2013 

SEQUESTRATION 

AND SHUTDOWN

Selected Agencies 

Generally Managed 

Unobligated Balances 

in Reviewed 

Accounts, but 

Balances Exceeded 

Target Levels in Two 

Accounts 

Report to the Chairman, Committee on 

the Budget, House of Representatives

October 2015

GAO-16-26

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-16-26, a report to the 

Chairman, Committee on the Budget, 

House of Representatives

October 2015 

2013 SEQUESTRATION AND SHUTDOWN

Selected Agencies Generally Managed Unobligated 

Balances in Reviewed Accounts, but Balances 

Exceeded Target Levels in Two Accounts 

Why GAO Did This Study

Both the 2013 sequestration and 

government shutdown highlighted the 

importance of actively managing public 

funds. Effective management of 

unobligated balances that are carried 

over for use in the next fiscal year 

presents agencies with an opportunity 

to better respond to unexpected events

in the future. GAO was asked to review 

how balances have changed since 

2012. This report evaluates how 

selected agencies managed and used 

unobligated balances in reviewed 

accounts, focusing on fiscal years 

2012 through 2014, which covers the 

2013 sequestration and shutdown.

GAO selected a nongeneralizable 

sample of eight accounts from four 

agencies for this review—Commerce, 

Energy, NASA, and State—based on 

their use of balances to address 

sequestration and large or significant 

changes in the balances. GAO 

analyzed data on the size and 

composition of unobligated balances, 

reviewed agency documentation on 

managing the balances, and 

interviewed budget officials responsible 

for the accounts.

What GAO Recommends

GAO is recommending that Energy

finalize and implement a strategy and 

that State finalize its strategy and 

continue efforts to ensure more

effective management of unobligated 

balances in the WAPA CROM account

and CBSP within the D&CP account, 

respectively. Energy and State 

concurred with GAO’s

recommendations. Commerce, Energy, 

and State provided technical 

comments which GAO incorporated; 

NASA had no comments.

What GAO Found

GAO found that the selected agencies—the Departments of Commerce, Energy, and 

State, and the National Aeronautics and Space Administration (NASA)—generally 

managed and tracked unobligated balances to ensure the effective use of program 

resources in the eight reviewed accounts. Agency estimation and management of 

unobligated balances in the reviewed accounts involved the following activities: 

• Regular review of unobligated balances. Agency officials for all of the eight 

reviewed accounts reported having a process for managing unobligated balances 

throughout the year. For example, officials managing NASA’s Science account 

reported that they monitor unobligated balances monthly by considering 

obligations from the prior months. 

• Tracking the appropriation year of unobligated balances. Officials reported 

that agencies tracked the year of appropriation for the five reviewed accounts 

that receive multi-year budget authority. This action is important to help ensure 

that the agency obligates the authority in the order appropriated to maximize 

resources. All five accounts had balances that expired during fiscal years 2012 

through 2014; however, there can be various reasons for an agency to not 

obligate funds late in the fiscal year, and in some cases, special authority 

expands the use of certain budget authority. For example, for State’s Diplomatic 

and Consular Programs (D&CP) and International Narcotics Control and Law 

Enforcement accounts, State has the authority to use expired funds beyond their 

initial period of availability for specific purposes and to extend the availability of 

certain funds. 

• Estimating and identifying needed unobligated balances. Officials managing

three of the eight reviewed accounts identified a need to retain unobligated 

balances to sustain agency operations and manage financial risk. For example, 

officials responsible for managing Energy’s Western Area Power Administration 

(WAPA) Construction, Rehabilitation, Operation and Maintenance (CROM) 

account said that two of the account’s four use categories have a target to 

carryover equal to or up to 25 percent of funds against unexpected 

environmental factors that could introduce financial risk to their mission of 

marketing hydroelectric power. However, in fiscal year 2014, the balance for one

category exceeded its target by approximately $40 million. WAPA officials 

reported that they have drafted a strategy to manage excess balances, but the 

strategy has not been fully implemented. Similarly, in fiscal year 2014, within 

State’s D&CP account, officials reported exceeding the target to carryover about 

25 percent of projected program expenditures for the next year to manage 

complex global visa and passport operations for the Consular and Border 

Security Programs (CBSP) by approximately $440 million. State officials said that 

they have developed a draft strategy for reducing excess unobligated balances. 

Officials said that they plan to finalize the strategy by June 2016. In the 

meantime, they reported taking steps to reduce unobligated balances for CBSP. 

These steps include decreasing fees or delaying fee increases when unobligated 

balances were adequate to cover costs. 

In accordance with Office of Management and Budget guidance, the selected 

agencies used unobligated balances in four of the reviewed accounts to mitigate the 

effects of the 2013 sequestration. The agencies also used unobligated balances to 

fund operations in six of the accounts during the October 2013 government 

shutdown. 

View GAO-16-26. For more information, 

contact Susan J. Irving, Director for Federal 

Budget Analysis at (202) 512-6806 or 

irvings@gao.gov. 
Page i GAO-16-26 2013 Sequestration and Shutdown

Letter 1

Background 5

Selected Agencies Vary in Their Management of Unobligated 

Balances, Including Use of Balances to Mitigate Effects of the 

2013 Sequestration and Government Shutdown 12

Conclusions 32

Recommendations for Executive Action 32

Agency Comments 33

Appendix I Objective, Scope, and Methodology 35

Appendix II Key Budget Questions Applied to Reviewed Budget Accounts 39

Appendix III Overview of Select Budget Information on Government-wide 

Unobligated Balances 56

Appendix IV Comments from the Department of Energy 62

Appendix V Comments from the Department of State 63

Appendix VI Glossary of Budget Terms 65

Appendix VII GAO Contact and Staff Acknowledgments 68

Tables

Table 1: Select Budget Accounts and Unexpired, Unobligated 

Balances at Four Agencies, End of Fiscal Years 2012 

through 2014 4

Contents
Page ii GAO-16-26 2013 Sequestration and Shutdown

Table 2: Period of Availability of Funding in Reviewed Accounts 

from Fiscal Years 2012 through 2014 18

Table 3: Expired, Unobligated Balances in Reviewed Accounts 

Receiving Multi-Year Funds, Fiscal Years 2012 through 

2014 20

Table 4: Select Budget Accounts and Unexpired, Unobligated 

Balances at Four Agencies, End of Fiscal Years 2012 

through 2014 36

Table 5: The Top Three Mandatory, Split, and Discretionary 

Accounts with Unobligated Balances in Fiscal Year 2014 

(Dollars in Millions) 58

Figures

Figure 1: Federal Budget and Obligation Process Leading to 

Unexpended Balances 6

Figure 2: Treatment of Unobligated Balances under Sequestration 

in Fiscal Year 2013 10

Figure 3: Unobligated Balances as a Percent of Budgetary 

Resources in the Economic Development and Assistance 

Programs Account, Fiscal Years 2012-2014 40

Figure 4: Unobligated Balances as a Percent of Budgetary 

Resources in the United States Patent and Trademark 

Office Salaries and Expenses Account, Fiscal Years 

2012-2014 42

Figure 5: Unobligated Balances as a Percent of Budgetary 

Resources in Western Area Power Administration’s 

Construction, Rehabilitation, Operation and Maintenance 

Account, Fiscal Years 2012-2014 44

Figure 6: Unobligated Balances as a Percent of Budgetary 

Resources in the Defense Environmental Cleanup 

Account, Fiscal Years 2012-2014 46

Figure 7: Unobligated Balances as a Percent of Budgetary 

Resources in the Energy Efficiency and Renewable 

Energy Account, Fiscal Years 2012-2014 48

Figure 8: Unobligated Balances as a Percent of Budgetary 

Resources in NASA’s Science Account, Fiscal Years 

2012-2014 50

Figure 9: Unobligated Balances as a Percent of Budgetary 

Resources in the Diplomatic and Consular Programs 

Account, Fiscal Years 2012-2014 52
Page iii GAO-16-26 2013 Sequestration and Shutdown

Figure 10: Unobligated Balances as a Percent of Budgetary 

Resources in the International Narcotics Control and Law 

Enforcement Account, Fiscal Years 2012-2014 54

Figure 11: Unexpended Balances in Federal Budget Accounts, 

Fiscal Years 2007-2014 57

Figure 12: Mandatory, Split, and Discretionary Accounts as a 

Share of Unobligated Balances, Fiscal Years 2007-2014 58

Figure 13: Share of Unobligated Balances by Budget Function, 

Fiscal Years 2007-2014 60

Figure 14: Unobligated Balances by the Top Eight Agencies, 

Fiscal Years 2007- 2014 61
Page iv GAO-16-26 2013 Sequestration and Shutdown

Abbreviations

BBEDCA Balanced Budget and Emergency Deficit Control Act of 

1985

BEA Budget Enforcement Act

CBSP Consular and Border Security Programs

CFO Chief Financial Officer

Commerce Department of Commerce

CR continuing resolution 

CROM Construction, Rehabilitation, Operation and Maintenance

DEC Defense Environmental Cleanup

DOD Department of Defense

D&CP Diplomatic and Consular Programs

EDA Economic Development Administration

EDAP Economic Development Assistance Programs 

EERE Energy Efficiency and Renewable Energy

EM Office of Environmental Management

Energy Department of Energy

INCLE International Narcotics Control and Law Enforcement

INL Bureau of International Narcotics and Law Enforcement

 Affairs 

NASA National Aeronautics and Space Administration

OCO Overseas Contingency Operations

OIG Office of the Inspector General

OMB Office of Management and Budget

S&E Salaries and Expenses

State Department of State

USPTO United States Patent and Trademark Office

WAPA Western Area Power Administration

WSP Worldwide Security Protection
Page v GAO-16-26 2013 Sequestration and Shutdown

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Page 1 GAO-16-26 2013 Sequestration and Shutdown

441 G St. N.W.

Washington, DC 20548

October 30, 2015

The Honorable Tom Price

Chairman

Committee on the Budget

House of Representatives

Dear Mr. Chairman:

During two recent events—the fiscal year 2013 sequestration and 

government shutdown at the beginning of fiscal year 2014—federal 

agencies faced significant challenges related to managing and executing 

their budgets. Sequestration—the cancellation of budgetary resources 

under a presidential order—required agencies to carefully scrutinize 

spending on nonexempt programs, projects, and activities to manage 

these budget reductions. The government shutdown in October 2013 

required agencies to make multiple, complex decisions about whether 

and how to continue funding mission-critical activities. In the months 

following sequestration, agencies were faced with reduced budgets and 

reduced capacity for carrying out regular activities, which continued after 

the shutdown. This resulted in altered priorities and the need to consider 

reallocating available funds between and within budget accounts. Both 

sequestration and the government shutdown highlighted the importance 

of active management of public funds, as well as the importance of using 

available resources effectively. In addition, effective management of 

unexpended account balances that carryover for use in the next fiscal 

year—and especially, unobligated balances—present agencies with an 

opportunity to better respond to unexpected events in the future.1

 An 

unexpended balance is the sum of obligated and unobligated balances. 

An obligated balance is the amount of obligations already incurred for 

which payment has not yet been made. This could include obligations 

through a contract for which payment may be made as services are 

rendered over time or milestones met. An unobligated balance is the 

portion of available budget authority that has not yet been obligated. This 

 

1

For the purposes of this report, we focused on unobligated balances from multi-year and 

no-year appropriations, which remain available for new obligations. Unless otherwise 

specified, balances reported are derived from the “Unexpired unobligated balance, end of 

year” line associated with the budget account in the Appendix to the President’s Budget.

Letter
Page 2 GAO-16-26 2013 Sequestration and Shutdown

could include a balance in a multi-year appropriation or held in a 

business-like account to help mitigate the risk of environmental factors 

that may affect collections.

In fiscal year 2014, unexpended balances in federal budget accounts 

were about $2.3 trillion, of which about $870 billion had not yet been 

obligated. In 2014, we reported that agencies used unobligated balances 

to help manage the effects of sequestration and the government 

shutdown on their operations and services, and to protect mission-critical 

activities by providing funding for the continuation of such activities.2 In 

our September 2013 report on unexpended balances carried forward in 

federal budget accounts, we concluded that answering key questions 

during a review of unexpended balances would provide insights into why 

a balance exists, what size balance is appropriate, and what opportunities 

(if any) for savings exist.3 We also noted that a review of unexpended 

balances may provide opportunities for enhanced oversight of agencies’ 

management of federal funds, and for the identification of areas where 

the federal government can improve and maximize its use of resources. 

Further, we stressed that, given the complexity of the federal budget, a 

case-by-case analysis at either the account or program level is necessary 

to better understand opportunities for achieving budgetary savings or 

redirecting resources to other priorities.

You asked us to build on our prior work on unexpended balances by 

reviewing how such balances have changed since our 2013 report and by 

evaluating how agencies are managing unexpended balances. Our 

objective was to evaluate how selected agencies managed and used 

unobligated balances in reviewed accounts, focusing on fiscal years 2012 

through 2014, which covers the fiscal year 2013 sequestration and fiscal 

year 2014 government shutdown. In addition, we analyzed the size and 

composition of unexpended balances in the federal budget from fiscal 

 

2

GAO, 2013 Government Shutdown: Three Departments Reported Varying Degrees of 

Impacts on Operations, Grants, and Contracts, GAO-15-86 (Washington, D.C.: Oct. 15, 

2014), and 2013 Sequestration: Agencies Reduced Some Services and Investments, 

While Taking Certain Actions to Mitigate Effects, GAO-14-244 (Washington, D.C.: Mar. 6, 

2014).

3

GAO, Budget Issues: Key Questions to Consider When Evaluating Balances in Federal 

Accounts, GAO-13-798 (Washington, D.C.: Sept. 30, 2013).
Page 3 GAO-16-26 2013 Sequestration and Shutdown

years 2012 through 2014, and compared those balances to previously 

reported balances for fiscal years 2007 through 2012.4

To address this objective, we examined selected agencies’ management 

of unobligated balances in reviewed accounts both during fiscal years 

2012 through 2014 and the current management of the reviewed 

accounts. For this review, we selected a nongeneralizable sample of four 

agencies—the National Aeronautics and Space Administration (NASA) 

and the Departments of State (State), Commerce (Commerce) and 

Energy (Energy).5 To select these four agencies, we first identified all 

budget accounts having unobligated balances in fiscal years 2012, 2013, 

or 2014 in the Office of Management and Budget (OMB) MAX database.6

We found the data to be sufficiently reliable for the purpose of our report.7

We selected the four agencies based upon whether they had accounts 

with significant unobligated balances as well as whether they used or 

were planning to use reprogramming of funds, transfers among accounts, 

and/or multi-year funding to mitigate the effects of sequestration, as 

reported in our previous work on the 2013 sequestration.8

Within the four selected agencies, we identified a nongeneralizable 

sample of eight budget accounts. To select the eight accounts, we 

reviewed OMB MAX data for every budget account in the four agencies 

 

4

GAO-13-798. 

5

For the purposes of this report, we will refer to the three selected departments and one 

agency as “agencies.” We excluded the Department of Defense (DOD) from our review 

because of recent work on sequestration in DOD. See GAO, Sequestration: Documenting 

and Assessing Lessons Learned Would Assist DOD in Planning for Future Budget 

Uncertainty, GAO-15-470 (Washington, D.C.: May 27, 2015). 

6

OMB MAX database is a computer system used to collect and process most of the 

information required for preparing the budget. OMB uses MAX to collect, validate, 

analyze, model, collaborate with agencies on, and publish information relating to its 

government-wide management and budgeting activities. According to OMB, perhaps the 

most visible end product of the MAX system is the “Budget of the United States 

Government,” also known as the President’s Budget, which is to be produced no later than 

the first Monday in February of each year.

7

To determine the reliability of the data, the team cross-checked the MAX data against the 

numbers reported in the corresponding President’s Budget Appendixes. Data reported in 

MAX and the Budget Appendix are subject to rigorous review and checks through OMB to 

help ensure data consistency. Accordingly, such data were considered reliable for the 

purpose of this report.

8

GAO-14-244. We consider “significant” to mean millions of dollars. 
Page 4 GAO-16-26 2013 Sequestration and Shutdown

for fiscal years 2012 through 2014. From these accounts, we selected 

eight accounts for in-depth review based on whether the agencies 

reprogrammed funds within accounts, transferred funds among accounts, 

and/or used multi-year funds to mitigate the effects of the 2013 

sequestration. We also selected accounts that had particularly large 

unobligated balances or significant changes in unobligated balances 

during fiscal years 2012 through 2014. We selected only accounts with 

discretionary appropriations and split authority—a combination of 

discretionary appropriations and mandatory budget authority—and 

excluded mandatory accounts from our review to avoid duplication with 

our concurrent review of mandatory accounts. See table 1 for a list of 

accounts selected.

