Advance Appropriations, Forward Funding, and Advance Funding

Sandy Streeter, Analyst in American National Government
Government and Finance Division
January 21, 2000

During consideration of recent appropriations measures, two long-standing but obscure budget practices - advance appropriations and forward funding - received considerable attention. In a time of budgetary constraints, advance appropriations and forward funding provide opportunities to include spending in appropriations measures that, in varying degrees, are not immediately counted. A related, but less discussed practice, is advance funding.

Appropriations measures generally make budget authority (or BA) (1) available for use (or obligation) at the start of the fiscal year covered by the measure. For example, the FY1999 appropriations acts generally made budget authority available on October 1, 1998. Sometimes appropriations bills provide a different starting date for specified budget authority within the act so that the funding cycle does not coincide with the fiscal year generally covered by the act. There are three types of this kind of budget authority - advance appropriations, forward funding, and advance funding.

Advance Appropriations

Advance appropriations means that budget authority becomes available one or more fiscal years after the fiscal year covered by the act. An advance appropriation in a FY2000 appropriations act could have provided that the budget authority for specified activities would not become available until Oct.1, 2000 - the start of FY2001 - or later.

Advance appropriations is generally scored (2) in the fiscal year the funds first become available. Therefore, an advance appropriation (and resulting outlays) for FY2001 that were included in a FY2000 appropriations act would be included for calculating total budget authority and outlays for FY2001, but not FY2000. The funds would not be included in calculations to determine if--

  1. the total enacted FY2000 discretionary budget authority and outlays exceeded the discretionary spending limits;
  2. the Congressional Budget Act(3) points of order dealing with the enforcement of FY2000 spending levels were violated; or
  3. the total FY2000 outlays exceeded the on-budget revenues (excluding Social Security).

Forward Funding

Forward funding generally becomes available for obligation in the last quarter of the fiscal year of the appropriations act and the availability continues the following fiscal year. Forward funding in a FY2000 appropriations act could have provided that the budget authority for specified activities would not become available until July 1, 2000, and would remain available through FY2001.

This budget authority is scored in the fiscal year in which it first becomes available. Budget authority in a FY2000 appropriations act would be included in the FY2000 calculations. Since forward funding generally becomes available near the end of the fiscal year, the Office of Management and Budget and Congressional Budget Office may estimat (4) that most of the outlays will occur in subsequent fiscal years. Forward funding outlays would not be scored for the first fiscal year, but would be scored for subsequent fiscal years.

Advance Funding

Advance funding is budget authority authorizing obligations late in the fiscal year, if needed. However, unless used, the budget authority is charged to the succeeding fiscal year. Advance funding is contingency funding for a few programs that require federal payments in which the funds are borrowed from the succeeding fiscal year.

Advance funding is used to fund benefit payments that are difficult to predict, such as unemployment compensation. An appropriations act would provide a specific amount of budget authority, but also states that, if needed, an agency may obligate additional funds to meet benefit needs. If advance funding is used, budget authority for that fiscal year is increased by the amount obligated and budget authority for the succeeding fiscal year is reduced by that amount.

1. For definitions of budget authority, obligation, and outlays, see U.S. Library of Congress, Congressional Research Service, Basic Federal Budgeting Terminology, by Bill Heniff, Jr., CRS Report 98-410 GOV (Washington: updated periodically).

2. Scoring refers to estimates of budget authority, outlays, revenues, and deficit levels resulting from congressional budgetary action. These estimates are usually prepared by the Congressional Budget Office and Office of Management and Budget and compare congressional action to targets and ceilings, such as discretionary spending caps and budget resolution spending ceilings.

3. P.L. 93-344. Section 303 of the Congressional Budget Act exempts certain advanced appropriations from the prohibition against considering spending legislation until after Congress has agreed to the budget resolution for the fiscal year. For more information on discretionary spending limits and Congressional Budget Act points of order, see U.S. Library of Congress, Congressional Research Service, The Congressional Appropriations Process: An Introduction, by Sandy Streeter, CRS Report 97-684 GOV (Washington: updated periodically).

4. Outlay estimates are used in scoring appropriations measures for enforcing discretionary spending limits and Congressional Budget Act points of order, and in calculating the federal deficit. Information on actual outlays is not available until the fiscal year is completed. OMB and CBO provide outlay estimates for each appropriation based on historical patterns.