Basic Fiscal Law Keith M. Dunn Counsel to the Navy Surgeon General Navy Bureau of Medicine and Surgery keith.dunn@med.navy.mil 202.762.3299 www.twitter.com/TheFiscalLawyer

The Power of the Purse “No money shall be drawn from the Treasury, but in Consequence of Appropriations made by law . . . “ Constitution, Article I, section 9, clause 7

what does it mean? United States v. MacCollom, 426 US 317 (1976) “The established rule is that the expenditure of public funds is proper only when established by Congress, not that public funds may be expended unless prohibited by Congress.” United States v. MacCollom, 426 US 317 (1976)

Sources of Law US CODE AUTHORIZATION ACTS APPROPRIATION ACTS AUTHORIZE PROJECTS - 10 USC 2802 AUTHORIZE APPROPRIATIONS - 10 USC 114 ENACT PERMANENT LEGISLATION APPROPRIATION ACTS 31 USC 1301(d) GENERALLY TEMPORARY OTHER PUBLIC LAWS OPINIONS

Authorization Act “ No funds may be appropriated for any fiscal year to or for the use of any armed force or obligated or expended … unless funds therefore have been specifically authorized by law.” 10 U.S.C. 114(a) “The Secretary of Defense and the Secretaries of the military departments may carry out such military construction projects as are authorized by law...” 10 USC 2802

Appropriations Act An act of Congress that permits Federal agencies to incur obligations and to make payments out of the Treasury for specified purposes. A law must contain express language that it is making an appropriation. §1301(d). Authority to obligate or expend collections without further action by Congress is a continuing appropriation of the collections.

DoD Appropriations Act Title I - Military Personnel Title II - Operations and Maintenance Title III - Procurement Title IV - Research & Development Title V - Revolving Funds Title VI - Other DoD Programs Title VII - Related Agencies Title VIII - General Provisions

How Congress Gives Us Our Money Remember the Bank of Mom -- Don’t mix those envelopes!

Other Laws (why having money is not always enough) T.V.A. v. Hill: notwithstanding Appropriation Act legislative history, lump sum appropriation for the Tellico dam did not repeal application of Endangered Species Act protecting snail darters - 437 U.S. 153 V. OTHER LAWS IMPORTANT POINT: This case is meant to illustrate the practice that Appropriators can’t repeal or negate other laws simply by specifically appropriating funds for a project. In fact, repeal by implication is disfavored and statutes will be construed to avoid this result whenever reasonably possibly. A corollary is the rule of construction that statutes should be construed harmoniously so as to give maximum effect to both wherever possible. TVA: Snail darter case – with SEN Baker. Tellico Dam never built. But how about other really conflicting laws?

Legal Opinions Opinions from Attorney General Opinions from Comptroller General Who may seek decisions/opinions? DOD Policy: All requests go through OSD first 22 Nov 1991 OSD(GC) Memo Navy Policy: All requests go through AGC(FM&C) 5 May 2003 DON GC/ASN(FM&C) Memo

THE BOX: PURPOSE TIME AMOUNT Funds may be obligated and expended only for specified purposes TIME Funds are available for obligation only for specified time limits AMOUNT Agencies may not spend more than appropriated

PURPOSE USE ONLY FOR INTENDED PURPOSES “…only for the objects for which the appropriation is made…” 31 USC § 1301(a)

PURPOSE What is the Navy’s “purpose”? Within the Navy’s various appropriations, there are separate purposes. Necessary Expenses

Purpose[less] Food Clothing Bottled Water Gifts & trinkets

Personal Expenses Questions to ask: Examples: Is there a reasonable relationship between the proposed expenditure and the purpose for which the funds were appropriated? What is the benefit to the agency? What is the benefit to the individual? Is there a more cost effective way to achieve the agency mission or program goals? Examples: Registered traveler programs Health promotion items Recruiting items Gifts and other giveaway items

TIME Unless defined otherwise, every appropriation has a time limit Funds are available for obligation only during availability of appropriation Annual Presumption (31 U.S.C. §1301(c) & §8003 of each Appropriations Act Also multiple, no year, and indefinite accounts Do not obligate or expend in advance of appropriation. 31 USC §1341(a)(1)(B)

Bona Fide Needs Rule 31 USC 1502(a) The balance of an appropriation limited for obligation to a definite period is available ONLY for: - payment of expenses properly incurred during the period of availability or - to complete contracts properly made within that period of availability. * The appropriation is not available for expenditure for a period beyond the period otherwise authorized by law.

