DATA PERTINENT TO U S GOVERNMENT BUDGETING

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP76B00952R000400080001-7
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 157
• Document Creation Date: December 16, 2016
• Document Release Date: January 24, 2005
• Sequence Number: 1
• Content Type: REPORT

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OFFICE OF
EDLANNING,
PROGRAMMING, &
DUDGETING
Data Pertinent to U S Government Budgeting
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INTRODUCTION
1. Your assignments involve you in the decision-making processes
which result in the spending of money. You will be participating in the
operation of activities that will cost anywhere from a few dollars to
millions of dollars. You will in most cases never actually see those
dollars but you will be acutely aware of their presence. If not already,
you will soon come to realize that the dollar is an important intelligence
tool.
2. The purpose of the material in this booklet is to help you meet
your financial management responsibilities. Specifically, the material is
intended to give you a background in budgetary procedures. Starting with
a definition of budgeting and a brief history of the Federal budget, it
includes a condensed listing of governmental budget powers, and a step-
by-step discussion of the Federal budget process. While a detailed
analysis of this huge and complex process is not appropriate here, it is
believed that enough of the important facts and procedures have been
included to give a clear, general understanding of the matters treated. It
should be noted that some of the budgetary process steps are covered in
each of the three documents. This repetitive coverage is desirable because
it is presented from three points of view (independent agency, Bureau of the
Budget, and a Congressional Committee).
3. For convenience, certain excerpts from public laws pertinent to
the budgetary process and the responsible agencies have been gathered
together.
4. In the literature of this field, frequent contact will be made with
such terms as "program budget", "apportionment", "obligation", and
"target oriented display". Definitions of these terms have been included.
5. The list of reference reading, although of necessity incomplete,
includes a selection of current material for further study and research in
the area of the Federal budget.
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SONIGV3S C130313S
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THE FEDEaAL BUDGET
(Adapted from materials originally prepared for use
in the Industrial College of the Armed Forces)
A. Definition
1. What does the term "budget" mean as applied to the Federal
Government? The President's Commission on Budget Concepts in its 10 October
1967 report stated:
"Fundamentally, it presents the essential ingredients of the
financial plan of the Federal Government for the coming year. This
plan has many aspects and must serve many purposes:
It sets forth the President's requests to Congress for new
programs, appropriation of funds, and changes in revenue
legislation;
It proposes an allocation of resources to serve national
objectives, between the private and the public sectors, and
within the public sector;
It embodies the fiscal policy of the Government for promoting
high employment, price stability, health growth of the
national economy, and equilibrium in the Nation's balance of
payments;
It provides the basis for executive and agency management of
Federal Government programs;
It gives the Treasury needed information for its management
of cash resources and the public debt;
It provides the public with information about the national
economy essential for private business, labor, agriculture,
and other groups, and for an informed assessment by citizens
of governmental stewardship of the public's money and
resources."
2. The budget document itself is published annually in two large
volumes of approximately 1,700 closely printed pages. It consists of the
President's budget message, government receipts, activities by function,
programs by agency, and summary tables, detailed data, and special analyses.
An appendix contains more detailed information on budget estimates, personal
services, and supplementary material. Because of its length, vast masses of
figures, and complex legal and accounting language, it is about as readable
as a medical dictionary or a telephone directory.
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B. History.
1. Prior to 1921 there was no true Federal budget system in this
country. Appropriation bills for the various Departments were referred to
several congressional committees. The procedure had developed into a
multiple committee system, with the President having little or no part in
the process. Nowhere were the expenditures and revenues examined as a
whole.
2. The history of the Federal budget, as we now know it, began
with the passage of the Budget and Accounting Act of 1921. This act placed
with the Executive the responsibility for planning and controlling expendi-
tures. It provided for a national budget system and required the President
to transmit to Congress an annual budget of estimated receipts and expendi-
tures. The act
a. Provided for an "Executive" budget.
b. Required the President to submit a budget plan annually,
including estimates of expenditures and receipts for the last, current, and
the ensuing fiscal years.
c. Provided for submission of all deficiency and supple-
mental estimates by the President.
d. Provided for the establishment of the Bureau of the
Budget to aid the President and established the various authorities and
responsibilities of the Bureau of the Budget.
e. Created the General Accounting Office under the
Comptroller General of the United States and established his authority and
responsibilities for an independent legislative audit.
3. By 1922 the Senate and House of Representatives had each
passed a resolution referring all appropriation bills to its Committee on
Appropriations. Although this did away with the confusion of the multiple
committee process and placed appropriation jurisdiction within a single
committee in each House, revenue measures continued to be considered
separately. Nevertheless, for the first time in our national history we
had a workable budget system.
4. The Budget and Accounting Procedures Act of 1950 made
extensive revisions in the Federal budget process. It
a. Adopted the performance budget principle by authorizing
the President to determine the form and content of the national budget
estimates and to modernize govetnmental accounting and auditing methods.
The budget must, however, set forth the functions and activities of the
Government.
b. Directed that the Comptroller General of the United
States, the Secretary of the Treasury, and the Director of the Bureau
of the Budget conduct a continuous program for the improvement of account-
ing and financial reporting in the Government.
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c. Allowed each agency to develop its own accounting
system to serve management needs. If directed that the Comptroller General,
after consulting with the Secretary of the Treasury and the Director of the
Bureau of the Budget, shall prescribe the principles and standards for
accounting to be observed by each executive agency, shall review the
accounting systems, and report to the Congress, as he deems proper.
5. The General Appropriation Act of 1951 defined the appor-
tionment authority of the Director of the Bureau of the Budget and
authorized the establishment of reserves in the apportioning process. It
also stated that any officer or employee of the United States who over-
obligated an appropriation, an apportionment, or other administrative
subdivision of appropriated funds, should, in addition to liability under
other law, be subjected to appropriate administrative discipline, including
suspension from duty or removal from office and a fine of 5,000 dollars or
imprisonment for two years, or both.
6. The 1956 Act to Improve Governmental Budgeting and Accounting
Methods and Procedures provided for further financial management improve-
ments. It directed
a. Maintenance of accounts on the accrual basis, including
the use of adequate inventory and property records.
b. Development of cost-based budgeting practices.
c. Review and appropriate revision of budget and accounting
classifications for consistency and synchronization with organization units
to the extent possible.
d. Development of supporting information by organizational
unit where budget classifications do not coincide with the organization of
the Agency.
e. Simplification of the allotment structure.
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GOVERNMENTAL BUDGET POWERS AND FUNCTIONS
Budgetary Authority
1. In keeping with our recognized system of checks and balances,
two branches of the Federal Government are concerned with the budgetary
process. The executive branch is assigned the management phase, that is,
the planning, preparation, and submission of the budgetary program, and
the execution and operation of the approved program. The legislative
branch has the control function by determining fiscal policy and approving
the program. This division of power in regard to the budget has its
foundation in the Constitution.
2. Article I, section 8, of the Constitution gives Congress the
power to (among other things):
a. Lay and collect taxes.
b. Pay the debts.
c. Make all laws necessary and proper for carrying into
execution the powers of Congress.
d. Provide for the common defense.
3. Article II, section 3, of the Constitution assigns the President
the following responsibilities:
a. To give the Congress information of the state of the Union,
and recommend to their consideration such measures as he shall judge
necessary and expedient.
b. To take care that the laws be faithfully executed.
4. The Constitution further provides that "No money shall be drawn
from the Treasury but in consequence of appropriations made by law."
(Art. I, Sec. 9(7)) It is further provided by law that ". . . all sums
appropriated . . shall be applied solely to the objects for which they
are respectively made and for no others" (31 USC 628 ) Thus it is evident
that the founders of our country gave serious consideration to sound
financial planning by insuring that this phase of Government was in keeping
with our democratic system, being duly planned and approved by elected
representatives of the people.
5. The President, then, assisted by the Bureau of the Budget and
various executive departments, takes the first step in the budgetary
process, the "formulation," and participates in the second phase, the
"adoption." The most important job of the executive branch comes, however,
in the third step, the "execution." There the true managerial function
becomes apparent.
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6. The legislative branch figures most prominently in the "adoption"
phase, when Congress considers the budget as submitted by the President,
modifies it, if deemed appropriate, and eventually passes appropriation acts
which constitute the approval and authorization of a budgetary program. It
should not be construed however that the legislative branch plays a secondary
role in the budgetary process. During the adoption phase, both Houses of
Congress carefully scrutinize all elements of the budget, and the final
product, as passed by Congress, is not only approval of funds but also a
statement of fiscal policy.
THE BUDGET PROCESS
A. Formulation of the Budget.
The budget is one of the chief means by which the policies of the
Government are executed. A description of the three steps in the budget
process, which have previously been mentioned, will show how those policies
are visualized in fiscal terms, how the money to carry them out is authorized,
and how the expenditures that put them into effect are managed.
B. Preparation of the Budget.
1. Preparation of the budget is the initial step in the budgetary
process. It has within itself certain subordinate steps, including:
a. Translating policies into budget objectives and
determining ceilings.
b. Submission of estimates by the agencies to the Bureau
of the Budget.
c. Budget hearings by the Bureau on these estimates.
d. Review by the Director of the Bureau of the Budget.
e. Review by the President.
f. Completion of the budget for presentation to Congress.
g. The President's budget message to Congress.
Translating Policies into Budget Objectives; Determining Ceilings
2. All administrative agencies of the Federal Government
participate to some extent in the preparation of the annual budget. The
Bureau of the Budget seeks to bring together the budgetary labors of the
infinite variety of departments and offices into a cohesive and well-con-
ceived program. In this joint effort each agency needs to understand the
President's policies programs and overall objectives that bear upon the
expenditures of the Government.
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3. In determining the kind of guidance to give the Federal
agencies for their initial budgetary decisions, the President must consider
a wide range of factors. He must appraise, in the light of changing
situations, the domestic and foreign needs and interests of the country,
including those of its national security. He must examine the trends of
economic development and the likely influence of the budget upon them. He
must take into account the capacity of the national economy and the great
body of taxpayers for meeting the Government's financial requirements.
4. The Budget Bureau assists the President in establishing the
guidance for the formulation of the budget. The Bureau, in turn, has the
benefit of advice from other agencies, such as the Treasury Department with
regard to matters of revenue, and, within the Executive Office of the
President, the Council of Economic Advisers and the National Security
Council.
5. During the year the agencies have an opportunity to study
administrative programs and policies through reports, Executive orders,
and legislative hearings. The Budget Bureau, likewise, can review agency
problems involving personnel demands, expansion plans, reserves, criticisms
of agency operations, and general conditions that may affect agency needs.
Thus, both the agencies and the Bureau may arrive at an understanding of
programs and objectives as common guides in budget planning.
6. Beginning usually in late May, a preview is held of appro-
priations and expenditures and of program policies involved in the budget
then being considered by Congress. To prepare the ground for the preview,
the Bureau draws up tentative estimates, identifies policy questions that
have to be answered, and tentatively defines for the larger agencies
so-called budget "ceilings"--target figures that serve as guides for these
agencies.
7. The Director meets with each of the heads of the agencies
for which budget ceilings are to be determined. For these meetings the
divisions and the Office of Budget Review post the Director about matters
qv, which the agency head may bring up.
8. After the Director has obtained the President's views on
policy questions and the character of the budget in general, the divisions
proceed to assemble for each agency detailed materials for preview purposes.
These materials distinguish what is to be under the ceiling and what is not;
show where and how far the agency and the Bureau are apart, and point up the
assumptions and policies not yet resolved by the President.
9. As soon as the President has made his decisions on the
proposed ceilings, the Director notifies the individual agencies by
letter, generally toward the end of June. These letters also tell the
agencies what particular policies and assumptions the President in each
case wants them to apply in framing their estimates. The letters further
point out that it is the responsibility of the agency to formulate within the
ceiling a well-balanced budgetary program; that the ceiling is no commit-
ment in the sense of a final allowance, prior to the Bureau's detailed
examination of the agency's subsequent estimates; and that any financial
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request above the ceiling may be
this proves essential. In order
about the President's decisions,
head of each of the agencies for
presented in the estimates only when
to come to a complete understanding
the Director once more meets with the
which a ceiling has been determined.
Agency Estimates
10. The next stage in the making of the annual budget is the
call for estimates by the Director. The call is a standing instruction
in the form of a Budget Circular (Circular A-11) of pamphlet size sub-
ject to annual revision. Its revised parts go to all Federal agencies
each spring for the fiscal year beginning more than 12 months later--
1 July. The call describes the form of the estimates in considerable
detail and requires their submission to the Budget Bureau in the early
fall, usually by 30 September.
11. About the same time that the call for estimates is issued,
agency heads are formally notified of the general policy of the President
with respect to the budget. This policy statement usually also sum-
marizes the economic assumptions on which the estimates are to be based.
Other matters likely to be dealt with are the scope and character of
Federal construction, the limitations imposed on any new activities, and
the need for economy.
12. Except for certain special cases, each activity listed in
the schedule of obligations by activities must be described in a narrative
statement. These narratives present in summary form the work plan and its
expected accomplishment in relation to the estimate, together with an
indication of how both program and performance may be measured. The
detailed analysis of the estimates is in the form of separate budgetary
justifications prepared by each agency. Wherever possible, work measure-
ment and unit costs are to be relied upon in justifying estimates.
13. The justifications must include information about staffing
and cost requirements for activities common to most agencies of the
Government. Guides and criteria for all agencies are annually laid down
by the Bureau. These guides do not rule out conceivable variables in the
application of staffing and cost ratios which may warrant special con-
sideration.
14. Special information is needed about certain areas of agency
action. One of these areas is that of public works and improvement pro-
grams. A schedule of projects, showing the agency's construction program,
must be prepared to include such information as the reasons for the
proposed timing of work, the anticipated cost level, and the merits on
which priority is based. Upon the Bureau's request, agencies must submit
feasibility reports which show the engineering basis of individual projects,
their estimated total and annual costs, the expected repayment plan, and
the economic needs and benefits.
15. Another area of agency action on which special information
is needed is contemplated legislation. Each agency- must indicat its
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preliminary legislative program for the next session of Congress. The
information covers those items that are included in the President's
legislative program but have not yet been enacted, together with proposals
outside this list grouped according to their consequences in terms of new
expenditure.
16. For all items it is necessary to outline the character of
the legislation sought, with an indication of the need for it; to describe
the state of readiness of the draft of the budget and supplementary mater-
ials; to make reference to bills and reports on the same subject in recent
sessions of Congress, with an appraisal of the adequacy of these bills;
to forecast the expected demands on the Treasury in case of enactment of
the proposal; and to name all other agencies interested in the subject.
17. In addition, the call for estimates states that business-
type budgets will be submitted for all enterprises, which are specifically
required to submit such budgets by the Government Corporation Control Act
or similar legislation, and all revolving funds except those solely
available for making advances to other funds or accounts. The basic
business-type budgets will be a statement of sources and application of
funds, including an analysis of the enterprise's operations; a statement
of income, expenses, and retained earnings; and a statement of financial
condition.
Bureau of Bud et HearinEs on A ency Estimates
18. Hearings on appropriation requests are conducted between
late September and early December. A small independent establishment may
be heard in a few hours. Hearings for a large department may extend over
a period of three or four weeks. Hearings are conducted by the budget
examiners. The chief or an assistant chief of the appropriate division
is usually present. Departmental representation usually includes top
departmental and bureau officials and their respective budget officers
and assistants.
19. The atmosphere of the hearings is usually relatively
informal, with general participation by those present and a rather frank
interchange of views. Questions may be raised with respect to any or
all aspects of the appropriation estimates, ranging from the necessity
and desirability of proposed programs to details of cost estimating and
appropriation wording.
Review b Director
20. After each hearing, the examiners reach a decision, and
the agency's request is "marked up" accordingly. A Director's review
book is then prepared for the entire agency. The content may vary from
year to year but usually for each agency the book contains a summary
table, a discussion of proposals and issues, a statement of the legisla-
tive program, and supporting financial tabulations.
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21. In the Director's review, the budget process becomes an
internal matter within the Bureau until the President takes action on the
Director's recommendations. Prior to such action the Director must
consider both the estimates and the recommendations formulated after
the hearings. The procedure is generally identical with that followed
in the budget preview. The Director sits with a few top Bureau officials
designated by him to advise with him on the estimates.
22. At each session, the division chief or ranking assistant
orally outlines the goals of the agency under consideration and the
issues to be considered. A budget examiner keeps notes and reports
all actions taken in a memorandum, which is prepared immediately upon
the conclusion of the session. The estimates and the supporting materials
are now revised to conform to the decisions of the Director on the amounts
to be recommended to the President. On this basis the President's review
book is assembled.
Review by the President
23. The estimates, in the form of the President's review book,
are now laid by the Director before the President for his consideration
and final determination. Although the President is familiar with impor-
tant budgetary questions, he allows considerable time for the final con-
ferences with him. Presidential action may take the form of specific
notations on the detailed schedules relating to individual appropriation
accounts or, more commonly, on the recapitulation table showing only the
subtotals for each bureau or broad program. The schedules as revised by
the President are returned to the responsible examiners, together with
any farther information they may need as to the President's determinations.
24. A letter of allowance is sent immediately to the agency
head notifying him of the amounts of appropriations approved by the
President, and the nature of any changes in its proposal as to language
which result from the review by the Bureau of the Budget and the President.
The budget examiners inform the agency budget officer as to the major
reasons for any changes in its request and the general nature of intended
adjustments. At the same time, they communicate any determinations
regarding detailed estimates which are binding upon the agency.
25. The agency is called upon to revise its detailed estimates
of obligations in accordance with the appropriation allowances. Although
it cannot deviate from the President's determinations, on rare occasions
an agency may feel that a critical situation would result from a determi-
nation and appeal the allowance to the President through the Bureau of
the Budget. These appeals are known as "reclamas." No set procedure is
established in the Bureau for handling appeals, but such requests are
likely to involve reconsideration of the estimate by the examiners and
officials originally responsible, as well as intensive study "up the line"
to provide a basis for appropriate advice to the President.
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Completion of Budget
26. On the basis of the allowances made, the agency revises and
resubmits to the Bureau of the Budget the estimates of appropriations and
supporting schedules of obligations with respect to each item changed as a
result of review. The responsible budget examiners verify the amounts of
the revised estimates against the allowances, review and clear any resulting
language changes or change in the narrative statements, and examine the
schedules of obligations for internal accuracy and for consistency with the
President's determinations. The resulting estimates are then arranged to
be typeset for inclusion in the annual budget document.
27. The Treasury Department prepares the estimates of internal
revenue taxes and customs receipts for the budget. A close liaison is
maintained between its research staff and the economists of the Bureau of
the Budget. Conferences are held, prior to the actual development of
estimates for use in the Budget, at which the two staffs attempt to secure
agreement as to the economic assumptions on which the estimates are based.
As a result Treasury estimates of revenues from existing taxes and customs
normally involve little discussion when received by the Bureau in December.
28. The budget contains no specific proposals for new revenues,
although recent budget messages have indicated the size and general nature
of revenue needs. New tax proposals of recent years have originated for
the most part in the Treasury Department or in joint staff work of the
Treasury and the Congressional Joint Committee on Internal Revenue Taxation.
29. The agency budget requests contain schedules showing their
estimated expenditures for the current year and the budget year. These
expenditure figures are reviewed with respect to fiscal policy, as well as
for accuracy of estimating, by the examiners in the operating divisions
and may be subsequently revised at least twice during considerations of
every request by the Bureau of the Budget: first, to accord with the
examiner's recommendations to the Director as to appropriations, and then
a second time to reflect the President's determinations of agency allowances
for the ensuing year. The procedure for these two revisions is intimately
associated with the processing of detailed estimates of appropriations.
The President's Budget Mess.aa
30. The budget message of the President sets forth the broad
policies on which the detailed estimates are based, makes the general
presentation of his financial program, and outlines his major recommenda-
tions. It is the longest and most detailed message on national policies
and programs which he sends to the Congress.
31. The Office of Budget Review is primarily responsible for:
a. Assembling suggestions, comments, and initial drafts
of various portions of the budget message from the staff of the Bureau
and other agencies.
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b. Checking the proposed material with the budget examiners
and other members of the Bureau, and, in certain instances, with officials
in other Government agencies.
c. Preparing successive drafts of the message for review
by the Director and other top officials of the Bureau of the Budget.
The Director and Assistant Director are likely to confer at length with
the President regarding his message. As an expression of major policies,
it usually receives much of his personal time and attention before being
ready in final form for inclusion in the budget. Frequently, in the
consideration of the total program, major policy issues and inter-agency
conflicts develop which only he can resolve. Sometimes these decisions
necessitate last-minute changes in the budget tables and detailed estimates.
32. Within 15 days after the beginning of each regular session
of Congress, the President transmits "the budget," which is required to
include "estimates of the expenditures and appropriations necessary in
his judgment for the support of the Government for the ensuing fiscal
year. . . ." In some instances the President delivers his budget message
in person, addressing a joint session of both Houses.
C. Luislative InvestizaIlarilacl Enactment
House Committee on Appropriations
L. Appropriation measures are considered in the House of
Representatives by the House Committee on Appropriations, of some 50
members, and by the several subcommittees. Each subcommittee is responsible
for a single major annual appropriation bill covering one or more depart-
ments or agencies. Each member of a subcommittee has two basic written
documents for use in considering the estimates; a book (subcommittee print)
prepared by the staff of the committee, which includes the entire appropria-
tion bill proposed in the budget, together with summary data and supporting
obligation schedules; and the written explanations and justifications
submitted directly by the departments or agencies covered by the proposed
bill,
2. Other evidence on the estimates comes primarily from the
hearings held by the subcommittees. Although Members of Congress and
representatives of private associations and groups may appear regarding
particular items, the bulk of the testimony is provided by officials of
the agencies covered by the bill--operating heads of departments, bureaus,
and other major organization units, and their respective budgetary and
administrative assistants. The hearings usually are not open to the general
public; however, the testimony and many written materials submitted at
hearings are printed in full, except for limited "off the record" discussion,
and provide a basic source of information on departmental programs, orga-
nization, and financing.
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3. The success in obtaining funds from Congress is based largely
upon the ability of those testifying to present concise and logical justi-
fications in support of the departments estimates, presuming of course that
the programs concerned are sound. The method of presentation is often of
equal, or even more, importance than the format of the justifications. This
requires considerable preparedness and ingenuity by the individuals concerned
since voluminous presentations prejudice the estimates, while incomplete
presentations leave doubt which may result in unwarranted budget reductions.
Hearings before the appropriations subcommittees provide a valuable oppor-
tunity for face-to-face discussion between Members of Congress and officials
of the executive departments and agencies.
4. After conclusion of the hearings, the subcommittee makes
its determinations in a closed session. Its clerical staff prepares and
has printed two documents:
a. A print of the bill as proposed by the subcommittee.
b. A report on the bill as proposed, providing tabular
comparative data and brief explanations of reasons for major changes from
the budget recommendations and from previous appropriations.
These documents are available only on a confidential basis until the full
Appropriations Committee has acted upon them.
5. The Committee on Appropriations meets in executive session
to review the action of the subcommittees. Although in the great majority
of instances no change-will result from this review, the relatively few
issues which do arise are likely to be of major significance. Upon adoption
by the committee of the subcommittee recommendations, or of any changes, the
bill is introduced in the House on behalf of the committee (usually by the
chairman of the subcommittee).
