Running head 1
Appropriations and Expenses Trend Analysis
[Author’s note: All U.S. currency mentioned in this paper was adjusted to 2020 inflation rate]
Executive Summary
When a company or the government borrows money from an individual or institution
they create a contract promising to repay the bond’s face amount by an agreed date or to make
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contractual payments until the loan is completed. Debt from the government can result from a
range of factors including covering deficits, financing capital-project constructions, attempts to
stabilize the economy, combined with many other circumstances (Mikesell, 2018, p. 674). For
long term successful economic growth, governments need to avoid defaulting on loans, filing for
bankruptcy and repudiation. These can lead to high interest rates and other consequences in the
future for the economy. To evade this the government needs to monitor and track their expenses
and ensure they do not exceed spending. This paper will analyze a three year trend
(2015,2016,2017) of selected appropriations and expenses for agencies within the Department of
Homeland Security. It will also discuss the relationship between appropriations and expenses.
Appropriations and Expenses Trend Analysis
An expense trend analysis is designed for agencies to who want to look at summarized
expense data over time. An appropriation is a law of Congress that provides an agency with
budgeting authority. It allows an agency to acquire responsibilities and to make payments from
the U.S Treasury to a designated intent. Each year during the annual budget, Congress passes
twelve appropriation acts, as well as supplemental appropriation acts which provide budget
authority to require and expend funds from the U.S. Treasury for specific purposes (Glossary of
Terms, n.d). One of these agencies is the Department of Homeland Security (DHS) and the nine
component agencies that fall under them. The DHS was established in 2003, and their mission is
to protect the nation from any foreign or domestic threats. This paper is going to specifically
focus on U.S Immigration and Customs Enforcement, Transportation Security Administration,
and the U.S Coast Guard.
Total Budget Authority
Budget Authority is specified in section 3(2) of the Congressional Budget Act of 1974
and defines it as “the authority provided by Federal law to incur financial obligations, with
certain delineated specific terms.” There are four basic forms of budget authority including:
appropriations, borrowing authority, contract authority, and authority to obligate and expand
balancing receipts and collections. Once an agency is given authority it is their responsibility to
use proper financial management tools to track their spending. Financial management is the
strategic planning, organizing, directing, and controlling of financial responsibilities within an
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agency. Financial management plays a vital role in maintaining enough of the funds allocated to
the agencies to not go over or under budget, getting good returns on investments, utilizing the
funds in an optimum and efficient way, and creating investment opportunities (Financial
management: What is it and why is it important?, n.d). Using these tools financial managers can
identify key areas of issues and adjust or fix the problem. If the financial management is
inadequate it can lead to distrust of the government by the citizens, services and goods needed
might not be available, and long term budget restraints could be imposed until new sources of
revenue can be established.
On the other hand, various organizations have budgets that expire at the end of the fiscal
year and are required to use the money or return the funds back to the Treasury department. This
can lead to wasteful buying practices. According to a study done by Liebman and Mahoney, it is
estimated federal agencies spend 4.9 times more in the last week of their fiscal year than in a
typical week during the year. Agencies are worried they will receive a lower budget the next
fiscal year if they do not spend what they have now. This incentives agencies to buy unnecessary
expense equipment.
Table 1 shows a comparison of the years 2015, 2016 and 2017 (in constant dollars, 2020)
of the total budget the Department of Homeland Security was allocated. From 2015 to 2017 the
overall total budget was only raised 1.7%. Due to a 9.3% increase in mandatory spending, fees,
and trust fund the overall gross discretionary budget authority decreased .22% from 2015 to
2017. From 2015 to 2016 the overall budget increase was 3% and for the overall gross
discretionary budget authority there was a 3.8% increase. From 2016 to 2017 the overall budget
decreased 1.37% and the overall gross discretionary budget authority decreased 3.9%. The
mandatory spending, fees, and trust fund total increased 8.9% from 2016 to 2017. The adjusted
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net discretionary budget authority from 2015 to 2016 increased 1.7% but decreased 3% from
2016 to 2017. Overall, the net discretionary budget authority decreased 1.4% from 2015 to 2017.
