TYPES OF APPROPRIATION - 8326

(New: 09/2020)

Agency/department accounting staff should be familiar with the types of appropriations and appropriation terminology to ensure that budget information is properly reflected in the accounting records.

Standard Appropriation

A regular Budget Act appropriation is an authorization for a specific agency/department to make expenditures or create obligations from a specific fund for a specific purpose. It is usually limited in amount and period of time during which the expenditure is to be recognized.

Continuing Appropriation

A multi-year appropriation for a set amount that is available for more than one year.

Continuing appropriations are available for encumbrance during more than one fiscal year (typically capital outlay appropriations or certain items within Control Section 2.00 of the Budget Act containing provisional language allowing for extended availability).  For the first year of availability, agencies/departments will record the entire appropriation.  At the beginning of each subsequent year that the appropriation is available for encumbrance, agencies/departments may:

1.   Record the previous year's ending unencumbered balance as the new appropriation.

2.   Reverse the previous year's accrued expenditures and accrued accounts payable entry, and

3.   Record amounts for encumbrance and reserve for encumbrance equal to the accrued expenditures.  The reversal of prior year accruals will create a negative balance (credit) in the expenditures. This negative expenditure balance will equal the unliquidated encumbrance total.  This procedure will also make the beginning unencumbered balance equal to the previous year's ending unencumbered balance.

Continuous Appropriation

A multi-year appropriation that is renewed each year without further legislative action.  The amount available may be a specific, recurring sum each year; all or a specified portion of the proceeds of specified revenues that have been dedicated permanently to a certain purpose; or, whatever amount is designated for the purpose as determined by formula, e.g., school apportionments. Control Section 30.00 of the annual Budget Act traditionally extends the continuous appropriations for one additional fiscal year.

Reappropriation

 

A reappropriation is the authorization to extend an appropriation’s availability for encumbrance and/or expenditure beyond its set termination date and/or for a new purpose. Reappropriations are typically authorized by statute for one year at a time, but may be for some greater or lesser period. Generally, the purpose of the appropriation remains unchanged. 

Reverted Appropriation

An appropriation that reverts to its fund source when the period of availability for expenditures and encumbrances has expired, and it is no longer available for use. Government Code section 16304.1 provides that after reversion, any unpaid encumbrance against the appropriation may be paid from any current appropriations available for the same purposes. For example, a claim against a reverted support appropriation may be paid from a current support appropriation. 

Carryover Appropriations

The balance of appropriations available for expenditure in years subsequent to the year of enactment.

Appropriations not in Budget Act or Executive Orders

Appropriations not contained in the Budget Act and Executive Orders that do not augment an appropriation may be maintained at sufficient detail to meet the requirements of the agency/department. There are some Non-Governmental Cost Funds that are required to submit annual budgets for approval, and subsequent quarterly budget reports, but that operate out of their own operating funds and do not receive specific appropriations or executive orders. The budgets of these funds are shown in the appendix to the Governor’s Budget but are not included in the Budget Act.  

Appropriations may be maintained without a Controller's Journal Entry officially establishing the budget.  Some agencies/departments may not be required to submit Budget Revisions or Transfers of Budget Allotment. In those cases, appropriations will be recorded and adjusted by internal documents only.

Other Appropriation Related Processes

 

Augmentation

An increase to a previously authorized appropriation. This increase can be authorized by Budget Act provisional language, control sections, or other legislation. Usually, a Budget Revision or an Executive Order is processed to the State Controller’s Office to implement the increase.

Budget Revisions

A Budget Revision (BR) document prepared by the agency/department that cites a legal authority to authorize a change in an appropriation. A BR must be approved by the Department of Finance. Typically, BRs either increase the appropriation or make adjustments to the categories or programs within the appropriation as scheduled.  Agencies/departments are permitted to encumber or expend against pending requests to increase appropriation only if the encumbrance or expenditure is made pursuant to an encumbrance document or other written document approved by Finance.

Executive Order

An Executive Order (EO) is a budget document issued by Finance requesting the State Controller’s Office to make an adjustment in their accounts. The adjustments are typically authorized by Budget Act provision language, Budget Act control sections, and other statutes. An EO is used when the adjustment makes increases or decreases on a state-wide basis, involves two or more appropriations, or makes certain transfers or loans between funds.