43. Program and financing in special cases.

The following special instructions will apply in the situations indicated:

Management funds. For management funds (including the schedules for consolidated working funds and reimbursements not included in appropriation schedules), the schedule will be modified as illustrated in exhibit 41D. It will be titled "Operations and financing", and the first section will be headed "Operations by activities."

The schedule will be presented in two balanced sections, with identical totals. The total line for the first section will read "Total obligations"; the total line for the second section will read "Total financing." The arithmetic signs for the entries in the second section will be the reverse of those in the regular appropriation schedules-minus entries identified in section 42 will become plus entries and vice versa.

Revolving funds. -A "Program and financing" schedule will be required for revolving funds when specified by the Bureau of the Budget. In these cases, the schedule will be modified as illustrated in exhibit 41E or 41F. When the program is to be presented on an obligation basis the style of exhibit 41E will be used. When the program is to be presented on a cost basis reconciled to obligations the style of exhibit 41F will be used.

The schedule will always be presented in two balance sections with identical totals.

In cases where there is interest expense, a subtotal "Total operational program" will be used to cover all obligations except interest.

In the financing section an entry "Amounts becoming available" will precede and cover all sources of financing except the balances brought forward. Balances brought forward and carried forward and capital transfers will be displayed as in exhibit 41E.

It should be noted that the term "financing" here has a different meaning than used in the businesstype schedules for revolving funds (section 57).

Advances and reimbursements in appropriation schedules. When advances or reimbursements are shown in a schedule pertaining generally to appropriations, the program by activities section of the schedule will be divided into a subsection for direct obligations and one for reimbursable obligations. Both in such cases and in the case of management funds (including consolidated working funds and reimbursements not included in appropriation schedules), the activities entries will identify both the nature of the work and the agency for which it is performed, where the amounts are significant.

Allocations and allotments. - The schedules for allocations and allotments will be combined with the

parent account, with the movement of funds between the parent account and allocations eliminated. (Note, however, that obligations incurred under allocations and allotments will be identified in the schedule of obligations by objects see section 45.1.)

Cost-type budgets. - The form of the program and financing schedule will be modified as described in sections 76-79 when the budget is to be printed on a cost-type basis.

Annual limitations on use of revolving funds.Schedules showing the program and financing for administrative expenses and other annual limitations on the use of revolving funds will be prepared on the basis of obligations, accrued expenses, or accrued expenditures, depending upon the basis on which the limitation operates. The wording of the stub entries will be adjusted accordingly.

Consolidated schedules. - In cases where two or more accounts are consolidated in a single set of schedules (see section 13), the title of each account will be listed as an activity. Subentries may be used to identify activities carried on under the account where the amounts are significant. Accounts included in the schedule under which no obligations were incurred will be identified in a headnote reading:

"NOTE. The following schedules include unobligated balances for [titles of accounts].

44. Basis for the activity classifications.

Since the appropriation structure establishes the framework within which the activity schedules must be constructed, it is necessary to consider the activities pattern and appropriation structure in relationship to each other. This section therefore is to serve as a guide in determining both the appropriation structure and the activities classifications for the annual budget. It is essential that the budget structure for each agency be tailor made to fit the circumstances of individual cases.

Principles. The basic principles to be considered in selecting the pattern of appropriations and activities schedules to be used in the budget document, are as follows:

(a) The budget document must provide a constructive basis for the analysis and evaluation of the estimates. Therefore the pattern of appropriations and activities in the budget must indicate clearly the services to be performed or other basis of justification.

(b) The size of the budget document should be kept to a minimum in order to facilitate the handling of estimates and appropriations. Therefore, the appropriation and activities pattern should be kept as simple as possible, and the amount of break

down should be limited as far as possible without sacrificing clarity.

(c) The appropriation and activities pattern should be related directly to administrative control and operation of the agency and the amounts shown for each item must have a firm accounting basis.

Guides. The following guides will be used in determining the appropriation and activities pattern in the budget document:

(a) A distinction will be made between capital programs, developmental programs, grant and subsidy programs, and operating programs. This can be done either by treating each type of program as a separate appropriation or as separate activities under a single appropriation. (The phrase "capital programs" here refers to major programs of construction or loans; ordinary equipment purchases and minor capital additions for operating programs will not be treated as separate items.)