Table 1: Select Budget Accounts and Unexpired, Unobligated Balances at Four Agencies, End of Fiscal Years 2012 through 

2014

Unexpired, Unobligated 

Balance, End of Fiscal Year

(dollars in millions)

Agency Name Account Name (BEA category)a 2012 2013 2014

Percentage 

Change from 

2012 to 2014

Department of 

Commerce 

Economic Development Assistance Programs, 

Economic Development Administration (Discretionary)

185 51 65 -65

Salaries and Expenses, US Patent and Trademark 

Office (Discretionary)

238 442 503 +111

Department of Energy Construction, Rehabilitation, Operation and 

Maintenance, Western Area Power Administration 

(Split)

369 496 556 +51

Defense Environmental Cleanup (Discretionary) 80 32 60 -25

Energy Efficiency and Renewable Energy 

(Discretionary) 

335 119 408 +22

National Aeronautics 

and Space 

Administration

Science (Discretionary) 64 172 275 +330

Department of State Diplomatic and Consular Programs (Split) 4,421 4,446 2,525 -43

International Narcotics Control and Law Enforcement 

(Discretionary) 

1,422 1,888 1,217 -14

Source: GAO analysis of data from President’s Budget Appendixes. | GAO-16-26

a

The Balanced Budget and Emergency Deficit Control Act of 1985 (BBEDCA), as amended defines 

the terms direct spending, which is also known as mandatory spending, and discretionary 

appropriations. OMB applies these definitions for budget enforcement purposes prescribed by law. 

These categories of spending are commonly referred to as BEA (Budget Enforcement Act) 

categories, after legislation that incorporated the definitions into BBEDCA. Split accounts contain both 

mandatory budget authority and discretionary appropriations. 
Page 5 GAO-16-26 2013 Sequestration and Shutdown

To evaluate how the selected agencies managed and used unobligated 

balances in the reviewed accounts, we reviewed agency budget reports 

and guidance, congressional budget justifications, congressional 

notifications, and financial and annual reports. We interviewed agency 

officials at the department (or agency), the bureau, and account levels 

about account management policy and practice with regards to 

unobligated balances, using analysis from our prior work (described in 

detail below) as criteria.

We conducted our review from December 2014 to October 2015 in 

accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives. For more detailed information 

on scope and methodology, see appendix I.

Congress provides budget authority to federal agencies to incur financial 

obligations through annual appropriations acts or other legislation.9

 An 

obligation is a definite commitment that creates a legal liability of the 

government for the payment of goods and services, or a legal duty that 

could mature into a legal liability by virtue of actions that are beyond the 

control of the United States. Based on the authority provided in

legislation, agencies obligate and expend funds.10 For example, an 

agency incurs an obligation when it places an order, signs a contract, 

awards a grant, or purchases a service. Expenditures or outlays occur 

when funds that have been obligated are transferred for payment. See 

figure 1 for an overview of this process.

 

9

Fundamental to Congress’s constitutional spending power is that federal programs may 

only expend federal funds to the extent appropriated by an act of Congress. U.S. Const. 

art I, § 9, cl.7. For a discussion and history of the congressional “power of the purse” see 

GAO, Principles of Federal Appropriations Law, 3 ed., vol. 1, ch. 1 (GAO-04-261SP, 

January 2004). 

10Laws providing appropriations govern the amount, purpose, and time period availability 

of funds.

Background
Page 6 GAO-16-26 2013 Sequestration and Shutdown

Figure 1: Federal Budget and Obligation Process Leading to Unexpended Balances

Note: Not all steps in the federal budget and obligation process are identified in this figure. 

One of the limits set by appropriations acts is the period of availability of 

budget authority: periods of availability include one-year, multi-year, and 

no-year.11 Although federal funding may be available to obligate for one 

year, multiple years, or until expended (no-year), only accounts with multiyear or no-year funds may carry forward amounts that remain legally 

available for new obligations from one fiscal year to the next. Such 

amounts are referred to as unobligated balances. Agencies may also 

carry forward obligated balances. As shown in figure 1 and previously 

described, obligated balances are the amount of obligations already 

incurred for which payment has not yet been made while an unobligated 

balance is the portion of available budget authority that has not yet been 

obligated.12 If the agency does not obligate one-year or multi-year funds 

 

11Multi-year budget authority is available for obligation for a fixed period of time in excess 

of 1 fiscal year. No-year budget authority is available for obligation until expended.

12Obligated balances may be drawn down over a period of years. Unobligated balances 

may be available for 2 or more years, and some are available until expended. 
Page 7 GAO-16-26 2013 Sequestration and Shutdown

by the end of the period of availability, the budget authority will expire. 

The agency may not incur new obligations using expired budget authority, 

unless otherwise provided by law.13 The sum of unobligated and obligated 

balances is referred to as unexpended balances. 

Federal spending is categorized as discretionary or mandatory. This 

distinction refers to the way budget authority is provided. Discretionary 

spending is controlled through annual appropriations acts (plus, in some 

cases, supplemental appropriations acts). In contrast, mandatory 

spending accounts, which include “entitlement authority,” receive budget 

authority through laws other than appropriations acts. This distinction 

affects the management of unobligated balances because mandatory 

funding may require programmatic changes to authorizing legislation to 

affect unobligated balances, while discretionary accounts are controlled 

through the annual appropriation process.

In 2013, we reported that reviewing unexpended balances—and in 

particular, unobligated balances—may provide an opportunity to identify 

potential budgetary savings and direct those resources towards other 

programs or priorities.14 We identified four key questions that agencies 

and decision makers should answer during a review of unexpended 

balances, and used those questions for this review to evaluate 

unobligated balances at selected agencies. These questions can provide 

insights into why a balance exists, what size balance is appropriate, and 

what opportunities (if any) for savings exist (see text box).

 

13Expired balances remain available for 5 fiscal years for recording, adjusting, and 

liquidating obligations properly incurred during the budget authority’s period of availability. 

Amounts not used within this 5-year period are permanently cancelled. Congress may 

provide exceptions to these procedures.

14GAO-13-798. 
Page 8 GAO-16-26 2013 Sequestration and Shutdown

Evaluating Unexpended Balances: A Framework for Understanding 

In 2013, we identified the following questions for agencies and decision makers to 

consider when evaluating unexpended balances in federal budget accounts. Findings 

based on these questions can provide managers with important information about 

financial challenges and opportunities which may exist; in turn, this information may 

help guide more effective account and program management.

1) What mission and goals is the account or program supporting? 

Understanding the mission activities, goals, and programs the account supports 

provides insight into whether a program needs to maintain a balance to operate 

smoothly, what size balance is appropriate, and whether opportunities for savings exist. 

2) What are the sources and fiscal characteristics of the funding? 

The sources and fiscal characteristics of the funds influence what opportunities may 

exist for savings. If funds are primarily mandatory, opportunities are more limited as 

programmatic changes would generally be required to reduce balances. In such cases, 

reducing an account’s balance may have no economic benefit and instead would 

impose unnecessary administrative costs. If funds are discretionary, balances can be 

controlled by the annual appropriations process. 

3) What factors affect the size or composition of the carryover balances? 

It is important to consider which factors were within the agency’s control and which 

were not. Agencies or programs may operate in a way that contributes to a faster or 

slower spendout rate for a particular account. In addition, external events beyond 

agencies’ control—such as natural disasters or economic crises—can dramatically 

increase carryover balances.

4) How does the agency estimate and manage carryover balances? 

Understanding an agency’s processes for estimating and managing carryover balances 

provides information to assess how effective agencies are in anticipating program 

needs and ensuring the most efficient use of resources. If an agency does not have a 

robust strategy in place to manage carryover balances or is unable to adequately 

explain or support the reported carryover balance, then a more in-depth review is 

warranted with the potential to identify opportunities for budgetary savings.

Note: A “carryover balance” is another term for unexpended balances and is the sum of 

obligated and unobligated balances.

Source: GAO-13-798. | GAO-16-26

Unobligated balances can provide agencies with flexibility when 

responding to unexpected budget events. For example, agencies faced 

with reduced budget authority—such as during a sequestration—or with a 

lapse in annual appropriations may choose to use unobligated balances 
Page 9 GAO-16-26 2013 Sequestration and Shutdown

from prior year appropriations that remain available for new obligations to 

ensure continuity of agency activities. In 2014, we reported that 

unobligated balances that remain legally available from prior year 

appropriations could provide agencies with funding flexibility to respond to 

sequestration.15 Similarly, in September 2013, OMB issued guidance to 

agencies that said unobligated balances could be used to fund activities 

during the government shutdown.16

Sequestration. On March 1, 2013 the President ordered a sequestration 

of $85.3 billion across federal government accounts.17 Final 

appropriations enacted on March 26, 2013 had the effect of reducing this 

amount to $80.5 billion.18 The reductions were to be split evenly between 

defense and nondefense functions. Under current law, a sequestration of 

mandatory spending will occur through fiscal year 2024, and another 

sequestration of discretionary appropriations could occur in any fiscal 

year through 2021.19 The fiscal year 2013 sequestration reduced funding 

to selected components of federal agencies and their program partners—

such as state and local governments—that assist in carrying out agency 

missions. As a result, the selected components and their partners 

reduced or delayed some services to the public and operations in 2013. 

As we found in March 2014, agencies reported that sequestration 

 

15GAO-14-244. 

16OMB, Memorandum for the Heads of Executive Departments and Agencies: Planning 

for Agency Operations during a Potential Lapse in Appropriations, (Washington, D.C.: 

Sept. 17, 2013).

17The Budget Control Act of 2011, which amended the Balanced Budget and Emergency 

Deficit Control Act of 1985 (BBEDCA), established the Joint Committee on Deficit 

Reduction (Joint Committee), which was tasked with proposing legislation to reduce the 

deficit by at least an additional $1.2 trillion through fiscal year 2021. The Joint Committee 

did not report a proposal and legislation was not enacted. This triggered the sequestration 

process in section 251A of BBEDCA, known as the Joint Committee Sequestration. Under 

the Joint Committee Sequestration, BBEDCA required an annual reduction of $109.3 

billion, which was reduced to $85.3 billion for fiscal year 2013 in January 2013 due to 

savings achieved under the American Taxpayer Relief Act of 2012.

18See 2 U.S.C. § 903(f).

19If discretionary spending caps established by BBEDCA are breached in any given fiscal 

year through 2021, they will be enforced by an “after session sequestration” within 15 

days after the end of a congressional session. This report focuses on the Joint Committee 

Sequestration. Mandatory, otherwise called direct spending, is budget authority that is 

provided in laws other than appropriation acts and the outlays that result from such budget

authority.
Page 10 GAO-16-26 2013 Sequestration and Shutdown

reduced assistance for education, housing, and nutrition, as well as 

health and science research and development grants.20 We also found 

that agencies delayed investments such as information technology and 

facilities projects.

In 2013, both mandatory spending and discretionary appropriations were 

subject to sequestration. In accounts with budgetary resources classified 

as defense spending, prior year unobligated balances were also subject 

to sequestration. Prior year unobligated balances in nondefense accounts 

were exempt. This means that only prior year balances for some 

agencies’ accounts were affected by sequestration, while others were not. 

Figure 2 shows the breakdown of unobligated balances by different types 

of accounts and how these different balances were treated under 

sequestration in fiscal year 2013.

Figure 2: Treatment of Unobligated Balances under Sequestration in Fiscal Year 

2013

 

20GAO-14-244. 
Page 11 GAO-16-26 2013 Sequestration and Shutdown

a

The defense spending category consists of budgetary resources in the national defense budget 

function. In addition to the Department of Defense, several other agencies received appropriations 

classified under the national defense budget function, including the Departments of Energy and 

Homeland Security. The nondefense spending category consists of budgetary resources in budget 

functions other than national defense. 

b

On March 1, 2013, pursuant to the Balanced Budget and Emergency Deficit Control Act of 1985, the 

President ordered an across-the-board cancellation of budgetary resources—known as 

sequestration—to achieve $85.3 billion in reductions across federal government accounts. When the 

Consolidated and Further Continuing Appropriations Act, 2013, was enacted on March 26, 2013, it 

had the effect of reducing the sequestered amount for fiscal year 2013 to $80.5 billion. In fiscal year 

2014, sequestration continued to be in effect for mandatory spending. 

In fiscal year 2013, agencies had the ability to reprogram funds and had 

various transfer authorities to respond to sequestration. Reprogramming 

is the shifting of funds from one program activity to another within an 

appropriation account for purposes other than those contemplated at the 

time of appropriation. Generally, no statutory authority is necessary for 

agencies to reprogram funds, but in some instances the ability to 

reprogram funds may be limited by law for certain purposes or amounts. 

A transfer is the shifting of funds between appropriation accounts. 

Agencies must have statutory authority to transfer funds, and that 

authority may also be limited by purpose or amount.

Government Shutdown. The federal government partially shut down for 

16 days in October 2013 because of a lapse in appropriations. According 

to OMB, about 850,000 federal employees were furloughed for part of this 

time, and agencies furloughed federal employees for a combined 6.6 

million work days. Over the past 20 years, there have occasionally been 

federal lapses in appropriations that led to government shutdowns.21

During a government shutdown, one of the key issues OMB and agencies 

must determine is what activities and programs an agency is permitted or 

required to continue when faced with a funding gap. The Antideficiency 

Act generally restricts agencies from continuing operations funded by 

annual appropriations during a government shutdown.22 However, there 

are some categories of activities that are permitted to continue during an 

appropriations lapse. This includes activities funded through multi-year 

 

21For the purposes of this report, we will refer to the appropriations lapse in October 2013 

as the “government shutdown.” 

2231 U.S.C. §§1341-42.
Page 12 GAO-16-26 2013 Sequestration and Shutdown

appropriations that did not expire at the end of the fiscal year or no-year 

appropriations.23

As described earlier in this report, in September 2013 we identified four 

key questions for evaluating balances in budget accounts, including 

unobligated balances or the portion of the available budget authority that 

has not yet been obligated, to help agencies more effectively manage 

public funds.24 For the eight accounts we reviewed across the four 

agencies, the agencies generally addressed the key questions in their 

 

23GAO-15-86. The activities which may continue during a shutdown fall into two broad 

categories. The first category is obligations authorized by law. Within this category, 

exceptions include: (1) activities funded through multi-year or no-year appropriations, 

which do not expire at the end of the fiscal year; (2) activities authorized by statutes that 

expressly permit obligations in advance of appropriations; (3) activities “authorized by 

necessary implication from the specific terms of duties that have been imposed on, or of 

authorities that have been invested in, the agency”; and (4) obligations “necessarily 

incident to presidential initiatives undertaken within his constitutional powers,” for 

example, the power to grant pardons and reprieves. The second broad category reflects 

the exceptions authorized under the Antideficiency Act (31 U.S.C. § 1342)—emergencies 

involving the safety of human life or the protection of property. 

24GAO-13-798. 

Selected Agencies 

Vary in Their 

Management of 

Unobligated 

Balances, Including 

Use of Balances to 

Mitigate Effects of the 

2013 Sequestration 

and Government 

Shutdown

In Reviewed Accounts, 

Agencies Generally 

Addressed Key Questions 

for Evaluating Unobligated 

Balances
Page 13 GAO-16-26 2013 Sequestration and Shutdown

management and ongoing review of unobligated balances.25 We describe 

the four key questions below and provide examples of how the selected 

agencies applied the questions to the reviewed accounts (see text 

boxes).26

Understanding the mission activities, goals, and programs the account 

supports provides information about whether a program needs to 

maintain an unobligated balance to operate smoothly, what size balance 

is appropriate, and whether opportunities for savings exist. Such context 

can inform assessments of whether, and how, to reduce unobligated 

balances and what effect a reduction would have on the agency’s ability 

to carry out its mission. The text box below describes two examples from 

the reviewed accounts.

Mission Activities and Goals and Unobligated Balances

Western Area Power Administration (WAPA) Construction, Rehabilitation,

Operation and Maintenance (CROM). Energy’s WAPA CROM account supports 

critical energy function across the central and western region of the United States. The 

agency holds unobligated balances in the account from one year to the next to maintain 

operations in case unexpected events, such as a droughts or economic downturns, 

lead to lower than expected power sales.

Economic Development Assistance Programs (EDAP). Among its missions, 

Commerce’s Economic Development Administration (EDA) provides grants to public 

and private non-profit organizations to mitigate sudden and severe economic impacts, 

such as natural disasters, through the EDAP account. According to EDA officials, 

funding in this account that is appropriated for specific disaster relief programs cannot 

be spent for other activities. A delay in assistance applications for EDA’s grants could 

result in unobligated balances for those program funds. For example, EDA officials 

attributed the majority of the $185 million unobligated balance at the end of fiscal year 

2012 to the additional $200 million appropriated by Congress in fiscal year 2012 to fund 

disaster relief efforts in areas with major disaster designations in 2011, which included 

areas affected by Hurricane Irene. According to officials, communities eligible to apply 

for this relief were focused on short-term recovery in 2012 and were not in a position to 

 

25For this review, the eight accounts selected across four agencies include: Economic 

Development Assistance Programs (Commerce); Salaries and Expenses at the U.S. 