Action on the House Floor
6. Upon introduction the bill is referred, together with the
report thereon, to the Committee of the Whole House. As a highly privileged
measure it is usually called up within the next few days for House con-
sideration. The Legislative Reorganization Act of 1946 requires that
appropriations bills may not be considered until printed reports and hearings
have been available for at least three days. Time for general debate is
limited by agreement to a definite number of hours and is controlled on a
50-50 basis by the member "managing" the bill and a minority member--usually
the chairman and ranking minority member of the subcommittee, respectively.
After general debate, the bill is read by sections and paragraphs for
amendment under the "five minute rule," which permits any member to propose
and argue an amendment for not more than five minutes, and similary limits
other members in speaking on amendments. The Committee of the Whole then
reports the bill to the House.
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7. The House votes on the amendments recommended by the Committee
of the Whole and on its passage as amended. After a favorable vote the bill
is transmitted to the Senate, where it is referred to the Committee on
Appropriations.
Senate Committee on Appropriations
8. The Senate Committee on Appropriations, though smaller in
total membership, has a subcommittee structure similar to that of the House
Committee. Action by the Senate subcommittees and by the full committee
is similar to that by the House Committees, except that bearings usually
deal mainly with the House action and agency appeals therefrom, although
sometimes members will wish to explore some items more intensively than
did the House committee. The bill is submitted to the Senate, accompanied
by the committee report.
Action on the Senate Floor
9. After advance notice that the bill will be called, at least
three days after hearings and reports are available to members, it is
debated on the Senate floor. As distinguished from House procedure in
Committee of the Whole, Senate consideration of appropriation bills is
not subject to a preestablished time limit, and therefore no absolute
division of time applies as between majority and minority. Amendments
to the House bill proposed by the Appropriations Committee are first
considered and either accepted or rejected, after which amendments
proposed by other committees or by individual Senators may be debated.
The rules of the Senate place definite limitations on the introduction of
members' amendments which would add new items or would increase items
already in the bill. Following consideration of amendments, the bill is
passed as amended.
The Conference Committee
10. With rare exceptions, it is necessary for the presiding
officer of each House to appoint conferees to work out adjustments between
the bill as passed by the House and by the Senate. The number of conferees
varies as between different bills and is not necessarily identical for the
two Houses. However, since the representatives of each House vote as a
unit, this is relatively unimportant. The conference committee is usually
made up of several members of the sub-committees which handled the bill.
If action on the report of the first conference committee does not bring
complete agreement between the two Houses, other members may be designated
to the second or subsequent conference groups.
11. The committee prepares a "conference report," proposing
acceptance by the respective Houses of appropriatinn amounts originally
approved by one or the other or of some figure between, and indicating
points on which no conference agreement has been reached. The conference
report is presented to each house by the ranking member of "manager" of
its conference representation.
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12. After consideration on the floor of each House of one or
AA more conference reports, all differences are eliminated, and the bill as
finally passed is enrolled. It is signed by the Speaker of the House and
the President of the Senate and transmitted to the President.
Action by the President
13. Like any other legislation, an appropriation bill becomes
law only by approval of the President, by his failure to veto it within
the time set by the Constitution, or by passage over his veto by a two-
thirds' vote in both Houses. As in the case of other legislation, the
Bureau of the Budget assists the President in his consideration of appro-
priation bills passed by Congress. Upon the basis of written comments
by the departments or agencies concerned and on its own analysis, the
Bureau prepares a summary report to the President on each appropriation
measure. This report generally summarizes the act, especially as it
differs from proposals made to Congress by the President in the budget
and in any supplemental estimates, and recommends the action to be taken
by the President. Vetoes of appropriations are extremely rare. The
President must act upon an appropriation bill in its entirety.
D. Execution of the Budget
1. Execution of the budget includes the spending and manage-
ment of the appropriated funds. It is primarily the responsibility of the
executive departments, the Bureau of the Budget--representing and acting
for the President, and the operating agencies. The Congress, however,
retains a certain amount of control in this phase, principally through the
Comptroller General, but also, through the Appropriations Committees and
investigating committees.
2. Ideally, all the steps outlined in the formulation and adop-
tion phases are completed prior to the beginning of the fiscal year to
which the appropriation pertains. Many times, however, the time consumed
on the bill in the Congress is so great that it has not been passed by
1 July. In this case, by joint resolution of both Houses, funds are
usually made available in amounts necessary for carrying on programs or
activities for which authority was available in the previous fiscal year.
The execution phase commences either at the beginning of the fiscal year
or immediately upon passage of the appropriation bill and spans the entire
fiscal year.
3. The majority of appropriations are "annual" and must be
Obligated within the fiscal year. However, two additional years remain
available for expenditure, after which the appropriations lapse and revert
to the Treasury. Moreover, some appropriations are termed "multiple year,"
which means they are available for obligation for a definite period in
excess of one fiscal year. And there are "no year" or continuing appropri-
ations which have no time limit on the period of availability for obligation
or expenditure. Thus, the execution phase may extend several years beyond
the end of the one fiscal year. Two devices which are used for budget
supervision during the execution phase are "financial reporting" and
"apportionment 11
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Financial Reporting
4. Specific information about the progress of agency spending
is obtained by a governmentwide system of financial reporting. The
reporting responsibilities of Federal agencies are laid down in several
regulations issued jointly by the Secretary of the Treasury and the
Director of the Bureau of the Budget, with the concurrence of the Comp-
troller General. All agencies are required to furnish monthly reports
on the status of their appropriations. These reports indicate not only
the amounts of current appropriations available for Obligation and for
expenditure, but also balances in previous appropriations which have not
yet reverted to the Treasury Department. Expenditures and obligations
must be shown separately. Special provisions apply to Government
corporations and enterprises managed along commercial lines.
Apportionment
5. Usually an appropriation act is only an authorization to
spend and not a mandate. The Bureau of the Budget, acting for the
President, apportions the amounts appropriated by the Congress for use
by the departments and agencies. Apportionments are made at the be-
ginning of the fiscal year, generally for all the ensuing four quarters.
Portions of the appropriations, or reserve funds, may be withheld, and
apportionments may subsequently be revised. Unless new circumstances
warrant a restoration of these reserves to an agency, they have the
effect of reducing the appropriations available to the agency. The quar-
terly apportionments determine the rate at which the funds may be Obligated.
Audit of Accounts by GAO
6. The General Accounting Office 00 provides an independent
legislative audit of Government accounts. The Comptroller General, the
head of this agency, is appointed by the President with the advice and
consent of the Senate for a term of 15 years. He is not eligible for
reappointment and can be removed only 1)y joint resolution Of the Congress
for cause. Although he reports to both the President and the Congress, he
is an agent of the Congress rather than an officer of the executive branch,
and thus in no way is subject to the President's direction. The law
provides that all Government financial transactions shall be audited by the
GAO, and that the Comptroller General, after consulting the Secretary of
the Treasury and the Directory of the Bureau of the Budget, shall prescribe
the principles, standards, and related requirements for accounting to be
observed by each executive agency.
Agency Accounting
7. All management depends on accounting to reveal current
financial information for purposes of planning and control as well as
for a historical record of fiscal transactions. Financial reports of the
Federal Government fall into three groups:
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a. Agency reports for internal management purposes.
b. Agency reports made available by an agency for the
use of others.
c. Reports prepared by the Treasury Departments as a
centraL fiscal agency.
8. The individual departments and agencies assume prime
responsibility for developing their systems of accounting and internal
control to fill the unique management needs springing from the diversified
programs and operations. The central fiscal agencies--the Treasury
Department, the Bureau of the Budget, and the GAO?cooperatively assist
the agencies in the basic steps. They also conduct an intensive program
aimed at the elimination of any overlapping and duplicating.
Financial Management
9. Economy and efficiency in the execution of the budget in
the departments and agencies depend upon more than accounting and financial
reporting. The term generally applied to the supervision of all phases
of the budget, including execution, is "financial management." Maximum
effectiveness of financial management is achieved only when it is fully
integrated into total management. The financial viewpoint is one of the
basic factors on which policies and decisions are made. The head of each
department or agency has the responsibility for sound financial management,
but he usually assigns the leadership in this area to an especially quali-
fied member of his staff. This key staff member normally is the comptroller
or budget officer.
10. Financial management employs such tools as budgeting and
funding, the expenditure and collecting of funds, accounting, and auditing.
All phases of the cycle of the budget process ranging from program planning
and analysis to procurement policies and procedures, fall into the cogni-
zance circle of the comptroller or financial manager. This cognizance is
an integral part of the total management at all leyels of organization.
11. The Bureau of the Budget is the watchdog of appropriations
for the Nation; the General Accounting Office, the policeman. In addition,
each department and agency is continually watching and checking the manage-
ment of these appropriations under the guidance of a comptroller or budget
officer. By practicing efficient management of funds during the current
year, a better budget can be formulated for the ensuing year.
E. Summary of the Budget Process.
1. The Federal budget cycle has three phases--preparation,
enactment, and execution. These phases span a period of nearly three
years. With the extension of the execution phase to cover the years
remaining available for expenditure of appropriated funds, the cycle can
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be considered to span several more years. One budget is being formulated,
while the next one is being reviewed and adopted, while others are being
executed. Five or more separate cycles can be operating at any one time.
2. The budget process starts with the determination of objectives
and policies, and progresses through formulation of estimates, through the
various hearings, and through the congressional adoption procedures, to the
execution of the budget. The execution phase includes apportionment of the
funds, financial reporting, accounting, auditing, obligation, and expendi-
ture--the whole realm of financial management.
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EXECUTIVE OFFICE OF THE PRESIDENT
BUREAU OF THE BUDGET
Washington, D.C. 20503
PREPARATION AND EXECUTION OF THE FEDERAL BUDGET
The preparation and execution of the Federal budget for
any fiscal year covers at least 27 months. Thus, each
spring attention is directed to the control of obligations
and expenditures during the final months of the year in
progress; to the planning of programs for the next fiscal
year, which will begin the next July; and to the develop-
ment of preliminary plans and policies for the succeeding
fiscal year. Even during the period of specific work on
a particular budget, attention is also given to projecting
the effect of program decisions on subsequent budgets and
to identifying major issues or problems affecting the
budget in the future.
The preparation and execution procedures change somewhat
from year to year. Currently, for example, efforts are
being made to further improve planning, programming, and
analytical techniques in close integration with the
budget process. The results of these efforts should
become a more significant factor in the budget process
in the future.
Preliminary steps
Staff of the Bureau of the Budget, in cooperation with staff
of the Treasury Department and the Council of Economic
Advisers, keep under continuous review the relationships
between Government finances and the economy generally.
This review includes study of recent and current conditions,
as well as the outlook for coming quarters. Each spring
the outlook is extended to cover the fiscal year for which
a budget will be submitted in the following January. Con-
sideration is given to tentative assumptions on the
economic environment, projections of revenue expected under
these assumptions, and the aggregate expenditure range which
would be appropriate in view of current fiscal policies.
Under the integrated planning-programming-budgeting system
each major agency submits to the Bureau of the Budget, on a
time-phased schedule during the spring and summer, a series
of program memoranda and special study papers. These
memoranda and papers reflect the application of systematic
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analysis to the programs, plans, and work design for various
objectives and subjects with which the agency is concerned.
They include the agency head's tentative choice among alter-
native solutions to the problems discussed.
These agency submissions are critically examined in the
Bureau of the Budget. Proposed program expansions and new
programs are viewed in terms of possible measurable benefits.
Efforts are made to discontinue the application of resources
to marginal and obsolete activities. Discussions between
the Bureau of the Budget and the agency often help to shed
light on specific problem areas.
In the late spring and early summer the Bureau of the Budget
staff prepares estimates indicating a probable range of
expenditures, for each of the vbarious major programs and
agencies, for the forthcoming budget. In preparing this
estimate, staff draws upon its knowledge of agency programs,
agency estimates for particular programs in Program
Memoranda submitted in the spring, and informal discussions
with responsible agency budget and planning personnel.
The Director reviews the fiscal and economic situation, the
expenditure outlook, and the individual issues posed in
the agency schedules. He discusses the results of the review
with agency heads and with the President as appropriate.
Guidance is sought and obtained as needed, and is made
known to the agencies so that they may reshape their plans and
prepare their budgets accordingly.
Compilation and submission of agency estimates
During the next several months agencies revise their program
plans in accordance with guidance received, and decide
upon the budget requests they wish to make for the upcoming
budget. They compile schedules and supporting information
in accordance with the instructions prescribed by the
Bureau of the Budget (Circular No. A-11).
The process of compiling the detailed estimates begins with
the personnel who are responsible for carrying out the
actual operations. They prepare information on obligations,
personnel, workload, and other supporting data, for the
year just ended (the past year), the amounts planned for
the year just beginning (the current year), and the estimates
for the budget year, which still will not begin for almost
a year.
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In most agencies preparation of the budget begins at the
field station level. It then goes through successive
stages of review within the agency. At each level of
review the viewpoint is different -- the regional office
must consider the estimates of each field station in
relation to other field stations and to the total require-
ments for the region. Finally, at the departmental level,
the estimates for bureaus and major programs must be
judged in comparison with other bureaus and programs and
with the total for the agency.
Agency budget submissions are due in the Bureau of the Budget
in September. The submission covers all accounts in which
money is available for obligation or expenditure, whether
or not any action by Congress is requested. Schedules
are based on amounts already available for the current fiscal
year and those specifically requested for the budget year
for programs in effect as of the date of the budget sub-
mission, including those for which additional authorizing
legislation is required in order to carry them on during
the budget year. The agencies also submit summary infor-
mation with respect to items to be formally requested
later covering (1) anticipated additional requirements
for the current year which were not foreseeable at the
time the appropriations were enacted and (2) amounts which are
expected to be required to finance new legislative programs
recommended by the President.
Review of agency estimates in the Bureau of the Budget
When the estimates are received in the Bureau of the
Budget, they are referred to the examiners assigned to
the programs involved. All the knowledge the examiners
possess about the agency -- whether based on long-run
analysis, field investigations, special studies, or
conferences held with agency officials -- is brought to
bear on the estimates at this time. The examiners must
be thoroughly familiar with the President's budget .
policy and previous congressional action, as well as
with the programs of the agency and their relationship
to activities of other agencies. They give considerable
attention to the bases for the individual estimates: the
volume of work on hand and forecast; the method by which
the agency proposes to accomplish its objectives; and
the estimates of requirements in terms of numbers of
people required. They review past performance, check the
accuracy of factual information presented, and consider
the future implication of the program. They identify
issues of major importance to be raised for discussion
with agency representatives at hearings. The hearings
usually last only a few hours for a small agency, but may
run into weeks for a large department.
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After the hearings are completed, the examiners prepare
their recommendations for the Director's Review. This
review concentrates attention principally on the major
items involving Presidential policy, but also provides
a test check on other aspects of the recommendations.
Assumptions with respect to the economic outlook and
the international situation are brought up to date as
a basis for this review.
Examining staff sometimes discuss the Director's tentative
decisions with the budget officer of the agency to
identify and narrow the issues which require special
Presidential attention.
The Director sometimes meets with the head of a major
agency to discuss with him the information and recommenda-
tions which the Director proposes to make to the President.
The agency head thus has an opportunity to appeal to the
Director for reconsideration of any reductions which the
Bureau might be proposing that the President make in the
agency's request. The agency's position and the substance
of the appeal, if the difference cannot be resolved, are
noted in the material supporting the Bureau's recommendations
sent to the President and a decision is requested. The
President is also informed of the likely consequences of
adopting alternative positions on the issues placed before
him.
The process of review occupies the Bureau of the Budget
from the latter part of September through most of December.
During this period, the economic outlook is again assessed
by the Treasury Department, the Council of Economic
Advisers, and the Bureau, and revenue estimates are prepared
for presentation to the President.
Decision by the President
Because of the scope and complexity of the budget, the
recommendations are sent to the President as portions of
the Budget Bureau review are completed.
The President is faced with the task of recommending a
budget which meets the most urgent needs of the country
and still is prudent within the constraints imposed by
the availability of resources. This task is complicated
by the large segment of budget expenditures which is
wrari
relatively unaffected by the annual budget process -- for
the last few years such items as interest on the public
gni
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debt, veterans pensions, grants for public assistance,
and agricultural price supports have accounted for almost
half of the total non-defense budget expenditures or more
than 20 percent of the grand total. The level of these
expenditures depends upon provisions of the laws which
authorized the programs and on other factors not readily
subject to annual budgetary control.
As soon as the President makes his decisions, each agency
head is notified by the Director of the amounts which will
be recommended to Congress for his agency's programs for
the ensuing fiscal year.
oration of the budget document
When the agency receives its budget allowance, the initial
budget estimates are revised -- in conformity with the
President's decisions -- for inclusion in the printed
budget documents. The Budget Appendix sets forth the
exact wording of the appropriation language last enacted
by the Congress, with the changes proposed by the
President, followed by detailed schedules supporting
each estimate. In line with the policies set forth in
Public Law 84-863, cost type budget presentations are now
used for most accounts. This type of presentation, based
on accrual accounting systems, provides information on
inventories and other resources available to finance the
agency's program and on the costs for these resources
accruing within each fiscal year.
As soon as revisions of the individual schedules for
each agency are completed, the figures from the individual
appropriation and authorization schedules are summarized
for each agency. Figures from the agency summaries are
then consolidated to make up the tables which, together
with final revenue estimates prepared by the Treasury
Department, set forth the budget totals.
Submission to Congress
The President's budget is transmitted to the Congress in
January, but staff of the House Appropriations Committee
may start work on the estimates before that time, based
on advance proofs of certain chapters. The Director
of the Bureau of the Budget and the Secretary of the
Treasury are sometimes invited to appear before the
Appropriations Committees to explain the general basis
for the preparation of the budget proposals.
Agencies prepare and submit justifications providing
additional detailed information for consideration by the
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Appropriations Committee, and agency witnesses appear
before its subcommittees to explain the estimates and
answer questions. The justification material presented
to the Committee generally is the same type of material
given to the Bureau of the Budget earlier -- revised to
reflect the President's decisions on the budget. However,
if the Committee wishes additional information or a
different format of justification, it is provided.
The Committee reviews performance in the past year and
the latest available information on the status of current
year programs, as well as the estimates proposed for
the budget year. Agencies also present information on
balances of prior appropriations. In the case of major
procurement programs (as in Defense) which require a
long period of time between placing the orders and the
delivery of material, the justification usually includes
information on delivery schedules.
In many cases, the Committee regularly receives agency
financial and work reports, and information from the
General Accounting Office on the results of its audits
of the agencies. It also has available its own staff
and investigative staff on detail to it from executive
wit branch agencies.
About twelve appropriation bills are prepared and adopted
each year. After an appropriation bill is passed by the
House, the Senate Appropriations Committee receives further
statements and justifications from the agencies and its
subcommittees hold hearings on the estimates.
After action on the bill is completed by the House and
the Senate (including action on the Conference Committee
report) the bill as passed is presented to the President,
who has the power to veto the bill as a whole but not
specific items in it. Congressional action on some appro-
ver priation bills is usually not completed until sometime in
September or October. When a bill has not been enacted by
the beginning of the fiscal year for which the funds are
requested, Congress enacts a temporary appropriation act
vie which authorizes the agency to continue its operations
until the bill is enacted.
lee Budget amendments and supplemental estimates
Even while congressional review of the budget is in
process, continuing attention in the agencies is being
given to the need for revising the original estimates
WNW
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upward or downward, due to developments which have arisen
since the estimates were originally submitted to the
Congress. Additional funds for the budget year may be
required to carry out programs for which new legislation
is enacted or to meet emergencies which have arisen
since the budget was prepared. While preliminary estimates
are included in the budget totals for the new legislation
anticipated at the time the budget is prepared, specific
amounts which are subsequently recommended to the Congress
are the result of detailed analysis and review, based on
the conditions at the time the recommendation is transmitted.
During this same period, additional amounts required for
the current year are recommended in the form of supplemental
estimates.
Apportionment by the Bureau of the Budget
The Anti-Deficiency Act -- Section 3679 of the Revised
Statutes, as amended -- requires that the Director of
the Bureau of the Budget apportion, with a few exceptions,
appropriations and funds made available to the executive
branch. One type of violation occurs when an agency
incurs obligations or makes expenditures in excess of the
amounts apportioned.
The apportionment system is intended to achieve the most
effective and economical use of the funds available and,
for appropriations available for a definite period of
time, to prevent the necessity for supplemental or
deficiency appropriations. The Anti-Deficiency Act
permits apportionments which anticipate the need for a
supplemental appropriation, only when the appropriation
is needed to meet expenditures required by laws enacted
subsequent to the transmission of appropriation estimates
(e.g., Government-wide salary increases) or to meet
certain specified emergency conditions. In each case
where an apportionment is made on the basis of an
anticipated supplemental, a report of the facts is
required by law to be submitted to the Congress.
Agency requests for apportionments must be submitted
to the Bureau of the Budget by May 21 of each year or
within 15 days after approval of the appropriation
act, whichever is later. The requests are referred to
the examiners responsible for the programs involved who
review the request and the supporting material in
arriving at their recommendations on amounts to be
apportioned. The Bureau is required to act on the
apportionment request by June 10, or 30 days after the
approval of the appropriation act, whichever is later.
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Reserves may be established "to provide for contingencies,
or to effect savings whenever savings are made possible
by or through changes in requirements, greater efficiency
of operations, or other developments subsequent to the
date on which such appropriation was made available."
Amounts reserved may not be obligated by the agency, but
may be released in whole or in part by reapportionment
action by the Bureau at any time during the year.
Agency controls over funds
Each agency is required by law to have a system of
administrative control which is designed to (1) restrict
obligations or expenditures against each appropriation
or fund to the amount of the apportionments or reapportion-
ments of such appropriation or fund, and (2) enable the
agency head to fix responsibility for the creation of
any obligation or the making of any expenditure in excess
of an apportionment or reapportionment.
In most agencies, the system of administrative control is
based on allotments to the personnel in the various
organization units who have authority to incur obligations
in carrying out the programs of the agency.
By the time the appropriation bill for a fiscal year is
finally enacted, the agency's plans for the fiscal year
must be brought up to date. The revisions take account
of changes in the amounts expected to become available
and of changes in conditions which affect the agency's
program. The plans at this stage are usually more
specific than they were at the time the original estimates
were prepared. The revised plans are usually prepared in
the same office which prepared the original budget
estimates, and are again reviewed and consolidated at
successive levels in the agency to serve as a basis for
both the apportionment requests to the Bureau of the Budget
and for allotments within the agency.
Review of progress during the year
Progress on the budget program is reviewed throughout
the fiscal year at successive levels, both in the agency
and the Bureau of the Budget. Periodic reports on the
status of apportionments are supplemented by more spec-
ialized reports which relate accomplishments to cost.
Shifts in the agency budget plans are frequently required
to meet changing conditions -- to finance unforeseen
emergencies or to provide savings where the workload is
less than was estimated or where increased efficiency
permits accomplishment at less cost than was anticipated.
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The Committee on .A.ppropriations
U.S. House of Representatives
The framers of the Constitution of the United States placed the
control of the National purse in the hands of the Congress. Article I,
Section 9, of the Constitution provides:
"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."
