Annual Budget Process (2020 DOE transition)
 | DOE’s nominal budget process includes four main processes and overlaps with multiple years active at the same time. |
| Book 2 - Issue Papers
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| Entire 2020 DOE Transition book As of October 2020 |
The Department of Energy (DOE) develops and executes the budget using processes similar to other federal agencies, managed on behalf of the Secretary by the Office of the Chief Financial Officer (OCFO, CFO). Implementing policy direction for programs and projects requires requesting funding and allocating that funding to specific appropriation accounts and control points. Knowledge of this process and associated timelines are important for developing and implementing policy for execution of Departmental programs and projects.
A Nominal Budget Formulation Process
Each fiscal year budget is built on leadership priorities and from previous year budget cycles and appropriations, federal spending agreements, and improvements in budget tools, there is a general structure and flow to the process.
The Office of Management and Budget’s (OMB) circular A-11, parts 2 to 4, sets the minimum requirements for a budget. DOE has established its own processes to meet OMB’s requirements. Annually the DOE budget process has four broad concurrent steps: Planning, Programming, Budgeting, and Execution (PPBE) borrowed and modified based on the Department of Defense process.
The PPBE processes typically actively manage three to four years concurrently during a given year. The budget is rarely passed by the end of the Fiscal Year – only once in the last two decades – resulting in a Continuing Resolution that can last additional months. In November, 2020, four years will be under review or consideration by some part of DOE:
Fiscal Year (FY) 2020 (Prior Year)
Led by the CFO’s Office of Finance and Accounting, final reviews are being completed of FY2020 spending and the annual financial audit of DOE’s financial management is being completed.
FY2021 (Current Year)
Should there be a FY2021 enacted appropriation, DOE would be operating based on the enacted FY2021 appropriations act. CFO’s Budget Office would be distributing funds guided by the Act and OMB apportionment. Instead, DOE (and the rest of the government) is operating under a CR, and the amounts the Budget Office is releasing are based on FY2020 levels. Once a full-year bill is passed, appropriation amounts will be updated based on the enacted bill.
A delay in getting a bill also means DOE is still actively negotiating with the Hill on the FY2021 request, specifically in support of technical questions for a conference and for appeals to both funding and language based on Senate and House marks.
FY2022 (Budget Year)
In coordination with OMB, DOE has already built a full FY2022 budget request. The input is being reviewed at OMB through late November. In a nominal year, in early December, DOE would get decisions in the form of a Passback (initial OMB proposal to the Department’s input), followed by a Department wide appeal on specific items as determined by leadership, and then Settlement (final decision for the President’s Budget Request (PBR)) in mid-December, after which all material would be finalized to send Congress in early February.
FY2023 (Initial Formulation)
Early data collection and bottoms-up identification of policy proposals and funding needs would begin in conjunction with Passback and Settlement. In a nominal year, this process ramps up considerably once the current budget being formulated goes to the Hill. This aspect will likely happen while Congress is still debating FY2021 funding.
Stages in the Annual Budget Process
Planning (Year round)
The purpose of the Planning phase of the PPBE process is to gather or update all the information, cost data, and options necessary to prepare to make resource decisions based on priorities during the programming phase. Planning considers the full range of work to be done against current plans and should be fiscally unconstrained so that all requirements and other mission needs are considered. All offices conduct this review either explicitly or implicitly throughout the year. Some offices conduct a discrete Planning phase with stated objectives, guidance, and outputs (e.g., the National Nuclear Security Administration (NNSA)).
Programming (Winter and Spring)
The purpose of the Programming phase of the PPBE process is to make decisions to align available program resources with priorities resulting in a balanced, integrated, executable budget to be proposed to OMB as the basis for that year’s Congressional budget request. This process is fiscally conscious, allocating available resources against office and DOE priorities.
Budgeting (February through November)
The Budgeting process includes development of the OMB and President’s budget requests and then the process of getting the President’s budget passed by Congress. This process starts in February or March and is supposed to end with Congressional passage of the budget by the following September. A wide range of inputs are considered from the output of the Planning and Programming efforts, to data on program performance and risks to achieving agency goals, to past financial performance.
Execution (October to September)
Execution is the process to spend enacted funds and to assess progress made toward achieving identified performance measures. These performance measures can either be low-level milestones for internal use, or high- level performance measures in accordance with the Government Performance and Results Modernization Act (GPRA-MA) of 2010. The results of the evaluation process feed back into the Planning process for the next PPBE cycle.
DOE’s OCFO manages the front end of the execution process – understanding better congressional intent, requesting the apportionment from OMB, and preparing and issuing the allotment to program and functional offices. These offices then allocate funds and obligate them for the many missions of the Department. Those funds are later costed as work is completed. Failure to meet the legal requirements of execution can result in criminal penalties, so this process is carefully monitored through the DOE accounting system.
Spend plans, execution dashboards, and ad hoc reporting give DOE effective insight into the rate of spending and how it compares to program financial plans.
To understand the manner in which appropriated resources are being used to meet mission goals, DOE also tracks performance against its strategic goals, Agency Priority Goals (APGs), and over 100 office- established annual goals.
Budgets in an Inauguration Year
Budgets in an Inauguration year are typically on a different schedule.
- In year one (1) of an administration, the multi- year PPBE process is compressed into a few months. Issues developed during the campaign and papers prepared by DOE for transition are used to structure policies. The incoming President sets budget toplines. The transition team, incoming agency leadership, OMB, and the OCFO work in less structured way than a Nominal year to build a budget from December/ January to March/April. Congress then gets the budget with 4-5 months before the end of the Fiscal Year, not the usual seven (7).
- In year five (5) of an administration, much of the work has already been done during the Presidential campaign. During a change of Administration, the Inauguration and related activities often result in a delay to the release to Congress of the budget by a few weeks.