislation changing existing laws or pending legislation 
in order to bring spending, revenues, or debt limit into conformity 
with the budget resolution. The instructions specify the committees to 
which they apply, indicate the appropriate total dollar changes to be 
achieved, and usually provide a deadline by which the legislation is to 
be reported or submitted. 

Reconciliation Resolution: 

A concurrent resolution (i.e., a resolution that the President does not 
sign) reported pursuant to reconciliation instructions in a 
congressional budget resolution directing the Clerk of the House of 
Representatives or the Secretary of the Senate to make specified 
changes in bills and joint resolutions that have not been enrolled to 
bring direct spending or revenue laws into conformity with the budget 
resolution. 

Reduction: 

Cancellation of the availability of budgetary resources previously 
provided by law before the authority would otherwise lapse. Reductions 
can be account specific and across-the-board. (See also Rescission; 
Sequestration.) 

Refunds: 

Either (1) the return of money that the government improperly collected 
or collected in excess of the amount owed (for example, refund is money 
owed to taxpayers by the government when their total tax payments are 
greater than their total tax) or (2) money returned as an appropriation 
by outside sources for payments that the government made in error, 
overpayments, or adjustment for previous amounts disbursed. (See also 
under Offsetting Collections under Collections.) 

Reimbursement: 

A sum (1) that is received by an agency as a payment for commodities 
sold or services furnished either to the public or to another 
government account and (2) that is authorized by law to be credited 
directly to specific appropriation and fund accounts. Reimbursements 
between two accounts for goods or services are usually expenditure 
transactions/transfers. 

Anticipated reimbursements are, in the case of transactions with the 
public, estimated collections of expected advances to be received or 
expected reimbursements to be earned. In transactions between 
government accounts, anticipated reimbursements consist of orders 
expected to be received for which no orders have been accepted. 
Agencies cannot obligate against anticipated reimbursements without 
specific statutory authority. (See also Offsetting Collections under 
Collections; Unfilled Customer Orders.) 

Reobligation: 

Obligation of deobligated funds for a different authorized use. (See 
also Deobligation.) 

Reprogramming: 

Shifting funds within an appropriation or fund account to use them for 
purposes other than those contemplated at the time of appropriation; it 
is the shifting of funds from one object class to another within an 
appropriation or from one program activity to another. While a transfer 
of funds involves shifting funds from one account to another, 
reprogramming involves shifting funds within an account. (For a 
distinction, see Transfer.) 

Generally agencies may shift funds within an appropriation or fund 
account as part of their duty to manage their funds. Unlike transfers, 
agencies may reprogram without additional statutory authority. 
Nevertheless, reprogramming often involves some form of notification to 
the congressional appropriations committees, authorizing committees, or 
both. Sometimes committee oversight of reprogramming actions is 
prescribed by statute and requires formal notification of one or more 
committees before a reprogramming action may be implemented. 

Rescission: 

Legislation enacted by Congress that cancels the availability of budget 
authority previously enacted before the authority would otherwise 
expire. 

The Impoundment Control Act of 1974 (2 U.S.C. ï¿½ 683) provides for the 
President to propose rescissions whenever the President determines that 
all or part of any budget authority will not be needed to carry out the 
full objectives or scope of programs for which the authority was 
provided. Rescissions of budget authority may be proposed for fiscal 
policy or other reasons. 

All funds proposed for rescission must be reported to Congress in a 
special message. Amounts proposed for rescission may be withheld for up 
to 45 calendar days of continuous session while Congress considers the 
proposals. If both houses have not completed action on a rescission 
bill rescinding all or part of the amount proposed by the President for 
rescission in his special message within 45 calendar days of continuous 
session, any funds being withheld must be made available for 
obligation. Congress may also initiate rescissions. Such congressional 
action occurs for various reasons, including changing priorities, 
program terminations, excessive unobligated balances, offsets, and 
program slippage. (See also Apportionment; Budgetary Reserves; Deferral 
of Budget Authority; Impoundment; Reduction; Rescission Bill under 
Rescission.) 

Enhanced Rescission: 

Legislative initiatives, proposed over the years, that would allow the 
President to withhold funds from obligation upon proposing a rescission 
and to continue withholding the funds unless and until Congress acts to 
disapprove the presidential proposal to rescind funds. The President 
could then veto the disapproval bill, forcing each house to muster a 
two-thirds majority to override the veto. This would be a reversal of 
current Impoundment Control Act procedures that require funds proposed 
for rescission to be released unless Congress approves, by law, all or 
part of the amount proposed to be rescinded by the President. In 1996, 
Congress enacted a form of enhanced rescission authority in the Line 
Item Veto Act, which authorized the President, after signing a bill 
into law, to cancel in whole any dollar amount of discretionary budget 
authority, any item of new direct spending, or any limited tax benefit 
if the President made certain determinations. The act provided that the 
cancellation was effective unless Congress enacted a disapproval bill 
into law to void the cancellation. In 1998, the United States Supreme 
Court in Clinton v. City of New York, 524 U.S. 417 (1998), held that 
the Line Item Veto Act violated the Presentment Clause, Article 1, 
Section 7, of the U.S. Constitution. (See also Impoundment; Line Item 
Veto; Rescission.) 

Expedited Rescission: 

Legislative proposals designed to ensure rapid and formal congressional 
consideration of rescissions proposed by the President. An essential 
element of an expedited rescission procedure is a prompt up-or-down 
vote in Congress on the President's proposals to reduce enacted 
spending authority. This would prevent rescissions from being enacted 
solely due to absence of action. While such legislation has been 
proposed at various times in the past, Congress has not enacted 
expedited rescission procedures. (See also Impoundment; Line Item Veto; 
Rescission.) 

Rescission Bill: 

A bill or joint resolution to cancel, in whole or in part, budget 
authority previously enacted by law. Rescissions proposed by the 
President must be transmitted in a special message to Congress. Under 
section 1012 of the Impoundment Control Act of 1974 (2 U.S.C. ï¿½ 683), 
unless both houses of Congress complete action on a rescission bill 
within 45 calendar days of continuous session after receipt of the 
proposal, the budget authority must be made available for obligation. 
(See also Rescission.) 

Results-Based Budgeting: 

See under Performance Budgeting. 

Revenue: 

Either of the following: 

(1) As used in the congressional budget process, a synonym for 
governmental receipts. Revenues result from amounts that result from 
the government's exercise of its sovereign power to tax or otherwise 
compel payment or from gifts to the government. Article I, Section 7, 
of the U.S. Constitution requires that revenue bills originate in the 
House of Representatives. 

(2) As used in federal proprietary accounting, an inflow of resources 
that the government demands, earns, or receives by donation. Revenue 
comes from two sources: exchange transactions and nonexchange 
transactions. Exchange revenues arise when a government entity provides 
goods and services to the public or to another government entity for a 
price. Another term for exchange revenue is "earned revenue." 
Nonexchange revenues arise primarily from exercise of the government's 
power to demand payments from the public (e.g., taxes, duties, fines, 
and penalties) but also include donations. The term "revenue" does not 
encompass all financing sources of government reporting entities, such 
as most of the appropriations they receive. Revenues result from (1) 
services performed by the federal government and (2) goods and other 
property delivered to purchasers. (See also Collections.) 

Revolving Fund: 

A fund established by Congress to finance a cycle of businesslike 
operations through amounts received by the fund. A revolving fund 
charges for the sale of products or services and uses the proceeds to 
finance its spending, usually on a self-sustaining basis. Instead of 
recording the collections in receipt accounts, the budget records the 
collections and the outlays of revolving funds in the same account. A 
revolving fund is a form of permanent appropriation. (See also 
Account.) 

Rollover: 

Instead of paying off a loan when due, the principal and sometimes 
accrued interest outstanding of a borrower is refinanced (rolled over) 
as a new loan with a new maturity date. (See also Federal Credit.) 

S: 

Scorekeeping: 

The process of estimating the budgetary effects of pending legislation 
and comparing them to a baseline, such as a budget resolution, or to 
any limits that may be set in law. Scorekeeping tracks data such as 
budget authority, receipts, outlays, the surplus or deficit, and the 
public debt limit. The process allows Congress to compare the cost of 
proposed budget policy changes to existing law and to enforce spending 
and revenue levels agreed upon in the budget resolution. Budget 
Committees and the Congressional Budget Office (CBO) score legislation 
in relation to the levels set by Congress in concurrent budget 
resolutions. 

Scorekeeping Rules: 

Guidelines established for use by the Office of Management and Budget 
(OMB), the Congressional Budget Office (CBO), and the Committees on 
Budget and Appropriations in the House of Representatives and the 
Senate in measuring compliance with the Balanced Budget and Emergency 
Deficit Control Act, as amended by the Budget Enforcement Act (BEA), 
and with the congressional budget process. Though the enforcement 
mechanisms of BEA expired, or became ineffective, at the end of fiscal 
year 2002, OMB continues to use the same scorekeeping rules developed 
for use with BEA for purposes of budget execution. Scorekeepers (OMB, 
CBO, and budget committees) have an ongoing dialogue and may revise 
rules, as required. 

Scoring: 

See under Scorekeeping. 

Seasonal Rate: 

The average commitments, obligations, and expenses of 1 or more of the 
last 5 fiscal years used to determine funding under a continuing 
resolution. (See also Continuing Appropriation/Continuing Resolution; 
Current Rate.) 

Seigniorage: 

The difference between the face value of minted circulating coins and 
the cost of their production, including the cost of metal used in the 
minting and the cost of transporting the coins to Federal Reserve Banks 
for distribution to the public. Seigniorage reflects an increase in the 
value of government assets when coinage metal is converted to a coin 
whose face value is higher than the cost of the metal. Seigniorage 
arises from the government's exercise of its monetary powers. In 
contrast to receipts from the public, seigniorage involves no 
corresponding payment by another party. For budget reporting purposes, 
seigniorage is excluded from receipts and treated as a means of 
financing a deficit--other than borrowing from the public--or as a 
supplementary amount that can be applied to reduce debt or to increase 
the Treasury's cash. The budget includes an estimate of receipts 
(offsetting collections) equal to the cost of manufacturing and 
distributing circulating coins, including a charge for capital. (See 
also Means of Financing.) 

Separate Enrollment: 

A procedure that would require that once an appropriation bill is 
passed by Congress, each provision of funding would be separately 
enrolled as a discrete "bill." An enrolled bill is the final, official 
copy of a bill or joint resolution that both houses have passed in 
identical form to present to the President for signature. Each 
separately enrolled provision would be presented independently to the 
President for signature, allowing the veto of some "bills" with 
spending provisions to which the President objects while allowing 
signing the others. While such legislation has been proposed at various 
times in the past as a way of providing the President with something 
like a line item veto, Congress has not enacted separate enrollment 
procedures. (See also Impoundment; Line Item Veto; Rescission.) 

Sequester: 

See under Sequestration. 

Sequestration (Budget Enforcement Act Term): 

Under Budget Enforcement Act (BEA) provisions, which expired in 2002, 
the cancellation of budgetary resources provided by discretionary 
appropriations or direct spending laws. New budget authority, 
unobligated balances, direct spending authority, and obligation 
limitations were "sequestrable" resources; that is, they were subject 
to reduction or cancellation under a presidential sequester order. (See 
also Budgetary Resources; Entitlement Authority; Gramm-Rudman- 
Hollings; Impoundment; Rescission.) 

Special Fund Accounts: 

See under Federal Fund Accounts under Accounts in the President's 
Budget. 

Spending Caps: 

Overall limits on discretionary spending, which were originally set in 
the Budget Enforcement Act (BEA) and the enforcement of which expired 
at the end of fiscal year 2002. Congress, however, continues to set 
limits on discretionary spending, typically in concurrent budget 
resolutions, which are enforceable during the congressional budget 
process. (See also Discretionary; Concurrent Resolution on the Budget.) 

Spending Committee: 

A standing committee of the House or Senate with jurisdiction over 
legislation permitting the obligation of funds. The House and Senate 
Appropriations Committees are spending committees for discretionary 
programs. For other programs, the authorizing legislation itself 
permits the obligation of funds (backdoor authority). In that case, the 
authorizing committees are the spending committees. (See also 
Authorizing Committee; Backdoor Authority/Backdoor Spending.) 

Spendout Rate/Outlay Rate: 

The rate at which budget authority becomes outlays in a fiscal year. It 
is usually presented as an annual percentage. 

Standard General Ledger (SGL) Chart of Accounts: 

A chart of accounts (and technical guidance) established to support the 
consistent recording of financial events as well as the preparation of 
standard external reports required by the Office of Management and 
Budget (OMB) and the Department of the Treasury. Agencies are required 
by law (31 U.S.C. ï¿½ 3512) to "implement and maintain financial 
management systems that comply substantially with," among other things, 
the Standard General Ledger. It contains two complete and separate, but 
integrated, self-balancing sets of accounts--budgetary and proprietary. 
Budgetary accounts are used to recognize and track budget approval and 
execution, whereas proprietary accounts are used to recognize and track 
assets, liabilities, revenues, and expenses. The Standard General 
Ledger is reproduced in the Treasury Financial Manual "Standard General 
Ledger Supplement," available at [Hyperlink, 
http://www.fms.treas.gov/ussgl/index.html]. OMB policies regarding the 
Standard General Ledger are in OMB Circular No. A-127. 

