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RUSSIAN-AMERICAN JUDICIAL PARTNERSHIP II
CHEMONICS INTERNATIONAL INC.
Understanding the United States Judiciary’s
National Budget Process
Administrative Office of the United States Courts
Washington, D.C. 20544Contents
Introduction.................................................................................................................................. v
Decentralized Budgeting—In Brief ..........................................................................................vii
Part 1. The Budget Process.......................................................................................................... 1
The Judiciary’s Budget ................................................................................................ 1
Formulating the Budget ............................................................................................... 2
Approving the Budget................................................................................................... 4
Allocating and Allotting the Budget............................................................................ 5
Allotment Schedule ....................................................................................................... 6
Part 2. Courthouse Construction .............................................................................................. 11
Funding Mechanism ................................................................................................... 11
The Role and Responsibilities of the Court .............................................................. 12
Judiciary Funding for Related Requirements.......................................................... 13
Part 3. Budget Decentralization ................................................................................................ 15
Centralized Administration ....................................................................................... 15
The Switch to Budget Decentralization..................................................................... 15
Benefits of Budget Decentralization .......................................................................... 16
Requirements of Budget Decentralization................................................................ 17
Allotment Simplification ............................................................................................ 18
Delegations of Authority to Chief Judges ................................................................. 19
Decentralization of Personnel Management............................................................. 19
iiiUnderstanding the Judiciary’s Budget Process
Cost Control Monitoring System ...............................................................................20
Contracting and Procurement Authority..................................................................21
Travel Management ....................................................................................................22
Funds Not Decentralized to the Court .......................................................................22
Information Technology Fund ...................................................................................23
Federal Public Defenders............................................................................................24
Part 4. Managing the Court’s Budget .......................................................................................25
Phases of the Local Budget Cycle ..............................................................................25
Court Unit Budget Organizational Plans ..................................................................26
Annual Spending Plans ...............................................................................................27
Responsibilities of Court Unit Executives.................................................................28
Status of Funds Report ...............................................................................................29
A Court’s Reprogramming Authority.......................................................................31
Coordination of Administrative Services and Sharing of Funds ...........................32
Voluntary Return of Funds ........................................................................................34
Court Unit Spending Projections...............................................................................34
ivIntroduction
This publication has been prepared to
improve understanding of the processes through which the United States Judiciary’s
budget is formulated and executed at the national level and in the individual courts.
The chief judge has a leadership role in court management and stewardship. While most
day-to-day administration should be handled by court unit executives, ultimately the
responsibility for the integrity of the court’s management practices rests with the court
and its chief judge.
The chief judge’s responsibilities extend beyond those areas specifically assigned by
statute or delegation by the Director of the Administrative Office. It is a generally
accepted notion that the chief judge serves as the presiding officer for the court. The
Judges Manual in the Guide to Judiciary Policies and Procedures (the Guide), Volume
III, Chapter I, defines the management responsibilities of a chief judge in this way “ . . .
substantial legal and administrative authority is vested in the court as a whole, and the
chief judge speaks and acts for the court. . . .” The Desk Book for Chief Judges of U.S.
District Courts similarly states that the chief judge “. . . is ultimately responsible for
seeing that the court is administered effectively and efficiently (and in compliance with
statutes, Judicial Conference and circuit judicial council policies and Conference-
approved Administrative Office regulations). . . .” (Federal Judicial Center [1993]: 6)
The delegations of authority impose on each chief judge and unit executive a substantial
responsibility for good stewardship. In effect, the chief judge, the unit executive (s), and
the court as a whole share responsibility for ensuring that the court is properly managed.
Together, they should ensure that organizational structures and planning processes are
established to guide the expenditure of funds, that systems are in place to prevent waste
or abuse, and that important decisions are elevated to an appropriate level in the court.
The chief judge, together with unit executives and other court personnel, holds in trust
the court’s physical assets, the fees and other monies paid directly to the court, and the
funding appropriated for the court’s use by the Congress. Awareness of this stewardship
responsibility is critical to upholding the well-earned reputation of the judicial branch for
fairness, attention and adherence to legal and administrative procedures, and to
preserving the system of judicial administration that has served the country well for
many years.
vDecentralized Budgeting—In Brief
In a nutshell, the budget decentralization system works as follows:
1. The Executive Committee approves the National Financial Plan for the
Judiciary at the beginning of each fiscal year, based on the level of
appropriations provided by Congress.