These numbers
are
important for they determine the allocated amount of money that will be given to each of the
nine departments that fall under the DHS. Below the paper is going to take a closer look at how
the overall total budget impacts expenses for the CAS-ICE, CAS-TSA, and the U.S Coast Guard.
U.S. Immigration and Customs Enforcement (CAS-ICE)
The U.S. Immigration and Customs and Enforcement (ICE) agency’s mission is to
promote homeland security and public safety by focusing on the enforcement of immigration and
custom laws. The agency is spilt into two main components: Homeland Security Investigations
(HSI) and Enforcement and Removal Operations (ERO). HSI is responsible for disrupting and
dismantling criminal organizations and enforces export laws, trade agreement noncompliance,
and investigating and enforcing violations of the immigration laws (Painter et al, 2015, p.16).
ERO locates, detains, and removes foreign nationals whose visas expired, those who have
entered the U.S. without proper documentation and those who have committed crimes and
violated their visas becoming eligible for deportation. ICE is also tasked with detaining or
monitoring aliens who are awaiting trial, transportation of undocumented and unaccompanied
minors, and representing the government’s position during removal proceedings, requiring the
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need for lawyers and support staff. In recent years, the job of the U.S. Immigration and Customs
Enforcement has become more of a political standpoint for politicians running for office.
Table 2 is the comparison of the U.S. Immigration and Customs Enforcement agencies
budget from 2015 to 2017, in constant 2020 U.S. dollars. From 2015 to 2017 the overall total
appropriations was decreased 2.7%. Due to the decrease in budget the agency had to decrease
their overall operations and support budget by 1.9% from 2015 to 2016 and 2.7% from 2015 to
2017. In 2015, Congress wanted to push policies increasing the number of people who could
receive worker visas and grant legal status to the estimated eleven million to twelve million
noncitizens who reside in the United States (How Changes in Immigration Policy Might Affect
the Federal Budget, 2015, p.22). To accomplish this ICE was required to increase their
management and administrative under the procurement, construction, and improvements budget,
104% from 2015 to 2016 and overall, 89% from 2015 to 2017. They also needed to increase their
Office of Principal Legal Advisor budget to keep up with the demand of paperwork, so the
budget increased 9% from 2015 to 2016 and 19.3% total from 2015 to 2017. Since the overall
budget was decreased but demand for an increase in administrative and legal work the money to
increase their budget had to be taken from other departments within ICE. Enforcement and
removal was hit the hardest with a 4.2% decrease from 2015 to 2016 and an overall 10%
decrease from 2015 to 2017.
Transportation Security Administration (CAS-TSA)
The TSA was created in 2001 and is responsible for protecting air, land, marine, and
rail transportation in the U.S. Originally, the agency fell under the Department of Transportation
but has since been transferred to fall under the Department of Homeland Security. The TSA has
the task of protecting aviation systems from terrorist threats by deploying detection systems for
explosives, bags, and passenger checks in airports, along with other security technology (Painter
et al, 2015, p.20). The TSA’s budget is complex because it does not show all the budget resources
available. Airline security fees and other fees collected offsets portions of transportation security
cost. Overall, from 2015 to 2017 there was only a 0.5% decrease of appropriations and from
2015 to 2016 only 0.4%. Since the decrease in appropriations were so minimal, a majority of the
TSA budget was unaffected. However, to account for the loss of money, operations and supports
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budget decreased 0.2% from 2015 to 2016 and from 2015 to 2017 decreased 0.42%. Operations
and Support (Mandatory) was affected the worst with a 63.3% decrease from 2015 to 2016 and a
decrease of 64.1% from 2015 to 2017. Transportation screening operations were able to increase
their budget 10.3% from 2015 to 2016 and 11.5% from 2015 to 2017. This increase is due to the
push by Congress to enhance the detection capabilities of TSA’s checkpoint screening
technologies and continue deploying hardware and software improvements to checkpoint
equipment throughout U.S. airports (Budget in Brief Fiscal Year 2017, 2017 p.42). Politically the
TSA is an essential component of keeping the American people safe from terrorist attacks and
rarely will a President cut their budget drastically due to this reason. The TSA is also able to
create revenue on its own by increasing passenger’s fees. For the 2017 fiscal year, they proposed
to increase the passenger fee by one dollar. The price would go up from $6.04 to $7.12 per one
way trip, generating an estimated 527.1 million U.S. dollars (Budget in Brief Fiscal Year 2017,
2017 p.43).
