The Role of Executive Agencies in Budget Development: In Brief

The Role of Executive Agencies in Budget Development: In Brief

The Role of Executive Agencies in Budget
Development: In Brief
Updated February 26, 2024
Congressional Research Service
https://crsreports.congress.gov
R47091

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The Role of Executive Agencies in Budget Development: In Brief

Contents
Introduction ..................................................................................................................................... 1
Initial Preparation of Agency Budget Requests ............................................................................... 1
Agency Performance Planning and Reporting in the Budget Process ............................................. 3
OMB Review and Modification of Agency Budget Requests ......................................................... 4
Potential Issues for Congress........................................................................................................... 5

Figures
Figure 1. Budget Development Milestones Leading to Annual Submission to Congress ............... 3

Contacts
Author Information .......................................................................................................................... 6

The Role of Executive Agencies in Budget Development: In Brief

Introduction
The Constitution vests Congress with the power of the purse, with provisions that refer to
congressional authority to levy taxes, authorize the issuance of debt, and make appropriations to
fund the federal government.1 The Constitution does not provide an explicit role for the President
in the budget process. Rather, the executive budget process exists primarily due to statutes
enacted by Congress, and it specifies roles for the President, the Office of Management and
Budget (OMB), and executive agencies.
The executive budget process is a complex set of activities that includes (1) development of the
President’s budget proposal, (2) submission and justification of the President’s budget proposal,
and (3) execution of enacted appropriations and other budgetary legislation. While some of the
activities must be completed by specific dates, many follow a more flexible schedule established
by formal and informal rules and procedures.
This report briefly covers agencies’ roles in budget development in the context of the executive
budget process. The President is required to prepare and submit a comprehensive federal budget
to Congress each year. Due to the size and complexity of the federal budget, however, the
President in practice relies on agencies to bear the primary responsibility for formulating their
budget requests. For a more detailed overview of the development, submission, and justification
of the President’s budget proposal, see CRS Report R47019, The Executive Budget Process: An
Overview, by Dominick A. Fiorentino and Taylor N. Riccard. CRS has also published a suite of
“In Brief” products covering components of the executive budget process including
• CRS Report R47089, The Role of the Office of Management and Budget (OMB)
in Budget Development: In Brief, by Taylor N. Riccard;
• CRS Report R47092, The Role of the President in Budget Development: In Brief,
by Taylor N. Riccard;
• CRS Report R47091, The Role of Executive Agencies in Budget Development: In
Brief, by Dominick A. Fiorentino (this report);
• CRS Report R47090, Executive Agency Justification of the President’s Budget: In
Brief, by Dominick A. Fiorentino; and
• CRS Report R47088, The Executive Budget Process Timeline: In Brief, by
Dominick A. Fiorentino.
Initial Preparation of Agency Budget Requests
The development of the President’s budget begins approximately 10 months before the President
must submit the proposal to Congress, which is about 18 months prior to the start of the fiscal
year that the budget will cover. A significant implication of this timeline is that multiple cycles of
the annual appropriations process overlap with each other. Specifically, as Congress begins action
on appropriations bills and other budgetary legislation for the upcoming fiscal year, OMB and
agencies have already begun planning for the subsequent fiscal year.
OMB coordinates the development of the President’s budget proposal by issuing circulars,
memoranda, and guidance documents to the heads of executive agencies. Executive agencies are
then expected to prepare their budget requests in accordance with the instructions and guidance

1 See CRS Report R46240, Introduction to the Federal Budget Process, by James V. Saturno.
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provided by OMB.2 In particular, OMB’s annually issued Circular No. A-11 is an extensive
document that contains instructions and schedules for agency submission of budget requests and
justification materials to OMB.3
Early in the development phase of the executive budget process, OMB often issues a
memorandum containing budget planning guidance that observers often refer to as the “spring
guidance.” This memorandum provides executive agencies with detailed instructions and
deadlines for submitting their budget requests and supporting materials to OMB.4 The guidance
may also include specific instructions for how agency budget requests may help achieve the
President’s budgetary priorities and other policy goals.
Agencies rely on internal processes and analysis to formulate their budget requests, which vary
from agency to agency.5 Most agencies generally follow a bottom-up process. Typically,
leadership of the agency establishes budget guidelines and communicates them to lower
organizational levels. Initial budget requests are then formulated by lower organizational levels of
an agency and reviewed at successively higher levels.6 When developing their budgets, agencies
usually estimate the resources necessary to continue the existing programs at current levels for the
next fiscal year. Then, agencies may include estimates for new or modified initiatives funded with
any available incremental resources.
In a typical bottom-up process, a higher organizational unit within the agency then reviews
preliminary budget requests. Decisions are made and passed back to the originating level. Any
disagreements with these decisions may be appealed. Once decisions are made on appeals, the
budget request is then consolidated with the budget requests of similarly situated units to be
reviewed at the next decisionmaking level. This process of review and appeal continues at each
level up to the highest level of a department or agency. All the lower-level budget requests are
then consolidated into an agency-wide budget to be submitted to OMB.7 Typically, OMB has
administratively set the annual submission dates for September, which occurs 13 months before
the beginning of the forthcoming fiscal year. For a timeline containing executive budget process
milestones related to agency budget development, see Figure 1.

