APPROPRIATED FUNDS

8.04.03
POLICY
Obligations of appropriations are to be restricted to the amounts apportioned by OMB. In addition: (1) all representations in the budget transmittal by the President, in the estimates and justifications submitted by the Department, and in testimony of departmental witnesses shall be adhered to; and (2) all expressions of Congressional intent stated in committee reports or in discussion on the floor of the Congress with respect to the objects or purposes for which funds are appropriated shall be adhered to, unless the Secretary specifically authorizes or directs a different course of action or unless a notification of reprogramming has been transmitted to the Congress.

8.04.04
RESPONSIBILITIES
a. The Director is responsible for administrative control of NIST appropriated funds. This includes:

(1) Developing financial management systems and procedures consistent with the requirements of the DoC Budget and Program Analysis Handbook and Accounting Principles and Standards Handbook;

(2) Allocating funds to heads of Operating Units (OUs);

(3) Ensuring that operations are maintained within the limits of approved apportionments, financial plans, and operating budgets; and

(4) Providing notification to appropriations committees and obtaining proper clearances prior to proceeding with reprogramming actions.

b. The Chief Financial Officer (CFO), in cooperation with the Budget Officer and the Chiefs of the Finance Division and Business Systems Division, is responsible for developing procedures to provide financial and employment data needed for administrative control and reporting requirements and for maintaining liaison with the DoC Office of Budget and the Office of Financial Management on resolution of problems.

(1) Specific responsibilities of the Budget Officer are as follows:

(a) Preparation of apportionment and reapportionment requests and backup, and periodic reports and other required data;

(b) Allocation of budgetary resources to OUs in support of the programmatic distribution of funds appropriated by Congress, quarterly apportionments approved by OMB, and decisions by the NIST Director;

(c) Issuance of operating budgets to OUs and divisions reflecting the programmatic distribution of funds appropriated by Congress; and

(d) Clearance and/or preparation and release of financial data from official records in response to miscellaneous external requests for information.

(2) Specific responsibilities of the Chief of the Finance Division are as follows:

(a) Organizing, planning, developing, coordinating, and managing a comprehensive accounting/finance program for NIST; and

(b) Certifying the accuracy of official accounting records and reports.

(3) The Business Systems Division is responsible for maintaining a financial management system that produces reports which show accrued costs, total obligations, unobligated balances, and total budgetary resources available to NIST.

c. OU Directors are responsible for establishing division operating levels and project authorizations and ensuring that operations are maintained within limits of allocations issued by the Budget Division.

d. Specific responsibilities regarding operating budgets and administrative control of funds are given in Appendix A.

8.04.05
DEFINITIONS
a. Allocation - At NIST, approval by the Director for OU Directors to incur obligations up to a set level of funding. The sum total of allocations must equal the apportionment. Suballocations or operating levels to division chiefs are established by the OU Directors consistent with the programmatic distribution of funds appropriated by the Congress and quarterly apportionments approved by OMB.

b. Allotment - An administrative subdivision of appropriated funds below the apportionment level. Allotments are used by the head of an agency to delegate to agency employees authority to incur obligations within a specified amount pursuant to an OMB apportionment or other statutory authority.

c. Antideficiency Act - Refers to 31 U.S.C. 1341 and related sections, which make it a violation of law for an agency to incur obligations or make expenditures in excess of an appropriation or apportionment or in advance of an appropriation.

d. Apportionment - A distribution made by OMB of amounts available for obligation in an appropriation or fund account into amounts available for specified time periods, programs, activities and/or objects. The amounts so apportioned limit the obligations that may be incurred.

e. Appropriation - Enacted legislation providing authority to incur obligations and to make payments out of the Treasury for specified purposes during a specified period of time. See Subchapter 8.03, Budget Formulation.

f. Budget Authority - Authority provided by law which permits government agencies to enter into financial obligations requiring either immediate or future cash disbursements.

g. Deferral - An action or inaction that temporarily withholds, delays, or precludes the obligation or expenditure of budget authority. Deferrals may only be for the purposes authorized by the Antideficiency Act and may not be made for policy reasons. They may not extend beyond the end of the fiscal year in which the funds are withheld. The President must advise Congress of proposed deferrals, and either House of Congress may overturn a deferral by passage of an impoundment resolution.