Patent and Trademark Office (Commerce); Defense Environmental Cleanup (Energy); 

Energy Efficiency and Renewable Energy (Energy); Construction, Rehabilitation, 

Operation and Maintenance at the Western Area Power Administration (Energy); 

Diplomatic and Consular Programs (State); International Narcotics Control and Law 

Enforcement (State); and Science (NASA). 

26For additional details on how the selected agencies addressed the key questions for 

each of the eight reviewed accounts, see appendix II. 

What Mission and Goals is the 

Account or Program 

Supporting?
Page 14 GAO-16-26 2013 Sequestration and Shutdown

apply for EDAP funds until long-term recovery plans were in place, generally after the 

end of fiscal year 2012.

Source: GAO analysis of agency information. | GAO-16-26

The sources and fiscal characteristics of the funding influence what 

opportunities may exist for budgetary savings. Sources of funding include 

appropriations acts (i.e. discretionary spending) and laws other than 

appropriations acts (i.e. mandatory spending). Budget accounts can have 

both discretionary and mandatory amounts: these are known as split 

accounts. Discretionary and mandatory budget authority presents 

different issues for Congress in its oversight of the size of any balance. 

Specifically, if amounts are mandatory, Congress must make

programmatic changes to authorizing legislation in order to begin to affect 

the size of any unobligated balance.

27 Fiscal characteristics include the 

period of availability for new obligations and are also important to 

evaluating unobligated balances. If an account receives multi-year or noyear appropriations, an unobligated balance can be expected in some 

accounts or programs. Accounts that receive funding primarily from 

outside sources, such as fees, have their own unique considerations 

when evaluating unobligated balances. The text box below describes 

three examples from the reviewed accounts.

Sources and Fiscal Characteristics of Funding and Unobligated Balances

Diplomatic and Consular Programs (D&CP). State’s D&CP account is composed of 

both discretionary and mandatory authority that come from various sources including 

annual appropriations, Overseas Contingency Operations appropriations, offsetting 

collections derived from services to the public for visas and passports, and 

reimbursements from other agencies. Almost all of the unobligated balances support 

activities funded by discretionary appropriations. The account includes no-year, multiyear, and one-year appropriations. In fiscal year 2014, D&CP’s appropriation did not 

provide multi-year authority as in previous years, but rather, permitted the extension of 

up to about 15 percent of new one-year authority to two-year authority. State officials 

reported that this change led to greater scrutiny of the balances, as well as closer work 

with the Department of the Treasury to transfer funds into the two-year portion of the 

account. 

International Narcotics Control and Law Enforcement (INCLE). State’s INCLE 

account receives two-year appropriations. Therefore, these funds must be obligated 

within the two-year period or they will expire. INCLE officials said that they strive to 

obligate all funds within this period of availability.

 

27If Congress desires to immediately affect the size of an unobligated balance, it could 

enact a rescission. 

What Are the Sources and 

Fiscal Characteristics of the 

Funding?
Page 15 GAO-16-26 2013 Sequestration and Shutdown

United States Patent and Trademark Office (USPTO) Salaries and Expenses (S&E). 

The USPTO S&E account at Commerce is composed of receipts from patent and 

trademark fees. USPTO receives congressional authority in annual appropriations acts 

to spend a fixed amount of these receipts. Funds are obligated in this account as 

salaries are earned and expenses incurred. The unobligated balance in this account 

therefore depends on the volume of fee collections going in and salaries and expenses 

going out.

Source: GAO analysis of agency information. | GAO-16-26

It is important to consider which factors affecting unobligated balances 

are within the agency’s control and which are not. The rate at which 

obligations are incurred and subsequently liquidated in a fiscal year can 

vary with the nature of the activity. External events beyond agencies’ 

control—such as natural disasters or economic crises—can also affect 

unobligated balances. The text box below describes two examples from 

the reviewed accounts.

Factors Affecting Size and Composition of Unobligated Balances

Science. NASA officials said that while they attempt to obligate funds during the first 

year of appropriation within the Science account, a delayed project may result in an 

unobligated balance in the account. For example, in fiscal year 2014, the Europa 

mission funding for the Jet Propulsion Laboratory was delayed while officials conducted 

a July progress review, resulting in a delay of obligations and an unobligated balance at 

the end of the year.

Defense Environmental Cleanup (DEC). Officials managing Energy’s DEC account 

said that unobligated balances in fiscal year 2014 resulted from a variety of reasons, 

including contracts that could not be awarded before the end of the fiscal year, delays 

in hiring employees, and funding allocated for a finished construction project. 

Source: GAO analysis of agency information. | GAO-16-26

Understanding an agency’s processes for estimating and managing 

carryover balances provides information to assess how effectively 

agencies anticipate program needs, and ensure the most efficient use of 

resources. Agency management and estimation of unobligated balances 

also helps to ensure that any amounts carried over into the next year 

meet the targets the agency has determined are necessary to continue 

activities. The text box below describes three examples from the reviewed 

accounts.

What Factors Affect the Size or 

Composition of the Carryover 

Balances?

How Does the Agency 

Estimate and Manage 

Carryover Balances?
Page 16 GAO-16-26 2013 Sequestration and Shutdown

Management and Estimation of Unobligated Balances

Economic Development Assistance Programs (EDAP). In managing the EDAP 

account, EDA tracks expended, obligated, and unobligated balances, and reports 

weekly on these fund balances to program staff. The budget office estimates the 

likelihood of the remaining unobligated funds being obligated during the fiscal year, and 

continually revises these estimates, putting forward a final estimate of the unobligated 

balance that is expected to be carried over at the end of the fiscal year.

Energy Efficiency and Renewable Energy (EERE). EERE officials monitor 

unobligated balances monthly, with a more thorough analysis at the end of the fiscal 

year. According to officials, there is no set formula for estimating unobligated balances 

in future years; project managers are asked in the fourth quarter for their expected level 

of obligations which helps the agency estimate current year unobligated balances.

Science. Unobligated balances for NASA’s Science account are monitored monthly. 

Specifically, budget analysts compare actual and planned spending, and monitor the 

level of unobligated balances. If an analyst believes that there is a significant difference 

between expected and actual unobligated balances, then he or she can flag those 

balances for further review.

Source: GAO analysis of agency information. | GAO-16-26

Of the four key questions, agency management of balances is especially 

important in that it highlights how ongoing, routine estimation, and agency 

management of unobligated balances throughout the year is critical to 

help ensure the effective use of program resources. Our work shows that 

actively managing unobligated balances involves (1) regular review of 

unobligated balances, including ongoing monitoring and tracking, 

throughout the year; (2) tracking the appropriation year of the balances; 

(3) estimating projected annual unobligated balances and identifying the 

amount of unobligated balances that may be necessary to retain the 

following year; and (4) recognizing how unobligated balances may result 

from, or be affected by, events outside of an agency’s control.

If an agency does not have a robust strategy in place to manage 

unobligated balances, or is unable to adequately explain or support the 

reported unobligated balances, then a more in-depth review is warranted. 

In those cases, balances may either fall too low to efficiently manage 

operations, or rise to unnecessarily high levels. This produces potential 

opportunities for those funds to be used more efficiently elsewhere.

For Reviewed Accounts, 

Agencies Actively 

Estimate and Manage 

Unobligated Balances; 

However, for Two of the 

Accounts, Balances 

Exceeded Target Levels
Page 17 GAO-16-26 2013 Sequestration and Shutdown

For all of the eight accounts we reviewed, agency officials reported 

having a process for managing unobligated balances throughout the year, 

including ongoing monitoring and tracking of the balances. Having a 

process to regularly review unobligated balances throughout the year

allows agencies and decision makers to better understand the size and 

nature of their balances and determine if actions should be taken to 

increase or reduce these balances. Specific examples include the 

following:

• Officials for State’s D&CP account reported that they monitor 

unobligated balances monthly to ensure that program spending is on 

track, with more frequent monitoring of some subaccounts with large 

balances, such as the Overseas Contingency Operations (OCO) 

subaccount. Frequent monitoring may make it easier to identify 

whether unobligated balances will meet program needs.

• Officials managing NASA’s Science account said their monthly 

monitoring of unobligated balances begins the first day of each month 

when obligations are transferred from the agency’s accounting system 

into a project management system, which is used to compare planned 

and actual expenditures. Budget analysts monitor the level of 

unobligated balances, taking into account obligations from the prior 

month. NASA officials said it is the responsibility of the budget analyst 

for the account to raise significant differences between planned and 

actual levels of unobligated balances for further review by the Budget 

Director, the Deputy Chief Financial Officer, and the Chief Financial 

Officer.

• Commerce’s USPTO finalized an operating reserve policy on

September 25, 2015. This policy includes a regular process for 

monitoring unobligated balances within the S&E account. In the S&E 

account, which is funded through fees that are paid by customers to 

obtain and renew patents and trademarks, USPTO sets aside its 

unobligated balances as an operating reserve. In April 2012, we 

recommended that the Secretary of Commerce direct the USPTO 

Director to finalize an operating reserve policy, including the expected 

level of reserves, to smooth economic downturns on operations and to 

ensure its use aligns with agency goals.

28 The finalized policy was 

developed in response to our recommendation. The policy requires 

 

28GAO, Patent and Trademark Office: New User Fee Design Presents Opportunities to 

Build on Transparency and Communication Success, GAO-12-514R (Washington, D.C.: 

Apr. 25, 2012).

For Reviewed Accounts, 

Officials Reported Having a 

Process to Regularly Review 

Unobligated Balances 

throughout the Year
Page 18 GAO-16-26 2013 Sequestration and Shutdown

monthly monitoring of the operating reserve balance compared to the 

established minimum level, among other things.

We have previously reported that the time limits imposed upon the budget 

authority are important when evaluating unobligated balances.29 If an 

account receives multi-year or no-year appropriations, an unobligated 

balance can be expected in some cases. Similarly, if an account receives 

multi-year supplemental appropriations late in the fiscal year or for longterm projects, there is an increased likelihood of, and perhaps expectation 

for, an unobligated balance in the account. It is important to track the year 

of appropriation for accounts with multi-year budget authority to obligate 

the authority in the order appropriated to maximize resources for program 

implementation and prevent budget authority that otherwise could have 

been used from expiring. There may be different periods of availability for 

funds within the same agency, program, or account. As shown in table 2 

below, six of the eight accounts we reviewed received no-year funds, 

which do not expire, and two of the accounts received only multi-year 

funds. One account received no-year, multi-year, and one-year funds.

Table 2: Period of Availability of Funding in Reviewed Accounts from Fiscal Years 2012 through 2014

Period of Availability

Agency Account One-year Multi-year No-year

Department of Commerce Economic Development Assistance Programs (EDAP) 

United States Patent and Trademark Office, Salaries 

and Expenses (USPTO S&E)



Department of Energy Defense Environmental Cleanup (DEC)  

Energy Efficiency and Renewable Energy (EERE)  

Western Area Power Administration, Construction 

Rehabilitation, Operation and Maintenance (WAPA 

CROM)



National Aeronautics and 

Space Administration

Science 

Department of State Diplomatic and Consular Programs (D&CP)   

International Narcotics Control and Law Enforcement 

(INCLE)



Source: GAO analysis of appropriation laws. | GAO-16-26

 

29GAO-13-798. 

Although Agencies Tracked the 

Appropriation Year of 

Unobligated Balances for 

Reviewed Accounts with MultiYear Funds, Some Funds 

Expired in All Such Accounts 

during Fiscal Years 2012

through 2014
Page 19 GAO-16-26 2013 Sequestration and Shutdown

Multi-year Funds. Five of the accounts we reviewed receive multi-year 

funds in the form of 2-year funds—NASA’s Science account, State’s 

INCLE and D&CP accounts, and Energy’s EERE and DEC accounts. 

Officials managing each of these five accounts reported tracking the 

appropriation year of the funds to help ensure that the agency incurs new 

obligations only during the appropriation’s period of availability. Since 

funds are available for only 2 years, in most cases they will expire at the 

end of the 2-year period.30 For example, officials managing State’s INCLE 

account said that they divide responsibility for tracking funds between 

budget execution analysts and program staff. While the budget execution 

analysts are responsible for tracking funds in the accounting system and 

highlighting any problems as they arise, it is ultimately the responsibility of 

program staff to ensure that the agency incurs new obligations only 

during the appropriation’s period of availability.

Although officials in the five reviewed accounts with two-year funds said 

they track the appropriation year of funds to help ensure effective use of 

current budget authority within the appropriation’s period of availability, all 

of the accounts had unobligated balances that expired during fiscal years 

2012 through 2014. Expiration of funds can occur for a variety of reasons 

including contract adjustments, delays in entering contracts because of 

continuing resolutions, or poor management. See table 3 for the amounts 

of expired funds in five reviewed accounts and an explanation of the 

expiration, according to agency officials.

 

30Expired budget authority is no longer available to incur new obligations but is available 

for an additional 5 fiscal years for recording, adjusting, and disbursing obligations properly 

incurred during the budget authority’s period of availability. For INCLE, however, if funds 

are obligated during the initial period of availability, those funds become available for 

obligation for another 4 years. 
Page 20 GAO-16-26 2013 Sequestration and Shutdown

Table 3: Expired, Unobligated Balances in Reviewed Accounts Receiving Multi-Year Funds, Fiscal Years 2012 through 2014

Expired, Unobligated Balances 

(dollars in millions)

Account 

(Department or 

Agency) 2012 2013 2014 Agency Reported Explanation for Expired, Unobligated Balances

Defense 

Environmental 

Cleanup (DEC) 

(Energy) 

0 1 0 Officials managing the DEC account said that the actual expired 

amount was approximately $574,000, and that the majority of these 

funds were associated with a service contract that cost less than 

anticipated.

Energy Efficiency and 

Renewable Energy 

(EERE) (Energy)

0 1 0 Energy officials said the funds marked as expired, unobligated funds 

for fiscal year 2013 were actually no-year appropriations that were 

rescinded by Congress.

Science (NASA) 0 7 6 NASA officials said that the expiration of these funds was due to the 

closeout of contracts for less than the obligated amount. NASA 

deobligated amounts when, for example, the contractor did not meet 

certain performance goals. The expired balances for these years 

represent the sum of small amounts of funds from many contracts.

Diplomatic and 

Consular Programs 

(D&CP) (State)

82 144 369 Officials managing the D&CP account said the expired, unobligated 

balances were the result of a variety of circumstances including 

exchange rate fluctuations; adjustments of obligated, but unexpended 

balances; and delayed contract and grant activities. Officials said that 

they exercised specific statutory authority to transfer expired balances 

for other specific purposes and used the funds. 

International 

Narcotics Control and 

Law Enforcement 

(INCLE) (State)

55 25 14 Officials managing the INCLE account said that for fiscal years 2012 

through 2014, some balances that were listed as expired in the 

President’s Budget Appendix were available to be reobligated 

pursuant to specific statutory authority. Officials explained that in 

some cases, funds were nearing the end of their extended period of 

availability when they were deobligated from programs that had 

ended. For example, of the $14 million in fiscal year 2014 that expired, 

officials said that only $587,000 was cancelled that year. 

Source: GAO analysis of the President’s Budget Appendix and agency information. | GAO-16-26

State officials managing the D&CP account told us that they attempt to 

avoid cancellation of expired funds and their unavailability for future use 

by using four separate authorities to transfer expired funds for specific 

uses such as offsetting overseas price inflation for projects and wages 

paid to local employees, making reward payments for captured terrorists, 

and reimbursing New York City for the protection of foreign missions and 

officials at the United Nations.31 According to officials, State notifies OMB 

 

31See Pub. L. No. 113-76, div. K, title VII, §§ 7034(j), 7082(d), 128 Stat. 5, 514-15,567 

(Jan. 17, 2014); Pub. L. No. 110-252, § 1408, 122 Stat. 2323, 2341-42 (June 30, 2008); 

Pub. L. No. 110-161, div. J, title I, 121 Stat. 1844, 2278 (Dec. 26, 2007).
Page 21 GAO-16-26 2013 Sequestration and Shutdown

and Congress regarding the Department’s intent to transfer expired funds 

for such purposes. Officials said they transfer the oldest expired funds 

first, such as those nearing the end of their expiration period, which would

be the first to be cancelled, before obligating the more recently expired 

funds. In fiscal year 2014, D&CP’s appropriation consisted of primarily 

one-year authority, of which State could extend up to about 15 percent for 

an additional year, versus the primarily two-year authority generally 

appropriated to D&CP. 32 Officials said that all expired fiscal year 2014 

funds ($369 million) were transferred to the two-year portion of the 

account because the $369 million fell within the 15 percent limit.

For the INCLE account, State has the authority to extend the availability 

of certain balances that would have otherwise expired after 2 years.