Traditionally, all revenue and appropriation bills have originated
in the House of Representatives. Article I, Section 7, of the Constitution
reads as follows:
"All Bills for raising Revenue shall originate in the House
of Representatives; but the Senate may propose or concur
with Amendments as on other Bills."
This provision has been the subject of much discussion and
contention over the years. However, the House has insisted that this
provision gives it the exclusive prerogative to initiate the general
appropriation bills as part of the revenue powers provided for in the
Constitution.
The original definition of the word "raising" included the bill which
made the money available to the departments for spending. In other
words, it was not "raised" until the "appropriation" had been made.
In any event, while there has been dispute as to the theory, there
has been no deviation from the practice that the general appropriation
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bills originate in the House. And with some exceptions this is also true
of appropriation bills for specific purposes.
For the first 75 years of its existence, the House of Representatives
had a budget committee -- the Committee on Ways and Means. That
Committee reported both revenue bills and appropriation bills.
This arrangement prevailed until near the close of the Civil War,
when in March 1865 the House created a Committee on Appropriations
to consider the details of appropriation estimates from the executive
departments .-1/
The Committee on Ways and Means continued to report
tax bills.
This arrangement continued for some 20 years. But in 1885,
responsibility for the major appropriation bills was transferred to the
various legislative committees charged with the handling of legislation
in the same subject matter areas. The jurisdiction of the standing
Committee on Appropriations was limited to deficiencies and four or
five minor bills.
On Tune 1, 1920, precedent to the passage of the Budget and
Accounting Act of 1921, the Committee on Appropriations was given
again jurisdiction over all appropriations by an amendment to the Rules
of the House.
?1/ The 100th anniversary of the Committee on Appropriations, March 2,
1965, was the occasion for a rather extended speech by the Chairman
on the history and the changing fortunes of the Committee and the
appropriations process. See Congressional Record, Daily Edition,
March 2, 1965, pp. 3863-3867.
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Duties and Powers of Committee
Rule X of the House provides for the various standing committees
of the House, including the Committee on Appropriations, as follows:
"There shall be elected by the House, at the commencement
of each Congress, the following standing committees:
**************
(b) Committee on Appropriations, to consist of forty-three
Members
Clause 2 of Rule XI of the House assigns the following powers
and duties to the Committee on Appropriations:
"2. Committee on Appropriations:
(a) Appropriation of the revenue for the support of
the Government.
(b) The Committee is authorized, acting as a whole or
by any subcommittee thereof appointed by the Chairman for
the purposes hereof and in accordance with procedures author-
ized by the committee by a majority vote, to conduct studies
and examinations of the organization and operation of any
executive department or other executive agency (including any
agency the majority of the stock of which is owned by the
Government of the United States) as it may deem necessary to
assist it in the determination of matters within its jurisdiction;
and for this purpose the committee or any subcommittee thereof
is authorized to sit and act at such times and places within the
United States, whether the House is in session, has recessed,
or has adjourned, to hold such hearings, to require the attend-
ance of such witnesses, and the production of such books or
papers or documents or vouchers by subpoena or otherwise,
and to take such testimony and records as it deems necessary.
2/ Has been changed from this number in various Congresses. Present
number of 51 Members established by House Resolution at beginning
of 90th Congress, (January, 1967). Prior number of 50 members
set in 82nd Congress (1951).
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Subpoenas may be issued over the signature of the Chairman
of the committee or subcommittee, or by any person designated
by him, and shall be served by such person or persons as the
Chairman of the committee or subcommittee may designate.
The Chairman of the committee or subcommittee, or any
member thereof, may administer oaths to witnesses."
Membership and Subcommittees
As presently constituted, the Committee consists of fifty-one
Members of the House, thirty from the majority and twenty-one from
the minority party.
The bulk of Committee work is processed initially through its
various subcommittees. The Committee empowers the Chairman to
appoint subcommittees and fix their jurisdiction. Presently, there are
twelve subcommittees as follows:
1. Department of Agriculture and Related Agencies (5 Dem. - 3 Rep.)
2. Department of Defense (7 Dem. - 4 Rep.)
3. District of Columbia (4 Dem. - 3 Rep.)
4. Foreign Operations (6 Dem. - 4 Rep.)
5. Independent Offices (6 Dem. - 4 Rep.)
6. Department of Interior and Related Agencies (5 Dem. - 3 Rep.)
7. Departments of Labor and Health, Education and Welfare and
Related Agencies (5 Dem. - 3 Rep.)
8. Legislative (5 Dem. - 4 Rep.)
9. Military Construction (4 Dem. - 3 Rep.)
10. Public Works (5 Dem. - 3 Rep.)
11. Departments of State, Justice and Commerce, the Judiciary, and
Related Agencies (6 Dem. - 4 Rep.)
12. Departments of Treasury and Post Office and Executive Office
(5 Dem. - 3 Rep.)
Note: At the time of printing of this document, the newly-created
Department of Transportation had not been assigned to any
subcommittee. A special subcommittee is to be appointed
at a later date.
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Assignments to Subcommittees
The Chairman of the Committee is empowered by the Committee
to make subcommittee assignments. As a practical matter he confers
with the ranking minority member of the Committee concerning assign-
ments for the minority. Generally, length of service on a subcommittee
determines subcommittee chairmanships and positions of seniority on
subcommittee lists.
Membership on the various subcommittees varies from time to
time as workload and other circumstances require. At present, the
minimum number on any subcommittee is seven and the maximum
number is eleven.
Most Members are presently serving on two subcommittees; a
few Members are serving on three subcommittees.
Committee Staff
The staff of the Committee consists of three parts, each of which
to a large degree operates independently of the others.
The regula"i? staff presently consists of a clerk and staff director,
an assistant clerk and staff director, twenty-one principal and supporting
staff assistants, and editorial, clerical and messenger help. The
principal and supporting staff men are assigned to the various sub-
committees. Most subcommittees have the services of at least two
staff men, a principal and an assistant, as workload requires. Staff
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personnel assist each other as peak workload requires and as hearing
schedules, reporting dates, floor and conference action on the various
appropriation bills permit.
In addition to the regular staff, the Committee has a Surveys and
Investigation Staff which functions independently of the regular staff.
This staff is headed by a director and two assistant directors, each of
whom, is detailed from the Federal Bureau of Investigation. Each of
these men serves as an assistant director for two years and then as
director for the third year, and then return to their former organization.
Additional investigators are brought in on a reimbursable basis from
various Federal agencies and non-government organizations, as
required, to make studies and investigations requested by the various
subcommittees and approved by the Chairman and Ranking Minority
Member. None of the investigators on this staff are permanent
employees of the Committee.
The third segment of the staff is composed of clerical or
stenographic help assigned to the offices of the chairmen and ranking
minority members of the various subcommittees to help meet the
additional workload in those offices.
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Processing of Appropriation Requests
Budget Estimates:
As required by the Budget and Accounting Act of 1921, budget
estimates are submitted to the Congress by the President. The regular
annual budget is forwarded to Congress in January of each year. Supple-
mental and deficiency estimates are submitted from time to time during
each session of Congress as additional appropriation needs develop.
The Budget estimates, when received in the House, are referred
by the Speaker to the Committee on Appropriations. The Chairman in
turn refers them to the appropriate subcommittees for consideration.
Subcommittee Consideration:
The subcommittee staff assistant, at the direction of the Chairman,
obtains the necessary supporting justifications and other material from
the agencies concerned and takes the lead in arranging for subcommittee
hearings and other meetings.
Hearings are held in executive session, due to space limitations
and other factors. Generally, department and agency officials are
heard first in support of their estimates. Following this, testimony is
taken from Members of Congress and others interested in one or more
items in the appropriation request under consideration.
When all hearings have been completed, the subcommittee meets
in executive session to work out and agree upon the bill and report to be
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recommended. During these so-called "mark-up" sessions, the
members of the subcommittee decide upon the amounts to be
recommended for each appropriation item, the language to be
included in the bill, and special directives or statements to be
included in the Committee report which will accompany the bill.
A complete record of the hearings is printed and made available
to Members of the House and others prior to consideration of the bill
by the full committee and on the House floor. Under House rules,
printed hearings must be available at least 3 days before the related
bill is taken up on the floor. (Rule XXI, Clause 6).
Full Committee Consideration:
As soon as ready, the bill and report are considered by the
full committee of fifty-one members. At this meeting, the Chairman,
ranking minority member, and other members of the subcommittee
discuss the bill and report in considerable detail. After full and
free discussion, and after disposition of any amendments, the bill
is reported by the full committee to the House for consideration.
Consideration by House:
The bill is next considered by the full membership of the House
of Representatives. The rules of the House require the lapse of at least
three calendar days between date of reporting by the Committee and
date of consideration by the House, unless unanimous consent is obtained
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for earlier consideration. The subcommittee Chairman customarily
reports the bill on behalf of the Whole Committee; his name appears
on the bill and report and he normally acts as floor manager of the
bill.
The bill is usually considered in the Committee of the Whole
House on the State of the Union. This involves a limited period of
general debate, plus reading of the bill for amendment under the
"five minute rule" which limits discussion to five minutes per member
on each item (Rule XXIII).
Consideration by Senate:
After final passage by the House, the bill is messaged to the
Senate, where under normal procedure the mechanics for processing
are somewhat similar to those described above for the House.
Conference Consideration:
After approval by the Senate, in almost all instances the bill
is sent to Conference to adjust the diffepen.ces between the two versions
of the bill as passed by the two bodies. Conferees named by both the
House and Senate meet together for this purpose. House conferees on
appropriation bills are designated by the Speaker from Members of the
Committee on Appropriations, usually from the subcommittee which
handled the bill in the first instance.
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When agreement is reached as to disposition of each Senate
amendment, a conference report is prepared and approved by the
conferees. This report is then filed with both Houses for disposition.
Sometimes, agreement cannot be reached at the initial conference
on all points of difference, in which event each group of conferees
takes the propositions still at issue back to their respective Houses
for further action. And, sometimes further conferences are necessary,
but in a great many instances, a single conference completes the
business of adjusting differences.
Adoption of Conference Report:
The Conference report is normally acted on first by the House.
Upon House approval, it is sent to the Senate for action. Following
adoption by the Senate, the enrolled bill as finally agreed to by both
Houses is signed by the Speaker and the Vice President and sent to
the President for signature. When signed by the President it becomes
law.
Only rarely does a bill pass both Houses in exactly the same form.
When this happens, conference consideration is not required and the bill
goes to the President for signature without further Congressional action.
And occasionally, the changes made by the Senate are so minor as not to
justify the formal conference routine, in which event the changes are
formally agreed to on the floor of the House.
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BIBLIOGRAPHY
Two sections of bibliography are given for use in broadening your
budgetary background. Section I consists of some "historical standbys"
that have been the basis of understanding the development of the
budgetary process we have today. Section II is a Bureau of the Budget
bibliography dealing with the more recent federal budgeting concepts
and practices.
It should be noted that Section II includes pertinent references
for the period 1960-1965. Most of what has been written since 1965
is referred to or summarized in the publications of the President's
Commission on Budget Concepts:
1. "Report of the President's Commission on Budget
Concepts", Washington, U. S. Government Printing Office,
1967, 109 p.
2. "Staff Papers and Other Materials Reviewed by the
President's Commission", Washington, U. S. Government
Printing Office, 1967, 512 p.
In all probability, the President's Commission has given the best
insight to and is having the greatest impact on current federal
budgetary practices.
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BIBLIOGRAPHY -- SECTION I
REFERENCE READING
to'
1 Bartelt, E. F. Accounting Procedures of the U. S. Government.
Chicago, Public Administration Service, 1940. p. 88-115.
A series of papers on the U. S. Treasury and Government
accounting. Pages 88-115 cover a description of the budget
procedure and control of Federal expenditures. There is an
analogy between Federal Government and business corporations,
and the approach is that of an accountant. Some of the material
is out of date.
2. Blough, Roy. The Federal Taxing Process, N. Y., Prentice-
Hall, 1952. p. 307-386.
3. Buck, A. E. Public Budgeting. N. Y. , Harper, 1929, 612 ID.
4. Burkhead, Jessie. Governmental Budgeting. John Wiley and
Sons, 1956.
5. Committee on Public Debt Policy. Our National Debt, N. Y.,
Harcourt, 1949. 182 p.
Report and recommendations on the public debt. Chapter 2
deals with the Federal budget in controlling Government
spending and managing the national debt,
6. Hanes, John W. Fiscal, Budgeting, and Accounting Systems of
Federal Government. Wash,, D. C., GPO, 1949, 110 p.
7, Huzar, Elias. The Purse and the Sword, Ithaca, Cornell Univ.
Press, 1950. 417 p.
8. Mosher, Fredrick C. Program Budgeting: Theory and Practice.
Syracuse, Public Administration Service, 1954. 258 p,
A detailed consideration of public budgeting with relation to
specific budget plans of the DOD and particularly the Depart-
ment of the Army. The author offers some proposals to over-
come what he believes to be shortcomings in the military
budget program.
9. Naylor, E. E. The Federal Budget System in Operation. Wash.,
D. C., Hayworth, 1941. 306 p.
History and development of the Federal budget system,
1
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10, Seekler-Hudson, Catheryn. Budgeting--An Instrument of Planning
and Management. Wash. , D. C., American Univ., 1944. 6 vols.
(Mimeographed)
Volume V is a group of readings devoted to a consideration of
the formulation of the Federal budget and the appropriation of
funds. In volume VI readings have been selected in an effort
to deal with specific aspects of budgetary execution and fiscal
accountability.
11. Seiko, Daniel T. The Federal Financial System. Wash., D. C.,
Brookings Institute, 1940. 606 p.
Part I explains the development of the Federal financial
system. The following four parts contain critical discussions
of the development and operation of (1) the budget system,
(2) the revenue system, (3) the fiscal system, and (4) the
accounting system as of 1940.
12. Smith, Harold D. The Management of Your Government. N. Y.,
McGraw Hill, 1945. p. 54-99, 167-179.
Chapter V describes the responsibilities of the Bureau of the
Budget. Chapter VI relates the history of the Federal budget.
Chapter VII explains the budget as a management and control
tool. Chapter XIII sketches the management task ahead of the
Nation (1945).
13. Smithies, Arthur. The Budgetary Process in the United States.
N. Y., McGraw Hill, 1955. 469 p.
An extensive study and review of the Federal budgetary process
in the United States. Discusses requirements for Government
accounting systems, and describes the accounting and budget
execution systems of France, Netherlands, Sweden, and the
United States.
14, United Nations. Department of Economic Affairs. Government
Accounting and Budget Execution. N. Y., 1952. 90 p.
15. U. S. Bureau of the Budget. Commission on Organization of the
Executive Branch of the Government. Budget and Accounting.
Wash., D. C., GPO, June 1955. 72 p.
Twenty-five recommendations for improving budgetary and
accounting procedures in executive agencies.
2
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16. Willoughby, W. F. The National BudAet System, Baltimore,
Johns Hopkins Press, 1927. 343 la.
Sets forth the provisions of the Budget a.nd Accounting Act
of 1921 and describes the manner in which it operated in
the next five years.
3
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U.S. BUREAU OF THE BUDGET
LIBRARY
FEDERAL BUDGETING, 1960-1965: A SELECTED BIBLIOGRAPEY
This bibliography deals with United States federal budgeting concepts
and practices. It excludes studies published prior to 1960 and those
on State and municipal budgeting. Articles on specific annual budgets
are omitted as being primarily of temporary interest. Information on
budgeting in other countries is limited to materials which compare
foreign practices with those of the United States,
CONTENTS
Page
GENERAL
1
BUDGET CONCEPTS
2
BUDGET AND FISCAL POLICY
3
BUDGETARY IMPROVEMENTS
7
LONG-RANGE PLANNING
8
PROGRAM AND PERFORMANCE EVALUATION
9
COMPARATIVE BUDGET SYSTEMS
12
October 1965
Mid
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FEDERAL BUDGETING, 1960-1965: A SELECTED BIBLIOGRAPHY
GENERAL
Eckstein, Otto. Public finance. Englewood Cliffs, N.J., Prentice-Hall,
1964. 120p.
Efficiency in government expenditures, p.20-36; Budget policy for
economic stability, p.84-104.
Harris, Joseph P. Congressional control of administration. Washington, D.C.,
Brookings Institution, 196)4. 306p.
Congress and the budget, p.46-67; The appropriations process, p.68-103;
Proposals for budget control reform, p.104-127.
Heilbroner, Robert L. and Peter L. B
New York, Vintage Books, 1963.
The purpose of this primer is
as government spending, deficit
and inflation.
Ott,
ernstein. A primer on government spending.
120p.
to spell out the meaning of such words
financing, the national debt, growth,
David J. and Attia F. Ott. FederaL budget policy. Washington, 1965.
150p. (Brookings Institution, Washington, D.C. Studies of government
finance)
A nontechnical guide
budget making process,
the economy.
for the layman who wishes to understand the
budget policy, and the impact of the budget on
Patterson, Kenneth D. Legislative budget review: an economist's viewpoint.
(In Public administration review, Mar. 1964; v.2)4, p.7-13)
mi "According to this author, the review of governmental budgets involves
questions of economic efficiency which require the quantitative
expression of the relation between 'things,' money, and output. He
011 argues that conflict resulting from the rational questioning of the
executive budget may be evidence of the presence of real economic
alternatives."
smi
Saloma, John S. The responsible use of power; a critical analysis of the
congressional budget process. Washington, American Enterprise Institute
for Public Policy Research, 1964. 101p.
"Primary focus is the authorization-appropriations phase of budgeting,
although it also is concerned with revenue actions, the congressional
review function in the expenditure of funds, and the broader economic
Implications of congressional budgetary decisions."
Smithies, Arthur. The theory of budgeting and government organization.
(In Indian journal of public administration, Jan-Mar. 1964, v.10, .26-33)
trig "Text of a lecture delivered Dec. 11, 1962."
amMil
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GENERAL (Cont'd)
U.S. Congress. Senate. Committee on Government Operations. Financial
management in the Federal Government; a comprehensive analysis of existing
and proposed legislation including financial management improvements made
on a Government-wide basis. Prepared by the staff. Washington, U.S.
Govt. Print. Off., 1961. 366p. (87th Cong., 1st sess. S.Doc.11)
A compilation of significant documents and legislative proposals.
U.S. Laws, statutes, etc. Principal laws relating to the Bureau of the Budget,
with amendments through Dec. 30, 1963. Washington, 1964, 43p.
Weidenbaum, Murray L. Budgetary procedures inhibiting expenditure control.
(In Federal accountant, Summer 1965, v.14, p.83-88)
"Assesses the relatively limited extent to which current procedures
permit congressional control of expenditures."
Wildavsky, Aaron. The politics of the budgetary process. Boston, Little,
Brown and Co. 1964. 216p.
Presents a description and analysis of the roles of people involved
in the Federal budgetary process: how they decide what to ask for,
how they go about trying to get it, how they view each other, the
strategies of consultation and the patterns of discussion.
BUDGET CONCEPTS
Bell, David E. Budget concepts and budget policy. Address.. .before the
American Institute of Certified Public Accountants, Chicago, Oct.30,
1961. Washington, Bureau of the Budget, 1961. 13p.
Budgetary concepts: a symposium. (In Review of economics and statistics,
May 1963, v.)45, p.113-147)
Contents - Introduction, by Seymour E. Harris, - Budgetary reform:
notes on principles and strategy, by Francis M. Bator. - Consolidated
cash statement of Federal financial transactions - some issues, by
Samuel M. Cohn. - Some observations on the budget concept, by Gerhard
Calm and Peter Wagner. - On choice of concepts for the Federal budget,
by Otto Eckstein. - Budget concepts and accounting by Richard Goode. -
Federal budget on national income and product account: the next step,
by George Jaszi. - Should we have capital budget? by Richard A.
Musgrave. - Budgetary accounting for fiscal policy, by Carl S. Shoup.-
a synthesis of Federal accounts, by Stephen Taylor and others. -
Comments by Alvin H. Hansen and Paul W. McCracken.
Chamber of Commerce of the United States of America. Report of the Committee
for Improving the Federal Budget... Washington, 1962. 8p.
In its major recommendations the Committee concludes that "a compre-
hensive cash budget should be the principal vehicle for the President to
present his annual financial plans to the Congress and to the public."
2
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BUDGET CONCEPTS (Cont'd)
Humphrey, Hubert H. The Federal budget as a economic document. (In
Congressional record, Sept. 5, 1962, v.108, p.18,642-18,643)
Addressing himself to the problem of the failure of the economy to
meet the needs of the time, Senator Humphrey concludes that "until we
scrap the obsolete accounting procedures of the Federal administrative
budget, we will be unable to create the dynamism which one has a right
to expect from the leader of the free world."
Levy, Michael E. Fiscal policy, cycles and growth. New York, 1963. 141p.
(National Industrial Conference Board. Studies in business economics
no. 81)
Chapter 6 explores the "fall-employment budget surplus, "with special
emphasis on the meaning and economic significance of the concept.
Chapter 7 considers the national-income-accounts budget, its meaning,
significance, and limitations for fiscal analysis. Reprinted in part in
Conference Board business record, Feb. 1962, v.19, p.8-13.
New budget would help free spenders. (In Nation's business, Aug. 1962,
v.50, p.64-67)
Pros and cons of the capital budget technique, the pros expressed by
Robert C. Turner, Assistant Director, Bureau of the Budget and the
cons by Maurice H. Stans, former Budget Director.
Plumley, H. Ladd. Private business looks at the Federal budget. (In Federal
accountant, Sept. 1963, v.13, p.31-38)
"A comprehensive cash budget, carefully evolved and tested, is
advocated as the most effective framework in which to present overall
Federal planning."
Turner, Robert C. Comcepts of the budget and the budget outlooks Remarks ...
before the Interdepartmental Seminar, Ohio State University, Columbus,
Ohio. Nov. 7, 1961. Washington, Bureau of the Budget, 1961. 16p.
Understanding the Federal Budget, address before the Graduate School
of Savings and Loan, Graduate School of Business, Indiana University,
Aug. 22, 1961. Bloomington, Foundation for Economic and Business Studies,
Indiana University, 1961. 24p. (Indiana University. Bureau of Business
Research. Indiana Business paper no. 2)
Focusses on basic principles underlying the budget and the budget
process.
BUDGET AND FISCAL POLICY
Bator, Francis M. Money and government. (In Atlantic, Apr. 1962, v.209,
p.110-118)
Presents the arguments for and against a balanced Federal budget
"year in and year out."
3
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BUDGET AND FISCAL POLICY (Cont'd)
Bator, Francis M. The question of government spending; public needs and
private wants. New York, Harper, 1960. 167p.
Part One of this study presents the essential facts of public spending,
year by year, since 1929 broken down by source and by major function.
Part Two discusses the issues "which have shaped the postwar debate on
what we can afford, with particular attention to the more popular rules
advanced to guide public spending."
Budget authorities speak out on spending. (In Nation's business, May 1963,
v.51, p.86-90)
Interviews with five former U.S. Budget Bureau Directors who tell
what's right and what's wrong about expenditure trends.
Diamond, James J. Postwar deficity spending and the price level: an
empirical study. (In Quarterly review of economics & business, Summer
1963, v.3, p.97-102)
Examines the record concerning the relationship of Federal Government
budget balances to changes in the price level.