U.S.
Coast Guard
The U.S.
Coast Guard is
the lead agency
responsible for the security of U.S. ports, coastal and inland waterways, and territorial waters.
The Coast Guard is also task with oil spill prevention, enforcing correct fuel use for ships to
reduce emissions, installing, and maintaining aids to navigation (beacons, buoys, etc.), and
search and rescues.
From 2015 to 2016 the U.S. Coast Guard budget increased 6.9% but drastically decreased
8.7% from 2016 to 2017. From 2015 to 2016 the budget for vessels under the acquisitions,
constructions, and improvements, increased 51.5% but decreased 83% from 2016 to 2017. One
reason for the increase in 2016 was the Senate committee recommended the U.S Coast Guard
acquire an eighth vessel, with possibility for a ninth vessel in the future (DHS Appropriations
FY2017: Security, Enforcement, and Investigations, 2016). The Senate did not make the same
recommendations for the 2017 fiscal year, causing a significance decrease in the vessel budget.
For operations expenses the budget decreased 0.42% from 2015 to 2016 and overall, declined
1.3% from 2015 to 2017. Even though the Coast Guard requested to increase the staffing level
due to more responsibilities and double the workload compared to previous years, Congress
recommended they look into independent organizations to help offset the work (DHS
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Appropriations FY2017: Security, Enforcement, and Investigations, 2016). The U.S. Coast
Guard’s budget was affected drastically from 2016 to 2017 due to the overall reduction in the
appropriations given to the Department of Homeland Security for the fiscal year 2017.
Expense Indicators for the TSA
The majority of the TSA’s budget is allocated towards operations and support. This
includes transportation screening operations, transportation assessment and enforcement, and
management and administration. From 2015 to 2016 the budget for transportation screening
operations increased 11% and from 2015 to 2017 increased a total of 12.6%. Transportation
assessment and enforcement also went up 5.4% from 2015 to 2016 and 7.2% from 2015 to 2017.
Management and administration increased their budget 6.4% from 2015 to 2016 but did have a
2.6% decrease from 2016 to 2017. This decrease is due to the overall slight decline in the total
budget the Department of Homeland security was allocated in 2017 and to offset the increase in
budget for transportation assessment and enforcement and transportation screening operations.
The TSA does have the ability to produce revenue to help with the offset cost caused by the
decrease in total budget. From 2015 to 2016 the TSA raised their passenger fees by 1.9%. From
2016 to 2017 the passenger fee was raised 28.2%. This gave the TSA the ability to not drastically
reduce budgets, as seen for the U.S. Coast Guard during the 2017 fiscal year.
Figure 5: Percent CAS-TSA Budget Data with FY2020 Inflation
Conclusion
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Each year the Federal government reviews and renews twelve appropriations. When the
overall total of appropriations decreases, the agencies need to evaluate and determine where
expenses can be cut or how other revenue can be produced to account for the loss of money. The
problem with the process is only the discretionary spending potion of the budget is subject to
annual scrutiny and increasingly complex rules, while major mandatory programs and the tax
code operate without continuous review. One solution to fix this problem according to a paper by
Rivlin, is to review discretionary spending less frequently, review mandatory spending and tax
expenditures every five or six years and move to biannual appropriations. This would give
Congress and the Executive branch more time to review, plan, and implement budgets without
causing drastic changes in the budget which could affect the people working in the departments
as we saw with the TSA and U.S. Coast Guard. Realistically, the process will never change so
each department needs to use proper financial management to ensure their budgets are not
drastically decreased, like the U.S. Coast Guard from 2016 to 2017.
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References
Budget Authority (n.d). Section 3 of the Congressional Budget Act of 1974.
https://budgetcounsel.com/cyclopedia-budgetica/cb-budget-authority/
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https://www.dhs.gov/sites/default/files/publications/FY2017_BIB-MASTER.pdf
DHS Appropriations FY2017: Security, Enforcement, and Investigations. (2016) Congressional
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https://www.everycrsreport.com/files/20161220_R44666_a73f4e872de75c754a1593baffc2d3f8ff
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