Defense Primer: The National Defense Budget Function (050)

Defense Primer: The National Defense Budget Function (050)

March 17, 2017
Defense Primer: The National Defense Budget Function (050)
The budget function classification system provides a
categories. Changes to the scheme can be made by the
framework for examining spending patterns of the federal
President only in consultation with the House and Senate
government by category of activity, rather than by agency
Appropriations Committees and Budget Committees.
or type of financing. Within the system, spending categories
In addition to its role reviewing agency budgets to ensure
are called functions, and each is coded with both an
they conform to presidential priorities, OMB requires that
explanatory title and numeric code ending in zero (and
agencies prepare and submit their budget requests in
shown in parenthesis). This defense primer addresses the
functional categories. These are organized and presented to
National Defense Budget (050), which is frequently used to
Congress each year in the President’s Budget Request
explain trends in military spending but which also includes
(PBR).
some activities not conducted by the Department of
Defense.
How Are Budget Functions Used in the Budget
What Is the Purpose of the Budget Function
Process?
System?
The PBR is organized according to budget function when it
is submitted to Congress. After receiving the PBR,
The budget function classification system organizes the
Congress sets spending and credit amounts by function and
spending of the federal government into categories, or
‘functions,’
by total spending level in an annual Concurrent Resolution
that describe the public purpose of each
on the Budget (commonly referred to as the ‘Budget
activity. When spending among all agencies is summarized
Resolution’). For Congress, the amounts indicate an
topically in this way, patterns may be revealed that help
expression of overall spending priorities, not a binding
analysts identify the overall priorities of the federal
requirement. Using the Budget Resolution as a guide, each
government. For instance, in FY2016, spending for
chamber separately assigns binding spending limits—called
National Defense (050) represented 15% of all federal
302a allocations—to its respective appropriation
expenditures. This was, for example, only slightly more
committee. A 302a allocation represents the total amount of
than the government spent on activities in the Health (550)
discretionary budget authority to be made available in the
function, which accounted for 13% of all federal spending.
upcoming fiscal year. The appropriation committees then
Since federal agencies often have diverse, overlapping
subdivide their allocated budget authority among the twelve
responsibilities, it is not uncommon for them to be
appropriation subcommittees (302b allocations).
associated with multiple categories of activity. In the
functional classification system, this can sometimes lead to
Figure 1. Congressional Consideration of
unexpected results. For example, though most DOD
Discretionary Spending Levels
spending is associated with the National Defense Function
(050), in some years, agency expenditures can be found in
such divergent functions as International Affairs (150),
Education, Training, Employment, and Social Services
(500), and Health (550).
How Are Budget Functions Organized?
The budget function classification system primarily
organizes federal spending into broad activities and smaller
elements called subfunctions, which describe individual
policy activities. Subfunctions are assigned a numeric
identifier (ending in a single digit) related to the function to
which they belong. For instance, function 050 is composed
of the subfunctions 051, 053, and 054. Function 250 is
composed of subfunctions 251 and 252. In common usage,
an analyst might employ budget functions and subfunctions
to describe federal spending by explaining, “In FY2016,
budget authority for National Defense (050) was $615
billion. Within that, the Department of Defense-Military

(051) comprised $587 billion.”
The National Defense Function (050)
How Are Budget Functions Managed?
The DOD is the agency responsible for approximately 96%
The Office of Management and Budget (OMB) is
of spending within the National Defense Budget (050).
considered the official custodian of federal budget data and
Because nearly all DOD spending is also included within
plays the largest role in managing and updating the
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Defense Primer: The National Defense Budget Function (050)
the National Defense Budget (050), it is often used as a
Historical and Analytical volumes posted by OMB on the
convenient summary of all DOD spending.
White House official website or, for detailed estimates, in
the DOD Comptroller’s annual release of the “National
A relatively small amount—roughly 4% of National
Defense Budget Estimates.”
Defense (050) funding—is spread among non-DOD
agencies that perform defense-related activities, such as the
Department of Energy nuclear programs. The activities of
Average Historical Percentage of Select Accounts within
these agencies are included in subfunctions 053 and 054, as
Subfunction 051 (2001-2017)
shown in the graphic below

Accounts
Description
Figure 2. Spending by Subfunctions of National
Defense (050)
41% Operation and
Cost of ground, sea, and air
Maintenance (O&M)
operations, equipment repair,
and maintenance of defense
facilities, healthcare costs, and
administration.
24% Military Personnel
Pay and allowances, and various
(MILPERS)
benefits including military
retirement funds.
19% Procurement
Acquisition of weapons and
support systems.
12% Research,
Basic research and development
Development, Test
of new weapons and equipment.

and Evaluation
(RDT&E)
People Talk about the Defense Budget in Various
Ways
2%
Military
Facility management and
In discussions about defense spending, total amounts may
Construction
construction.
sometimes differ for a variety of reasons. It is not
(MILCON)
uncommon for observers of the federal budget to re-group

budget functions to account for factors not included in the
original scheme. For example, National Defense (050)
Relevant Statutes
excludes some activities (such as funding for Veterans
31 U.S.C. 1105(a)(22) requires the President provide a
Benefits or Homeland Security) that might reasonably be
statement of outlays and budgetary authority in terms of national
included under a broader definition of defense spending.
needs.
Observers that adopt such non-conventional definitions
might arrive at different conclusions about overall defense
31 U.S.C. 1104(c) requires the President to consult with
spending.
Congress before changing budget format.

An additional reason defense spending totals may differ
relates to the type of spending (discretionary or mandatory)
CRS Products
included in the analysis. Discretionary funds are provided
CRS Report 98-280, Functional Categories of the Federal Budget,
by appropriation acts, and are subject to spending caps set
by Bill Heniff Jr.
in the Budget Control Act. Most defense spending is
CRS Report IG10006, How People Talk About the FY2017
discretionary. Mandatory spending is controlled by laws
National Defense Budget, by Lynn M. Williams and Pat Towell.
other than appropriation acts, including federal spending on
entitlement programs. It accounts for a relatively small

portion (2%) of defense spending, and primarily funds
retirement benefits.
Other Resources
Historical Tables, Office of Management and Budget
Finally, because OMB and the congressional budget
National Defense Budget Estimates for FY2017, DOD (‘Green
resolution show war (Overseas Contingency
Book’)
Operations/GWOT) and other emergency spending
separately from the functional scheme, budget analysts may
Status of Discretionary Appropriations, Congressional Budget
choose either to include or exclude such funds.
Office
How Can I Analyze DOD Spending?

Within the Department of Defense –Military (051) are
Christopher T. Mann, Research Assistant
accounts that generally correspond to major types of DOD
activities, such as Procurement to buy weapon systems and
IF10618
Military Personnel to provide pay and benefits. Budgetary
totals for these accounts can be found in the suite of
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Defense Primer: The National Defense Budget Function (050)

Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to
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