(b) Subcategories may be used where appropriate to provide full understanding of agency programs. Such subcategories may divide an activity according to projects, recipients or clientele groups, types of service, processes, institutions, or other appropriate breakdown, provided they meet the same criteria as set forth for major categories.

(c) The appropriation and activity pattern must be so constructed that the figures for each can be supported by factual data that is taken for the "past year," to the maximum extent possible, from the accounts. The emphasis upon firm accounting support will in some cases require modification of the pattern from a full program approach to one more closely related to control and operations.

(d) Personal service costs should normally be charged to activities on the basis of organization units, or on the basis of specific assignments of personnel. However, where this is not possible, because of a difference between the basis of operation and the most appropriate appropriation and activities breakdown, distribution of costs will be acceptable provided such distribution is based on readily supportable factors and does not involve overly detailed procedures. Where distribution is required, the method of distribution in each instance will be reviewed in some detail prior to determination as to acceptability.

(e) Obligations for items other than personal services should be charged directly to activities wherever feasible. However, if obligations for object classes 02 through 09 must be distributed to activities periodically throughout the year, or for the year as a whole, such distribution will be acceptable provided that it is consistent with the principles set forth in paragraph (d) above.

(f) Where it has been customary to have "administration" or overhead as a separate activity, or where an Appropriations Committee has expressed the desire for separate treatment, that practice will be followed. In other cases, the cost of administration or overhead may be distributed among the activities, in order that the amount shown for each will be a more nearly complete indication of the cost of performance. However, the basis for any such allocation must be firm, reasonable, and consistently applied from year to year. The amounts so distributed must be readily separable from other charges to each activity in order to permit of consideration of overhead as contemplated below.

The justification submitted to the Bureau of the Budget should specifically break down the amount for each activity as follows:

Direct costs (those items directly chargeable to the activity):

Personal services (by organization unit)
Other current expense, object classes 02 through 08
Equipment, object class 09

Other items, object classes 10 through 16

Indirect costs (the activity's share of any items which are accumulated separately and then allocated to two or more activities; for example, administration in certain cases)

Following the justification for the various activities, there will be a justification for "indirect" costs-those items which have been allocated to two or more activities. This section of the justification will draw together the amounts allocated to the activities, justify and explain such costs, and indicate the basis for the distribution of charges.

In the case of appropriation accounts from which allocations have been made, the schedule of obligations by objects will be broken down into sectionsone section for each bureau in the same agency and one section for each other agency-with a one-line total at the end.

When reimbursable obligations are shown within an appropriation schedule, the object schedule must follow the practice of the program and financing schedule with respect to splitting out the reimbursable obligations (section 43). Where there is such a split, the first section of the schedule will set forth the entries above which precede "Total per

sonal services." In this section, the entry "Personal service obligations" will be substituted for "01 Personal services," and the total line will read "Total personal service obligations." The data in this section will cover all obligations for personal services. Following this summary of personal services, obligations by objects will be shown under side headings "Direct obligations" and "Reimbursable obligations." The sum of amounts shown for object class 01 in the two sections must equal the total line of the summary section.

45.2 Number of positions and employees.

The first four lines of the object schedule will contain information as follows:

"Total number of permanent positions"-All fulltime permanent positions, regardless of the status of the employees (permanent, temporary, etc.), which are occupied or to be occupied at any time during the fiscal year.

"Full-time equivalent of all other positions"Full-time equivalent of all positions other than those included under "permanent positions" above.

"Average number of all employees"-Average paid employment on a full-year basis, stated to the nearest whole number, including the full-time equivalent of terminal leave and of temporary and part-time employment, but excluding employees on detail from another agency on a reimbursable basis.

In cases where there are no permanent positions, only the entry "Average number of all employees" will be used.

"Number of employees at end of year"-Number of civilian employees at the end of the year, computed on the same basis as the employment reports to the Civil Service Commission (Standard Form 113). The number shown in the past year column should be consistent with the number of total paid employees reported to the Civil Service Commission for June of the past year.

