Pi:,I'.[ T( ESSPi:,I'.[ T( tI071IE (7 ON(,. ESS, i(.(MtI .y %BY Tlit ,W)I.,!I ( !IN I vA I, 01 lif N J ,1 1 S ,,. Starndard Budget Classifications-Proposed Functions And Subfu nctions

Pi:,I'.[ T( tI071IE (7 ON(,. ESS

, .y %BY Tlit i(.(MtI ,W)I.,!I ( !IN I vA I, ,./. 01 lif N ,1 J S 1 ,,.

Starndard Budget Classifications-Proposed Functions AndSubfu nctions

It is necessoiv to prcpose changes if, the Federalbtudget's iunctionoi (:und suhfunctiolol clssifico-tion structure in oider to mrve toword a bieterciussificotion slructurc fo conc.esslnao l dccision.moking.

A pre;enrtaoion of tlh Bjudrget using the clossificn-1ion strctur. propo-;cd in this report, along with

the presentt iurnclions rnd subfunctions, wIll pro-vide a bis;s of conmpiorison that will assist :heCongiress in deciding w!ich structure, or whichcombination of structurer;, i most oppro riote forcotrlressionrol ibudgc' for'rulntion.

BEST DOCUJMENT AVAILABLEPAD-.76.49 1 76

C, O/ oo:

COMPTROLLER GENERAL OF THE UNITED STATESWASHINGTON, D.C. 2048

B-115398

To the President of the Senate and theSpeaker of the House of Representatives

This report describes a proposed revision of the Federal.Budget's function/subfunction classifications,. It representspart of our effort toward the development of sta:.dard classi-fications pursuant to section 202(a)(1) of the LegislativeReorganization Act (84 Stat. 1140), as amended by the Con-gressional Budget Act of 1974 (88 Stat. 297).

Copies of the repert are being sent to the Director,Congressional Budqet Office; the Director, Office of Man-agement and Budget; and the Secretary of the Treasury.

Omptroller Generalof the United Statc:s

-BEST . i' ' A , L LLs~~ , AVALABLE

Contents

Page

DIGEST

CI:IAPTER

1 INTRODUCTION 1Purpose of report Ic;cope 2Pelated word 2

2 BACKGROUND 4

3 APPROACH 6

4 CRITERIA 10

5 CONCLUSIONS AND RECOMMENDATION 11Reconm-endation 12

APPENDIX

I Proposed functions and subfunctions 14

II Discussion of proposed functions andsubfunctions 21

HTI Comparison of proposal to existing fu,,c-tions 61

IV Discussion of general comments on staffstudy 67

V Listing of accounts under proposed func-tions and subfunctions 72

ABBREVIATIONS

ERDA Energy Research and Development AdministrationGAO General Accounting OfficeHEW Department of Health, Education, and WelfareHUD Department of Housing and Urban DevelopmentIRS Inte.rnal Revenue ServiceNASA National Aeronautics and Space AdministrationNOAA National Oceanic and Atmospheric A6ministrationOMB Office of Management and Budget

BEST DOCUMET AVi;,ELABLE_1

COMPTROLLER GENERAL'S STANDARD tUDGET CLASSIFICA£rIONS--REPORT TO THE CONGRESS PROPOSED FUNCTIONS AND SUBFUINCTIONS

DIGEST

The Comptroller General, in cooperationwith the Secretary of one Treasury, theDirector of the Office of ManagemenC andBudget, and the Director of the Congres-sional Budget Office, is req ired to"develop, establish, maintain and publishstandard terminology, definitions, classi-fications, and codes for Federal fiscal,budgetary and program-related data andinformation."

As part of this effort, this report presentsa proposal for revising the catec;ories of theFederal Budget in order to move toward betterclassification as a basis for congressionaldecisionmaking.

By increasing the number of functions andsuotfunctions, greater flexibility will existto permit rearrangement of data to meet needsof the various participants in the budgetprocess.

Functional classifications have been used formany years to display the President's budgetin a number of mutually exclusive categoriesaccording to a central purpose. regardlessof administering agency.

Under the new congressional budget process,however, functional classifications now mustprovide a framework in which the Congrisscan make and communicate its decisionsallocating Federal resources amo .g competingnational pri¢orities.

Evolutionary development of new, secondaryclassifications and rearrangement of ac-counts, as well as better program informa-tion, will meet most congressional needs.

i PAD-76-49

T fl.b.ej. Upon removal. the reportcover date should be noted hereon.

BEST ?V 7T A !VdJLABLE

A presentation of the Budget using the clas-sification structure proposed in this report,along with the present functions and sub-functions, will provide a basis of comparisonthat will assist the-'Congress in decidingwhich structure, or which combination ofstructures, is most appropriate for congres-sional budget formulation.

The Director of the Office of Management andBudget should provide in conjurction with tnfBudget for fiscal year 1978 a presentation of theprincipal budget data using the alternativestructure proposed in this report as a sup-plement to the existing functional presenta-tion.

The Office of Management and Budget disagreeswith the GAO recommendation because the ad-ditional workload required would occur at thepeak of the budget cycle and because some ofthe data is not readily available. They alsoquestion whether the Budget itself is the pro-per vehicle for carrying out this proposal.

GAO believes, however, that movement tcwarda classification system that will better servethe needs of the Congress is necessary at thistime and the Budget itself is the most effec-tive vehicle for focusing discussion on theproposal. The additional workload requirementson the Office of Management and Budget and theagencies should be minimal, and GAO has advisedthe Office of Management and Budget that itwould be willing to assist them by sharing thereclassification of accounts which underliesthis report. In addition, the data would nothave to ba submitted simultaneously with theofficial budget data, but could be presentedshortly thereafter. GAO will continue to workwith the Otfice of Management and Budget tofind the best way of carrying out our recom-mendation.

In the Comoptroller Genecal's initial reporton standard classifications under the Con-gressional Budget Act (ACG-75-29, June 30,

ii

BEST DOCUwENsT t AVALABLEi._ B~~B W~Q~d~il~wecaas~~-ENT 11' rIVMIABL

1975), GAO pointed out that there were sev-eral problems in using the present oudget.structure. The major problems relating totne functional categories in particularwere that they were too broad and groupedwidely differing programs in many cases.

Shortly after issuing the report, GAOformed a working group composed of staffmembers from the Senate and House Commit-tees on the Budget and Appropriations, theCongressional Budget Office, and GAO, whichmet periodically on this subject over aperiod of 6 montns. Tne purpose of the work-ing group was to seek consensus within thelegislative oranch, to the extent possible,regarding changes in the present structureof functional categories.

While no consensus was reached, the discus-sions enabled GAO to gain sufficient insightto provide a basis tor a GAO staff study whichproposed changes to the functional and sub-functional classifications. This staff studywas circulated to all standing congressionalcommittees, tne Oftice of Management andBudget, the Congressional Budget Office, andthe Department of the Treasury for review andcomment. Based on those comments, GAO revisedthe proposed structure. The GAO study concen-trat2d on the emerging need for interactionamoni key participants in the new budgetprocess at tne congressional level. From thestandpoint of most congressional leaders,adoption of changes along the lines proposedhas important advantages in terms of improv-ing their capability to make budgetary deci-sions. Several key committees, however,prefer that no changes be made until fiscalyear 1979. One key committee recommends nochange at all to the present functional cate-gories.

iii

CHAPTER 1

INTRODUCTION

Section 202(a)(1) of the Legislative Reorganization Actof 1970, as amended by title VIII of the Congressional BudgetAct of 1974 (P.L. 93-344), directs the Comptroller General,in cooperation with the Secretary of the Treasury, the Direc- 3'tor of the Office of Management and Budget (OMB), and the 27Director of the Congressional Budget Office, to UTH cOo1 7

"Develop, establish, maintain, and publish stand-ard terminology, definitions, classifications,and codes for Federal fiscal, budgetary, andprogram-related data and information."

This section further directs that

"Such standard terms, definitions, classifications,and codes shall be used by all Federal agenciesin supplying to the Congress fiscal, budgetary,and program-related data and information."

Section 802 of the Congressional Budget Act of 1974, however,specifies that

"Any change in the functional categories set forthin the Budget * * * ,hall be maCe only in consul-tation with the Committees on Appropriationsand the Budget of the House of Representativesand Senate."

The act reauired the Comptroller General to submit a reportto the Congress containing the initial standard terminology,definitions, classifications, and codes on or before June 30,1975. Additional reports on this subject were authorizedwhen deemed advisable.

PURPOSE OF REPORT

Our June 30, 1975, report to the Congress (ACG-75-29)discussed our initial efforts in the area, progress to date,and our general plan to carry out our responsibilities underthe act. The report indicated that our aoal was to developa standard classification structure to be available for useon a trial-run basis for the fiscal year 1978 Budget. Weanticipated that such a trial run would provide the experiencenecessary to more fully ascertain congressional r:quirements

BEST DOCU r T AVAILABLE

prior to full implementation of a revised standard classifi-cation structure in fiscal year 1979.

In order to begin moving toward a classification struc-ture which will better facilitate decisionmaking by theCongress, we feel that it is necessary at this time topropose changes in the existing structure of functions andsubfunctions.