2. The AO allocates the funds to the appropriate activities, as defined in the
plan.
3. The AO then allots the funds to individual court units at the beginning of
the fiscal year, largely using objectively derived formulas.
4. The funds are distributed in three “baskets”:
(1) salaries;
(2) operating expenses; and
(3) automation.
Each court unit must sub-allot funds in the three baskets into individual
budget object classifications (BOCs), such as travel, office supplies,
equipment maintenance and repair, etc. The courts have considerable
discretion in managing local resources to meet local needs.
5. Funds may be pooled or shared among court units within a district, including the
district clerk’s office, the probation office, the pretrial services office, and the
bankruptcy clerk’s office, upon the approval of the respective court unit
executives and the AO. Appellate and circuit administration units within the
same circuit also may reprogram funds within the circuit, but funds may not be
reprogrammed between district and appellate units.
6. Each court unit must keep track of all spending and reprogramming of its funds,
and it must periodically file Status of Funds Reports with the AO.
7. Using these Status of Funds reports, the AO is able to monitor spending in each
court unit, including movement of funds among BOCs. The AO can identify
where there may be surpluses or deficits, take appropriate action to adjust the
National Financial Plan, and plan ahead for the next year.
8. During the course of the fiscal year, the AO asks the courts to return funds that
are not needed, so that they may be carried over to meet anticipated shortfalls in
the national Judiciary budget for the next fiscal year. The Judiciary has special,
limited statutory authority to carry over certain monies from one fiscal year to the
next, such as through use of the fee account and the Judiciary Information
Technology Fund.
vivii
The Budget
Part 1Process
The Judiciary’s Budget
The Judiciary obtains its funding through appropriations from Congress each
year. The process for doing so — governed by statute, congressional directives
and preferences, and Judicial Conference procedures — is very exacting and
requires a massive, coordinated effort by the Budget Committee and other
Conference committees, the AO, and many court officers and employees. For
each fiscal year, the budget cycle requires about 18 months — from the
beginning of budget development in the spring of the first year to the legislative
appropriation of funds by October 1 of the following year. The legislative
appropriation often does not occur by the start of the fiscal year or October 1.
Congress will therefore pass a continuing resolution if it is to provide budget
authority for the Judiciary until the regular appropriations are enacted.
By statute, the Director of the AO prepares the Judiciary’s budget requests.
After consideration by the Budget Committee, a recommended budget is then
sent for approval by the Judicial Conference and submitted to the Office of
Management and Budget and Congress. 28 U.S.C. § 605. The Judiciary’s
appropriations are divided into 12 separate accounts:
! Courts of Appeals, District Courts, and Other Judicial Services—
• Salaries and Expenses
• Fees of Jurors and Commissioners
• Court Security
• Defender Services
! Supreme Court—
• Salaries and Expenses
• Care of the Building and Grounds
! Court of Appeals for the Federal Circuit—Salaries and Expenses
! Court of International Trade—Salaries and Expenses
! Administrative Office—Salaries and Expenses
1The Budget Process
! Federal Judicial Center—Salaries and Expenses
! U.S. Sentencing Commission—Salaries and Expenses
! Payment to Judicial Retirement Funds
Each account is treated separately in the Judiciary’s submission to Congress and
supported by detailed statistics and narrative justifications. Funds are
appropriated by Congress for each segregated account and may not be
transferred from one account to another without specific congressional approval.
The Judiciary, however, has some limited authority to reprogram funds up to
certain dollar amounts.
For most government agencies, funds appropriated by Congress generally lapse
each year. The Judiciary, however, is able to avoid this problem to some degree
because it has specific statutory authority to carry over to following years the
unused monies collected in filing and other fees and the multi-year funding for
planned automation expenses in the Judiciary Information Technology Fund.
