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Introduction Introduction Financial Management Course

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1 Introduction Introduction Financial Management Course
Overview of the Federal Budget Process The Philosophy of Appropriations Law Contracts, Grants and Cooperative Agreements Spending Plans, Operating Plans and Budget Execution Financial Responsibilities

2 Module 1 Objectives Module 1: Overview of the Federal Budget Process
Identify the major legislation that affects the federal budget process. Know the phases of the budget process and timeline. Recognize the purpose of an operating plan.

3 1921 The Budget and Accounting Act of 1921
Module 1: Overview of the Federal Budget Process The Budget and Accounting Act of 1921 Requires the President of the United States to submit an annual budget proposal and a statement of the government’s financial condition to Congress. Includes a budget message and a summary of reporting information on past and future budgets. Established the Bureau of the Budget, now known as the Office of Management and Budget (OMB), which provides resources to produce the President’s budget. Established the General Accounting Office now known as the Government Accountability Office (GAO) to provide Congress with resources to ensure accountability. 1921 The Budget and Accounting Act of 1921 was a huge turning point in budgetary control efforts for the United States government. This Act requires the President of the United States to submit an annual budget proposal and a statement of the government’s financial condition to Congress. Each Budget shall include a budget message and a summary of reporting information on past and future budgets. Additionally, prior to this Act, Congress did not have the power to independently review the legality and proprietary expenditures of the Executive Branch. This Act established the Bureau of the Budget; now known as the Office of Management and Budget, or OMB, which provides resources to produce the President’s budget. Through the creation of the Government Accountability Office, or GAO, Congress now has authority to access and inspect records of an agency to obtain financial and program information. On what date is the President required to submit his Budget to Congress? The first Monday in February.

4 Government Performance and Results Act of 1993 (GPRA)
Module 1: Overview of the Federal Budget Process Government Performance and Results Act of 1993 (GPRA) The primary legislative framework includes three main components: Strategic Plan Mission statement General goals and objectives (outcome related) Performance Plan Measurable performance goals by program activity Operational processes, technology, human capital, and other resources required to meet the performance goals Performance Report Compare actual program performance achieved to the performance goals and indicators in the plan Performance indicators: output, outcome, efficiency, and effectiveness Provide explanations if goals were not met The Government Performance and Results Act of 1993, or GIPRA, dramatically changed the federal government’s budgeting and policymaking mechanisms. It has become the primary legislative framework through which agencies are required to set a strategic plan, a performance plan, and performance report. Each agency was required to develop a strategic plan by September, 30, 1997, which includes the mission statement, general goals and objectives and must cover a period of five years, and be updated and revised at least every three years. A performance plan measures goals by program activity and reviews operational processes required to meet the performance goals. The performance report measures annual financial and program performance by identifying four key performance indicators which include output, outcome, efficiency, and effectiveness. The performance report provides Congress with information for allocating resources.

5 The primary legislative framework includes the following goals:
Module 1: Overview of the Federal Budget Process GPRA Modernization Act of 2010 The primary legislative framework includes the following goals: Adopt a more coordinated and crosscutting approach to achieve common goals Address weaknesses in major management functions Ensure that performance information is both useful and used in decision making Instill sustained leadership commitment and accountability for achieving results The GPRA Modernization Act of 2010 was passed to strengthen the Government Performance Results Act of and requires agencies to: Adopt a more coordinated and crosscutting approach to achieve common goals Address weaknesses in major management functions Ensure that performance information is both useful and used in decision making Instill sustained leadership commitment and accountability for achieving results

6 The Anti-deficiency Acts of 1921 and 1950
Module 1: Overview of the Federal Budget Process The Anti-deficiency Acts of 1921 and 1950 Congressional “Power of the Purse” Prohibits the obligation or expenditure of government funds in excess of the amounts appropriated by Congress or in excess of amounts permitted by regulations. Forbids the obligation of any funds before the appropriation is passed. Requires a funds control system for making obligations. The Anti-deficiency Acts of 1921 and 1950 is one of the major laws through which Congress exercises it constitutional control of the public purse. The Anti deficiency Acts have evolved over a period of time in response to various abuses by agencies and dates back to 1870 when it was included as part of a reform to appropriation practices. It has since been amended through a series of statutes. Some of the most common statutes include: Number 1, prohibits the obligation or expenditure of government funds in excess of the amounts appropriated by Congress or in excess of amounts permitted by regulations. Number 2, Forbids the obligation of any funds before the appropriation is passed. And number 3, each agency is required to have a funds control system for making obligations. The purpose of the funds control system is to detect and report violations of the Anti-Deficiency Act through the Executive Branch to Congress.

7 6 Phases in the Federal Budget Process
Module 1: Overview of the Federal Budget Process 6 Phases in the Federal Budget Process Strategic Plan: Identifies new initiatives as well as expands existing programs. Formulation: Prepares budget estimates and justifications based on guidelines provided by Congress, OMB and Health and Human Services(HHS). Presentation: Justifies budget request before Congress and responds to questions. Execution: Develops apportionments, spending plans, allotments, allowances, and obligates funds. Performance: Evaluation and Analysis – determines if the expected results were achieved. 6. Future Strategic Direction: Performance results determine future funding decisions. There are six phases to the Federal budget Process. Phase1: Strategic Plan(pause) The Strategic plan identifies new program initiatives as well as decisions to expand existing programs. Phase2: Formulation – During this phase CDC prepares its budget submissions to include budget estimates and justifications based on the strategic plan, in accordance with guidelines provided by Congress, OMB and Health and Human Services also referred to as HHS. Phase3: Presentation – This is when CDC justifies its budget requests before Congress, highlights its accomplishments and vision and responds to questions. Phase 4:Execution – After appropriations become available, there are apportionments, spending plans, allotments, allowances that allow the obligation of funds. Phase5: Performance – During this phase, an evaluation and analysis of program activities takes place to determine if the expected results were achieved. Phase 6: Future Strategic Direction – This is when the performance results have been compiled and CDC leadership is informed of the program’s performance in order that future funding decisions can be made.