Statement of Federal Financial Accounting Standards (SFFAS): 

See under Federal Accounting Standards Advisory Board. 

Structural/Standardized Budget Surplus/Deficit (Economics Term): 

A concept adjusting the surplus/deficit for the effects of the business 
cycle and other temporary factors such as sales and spectrum auctions. 

Structural Surplus/Deficit (Economics Term): 

See under Cyclically Adjusted Surplus or Deficit. 

Subcommittee Allocation: 

As required by section 302(b) of the Congressional Budget and 
Impoundment Control Act of 1974 (2 U.S.C. ï¿½ 633(b)), the distribution 
of spending authority and outlays by the appropriations committees of 
each house of Congress to their relevant appropriations subcommittees 
of jurisdiction based on the levels contained in the concurrent 
resolution on the budget. 

Subfunction: 

A subdivision of a budget function. For example, health care services 
and health research are subfunctions of the health budget function. 
(For a presentation of the budget in terms of subfunctions, see app. 
IV. See also Functional Classification.) 

Subsidy: 

Generally, a payment or benefit made by the federal government where 
the benefit exceeds the cost to the beneficiary. Subsidies are designed 
to support the conduct of an economic enterprise or activity, such as 
ship operations. They may also refer to (1) provisions in the tax laws 
for certain tax expenditures and (2) the provision of loans, goods, and 
services to the public at prices lower than market value. These include 
interest subsidies. 

Under credit reform, subsidy means the estimated long-term cost to the 
government of a direct loan or loan guarantee, calculated on a net 
present value basis over the life of the loan, excluding administrative 
costs and any incidental effects on governmental receipts or outlays. 
(See also Credit Reform and Credit Subsidy Cost under Federal Credit; 
Tax Expenditure.) 

Subsidy Cost: 

See under Credit Subsidy Cost under Federal Credit. 

Supplemental Appropriation: 

An act appropriating funds in addition to those already enacted in an 
annual appropriation act. Supplemental appropriations provide 
additional budget authority usually in cases where the need for funds 
is too urgent to be postponed until enactment of the regular 
appropriation bill. Supplementals may sometimes include items not 
appropriated in the regular bills for lack of timely authorizations. 

Surplus: 

Budget Surplus: 

The amount by which the government's budget receipts exceed its budget 
outlays for a given period, usually a fiscal year. Sometimes a deficit 
is called a negative surplus and is shown in parentheses in budget 
tables. 

Unified Surplus/Total Surplus: 

Used interchangeably to refer to the amount by which the sum of the 
government's on-budget and off-budget receipts exceed the sum of its on-
budget and off-budget outlays for a given period, usually a fiscal 
year. (See also Unified Deficit/Total Deficit under Deficit.) 

T: 

Tax: 

A sum that legislation imposes upon persons (broadly defined to include 
individuals, trusts, estates, partnerships, associations, companies, 
and corporations), property, or activities to pay for government 
operations. The power to impose and collect federal taxes is given to 
Congress in Article I, Section 8, of the U.S. Constitution. Collections 
that arise from the sovereign powers of the federal government 
constitute the bulk of governmental receipts, which are compared with 
budget outlays in calculating the budget surplus or deficit. (See also 
Government Receipts under Collections; Revenue.) 

Tax Credit: 

An amount that offsets or reduces tax liability. When the allowable tax 
credit amount exceeds the tax liability and the difference is paid to 
the taxpayer, the credit is considered refundable and is considered an 
increase in outlays in the federal budget. Otherwise, the difference 
can be (1) allowed as a carryforward against future tax liability, (2) 
allowed as a carryback against taxes paid, or (3) lost as a tax 
benefit. (See also Tax Expenditure.) 

Tax Deduction: 

An amount that is subtracted from the tax base before tax liability is 
calculated. 

Tax Expenditure: 

A revenue loss attributable to a provision of the federal tax laws that 
(1) allows a special exclusion, exemption, or deduction from gross 
income or (2) provides a special credit, preferential tax rate, or 
deferral of tax liability. Tax expenditures are subsidies provided 
through the tax system. Rather than transferring funds from the 
government to the private sector, the U.S. government forgoes some of 
the receipts that it would have collected, and the beneficiary 
taxpayers pay lower taxes than they would have had to pay. The 
Congressional Budget Act requires that a list of "tax expenditures" be 
included in the President's budget. Examples include tax expenditures 
for child care and the exclusion of fringe benefits, such as employer- 
provided health insurance, from taxation. 

Technical and Economic Assumptions: 

Assumptions about factors affecting estimations of future outlays and 
receipts that are not a direct function of legislation. Economic 
assumptions involve such factors as the future inflation and interest 
rates. Technical assumptions involve all other nonpolicy factors. For 
example, in the Medicare program, estimations regarding demography, 
hospitalization versus outpatient treatment, and morbidity all affect 
estimations of future outlays. 

302(a) Allocation: 

See under Committee Allocation. 

302(b) Allocation: 

See under Subcommittee Allocation. 

Transfer: 

Shifting of all or part of the budget authority in one appropriation or 
fund account to another. Agencies may transfer budget authority only as 
specifically authorized by law. For accounting purposes, the nature of 
the transfer determines whether the transaction is treated as an 
expenditure or a nonexpenditure transfer. (See also Allocation. For a 
distinction, see Reprogramming.) 

Expenditure Transfer: 

For accounting and reporting purposes, a transaction between 
appropriation and fund accounts, which represents payments, repayments, 
or receipts for goods or services furnished or to be furnished. 

Where the purpose is to purchase goods or services or otherwise benefit 
the transferring account, an expenditure transfer/transaction is 
recorded as an obligation/outlay in the transferring account and an 
offsetting collection in the receiving account. 

If the receiving account is a general fund appropriation account or a 
revolving fund account, the offsetting collection is credited to the 
appropriation or fund account. If the receiving account is a special 
fund or trust account, the offsetting collection is usually credited to 
a receipt account of the fund. 

All transfers between federal funds (general, special, and nontrust 
revolving funds) and trust funds are also treated as expenditure 
transfers. 

Nonexpenditure Transfer: 

For accounting and reporting purposes, a transaction between 
appropriation and fund accounts that does not represent payments for 
goods and services received or to be received but rather serves only to 
adjust the amounts available in the accounts for making payments. 
However, transactions between budget accounts and deposit funds will 
always be treated as expenditure transactions since the deposit funds 
are outside the budget. Nonexpenditure transfers also include 
allocations. These transfers may not be recorded as obligations or 
outlays of the transferring accounts or as reimbursements or receipts 
of the receiving accounts. For example, the transfer of budget 
authority from one account to another to absorb the cost of a federal 
pay raise is a nonexpenditure transfer. (See Allocation; see also 
Transfer Appropriation (Allocation) Accounts under Accounts for 
Purposes Other Than Budget Presentation.) 

Transfer Authority: 

Statutory authority provided by Congress to transfer budget authority 
from one appropriation or fund account to another. 

Transfer Payment (Economics Term): 

A payment made for which no current or future goods or services are 
required in return. Government transfer payments include Social 
Security benefits, unemployment insurance benefits, and welfare 
payments. Taxes are considered transfer payments. Governments also 
receive transfer payments in the form of fees, fines, and donations 
from businesses and persons. (See also National Income and Product 
Accounts.) 

Treasury Security: 

A debt instrument of the U.S. Treasury issued to finance the operations 
of the government or refinance the government's debt. 

Treasury Bill: 

The shortest term federal debt instrument or security. Treasury bills 
mature within 1 year after the date of issue. 

Treasury Bond: 

A federal debt instrument with a maturity of more than 10 years. 

Treasury Note: 

A federal debt instrument with a maturity of at least 1 year but not 
more than 10 years. 

Trust Fund Accounts: 

See under Account in the President's Budget. 

U: 

Uncollected Customer Payments from Federal Sources: 

Orders on hand from other federal government accounts that are recorded 
as valid obligations of the ordering account and for which funds or 
noncash resources have not yet been collected. The amount represents 
both accounts receivable from federal sources and unpaid, unfilled 
orders from federal sources. 

Undelivered Orders: 

The value of goods and services ordered and obligated that have not 
been received. This amount includes any orders for which advance 
payment has been made but for which delivery or performance has not yet 
occurred. (See also Advance Payments; Unliquidated Obligations.) 

Undistributed Offsetting Receipts: 

Offsetting receipts that are deducted from totals for the government as 
a whole rather than from a single agency or subfunction in order to 
avoid distortion of agency or subfunction totals. Offsetting receipts 
that are undistributed in both agency and functional tables are the 
collections of employer share of employee retirement payments, rents, 
and royalties on the Outer Continental Shelf, and the sales of major 
assets. 

Interest received by trust funds is undistributed offsetting receipts 
in the agency tables, but is distributed by function (i.e., subfunction 
950 in functional tables). 

Unemployment Rate (Economics Term): 

As defined by the Bureau of Labor Statistics (BLS), the number of 
people who do not have jobs but have actively looked for work in the 
prior 4 weeks and are currently available for work, expressed as a 
percentage of the civilian labor force. 

Unfilled Customer Orders: 

The dollar amount of orders accepted from other accounts within the 
government for goods and services to be furnished on a reimbursable 
basis. In the case of transactions with the public, these orders are 
amounts advanced or collected for which the account or fund has not yet 
performed the service or incurred its own obligations for that purpose. 
(See also Reimbursements under Offsetting Collections under 
Collections.) 

Unfunded Mandate: 

Federal statutes and regulations that require state, local, or tribal 
governments or the private sector to expend resources to achieve 
legislative goals without being provided federal funding to cover the 
costs. 

The Unfunded Mandates Reform Act of 1995, Pub. L. No. 104-4 (2 U.S.C. 
ï¿½ï¿½ 658-658g), generally defines intergovernmental and private sector 
mandates as "any provision in legislation, statute, or regulation that 
imposes an enforceable duty" but excludes "conditions of federal 
assistance" and "duties that arise from participation in a voluntary 
federal program," among others. The Congressional Budget Office (CBO) 
is required to determine whether the costs to the states or private 
sector of a mandate in legislation reported from a congressional 
committee exceeds certain statutory thresholds. This determination is 
included in the cost estimate provided to Congress on that legislation. 
The act also contains procedures for congressional consideration of 
proposed legislation that contains mandates whose costs are estimated 
to be over the thresholds unless the legislation also provides funding 
to cover those costs. 

Unified Budget: 

Under budget concepts set forth in the Report of the President's 
Commission on Budget Concepts, a comprehensive budget in which receipts 
and outlays from federal and trust funds are consolidated. When these 
fund groups are consolidated to display budget totals, transactions 
that are outlays of one fund group for payment to the other fund group 
(that is, interfund transactions) are deducted to avoid double 
counting. The unified budget should, as conceived by the President's 
Commission, take in the full range of federal activities. By law, 
budget authority, outlays, and receipts of off-budget programs 
(currently only the Postal Service and Social Security) are excluded 
from the current budget, but data relating to off-budget programs are 
displayed in the budget documents. However, the most prominent total in 
the budget is the unified total, which is the sum of the on-and off- 
budget totals. (See also Nonbudgetary; Off-Budget; On-Budget.) 

Unliquidated Obligations: 

The amount of outstanding obligations or liabilities. (See also 
Obligation; Undelivered Orders.) 

User Fee/User Charge: 

A fee assessed to users for goods or services provided by the federal 
government. User fees generally apply to federal programs or activities 
that provide special benefits to identifiable recipients above and 
beyond what is normally available to the public. User fees are normally 
related to the cost of the goods or services provided. Once collected, 
they must be deposited into the general fund of the Treasury, unless 
the agency has specific authority to deposit the fees into a special 
fund of the Treasury. An agency may not obligate against fees collected 
without specific statutory authority. An example of a user fee is a fee 
for entering a national park. 

From an economic point of view, user fees may also be collected through 
a tax such as an excise tax. Since these collections result from the 
government's sovereign powers, the proceeds are recorded as 
governmental receipts, not as offsetting receipts or offsetting 
collections. 

In the narrow budgetary sense, a toll for the use of a highway is 
considered a user fee because it is related to the specific use of a 
particular section of highway. Such a fee would be counted as an 
offsetting receipt or collection and might be available for use by the 
agency. Alternatively, highway excise taxes on gasoline are considered 
a form of user charge in the economic sense, but since the tax must be 
paid regardless of how the gasoline is used and since it is not 
directly linked with the provision of the specific service, it is 
considered a tax and is recorded as a governmental receipt in the 
budget. (See also Offsetting Collections under Collections; Tax.) 

V: 

Views and Estimates Report: 

A report that the Congressional Budget Act of 1974 requires each House 
and Senate committee with jurisdiction over federal programs to submit 
to its respective budget committees each year within 6 weeks of the 
submission of the President's budget, in advance of the House and 
Senate Budget Committees' drafting of a concurrent resolution on the 
budget. Each report contains a committee's comments or recommendations 
on budgetary matters within its jurisdiction. (See also Concurrent 
Resolution on the Budget.) 

W: 

Warrant: 

An official document that the Secretary of the Treasury issues upon 
enactment of an appropriation that establishes the amount of moneys 
authorized to be withdrawn from the central accounts that the 
Department of the Treasury maintains. Warrants for currently 
unavailable special and trust fund receipts are issued when 
requirements for their availability have been met. (For a discussion of 
availability, see Availability for New Obligations under Budget 
Authority.) 

