Supplemental Appropriations: Opportunities Exist to Increase Transparency and Provide Additional Controls
Published: 2008-01-31T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Supplemental appropriations laws (supplementals) are a tool for policymakers to address needs that arise after the fiscal year has begun. Supplementals provide important and necessary flexibility but some have questioned whether supplementals are used just to meet the needs of unforeseen events or whether they also include funding for activities that could be covered in regular appropriations acts. GAO was asked to evaluate (1) trends in supplemental appropriations enacted from fiscal years 1997-2006 and (2) steps that could be taken to increase transparency and establish additional controls over emergency supplemental appropriations. Also, GAO consulted with budget experts to discuss options for reform.
section_title: What GAO Found
paragraphs: The use of supplementals has increased over the last several years, largely as a result of an increase in Department of Defense (DOD) funding and the use of supplementals to provide that funding for activities such as the Global War on Terrorism (GWOT). Over the 10-year period from fiscal year 1997 through fiscal year 2006, supplemental appropriations provided about $612 billion ($557 billion net of rescissions) in new gross budget authority, a five-fold increase over the previous 10-year period. Ninety-five percent of the total supplemental funds were appropriated to 11 departments, with DOD receiving nearly 60 percent of the total. Further, an analysis of the type of emergency prompting the need for the supplemental shows that defense-related emergencies received over 50 percent of the emergency-designated funds. In comparison, 28 percent was to respond to natural or economic disasters and 16 percent went to antiterror, security, and post-9/11 activities. International humanitarian assistance, pandemic influenza, and other activities comprised 3 percent of the total emergency-designated supplemental funds provided over the 10-year period. The majority of the supplemental funds appropriated over this 10-year period were designated as emergency. Emergency-designated funds do not have to compete for scarce resources that are constrained by budget controls. Although Congress has specified criteria for the emergency designation in Budget Resolutions, these criteria are not self-executing and there are limited screening and enforcement processes. The increased use of supplementals raises questions about the current incentives and controls surrounding their use. GAO reviewed emergency-designated supplementals and found provisions that were not clearly consistent with emergency designation criteria or did not contain sufficient information for us to make a determination. Also, GAO identified provisions that raise questions about whether supplemental appropriations bills can become vehicles for funding some activities that could be covered in the regular budget and appropriations process. For example, we found $710 million in emergency-designated provisions that appeared to be unrelated to the event/issue(s) that may have prompted the supplemental. In addition, we found that 35 accounts received supplemental appropriations in at least 6 of the 10 years studied, totaling over $375 billion. Twenty-one of these accounts were in DOD and the gross budget authority granted to these 21 accounts ($258 billion) comprised over 40 percent of the total gross budget authority in the supplemental appropriations enacted over the studied period. Finally, over one-third of the supplemental appropriations enacted were available until expended ("no-year" funds). Such no-year funds provide agencies with important flexibility but do not prompt the annual or periodic Congressional oversight typical of funds that are available for a fixed amount of time. If the use of supplemental appropriations is to be limited to addressing unforeseen needs that arise suddenly after the start of a fiscal year, additional controls and increased transparency are needed. Budget experts GAO consulted generally agreed reform was needed but differed on how best to achieve this.

section_title: Letter
paragraphs: Experience shows that the federal government will need to respond to  some level of emergency during a fiscal year. The question is not whether  there will be emergency spending, but rather at what point in the budget  process these funds will be requested and provided. Although some  funding for emergencies is provided through the regular appropriations  process, supplemental appropriations laws (supplementals) are a tool  available to policymakers to address needs that arise after annual  appropriations have been enacted. Just as not all emergency funding is  provided through supplementals, not all supplementals are for  emergencies. Within a single supplemental appropriations law, some funds  may be designated as emergency and others may not.
Supplementals provide important and necessary flexibility, but some have  questioned whether supplementals are used just to meet the needs of  unforeseen events or whether they also include funding for activities that  could be covered in regular appropriations acts. A Congressional  Research Service (CRS) report concluded that from the expiration of the  Budget Enforcement Act of 1990 (BEA) at the end of the fiscal year 2002  through fiscal year 2005, supplementals net of rescissions increased the  budget deficit by almost 25 percent per year. Some experts have also  suggested that the increased use of supplementals is symptomatic of  breakdowns in the regular, annual budget and appropriations process  resulting in greater use of supplementals to support federal programs on  an ongoing basis. Both because of the nation’s long-term fiscal challenge  and the need for reexamination of the government’s activities, it is  increasingly important to consider as much of the cost of government as  possible through the regular budget and appropriations process, which  allows for fuller debate about the trade-offs between competing claims.
In light of the need for greater budget transparency and improvements in  the budget process overall, you asked that we examine the use of  supplemental appropriations. We were asked to evaluate (1) trends in  supplemental appropriations enacted from fiscal years 1997–2006 and (2)  steps that could be taken to increase transparency and establish additional  controls over emergency supplemental appropriations.
To address the first objective, we developed a database that contained  information from the 25 supplemental appropriations laws that were  enacted from fiscal years 1997–2006 and information from the  Congressional Budget Office (CBO) scoring reports that accompanied  these laws. The database contained both general information about the  laws—such as the public law number and the date of enactment—and  information about individual provisions within the laws such as the  amount of new budget authority granted and the department/agency and  account receiving the funds. For emergency-designated provisions, we  used the provision language and/or other information in the law to  determine what type of emergency or emergencies may have prompted the  funding provision. The categories we developed for this analysis were as  follows: Antiterrorism and Security, Defense-Related, International  Humanitarian Assistance, Natural and/or Economic Disasters (Domestic),  Pandemic Influenza, September 11, 2001, Other, and Not Specified. In  limited cases, these categorizations required some professional judgment  on the part of the analyst.