h. Full-Time Equivalent (FTE) - Total number of hours paid or to be paid in the reporting year divided by 2080. It is always 2080 hours, even in fiscal years with extra compensable days.

i. Impoundment - Any action or inaction by the President or a federal agency that delays or withholds the obligation or expenditure of budget authority provided by the Congress. There are two categories of impoundments: deferrals and rescissions.

j. Obligation – A binding agreement (amount of an order placed, contract awarded, service received, or similar transaction) that will result in cash disbursements, either immediately or in the future.

k. Operating Budget - Allocation of appropriated funds by budget/program code which is issued by the Budget Division to heads of OUs and division chiefs.

l. Outlays, Net - Gross payments made to liquidate obligations incurred (cash payments or issuance of checks) less reimbursements, refunds, and loan repayments received and credited in the appropriation or fund accounts; the net of disbursements less receipts.

m. Program Code - Coding number assigned to each project to identify the budget activity, subactivity, line item, and program under which the project is identified (also referred to as budget/program code).

n. Program Manager - Individual assigned responsibility for developing and presenting program objectives and plans and monitoring technical and fiscal progress for a particular NIST-wide program.

o. Program, Project, or Activity (PPA) - major area of work for which funding is identified in the budget submission (budget subactivities and line items) to Congress or as provided in the enacted appropriations bill or committee reports accompanying the appropriations bill.

p. Reapportionment - A revision by OMB of a previous apportionment.

q. Reclassification - Any change in the project budget/program code designation not involving a change in program objectives.

r. Reprogramming - The shifting of resources within an appropriation account from one PPA to another to use them for purposes other than those outlined in the budget justifications or expressed as Congressional intent in the enacted appropriations bill and committee reports.

s. Rescission - A Presidential request that Congress cancel (rescind) all or part of an appropriation or available unobligated balances. Generally, amounts proposed for rescission are withheld for up to 45 calendar days of continuous session while the Congress considers the proposals. Unless both Houses of the Congress complete action on a rescission bill within that time period, the budget authority must be made available for obligation. Congress may also initiate rescissions through its own appropriations process. Such action occurs for various reasons, including changing priorities, program terminations, excessive unobligated balances, and program slippage.

t. Reserve - Portions of appropriations, funds, or contract authority set aside for contingencies or savings. Reserves established by OMB on an apportionment can only be released by means of an approved reapportionment. Such reserves must be reported to the Congress under the provisions of the Impoundment Control Act of 1974.

u. Working Capital Fund - The NIST revolving fund established by Congress in 1950 (see Subchapter 8.07).

8.04.06
APPORTIONMENTS AND REAPPORTIONMENTS
a. 31 U.S.C. 1512 requires that all appropriations be administratively apportioned: (1) to ensure their obligation at a controlled rate which will prevent deficiencies from arising before the end of the fiscal year; and (2) to ensure that there is no drastic curtailment of the activity for which the appropriation is made.

Appropriations are commonly apportioned by quarter, based on estimated obligations to be incurred each quarter. At the end of each quarter, unobligated balances of apportionment are available, on a cumulative basis, for obligation in subsequent quarters without reapportionment unless otherwise specified by OMB. Apportionments also may be in total by specific programs, projects, activities, objects, or combinations thereof.

The NIST Working Capital Fund was exempted from the apportionment requirement by OMB in 1975.

b. Preparation and Submission of Schedules - Requests for apportionment of NIST appropriations are submitted to OMB through the Department on the Apportionment and Reapportionment Schedule, SF-132, by August 21 of each year or within ten days after approval of the appropriation act, whichever is later. Financial plans which are consistent with the subactivity levels presented in the budget are submitted in support of the schedules (see Section 8.04.09). The Budget Division is responsible for the preparation and submission of the schedules.

At OMB, apportionment requests are referred to the examiners responsible for the programs involved, who review requests and the supporting material to arrive at recommendations on amounts to be apportioned. OMB is required to act on the apportionment request by September 10, or within 30 days after the approval of the appropriation act, whichever is later.