Fellner, William. Budget deficits and their consequences. (In Proceedings
of the Academy of Political Science, May 1963, v.27, p.223-238)
Agrees that "a rational fiscal policy should favor tax reductions in
spite of the resulting deficits." However, considers the deficity
program of the administration "oversized".
The Geographic impact of the Federal budget; a joint undertaking by the Upper
Midwest Research and Devel9pment Council and the University of Minnesota.
Minneapolis, University of Minnesota, 1962. 27p. (Upper Midwest
Economic Study. Technical paper no. 3)
"This study estimates the extent to which the Federal cash budget
redistributes income between areas in the United States."
Gordon, Kermit. Federal budgetary policy in economic perspective. (In
Federal accountant, Sept. 1963, v.13, p.19-30)
Illustrates how economic factors are guiding the 1965 budget
determinations currently in process.
Holmans, A.E. United States fiscal policy, 1945-1959; its contribution to
economic stability. London, Oxford University Press, 1961. 342p.
Lewis, Wilfred. Federal fiscal policy in the postwar recessions. Washington,
1962. 311p. (Brookings Institution, Washington, D.C. Studies of
government finance)
"Describes, measures, and evaluates the Federal Government's fiscal
activity during 1948-50, 1953-55, 1957-59, and 1960-62. ...gives
attention to the statements by public officials and others about what
the Government did and about the actions that were proposed but not
carried out. The author seeks to point out the sources of weakness and
strength of fiscal policy and to suggest ways in which improvements can
be made."
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BUDGET AND FISCAL POLICY (Cont' d)
Nourse, Edwin G. Study in interaction, the national budget and the economy.
mi (In Challenge, May 1961, v.9, p.12-16)
Phelps, Edmund S., ed. Private wants and public needs; issues surrounding
the size and scope of Government expenditure. New York, Norton, 1962.
148p.
The economists and political philosophers whose works are included in
this volume debate the issue of private vs. public spending and suggest
moo
criteria for judging the proper role of government expenditures.
Smithies, Arthur. The balanced budget. (In American economic review, May
1960, v.50, p.301-309)
Offers three suggestions for improvement in the formation of fiscal
and budget policy: (1) the President should transmit his budget to
Congress as part of a comprehensive economic program; (2) the President's
economic program should distinguish between long-run economic policy and
the policy needed to counteract particular episodes of boom and recession;
and (3) the question of countercyclical policy should be dealt with in
a separate chapter of the President's program. Discussion follows by
Samuel M. Cohn.
Solomon, Robert. A note on the full employment budget surplus. (In Review
of economics and statistics, Feb. 196)-i-, v.46, p.105-108)
Staats, Elmer B. Government outlays and the tax outlook. Statement for
presentation on a panel on "The short-term outlook by sectors" at the
5th Annual Economic Conference of the National Industrial Conference
Board, New York. May 17, 1962. Washington, Bureau of the Budget, 1962.
10p.
Turner, Robert C. Budget methods and economic policy. Remarks before the
Midwest Economics Association, Omaha, Nebraska. Apr.12, 1962. Washington,
Bureau of the Budget, 1962. 16p.
Discusses relation of budget policy to employment and economic growth.
U.S. Congress. Joint Economic Committee, The Federal budget as an economic
document. Hearings before the Subcommittee on Economic Statistics ...
88th Cong., 1st sess. pursuant to sec. 5(a) of Public law 304 (79th
Congress). Washington, U.S. Govt.Print. Off., 1963. 355p.
Statement of Charles L. Schultze, p.149-212.
With this is bound Committee print: The Federal budget as an economic
document; report. (88th Cong., 1st sess. S.Rept. 396)
The Federal budget as an economic document. Prepared for the Subcommittee
on Economic Statistics by Roy E. Moor ... Washington, U.S. Govt.Print.Off.,
1962. 189p. (87th Cong. 2d sess. Joint Committee print)
"Examines the Federal budget from only one aspect: the extent to
which the budget indicates the economic impact of the Federal Government
on the private sector of the economy. No attempt is made to appraise the
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BUDGET AND FISCAL POLICY (Cont'd)
effectiveness of the budget in performing other functions." For a
summary see: "Budget doesn't tell us enough," by Roy E. Moor.
(In Challenge, May 1962, v.10, p.16-19)
U.S. Congress Joint Economic Committee. Fiscal policy issues of the coming
decade. Hearings before the Subcommittee on Fiscal Policy...89th Cong.,
1st sess., July 20-22, 1965. Washington, U.S.Govt.Print.Off., 1965,
105p.
Testimony of Gardner Ackly, Chairman, Council of Economic Advisers,
p.2-33; and Charles L. Schultze, Director, Bureau of the Budget, p.59-96.
---- Fiscal policy issues of the coming decade; statements by individual
economists and representatives of interested organizations. Materials
submitted to the Subcommittee on Fiscal Policy... Washington, U.S.
Govt.Print.Off., 1965. 196p. (89th Cong., 1st sess. Joint
Committee print)
Includes statements by Kenneth Boulding, Arthur F. Burns, Gerhard
Colm, Seymour E. Harris, Raymond J. Saulnier and others on such issues
as the future economic consequences of present trends in Federal revenues
and expenditures, the applicability of full employment budget analysis
to policy determination, recent or needed analyses of the impact of
past policy decisions, measures to strengthen the Federal Government's
contribution to economic growth and stability, tax revisions, etc.
U.S. Congress. Senate. Committee on Government Operations. Create a Joint
Committee on the Budget. Hearings...88th Cong., 1st sess. on S.537,
a bill to amend the Legislative Reorganization Act of 1946 to provide for
more effective evaluation of the fiscal requirements of the executive
agencies of the Government of the United States, Mar. 19-20, 1963.
Washington, U.S.Govt.Print.Off., 1963. 114p.
---- Joint Committee on the Budget. Report to accompany S.2, amending the
legislative Reorganization Act of 1946 to provide for more effective
evaluation of the fiscal requirements of the executive agencies of the
Government of the United States. Jan. 26, 1965. Washington, U.S.
Govt.Print.Off., 1965. 75p. (89th Cong., 1st sess. Senate. Rept.6)
Universities-National Bureau Committee for Economic Research. Public
finances: needs, sources, and utilization; a conference... Princeton,
Princeton University Press, 1961. 512p. (National Bureau of Economic
Research. Special conference series, 12)
Papers "devoted to separate aspects of the larger problem of collective
decision-making. They do not examine individual behavior in response
to government fiscal action, but rather individual behavior in making
decisions that constitute fiscal action."
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BUDGET AND FISCAL POLICY (Cont' d)
Vickrey, William S. The balanced budget; defense against inflaction?
(In Challenge, Apr, 1960, v.8, p.57-61)
Concludes that the "inflationary or deflationary effect of a budget
depends very markedly on the makeup of both the revenues and the
expenditures; it cannot be inferred from a mere surplus or deficit
figure."
Weidenbaum, Murray L. Federal budgeting; the choice of Government programs.
Washington, American Enterprise Institute for Public Policy Research,
1964. 99p.
"The author indicates several lines of potential improvement in both
the preparation of the Federal budget in the executive branch and the
review of the budget by the Congress."
BUDGETARY IMPROVEMENTS
Held, Walter G. Systemic improvement in the Federal budgetary process. (In
Armed Forces comptroller, Mar. 1961, v.6, p.18-28)
Concerned with "certain general concepts and aspects of the budget
process, specific features of budget structure and format, and organi-
zation problems and selected procedures. Observations regarding the
validity of present arrangements or suggestions for change and improve-
ment are presented."
Joint Financial Management Improvement Program. Improvement of financial
management in the United States Government; progress 1948-1963.
Washington, U.S.Govt.Print.Off., 1964, 102p.
Covert title: 15 years of progress.
McCandless, William F. Ten years of progress. (In Armed Forces comptroller,
Mar. 1960, v.5, p.7-11)
Reviews the progress made during the last ten years in financial
management in the Department of Defense.
Novick, David and G.H. Fisher. Federal budget as a business indicator.
(In Harvard business review, May-June 1960, v.38, p.64-72)
Using the defense budget to illustrate their point, the authors
recommend five major improvements which should be made in the present-
ation of the Federal budget document.
Stans, Maurice H. Current improvements in Federal budgeting. (In Journal
of accountancy, July 1960, v.110, p.27-31)
Enumerates the steps which have been taken within the executive branch
Lu regard to control of foreign currencies, elimination of "back-door"
v.* spending, extension of cost-based budgeting, and accrued expenditure
limitations.
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U. S. Bureau of the Budget. Progress in improving budget practices, 1953 to
1961. Washington, 1961. 7p. (Its Staff report 1961 no. 2)
Weidenbaum, Murray L. Improving the Federal budget. (In Federal accoun-
tant, Dec. 1963, v. 13, p. 101-112)
"...sets forth specific recommendations for improving the budget
in its two-fold aspect: as an instrument for decision-making
within government and as a tool of business and economic analysis."
LONG-RANGE PLANNING
Bell, David E. Longer-range budgeting and program planning. Address .
at the 17th annual meeting of the National Association of State
Budget Officers, Gatlinburg, Tenn., Aug. 21, 1961. Washington,
Bureau of the Budget, 1961. 16p.
Discusses two aspects of longer-range budgeting and planning as
they appear in the Federal context. "The first relates to fiscal
policy and the relationship between budgetary decisions and the
economic outlook. The second relates to the making of decisions
on particular programs and to the use of the budget as an instrument
of coordination among different programs..."
Carey, William D. Long-range budgeting and planning. Address...
?before the Financial Management Roundtable, Washington, D.C.,
May 23, 1961. Washington, Bureau of the Budget, 1961. 6p.
Staats, Elmer B. Relationship of budget planning to long-range
planning. Address before the Financial Management Roundtable,
Washington, D.C., Nov. 28, 1961. Washington, Bureau of the
Budget, 1961, 13 p.
Steiner, George A., ed. Managerial long-range planning. New York,
McGraw-Hill, 1963. 334 p.
Partial contents -- Long-range planning in the Atomic Energy
Commission, by John L. McGruder -- Program budgeting: long-
range planning in the Department of Defense, by David Novick --
Long-range planning in the Federal Aviation Agency, by Alan L.
Dean -- Long-range planning in the National Aeronautics and
Space Administration, by Addison M. Rothrock.
U.S. Bureau of the Budget. Ten-year projection of Federal budget
expenditures. Special study. Washington, 1961. 72p.
In this ten year projection three alternative levels of
expenditures are presented--low, medium, and high--based
generally on a continuation of the present international
situation, but representing different attitudes about the
role to be played by the Federal Government in the coming
decade.
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Breckner, Norman V. Search for an appropriation basis. (In National tax
journal, Sept. 1960, v. 13, p. 270-281)
Considers the origin of the issue and some alternative proposals.
Dorfman, Robert, ed. Measuring benefits of government investments. Papers
presented at a conference of experts held Nov. 7-9, 1963. Washington,
1965. 429 p. (Brookings Institution. Studies of government finance)
Contents. Government research and development programs, by Fredric
M. Scherer. Outdoor recreation, by Ruth P. Mack and Sumner Myers.
Preventing high school dropouts, by Burton A. Weisbrod. Civil
aviation expenditures, by Gary Fromm. Urban highway investments, by
Herbert Mohring. Urban renewal programs, by Jerome Rothenberg.
Syphilis control programs, by Herbert E. Klarman.
Enthoven, Alain C. Economic analysis in the Department of Defense.
Address by Deputy Assistant Secretary of Defense (Systems Analysis)
before the American Economic Association, Pittsburgh, 29 Dec.
1962. Washington, Department of Defense, 1962 17p.
Focuses "upon the problems of determining requirement for weapons
systems and forces, that is, the allocation of the defense budget."
Herman, Robert S. Two aspects of budgeting. (In Indian journal of public
administration, July-Sept. 1962, v. 8, p. 317-331)
Considers the budget function in modern government and some uses
and limitations of performance budgeting.
Hitch, Charles J. Management of the defense dollar. (In Federal accoun-
tant, June 1962, v. 11, p. 33-44)
"An authoritative exposition of the new approach to decision-
makine in the Government's largest department, with emphasis on its
accounting and auditing impact."
---- Plans, programs, and budgets in the Department of Defense. (In
Operations research, Jan.-Feb. 1963, v. 11, p. 1-17)
Hitch, Charles J. and Roland N. McKean. Economics of defense in the
nuclear age. Cambridge, Harvard University Press, 1960. 422p.
Massey, Robert J. Program packages and the program budget in
ment of Defense. (In Public administration review, Mar.
p. 30-34)
Author argues that programming by-passes problems that
trated attempts at program budgeting.
the Depart-
1963, V. 23,
have frus-
Novick, David. Costing tomorrow's weapon systems. (In Quarterly review
of economics & business, Spring 1963, v. 3, p. 33-)40)
Describes the process of looking at a range of values called cost
sensitivity analysis which appears promising as a way of giving the
planner a full view of the cost implications of decisions affecting
system configuration and operations.
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Novick, David. Planning ahead in the Department of Defense. (In California
management review, Summer 1963, v. 5, p. 35-42)
Describes the new planning and programming process initiated in the
Department of Defense which incorporates and up-to-date, five-year force
structure and financial program, expressed in terms of forces, manpower,
and dollar requirements.
Program budgeting in the Department of Defense. Santa Monica, Calif.,
1964. 29p. (Rand Corporation. Research memorandum RM-4210-RC)
This chapter from a forthcoming book describes procedural changes in
planning, programming and budgeting in the Department of Defense;
considers problems encountered during the transition; and discusses
changes still to come.
---- Program budgeting...program analysis and the Federal budget. Washing-
ton, U.S. Govt. Printing Office, 1965. 236p.
A Rand Corporation-sponsored research study.
This is an abridgment of a larger Rand Corporation study of program
budgeting to be privately published. It is being made available in this
form to provide timely and freely accessible assistance to those con-
cerned with the application of program budgeting in the Federal Government.
Rowen, Henry S. Improving decision making in government. Talk...at a
meeting of the Budget Bureau's Summer Seminar on Systems Analysis and
Program Evaluation, Aug. 19, 1965. Washington, Bureau of the Budget
1965, 28p.
Schultze, Charles L. Needed: new approach to expenditure evaluation. (In
Tax review, Aug. 1965, v. 26, p.31-3)4)
Based on a statement made before the Joint Economic Committee.
----
Statement.. .before the Joint Committee on the Organization of the
Congress, Aug. 31, 1965. Washington, Bureau of the Budget, 1965.
21p.
Smithies, Arthur. A conceptual framework for the program budget. Santa
Monica, Calif., 1964. 41p. (Rand Corporation. Research memoran-
dum RM-4271-RC)
This chapter from a forthcoming book, presently in preparation by
Rank staff members, "outlines the government decision-making process
and the role of budgeting in it; traces past improvements in the
budgetary process; examines the techniques of program budgeting; and
considers some possible problems of organization and administration
in connection with implementation of the program budget."
Staats, Elmer B. Evaluating program effectiveness. (In Bowen, Donald
and Caldwell, Lynton K., eds. Program formulation and development;
the role of the government executive. Bloomington, Indiana Univer-
sity, Department of Government, 1960, p. 62-76)
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United Nations. Department of Economic and Social Affairs. A manual for
programme and performance budgeting... Prepared by Frank Krause for
the Workshop on Problems of Budget Reclassification and Management in
South America, Santiago, Chile, 3-15 September 1962. New York, 1962
140p. (United Nations. Economic and Social Council. E/CN.12/BRW.2/
L.5)
---- Performance budgeting for capital projects (an illustrative appli-
cation). Prepared by Frank Krause for the Workshop on Problems of
Budget Classification and Management in South America... Santiago,
Chile, 3-15 September 1962. New York, 1962 35p. (United Nations.
Economic and Social Council. E/CN.12/BRW.2/L.5 add.1)
U.S. Bureau of the Budget. United States Government planning-programming-
budgeting system. Washington, 1965, 7 1.
Charts describing the new "Planning-Programming-Budgeting System."
U.S. Congress. Senate. Committee on Government Operations. Organizing
for national security: the Bureau of the Budget and the budgetary
process. A study submitted... by its Subcommittee on National
Policy Machinery. Washington, U.S. Government Printing Office, 1961.
8p. (87th Cong., 1st sess. Committee print)
In the job of making the budgetary process a more versatile and
useful tool of the President two problems rank highest according
to the Jackson Committee. These are: "How to make tile budget more
helpful in forward planning. And how to make it more useful in
illuminating program choices and measuring program performance."
---- Organizing for national security. Hearings before the Subcom-
mittee on National Policy Machinery... 87th Cong., 1st sess. July
24-Aug. 1, 1961. Washington, U. S. Government Printing Office,
1961. 169p.
See: pt.8: The budget and the policy process.
Includes testimony of David E. Bell, Maurice H. Stans, Charles J.
Hitch and Wilfred J. McNeil.
The United States Department
system presented by W.L.
1965, 55p.
Charts and commentary
Budget's Summer Seminar
Aug. 31, 1965.
of Defense planning-programming-budgeting
Johnson, Jr. Washington, Dept. of Defense,
accompanying talk given at the Bureau of the
on Systems Analysis and Program Evaluation,
Weidenbaum, Murray L. Another look at the budget. (In Challenge, July
1964, v. 12, p. 4-7)
Urges the adoption of a different method of presenting the Federal
budget, grouping program expenditures according to certain basic
purposes, an approach which the author feels would aid the evaluation
of each Federal program in relation to other programs and national
priorities.
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Biswas, A. N. Problems of the national budget. (In Indian journal of public
administration, Jan.-Mar. 1962, v. 8, p. 75-81)
Brief review of the main characteristics of the budget system in
various countries in Europe, the United States, and the United Nations.
Caulcott, T. H. Control of public expenditure. (In Public administration,
Autumn 1962, v. 40, p. 267-288)
Compares the work of the Bureau of the Budget with that of the Treasury
in the British Government in controlling expenditure. Considers their
organization, examination of the estimates, their continuing control,
and policy formation.
Gantt, Andrew H. Central governments: cash deficits and surpluses. (In
Review of economics and statistics, Feb. 1963, v. 45, p. 3)4-46)
Presents "a method for measuring cash deficits and surpluses for
the central governments of the United States, the United Kingdom,
France, and West Germany on a comparable basis using the concepts emp-
loyed by the United States Government." Also issued as Brookings
Institution. Studies of Government Finance. Reprint no. 68.
---- European budgetary experience: its implications for the U. S.
Budget presentation. (In U.S. Congress. Joint Economic Committee.
The Federal budget as an economic document. Hearings... 88th Cong.,
1st sess... Apr. 23-30, 1963, p. 307-317)
Where deficits are no concern. (In U.S. news and world report, Sept. 2,
1963, v. 55, p. 76-78)
Findings of a survey made by the Economic Unit of U.S. News and
World Report of the budget policies of seven countries.
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BUDGET LAWS
The following are excerpts from public laws pertinent to the
budgetary process and the responsible agencies:
1. Budget and Accounting Act, 1921. (Public Law 13--67th Cong.)
Title II.--The Budget
Sec. 201. The President shall transmit to Congress on the
firs-C day of each regular session, the Budget, which shall set forth in
summary and in detail:
(a) Estimates of the expenditures and appropriations neces-
sary in his judgment for the support of the Government for the ensuing
fiscal year; except that the estimates for such year for the Legislative
Branch of the Government and the Supreme Court of the United States
shall be transmitted to the President on or before October 15th of each
year, and shall be included by him in the Budget without revision;
(b) His estimates of the receipts of the Government during
the ensuing fiscal year, under (1) laws existing at the time the Budget
is transmitted and also (2) under the revenue proposals, if any, con-
tained in the Budget;
(c) The expenditures and receipts of the Government during
the last completed fiscal year;
(d) Estimates of the expenditures and receipts of the Govern-
ment during the fiscal year in progress;
(e) The amount of annual, permanent, or other appropriations,
including balances of appropriations for prior fiscal years, available
for expenditure during the fiscal year in progress, as of November 1 of
such year.
(f) Balanced statements of (1) the condition of the Treasury at
the end of the last completed fiscal year, (2) the estimated condition of
the Treasury at the end of the fiscal year in progress, and (3) the esti-
mated condition of the Treasury at the end of the ensuing fiscal year
if the financial proposals contained in the Budget are adopted;
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(g) All essential facts regarding the bonded and other inde
edness of the Government; and
(h) Such other financial statements and data as in his opinion
are necessary or desirable in order to make known in all practicable
detail the financial condition of the Government.
Tax and Loan Recommendations
Sec. 202. (a) If the estimated receipts for the ensuing fiscal
year contained in the Budget, on the basis of laws existing at the time
the Budget is transmitted, plus the estimated amounts in the Treasury
at the close of the fiscal year in progress, available for expenditure in
the ensuing fiscal year, are less than the estimated expenditures for the
ensuing fiscal year contained in the Budget, the President in the Budget
shall make recommendations to Congress for new taxes, loans, or
other appropriate action to meet the estimated deficiency.
(b) If the aggregate of such estimated receipts and such esti-
mated amounts in the Treasury is greater than such estimated expendi-
tures for the ensuing fiscal year, he shall make such recommendations
as in his opinion the public interests require.
Supplemental and Deficiency Estimates
Sec. 203. (a) The President from time to time may transmit
to Congress supplemental or deficiency estimates for such appropria-
tions or expenditures as in his judgment (1) are necessary op account
of laws enacted after the transmission of the Budget, or (2) are other-
wise in the public interest. He shall accompany such estimates with a
statement of the reasons therefor, including the reasons for their
omission from the Budget.
(b) Whenever such supplemental or deficiency estimates reach
an aggregate which, if they had been contained in the Budget, would have
required the division (a) of section 202, he shall thereupon make such
recommendations.
Justification Statements
(b) Estimates for lump-sum appropriations contained in the
Budget or transmitted under section 203 shall be accompanied by
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statements showing, in such detail and form as may be necessary to
inform Congress, the manner of expenditure of such appropriations and
of the corresponding appropriations for the fiscal year in progress and
the last completed fiscal year. Such statements shall be in lieu of
statements of like character now required by law.
Additional Re9uests
Sec. 206. No estimate or request for an appropriation
and no request for an increase in an item of any such estimate or request,
and no recommendation as to how the revenue needs of the Government
should be met, shall be submitted to Congress or any committee thereof
by any officer or employee of any department or establishment, unless
at the request of either House of Congress.
Bureau of the Budget
Sec. 207. There is hereby created in the Treasury Department
a Bureau to be known as the Bureau of the Budget. There shall be in
the Bureau a Director and an Assistant Director, who shall be appointed
?by the President . . . The Bureau, under such rules and regulations
as the President may prescribe, shall prepare for him the Bud,$et, the
alternative Budget, and any supplemental or deficiency estimates, and
to this end shall have authority to assemble, correlate, revise, reduce,
or increase the estimates or -Lie several departments or establishments.
Committee Aid
Sec. 212. The Bureau shall, at the request of any committee
of either House of Congress having jurisdiction over revenue or appro-
priations, furnish the committee such aid and information as it may
request.
Department Information
Sec, 213. Under such regulations as the President may pre-
scribe, (1) every department and establishment shall furnish to the
Bureau such information as the Bureau may from time to time require,
and (2) the Director and the Assistant Director, or any employee of
the Bureau when duly authorized, shall, for the purpose of securing
such information, have access to, and the right to examine, any books,
documents, papers, or records of any such department or establishment.
