Senate Budget Committee - Democratic Staff Website

Fact Sheet on Senate Budget Process: 98-280 GOV

Functional Categories of the Federal Budget

Bill Heniff Jr., Consultant in American National Government
Government and Finance Division
March 23, 1998

The President's budget and the congressional budget resolution classify federal budgetary activities into functional and subfunctional categories that represent the major purposes of the federal government. Each budgetary activity of the federal government, including budget authority, outlays, tax expenditures, and credit authority, is classified into a subfunction based on the primary purpose it serves without regard to the agency or other unit responsible for it. The functional categories provide a broad statement of budget priorities and facilitate the analysis of trends in related programs regardless of the type of financial transaction or agency organization.

The annual budget resolution sets forth spending and credit amounts for each functional category. The amounts are used for informational purposes in the congressional budget process and are not enforced by points of order. Instead, amounts in each functional category are distributed to the various congressional committees with jurisdiction over the spending and credit activities. The committee allocations made under Section 302 of the Congressional Budget Act | P.L. 93-344 are enforceable through points of order on the floor of each house. In suballocating their allocations, committees effectively may alter the functional distributions made in the budget resolution.

Historically, the use of functional classifications by the federal government can be traced to the first appropriations act. The current function and subfunction classifications have evolved over time. Under Section 1104| c of Title 31 U.S.C., the President may change the form of his budget presentation. Any change in the functional categories, however, must be made in consultation with the House and Senate Appropriations Committees and Budget Committees. The General Accounting Office reviews budgetary classification schemes, from time to time, and makes recommendations for change.| 1

A list of the 20 functional categories currently included in the federal budget, as well as the subfunctions, is presented in Table 1. Generally, the first 17 functional categories reflect major policy areas, while the remaining three represent non-programmatic elements of the budget that must be included to complete the presentation. Every budgetary account is assigned an identification code, and the last three digits of these codes designate the subfunction into which it is classified.

Table 1. List of Functional and Subfunctional Categories

1. For a recent GAO report on this topic, see: Budget Function Classifications: Origins, Trends, and Implications for Current Uses, GAO/AIMD-98-67, February 1998.