A request for reapportionment is submitted as soon as a change in a previous apportionment becomes necessary due to a change in resources or within ten days after legislation is passed which changes budget authority.

c. Apportionment Reserves - Reserves may be established by OMB only to provide for contingencies, or to effect savings whenever savings are made possible by or through changes in requirements or greater efficiency of operations. Amounts reserved may not be obligated by the agency but may be released in whole or in part by reapportionment action by OMB at any time during the year or by Congressional action on proposed rescissions or deferrals. Reserves must be reported by the President to the Congress as either a proposed rescission or a proposed deferral. Proposed rescissions must be released if both Houses of Congress have not completed action on the rescission bill within 45 days. Proposed deferrals must be released if either House of Congress passes an impoundment resolution disapproving such proposed deferral.

d. Apportionment Control - The original copy of an approved apportionment is maintained by the Budget Division. The Budget Division records the apportionment in the financial management system, Commerce Business System (CBS), in which funds are controlled at the appropriation level. The Budget Division ensures from its control records that quarterly OU allocations are within the apportioned amounts. The Finance Division verifies that obligated balances in the standard general ledger accounts do not exceed apportioned amounts.

e. Employment and Outlay Ceilings - OMB may establish ceilings on employment and issue target outlay ceilings as supplements to the apportionment process. Although special requirements are imposed by law from time to time, generally OMB ceilings are applicable as administrative rather than legal limitations, and they are issued on an agency-wide basis rather than on an individual appropriation basis.

8.04.07
ALLOCATIONS TO OPERATING UNITS
a. Through the Budget Division, the Director assigns total allocations of appropriations, with quarterly breakdowns by program code, to the OU Directors. The sum of the allocations may not exceed the quarterly distribution and total appropriation amounts, in accordance with the provisions of the Antideficiency Act. These allocations constitute authority for OU Directors to incur obligations or costs within a given amount.

The OU Directors divide their allocations by assigning operating levels to division chiefs within their OU. In addition, managers of NIST-wide programs provide operating levels to all organizational units which receive program funding. These operating levels are further divided into project authorizations by quarter, which are entered into CBS.

The initial allocation is intended to provide for the performance of the primary responsibilities of the OU throughout the fiscal year. The OU Director is responsible for conducting the program within the limits of the allocation. In the event that an allocation is exceeded, the OU Director or division chief directly responsible for the overrun may be subject to administrative discipline if the circumstances warrant. The statutory penalties of the Antideficiency Act concerning over-obligation of funds do not apply to the allocations to the OU Director, except as they affect NIST as a whole. However, it is important that each OU Director recognize their responsibility to conduct operations within the allocation.

b. The Budget Division issues revised OU quarterly allocations to reflect changes due to transfer of funds, distribution of unobligated balances, distribution of additional appropriations, rescission of funds, and other financing adjustments. The Budget Division should be informed as soon as possible if it appears that a departure from the quarterly plan is necessary. A reapportionment may be obtained if the change cannot be accommodated within the existing apportionment.

8.04.08
OPERATING BUDGETS
a. Development of Annual Operating Budgets - The base point for developing operating budgets for appropriated funds for the coming year is the budget as communicated to the Congress. During the spring of each year, the Budget Division develops for the Director's approval funding levels for each appropriation by program and OU. These levels are determined by the timing of Congressional action, but they normally are the House or Senate Allowance or the level of the previous fiscal year, whichever is lower. These funding levels are issued to OU Directors prior to the beginning of each fiscal year. OUs establish project authorizations by quarter that reflect estimated annual spending.

b. Issuance of Operating Budgets - The Budget Division issues operating budgets at OU and division levels at the start of the fiscal year. Each month, revised operating budgets are issued to reflect any changes in funding or program levels. OU operating budgets support the NIST financial plans throughout the year (see Section 8.04.09).

8.04.09
FUNDS CONTROL AND REPORTING
a. 31 U.S.C. 3512 specifies that agency heads are responsible for establishing and maintaining accounting and internal control systems that provide reliable accounting for agency activities that will be the basis for preparing and supporting the agency budget request and for executing the agency budget.

Reports generated from the financial management system reflecting financial status are used by NIST management to maintain obligations within authorized levels and to comply with any restrictions included in appropriations acts. Managers must reconcile any locally-maintained records to the official accounting records in CBS.