8 The Federal Budget Process
Module 1: Overview of the Federal Budget Process The Federal Budget Process STRATEGIC PLANNING PERFORMANCE BUDGET FORMULATION EVALUATING RESULTS BUDGET PRESENTATION BUDGET EXECUTION COST/BENEFIT ASSESSMENT WHAT PRODUCES THE BEST VALUE? Congressional hearing, respond to formal questions form appropriation subcommittees Define recommendations for funding and priorities TRACK THE PROGRESS OF ACHIEVING OUTCOMES Apportionment of funds, obligations incurred GPRA measures and develops indicators Prepare budget estimates and budget justifications Reviewed and approved by HHS & OMB The Federal budget process can be described as a process that never stops. This slide illustrates the six phases of the budget cycle beginning with strategic planning, budget formulation, budget presentation, budget execution, performance and future strategic direction.

9 The Federal Budget Timeline
Module 1: Overview of the Federal Budget Process The Federal Budget Timeline Jan Feb Mar Apr May Jun Aug Jul Sep Oct Nov Dec CY 2011 CY 2012 CY 2013 FY 2012 FY 2013 FY 2014 OMB Submission Hearings Appropriation Bills HHS Submission President’s Budget Markup The Federal budget process also has a distinct timeline that must be followed in order to meet the requirements of The Budget and Accounting Act of 1921 and The Government Performance and Results Act of 1993, or GIPRA. The first three phases for any fiscal year take approximately months. Planning: Selection of Program Initiatives Formulation: CDC/HHS/OMB Budgets, President’s Budget, Congressional Budget Presentation: Committees Hearings, Q&As, House & Senate Reports, Appropriation Bill Execution: Apportionments, Spending Plans, Allotments, Allowances Analysis and Evaluation and inform the Future Strategic Direction

10 The Federal Budget Timeline
Module 1: Overview of the Federal Budget Process The Federal Budget Timeline Jan Feb Mar Apr May Jun Aug Jul Sep Oct Nov Dec CY 2011 CY 2012 CY 2013 FY 2012 FY 2013 FY 2014 OMB Submission HHS President’s Budget Hearings Markup Appropriation Bills Notice that in Calendar Year July 2012, there are 3 different phases of the budget cycle going on. The FY 2012 budget is in the execution phase, The FY 2013 budget is in the presentation phase and the FY 2014 budget is being formulated. The enormity and complexity of the federal budget process can be mind-boggling. However, every federal employee supports a piece of the federal budgeting process by performing his/her job on a daily basis. The job you perform supports the mission of CDC. Planning: Selection of Program Initiatives Formulation: CDC/HHS/OMB Budgets, President’s Budget, Congressional Budget Presentation: Committees Hearings, Q&As, House & Senate Reports, Appropriation Bill Execution: Apportionments, Spending Plans, Allotments, Allowances Analysis and Evaluation and inform the Future Strategic Direction 10 10

11 Strategic Planning Phase
Module 1: Overview of the Federal Budget Process Strategic Planning Phase Jan Feb Mar Apr May Jun Aug Jul Sep Oct Nov Dec CY 2012 CY 2013 CY2014 FY 2014 FY 2015 Administration goals, themes, & initiatives (includes President and Secretary) CDC-wide priorities & mission-related activities Congressional priorities Constituent & partner priorities Government Performance and Results Act (GPRA) The strategic planning phase is the first phase of 6 phases of the federal budget process. CDC leadership is working on the strategic planning phase during February, March and April of each calendar year. Therefore, in February, March and April of 2012, CDC leadership is determining recommendations for funding and priorities for FY 2014. This phase begins with the National Centers, Institute, and Offices, or NCIOs, submitting their plans through the National Centers/Offices, or NC/NOs. These plans outline proposals for funding, containing scientific programmatic goals, themes, and narratives.

12 Budget Formulation Phase
Module 1: Overview of the Federal Budget Process Budget Formulation Phase Stage 1 (April - July) Stage 2 (August – November) Stage 3 (December – February) The Budget Formulation phase is the second phase of the Federal budget process which is accomplished in three distinct stages. Let’s examine each one of stages. 12

13 Budget Formulation Phase – Stage 1
Module 1: Overview of the Federal Budget Process Budget Formulation Phase – Stage 1 Jan Feb Mar Apr May Jun Aug Jul Sep Oct Nov Dec CY 2011 CY 2012 CY 2013 FY 2014 HHS Submission FY 2013 HHS Submission First Formulation Stage (April - July) HHS budget development/submission Prepare budget estimates and justifications Compile information for HHS review HHS review of the budget Presentation to the Secretary’s Budget Council (SBC) Report Card for budget Funding levels provided to the OPDIVs Appeals Final funding levels provided for OMB submission The first stage of the formulation process for FY 2013 happens in April, May, June and July of calendar year And it is the first stage of the formulation budget submitted to HHS. The product or document produced is the preliminary Congressional Justification, or CJ. During this stage CDC is preparing budget estimates and justifications. Currently, CDC has approximately 320 budgetary lines that are driven by appropriation language. A budget line is a budget activity, or a sub budget activity or a sub-budget activity. The budget information is complied in an HHS budget submission that has a blue cover. It is not released to the public. The blue covered budget is reviewed by HHS’s Secretary’s Budget Council. CDC will respond to questions, final funding levels are provided by HHS, and then CDC prepares for an OMB budget submission.

