Cyclopedia of Congressional Budget Law
Functional categories, which divide the Federal Government into general policy areas, are further divided in subfunctions that specify activities or programs of an executive branch agency more specific than functions, they still may be broad in scope.
Each account of the Federal Government has a number designating it. The last three digits indicate the function and subfunction of the account. For example, a random account of the Federal Government is: 16–0174–0–1–504
The last three digits, 5-0-4, indicate that the function is 500 (Education, Training, Employment, and Social Services), but the subfunction is 504, which is identified as Training and employment” within that function 500.
GAO Glossary of Terms and Definition (September 2005)
A subdivision of a budget function. For example, health care services and health research are subfunctions of the health budget function. (For a presentation of the budget in terms of subfunctions, see app. IV. See also Functional Classification.)
Subfunctions Defined in Analytical Perspectives
(President’s Budget Submission)
In the Analytical Perspectives document of the President’s Budget submission includes descriptions and definitions related to the budget process. This material changes, and the following description of functions and subfunctions is from the President’s Budget for Fiscal Year 2018:
The functional classification is used to organize budget authority, outlays, and other budget data according to the major purpose served—such as agriculture, transportation, income security, and national defense. There are 20 major functions, 17 of which are concerned with broad areas of national need and are further divided into subfunctions. For example, the Agriculture function comprises the subfunctions Farm Income Stabilization and Agricultural Research and Services. The functional classi cation meets the Congressional Budget Act requirement for a presentation in the budget by national needs and agency missions and programs. The remaining three functions—Net Interest, Undistributed Offsetting Receipts, and Allowances—enable the functional classification system to cover the entire Federal budget.
The following criteria are used in establishing functional categories and assigning activities to them:
• A function encompasses activities with similar purposes, emphasizing what the Federal Government seeks to accomplish rather than the means of accomplishment, the objects purchased, the clientele or geographic area served (except in the cases of functions 450 for Community and Regional Development, 570 for Medicare, 650 for Social Security, and 700 for Veterans Benefits and Services), or the Federal agency conducting the activity (except in the case of subfunction 051 in the National Defense function, which is used only for defense activities under the Department of Defense—Military).
• A function must be of continuing national importance, and the amounts attributable to it must be significant.
• Each basic unit being classified (generally the appropriation or fund account) usually is classified according to its primary purpose and assigned to only one subfunction. However, some large accounts that serve more than one major purpose are subdivided into two or more functions or subfunctions.
In consultation with the Congress, the functional classification is adjusted from time to time as warranted. Detailed functional tables, which provide information on Government activities by function and subfunction, are available online at http://www.budget.gov/budget/Analytical_ Perspectives and on the Budget CD-ROM.
Office of Management and Budget, Budget of the U.S. Government, Fiscal Year 2018: Analytical Perspectives (May 21, 2017), p. 76.