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Budget Officers
Sec. 214. (a) The head of each department and establishment
shall designate an official thereof as budget officer therefor, who, in
each year under his direction and on or before a date fixed by him,
shall prepare the departmental estimates.
(b) Such budget officer shall also prepare, under the direction
of the head of the department or establishment, such supplemental and
deficiency estimates as may be required for its work.
Department Estimates
Sec. 215. The head of each department and establishment
shall revise the departmental estimates and submit them to the Bureau
on or before September 15 of each year. In case of his failure so to do,
the President shall cause to be prepared such estimates and data as are
necessary to enable him to include in the Budget estimates and state-
ments in respect to the work of such department or establishment.
Title III.--General Accounting Office.
or Sec. 301. There is created an establishment of the Government
to be known as the General Accounting Office, which shall be independent
of the executive departments and under the control and direction of the
Comptroller General of the United States . . . .
oi
Comptroller General
Sec. 302. There shall be in the General Accounting Office a
Comptroller General of the United States and an Assistant Comptroller
General of the United States, who shall be appointed by the President
with the advice and consent of the Senate, . . . .
Sec. 303. Except as hereinafter provided in this section, the
Comptroller General and the Assistant Comptroller General shall hold
office for fifteen years. The Comptroller General shall not be eligible
for reappointment. The Comptroller General or the Assistant Comp-
troller General may be removed at any time by joint resolution o
Congress after notice and hearing, when, in the judgment of Congress,
the Comptroller General or Assistant Comptroller General has become
permanently incapacitated or has been inefficient, or guilty of neglect
of duty, or of malfeasance in office, or of any felony or conduct involving
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moral turpitude, and for no other cause and in no other manner except
by impeachment. Any Comptroller General or Assistant Comptroller
General removed in the manner herein provided shall be ineligible for
reappointment to that office. When a Comptroller General or Assistant
Comptroller General attains the age of seventy years, he shall be re-
tired from his office.
Claims and Demands
Sec. 305. Section 236 of the Revised Statutes is amended to
read as follows:
"Sec. 236. All claims and demands whatever by the Govern-
ment of the United States or against it, and all accounts whatever in
which the Government of the United States is concerned, either as debtor or
creditor, shall be settled and adjusted in the General Accounting Office."
Comptroller's Reports and Investigations
Sec. 312. (a) The Comptroller General shall investigate, at
the seat of government or elsewhere, all matters relating to the receipt,
disbursement, and application of public funds, and shall make to the
President when requested by him, and to Congress at the beginning of
each regular session, a report in writing of the work of the General
Accounting Office, containing recommendations concerning the legisla-
tion he may deem necessary to facilitate the prompt and accurate rendi-
tion and settlement of accounts and concerning such other matters
relating to the receipt, disbursment, and application of public funds as
he may think advisable. In such regular report, or in special reports
at any time when Congress is in session, he shall make recommenda-
tions looking to greater economy or efficiency in public expenditures.
(b) He shall make such investigations and reports as shall be
ordered by either House of Congress or by any committee of either House
having jurisdiction over revenue, appropriations, or expenditures. The
Comptroller General shall also, at the request of any such committee,
direct assistants from his office to furnish the committee such aid and
information as it may request.
(c) The Comptroller General shall specially report to Congress
every expenditure or contract made by any department or establishment
in any year in violation of law.
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(d) He shall submit to Congress reports upon the adequacy and
effectiveness of the administrative examination of accounts and claims
in the respective departments and establishments and upon the ade-
quacy and effectiveness of departmental inspection of the offices and
accounts of fiscal officers.
(e) He shall furnish such information relating to expenditures
and accounting to the Bureau of the Budget as it may request from time
to time.
2. Government Corporation Control Act, 1945.(Public Law 248--
79th Cong.)
Title I.--Wholly Owned Government Corporations.
Sec. 102. Each wholly owned Government corporation shall
cause to be prepared annually a budget program, which shall be sub-
mitted to the President through the Bureau of the Budget on or before
September 15 of each year. The Bureau of the Budget, under such
rules and regulations as the President may establish, is authorized and
directed to prescribe the form and content of, and the manner in which,
such budget program shall be prepared and presented. The budget pro-
gram shall be a business-type budget, or plan of operations, with due
allowance given to the need for flexibility, including provision for emer-
gencies and contingencies, in order that the corporation may properly
carry out its activities as authorized by law. The budget program shall
contain estimates of the financial condition and operations of the corpora-
tion for the current and ensuing fiscal years and the actual condition and
results of operation for the last completed fiscal year. Such budget
program shall include a statement of financial condition, a statement of
income and expense, an analysis of surplus or deficit, a statement of
sources and application of funds, and such other supplementary state-
ments and information as are necessary or desirable to make known the
financial condition and operations of the corporation. Such statements
shall include estimates of operations by major types of activities,
together with estimates of administrative expenses, estimates of bor-
rowings, and estimates of the amount of Government capital funds which
shall be returned to the Treasury during the fiscal year or the appropria-
tions required to provide for the restoration of capital impairments.
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a project, such estimated cost to be revised and necessary appropria-
tion adjustments made when adequate data become available.
3. Budget and Accounting Procedures Act of 1950. (Public Law
784-81st Cong.)
Title I--Budgeting and Accounting
The President
Sec. 102. (a) Section 201 of such Act is amended to read as
follows:
"Sec. 201. The President shall transmit to Congress during
the first fifteen days of each regular session, the Budget, which shall
set forth his Budget message, summary data and text, and supporting
detail. The Budget shall set forth in such form and detail as the
President may determine:
"(a) functions and activities of the Government;
"(b) any other desirable classifications of data;
"(c) a reconciliation of the summary data on expenditures
with proposed appropriations;
"(d) estimated expenditures and proposed appropriations
necessary in his judgment for the support of the Government for
the ensuing year, except that estimated expenditures and proposed
appropriations for such year for the legislative branch of the Govern-
ment and the Supreme Court of the United States shall be trans-
mitted to the President on or before October 15 of each year, and
shall be included by him in the Budget without revision;
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"(e) estimated receipts of the Government during the ensuing
fiscal year, under (1) laws existing at the time the Budget is trans-
mitted and also (2) under the revenue proposals, if any, contained
in the Budget;
"(f) actual appropriations, expenditures, and receipts of the
Government during the last completed fiscal year;
"(g) estimated expenditures and receipts, and actual or pro-
posed appropriations of the Government during the fiscal year in
progress;
"(h) balanced statements of (1) the condition of the Treasury
at the end of the last completed fiscal year, (2) the estimated con-
dition of the Treasury at the end of the fiscal year in progress, and
(3) the estimated condition of the Treasuty at the end of the ensuing
fiscal year if the financial proposals contained in the Budget are
adopted;
"(i) all essential facts regarding the bonded and other in-
debtedness of the Government; and
"(j) such other financial statements and data as in his opinion
are necessary or desirable in order to make known in all practicable
detail the financial condition of the Government."
Supplemental and Deficiency Appropriations
(b) Section 203 of such Act is amended to read as follows:
"Sec. 203. (a) The President from time to time may transmit
to Congress such proposed supplemental or deficiency appropriations
as in his judgment (1) are necessary on account of laws enacted after the
transmission of the Budget, or (2) are otherwise in the public interest.
He shall accompany such proposals with a statement of the reasons
therefor, including the reasons for their omission from the Budget.
Contents and Arrangement
(c) Section 204 of such Act is amended to read as follows;
"Sec. 204. (a) Except as otherwise provided in this Act, the
contents, order, and arrangement of the proposed appropriations and the
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statements of expenditures and estimated expenditures contained in the
Budget or transmitted under section 203, and the notes and other data
submitted therewith, shall conform to requirements prescribed by the
President.
"(b) The Budget, and statements furnished with any proposed
supplemental or deficiency appropriations, shall be accompanied by
information as to personal services and other objects of expenditure
in the same manner and form as in the Budget for the fiscal year 1950:
Provided, That this requirement may be waived or modified, either
generally or in specific cases, by joint action of the committees of
Congress having jurisdiction over appropriation: and provided further,
That nothing in this Act shall be construed to limit the authority of
committees of Congress to request and receive such information in
such form as they may desire in consideration of and action upon budget
estimates."
Changes in Form
(d) Section 205 of such Act is amended to read as follows:
"Sec. 205. Whenever any basic change is made in the form of
the Budget, the President, in addition to the Budget, shall transmit to
Congress such explanatory notes and tables as may be necessary to
show where the various items embraced in the Budget of the prior year
are contained in the new Budget."
Bureau Changes
(e) The last sentence of section 207 of such Act is amended to
read as follows: "The Bureau, under such rules and regulations as the
President may prescribe, shall prepare the Budget, and any proposed
supplemental or deficiency appropriations, and to this end shall have
authority to assemble, correlate, revise, reduce, or increase the re-
quests for appropriations of the several departments or establishments."
(f)
Department Requests
Section 214. The head of each department and establishment
shall prepare or cause to be prepared in each year his requests for
regular, supplemental, or deficiency appropriations."
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(g) Section 215 of such Act is amended to read as follows:
"Sec. 215. The head of each department and establishment
shall submit his requests for appropriations to the Bureau on or before
a date which the President shall determine. In case of his failure to do
so, the President shall cause such requests to be prepared as are neces-
sary to enable him to include such requests with the Budget in respect
to the work of such department or establishment."
Business Type Budget
Sec. 105. The first two sentences of section 102 of the Govern-
ment Corporation Control Act of 1945 (59 Stat. 597), are amended to read
as follows: "Each wholly awned Government corporation shall cause to
be prepared annually a business-type budget which shall be submitted
to the Bureau of the Budget, under such rules and regulations as the
President may establish as to the date of submission, the form and con-
tent, the classifications of data, and the manner in which such budget
program shall be prepared and presented."
Accounting fy-stems
Sec. 111. It is the policy of the Congress in enacting this part
that--
(a) The Accounting of the Government provide full disclosure
of the results of financial operations, adequate financial information
needed in the management of operations and the formulation and execu-
tion of the Budget, and effective control over income, expenditures,
funds, property, and other assets.
(b) Full consideration be given to the needs and responsibilities
of both the legislative and executive branches in the establishment of
accounting and reporting systems and requirements.
(c) The maintenance of accounting systems and the producing
of financial reports with respect to the operations of executive agencies,
including central facilities for bringing together and disclosing informa-
tion on the results of the financial operations of the Government as a
whole, be the responsibility of the executive branch.
(d) The auditing for the Government, conducted by the Comp-
troller General of the United States as an agent of the Congress be
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directed at determining the extent to which accounting and related
financial reporting fulfill the purposes specified, financial transactions
have been consummated in accordance with laws, regulations or other
legal requirements, and adequate internal financial control over opera-
tions is exercised, and afford an effective basis for the settlement of
accounts of accountable officers.
(e) Emphasis be placed on effecting orderly improvements
resulting in simplified and more effective accounting, financial report-
ing, budgeting, and auditing requirements and procedures and on the
elimination of those which involve duplication or which do not serve a
purpose commensurate with the costs involved.
(0 The Comptroller General of the United States, the Secretary
of the Treasury, and the Director of the Bureau of the Budget conduct a
continuous program for the improvement of accounting and financial
reporting in the Government.
Accounting and Reporting Provisions
Sec. 112. (a) The Comptroller General of the United States,
after consulting the Secretary of the Treasury and the Director of the
Bureau of the Budget concerning their accounting, financial reporting,
and budgetary needs, and considering the needs of the other executive
agencies, shall prescribe the principles, standards, and related require-
ments for accounting to be observed by each executive agency, including
requirements for suitable integration between the accounting processes
of each executive agency and the accounting of the Treasury Department.
(b) The General Accounting Office shall cooperate with the
executive agencies in the development of their accounting systems, in-
cluding the Treasuty Department, in the development and establishment
of the system of central accounting and reporting required by section
114 of this part. Such accounting systems shall be approved by the Comp-
troller General when deemed by him to be adequate and in conformity
with the principles, standards, and related requirements prescribed
by him.
(c) The General Accounting Office shall from time to time
review the accounting systems of the executive agencies. The results of
such reviews shall be available to the heads of the executive agencies
concerned, to the Secretary of the Treasury, and to the Director of the
is. Bureau of the Budget, and the Comptroller General shall make such
reports thereon to the Congress as he deems proper.
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Agency Systems
Sec. 113. (a) The head of each executive agency shall establish
and maintain systems of accounting and internal control designed to
provide-
(1) full disclosure of the financial results of the agency's
activities;
(2) adequate financial information needed for the agency's
management purposes;
(3) effective control over and accountability for all funds,
property, and other assets for which the agency is responsible,
including appropriate internal audit;
(4) reliable accounting results to serve as the basis for
preparation and support of the agency's budget request for con-
trolling the execution of its budget, and for providing financial
information required by the Bureau of the Budget under section
213 of the Budget and Accounting Act, 1921 (42 Stat. 23);
(5) suitable integration of the accounting of the agency with
the accounting of the Treasury Department in connection with the
central accounting and reporting responsibilities imposed on the
Secretary of the Treasury by section 114 of this part.
(b) The accounting systems of executive agencies shall conform
to the principles, standards, and related requirements prescribed by
the Comptroller General pursuant to section 112 (a) of this part.
Treasury Reports
Sec. 114. (a) The Secretary or the Treasuty shall prepare
such reports for the information of the President, the Congress, and the
public as will present the results of the financial operations of the Govern-
ment: Provided, That there shall be included such financial data as the
Director of the Bureau of the Budget may require in connection with the
preparation of the Budget or for other purposes of the Bureau. Each
executive agency shall furnish the Secretary of the Treasury such reports
and information relating to its financial condition and operations as the
Secretary, by rules and regulations, may require for the effective per-
formance of his responsibilities under this section.
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Joint Regulations
Sec. 115. (a) When the Secretary of the Treasuty and the
Comptroller General determine that existing procedures can be modified
in the interest of simplification, improvement, or economy, with suf-
ficient safeguards over the control and accounting for the public funds,
they may issue joint regulations providing for the waiving, in whole or
in part, of the requirements of existing law that--
(1) warrants be issued and countersigned in connection
with the receipt, retention, and disbursement of public moneys
and trust funds; and
(2) funds be requisitioned, and advanced to accountable
officers under each separate appropriation head or otherwise.
(b) Such regulations may further provide for the payment of
vouchers by authorized disbursing officers by means of checks issued
against the general account of the Treasurer of the United States: Pro-
vided, That in such case the regulations shall provide for appropriate
action in the event of delinquency by disbursing officers in the rendition
of their accounts or for other reasons arising out of the condition of the
officers' accounts, including under necessary circumstances, the suspen-
sion or withdrawal of authority to disburse.
Discontinuance of Accounts
Sec. 116. The Comptroller General is authorized to discontinue
the maintenance in the General Accounting Office of appropriation, ex-
penditure, limitation, receipt, and a personal ledger accounts when in
his opinion the accounting systems and internal control of the executive,
legislative, and judicial agencies are sufficient to enable him to perform
properly the functions to which such accounts relate.
Auditing Provisions
Sec. 117. (a) Except as otherwise specifically provided by law,
the financial transactions of each executive, legislative, and judicial
agency, including but not limited to the accounts of accountable officers,
shall be audited by the General Accounting Office in accordance with such
principles and procedures and under such rules and regulations as may
be prescribed by the Comptroller General of the United States. In the
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determination of auditing procedures to be followed and the extent of
examination of vouchers and other documents, the Comptroller General
shall give due regard to generally accepted principles of auditing, in-
cluding consideration of the effectiveness of accounting organizations
and systems, internal audit and control, and related administrative
practices of the respective agencies.
4. General Appropriation Act, 1951. (Public Law 759--81st Cong.)
Sec. 1211. Section 3679 of the Revised Statutes, as amended
(31 U.S.C. 665), is hereby further amended to read as follows:
Obligation Authority
"Sec. 3679. (a) No officer or employee of the United States shall
make or authorize an expenditure from or create or authorize an obliga-
tion under any appropriation or fund in excess of the amount available
therein; nor shall any such officer or employee involve the Government
in any contract or other obligation, for the payment of money for any
purpose, in advance of appropriations made for such purpose, unless
such contract or obligation is authorized by law.
Apportionments
"(c) (1) Except as otherwise provided in this section, all
appropriations or funds available for Obligation for a definite period of
time shell be so apportioned as to prevent obligation or expenditure
thereof in a manner which would indicate a necessity for deficiency or
supplemental appropriations for such period; and all appropriations or
funds not limited to a definite period of time, and all authorizations to
create obligations by contract in advance of appropriations, shall be so
apportioned as to achieve the most effective and economical use thereof.
As used hereafter in this section, the term "appropriation" means
appropriations, funds, and authorizations to create obligations by con-
tract in advance of appropriations.
Reserves
"(2) In apportioning any appropriation, reserves may be
established to provide for contingencies, or to effect savings
whenever savings are made possible by or through changes in
requirements, greater efficiency of operations, or other devel-
opments subsequent to the date on which such appropriation was
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made available. Whenever it is determined by an officer
designated in subsection (d) of this section to make apportion-
ments and reapportionments that any amount so reserved will
not be required to carry out the purposes of the appropriation
concerned, he shall recommend the rescission of such amount
in the manner provided in the Budget and Accounting Act, 1921,
for estimates of appropriations.
Apportionment Distribution
"(3) Any appropriation subject to apportionment shall be
distributed by months, calendar quarters, operating seasons,
or other time periods, or by activities, functions, projects, or
objects, or by a combination thereof, as may be deemed appro-
priate by the officers designated in subsection (d) of this section
to make approtionments and reapportionments. Except as
otherwise specified by the officer making the apportionment,
amounts so apportioned shall remain available for obligation, in
accordance with the terms of the appropriation, on a cumulative
basis unless reapportioned.
Apportionment Review
"(4) Apportionments shall be reviewed at least four times
each year by the officers designated in subsection (d) of this
section to make apportionments and reapportionments, and such
reapportionments made or such reserves established, modified,
or released as may be necessary to further the effective use of
the appropriation concerned in accordance with the purposes
stated in paragraph (1) of this subsection."
Apportionment Procedure
"(d) (2) Any appropriation available to an agency, which is
required to be apportioned under subsection (c) of this section, shall
be apportioned or reapportioned in writing by the Director of the Bureau
of the Budget. The head of each agency to which any such appropriation
is available shall submit to the Bureau of the Budget information, in
such form and manner and at such time or times as the Director may
prescribe, as may be required for the apportionment of such appropria-
tion. Such information shall be submitted not later than forty days
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before the beginning of any fiscal year for which the appropriation is
available, or not more than fifteen days after approval of the Act by
which such appropriation is made available, whichever is later. The
Director of the Bureau of the Budget shall apportion each such appro-
priation and shall notify the agency concerned of his action not later
than twenty days before the beginning of the fiscal year for which the
appropriation is available, or not more than thirty days after the
approval of the Act by which such appropriation is made available,
whichever is later. When used in this section, the term "agency" means
any executive department, agency, commission, authority, administration,
board, or other independent establishment in the executive branch of the
Government, including any corporation wholly or partly owned by the
United States which is an instrumentality of the United States . ? .
Administrative Subdivision
"(g) Any appropriation which is apportioned or reapportioned
pursuant to this section may be divided and subdivided administratively
within the limits of such apportionments or reapportionments. The
officer having administrative control of any such appropriation available
to the legislative branch, the judiciary, or the District of Columbia, and
the head of each agency, subject to the approval of the Director of the
Bureau of the Budget, shall prescribe, by regulation a system of adminis-
trative control (not inconsistent with any accounting procedures prescribed
by or pursuant to law) which shall be designed to (A) restrict obligations
or expenditures against each appropriation to the amount of apportion-
ments or reapportionments made for each such appropriation, and (B)
enable such officer or agency head to fix responsibility for the creation
of any obligation or the making of any expenditure in excess of an ap-
portionment or reapportionment.
Overobligation
"(h) No officer or employee of the United States shall authorize
or create any obligation or make any expenditure (A) in excess of an ap-
portionment or reapportionment, or (B) in excess of the amount permitted
by regulations prescribed pursuant to subsection (g) of this section.
Penalties
"(i) (1) In addition to any penalty or liability under other law,
any officer or employee of the United States who shall violate subsection
(a), (b), or (h) of this section shall be subjected to appropriate adminis-
trative discipline, including, when circumstances warrant, suspension
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from duty without pay or removal from office; and any officer or
employee of the United States who shall knowingly and willfully violate
subsection (a), (b), or (h) of this section shall, upon conviction, be
fined not more than $5,000 or imprisoned for not more than two years,
or both."
5. Supplemental Appropriation Act, 1955. (Public Law 663--
83rd Cong.)
Sec. 1311. (31 V.S.C. 200)
Valid Obligations
Sec. 200 (a) After August 26, 1954 no amount shall be recorded
as an obligation of the Government of the United States unless it is
supported by documentary evidence of -
(1) a binding agreement in writing between the
parties thereto, including government agencies, in a
manner and form and for a purpose authorized by law,
executed before the expiration of the period of
availability for obligations of the appropriation or fund
concerned for specific goods to be delivered, real
property to be purchased or leased, or work on services
to be performed; or
(2) a valid loan agreement, showing the amount of
the loan to be made and the terms of repayment thereof; or
(3) an order required by law to be placed with a
Government agency; or
(4) an order issued pursuant to a law authorizing
purchases without advertising when necessitated by public
exigency or for perishable subsistence, supplies or within
specific monetary limitations; or
(5) a grant of subsidy payable (i) from appropriations
made for payment of, or contributions toward, sums required
to be paid in specific amounts fixed by law or in accord with
formulas prescribed by law, or (ie) pursuant to agreement
authorized by, or plans approved in accord with and authorized
by law; or
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(6) a liability which may result from pending litigation
brought under authority of law; or
(7) employment or services of persons or expenses of travel
in accord with law, and services performed by public utilities; or
(8) any other legal liability of the United States against
an appropriation or fund legally available therefor.
6. To simplify Accounting, Facilitate the Payment of Obligations, 1956.
(Public Law 798-84th Cong.)
M Account
Sec. 701 (a) The account for each appropriation available for
obligation for a definite period of time shall be closed as follows:
(1) On June 30 of the second full fiscal year following the fiscal
di year or years for which the appropriation is available for obligation,
the obligated balance shall be transferred to an appropriation account
of the agency or subdivision thereof responsible for the liquidation of
the obligations, in which account shall be merged the amounts so trans-
ferred from all appropriation accounts for the same general purposes;
and
? (2) Upon the expiration of the period of availability for obligation,
the unobligated balance shall be withdrawn and, if the appropriation was
derived in whole or in part from the general fund, shall revert to such
fund, but if the appropriation was derived solely from a special or
di trust fund, shall revert, unless otherwise provided by law, to the fund
from which derived: Provided, That when it is determined necessary by
the head of the agency concerned that a portion of the unobligated
balance withdrawn is required to liquidate obligations and effect ad-
justments, such portion of the unobligated balance may be restored to
the appropriate accounts: Provided further, That prior thereto the
head of the agency concerned shall make such report with respect to each
such restoration as the Director of the Bureau of the Budget may require,
and shall submit such report to the Director, the Comptroller General,
the Speaker of the House of Representatives, and the President of the
Senate.
