For people who do not work on the federal budget process (and even for some who do), this has been a confusing year. The process has been long and convoluted. Before we close the book on fiscal year 2011, it might help to take a closer look at the process. In Part I of this post, let’s look at a comparison of how the budget process “typically” works, compared to FY 2011.

Current procedures for creating a federal budget were laid out by the Congressional Budget Act of 1974. The process begins when the President makes his yearly budget request to Congress in early February, during the calendar year prior to the budget fiscal year (eg, fiscal year 11 budget is proposed in February of 2010). The President uses this request to highlight his spending priorities in areas like education and defense as well as overall federal fiscal priorities for taxation, revenue, and the deficit. This budget request helps set the tone for later negotiations and often serves as a starting point for Congressional action. President Obama’s 2011 Budget Request was submitted to Congress on February 1, 2010.

After receiving the President’s request, the House and Senate Budget Committees get to work drafting a Congressional Budget Resolution. Much simpler than the President’s request, the budget resolution acts as a guide for the overall amount of spending and cuts in the federal budget. It sets spending limits for broad categories known as “budget functions.” Ideally, both chambers will agree to the same budget resolution. However, more often than not, each chamber usually settles on a different amount and reconciles their numbers later in the process.

As part of the resolution, the Appropriations Committees receive a 302(a) allocation, which is the total amount of money that they can appropriate to discretionary programs. Other committees receive similar information, which details the money spent on the mandatory programs they oversee. Mandatory or “entitlement” programs, such as Social Security or Medicare, have a predetermined amount of spending each year.

The Appropriations Committee next divides the total allocation among 12 subcommittees. Each Subcommittee has jurisdiction over certain fields like defense or agriculture, and is responsible for drafting a bill that sets specific funding levels for the executive agencies and federal programs in its jurisdiction. For our purposes, the Labor, Education, Health and Human Services (HHS) appropriations bill matters most. These bills are typically completed by the end of August to leave room for negotiation between the House and the Senate.

According to the 1974 Budget Act, the budget resolution must be passed by April 15 so that the Appropriations Committees have enough time to finish their work. For the government to stay open, the final Appropriations Bills must be signed into law by the President no later than October 1, the start of the Federal Government’s fiscal year.

For fiscal year 2011, because of disagreements and political wrangling, Congress never completed the appropriations process. Plagued with problems from the beginning, neither the House nor the Senate ever passed a Budget Resolution. The Appropriations Committees did not start their work until July and most of the appropriation bills were never even debated. By October, with nothing to vote on, Congress passed a Continuing Budget Resolution (CR), allowing the government to temporarily continue functioning at the previous year budget levels, and to buy more time to come to a final agreement.

Often when Congress can’t agree on a budget, they will pass a CR. While working on the fiscal year 2011 budget, Congress passed seven CRs that maintained 2010 funding levels. If nothing is agreed to, the federal government must close – something that has not happened since 1996. This year, the extra time meant an election, which saw control of the House change to the Republican Party. With Republicans in charge of the House and Democrats in charge of the Senate, hopes of a budget agreement were further dimmed.

Finally, in April 2011,six months into the new fiscal year, and following 7 CRs and a near government shutdown, Congress and the President were able to agree to the Continuing Appropriations Act of 2011 (PL 112-10). In this legislation, some programs important to children were eliminated or saw their funding reduced, while others received additional funding. The bill also included a general 0.2% cut or “rescission” across the board to all remaining programs. Unlike the standard appropriation bills, PL 112-10 did not include a specific accounting of the spending for each program. This is why we have been anxiously awaiting the final tables from each agency.

Our next post will show how early childhood programming fared in this process and will discuss the ramifications for the remainder of this year and fiscal year 2012.

For more details on the federal budget process, we recommend the following resources:

“2011 Education Appropriations Guide” – The New America Foundation
“Policy Basics: Introduction to the Federal Budget Process” – Center on Budget and Policy Priorities
“Budget” – The Senate Virtual Reference Guide