Obligation (CongressionalGlossary.com)

From the Congressional Glossary – Including Legislative and Budget Terms

Obligation

photo credit: smudie

A legally binding agreement that will result in outlays, immediately or in the future. A promise to pay. The obligation, the promise to pay, is the initial action in the Federal spending process. Appropriations laws establish whether funds are available to obligate.

What is needed to Obligate?

• A budgetary resource (31 USC §1341(a))
• A funds control process
• Apportionment (31 USC §1517)
• Allotment / Allowance (31 USC §1514)
• Documentary evidence (31 USC §1501) (Note that recording provides evidence of the obligation, but does not create it. Failing to record a valid obligation does not diminish its validity or change the FY to which it is properly chargeable.)

An obligation may be “matured” or “unmatured”; “matured” means a liability that is currently payable; “unmatured” means a liability that is not currently payable but for which a definite liability exists in the future.

Services and supplies that are purchased by contract are recorded as obligations at the time there is a binding agreement – usually when the contract is signed. As a general rule, the amount of the obligation is the maximum liability to the Federal Government. The maximum liability is normally limited by the terms of the contract (e.g., cancellation clauses).

A definite commitment that creates a legal liability of the government for the payment of goods and services ordered or received, or a legal duty on the part of the United States that could mature into a legal liability by virtue of actions on the part of the other party beyond the control of the United States. Payment may be made immediately or in the future. An agency incurs an obligation, for example, when it places an order, signs a contract, awards a grant, purchases a service, or takes other actions that require the government to make payments to the public or from one government account to another. The standards for the proper reporting of obligations are found in section 1501(a) of title 31 of the United States Code. 31 USC Sec. 1501(a).

An outlay is a payment to liquidate an obligation. Paying the promise.

See also

• Direct Spending / Mandatory Spending (CongressionalGlossary.com)
• Discretionary / Discretionary Spending (CongressionalGlossary.com)
• Expenditure
• Expense
• Monthly Treasury Statement
• OMB Circular No. A-11 (CongressionalGlossary.com)
• Off-Budget / Off-Budget Entities / On-Budget Entities (CongressionalGlossary.com)
• Offsetting Collections (CongressionalGlossary.com)
• Outlay (CongressionalGlossary.com)
• Chapter 7.H. Appropriations; Chapter 7.J. Debt Ceiling; in Congressional Procedure

More

• Combined Statement of Receipts, Outlays, and Balances, Current Report – Treasury
• Statistical Abstract: Federal Gov’t Finances & Employment: Federal Budget–Receipts, Outlays, and Debt – Census Bureau
• Historical Tables – OMB
• Distortions versus Outlays – Sallie James
• “Federal Funding Gaps: A Brief Overview,” CRS Report RS20348 (13-page PDF)
• “Advance Appropriations, Forward Funding, and Advance Funding,” CRS Report RS20441 (5-page PDF)
• “Appropriations and Fund Transfers in the Affordable Care Act (ACA),” CRS Report R41301 (37-page PDF)
• “Federal Spending by Agency and Budget Function, FY2001-FY2006,” CRS Report RL33228 (20-page PDF)
• “Trends in Discretionary Spending,” CRS Report RL34424 (52-page PDF)
• “The Largest Spending Programs in the Federal Budget: FY2002 Outlays Over $10 Billion,” CRS Report 98-319 (3-page PDF)
• “Federal Spending Programs Exceeding $10 Billion in Outlays in FY2006,” CRS Report RS22426 (3-page PDF)
• “Proposed and Actual Budget Totals for the Fiscal Years 1980 Through 2001,” CRS Report RS20034 (8-page PDF)
• “Savings in Mandatory Outlays in Selected Reconciliation Acts,” CRS Report RS22277 (8-page PDF)
• “Medicare Primer,” CRS Report R40425 (47-page PDF)
• “Interest Payments on the Federal Debt: A Primer,” CRS Report RS22354 (11-page PDF)

Courses

• Congressional Operations Briefing – Capitol Hill Workshop
• Drafting Federal Legislation and Amendments
• Writing for Government and Business: Critical Thinking and Writing
• Custom, On-Site Training
• Congressional Operations Poster, with Federal Budget Process Flowchart
• Federal Budgeting, a Five-Course series on CD
• Congress, the Legislative Process, and the Fundamentals of Lawmaking Series, a Nine-Course series on CD

Publications

The Federal Budget Process 2E

Pocket Constitution

Citizen’s Handbook to Influencing Elected Officials: A Guide for Citizen Lobbyists and Grassroots Advocates

Congressional Procedure

CongressionalGlossary.com, from TheCapitol.Net