14 Budget Formulation Phase – Stage 2
Module 1: Overview of the Federal Budget Process Budget Formulation Phase – Stage 2 Jan Feb Mar Apr May Jun Aug Jul Sep Oct Nov Dec CY 2011 CY 2012 CY 2013 FY 2013 OMB Submission FY 2014 OMB Submission Second Formulation Stage (August – November) OMB Budget development and submission Compile information for OMB Review OMB Review Presentation to OMB Staff Respond to additional questions & concerns OMB Passback Appeal Final funding levels provided for President’s Budget The second stage of the formulation process for 2013 happens in August, September, October and November of calendar year It is the second stage of the formulation process when the budget submission goes to OMB. After CDC’s budget has been reviewed by HHS and final funding levels are approved, the information is put into another budget submission, only this one has a red cover. After the red cover budget submission is presented and reviewed by OMB and CDC answers additional questions and concerns, the “passback” occurs. OMB’s passback can be general in overall terms, but sometimes it may go into detail. The passback may adjust funds and FTE’s for budget requests or it may specify that programs must continue regardless of funding levels. CDC has an opportunity to appeal passback decisions and then final funding levels are provided by OMB for the President’s budget. The OMB passback usually happens around Thanksgiving every year. In the past FMO’s budget office worked the Friday and the weekend after Thanksgiving, since final appeals to funding levels had to be provided the Monday after Thanksgiving. And it was not unusual to work on Thanksgiving Day too! In recent years, however, the passback has been issued by OMB the week after Thanksgiving. The turn around time for appeals is still only a few days though. So budget staff work long hours to ensure a quality product is submitted.

15 Budget Formulation Phase – Stage 3
Module 1: Overview of the Federal Budget Process Budget Formulation Phase – Stage 3 Jan Feb Mar Apr May Jun Aug Jul Sep Oct Nov Dec CY 2011 CY 2012 CY 2013 FY 2013 President’s Budget FY 2014 President’s Budget Third Formulation Stage (December - February) 1. Enter information into OMB’s MAX database 2. Compile, edit, revise and complete budget narratives and exhibits preparing for presentation to Congress 3. President’s Budget and Congressional Justification development and submission The third stage of the formulation process for 2013 happens after the passback in December of calendar year 2011 and January and February of calendar year Final budgets and other data are entered into OMB’s “MAX” database. MAX contains information on budget authority, outlays, obligations, personnel and other agency data that is used to prepare the President’s Budget Appendix. CDC prepares a Congressional Justification that is available for public distribution that has a green cover on it. By law, on or before the first Monday in February, the President submits his budget to Congress for the upcoming fiscal year. The President’s Budget tells Congress three things. The first item is what the President thinks the overall federal fiscal policy should be. This includes: How much money should the Federal government spend on public purposes? How much money should the Federal government take in tax revenues? How much the Federal deficit or surplus should be? The difference between spending and revenues. The second item is what the Presidents spending priorities are. How much should be spent on defense, agriculture, education, health, etc. The third item is a signal to Congress on what spending and tax policy changes the President is recommending. The President’s Budget are only recommendations! Why? Only Congress can pass appropriations! Article 1, Section 9 of the Constitution of the United States, “ No money shall be drawn from the Treasury, but in consequence of appropriations made by law.

16 Budget Presentation Phase
Module 1: Overview of the Federal Budget Process Jan Feb Mar Apr May Jun Aug Jul Sep Oct Nov Dec Jan Feb Mar Apr May Jun Aug Jul Sep Oct Nov Dec Jan Feb Mar Apr May Jun Aug Jul Sep Oct Nov Dec Budget Presentation Phase CY 2011 CY 2012 CY 2013 Hearings Appropriation Bills Markup FY 2014 FY 2013 Presentation Phase (February - October) Includes the following activities: Preparation for Congressional Appropriations Hearings CDC Director testifies before House and/or Senate Appropriations Subcommittees Respond to formal questions submitted by Appropriations Subcommittee members Congress determines funding levels for Subcommittees for FY 2011 Budget CDC works closely with Appropriations Subcommittee staff House & Senate mark-up Appropriations Bill signed by the President Now that we have discussed the 3 stages of the budget formulation phase, let’s now look at the budget presentation phase which occurs between February and October. This phase includes the following activities: CDC prepares for Congressional Appropriations Hearings for the upcoming Fiscal Year. During this time, the head of each agency has to testify before House and/or Senate Appropriation Subcommittees and respond to their questions and justify what is in CDC’s final Congressional Justification So, from February through October, the Director of CDC will be testifying before Congress in order to persuade Congress to pass appropriations for CDC at the levels they have been submitted. Based on these hearings, Congress may choose to mark-up and make changes to Appropriation bills before they are passed on or by October 1, or if not they will pass a Continuing Resolution, or CR, in order for the government to operate. Once both Houses of Congress have passed the Appropriations Bill, it is sent to the President for signature. Once signed, it becomes law and OMB loads the appropriation language into the MAX database and agencies are notified that the language is ready to be edited.

