plicated by the large segment of budget expenditures which are relatively unaffected by the budget process-for the last few years such items as interest on the public debt, veterans' pensions, grants for public assistance, and agricultural price support have accounted for 60 to 70 percent of the total budget expenditures other than the national security items, or about 25 percent of the grand total. The level of these expenditures depends upon provisions of the laws which authorized the programs and on other factors not readily subject to annual budgetary control.

The estimates submitted by each agency were reviewed by Bureau of the Budget examiners familiar with the individual programs, who are assigned to continuing responsibility with respect to those programs. Consideration at that time was given to the size of the proposed programs and their relationship to other activities, and the effect of reductions in the proposals. The examiners' recommendations with respect to the agency proposals were considered by the Director and his top assistants in the light of the total budget situation. The Director then recommended to the President the amounts of "ceilings" which should be established for each major agency for that part of its programs which is subject to control through the budgetary process. "Target" amounts were generally established for that part of the expenditures which is mandatory under existing law. When the President made his decisions on the recommendations, the Director met with each agency head to discuss the effect of the decision on the agency's programs. The budget situation was again the subject of Cabinet attention at that time. At this time the Director and the PresiIdent had the benefit of a revised estimate of revenues and economic prospects by Treasury, the Council of Economic Advisers, and the Bureau of the Budget.

The precise procedure sometimes varies for certain agencies. Last year, for example, the figures for Defense and mutual security were determined on the basis of additional consultations and on a slightly different time schedule.

COMPILATION OF DETAILED SCHEDULES--HEARINGS

During the next 3 months (July through September) the agency compiled the detailed schedules and supporting information in accordance with the instructions prescribed by the Bureau of the Budget (Circular No. A-11). In the larger agencies, the total amount of the "ceiling" is usually allocated to the program divisions or bureaus of the agency, and sometimes suballocated to field office levels. The extent

of this subdivision varies from agency to

agency.

In practically all agencies, however, the process of compiling the detailed estimates began with the personnel who are responsible for carrying out the actual operations. They prepared information on actual obligations, personnel, workload, and other supporting data, for the past year (1956), the amounts planned for the year just beginning (1957) and their estimates for the budget year (1958), which still would not begin for almost a year. These estimates, together with the supporting data, were reviewed at successive levels.

In a typical agency, these levels might involve preparation at individual field stations, review and consolidation at a regional level for all the field stations in the region, review and consolidation at a division level, and possibly the bureau level. Most appropriations are made for operations at the bureau level, so that there would be no further consolidation of the information, but there would be a summarization and a final review by the head of the agency or someone designated by him.

At each level of review, of course, the viewpoint is different-the regional office must consider the estimates of each field station in relation to other field stations and to the total requirements for the region. Finally, at the departmental level, the estimates for bureaus and major programs must be judged in comparison with other bureaus and programs and with the total for the agency.

Agency 1958 budget submissions were due in the Bureau of the Budget on September 30, 1956. In order that the budget document might reflect the complete situation, the submission covered all accounts in which money was available for obligation or expenditures, whether or not any action by Congress was requested. Although detailed schedules were based on amounts already available for 1957 and those specifically recommended for 1958 under existing legislation, the agencies also submitted summary information with respect to items "proposed for later transmission," covering anticipated additional requirements for both 1957 and 1958 which were foreseeable at that time. These items included amounts which were expected to be required to finance the President's legislative program for the 1957 session of Congress (and which would be submitted formally in detail only at a later date), as well as additional amounts required for 1957 to meet conditions which had arisen since the 1957 appropriations were enacted.

When the estimates were received in the Bureau of the Budget, they were referred to the

All the knowledge the examiner possessed about the agency-whether based on long-run analysis, field investigations, special studies, or conferences held with agency officials--was brought to bear on the estimates at this time. The examiners must be thoroughly familiar with the President's budget policy and previous congressional action, as well as with the programs of the agency and their relationship to activities of other agencies. The examiners at this time gave considerable attention to the basis for the individual estimates-the volume of work on hand and forecast; the method by which the agency proposed to accomplish its objectives; and the estimates of requirements in terms of numbers of people required. They reviewed past performance, checked the accuracy of factual information presented, and considered the future implications of the program. They identified matters of major importance and the issues involved for discussion with agency representatives at hearings. The hearings usually last only a few hours for a small agency, but may run into weeks for a large department.

REVIEW BY THE DIRECTOR

After the hearings were completed, the examiners prepared their recommendations for the Director's review. This review concentrated attention principally on the major items involving Presidential policy but also provided a test check on other aspects of the recommendations. Assumptions with respect to the economic outlook and the international situation were brought up to date as a basis for this review.

Examining staff discussed the Director's tentative decisions with the budget officer of the agency to identify and narrow the issues which required detailed Presidential attention.

Throughout the Director's review, a current record was kept of the effect of the decisions made.

DECISION BY THE PRESIDENT

Tables and analyses were then prepared to present the Director's recommendations to the President, identifying the issues involved. As soon as the President made his decisions, each agency was notified by letter from the Director of the amounts allowed. Occasionally an agency appeals (through the Director) in order to obtain an upward revision of the allowance. Final decision depends on the President's position in the matter.