To address the second objective, we reviewed relevant literature to  identify the rules and guidance that were in place in Congress to govern  the use of supplemental appropriations from fiscal years 1997–2006. Then,  we conducted a content analysis by having two GAO analysts  independently review the information on each emergency-designated  provision in the database to analyze consistency with Congressionally  specified emergency-designation criteria and determine whether the  provision was related to emergency event(s) that may have prompted the  supplemental. For any provision where the two did not come to the same  conclusion, a third GAO analyst reviewed the information and resolved the  discrepancy. We also drew on our analysis of the database and reviewed  existing recommendations and proposals from GAO, CBO, CRS, and other  sources to develop options for addressing the issues we identified. We  then sought opinions from recognized experts in budgeting practices at  the federal level from organizations, such as the Center on Budget and  Policy Priorities, Center for American Progress, Committee for a  Responsible Federal Budget, Committee for Economic Development, and  CBO, as well as knowledgeable former Congressional staff, on these  options. See appendix I for more details on our scope and methodology.
We conducted this performance audit from November 2006 to January  2008 in accordance with generally accepted government auditing  standards.
subsections: section_title: Background
paragraphs: Supplementals provide additional budget authority for government  activities for the fiscal year already in progress, over and above any  funding provided in regular appropriations laws, continuing resolutions, or  omnibus appropriations. The President may also submit to Congress  proposed supplemental appropriations the President decides are  necessary because of laws enacted after the submission of the budget or  that are in the public interest. Within a single supplemental appropriations  law, some funds may be designated as emergency and others may not.  Emergency-designated funds do not have to compete for scarce resources  that are constrained by budget controls.
Figure 1 shows the amount of supplemental gross budget authority (i.e.,  before rescissions) from fiscal year 1981 through fiscal year 2007.  Although our review focused on supplementals enacted from fiscal year  1997 through fiscal year 2006, we included data from fiscal year 1981  through fiscal year 2007 in this figure to provide context.
From fiscal year 1981 through fiscal year 1999, fiscal year 1991’s nearly $50  billion stands out even in the absence of a consistent pattern. Most of the  $48.6 billion in supplemental appropriations provided that year was for the  Gulf War. From fiscal year 2000 through fiscal year 2005, however, the  amount grew steadily to a peak of over $160 billion. The amount in 2006  declined to just over $128 billion. For fiscal year 2007, just over $120  billion in supplemental gross budget authority was appropriated.
As we previously noted, not all emergency funding is provided through  supplementals. CBO has noted that until 1999 virtually all emergency- designated funds were provided as emergency-designated supplemental  budget authority in response to natural disasters or international crises.  But in the 1999 omnibus appropriation act more than $21 billion in  appropriations were designated as emergencies. That number rose to $31  billion in 2000. This change illustrates two points of significance to this  study: (1) a change in the way the emergency designation is used and (2)  the fact that emergency funding can be provided through legislative acts  other than supplementals. Although this report focuses on supplementals  and so does not look at emergency-designated funds in regular  appropriations, their existence emphasizes the fact that the decision on  whether to use supplementals and the decisions regarding the emergency  designation are separate.
From fiscal years 1991 through 2002, appropriations were governed by the  provisions of the Budget Enforcement Act of 1990 (BEA), which  Congress and the President adopted in November 1990 as part of a  multiyear budget agreement. The BEA established statutory limits on  discretionary spending coupled with a “pay-as-you-go” (PAYGO)  requirement designed to ensure that new legislation affecting mandatory  spending or tax revenues did not increase the deficit. The discretionary  spending limits applied to both budget authority and outlays. If the  discretionary appropriations enacted for a given year caused any of the  caps to be exceeded, the President had to order a sequestration of funds in  the category of spending in which the breach occurred.
The BEA did recognize that there would be emergencies for which  Congress and the President would want to provide funds over and above  the amounts envisioned in the discretionary spending caps and provided a  kind of “safety valve.” If a provision was designated as “emergency” by  both the President and Congress, the discretionary spending caps were  raised for both the budget authority and outlays associated with the  emergency spending (this is sometimes referred to as being exempted  from the caps). Thus, supplemental appropriations designated as  emergency spending did not cause a breach of the caps, did not trigger a  sequestration, and were not required to be offset with a rescission. In  addition, BEA treated all incremental costs associated with Operation  Desert Shield as if they were designated emergency without requiring  further action by Congress and the President. Under the BEA,  nonemergency supplementals were subject to the discretionary spending  caps. If a nonemergency supplemental under consideration by either the  House or the Senate would have exceeded the amount allocated to the  applicable budget function under the budget resolution, the supplemental  was subject to a point of order. In practice, however, such points of order  generally were not raised. In some cases, supplemental appropriations  have been protected with waivers of the points of order in both the House  and the Senate.
Although most budget enforcement mechanisms expired in fiscal year  2002, Congress generally has included overall limits on discretionary  spending and exemptions for emergency-designated funding in its Budget  Resolutions. In addition, the Budget Resolutions for fiscal years 2005 and  2006 provided exemptions for all appropriations related to overseas  contingency operations for the Global War on Terrorism.
section_title: Increased Use of Supplementals is Largely Attributable to Defense Funding
paragraphs: As figure 1 showed, the use of supplementals has increased over the last  several years. Over the 10-year period from fiscal year 1997 through fiscal  year 2006, 25 supplemental appropriations laws were enacted providing  about $612 billion ($557 billion net of rescissions) in new gross budget  authority. In contrast, during the 10 years immediately preceding this  period, $126 billion in gross budget authority ($86 billion provided net of  rescissions) was provided in 39 supplemental appropriations acts. The  majority of the supplemental funds provided from fiscal years 1997  through 2006 received an emergency designation.
Ninety-five percent of the total supplemental funds were appropriated to  11 departments, with the DOD receiving nearly 60 percent of the total (see  fig. 2 for the distribution). In comparison, just over 14 percent of the total  was appropriated to the Department of Homeland Security (DHS), with  other departments receiving 5 percent or less of the total supplemental  funds.  Factoring in rescissions during the same time period shows that  DOD received the most supplemental funds on both a gross and net basis.  Ten percent of the total funds rescinded through supplementals over this  10-year period were rescinded from DOD. In contrast, 43 percent of the  funds rescinded through supplementals were rescinded from DHS. When  the emergency-designated provisions were analyzed by the type of  emergency prompting the need for the supplemental, not surprisingly,  defense-related emergencies received over 50 percent of the funds.