SCOPE

The proposed classification structure is based on ananalysis of the functiun.:, subfunctions, and appropriationaccounts used to display the President's Budget for fiscalyear 1977. Our analysis was limited to those appropriationaccounts having estimated budget authority in excess of $25million for fiscal year 1977.

RELATED WORK

There are a n imber of ongoing efforts related to theproposed budget classification structure:

--In cooperation with t:h. Congressional Budget Office,we have been working t)ward meeting specializedinformation needs for various authorizing andappropriations coimmittees. Our work in this areahas been primarily directed toward developing program-level classification structures which are more closelyrelated to authorizing legislation and to assistingappropriations subcommittees in obtaining budgetjustification data ihich is more program related. Weexpect that these efforts will provide the basis foraggregating budget information in the broadercategories of functions and subfunctions.

--In November 1975, in coordination with the Departmentof the Treasury, OMB, and the Congressional Budgetffice, we published a glossary of about 90 standardms and definitions entitled "Budgetary Definitions"A-76-8). A revised edition of the glossary is

planlned for publication later in 1976.

--We are conducting an ongoing study to identify andcategorize tax expenditure' within the existing func-tional classifications so that they may be morereadily associated with related 'irect expenditureprograms. This effort will provide the Congress with

2 BEST DOCUMENT AVW!LABLE-~ .1

a better picture of the total Federal resources(expended or foregone) in support of a particularfunction.

--The House Committee on the Budget established a task 0SE o6 8o nforce on the budget process to study the functionalcategories and to recommend possible revisions toimprove their usefulness to the Congress. In February1976, the House Buaget Committee circulated a staffstudy for comment which recommended possible changes.The task force has revised its recommendations toreflect comments received and has presented them to

the Committee for its consideration. There are many

similarities between our recommendations in this report

and those of the task force.

BEST ... : T AVAILABLE

3

CIHAPTER 2

BACKGROUND

The Congressional Budget Act of 1974 has provided a pro-ceno by which the Congress can make integrated decisions withreosp.ct to the size and composition of the Federal Budqet.The Congressr is impl:nmenting the full process for the firsttime in its de]iberot>ions on the fiscal year 1977 Budget.Under the act, the Conqgress must set overall annual spendingtargetL, ,nd subtairqcts for the major functional categories.

Tho act thus provides that the structure of major func-tionall cateoories will occupy a central role in the congres-sionil process of allocating budget resources, marking amajor changie in their use. The functional categories havebeen tled for many years to display the President's Budqetin a limnited number of mutually exclusive categories accordingto mIIor purpose, reqcirdless of administering agency. Underthe now cornreossional budget process, however, the categoriesmus'. plrovidcL a framework for making budget de-isions--.nef-l:cctivv Iramework within which the Congress can make andcommiunic.9tL its decision; on the allocation o2 resourcesamon. cmcllliet:nl national priorities. We believe this new useof the functional category structure necessitates continuingreexamination of the adequacy of that structure and considera-tion of possible changes to make it more effective.

Our June 30, 1975, report to the Congress identifiedseveral problems with the present structure:

--Title VI, section 601, of the Congressional BudgetAct of 1974, requires that there be a presentation ofthe fiscal year 1979 Budget in terms of national needs,naqency micsions, arid basic programs. While this provi-Sion is still subject to considerable differences ininterpretation, substantial changes in the presentbudget structure could be required.

-- The present categorization of 16 functions is not suf-ficiently detailed and in many cases combines programsof varying purposes. For example, all commerce andtransporation programs are combined in one function.

--The present functional category structure is generallybuilt around appropriaton accounts which are oftencomposed of widely differing programs. For example,the Fede-ral Disability Insurance Trust Fund, presently

4 &nEB ̂ST " ' T-A':L··''% ..eib,. ...'~~

categorized under the Income Security function, alsoincludes vocational rehabilitation services which couldproperly be categorized under the Education, Training,Employment, and Social Services function.

--Many of the present fund-account and program-levelclassifications do not reflect program purpose, norare they presented consistently.

--Many prcgrams have dual or multiple objectives, andthus may be classified in a number of different ways.The present structure does not provide for the reag-gregation of budgetary information in different waysfor different purposes.

Our report concluded that it would be preferable to gain moreexperience in working with the act before recommending anyspecific changes.

Beginning in the summe. of 1975, a working Sroup composedof staff members from the Senate and House Committees on theBudget and ApDropriations, the Congressional Budget Office,and our representatives met periodically on this subject overa period of 6 months. The working group sought consensuswithin the legislative branch, to the extent possible, con-cerning changes in the present classification structure.While consensus was not reached relative to specific changes,these discussions enabled us to gain considerable insightregarding an overall approach.

Based on these discussions we developed a staff studyentitled "Proposed Budget Classifications, Functions andSubfunctions" (OPA-76-32), published in February 1976. Thestudy included a comparison of our proposal with the HouseBudget Committee staff study on proposed changes to thefunctional categories. The two studies had many elements incommon at the functional level. (The task force did notspecifically address changes in the subfunction categories.)

In order to obtain the views of all participants in theiew budget process, we circulated our proposal to all standingcommittees of the Congress, the Office of Managc.ment and!Budget, the Department of the Treasury, the CongressionalBudget Office, and the Congressional Research Service. Wehave received a wide range of comments on the approach out-lined in our staff study. Based on analysis of these com-ments, we have reviewed and further revised our proposedstructure.

..... pVALB

CHAPTER 3

APPROACH

Varied opinions exist regarding the changes, if any, re-quired in the functional category structure to assist theCongress in implementing the Congressional Budget Act of1974. It was clear in an early stage that no consensus onthe preferred structure existed. No single structure (in-cluding the present one) could fulled satisfy the needs ofall users. Accordingly, our general approach has been toemphasize incorporating as much flexibility as possibleinto our recommended primary structure. Different functionalaggregations, for example, can be compiled using the subfunc-tions which we propose.

Additional flexibility can be built into the system bydeveloping a system of secondary classifications, which weconsider necessary. Many programs have more than one im-portant objective. Military hospitals, for example, supportthe national defense objective, but they are also part ofthe nation's health care system. The classiflcation systemshould make it possible to consider those programs in anycontext in which they are relevant.

The Special Analyses in the President's Budget are es-sentially a secondary classification system which cute acrosoagency and functional category lines. Their utility, however,is limited because congressional needs and requirements forinformation are extensive and varied, while the SpecialAnalyses are relatively fixed in coverage. A highly flexiblesystem is needed which will permit data to be assembledrapidly in different ways for various purposes. A standardclassification structure having standard codes which are as-signud to reflect both primary and secondary purpotoes of pro-gr.ims would help satisfy the varying needs of users at dif-ferent stages of decisionmaking, allowing them to draw fromconsistent and easily identifiable sources of program infor-mation. The diversity of information needed by the Congrnsswas reflected in the comments received on our earlier staffproposal. Views ranged from favoring a complete rest-uctur-ing of the budget presentcation to preferring no change in theexisting structure at this time.

Proponents of a complete restructuring desire changeeither to meet the requirements of section 601 of the Con-gressional Budget Act of 1974 for a budget presentation ar-ranged according to national needs, agency missions, and basicprograms, or to develop a three-level structure which would

B D60HETAVLBBEST D J1EPT AVAILABL-

address program purpose, tne means of carrying out the program,and the program recipient. A pure implementation of eitherapproach would require the development of a complete structureof "programs" as the Dasic data element. While such work isnow well underway, it is not yet co!nplete. Historically,budget and related financial data have used appropriationaccounts as the oase. In some cases the activities fundedoy a given appropriation account represent a program; inmany cases, however, an appropriation account provides fundsfor activities which, at least to some observers, representseveral programs. Tnus, csing programs as the basic datawould require splitting appropriation accounts, or at leastthe accumulation of reliaole data, at a level of detail De-low that of the appropriation account.

In contrast to those who favored completely restructur-ing the functional category structure, some recommended nochange at this time. Tnis is the view of several congres-sional committees and the Office of Management and Budget.Some of those favoring no change argue that the structureis adequate as is. Others believe that since substantialchange will De necessary next year, changes should be avoidedthis year in order to minimize the disruption. For example,if changes are implemented for the fiscal year 1978 Budget,additional changes might have to De implemented for the fis-cal year 1979 Budget to meet the requirements of section 601.It was also pointed out that avoiding changes now would al-low additional time to consider the implications of tne newprocess the Congress is using in its deliberations on theBudget in fiscal year 1977.

However, as our June 30, 1975, report pFints out, thereare several problems in the present classification structurewhich nave been made greater by the increased emphasisplaced on the functional categories Dy the CongressionalBudget Act of 1974. Under the act, the use of the functionalcategories has changed from displaying the Budget to provid-ing a framework for making budget decisions.

We feel that tne Congress should not simply accept fordecisionmaking a structure which OMB designed to displaydecisions already made Dy the President. The structureshould highlight the budget issues, priorities, and nationalgoals on which the Congress wishes to focus its attention,recognizing that these areas of emphasis are likely to changeoccasionally.

Our purpose has been to develop both a framework to as-sist the Congress in evaluating competing national priorities

7

BEST `D AVAILABLE

and a classification system which would assemble useful, con-sistently high-quality data. This process is evolutionary,and we believe that continued development and presentationof alternatives are necessary so that the Congress can know-ledgeably determine the most appropriate structure.

