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Fact Sheet on Senate Budget Process: 98-405 GOV
The Spending Pipeline:
Stages of Federal Spending
Bill Heniff Jr., Consultant in American National Government
Government and Finance Division
Updated March 2, 1999
Federal government spending
involves a multi-step process in which budget
authority is enacted and obligated, and outlays are generated. Budget authority is enacted in law;
it provides federal agencies the legal basis to incur obligations. Obligations, which reflect such activities as employing personnel, entering into contracts,
and submitting purchase orders, establish financial liabilities of the federal government. Outlays are payments that liquidate these obligations. This multi-step process can be illustrated
as a spending pipeline (see Figure 1).
Figure 1. The Spending Pipeline
Budget authority, which is provided in appropriations acts and direct spending legislation, establishes
the specific amounts made available for obligation. In some instances, however, budget authority is indefinite, providing "such
sums as may be necessary" to achieve certain purposes. Budget authority may be made available for obligation
for a one-year, multi-year, or no-year period. One-year, or annual, budget authority is available for obligation only during
a specific fiscal
year, and any unobligated authority expires at the
end of that fiscal year; multi-year authority is available for a period longer than one fiscal year; and no-year
budget authority is available for an indefinite period.
The Antideficiency Act (31 U.S.C. 1341-42; 1511-1519) prohibits agencies
from obligating more budget
authority than was provided in law. Certain adjustments (e.g., a rescission) may be made to cancel
or reduce budget authority after it has been enacted in law.
Outlay amounts included in budget documents are estimated amounts, and the actual outlays
for a fiscal year may differ from the estimates. The estimated outlays are calculated using the historical
spendout rates for each spending account and other factors. The spendout rate reflects the proportion of total
budget authority for an account that becomes outlays during a fiscal year.
The amount of new budget authority enacted in a fiscal
year does not necessarily equal the amount of outlays in that year. Figure 2 illustrates this using the President's
proposed FY1999 budget. Most new budget authority made available is obligated and becomes outlays in the fiscal year for which
it is enacted; $1,365 billion of the $1,751 billion of new budget authority is expected to become outlays in FY1999.
However, a portion of the FY1999 new budget authority, $386 billion, either
will be obligated, but will not become outlays until future years, or will
remain unobligated until future years. This amount reflects multi-year and no-year budget authority for activities
like construction, where the obligation and outlay of funds may occur over a period of several years. The remaining
outlays for FY1999, $368 billion, are expected to derive from unobligated budget authority from prior years, reflecting
previously-enacted multi-year or no-year budget authority that will be obligated and become outlays in FY1999.
Figure 2. Relationship of Budget Authority to Outlays
for FY1999
(dollars in billions)
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