As figure 3 shows, during fiscal years 1997–2006 the vast majority of  supplemental appropriations were emergency designated— over $511  billion of the $612 billion in gross supplemental budget authority. Fiscal  year 2003 stands out with a large amount of funds that were not  emergency designated, primarily targeted to war-related efforts. The lack  of emergency designation for these funds could have been the result of the  close timing between the supplemental request and the introduction of the  fiscal year 2004 Budget Resolution. The Budget Resolution was written to  allow for the war-related supplemental. Supplemental funding for similar  activities was emergency designated in later years. Although funds that are  not emergency designated do not receive any special budgetary treatment,  they may receive less scrutiny than appropriations made during the  regular budget process.
As shown in figure 4, more than 50 percent ($270 billion) of the  emergency-designated supplemental funds were appropriated for defense- related activities. In comparison, 28 percent was directed to respond to  natural or economic disasters and 16 percent went to antiterror, security,  and post-9/11 activities. International humanitarian assistance, pandemic  influenza, and other activities comprised 3 percent of the total emergency- designated supplemental funds provided over the 10-year period we  studied.
section_title: Additional Controls Could Reduce the Use of Supplementals and Increase Opportunities for Oversight
paragraphs: Our analysis indicates that there are a number of issues to be addressed if  the use of supplementals is to be limited to needs identified after the  beginning of the fiscal year. Although Congress has specified criteria for  the emergency designation in Budget Resolutions, these criteria are not  self-executing and there are limited screening and enforcement processes.  In our review of emergency-designated supplementals, we found  provisions that were not clearly consistent with these criteria as well as  provisions that did not contain sufficient information for us to make a  determination. We also found that provisions in supplemental  appropriations were not always related to the emergency events that may  have prompted the supplemental, which raises questions about the  potential use of supplementals to fund items that could have been  included in the regular budget and appropriations process. In addition, we  found that a number of accounts are regularly funded through  supplementals, which may indicate that they are being funded through  supplementals in lieu of the regular budget and appropriations process.  Finally, we found that over one-third of the supplemental appropriations  enacted were available until expended (referred to as “no-year” funds).  Such funds provide agencies with great flexibility but do not prompt the  annual or periodic Congressional review and reconsideration typical of  funds that are available for a limited amount of time.
subsections: section_title: Emergency-Designation Criteria Are Not Self- Executing and May Not Always Be Applied
paragraphs: The term “emergency” is not defined in budget process law. However, in a  1991 report to Congress, the Office of Management and Budget (OMB)  proposed what it described as a neutral definition of “emergency  requirement,” and Congress has included this definition in its Budget  Resolutions. The definition requires that for something to qualify as an  “emergency” all five of the following criteria must be met:    a necessary expenditure (an essential or vital expenditure, not one that  is merely useful or beneficial);    sudden (coming into being quickly, not building up over time);    urgent (a pressing and compelling need requiring immediate action);    unforeseen (not predictable or seen beforehand as a coming need,  although an emergency that is part of an overall level of anticipated  emergencies, particularly when estimated in advance, would not be  “unforeseen”); and    not permanent (the need is temporary in nature).
These emergency criteria, modified slightly, have appeared in several  proposed budget process reform bills. Although none of the proposed  reform bills have been enacted, Congress incorporated the emergency  criteria into its Concurrent Budget Resolution in years 2004, 2005, and  2006. In 2003, there was no Concurrent Budget Resolution. We interpreted  the continued appearance of the criteria as a statement of Congress’  general acceptance of the definition.
Critics of the use of the emergency designation cite numerous examples of  funding designated as emergency that they believe meet none of the  criteria listed above. In our review of emergency-designated supplemental  provisions enacted from fiscal years 1997 through 2006, we found  provisions that were not clearly consistent with these criteria as well as  provisions that did not contain sufficient information for us to make a  determination. These provisions totaled over $31 billion—or about 5  percent of the supplemental appropriations in the 10-year period.  Specifically, we found 26 provisions with over $6 billion of the over $500  billion in emergency-designated supplemental funds that stood out as not  being clearly consistent with the emergency-designation criteria of  “sudden” and “unforeseen.” Most of these funds were appropriated in  preparation for a potential emergency—the threat of pandemic influenza.  While we do not question the importance or urgency of the pandemic  work, applying the emergency designation to preparation for future events  does raise questions regarding the application of the “sudden” or  “unforeseen” criteria. The remaining funds were primarily provided for  research and development activities. Although these are a relatively small  portion of total supplemental funding, these examples raise questions  about the credibility of the emergency-designation criteria in the budget  enforcement process.
In addition, nearly $25 billion was provided in emergency-designated  provisions without sufficient explanation for us to determine their  consistency with the emergency-designation criteria. Without further  explanation in individual provisions as to what prompted the emergency  designation, the use of emergency-designated supplemental appropriations  for such activities reduces the transparency of the emergency designation.
As we have previously reported, since fiscal year 2002 defense-related  funds for GWOT have generally been provided as emergency-designated  funds in either supplementals or a separate title (Title IX) of annual  defense appropriations acts. Some have questioned the use of the  emergency designation for the funds provided for the ongoing military  operations related to GWOT—noting that it is problematic for an ongoing  event to be considered “sudden” or “unforeseen.” However, we do not  address this in our analysis, because Congress has provided that some of  the funds for overseas contingency operations related to GWOT can be  designated emergency and are exempt from certain points of order and  other budget enforcement provisions. Proponents of the current approach  note that it avoids inflating DOD’s “baseline” budget, while including some  funds in the regular appropriations process. Indeed the question here is  more whether these funds should be provided through supplementals or  through the regular budget and appropriations process, not whether they  are designated as emergency. We have previously encouraged the  Administration to include known or likely projected costs of ongoing  operations related to GWOT within DOD’s base budget requests. Whether  designated emergency or not, continuing to fund GWOT through  supplementals reduces transparency and avoids the necessary  reexamination and discussion of defense commitments and funding trade- offs.
section_title: Provisions in Supplemental Appropriations Were Not Always Related to Emergency Events That May Have Prompted the Supplemental
paragraphs: Supplemental appropriations provide funds outside the regular, annual  budget and appropriations process, typically in response to some need,  event, or emergency that may arise after the fiscal year has begun. Unlike  regular appropriation bills, which are under the jurisdiction of a single  appropriations subcommittee in the House and the Senate, supplemental  appropriations may include items under the jurisdiction of many  subcommittees, with varying purposes and levels of urgency. In  considering supplementals, appropriators must grapple with issues of  grouping disparate items, considering emergency and nonemergency items  together, and determining when requests form enough of a “critical mass”  to warrant going forward with a supplemental appropriation bill. This  raises two issues that were confirmed in our analysis.