33

When funds are obligated during their initial period of availability, those 

funds remain available to incur new obligations for an additional 4 years 

from the date on which the availability of such funds would have 

otherwise expired. To enter into new obligations during this extended 

period of availability, State officials must deobligate previously obligated 

funds. State reported that deobligated amounts are moved from an 

expired account into what officials call an “extended account” and are 

available to be reobligated. State officials said that expired funds reflected 

in the President’s budget may actually be in a holding status awaiting 

coordination, including coordination with Congress. However, State’s 

Office of the Inspector General (OIG) also identified issues with the 

process of tracking obligations within the INCLE account. State’s OIG 

recommended that the agency should develop a list of bureaus’ 

requirements related to tracking and reporting foreign assistance funds by 

program, project, and country, among other things, and develop and 

implement a comprehensive plan with target completion dates to address 

foreign assistance tracking and reporting requirements.34 State agreed 

and initiated a working group to address the recommendation.

 

32See Pub. L. No. 113-76. 128 Stat. 465.

33See Pub. L. No. 113-76, § 7011, 128 Stat. 496. An identical or similar provision is 

generally enacted in the Department of State, Foreign Operations, and Related Programs 

Appropriations Act each year.

34Department of State, Office of the Inspector General, Management Assistance Report – 

Department Financial Systems Are Insufficient to Track and Report on Foreign Assistance 

Funds (ISP-I-15-14) (Washington, D.C.: Feb. 26, 2015). 
Page 22 GAO-16-26 2013 Sequestration and Shutdown

No-year Funds. In accounts with no-year funds, agencies may choose to 

track the year in which such funds were appropriated, but such funds do 

not expire.35 Officials managing the three reviewed accounts at Energy—

DEC, EERE, and WAPA CROM—each reported tracking no-year funds 

by the year of appropriation. In contrast, officials from the other three 

reviewed accounts with no-year funds reported that they did not do this. 

For example, at Commerce, officials managing EDA’s EDAP account 

reported that the agency does not track the appropriation year of the 

unobligated balances. Officials managing the EDAP account said they 

track the funds by program, such as Economic Adjustment Assistance or 

Public Works, but do not track funds by year because these are no-year 

funds. When a grant funded from the account is completed, officials said 

any remaining funds tied to that grant are deobligated, and may be used 

to fund a new grant that would qualify under the parameters of the original 

activity or subprogram.

As we have previously reported, both the necessity for and appropriate 

size of minimum unobligated balances varies among agencies and within 

agencies.36 It is important for agencies to estimate the projected 

unobligated balances for the fiscal year and identify the amount of the 

balances, if any, which may be necessary to carryover into the following 

year to sustain agency operations. For five of our reviewed accounts—

Energy’s DEC and EERE, Commerce’s EDAP, State’s INCLE, and 

NASA’s Science—agency officials said a minimum level or consistent 

target of unobligated funds was not necessary to maintain operations 

across fiscal years. For example, Energy officials managing the DEC 

account told us that a minimum level of unobligated funds was not 

necessary for their operations and that their goal is to obligate all of their 

funds in the first year. Energy officials reported they obligate more than 

99 percent of DEC funds, on average, within the first year of 

appropriations. Similarly, officials managing the INCLE account said they 

would obligate all funds in the first year if possible. However, planning 

and reporting requirements often delay obligations leading to significant 

unobligated balances each year.

 

35No-year appropriations may be canceled if the head of the agency or the President 

determines that the purposes for which the appropriation was made have been carried out 

and if no disbursement has been made for 2 consecutive years. 31 U.S.C. § 1555.

36GAO-13-798. 

Three Agencies Identified a 

Need to Retain Unobligated 

Balances in Three of the 

Reviewed Accounts, but 

Unobligated Balances 

Exceeded Target Levels in 

Two of These Accounts
Page 23 GAO-16-26 2013 Sequestration and Shutdown

We have previously reported that unobligated balances in some instances 

support an agency’s ability to carry out its mission by providing flexibility 

for the agency to respond to contingencies or emergencies.37 In three of 

the eight accounts we reviewed—USPTO’s S&E, State’s D&CP, and 

Energy’s WAPA CROM—officials reported that a certain level of 

unobligated balances was necessary to properly execute activities and 

manage financial risk for certain programs within the accounts.

• In our prior work, USPTO officials reported that maintaining an 

operating reserve is important for the user fee funded agency 

because, without an unobligated balance, its businesslike operations 

would leave the agency vulnerable to financial risk and threaten longterm operational stability.38 All unobligated balances within USPTO’s 

S&E account are considered part of this operating reserve. In 

response to our 2012 recommendation, USPTO drafted and, as of 

September 25, 2015, has finalized a policy to guide its management 

of this operating reserve. The policy describes a method for 

determining an acceptable minimum size for the operating reserve as 

well as a model for determining its optimal size. This model takes into 

account the likelihood and consequence of seven different spending 

and fee collection risk factors such as economic uncertainty and 

climate, unexpected costs, and fee and workload projection 

uncertainties. Depending on the levels of risk and consequence, the 

model calls for maintaining, in addition to the established minimum 

reserve requirement, between 0- and 4-months of operating expenses 

in its reserve.

• Additionally, for the Consular and Border Security Programs (CBSP) 

within the D&CP account, State officials said they have a target to 

carryover approximately 25 percent of projected program 

expenditures for the next year to manage complex global visa and 

passport operations. CBSP is fully fee funded, which means that all 

appropriations for the program are offsetting collections from consular 

fees and surcharges. These fees and surcharges include the Passport 

Security Surcharge, the Diversity Visa Lottery fee, and the Machine 

Readable Visa fee. Congress has permanently appropriated these 

collections to State as no-year authority for CBSP’s use. State set this 

target of 25 percent based on activity-specific analysis using historical 

data and projections. However, officials did not report using models or 

 

37GAO-14-244. 

38GAO-12-514R. 
Page 24 GAO-16-26 2013 Sequestration and Shutdown

formulas to help anticipate how certain factors would impact the 

financial risk of the account. Our previous work has found that 

unobligated balances in fee-based accounts should be subject to the 

same scrutiny as unobligated balances in accounts funded by general 

revenues.39 Based on our findings from this review, we continue to 

believe that agencies need to understand the vulnerabilities of user 

fees and to be deliberate in their design of a reserve fund to 

effectively manage them. 

Specifically, we found that in fiscal year 2014 unobligated balances for 

CBSP accounted for 38 percent, or approximately $1.3 billion, of 

projected program expenditures for fiscal year 2015 for the program. 

This exceeded the 25 percent target of approximately $850 million by 

approximately $440 million. Similarly, in fiscal years 2012 and 2013, 

unobligated balances for CBSP accounted for approximately 40 

percent of program expenditures for the next fiscal year. State officials 

reported that unobligated balances were higher than the 

predetermined target, in part, because of limitations on the purposes 

for which fees collected under CBSP may be used. In particular, fees 

collected for fraud prevention and detection on certain types of visas 

can only be spent on specific fraud activities. State officials reported 

that annual revenue from this fee is usually higher than the cost of 

these activities, resulting in an annual increase in unobligated 

balances. However, this limitation on how fees can be spent accounts 

for only a small proportion of the excess unobligated balances 

(approximately $97 million of the total excess unobligated balance of 

$440 million in fiscal year 2014).

State officials within the Bureau of Consular Affairs said that they 

began drafting a plan in 2013 for managing and monitoring funding for 

each program within CBSP. According to officials, this plan will 

include a strategy on how unobligated balances will be tracked and 

managed to reach the identified target of 25 percent. Officials said 

that the plan is awaiting clearance by leadership and they anticipate 

that it will be finalized by June 2016. While unobligated balances for 

CBSP were greater than the 25 percent target in recent years, State 

officials reported that they have taken steps to regulate and reduce 

unobligated balances. According to officials, these steps included 

decreasing fees or delaying fee increases when unobligated balances 

 

39GAO, Federal User Fees: Fee Design Options and Implications for Managing Revenue 

Instability, GAO-13-820 (Washington, D.C.: Sept. 30, 2013).
Page 25 GAO-16-26 2013 Sequestration and Shutdown

were adequate to cover costs; realigning spending, consistent with 

authorities, to better coincide with actual costs; and improving internal 

coordination to better track and model revenues and obligations. For 

example, officials reported that since fiscal year 2012, the cost of the 

Passport Security Surcharge service was higher than the $40 fee 

charged. In 2015, State announced that it intended to raise the fee to 

$60. Officials said that this delay of the fee increase allowed them to 

spend down existing unobligated balances. According to data 

provided by State, unobligated balances for the Passport Security 

Surcharge decreased from 95 percent of next year’s program 

expenditures in fiscal year 2012, to 72 percent in fiscal year 2014.

• Similarly, the unobligated balances in WAPA’s CROM account 

exceeded the level officials said was necessary to maintain certain 

activities and manage risk for those activities. Specifically, officials 

said that for two of the account’s four use categories—the annual 

expense fund, and purchase power and wheeling—they set a target 

level of unobligated balances as contingency funds against 

unexpected events. For the annual expense fund, officials set a target 

to retain up to one quarter, or 25 percent, of the yearly budget 

requirement. For purchase power and wheeling, the target was equal 

to 25 percent of each region’s maximum annual receipts.40 WAPA 

officials explained that WAPA’s mission to market hydroelectric power 

to multiple regions across the western United States can be affected 

by a number of environmental factors such as drought, animal 

breeding seasons, and flood prevention—all of which may affect the 

function of power generating dams and introduce financial risk. WAPA 

officials reported addressing these environmental factors and potential 

financial risks by carrying over unobligated funds. WAPA officials told 

us that while a carryover of up to or equal to 25 percent in unobligated 

balances is the current target for these two use categories, they are 

continuing to refine and evaluate the necessary level of unobligated 

balances. These officials added that they do not have a model or 

formula to estimate anticipated environmental factors, and how those 

factors would have a fiscal impact on the agency.

 

40For the other two account use categories—capital and reimbursables—officials said that 

the levels of unobligated balances varied across years. For capital, officials said that they 

use a 10-year capital investment plan to guide decisions on unobligated balances and that 

unobligated balances varied between 1 and 3 years of funding per project. For 

reimbursables, officials said that unobligated balances varied based on the number and 

amount of active contracts, which require funds to be held until expended.
Page 26 GAO-16-26 2013 Sequestration and Shutdown

For fiscal year 2014, unobligated balances for purchase power and 

wheeling fell below the 25 percent target. However, for the annual 

expense fund, unobligated balances were above this previously 

identified target. For the annual expense fund, officials estimated that 

the 25 percent target for the unobligated balance would be about $52 

million for fiscal year 2014. The unobligated balance, however, for the 

annual expense fund was $92 million, or $40 million more than 

officials deemed necessary to avoid risk. According to WAPA officials, 

the annual expense fund’s unobligated balance for fiscal year 2014 

was higher than the predetermined target partially because they 

forecasted a 3 percent cost of living increase for personnel, which 

never occurred. WAPA officials reported that they developed a 

strategy in fiscal year 2013 for managing unobligated balances in the 

annual expense fund within the CROM account. According to officials, 

the draft strategy includes three alternatives for reducing unobligated 

balances in the annual expense fund, including one to decrease future 

budget requests and rely on existing unobligated balances to cover 

expenses. Officials said that this alternative was approved by WAPA 

senior management. However, officials acknowledged that this 

strategy would not be fully implemented until officials assess the 

outcomes of the strategy at the end of 2015. WAPA officials also 

reported that they are considering other strategies for reducing 

unobligated balances to required targets. As of October 2015, WAPA 

had not finalized or fully implemented a strategy to reduce unobligated 

balances.

Without a finalized and fully implemented strategy for reducing 

unobligated balances in excess of the agencies’ predetermined targets for 

necessary balances for the identified programs or activities in these two 

accounts, Energy and State are missing opportunities to actively manage 

unobligated balances. Thus, they should consider whether actions such 

as reprogramming or transferring unobligated balances, reevaluating the 

necessary threshold of unobligated balances, or reducing funding 

requests in future appropriations for these accounts are appropriate 

courses of action for using their resources effectively.
Page 27 GAO-16-26 2013 Sequestration and Shutdown

We have previously reported that the nature of some accounts may 

routinely cause unobligated balances that result from events outside of an 

agency’s control.41 Spending in some accounts may require processes to 

be completed by state, local, or private entities that receive funds from 

federal agencies. If these processes are not completed in a time frame 

necessary to obligate the funds in the current fiscal year, funds may 

remain unobligated at the end of the fiscal year and be carried over. 

These events are separate from the active estimation of the necessary 

size of unobligated balances described above. Nevertheless, as we have 

previously noted, it is important for agencies to understand how these 

events may influence the level of their balances.

For example, in EDA’s EDAP account, officials said that many of their 

programs are driven from the bottom up in that funding cannot be 

obligated until potential recipients apply for grants. Specifically, EDA 

officials told us that unobligated balances for the Reshoring program have 

been carried over for 3 years while the program waits to receive 

applications from eligible public and private non-profit organizations. The 

Reshoring program, a subprogram under EDA’s Economic Adjustment 

Assistance program, provides aid to businesses bringing jobs from 

overseas to the U.S. It received approximately $5 million each year for 

fiscal years 2013 and 2014. However, funds cannot be obligated until 

eligible recipients take actions outlined in programmatic rules and 

regulations and these funds were carried over as unobligated balances.

As we have previously reported, for agencies that rely on user fees for 

funding, economic factors may impact the amount of fees collected and 

contribute to unobligated balances.42 For example, officials at USPTO 

said that an economic downturn can decrease USPTO’s collected fees. 

This would create an imbalance with planned spending, and lead to a 

decrease in its operating reserve of unobligated balances.

 

41GAO-13-798. 

42GAO-13-820. 

Agency Officials Said 

Unobligated Balances May 

Result from, or Be Affected by, 

Events outside an Agency’s 

Control
Page 28 GAO-16-26 2013 Sequestration and Shutdown

Uncertain budget environments can also affect the level of unobligated 

balances. As we reported in March 2013, under a continuing resolution 

(CR) agencies may have difficulty making long-term decisions due to 

uncertainty about, both, when they will receive their final appropriation, 

and what level of funding ultimately will be available.43 Agencies are 

directed to operate at a conservative rate of spending while CRs are in 

effect, thus compressing the time period to obligate funds once final 

appropriations decisions are made. State officials managing the D&CP 

account said that they will limit the obligation of funds until full-year 

appropriations are made. Officials said that higher obligation rates occur 

in the third and fourth quarters of the fiscal year as the agency obligates 

money for procurement purposes. On the other hand, obligations for 

salaries and personnel expenses remain relatively consistent across 

quarters. Depending on a number of factors, including the timing of 

appropriations for the rest of the year, agencies may not be able to 

obligate funds before the end of the fiscal year and so will carryover 

unobligated funds. For example, although Energy has a goal for its EERE 

account to obligate all funds in the first year of appropriations, in fiscal 

year 2014 it carried over unobligated balances of $408 million. Energy

officials said that the majority of the unobligated balance resulted from 

delays in issuing funding opportunity announcements associated with 

EERE’s research and development programs in the areas of solar 

energy, bioenergy, advanced manufacturing, and water power. Officials 

said that they delayed the issuance of funding announcements during the 

3-month continuing resolution of fiscal year 2014 following the 

government shutdown.

 

43GAO, Budget Issues: Effects of Budget Uncertainty from Continuing Resolutions on 

Agency Operations, GAO-13-464T (Washington, D.C.: Mar. 13, 2013).

Continuing resolution (CR): an 

appropriation act that provides budget 

authority for federal agencies, specific 

activities, or both to continue operation when 

Congress and the President have not 

completed action on the regular 

appropriations acts by the beginning of the 

fiscal year. A CR may be enacted for a full 

year, up to a specified date, or until regular 

appropriations are enacted. CRs have been 

passed in all fiscal years since 1997, the most 

recent fiscal year that all regular 

appropriations bills were completed on time. 

During this time, CRs funded an average of 5 

months each fiscal year. 

Source: GAO and the Congressional Research Service. | 

GAO-16-26
Page 29 GAO-16-26 2013 Sequestration and Shutdown

According to guidance for the fiscal year 2013 sequestration, OMB 

recommended early budget planning to minimize the impact on essential 

activities tied to an agency’s mission. These activities include identifying 

opportunities for reprogramming or transferring funds (including 

unobligated balances and new budget authority), and reviewing grants 

and contracts for possible cost savings and reviewing reductions in 

personnel costs, such as hiring freezes.44

Unobligated balances that remain legally available from prior year 

appropriations could provide agencies with funding flexibility to respond to 

sequestration. Agency officials for four of the eight reviewed accounts—

Energy’s EERE and WAPA CROM accounts, State’s D&CP account, and 

USPTO’s S&E account—reported using unobligated balances to mitigate 

the effects of sequestration in fiscal year 2013.

• Using prior year unobligated funds, Energy officials managing the 

EERE account reported reprogramming approximately $80 million of 

the unobligated balances. Officials reported deobligating previously 

obligated amounts that had not yet been expended from various 

projects and activities. They then reobligated these amounts for other 

activities, such as the Weatherization Assistance Program, which 

funds weatherization of homes through grants to states, territories and 

some Native American lands.

• Officials managing Energy’s WAPA CROM account reported using 

unobligated balances to mitigate the effects of sequestration by 

reprogramming approximately $4.7 million in funds within the account. 