17 Budget Execution Phase
Module 1: Overview of the Federal Budget Process Budget Execution Phase Jan Feb Mar Apr May Jun Aug Jul Sep Oct Nov Dec CY 2011 CY 2012 CY 2013 FY 2012 FY 2013 FY 2014 Execution Phase (October - September) Includes the following activities: Apportionments, Allotments, Allowances and CANs Obligations and expenditures Funds control Monitoring, analyzing & projecting resource utilization Prevention of anti-deficiency violation The budget execution phase is the 4th phase of the Federal budget process which starts on October 1st of each year and ends on September 30 the following year. Budget execution is everything that needs to be done to ensure that funds become available for the purposes that Congress appropriated funds and the President signed into law and the obligation for goods and services. Typical functions associated with the budget execution phase include: Allocating funds to various operating levels including Apportionments, allotments, allowances and CANs. Obligations are the contracts, purchase orders and grants that are issued for goods and services. Expenditures are the actual payment for the obligation that has been incurred. Funds control is the monitoring and analyzing of the use of funds to make sure properly established limits are not exceeded in order to prevent an Anti-deficiency Act violation.

18 6% 36% 59% FY 2011 Federal Spending $251 $1,415 $2,164
Module 1: Overview of the Federal Budget Process FY 2011 Federal Spending 6% 36% $251 $1,415 This pie chart represents the Federal Budget spending in three areas: Entitlement or mandatory spending refers to funds for programs like Medicare/Medicaid, Social Security and Veterans Benefits. Funding levels are automatically set by the number of eligible recipients, not the discretion of Congress. Each person eligible for benefits by law receives them unless Congress changes the eligibility criteria. Entitlement payments represent the largest portion of the Federal Budget. Discretionary spending - refers to spending set by annual appropriation levels made by decision of Congress. This spending is optional. Interest spending – represents interest payments on public debt securities. Where Does the Money Go? While the size of the annual federal budget has increased in dollar terms (reflecting inflation, increased population and economy) over the years, the proportion available for common government services has shrunk dramatically. Competition among federal agencies for funding is heating up. Over the last three decades, discretionary spending has been cut significantly to accommodate rapid growths in other expenses. Discretionary spending covers everything from road building to police protection to medical research to our national defense -- most of the government services with which Americans are familiar. All other spending is mandatory -- required by law regardless of what is left over for discretionary spending. Mandatory spending includes entitlements such as Social Security and Medicare, and the enormous interest the U.S. must pay every year to finance the national debt. Three decades ago, nearly two-thirds of the federal budget was available for discretionary programs and one-third was for mandatory programs. $2,164 59% Discretionary Mandatory Interest (In Billions)

19 HHS Total BA Funding = $81.2 billion
Module 1: Overview of the Federal Budget Process FY 2011 Discretionary Funding – Budget Authority (BA) Department of Health and Human Services This pie chart represents the Federal Budget spending in three areas: Entitlement or mandatory spending refers to funds for programs like Medicare/Medicaid, Social Security and Veterans Benefits. Funding levels are automatically set by the number of eligible recipients, not the discretion of Congress. Each person eligible for benefits by law receives them unless Congress changes the eligibility criteria. Entitlement payments represent the largest portion of the Federal Budget. Discretionary spending - refers to spending set by annual appropriation levels made by decision of Congress. This spending is optional. Interest spending – represents interest payments on public debt securities. Where Does the Money Go? While the size of the annual federal budget has increased in dollar terms (reflecting inflation, increased population and economy) over the years, the proportion available for common government services has shrunk dramatically. Competition among federal agencies for funding is heating up. Over the last three decades, discretionary spending has been cut significantly to accommodate rapid growths in other expenses. Discretionary spending covers everything from road building to police protection to medical research to our national defense -- most of the government services with which Americans are familiar. All other spending is mandatory -- required by law regardless of what is left over for discretionary spending. Mandatory spending includes entitlements such as Social Security and Medicare, and the enormous interest the U.S. must pay every year to finance the national debt. Three decades ago, nearly two-thirds of the federal budget was available for discretionary programs and one-third was for mandatory programs. $2,164 HHS Total BA Funding = $81.2 billion

20 CDC Funding History Module 1: Overview of the Federal Budget Process
Funding in Billions FTE Count This slide represents CDC’s funding history.

21 CDC has several types of Appropriations
Module 1: Overview of the Federal Budget Process CDC has several types of Appropriations Three types of appropriations are classified by period of availability: Annual-year- obligational authority expires at the end of the first year of appropriation and are cancelled at the end of the fifth year after expiration Multi-year - obligational authority expires at the end of a designated time period greater than one year and are cancelled at the end of the fifth year after expiration No-year - are available until expended CDC has several different types of appropriations available for its use and they are classified as Annual Appropriations, Multi-year Appropriations and No-year Appropriations. “Annual-year” refers to obligational authority which expires at the end of the first year of the appropriation. “Multi-year” refers to obligational authority which expires at the end of the designated time period. “No-year” refers to funds that are available until expended. An example is CDC’s Buildings and Facilities or B&F fund. 21

22 Module 2 Module 2: The Philosophy of Appropriation Law
The Philosophy of Appropriations Law Module 2 – The Philosophy of Appropriations Law

23 Module 2 Objectives Module 2: The Philosophy of Appropriation Law
Name the three dimensions of appropriations law. Understand the difference between an authorization and an appropriation. Understand important terms in appropriations language.

24 Laws, Rules, Directives and Regulations
Module 2: The Philosophy of Appropriation Law Laws, Rules, Directives and Regulations Who makes the rules? The U.S. Constitution Congress Office of Management and Budget (OMB) United States Department of Treasury Department of Health and Human Services (HHS) All Federal agencies have to follow laws, rules, directives, and regulations that have been issued by these governing bodies. The United States Constitution, Congress, central agencies in the Federal government such as the Office of Management and Budget, referred to as OMB, and the United States Department of Treasury. Additionally, policies and regulations are issued by the Department of Health and Human Services, also referred to as HHS. The Office of Management and Budget and the Department of Treasury are often referred to as “Central Agencies.”