28 U.S.C. §§ 612, 1931.
Formulating the Budget
The Judiciary’s annual budget estimate to the Congress is based on a number of
diverse factors, including:
! The number of judgeships established by law.
! The number of chambers staff authorized by Judicial Conference
policy and appropriations language.
! Rent charged by the General Services Administration (GSA) for court
facilities.
! Formulas that calculate employment benefits.
! Projected case filings in the courts.
2Understanding the Judiciary’s Budget Process
! Judicial Conference-approved formulas that determine the staffing
needs of court support units, such as clerks’ offices and probation
offices.
! Formulas and other data that determine other court operational needs,
such as equipment, cyclical space maintenance and repair, overtime,
utilities, supplies, and travel .
! Adjustments for inflation, vacancies, changed conditions, and
technical matters.
! The cost of new legislation and programs approved by the Judicial
Conference.
The AO uses formulas as an objective means of determining the number of
supporting personnel necessary for court support offices. Each formula has
multiple factors that capture all the staffing needs of each office, including case
filings, divisional office support, financial and other transactions, automation
support, and credits for various administrative functions.
The formulas were developed with substantial input from court managers and
employees, intensive fact gathering and analysis, and extensive job surveys and
interviews. They are used both to justify budget estimates to Congress and to
allot funding to individual court units. The formulas were comprehensively
revised in 2000, and they will be updated and refreshed on a three-year cycle in
the future to account for changing work requirements and conditions. As filings
fluctuate from year to year, application of the formulas adjusts for increases and
decreases in corresponding staffing levels.
In addition, Judicial Conference committees are asked by the chair of the
Budget committee to identify funding needs and any initiatives within their
respective program areas that may result in new costs. The committees are
required to identify the cost of any new program or initiative in their reports to
the Conference and forward them to the Budget Committee.
The Budget Committee’s Economy Subcommittee works cooperatively with the
various program committees of the Conference throughout the year to
3Understanding the Judiciary’s Budget Process
consolidate their spending requests as well as identify potential savings and
efficiencies.
The full Budget Committee meets each July and invites the chairs of the
program committees to participate in its meeting. After consultation, the Budget
Committee decides upon an overall, target amount for the Judiciary to request
from Congress for the next fiscal year’s budget. As part of this process,
political realities must be balanced against requests by the committees and
courts for additional spending.
The Budget Committee then recommends a final budget request, and the
Judicial Conference at its September meeting approves the budget for
submission to Congress—one full year in advance of the fiscal year under
consideration.
Approving the Budget
The AO sends a summary of the estimated budget request approved by the
Judicial Conference to the Office of Management and Budget (OMB) in
October so that it may be included in the government-wide budget presented by
the President to Congress. OMB must include the Judiciary’s budget request
“without change.” 31 U.S.C. § 1105(b).
The AO submits the formal budget request to Congress in February, taking into
account the most recent case filing statistics, newly enacted legislation, and
pertinent Judicial Conference actions. The “Yellow Book” provides substantial,
detailed justifications for the House and Senate Appropriations Committees in
support of each element in the budget.
The pertinent appropriations subcommittees of each house of Congress normally
hold hearings in March or April. The chair and, usually another member of the
Budget Committee, together with the AO and FJC Directors, testify before the
subcommittees and respond to questions.
4The Budget Process
Many contacts are made between congressional appropriations staff and the AO
regarding the resource requirements and justifications in the budget. The
Judiciary may be asked to provide substantial additional information and to
respond to numerous questions from members of Congress. Judges also may be
brought into the process, as needed, to speak to their members of Congress.
The House usually “marks up” the Judiciary’s appropriations bill first. The
Senate generally follows suit reasonably soon thereafter. If necessary, an appeal
document is sent to the Senate requesting restoration of items that the House
allowance has denied or reduced. Judges may be asked to speak to their
representatives and senators in support of the appeals.
Once the Senate has completed action on the budget request — typically
providing amounts different from those approved by the House — a
congressional conference committee is appointed to reach agreement on a final
appropriations bill providing funding for the coming fiscal year. After both
houses of Congress have passed the appropriations legislation, it is sent to the
President for signature. At that point, funds can legally be released from the
Treasury for obligation and expenditure by the Judiciary.