Reductions based on sequestration resulted in lower than needed 

funds for construction projects related to WAPA’s delivery of costbased federal hydroelectric power and related services across the 

western United States. As a result, officials said they reprogrammed 

approximately $4.7 million from the program direction portion of the 

account (which supports activities such as personnel salaries) to 

mitigate the effect of sequestration on the construction portion of the 

account. 

• At State officials reported that they reprogrammed $64 million in 

unobligated balances from non-Overseas Contingency Operation 

 

44Both transferring—moving funds from one account to another—and reprogramming—

moving funds within an account from one activity or program to another—may be applied 

to both unobligated balances and new budget authority. Some agencies may have opted 

to transfer or reprogram unobligated balances in accounts, in accordance with their 

particular statutory authorities and limitations.

Four of Eight Reviewed 

Accounts Used 

Unobligated Balances to 

Mitigate the Effects of 

Sequestration in Fiscal 

Year 2013
Page 30 GAO-16-26 2013 Sequestration and Shutdown

(OCO) Iraq funding within the non-OCO portion of the D&CP account 

to about 40 other activities within the account. These activities 

included personnel salaries and benefits, facility operating and 

maintenance costs, travel, and other operational requirements.45 They 

said this decision was made because there was a reduction of needs 

in Iraq due to lower than anticipated costs. This resulted in higher than 

necessary unobligated balances that could be better used for other 

activities. State officials said they notified OMB and Congress of this 

reprogramming.

Officials managing other accounts we reviewed—State’s INCLE, Energy’s 

DEC, and NASA’s Science accounts—reported that no unobligated 

balances were used to mitigate the effects of sequestration.

• For example, for State’s INCLE account, officials reported that 

Foreign Assistance funds, including INCLE and other accounts, were 

not reprogrammed to mitigate the effects of sequestration to maintain 

fairness among the countries that receive assistance. As we 

previously reported, officials said it would be easier to explain to 

foreign partners that these cuts to programs and commitments were 

mandated by U.S. law, and that they were being applied equally.46

• Officials managing Energy’s DEC account reported that they 

reprogrammed funds from new budget authority for fiscal year 2013, 

and did not use unobligated balances from previous years.47 Unlike 

the other seven accounts we reviewed, the DEC account is 

categorized as a defense account with its unobligated balances 

subject to sequestration.48 Officials reported that $1 million was 

sequestered from fiscal year 2012 unobligated balances in the DEC 

account during the 2013 sequestration.

The funds in Commerce’s EDAP account were not subject to 

sequestration. Therefore, unobligated balances did not need to be used 

 

45Overseas Contingency Operations funding is a category of federal funding for purposes 

of supporting overseas operations, including wartime and humanitarian efforts such as the 

Syria crisis and the Iraq war. 

46GAO-14-244. 

47New budget authority is the amount of budget authority that first becomes available in a 

given fiscal year. 

48The unobligated balances in defense accounts that remained available for spending 

were subject to sequestration in fiscal year 2013; the unobligated balances in nondefense 

accounts were exempt.
Page 31 GAO-16-26 2013 Sequestration and Shutdown

to mitigate its effects. As previously reported in our work on 

sequestration, the account’s funding was not sequestered in fiscal year 

2013 due to a reduction in funding for the account.49

In the event of a government shutdown, OMB is responsible for ensuring 

agencies have taken the essential actions needed to manage the 

shutdown effectively. It does so by providing policy guidance and 

shutdown-related instructions. For example, OMB guidance to agencies 

for the October 2013 government shutdown permitted them to use 

unobligated funds to continue operations on activities.

Six of the eight accounts we reviewed—State’s INCLE and D&CP, 

USPTO’s S&E, and Energy’s EERE, DEC and WAPA’s CROM 

accounts—used unobligated balances to fund activities during the 

October 2013 government shutdown. For these selected accounts, 

agency officials reported that having no-year or multi-year funds made it 

possible to continue to carry out agency missions, such as allowing 

WAPA to continue providing electrical energy to customers and USPTO 

to continue to review patent and trademark applications.

• Officials at Energy reported that, in anticipation of the shutdown, 

agency officials reviewed program data to assess how much of the 

unobligated balances would be available for specific activities for the 

next fiscal year. This would allow the funds to be obligated during the 

shutdown to ensure operations could continue. This is consistent with 

our prior work on the government shutdown in which we reported that 

Energy reevaluated its budget priorities to have funds available to 

meet payroll and to help ensure that the highest priority activities, 

such as providing electrical power to customers, could continue during 

the shutdown.50

• Officials from USPTO’s S&E and WAPA’s CROM accounts described 

continuing normal activity for their business-like accounts. Both 

 

49GAO-14-244. The Consolidated and Further Continuing Appropriations Act, 2013 

reduced funding for the EDAP account by about $37 million—from $220 million to $183 

million. Under federal law, if sequestration goes into effect when there is only a part-year 

budget, when a full-year budget is enacted, any account receiving a reduction from the 

part-year budget to the full-year budget equal to or more than the calculated sequestered 

amount will not be reduced any further. 2 U.S.C § 903(f)(2). 

50GAO-15-86. 

Six of Eight Reviewed 

Accounts Used 

Unobligated Balances to 

Fund Activities during the 

October 2013 Government 

Shutdown
Page 32 GAO-16-26 2013 Sequestration and Shutdown

accounts receive either all or most of their funding from customer 

receipts. All appropriated funds for USPTO’s S&E account come from 

receipts, while approximately 90 percent of appropriated funds for 

CROM come from customer advances and receipts for services such 

as construction improvements and providing electrical energy to 

customers from federally owned dams and other infrastructure. For 

these accounts, agency officials reported that they were able to use 

unobligated balances to continue to operate and provide services 

directly to their customers during the shutdown.

• Two of our reviewed accounts, NASA’s Science account and EDA’s 

EDAP account, did not use unobligated balances to continue to fund 

activities or operations. For example, EDA officials reported that 

account balances are specifically appropriated to support grant 

funding, and, therefore, could not fund salaries and expenses for EDA 

employees.

Given the significant events during the last 2 years—sequestration and 

the government shutdown—and the potential for budget uncertainties in 

the future, effective management of unobligated balances is critical for 

agencies to ensure the most efficient use of resources and to effectively 

respond to budget uncertainties. Understanding the justification for or 

impact of unobligated balances requires a close look at individual 

accounts and agencies, and how they manage unobligated balances. We 

found that officials generally managed unobligated balances effectively by 

tracking balances, having a process to estimate balances, and identifying 

necessary balances to carryover each year to fulfill their missions. 

However, there are opportunities for improvement in the way agencies 

manage unobligated balances in two of the reviewed accounts. 

Specifically, agency officials managing Energy’s WAPA CROM account 

and State’s CBSP within the D&CP account are not taking sufficient steps 

to ensure that the accounts only carryover the necessary unobligated 

balances into the next year. Without proper management of unobligated 

balances, opportunities for budgetary savings or funding activities may be 

missed.

To ensure effective use of federal funds and management of unobligated 

balances, the Secretary of Energy should direct WAPA’s Administrator 

and Chief Executive Officer to finalize and implement a strategy to reduce 

excess unobligated balances within the CROM account. Similarly, the 

Secretary of State should direct the Assistant Secretary of State for 

Consular Affairs to finalize Consular Affair’s strategy for the management 

of its unobligated balances, and to continue efforts to reduce excess 

Conclusions

Recommendations for 

Executive Action
Page 33 GAO-16-26 2013 Sequestration and Shutdown

unobligated balances allocated to CBSP in the D&CP account. For both

the CROM and D&CP accounts, as appropriate, these strategies may 

include

• reprogramming or transferring funds to other activities, as allowed by 

appropriation law,

• reevaluating fees to ensure fee revenues match program needs, or

• reducing budget authority requests in future years.

We provided a draft of this report to the Secretaries of Commerce, 

Energy, and State; and the Administrator of NASA for comment. Energy 

and State concurred with our recommendations and provided written

comments that are reproduced in appendixes IV and V, respectively. In its 

letter, Energy said that it agrees with the need to avoid excess 

unobligated balances and reported that WAPA is finalizing a plan to better 

manage unobligated balances in the CROM account.

After receiving the draft report, officials from State discussed our findings, 

conclusions, and recommendation with us and provided additional 

information on unobligated balances. Based on these discussions and 

information provided, we made minor revisions to the body of the report, 

including the recommendation, to reflect actions taken by Bureau of 

Consular Affairs officials to reduce unobligated balances. In its letter, 

while State concurred with the revised recommendation, officials noted 

that they disagreed with the use of the term “excess” to describe the 

unobligated balances in CBSP. State said it will continue efforts to better 

align unobligated balances and finalize the plan for CBSP to maintain 

balances at optimal levels. We maintain that the unobligated balances for 

CBSP are “excess” because they are above the agency’s own target of 

25 percent of projected program expenditures for the next year. We 

received technical comments from Commerce, Energy, and State, which 

we have incorporated into the final draft where appropriate. NASA did not 

have any comments on the draft report.

We are sending copies of this report to the appropriate congressional 

committees; the Secretaries of Commerce, Energy, and State; the 

Administrator of NASA; and other interested parties. In addition, the 

report is available at no charge on the GAO website at 

http://www.gao.gov. 

Agency Comments
Page 34 GAO-16-26 2013 Sequestration and Shutdown

If you or your staff have any questions about this report, please contact 

Susan J. Irving at (202) 512-6806 or irvings@gao.gov. Contact points for 

our Office of Congressional Relations and Public Affairs may be found on 

the last page of this report. GAO staff who made major contributions to 

this report are listed in appendix VII. 

Sincerely yours,

Susan J. Irving

Director for Federal Budget Analysis

Strategic Issues
Appendix I: Objective, Scope, and 

Methodology

Page 35 GAO-16-26 2013 Sequestration and Shutdown

Our objective was to evaluate how selected agencies managed and used 

unobligated balances in reviewed accounts, focusing on fiscal years 2012 

through 2014, which covers the fiscal year 2013 sequestration and fiscal 

year 2014 government shutdown. In addition, we analyzed the size and 

composition of unexpended balances in the federal budget from fiscal 

years 2012 through 2014, and compared those balances to previously 

reported balances for fiscal years 2007 through 2012.1 To address this 

objective, we examined selected agencies’ management of unobligated 

balances in reviewed accounts both during fiscal years 2012 through 

2014, and the current management of the reviewed accounts. We 

focused on unobligated balances because our prior work has shown that 

agencies used unobligated balances to offset reductions from the 2013 

sequestration and the government shutdown.2 For this review, we 

selected a nongeneralizable sample of four agencies—the National 

Aeronautics and Space Administration (NASA) and the Departments of 

State (State), Commerce (Commerce) and Energy (Energy).3 To select 

these four agencies, we identified all budget accounts having unobligated 

balances in fiscal years 2012, 2013, or 2014 in the Office of Management 

and Budget (OMB) MAX database.4 We then reviewed the data for each 

of the 24 Chief Financial Officer Act agencies, as well as agency plans to 

use unobligated balances to offset sequestration, according to our 

previous work on the 2013 sequestration.5 We selected the four agencies 

 

1

GAO, Budget Issues: Key Questions to Consider When Evaluating Balances in Federal 

Accounts, GAO-13-798 (Washington, D.C.: Sept. 30, 2013).

2

GAO, 2013 Government Shutdown: Three Departments Reported Varying Degrees of 

Impacts on Operations, Grants, and Contracts, GAO-15-86 (Washington, D.C.: Oct. 15, 

2014); 2013 Sequestration: Agencies Reduced Some Services and Investments, While 

Taking Certain Actions to Mitigate Effects, GAO-14-244 (Washington, D.C.: Mar. 6, 2014).

3

We excluded the Department of Defense (DOD) from our review because of ongoing 

work on sequestration in DOD, which resulted in a report issued during this review. See 

GAO, Sequestration: Documenting and Assessing Lessons Learned Would Assist DOD in 

Planning for Future Budget Uncertainty, GAO-15-470 (Washington, D.C.: May 27, 2015).

4

OMB MAX database is a computer system used to collect and process most of the 

information required for preparing the budget. OMB states that it uses MAX to collect, 

validate, analyze, model, collaborate with agencies on, and publish information relating to

its government-wide management and budgeting activities. According to OMB, perhaps 

the most visible end product of the MAX system is the “Budget of the United States 

Government,” also known as the President’s Budget, which is to be produced no later than 

the first Monday in February of each year.

5

GAO-14-244. 

Appendix I: Objective, Scope, and 

Methodology
Appendix I: Objective, Scope, and 

Methodology

Page 36 GAO-16-26 2013 Sequestration and Shutdown

based upon whether they had accounts with significant unobligated 

balances, as well as whether they used or were planning to use 

reprogramming of funds, transfers among accounts, and/or multi-year 

funding to mitigate the effects of sequestration.

Within the four selected agencies, we identified a nongeneralizable 

sample of eight accounts. To select the eight accounts, we reviewed 

OMB MAX data for every budget account in the four agencies for fiscal 

years 2012 through 2014. In 2013, the most recent end of year data 

available at that time of our initial selection, these four agencies had a 

total of 157 budget accounts. From these accounts, we selected eight 

accounts for in-depth review based on whether the agencies 

reprogrammed funds within accounts, transferred funds among accounts, 

and/or used multi-year funds to mitigate the effects of the 2013 

sequestration. We also selected accounts that had particularly large 

unobligated balances or significant changes in unobligated balances 

during fiscal years 2012 through 2014. We selected only accounts with 

discretionary appropriations and split authority—a combination of 

discretionary appropriations and mandatory budget authority—and 

excluded mandatory accounts from our review to avoid duplication with 

our ongoing review of mandatory accounts. See table 4 for a list of 

accounts selected.

Table 4: Select Budget Accounts and Unexpired, Unobligated Balances at Four Agencies, End of Fiscal Years 2012 through 

2014

Unexpired, Unobligated 

Balance, End of Fiscal Year

(dollars in millions)

Agency Name Account Name (BEA category)a 2012 2013 2014

Percentage 

Change from 

2012 to 2014

Department of 

Commerce 

Economic Development Assistance Programs, 

Economic Development Administration 

(Discretionary) 

185 51 65 -65

Salaries and Expenses, US Patent and Trademark 

Office (Discretionary)

238 442 503 +111

Department of Energy Construction, Rehabilitation, Operation and 

Maintenance, Western Area Power Administration 

(Split)

369 496 556 +51

Defense Environmental Cleanup (Discretionary) 80 32 60 -25

Energy Efficiency and Renewable Energy 

(Discretionary) 

335 119 408 +22
Appendix I: Objective, Scope, and 

Methodology

Page 37 GAO-16-26 2013 Sequestration and Shutdown

Unexpired, Unobligated 

Balance, End of Fiscal Year

(dollars in millions)

Agency Name Account Name (BEA category)a 2012 2013 2014

Percentage 

Change from 

2012 to 2014

National Aeronautics 

and Space 

Administration

Science (Discretionary) 64 172 275 +330

Department of State Diplomatic and Consular Programs (Split) 4,421 4,446 2,525 -43

International Narcotics Control and Law Enforcement 

(Discretionary) 

1,422 1,888 1,217 -14

Source: GAO analysis of data from the President’s Budget Appendixes. | GAO-16-26

a

The Balanced Budget and Emergency Deficit Control Act of 1985 (BBEDCA), as amended, defines 

the terms direct spending, which is also known as mandatory spending, and discretionary 

appropriations. OMB applies these definitions for budget enforcement purposes prescribed by law. 

These categories of spending are commonly referred to as BEA (Budget Enforcement Act) 

categories, after the legislation that incorporated the definitions into BBEDCA. Split accounts contain 

both mandatory budget authority and discretionary appropriations. 

To evaluate how the selected agencies managed and used unobligated 

balances in the reviewed accounts, we reviewed agency budget reports 

and guidance, congressional budget justifications, and congressional 

notifications. We interviewed agency officials at the department (or 

agency), the bureau, and the account levels about account management 

policy and practice, especially with regard to unobligated balances, using 

the four key questions from our prior work as criteria. To analyze agency 

budget data from fiscal years 2012 through 2014, we asked agency 

officials to explain the size of the balances, any balance changes, how 

and whether balances were used to mitigate the effects of the 2013 

sequestration and the government shutdown, discuss any expired funds, 

and whether any transfers or reprogramming occurred during this time. 

We discussed with agencies the four key questions described earlier from 

our prior work, including the mission and goals of programs supporting 

the accounts, sources and fiscal characteristics of the funding, factors 

that affect the size and composition of unobligated balances, and agency 

estimation and management of balances.