On February 20, 1976, our staff study, "Proposed BudgetClassifications--Functions and Subfurnctions, Fiscal Year1978," was distributed for review and comment. Copies weresent to all standing congressional committee chairmen, theCongressional Budget Office, OMB, and the Department of theTreasury.

In addition to the written responses to the study fromcongressional leaders, we have received many comments andsuggestions through participation in meetings and personaldiscussions with many congressional staff representatives.Appendix II includes a discussion of the various commentsmade regarding each functional category and our proposalsrelative to them. In appendix IV.we discuss comments of ageneral nature relating to our staff paper.

Based on analysis of comments received, we have nowreviewed and in certain respects revised the structure pre-sented in our earlier staff study. The revised structurerepresents the initial standard classifications we proposeto fulfill section 202(a)(1) of the Legislative Reorganiza-tion Act, as amended.

The proposed functions and subfunctions represent areasonable compromise after consideration of the varyingviews of congressional committees and institutions involvedin the budget process. Obviously, it is impossible to ac-commodate all of the viewpoints in a single structure be-cause many suggestions were contradictory. For example,there were many recommendations to split up the Income Se-curity function, primarily because of its size and thediversity of programs included in it. On the other hand,there were strong suggestions to maintain the Income Se-curity function intact for legislative purposes becausethe various programs grouped under it have much in common.Our proposal recommends splitting up the Income Securityfunction, but maintains the integrity of the subfunctionsfor ease in reaggregating the programs.

Our efforts will continue to be directed primarilytoward meeting the requirements of title VIII while simul-taneousiy considering' the requirements of title VI of the

8 BEST DOCUMENT AVAILABLE

act for fiscal year 1979. Our ongofni work at the appro-priation and fund-account level and i,. developing anddisplaying budget data related to authorizing statuteswill provide a continually improving base for a standardclassification structure which systematically aggregatesFederal programs according to primary purpose. In addi-tion, it will aid in developing a standard coding systempermitting secondary classifications so that budget in-formation can be used as flexibly as possible. We believethis approach will best allow the time and experience nec-essary to implement formal changes in the present structurefor the fiscal year 1979 budget presentation.

8Et EST;: i;; A!VAILABLE9

CHAPTER 4

CRITERIA

Our approach has been to propose changes in the presentfunctional category structure only when they will alleviateproblems identified with the present Offj-i of Management andBudget function/subfunction aggregations. Our changes havefocused on three criteria:

--HighlightinIg major ongoing areas of national concern.For example, Energy is combined under the presentstructure with Natural Resources and Environment.Our approach would provide a separate functionalcategory for Energy.

--Separating functions containing programs with diver-gent purposes, where feasible. For example, thepresent structure combines Education, Training, Em-ployment, and Social Services in one function. Ourapproach would separate these programs. However,those who need them for analytical purposes can re-aggregate them through the subfunctions.

--Aggregating functions/subfunctions on a more consis-tent basis.

In general our proposed structure would not at this timerequire major splitting of appropriation accounts. However,it would include those splits already used by OMB and alsirequire splitting the appropriation accounts in the NationalDefense function in order to expand the number of subfunctionsfrom 4 to the proposed number of 14.

10 , !

10

!-I- 1,~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~.

CHAPTER 5

CONCLUSIONS AND RECOMMENDATION

Our proposed classification structure would increasethe number of major functional categories from the 16 nowused by the Office of Management and Budget to 22.

We propose:

--Creating new functional categories for Energy andHousing.

--Splitting the present Commerce and Transportationcategory in four parts, with new functions forTransportation, Postal Service, and Commerce, respec-tively, and moving housing-related programs to thenew Housing function.

--Splitting the Education, Training, Employment, andSocial Services function, and the Income Securityfunction, and recombining the parts into four newcategories: Education, Employment and UnemploymentBenefits, Social Services and Public Assistance, andRetirement Benefits.

--Expanding the present Interest function to includeother activities related to financing the Governmentand retitling it Financial Operations of the FederalGovernment.

Our proposal also includes revisions to the existingsubfunctional categories and expands their number from 68to 98. Among the major changes is the expansion of theNational Defense subfunctions from 4 to 14 in order to dis-play those programs more precisely. In addition, the iden-tification of programs directed toward Indians and ruralareas at the subfunction level would make these programsmore visible. We believe these additional subfunctionswill increase the armount of useful detail available formany functions.

Rents and royalties on the Outer Continental Shelf arepresently carried as a reduction in expenditures under theUlndistributed Offsetting Receipts function. We recommendthat these amounts be treated as a budget receipt, thuspresenting more valid budget totals.

1 r > -. _AVAlabLE

RECOMMENDATION

We recommend that the Director of the Office of Manage-ment and Budget provide in conjunction with the Budget for fis-cal year 1978 a presentation of the principal budget data usingtne alternative structure discussed in this report as asupplement to the existing functional presentation. Thispresentation would provide tne Congress a basis for comoari-son with the existing functional category structure of thePresident's Budget, in order to determine which structureor combination of structures is most appropriate for con-gressional budget formulation.

In addition, it would maintain continuity and provideexperience in dealing with new aggregations of the existingdata during a period when the Congress will be gaining anadditional year of experience with the new budget process.

OMB has advised us that they disagree with our recom-mendation for the following reasons.

OMB indicated that there is not sufficient time beforeprinting tne fiscal year 1978 Budget for necessary agencyinvolvement and computer reprograming and that the additionalworkload for OMB would occur at the peak of the budget cycle.however, we feel the additional workload on OMB and the agenciesshould be minimal because most of the proposed categories.rep-resent reaggrega;.ions of the existing appropriation accountsto form new functions and subfunctions. We would also bewilling to assist OMB by sharing with them our work on reclas-sification of major accounts which underlies this report. Inaddition, we do not consider it essential that data on the newbasis be published simultaneously with the Budget. A briefdelay of a few days would not seriously impair the usefulnessof the presentation.

OMB stated that it was not feasible for the Department ofDefense to produce outlay data for the proposed suotunctionalcategories. We recognize that this outlay data is not readilyavaiiable. However, for purposes of judging the usefulness ofour proposed structure, estimates would be sufficient. Changeswhich would be necessary to fully implement a new structureshould await decisions on the details of that structure.

OMB questions using the Budget itself as a venicle fortesting an option for which there iz not evidence of strongsupport in the Congress. We agree chat there is no clearconsensus for any partic.ul.ar structure at this time, including

12 BEST DOCUNENT AVAILABLEL. -

our proposal. However, as our report indicates, there isconsiderable evidence of dissatisfaction with the presentstructure and we believe that movement towards a classifi-cation structure tnat will better serve the needs of theCongress is necessary at this time. We believe th'at theBudget itself is the most effective vehicle for focusingdiscussion on various ways of accomplishing this.

we wiil continue to work witn OMB to find the best wayof carrying out our recommendation.

13 BEST DOCUiM'ENT AVAILABLE

APPENDIX I APPENDIX I

PROPOSED FUNCTIONS AND SUBFUNCTIONS

FY 1977--President'sbudget proposals

Budget authority-total obligation

authority(note a) Outlays

(millions)

0100 NATIONAL DEFENSE:0101 Strategic Forces $ 9,3320102 General Purpose

Forces 40,1890103 Intelligence and Com-

inunications 7,7340104 Airlift and Sealift 1,5850105 Guard and Reserve

Forces 5,9080106 Research and Develop-

ment 10,4640107 Central Supply and

Maintenance 10,9290108 Training and Other

General PersonnelActivities 11,458

0109 Medical Activities 3,1250110 Administration and As-

sociated Activities 2,1430111 Military Assistance 1,3890112 Atomic Energy Defense

Activities 1,9430113 Defense Related Ac-

tivities 1390114 Military Retirement 8,382

114,720Prior .year funds and

other ajijustments 185

Total $114,905 $101,129

a/Total obligation authority represents the sum of all budge.authority granted (or requested) from the Conaress in agiven year, plus amounts authorized to be credited to aspecific fund, and the balances of unused budget authorityfrom previous years which remain available for obligation.

14 BEST DOCUPVENT AVAILABLE


Budgetauthority Outlays

(millions)

0200 INTERNATIONAL AFFAIRS:0201 Bilateral Development

Ass.stance $ 4,226 $3,5540202 Multiiateral Development

Assistance 1,236 1,1120203 Conduct of Foreign Affairs 974 8990204 Foreign Information and

Exchange Programs 360 3580205 International Financial

Programs 3,348 1,306

Total $10,144 $7,229

0300 GENERAL SCIENCE, SPACE ANDTECHNOLOGY (note a):

0301 General Scientific Researchand Training $ 1,405 $1,310

0302 Space Science0303 Space Applications 1,668 1,7800304 Supporting Space Activities 1,655 1,549

Total $ 4,728 $4,639

040r NATURAL RESOURCES AND ENVIRON-MENT:

0401 Flood Control and Irrigation $.3,014 $3,0260402 Land Management and Conser-

vation 1,894 1,7710403 Recreational Resources 636 6570404 Pollution Control and Abate-

ment 613 5870405 Other Natural Resources 136 94

Total $ 6,293 $6,135

a/Estimates of budget authority and outlays for subfunctions0302, 0303, and 0304 are based on Committee on the Budget,U.S. House of Representatives, Hearings of Mar. 23, 1976;and p. 80 of "The Budget of the United States Government,Fiscal Year 1977."

