Reprogramming Funds: Understanding the Appropriators’ Perspective
By Michelle Mrdeza, Adjunct GAI Faculty and Guest Contributor, and Kenneth Gold, GAI Director
Reprogramming funds within accounts is often essential for agencies as they cope with changing circumstances affecting their programs. But getting permission is anything but a “given”. As a result, it is crucial for agency officials to understand both their agency guidance on reprogramming as well as the larger budget context appropriators work in so that they can develop requests that can pass muster on Capitol Hill.
In late May the Director of the National Weather Service (NWS) abruptly retired after a five-month internal investigation found that the agency had improperly reprogrammed funds without either receiving permission from or informing Congress of its activities. The investigation found that more than $30 million had been used for agency expenses that differed from the purpose that Congress intended. There was no evidence of any fraud or corruption, or that any of the funds were used for personal financial gain or for inappropriate purchases, only that “National Weather Service employees engaged in the reprogramming of funds without congressional notification as required.”
The investigation concluded that NWS personnel shifted the funds in an effort to preserve the weather service’s critical forecast units from layoffs. It could be argued, in fact, that NWS personnel were simply exercising sound management judgment in reallocating resources to where they were most needed. Nonetheless, in a statement, Senator Olympia Snowe (R-ME) expressed concern that the report raised “fundamental concerns that the core operations of the National Weather Service are underfunded”, but that nevertheless, senior NWS staff had engaged in “potentially illegal transfers of taxpayer’ money.”
Although appropriators in both chambers were angered by the revelations, they ultimately forgave the agency, which promised to enact management reforms to prevent this sort of thing from re-occurring. Less than a month after the scandal, the appropriators agreed to allow NOAA to reprogram some $35 million in NWS accounts precisely for the purposes that agency officials had identified earlier.
Over the past several years, one of the true constants of the annual appropriations process is the uncertainty of it all. Since 1977 Congress passed all appropriations bills on time only four times; the last year where all agencies were funded on time was 1997! Fiscal year 2013 won’t break this trend. With Congress struggling to figure out even the simple things such as how much discretionary money will ultimately be parsed out to federal agencies, the one thing we are already sure of is that most, if not all, agencies will once again operate under a continuing resolution (CR), at least through the elections. The second thing we know is that total spending for discretionary programs will go down. For agency heads and program managers, this means another year of uncertainty and another year of trying to figure out how to make programs work under fiscal constraints.
On paper, the appropriations process isn’t complicated; in actual practice, complications seem to increase each year. In the days of doing more with less, it is a highly competitive process. Appropriators are charged with divvying up a little over $1.0 trillion in scarce taxpayer dollars – and they take the job seriously. $1.0 trillion is a lot of money, but when you start splitting it among 12 subcommittees, it goes fast. Always remember, the Constitution dictates that no money can be drawn from the Treasury but “in consequence of appropriations made by law”. Congress considers the President’s budget but by no means does it rubber-stamp it. It is debated, dissected, and amended. At the end of the day, the stamp of approval comes from Congress and Congress alone. The President may disagree on the final product, but vetoes of appropriations bills are rare.
Timing is Everything
From a staffing perspective, one of the more challenging parts of putting an appropriations bill together is getting timely and useful information. In order to do their jobs, staff need information that is relevant, accurate and timely. Here’s the rub. The President begins putting his budget together a full one and a half years before the start of the new fiscal year. A lot can change in 18 months. When you tack on months of continuing resolutions and budget uncertainty, plans can change dramatically. At the end of the day, when the ink is dry on the final bill, all too often agencies are faced with either over-funding or under-funding in different programs. Things happen—programs are delayed; priorities change; RFP’s don’t go out; proposals come in over or under budget. The result—agencies need to move the money around either through a transfer of funds or a reprogramming request.
So You Want To Rewrite the Appropriations Bill?
From an appropriators’ perspective, reprogrammings are a necessary evil. Each appropriations subcommittee has its own statutory guidelines for when agencies can move funds and these guidelines must be followed. They are clearly spelled out both in statute and in accompanying reports. It is highly recommended that agency officials keep these guidelines in plain sight; the consequences of moving money outside the established parameters is significant. Appropriations law prohibits agencies from transferring funds between accounts (“transfers”), and doing so without specific statutory authority is illegal. Prohibitions against reprogramming funds within an appropriations account, however, vary among agencies and appropriations subcommittees, as there are no government-wide reprogramming rules. At some level, all agencies routinely move funds around within accounts as needs shift, and as a matter of sound budgeting. Much of this takes place without the knowledge of appropriators, or even high level agency officials. The misdeeds at NOAA were only uncovered after agency executives received an anonymous tip on the agency hotline.
All appropriations committees require at a minimum notification of reprogramming, either in statute or as instruction in committee report, hearings, or some other informal guidance. Most agencies are also required to receive committee approval for reprogramming above a specified threshold. For example, at DHS, if an agency wants to augment a program, project or activity by $500,000 or 10 percent, whichever is less, congressional approval is required. Additionally, the department may not create or eliminate programs; may not reduce funding by 10 percent for any program, project or activity; or fund programs that have been denied or restricted by Congress. The Defense Department requires approval of procurement reprogramming if it exceeds $20 million, or 20 percent of the appropriated amount, whichever is greater.
While the courts have ruled that agencies aren’t legally required to follow nonstatutory limitations, violating instructions from the appropriations committee is generally not considered good practice. Getting Congressional approval is time consuming and, similar to the regular appropriations process, agencies must justify why they want to move the money. After spending a minimum of 9 months putting a bill together, it can be aggravating to appropriators when agencies come forward with proposed changes.
In the first place, there are always winners and losers. For every program that’s being augmented, there’s another program that’s losing funds. Every reprogramming must be offset dollar for dollar. In the second place, agencies do not do a great job of justifying why they want to move the money. Similar to supporting the President’s budget through Congressional Justifications, the burden is on agencies to prepare comprehensive and well thought out justifications for reprogrammings.
Finally, the biggest surprise in agency reprogrammings is often the source of funds. More often than not, agencies “find” unobligated funds. Time and time again, agencies operate under the premise that appropriators hate unobligated balances. Nothing could be further from the truth. Appropriators love unobligated balances; they just hate it when agencies hide them and then use them for a reprogramming.
“The Tip of the Iceberg”
House appropriators have indicated that they believe the NOAA scandal suggests that this sort of practice is far more widespread than just the NWS. House Commerce Justice Science Appropriations member John Culberson (R-TX) stated “I think this is the tip of the iceberg…I think it is bigger than NOAA.” Appropriators are especially concerned with the depth of the practice at DOD, in light of the number and size of reprogramming requests each year. In FY 2011, there was an almost 500% increase in reprogramming requests from DOD that totaled over $15 billion. The House version of the FY 2013 Defense Appropriations bill would cut the department’s reprogramming authority by $3 billion, with the committee report expressing great concern over DOD’s “excessive reliance” on reprogramming.