To describe unexpended balances—including unobligated balances—in 

appendix III, we analyzed data on government-wide unexpended 

balances across all federal budget accounts for fiscal years 2007 through 

2014. For our analysis, we obtained government-wide data on obligated 

and unobligated balances. We queried OMB’s MAX database for data by 

account on obligated and unobligated balances, including budget 

function, and composition of the account (e.g., mandatory, discretionary, 
Appendix I: Objective, Scope, and 

Methodology

Page 38 GAO-16-26 2013 Sequestration and Shutdown

split), for fiscal years 2012 through 2014. We found the data to be 

sufficiently reliable for the purpose of our report.6 We also drew from data 

reported in our previous report on unexpended balances from fiscal years 

2007 through 2012 to add context to the new analysis.7 Although we did 

not attempt to identify causal links, two significant events occurred during 

fiscal years 2013 through 2014—sequestration and the government 

shutdown—which may have affected unexpended balances, possibly 

causing agencies to use unobligated balances to mitigate effects of the 

budget events.

We conducted our review from December 2014 to October 2015 in 

accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

 

6

To determine the reliability of the data, the team cross-checked the MAX data against the 

numbers reported in the corresponding President’s Budget Appendices. Data reported in 

MAX and the Budget Appendix are subject to rigorous review and checks through OMB to 

help ensure consistency of the data. Accordingly, such data were considered reliable for 

the purpose of this report.

7

GAO-13-798. 
Appendix II: Key Budget Questions Applied to 

Reviewed Budget Accounts

Page 39 GAO-16-26 2013 Sequestration and Shutdown

In this appendix, we summarized how the selected agencies are 

managing and using unobligated balances in the eight reviewed accounts 

according to the four key questions from our prior work.1

• What Mission and Goals Is the Account or Program Supporting?

• What are the Sources and Fiscal Characteristics of the Funding?

• What Factors Affect the Size or Composition of the Carryover 

Balance?

• How Does the Agency Estimate and Manage Carryover Balances?

We also included analysis of the ways agencies used unobligated 

balances to mitigate the effects of the 2013 sequestration and 

government shutdown. Each template includes a graphic which shows 

the unobligated balance as a percentage of budgetary resources.2

 

1

GAO-13-798. While the key questions refer to carryover—or unexpended—balances, for 

the purposes of this review, we focused analysis on the unobligated portion of 

unexpended balances.

2

For this analysis, budgetary resources are the sum of new obligations incurred against 

current budget authority and unobligated balances. Unless otherwise specified, 

unobligated balances reported are derived from the “Unexpired unobligated balance, end 

of year” line associated with the budget account in the Appendix to the President’s 

Budget.

Appendix II: Key Budget Questions Applied 

to Reviewed Budget Accounts
Page 40 GAO-16-26 2013 Sequestration and Shutdown

Appendix II

Account Name: Economic Development Assistance Programs 

(EDAP) 

National Priority: 452 (Area and regional development)

Unobligated Balances

Factors Affecting the Size or Composition of Unobligated Balances

EDA officials said their goal is to obligate all funds in the year that they are 

appropriated. However, several circumstances have led to unobligated 

balances remaining at the end of fiscal years 2012 through 2014. These

included the fact that the rate of obligation for some grants is dependent 

on the recipient taking action, which is sometimes delayed. Disasterspecific appropriations that may no longer be needed may also result in an 

unobligated balance. In addition, because the agency waits for full-year 

appropriations before initiating grant cycles, continuing resolutions delay 

obligation to recipients.

EDA officials attributed the majority of the $185 million unobligated 

balance at the end of fiscal year 2012 to the additional $200 million 

appropriated by Congress in fiscal year 2012. The latter amount funded

disaster relief efforts in areas with major disaster designations in 2011, 

including areas affected by Hurricane Irene. These funds could not be 

obligated until affected communities applied for grants, which, according 

to EDA officials, generally occurred after fiscal year 2012, resulting in 

unobligated balances. Unobligated balances for the account decreased in 

fiscal year 2013, followed by a slight increase in fiscal year 2014.

Figure 3: Unobligated Balances as a Percent of Budgetary Resources in the 

Economic Development and Assistance Programs Account, Fiscal Years 2012-2014

Agency Estimation and Management of Unobligated Balances

The EDA budget office produces and issues a weekly report to all regions 

and headquarters programs; this report provides an update of unobligated, 

obligated, and expended funds, as well as information on expected 

Department of 

Commerce

Economic Development 

Administration (EDA)

Overview of Account

Mission and Goals of Account

With funds from the EDAP account, 

EDA provides grants through 

several programs, including Public 

Works and Trade Adjustment 

Assistance. These investments are 

intended to generate or retain jobs, 

attract new industry and private 

sector investment, and encourage 

business expansion. They are also 

intended to serve as a backstop to 

sudden and severe economic 

impacts. These investments assist 

communities characterized by 

substantial and persistent 

unemployment levels, low income 

and population growth, loss of jobs, 

out-migration, and long-term 

economic deterioration.
Page 41 GAO-16-26 2013 Sequestration and Shutdown

Appendix II

Account Name: Economic Development Assistance Programs 

(EDAP) 

National Priority: 452 (Area and regional development)

Unobligated Balances (continued)

time frames for grant awards. Officials reported that, as part of this 

process, EDA estimates the likelihood that unobligated funds will be 

obligated. Unobligated balance estimates are revised throughout the year, 

and a final estimate is produced at the end of the fiscal year.

Agency Use of Unobligated Balances to Mitigate the Effects of Fiscal 

Year 2013 Sequestration or the Fiscal Year 2014 Government 

Shutdown

The account’s funding was not sequestered in fiscal year 2013 due to a 

reduction in account funding during the fiscal year, which was a result of 

the Consolidated and Further Continuing Appropriations Act of 2013. 

According to EDA officials, since the EDAP account supports grant 

activities, not salaries and expenses, unobligated balances in the account 

could not be used to pay operating costs, and therefore could not be used 

to offset the government shutdown. 

Department of 

Commerce

Economic Development 

Administration (EDA)

Overview of Account 

(continued)

Sources of Funding

EDAP is funded through annual 

appropriations. Funds in the 

account are discretionary.

Characteristics of Funding 

Funds are available until 

expended. 
Page 42 GAO-16-26 2013 Sequestration and Shutdown

Appendix II

Account Name: Salaries and Expenses (S&E)

National Priority: 376 (Other advancement of commerce)

Unobligated Balances

Factors Affecting the Size or Composition of Unobligated Balances

The major factors affecting the size of USPTO’s unobligated balance are 

the varying costs of agency operations and patent and trademark fee 

operations, which are sensitive to changes in the economy. Changes in 

the economy may also affect the volume of patent and trademark 

applications. The volume of application fees received may also affect the 

size of unobligated balances. According to USPTO officials, fees are 

collected and obligated throughout the year as they are earned for 

activities such as paying salaries and expenses. From 2012 through 2014, 

the size of the unobligated balance steadily increased. Officials said that 

unobligated balances are necessary to respond to unanticipated events, 

such as a continuing resolution or an economic downturn resulting in a 

reduction of applications.

Fees collected and held in the account are available only as appropriated 

by Congress. Beginning in 2012, fees collected above the amount 

appropriated in the S&E account are transferred to the Patent and 

Trademark Fee Reserve Fund. 

Figure 4: Unobligated Balances as a Percent of Budgetary Resources in the United 

States Patent and Trademark Office Salaries and Expenses Account, Fiscal Years 

2012-2014

Agency Estimation and Management of Unobligated Balances

USPTO officials reported that while receipt collections can be fairly volatile 

for both the patent side and trademark side of business, estimates are 

derived from historical trends as well as forward-looking indicators, such 

as global and national economic forecasts. According to a USPTO official, 

it is important to retain some unobligated balances in the form of operating 

reserve funds to mitigate risks for business operations, such as 

government-related or economic impacts on revenue generation.

Department of 

Commerce

United States Patent and 

Trademark Office (USPTO)

Overview of Account

Mission and Goals of Account

USPTO issues patents and 

registers trademarks, which 

provide protection to inventors and 

businesses for their inventions and 

their corporate and product 

identifications. USPTO also 

advises other U.S. Government 

agencies on intellectual property 

issues and promotes stronger 

intellectual property protections in 

other countries. Funds collected for 

patents are used for examining 

patent applications and granting 

patents. Funds collected for 

trademarks provide resources for 

examining trademark applications, 

registering trademarks and 

improving trademark practices 

worldwide. Most of the account 

provides compensation and 

benefits for examiners and staff; 

the remainder is for equipment and 

other expenses.

Department of 

Commerce

United States Patent and 

Trademark Office (USPTO)

Overview of Account

Mission and Goals of Account

USPTO issues patents and 

registers trademarks, which 

provide protection to inventors and 

businesses for their inventions and 

their corporate and product 

identifications. USPTO also 

advises other U.S. government 

agencies on intellectual property 

issues and promotes stronger 

intellectual property protections in 

other countries. Funds collected for 

patents are used for examining 

patent applications, granting 

patents, and improving patent 

practices worldwide. Funds 

collected for trademarks provide 

resources for examining trademark 

applications, registering 

trademarks, and improving 

trademark practices worldwide. 

The largest portion of the account 

provides compensation and 

benefits for examiners and staff; 

the remainder is for equipment and 

other expenses.
Page 43 GAO-16-26 2013 Sequestration and Shutdown

Appendix II

Account Name: Salaries and Expenses (S&E)

National Priority: 376 (Other advancement of commerce)

Unobligated Balances (continued)

On September 25, 2015, USPTO finalized a policy for estimating and 

managing operating reserves. The policy includes a methodology for 

determining the minimum and optimal level of reserves for both patent and 

trademark operations. In April 2012, we recommended that the Secretary 

of Commerce direct the USPTO Director to finalize an operating reserve 

policy, including the expected level of reserves, to smooth the impact of 

economic downturns on operations and to ensure its use aligns with 

agency goals.1 The finalized policy was developed in response to our 

recommendation. The policy requires monthly monitoring of the operating 

reserve balance compared to the established minimum level, among other 

things. 

Agency Use of Unobligated Balances to Mitigate the Effects of Fiscal 

Year 2013 Sequestration or the Fiscal Year 2014 Government 

Shutdown

USPTO officials reported that unobligated balances were used to mitigate 

the effects of sequestration; however, the agency’s spending during 

sequestration was cautious given the high variability in patent fee 

collections in 2013 resulting from the implementation of a new patent fee 

schedule in March 2013. USPTO’s unobligated balance grew in fiscal year

2013 as a result of stronger-than-expected collections late in the fiscal 

year. According to a USPTO official, USPTO decided not to reprogram 

funds within its S&E account to mitigate the effects of sequestration. Prior 

to the government shutdown, USPTO held discussions with the Office of 

Management and Budget and received permission to continue operating 

with fee collections from the preceding year that had not been obligated. 

As a result, USPTO did not shut down during the lapse in appropriations.

 

1

GAO, Patent and Trademark Office: New User Fee Design Presents 

Opportunities to Build on Transparency and Communication Success, GAO-12-

514R (Washington, D.C.: Apr. 25, 2012).

Department of 

Commerce

United States Patent and 

Trademark Office (USPTO)

Overview of Account 

(continued)

Sources of Funding

USPTO’s S&E account is funded 

through fees that are paid to obtain 

and maintain patents and register 

trademarks. Patent fees must be 

used only for patents, and 

trademark fees must be used only 

for trademarks. Congress enacts 

an annual appropriation for 

USPTO; however, the 

appropriation is offset by fee 

collections. Funds in the account 

are discretionary. 

Characteristics of Funding 

Since passage of the America 

Invents Act in 2011, USPTO has 

set its own patent and trademark 

fee schedule by regulation. 

Appropriations are available until 

expended. 
Page 44 GAO-16-26 2013 Sequestration and Shutdown

Appendix II

Unobligated Balances

Factors Affecting the Size or Composition of Unobligated Balances

According to officials, WAPA has an unobligated balance to respond to 

unforeseen contingencies, such as droughts or economic downturns 

which may lead to lagging power sales or unusually high purchases of 

power, or to carry forward funds designated for specific project needs that 

were not completed as anticipated during the budget year. The amount of 

unobligated balances varies by the four use categories. Among the use

categories, WAPA officials attributed approximately 70 percent of the 

fiscal year 2014 unobligated balance of $556 million to advances for

specific projects contracted with customers. According to officials, these 

projects are subject to external factors, such as land disputes, which may

delay projects and result in unobligated balances. Officials also reported 

that these advances drove the increases in unobligated balances from 

fiscal years 2012 through 2014.

Figure 5: Unobligated Balances as a Percent of Budgetary Resources in Western 

Area Power Administration’s Construction, Rehabilitation, Operation and 

Maintenance Account, Fiscal Years 2012-2014

For two use categories, the annual expense fund and purchase power and 

wheeling, WAPA officials said that they set a target level of unobligated 

balances to maintain as contingency funds against unexpected events.

For the annual expense fund officials set a target to retain up to one 

quarter, or 25 percent, of the yearly budget requirement. For purchase 

power and wheeling, the target was equal to 25 percent of each region’s 

maximum annual receipts. The other two categories also may retain 

balances; however, officials did not have a specific goal for unobligated 

balances for these use categories. Instead, they reported that unobligated 

balances will vary depending on the need to retain funds for things such 

as multi-year construction projects. 

 

Department of Energy

Western Area Power 

Administration (WAPA)

Overview of Account

Mission and Goals of Account

WAPA, which receives funds from 

the CROM account, markets 

electric power in 15 central and 

western states from federallyowned power plants operated 

primarily by the Bureau of 

Reclamation, the Army Corps of 

Engineers, and the International 

Boundary and Water Commission. 

WAPA serves a diverse group of 

nearly 700 wholesale customers, 

including municipalities, 

cooperatives, public utility and 

irrigation districts, federal and state 

agencies, and Native American 

tribes. In turn, WAPA’s customers 

provide service to millions of retail 

consumers.

WAPA’s CROM account is 

composed of four sub-programs: 

(1) Operation and Maintenance; (2) 

Construction and Rehabilitation; (3) 

Purchase Power and Wheeling; 

and (4) Program Direction. 

Officials also reported that the 

account supports four use

categories: (1) annual expense 

fund; (2) capital; (3) purchase 

power and wheeling; and (4) 

reimbursables (or advances tied to 

specific projects contracted with 

customers). There is not a one-toone match between the subprograms and use categories as 

some categories apply to more 

than one sub-program.

Account Name: Construction, Rehabilitation, Operation and 

Maintenance (CROM)

National Priority: 271 (Energy supply)
Page 45 GAO-16-26 2013 Sequestration and Shutdown

Appendix II

Unobligated Balances (continued)

For fiscal year 2014, unobligated balances for purchase power and 

wheeling fell below the 25 percent target. For the annual expense fund, 

officials estimated that the 25 percent target for the unobligated balance 

would be about $52 million for fiscal year 2014. However, the unobligated 

balance for the annual expense fund was $92 million, or $40 million more 

than officials deemed necessary to avoid risk. According to WAPA 

officials, the annual expense fund unobligated balance for fiscal year 2014 

was higher than the established threshold partially because they 

forecasted a 3 percent cost of living increase for personnel, which never 

occurred. WAPA officials reported that they developed a strategy in fiscal 

year 2013 for managing unobligated balances in the annual expense fund 

within the CROM account. According to officials, the draft strategy 

includes three alternatives for reducing unobligated balances in the annual 

expense fund, including one to decrease future budget requests and rely 

on existing unobligated balances to cover expenses. However, officials 

acknowledged that this strategy would not be fully implemented until 

officials assess the strategy’s outcomes at the end of 2015. 

Agency Estimation and Management of Unobligated Balances

According to officials, twice a year, WAPA managers obtain information 

from regional project directors on actual and planned obligations through 

the end of the fiscal year. They also collect information on any projects 

which will not be completed at year-end, and estimate the resulting

unobligated balances. 

Agency Use of Unobligated Balances to Mitigate the Effects of Fiscal 

Year 2013 Sequestration or the Fiscal Year 2014 Government 

Shutdown

WAPA officials reported that sequestration reductions resulted in lower 

than necessary funds in the CROM account for construction projects. 

Therefore, officials decided to reprogram approximately $4.7 million in 

unobligated balances within the CROM account to mitigate the effect of 

sequestration on the construction portion of the account. According to 

WAPA officials, WAPA used unobligated funds in the CROM account to 

continue operations during the government shutdown.

 

 

Account Name: Construction, Rehabilitation, Operation and 

Maintenance (CROM)

National Priority: 271 (Energy supply)

Department of Energy

Western Area Power 

Administration (WAPA)

Overview of Account 

(continued)

Sources of Funding

WAPA’s CROM account receives 

an annual appropriation derived in 

part from a special fund account 

belonging to the Department of 

Interior’s Bureau of Reclamation—

the Reclamation Fund. WAPA also 

has offsetting collections authority 

to obligate certain collections from 

businesslike operations (described 

above) without further 

congressional approval. WAPA’s 

CROM account receives both 

discretionary and mandatory funds. 