First, supplementals sometimes contain a mix of emergency-designated  and nonemergency-designated provisions.  Over the 10-year period we  examined, 8 of the 25 supplemental appropriations laws that were enacted  combined emergency-designated funding with that which was not so  designated. In total, over $11 billion of the over $279 billion provided in  these laws was not designated as emergency. Emergency-designated  provisions may necessarily be on a fast track—and therefore receive less  scrutiny—to facilitate a rapid response to some emergency event.  Meanwhile, the items that are not emergency designated may benefit from  the urgency of the legislation by avoiding the scrutiny and trade-offs that  are inherent in the regular budget and appropriations processes.
Second, our analysis showed that some supplementals contain emergency- designated provisions not related to the event/issue(s) that may have  prompted the need for the supplemental. From fiscal years 1997 through  2006, over $710 million was provided in emergency-designated provisions  found to be unrelated to the emergency that may have prompted the  supplemental. Some of these appeared to be for other emergencies and  some for activities for which the emergency nature was unclear. For  example, $9 million in drought relief was provided in a law entitled  “Emergency Supplemental Appropriations Act for Defense, the Global War  on Terror, and Hurricane Recovery, 2006.” In another example, the Coast  Guard received $110 million for a Great Lakes Icebreaker replacement as  part of a $578 million appropriation for the Coast Guard in a section of law  entitled “Kosovo and Other National Security Matters.” Although these  sums are small in terms of the aggregate budget, they may be significant  for a given agency or program. In addition, over $12 billion were provided  in provisions in which the relationship to the event/issue(s) that may have  prompted the supplemental was unclear. For example, one section of a  law contained provisions with funding for a myriad of activities—including  activities related to stemming illegal immigration, international health  programs, and several highway and rail improvement projects—that did  not provide information to determine the relationship to the event/issue(s)  that prompted the need for “emergency” funding. The appearance of these  provisions in supplemental appropriations raises the question of whether  supplemental appropriations bills can become vehicles for funding some  programs or activities while avoiding the greater scrutiny and trade-offs  that occur in the regular appropriations process.
section_title: Some Accounts Received Supplemental Funding on a Recurring Basis
paragraphs: Although some supplementals are clearly necessary to provide for costs  that were not contemplated in the regular budget and appropriations  process, many people suspect that the availability of supplemental  appropriations as a funding vehicle may contribute to the underfunding of  some programs in the annual budget and appropriations process and  subsequent funding through supplementals. For activities that regularly  receive emergency-designated supplemental appropriations, there can be  an incentive to provide funding in a supplemental rather than in the  regular appropriations process where these activities would have to  compete with others for limited resources in trade-off decisions. Even if  the funds were emergency designated, including them in the regular  budget and appropriations process provides greater transparency. When  full funding information is not included in the regular budget and  appropriations process, it understates the true cost of government to  policymakers at the time decisions are made and steps can still be taken to  control funding, which is even more important in a time of constrained  resources.
In our review of supplementals over the 10-year period, we found that 35  accounts received supplemental appropriations in at least 6 of the 10 years  studied, totaling over $375 billion. The majority of these accounts fell  within DOD. Table 1 details these accounts, the department in which the  accounts reside, and the total new budget authority the account received  over the studied 10-year period. DOD had 21 accounts that received  supplemental funds in at least 6 out of the 10 years in question. In addition,  the gross budget authority granted to these 21 DOD accounts ($258 billion)  comprised over 40 percent of the total gross budget authority in  supplemental appropriations enacted over the studied period. Overall, the  35 accounts receiving funds on a recurring basis accounted for 61 percent  of the gross supplemental budget authority over the 10-year period.
The Federal Emergency Management Agency’s (FEMA) Disaster Relief  account repeatedly receives emergency-designated funds through both  supplemental appropriations and the regular annual appropriations  process. Funding for FEMA’s Disaster Relief account is shown in table  2. This analysis shows that on average the appropriations FEMA receives  through regular appropriations are less than the average amount received  through supplemental appropriations each year. Even when extraordinary  events such as Katrina and 9/11 are removed, the supplemental  appropriations are still of a significant size relative to the regular annual  appropriations.
The Department of the Interior’s Wildland Fire Management account also  receives funds through regular and supplemental appropriations. This  account, like FEMA’s Disaster Relief account, received supplemental  funding in at least 6 of the 10 years studied. Regular budget requests for  fire suppression activities are based on a historical 10-year average of  suppression expenditures adjusted for inflation. Previous GAO work has  found that these estimates often fall short of actual costs. In addition to  funds provided through the regular budget and appropriations process, the  Wildland Fire Management account received at least $936 million in  supplemental appropriations over the studied 10-year period.