Wholly-Owned Government Corporation: 

An enterprise or business activity designated by the Government 
Corporation Control Act of 1945 (31 U.S.C. ï¿½ 9101) or some other 
statute as a wholly-owned government corporation. Each such corporation 
is required to submit an annual business-type statement to the Office 
of Management and Budget (OMB). Wholly-owned government corporations 
are audited by Government Accountability Office (GAO) as required by 
the Government Corporation Control Act, as amended (31 U.S.C. ï¿½ 9105), 
and other laws. The Pension Benefit Guaranty Corporation is an example 
of a wholly-owned government corporation. Budget concepts call for any 
corporation that is wholly owned by the government to be included on- 
budget. (For distinctions, see Government-Sponsored Enterprise; Mixed- 
Ownership Government Corporation; Off-Budget.) 

Working Capital Fund: 

A type of intragovernmental revolving fund that operates as a self- 
supporting entity that conducts a regular cycle of businesslike 
activities. These funds function entirely from the fees charged for the 
services they provide consistent with their statutory authority. (See 
also Intragovernmental Revolving Fund Account under Intragovernmental 
Fund Accounts under Federal Fund Accounts under Account in the 
President's Budget.) 

[End of section] 

Appendixes: 

Appendix I: Overview of the Development and Execution of the Federal 
Budget: 

The United States Constitution gives Congress the power to levy taxes, 
to finance government operations through appropriations, and to 
prescribe the conditions governing the use of those appropriations. 
This power is referred to as the congressional "power of the purse." 
The power derives from various provisions of the Constitution,[Footnote 
1] particularly article I, section 9, clause 7, which provides that: 

"No money shall be drawn from the Treasury, but in Consequence of 
Appropriations made by Law; and a regular Statement and Account of the 
Receipts and Expenditures of all public Money shall be published from 
time to time." 

Thus an agency may not draw money out of the Treasury to fund agency 
operations unless Congress has appropriated the money to the agency. At 
its most basic level, this means that it is up to Congress to decide 
whether to provide funds for a particular program or activity and to 
fix the level of that funding. Although the Constitution does not 
provide detailed instructions on how Congress is to do so, Congress has 
and continues to implement its power of the purse in two ways: through 
the enactment of laws that raise revenue and appropriate funds, 
including annual appropriations acts, and through the enactment of 
"fiscal statutes" that control and manage federal revenue and 
appropriations (one such fiscal statute, the Antideficiency Act, is 
explained in detail in phase 3).[Footnote 2] 

A "budget," in customary usage, is a plan for managing funds, setting 
levels of spending, and financing that spending. For purposes of this 
overview, however, the "federal budget" is used more broadly to include 
not only the planning through the federal budget process, but also the 
end result of that plan after the fiscal effect of spending and revenue 
laws in effect for any given fiscal year are calculated. Those laws 
consist of permanent laws enacted in prior years, including any 
permanent appropriations, and the appropriations acts enacted for that 
fiscal year. 

Beginning in 1921, Congress enacted laws that provide a framework of 
procedures for coordinating and planning for federal spending and 
revenues. The Budget and Accounting Act of 1921 requires the President 
to submit an annual budget proposal to Congress and established the 
Office of Management and Budget (OMB) and the Government Accountability 
Office (GAO) (formerly, the General Accounting Office). In 1974, 
Congress enacted the Congressional Budget and Impoundment Control Act, 
which provides for the adoption of a budget resolution and established 
the House and Senate Budget Committees and the Congressional Budget 
Office (CBO). These laws overlay the existing processes by which 
Congress enacts and the President signs into law spending and revenue 
measures and have come to be known, collectively, as the federal budget 
process. 

The federal budget process provides the means for the federal 
government to make informed decisions between competing national needs 
and policies, to determine priorities, to allocate resources to those 
priorities, and to ensure the laws are executed according to those 
priorities. The federal budget process can be broken down into four 
phases: budget formulation, the congressional budget process (during 
which Congress adopts its budget and enacts laws appropriating funds 
for the fiscal year), budget execution and control, and audit and 
evaluation. The discussion that follows describes in detail the four 
phases of the federal budget process. 

Phase 1: Executive Budget Formulation: 

The federal government begins to assemble an annual federal budget in a 
long administrative process of budget preparation and review. This 
process may well take place several years before the budget for a 
particular fiscal year is ready to be submitted to Congress. The 
primary participants in the process at this stage are the agencies and 
individual organizational units, which review current operations, 
program objectives, and future plans, and OMB, the office within the 
Executive Office of the President charged with broad oversight, 
supervision, and responsibility for coordinating and formulating a 
consolidated budget submission. (See fig. 1 in app. II.) 

By the first Monday in February, the President submits a budget request 
to Congress for the fiscal year starting on the following October 1 
(i.e., in February 2005 the President submitted the budget request for 
fiscal year 2006, which runs from October 1, 2005, through September 
30, 2006). However, preparation of this particular budget request began 
about 10 months before it was submitted to Congress. For example, for 
the fiscal year 2006 budget request, transmitted to Congress in 
February 2005, the budget process began in the spring of 2004. Thus, 
federal agencies must deal concurrently with 3 fiscal years: (1) the 
current year, that is, the fiscal year in progress; (2) the coming 
fiscal year beginning October 1, for which they are seeking funds (for 
purposes of formulation of the President's budget request, this fiscal 
year is known as the budget year); and (3) the following fiscal year, 
for which they are preparing information and requests. OMB Circular No. 
A-11, Preparation, Submission, and Execution of the Budget (revised 
annually), provides detailed guidance to executive departments and 
establishments on preparing budget submissions. The President's budget, 
which is the sole single document with budget information for the 
entire government, contains: 

* a record of actual receipts and spending levels for the fiscal year 
just completed; 

* a record of current-year estimated receipts and spending; and: 

* estimated receipts and spending for the upcoming fiscal year and 9 
years beyond, as proposed by the President. 

Executive budget formulation, based upon proposals, evaluations, and 
policy decisions, begins in agencies' organizational units. During 
executive budget formulation, federal agencies receive revenue 
estimates and economic projections from the Department of the Treasury 
(Treasury), the Council of Economic Advisers (CEA), and OMB. 

Executive Budget Formulation Timetable: 

Spring-Summer: OMB Establishes Policy for the Next Budget Request: 

During this period, OMB and the executive branch agencies discuss 
budget issues and options. OMB works with the agencies to identify 
major issues for the upcoming budget request; to develop and analyze 
options for the upcoming reviews of agency spending and program 
requests; and to plan for the analysis of issues that will need 
decisions in the future. OMB issues policy directions and planning 
guidance to the agencies for the upcoming budget request and detailed 
instructions for submitting budget data and materials for the upcoming 
fiscal year and following 9 fiscal years. 

September-October: Agencies Submit Initial Budget Request Materials: 

By law, the President's budget request must include information on all 
agencies of all three branches of the federal government.[Footnote 3] 
Executive branch departments, agencies that are subject to executive 
branch review, and the District of Columbia must submit their budget 
requests and other initial materials to OMB typically the first Monday 
after Labor Day of the year prior to the start of the year that the 
budget request covers (i.e., September 8, 2004, for fiscal year 2006, 
which started October 1, 2005). Agencies not subject to executive 
branch review (e.g., the Federal Reserve Board) and the legislative and 
judicial branches are required to submit their budget materials in fall 
of the year prior to the year that the budget requests cover (e.g., in 
October 2004 for fiscal year 2006).[Footnote 4] 

October-December: OMB Performs Review and Makes Passback Decisions: 

OMB staff representatives conduct the fall review. OMB has informal 
discussions with agencies about their budget proposals in light of 
presidential priorities, program performance, and any budget 
constraints. OMB examiners prepare issues for the Director's review. 
The Director briefs the President and senior advisors on proposed 
budget policies and recommends a complete set of budget proposals after 
a review of all agency requests. The President considers the estimates 
and makes his decisions on broad policies. In late November, OMB passes 
back budget decisions to the agencies on their budget requests, the so- 
called passback. These decisions may involve, among other things, 
funding levels, program policy changes, and personnel ceilings. The 
agencies may appeal decisions with which they disagree. If OMB and an 
agency cannot reach agreement, the issue may be taken to the President. 

Final budget decisions will also reflect proposals for management and 
program-delivery improvements resulting from agency and OMB reviews 
during the executive budget formulation process. OMB not only assists 
in making individual budget decisions, it also tracks the result of 
these decisions. OMB calculates the effect of budget decisions on 
receipts, budget authority, and outlays. Once final decisions on the 
budget requests are reached, agencies revise their budget submissions 
to conform to these decisions. These final estimates are transmitted to 
Congress in the President's budget request. 

By the First Monday in February: President Submits Budget Request: 

In accordance with current law, the President must transmit the budget 
request to Congress on or before the first Monday in February.[Footnote 
5] 

By July 15: President Submits Mid-Session Review Document to Congress: 

The Budget and Accounting Act of 1921, as amended, requires the 
President to submit to Congress on or before July 15 a supplementary 
budget summary that provides data to aid in evaluation of the 
President's budget request.[Footnote 6] This summary, referred to as 
the mid-session review, includes updated presidential policy budget 
estimates, summary updates to the information contained in the budget 
submission, and budget-year baseline estimates. 

Phase 2: The Congressional Budget Process: 

Once the President submits his budget request, the congressional phase 
begins. Since the constitutional power of the purse is vested solely in 
Congress, the President's budget request is just that--a request. 
Congress, of course, may choose to adopt, modify, or ignore the 
President's budget proposals when adopting its budget resolution and 
when enacting appropriations and other laws. (See fig. 2 in app. II.) 

The Congressional Budget Act establishes the following key steps in the 
congressional budget process. 

January-February: CBO Submits Report to the Budget Committees and 
Congress Receives the President's Budget Request: 

Usually in late January, CBO submits to the Budget Committees its 
annual report, entitled The Budget and Economic Outlook. The report 
contains CBO's projection of federal revenue and spending for the next 
10 years, based on its current economic forecast and the general 
assumption that existing laws and policies remain unchanged. 

Congress receives the President's budget request no later than the 
first Monday in February. At the same time, the President transmits 
current services estimates to Congress. The House and Senate Budget 
Committees, in preparation for drafting the concurrent resolution on 
the budget, hold hearings to examine the President's economic 
assumptions and spending priorities. At the request of the Senate 
Appropriations Committee, CBO prepares an analysis of the President's 
request. 

Committees Transmit the Views and Estimates Reports to Budget 
Committees: 

While the Budget Committees examine aggregate budget levels and budget 
functions, the other committees of Congress with jurisdiction over 
federal programs transmit to the Budget Committees their views and 
estimates on spending and revenue levels for programs under their 
jurisdiction. The Budget Committees use these reports on views and 
estimates to develop the total revenue and spending estimates that they 
will propose in the concurrent budget resolution. In conjunction with 
these views and estimates reports, the Joint Economic Committee submits 
its recommendations concerning fiscal policy to the Budget Committees. 

March-April: Congress Adopts a Budget Resolution: 

Typically, during March, the Budget Committees mark-up and report to 
their respective houses a budget plan in the form of a concurrent 
resolution on the budget. This budget resolution is drafted using the 
President's budget request, information from their own hearings, views 
and estimates reports from other committees, and CBO's reports. The 
budget resolution is required to set forth (for the upcoming fiscal 
year and for each of at least the next 4 years) the total level of new 
budget authority, outlays, revenues, the deficit or surplus, the public 
debt, and spending by functional category. The budget resolution may 
include reconciliation instructions to the extent necessary to meet the 
revenue or direct spending targets in the budget resolution. 

The budget resolution is considered in each House under special 
procedures set forth in the Congressional Budget Act. When the Senate 
and House have both adopted their respective versions of the budget 
resolution, it is referred to a conference committee to resolve the 
differences between the two versions. Each chamber must then vote on 
the conference report. The Congressional Budget Act sets April 15 as 
the date by which Congress should complete action on the budget 
resolution; however, in practice, Congress may not meet this 
date.[Footnote 7] For example, in 2005 Congress adopted the budget 
resolution for fiscal year 2006 on April 28, 2005. In 1998 (for fiscal 
year 1999), in 2002 (for fiscal year 2003), and in 2004 (for fiscal 
year 2005) Congress did not complete action on budget 
resolutions.[Footnote 8] 

The joint explanatory statement accompanying a conference report on the 
budget resolution includes an allocation of budget authority and 
outlays to the Appropriations Committees (for discretionary spending) 
and to each authorizing committee (for direct spending) of the House 
and Senate. The Appropriations Committees subsequently subdivide their 
allocation among their subcommittees according to jurisdiction. 

The concurrent resolution on the budget does not become law; it is not 
signed by the President. The aggregate levels of revenues, budget 
authority, and outlays and the committee allocations are guidelines and 
targets against which subsequent fiscal legislation--appropriation 
acts; authorizing legislation that provides budget authority; revenue 
acts; and, if necessary, reconciliation acts (see below)--is measured. 