BEST DOCUMENT AVAILABLE15



(millions)

0500 ENERGY (note a):0501 Energy Production $ 542 $ 1,4120502 Nuclear Energy Research

and Development 3,000 2,6000503 Non-Nuclear Energy Re-

search and Development 1,309 1,0690504 Energy Conservation and

Regulation 392 404

Total $ 5,243 $ 5,485

0600 AGRICULTURE:0601 Farm Income Stabilization $ 1,102 $ 1,0200602 Agricultural Research 386 3950603 Agricultural Services 751 265

Total $ 2,239 $ 1,680

0700 COMMERCE:0701 Advancement of Commerce $ 205 $ 2000702 Regulation of Commerce 243 2430703 Small Business Assistance 538 313

Total $ 986 $ 756

0800 TRANSPORTATION:0801 Ground Transportation $ 9,610 $ 9,7540802 Air Transportation 2,773 2,7150803 Water Transportation 1,624 1,6420804 Other Transportation 120 117

Total $14,127 $14,228

0900 HOUSING:0901. Low and Moderate Income

Housing Assistance $17,163 $ 5790902 Rural Housing 177 -4530903 Maintain Housing Mortgage

Market' 975 830

Total $18,315 956

a/Estimates of budget authority and outlays for subfunctions0502 and 0503 are based on p. 33, Federal Energy Programs,Senate Budget Committee Report, "First Concurrent Resolu-tion on the Budget--Fiscal Year 1977 and the Budget for theTransition Quarter," Report No. 94-731, Apr. 3, 1976.

16

BEST DOCUMENT AVAILABLE


fBidgetauthority Outlays

(millions)

1000 COMMUNITY AND REGIONAL DEVELOP-MENT:

1001 Community.Development $ 3,568 $ 2,0361002 Rural Economic Develop-

ment 346 2091003 Regional Development 762 7661004 Indian Assistance 684 7441005 Disaster Relief and In-

surance 291 540

Total $ 5,651 $ 4,295

1100 REVENUE SHARING:1101 General Revenue Sharing $13,085 $13,0.911102 Other General Purpose

Fiscal Assistance 830 830

Total $13,915. $13,921

1200 EDUCATION:1201 Elementary and Secondary

Education $ 4,258 $ 3,4361202 Higher Education 2,117 2,5061203 Vocational and Adult Edu-

cation 539 6721204 Research and General Educa-

tion Aids 931 9661205 Indian Education 286 289

Total $ 8,131 $ 7,869

1300 POSTAL SERVICE (note a):1301 Public Service Operations $ 920 $ 9201302 Reduced Rate Mail 485 4851303 Accumulated Deficit and

Liabilities 54 54

Total $ 1,459 $ 1,459

a/Estimates of budget authority arid outlays for subfunctions1301, 1302, and 1303 .are based on pp. 763-64 of "The Budgetof the United States Government, Fiscal Year 1977 Appendix."

17 &S3EST D G ·, ' T AVAILABLE


Budget.authority Outlays

(millions)

1400 EMPLOYMENT AND UNEMPLOYMENTBENEFITS:

1401 Unemployment Benefits $21,560 $21,8601402 Job Training 3,054 3,0541403 Employment Services 493 493

Total $25,107 $25,407

1500 SOCIAL SERVICES AND PUBLICASSISTANCE:

1501 Rehabilitative Services $ 1,040 $ 1,1331502 Food Assistance 6,83? 6,7961503 Other Public Assistance 15,647 15,693

Total $23,539 $23,622

1600 IHALTII:1601 Medicare $28,892 $27,73116U2 Health Research and Develop-

ment 2,155 2,16216J03 Health Resource Development 516 7971604 Control of Health Problems 1,251 1,4881605 Indian Health Care Services 355 3491606 Medicaid 10,001 9,0011607 Other Health Care Services 749 1,126

Total $43,919 $42,654

1700 RETIREMENT BENEFITS:1701 General Retirement $ 77,864 $ 76,7341702 Disability Retirement 11,919 12,1601703 Federal Employee Retirement

and Disability 16,938 11,179

Total $106,721 $100,073.

1800 VETERANS BENEFITS AND SERVICES:ld01 Veterans Pensions, Disabil-

ity, or Death Benefits S 8,068 $8,0601802 Veterans Life Insurance 970 750ld03 Veterans Education, Training,

and Rehabilitation 4,161 4,1881004 Hospital and Medical Care

for Veterans 4,425 4,510

18




(miiiions)

1800 VETERANS BENEFITS AN!) SERVICES(CONT.):

1805 Veterans Housing (a) (a)1806 Other Veterans Benefits and

Services 513 512

Total $18,137 $18,020

1900 LAW ENFORCEMENT AND JUSTICE:1901 Federal Law Enforcement and

Prosecution $ 1,731 $ 1,7191902 Federal Judicial Activities 302 3001903 Federal Correctional and

Rehabilitative Activities 299 .2791904 Law Enforcem-nt Assistance

to Stdte and Local Gc¢ern-nr.:nts 708 840

1905 Legal Assistance to Indivi-duals 80 83

Total $ 3,120 $ 3,221

2000 FINANCIAL OPE'.(iTIONS OF THEFEDERAL Z3VERNMEN.:

2001 Revenue Collections $ 1,672 $ 1,6592002 Maintaining Fiscal Opera-

tions 332 3322003 Financing Agency Debt2004 Interest on the Public Debt 45,396 45,396

Total $47,400 $47,387

2100 GENERAL GOVERNMENT:2101 Legislative Functions $ 661 $ 6612102 Executive.Direction and

Management 26 262103 General Property and Records

Management 284 2832104 Central Personnel 4araqement 7,257 7,2572105 Othe: General Government 399 362

Total $ 8,627 $ 8,589

a/Less th..i $25 million.

19

BS SC ..:.. *T AVAULAILE

APPEi:DIX I APPENDIX I


(millions)

2200 UNDISTRnI1DUTED OFFSETTINGRECEIPTSt

2201 Employer Share, EmployeeRetirement $ -4,468 $ -4,468

2202 Interest Received byTrust Funds -8,373 -8,373

Total $-12,841 $-12_841

BEST DOCGIENT AVAILABLE20

so- · . I.J

APPENDIX II APPENDIX II

DISCUSSION OF PROPOSED

FUNCTIONS AND SUBFUNCTIONS

The following is a detailed description and discussionof each budget function/subfunction classification which wepropose. It includes a discussion ot comments received onthe structure proposed in our staf paper circulated to con-gressional committees, OMB, the Congressional Budget Office,the Congressional Fesearch Service, and the Treasury DePart-ment. In general, the dollar figures are based on the as-sianment of each appropriation or fund account with budgetauthority in excess of. $25 million to a single function inaccordance with its primary purpose.

We recognize that individual accounts may be viewed indifferent ways for classification purposes, and that indi-vidual accounts mayv contain a number of programs with vary-ing objectives. Colseauently, approoriation accounts shouldbe split to achieve a high degree of functional purity. How-ever, at the recognized cost of technical purity in classfi-cation, except in a few instances, our nroposal does notattempt to split appropriation accounts cther than those al-ready sDlit by OhB. We feel that this approach is necessaryat this time because of the technical and other difficultiesinvolved in splitting appropriation accounts. Full imple-mentation of a new functional category structure, however,should be accompanied by consideration of the need for furtnersplitting when it would add sianificantly to the validity andusefulness of the data.

The discussion for each proposed function is Presentedin three sections:

--A tabular disolay of: the amounts of budget authorityand outlays for' each of the proposed functions andsubfunctions.

--A narrative description of the proposed functionalcategory as a whole and each of the proposed subfunc-tions, including major program areas and major aaen-cies involved. (In some cases procram areas or aqen-cies are included here for illustrative purposes eventhough they are off budget or have budget authority cfless than $25 million.)

--A general discussion ef proposed chances in the presentOMB function/subfunction classification structure, rea-sons for the changes, and relevant comments receivedon the GAO staff study, "Proposed Budaet Classifica-tions Functions and Subfunctions Fiscal Year lY78."

21

BEST D 0 EW T AVAILABLE


Budget authority-total obligationalauthority (note a) Outloys

(millions)

0100 NATIONAL DEFENSE:0101 StrateQic Forces $ 9,3320102 General Purpose Forces 40,1890103 Intelligence and Com-

munications 7,7340104 Airlift and Sealift 1,5850105 Guard and Reserve

Forces 5,9080106 Research and Develop-

ment 10,4640107 Central Supply and

Maintenance 10,9290108 Training and Other

General PersonnelActivities 11,458

0109 Medical Activities 3,1250110 Administration and

Associated Activities 2,1430111 Military Assistance 1,3890112 Atomic Energy Defense

Activities 1,9430113 Defense Related Acti-

vities 1290114 Military Retirement 8 382

114,720

Prior year funds andother adjustments 185

Total $1].419~ S$101 129

-/Data available for total obligational authority, but notoutlays tor subfunctions 0100 through 0111.

