(For more information about how the Congressional Budget Office estimates outlays, see CBO’s Waterfall Model for Projecting Discretionary Spending, March 2021.). That occurs, for example, when a federal agency deposits grant funds into recipients’ accounts or the Social Security Administration disburses payments to beneficiaries.

In general, outlays occur when a federal agency issues checks, disburses cash, or makes electronic transfers to liquidate (or settle) an obligation. If funds are not obligated within the specified period, they expire (or lapse) and are no longer available for use. Often, the funds must be obligated within a specified period-typically one or several years-although some funds are available indefinitely. For example, the Department of Defense incurs an obligation when it enters into a contract to purchase equipment. Once budget authority has been provided for a given purpose, an agency can incur an obligation-a legally binding commitment. For example, the federal crop insurance program uses indefinite budget authority to provide insurance products to farmers and ranchers at subsidized rates.

The amount of budget authority provided can be specific-such as when the Congress provides a set amount for a program or activity-or indefinite. The authority to commit to spending federal funds is provided to agencies by law. Often called funding, budget authority is the amount of money available to a federal agency for a specific purpose. Budget Authority, Obligations, and Outlays?īudget authority, obligations, and outlays are related terms that describe the funds provided, committed, and used for a program or activity. (For detailed definitions, see CBO’s Glossary. This guide briefly explains-in plain language-the differences between some common budgetary terms.

Spending types