Characteristics of Funding 

WAPA’s appropriations, including 

offsetting collections, are available 

until expended.
Page 46 GAO-16-26 2013 Sequestration and Shutdown

Appendix II

Account Name: Defense Environmental Cleanup (DEC)

National Priority: 053 (Atomic energy defense activities)

Unobligated Balances

Factors Affecting the Size or Composition of Unobligated Balances

According to EM officials, a majority of the unobligated balances in fiscal 

years 2012 through 2014 were directly related to project funds that were 

not spent or reprogrammed, and had to be placed in reserve. For 

example, officials reported that an unobligated balance of $12.2 million in 

the account for each fiscal year from 2012 to 2014 was associated with 

old construction projects at Savannah River that had been completed and 

closed out. According to EM, in fiscal year 2014, an unobligated balance 

of $1.1 million supported the Natural Resource Damages Assessment 

contracts for the Los Alamos National Laboratory. These contracts could 

not be set up before the year-end, thus delaying obligation and resulting in 

an unobligated balance. 

Unobligated balances in the DEC account decreased in 2013 and 

increased again in 2014. Officials reported that the decrease in fiscal year 

2013 was due, in part, to sequestration. They also said that the increase in 

fiscal year 2014 was influenced by the Office of Management and Budget

directing EM to set aside funds to be used for new hires in early fiscal year 

2015.

Figure 6: Unobligated Balances as a Percent of Budgetary Resources in the Defense 

Environmental Cleanup Account, Fiscal Years 2012-2014

Agency Estimation and Management of Unobligated Balances

According to EM officials, field budget offices—which are responsible for 

obligating funds and estimating unobligated balances—submit a spend 

plan to EM management containing estimated costs and obligations for 

each fiscal year. EM’s budget office compares actual and estimated 

Department of Energy 

Office of Environmental 

Management (EM)

Overview of Account

Mission and Goals of Account

The mission of EM and the DEC 

account is to complete the safe 

cleanup of sites where the 

Department of Energy carried out 

defense-related nuclear research 

and production activities. Those 

activities resulted in radioactive, 

hazardous, and mixed-waste 

contamination requiring 

remediation, stabilization, 

decontamination, and 

decommissioning, or some other 

type of cleanup action.

EM aims to reduce risk and 

environmental liability while 

working towards its goals. For 

example, EM remediates soil and 

ground water contaminated with 

the radioactive and hazardous 

constituents, secures and stores 

nuclear material in a stable, safe 

configuration in secure locations to 

protect national security, and 

constructs and operates facilities to 

treat radioactive liquid tank waste. 

 
Page 47 GAO-16-26 2013 Sequestration and Shutdown

Appendix II

Account Name: Defense Environmental Cleanup (DEC)

National Priority: 053 (Atomic energy defense activities)

Unobligated Balances (continued)

spending and obligations each month; if estimated and actual spending 

vary considerably, the budget office reviews plan execution with field 

officials in June or July.

Agency Use of Unobligated Balances to Mitigate the Effects of Fiscal 

Year 2013 Sequestration or the Fiscal Year 2014 Government 

Shutdown

According to EM officials, prior year unobligated balances were not used

to mitigate the effects of sequestration, but new budget authority was 

reprogrammed from current year appropriations. Sequestration affected 

the size of DEC’s unobligated balances because the DEC account is 

classified under the national defense budget function and unobligated 

balances that remained available for spending in accounts within the 

defense spending category were subject to sequestration. For the 2013 

sequestration, EM officials reported that $1 million was sequestered from 

fiscal year 2012 unobligated balances in the DEC account.

EM officials said they used unobligated balances from the DEC account to 

mitigate the effects of the government shutdown. EM was able to avoid 

total shutdown by using unobligated program direction funds under the 

guidance of the Department of Energy Chief Financial Officer to pay staff 

and avoid furloughs. Officials reported using obligated balances to fund 

ongoing projects, with the exception of Los Alamos National Laboratory

(where operations were suspended), which receives funds from the DEC 

account. 

Department of Energy 

Office of Environmental 

Management (EM)

Overview of Account 

(continued)

Sources of Funding

DEC is funded through annual 

appropriations and all funds are 

discretionary. 

Characteristics of Funding 

Most of DEC’s appropriation is 

available until expended; a small 

portion is available for obligation in 

the first 2 years for program 

direction, which funds the federal 

workforce responsible for the 

overall direction and administrative 

support of the EM program.
Page 48 GAO-16-26 2013 Sequestration and Shutdown

Appendix II

Unobligated Balances

Factors Affecting the Size or Composition of Unobligated Balances

Because the EERE account funds clean energy technology through

funding opportunities such as grants and agreements, the timing of the 

awards cycle affects the obligation of funds. According to Energy officials

managing the EERE account, a delay in final appropriations (such as a 

continuing resolution) will result in a delay in the award cycle. The award 

cycle may then cross fiscal years, resulting in unobligated balances. 

Officials also reported that the Office of Management and Budget’s

apportionment of EERE funds for 30-day periods at a time during a

continuing resolution also leads to delays in EERE obligations. 

In fiscal year 2012, delays in the award cycle contributed to a large 

proportion of the year-end unobligated balance of $335 million. In fiscal 

year 2013, despite a 6-month delay in receiving a full-year appropriation, 

officials said they streamlined the award process to allow for a more 

efficient disbursement of funds and a reduction of the year-end 

unobligated balance to $119 million. However, in fiscal year 2014 a 3-

month continuing resolution following the government shutdown caused 

officials to delay the initiation of that year’s award cycle and unobligated 

balances increased to $408 million at year-end. 

Figure 7: Unobligated Balances as a Percent of Budgetary Resources in the Energy 

Efficiency and Renewable Energy Account, Fiscal Years 2012-2014

Agency Estimation and Management of Unobligated Balances

Energy officials said that their goal in managing EERE funds is to obligate 

all funds within the first fiscal year of availability. However, as discussed 

above, this does not usually occur. When unobligated balances do occur, 

EERE managers will request permission from the agency Chief Financial 

Officer to allow reallotment of the funds in the following fiscal year.

Department of Energy

Office of Energy Efficiency and 

Renewable Energy 

Overview of Account

Mission and Goals of Account

The Office of Energy Efficiency and 

Renewable Energy, which receives 

funds from the EERE account, is 

the federal government's primary 

clean energy technology 

organization. This office works with 

many innovators and businesses to 

support applied research, 

development, demonstration, and 

deployment activities in sustainable 

transportation, renewable power, 

and end-use energy efficiency. It

implements a range of strategies 

aimed at reducing reliance on oil, 

creating jobs, and reducing 

pollution.

The EERE account funds clean 

energy technology through 

competitive funding opportunities, 

cooperative research and 

development agreements, formula 

grants for state and local 

governments, procurements, and 

technology investment 

agreements. 

Account Name: Energy Efficiency and Renewable Energy 

(EERE)

National Priority: 270 (Energy)
Page 49 GAO-16-26 2013 Sequestration and Shutdown

Appendix II

Unobligated Balances (continued)

The Office of Energy Efficiency and Renewable Energy monitors

unobligated balances monthly, with a more thorough analysis at the end of 

the fiscal year. According to officials, there is no set formula for estimating 

unobligated balances in future years; project managers are asked in the 

fourth quarter for their expected level of obligations which help the agency 

estimate current year unobligated balances.

Agency Use of Unobligated Balances to Mitigate the Effects of Fiscal 

Year 2013 Sequestration or the Fiscal Year 2014 Government 

Shutdown

To mitigate the effects of sequestration, Energy officials managing the 

EERE account reported reprogramming prior year unobligated balances 

and recovered prior year unpaid obligations from various projects and 

activities to other activities, such as the Weatherization Assistance 

Program. This program funds the weatherization of homes through grants 

to states, territories, and some Indian tribes. During the government 

shutdown, according to officials, the office used no-year funds from the 

EERE account to continue projects and, under the guidance of the Energy 

Chief Financial Officer, used unobligated program direction funds to pay 

staff and avoid furloughs.

Department of Energy

Office of Energy Efficiency and 

Renewable Energy 

Overview of Account 

(continued)

Sources of Funding

EERE is funded through annual 

appropriations and all funds in the 

account are discretionary.

Characteristics of Funding 

Most of EERE’s appropriation is 

available until expended, but a 

small portion is available for 

obligation in the first 2 years for 

program direction, which supports 

the EERE workforce. 

Account Name: Energy Efficiency and Renewable Energy 

(EERE)

National Priority: 270 (Energy)
Page 50 GAO-16-26 2013 Sequestration and Shutdown

Appendix II

Unobligated Balances

Factors Affecting the Size or Composition of Unobligated Balances

Unobligated balances in the Science account steadily increased from 

fiscal years 2012 through 2014. NASA officials attributed the growth in 

unobligated balances to challenges in implementing projects—which 

resulted in delayed obligations. For example, for fiscal year 2014, $68 

million of the $275 million in unobligated balances was for the Earth 

Venture project. NASA officials attributed delayed consideration of 

contract proposals, contract awards, and obligation of funds for this project 

to the government shutdown at the beginning of the fiscal year. Seven 

other projects accounted for $113 million in unobligated funds in fiscal 

year 2014. For example, appropriations for the Europa mission specified a 

funding increase to facilitate completing the project, but an unobligated 

balance occurred when the project was delayed pending a progress 

review. 

Despite the 2014 increase in unobligated balances described above, 

unobligated balances remained a small proportion of budgetary resources 

for the Science account from fiscal years 2012 through 2014. 

Figure 8: Unobligated Balances as a Percent of Budgetary Resources in NASA’s 

Science Account, Fiscal Years 2012-2014

Agency Estimation and Management of Unobligated Balances

At the start of the fiscal year, agency management asks each mission 

director to develop a month-by-month plan for obligating funds. 

Unobligated balances are then monitored by managers at the program 

and project level, who report data to the Chief Financial Officer (CFO). 

The Office of the CFO provides information to the agency monthly 

performance review meetings led by an Assistant Administrator, who 

reviews each

National Aeronautics 

and Space 

Administration (NASA)

Overview of Account

Mission and Goals of Account

The Science account provides 

funds for NASA's science mission, 

which is composed of the agency's 

Earth and space science programs: 

Earth Science, Planetary Science, 

Heliophysics, the James Webb 

Space Telescope, and 

Astrophysics. The Science Mission 

Directorate manages these 

programs, which seek to answer 

fundamental questions concerning 

the ways in which Earth's climate is 

changing; the comparison of Earth 

with other planets in the solar 

system and around other stars; the 

connections among the Sun, Earth, 

and heliosphere; and the origin and 

evolution of planetary systems, the 

galaxy, and the universe, including 

the origin and distribution of life in 

the universe. 

Account Name: Science

National Priority: 252 (Space flight, research, and supporting 

activities)
Page 51 GAO-16-26 2013 Sequestration and Shutdown

Appendix II

Account Name: Science

National Priority: 252 (Space flight, research, and supporting 

activities)

Unobligated Balances (continued)

account once a quarter. Officials reported that the Resource Management 

Division of each Mission Directorate (the Science Mission Directorate for 

the Science account) generates estimates for the current fiscal year based 

on past performance, plus known programmatic issues that may affect 

future performance. 

Agency Use of Unobligated Balances to Mitigate the Effects of Fiscal 

Year 2013 Sequestration or the Fiscal Year 2014 Government 

Shutdown

According to NASA officials, no unobligated balances were reprogrammed 

or otherwise used to mitigate the effects of the 2013 sequestration. NASA 

did not use unobligated balances from the Science account to continue to 

fund activities or operations during the government shutdown at the 

beginning of fiscal year 2014. 

National Aeronautics 

and Space 

Administration (NASA)

Overview of Account 

(continued)

Sources of Funding

The Science account is funded 

through annual appropriations and 

all funds are discretionary. 

Characteristics of Funding 

Funds are available for obligation 

for 2 years.
Page 52 GAO-16-26 2013 Sequestration and Shutdown

Appendix II

Unobligated Balances

Factors Affecting the Size or Composition of Unobligated Balances

According to State officials, unobligated balances in this account are 

driven by a number of factors, including delayed obligations resulting from 

the agency’s decision to wait until a full year funding appropriation is 

passed before making many final obligation decisions. Additionally, 

complex actions planned for the fourth quarter—such as procurements, 

interagency agreements, grants, and wage increases for local embassy 

staff—may be beyond the agency’s control, and may slip into the next 

fiscal year resulting in an unobligated balance. Officials also reported that 

another factor that affects unobligated balances is for the Worldwide 

Security Protection (WSP) program. For this program, a relatively large 

portion of funding is devoted to security contracts that have varying 

periods of performance. This funding can be subject to unexpected scope 

changes in response to overseas security threats. 

Officials reported that Consular and Border Security Programs (CBSP), 

which relies on offsetting collections from visa and passport applicants,

needs at least one quarter of funding to maintain operations. However, for 

fiscal year 2012, officials reported unobligated balances reached 42 

percent; in fiscal year 2013, they were 41 percent; and for fiscal year 

2014, 38 percent of the next year’s program expenditures. Officials 

explained that balances were often affected by economic factors and 

policy changes, such as an extension in how long a Chinese visa is valid,

which increased the number of applicants. Officials also said that some of 

the offsetting collections authorities have purpose restrictions, limiting the 

activities on which the fees may be spent. This, however, accounts for 

only a small proportion of the excess unobligated balances.

Figure 9: Unobligated Balances as a Percent of Budgetary Resources in the 

Diplomatic and Consular Programs Account, Fiscal Years 2012-2014

Department of State

Overview of Account

Mission and Goals of Account

D&CP is the Department of State’s 

primary operating account. It funds 

a broad range of activities, 

including operational support for 

U.S. embassies, consulates, and 

other diplomatic posts worldwide. 

Funds are allocated to four main 

categories: human resources, 

overseas programs, diplomatic 

policy and support, and security 

programs. This includes funding for 

CBSP and WSP. D&CP’s 

appropriation also includes fees 

collected for services to foreign 

audiences, such as library and 

motion pictures programs, 

educational advising and 

counseling programs, and other 

services. 

Account Name: Diplomatic and Consular Programs (D&CP)

National Priority: 153 (Conduct of foreign affairs)
Page 53 GAO-16-26 2013 Sequestration and Shutdown

Appendix II

Account Name: Diplomatic and Consular Programs

(D&CP)

National Priority: 153 (Conduct of foreign affairs)

Unobligated Balances (continued)

State officials within the Bureau of Consular Affairs said that they 

began drafting a plan in 2013 for managing and monitoring funding 

for each program within CBSP. According to officials, this plan will 

include a strategy on how unobligated balances will be tracked and 

managed to reach the identified target of 25 percent. Officials said 

that the plan is awaiting clearance by leadership and they anticipate 

that it will be finalized by June 2016. State officials also reported 

that they have taken steps to regulate and reduce unobligated 

balances. For example, officials reported that they delayed an 

increase to the Passport Security Surcharge to spend down existing 

unobligated balances. According to data provided by State, 

unobligated balances for the Passport Security Surcharge 

decreased from 95 percent of next year’s program expenditures in 

fiscal year 2012, to 72 percent in fiscal year 2014. 

Agency Estimation and Management of Unobligated Balances

According to officials, unobligated balances are reviewed at least 

monthly, and more frequently when needed. As part of this process, 

remaining unobligated balances are reviewed and plans for 

obligations are made based on those estimates. Officials said that 

some subaccounts may be monitored more frequently than others, 

such as the Overseas Contingency Operations (OCO) subaccount 

because of the sensitivity of the programs and activities it supports. 

Officials reported that future year unobligated balances are 

estimated using historical data and bureau projections based on 

planned activities.

Agency Use of Unobligated Balances to Mitigate the Effects of 

Fiscal Year 2013 Sequestration or the Fiscal Year 2014 

Shutdown

State notified the Office of Management and Budget and Congress 

of its intent to reprogram $64 million from the non-OCO Iraq war 

funds to other account activities to mitigate the effects of the 2013 

sequestration. According to officials, during the shutdown, State 

used unobligated balances from D&CP to continue to operate. 

However, no funds were reprogrammed to mitigate the effects of the 

government shutdown. 

Department of State

Overview of Account 

(continued)

Sources of Funding

The account receives annual 

appropriations, including 

appropriations for OCO, offsetting 

collections derived from services to 

the public for visas and passports, 

and reimbursements from other 

agencies. Virtually all of the funds 

in the account are discretionary; 

however the account does also 

include some mandatory funds. 

 

Characteristics of Funding 

The period of availability for 

funding in this account is no-year, 

multi-year and one-year. In fiscal 

year 2014, D&CP received

primarily one-year authority in its 

appropriation, with the authority to 

extend up to about 15 percent of 

the funds for an additional year. 
Page 54 GAO-16-26 2013 Sequestration and Shutdown

Appendix II

Unobligated Balances

Factors Affecting the Size or Composition of Unobligated Balances

Although the goal is to obligate balances as soon as possible, officials 

explained that a number of factors affect the composition of unobligated 

balances resulting in the significant unobligated balances, including 

approximately 57 percent of available budget authority in 2013, as shown 

below. Those factors included the completion of agency processes that

fulfill reporting requirements to both the Office of Management and Budget

and Congress. For example, State must (according to the Foreign 

Assistance Act) present spending plans to congressional appropriators on

assistance it proposes to provide to support international efforts to combat 

illicit narcotics production, including country specific information. Because 

officials said that it is agency policy to wait for confirmation before 

proceeding with those plans, as well as to wait for full-year appropriations 

before finalizing spend plans, they often are not able to obligate funds in 

the first fiscal year they are appropriated. 