When it becomes apparent that appropriated funds will not be sufficient to meet
specific needs of the Judiciary, it may be necessary to submit an amended or
supplemental budget request. This can occur if new legislation requiring
additional judicial resources is enacted, or if workload significantly exceeds the
projections in the original budget request.
Allocating and Allotting the Budget
The Executive Committee of the Judicial Conference usually approves an
interim “National Financial Plan” in September, generally before the
appropriations legislation is passed. The interim plan makes a number of
assumptions, based on the funding levels already approved by the House and
Senate and the ultimate amounts anticipated to be agreed upon in conference.
The interim plan also makes assumptions about other funding available from
sources such as fees to be collected and amounts carried forward from the prior
year.
After Congress enacts legislation providing the Judiciary with its appropriations
5The Budget Process
for the new fiscal year, the Executive Committee approves or modifies the
National Financial Plan determining the amount of money provided for each
budgeted program and activity within the following accounts–Salaries and
Expenses, Defender Services, Court Security, and Fees of Jurors. Later, the
plan is presented to the congressional appropriations committees for their
information. The funding appropriated for the year is then distributed in
accordance with the plan in the form of allocations and allotments.
ALLOCATIONS. The AO divides the total appropriations into allocations, giving
various AO offices authority to incur obligations for particular national
programs and purposes. Thus, for example, the allocation to the Space and
Facilities Division includes funding for GSA space rental and tenant alterations
in the courts.
ALLOTMENTS. The AO divisions then distribute the funding in the form of
allotments to the persons who will actually spend them. Some of the allotments
are administered centrally by AO offices, such as judges’ salaries, GSA rent,
and employee benefits. But a great deal of funding is allotted directly to court
units for local administration, such as staff salaries, travel, consumable supplies,
equipment, and the like. Each unit within a district has its own budget
allotments, i.e., district clerk, probation office, pretrial services office, and
bankruptcy clerk. Likewise, each appellate unit also receives its own
allotments, i.e., circuit executive, court of appeals clerk, bankruptcy appellate
panel clerk, library, and staff attorneys’ office. Some court-wide or chambers
needs (e.g., furniture, furniture repair and telephone service) are included, for
administrative convenience, among the allotments provided to the clerk’s office.
In that limited context, the clerk administers funds on behalf of the entire court
and not merely the clerk’s office as a court unit.
Allotment Schedule
Regular and Recurring Expenses
The fiscal year begins on October 1 of each year. Ideally, appropriations
legislation is enacted before the start of the fiscal year. In such case, the AO
distributes the funding electronically to each court by October 1 using the
pertinent allotment formulas and the National Financial Plan. All allotments
are transmitted by the AO directly to the respective court units. Approximately
95% of the funds allocated to the courts are determined by formula and are
6The Budget Process
designed to meet the courts’ regular and recurring costs, namely salaries,
operating expenses, and information technology. The derivation of the formula
allotments in each of the funding categories can be viewed on the InfoWeb,
available on the Judiciary’s intranet, or the J-Net.
Upon receiving their allotments from the AO, court unit executives have the
legal authority to obligate funds. This carries with it the responsibility to
manage those funds wisely throughout the fiscal year.
If appropriations legislation is not enacted by October 1, Congress normally
enacts one or more “continuing resolutions” allowing government operations to
continue on a temporary basis. A continuing resolution typically allows
funding for the new fiscal year equal to the previous year’s level or to the lesser
of the amounts provided in the pending House and Senate versions of the
appropriations bill. When there is a continuing resolution, the Executive
Committee will normally approve an interim National Financial Plan, and the
AO will provide appropriate guidance and funding to allotment holders.
During a year when an appropriations bill is enacted by October 1, funds are
allotted generally in accordance with the following schedule:
! October 1 Initial allotments are transmitted to all court
units, and the annual Allotment Guidelines are published
electronically on the Judiciary’s J-Net.
! October An appeals window is open for 3 weeks to
give court units an opportunity to submit technical and
substantive appeals to their initial allotments.
! Any time For cause, adjustments to salary allotments
may be made throughout the fiscal year.