2 See CRS Report RS21665, Office of Management and Budget (OMB): An Overview, coordinated by Taylor N.
Riccard.
3 OMB, Circular No. A-11, Preparation, Submission and Execution of the Budget, August 2023,
https://www.whitehouse.gov/omb/information-for-agencies/circulars/.
4 The budget planning guidance memorandum is usually issued in mid- to late spring, nearly a year before the President
submits the budget proposal to Congress. However, the memorandum has been issued as late as August.
5 Allen Schick, The Federal Budget: Politics, Policy, Process, 3rd ed. (Washington, DC: Brookings Institution Press,
2007), pp. 92-93.
6 For an overview of the budget development processes at the Department of Defense, see CRS In Focus IF10429,
Defense Primer: Planning, Programming, Budgeting, and Execution (PPBE) Process, by Brendan W. McGarry. For an
illustrative example of the budget development process at a civilian agency, see U.S. Department of Education,
Illustrative Calendar of Steps Followed in the Department of Education Budgeting Process FY 2004, 2003, archived at
https://web.archive.org/web/20090114091623/http:/www.ed.gov/about/overview/budget/edlite-calendar.html.
7 For an illustrative example of the appeals and decisionmaking process within an agency, see U.S. Department of the
Treasury, Treasury Inspector General for Tax Administration Operations Manual, “Chapter 600—Mission Support,”
October 1, 2018, https://www.tigta.gov/sites/default/files/publications/2022-12/
TIGTA%20Operations%20Manual%20-%20Chapter%20600.pdf#page=261.
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The Role of Executive Agencies in Budget Development: In Brief

Figure 1. Budget Development Milestones Leading to Annual Submission
to Congress

Sources: CRS analysis of the U.S. Code, OMB guidance documents, and Presidents’ budget submissions.
Milestones that are established by law are also indicated by listing relevant U.S. Code citations.
Agency Performance Planning and Reporting in the
Budget Process
The GPRA Modernization Act of 2010 (GPRAMA),8 which modified the Government
Performance and Results Act of 1993 (GPRA),9 established a statutory framework synchronizing
budget development with agency annual performance planning, measurement, and reporting.10
GPRAMA requires agencies to publish three periodic documents, two of which have statutory
deadlines aligning with the President’s budget submission:11
1. Agency Strategic Plan. This document, published every four years to coincide
with the start of a new presidential term, describes the general goals and
objectives of an agency. GPRAMA requires agencies to submit their strategic
plans by the first Monday in February during the second year of a President’s
term—the same statutory deadline for the President’s budget submission.12

8 124 Stat. 3866, and codified in Titles 5 and 31 of the U.S. Code. The law has also been cited as GPRMA, the
Government Performance and Results Act of 2010, and GPRA.
9 107 Stat. 285.
10 The contents of this section draw in part from CRS Report R42379, Changes to the Government Performance and
Results Act (GPRA): Overview of the New Framework of Products and Processes, by Clinton T. Brass.
11 OMB provides annual guidance to executive agencies on how to comply with GPRA. See OMB, Circular No. A-11,
Part 6.
12 5 U.S.C. §306.
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The Role of Executive Agencies in Budget Development: In Brief

2. Agency Performance Plan (commonly referred to as Annual Performance
Plan). An agency is required annually to submit a plan that contains measurable
performance goals corresponding to each “program activity” as presented in the
President’s budget submission to Congress. The submission deadline for Annual
Performance Plans also matches that of the President’s budget submission.13
3. Agency Performance Update (commonly referred to as Annual Performance
Report). GPRAMA requires the Agency Performance Report to provide
performance indicators from the relevant Agency Performance Plan and compare
performance goals with actual results. GPRAMA established a submission
deadline of less than 150 days after the end of each fiscal year.14 In practice,
however, OMB has instructed most agencies to publish their Annual Performance
Reports with their Annual Performance Plans and congressional budget
justifications.15
OMB Review and Modification of Agency
Budget Requests
Agency budget requests are submitted to OMB in early fall, approximately four to five months
before the President must submit the budget to Congress. Agency requests are first reviewed by
OMB program examiners who are responsible for the associated policy areas. The program
examiners evaluate policy options and ensure that agency requests are consistent with the
President’s policy objectives. More senior OMB officials may also review agency requests. Prior
to making recommendations, OMB program examiners may ask for additional information from
agencies, either informally or by conducting formal hearings. More senior OMB career and
political officials review examiners’ recommendations, culminating in review and approval by the
OMB director.16
Agencies are notified of OMB’s decisions through a process known as “passback.” During
passback, OMB officials notify agencies of their approved budgetary levels, which may differ
from the agencies’ budget requests.17 The passback process and the content of passback decisions
may differ under each Administration and each OMB director. For example, passback decisions
may also include program policy changes.18 Agencies may appeal these decisions to the relevant
OMB examiner of branch chief, the OMB director, a group of officials, or, in some cases, the
President directly, depending on the procedures established by each Administration.19
Once OMB and the President make final decisions, agencies must revise their budget requests
and performance plans to conform to these decisions. Agency officials prepare budget material