In FEMA’s case, the imbalance between the amounts of appropriations  provided through the annual and supplemental processes is by design.  However, the fact that the imbalance exists even with the removal of  extraordinary events may indicate a need to revisit how much is provided  in the annual process. We have previously reached a similar conclusion in  regards to Wildland Fire Management and the same may be true for other  programs that receive supplemental funds on a recurring basis. Providing  more in the regular appropriations process could result in less funding  through supplementals. Again, when funds are regularly provided via  supplemental appropriations, the true cost of government is not fully  transparent in the regular appropriations process. Therefore, decision  makers may not have full information when allocating resources.
section_title: While No-Year Funds Provide Flexibility, They May Also Limit Periodic Oversight
paragraphs: Given the timing of the budget process and the combination of the need to  provide funds promptly with the desire that they be spent in a thoughtful  and targeted manner, it is understandable that supplemental funds would  need to be available beyond the current fiscal year. Indeed, in the cases of  some emergency events it is likely that funding will need to be available  for multiple years. Some funds are available until expended (referred to as  “no-year” funding). Over the 10-year period we studied, over one-third of  the supplemental appropriations provided (about $209 billion) were  available for obligation until expended. These no-year funds provide  flexibility but also limit opportunities for oversight and control. The  expiration date of single or multiyear funds provides an automatic  incentive for revisiting program needs. If the need for funding for a  specific emergency continues for several years, it can be argued that such  funding subsequently could be considered in the regular budget and  appropriations process. No-year funding is available indefinitely and does  not prompt annual or periodic Congressional oversight.
section_title: Options to Control the Use of Emergency Supplementals
paragraphs: We have identified four proposals that could help increase controls over  and transparency of the use of supplementals. These proposals are  intended to ensure the following: (1) emergency-designated provisions  meet established criteria, (2) emergency supplementals do not become the  vehicle for items that do not require the rapid enactment demanded to  respond to an emergency event, (3) supplementals are not used where the  regular budget and appropriations process should suffice, and (4) a  balance exists between flexibility and oversight with regard to the time  availability of funds. We consulted individuals with expertise in the budget  and appropriations process and reform proposals to obtain opinions on  the options that follow. These experts generally agreed that reform was  needed but differed on how best to achieve this. Most of the experts  suggested that the increased use of supplementals is symptomatic of  breakdowns in the regular process—which has resulted in reliance on  supplementals as a way to provide funding for federal activities. Given  this, they expressed doubts about the likelihood of any reform unless a  way was found to return to some “regular order” for the budget and  appropriations process. In general they expressed a desire to reduce the  complexity of the process and so preferred options that did not add  significant procedural hurdles.  Most agreed that some limitations on the  availability of funds—i.e., a turn away from “no-year” funds—made sense.
subsections: section_title: Codify Emergency- Designation Criteria and Establish New Mechanisms for Enforcement
paragraphs: The frequent inclusion of the emergency-designation criteria in Budget  Resolutions would seem to imply Congressional adoption of these criteria.  However our review found some cases where provisions were not clearly  consistent with the emergency-designation criteria and many cases where  provisions did not contain sufficient information for us to make a  determination. These cases raise questions about the credibility of the  emergency-designation criteria in the budget enforcement process. The  fact that they are in resolutions and not in law may affect the way they are  treated. Therefore, codifying these criteria as an amendment to the  Congressional Budget Act should be considered. However, most of the  budget experts we consulted believed this would make little difference.
Whether or not the criteria are codified, there are a variety of enforcement  approaches that could help decision makers to better weigh priorities and  assess trade-offs. For example, currently the criteria in Budget Resolutions  are not self-enforcing in that they do not require affirmative action to move  forward. Legislative language that has an emergency designation is subject  to a point of order; it requires a Member (or Members) to make a motion  to strike such a provision. This step is rarely taken; if the point of order is  raised and sustained, then the provision making the emergency  designation is stricken and may not be offered as an amendment from the  floor. Congress could flip the default—requiring an affirmative vote to  provide an emergency designation. Some of the budget experts we  consulted saw merit in this idea, saying it might result in greater visibility  and transparency in the process. Others thought it would have little  impact. Two suggested retaining the current system but increasing the  number of votes needed to overturn or waive any point of order. Another  suggested that the point of order be more narrowly targeted—that it strike  the emergency designation while leaving the funding provision in the bill.  Depending on the statutory or Budget Resolution-imposed spending limits,  such a system could require the funding to be offset—i.e., to have trade- offs considered more explicitly.
A related idea would be to require that a statement or narrative  justification describing how the provision meets the emergency criteria  accompany any provisions carrying the emergency designation.  Absent  such a justification, the provision would be out of order and could not be  considered without an affirmative vote.  Provisions with accompanying  justifications could still be challenged on substantive grounds, but they  would not be subject to a point of order on procedural grounds.
Another approach might be to require explicit review of all emergency- designated provisions (and proposed amendments that carry such a  designation) by a special House or Senate “Supplementals Subcommittee”  made up of the leadership of the appropriations subcommittees—or their  senior designees—in the relevant body. This subcommittee could provide  some consistency in the application of the emergency criteria. A number  of the budget experts whom we consulted found this worth exploring; a  few said it would be important to find a way to assure prompt  consideration of emergency needs. This subcommittee might require that  proposals be accompanied by a narrative justification of how a proposal  meets the emergency criteria. One of the experts suggested the rule might  be that if the Supplementals Subcommittee designated funds as  “emergency” and provided an explanation of how the criteria were met,  then there would be no point of order against the provision or its  designation as emergency. This would not, of course, eliminate the ability  of a Member to challenge the provision on substantive grounds.
section_title: Separate the Consideration of Emergency and Nonemergency Items
paragraphs: In considering supplementals, appropriators must grapple with issues of  grouping disparate items, considering emergency and nonemergency items  together, and determining when requests form enough of a “critical mass”  to warrant going forward with a supplemental appropriations bill. This  raises two issues that were confirmed in our analysis.  First,  supplementals sometimes contain a mix of emergency-designated and  nonemergency-designated provisions. Emergency-designated provisions  may necessarily be on a fast track—and therefore receive less scrutiny—to  facilitate a rapid response to some emergency event. Meanwhile, those  provisions that are not emergency designated may benefit from the  urgency of the fast-track legislation by avoiding the scrutiny and trade-offs  that are inherent in the regular budget and appropriations process.  Second, our analysis showed that some supplementals contain emergency- designated provisions not related to the event/issue(s) that may have  prompted the need for the supplemental. This raises questions as to  whether “emergency” supplementals are not always used just to meet the  needs of unforeseen emergencies but also include funding for activities  that could be covered in regular appropriations acts, if funded at all.