NIST-wide year-end analyses are performed to ensure that all transactions affecting the appropriation and fund balances have been recorded properly, accurately, completely, and on a timely basis. All estimated obligations are reviewed for reasonableness and appropriateness, and adjustments are made as necessary.

b. External Reporting Requirements - The OMB and DoC systems for control of funds require periodic reporting against approved plans to evaluate progress and detect early deviations from approved plans.

The Finance Division prepares a quarterly Report on Budget Execution, SF-133, and an annual Year End Closing Statement, FMS 2108, for each NIST appropriation or fund account that are submitted to Treasury via the Federal Agencies’ Centralized Trial Balance System (FACTS II). The Budget Division reviews the SF-133s and advises the Finance Division of their concurrence prior to transmittal. Certified copies are also provided to the DoC Office of Financial Management and DoC Office of Budget.

The Budget Division prepares the following for submission to the Department and OMB:

(1) Outlay plans by appropriation by month. Revisions to the initial plan and reports of actual outlays are required during the year.

(2) Financial plans of obligations by appropriation by budget subactivity by month.

(3) Staffing plans showing FTE and onboard staffing estimates by month for NIST in total.

Revisions to the financial and staffing plans may be made to reflect changes in OMB ceilings, approved reprogramming, or changes which require reapportionment of funds. Reports against the financial and staffing plans are submitted monthly to DoC by the Budget Division. Variances of more than ten percent from the budget subactivity plan must be explained. Affected OU management and program managers will be asked to provide supporting information.

8.04.10
REPROGRAMMING
a. Reprogramming is the technical term applied to the transfer of funds and associated positions between programs, projects, or activities (budget subactivities or line items) which results in a change in the resources for a PPA from that reflected within the Congressionally approved budget for the current fiscal year. In addition it includes:

(1) Proposals to use apportionment reserves or unobligated balances available from prior-year appropriations for purposes other than those for which they were appropriated; and

(2) Significant changes in program direction or output (without transfer of funds) from those justified in the budget.

b. As specified in the General Provisions of the annual Appropriations Act, proposed reprogramming actions which equal or exceed $750,000 or ten percent of a PPA require Congressional approval. The Budget Division is responsible for submitting external notifications of reprogramming to DoC, OMB, and Congress in the required formats before the reprogramming is effected. Congress has 15 days to respond to a reprogramming notification.

c. OU Directors may propose a reprogramming action (both within and exceeding the NIST statutory limitations) for consideration by the Director. The request should be sent to the Director through the Budget Officer and must include a justification of the reprogramming and details of the resources involved.

8.04.11
DISPOSITION OF END-OF-YEAR UNOBLIGATED BALANCES AND OVER- AND UNDER-ACCRUAL OF PRIOR-YEAR OBLIGATIONS
a. All recorded obligations against NIST appropriations are financed from funds authorized by the Director. Until the obligations are liquidated (paid) or cancelled, these obligations and authorizations are carried forward and identified with the fiscal year of obligation. Since NIST appropriations are "no-year appropriations," which means that obligations may be incurred beyond the end of the fiscal year for which the appropriation was made, the following procedures have been established to ensure the effective and timely utilization of all funds, consistent with program plans.

b. End-of-Year Unobligated Balances - For the Scientific and Technical Research Services appropriation, each OU may retain for use in the following fiscal year unobligated balances of up to one-half of one percent of its total budgetary resources.

An OU may request the Director's approval to retain additional balances when circumstances warrant (for example, a large increase which was not apportioned until too late in the year to be fully obligated). The justification in support of the request must be specific as to the programs, contracts, projects, and affected milestones for which carryover is needed. Specific instructions for such requests are issued by the Budget Division during the fourth quarter of the fiscal year.

Unobligated balances in the Construction of Research Facilities and Industrial Technology Services appropriations are authorized in total to the program managers, once they are apportioned by OMB.

c. Over- and Under-Accrual of Prior-Year Obligations - Unliquidated obligations do not always accrue for exactly the same amount as the original obligation. In the case of obligations that were made in prior years, this may result in unbilled costs, which must be covered, or may result in excess balances.

Changes in prior-year payments and obligations are monitored throughout the year by the Budget Division and the Finance Division. Generally, they are summarized by OU and program code at the end of the fiscal year, and balances will be added to carryover allocations or deficits will be netted against budgetary resources. If a particular organizational unit shows a pattern of consistent or large prior-year deficits, the transactions are reviewed and corrective action, if necessary, is recommended to NIST management.