The Congressional Budget Act contains rules of the House and Senate 
that implement the priorities agreed to and set in the concurrent 
resolution on the budget. These rules generally prohibit the 
consideration of legislation that is not in compliance with the 
committee allocations or the revenue or spending totals in the 
resolution. Accordingly, if legislation is out of compliance, it is 
subject to a point of order and, if the point of order is sustained, 
Congress is precluded from further consideration of the legislation 
until it is brought into compliance.[Footnote 9] 

If changing economic circumstances or policy requirements dictate, 
Congress may revise its budget resolution during the fiscal year, 
thereby altering the spending and revenue totals. 

May-September: Congress Addresses Fiscal Legislation: 

Reconciliation Measure: 

When the concurrent resolution on the budget contains reconciliation 
instructions, the committees must submit legislative language that 
changes laws in their jurisdiction to the Budget Committee of their 
house on the date specified in the instructions. The Budget Committees 
may make no substantive changes to the submissions, but must report the 
submissions to the House or Senate as a single reconciliation bill. If, 
however, a reconciled committee fails to meet the numerical targets 
included in its reconciliation instruction, procedures exist to modify 
the bill on the floor so that the targets are met. (If only one 
committee is instructed, that committee reports its recommendations 
directly to the House or Senate.) 

The reconciliation legislation is a unique vehicle through which 
Congress enforces its budget plan for revenue and direct spending set 
forth in the budget resolution. Both the House of Representatives and 
the Senate consider the reconciliation legislation reported to them 
from their respective Budget Committees under special rules. (The 
Appropriations Committees are not subject to reconciliation 
instructions.) Generally, in the House, the legislation is considered 
under a special rule, a simple resolution adopted by the House prior to 
consideration of the reconciliation legislation that governs the debate 
and the amendments that are in order. In the Senate, reconciliation 
legislation is considered under special procedures set forth in the 
Congressional Budget Act, which limits the period of debate and the 
types of amendments that are in order and subjects the legislation and 
amendments to the Byrd Rule, which prohibits "extraneous material." 
(See Byrd Rule for more detail.) The differences between the two houses 
are typically resolved in a conference committee and the resulting 
legislation is passed by both houses and must be signed by the 
President to become law. 

Appropriations and Other Fiscal Legislation: 

Generally, throughout this period, Congress considers revenue 
legislation and legislation affecting spending, including the regular 
appropriations acts.[Footnote 10] All legislation considered by 
Congress that affects revenue or spending must comply with the 
committee allocations and the total levels of revenues and spending in 
the concurrent resolution on the budget.[Footnote 11] 

Appropriations bills are developed by the House and Senate 
Appropriations Committees and their subcommittees.Each subcommittee has 
jurisdiction over specific federal agencies or programs and is 
responsible for one of the general appropriations bills.[Footnote 12] 
The Constitution requires that all revenue (tax) bills originate in the 
House; by custom, the House also originates appropriations measures. 

The Congressional Budget Act requires that the House and Senate 
Appropriations Committees subdivide the amounts allocated to them under 
the budget resolution among their subcommittees (Section 302(b) 
allocations).[Footnote 13] Once the subcommittees receive their 
allocations, the subcommittees begin drafting their appropriations 
bills to fund discretionary spending programs. Proposed legislation 
that would cause the section 302(b) allocations to be exceeded is 
subject to a point of order. 

CBO prepares a cost estimate on each appropriations bill, just as it 
provides cost estimates for any legislative measure reported by a 
committee of Congress. The Budget Committees use this information to 
determine whether the legislation complies with a committee's 
allocation, a subcommittee's suballocation, and the budget totals in 
the budget resolution. 

Congress must enact these regular appropriations bills by October 1 of 
each year. If these regular bills are not enacted by the deadline (and 
they usually are not), Congress must pass a continuing resolution prior 
to the beginning of each fiscal year to fund government operations into 
the next fiscal year. When an agency does not receive its new 
appropriation before its current appropriation expires, it must cease 
ongoing, regular functions that are funded with annual appropriations, 
except for those related to emergencies involving the safety of human 
life or the protection of property. 

Phase 3: Budget Execution and Control: 

The body of enacted laws providing appropriations for a fiscal year 
becomes the government's financial plan for that fiscal year. The 
execution and control phase refers generally to the period during which 
the budget authority made available by appropriations remains available 
for obligation. An agency's task during this phase is to spend the 
money Congress has given it to carry out the objectives of its program 
legislation in accordance with fiscal statutes and appropriations, 
while at the same time beginning phase 1 for the next budget. 

The Antideficiency Act is one of these fiscal statutes. It is a funds 
control, financial management statute, and it achieves this funds 
control objective through a system of apportionments, allotments, 
suballotments, and allocation of funds. It requires that agency heads 
prescribe, by regulation, a system of administrative control of funds. 
The system is also called the funds control system, and the regulations 
are called funds control regulations. 

OMB is responsible for apportioning appropriated amounts to the 
executive branch agencies, thereby making funds in appropriation 
accounts (administered by Treasury) available for obligation. The 
apportionment is intended to achieve an effective and orderly use of 
available budget authority and ensure that obligations and expenditures 
are made at a controlled rate to reduce the need for supplemental 
appropriations, and prevent deficiencies from arising before the end of 
a fiscal year. 

Once OMB apportions funds, it is the agency's responsibility to 
allocate the funds in accordance with its funds control system and 
regulations. The purpose of the funds control system and regulations is 
(1) to prevent overobligations and expenditures and (2) to fix 
accountability for obligations or expenditures. An obligation or 
expenditure that exceeds the amount of the appropriation, the 
apportionment, or the allotment violates the Antideficiency Act. For a 
more detailed explanation of these controls, see [Hyperlink, 
http://www.gao.gov/cgi-bin/getrpt?GAO/OGC-92-13], Principles of Federal 
Appropriations Law, volume II, second edition (available at 
http://www.gao.gov/legal.htm), and OMB Circular No. A-11, part 4, 
Instructions on Budget Execution. 

Impoundment: 

At various times, the executive branch has refused to execute 
appropriations laws, that is, refused to spend money appropriated by 
Congress because the executive branch disagreed with the use of the 
funds. Under the Impoundment Control Act of 1974 whenever the 
President, the Director of OMB, or an agency or other federal 
government official does not make an appropriation or any part of an 
appropriation available for obligation, that official is impounding 
funds. The act permits the President, the Director of OMB, or an agency 
or other federal government official to impound funds only for certain 
reasons and under certain circumstances. The act also requires that 
impoundments be reported to Congress and the Comptroller General of the 
United States. The act requires the Comptroller General to monitor the 
performance of the executive branch in reporting proposed impoundments 
to Congress. For more information on impoundments, see section D.3 
(Budget Execution and Control: Impoundment) in Principles of Federal 
Appropriations Law, volume I, third edition, [Hyperlink, 
http://www.gao.gov/cgi-bin/getrpt?GAO-04-261SP] (available at 
http://www.gao.gov/special.pubs/redbook1.html). 

Phase 4: Audit and Evaluation: 

Individual agencies are responsible--through their own review and 
control systems--for ensuring that the obligations they incur and the 
resulting outlays adhere to the provisions in the authorizing and 
appropriations legislation as well as to other laws and regulations 
governing the obligation and expenditure of funds. OMB Circular No. A- 
11 provides extensive guidance to agencies on budget execution. In 
addition, a series of federal laws are aimed at controlling and 
improving agency financial management. The Inspector General Act of 
1978, Pub. L. No. 95-452 as amended, established agency inspectors 
general to provide policy direction for and to conduct, supervise, and 
coordinate audits and investigations relating to agency programs and 
operations. The Chief Financial Officers Act of 1990 established agency 
chief financial officers to oversee all financial management activities 
relating to agency programs and operations. The Government Management 
Reform Act of 1994 requires the audit of agency financial statements 
and the preparation and audit of a consolidated financial statement for 
the federal government. And the Federal Financial Management 
Improvement Act of 1996 directs auditors to report on whether agency 
financial statements comply with federal financial management systems 
requirements, federal accounting standards, and the U.S. Standard 
General Ledger (SGL). 

In 1993, Congress enacted the Government Performance and Results Act 
(GPRA) to improve congressional spending decisions and agency oversight 
through performance budgeting. GPRA holds federal agencies accountable 
for achieving program results and requires agencies to clarify their 
missions, set program goals, and measure performance toward achieving 
those goals. Among other things, the act requires each agency, on an 
annual basis, to submit a performance plan and performance report to 
OMB and Congress covering each program activity in the agency's budget. 
The agency plan must establish goals that define the level of 
performance to be achieved by a program activity and describe the 
operational processes and resources required to achieve goals. The 
program performance reports present the agency's performance in 
comparison to the plan for the previous fiscal year. 

OMB reviews program and financial reports and monitors agencies' 
efforts to attain program objectives. Congress exercises oversight over 
executive branch agencies through the legislative process, formal 
hearings, and investigations. Congress uses oversight hearings, for 
example, to evaluate the effectiveness of a program and whether it is 
administered in a cost-effective manner, to determine whether the 
agency is carrying out congressional intent, and to identify fraud or 
abuse. 

GAO regularly audits, examines, and evaluates government programs. Its 
findings and recommendations for corrective action are made to 
Congress, to OMB, and to the agencies concerned. GAO also has the 
authority to settle all accounts of the United States government and to 
issue legal decisions and opinions concerning the availability and use 
of appropriated funds.[Footnote 14] GAO develops government audit and 
internal control standards. Government Auditing Standards (the "Yellow 
Book") contains standards for audits of government organizations, 
programs, activities, and functions, and of government assistance 
received by contractors, nonprofit organizations, and other 
nongovernmental organizations. These standards, often referred to as 
U.S. generally accepted government auditing standards, are to be 
followed by auditors and audit organizations when required by law, 
regulation, agreement, contract, or policy. The internal control 
standards, Standards for Internal Control in the Federal Government, 
provide the overall framework for establishing and maintaining internal 
control and for identifying and addressing major performance and 
management challenges and areas at greatest risk for fraud and 
mismanagement. Also, as mentioned above, the Impoundment Control Act of 
1974 requires the Comptroller General to monitor the performance of the 
executive branch in reporting proposed impoundments to Congress. 

[End of section] 

Appendix II: Federal Budget Formulation and Appropriation Processes: 

As described in appendix I, figure 1 shows the executive branch budget 
formulation process, which starts when the President develops budget 
and fiscal policy and concludes when the President sends the proposed 
budget to Congress by the first Monday in February. Congress then 
starts the budget and appropriations process illustrated in figure 2. 

Figure 1: Federal Budget Formulation Process: 

[See PDF for image] 

[A] The term "agency" refers to either the department, agency, or lower 
component levels, depending on the level of decision being made. The 
budget submitted to OMB represents the budget decisions made at the 
department or the highest organizational level. 

[End of figure] 

Figure 2: Federal Budget and Appropriation Process: 

[See PDF for image] 

[End of figure] 

[End of section] 

Appendix III: The Methods for Tracking Funds in the Federal Government: 

The federal government uses two different but overlapping methods for 
tracking funds. This reflects the fact that the federal government is 
made up of many different entities and serves multiple constituencies. 
Financial information generated by federal entities serves a range of 
purposes. For example, Congress seeks to monitor the obligation and 
expenditure of federal funds it appropriates and evaluate the need for 
additional funds; managers of federal entities seek to control the cost 
of operations; and economists seek to understand the effects of federal 
operations and financing on different markets. 

The two methods for tracking funds are generally known as obligational 
accounting and proprietary accounting. While each method involves 
different processes, people, and information systems that rely on a 
given nomenclature, each system plays an important part in ensuring the 
financial accountability of the government to the American people, and 
agencies cannot overlook either of them. 

Although the budget and budget process largely use obligational 
accounting, users of this glossary should recognize that terms used in 
obligational accounting might have different meanings when used in 
proprietary accounting.[Footnote 15] The purpose of this appendix is to 
describe, briefly, the two methods, their statutory bases, and the role 
each plays in federal government financial accountability. This 
appendix also supplies references for detailed information on each 
method. In its simplest form obligational accounting means that an 
obligation must be recorded when an agency enters into a contract for 
goods or services. In contrast, under proprietary or financial 
accounting no transaction is recorded until the entity accepts the 
goods or services when an "accounts payable" is recorded. The following 
paragraphs explain these two systems further. 

Obligational accounting involves the accounting systems, processes, and 
people involved in collecting financial information necessary to 
control, monitor, and report on all funds made available to federal 
entities by legislation--including both permanent, indefinite 
appropriations and appropriations enacted in annual and supplemental 
appropriations laws that may be available for 1 or multiple fiscal 
years. It is through obligational accounting that agencies ensure 
compliance with fiscal laws, including the Antideficiency Act[Footnote 
16] and the "purpose" and "time" statutes.[Footnote 17] Obligational 
accounting rests on the central concepts of the obligation and 
disbursement of public funds, as those terms are defined in this 
glossary. The Antideficiency Act and the "recording statute"[Footnote 
18] provide the fundamental components of obligational accounting. The 
Antideficiency Act requires each agency head to establish an 
administrative system of funds control designed to restrict obligations 
or expenditures and to affix responsibility for obligations or 
expenditures. The recording statute requires agencies to account for 
obligations as a key mechanism for measuring compliance. The basic 
premise of obligational accounting is that if an agency controls its 
obligations, it is unlikely to overspend, or improperly use, its 
appropriations. 

