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February 15, 2023
Expiration and Cancellation of Unobligated Funds
Unless Congress chooses to intervene, appropriated funds
Figure 1. Example of the Expiration and Cancellation
that have not been obligated may expire and be cancelled
of Unobligated Funds with a Definite Period of
according to procedures that are outlined in statute.
Availability
Relevant provisions related to the expiration and
cancellation of appropriated funds are found in Title 31 of
the United States Code.
Background
The Constitution vests Congress with the authority to levy
taxes, authorize the issuance of debt, and make
appropriations to fund the federal government, which is
collectively known as the power of the purse. Those funds
may be drawn from the Treasury only in consequence of
appropriations made by law.
The President, the Office of Management and Budget
(OMB), and agencies execute the budget in accordance
with the budgetary laws that have been enacted. They
possess limited authority to make spending adjustments
after appropriations and other spending legislation have
been enacted. Budget execution occurs in multiple steps:
Budget authority is enacted into law by appropriations
legislation. Budget authority provides agencies with the
legal basis to incur obligations.
Obligations are incurred when agencies enter into
legally binding commitments such as employing
personnel or awarding contracts for the provision of
goods or services.
Source: CRS analysis of 31 U.S.C. §§1552-1555.
Outlays are payments made to liquidate these
Notes: This graphic serves as an il ustrative example and does not
obligations.
represent a particular appropriations account or appropriated
amount.
After enactment of a particular appropriation into law,
agencies may obligate and expend funds subject to several
Accounts with a Definite Period of
conditions addressed by appropriations statutes. These
Availability
conditions on the availability of appropriations include:
In most cases, appropriated funds may be obligated only
during a defined period of availability. One-year funds are
the time period during which funds are available for
appropriations that remain available for obligation for one
obligation, sometimes referred to as the period of
year. Multiyear funds are appropriations that remain
availability or duration of appropriations;
available for obligation for more than one year.
the purpose(s) for which particular funds are
Expiration of Funds
appropriated; and
When the defined period of availability for an appropriation
account ends, any remaining funds in the appropriation
the amount of appropriated funds that may be obligated
account expire. Expired funds are no longer available for
and expended.
incurring new obligations, because the period of availability
has ended (31 U.S.C. §1552). For five fiscal years
While executive agencies may have legal discretion to
following the expiration of appropriated funds, the funds
determine how to allocate and obligate the funds available
may still be available for the payment of obligations
to them, they are also legally required to execute spending
properly incurred during the period of availability (31
legislation as enacted.
U.S.C. §1553; see Figure 1). During this five-year period,
additional obligations may be incurred due to contract
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Expiration and Cancellation of Unobligated Funds
changes, which may trigger reporting requirements if the
availability. No-year funds do not have an expired phase
changes exceed certain thresholds (31 U.S.C. §1553(c)). If
before cancellation.
additional obligations are incurred due to contract changes
that exceed $4 million, then the obligation may be made
Cancellation of Funds
only if it is approved by the head of the agency or a
In the context of appropriations accounts with indefinite
designated officer of the agency. If additional obligations
periods of availability, the accounts are closed and any
are incurred due to contract changes that exceed $25
remaining balance is cancelled if:
million, then the obligation may not be made until (1) the
head of the agency submits a notice in writing of the intent
1. the head of the agency or the President
to obligate such funds to the appropriate authorizing
determines that the purposes for which
committees of Congress and the Committees on
the appropriation was made have been
Appropriations of the Senate and the House of
carried out, and
Representatives, a description of the legal basis for the
2. no disbursement has been made against
proposed obligation, and the policy reasons for the
the appropriation for two consecutive
proposed obligation; and (2) a period of 30 days has elapsed
fiscal years (31 U.S.C. §1555).
after the notice is submitted.
Considerations for Congress
Congress has demonstrated a sustained interest in executive
After the period of availability for obligation of an
agencies’ execution of enacted budgetary legislation. The
appropriation account ends, the account is subject to any
established process for the expiration and cancellation of
audit requirements, limitations on obligations, or reporting
unobligated funds may raise topics for congressional
requirements that were applicable during the period of
consideration.
availability (31 U.S.C. §1554). The head of each agency is
required to submit a report to Congress, the President, and
For example, Congress may consider if the current
the Secretary of the Treasury detailing unliquidated
reporting requirements for unobligated balances are
obligations, unobligated balances, cancelled balances, and
sufficient for congressional oversight. Congress may further
adjustments made to appropriation accounts after the close
consider if the current amount of time between the
of each fiscal year. To fulfill this requirement, OMB
expiration and cancellation of funds—five years—is
established the SF 133 Report on Budget Execution and
sufficient. Another issue of potential interest to Congress
Budgetary Resources, which can be accessed online via
OMB’s MAX.gov website
may be additional obligations that are incurred due to
. In addition, the President
contract changes during the five-year period between the
submits a budget document called Balances of Budget
expiration of funds and the cancellation of funds.
Authority to Congress as a component of the President’s
Specifically, Congress could consider if the statutory
annual budget submission. This document contains the
thresholds provided in Section 1553(c) are satisfactory.
balances of budget authority for the end of the past three
Congress could also consider the potential tradeoffs of
fiscal years. These documents are available on the
granting agencies transfer authority to repurpose leftover,
GovInfo.gov website dating back to FY1996.
unobligated funds before they are cancelled.
Cancellation of Funds
On September 30, five fiscal years after the period of
Selected References
availability for an appropriation account ends, the account
31 U.S.C. §§1552-1555
is closed and any remaining balance, whether obligated or
unobligated, is cancelled. The remaining balance is no
CRS Report R47019, The Executive Budget Process: An Overview,
longer available for obligation or expenditure for any
by Dominick A. Fiorentino and Taylor N. Riccard
purpose.
CRS Report R47333, Reporting on Agency Budget Execution:
Processes and Case Study Illustration, by Dominick A. Fiorentino
Accounts with an Indefinite Period of
Availability
In some cases, appropriated funds may also be obligated
during an indefinite period of availability. No-year funds
Taylor N. Riccard, Analyst in Government Organization
are appropriations that have no defined period of
and Management
availability and remain available until expended. The
process for cancelling unobligated funds is distinct for an
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appropriations account with an indefinite period of
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Expiration and Cancellation of Unobligated Funds
Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to
congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress.
Information in a CRS Report should not be relied upon for purposes other than public understanding of information that has
been provided by CRS to Members of Congress in connection with CRS’s institutional role. CRS Reports, as a work of the
United States Government, are not subject to copyright protection in the United States. Any CRS Report may be
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copyrighted images or material from a third party, you may need to obtain the permission of the copyright holder if you
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