13 31 U.S.C. §1115(b).
14 31 U.S.C. §1116.
15 OMB, Circular No. A-11, §240.21. OMB encourages small agencies to publish a combined Annual Performance
Plan and Annual Performance Report, but agencies still retain the flexibility to publish an Annual Performance Report
as part of a Performance and Accountability Report. For more information, see OMB, Circular A-136, Financial
Reporting Requirements.
16 Shelley Lynne Tomkin, Inside OMB: Politics and Process in the President’s Budget Office (New York: M.E. Sharpe,
1998), pp. 120-130.
17 Tomkin, Inside OMB, p. 131.
18 U.S. Government Accountability Office, A Glossary of Terms Used in the Federal Budget Process, GAO-05-734SP,
September 2005, p. 105, https://www.gao.gov/products/gao-05-734sp.
19 Tomkin, Inside OMB, pp. 131-134.
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The Role of Executive Agencies in Budget Development: In Brief

for inclusion in the President’s budget, which is to be transmitted to Congress by the first Monday
of February.20 These materials include program descriptions, the requested spending levels, and
the proposed appropriations language for each account. This information is contained in the
Appendix volume of the President’s budget submission.21 In addition, agencies’ performance
plans are provided to Congress with their congressional budget justifications soon after
transmittal of the President’s budget.22
Potential Issues for Congress
The President’s budget is a statement of the President’s policy priorities and a unified plan for the
allocation of federal budgetary resources. Although the President’s budget is a set of
recommendations, which Congress is not required to adopt, it creates a starting point for
congressional revenue and spending actions. Additionally, the executive budget process provides
a venue for information sharing between agencies and Congress. In evaluating the existing budget
process, Congress may consider the following issues and questions:
• Budget process timeline and agency planning. Agencies typically begin their
budget formulation processes in the spring—approximately 18 months prior to
the beginning of the fiscal year on October 1—upon receipt of OMB’s spring
guidance. Consequently, agencies may experience a gap of at least a year and a
half between budget planning and the receipt of appropriated funds, with an even
longer gap in the case of a continuing resolution.23 This lag might affect the
ability of agencies to plan for new programs or respond to changing
circumstances. Congress may consider amending the current budget process to
reduce the period of time between budget planning and agency receipt of
appropriated funds.
• Access to information from agencies. By law, the President may change agency
budget requests before they are submitted to Congress. This may prevent
Congress from assessing agency proposals that were removed or amended during
OMB’s review. For this reason, Congress may require agencies to provide
relevant appropriations subcommittees with information about resource needs, as
well as policy proposals that were modified during the passback process.
Congress may also consider lawmaking and oversight strategies that would
enhance the information provided by agencies.
• Agency performance measurement and reporting. In conducting oversight of
agency planning activities, Congress may seek more information on how

20 The President’s budget includes budget requests for all executive departments and agencies as well as budget
requests for entities in the legislative and judicial branches. The President and OMB play no role in the development of
legislative and judicial branch requests. Instead, entities in the legislative and judicial branches transmit their budget
requests to the President, who is then required to include them in the budget submission to Congress without
modification (31 U.S.C. §1105(b)). Some executive agencies submit budget requests directly to Congress by law or
custom. For related discussion, see CRS Insight IN10715, When an Agency’s Budget Request Does Not Match the
President’s Request: The FY2018 CFTC Request and “Budget Bypass,” by Jim Monke, Rena S. Miller, and Clinton T.
Brass (an example of an agency bypassing OMB and the President with a budget submission [available upon request
for congressional clients]); also see OMB Circular No. A-11, §25.1 (listing certain agencies and programs whose
budget requests are not subject to OMB modification “by law or custom”).
21 See CRS Report R43475, FY2024 Budget Documents: Internet and GPO Availability, by Carol Wilson.
22 OMB, Circular No. A-11, §240.21.
23 See CRS Report RL34700, Interim Continuing Resolutions (CRs): Potential Impacts on Agency Operations, by
Clinton T. Brass.
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The Role of Executive Agencies in Budget Development: In Brief

• agencies set goals and measure their performance against those goals. In
particular, Congress may require agencies to explain how the metrics included in
their Annual Performance Plans and Reports accurately measure agency
performance. Additionally, Congress may require agencies to justify their choice
of annual performance targets. Additionally, Congress may want to assess if
duplication exists in agency reporting and whether the performance information
contained in these documents is useful to its decisionmaking.

Author Information

Dominick A. Fiorentino

Analyst in Government Organization and
Management

Acknowledgments
This report supersedes CRS Report RS20198, which was originally written by Bill Heniff Jr., Analyst on
Congress and the Legislative Process at CRS.
Mari Y. Lee, Visual Information Specialist, collaborated on the report’s figure.

Disclaimer
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