This is the first in a series of blog posts on the federal budget process and how Congress funds early childhood programs.
As First Five Nebraska continues to move into early childhood policy work at the federal level, we’ve developed this overview of the federal budget process.
Every year, Congress tackles the massive job of setting the federal budget for the next fiscal year, which runs from October 1 to September 30 of the following year.
The Congressional Budget and Impoundment Control Act passed in 1974 standardized the annual budget process by:
⇒ Creating the House and Senate Budget Committees to oversee everything.
⇒ Setting up timetables for every step of the process.
⇒ Establishing the Congressional Budget Office (CBO). The Congressional Budget Office (CBO) is a nonpartisan agency that helps Congress understand how proposed legislation could affect the federal budget. It provides economic analysis and estimates on how much bills would cost or save the government.
The Budgeting Process
Every year from October to January of the following year, federal agencies develop proposed budgets and submit the requests to the Office of Management and Budget (OMB). The Administration then reviews the requests and determines its priorities.
The President is supposed to present his budget proposal for the next fiscal year in February, but sometimes it is submitted much later. The President’s budget is a recommendation, not law. After that, the House and Senate Budget Committees each write their own “Budget Resolution,” a spending blueprint for the upcoming fiscal year that includes totals for mandatory and discretionary spending.
Mandatory, Discretionary Spending
About two-thirds of the government’s budget goes toward mandatory spending, which is paid out automatically every year unless Congress steps in. Through “reconciliation instructions,” to committees that oversee those programs, Congress can bring the cost of mandatory programs in line with current budget limits. Mandatory spending includes funding for Medicaid and the Supplemental Nutrition Assistance Program (SNAP).
Unlike mandatory spending, Congress must decide on and approve discretionary spending each year through the appropriations process. Most early learning and child care programs, including the Child Care and Development Block Grant (CCDBG), Head Start/Early Head Start and the Preschool Development Grant Birth through Five (PDG B-5) are discretionary spending.
After a budget resolution is approved by the House and Senate Budget Committees, it goes to the respective floors for debate. When passed, the resolutions go to a Conference Committee comprised of members of each chamber that works out the differences between the two versions. The final resolution is an agreement between the House and Senate establishing Congress’ internal fiscal framework. It is not law. It rarely happens, but a final budget compromise is supposed to be approved by both the House and the Senate by April 15 annually. Because the final product is a resolution and not a bill, the President does not sign or veto it.
After Congress decides on the budget amount, the House and Senate Appropriations Committees divide that amount among 12 subcommittees, with each one responsible for writing an appropriations bill. These 12 bills are massive, usually covering multiple agencies at once. For example, the single bill that funds the Department of Health and Human Services also covers other large departments within the government. Spending bills traditionally start in the House, but the Senate sometimes jump-starts the process by working on its own versions first.
Ideally, the timeline is:
⇒ By June 30: House passes all 12 of its spending bills.
⇒ Summer months: Senate debates and passes its own versions.
⇒ Before October 1: A conference committee irons out the differences between the House and Senate versions, negotiates a final compromise bill and both chambers approve it before the new fiscal year begins.
CRs Avoid Government Shutdown
If Congress and the President don’t sign off on a spending bill for a federal agency by October 1, that agency faces a partial government shutdown and has to halt its “non-essential” activities until their funding is officially approved.
Because Congress rarely passes all 12 of the appropriations bills by the start of the fiscal year, it can buy extra time and avoid a shutdown by passing a “continuing resolution” (CR) that keeps money flowing, usually at the same funding level as the previous year.
Congress may pass multiple CRs in a row, stacking them up to keep the government running while they work to complete the appropriations process.