Agency officials also noted that unobligated balances are affected by the 

need to respond to uncertain outside events. For example, in 2014, INL 

officials decided to hold some unobligated balances as a reserve to 

address uncertainties in Syria and Ukraine. 

Figure 10: Unobligated Balances as a Percent of Budgetary Resources in the 

International Narcotics Control and Law Enforcement Account, Fiscal Years 2012-

2014

Agency Estimation and Management of Unobligated Balances

According to officials, unobligated balances are managed through INL’s 14 

regional budget execution analysts who monitor budgets for specific 

countries and programs; this includes monitoring unobligated balances to 

ensure balances are not obligated before the agency has met all

Department of State

Bureau of International 

Narcotics and Law 

Enforcement Affairs (INL)

Overview of Account

Mission and Goals of Account

The INCLE account supports 

foreign assistance programs. This 

includes activities in foreign 

countries and international 

organizations to develop and 

implement policies and programs 

that strengthen institutional law 

enforcement and judicial 

capabilities, counter drug flows, 

combat transnational crime, 

establish and maintain the rule of 

law, and provide capacity building 

to nations encountering instability. 

Funds are obligated through bulk 

obligations to programs and, when 

specific requirements are identified, 

subobligations are made. 

Account Name: International Narcotics Control and Law 

Enforcement (INCLE)

National Priority: 151 (International development and 

humanitarian assistance)
Page 55 GAO-16-26 2013 Sequestration and Shutdown

Appendix II

Account Name: International Narcotics Control and Law 

Enforcement

National Priority: 151 (International development and 

humanitarian assistance)

Unobligated Balances (continued)

congressional reporting requirements. Through this process, estimates of 

remaining unobligated balances are continually revised as new obligations 

are made. 

Large balances, or ones that otherwise raise concern, are reviewed by the 

department at budget decision points such as enactment of 

appropriations. Officials said that future unobligated balance estimates are 

based on historical rates of obligation as well as on future plans for 

obligations. 

Agency Use of Unobligated Balances to Mitigate the Effects of Fiscal 

Year 2013 Sequestration or the Fiscal Year 2014 Government 

Shutdown

Officials reported that to maintain fairness among the countries that 

receive assistance, no unobligated balances in the INCLE account were 

used to mitigate the effects of the 2013 sequestration. Officials reported 

that unobligated balances were used to continue operations and activities 

during the October 2013 government shutdown; however, no balances 

were reprogrammed within the account during this time. 

Department of State

Bureau of International 

Narcotics and Law 

Enforcement Affairs (INL)

Overview of Account 

(continued)

Sources of Funding

Funds are available through annual 

appropriations, including 

appropriations for Overseas 

Contingency Operations (OCO). 

Funds in the account are 

discretionary.

Characteristics of Funding 

Funding is available to be obligated 

for 2 years. Funds initially obligated 

within this 2-year period remain 

available for obligation for another 

4 years pursuant to authority 

traditionally provided in the 

Department of State, Foreign 

Operations, and Related Programs 

Appropriations Act each year. 
Appendix III: Overview of Select Budget 

Information on Government-wide Unobligated 

Balances 

Page 56 GAO-16-26 2013 Sequestration and Shutdown

We analyzed unobligated balances across all federal budget accounts 

from fiscal years 2012 through 2014 to help provide a broader context to 

the unobligated balances in the eight selected accounts within the four 

agencies discussed in this report. We drew from data reported in our 

previous report on unobligated balances from fiscal years 2007 through 

2012 to supplement the new analysis conducted for this review.1

To describe the size and composition of unobligated balances 

government-wide, we analyzed the unobligated balances (1) as a 

proportion of total unexpended balances; (2) by category of spending—

discretionary, mandatory, or split; (3) by budget function; and (4) by 

agency.

Federal agencies reported unexpended balances—the sum of obligated

and unobligated balances—in 1,358 of 1,493 active budget accounts from 

fiscal year 2012 through 2014.2 Total unexpended balances fluctuated 

from $2.23 trillion in fiscal year 2012 to $2.27 trillion in fiscal year 2014. 

This represents an overall increase of approximately $41 billion with a 

decrease in 2013. About 91 percent of active accounts carried 

unobligated balances with total unobligated balances increasing from 

$788 billion to $872 billion during this period.

As shown in figure 11, unobligated balances were more than one-third of 

total unexpended balances from fiscal year 2012 through 2014, which is 

generally consistent with data from fiscal years 2007 through 2011.

 

1

GAO-13-798. 

2

Active accounts are accounts that, in any fiscal year during this period, had budget 

authority/outlays and/or unobligated balances. The total number of accounts listed 

includes accounts from all three branches of the federal government. Federal agencies 

reported these data through OMB MAX. A total of 135 active accounts did not report 

unexpended balances. 

Appendix III: Overview of Select Budget 

Information on Government-wide 

Unobligated Balances

Unobligated Balances 

as a Proportion of 

Total Unexpended 

Balances
Appendix III: Overview of Select Budget 

Information on Government-wide Unobligated 

Balances 

Page 57 GAO-16-26 2013 Sequestration and Shutdown

Figure 11: Unexpended Balances in Federal Budget Accounts, Fiscal Years 2007-

2014

Each budget account is assigned a category of spending—discretionary, 

mandatory, or split, which is a combination of both discretionary and 

mandatory. As shown in figure 12, mandatory accounts represent about 

50 percent of total unobligated balances in fiscal years 2012 through 

2014. From fiscal year 2009 through 2011 the share of unobligated 

balances in mandatory accounts was relatively stable at about 52 percent 

of total unobligated balances. This comes after a growth in the mandatory 

share of the balances from about 25 percent in fiscal year 2007 to about 

47 percent in fiscal year 2008.

The percentage of unobligated balances in split accounts remained at 

about 32 percent in fiscal years 2012 through 2014, which has been

generally consistent since 2010.

From fiscal years 2012 through 2014, unobligated balances in 

discretionary accounts were between approximately 16 and 19 percent of 

all unobligated balances. As shown in figure 12, this has been the case 

since 2010, before which discretionary balances represented higher 

Unobligated Balances 

by Category of 

Spending
Appendix III: Overview of Select Budget 

Information on Government-wide Unobligated 

Balances 

Page 58 GAO-16-26 2013 Sequestration and Shutdown

proportions of unobligated balances, including nearly 26 percent in fiscal 

year 2007.

Figure 12: Mandatory, Split, and Discretionary Accounts as a Share of Unobligated Balances, Fiscal Years 2007-2014

As shown in table 5, the three mandatory accounts with the largest 

amount of unobligated balances in fiscal year 2014 were more than 12 

times larger than the top three discretionary account balances.

Table 5: The Top Three Mandatory, Split, and Discretionary Accounts with 

Unobligated Balances in Fiscal Year 2014 (Dollars in Millions)

Funding Type

Budget Account 

(Department/Agency)

Unobligated 

Balance

Sum of Top 

Three Accounts 

Mandatory GSE Preferred Stock Purchase 

Agreements (Department of the 

Treasury)

258,050 313,377

Exchange Stabilization Fund 

(Department of the Treasury)

40,507

US Quota, International Monetary 

Fund (International Assistance 

Programsa

) 

14,820

Split Deposit Insurance Fund (FDIC) 50,837 119,609

Employees Life Insurance Fund 

(Office of Personnel Management)

42,623
Appendix III: Overview of Select Budget 

Information on Government-wide Unobligated 

Balances 

Page 59 GAO-16-26 2013 Sequestration and Shutdown

Funding Type

Budget Account 

(Department/Agency)

Unobligated 

Balance

Sum of Top 

Three Accounts 

Federal-aid Highways (Department of 

Transportation)

26,149

Discretionary Shipbuilding and Conversion, Navy 

(Department of Defense)

9,846 25,277

Public Transportation Emergency 

Relief Program (Department of 

Transportation)

7,767

Contributions to International Bank for 

Reconstruction and Development 

(International Assistance Programsa

) 

7,664

Source: GAO analysis of Office of Management and Budget (OMB) MAX data. | GAO-16-26

a

International Assistance Programs accounts are denoted separately from an agency or department 

designation in OMB MAX; however the accounts are administered by the Department of State. 

Each budget account appears in 1 of the 19 budget functions that best 

reflects its major purpose or important national need. These functions 

include income security, national defense, and transportation. Accounts 

under a particular budget function may support programs and activities at 

multiple agencies. For example, accounts that are categorized as within 

the “national defense” budget function may support activities at multiple 

agencies such as operations and maintenance at the Department of 

Defense, infrastructure protection at the Department of Homeland 

Security, and defense environmental cleanup at the Department of 

Energy.

As shown in figure 13, the majority of unobligated balances were in 

accounts classified under three budget functions: (1) commerce and 

housing credit, (2) international affairs, and (3) national defense. These 

three functions combined accounted for around 65 percent of unobligated 

balances in all budget accounts from fiscal years 2012 through 2014. This 

is consistent with data from fiscal years 2008 through 2011.

Unobligated Balances 

by Budget Function
Appendix III: Overview of Select Budget 

Information on Government-wide Unobligated 

Balances 

Page 60 GAO-16-26 2013 Sequestration and Shutdown

Figure 13: Share of Unobligated Balances by Budget Function, Fiscal Years 2007-2014

From fiscal years 2012 through 2014 and consistent with earlier years, 

the majority of unobligated balances were in eight agencies: Departments 

of Defense, Health and Human Services, Housing and Urban 

Development, State, Transportation, and the Treasury, and the Office of 

Personnel Management and the Federal Deposit Insurance Corporation 

(see figure 14). These eight agencies had between 81 and 83 percent of 

unobligated balances across all budget accounts from fiscal years 2012 

through 2014—approximately the same percentages since 2008. From 

2008 through 2014, the agencies combined together in the “all other” 

category represented between 16 percent and 20 percent of all 

unobligated balances.

Unobligated Balances 

by the Top Eight 

Agencies

a

“All Other” is composed of 12 other budget functions. Budget functions are coded with a three-digit 

number that directly correlates to a specific national priority. 
Appendix III: Overview of Select Budget 

Information on Government-wide Unobligated 

Balances 

Page 61 GAO-16-26 2013 Sequestration and Shutdown

Figure 14: Unobligated Balances by the Top Eight Agencies, Fiscal Years 2007- 2014

b

The Department of State and International Assistance Programs category includes other entities, 

such as the U.S. Agency for International Development, the Millennium Challenge Corporation, and 

the Peace Corps. 

a

“All Other” is composed of more than 100 departments/agencies such as the Department of 

Homeland Security and Social Security Administration. 
Appendix IV: Comments from the Department 

of Energy

Page 62 GAO-16-26 2013 Sequestration and Shutdown

Appendix IV: Comments from the 

Department of Energy
Appendix V: Comments from the Department 

of State

Page 63 GAO-16-26 2013 Sequestration and Shutdown

Appendix V: Comments from the Department 

of State 
Appendix V: Comments from the Department 

of State

Page 64 GAO-16-26 2013 Sequestration and Shutdown
Appendix VI: Glossary of Budget Terms

Page 65 GAO-16-26 2013 Sequestration and Shutdown

Apportionment: The action by which the Office of Management and 

Budget distributes amounts available for obligation, including budgetary 

reserves established pursuant to law, in an appropriation or fund account. 

An apportionment divides amounts available for obligation by specific 

time periods (usually quarters), activities, projects, objects, or a 

combination thereof. The amounts so apportioned limit the amount of 

obligations that may be incurred. An apportionment may be further 

subdivided by an agency into allotments, suballotments, and allocations.

Appropriation: Budget authority to incur obligations and to make 

payments from the Treasury for specified purposes. An appropriation act 

is the most common means of providing appropriations; however, 

authorizing and other legislation itself may provide appropriations.

Availability: Budget authority that is available for incurring new 

obligations.

Budget authority: Authority provided by federal law to enter into financial 

obligations that will result in immediate or future outlays involving federal 

government funds.

Budget function: The functional classification system is a way of 

grouping budgetary resources so that all budget authority and outlays of 

on-budget and off-budget federal entities and tax expenditures can be 

presented according to the national needs being addressed. National 

needs are grouped in 17 broad areas to provide a coherent and 

comprehensive basis for analyzing and understanding the budget.

Discretionary spending: Budget authority that is provided in and 

controlled by appropriation acts other than those that fund mandatory 

programs.

Expenditure: The actual spending of money; an outlay.

Expired budget authority: Budget authority that is no longer available to 

incur new obligations but is available for an additional 5 fiscal years for 

disbursement of obligations properly incurred during the budget 

authority’s period of availability. Unobligated balances of expired budget 

authority remain available for 5 years to cover legitimate obligation 

adjustments, or for obligations properly incurred during the budget 

authority’s period of availability that the agency failed to record.

Appendix VI: Glossary of Budget Terms
Appendix VI: Glossary of Budget Terms

Page 66 GAO-16-26 2013 Sequestration and Shutdown

Obligated balance: The amount of obligations already incurred for which 

payment has not yet been made.

Obligation: A definite commitment that creates a legal liability of the 

government for the payment of goods and services ordered or received, 

or a legal duty that could mature into a legal liability by virtue of actions on 

the part of the other party beyond the control of the United States. For 

example, an agency incurs an obligation when it places an order, signs a 

contract, awards a grant, or purchases a service.

Mandatory (or direct) spending: Budget authority that is provided in 

laws other than appropriation acts and the outlays that result from such 

budget authority. Mandatory spending includes entitlement authority (for 

example, the Food Stamp, Medicare, and veterans’ pension programs), 

payment of interest on the public debt, and nonentitlements such as 

payments to states from Forest Service receipts.

Multi-year funds: Budget authority available for a fixed period of time in 

excess of 1 fiscal year. This authority generally takes the form of 2-year, 

3-year, and so forth availability, but may cover periods that do not 

coincide with the start or end of a fiscal year.

No-year funds: Budget authority that remains available for obligation for 

an indefinite period of time.

Reappropriation: Legislation permitting an agency to obligate, whether 

for the same or different purposes, all or part of the unobligated portion of 

budget authority that has expired or would otherwise expire if not 

reappropriated.

Reprogramming: Shifting funds within an appropriation or fund account 

to use them for purposes other than those contemplated at the time of 

appropriation; it is the shifting of funds from one object class to another 

within an appropriation or from one program activity to another.

Rescission: Legislation enacted by Congress that cancels the availability 

of budget authority previously enacted before the authority would 

otherwise expire.

Spendout rate: The rate at which budget authority becomes outlays in a 

fiscal year.
Appendix VI: Glossary of Budget Terms

Page 67 GAO-16-26 2013 Sequestration and Shutdown

Transfer: Shifting of all or part of the budget authority in one 

appropriation or fund account to another. Agencies may transfer budget 

authority only as specifically authorized by law. 

Unexpended balance: The sum of obligated and unobligated balances.

Unobligated balance: The portion of obligational authority that has not 

yet been obligated. For an appropriation account that is available for a 

fixed period, the budget authority expires after the period of availability 

ends. However, its unobligated balance remains available for 5 additional 

fiscal years for recording and adjusting obligations properly chargeable to 

the appropriations period of availability. For example, an expired, 

unobligated balance remains available until the account is closed to 

record previously unrecorded obligations, or to make upward adjustments 

in previously under recorded obligations (such as contract modifications 

properly within scope of the original contract). At the end of the fifth fiscal 

year, the account is closed and any remaining balance is canceled. For a 

no-year account, the unobligated balance is carried forward indefinitely 

until (1) specifically rescinded by law, or (2) the head of the agency 

concerned (or the President) determines that the purposes for which the 

appropriation was made have been carried out, and disbursements have 

not been made from the appropriation for 2 consecutive years.1

 

1

For the purposes of this report, we focused on unobligated balances from multi-year and 

no-year appropriations, which remain available for new obligations. Unless otherwise 

specified, balances reported are derived from the “Unexpired unobligated balance, end of 

year” line associated with the budget account in the Appendix to the President’s Budget.
Appendix VII: GAO Contact and Staff 

Acknowledgments

Page 68 GAO-16-26 2013 Sequestration and Shutdown

Susan J. Irving, (202) 512-6806 or irvings@gao.gov. 

In addition to the contact named above, Janice Latimer, Assistant 

Director; Mary C. Diop; Steve Berke; and Shelby Kain made major 

contributions to this report. Also contributing to this report were Shari 

Brewster, Deirdre Duffy, John Mingus Jr., Robert Robinson, and Cynthia 

Saunders. In addition, the following individuals provided programmatic 

and subject matter expertise: Johana Ayers, Allison Bawden, Carol Henn, 

Jon Ludwigson, Christine Kehr, Farahnaaz Khakoo, Thomas James, 

Judith McCloskey, Leah Q. Nash, Shelby Oakley, Michelle Sager, Robert 

Sanchez, Roger Stoltz, and Matthew Ullengren.

Appendix VII: GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments

(451130)
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