IMO
(b) The withdrawals required by subsection (a) (2) of this section
shall be made--
(1) not later than September 30 of the fiscal yearimmediately
following the fiscal year in which the period of availability for
obligation expires, in the case of an appropriation available both for
obligation and disbursement on or after the date of approval of this
Act; or
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(2) not later than September 30 of the fiscal year immediately
following the fiscal year in which this Act is approved, in the case of
an appropriation, which, on the date of approval of this Act, is available
only for disbursement.
(c) For the purposes of this Act, the obligated balance of an
appropriation account as of the close of the fiscal year shall be
tha amount of unliquidated obligations applicable to such appro-
priation less the amount collectible as repayments to the appro-
priation; the unobligated balance shall represent the difference
between the obligated balance reported pursuant to section 1311 (b)
of the Supplemental Appropriation Act, 1955 (68 Stat. 830; 31 U.S.C.
200 (b), and the total unexpended balance. Collections authorized
to be credited to an appropriation but not received until after the
transfer of the obligated appropriation balance as required by sub-
section (a) (1) of this Act, shall, unless otherwise authorized by
law, be credited to the account into which the obligated balance
has been transferred, except that any collection made by the General
Accounting Office for other Government agencies may be deposited
into the Treasuty as miscellaneous receipts.
(d) The withdrawals made pursuant to subsection (a) (2) of this
section shall be accounted for and reported as of the fiscal year in
which the appropriations concerned expire for obligation. The with-
drawals described in subsection (b) (2) of this section shall be
accounted for and reported as of the fiscal year in which this Act
is approved.
Sec. 702. Each appropriation account established pursuant to this
Act shall be accounted for as one fund and shall be available without
fiscal year limitation for payment of obligations chargeable against
any of the appropriations from which such account was derived. Subject
to regulations to be prescribed by the Comptroller General of the
United States, payment of such obligations may be made without prior
action by the General Accounting Office, but nothing contained in this
Act shall be construed to relieve the Comptroller General of the United
States of his duty to render decisions upon requests made pursuant to
law or to abridge the existing authority of the General Accounting
Office to settle and adjust claims, demands, and accounts.
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Sec. 703. (a) Appropriation accounts established pursuant to this
Act shall be reviewed periodically, but at least once each fiscal year,
by each agency concerned. If the undisbursed balance in any account
exceeds the obligated balance pertaining thereto, the amount of the
excess shall be withdrawn in the manner provided by section 1 (a) (2)
of this Act; but if the obligated balance exceeds the undisbursed
balance, the amount of the excess, not to exceed the remaining unobli-
gated balances of the appropriations available for the same general
purposes, may be restored to such account. A review shall be made as
of the close of each fiscal year and the restorations or withdrawals
required or authorized by this section accomplished not later than
September 30 of the following fiscal year, but the transactions shall
be accounted for and reported as of the close of the fiscal year to
which such review pertains. A review made as of any other date for
which restorations or withdrawals are accomplished after September 30
in any fiscal year shall be accounted for and reported as transactions
of the fiscal year in which accomplished: Provided, That prior to any
restoration under this subsection the head of the agency concerned shall
make such report with respect thereto as the Director of the Bureau of
the Budget may require.
(b) In connection with his audit responsibilities, the Comptroller
General of the United States shall report to the head of the agency
concerned, to the Secretary of the Treasury, and to the Director of
the Bureau of the Budget, respecting operations under this Act,
including an appraisal of the unliquidated obligations under the appro-
priation accounts established by this Act. Within thirty days after
receipt of such report, the agency concerned shall accomplish any
actions required by subsection (a) of this section which such report
shows to be necessary.
Sec. 704. During the fiscal year in which this Act becomes effective,
and under rules and regulations to be prescribed by the Comptroller
General of the United States, the obligated balance of the appropria-
tion account for payment of certified claims established pursuant to
section 2 of the Act of July 6, 1949 (63 Stat. 407; 31 U.S.C. 712b),
shall be transferred to the related appropriation accounts established
pursuant to this Act and the unobligated balance shall be withdrawn.
Sec. 705. The obligated balances of appropriations made available
For obligation for definite periods of time under discontinued appro-
priation heads may, upon the expiration of the second full fiscal year
following the fiscal year or years for which such appropriations are
available for obligation, be merged in the appropriation accounts pro-
vided for by section 1 hereof, or in one or more other accounts to be
established pursuant to this Act for discontinued appropriations of
the agency or subdivision thereof currently responsible for the liquidation
of the obligations.
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Sec. 706. The unobligated balances of appropriations which are not
limited to a definite period of time shall be withdrawn in the manner
provided in section 1 (a) (2) of this Act whenever the head of the
agency concerned shall determine that the purposes for which the appro-
priation was made has been fulfilled; or in any event, whenever dis-
bursements have not been made against the appropriation for two full
consecutive fiscal years: Provided, That amounts of appropriations not
limited to a definite period of time which are withdrawn pursuant to
this section or were heretofore withdrawn from the appropriations account
by administrative action may be restored to the applicable appropriation
account for the payment of obligations and for the settlement of accounts.
Sec. 707. The provisions of this Act shall not apply to the appropria-
tions for the District of Columbia or appropriations to be disbursed by
the Secretary of the Senate or the Clerk of the House of Representatives.
Sec. 708. The inclusion in appropriation Acts of provisions excepting
any appropriation or appropriations from the operation of the provisions
of this Act and fixing the period for which such appropriation or appro-
priations shall remain available for expenditures is hereby authorized.
7. Act to Improve Governmental Budzetin and Accounting Methods and
Procedures, 1956. (Public Law 863--84th Cong.) .
AMENDMENTS TO THE BUDGET AND ACCOUNTING ACT, 1921
Sec. I (a) Section 201 of the Budget and Accounting Act 1921,
as amended (31 U.S.C. 11), is further amended by inserting "(a)"
after the words "Sec. 201,"; by changing subsection (a) to sub-
paragraph (1); by adding after subparagraph (1) a new subparagraph
"(2) at such times as may be practicable, information on program
costs and accomplishments"; by changing subsections (b) through (j)
to subparagraphs (3) through (11), respectively.
(b) Section 216 of such Act, as amended (31 U.S.C. 2)-I-), is
further amended by inserting "(a) after the words "Sec. 216." and
by adding the following new subsections:
"(b) The requests of the departments and establishments for
appropriations shall, in such manner and at such times as may be
determined by the President, be developed from cost-based budgets.
"(c) For purposes of administration and operation, such cost-
based, budgets shall be used by all departments and establishments
and their subordinate units. Administrative subdivisions of
appropriations or funds shall be made on the basis of such cost-
based. budgets."
AMENDMENTS TO THE BUDGET AND ACCOUNTING PEOCEDURES ACT OF 1950
Sec. 2 (a) The Budget and Accounting Procedures Act of 1950 is
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amended by inserting after section 105 thereof the following new
section:
"ACCOUNTING AND BUDGET CLASSIFICATIONS
"Sec. 106. The head of each executive agency shall, in consul-
tation with the Director of the Bureau of the Budget, take whatever
action may be necessary to achieve, insofar as is possible, (1) con-
sistency in accounting and budget classifications, (2) synchronization
between accounting and budget classifications and organizational struc-
ture, and (3) support of the budget justifications by information on
performance and program costs by organizational units."
(b) Section 113 of such Act (31 U.S.C. 66a) is amended by
adding at the end thereof the following new subsection:
"(c) As soon as practicable after the date of enactment of this
subsection, the head of each executive agency shall, in accordance
with principles and standards prescribed by the Comptroller General,
cause the accounts of such agency to be maintained on an accrual
basis to show the resources, liabilities, and costs of operations
of such agency with a view to facilitating the preparation of cost-
based budgets as required by section 216 of the Budget and Accounting
Act, 1921, as amended. The accounting system required by this sub-
section shall include adequate monetary property accounting records
as an integral part of the system."
(c) Section 118 of such Act is amended by inserting "113 (c)"
after the words "section 111".
SIMPLIFICATION OF SYSTEM FOR SUBDIVIDING FUNDS
Sec. 3 Section 3679 (g), Revised Statutes, as amended (31 U.S.C.
665 (g)), is further amended by adding at the end thereof the follow-
ing sentence: "In order to have a simplified system for the adminis-
trative subdivision of appropriations or funds, each agency shall
work toward the objective of financing each operating unit, at the
highest practical level, from not more than one administrative sub-
division for each appropriation or fund affecting such unit."
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amended by inserting after section 105 thereof the following new
section:
"ACCOUNTING AND BUDGET CLASSIFICATIONS
"Sec. 106. The head of each executive agency shall, in consul-
tation with the Director of the Bureau of the Budget, take whatever
action may be necessary to achieve, insofar as is possible, (1) con-
sistency in accounting and budget classifications, (2) synchronization
between accounting and budget classifications and organizational struc-
ture, and (3) support of the budget justifications by information on
performance and program costs by organizational units."
(b) Section 113 of such Act (31 U.S.C. 66a) is amended by
adding at the end thereof the following new subsection:
"(c) As soon as practicable after the date of enactment of this
subsection, the head of each executive agency shall, in accordance
with principles and standards prescribed by the Comptroller General,
cause the accounts of such agency to be maintained on an accrual
basis to show the resources, liabilities, and costs of operations
of such agency with a view to facilitating the preparation of cost-
based budgets as required by section 216 of the Budget and Accounting
Act, 1921, as amended. The accounting system required by this sub-
section shall include adequate monetary property accounting records
as an integral part of the system."
(c) Section 118 of such Act is amended by inserting "113 (c)"
after the words "section 111".
SIMPLIFICATION OF SYSTEM FOR SUBDIVIDING FUNDS
Sec. 3 Section 3679 (g), Revised Statutes, as amended (31 U.S.C.
665 (g)), is further amended by adding at the end thereof the follow-
ing sentence: "In order to have a simplified system for the adminis-
trative subdivision of appropriations or funds, each agency shall
work toward the objective of financing each operating unit, at the
highest practical level, from not more than one administrative sub-
division for each appropriation or fund affecting such unit."
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GLOSSARY
This glossary attempts to explain in as nontechnical language
as possible only the more technical and special useage terms found
in the materials used in this course--all of the terms used in
budgeting are NOT included.
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Administrative Plan - A supplement to a project outline which constitutes the
administrative frameworkprescribing the specific procedures and requirements
applicable to the project.
Allotment - Authorization given by the head of an Agency, or his designee, to
a subordinate official to obligate and expend funds from the Agency's
apportioned resources.
Allotment Account - A control account covering the total operating funds for
an office or covering special control items such as fund releases from the
reserve for contingencies and funds from other government agencies.
Apportionment - An authorization by the Bureau of the Budget to the head of
an agency to incur obligations and spend money out of appropriations and
other funds made available to the agency. The apportionment represents the
amount that can be committed or obligated regardless of the amounts appro-
priated or otherwise made available. By Act of Congress the apportionment
distributes approved amounts "by months, calendar quarters, operating seasons,
or other time periods, or by activities, functions, projects, or objects, or
by a combination thereof, as may be deemed appropriate" in order to prevent
the incurrence of a deficiency.
100 Appropriation - An authorization by an Act of Congress to incur obligations and
make payments out of the Treasury for specified purposes within a prescribed
amount.
Miff
Average Employment - The full year equivalent of paid employment stated to the
nearest whole number (includes the full time equivalent of terminal leave).
Budget Call - General guidelines and detailed instructions issued by the
Budget Division for the preparation and submission of a particular budget
document, e.g., operating budget, office estimates.
Confidential Funds - Funds used for necessary official purposes of a confidential,
extraoFarhary, or emergency nature under the authority of the Central Intell-
igence Act of 1949, which are accounted for outside the Agency solely on the
certification of the DCI.
Cost-Benefit (or Cost-Effectiveness) Analysis - An analytical approach to
solving problems of choice which requires the definition of objectives and
identification of the alternative that yields the greatest benefit (effective-
ness) for any given costrior what amounts to the same thing, that yields a
required amount of lienefits (effectiveness) for the least cost. The term
benefits usually applies to situations in which the alternative outputs can
be quantified in dollars, while the term effectiveness is used where the
alternative outputs cannot be easily quantified in dollars.
DCI Certification - The certification executed by the DCI or the DDCI on a
voucher which summarizes by fiscal year and directorate all expenditures
recorded in the Agency records during a given quarter and which constitutes
the formal accounting for all expenditures of a confidential, extraordinary,
or emergency nature pursuant to Section 8(b) of the Central Intelligence Act
of 1949, as amended.
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Disbursement - A payment of money by cash or check for properly authorized and
approved purposes.
Expenditures - The charges indUrred against allotments (appropriations) for
goods and services received and other assets acquired.
FAN - Abreviation for Financial Analysis Number which is the identification of
an allotment and operating account. The FAN System is designed to array basic
financial data (obligations, expenditures, encumbrances, issues) in any one
or combination of program, organization, geographic, and object classifications
to respond to management and budgetary requirements.
Fiscal Annex - A supplament to a project outline which sets forth funding
arrangements, specific accounting controls, financial reporting requirements,
and write-off provisions.
Fund - A loosely used term that has been given varied meanings. Technically
a fund is an accounting entity reflecting the morretary transactions related
to a specified purpose. Also used to identify a sum of money available for
a specified purpose. In the Agency the term is also used in distinguishing
between vouchered and confidential transactions (vouchered funds, confidential
funds).
Issue Memorandum - A presentation of specific program considerations or issues
which require top management attention and decision prior to developing the
Agency's five-year program plans. Issues may consist of: major changes
in program emphasis or thrust; significant changes in allocation of
resources; lower priority activities which may be diverting resources from
more important programs; major upcoming developments bearing on Agency
programs; and so forth.
Object Classification - An accounting device for identifying obligations and
expenditures by the nature of the goods and services obtained (salaries,
travel, supplies, equipment, etc.). The purposes for which the goods and
services are used are identified by the FAN operating account charged.
Obligation - A valid commitment (order placed for goods and services such as
contract, travel order, personnel action) to pay out money. An obligation
reserves funds pending the delivery and acceptance of the ordered goods and
services.
Obligation Abstract - Form used by an allottee to report pertinent information
(date, reference number, operating account number, object class, amount) of
the obligation transactions incurred by an office. Use of this form not only
facilitates computer processing of financial data but avoids some of the
damage risk involved in handling and transporting original obligation docu-
ments which must be preserved for accounting and auditing purposes.
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Obligation Reference Number - A number assigned by an allottee to identify
Individual obligations established for travel orders, purchase orders, con-
tracts, payroll obligations, etc.; the same number is used to identify
related expenditures in the liquidation of the obligations.
Operating Account - Account established at the office level or at some point
below the office level (branch, project, station, cost item such as contract,
etc.) to record the use of the fund and property authorities granted to
an office. Separate accounts are maintained for vouchered and confidential
transactions.
Operating Budget - A financial plan for the coming fiscal year updating the
Congressional Budget in order to reflect current conditions and costs as
compared with those prevailing at the time the Congressional Budget was
prepared.
Planning Assumptions - A survey of the world situation with particular emphasis
on those trends and uncertainties that may confront the policy makers and
intelligence planner during the forward five-year period. The paper includes
for each major world region, an identification of some implications to
intelligence programs.
Positions - A term widely applied to all tasks performed by persons for which
the compensation is solely based on a time factor. In a budget context the
term is most usually applied to permanent jobs subject to staff ceiling
control.
Program - A major Agency activity, a grouping of like or related activities.
Program Budget - A budget which defines programs of work and arrays the planned
use of resources to accomplish the objectives of the programs.
Program and Financial Plan (PFP) - A comprehensive multi-year summary (the
past year, current year, budget year and the four succeeding years) of Agency
programs in terms of their outputs, costs, and financing needs over the
planning period.
Program Memorandum (PM) - A document which presents the five-year program plans
and resource requirements for a major program activity (e.g. Collection of
Intelligence) of the Agency. In addition, the program memorandum will treat
major program issues which have been identified by the Bureau of the Budget.
The program memoranda provides the programmatic context for the budget which
is in great detail and covers a shorter time period.
Program Structure - A hierarchical framework of program categories, program
subcategories and progriam elements which will permit the grouping of like
activities with related objectives, regardless of where the activities are
going on in the Agency. The basic purpose of the program structure is to
organize data about all Agency activities for review, analysis, and pre-
sentation to senior management.
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Project - A management device through which definite activities are undertaken
to meet programmed objectives, and to which funds and other resources are
allocated and accountability maintained.
Property Requisitioning Authority (PRA) - The authorization to acquire supplies
and equipment up to an approved limitation. PRA is not an allotment of funds.
Reprogramming - The changing or shifting of programmed activities and related
resources within the approved program to accommodate new developments and
to adjust programs according to actual experience in executing the approved
program.
Reserve - A term applied to funds (obligational authority) designated for use
in meeting unforeseen contingencies which can not be funded within the
resources apportioned for regular programs. The reserve consists of funds
appropriated for reserve purposes and unbbligated prior year funds. With-
drawals from the reserve must be approved by the Bureau of the Budget and
appropriate Congressional Committees informed.
Systems Analysis - Systems analysis has several definitions depending on the field
of endeavor. However, when used in the context of cost-effectiveness studies
it may be viewed as the search for and evaluation of alternatives which are
relevant to defined objectives, based on judgment and, whevever possible, on
quantitative methods, with the objective of presenting such evaluations to
decision-makers for their consideration. In this sense, systems analysis
encompasses both cost-benefit and cost-effectiveness analyses and other
analyses which may be more limited in scope.
Target Oriented Display - The compilation, analysis and -presentation of financial
and manpower data according to their distribution against specific target
geographic areas.
Vouchered Funds - Funds which can be accounted for and audited in conformance
with the laws that apply to other Government agencies and with standard
Government regulations and procedures.
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CENTRAL
INTELLIGENCE
AGENCY
Planning, Programming, and Budgeting System
DRAFT
1March 1969
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CIA
PLANNING, PROGRAMMING, AND BUDGETING SYSTEM
OFFICE OE
wommomenagamm
ILA NNING,
ROGRAMMING,
UGGETING
GROUP 1
Excluded from automatic
downgrading and declassification
?
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TABLE OF CONTENTS
Page
Introduction 1
Chapter I: Planning
1. Planning Defined 3
2. Establishment of PPBS 3
3. Planning and Managing 4
4. Relationship of Planning, Programming, and Budgeting 6
5. Elements of Planning 6
a. Determination of Objectives 7
b. Systematic Analysis 7
6. Agency PPB 8
a. Participants 8
b. Agency-wide 9
c. Directorate Planning 10
7. Planning Outputs 10
8. The Planning Environment 11
9. Agency Planning Today 12
Chapter II: The Programming System 13
1. General 13
2. Planning Assumptions 13
3. Program Call 15
a. Program Structure 15
4. Letters to Deputy Directors recommending issues for
Special Emphasis 17
5. Directorate Issue Identification and Analysis 18
6. Program Submissions 19
7. 0/PPB Issue Identification and Analysis 20
a. Issue Identification 20
b. Systematic Analysis 20
(1) Program Evaluation 21
(2) Special Analytical Studies 22
8. Issue Memorandum 22
9. Five-Year Program 24
10. Program Guidance Memoranda 24
11. Program Memoranda 24
12. Program and Financial Plans 25
13. Planning, Programming, Budgeting Timetable 26
14. Planning Diagram 29
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TABLE OF CONTENTS (Cont'd)
Page
Chapter III: Budget Formulation 30
1. The Role of Budgeting 30
2. Types of Budgeting 31
3. The CIA Budget Cycle 32
4. The Formulation Environment 32
a. BOB Guidance 33
b. Agency Guidance 36
(1) Headquarters Regulations for Budgeting 36
5. The Formulation Process 38
a. Office Estimates 38
b. The BOB Submission 39
c. The Congressional Budget 41
6. Budget Content and Format 43
a. Program Categories 43
b. Organizational 43
c. Object Class 44
d. Target Oriented Display 44
e. Budget Forms 45
(1) Special Schedules 45
(2) Object Class Justification and Explanation of Change 46
(3) Personal Services Forms 46
(4) Summary Forms 46
f. Budget Format 47
Chapter IV: Budget Execution 49
1. General 49
2. Legal Requirements 49
3. Funding Authorities 50
a. Joint Resolution 50
b. Appropriation 51
c. Apportionment 52
d. Allocation 52
e. Allotment 53
4. Reserve for Contingencies 53
5. The Operating Budget 55
6. Reprogramming 56
7. The Approvals System 57
8. Administrative Plans 5i3
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TABLE OF CONTENTS (Cont'd)
Page
9. Management Reports 59
a. Office Level Reports 59
b. Program Status Reports (FAN Data Reports) 60
c. Property Reports 61
d. Directorate Level Reports 62
e. Agency Level Reports 63
f. External Reports 64
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Introduction
The Planning, Programming, and Budgeting System (PPBS) is a
management system which is designed to help the Agency accomplish
its business in the most rational, systematic manner possible. It is
the tool the Agency uses to bring resource management into focus:
to determine Agency objectives, to weigh competing needs and set
priorities, to evaluate alternative program options by measuring costs
and benefits, and to facilitate management direction and control of the
operations of the Agency.
Much of the essense of PPB is not new. Its activities, to a large
extent, occur in any business or governmental organization. The
system does, however, provide a new emphasis because it is the first
system which is designed to integrate the functions of planhing and
budgeting. The vehicle for this integration is programming. The
programming process is designed to achieve more objective directed
budgeting and more realistic, more thorough planning. PPBS seeks:
(1) to improve the quality of the decision making process in the Agency;
(2) to provide evaluation and analysis of plans and performance; and
(3) to support a sound budgetary control and reporting mechanism.
Improvement of decision-making through PPB is based on the concept
that decisions in implementing programs should involve choice among
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explicit alternatives. The techniques used to systematize this process
and to present full factual analysis of all costs and benefits narrow the
area of judgment in the decision-,making task. PPBS does not eliminate
the need for judgment; rather, it pinpoints that need.
The process of planning, programming, and budgeting requires the
interested involvement of all levels of the Agency. PPB products must
have sound substantive content and must reflect imagination, ingenuity,
and managerial expertise if PPBS is to accomplish effectively the task
it is designed to accomplish.
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CHATTER I: PLANNING
1. Planning Defined
In a generic sense planning involves setting goals and devising methods
of action for the future. In the continuing search for the most effective
techniques for rational business and for governmental planning many narrower
and more useful definitions of planning have been proposed. The most useful
definitions generally point to two distinct aspects of planning: determination
of objectives'; and evaluation of alternative resource allocation strategies
so that the best courses of action can be chosen. For example, the US
General Accounting Office's Planning, Programming, Budgeting Glossary
defines planning as:
The selection or identification of the overall, long-range
objectives of the organization and the making of systems analyses
of various possible courses of action in terms of relative
costs and accomplishments or benefits in order to aid managers
in deciding on courses of action (i.e. programs) to be followed
in working toward achieving those objectives. These analyses
are variously referred to as cost-effectiveness, cost-utility,
or cost-benefit studies.
Essentially, this level of planning involves deciding on what
the organization is in business to do and generally how it is
to be done. This is also called strategic planning.
2. Establishment of PPBS
One of the basic objectives of the August 25, 1965, directive, from
President Johnson to all agencies, which required establishment of an
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mw integrated "Planning, Programming, Budgeting System", was to create
an environment in which rational future action could be more easily
planned. The directive stated that, when properly implemented, PPBS
should help achieve four major Presidential objectives:
--Identify national goals with precision and on a continuing
? basis.