The National Defense function contains those programsdirectly related to the common defense and security of theUnited States. This function includes

--foreign military assistance;

--defense-related atomic energy needs;

22

BEST T' AVAUILABLi


--direct compensation and benefits for active militaryand civilian support personnel;

--military retirement, medical, and housing benefits;

--raising, eauippinq, and maintaining armed forces,including support activities;

--research, develooment, test, and evaluation of weaponssystems;

--procurement, construction, and stockpile activities;

--national security and intelligence activities;

--maintaining National Guard and Reserve forces; and

--other defense-related activities.

0101 Straqetic Forces

Includes all prorams whose primary purpose is to deteror respond to nuclear attack against the United States. Thissubfunction includes

--manned strategic bomber programs, including operationof the existing bomber force and procurement of newbombers;

--subinarine-launched missile programs, including opera-tions and procurement of new submarines and missiles;

--intercontinental ballistic missile oro-ram, includingmaintenance and operation of the existing intercon-tinental ballistic missile force and procurement ofnew missiles; and

--ballistic missile and early warning defense systems.

0102 General Purpose Forces

Includes all programs whose primary purpose is to defendthe United States against nonnuclear at-ac';s, includino aen-eral land, naval, and tactical air defense forces.

0103 Intelliqence and Communications

Includes all programs whose primary purpose is to gatherand communicate information necessary to insure a comprehensivenational defense.

BEST DOCUMENT AVAILABLEl,=.


0104 Airlift and Sealift

Includes all programs whose primary purpose is to trans-fer, by air or sea, large numbers of personnel and supplieson short notice.

0105 Guard and Reserve Forces

Includes all programs whose primary purpose is to pro-vide manpower to augment the active defense forces duringemergencies.

0106 Research and Development

Includes all programs whose primary purpose is to keepthe United States' defense forces modern, and to maintaintechnologial superiority throuch exploratory research, devel-opment, test, and evaluation.

0107 Central Supply and Maintenance

Includes all programs whose primary purpose is inventorymaintenance, storage, distribution, depot-level maintenance,or transportation of military material.

0108 Tralning and Other General Personnel Activities

Includes all programs whose primary purpose is to pro-vide training, family housing, military and civilian pay,and other general support for military personnel.

0109 Medical Activities

Includes all programs whose primary purpose is to pro-vide medical services to active duty personnel and their de-pendents and retired military.

0110 Administration and Associated Activities

Includes administrative support of d-.partmental andmajor administrative headquarters, field commands, and relatedactivities.

G111 Military Assistance

Includes all programs whose primary purpose is to pro-vide the support necessary to strengthen the efforts of coun-tries friendly to the U.S. to provide for their own defense.

24 BEST DT .'T AVAILABLEi._.~~~~~~~~~~~~~BI


0112 Atomic Enery Defense Activities

Includes all p-ograms whose primary purpose is the re-search and development of nuclear materials for nationaidefense purposes.

0113 Defense Related Activities

Includes all programs primarily related to providinga national defense not previously accounted for, such ascivil defense and the Selective Service.

0114 Iilitary Retirement

Includes all programs whose primary purpose is to pro-vide'payments to retired military personnel or their survi-vors.

Discussion and comments

At the functional level, our proposal is unchanged fromthat of the existinq OMB presentation. Our proposal would,however, expand the number of subfunctions from 4 to 14. Ourcategories relate closely to the major program categories inthe Department of Defense planning, orograming, and evalua-tion system.

The dollar amounts assigned to the proposed subfunctionswere obtained from the Department of Defense 5-year defenseplan for FY 1977. For subtunctions 0101 through 0111, appro-rriaioLn accounts have been split and allocations made to thevarious subfunctions on the basis of total obliqational au-thority.

We received several comments suggesting changes in thepresentation of military retirement, including treating mili-tary retirement in a manner similar to civilian retirement.The problem is that military retirement is not funded on acurrent basis, so that the figures shown under the NationalDefense function are the actual payments to retirees. Onesuggestion was to make an actuarial estimate of the coststhat would be shown in the National Defense function if mil'i-tary retirement were funded in a manner comparable to civilianretirement. That figure would then be included under NationalDefense with the payment to retirees being snown under IncomeSecurity the S;ame as civilian retirementr. Afte; careful con-sideration of the suggestions, we concluded that Military Re-tirement should remain categorized under the National Defensefunction on the bases that its unfunded character makes it

25

BEST DOOUMENT AVAILABLE,


distinct from civilian retirement and that actuarial estimatesof the present costs of future retirements would be difficultto make and in any case would not constitute budget authorityor outlays as presently defined in section 3 of the Congres-sional Budget Act of 1974.

We also received a suggestion to reclassify the militaryassistance programs with the International Affairs function,and another suggestion to combine all military assistance pro-grams under either the National Defense or the InternationalAffairs function. We recognize that the objectives of foreignmilitary assistance are closely related to tne objectives ofprograms included in the International Affairs function. In-deed, a very close relationship exists among most of the pro-granis in the two functional categories. However, the presumedpurpose for the military assistance programs is primarily toprovide for national defense. Therefore, we have retainedMilitary Assistance as a separate subfunction in the NationalDefense function.

Budaetauthority Outlays

(millions)

0200 INTERNATIONAL AFFAIRS:0201 Bilateral Development

Assistance $ 4,226 $3,5540202 Multilateral Develop-

ment Assistance 1,236 1,1120203 Conduct of Foreign

Affairs 974 8990204 Foreign Information

and Exchange Programs 360 3580205 International Financial

Programs 3,348 1 306

Total $10,144 $7ZL29

The International Affairs function is composed of pro-grams directed toward the establishment and maintenance ofpeaceful relations, commerce, travel, and development betweenthe United States and other countries. This function includes

--funds for foreign economic and financial programsthrough multilateral and bilateral development assis-tance;

--foreign information and exchange activities;

26

BEST DO(½ 7 AlVAILABLE


--Food for Peace (P.L. 480);

--The Peace Corps;

--conduct of foreign affairs; and

--programs to foster foreign commerce.

0201 Bilaterial Development Assistance

Includes all programs having as their primary purposethe provision of direct economic, financial, and securityassistance to foreign countries. This suPfunctionincludes funds for the Agency for International Development,P.L. 480, and the Peace Corps.

0202 Multilateral Development Assistance

Includes all programs whose primary purpose is the pro-vision of foreign aid through contributions to internationaldevelopment banks and other international organizations. Itincludes contributions to the International Development As-sociation, and investment in both the Asian Developr.ent Bankand the United Nations development programs.

0203 Conduct of Foreign Affairs

Includes all programs whose primary purpose is the for-mu;ation of foreign policy in the State Department, conductof diplomatic and consular relations, and contributions re-oauired for membership in international organizations.

0204 Foreign Information and Exchange Proqrams

Includes all programs whose primary purpose is thebroadening of American individual or institutional contactswith foreigan societies. Funds are provided primarily forthe U.S. Information Agency, Radio Free Europe, and RadioLiberty, and the Board for International Broadcasting.

0205 International Financial Programs

Includes all programs whose primary purpose is the pro-motion of international monetary stability and trade, suchas the Export-Import Bank.


It Was suggested that Advances, Foreign Ailitary Salesis a financing activity similar to that of the Expoct-Import

27

8EST DOI 'TAVA L)


Bank, and should be classified under the International Finan-cial Prog'ram subfunction.

There is a dual purpose involved in military assistanceactivities. One purpose is directed primarily toward meetingour national defense objectives and the other toward interna-tional assistance. We feel that the primary objective, how-ever, is to provide for national defense. These programsare a prime example of the desirability for a secondary clas-sification system.


(millions)

0300 GENERAL SCIENCE, SPACE ANDTECHNOLOGY:

0301 General scientific researchand training $1,405 $1,310

0302 Space science0303 Space applications 1,688 1,7800304 Supporting space activi-

ties 1,655 1,549

Total $4,728 $4,639

The General Science, Space, and Technology function in-cludes all science and research programs of the Federal gov-ernment directed toward man's general advancement of know-ledge. This function includes the following:

--Space flight, space applications, space research andtechnology, and supporting space activities.

--General science and basic research activities of theNational Science Foundation.

--Weather forecasting and studies of the ocean and at-mosphere.

0301 General Scientific Research and Trainina

This subfunction includes general scientific and basicresearch programs, weather and technical services, and scien-tific manpower development. Major agencies are the NationalScience Foundation and the Department of Commerce's NationalOceanic and Atmospheric Administration (NOAA) and NationalBureau of Standards.

28

BEST DOMUESNT AVAILABLE


0302 Space Science

This subfunction includes all National Aeronautics andSpace Administration (NASA) programs directed toward the ad-vancement of scientific knowledge involving exploration ofthe sun and the planets as well as other related scientificactivities which are either manned or unmanned.

0303 Space Applications

This subfunction includes all NASA programs orientedtoward the utilization of space for practical purposes suchas weather monitoring, communications, and earth resourcessurveys, as well as other related applications activitieswhich are either manned or unmanned.

0304 Supporting Space Activities

This subfunction includes all NASA programs intended toprovide support for space science and applications, which in-cludes space transportation systems, other launch systems,and tracking and data acquisition services.


It was suggested that Manned Space Flight no longercharacterizes NASA's basic mission; rather it is the perfor-mance of a variety of specifically defined tasks. Conse-quently, our proposal d3istributes the existing Manned SpaceFlight subfunction to Space Science, Space Applications,and Space Activities.