! November Revised allotments, which include any
additional amounts approved on appeal, are transmitted
to court units.
7Understanding the Judiciary’s Budget Process
! January 15 Based on necessary adjustments in actual,
on-board staffing levels in the courts on December 31,
the AO transmits adjustments in court units’ formula
allotments.
! April 15 A supplemental request window opens,
during which court units may request supplemental
funding for new circumstances that have arisen since the
initial allotments were transmitted. (Emergency
supplementals can be requested at any time.)
! August 15 The supplemental window closes.
The Budget Call and Special Court Needs
In addition to providing funds for regular and recurring expenses, the AO
automatically transmits supplemental allotments to court units for known
events of a significant nature, such as a new judicial appointment. These
event-driven allotments are provided to the clerk to cover the cost of furniture
and automation equipment for the new judge and are held until the event for
which the funds are intended occurs.
Funding also may be requested for event-driven, non-recurring expenses, such
as furniture for new, additive space, telephone purchases, sound (audio)
systems to replace aging systems that can no longer be repaired, non-GSA
space rental, certain equipment, ADP tenant alterations associated with server
rooms, and pilot projects, to name a few. Court unit executives identify their
special budget needs to the AO for the next fiscal year through the “budget
call” process. The schedule is usually along the following lines:
! Early June Court managers receive instructions to respond to an
automated budget call.
! Early July The deadline ends to submit a response to
the budget call.
! October 1 The new fiscal year begins.
8Understanding the Judiciary’s Budget Process
Court units should prepare an initial annual spending plan to cover their
estimated operating costs for the next fiscal year, taking into account both
normal, recurring operating expenses and any event-driven funding
requirements. The annual budget call provides court units with the opportunity
to request funding for any event-driven requirements. (See Part 4, “Annual
Spending Plans,” p.26.)
A court may submit a request at any time for emergency supplemental funding
to address uncontrollable circumstances arising during the year, if the district or
circuit does not have funds locally available to meet the need. These requests
must be of a truly “emergency” nature, such as the filing of a complex case
requiring additional staff to handle the additional workload, natural disasters
(e.g., earthquakes, tornadoes, or floods), or serious property damage.
9Understanding the Judiciary’s Budget Process
10Courthouse
Part
Construction
2
Funding Mechanism
Courthouse construction is different from other Judiciary programs because it
is funded through executive (not judicial) branch appropriations. Although the
courthouse construction budget is developed outside the regular Judiciary
budget process, the Judiciary does provide input into the construction budget
process.
The process begins with the development of a long-range facilities plan for
each district and court of appeals, projecting future growth and space needs at
court locations. Plans for all 94 districts and most courts of appeal were
initially developed by January 1995, and are now updated periodically. The
AO is notified when the chief judge approves the plan or any amendments
thereto. The circuit judicial council approves any requests for additional
space. If new construction is required, the AO scores and ranks the
construction project based on the following factors:
! The year in which the facility runs out of space (30% weight);
! The level of security problems (30% weight);
! Any operational concerns (25% weight); and
! The number of judges impacted (15% weight).
The Judicial Conference approves a Five-Year Construction Project Plan that
prioritizes the projects and groups them so that funding for a mix of site,
design, and construction projects will be requested for each year. Funding of
the site and design phases of a project precedes funding of the construction
phase by two years to allow sufficient time for design completion. Through the
individual court long-range facilities plans and the national five-year project
plan, the Judiciary notifies GSA of the needs for space at particular locations.
The latter then determines whether to fill a space requirement by renovating
existing facilities, leasing additional space, or constructing a new courthouse or
annex.
11Understanding the Judiciary’s Budget Process
For projects whose funding requirements exceed $1.99 million (in FY 2001),
line-item approval is required from the congressional authorizing and
appropriations committees. GSA prepares for each of these projects a
“prospectus” that includes estimates of the site, design, and construction costs
based on U.S. Courts Design Guide and GSA standards and local construction
costs. Cost estimates for design and construction projects planned for an
upcoming year are then submitted to OMB, which in turn includes some, all, or
none of the estimates in the President’s budget that is submitted (along with the
relevant prospectuses) to Congress. When an authorizing resolution for a
project is approved by the House Transportation and Infrastructure Committee
and the Senate Environment and Public Works Committee, money for the
various project phases is included in the annual Treasury, Postal Service and
General Government appropriations acts. In some instances, however, a
project receives appropriations first and is authorized later.