Application of the bona fide needs rule Inventory Training Subscriptions

Continuing Needs/Future Years’ Needs Current FY funds may be obligated to satisfy a need which arose in a prior FY where: - need was not previously met for legitimate reasons - need continues into the subsequent FY AND - incurring obligation was discretionary with the agency Funds appropriated for a specific fiscal year are not legally available for the needs of a future fiscal year.

The Life of a Definite Account EXPIRED 5 YEARS CLOSED FOREVER CURRENT

* NO EXPENDITURES 2 YEARS The Life of an Indefinite Account CURRENT CLOSED* * NO EXPENDITURES 2 YEARS AND NO LONGER NEEDED 31 USC 1555

Adjustments to Expired Accounts 31 USC 1553(a) Retains identity Available for Recording Adjusting Liquidating obligations properly chargeable

Closed Accounts 31 USC 1552 All Balances Cancelled Not Available for Obligation or Expenditure for ANY Purpose! Existing Bill? Receipt?

AMOUNT The rules revolve around two concepts: do not spend your money too quickly (i.e., make it last the entire fiscal year); do not spend more than you have available at the time (you cannot hoard money, either – sec. 8004)

Apportionment “ . . . [A]n appropriation available for obligation for a definite period shall be apportioned to prevent obligation or expenditure at a rate that would indicate a necessity for a deficiency or supplemental appropriation for the period.” 31 U.S.C. 1512(a) . . . An appropriation shall be apportioned not later than the later of the following: (1) 30 days before the beginning of the fiscal year for which the appropriation is available; or (2) 30 days after the date of enactment of the law by which the appropriation is made available.” 31 U.S.C. 1513(a)

Earmarks The designation of a part of a lump sum appropriation for a particular purpose must be in the statute itself to be binding limitations on legislative history can illuminate cannot provide that which is not there DoD memo dtd 10 Feb 2006 OMB memo dtd 15 Feb 2007 Executive Oder, Protecting American Taxpayers From Government Spending on Wasteful Earmarks, 29 Jan 08

Augmentation No agency may augment its appropriations from outside sources or from improper internal sources unless statutorily authorized to do so. Amounts appropriated for a purpose represent a limitation Congress has fixed for that purpose and all expenditures for that purpose must come from that appropriation and may not exceed that amount absent express statutory authority. . . . an official or agent of the Government receiving money for the Government from any source shall deposit the money in the Treasury as soon as practicable without deduction for any charge or claim.” 31 U.S.C. §3302(b)

Repayment Exception Authorized “repayments” are either “reimbursements” or “refunds.” “Reimbursements” are amounts collected which may, by law, be credited directly to appropriations. “Refunds” are amounts collected for payments made in error, overpayments, or adjustments for previous amounts disbursed, including returns of authorized advances.

Gifts 10 USC 2601 – general gift statute 10 USC 7220 – gifts for welfare of enlisted members

The Antideficiency Act The ADA is codified at Title 31 United States Code: 31 U.S.C. § 1341 (prohibiting obligations or expenditures in excess of appropriations and contracting in advance of an appropriation) 31 U.S.C. § 1342 (prohibiting government employees from accepting voluntary services) 31 U.S.C. §§ 1511-1517 (requiring apportionment/ administrative subdivision of funds and prohibiting obligations or expenditures in excess of apportionment or administrative subdivision of funds) 31 U.S.C. § 1344 (prohibiting the unofficial use of passenger carriers) The ADA is a compilation of Acts and has 4 basic parts. So when we discuss the ADA we are really talking about a several different statutes, which can be violated simultaneously. The ADA was first passed in the 19th century and has evolved into the 4 statues that were incorporated into title 31 of the USC. In 1982 Congress reworked the ADA along with the rest of Title 31 In addition violations of other statues such as the Purpose Statute 31 USC 1301(a). Or some sections of the FMR can also violate the ADA. Lastly revolving funds are subject to the provisions of the ADA.

Types of Violations Purpose Time Amount

Reports 31 USC 1517 & 1351 President, Congress, and GAO OMB Circular A-34 FMR vol. 14 n accordance with 31 USC 1517 and 1351, the head of the agency (SECDEF) must report to the President and Congress violations of 31 US.C. 1341, 1342, or 1517. Contents of the report must include all relevant facts and a statement of actions taken. The process is documented in OMB A-34 and the FMR volume 14. A-34 says when knowing and willful, report must indicate that the matter was referred to DOJ for determination of what additional action is appropriate. Where necessary, we (FMC) will refer entire file to the public integrity section at DOJ in order to satisfy that requirement. We did that with the Yokosuka comptroller.

Sanctions & Penalties Administrative Criminal Up to removal If knowing & willful 2 years in jail $5000 Or both