--Choose from among those goals the ones that are most urgent.
--Provide information not merely on next year's program costs --
but on the second, third, and subsequent years' costs.
--Measure program performance to insure a dollar's worth of
service for each dollar spent.
Of the four major objectives, it is significant to note that three are pLanning
or future oriented. The emphasis of the PPBS is not on financial manage-
ment or budgeting. Rather it is concentrated on the need for agencies to
establish an effective system for rational resource allocation to meet
appropriate objectives. BOB Circular 66-3, which implemented the President's
directive, was organized to show that planning, programming and budgeting
are part of a single integrated and continuous process for decision making.
3. Planning and Mana.ging
The intimate concern of planning with the objectives of an organization
and with the way in which these objectives are achieved emphasizes the
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inaccuracy of saying that planning is a distinct entity which is followed by
programming and finally by budgeting. Planning is an ongoing activity
organic to all processes of the PPB System. It is an integral part of
managing, and, as such, must be included, in some form, in any manage-
ment system. It is not a distinct activity of management which occurs at a
given time with respect to specially tailored inputs. Every activity performed
within a management system involves plans in a variety of forms and must
implicitly or explicitly contribute to the planning system. For example, the
budget itself is a plan expressed in financial terms; manpower projections
are plans expressing personnel numbers; qualifications,
support needs are formulated in plans.
Since planning is so intimately tied to the every
planning, and, indeed, the entire PPB system, is highly
and pay levels; and
day process of managing,
dependent on full
involvement of competent operating managers. PPB requires planning at all
relevant organizational levels, reserving for top management only those
decisions which it should make. Thus planning is a two-way proposition. On
the one hand, the Directorates must be intimately involved in any Agency
planning process, initiating and justifying proposals for Agency activities on
the basis of professional, substantive judgment about efficient ways to achieve
sound goals. Given the complexity of operations which exist today, the line
organizations must play the major part in relating decisions to the actual
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operational environment. On the other hand, planning requires guidance
and policy direction from top management, particularly with respect to
identification of broad objectives and priorities, as well as final decisions
on certain proposed activities.
4. Relationship of Planning, Prozramming? and Budgeting
Although planning, programming, and budgeting are all aspects of the
PPBS, programming and budgeting involve planning. The title Planning,
Programming, and Budgeting System may, therefore, have been an inauspicious
choice since the title implies a sequential occurrence, first of planning,
then programming, and finally budgeting. In fact, the entire system is
formed around the new concept of programming which encompasses both
traditional substantive non-fiscal planning and traditional budgeting.
Programming really implies both fiscally responsible planning and budgeting
tied to substantive goals. When first instituted at the Defense Department,
a main objective of programming was to link the Joint Strategic Operations
Plan with fiscal reality. It was a systematic effort to allocate scarce
resources optimally over a five to ten year period. Thus Agency programming
is an effort to make substantive plans for the future within the context of the
resources likely to be available and eventually to budget within that context as
well.
5. Elements of Planning
The two key elements of a fully developed programming system which
are intimately tied to Agency planning are those noted in the planning
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definition in paragraph (1): determination of objectives, and systematic
analysis, which is essentially evaluation of alternative courses of action
so that the best courses of action can be selected.
a. Determination of Objectives
An organization can play only insofar as it can group its
anticipated outputs (achievements) under its objectives. Only they can
resource inputs and resource allocation strategies be adjusted so that
outputs will meet objectives. Objectives must, therefore, be carefully
defined. Further, outputs must be measurable in terms of objectives,
although not necessarily in quantitative terms. The PPB system assesses
outputs against objectives by means of packages in which outputs are
lumped under the objectives which they are designed to achieve. Similar
output-objective packages tend to group together, as program elements,
program sub-categories and program categories, at each higher organizational
level which has a definable output. It is therefore imperative, if
planning is to be effective, that objectives be clearly and succinctly stated
by line managers. Further, they must be stated in terms of capability to
achieve them by a given point in time.
b. Systematic Analysis
Systematic analysis is the technique which helps determine
which input-output combinations are likely to achieve objectives most effectively.
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It helps assess priorities. Systematic analysis itself is simply an
analytical method which is characterized by a systematic and rational
approach to issues with assumptions made explicit, objectives and
criteria clearly defined, and alternative courses of action compared
in the light of their possible consequences. Systematic analysis relates
outputs to objectives in comparable terms. An effort is made to use
quantitative methods, but this is not essential. What is essential is a
procedure that enables expert intuition and judgment to be applied
efficiently. This is a difficult task since the Agency has not, except in
isolated instances, developed adequate means to measure the value of
its intelligence product. Therefore, the planning process must operate
with approximate definitions of program benefits in terms of progress
toward objectives.
There are two aspects to Systematic Analysis. Both are discussed
in more detail in Chapter II. On the one hand is Program Evaluation, either
of the Program Submission or of its elements as it rises through the
organization. On the other hand are Special Analytical Studies which analyze
issues in more detail than the program evaluation process allows.
6. Agency PPB
a. Participants The Agency PPB planning process revolves around
six key management elements each of which has differing inputs and respon-
sibilities:
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(1) Top Management (the DCI, DDCI, and ExDir);
(2) The Office of Planning, Programming, and
Budgeting (O/PPB);
(3) The Deputy Directors (DD's)
(4) The Deputy Directors' Planning Staffs
(5) The Operating Managers (Division and Branch
Chiefs); and
(6) The Operating Units, including the Field
b. Agency-wide The Office of Planning, Programming and Budgeting
is directly responsible to the Executive Director-Comptroller. 0/PPB
develops the Agency's program planning concepts, structure and
procedures. It initiates and develops Agency planning by (1) issuing
Agency-wide Planning Assumptions and the annual Program Call to the
Directorates, (2) providing guidance to Directorates from top management
on program matters which may require special emphasis in their Program
Submissions, (3) reviewing and analyzing Program Submissions received
from Directorates, (4) identifying objectives, issues and programs requiring
special study, and (5) identifying those issues requiring DCI policy guidance
or resolution and (6) issuing the Budget Call and developing an Agency budget,
In consultation with the Directorates involved, 0/PPB prepares Program
Memoranda, for submission to the DCI and then to the Bureau of the Budget,
on each Agency program category. It is important to note, although it is
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more fully explained in Chapter II, that the Program Submissions from
the Directorates, and the Program Memoranda for the Bureau of the
Budget, are essentially planning documents and constitute program plans.
c. Directorate Planning Each Directorate maintains a Planning Staff
which is directly responsible to its Deputy Director. The Directorate
planning staffs undertake, at the Directorate level, essentially the same
process at their own levels. Effective five-year planning is not possible
at the highest levels of the Agency unless it is also done effectively at the
lowest levels. Top management seeks to guide the Agency by using the five-
year plans submitted by subordinate managers as a means to discover what
output-objective packages need to be changed to reach future goals.
7. Planning Outputs
Since planning is primarily concerned with the identification of how
future developments and requirements will affect programs and resource
allocation, it is a continuous process of identifying issues, developing
alternative solutions to those issues, and recommending decisions which
should be made to resolve them. PPBS planning can be described as a
process of preparing a set of decisions, for future action, directed at
establishing and achieving objectives by optimal means. The critical
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outputs of the planning process are:
a. Determination of objectives
b. Policy guidance
c. Issue identification and decision forecasting.
d. Issue analysis through identification of alternative means
of pursuing objectives.
Each of these outputs is involved in the Agency's planning process, a
process probably best described as five year program planning. The
five-year planning period is practical because Agency activities are, by
their nature, largely impossible to specify in detail for longer periods
and do not, in general, have lead times exceeding five years.
8. The Planning Environment
Agency operators are all involved in planning. They should have
no misapprehensions about the difficulty of planning. The environment in
which CIA operates is dynamic rather than static. CIA customers and
problems are diverse. Time and quality standards, communication, security,
and behavioral processes all pose particular problems which must be met.
The unique and diverse nature of the Agency's missions and responsibilities,
coupled with constant changes in the requirements placed upon it, therefore,
present a real challenge to planning.
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9. Agency Planning Today
The details of implementing the planning process through programming
and budgeting are contained in the succeeding Chapters. As background for
these Chapters, it may be useful to summarize what Agency planning seeks
to accomplish:
--It focuses on identifying fundamental program objectives, by
country and target where feasible, and relates all Agency activities
to these objectives, regardless of where the Agency activity is
located within the organizational structure.
--It identifies alternative courses of action for accomplishing
objectives and systematically analyzes them in terms of cost and
benefits.
--It identifies future year implications and ensures management
consideration of these implications.
--It ensures line manager participation in the planning process and
is sensitive to the organizational structure within the Agency.
--It assists the DCI in discharging his intelligence coordination
responsibilities by providing systematic procedures for accomplishing
the Agency's mission.
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CHAPTER II:
The Programming System
1. General
The basic Agency programming documents or activities are:
(1) Planning Assumptions; (2) Program Call; (3) Guidance letters to DD's
from the Executive Director outlining topics for Special Emphasis;
(4) Directorate Issue Identification and Analysis; (5) Program Submissions;
(6) 0/PPB Issue Identification and Analysis; (7) Issue Memorandum;
(8) The Five Year Program; (9) DCI Program Guidance Memoranda to the
DD's; (10) Program Memoranda; (11) Five Year Program Financial Plan and
(12) The Budget.
2. Planning Assumptions
Since Agency objectives and supporting programs must be responsive to
a sound assessment of foreign affairs trends which have CIA resource
allocation implications, the Executive Director-Comptroller initiates the
annual five-year program planning cycle by issuing planning guidance in
the form of Planning Assumptions which contains two inputs to the planning
process:
--A forecast of the world environment, which draws heavily upon
the expertise of the Office of National Estimates and which seeks
to identify major foreign affairs trends on a regional and selected
country basis. Where possible basic U.S. national interests are
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noted as they relate to developments that may arise during the
planning period. It attempts to develop a common understanding
of the world environment in which all elements of the Agency will
engage in program and resource planning.
--An estimate of how the forecasted world environment seems likely
to affect intelligence requirements. This estimate tentatively
identifies program implications and areas of Agency activities
which should be examined. An effort is made to identify particularly
important resource implications from an assessment of both the
forecast of the world environment and the achievements and failures
of current programs. Management implications are developed on the
basis of executive guidance, technical developments and the existing
budgetary climate as reflected in the Bureau of the Budget advice to
the Agency. These guidelines are generally short, target., or end-
product oriented statements designed not to be comprehensive but
to suggest program changes by noting critical contingencies and
changes of emphasis. These implications are meant to be supplemented
in more detailed fashion by the directorates.
Neither the forecast nor the implications in the Planning Assumptions
are designed to be directive. Rather, they are to provide general guidance,
for the Directorates and Independent Offices responsible for submitting
program plans and resource requirements, to provoke thought, and to
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generate ideas and thorough assessment of programs.
3 , 1. Lcs Pa.1
The annual Program Call is issued by 0:PPB to all Directorates
and Indepe'ndent Offices. It specifies both the required contents of
the Directorate Program Submissions for the time period covered by the
Call and the CIA program structure. Specifically, components are
asked to present their accomplishments and progress against stated
objectives during the preceding twelve-month period, their objectives
for the future five-year period of the Call, their program plans to
accomplish the objectives, and resources (manpower and funds) required.
In discussing plans, components are requested to indicate risks and
uncertainties, alternatives that were considered in developing the proposed
program plan, and coordination undertaken.
a. Program Structure
A major function of the Program Call is to present the Agency
program structure. The program structure is the vehicle which presents
the Agency's input-output-objective packages. The program structure
organizes program data for review, analysis, and decision making. It
groups like activities with related objectives, regardless of organizational
lines, so that reviews and decisions can be made on a program basis, not
on a project or organizational basis. Programs are mission oriented;
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their purpose is to delineate broad areas of Agency responsibility and
to organize under them the outputs designed to achieve them.
The Agency program structure includes three levels of classification:
program categories, program sub-categories, and program elements.
The categories in a program structure provide the framework for
considering and resolving major questions of mission emphasis and
scale of operations in the several primary activities for the Agency as
a whole, e. g. , relative resource allocations for collection and production
of intelligence. Agency activities are arranged within seven major
objective-oriented program categories.
1 Program subcategories
are an intermediate breakdown of program categories, e. g. , collection of
intelligence through clandestine means. Program elements are more
specific Agency activities related directly to the production of a discrete
Agency outputs, e.g. , unilateral clandestine collection activity. The
following is an example of the hierarchial relationship within the program
structure, using the Collection program category.
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particularly to address those projects for which full treatment is desirable
or where there seems to be an emerging issue. Identification of these
topics is designed to increase programmatic flexibility by encouraging
new projects and revaluing old projects.
5. Directorate Issue Identification and Analysis
After analysis of the Planning Assumptions, and in response to the
Program Call and the Special Emphasis letters, the Directorates begin
to develop and evaluate their programs, to identify their own issues, and
to undertake special studies to resolve them through systematic analysis.
Each Directorate then develops a program submission based on Directorate
program evaluation and decisions arising out of special studies. However,
if PPB is to be an effective force in the Agency, and not simply a staff
exercise to produce a program submission, PP 13 techniques and approaches
must be major management tools within the Directorates. They should be
a way to help make decisions about what should be done, not a reflection of
line decisions already made. Line management must be actively involved
in PPB since the principal inputs to the Program Submissions demand
detailed consideration of existing and projected contracts, projects, and
ongoing activities. The quality of the Program Submissions is largely
dependent on the skill and interest of line managers.
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6. Program Submissions
Directorate Program Submissions describe accomplishments,
objectives, program plans and resource requirements. They are
presented under the appropriate category in the program structure
down to at least the program element level. Particular features of
the program plans developed to attain objectives are: the intended
targets, the rationale of the approach, significant milestones, risks
involved, alternatives considered, and resources required. Directorate
submissions also contain a summary of fund and position requirements
for each program for the full five-year period of the Program Call.
Substantial changes in fund and manpower levels from year to year are
discussed.
Since the effectiveness of Agency planning is largely dependent upon
the analytical and managerial skills of Directorate line elements in the
execution of the PPB system, managers should give particular care to the
Program Submissions. These are the Agency's critical planning documents,
and must provide thoughtful presentation of objectives, identification of
targets and alternative plans, while indicating risks involved and resources
required. Plans should be projected not only for the first year of the
program submission, for which budgets are ultimately prepared, but also
for the following four years. Projection of out-year requirements is critical
to effective planning since there is still time, at that point, to develop
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alternative plans. Important issues which must be decided at various
times during the five year period should be identified as concisely as
possible.
7. 0/PPB Issue Identification and Analysis,
a. Issue Identification
During the entire planning cycle 0/PPB tries to identify, for
top management, issues which should be resolved during the program
planning process. Issues may be identified for 0/PPB by the Directorates,
0/PPB staff members, other elements of top management, or BOB.
Issues are identified not only for the next budget year, but also for the
later years of the planning period. Issues may be country, policy, (e.g.
counter-insurgency policy), programmatic, functional, organizational or
methodological. Some issues will arise from changes in the world environ-
ment to which the CIA must react. Other issues may have existed for
some time, but either have not been analyzed or have not been fully
resolved.
b. Systematic Analysis of Issues
0/PPB handles two quite different types of analytical problems
during the course of the PPB cycle. On the one hand is the process of
program evaluation. On the other are issues requiring Special Analytical
Studies.
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(1) Program Evaluation
Evaluation of the Program Submissions begins upon their
receipt by 0/PPB. 0/PPB conducts an overall program review in
order to provide top management with the information needed to make
choices between what Agency components would like to do and what the
Agency might reasonably expect to do with the resources that are likely
to be available. 0/PPB uses teams of officers with broad Agency
experience, one team for each Program Category, to review and evaluate the
program submissions. These teams develop the questions and issues
which are raised in the program hearings, identify issues for the Director,
propose alternatives and make recommendations to the Director, and
draft the Program Memoranda.
The Director of 0/PPB provides specific guidelines to assist
the program review teams as the cycle progresses. For example, criteria
are prepared for use in analyzing program submissions and preparing
Program Memoranda. These criteria provide guidance for, among others,
judging whether a proposed program is an appropriate Agency responsibility,
and for evaluating alternatives and risks. The Program Call, Planning
Assumptions, and the Executive Director's special emphasis letters to
the Deputy Directors provide additional guidance and criteria for program
review.
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(2) Special Analytical Studies
Those issues which have major program implications
and which can best be resolved through detailed consideration of
alternatives are systematically analyzed in Special Analytical Studies.
The various issues which require systematic analysis demand differing
capabilities. Some are done by 0/PPB. Others are prepared by the
Directorates with terms of reference provided by 0/PPB. Still others
are done by Agency task forces.
Special Analytical Studies provide the analytical basis
behind many of the decisions reflected in the Program Memoranda.
These studies are designed to assist the decision maker in his task of
identifying a preferred course of action from among competing alternatives.
Such studies typically try to compare alternative courses of action in terms
of a mission requirement, or conversely, to maximize output for given
resource limits. Such studies are frequently used to resolve budget year
issues. They support the Program Memoranda, and, as such, may be releas
to the Bureau of the Budget. Broader studies are conducted where basic
policy level considerations are involved,
8. Issue Memorandum
The issue memorandum is a particularly significant document in the
Agency's PPB System. Its purpose is to obtain guidance and decisions
from top management on specific program considerations which have been
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identified during the analysis of the Program Submissions and during the
0/PPB hearings on these submissions. For each issue which is raised,
the Issue Memorandum presents a brief description of the problem area,
identifies alternatives available and their costs and implications, and
recommends a course of action for approval of the Executive Director-
Comptroller and the Director. Recently the Issue Memorandum has been
presented in three sections -- resource related issues, general program
considerations, and future managerial concerns and suggested areas of
study. Resource issues are presented when major new programs are
proposed or when there is serious question about the level of effort the
Agency should commit for specific programs. The general program
considerations section provides a method for obtaining guidance on the
topics and positions to be presented to the Bureau of the Budget in the
Agency's Program Memoranda. The future managerial concerns and
suggested studies section raises potential issues or proposes studies on
problems which may require future decisions. They are not usually
associated with the forthcoming Agency budget submission.
An important characteristic of the Issue Memorandum process is that
it is an internal Agency management tool used to identify problem areas
and to obtain executive guidance in developing the Agency's program
plans and the budget levels which the Director will support in the ensuing
budget and appropriation process. It addresses major program issues of
which BOB may not be aware, as well as those identified by the Bureau
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of the Budget. Any issue deemed by the team members to require
top management's attention is considered for inclusion in the Issue
Memorandum.
9. The Five-Year Program
The decisions made on the issues raised in the Issue Memorandum
act as changes to the Program Submission. The result is the Agency's
Five-Year Program --- the Agency's projection of the activities it
should undertake over the planning period. It should be a consistent
entity which reflects the demands on the Agency as well as its internal
needs. It is, of course, a dynamic program. It is constantly being
changed through the reprogramming process and through detailed planning
studies,
10. Program Guidance Memoranda
The purpose of these memoranda is to inform the Deputy Directors
of the DCI's decisions on both program scope and emphasis and on
resource levels which are to be submitted to the Bureau of the Budget in
the Draft Program Memoranda. These levels become the basis for the
resource levels to be included in office budget estimates.
11. Program Memoranda
Program Memoranda are prepared for the Bureau of the Budget. They
present major program issues, cost and effectiveness comparison of
alternatives for resolving the issues, the Director's decisions on programs
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to be carried out, and the rationale behind them. These memoranda
document the Director's decisions on policies and programs for the
?
Agency, and they relate them to requirements for resources.
The Bureau of the Budget requires Program Memoranda to address
only those major program issues which have been identified by BOB.
These involve "questions requiring decision in the current budget cycle,
with major implications in terms of either present or future costs, the
direction of a program or group of programs, or a policy choice."
Agency policy, however, has been to view the Program Memoranda more
broadly, and to use them as an effective means of presenting the thrusts,
trends, and rationale for Agency Programs, as well as general problem
areas. The Issue Memorandum provides ample opportunity for develop-
ment of other issues the Director may elect to present to the Bureau of the
Budget,
12. Program and Financial Plans (PFP)
The Program and Financial Plan is a comprehensive multi-year
summary of funding and manpower requirements for Agency programs for
the period covering the past year, current year, budget year, and four
future years. Program and Financial Plans provide a continuing record
from year to year of costs and financing of Agency programs. They are
submitted to the Bureau of the Budget twice annually -- in September and
February -- and serve as the vehicle for summarizing in dollar and man-
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power terms all program decisions made in the Agency. The September
submission is the Agency's proposed PFP and is reviewed by the
Bureau of the Budget and the President; the February submission reflects
changes incorporated in the President's budget submission to Congress
in January.
13. Planning, Programming and l3udgeting Timetable
The aspects of the CIA PPB cycle described above occur in roughly
the following time sequence.
1.
2.
October
1st Quarter of
Calendar Year
1,
2,
0/PPB issues Planning Assumptions
and Program Call to Agency Directorates
and Independent Offices. Special Emphasis
letters sent to DD's,
The Bureau of the Budget identifies major
program issues requiring treatment in the
Agency's Program Memoranda and
suggests special studies to be undertaken.
3.
Feb. 15 - July 15
3.
Agency holds internal program hearings,
makes basic decisions regarding programs,
and submits draft Program Memoranda
to the Bureau of the Budget.
4.
July - August
4.
The Bureau of the Budget reviews Program
Memoranda and Special Analytical Studies
and responds to the Agency with a
suggested budget total. Final adjustments
are made to programs.
5.
September 30
5.
Final Program Memoranda, Special
Analytical Studies, and Annual Budget
Estimate submitted to the Bureau of the
Budget.
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6, October -
December
7. January
6, The Bureau of the Budget reviews Agency
budget submissions, holds hearings with
Agency officers on specific programs,
and makes recommendations to the
President concerning Agency resource
levels to be included in the President's
Budget.
7. The President's Budget is transmitted to
Congress. Agency revises the PFP to
conform to President's Budget.
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Planning-Programming-Budgeting Timetable
SEQUENCE of EVENTS
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Prepare Planning Guidance & Assumptions
? 1
?
Issue Program Call
DD's prepare Programs*

IP
Review Programs
Prepare Issue Memo. for DCI**
, ?
-
Prepare Draft Prog. Memo. & P.F.P.
I
DCI mtg. w/Dir. BOB on Prog . levels
M
Prepare final Prog. Memo. for BOB
Issue Office Estimate Call
DD's prepare Office Est.
Prepare BOB Budget Submission
I
BOB hearing on budgetary levels
I CLIIRRENT FY +1
DCI meeting with Dir. BOB on Pres. Budget
Prepare & defend Congl. Budget
Issue Oper. Budget Call
Review & approve Oper. Budget
CURRENT
FY
Budget execution
*Programs cover five year period starting with current FY +2.
*Special Studies on Selected Issues are conducted throughout the year.