It was also suggested that a portion of NASA is pri-marily related to providing a national defense and should beidentified separately. While we recognize that the samespace programs result in important benefits to national se-curity, they are difficult to identify. In order to allo-cate any portion of the NASA budget to National Defense,the appropriation accounts would have to be allocated betweenthe functions.

BEST DO. -IT AVAILABLE29



(millions)

0a30 NATURAL RESOURCES AND ENVIRONMENT:0401 Flood Control and Irrigation $3,014 $3,0260402 Land Management and Conser-

vation 1,984 1,7710403 Recreational Resources 636 6570404 Pollution Control and Abate-

ment 613 5870405 Other Natural Resources 136 94

Total $6,293 $6,135

The Natural Resources and Environment function involvesthe management and development of the Nation's fish, wildlife,and recreation lands. This function includes the following:

--Pollution abatement and control.

--Fostering of conservation practices on both publicand private lands.

---Development and operation of water and land recreationareas.

--Development and manageim.nt of water resources.

0401 Flood Control and Irrigation

This subfunction includes technical and financial assist-ance for watershed protection and maintenance, major erosionand flood control projects, and irrigation projects. Theseactivities are cenducted primarily by the Soil ConservationService in the Departient of Agriculture, the Corps of En-gineers in the Department of Defense, and the Bureau of Re-clamation in the Department of the Interior.

0404 Land Management and Conservation

This subfunction includes the promotion of rural landconservation, the protection and management of forest re-sources, the management and conservation of Indian trust landsand Federally owned public lands and minerals, coastal zonemanagement, and land and water surveys and mapping. This sub-function primarily groups the land resource activities of theDepartment of Agriculture's Soil Conservation Service andForest Service, the Department of Interior's U.S. Fish andWildlife Service, Bureau of Land Management, and Geological

30



Survey, and the Department of Corimerce's NOAA (CoastalZone Management).

0403 Recreational Resources

This subfunction includes-all programs primarily di-rected toward the conservation, protection, and utilizationof sport fisheries and wildlife resources, including pro-tecting endangered species, increasing and improving outdoorrecreation facilities, and preserving historic properties.These activities are conducted primarily by the Departmentof Interior's Bureau of Outdoor Recreation and the NationalPark Service.

0404 Pollution Control and Abatement

This subfunction includes all pollution control andabatement activities of the Environmental Protection Agency.

0405 Other Natural Resources

This subfunction includes all programs related tonatural resources not accounted for elsewhere, including thedirection and administration of the Dtpartment of Interior;the improvement of mining and metallurgy techniques; and thedevelopment and conservation of helium reserves.


It was suggested that there is an essential trade-offin allocating the Nation's resources between environment andenergy programs and that consequently they should all remaingrouped in the same function. On the other hand, it was alsopointed out that there is a need to emphasize growing nationalconcerns through separate classification at the functionallevel. While we recognize the importance of maintaining com-peting programs in the same function, on balance we concludedthat it was more important to identify energy as a separatefunction.

31 BEST DOCUMENT AVAILABLE

APPENDIX II APPENDIX il

Budgetauthority Outlay

(millions)

0500 ENERGY:0501 Ei,ergy Production $ 542 $1,4120502 Nuclear Energy Research

and Development a/3,000 a/2,6000503 Non-Nuclear Energy Re-

search and.Development a/1,300 a/1,0690504 Energy Conservation and

Regulation 392 404

Total $5,243 $5,485

a/Estimate.

The energy function contains all programs primarilyconcerned with the supply and use of energy. It includesthe following:

--Research to develop new technologies and applicationsof nuclear power, fossil fuels, and other energysources for nonmilitary purposes.

--Production and marketing of pow,er and fuels by gov-ernment operations.

--Regulation of industries affecting the distribution,supply, and use of fuels and energy.

--Promotion of energy conservation practices.

0501 Energy Production

This subfunction includes the construction, maintenance,and operation of facilities to market electric power producedby Federal facilities and the production of nuclear materialsfor civilian power reactors. Energy production activitiesare carried out by the Energy Research and Development Admin-istration, the Tennessee Valley Authority, and the power-related agencies, such the Rural Electrification Administrationand the Bonneville Power Administration.

U502 Nuclear Energy Research and Development

This subfunction includes the development of nuclearenergy resources and nuclear energy conservation research anddevelopment projects and the reduction of environmental andsafety hazards resulting from nuclear energy source materials.

32

BEST D .O. \T AVAILABLEBEST Ln.,nllb~TLQ~~Pda


T'i'me Activities are conducted primarily through the Environ-mental Protection Agency and the Energy Research and Develop-ment Administration.

0503 Non~Nuclear Energy Research and Development

This subfunction includes all programs primarily in-tended to provide for the research and development of non-nuclear energy resources. It also includes nonnuclear re-roarch and development directed toward conservation andreduction of resultant environmental and safety hazards.Thone activities are conducted primarily through the EnergyReoearch &nd Development Administration, the Department ofIntorior's Bureau of Mines, and the Environmental ProtectionAgency.

0504 Energy Conservation and Regulation

Thi; rubfunction includes policy formulation and admin-istration of programs primarily directed toward the conserva-tion and regulation of energy. These activities are primarilycondluct.id by the Federal Energy Administration, the FederalPower Commission, and the Nuclear Regulatory Commission.

tiscurnion and comments

There were a number of comments supporting the separationof ener'y from the Natural Resources, Environment, and Energyfunction becaus.e it is a growing national concern. It wasarno suggested that a clear differentiation be made betweennuclear and nonnuclear energy programs, polsibly at the sub-fonction level. Our proposal recognizes the increasing inter-eit in both energy in general and the distinction between nu-clear and nonnuclear energy research and development in parti-cular through their respective identifications as a separatefunction and subfunctions.


(millions)

0600 AGRICULTURE:0601 Farm Income Stabilization $1,102 $1,0200602 Agricultural Research 386 3950603 Agricultural Services 751 265

Total $2 2 39 $1,680

BEST D 7VNT0 AVAILABLE


The Agriculture function includes all programs primarilydirected toward farm income stabilization and agriculturalproduction and marketing. This function includes the follov!-ing:

--Agricultural commodity price and income support.

--Promotion of production and marketing through re-search, education, regulation, and services.

0601 Farm Income Stabilization

This subfunction includes all programs intended to pro-vide income protection for farmers related to overall programmanagement, agricultural commodity production, and indemnityprograms. These activities are conducted by the Departmentof Agriculture's Commodity Credit Corporation, and the Agri-cultural Stabilizacion and Conservation Service.

0602 Agricultural Research

This subfunction includes all programs dealing with theconduct of agriculutral research and the dissemination ofresearch information. These activities are carried out pri-marily through the Department of Agriculture's AgriculturalResearch Service and the Cooperative State Research Service.

0603 Agricultural Services

This subfunction includes all programs dealing withtechnical assistance and manpower development, extension edu-cation, marketing improvement, agricultural statistics, econo-mic analysis, protecting animals and plants from diseases andpests, providing financial assistance to farmers, protectionof crops against hazards, and general planning and coordina-tion of the Department of Agriculture programs. These activi-ties are conducted primarily by the Departmnent of Agricul-ture's Animal and Plant Health Inspection Service, ExtensionService, Statistical Reporting Service, and the AgriculturalMarketing Service.


There were several cominents supporting the separation ofAgricultural Research and Agricultural Services into two dis-tinct subfunctions. Our proposal now contains two separatesubfunctions for these activities highlighting differences inpurpose and clientele.

34 BEST ',":, ,'3Tl AV^lNBLEi._, · i~~~~~~UAAK VRAL

APPENDIX TI APPENDIX II


(millions)

0700 COMMIIRCE,0701 Advancement of Commerce $205 $2000702 iRoguJation of Comnerce 243 243

0.703 Small, Business Assistance 538 313

T'otaal $98 $986 $756

Tho Commerce function includes all programs concernedwith the promotion and regulation of commerce and industry.Thin function includes the following:

--Collection and dissemination of social and economicdata which is not an integral part of another func-tion.

-Aceitance to small business.

--Rlegulation of business.

0701 Advancement of Commerce

Thio subfunction includes programs for the collection,

compilation, and publication of demographic, economic and

nocial otatistics; activities which provide consumer infor-

mation on products and services, and the promotion and devel-opmont of commerce. The major agencies involved are the De-

partment of Commerce's Bureau of the Census, the Domesticand International Business Administration, the Office of

Minority Business Enterprise, and certain government-nponlnoliod off-budget agencies, such as the federal DepositInourance Corporation and the Federal Savings and Loan In-nurance Corporation.

0702 Regulation of Commerce

T'hhis oubrunction includes copyright, patent, and trade-nmalk reQulation and services; regulation of communicationsinduntry buniness. practices; and regulation of securitiesmarkets and offerings including commodity futures trading.

It inc1ltldefj the regulatory activities of the followingAgeonsCel. The Department of Housing and Urban Development's(1IIUt)'~) Otffice of Interstate Land Sales-Registration, the'odetlral Trade Commission, the Commodity Futures Trading Com-miaosn, the Securities and Exchange Commission, the F.ederal

35



Communications Commission, and the Department of Commerce'sPatent and Trademark Office.

