Advance Appropriations

Congress regularly provides partial funding for four K-12 education programs through a little understood budgeting technique called "advance appropriations." This budgeting approach takes advantage of a timing quirk whereby the academic year (July 1 to June 31st) spans two fiscal years (October 1 to September 30th). Few federal programs are funded with advance appropriations, but it is particularly important to understand how the budgeting approach affects education spending.

Advance appropriations account for about 28 percent ($17 billion) of the total appropriation for the Department of Education in fiscal year 2008, and over half of all funding for some individual programs. They tend to cause confusion about the actual funding level provided for certain federal education programs for any given fiscal or academic year. The description below explains the use of and limits on advance appropriations.

Education Advance Appropriations Defined

Technically defined, an advance appropriation is funding provided in an appropriation law that becomes available one or more fiscal years after the fiscal year for which the appropriation act was enacted. For example, the fiscal year 2007 education appropriations law provided $5.5 billion for Title I grants in that fiscal year and another $7.4 billion as an advance that became available at the start of fiscal year 2008. Thus, the regular appropriation is added to the appropriation for the succeeding fiscal year (the advance appropriation) to reflect the full amount available in a school year.

The two-part approach to providing funds for a subset of education programs through a regular and an advance appropriation does not matter, in most cases, to the schools receiving the grant aid. The regular appropriation made for fiscal year 2007 and the advance for 2008 both become available to schools in one school year (2007-2008).

The Problem With Advance Appropriations

Advance appropriations make it difficult to assess the actual level of funding for education programs. The subset of education programs funded with advances are effectively funded in three pieces (the prior year advance, the current year appropriation, and the succeeding year advance). Thus, anyone who wishes to assess education funding for a given year needs to analyze each of these three funding pieces and put them together in the right manner to reflect funding in either the federal fiscal year or the school year.

Education advance appropriations also make it difficult to compare spending to the rest of the federal budget, because virtually all programs funded through appropriations receive only one regular appropriation. When Congress considers appropriations bills for the upcoming fiscal year, it effectively considers only part of the education budget for the upcoming year (the regular appropriation), and part of the budget for the year after that (the advance). But even before Congress considers appropriations for the upcoming year, a portion of the education budget has already been determined (the advance from the year before). Thus, the appropriations process involves three parts for some education programs but only one part for the rest of the budget.

Why Advance Appropriations Are Used

Prior to fiscal year 1996, funding for all discretionary education programs was provided in a regular, one-year appropriation. Budget laws in place from 1991 to 2002 provided Congress and the Administration, however, with a new incentive to allocate education funding through advance appropriations. During those years, total spending on appropriations bills was capped in law. Using advance appropriations allowed Congress to increase education spending for a given school year while keeping under a specific fiscal year’s appropriation cap. Because of the timing difference between federal fiscal year and the school year, schools receiving the grant aid were not affected by the shift in funding.

The relevant budget laws have expired and fiscal year spending caps are no longer statutorily in place, but Congress continues to make advance appropriations for education programs. It does so because when advances were first made, Congress effectively borrowed from the next fiscal year to fund education programs for the then current school year. If Congress chose to end advances, the first year it did so, it would have to "pay back" what it had been borrowing from future years. That would require a one-time infusion of funds in a given fiscal year creating the appearance of a large increase in funding while simultaneously having no tangible impact on schools.

Budget Rules For Advance Appropriations

In most years since fiscal year 2001, Congress has limited the amount of funding that can be provided through advances in each appropriations cycle. The limit is enforced through a "point of order" that Congress includes in its annual budget resolution. The budget resolution also restricts advances to a small set of programs, most of which are education programs. But the limit has grown significantly over the last decade. The fiscal year 1996 limit was $1.3 billion. The fiscal year 2008 level is $25.2 billion. The majority is used on education programs.