In obligational accounting, the Department of the Treasury (Treasury), 
in collaboration with the Office of Management and Budget (OMB), 
establishes federal appropriations and fund accounts to record 
information on the amount and period of availability of funding 
appropriated by acts of Congress. Imbedded in the information fields 
and symbols assigned by Treasury to appropriations and fund accounts 
are the same Treasury account symbols OMB assigns for budget 
accounts.[Footnote 19] For additional levels of control, OMB and 
federal entities subdivide the appropriations and fund accounts, and 
then the entities record transactions in these accounts as they occur. 
(See Apportionment.) Treasury publishes guidance in the Treasury 
Financial Manual, available at http://www.fms.treas.gov/tfm/, for 
agencies to follow in accounting for use of funds and in preparing 
financial reports on their accounts.[Footnote 20] Reports on the status 
of funds obligated and expended are periodically reported through 
Treasury's FACTS II and presented in a manner that is compatible with 
the federal budget. The Comptroller General also has statutory 
authority to settle the accounts of the U.S. government that involves 
the review and determination that obligations and disbursements from an 
account were made in accordance with law.[Footnote 21] GAO's Principles 
of Federal Appropriations Law, available at http://www.gao.gov, 
provides a comprehensive discussion of the relevant statutes and case 
law, including Comptroller General decisions and opinions applicable to 
obligational accounting. 

Proprietary accounting, also referred to as financial accounting, 
involves federal entities recording and accumulating financial 
information on transactions and balances for purposes of reporting both 
internally to management and externally in an entity's financial 
statements in accordance with a comprehensive basis of 
accounting.[Footnote 22] Proprietary accounting is usually based on 
generally accepted accounting principles, which follow established 
conventions such as the recognition of transactions on an accrual basis 
instead of recognition based on strict association with the obligation 
or expenditure of appropriated funds. For example, in proprietary 
accounting, the expense associated with a capital asset would be 
recognized over the asset's life as depreciation. In obligational or 
budgetary accounting, capital asset costs are recognized as obligations 
when the commitment to purchase the asset is made and as expenditures 
when cash is paid for the asset. Most federal entities are subject to 
proprietary accounting standards promulgated through the Federal 
Accounting Standards Advisory Board (FASAB).[Footnote 23] FASAB was 
established jointly by GAO, Treasury, and OMB to promulgate accounting 
standards for the executive branch. The Consolidated Financial 
Statements of the U.S. Government, required by law to be prepared 
annually by Treasury and audited by GAO, are to be prepared in 
accordance with FASAB accounting standards.[Footnote 24] All executive 
agencies that are not required by another provision of federal law to 
prepare audited financial statements are required by 31 U.S.C. ï¿½ 3515 
to prepare audited financial statements. Government corporations are 
also required to prepare audited financial statements.[Footnote 25] 

Most agencies and some government corporations follow FASAB accounting 
standards. These agencies use accounts established in the Standard 
General Ledger (SGL). The SGL accounts, established by Treasury and 
published in a chart of accounts, record similar types of transactions 
and balances that aggregate to specific classifications in the 
financial statements. The SGL accounts are structured differently than, 
but integrate information from, appropriations and fund accounts. Some 
federal entities, however, such as government corporations, may follow 
other generally accepted proprietary accounting standards (such as 
those issued by the Financial Accounting Standards Board) unless they 
chose to adopt FASAB standards and the SGL. Other small federal 
entities, such as boards and commissions, and some legislative and 
judicial branch entities may not engage in proprietary accounting. 

The differences between obligational accounting and proprietary 
accounting are most apparent in their application to federal entities' 
transactions, as the following hypothetical text illustrates: 

When an agency official enters into a contract for goods or services, 
obligational accounting rules dictate that the entity record an 
obligation of federal funds that will be due for the expected payment. 
An expenditure is recorded when payment is made (typically, after 
acceptance of the goods or services). Under proprietary accounting, no 
transaction is recorded until the entity accepts the goods or services, 
at which point an account payable and related expense will be recorded. 

As illustrated above, each method of tracking funds serves a different 
purpose, and users need to be cognizant of the different purposes and 
the different views that these systems provide regarding federal 
entities' status of funds and financial condition at any given point in 
time. 

[End of section] 

Appendix IV: Budget Functional Classification: 

The functional classification system is a way of grouping budgetary 
resources so that all budget authority and outlays of on-budget and off-
budget federal entities and tax expenditures can be presented according 
to the national needs being addressed. National needs are grouped in 17 
broad areas to provide a coherent and comprehensive basis for analyzing 
and understanding the budget. Three additional categories--Net 
Interest, Allowances, and Undistributed Offsetting Receipts--do not 
address specific national needs but are included to cover the entire 
budget. A final category, Multiple Functions, is used for accounts that 
involve two or more major functions. 

To the extent feasible, functional classifications are made without 
regard to agency or organizational distinctions.[Footnote 26] Each 
federal activity is placed in a single functional classification that 
best defines the activity's most important purpose even though many 
activities serve more than one purpose. This is necessary so that the 
sum of the functional categories equals the budget totals. The 
functional classifications are also the categories that Congress uses 
in the concurrent resolutions on the budget, pursuant to the 
Congressional Budget and Impoundment Control Act of 1974 (2 U.S.C. ï¿½ 
632). Different programs within a single function may fall under the 
jurisdiction of different committees. 

A function may be divided into one or more subfunctions, depending upon 
the complexity of the national need addressed by that function. A three-
digit code represents each functional/subfunctional category. The 
functional codes also make up the last three digits of the account 
identification code. (See app. V.) 

The functional structure is relatively stable, but changes are made 
from time to time to take into account changing conditions and 
requirements. As a rule, any changes in this structure are made after 
the Office of Management and Budget (OMB) consults with the 
Appropriations and Budget Committees of the Senate and House of 
Representatives. 

Table 1 outlines the functional classification structure as taken from 
the President's Budget of the United States Government, Fiscal Year 
2006. The definitions for the subfunctional structure are from OMB's 
technical staff paper, "The Functional Classification in the Budget" 
(1979 Revision). Where necessary, these definitions have been updated 
to accommodate changes since issuance of that document. The three-digit 
numbers listed under Code and the associated titles and definitions are 
for the major functions. The three-digit numbers listed under Subcode 
and the associated titles and definitions are for the subfunctions. 

Table 1: Functional Classification Structure: 

Code: 050; 
Function: National Defense. 

Common defense and security of the United States. It encompasses the: 

* raising, equipping, and maintaining of armed forces (including 
civilian support activities), development and utilization of weapons 
systems (including nuclear weapons), and related programs. 

* direct compensation and benefits paid to active military and civilian 
personnel and contributions to their retirement, health, and life 
insurance funds;[A]. 

* defense research, development, testing, and evaluation; and, 

* procurement, construction, stockpiling, and other activities 
undertaken to directly foster national security. 

Excludes: 

* benefits or compensation to veterans and their dependents and 
military and civil service retirees. 

* the peaceful conduct of foreign relations. 

* foreign military, economic, and humanitarian assistance. 

* subsidies to businesses by civilian agencies (such as maritime 
subsidies) that may be partially justified as promoting national 
security; and, 

* research and operations of agencies (such as space research) whose 
program missions are not directly designed to promote national defense 
but could result in some significant benefits to our national security. 

Subcode: 051; 
Subfunction: Department of Defense--Military. 

With minor exceptions, entire agency is included in this subfunction. 

Subcode: 053; 
Subfunction: Atomic energy defense activities. 

Department of Energy programs devoted to national defense, such as 
naval ship reactors and nuclear weapons. 

Subcode: 054; 
Subfunction: Defense-related activities. 

Miscellaneous defense activities, such as the expenses connected with 
selective services and with defense stockpiles outside of the 
Departments of Defense and Energy. 

Code: 150; 
Function: International Affairs. 

Maintaining peaceful relations, commerce, and travel between the United 
States and the rest of the world and promoting international security 
and economic development abroad. (Excludes outlays from domestic 
programs that may tangentially affect foreign relations or the citizens 
of other nations.) 

Subcode: 151; 
Subfunction: International development and humanitarian assistance. 

Humanitarian assistance, development assistance, security support 
assistance, grants to and investments in international financial and 
development institutions, and the budgetary costs associated with 
concessionary agricultural exports. 

Subcode: 152; 
Subfunction: International security assistance. 

The transfer of defense articles and services to foreign governments, 
including grants, credit sales, and training. Excludes the military 
sales trust fund, which is classified under subfunction 155 
(international financial programs). 

Subcode: 153; 
Subfunction: Conduct of foreign affairs. 

Diplomatic and consular operations of the Department of State, assessed 
contributions to international organizations, and closely related 
activities in other agencies (such as the Arms Control and Disarmament 
Agency). 

Subcode: 154; 
Subfunction: Foreign information and exchange activities. 

Student and cultural exchange programs and foreign library, radio, or 
other media information activities designed to promote mutual 
understanding between the people of the United States and other 
nations. 

Subcode: 155; 
Subfunction: International financial programs. 

Export credit, the military sales trust fund, international commodity 
agreements, international monetary programs, and other programs 
designed to improve the functioning of the international financial 
system. For pre-1992 direct loans or loan guarantees, includes the 
total cash flows on these loans and guarantees. For loans or loan 
guarantees obligated or committed after 1991, includes the credit 
subsidy costs of the loans or guarantees. 

Code: 250; 
Function: General Science, Space, and Technology. 

Budget resources allocated to science and research activities of the 
federal government that are not an integral part of the programs 
conducted under any other function. 

Includes the research conducted by the National Science Foundation, all 
space programs conducted by the National Aeronautics and Space 
Administration, and general science research supported by the 
Department of Energy. Includes research and technology programs that 
have diverse goals and cannot readily be classified under one specific 
function to avoid detailed splitting of accounts. 

Subcode: 251; 
Subfunction: General science and basic research. 

Conducting the National Science Foundation programs and the general 
science activities of the Department of Energy. 

Subcode: 252; 
Subfunction: Space flight, research, and supporting activities. 

Development and operation of space transportation systems, basic 
scientific research connected with outer space, research and 
demonstrations designed to promote terrestrial applications of 
technology developed through space research, and development of new 
space technologies for future flight missions. Also includes costs of 
tracking and data relay support for the National Aeronautics and Space 
Administration space science and applications for flight missions. 

Code: 270; 
Function: Energy. 

Promoting an adequate supply and appropriate use of energy to serve the 
needs of the economy. Included are the energy programs of the 
Department of Energy and its predecessor agencies. Excludes atomic 
energy defense activities and general science research not closely 
related to energy. 

Subcode: 271; 
Subfunction: Energy supply. 

Increasing the supply of energy through the development of domestic 
resources and systems capable of using them. Includes the costs of 
research and demonstration of supply systems. 

Subcode: 272; 
Subfunction: Energy conservation. 

Encouraging the prudent use of energy resources. 

Subcode: 274; 
Subfunction: Emergency energy preparedness. 

Developing and maintaining a stockpile of energy resources (currently 
confined to petroleum) to meet emergency needs and associated 
contingency planning activities. 

Subcode: 276; 
Subfunction: Energy information, policy, and regulation. 

Unallocable overhead activities of the Department of Energy plus the 
costs of energy information and regulation activities. 

Code: 300; 
Function: Natural Resources and Environment. 

Developing, managing, and maintaining the nation's natural resources 
and environment. Excludes the outlays for community water supply 
programs, basic sewer systems, and waste treatment plants, all of which 
are part of a community or regional development (rather than an 
environmental enhancement) program or are part of the cost of operating 
a federal facility (such as a military installation). 

Subcode: 301; 
Subfunction: Water resources. 

Water protection, conservation, irrigation, and related activities, 
including the total costs of multipurpose water projects where it is 
not feasible to separate the transportation (navigation) or energy 
(power) segments of these projects. 

Subcode: 302; 
Subfunction: Conservation and land management. 

Maintaining the public domain and national forests, encouraging 
conservation of private land, and reclaiming surface mining areas. 

Subcode: 303; 
Subfunction: Recreational resources. 

Acquisition, improvement, and operation of recreational lands and 
facilities, including fish, wildlife, and parks; also preserving 
historic areas. 

Subcode: 304; 
Subfunction: Pollution control and abatement. 

Controlling and reducing air, water, and land pollution, or enhancing 
the environment. Excludes water resources programs, water treatment 
plants, and similar programs that are not funded as part of an 
environmental enhancement activity. 

Subcode: 306; 
Subfunction: Other natural resources. 

Miscellaneous natural resources programs, not classified under other 
subfunctions, such as marine-, earth-, and atmosphere-related research 
and geological surveys and mapping. 

Code: 350; 
Function: Agriculture. 

Promoting the economic stability of agriculture and the nation's 
capability to maintain and increase agricultural production. Excludes 
programs that though related to rural development, are not directly 
related to agriculture, such as rural environmental and conservation 
programs classified in the natural resources function. Also excludes 
concessionary food export sales or food donations, whether overseas or 
for domestic income support purposes. 

Subcode: 351; 
Subfunction: Farm income stabilization. 