To address the first of these issues, Congress could consider establishing  two tracks for supplemental appropriations: one for emergencies and one  for nonemergencies. This would permit emergency-designated funds to  proceed on their necessary fast track while allowing more time for the  deliberation of nonemergency items. For those provisions not designated  emergency, the aforementioned Supplementals Subcommittees could  evaluate the necessity for action through supplementals rather than  regular appropriations. One current legislative proposal suggests an even  more stringent approach—a bill introduced in the House of  Representatives on October 16, 2007, to establish requirements for the  consideration of supplemental appropriation bills (H.R. 3857) proposes  that all supplemental appropriations would have to be emergency  designated in accordance with the emergency-designation criteria.
For emergency-designated supplementals, Congress could change the  budget process to require that all provisions in emergency supplemental  appropriations bills be related to the event/issue(s) that prompted the  supplemental. The Supplementals Subcommittees, if established, could be  tasked with certifying that each supplemental bill and amendments that  offer new areas to be funded meet this requirement. If such a  subcommittee is not established, Congress will need to consider another  enforcement mechanism. Another proposal, again from H.R. 3857, requires  all supplemental appropriations acts to have a single purpose. Under this  proposal, it would not be in order for Congress to consider any measure  making supplemental appropriations for two or more unrelated  emergencies.
Several experts agreed that it made sense to separate emergency and  nonemergency supplementals but questioned how this would be enforced.  In this vein, one expert proposed eliminating the emergency designation  altogether and requiring that all funds be counted under budget  caps/resolutions. Other experts raised concerns that the separation  potentially could slow the supplementals appropriations process. Experts  discussed the need for controls over the timeliness of supplementals,  suggesting that agencies should be required to submit disaster estimates  within a certain period of time after a disaster and Congress should be  required to report a bill related to that disaster a certain number of days  after that. This would help avoid situations where “emergencies” that  occurred 1 or more fiscal years previously receive emergency-designated  supplemental funding. It could also help to ensure prompt consideration of  funding for true emergencies. One expert, however, saw a real problem  with the idea of creating separate tracks for supplementals, seeing the  ability to package them together as an important legislative power that  serves to balance against the President’s veto power.
section_title: Provide More Funding in the Regular Budget and Appropriations Process
paragraphs: Although some supplementals are clearly necessary to provide for costs  that were not contemplated in the regular budget and appropriations  process, many people suspect that the increased use of supplemental  appropriations may contribute to the underfunding of some programs in  the annual budget and appropriations process. We found that 35 accounts  received supplemental appropriations in at least 6 out of the 10 years,  raising questions about whether emergency supplementals are being used  to fund activities that could have been included in regular appropriations.  Many of the experts we asked suggested this tendency to fund activities  through supplementals was a result of overly tight budget  caps/resolutions.  Most said that more of the federal government’s costs  should be considered through the regular appropriations process rather  than later through supplementals. However, there was not consensus on  the best way to achieve this.
To increase transparency by providing up-front recognition of the likely  call on federal resources for some unforeseen situation, Congress could  take several steps. For example, Congress could require that accounts that  repeatedly receive supplemental appropriations be funded on a realistic  historical average. Although some accounts—such as FEMA’s Disaster  Relief and Interior’s Wildland Fire Management accounts—are funded on  historical averages, data indicate that the methodologies used to develop  these averages result in amounts that are frequently insufficient to cover  annual costs. In conjunction with using realistic historical averages,  Congress might establish an emergency reserve fund to fence off funds for  extraordinary events that exceed those historical averages. That fund  could be based on a historical average of all emergency spending,  excluding military actions. The Securing America’s Future Economy  (SAFE) Act of 2007 includes a proposal for such a fund.
The reserve fund approach has several potential benefits—the use of  emergency reserves may reduce the need for supplemental appropriations,  encourage efforts to avoid or mitigate disasters, and highlight potential  alternatives to federal action, such as state or local initiatives or private  insurance. It also presents pitfalls which would have to be addressed in  the design of the reserve fund.  For example, there may be pressure to use  the reserve even if a triggering emergency does not occur, especially if not  all of the funds are needed in a given year. To mitigate against this,  Congress might wish to establish more specific criteria for the release and  use of such funds—the more specific and measurable the criteria, the  more likely there would be agreement over when the funds can be used.  Congress could also use the Supplemental Subcommittees that we  discussed earlier to apply these criteria and govern the use of the funds.
At least one expert openly supported the idea of an emergency reserve  fund. However, he and several others cautioned that this fund would need  to have explicit controls to determine when funds could be released to  avoid a situation in which the fund is raided when budget caps/resolutions  are unrealistic.
Given the changing nature of the nation’s defense challenge, funding for  military actions could be handled separately. Nevertheless, the use of  supplementals could still be limited. The use of the separate title within  DOD’s regular appropriations in recent years offers one model. As our  analysis of GWOT funding has shown, however, whether the separate title  model decreases the use of supplementals depends on how it is used. To  date, it has been used as a bridge between the regular appropriation and a  supplemental. However, more funding could be included in the regular  budget and appropriations process in lieu of a supplemental. In addition,  although emergency funding has historically been used to support  unexpected costs of contingency operations, care needs to be taken with  the use of the emergency designation for GWOT funds. Our recent work  has shown that changes in DOD’s GWOT funding guidance have resulted  in billions of dollars being added to GWOT funding requests for what DOD  calls the “longer war against terror,” making it difficult to distinguish  between base costs and the incremental costs to support specific  contingency operations.