25 Authorizations One-Step Process
Module 2: The Philosophy of Appropriation Law Authorizations One-Step Process Congress utilizes a one-step legislative process for most mandatory spending: The authorizing legislation establishes, continues or modifies an existing federal program and provides budget authority. (Authorizations and Appropriations) Most Major Entitlement Programs Typically Permanent Some Require Periodic Renewal There is a one-step legislative process as well as a two-step legislative process that provides authority for agencies to exist and spend funds. This slide addresses the one-step legislative process for most mandatory spending: Some authorization laws provide budget authority. In fact, well over half of federal spending now goes to programs for which the authorizing legislation itself creates budget authority. This spending is referred to as mandatory, spending. It includes funding for most major entitlement programs. Authorization laws such as Social Security, are typically permanent, however, some major mandatory spending programs, such as the Food Stamp program, require periodic renewal. 25 25

26 Authorizations and Appropriations
Module 2: The Philosophy of Appropriation Law Authorizations and Appropriations Two-Step Process Congress utilizes a two-step legislative process for discretionary spending: Establish authorizing language (Authorizations) Establish, continue, or modify an agency or program for a specified period of time or indefinitely Requirement under House and Senate rules Provide budget authority to fund programs (Appropriations) Provide budget authority to federal agencies for specified purposes, in accordance with authorizing legislation Applies to annual discretionary spending (roughly 1/3 of the federal budget) This slide addresses the two-step legislative process for discretionary spending, which is the most commonly used. The first step is to establish authorizing language for the program to exist. Authorization laws have two basic purposes. First they establish, continue, or modify federal programs, and second, they are a requirement under House and Senate rules, and sometimes under statute, for Congress to appropriate budget authority for programs. The Authorizations Committee passes the law or legislation that provides the authority for an appropriation to be passed. Authorization language is why agencies exist. It is why CDC exists. The second is to provide appropriations to fund programs in accordance with the authorizing legislation. The Appropriations committee provides the legislation for budget authority to federal agencies for specified purposes, in accordance with authorizing legislation. This applies to annual discretionary spending, which is roughly 1/3 of the federal budget.

27 The Constitution Module 2: The Philosophy of Appropriation Law
Only Congress has the authority to raise revenue, borrow funds and provide the funding to Federal agencies. Congress regulates virtually all executive branch programs and activities through the appropriations process. The United States Constitution states that “All Bills for raising revenue shall originate in the House of Representatives; but the Senate may propose or concur with amendments”

28 Branches of Government
Module 2: The Philosophy of Appropriation Law Branches of Government Let’s take a brief look at the Branches of the United States Government, paying particular attention to the legislative branch, since this is the branch of the government that has the power over financial and budgetary matters, which includes appropriating funds. The United States Congress is composed of the United States Senate and the House of Representatives and both of these chambers have representation on Appropriations Committees.

29 Chamber Organization Module 2: The Philosophy of Appropriation Law
US House of Representative 435 Members Majority rules (218 votes) Rules-driven chamber Local (district-based) focus US Senate 100 Members Majority Rules (60 votes) State focus This slide illustrates how these two chambers of Congress are organized. The US House of representatives is a rules-driven chamber that requires at least 218 votes in order for a law to be passed. The US Senate is composed of 100 members and 60 votes are typically required to pass laws.

30 Resources Module 2: The Philosophy of Appropriation Law
Legislative Information Thomas (appropriations tables) Congressional Quarterly website Senate website Procedural Information House Rules Committee website Congressional Research Reports Member Information (member profiles) Resources This slide provides some references and resources if you desire additional information on the legislative process and procedures.

31 1 2 3 The Three Dimensions of Appropriation Law
Module 2: The Philosophy of Appropriation Law The Three Dimensions of Appropriation Law Purpose – The purpose of the obligation or expenditure must be authorized. Time – The obligation must occur within the time limits applicable to the appropriation. Amount – The obligation and expenditure must be within the amounts Congress has appropriated. 1 2 3 When Congress passes an appropriation there are restrictions that are placed on it. All appropriations that are passed have restrictions as to the purpose on how the funds can be spent, how much time the agency has to spend the funds, and the amount of funds that can be spent. Purpose – The purpose of the obligation or expenditure must be authorized. Time – The obligation must occur within the time limits applicable to the appropriation. Amount – The obligation and expenditure must be within the amounts Congress has appropriated.

32 1 The Three Dimensions of Appropriation Law
Module 2: The Philosophy of Appropriation Law 1 The Three Dimensions of Appropriation Law Purpose – The purpose of the obligation or expenditure must be authorized. Determining the purpose for which funds can be spent: Appropriations language Authorizing language Report language The General Accountability Office (GAO) is responsible for analyzing and auditing program expenditures to determine if the appropriation was used properly. Purpose – The purpose of the obligation or expenditure must be authorized. How can you determine what the appropriations purpose is? You have to read the appropriations language and the authorizing language which will state the appropriate use of the funds and any limitations that may be placed on it. You also have to read the report language to understand the Congressional intent of the funding. The General Accountability Office, or GAO, is responsible for analyzing and auditing program expenditures to determine if the appropriation was used properly. Often called the "congressional watchdog," GAO investigates how the federal government spends taxpayer dollars. There work is done at the request of congressional committees or subcommittees or is mandated by public laws or committee reports.

33 1 The Three Dimensions of Appropriation Law Applying the Purpose
Module 2: The Philosophy of Appropriation Law 1 The Three Dimensions of Appropriation Law Applying the Purpose Expenditure items need not be specified in an appropriations act but it must be necessary. Under the necessary expense doctrine it must meet the following four conditions: The expenditure must bear a logical relationship to the appropriation being charged. In other words, the purchase must be in line with the authorizing language. The expenditure must not be prohibited by law. The expenditure must be in furtherance of the appropriation. The expenditure must not be otherwise provided for by a more specific appropriation or from another funding scheme.