0703 Small Business Assistance

This subfunction includes the activities of the SmallBusiness Administration, which provides aid to small business,


There was concern expressed that this function was notlarge enough in terms of dollar value to warrant a separatefunctional status. Several possible combinations were sug-gested. It is recognized that relative dollar value is animportant consideration in functional classification, butit should not be used as the only criterion for an otherwisearbitrary combination. Commerce is an area with sufficientongoing interest to justify separate functional classifica-tion.

It was also suggested that the existing Postal Servicesubfunction should be an independent function. Our proposalhighlights the increasing concern in this area by displayingthe Postal Service as a separate function (1300).


(millions)

0800 TRANSPGRTATION:0801 Ground. Transportation $ 9,610 $ 9,7540802 Air Transpcrtal.ion 2,773 2,7150803 Water Transportation 1,624 1,6420804 Other Transportation 120 117

Total $14,127 $14,229

The Transportation function covers most Federal supportto develop, maintain, or enhance transportation facilitiesand vsa:ems. This function includes the following activities:

--Assistance to States for road construction and im-provement and urban and rural transportation pro-grams;

--Assistance to, and regulation of, railroad, air, andwater. transportation.

E6

BEST -DOS.!?. 'T AVAILABLE


0801 Ground Trans, ortation

This subfunction includes programs intended to supportthe development of the Nation's highway system, improvementof railroad transportation systems, motor carrier and rail-road transportation safety, construction of the NationalCapital area's rapid rail transit system, and payments toprotected employees under the Regional Rail ReorganizationAct of 1973. This subfunction consists of activities pri-marily of the U.S. Railway Association; the Department ofTransportation's Federal Highway Administration, NationalHighway Traffic Safety Administration, and Federal RailroadAdministration; and the Washington MetropolitanArea Transit Authority.

0802 Air Transportation

This subfunction includes programs for the operationand maintenance of air traffic control systems; improvementin aircraft safety; promotion and regulation of commercialair transportation; operation of National and r:jlles Air-ports; and improvements in aeronautical technology. Theagencies having primary responsibility are the Departmentof Transportation's Federal Aviation Administration, theNational Aeronautics and Space Adminintration, and the CivilAeronautics Board.

0803 Water Transportation

This subfunction includes all programs primarily di-rected toward the promotion of our domestic shipping industry;the operation and maintenance of the Panama Canal and SaintLawrenue Seaway; the operation and training of the U.S. Mer-chant Marine; and the conduct of water transportation safetyduties of the U.S. Coast Guard. Included are the activitiesof the Department of Commerce's Maritime Administration; theDepartment of Transportation's Saint Lawrence Seaway Develop-ment Corporation and the U.S. Coast Guard; and the Canal ZoneGovernment and Company. (See p. 38 concerning Corps of En--gineers water transportation activities.)

0804 Other Trannportation

This subfunction includes the development and coordinationof national transportation policies and programs by the Depart-ment of Transportation and the National Transportation SafetyBoard and the regulation of interstate transportation by theInterstate Commerce Commission.

37

BEST 0CbI\!T AVAILABLE



Because of increasing national concern for adequatetransportation systems, there has been considerable supportfor a separate functional identification for Transportationfrom the existing Commerce and Transportation function. Ourproposal provides a separate functional category for Trans-portation.

There were several suggestions to include the portion ofthe activities of the Corps of Engineers supporting watertransportation in this function, instead of their presentclassification in the Natural Resources, Environment andEnergy function. We agree that the Water Transportationsubfunction (0803) is the more appropriate classification.However, in our proposal we have generally not split appro-priation accounts; thus, those Corps activities remain inthe Flood Control and Irrigation subfunction (0401).

Budget

authority Outlays

(millions)

0900 HOUSING:0901 Low and Moderate Income

Housing Assistance $17,163 $ 5790902 Rural Housing 177 -4530903 Maintain Housing Mortgage

Market 975 830

Total $18,315 $ 956

The Housing function involves assistance to mortgagecredit institutions as well as home buyers and owners. Thisfunction includes the following:

--Mortgage credit insurance for those families not ade-quately served by the private mortgage market.

--Assistance to low and moderate income families forpurchase, rehabilitation, or leasing of housing.

--Mortgage credit aid to lending institutions.

0901 Low and Moderate Income Housing Assistance

This subfunction includes programs for providing hous- '

ing to low income families and discovering new processes for

38

BEST Do .. \T AVA L'.T,

APPENDTv II APPENDIX II

solving housing problems. The Department of Housing and UrbanDevelopment has primary responsibility for conducting theseprograms.

0902 Rural Housing

This subfunction includes the Department of Agriculture'sFarmers Home Administration grant and loan programs for thepromotion of rural housing.

0903 Maintain Housing Mortgage Market

This subfunction includes mortgage and loan insuranceprograms to help finance the promotion of residentialhousing conducted by the Department of Housing and UrbanDevelopment's Federal Housing Administration and the FederalHome Loan Bank Board.


There were a number of comments received which supporteda separate functional cateqory for Housing. Our proposal com-bines the housing-related programs presently classified withthe Commerce function with those presently classified underthe Income Security function.

It was suggested that the programs presently classifiedunder the Community and Regional Development function shouldalso be considered in the same function with the housing-related programs. While we recognize that Federal programshave many times simultaneously addressed both problem areas,we feel that the increasing concern for each individual areamakes their separate classification desirable.


(millions)

1000 COMMUNITY AND REGIONAL DEVELOPMENT:1001 Community Development $3,568 $2,0361002 Rural Economic Development 346 2091003 Regional Development 762 7661004 Indian Assistance 684 7441005 Disaster Relief and Insurance 291 540

Total $5,651 $4,295

39 BEST BEST DOCUMENT AVAILABL'E


The Community and Regional Development function consistsof broad-based programs designed to foster the economic devel-opment of communities, regions, and rural areas. This func-tion includes the following:

--HUD programs for community development and urban re-newal.

--Areas and regional development programs, such as ruraldevelopment under the Department of Agriculture.

--Indian assistance programs operated by the Departmentof Interior.

--Economic programs under the Department of Commerceand the Appalachian Regional Commission.

--Disaster relief and insurance programs.

1001 Community Development

This subfunction includes programs primarily intendedto provide for the development of communities, principallythrough formula grants to State and local governments, andthrough loans to the District of Columbia for capital im-provement projects. It would also include the public servicejobs programs, such as job opportunities and public worksacceleration.

1002 Rural Economic Development

This subfunction includes programs primarily intendedto provide for the economic development of rural areas. Itsmajor programs provide grants for rural water and wastedisposal and rural development insurance.

1003 Regional Development

This subfunction includes programs primarily intendedto foster development of specific regional azeas of thecountry. The raujor programs are for the Appalachian andother Regional Commissions, the Trust Territories of thePacific, and the programs of the Economic Development Ad-ministration designed to reduce the problem of unemploymentin economically depressed areas.

BEST-I~ D OET AVAiLABLE40


1004 Indian Assistance

This subfunction includes all programs primarily intendedto develop and utilize Tribal resources, encourage businessenterprise development, and manage and administer the progrcamsunder the Department ot Interior's Bureau of Indian Affai;s.

1005 Disaster Relief and Insurance

This subfunction includes programs primarily intended toprovide assistance to individuals, businesses, and State andlocal governments in the event of an emergency or nationaldisaster, and to provide nationwide flood insurance.


There were a number of comments received supporting Ihetransfer of the Community Services Administration and ACTIONprograms from the present Community and Regional Developmentfunction to the Education, Training, Employment and SocialServices function. Our proposal includes these programs ina new Social Service and Public Assistance function on thebasis that they are more directly related to it.

BudgetauthoritXy Ouays

(millions)

1100 REVENUE SHARING:1101 General Revenue Sharing $13,085 $i3,0911102 Other General Purpose Fiscal

Assistance 830 830

Total $13,915 $13,921

The Revenue Sharing function consists of Federal aid toState, local, and territorial governments that in availablefor general fiscal.support or is available for distributionamong programs at the discretion of the recipient jurisdic-tion.

The function includes the following:

--General Revenue Sharing.

--Federal payment to the District of Columbia.

41 BEST DOCGUMENT AVAILABLE


--Shared revenue derived from certain taxes which aredistributed to the various States, Puerto Rico, andterritories.

1101 General Revenue Sharing

This subfunction provides fiscal assistance to Stateand local governments to meet their needs in accordance withtheir relative priorities.

1102 Other General Purpose Fiscal Assistance

This subfunction provides general financial assistanceto the District of Columbia government, and also provides forthe return or matching of certain receipts to States andlocalities, Puerto Rico, and the Virgin Islands.


fThe functional content of our proposal does not differfrom that of the existing function. However, we have changedthe coding so that it will be displayed next to the Communityand Regional Development function to facilitate comparisonbetween alternative methods of funding State and local finan-cial assistance programs.


(millions)

1200 EDUCATION:1201 Elementary and Secondary

Education $4,258 $3,4361202 Higher Education 2,117 2,5061203 Vocational and Adult Educa-

tion 539 6721204 Research and General Educa-

tion Aids 931 9661205 Indian Education' 286 289

Total $8,131 $7,869

The Education function contains those programs whichare primarily designed to promote the general extension ofknowledge and skills, from providing basic education throughincreasing the opportunity for higher or continuing educa-tion. This function includes the following:

.42 BEST `abD ' :TWT AVAILABLE


--Assistance to elementary, secondary, vocational, andhigher education programs.