Another expert suggested taking a different approach entirely by  separating the concept of “contingency” from that of “reserve fund.” He  suggested that both Presidential budgets and Congressional Budget  Resolutions should recognize estimates of uncertainty and  contingencies—both military and natural disaster—in a manner akin to  budget function 920 “allowances.” This estimate would not include any  real budget accounts or constitute a request for appropriations. Rather, it  would be an amount leading to an alternative total—a total should these  contingencies or emergencies occur.  One approach for this would be to  take a 10- or 15-year average of budget authority for natural disasters and  show that as a measure of possible additional claims on federal resources.  The expert analogized this to insurance—in most years the actual amount  needed for emergencies would be less than this estimate, but in others it  might be much more. A similar process could be established for military  contingency operations. The “allowances” function, or its equivalent,  would not provide funds but would be a way to inform budgetary trade- offs and decisions by highlighting the fact that there is uncertainty and that  emergency calls on federal resources are likely.
section_title: Limit the Legal Availability of Supplemental Appropriations to a Fixed Period of Time
paragraphs: Given the timing of the budget process and the combination of the need to  provide funds promptly with the desire that they be spent in a thoughtful  and targeted manner, it is understandable that some supplemental funds  would need to be available beyond the current fiscal year. Making funds  available for obligation beyond the current fiscal year provides flexibility  needed to address uncertainty, especially in the immediate aftermath of an  emergency. However, some funds are available until expended (referred to  as “no-year” funding), which provides flexibility but reduces opportunities  for oversight. As time passes and requirements become clearer, the need  for flexibility lessens. Limiting the availability of funds to a fixed period of  time would provide Congress the opportunity to revisit funding needs  once better information exists.
Over the 10-year period we examined, over one-third of the supplemental  appropriations enacted were no-year funds. To balance flexibility and  oversight in determining how long funds will be available for obligation,  Congress could consider using single or multiyear funds in lieu of no-year  funds to the maximum extent possible in supplemental appropriations.  Limiting the availability of funds to some fixed period of time could  increase the opportunities for Congressional oversight, as well as reduce  the use of supplementals by moving subsequent funding requests for past  emergencies to the regular budget and appropriations process.
One concern about limiting the time availability of funds is that agencies  may rush to obligate expiring funds before the end of the relevant fiscal  year. Our work on year-end spending has shown that problems occurred  when budget execution was not monitored effectively. This can result in a  lack of competition, poorly defined statements of work, inadequately  negotiated contracts, and the procurement of low-priority items or  services. However, mechanisms exist to limit year-end spending. For  example, OMB requires that agencies report their quarterly obligations  approximately 20 days after the close of each calendar year. Moreover,  reforms in procurement rules have reduced the potential magnitude of  problems with year-end spending.
Most experts agreed that limiting the availability of funds would allow for  increased Congressional oversight. One expert noted that he could not  think of a reason why no-year funds should be in any part of the federal  budget.
section_title: Broad Views Expressed by Experts
paragraphs: Although individual experts’ opinions on these process reform options  varied, there was general agreement that returning to a more limited use of  supplemental appropriations will be challenging. They noted that the  issues surrounding supplemental appropriations stem from a greater  breakdown of and failures in the regular budget and appropriations  process. In addition, many noted that when discretionary budget caps are  unrealistic there is an increased incentive to use supplemental  appropriations. Other experts suggested that it was important to view  supplementals as one piece of a broader system for budgeting for  contingencies, noting that attention given to issues such as disaster  mitigation, emergency reserve funds, government insurance programs, and  realistic funding in the regular budget and appropriations process may  lessen the need for supplemental appropriations.
section_title: Conclusions
paragraphs: To the extent possible, funds should be provided through the regular  appropriations process to ensure that trade-offs are made among  competing priorities, especially in an environment of increasingly  constrained resources. Therefore, controls should be in place to ensure  that emergency supplementals are enacted for their intended purpose—to  address unforeseen needs that arise suddenly after the start of a fiscal  year.
The current incentives and controls surrounding supplemental  appropriations may encourage the use of supplemental appropriations for  items outside of this purpose. Supplementals are frequently “must pass”  legislation with significant incentives for a quick response and are not  subject to the same level of scrutiny and trade-offs as the regular budget  and appropriations process. As a result, supplementals can be an inviting  vehicle for passing legislation that is not directly related to the emergency  that may have prompted the supplemental in the first place. Furthermore,  the greater scrutiny of the regular budget and appropriations process  combined with the expectation of recurring supplemental funds acts as a  disincentive for activities to be fully funded through regular  appropriations.
Additionally, the controls over the process are relatively weak. The  emergency-designation criteria are nonbinding and may be open to debate.  The current governance process over emergency supplementals requires  Members of Congress to take active steps to strike down the emergency  designation—by raising a point of order—as opposed to requiring  affirmation of the designation.
The combination of multiple incentives to use supplementals and  weaknesses in the controls governing their use could encourage  policymakers to use supplemental appropriations in lieu of the regular  appropriations process to fund certain activities.
section_title: Matters for Congressional Consideration
paragraphs: If the use of supplemental appropriations is to be limited, additional  controls and increased transparency are needed. To better target the  resources provided through supplemental appropriations, we recommend  that Congress consider adopting procedures and rules to increase controls  over and transparency of the use of supplementals. Specifically, we  recommend that Congress consider establishing procedures and  mechanisms to ensure that:   1.  Emergency-designated provisions meet established criteria by  establishing new mechanisms for enforcement of those criteria,  possibly including codification of the criteria and/or creation of review  procedures.   2.  Emergency supplementals do not become the vehicle for items that do  not require the rapid enactment demanded to respond to an emergency  event.  Among the approaches to be considered might be separate  tracks for emergency and nonemergency provisions and/or excluding  funding for emergencies that occurred in previous years.  3.  Supplementals are not used where the regular budget and  appropriations process should suffice by including a greater share of  funding in the regular appropriations bills.     4.  A balance exists between flexibility and oversight with regard to the  time availability of funds by using single or multiyear funds in lieu of  no-year funds to the maximum extent possible in supplemental  appropriations.
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If you or your staff have any questions about this report please contact me  at (202) 512-9142 or irvings@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this report. GAO staff making key contributions to this report are listed  in appendix III.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: The objectives for this report were to evaluate (1) trends in supplemental  appropriations enacted from fiscal years 1997–2006 and (2) steps that  could be taken to increase transparency and establish additional controls  over emergency supplemental appropriations.