34 2 The Three Dimensions of Appropriation Law
Module 2: The Philosophy of Appropriation Law 2 The Three Dimensions of Appropriation Law Time The obligation must occur within the time limits applicable to the appropriation. Bona-fide Needs Rule Severable or Non-severable services Time – The obligation must occur within the time limits applicable to the appropriation. The “bona fide needs rule,” applies to all obligations and the appropriation may only be obligated to meet legitimate needs in the fiscal year in which the appropriation was made. Severable or non-severable – Non-severable services represent a specific entire job or undertaking with a defined end product. A severable service, on the other hand, is defined as services that are continuing and recurring in nature. Services are provided on an ongoing basis and provide value to CDC at the time the work is performed.

35 2 The Three Dimensions of Appropriation Law Determining Time Periods
Module 2: The Philosophy of Appropriation Law 2 The Three Dimensions of Appropriation Law Determining Time Periods Congress has the authority to limit appropriations to particular times as well as to particular objects The Bona Fide Needs Rule You may only obligate appropriated funds only for the needs during the appropriations period of availability Congress also has the authority to limit appropriations to time availability, meaning that the period to obligate funds will expire at some time in the future. The Bona Fide needs rule states that you may only obligate funds during the appropriations period of availability.

36 3 The Three Dimensions of Appropriation Law
Module 2: The Philosophy of Appropriation Law 3 The Three Dimensions of Appropriation Law Amount – The obligation and expenditure must be within the amounts Congress has appropriated. Government Obligations Anti-deficiency Act (ADA) Applies Amount – The obligation and expenditure must be within the amounts Congress has appropriated. Government officials may not make payments or incur obligations to make payments at some future time for goods or services unless there is enough money in the "bank" to cover the cost in full. The Anti-deficiency Act, or ADA, can occur if an appropriation amount is exceeded, if an earmark is exceeded, or a monetary ceiling is exceeded. This is otherwise referred to as an apportionment. The Anti-deficiency Act violation may also occur if funds are obligated that violates the purpose or time laws.

37 3 The Three Dimensions of Appropriation Law
Module 2: The Philosophy of Appropriation Law 3 The Three Dimensions of Appropriation Law Violations of Anti-deficiency Act (ADA) Violations Purpose: Committing the United States to make payments for goods or services not available by that appropriation. Time: Authorizing or expending funds that exceed the amount available in an appropriation. Amount: Authorizing or expending funds for items or purchases not permitted by law.

38 3 The Three Dimensions of Appropriation Law
Module 2: The Philosophy of Appropriation Law 3 The Three Dimensions of Appropriation Law Important Terms Interpreting the Language on Amount If the appropriation specifies “not to exceed” or states “not more than” then this is the maximum amount that can be made available for this purpose. This is often referred to as a ceiling. “Not less than” means that the minimum amount that Congress expects will be obligated or expended. This is often referred to as a floor. “Shall be available” is considered both a maximum and cannot be supplemented and a minimum that must be spent. “Of which” or “of the funds provided” specifies an amount out of the appropriation to be used. “None of” means that you are prevented from using these funds for the purpose cited. “Up to” means that you cannot exceed the amount stated. “May be available” means that the funds may be used for the purpose cited.

39 3 The Three Dimensions of Appropriation Law You can’t make more $
Module 2: The Philosophy of Appropriation Law 3 The Three Dimensions of Appropriation Law You can’t make more $ Agencies are restricted to the appropriations Congress provides. You are prohibited from unauthorized “augmentation” of appropriations.

40 SOCIAL SERVICES BLOCK GRANT
Module 2: The Philosophy of Appropriation Law Animation The Three Dimensions of Appropriation Law Understanding an Appropriation Act 3 Amount 1 Purpose Let’s look at an example of appropriation language for a Social Services Block Grant that clearly states the three dimensions of appropriations law: purpose, time and amount. SOCIAL SERVICES BLOCK GRANT “For making grants to States pursuant to section 2002 of the Social Security Act, $2.8 billion. For carrying out section 2007 of the Social Security Act, an additional $1,800,000,000, which shall remain available until expended.” The Purpose is “For carrying out section 2007 of the Social Security Act” The Amount is “1.8 billion” The Time “is available until expended” SOCIAL SERVICES BLOCK GRANT For making grants to States pursuant to section 2002 of the Social Security Act, $2,800,000,000. For carrying out section 2007 of the Social Security Act, an additional $1,800,000,000, which shall remain available until expended. 2 Time

41 You cannot use amounts that have expired
Module 2: The Philosophy of Appropriation Law You cannot use amounts that have expired FY 2010 is now expired and FY 2011 will expire on September 30th. Funds left over from an old contract cannot be used on a new contract. Prior year funds cannot be used for new obligations. Obligated and unobligated balances are canceled 5 years after the budget authority expires.

42 Module 3 Module 3 Contracts, Grants and Cooperative Agreements

43 Module 3: Contracts, Grants and Cooperative Agreements
Module 3 Objectives Understand the difference between a contract, grant and a cooperative agreement. Understand the importance of reviewing a Statement of Work (SOW).

44 Contracts, Grants and Cooperative Agreements
Module 3: Contracts, Grants and Cooperative Agreements Contracts, Grants and Cooperative Agreements A procurement contract is when the principal purpose is to purchase/lease property and/or purchase goods or services. A contract is a mutually binding legal relationship obligating the seller to furnish goods or services and the buyer to pay for them. A grant is most appropriate when the principal purpose is to transfer a thing of value, money, property or services to the recipient to carry out the public purpose and little involvement is expected on the part of the issuing Agency. A cooperative agreement is used when the principal purpose of the relationship is to transfer a thing of value and the Agency is expected to provide substantive involvement in carrying out the activities.