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p R
L 0
AG
NR
NA
I M
N M
G I
& G
tml
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CONFIDENTIAL
Issue
Identification
by DD's
PROGRAM PLANNING
Systemat c Analysis
by DD's
Program
Special Development
Studies &
Program
Evaluation
Planning Assumptions
1) Foreign Affairs
Trends
2) Planning
Implications
Special Emphasis
Letters to DD's
Program
Call
Program
Submission
0/PPB Issue Identification
Issues arising
from
Foreign Affairs
Trends
Pre-existing
issues never
analyzed
Hearings
V
Issue
Memo
0/PPB Systematic Analysis
Special
Analytical
Studies
Systematic
Program
Evaluation
Five Year
Program
Program Memos
Budget
75509 1-69 CIA
II
CONFIDENTIAL
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CHAPTER III: Budget Formulation
1. The Role of Budgeting
The budget is a planning document in the sense that it is a detailed
projection of the financial and manpower needs of the Agency's approved
program. It expands in detail the fund and manpower estimates contained
in the first year of the five-year Program and Financial Plan. It is the
basis for appropriation action by Congress and provides a framework for
legal expenditure of funds and for fiscal accountability. Ultimately the
budget is the major determinant in the final allocation of Agency resources.
It serves as a vital link between the Agency and the overseeing activities
of the Bureau of the Budget and the special Congressional review
committees.
However, the budget is more than a device for detailing resource
allocation intentions. It is an essential management tool. Through the
formulation and execution phases of the budget process, it strives to achieve
sound, efficient, and economical program administration by:
1. Providing a sounder basis for forecasting and scheduling
work production;
Z. Improving the utilization of personnel by highlighting
distribution of work, aiding in the detection of overstaffing, and
supporting requests for personnel and.facilities;
3. Providing comparisons of results to check performance; and
4. Furnishing useful information concerning program progress
in relation to plan.
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The budget process provides a reporting system which brings
information to the proper level for decision making and which ensures
that decisions are properly carried out. Further, by providing a base
against which results of activities can be evaluated, the budget is a
control device which facilitates reallocation of resources to cope with
changing needs as operations progress.
Z. Types of Bud?etiLig
The traditional object class budget emphasizes inputs by organizational
unit and by objects of expenditure (such as personnel and travel) within each
organizational unit. This approach has been in use longer than other types
of Government budgeting. It is the most meaningful way that an Agency
can identify and monitor expenditures in a given resource area.
The program budget emphasizes the various substantive areas of
effort being carried out. Costs are attached to a program, such as
collection of intelligence or covert action, regardless of the organizational
unit that incurs that cost.
The performance budget emphasizes outputs, which are goods or service
produced, in relation to inputs, which are resources consumed in producing
those outputs. This third type of budgeting is derived from the other two and
represents the basis for any qualitative cost-benefit analyses. The Agency
budget is not presently arrayed in a formal performance budget format,
distinct, from a program budget display, due to difficulties in quantifying
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output measures. Rather, performance budgeting is basically an analytic
tool to encourage efficiency and responsibility by providing some means of
measuring the degree to which efficiency is achieved,
The Agency's budget approach is a combination of all three of these
approaches. However, because of the difficulties of obtaining quantitative
output measures in most of the Agency's substantive program areas, the
program budget approach best characterizes the Agency's budgetary process
at the present time.
3. The CIA Budget Cycle
The Agency budget is first prepared about twelve months prior to its
implementation. The CIA budget cycle consists of two phases, budget
formulation and budget execution, which take approximately twenty-four
months to complete for a given fiscal year, As such there is, at any point
in time, an overlap of these two phases during which the budget of the
current fiscal year is being executed while that of the next fiscal year is
being formulated. The exhibit on page 28 shows the organizational and
functional relationships of the Agency budget process in detail. This chapter
will discuss the process of budget formulation and Chapter IV will examine
budget execution.
4. The Formulation Environtnent
The Agency budget is in large measure determined in content and in
format by external reporting and review obligations to the Bureau of the
Budget and to selected Congressional subcommittees. While recognizing
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the sensitive nature of the Agency's mission, the BO T3 and Congress
require extensive display and justification of the Agency program.
a. BOB Guidance
The Director of the Bureau of the Budget, as the primary staff
for the President in budgetary and management responsibility
matters, issues instructions and guidance to all Federal agencies
for the preparation and submission of annual budget estimates. The
most important instruction comes in BOB Circular A-11, Although
much A-11 guidance is the same from year to year, some aspects
of the submission requirements do change.
Section 13 of Circular A-il contains instructions for the
preparation and submission of annual budget estimates by setting
forth broad guidance, applicable to all Federal agencies, which is
consistent with the President's fiscal policies. This policy
guidance for program decisions requires budget estimates to be
based on;
"(1) Consideration of the broad goals and specific program
objectives to be achieved over the next several years;
(Z) Selection of the best alternative methods for accomplishing
desired goals and objectives;
(3) Reasonably accurate forecasting of work output expected;
(4) Appropriate use of work measures to show progress
towards goals and objectives."
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Additionally, in an agency with an integrated PPD System,
program proposals are to be based upon its director's evaluation
of the issues identified, studies through systems analysis
techniques, and BOB advice from the latter's analysis of the
Agency's Draft Program Memoranda submitted in the previous
summer.
Section 13 also prescribes standard procedures for developing
the funding requirements for various expenditure categories. For
example, personnel compensation and allowances are based on a
40-hour work week and the compensation scales in effect on
September 15 of the current year. Estimates on other objects of
expenditure are also to assume general price stability during the
budget year.
The material required by A-11 in the budget submissions
for each appropriation of funds is composed of three primary
sections and two supplemental sections. The primary section consists
of Summary Statements, Detailed Material on Appropriation and
Funds, and Justifications and Explanations. The supplemental
sections consist of detailed personnel compensation schedules and
other special interest material such as data on external research
contracts, reimbursements, motor vehicles, and computers.
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In addition to the general requirements of A-11, the Director
of BOB informs the DCI of the general financial policy to be
followed in preparing his budget estimates for the upcoming fiscal
year. He forwards a planning target for total Agency estimates in
July or August, after completion of his review of the Draft Program
Memoranda, General administration policy on the reduction of U.S.
presence overseas and on gold flow are examples of other items
which have a key impact on BOB planning guidance. The Agency
incorporates the outcome of these various items of guidance in its
subsequent budget submission. However, with respect to the
overall target figure, the Agency may or may not adhere strictly
to BOB guidance, depending on new requirements which may have
arisen since the submission of the Draft Program Memoranda.
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b. Agency Guidance
The Executive Director-Comptroller and 0/PPB provide
centralized budget direction within the Agency. Much of this
internal direction is provided through a formal Budget Call and
special contingency exercises, responsive to BOB instructions
and changing fiscal or operational conditions. The authority for
0/PPB's centralized position and functions can be found in several
CIA Headquarters Regulations.
outlines the office's 25X1
broad responsibilities in the form of a mission and functions
statement. Headquarters Regulations governing budget formulation
procedures within the Agency are contained in
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5. The Formulation Process
While the status and content of an individual budget are always in
a state of flux, there is a general sequence of events for its formulation
around which a process has been structured. This process recognizes
the continuously changing operational and fiscal conditions contributing
to the final product of budget formulation, the Congressional Budget.
a. The Office Estimates
The first formal step in the budget cycle occurs in July
with the 0/PPB Budget Call to the Agency offices for the
fiscal year beginning twelve months hence. The resultant
submissions, called the Office Estimates, are the raw material
for the Agency's submission to the BOB. They reflect a) the
actual obligations incurred in the past fiscal year (PY); b) the
latest plan for obligations in the current year (CY); and c) the
proposed obligations for the budget year (BY). The BY
Submission is based on the levels approved for the first year
of the most recently developed Five Year Program Memoranda
and modified by the most recent thinking of the DCI and the BOB.
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The office control levels for both positions and dollars are
issued by the Executive Director-Comptroller at about the same
time as the Budget Call, The main thrust of the narrative in the
Office Estimates is to justify and explain reasons for increases
and decreases between BY and CY, and between CY and PY,
The individual offices prepare their Office Estimates for
submission to 0/PPB about the third week in August. While the
responsibility for budgetary detail on program activities and
resource requirements rests with the individual offices staffs,
and divisions, the Directorates are responsible for overseeing and
coordinating their components' inputs. The specific content and
format for this BOB, and the later Congressional, Submissions will
be discussed in the following section of this chapter,
b, The BOB Submission
The Budget Division of 0/PPB then organizes these submissions
for consolidation into a single Agency budget for review by the
Bureau of the Budget. This process consists first of screening the
individual office budgets for completeness, computational accuracy
and consistency, and adherence to the most recent DCI and BOB
guidance and Program Memoranda, Then the submissions are
consolidated by the content format and degree of specificity required
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The office control levels for both positions and dollars are
issued by the Executive Director-Comptroller at about the same
time as the Budget Call, The main thrust of the narrative in the
Office Estimates is to justify and explain reasons for increases
and decreases between BY and CY, and between CY and PY,
The individual offices prepare their Office Estimates for
submission to 0/PPB about the third week in August. While the
responsibility for budgetary detail on program activities and
resource requirements rests with the individual offices staffs,
and divisions, the Directorates are responsible for overseeing and
coordinating their components' inputs. The specific content and
format for this BOB, and the later Congressional, Submissions will
be discussed in the following section of this chapter,
b, The BOB Submission
The Budget Division of 0/PPB then organizes these submissions
for consolidation into a single Agency budget for review by the
Bureau of the Budget. This process consists first of screening the
individual office budgets for completeness, computational accuracy
and consistency, and adherence to the most recent DCI and BOB
guidance and Program Memoranda, Then the submissions are
consolidated by the content format and degree of specificity required
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to the Bureau, There then follows a period of bargain.ing between
the Agency and the Bureau in which some of the cuts are usually
restored. These negotiations can provide the Agency with a useful
insight into BOB logic and attitudes. In some cases the President
may be called upon to make finai decision on programs where the
DCI and Director, BOB are in disagreement, and, of course, the
President gives his final stamp of approval on the level of the
appropriation request.
c.
The Congressional Budget
Based on the budget levels arrived at during the BOB and
Presidential negotiations, the dollars are included (unidentified)
in other government agency appropriation requests and incorporated
in the President's Budget. For offices not affected by BOB cuts
or revisions initiated within the Agency, this process is little more
than a resubmission of a budget prepared the previous August.
Those offices affected by the BOB "mark" have a correspondingly
larger task. During this period also the Agency may be directed
to pursue major new operational programs, necessitating realignment
of programs which might otherwise be untouched by budgetary
revision. During January and February 0/PPB (with the help of
data from the Directorates) prepares the Congressional Budget using
the same procedures of analysis and consolidation of source data as
in the BOB submission, In addition, a generalized distillation
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(called "House Notes") of the full Congressional Budget is
prepared for the members of the special congressional
sub-committees, highlighting the more important changes
w thin each Program Category of Agency activity. Usually
during the month of February the Agency budget is sent to
Congress. This submission is highly classified and available
only to the Appropriations subcommittees charged with Agency
supervision although two other special subcommittees are also
made aware of the main essentials of the Agency's request.
The final stage in the formulation process involves Congress-
ional hearings. These occur during the spring and summer, at
the same time as the review of the President's total budget is
conducted on the Fill. At these hearings the Agency is represented
by the DCI, the Executive Director, the Director of 0/PPB, and
the Chief of the Budget Division. The resultant approved Congress-
ional Budget level is transmitted in the form of a letter to the BOB
from the Senate Committee. The BOB, in turn, informs the DCI.
This becomes the Agency's approved operating program level
for the fiscal year in question. The total congressional
appropriation level to the Agency is called "New Obligation
Authority" (N0A). Specific supplementary guidance is usually
provided either formally in the letters or informally, While
program direction and the basic priorities presented in the budget
are generally observed, as in all government operations
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there exists an understanding that some internal reprogramming
will be necessary in the subsequent cause of budget execution.
6. Budget Content and Format
In accordance with government-wide developments in planning,
programming, and budgeting, the Agency budget is organized to display
planned expenses primarily on a programmatic basis, but much additional
information, particularly in supporting details, is provided by organization
structure and by the traditional object classifications. In various contexts
these differing structures are required in order to develop and justify a
budget program both within the Agency and to outside review authorities.
a. Program Categories. Program Categories constitute the
primary structure for accumulating and displaying the Agency budget.
As discussed in paragraph 3(a) of Chapter II, this structure includes
three levels of program classification (categories, subcategories, and
elements) which arrange the Agency's activities in increasing degrees
of specificity. The Program Category structure provides a common
link between budgeting and programming.
b. Organizational. Organizational budgeting is a presentation of
the resources (dollars and personnel) that each office, staff, and
division organizational unit requires to do its assigned activities. This
is a "user" oriented structure. However, each organization ties its budget
needs into the Agency programming structure previously described and
arrays these resource requirements by country or by location, or related
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special-interest organizational configurations.
c. Object Class. Object class data represent the traditional
building blocks of budgeting by providing the answer to "what kind
of resources are required?" Every expenditure is associated with
one of the twelve object classes which are established on a government-
wide basis by BOB and are defined in
They include such items as personnel compensation, transportation of
things, supplies and materiels, etc. As in the program category
descriptions, the object class narrative is directed towards specific
reasons for increases arid decreases between the BY and CY, a nd
between the CY and py,
d. Target Oriented Display. Although Rot presently in use
as a budget tool, a Target Oriented Display (TOD) is being developed
to show the Agency's budgets and programs on a common basis with the
rest of the Intelligence Community. The TOD structure arrays
resources against an intelligence target, such as the Soviet Bloc or
Communist China, and within major targets to sub-targets such as
"military" or "economic". This program is still in its formative stage,
however, and suffers from the problems of allocating or prorating
individual and office activity to a specific target area.
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CHAPTER IV: Budget Execution
1. General
The budget execution process formally begins the first day of July
each year and continues through the last day of the next June. In essence,
it consists of the obligation and expenditure of funds to conduct approved
programs of the Agency. It entails the day to day operating procedures which
enable managers at all levels of the Agency to exercise varying degrees of
program and financial control. Beyond its traditional administrative control
function, budget execution also involves management techniques for optimizing
the use of available resources in carrying out approved and constantly
changing programs. As such, it provides a source of management information
needed to operate programs and make decisions.
2. Legal Requirements
The CIA Act of 1949 provides (1) that sums made available to the Agency
could be expended for purposes necessary to carry out assigned functions
regardless of other provisions of lay and (2) that expenditures for objects
of a confidential or emergency nature could be accounted for solely on the
Director's certification. There thus exists a mistaken impression that the
Agency is not bound by the legal provisions on appropriated funds which
govern other Federal agencies. Such is not the case. In addition to the
provisions of Section 3679 of the Revised Statutes (31 USC 665), which
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require all obligations to be legally authorized and within limitations imposed
by apportionments and allotments, the Agency follows the general legal
requirements governing individual Government transactions when security
considerations do not govern, as in salary schedules and per diem rates.
The Agency policy as contained in
has been to limit, to the extent 25X1
possible, the exercise of the special provisions of the CIA Act. Normally
the Agency abides by all the provisions of the statutes governing fund
management and accounting, except where Agency activities require protection
in the national interest.
3. Funding Authorities
The flow of funds within the government and, in turn within the Agency,
is accompanied by funding authorities permitting obligation of funds up to a
certain limitation. Such formal authorities are standard concepts in
government administration.
a. Joint Resolution
Because the annual appropriation bill is seldom passed by
Congress by the beginning of the fiscal year, Congress passes by July
first of each year a Joint Resolution, which provides authority to the
Agency and other government agencies to continue operations until the
appropriation bill is passed. This authority limits operations to a
rate not to exceed the rate in the prior year's obligations or that envisaged
in the present year budget request, whichever is less. This authority
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is in turn subdelegated to the individual offices within the Agency by
means of a Headquarters Notice or by Executive Director-Comptroller
memorandum just prior to the beginning of the fiscal year. Offices
are directed not to exceed (on a monthly basis) one-twelfth of the annual
limitation referred to in the Joint Resolution, Internally this would be
one-twelfth of the Operating Budget mentioned later, if the Agency'
Operating Budget happens to be less than the previous year's obligations.
Under special circumstances 0/PPB will issue upon request monthly
authority of greater than one-twelfth to those offices requiring heavy
obligations (e.g. for contracts) at the beginning of the year so long as the
Agency as a whole does not exceed the limitation. Such excess authority
is usually available on an overall Agency basis since overseas activities
are in some cases a month late in reporting their obligations. Allotments
are not issued until the appropriation act is passed and funds are
apportioned by the Bureau of the Budget, except for Reserve releases.
b. Appropriation
An appropriation is an authorization by an Act of Congress to
incur obligations and make payments out of the Treasury for specified
purposes. Congressional action gives the Agency an appropriation for the
conduct of regular operations and when necessary, a replenishment to the
Agency's Reserve for Contingencies. As explained in the previous chapter,
the Chairman of the Senate Appropriations Committee advises the Director,
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BOB of the amount appropriated to the Agency for the ensuing
fiscal year. The bureau in turn advises the Agency and the
budget execution process proceeds in the same manner as that
of any other Federal Agency, i. e., by an apportionment request
to the Bureau of the Budget submitted on standard form 132.
c. Apportionment
An apportionment is an authorization made by the Director
of the Bureau of the Budget. Under the concepts of Section 3679 it
represents an obligation limitation. The initial apportionment
request includes a financial plan based on the Agency's current
Operating Budget. BOB reviews the financial plan within the
context of the Congressional appropriation and will approve the
request in whole or in part depending upon current administration
direction.
d. Allocation
An allocation is the planned division of the Agency's
apportionment in accordance with the approved Operating Budget.
In recent years it has been issued in the form of a memorandum
from the Executive Director to the Deputy Directors and independent
office chiefs indicating position ceilings and dollar allocations by office.
The allocation differs from an allotment in that it does not
constitute legal authority to obligate. In fact, the allocation
memorandum asks that allotment requests be submitted in con-
formance with the allocation ceilings contained therein.
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e. Allotment
An allotment is a formal authority to obligate which is issued
to the head of each Agency office by 0/PPB on Form 716,, The
individual allotments are based on allocations approved by the Executive
Director and are signed by the Chief of the Budget Division. Reimburse-
ments and advances from other government agencies are also allotted
on Form 716. These allotments can be sub-allotted as necessary by
each office through Form 716a,
Each allotment indicates the amount of funds allotted and the
Property Requisitioning Authority (PRA) for supplies, materials, and
equipment to be issued and/or procured by the Office of Logistics on
the Office's behalf. Funds to cover the PRA are allotted to the Office
of Logistics in a consolidated allotment from 0/PPB. If property is to
be procured locally by the office concerned, allotment advice for such
funds is also indicated on the office's basic Form 716. For more
information on the Agency's property management procedures see Office
of Logistics pamphlet "Funding of Agency Property, June 1968."
4. Reserve for Contingencies
The BOB and Congress have recognized that many of the Agency's
activities are directed by operational considerations and intelligence
community decisions which cannot be foreseen and included in the Agency's
annual budget submission. To give the Agency appropriate financial
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flexibility to undertake such operations without recourse to special
supplemental Congressional appropriations, a special Reserve for
wa Contingencies has been established, This Reserve is replenished as
s
necessary at the time of the annual appropriation to provide an adequate
level for the range of contingency situations that may arise. During the
course of the fiscal year any release of funds from the Reserve must be
fully justified with appropriate supporting material. It must have BOB
approval in form of an apportionment. The DCI then notifies the Chairmen
to of the Congressional Appropriations Committees when such releases are
made and justifies the need for the releases as called upon. The Reserve
cannot be used as a hedge against over-obligation of the regular operational
program. Once approved, the amount of the release is merged with regular
operational funds (although usually accounted for separately) to provide a
new level of the Operating Budget for the Agency as well as the office
concerned.
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5. The Operating Budget
The budget execution process actually begins during the Spring before
the beginning of the fiscal year in the form of an Agency review to determine
what changes are necessary to the annual program as expressed in the
Congressional Budget. This review does not adhere to a formal pattern, but
in recent years has been conducted on an ad hoc basis at the direction of
the Executive Director-Comptroller. Directorates and offices are requested
to revise their annual program to reflect requirements that may not have
been anticipated six to nine months previously or included in the Congressional
Budget. Conversely, they may be requested to adjust their financial plan
downwards to eliminate lower priority needs or programs no longer needed,
in order to accommodate unfunded requirements. This reprogramming
effort, coordirated at the Directorate level and ultimately approved by the
Executive Director, results in the "Operating Budget", or financial plan for
the ensuing year. In no case can the resulting plan for allocation of resources
exceed in toto the amount anticipated to be appropriated by Congress for
regular operations.
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At the office level internal reprogramming among divisions and programs
will be necessary to provide for specific operational situations. The increased
needs and excesses should be highlighted in the Spring in conjunction with the
overall Agency "review" and results made known at the Directorate level.
The Directorate level in turn will attempt to balance the increases and
decreases among offices in conformance with overall guidelines or ceilings
approved by the Executive Director.
By 1 July each office and Directorate should be well prepared to proceed
with its Operating Budget for the new fiscal year. However, since Congress
seldom passes the appropriation bill by the first of the year, the Directorates
and offices are provided a tentative operating target which corresponds to the
approved Operating Budget but is tentative inasmuch as the appropriation
has not been passed.
6. R_eprop.amming
The operational and, accordingly, the funding needs of the Agency are
always changing. As stated in the previous chapter,
recognizes the
need to realign Agency resources to reflect changing fiscal and operational
conditions and changing priorities. Reprogramming actions should represent
a tangible product of these changes and thus form a very visible part of
budget execution. Reprogramming resources within an office can be handled
by that office provided the program changes are conitent with Agency policies
and priorities. Any change which involves the shifting of funds (and hence
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Rio allotment) between offices must be processed through 0/PPB, which
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el
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IMP
centrally manages Agency resources, as authorized by
When reprogramming occurs either within an office's allotment or
between offices(upon allotment approval), that action is reported on a
monthly basis on the Program Status Report discussed later in this chapter.
Reprogramming is constrained not only by the allotment medium but also
by the approvals system and administrative plans discussed below.
7. The .Approvals System
also establishes the framework for a project approval review
system administered by the Executive Director through 0/PPB, This
regulation describes the need for special review and study of projects based
on their scope, cost, or policy implications and directs that appropriate
reporting and review formula be established. Under present Agency policy
the Executive Director, through 0/PPB, reviews for the DireCtor's approval:
(a) All new research, development, and engineering projects,
and all non R&D scientific and technological projects of more than
and all extension and amendments to such projects of more
than
(b) All other new projects of more than
and amendments to these projects of more than
(c) All property purchases and sales, including real estate, vehicles,
and aircraft, and automatic data processing equipment of more than
and all extensions
and
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9. Mana.iement Rea2rts
The Agency generates a variety of internal reports to provide management
information for all levels of budgetary review. These reports provide both
status information on the current budget and justification data for future budget
submissions.
a. Office-Level Reports, The Agency's accounting system produces
two major monthly reports to enable each office, as an individual allottee,
to comply with the requirements for not exceeding its obligation
authority. These are the Status of Allotments and Property Authorizations
Report and the Obligation Status Report.
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CENTRAL
INTELLIGENCE
AGENCY
Planning, Programming, and Budgeting System
NW
APPENDICES
DRAFT
1March 1969
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CENTRAL
INTELLIGENCE
AGENCY
Planning, Programming, and Budgeting System
IMO
APPENDICES
DRAFT
1 March 1969
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I XICIN3cIdV
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