	Introduction

Every year, Congress considers numerous pieces of legislation that would create or modify federal government programs and activities. The legislative framework for establishing and funding the activities of the federal government is based on a fundamental distinction between two types of laws (and provisions within those laws)—"authorizations" and "appropriations." The funding source for either mandatory or discretionary spending may be the General Fund of the Treasury, which is where revenue and other collections made by the federal government are generally deposited. In some cases, spending also may be funded through a dedicated revenue source or other types of collections that result from the business-like activities that the federal government undertakes (referred to for the purposes of this report as dedicated collections ). The purpose of this report is to discuss these approaches and illustrate them with examples of how they have been applied in practice. The discretionary spending approach creates general or specific authority for an activity through an authorization law, but it leaves the decision as to how much that activity will actually be funded, if at all, to the annual appropriations process. This alternative approach is often referred to as "appropriated mandatory" spending. A further example of mandatory spending for a specific amount is the appropriation provided by the Social Security Act for the HHS Technical Assistance for Tribal Child Welfare Programs account:
There is appropriated to the Secretary, out of any money in the Treasury of the United States not otherwise appropriated, $3,000,000 for fiscal year 2009 and each fiscal year thereafter to carry out this subsection. Appropriated Mandatory Spending

In the examples of mandatory funding mechanisms discussed above, the authorization law controls the amount of spending and also contains an appropriation to fund it. Examples of each of these funding source types are included to illustrate the variety of options that exist across the federal government. An example of a program funded in this manner is the Maternal, Infant, and Early Childhood Home Visiting program (MIECHV) at HHS, which supports home visiting services for families with young children who reside in communities that have concentrations of poor child health and other risk indicators. How a collection is structured and the type of law that controls it vary depending on whether the collection supports mandatory or discretionary spending. Mandatory Spending

In general, if a mandatory spending program is funded by a dedicated collection, the authorization act provides three essential authorities:
the authority to make the collection; the authority to retain the collection; and the authority to expend the collection for the purposes of that program. Mixed Sources

Like the Health Surveillance and Program Support account discussed above, some programs or purposes are funded by both the GF and dedicated collections. Discretionary Spending

The discretionary spending for the Food and Drug Administration (FDA) review of human drugs, human medical devices, and veterinary drugs is also an example of activities with a funding source that is a mixture of dedicated collections and the GF. The authority to make collections that fund discretionary spending could be provided on a multiyear or permanent basis through authorization acts or each year through appropriations acts. In summary, some of the many factors that Congress may take into consideration when it is assessing potential funding mechanisms for a new or existing program include
the nature of the government program or service to be provided; whether funding stability or a guarantee of budgetary resources to meet whatever needs arise is important for the purposes or operation of the program; whether the program could adapt and still fulfill its mission if year-to-year funding levels are variable; how accurately the future funding needs of the program can be forecast; how often, and by what types of legislative vehicles, the parameters of the program (including its funding) should be reevaluated by Congress; what funding sources besides the GF could be used for the program; whether a program's dedicated funding source and spending from that source should be evaluated on the same or different schedules, and in the same or different legislative vehicles; and whether congressional control over various aspects of the funding itself, including the source of the funding, should be vested in one or more authorization committees, vested in the appropriations committees, or split between both types of committees. 4-5, 19 Child Care and Development Block Grant (CCDBG), pp. 5-6, 17 Violence Against Women Family Research and Evaluation, p. 6 State Children's Health Insurance Program (CHIP), p. 10 Technical Assistance for Tribal Child Welfare Programs, pp. 10-11 Social Security Disability Insurance (SSDI), pp. 11, 21-22 Social Services Block Grant (SSBG), p. 12 Supplemental Security Income (SSI), p. 13 Health Center Program, pp. 19-20 Immigration Examinations Fee Account, pp. 20-21 Manufactured Housing Standard Program, pp. 23-24 Medicare Part A and B, pp. 24-25 Prescription Drug User Fee Act (Food and Drug Administration), pp.
Every year, Congress considers numerous pieces of legislation that would create or modify federal government programs and activities. The variety of approaches used across the federal budget to fund these programs and activities involve different timelines for budgetary decisionmaking, and different processes (and committees) within Congress to make those decisions. How a particular funding mechanism is structured requires tradeoffs between the frequency of congressional review and the predictability of funding for the program. The purpose of this report is to explain these approaches, illustrating them with examples of how they have been applied in practice.
When attempting to understand the mechanism through which a program is funded, one of its most basic elements is the type of law that controls that funding. Such laws—and the provisions within them—can be distinguished based on whether their primary purpose is to create or modify federal government programs or activities ("authorizations"), or whether their purpose is to fund those activities ("appropriations").
Discretionary spending programs generally are established through authorization laws, but the annual appropriations process determines the extent to which those programs will actually be funded, if at all. Examples of discretionary spending discussed in this report include the Office of Apprenticeship (Department of Labor; DOL) and the Violence Against Women Family Research and Evaluation program (Department of Justice).
Mandatory spending is controlled by authorization laws. For this type of spending, the program usually is created and funded in the same law, often on a multiyear or permanent basis. Examples of this type of funding mechanism that are discussed in this report include the State Children's Health Insurance Program (Department of Health and Human Services; HHS), Technical Assistance for Tribal Child Welfare Programs (HHS), and Social Security Disability Insurance (Social Security Administration; SSA). Alternatively, a mandatory spending program might be created in an authorization law but funded annually through an appropriations act; this is often referred to as "appropriated mandatory" spending. Examples of appropriated mandatory spending include the Social Services Block Grant (HHS) and Supplemental Security Income (SSA).
In some cases, including the federal Health Center Program (HHS) and the Child Care and Development Fund (HHS), federal government programs are funded using a combination of mandatory and discretionary spending.
Besides the type of law that controls the spending, another important aspect of any funding mechanism is what the source of that funding will be. This is because there is a distinction between the authority to expend funds and the source of the funds themselves. Revenue and other collections made by the federal government are generally deposited in the General Fund (GF) of the Treasury, which is the default source of spending for many different types of federal government activities. Examples of funding mechanisms that utilize the GF include the Office of Apprenticeship (DOL) and the Maternal, Infant, and Early Childhood Home Visiting program (HHS). Spending also may be funded by dedicated collections that result from the business-like activities that the federal government undertakes. Both the legal authority to make these collections, and the legal authority to expend them, may be provided either through authorization or appropriations acts, and may support either mandatory or discretionary spending. Examples of dedicated collections that are discussed in this report include those associated with the Immigration Examinations Fee Account (Department of Homeland Security), the Manufactured Housing Standard Program (Department of Housing and Urban Development), and the Health Surveillance and Program Support account (HHS). In some cases, including Medicare Part A and B (HHS) and the Prescription Drug User Fee Act activities undertaken by the Food and Drug Administration (HHS), programs are funded using a combination of the GF and dedicated collections.