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Federal Budget Process

Operating Budget

Overview. The Reclamation Service Center and individual Regions have wide latitude to develop internal policies and procedures for effective execution of appropriated funds and other budgetary resources. The principal mechanism in Mid-Pacific Region is the Region operating budget. The operating budget is essentially an "organization budget." The primary purpose of the Region operating budget is to distribute and effectively manage budgetary resources received through the formulation, presentation and legislation phases of the budget.

The operating budget is formulated concurrently with the legislation phase of the budget year budget. The operating budget execution phase runs concurrently with the execution phase of the budget. Operating budget execution includes periodic program evaluation and reconciliation to accommodate changes in program and revenue balances (e.g. Water and Related Resources, P&A, etc.) that occur during the budget year.

The operating budget process promotes effective execution by:

Formulation. (3 - 5 months) The MP Region operating budget is formulated and managed by organization. This is because Region organizations are generally established on the basis of either functional specialization or geographic area of responsibility, rather than on the basis of an exclusive project or appropriation.

The Region operating budget is workload based. Consequently, in formulating the operating budget, each office manager must project his or her organization's total workload for the budget year regardless of funding source. For example, in addition to planning studies, the Chief, Planning Division must coordinate within the Region to identify how much work the Division staff is expected to perform in support of Facilities Operations and Restoration Fund activities.

Each organization operating budget is consolidated and presented on the basis of budget object class.

Schedule:  Apr - Jun
Tasks

The formulation process begins with the operating budget call letter that reflects anticipated funding levels and Region priorities for the budget year, and standard guidelines for formulating all organization operating budgets. Guidelines typically address:

  • Which object class each office should budget. For a variety of reasons it may be more administratively feasible for some Regional accounts to be managed centrally. Examples include workers' compensation costs and Reclamation leadership development program costs. Such "custodial accounts" are normally administered by the Regional Office Business Resources Center.
  • The types of activities that may be charged to certain accounts such as P&A and distributive accounts (Regional Office indirect K12, Project General, Division spread accounts). As the term implies, the purpose of distributive accounts is to distribute indirect costs (non-project labor, training, collateral duties) back on a pro-rated basis to only those customers for whom work has been done and consistent with the actual amount of that work.
  • Budget rates and assessments including the Regional Office indirect rate, government contribution (benefit) rate, and one-time surcharges.
  • Relationship to the activity plans, BRC notebook and other documents.
  • Budget format. The format may change from year to year to reflect changing requirements and technology. For purposes of presentation and evaluation, however, all offices formulate their internal operating budgets in the same format.
  • Formulation schedule.

Upon receipt of the operating budget call letter, each office begins actual formulation of their operating budget.

This requires significant analysis and coordination to develop an accurate budget for staff, contracts, equipment and other organization requirements.

Information derived from this coordination and analysis is used to formulate and present the operating budget. Currently, all Region operating budgets are formulated and presented using the Mid-Pacific Region Operating Budget (MRB) program maintained by Budget Services.

Schedule:  Jul - Aug
Tasks

Budget Services rolls up all initial operating budgets and compares totals against anticipated funding levels. This is informally referred to as "Round 1." Usually, an additional "Round 2" is required before the operating budget is in balance with funds available. The final operating budget is presented to the Regional Management Team (RMT) for approval (if required). This essentially completes operating budget formulation, although RMT approved levels may be subsequently adjusted to reflect any last minute changes to the President's budget.

Operating budgets become "final-final" upon enactment by Congress of the annual Energy and Water Development Appropriation bill. The Region may implement the operating budget even without a bill, depending upon the nature of any continuing resolution, and the prospects for potential changes to the Reclamation budget.

Final budget amounts are loaded by each organization into the Mid-Pacific Region budget (MRB 2000) system. MRB 2000 displays budget amounts by object code for each cost center in which budget information is loaded.

Execution. (14 months) Operating budget execution is a continuous process requiring a total team effort by Region managers, employees and Region support staff.

Region managers are accountable for managing their programs within their approved operating budgets. This includes, but is not limited to:

The Region does not have authority to unilaterally "realign" funds between funds or projects, or otherwise adjust approved appropriation levels. In such cases, the Region must request the Washington Office approval for funds transfers. Basically, the Washington Office has the authority to transfer funds between funds and projects within the following limits:

Programmatic Reprogramming Guidelines (fund transfer limitations). Reclamation's authority to transfer funds between projects without prior notice to the Appropriation Committees (Submission of Reprogramming Requests), is based on language contained in House and Senate reports accompanying the Energy and Water Development Appropriation Bills. Currently, Reclamation adheres to the reprogramming rules as stated in the Conference report (H. Report 105-749) accompanying the FY 1999 Energy and Water Development Appropriations Conference bill which is provided as follows:

The above guidelines appeared under Water and Related Resources, however, the Loan Program also follows these reprogramming guidelines. For some appropriations, there is only one line item in the Appropriations Act, therefore, the reprogramming guidelines do not apply (i.e., Policy and Administration, CVP Restoration Fund, California Bay-Delta Restoration). Permanent mandatory accounts require no appropriation and therefore the reprogramming guidelines also do not apply (i.e, Colorado River Dam Fund, Trust Funds, Lower Colorado River Basin Development Fund (revenues only), Upper Colorado River Basin Fund (revenues only), and Miscellaneous Appropriations.