In unusual circumstances, when a prior-year recovery becomes available and is needed during the current fiscal year, the OU may request by memorandum to the Budget Division that the balance be made available in the current fiscal year. The amount should be at least $10,000, and the memorandum should supply sufficient justification as to (1) why the funds were deobligated and (2) why the funds are needed in the current fiscal year. The Budget Division may return the funds to the requesting division only if the apportionment will not be exceeded and if year-to-date OU and NIST recovery levels are sufficient to permit such an allocation.

8.04.12
REVIEW AND EVALUATION
a. Within the Department, the Office of the Inspector General and offices under the Chief Financial Officer have joint responsibilities for evaluating the program and financial performance of the bureaus and offices. The Office of the Inspector General conducts centralized management audits of the operating, administrative, and financial activities of all organizational units, and of selected claims, costs, cost proposals, and cost and pricing data arising from contracts, grants, subsidies, and loans or other similar agreements entered into or proposed by bureaus of the Department. The offices under the DoC CFO conduct program studies and analyses, prepare reports on program and fiscal status, and perform assessments of internal controls over reporting.

b. The Government Accountability Office (GAO) conducts independent audits of the operations of the Department. GAO serves as the chief administrative arm of the Congress to ensure that laws relating to program management and financial operations of the government are being properly observed. GAO reports directly to the Congress on its findings.

8.04.13
REFERENCES
Regulations governing management of appropriated funds include:

Title 31 of the United States Code (Money and Finance), specifically:

--Sections 1341-1342, 1349-1351, 1511-1519
--Sections 1101, 1104-1108, 3324
--Sections 1501-1502

2 U.S.C. 681-688 (Title X of P.L. 93-344, The Impoundment Control Act of 1974)

The following are the provisions of additional pertinent statutes and OMB and DoC guidance relating to management of appropriated funds.

a. 31 U.S.C. 1301 limits the purpose for which funds may be spent. It states that "Appropriations shall be applied only to the objects for which the appropriations were made except as otherwise provided by law."

b. The Antideficiency Act requires that all appropriations be apportioned to prevent obligations or expenditures in a manner which would necessitate deficiency appropriations, and requires a review by OMB at least four times a year of apportionments and reserves, including a determination as to whether reserves should be established, modified, or released [31 U.S.C. 1512]; provides that financial apportionments are made by the President (Director of OMB) [31 U.S.C. 1513(b)(1)]; and provides that obligations or expenditures are not to be incurred or authorized in excess of such apportionments or reapportionments [31 U.S.C. 1517(a)].

c. 31 U.S.C. 1108(b)(1) prescribes the use of cost-based budgets in administrative subdivision of appropriations and funds and their use in administration and operation.

d. 31 U.S.C. 1501(a) sets forth the legal definition of an obligation and provides that no amount be recorded as an obligation unless it is supported by documentary evidence.

e. 31 U.S.C. 1112(e) requires consistency in accounting and budget classifications, synchronization between such classifications and organizational structure, and support of budget justifications by information on performance and program costs.

f. Federal Managers’ Financial Integrity Act (FMFIA) of 1982 provides the statutory basis for management’s responsibility for and assessment of internal financial controls.

g. OMB Circular A-11, Preparation, Submission, and Execution of the Budget, provides instructions on financial plans, apportionments, reapportionments, deferrals, proposed and enacted rescissions, systems for administrative control of funds, allotments, operating budgets, reports on budget execution, and reports on violations of the Antideficiency Act.

h. OMB Circular A-123, Management Accountability and Control, requires agency management to assess, document, and report on internal controls over financial reporting.

i. The DoC Accounting Principles and Standards Handbook prescribes accounting principles and standards to be followed within the Department in the design and operation of accounting systems, and it provides specific accounting principles and standards against which financial management and accounting systems can be evaluated and improved.

j. The DoC Budget and Program Analysis Handbook contains policies and procedures governing the preparation and justification of the Department’s budgets and the information and analysis necessary to meet the Secretary’s responsibilities for managing the budget.

k. Each fiscal year, the enacted Appropriations bill includes provisions that specifically address for that year the funding available for obligation and transfer to the NIST Working Capital Fund, reprogramming and other constraints, and additional reporting requirements.

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5/2008