--Aid to education research and cultural activities.

--Assistance for Indian education.

1201 Elementary and Secondary Education

This subfunction includes all basic educational programsfrom preschool through the high school level, including spe-cial and disadvantaged education. It excludes vocational andIndian education programs directed toward the elementary orsecondary level.

1202 Higher Education

This subfunction includes all programs intended to pro-vide educational assistance at the postsecondary level. Itincludes programs directed toward providing financial assist-ance to students, and those providing direct support forGallaudet College and Howard University.

1203 Vocational and Adult Education

This subfunction includes all programs primarily intendedto provide increased educational opportunities for adults. Itincludes programs directed toward the elimination of illiter-acy and those providing career education, including the ad-vancement of teachers.

1204 Research and General Education Aids

This subfunction includes those programs directed towardproviding research or general services at all educationallevels. Among the programs included are:

--Congressional library services.

--General improvement of schools and libraries.

--Noncommercial broadcasting.

--Promotion and preservation-of the arts, sciences,and humanities (including the Smithsonian).

--Administration of education programs.

43 BEST DOC.. ' T AVAILABLE


L.U in ul l.l Ltducation

This subfunction includes all programs primarily intendedto provide educational opportunities for Indians.


The present function combines Education with Training,Employment, and Social Services. Some concern was expressedthat this combination has given the mistaken impression thatthe Education programs have shared proportionately in theoverall growth of this function during the past few years.Our proposal would provide a separate functional categoryfor all Education programs.

There was also some concern expressed that there be anadequate distinction made between those educational programsprimarily directed toward the general improvement of the in-dividual, as opposed to those primarily directed toward jobplacement. Our proposed Education function would includeall programs focusing on the general education of the indi-vidual. Those vocational education programs primarily in-tended to provide a direct increase in employment opportuni-ties should be included in the proposed Employment and Unem-ployment Benefits function (1400).

Budget

authority Outlays

(millions)

1300 POSTAL SERVICE:1301 Public Service Operations $ 920 $ 9201302 Reduced Rate Mail 485 4851303 Accumulated Deficit and

Liabilities 54 54

Total $1,459 $1,459

Note: Numbers are estimates.

The Postal Service function involves the subsidy tothe U.S. Postal Service, which helps assure the continuedprovision of mail services. It includes the following:

--Reimbursement for public service costs and revenuelosses.

--Former Post Office Decpartment unfunded liabilities°

--Anticipated funds for debt reduction.

44 BEST I00CUfMENT AWSAILABLE


1301 Public Service Operations

This subfunction consists of reimbursements for postoffices in small communities or rural areas which are notconsidered to be self-supporting.

1302 Reduced Rate Mail

This subfunction includes reimbursements for loss inrevenue associated wi.h revenue foregone on free and reduced-rate mail. It provides for mail service at reduced rates tosecond- and third-class mailers and c2rtain other fourth-classmail and nonprofit organizations and free mail for blind andhandicapped persons. It also includes costs to cover sched-uled rate changes.

1303 Accumulated Deficit and Liabilities

This subfunction includes liabilities of the former PostOffice DepartmenC for injuries to employees and to postal em-ployees for unused leave as of June 30, 1971. It also pro-vides for future appropriations whose purpose is to reducethe Postal Service's operating deficit.


The subsidy to the Postal Service has been elevated froma subfunction under the Commerce and Transportation function(400) to a separate function. Our proposal initially separ-ated the payment to the Postal Service from the Commerce pro-grams and placed it in the General Government function. Sev-eral comments were received which suggested the establishmentof the Postal Service as an independent function. Afterfurther consideration, the Postal Service function was createdbecause it is a business-type enterprise rather than a aeneraloverhead cost of the Federel Government.

Bridgetauthority Outlay_

(mil]ions)

1400 EMPLOYMENT AND UNEMPLOYMENT BENEFITS:1401 Unemployment Benefits $21,560 $21,8601402 Job T:aining 3,054 3,0541403 Employment Services 493 493

Tot'al $25,107 $25,407

-'4 BEST ·4Z2 b~i AVAW LABLE

APPENDIX I APPENDIX Il

The Employment and Uneioyment Benefits function in-volves assistance to individuad'ta become self-supportingmembers of society and iril.rove thu uality of employmentlife and unemployment: compensation p 'ments provided by theFederal Government. It includes the f[lowing:

--Unemployment cotmpensation for workers temporarilyout of work.

--Administration of the unemployment compensation sys-tem.

--Training serviceo atnd income or support directly re-lated to employment.

-- Special unemployment assistance to provide jobs.

--Other manpower nervices and payments to States foremployment services.

l 4j1 9!_tnemplovment Benefits

This subfunctionl includes all proqrams administeredby the Department of Lo.lhor primarily intended to provideunemployment benefitn or insurance to qualified individualsand to assist in th, idministrotion of State unemploymentinsurance programs,. T'axes levied on employers' payrollsand advances of Federal funds primari.ly comprise the Un-employment Trust Fund. It also includes compensation paidto unemployed Federal. workers and veterans, for workers ad-versely affected by trade policy, and special unemploymentassistance.

1402 Job Traininq

This-subfunction includes all programs intended toprovide training and other services necessary to facilitatemaximum employment opportunities and enhance self-sufficiency.It includes work incerlti:ves, training pLrograms, and specialprograms for the ecrnoM:ic.] ly disadvantaged, unemployed, orunderemployed.

140 (.l tmplo!_,nent Services

This subfunction includes all programs to both increaseopportunities and improve standards related to employmentand the settlement: of labor disputes.

46

BEST L qVf ALA B L E

APPLNDIX 11 APPENDIX II

Riltinvlqon iAnd comments

1. tl:oeoived recommendations and support for splittingtho fotflir l Itlncome Security function (600), consisting of un-,mplloymliAt; benefit programs, retirement programs, and in-kindclfailnUer And other public assistance proqraims, into threenew iunerionn. Splitting this function permits considerationof tUhi eontributory programs, retirement and unemployment,oer*l).atloly from the major noncontributory welfare proqrams.'Th! ntw runothions are categorized as follows: Employmentand Uine.mptLloyment Benefits (1400); Social Services and PublicAntitalm:ol. (1500); and Retirement Benefits :1700). ,Seepp. 40=4' arnd 52 for further discussions of the other two.u lcti. t on , *

'T1r primary bRIse of the new Employment an' Unempl.oy-mont lbont.3tl t 1i funct j*-, obn3 and triin-inql oirl mi'pllllboyment compeli&Zt2.,.. f;r tho sei.a lS whoa-' teWl:orl'6tlIy unemployed. Our approach is to c- tc un-enl)oym,\nl: ibeno.fits with cer tain job creation anc jobl; -il1) rl!ml4\lw f:ro1m OMB's Education Training, Employmenlt, Sooivll 1slrvices function (500). These programs provide n eedeZSjob )( it Iwllui And training to facilitate the entry of the eco-noiitlcllly ritiadvantaged into the job market and to provideartnldncle t(o Individuals who are unemployed.

BudgetauthorL Outlays

(millions)

1500 :CtAt 1A ';E.RVICES AND PUBLICA:*5 [t;'V ANCE:

t)1 lkb;lntbilitative Services $ 1,040 $ 1,133oI'}lI I'ouod Assistance 6,832 6,7961.01 ) tllor Public Assistance 15,647 15_693

'1'dtI a $23,519 $23,622

Thrs uocital Services and Public Assistance function con-tainll- atn rl'ray of human services for the less fortunate andnl|)t'iPl tI;):ICt groups. It includes the followingl

.-.hAtaiptince to States for social and rehabilitation,Irvlees for the poor, handicapped, and others, to

lpIomote greater independence;

=U-:lrl'vies and programs for the aging and other groups;

47

BEST '9" 3(


--Food stamps and other nutrition assistance;

--Community services.

1501 Rehlabilitative Services

This subfunction includes ali programs primarilyintended to promote personal independence for aged or dis-abled individuals through rehabilitative services.

I502 Food Assistance

This subfunction includes all programs primarily in-tended to provide food and nutrition assistance to low incomeiioa:,iduals or families. This subfunction includes the foodstamp and the chfld nutrition programs.

1503 Other Public Assistance

This susbfunction includes all pro(lrams primarily intendedto provide needy i.ndividc!als with the necessary assistance andservices to attain or maiatain an acceptable standard of liv-ing. This subfunction includes supplemental security incomefunding to assis% the aged, blind, and disabled; aid to famli-lies with dependentl children; the Community Services Adminis-tration; an0 ACTION.


Our proposal splits the former Income Security function(600) into three new functions: Employment and UnemploymentBenefits (1400); Social Services and Public Assistance (1.500);and Retiremcnt Benefits (1700). The

Documents

Pi:,I'.[ T( ESSPi:,I'.[ T( tI071IE (7 ON(,. ESS, i(.(MtI .y %BY Tlit ,W)I.,!I ( !IN I vA I, 01 lif N J ,1 1 S ,,. Starndard Budget Classifications-Proposed Functions And Subfu nctions