Agencies then revised their estimates to conform with the President's decisions, and prepared the copy to be included in the printed budget document. The budget document sets

language last enacted by the Congress and that proposed by the President, as well as detailed schedules supporting each estimate.

As soon as the individual schedules for each chapter were completed the figures from the individual appropriation and authorization schedules were summarized into tables for each chapter. Figures from the chapter summaries were then totaled to make up the tables which, together with final revenue estimates prepared by the Treasury Department, set forth the budget totals.

SUBMISSION TO CONGRESS

The President's budget for 1958 was transmitted to the Congress in January, but staff of the House Appropriations Committee had already started work on the estimates, based on advance proofs of certain chapters. The Director of the Bureau of the Budget and the Secretary of the Treasury were invited to appear before the committee to explain the general basis for the presentation of the 1958 budget, although this was a departure from usual procedure.

Agencies prepared and submitted justifications providing additional detailed information for consideration by the Appropriations Committee, and agency witnesses appeared before its subcommittees to explain the estimates and answer questions. The justification material presented to the committee generally is the same type of material given to the Bureau of the Budget earlier, revised, if necessary, to reflect the President's decisions on the budget. Whenever the committee has indicated a desire for other information or for a different format of justification, the agencies comply readily with its wishes.

The committee reviews performance in the past year (at this time, 1956) and the latest available information on the status of currentyear programs (1957), as well as the estimates proposed for the budget year (1958). Agencies present full and complete information on balances of prior appropriations (both obligated and unobligated). In the case of major procurement programs (as in Defense) which require a long period of time between placing the orders and the delivery of material, the justification usually includes information on delivery schedules. In line with the policies set forth in P. L. 863, 84th Congress, the use of cost-type budget presentations is being increased. This type of presentation, based on accrual accounting systems, provides information on inventories and other resources available to finance the agency's program, and on

the costs accruing within each fiscal year. In many cases, the Committee regularly receives agency financial and work reports, and information from the General Accounting Office on the results of its audits of the agencies. It also has available its own staff, and investigative staff on detail to it.

After an appropriation bill is passed by the House, the Senate Appropriations Committee receives further statements and justifications from the agencies and its subcommittees hold hearings on the estimates.

After action on the bill is completed by the House and the Senate, the bill as passed is presented to the President, who has the power to veto the bill as a whole but not specific items in it. Congressional action on 1958 appropriation bills will probably not be completed until sometime in July.

Even while congressional review of the budget is in process, continuing attention is being given to the 1958 budget situation, and the amounts recommended are amended, either upward or downward, if there are subsequent developments which warrant such action. Supplemental estimates will be required to carry out programs for which new legislation is enacted or to meet emergencies which have arisen since the budget was prepared. While preliminary estimates were included in the budget totals for the new legislation which was anticipated at the time the budget was prepared, specific amounts which are subsequently recommended to the Congress are the result of detailed analysis and review, based on the conditions at the time the recommendation is transmitted.

APPORTIONMENT BY THE BUREAU OF THE BUDGET

When each appropriation bill becomes law, the Bureau of the Budget must apportion the appropriations and funds made available to the executive branch, with a relatively few exceptions. Agencies must submit a request for apportionment by May 21 or within 15 days after approval of the appropriation act, whichever is later. The Bureau of the Budget must make such apportionments by June 10 or 30 days after approval of the appropriation act, whichever is later. One type of violation of the Antideficiency Act occurs if obligations are incurred in excess of the amounts apportioned.

The agency's plans for the fiscal year 1958 will have to be brought up to date in the next 2 or 3 months. The revisions will take account of changes in the amounts expected to become

available and of changes in the situation with respect to the program. The plans at this stage are usually more detailed than they were at the time the original estimates were prepared. The revised plans are prepared in the offices which prepared the original budget estimates and are again reviewed and consolidated at successive levels in the agency, to serve as a basis for both the apportionment request to the Bureau of the Budget and for allotments which will be made by the agency when the apportionments are received.

The apportionment system is intended to achieve the most effective and economical use of the funds available, and, for appropriations available for a definite period of time, to prevent the necessity for supplemental or deficiency appropriations. The law permits apportionments which anticipate the need for a supplemental appropriation, only to meet expenditures required by laws enacted subsequent to the transmission of appropriation estimates, or to meet certain specified emergency conditions. In each case where an apportionment is made on this basis, a report of the facts is required by law to be submitted to the Congress.

Agency requests for apportionments are also referred to the examiners who are responsible for the programs involved. The request and the supporting material received close scrutiny by the examiners in arriving at their recommendations on amounts to be apportioned. Reserves may be established "to provide for contingencies, or to effect savings whenever savings are made possible by or through changes in requirements, greater efficiency of operations, or other developments subsequent to the date on which such appropriation was made available.' Amounts held in reserve may not be obligated. by the agency, but may be released in whole or in part by further reapportionment action at any time during the year.

Progress on the 1958 budget program will be reviewed throughout the fiscal year, at successive levels in both the agency and by Bureau of the Budget. Periodic reports on the status of apportionments are supplemented by more specialized reports which relate accomplishments to cost. Shifts in the agency plans are frequently required to meet changing conditions to finance unforeseen emergencies or to provide savings where the workload is less than was estimated or where increased efficiency permits accomplishment at less cost than was anticipated.