Control of Yearend Spending

Stengthening controls over yearend spending is not a new issue. There is a recurring concern that wasteful Government spending may result from the agency practice of obligating substantial amounts of funds during the last weeks of the fiscal year in order to keep them from lapsing at yearend. When funds are obligated or spent near the end of the year, it does not automatically mean that they were spent wastefully or inappropriately. In an effort to deal with these problems, the House Committee on Post Office and Civil Service reported out H.R. 4717, concerning personnel ceilings and contracting out, section 3 which would require that agencies obligate not more than 20 percent of their funds in the last 2 months of the fiscal year. Generally, GAO does not favor these types of limitations because they are difficult to administer and because they address a symptom rather than correcting underlying management problems. In this case, however, legislative action is warranted as a means of getting a handle on the basic problem. Over the years, the agencies and the Office of Management and Budget (OMB) have not effectively monitored and managed the execution of the budget. Congress created a mechanism, the apportionment process, which was intended to be the primary means for monitoring and controlling the effective use of funds. The apportionment process is also the appropriate vehicle for administering any limitation on yearend spending. Accordingly, GAO recommends an alternative to the present section 3 of H.R. 4717, which includes an approach using the existing apportionment process to administer the limitation. This would assign responsibility to those in the executive branch who should be monitoring and controlling spending. The alternative would have general applicability to all obligational authority available and planned for use in a fiscal year; it would limit total agency spending in the last 2 months of each fiscal year to 20 percent of planned spending for that year; and it would allow the Director of OMB to authorize exceptions to avoid serious disruption to the execution of the program, thereby allowing some flexibility. GAO supports the temporary use of limitation on yearend spending as a means of conveying Congess' concern with yearend spending and execution of the budget.