Subsidies and other payments to stabilize agricultural prices at an 
equitable level. Includes acquiring and storing agricultural commodity 
stockpiles, but does not include foreign agricultural export losses 
(classified in the international affairs function) or domestic 
donations of food (part of an income support, rather than a farm price 
support, program). Includes the total cash flows of farm price support 
loans (that is, loans that can be repaid in cash or by surrendering 
title to the crop used as security for the loan), which are not subject 
to credit reform. For all other agricultural loans and loan guarantees, 
includes either the total cash flows (for pre-1992 loans and loan 
guarantees) or the subsidy cost (for loans and loan guarantees subject 
to credit reform). 

Subcode: 352; 
Subfunction: Agricultural research and services. 

All other agricultural programs, such as agricultural research and 
extension services. 

Code: 370; 
Function: Commerce and Housing Credit. 

Promotion and regulation of commerce and the housing credit and deposit 
insurance industries, which pertain to: 

* collection and dissemination of social and economic data (unless they 
are an integral part of another function, such as health). 

* general purpose subsidies to businesses, including credit subsidies 
to the housing industry (for programs subject to credit reform, 
includes only the credit subsidy costs of loans and loan guarantees); 
and: 

* the Postal Service fund and general fund subsidies of that fund. 

In general, includes credit and insurance programs; however, if such 
programs are a means of achieving the basic objectives of another 
function and are an integral part of the programs of that function, 
they are classified under the other function. 

Excludes regional economic development programs, even if they use 
credit or insurance to achieve a community development objective. Also 
excludes other insurance or loan programs (such as railroad loans) that 
are an integral part of other functions. 

Subcode: 371; 
Subfunction: Mortgage credit. 

Includes the cash transactions for homeownership and related loan and 
insurance programs for pre-credit reform activity; under credit reform, 
includes the credit subsidy cost of any homeownership loans or 
guarantees. 

Subcode: 372; 
Subfunction: Postal Service. 

Any net outlays of the Postal Service included in the budget (or off-
budget). 

Subcode: 373; 
Subfunction: Deposit insurance. 

Insurance programs protecting deposits in certain financial 
institutions; programs to resolve failed institutions. Deposit 
insurance activities are not subject to credit reform, so the budget 
records the cash flows for deposit insurance rather than their subsidy 
values. 

Subcode: 376; 
Subfunction: Other advancement of commerce. 

Loan programs to aid specialized forms of business (such as small 
business) that are not included elsewhere in the functional structure. 
For such transactions undertaken prior to credit reform, includes the 
total cash flows. For activities under credit reform, includes the 
credit subsidy cost of the loans or guarantees. Also includes 
collecting and disseminating economic and demographic statistics (such 
as census data) and regulating business. 

Code: 400; 
Function: Transportation. 

Providing for the transportation of the general public, its property, 
or both, regardless of whether local or national and regardless of the 
particular mode of transportation. Includes: 

* construction of facilities. 

* purchase of equipment. 

* research, testing, and evaluation. 

* provision of communications directly related to transportation (for 
example, air traffic control by the Federal Aviation Administration). 

* operating subsidies for transportation facilities (such as airports) 
and industries (such as railroads); and: 

* regulatory activities directed specifically toward the transportation 
industry rather than toward business. 

Excludes: 

* moving personnel or equipment as part of the operation of other 
government services. 

* foreign economic assistance that may involve assisting transportation 
facilities or programs abroad. 

* the construction of roads or trails as an integral part of the 
operation of public lands, parks, forests, or military reservations, 
unless they are specifically funded as a part of a broader 
transportation program. 

* the construction of roads or other transportation facilities as an 
integral part of a broad community facility or regional development 
program where the clear intent of the program is regional development 
and the provision of transportation facilities is only an incidental by-
product or means to attain the objective of regional development; and: 

* research and technology activities devoted to space research (except 
aeronautical technology), even though this research may eventually 
benefit general transportation. 

Subcode: 401; 
Subfunction: Ground transportation. 

Aid, and/or regulation of both for the various components of ground 
transportation, such as roads and highways, railroads, and urban mass 
transit. 

Subcode: 402; 
Subfunction: Air transportation. 

Aid for and/or regulation of air transportation, including aeronautical 
research conducted by the National Aeronautics and Space 
Administration. 

Subcode: 403; 
Subfunction: Water transportation. 

Aid for and/or regulation of maritime commerce. 

Subcode: 407; 
Subfunction: Other transportation. 

General transportation programs and overhead not readily allocable to 
any of the preceding subfunctions. 

Code: 450; 
Function: Community and Regional Development. 

Development of physical facilities or financial infrastructures 
designed to promote viable community economies. Includes transportation 
facilities developed as an integral part of a community development 
program (rather than a transportation program). Usually excludes aids 
to businesses unless such aids promote the economic development of 
depressed areas and are not designed to promote particular lines of 
business for their own sake. Usually excludes human development and 
services programs. 

Subcode: 451; 
Subfunction: Community development. 

Grants and related programs designed to aid largely urban community 
development. Includes community development block grants and 
predecessor activities, such as the urban renewal and model cities 
programs. These programs are generally carried out by the Department of 
Housing and Urban Development. 

Subcode: 452; 
Subfunction: Area and regional development. 

Grants, loans, subsidies, and related aids for the economic development 
of depressed areas. For pre-credit reform loans, includes the total 
cash flows of the loans; for loans under credit reform, includes the 
credit subsidy cost of the loans. All these aids are generally for 
rural areas or are more regional than the community development 
programs. Area and regional development programs are generally carried 
out by agencies other than the Department of Housing and Urban 
Development, such as the Farmers Home Administration, Economic 
Development Administration, and Bureau of Indian Affairs. 

Subcode: 453; 
Subfunction: Disaster relief and insurance. 

Helping communities and families recover from natural disasters. 

Code: 500; 
Function: Education, Training, Employment, and Social Services. 

Promoting the extension of knowledge and skills, enhancing employment 
and employment opportunities, protecting workplace standards, and 
providing services to the needy. Excludes education or training 
undertaken as an integral part of the achievement of other functions 
(such as training military personnel; veterans education, training, and 
rehabilitation; or training of health workers in a health program). 
Nutrition or food service programs funded separately from social 
services or education are not part of this function--they are 
classified as income security. 

Subcode: 501; 
Subfunction: Elementary, secondary, and vocational education. 

Preschool, elementary, secondary, and vocational education programs. 

Subcode: 502; 
Subfunction: Higher education. 

College and graduate school programs. 

Subcode: 503; 
Subfunction: Research and general education aids. 

Education research and assistance for the arts, the humanities, 
educational radio and television, public libraries, and museums. 

Subcode: 504; 
Subfunction: Training and employment. 

Job or skill training, employment services and placement, and payments 
to employers to subsidize employment. 

Subcode: 505; 
Subfunction: Other labor services. 

Aids to or regulation of the labor market, including gathering labor 
statistics and mediation and conciliation services; excludes employment 
and training programs and occupational safety and health programs. 

Subcode: 506; 
Subfunction: Social services. 

Programs that provide a broad range of services to individuals to help 
them improve their vocational capabilities (such as vocational 
rehabilitation) or family status; services to the poor and elderly that 
are not primarily for income support and that are not an integral part 
of some other function (such as social services block grants). 

Code: 550; 
Function: Health. 

Programs other than Medicare whose basic purpose is to promote physical 
and mental health, including the prevention of illness and accidents. 
Excludes the Medicare program, the largest federal health program, 
which by law is in a separate function (function 570). Also excludes 
federal health care for military personnel (051) and veterans (703). 
Also excludes general scientific research that has medical applications 
(such as that conducted by the National Science Foundation) and health 
programs financed through foreign assistance programs. 

Subcode: 551; 
Subfunction: Health care services. 

Medical services to individuals and families, whether such services are 
provided directly by the federal government or financed through grants, 
contracts, insurance, or reimbursements. 

Subcode: 552; 
Subfunction: Health research and training. 

All research programs--whether basic or applied--that are financed 
specifically as health or medical research. Excludes research that is 
an integral part of other functions (such as biomedical research in the 
space program). 

Subcode: 554; 
Subfunction: Consumer and occupational health and safety. 

Meat and poultry inspection, food and drug inspection, consumer product 
safety, and occupational health and safety. 

Code: 570; 
Function: Medicare. 

Federal hospital insurance and federal supplementary medical insurance, 
along with general fund subsidies of these funds and associated 
offsetting receipts. 

Subcode: 571; 
Subfunction: Medicare. 

Entire Medicare function. 

Code: 600; 
Function: Income Security. 

Support payments (including associated administrative expenses) to 
persons for whom no current service is rendered. Includes retirement, 
disability, unemployment, welfare, and similar programs, except for 
Social Security and income security for veterans, which are in other 
functions. Also includes the Food Stamp, Special Milk, and Child 
Nutrition programs (whether the benefits are in cash or in kind); both 
federal and trust fund unemployment compensation and workers' 
compensation; public assistance cash payments; benefits to the elderly 
and to coal miners; and low-and moderate-income housing benefits. 

Excludes (1) financial assistance for education, (2) medical care 
(whether in cash or in kind), (3) subsidies to businesses (such as farm 
price supports), and (4) reimbursement for child care services, even 
though any of these may end up as income to persons. Also excludes 
income security programs included in the Social Security function 
(function 650) and programs restricted to veterans and their 
dependents. 

Subcode: 601; 
Subfunction: General retirement and disability insurance (excluding 
Social Security). 

Non-needs-tested retirement and disability programs composed mainly of 
the Railroad Retirement Fund and special benefits for coal miners. 
Excludes programs specifically restricted to federal employees. 

Subcode: 602; 
Subfunction: Federal employee retirement and disability. 

All funded retirement and disability programs restricted to federal 
employees. Includes military retirement benefits for all years, not 
just the years since the military retirement program began as a funded 
trust fund (1985). In cases where retirement benefits are not funded 
(such as in the case of Coast Guard retired pay), includes the cash 
benefits where the employees were employed (in the Coast Guard case, 
transportation), because otherwise those functions would never be 
charged for the retirement costs of their employees. 

Subcode: 603; 
Subfunction: Unemployment compensation. 

Benefits not conditioned by needs tests for unemployed workers. 
Excludes other benefits (such as food stamps) that an unemployed person 
might be eligible for under other programs. 

Subcode: 604; 
Subfunction: Housing assistance. 

Federal income support and related expenses that are specifically for 
financing or providing housing for individuals and families. Excludes 
loans, loan guarantees, or insurance. (The distinction between the 
housing assistance included in subfunction 604 and the mortgage credit 
assistance in subfunction 371 is that the subfunction 604 payments 
focus on subsidies to increase beneficiaries' effective income, whereas 
the credit subsidies in subfunction 371 are primarily aimed at 
encouraging the housing industry.) 

Subcode: 605; 
Subfunction: Food and nutrition assistance. 

Providing food or nutritional assistance to individuals and families. 

Subcode: 609; 
Subfunction: Other income security. 

Income security programs not included in any other subfunction. 
Primarily either direct payments or grants-in-aid to finance direct 
payments that constitute cash income to low-income individuals and 
families. Also includes refugee assistance and both administrative 
expenses and offsetting collections in the income security function 
that are not part of any other subfunction. 

Code: 650; 
Function: Social Security. 

Federal Old-Age and Survivors and Disability Insurance Trust Funds, 
along with general fund subsidies of these funds and associated 
offsetting collections. 

Subcode: 651; 
Subfunction: Social Security. 

Includes the entire Social Security function. 

Code: 700; 
Function: Veterans Benefits and Services. 

Programs providing benefits and services, the eligibility for which is 
related to prior military service, but the financing of which is not an 
integral part of the costs of national defense. As a rule, the outlays 
in this function are similar to those in the broader general purpose 
functions (such as income security or health), but restricted to 
veterans, their dependents, and their survivors. Excludes earned rights 
of career military personnel that are a cost of the defense budget 
(such as military retired pay or medical care). 

Subcode: 701; 
Subfunction: Income security for veterans. 

Veterans' compensation, life insurance, pensions, and burial benefits. 

Subcode: 702; 
Subfunction: Veterans' education, training, and rehabilitation. 

Composed primarily of the "G.I. Bill" readjustment, vocational 
rehabilitation benefits, and related programs. 

Subcode: 703; 
Subfunction: Hospital and medical care for veterans. 

Medical care and research financed by the Department of Veterans 
Affairs. 

Subcode: 704; 
Subfunction: Veterans' housing. 

Housing loan and guarantee programs for veterans and dependents. Pre-
1992 housing loans and guarantees are recorded on a cash basis, whereas 
under credit reform (post-1991), the budget records the credit subsidy 
cost of the activity. 

Subcode: 705; 
Subfunction: Other veterans benefits and services. 

Administrative expenses of the Department of Veterans Affairs. 

Code: 750; 
Function: Administration of Justice. 

Programs to provide judicial services, police protection, law 
enforcement (including civil rights), rehabilitation and incarceration 
of criminals, and the general maintenance of domestic order. Includes 
the provision of court-appointed counsel or other legal services for 
individuals. Excludes the cost of the legislative branch, the police or 
guard activities to protect federal property, and activities that are 
an integral part of a broader function (such as those for postal 
inspectors, tax collection agents, and Park Service rangers). The cost 
of National Guard personnel and military personnel who are called upon 
occasionally to maintain public safety and the cost of military police 
are included under the national defense function rather than this 
function. 

Subcode: 751; 
Subfunction: Federal law enforcement activities. 