Please note that funds available at the beginning of the fiscal year is defined as the amounts approved by Congress for the current fiscal year, plus the actual carryover amount (before reallotment) for that project.

Program or funding revisions (also know as fund transfers).

Request Type:  Moving Fund
Approval Required

Within a Project, within a category, but between activities
(Example - Middle Rio Grande - from A10 to A20)

Appropriate
W-6320 Staff

Within a Project, within an activity, but between regions
( Example - Reclamation Law Administration from PN to MP)

W-6320
Team Leader
Within a Project, within a category, but between activities and regions
(Example - Recreation Fish & Wildlife from LC A20 to UC A30)
W-6320
Team Leader

Within a Project, but between Categories
(Example - Middle Rio Grande - from A10 to A40)

Director,
W-6300

From Project to Project, within a Category
( Example - from Collbran A10 to Middle Rio Grande A20)

Director,
W-6300
From Project to Project, between Categories
(Example - from Collbran A10 to Middle Rio Grande A50)
Director,
W-6300

Transfers (reprogramming) requiring approval by the Appropriations Committees. A reprogramming letter is prepared by the Region or Office and submitted to W-6320. The following guidance is provided in preparation of reprogramming letters:

  1. Use of the term "transfer"and never "reprogram" in the text.
  2. Ensure that activities named are correctly identified.
  3. State the purpose for which the funds will be used.
  4. List future impacts of the reprogramming or lack thereof.
  5. List source of funds and why a surplus is available. The transfer must not appear to cause a shortage in the program or projects from which the funds are taken. Likewise, the source must not be a controversial project, especially of the addressee.
  6. Prepare a note to reviewers, as necessary, which includes copies of all appropriate and applicable laws, statutes and requirements/information in the reprogramming request folder. This may facilitate approval and minimize questions as the request moves through approval process (this may be initiated in the region).

Reprogramming letters are signed by Interior and submitted to Congress through OMB. Original letters are sent to the Chairman and Ranking Minority Members of both the House and Senate Subcommittees on Energy and Water Development.

In addition, individual projects or purposes may have specific limitations, and fund transfer authorities cannot supersede those restrictions.

Operating budgets are adjusted only after a funds transfer or reprogramming request is approved.

Timely and accurate fund analysis is critical to the decision-making process for maximum accomplishment of individual programs as well as the Region's total program. For this reason, Budget Services monitors, analyzes and advises program managers on fund utilization throughout the budget execution phase. Reclamation monitors overall Region utilization.

Estimates on monthly rates of fund utilization for each program are made at the beginning of each year to facilitate Reclamation-wide monitoring.

Fund utilization analysis is performed monthly on each program to:

The content and detail of individual analyses may vary in size and type of program but the process basically focuses on:

Summary data reflecting the status of each funded program as well as for the total Reclamation appropriation, are consolidated, published, and distributed monthly for Reclamation-wide review and use.

Budget Services also exercises delegated responsibility for prevalidation of funds for obligations over $25,000.

Schedule:  Oct
Tasks

Implement approved CY operating budget.

Schedule:  Mar - Apr
Tasks

Spring Workshops. The Region conducts a workshop for CVP water and power contractors to provide information on execution by the Region against the approved operating budget.

Schedule:  Apr - May
Tasks

During the third quarter, the Region convenes a Mid-Year Evaluation of the Region operating budget. The primary purpose of the evaluation is to develop a tentative "glidepath" for current year execution. This basically involves assessing projected spending levels to identify potential unobligated balances. The objective is to reconcile and reallocate funds to ensure effective utilization against all Region requirements. The Mid-Year Evaluation also sets the stage for the Strategic Planning Session by earmarking potential carry-over funds.

As part of the Mid-Year Evaluation, the Region considers input on priorities identified at customer workshops.

Schedule:  Oct
Tasks
At the conclusion of the fiscal year, the Region conducts an extensive Year-end Close-out. The purpose of the close-out is to meet financial management requirements, and to assess program execution.