45 Statement of Work (SOW)
Module 3: Contracts, Grants and Cooperative Agreements Statement of Work (SOW) The Statement of Work (SOW) details the specific work to be accomplished in clear and concise language that contains the following information. The SOW should contain: Background and need Project objectives Scope of work Detailed technical requirements Reporting schedule Special considerations References Work done outside the scope of the SOW is a violation of appropriations law.

46 Module 4: Spending Plans, Operating Plans and Budget Execution

47 Objectives Module 4: Spending Plans and Budget Execution
Understand why agencies need a good operating plan and spending plan. The importance of the Government Performance and Results Act (GPRA) of 1993. Understand the budget execution process.

48 Operating Plans and Spending Plans
Module 4: Spending Plans and Budget Execution Operating Plans and Spending Plans Federal Legislation: Title 31 of the United States Code. The Government Performance and Results Act of 1993 (GPRA). Federal agencies need a good operating plan and a good spending plan in order to effectively manage funds. There are two compelling pieces of legislation that Federal agencies must comply with when it comes to operating plans and spending plans. The first is Title 31 of the United States Code. The second, is the Government Performance and Results Act of 1993 or GIPRA.

49 Operating Plans and Spending Plans
Module 4: Spending Plans and Budget Execution Operating Plans and Spending Plans The Government Performance and Results Act (GPRA) of 1993 Requires Federal agencies to set strategic goals Measure performance and report on the degree to which goals are met Prior to 1993, there were no requirements to determine or ensure performance results. The second piece of legislation that requires an operating plan and spending plan is The Government Performance and Results Act of 1993 or GIPRA. GIPRA requires Federal agencies to set strategic goals, measure performance and report on the degree to which goals are met. Prior to 1993, there were no requirements to determine whether or not the desired results were obtained.

50 Operating Plans and Spending Plans
Module 4: Spending Plans and Budget Execution Operating Plans and Spending Plans Budget Execution Once an appropriation has been approved by Congress, and apportioned by OMB it must be: Obligated Controlled Managed Monitored Reported The sum of these processes is called Budget Execution

51 Operating Plans and Spending Plans
Module 4: Spending Plans and Budget Execution Operating Plans and Spending Plans Budget Execution When does Budget Execution start for an agency? All agencies must have appropriated funds by the start of the fiscal year (October 1) to operate; however Congress seldom passes appropriations acts by October 1. In order to keep the government from shutting down without an appropriations act, Congress passes a “Continuing Resolution” (CR) or stop-gap until the final appropriations are passed. OMB provides a formula for calculating amounts available for obligation under a CR.

52 CR Operating Plans and Spending Plans
Module 4: Spending Plans and Budget Execution Operating Plans and Spending Plans How is budget authority determined under a CR? CDC calculates a historical spending rate and a daily spending rate, and CDC’s budget authority is whichever rate is lower. For example if CDC’s historical rate is 13.4% and the daily rate is 15.8%, CDC would use 13.4% as the budget authority since it is the lowest number. CR The OMB formula dictates that CDC calculates a historical spending rate and a daily spending rate. CDC’s budget authority is whichever rate is lower. For example, if the historical rate is 13.4% and the daily rate is 15.8%, CDC would use 13.4% as the budget authority since it is the lowest number.

53 You cannot start a new program, project or activity!
Module 4: Spending Plans and Budget Execution How to spend under a CR? You cannot start a new program, project or activity! Spending is based on: Authorization Appropriation Allowable spending activities: Issue a full-year contract under the CR. Issue award to a new grantee. Hire new people. Under a CR, spending activities are dictated by language of the CR bill. The primary restriction under a CR is that new programs cannot be started or expanded upon, and a new activity or project not previously authorized is prohibited. Spending is based on Authorization and Appropriation. Normally, you can perform the same activities that were completed the previous year. It is critical to remember that funds are limited, and you may not want to obligate large items early in the fiscal year which will use your CR authority. For example, this means that a full-year contract can be issued. Even with a limited number of days, an agency may sign a service contract for up to a year, usually stating subject to availability of funds. A GAO decision supports this. Under a CR, an award can be permitted to a new grantee. The test of new activities is not dependent on the procurement vehicle, but the authority under which the program exists or whether the purpose changed.

54 Developing a Successful Spending Plan
Module 4: Spending Plans and Budget Execution Developing a Successful Spending Plan The 2 Steps are the following: Determine the Requirements Develop a Budget Plan There are 2 steps to develop a successful spend plan. They are: Number 1, to determine the requirements needed to accomplish your mission, and Number 2, to develop a Budget Plan to support the requirements.

55 Steps to Developing a Successful Spending Plan
Module 4: Spending Plans and Budget Execution Steps to Developing a Successful Spending Plan Step 1, Determine Requirements Program management follows: Strategic planning process that identifies goals, objectives, and associated tasks. Procurement requirements and mechanisms. Make "best guess" estimates on costs. Grants/Cooperative agreements Contracts Interagency Agreements Identify the type of funding needed for the activities. Annual Multi-year No-year Terrorism Non-terrorism Earmarks are funds provided by the Congress for specific projects, programs, or grants. Let’s take a closer look at step 1, which is to determine the requirements. Program management should follow a strategic planning process that identifies goals, objectives and the associated tasks required to successfully accomplish the mission. They will also need to determine the procurement requirements and appropriate mechanism to use. Types of mechanisms are grants, Cooperative agreements, contracts or Interagency agreements. You should also include estimated costs for each item. Requirements should also include other costs such as personnel, materials, supplies, etc. How many of your FTE’s or contractors will be used? What funding types are available for the activities? Annual, multi-year or no-year funding? Terrorism or non-terrorism funds? Are there any earmarks? Earmarks are funds provided by Congress for specific projects, programs, or grants and can only be used in accordance with the congressional direction contained in the statutory text, report language, or other communication.