The costs of operating the Federal Bureau of Investigation, Customs and 
Border Protection, Immigration and Customs Enforcement, the Drug 
Enforcement Administration, and police and crime prevention activities 
in other programs. Also includes the readily identifiable enforcement 
cost of civil rights activities. 

Subcode: 752; 
Subfunction: Federal litigative and judicial activities. 

The cost of the judiciary, the cost of prosecution, and federal 
expenses connected with financing legal defense activities. 

Subcode: 753; 
Subfunction: Federal correctional activities. 

Covers the costs of incarceration, supervision, parole, and 
rehabilitation of federal prisoners. 

Subcode: 754; 
Subfunction: Criminal justice assistance. 

Grants to state and local governments to assist them in operating and 
improving their law enforcement and justice systems. 

Code: 800; 
Function: General Government. 

General overhead cost of the federal government, including legislative 
and executive activities; provision of central fiscal, personnel, and 
property activities; and provision of services that cannot reasonably 
be classified in any other major function. As a rule, all activities 
reasonably or closely associated with other functions are included in 
those functions rather than being listed as part of general government. 
Also includes shared revenues and other general purpose fiscal 
assistance. 

Subcode: 801; 
Subfunction: Legislative functions. 

Includes most of the legislative branch. However, the Library of 
Congress (except the Congressional Research Service), the Tax Court, 
the Government Printing Office (except for congressional printing and 
binding), and the Copyright Royalty Tribunal are classified in other 
subfunctions. 

Subcode: 802; 
Subfunction: Executive direction and management. 

The Executive Office of the President (unless some major grants or 
operating programs should be included in the Office); occasionally some 
closely related spending outside the Office is included. 

Subcode: 803; 
Subfunction: Central fiscal operations. 

Covers the general tax collection and fiscal operations of the 
Department of the Treasury. 

Subcode: 804; 
Subfunction: General property and records management. 

Most of the operations of the General Services Administration (net of 
reimbursements from other agencies for services rendered). 

Subcode: 805; 
Subfunction: Central personnel management. 

Most of the operating costs of the Office of Personnel Management and 
related agencies (net of reimbursements from other agencies for 
services rendered). 

Subcode: 806; 
Subfunction: General purpose fiscal assistance. 

Federal aid to state, local, and territorial governments that is 
available for general fiscal support. The transactions of the now 
discontinued general revenue-sharing program are included in the 
historical data for this subfunction. Also includes grants for more 
restricted purposes when the stipulated purposes cross two or more 
major budgetary functions and the distribution among those functions is 
at the discretion of the recipient jurisdiction rather than the federal 
government. Includes payments in lieu of taxes, broad-purpose shared 
revenues, and the federal payment to the District of Columbia. Excludes 
payments specifically for community development or social services 
programs. 

Subcode: 808; 
Subfunction: Other general government. 

Miscellaneous other costs, such as federal costs of territorial 
governments. 

Subcode: 809; 
Subfunction: Deductions for offsetting receipts. 

Includes general government function offsetting receipts that are not 
closely related to any other subfunction in this function. 

Code: 900; 
Function: Net Interest. 

Transactions that directly give rise to interest payments or income 
(lending) and the general shortfall or excess of outgo over income 
arising out of fiscal, monetary, and other policy considerations and 
leading to the creation of interest-bearing debt instruments (normally 
the public debt). Includes interest paid on the public debt, on 
uninvested funds, and on tax refunds, offset by interest collections. 

Subcode: 901; 
Subfunction: Interest on the Treasury debt securities (gross). 

Outlays for interest on the public debt. (Where this interest is paid 
to the public, it is on an accrual basis; all other interest outlays in 
the budget are on a cash basis.) 

Subcode: 902; 
Subfunction: Interest received by on-budget trust funds. 

Interfund interest collected by on-budget nonrevolving trust funds. 
Most of this income derives from outlays included in subfunction 901, 
but this subfunction also includes offsetting receipts from investments 
in public debt securities issued by the Federal Financing Bank (FFB). 

Subcode: 903; 
Subfunction: Interest received by off-budget trust funds. 

Interfund interest collected by off-budget nonrevolving trust funds. 
Normally, all of this income comes from outlays included in subfunction 
901. 

Subcode: 908; 
Subfunction: Other interest. 

All other interest expenditures and offsetting receipts. The principal 
expenditure in this subfunction normally is interest on refunds of 
receipts. Since offsetting interest receipts are included in this 
subfunction, the subfunction totals are usually negative. 

Subcode: 909; 
Subfunction: Other investment income. 

The actual and estimated earnings on private securities of the Railroad 
Retirement Investment Trust. The actual year returns include interest, 
dividends, and capital gains and losses on private equities and other 
securities. The trust's end-of-year balance reflects the current market 
value of resources available to the government to finance benefits. 

Subcode: 920; 
Subfunction: Allowances. 

A category that may be included in a budget to ensure that the budget 
reflects the total estimated budget authority and outlay requirements 
for future years. 

In addition to the budget authority and outlays in each of the 
functional classifications, the President's budget normally includes 
some budget authority and outlays classified as allowances. 

Subcode: 921-929; 
Subfunction: Contingencies for specific requirements. 

The specific line entries will vary from budget to budget, depending on 
what projections are required. 

Code: 950; 
Function: Undistributed Offsetting Receipts. 

Most offsetting receipts are included as deductions from outlays in the 
applicable functions and subfunctions. However, there are five major 
categories of offsetting receipts that are classified as undistributed 
offsetting receipts rather than being included as offsets in any of the 
other functions. 

Subcode: 951; 
Subfunction: Employer share, employee retirement (on-budget). 

Employing agency payments to funded retirement systems of federal 
employees are intragovernmental transactions (that is, they are 
payments by government accounts collected by other government accounts) 
and, hence, both the payment and collection are included in federal 
outlays. The payments are included in the various agency outlays, while 
the offsets are undistributed.[B]. 

Most federal employees are now covered by the Hospital Insurance 
portion of the Medicare program. The employing agency payments to the 
Hospital Insurance fund are also offset in this subfunction. 

Subcode: 952; 
Subfunction: Employer share, employee retirement (off-budget). 

Includes collections similar in nature to those in subfunction 951, 
except that the accounts collecting the money are off-budget. 

Subcode: 953; 
Subfunction: Rents and royalties on the outer continental shelf. 

Rents and royalties on the outer continental shelf constitute a large 
source of nontax income that is largely a windfall to the government. 
Since there are no major government programs that give rise to this 
income, it would be inappropriate to offset it against the outlays in 
any function. Thus, the collections are undistributed. 

Subcode: 954; 
Subfunction: Sale of major assets. 

On occasion, the government derives large returns from the sale of 
major assets, and the proceeds of the sales are recorded in this 
category rather than in any major function. 

Subcode: 959; 
Subfunction: Other undistributed offsetting receipts. 

This category includes items such as collections for the lease of 
federal lands for petroleum exploitation and a proposal for the Federal 
Communications Commission to conduct auctions. 

Multifunction Account. 

Subcode: 999; 
Subfunction: Multifunction account (used for accounts that involve two 
or more major functions). 

Source: GAO. 

[A] For years prior to 1985, when the military retirement trust fund 
began, the historical data included imputed accruals for retirement, 
with a matching imputed undistributed offsetting collection 
(subfunction 951). The cash retirement benefits for all years are 
included in the income security function. 

[B] The historical data for this category for years prior to 1985 
include an offset equal to the imputed accrual for military retirement 
that is included in subfunction 051. These imputations were calculated 
so that the data for the years prior to the creation of the military 
retirement trust fund would be as comparable as feasible with the 
subsequent years. 

[End of table] 

[End of section] 

Appendix V: Federal Budget Account Identification Code: 

Each account, or group of accounts in the President's budget is 
assigned an account identification code by the Office of Management and 
Budget (OMB), in consultation with the Department of the Treasury 
(Treasury). These codes are used to store and access data in the budget 
database, run computer reports, and identify accounts in OMB and 
Treasury documents and computer reports. The budget schedules that are 
included in the Budget Appendix volume of the President's budget use an 
11-digit account identification code that is based on the following 
coding system (see table 2.) 

Table 2: Federal Budget Account Identification Code: 

Digits: XX-xxxx-x-x-xxx; 
Explanation: Treasury agency code--The first two digits designate the 
agency code as assigned by Treasury. The term "agency" refers to 
departments, independent agencies, and instrumentalities of the U.S. 
government. 

Digits: xx-XXXX-x-x-xxx; 
Explanation: Account symbol--Each account has an agency-unique number 
assigned by Treasury, or, in the case of merged or consolidated 
accounts, by OMB, that corresponds to the fund type. 

Digits: xx-xxxx-X-x-xxx; 
Explanation: Transmittal code--One-digit code that identifies the 
nature or timing of the associated schedules, as follows: 

0=Regular budget schedules; 
1=Supplemental proposals; 
2=Legislative proposals requiring authorizing legislation that 2=are 
not subject to pay-as-you-go (PAYGO); 
3=Appropriations language to be transmitted later; used when language 
for a significant policy proposal cannot be transmitted in the budget; 
4=Legislative proposals requiring authorizing legislation that have a 
PAYGO effect; 
5=Rescission proposal; 
9=Reserved for OMB use. 

Digits: xx-xxxx-x-X-xxx; 
Explanation: Fund code--One-digit code that identifies the type of 
fund, as follows: 

1=General fund; 
2=Special fund; 
3=Public enterprise revolving fund; 
4=Intragovernmental revolving or management fund; 
7=Trust non-revolving fund; 
8=Trust revolving fund. 

Digits: xx-xxxx-x-x-XXX; 
Explanation: Subfunction code--Three-digit code that corresponds to the 
account's subfunctional classification. (See app. III for a further 
explanation of subfunctions.) 

Source: GAO. 

[End of table] 

An alternate 13-digit identification code is also used by OMB to access 
data in the budget database and generate computer reports. This code 
substitutes a 3-digit agency code[Footnote 27] and a 2-digit bureau 
code assigned by OMB for the 2-digit agency code assigned by Treasury. 
(The bureau code is used to designate subordinate units within a 
department or agency.) The alternate OMB code was developed to 
facilitate the sequencing of information by agency and subordinate unit 
within the agency. (See fig. 3.) 

Figure 3: Federal Budget Account Identification Code Digits: 

[See PDF for image] 

[End of figure] 

[End of section] 

Appendix VI: Program and Financing Schedule: 

The Program and Financing (P&F) schedule for each budget account 
appears in the Appendix of the President's budget (see example in fig. 
4). In a standard format, it provides basic information about 
obligations, budget authority, and outlays for the account. Part A in 
figure 4 shows the information that precedes the P&F schedule. The 
numbers on specific features mentioned in part A are explained below: 

1. The account name and the President's proposed language for the 
budget year's appropriation act (fiscal year 2006 in the example) 
related to the account appear at the top. 

2. The language of the previous year's appropriation act is used as a 
base. Brackets enclose material proposed for deletion. 

3. Italic type indicates new proposed language. When a regular 
appropriation has not been enacted at the time the budget is prepared, 
the Office of Management and Budget (OMB) may print only the language 
related to the fiscal year in question, in italics with no brackets 
shown. 

4. At the end of the final appropriation language paragraph, and 
printed in italics within parentheses, are citations to relevant 
authorizing legislation and to the appropriation act from which the 
basic text of the language is taken. 

An 11-digit identification code, found at the top of the P&F schedule, 
facilitates computer processing of budgetary information. (See app. 
VI.) 

The P&F schedule, part B in figure 4, consists of eight sections. The 
numbered sections contained in part B are described in detail after the 
figure. 

Figure 4: Example of P&F Schedule Preceded by Appropriations Language 
for National Flood Insurance Fund Account: 

[See PDF for image] 

[End of figure] 

1. Obligations by program activity. Shows obligations for specific 
activities or projects. To provide a meaningful presentation of 
information for the program being financed, the activity structure is 
developed individually for each appropriation or fund account. That 
structure is tailored to the individual account and is not uniform 
across the government. According to OMB, the activities should clearly 
indicate the services to be performed or the programs to be conducted; 
finance no more than one strategic goal or objective; distinguish 
investment, development, grant and subsidy, and operating programs; and 
relate to administrative control and operation of the agency. The last 
entry, "total new obligations," indicates the minimum amount of 
budgetary resources that must be available to the appropriation or fund 
account in that year. 

2. Budgetary resources available for obligation. Lists detailed 
information on the new budget authority in the account, the unobligated 
balances of budgetary resources (that have not expired) brought forward 
from the end of the prior year, and adjustments to those amounts. The 
end-of-year unobligated balance is obtained by deducting new 
obligations and expiring amounts. 

3. New budget authority (gross) detail. Indicates the type of budget 
authority (i.e. appropriations, contract authority, and spending 
authority from offsetting collections) and whether the authority is 
discretionary (controlled by appropriations acts) or mandatory 
(controlled by other laws). 

4. Change in obligated balances. Offers a bridge between the start and 
end of the year's obligated balances. In this section, new obligations 
are added to previous years' unliquidated obligations. Gross outlays 
are subtracted from this amount. Adjustments such as transfers of 
obligated balances and changes in uncollected customer payments from 
federal sources, are added or subtracted, as appropriate, to determine 
the obligated balance at year-end. Transactions in unexpired accounts 
as well as outlays from and adjustments in expired (but not canceled) 
accounts are also reported. 

