Cyclopedia of Congressional Budget Law
Advance funding becomes available late in the budget year and is in addition to the funds for that entire fiscal year; any expenditure of the advance funds is charged to the following fiscal year’s appropriation. This period of availability has tended to be used for accounts that fund mandatory payments to individuals. The aggregate amount of such payments may be particularly sensitive to changes in eligible beneficiaries or difficult to predict more than a year in advance. In such instances, providing extra funds that become available late in the fiscal year might lessen or eliminate the potential for a funding shortfall and the need for separate supplemental appropriations. In the two cases where advance funds are currently used, they are available only during the final weeks of the fiscal year.
[Advance Appropriations, Forward Funding, and Advance Funding: Concepts, Practice, and Budget Process Considerations, Congressional Research Service, R43482, October 8, 2015.]
GAO Glossary of Terms and Definitions (September 2005)
Budget authority provided in an appropriation act to obligate and disburse (outlay) in the current fiscal year funds from a succeeding year’s appropriation. Advance funding is a means to avoid making supplemental requests late in the fiscal year for certain entitlement programs in cases where the appropriations for the current year prove to be insufficient. When such budget authority is used (i.e., funds obligated), the budget records an increase in the budget authority for the fiscal year in which it is used and a reduction in the budget authority for the following fiscal year. (For a distinction, see Advance Appropriation; Multiple-Year Authority under Duration under Budget Authority; Forward Funding.)
CRS Report on Advance Appropriations and Advance Funding (October 8, 2015)
Advance funding is a form of budget authority provided for a small number of accounts that allows for additional obligations late in the budget year that are counted as a part of the succeeding fiscal year’s funding. In essence, advance funds have three defining characteristics. First, advance funds are provided for an account in addition to the appropriation for the budget year in that account. Second, advance funds become available only after the budget year has begun, usually during the last two months of that year, and are no longer available once the budget year ends. Third, any expenditure of the advance funds is directed in the appropriations act to be charged to the succeeding fiscal year’s appropriation. For example, an appropriations act for FY2016 provides $100 million for an account in annual appropriations and additional budget authority for such sums as may be necessary for obligations after September 1, 2016. Legislative language in that account further directs that any expenditure of the “such sums” budget authority is to be charged to the next fiscal year’s appropriation for FY2017. At the end of FY2016, the obligations of the advance funds total $1 million. Subsequent appropriations for FY2017 total $100 million plus advance funding for that account, and the $1 million in obligations of the FY2016 advance funding is charged against that $100 million for FY2016. Effectively, then, FY2017 budget authority for new obligations is $99 million plus the advance funds for FY2017.
As with forward funding, the first time that advance funds were provided in an appropriations act is not known. Provisions that display the essential characteristics of advance funding date back to at least FY1967, when such additional funds were provided for the Unemployment Compensation for Federal Employees and Ex-Servicemen account. Historically, advance funding has tended to be provided for certain accounts that fund payments based on an entitlement formula. The practice of providing for such entitlements through advance funding, as opposed to other funding mechanisms, appears to be a legacy of earlier funding practices that pre-date the current conceptualization of budget enforcement and execution. It has limited application in the present day, as only two accounts currently receive advance funding:
- Office of Workers Compensation Programs—Special Benefits (Department of Labor); and
- Federal Unemployment Benefits and Allowances (Employment and Training Administration—Department of Labor).
The total amount of payments that are funded by these and similar accounts may be particularly sensitive to changes in eligible beneficiaries or difficult to predict more than a year in advance. In such instances, providing extra funds that become available late in the fiscal year might lessen or eliminate the potential for a funding shortfall and the need for separate supplemental appropriations. However, because any obligations of such funds must be charged to the succeeding fiscal year, any use of this budget authority technically reduces base appropriations that are available in that future year.
47 [P.L. 112-74, Consolidated Appropriations Act, 2012 (125 Stat. 786)], p. 8.
48 This is in contrast to supplemental funds that are provided late in the fiscal year in the event that the annual funds that were provided are insufficient to finance program obligations, which are charged to that fiscal year. For example, the Foster Care and Permanency (Administration for Children and Families—Department of Health and Human Services) provides, “For making, after May 31 of the current fiscal year, payments to States or other non-Federal entities under section 474 of title IV-E of the Social Security Act, for the last 3 months of the current fiscal year for unanticipated costs, incurred for the current fiscal year, such sums as may be necessary” (P.L. 112-74).
49 P.L. 97-787, which provided:
For payments to unemployed Federal employees and ex-servicemen, as authorized by title XV of the Social Security Act, as amended, $65,000,000, of which not to exceed $5,000,000 shall be available for benefit payments for trade adjustment activities, together with such amount as may be necessary to be charged to the subsequent year appropriation for the payment of benefits for any period subsequent to March 31 of the current year.
Advance funding, as a concept, dates back at least to the President’s FY1981 budget submission (Appendix, Fiscal Year 1981 [Washington, DC: GPO, 1980], p. 1143). CRS was unable to determine if this concept existed at any earlier period.
50 For example, the distinction between direct and discretionary spending for budget enforcement purposes.
51 It is not clear from a review of the program history of these and other accounts that have received advance funding why this funding structure is preferred, as opposed to supplemental budget authority that, if used, is charged to the budget year.
[Advance Appropriations, Forward Funding, and Advance Funding: Concepts, Practice, and Budget Process Considerations, Congressional Research Service, R43482, October 8, 2015, pp. 10-11.]