56 Steps to Developing a Successful Spending Plan
Module 4: Spending Plans and Budget Execution Steps to Developing a Successful Spending Plan Step 2, Develop a Budget Plan Uses final program decisions from the requirements gathering process Requirements are usually prioritized to meet the available funding level Budget Analysts and Program work together to input into the budget system. The second step in the spending plan process is to convert the requirements and program decisions into a budget plan. The budget plan uses the programmatic decisions that have been made in step 1, from determining the requirements. However, the budget plan takes it a step further by adding realistic costs associated in a consolidated fashion to form a complete budget.

57 Module 5 Module 5: Financial Responsibilities

58 Objectives Module 5: Financial Responsibilities
Understand key legislation that impacts day-to-day work activities. Understand why internal controls at CDC are important. Understand why CDC is required to integrate and coordinate internal control assessments or audits annually

59 Financial Responsibility Legislation
Module 5: Financial Responsibilities Financial Responsibility Legislation Government Management Reform Act of 1994 Federal Financial Management Improvement Act of 1996 (FFMIA) Government Performance and Results Act of 1993 (GPRA) Budget and Accounting Act of 1921 Anti-deficiency Act (ADA) In order to understand CDC’s financial responsibilities, we will be covering the following legislation: The Government Management Reform Act of 1994 The Federal Financial Management Improvement Act of 1996, or F-F-M-I-A The Government Performance and Results Act of 1993, or GPRA The Budget and Accounting Act of 1921, and The Anti-deficiency Act or ADA Over the next few slides we will discuss in greater detail each legislation.

60 The Government Management Reform Act of 1994
Module 5: Financial Responsibilities 1. The Government Management Reform Act of 1994 Requires all Executive agencies to produce annual audited financial statements.

61 The Government Management Reform Act of 1994
Module 5: Financial Responsibilities 1. The Government Management Reform Act of 1994 Annual financial audits are necessary, to determine: Resources are used efficiently Management/program objectives are accomplished Financial data is reliable Activities comply with laws and regulations Internal controls are effective

62 The Federal Financial Management Improvement Act (FFMIA) of 1996
Module 5: Financial Responsibilities 2. The Federal Financial Management Improvement Act (FFMIA) of 1996 Requires that agencies develop and maintain financial management systems in compliance with: Federal requirements Applicable standards US Standard General Ledger (SGL) CDC’s financial management system is the Unified Financial Management System (UFMS) The Federal Financial Management Improvement Act of 1996, or F-F-M-I-A, requires that Federal agencies develop and maintain financial management systems in compliance with federal requirements, applicable standards, and the United States Standard General Ledger also known as SGL. This is used to provide uniform, reliable, and more useful financial information. This means that CDC’s financial management accounting system, the Unified Financial Management System also referred to as UFMS, has been designed to comply with federal requirements and standards.

63 GPRA 3. The Government Performance and Results Act (GPRA) of 1993
Module 6: Financial Responsibilities 3. The Government Performance and Results Act (GPRA) of 1993 Primary legislative framework Strategic goals: Measure performance Report on the degree to which goals are met.  Key performance indicators: Output Outcome Efficiency, and Effectiveness. Funding decisions by Congress: Based on Program effectiveness  GPRA Another key piece of legislation that all Executive agencies must comply with is the Government Performance and Results Act of 1993, otherwise referred to as GIPRA. This act is the primary legislative framework through which agencies are required to set strategic goals, measure performance, and report on the degree to which goals are met. The Act also implemented a process for agencies to measure their annual financial and program performance by identifying four key performance indicators. These are: Output Outcome Efficiency, and Effectiveness. Such objective measurement means that funding decisions are based on program effectiveness rather than supposition, ultimately providing Congress with better information for allocating resources.

64 The Budget and Accounting Act of 1921
Module 6: Financial Responsibilities 4. The Budget and Accounting Act of 1921 This Act established: The General Accountability Office (GAO) The Bureau of the Budget Office of Management and Budget (OMB) President of the United States must submit to Congress: Annual budget proposal and a Statement of the government’s financial condition The Budget and Accounting Act of 1921 was a huge turning point in budgetary control efforts. Prior to this Act, Congress did not have the power to independently review the legality and proprietary of expenditures of the Executive Branch. This Act established the General Accountability Office, or GAO, the Bureau of the Budget, that we know today as the Office of Management and Budget, or OMB. It also required the President of the United States to submit an annual budget proposal and a statement of the government’s financial condition to Congress.

65 ADA 5. The Antideficiency Act Module 6: Financial Responsibilities
Prohibits the obligation or expenditure of government funds in excess of amounts appropriated or permitted by regulations Forbids the obligation of any funds in advance of the official appropriation of funds Requires each government agency to establish an administrative control system ADA The Anti-deficiency Act, or ADA, is one of the major laws through which Congress exercises its constitutional control of the public purse. It has evolved over a period of time in response to various abuses by agencies. The Act: Prohibits the obligation or expenditure of government funds in excess of the amounts appropriated by Congress or in excess of amounts permitted by regulations; (2) It forbids the obligation of any funds in advance of the official appropriation of funds; (3) And it requires each government agency to establish an administrative control system. By having the control system, obligations are kept within the amount of apportionment which enables the agency to detect and report violations of the Anti-Deficiency Act through the Executive Branch to Congress.


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