5. Outlays (gross), detail. Shows the account's gross outlays 
distributed on the basis of the type of the budget authority that 
financed the outlay. This section separately presents outlays from 
discretionary and mandatory budget authority and outlays from new 
authority and carryover balances. 

6. Offsets. Shows the offsets to gross budget authority and outlays 
used to arrive at net budget authority and outlays for the account. 
Gross outlays are reduced by cash collections (both unexpired and 
expired), while gross budget authority is reduced by cash collections 
(unexpired only) and orders from federal sources that are not 
accompanied by cash. The offsets section indicates the source of the 
offsetting collections (such as federal sources, interest on federal 
securities, and nonfederal sources). The change in uncollected customer 
payments from federal sources from the start to the end of the year is 
deducted from gross budget authority only. Increases in uncollected 
customer payments from the start to the end of the year increase the 
amount of the offset because the increase constitutes an increase in 
gross budget authority. Decreases reduce the amount of the offset 
because a decrease means that a portion of the offsetting collections 
(cash) received has been applied to liquidate obligations for which an 
offset was already counted. Only unexpired offsetting collections 
(cash) are offset from gross budget authority because gross budget 
authority includes only unexpired amounts. 

7. Net budget authority and outlays. Shows the amount available for new 
obligation net of the offsetting collections attributable to unexpired 
offsets. Net budget authority is equal to gross budget authority minus 
cash collections (unexpired only) and orders from federal sources that 
are not accompanied by cash. Net outlays are equal to gross outlays 
minus cash collections (both unexpired and expired). 

8. Memorandum (non-add) entries. May include obligations in excess of 
available budgetary resources, investments in federal securities, and 
balances of contract authority. The amounts are not added or deducted 
from the budget authority or outlay amounts. 

[End of section] 

Appendix VII: Object Classification: 

Object classes are categories used in budget preparation to classify 
obligations by the items or services purchased by the federal 
government. The major object classes and their corresponding numbers 
are: 

10 - Personnel compensation and benefits. 

20 - Contractual services and supplies. 

30 - Acquisition of assets. 

40 - Grants and fixed charges. 

90 - Other. 

These object classes present obligations according to their initial 
purpose rather than the result or service. For example, the wage 
obligations of a federal employee who is paid to construct a building 
are classified as "Personnel compensation and benefits," but the 
contractual obligations for the purchase of a building are classified 
as "Acquisition of assets." 

Obligations are recorded when the federal government places an order 
for an item or a service, awards a contract, receives a service, or 
enters into transactions that will require payments in the same or a 
future period. Obligations are also recorded when an expenditure 
transfer is made between federal government accounts. Object class 
information is mandated by law (31 U.S.C. ï¿½ 1104(b)), which requires 
the President's budget to present obligations by object class for each 
account. 

Object class information is reported whenever obligations are reported 
on a program and financing schedule (except that object class 
information is not reported for credit financing accounts). Therefore, 
obligations are reported by object class separately for the regular 
budget requests, supplemental budget requests, rescission proposals, 
and legislative proposals. Object class schedules also separately 
identify the following types of obligations: direct and reimbursable 
obligations; obligations covered by statutory limitations; and 
obligations for allocations between agencies. 

Object classes are subdivided into smaller classes. (For an example, 
see fig. 5.) The following table of object classification is taken from 
OMB Circular No. A-11: 

10; Personnel Compensation and Benefits. 

11; Personnel compensation. 

11.1; Full-time permanent. 

11.3; Other than full-time permanent. 

11.5; Other personnel compensation. 

11.7; Military personnel. 

11.8; Special personal services payment. 

11.9; Total personnel compensation. 

12; Personnel benefits. 

12.1; Civilian personnel benefits. 

12.2; Military personnel benefits. 

13; Benefits of former personnel. 

20; Contractual Services and Supplies. 

21; Travel and transportation of persons. 

22; Transportation of things. 

23; Rent, communications, and utilities. 

23.1; Rental payments to the General Services Administration. 

23.2; Rental payments to others. 

23.3; Communications, utilities, and miscellaneous charges. 

24; Printing and reproduction. 

25; Other contractual services. 

25.1; Advisory and assistance services. 

25.2; Other services. 

25.3; Other purchases of goods and services from government accounts. 

25.4; Operation and maintenance of facilities. 

25.5; Research and development contracts. 

25.6; Medical care. 

25.7; Operation and maintenance of equipment. 

25.8; Subsistence and support of persons. 

26; Supplies and materials. 

30; Acquisition of Assets. 

31; Equipment. 

32; Land and structures. 

33; Investments and loans. 

40; Grants and Fixed Charges. 

41; Grants, subsidies, and contributions. 

42; Insurance claims and indemnities. 

43; Interest and dividends. 

44; Refunds. 

90; Other. 

91; Unvouchered. 

92; Undistributed. 

93; Limitation on expenses. 

94; Financial transfers. 

99; Subtotal, obligations. 

99.5; Below reporting threshold. 

99.9; Total new obligations. 

[End of table] 

Figure 5: Example of Object Classification for Department of Defense 
Program: 

[See PDF for image] 

[End of figure] 

[End of section] 

Index of Terms: 

[See PDF for image] 

[End of figure] 

[End of section] 

Image Sources: 

This section contains credit and copyright information for images and 
graphics in this product, as appropriate, when that information was not 
listed adjacent to the image or graphic. 

Front cover clockwise: 

PhotoDisc (Treasury): 

Eyewire (White House): 

GAO (capitol): 

FOOTNOTES 

[1] Some examples of other provisions in the Constitution relating to 
the spending and control of funds are those to lay and collect taxes, 
duties, imposts, and excises; to borrow money on the credit of the 
United States; to "pay the Debts and provide for the common Defence and 
general Welfare of the United States;" and to "make all Laws which 
shall be necessary and proper for carrying into Execution the foregoing 
Powers [listed in art. I, ï¿½ 8], and all other Powers vested by this 
Constitution in the Government of the United States, or in any 
Department or Officer thereof." These provisions are all found in 
article I, section 8, of the Constitution. 

[2] The budget process and the financial management process (i.e., 
ensuring that federal financial management systems provide accurate, 
reliable, and timely financial management information to the 
government's managers, the President, and Congress) are closely 
related. 

[3] 31 U.S.C. ï¿½ 1105. 

[4] The budget requests for the legislative branch and the judicial 
branch and its related agencies must be submitted to OMB in late fall 
of each year and included in the President's budget request without 
change. The budget requests of several executive branch agencies are 
not subject to review by OMB. See OMB Circular No. A-11, sec. 25.1. 
Information on all three branches of government is included in the 
President's budget request so that Congress may review one submission 
that covers the entire government. 

[5] 31 U.S.C. ï¿½ 1105(a). 

[6] 31 U.S.C. ï¿½ 1106. 

[7] Article I, section 5, clause 2, of the Constitution reserves to 
each House of Congress the authority to determine the rules governing 
its procedures. The Budget Act contains several titles and sections 
that affect the internal procedures of the House and Senate enacted 
under this constitutional rule-making authority. Congress enacted the 
Budget Act with the full recognition that each House could change these 
rules at any time and in a manner consistent with past practice. Rule 
changes are usually accomplished upon adoption of either a simple 
resolution (for a change that affects one House) or a concurrent 
resolution (for changes that may affect both houses). S. Rep. No. 105- 
67 (revised December 1998). 

[8] See Bill Heniff, Jr., Congressional Budget Resolutions: Selected 
Statistics and Information Guide (Washington, D.C.: Congressional 
Research Service, Jan. 25, 2005). 

[9] In fiscal year 1994, Congress began including overall limits on 
discretionary spending in the budget resolution, known as spending caps 
or discretionary caps. Congress established these caps to manage its 
internal budget process, while the Budget Enforcement Act (BEA) 
statutory caps continued to govern for sequestration purposes. The caps 
were enforceable in the Senate by a point of order that prohibited the 
consideration of a budget resolution that exceeded the limits for that 
fiscal year. While the BEA limits expired at the end of fiscal year 
2002, Congress continues to use the budget resolution to establish and 
enforce overall discretionary spending limits. 

[10] Less than 40 percent of total budget authority is appropriated 
through the annual appropriations process. The remainder of the 
budgetary resources spent by the federal government are provided by law 
other than annual appropriations acts. (For further explanation, see 
the definitions of Backdoor Authority, Budget Authority, Direct 
Spending, Obligational Authority, and Outlay.) 

[11] The rules of the House of Representatives also prohibit 
consideration of appropriations bills for expenditures not previously 
authorized by law. See Rule XXI, Rules of the House of Representatives. 
A similar, but more limited provision exists in Rule XVI, Standing 
Rules of the Senate. (See Point of Order.) (Some agency programs or 
functions are reauthorized every year, while others are authorized for 
several years or permanently.) The effect of such rules is that an 
appropriation bill is subject to a point of order if it is not preceded 
by an authorization of appropriation. 

[12] As of March 2005, the House of Representatives has 10 
appropriation subcommittees: Agriculture, Rural Development, Food and 
Drug Administration, and Related Agencies; Defense; Energy and Water 
Development, and Related Agencies; Foreign Operations, Export Financing 
and Related Programs; Homeland Security; Interior, Environment, and 
Related Agencies; Labor, Health and Human Services, Education, and 
Related Agencies; Military Quality of Life and Veterans Affairs and 
Related Agencies; Science, the Departments of State, Justice, and 
Commerce, and Related Agencies; and Transportation, Treasury, and 
Housing and Urban Development, the Judiciary, and the District of 
Columbia. The Senate has 12 appropriation subcommittees: Agriculture, 
Rural Development, and Related Agencies; Commerce, Justice, and 
Science; Defense; District of Columbia; Energy and Water; Homeland 
Security; Interior and Related Agencies; Labor, Health and Human 
Services, Education and Related Agencies; Legislative Branch; Military 
Construction and Veterans Affairs; State, Foreign Operations, and 
Related Programs; and Transportation, Treasury, the Judiciary, Housing 
and Urban Development, and Related Agencies. 

[13] 2 U.S.C. ï¿½ 633. 

[14] 31 U.S.C. ï¿½ï¿½ 3526, 3529. 

[15] Some, including OMB, refer to obligational accounting as budgetary 
accounting. Budgetary accounting, however, more specifically refers to 
a bookkeeping refinement of obligational accounting. Obligational 
accounting is also sometimes referred to as funds control accounting or 
appropriation accounting. See Cornelius E. Tierney, Handbook of Federal 
Accounting Practices (Reading, Mass.: 1982). See also Senate Committee 
on Government Operations, Financial Management in the Federal 
Government, S. Doc. No. 87-11 at 85 (1961) (explaining new statute for 
recording obligations to support agency budget information). 

[16] Codified in part at 31 U.S.C. ï¿½ï¿½ 1341, 1514, and 1517. 

[17] The "purpose" statute states that "appropriations shall be applied 
only to the objects for which the appropriations were made." 31 U.S.C. 
ï¿½ 1301(a). The "time" statutes relate to limits on the availability of 
appropriations for more than a fiscal year for a definite 
appropriation. 31 U.S.C. ï¿½ï¿½ 1301(c) (limitation on construing the 
availability of appropriations for more than a fiscal year); and 
1502(a) (limitations on use of funds appropriated for obligation during 
a definite period). 

[18] 31 U.S.C. ï¿½ 1501. 

[19] Three appropriation and fund accounts are excluded by law from the 
U.S. budget even though OMB assigns each a budget account symbol (i.e., 
U.S. Postal Service Fund and the Social Security trust fund accounts). 
Balances in these accounts are included as the "off-budget" component 
in the presentation of the total receipts and expenditures of the 
federal government's "unified budget." 

[20] See 31 U.S.C. ï¿½ï¿½ 331 and 3513, and GAO's Policy and Procedures 
Manual for Guidance of Federal Agencies, Title 7 - Fiscal Guidance, 
available at http://www.gao.gov. 

[21] 31 U.S.C. ï¿½ 3526. See B-161457, August 1, 1969, for guidance on 
account settlement procedures. 

[22] In the private sector, the internal system of accounting within 
organizations to support planning (e.g., budgeting) and decision making 
by managers is also known as managerial accounting or managerial cost 
accounting. While both systems of accounting used in the federal 
government contain elements of or may support managerial accounting, 
the federal government generally does not use such a discrete system of 
accounting. Federal agencies may also use other special types or 
applications of accounting for discrete functions or purposes carried 
out under their cognizance. For example, the Board of Governors of the 
Federal Reserve System publishes national economic data in its 
quarterly Flow of Funds Accounts of the United States. See 
http://www.federalreserve.gov/releases/Z1. See also Statement of 
Federal Financial Accounting Standards No. 4, Managerial Cost 
Accounting Standards. 

[23] See http://www.fasab.gov. 

[24] 31 U.S.C. ï¿½ 331(e). 

[25] 31 U.S.C. ï¿½ï¿½ 9101 et seq. 

[26] For a graphic display of budget functions by agency and object 
class, see GAO, Federal Budget: Agency Obligations by Budget Function 
and Object Classification for Fiscal Year 2003, GAO-04-834 (Washington, 
D.C.: June 25, 2004). 

[27] OMB agency codes are not the same as Treasury agency codes. 

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