45.3. Average salaries and grades.

The entries relating to average salaries and grades will be computed as follows:

Separate entries covering average salaries and grades will be shown for each graded series comparable to the general schedule series. Average salary only will be shown for ungraded positions, which will include wage board employees, employees working at hourly or daily rates, positions which are designated by titles only, etc. Positions at rates in excess of the maximum for grade GS-18, other individual positions for which the rates are established by law, military personnel, and part-time and temporary positions will be excluded in computing these entries. Entries may be omitted for any grade series in which less than 5 percent of the total number of permanent positions fall (in all three years) except that the general schedule series must be shown in all cases where any employees are in this series.

The average salary will be computed by totaling the annual salaries of permanent civilian positions in each series of grades (e. g., general schedule) as listed in the detail of personal services, and dividing the total by the number of positions involved. Payments for overtime, nightwork differential, overseas duty, and the extra day or two in excess of 52 weeks will be excluded in computing average salaries.

The average grade will be computed by (a) multiplying each grade number by the number of positions in the grade; (b) totaling the results so obtained; and (c) dividing the total by the number of positions involved.

In cases where consolidated position schedules are used (see section 110), the average salary and grade will be computed on the consolidated basis, and the same average salary and grade will be included in each related object schedule.

45.4. Analysis of personal service obligations.

The amounts under object class 01 will be broken down as follows:

"Permanent positions"--Net obligations for regular pay for full-time, permanent positions, after deducting savings due to delays in filling vacancies, absences without pay, etc., offset to whatever extent may be necessary by terminal leave payments. Where such positions are paid from more than one appropriation, the applicable portion will be included under each appropriation. New positions for the budget year are to be estimated at the minimum of the grade.

"Positions other than permanent"-Net obligations for regular pay for all positions not included in "permanent positions" above.

"Regular pay above 52-week base"-Compensation at regular rates for the extra day or two, if any, in excess of 52 weeks in the fiscal year.

"Payment above basic rates" -Net obligations for all other types of compensation, including overtime and holiday pay, nightwork differential, living and quarters allowance, uniform allowances if paid to employees, and additional pay for service abroad.

"Other payments for personal services" - Amount paid for personal services to persons not included in regular employment reports to the Civil Service Commission, and to other agencies for reimbursable

SUBMISSION OF ANNUAL BUDGET ESTIMATES

details. This entry will include casual workers, payments to prison inmates, etc.

"Total personal services"-Total of the amounts shown for the entries above.

In the case of schedules covering expense limitations on revolving funds, all personal services of the enterprise will be shown under "01 Personal services," whether chargeable to the limitation or not. An additional entry "Deduct portion not chargeable to limitation" will be inserted following the entry "Total personal services." The final entry will then be "Net personal services." If there is more than one limitation, personal services not chargeable to any limitation may be reported in any one of the limitation schedules.

In cases where the schedule by objects is on an accrual basis, an entry titled "Excess of annual leave earned over leave taken" or "Excess of annual leave taken over leave earned" (minus entry) will be used immediately after the entry "Payment above basic rates" to reflect the net increase or decrease in the accrued liability.

45.5. Itemization of obligations for other object classes.

Each other object class will be set forth on a single line, except that (a) within class 07, reimbursements and advances to other agencies or to other bureaus in the same agency (for items ordinarily classed as 07) will be set forth separately as an unnumbered item, immediately following the usual entry for the remainder of 07, and (b) a more detailed subclassification may be used optionally to show the distribution of large or unusual obligations under any class.

Each reimbursement and advance to another appropriation, a working fund, or a revolving fund, will be classified in the object class which represents the type of transaction involved.

The distribution of obligations by object class will follow the definitions in Budget-Treasury Regulation No. 1.

The uniform wording of the object classes will be used exactly as set forth, although an explanatory phrase may be added in parentheses where the whole of the obligations in some class are for a particular or special object. The unnumbered entry "unvouchered" will be used only for obligations which may be incurred lawfully for confidential purposes, not subject to detailed vouchering or reporting.

45.6. Adjusting and total entries for object schedules. Where employees are charged for quarters or subsistence, provided in kind, an additional entry "Deduct charges for quarters and subsistence" will be used ahead of the final entry. It will be preceded by a "Subtotal" entry.