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Understanding the legal time limits for appropriated federal funds is integral to proper and efficient management of financial assistance (hereafter, 'FA') awards. A substantial percentage of funding used by the U.S. Fish and Wildlife Service's FA programs is from the annual resource management Resource Management appropriation set by Congress, so a good grasp of this concept is important.
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Each year Congress passes an appropriations bill which authorizes the federal government to expend public funds in specified ways. This is a constitutional requirement, often referred to as the ‘power of the purse’, which means the federal government cannot spend federal funding without express congressional approval.
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Funds must be obligated by the grantor agency within their period of availability. 31 The period of availability of appropriated funds is the period of time provided by law in which the administering agency has to obligate the funds. B-271607, June 3, 1996. The statutory requirement for recording obligations extends to all actions necessary to constitute a valid obligation, and includes, of course, grant obligations (31 U.S.C. § 150l(a)(5)). [5]
Appropriated funds which remain unobligated following their period of availability are considered expired. Deobligated funds after their period of availability are also considered expired. In each case, those expired funds are no longer available to the Program Office to usefor use by the program office.
In practical terms, this means that FY2017 appropriated resource management funds are available for obligation on financial assistance awards until September 30, 2018. Any funds not obligated by 9/30/2018 this date expire. If Also, any portion of those obligated funds are deobligated after September 30, 2018 (e.g. closeout of an FA award with a remaining balance) are expiredexpire. In both cases, expired resource management funds are lost to the program, though are recovered by FWS for future disbursement via the budget process. (EDITOR: Is this correct??)
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Following their expiration, obligated appropriations remain available for five federal fiscal years for liquidation. Any remaining obligations left unliquidated after the fifth year are cancelled and returned to the U.S. Treasury.
Continuing our “life cycle” analogy, an [A]n appropriation “dies” in a sense at the end of its period of obligational availability. There is, however, an afterlife to the extent of any unexpended balances. Unexpended balances, both obligated and unobligated, retain a limited availability for five fiscal years following expiration of the period for which the source appropriation was made. At midnight on the last day of an appropriation’s period of availability, the appropriation account expires and is no longer available for incurring new obligations. The expired appropriation remains available for 5 years for the purpose of paying obligations incurred prior to the account’s expiration and adjusting obligations that were previously unrecorded or under recorded. 31 U.S.C. § 1553(a). After 5 years, the expired account is closed and the balances remaining are canceled. 31 U.S.C. § 1552(a).[6]
Looking back to our example above, the FY2017 Resource Management funds that have been obligated on FA awards have a five-year period before being cancelled, which means they . This means that these funds are available to the recipient to liquidate project costs associated with the obligated award until September 30, 2023. After thatthis date, however, those funds are canceled, even though obligated, and the Program Office must program office must then take steps to backfill the cancelled funds on the FA award; typically with newer appropriations. This, as you can see, is not good. It means the Program Office is program office is essentially paying a portion of the project twice.
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An agency's compliance with the bona fide need rule is measured at the time the agency incurs an obligation. In the grant context, the obligation occurs at the time of award. [8]Funds must be obligated by the grantor agency within their period of availability. 31 The period of availability of appropriated funds is the period of time provided by law in which the administering agency has to obligate the funds. B-271607, June 3, 1996. The statutory requirement for recording obligations extends to all actions necessary to constitute a valid obligation, and includes, of course, grant obligations (31 U.S.C. § 150l(a)(5)) [9]
With FA awards, expenditures against the obligation, even though after the appropriation expiration itself, are valid for the award’s entire period of performance (which could be more than one year), or the cancellation of the appropriation, whichever is earlier. Unless, of course, a specific legislation states otherwise.
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