To address the first objective, we developed a database that contained  information from the 25 supplemental appropriations laws that were  enacted from fiscal years 1997–2006 and information from the  Congressional Budget Office (CBO) scoring reports that accompanied  these laws to permit summary analysis of the use of these supplementals  over time. The database contained both general information about the  laws—such as the public law number and the date of enactment—and  information about individual provisions within the laws. Generally a  provision included all of the information contained in a paragraph under  an account name. However, in some instances we used our judgment to  break out or combine information. In general, if a law provided for several  actions under one account header—such as both appropriating and  rescinding funds—we would separate out those actions. Additionally, if a  law provided several amounts to different activities under one account  heading, we might combine those amounts. In total, the database  contained 2,662 provisions.
For each provision, we included in the database the provision text; the  division, title, and/or chapter in which the provision appeared; information  about the entity to which the provision pertained (e.g., department,  agency, program); and whether or not the provision provided or rescinded  budget authority. If a provision provided new budget authority, we  included the amount, how long it was available, and whether or not it was  emergency designated. If a provision rescinded budget authority, we noted  that and the amount. If a provision did not provide or rescind budget  authority, we developed a very general description of what it did do (e.g.,  transfer funds between accounts, target or limit the use of funds, or amend  another law). For emergency-designated provisions, we used the provision  language and/or other information in the law, such as the title, to  determine what type of emergency may have prompted the supplemental  appropriation. The categories we developed for this analysis were as  follows:      Antiterrorism and Security    Defense-Related   International Humanitarian Assistance    Natural and/or Economic Disasters (Domestic)    Pandemic Influenza    September 11, 2001    Other    Not Specified   In limited cases, these categorizations required some professional  judgment on the part of the analyst. For example, if a provision was in a  law or section of law for war-related activities but specified that it was  providing funds to repair damage from a natural disaster within the United  States, we categorized it as a “Natural and/or Economic Disaster  (Domestic).” However, other funds provided in the same section of the law  that did not contain language specifically relating them to a natural  disaster would have been categorized as “Defense-Related.”
From the CBO scoring reports, we input data on the budget function code,  the subaccount identification code, and the amount of budget authority  provided or rescinded.
To address the second objective, we reviewed relevant literature to  identify the rules and guidance that were in place in Congress to govern  the use of supplemental appropriations from fiscal years 1997–2006. Then,  we conducted a content analysis by having two GAO analysts  independently review the information on each emergency-designated  provision in the database to determine consistency with congressionally  specified emergency-designation criteria. Our analysis focused on the  application of the “sudden” and “unforeseen” criteria. We did not attempt  to judge whether provisions were “necessary” or “urgent” as these are  policy judgments, not based purely on objective information. We also did  not make judgments on the “not permanent” criteria as it is not well  defined. There is no time frame given regarding when an activity has  become “permanent.” In addition, even “permanent” activities directed by  legislation may cease when legislation is repealed or amended. The two  analysts also determined whether the provision was related to the event  that may have prompted the supplemental. The two analysts came to  different conclusions in 29 instances (2.8 percent of the 1,014 emergency- designated provisions). For any provision where the two did not come to  the same conclusion, a third GAO analyst reviewed the information and  resolved the discrepancy. Although we had a high initial rate of agreement  between the two independent reviewers, we fully recognize that this was a  subjective judgment and other reviewers could reach different conclusions  than we did given the same information.
We drew on our analysis of all of the information in the database and a  review of existing recommendations and proposals that have been put  forth by GAO, CBO, the Congressional Research Service (CRS) and others  to develop options for addressing the issues that we identified. We then  sought opinions from recognized experts on these options to (1)  determine whether they were appropriate and sufficient and (2) ensure  that they were feasible and practical. To identify people with expertise in  budgeting practices at the federal level, we relied on sources we had used  in our background research and review of recommendations and  proposals that have been put forth by GAO, CBO, CRS, and others, as well  as our experience in this area, to compile a list of individuals with diverse  backgrounds in the field. We sought comments on a draft document from  experts from organizations such as the Center on Budget and Policy  Priorities, Center for American Progress, Committee for a Responsible  Federal Budget, Committee for Economic Development, and CBO, as well  as knowledgeable former Congressional staff. Six of these people  responded to our request. These comments were summarized and  incorporated where appropriate.
We conducted our work in accordance with generally accepted  government auditing standards from November 2006 to January 2008.
section_title: Appendix II: Supplemental Appropriations Laws Enacted from Fiscal Year 1997 through Fiscal Year 2006
subsections: section_title: 6/12/1997 1997 Emergency
paragraphs: Construction,  2001; (Div. B— Emergency  Supplemental Act,  2000)
Defense  Appropriations  Act, 2001 (Title  IX—Additional  Fiscal Year 2000  Emergency  Supplemental  Appropriations for  the Department of  Defense)
Supplemental  Appropriations Act  for Recovery from  and Response to  Terrorist Attacks  on the United  States  Defense and  Emergency  Supplemental  Appropriations for  Recovery from  and Response to  Terrorist Attacks  on the United  States, 2002 (2nd  $20 billion - 9/11  attacks)
Wartime  Supplemental  Appropriations  Act, 2003  Supplemental for  Disaster Relief  Act, 2003  Branch, 2003  (Title III— Emergency  Supplemental  Appropriations  Act, 2003)
Supplemental  Appropriations Act  for Defense, the  Global War on  Terror, and  Tsunami Relief,  2005  Interior,  Environment and  Related Agencies  Appropriations  Act, 2006 (Title  VI—Veterans  Health Care)
Supplemental  Appropriations Act  for Defense, the  Global War on  Terror, and  Hurricane  Recovery, 2006  of Defense  Appropriations  Act, 2007 (Title  X— Fiscal Year  2006 Wildland Fire  Emergency  Appropriations)
section_title: Appendix III: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Acknowledgments
paragraphs: In addition to the individual listed above, Carol Henn, Assistant Director;  Tiffany Mostert; Elizabeth Hosler; Farahnaaz Khakoo; and John Stradling  made significant contributions to this report. Thomas Beall, Pedro  Briones, John Brooks, Carlos Diz, Arthur James, Susan Offutt, Sheila  Rajabiun, John Smale, and Elizabeth Wood also made key contributions to  this report.