Once funding is provided, GSA selects and acquires the sites for the approved
courthouse projects, hires the architects to design the projects, and approves the
contracts with construction companies to complete the work.
Although GSA provides funding in its standard “build-out” for many
courtroom and chambers fixtures, such as judges’ benches, jury box platforms
and railings, and wall paneling, the costs of some items for clerks’ offices (e.g.,
vaults and counters) and probation and pretrial services offices (e.g., glassed-in
reception areas) are reimbursed from funds held centrally by the AO Space and
Facilities Division. Division staff work with GSA and the affected court
unit(s) to identify and fund these items via a reimbursable work authorization
to GSA.
The Role and Responsibilities of the Court
Veterans of successful courthouse construction projects recognize that success
or failure is dependent, not on any single individual, but on how well the teams
of individuals involved in the project work together. Planning, design, and
construction (or renovation) of a courthouse is an immense undertaking that
requires the participation, expertise, and dedication of many individuals
representing several different organizations. The Judiciary does not have
contractual relationships with either GSA or private architects, which means
12Understanding the Judiciary’s Budget Process
that the court cannot direct the architect on a project to do (or refrain from
doing) something. By statute, GSA alone has the authority to do so. If the
court perceives that particular action is needed, then it works through GSA and
the architect to get it done.
Even though the court does not have direct control, it can, does, and should
influence the decisions made on a project, and it should do so from the earliest
stages in the process. This pro-active approach sets the tone for the Judiciary’s
role in the project. Its role is to “participate,” to “influence,” to “oversee,” and
to “represent” the court’s best interests and goals.
Project teams for courthouse construction projects are composed of the
representatives of a number of organizations, including GSA, the
architect/engineer, the construction management firm, the construction
contractor, the Judiciary, the U.S. Marshals Service, and other building tenants.
It is important to understand that each of the organizations represented on the
team has a somewhat different perspective when it comes to planning,
designing, and building (or renovating) a courthouse. Their common goal, of
course, is to succeed in achieving the end goal of a new or renovated
courthouse and in keeping the project within budget and on schedule.
Judiciary Funding for Related Requirements
Although Congress provides funding for courthouse construction as part of
GSA’s budget, special courthouse requirements (e.g., furniture, computers,
telecommunications, and courtroom technologies) are funded in the Judiciary
budget as generally described below:
1. Furniture – In major projects, the AO provides funds to purchase
furniture for types of space that did not exist in the previously occupied
building and for new space designed for systems furniture. When
furniture costs exceed $200,000, a court is required to submit a Furniture
Acquisition Plan, signed by the chief judge, to the Space and Facilities
Division of the AO. This describes in detail the court’s furniture needs,
including costs, furniture placement, and procurement strategies. For
purchases
costing less than $200,000, a Furniture Acquisition Plan is not required
but court units must submit information with their funding requests
detailing specific items and exact pricing. See Guide to the Judiciary
13Understanding the Judiciary’s Budget Process
Policies and Procedures, Volume I, Chapter V (Procurement,
Contracting and Property Management), parts C, D and E.
2. Telecommunications – GSA funds and installs the new facility’s
telecommunications infrastructure, such as conduit and cable trays, as
part of the base funding. Funds for the cabling and telephone system
itself are provided by the Judiciary.
3. Computer Systems – A court that moves to a new location will usually
transfer existing automation equipment from the old facility to the new
facility. Early in the design phase of the project, the project systems team
should determine the equipment infrastructure requirements, such as the
size, positioning, and layout of telecommunications closets and wiring
limitations. Court units will need to consult with the AO about relocation
of the current systems design and any funding requirements.
4. Courtroom Technologies – The Judicial Conference endorses efforts to
plan for and equip courtrooms with advanced technology and systems
and encourages the court to contribute funding from the court’s local
budget for courtroom technologies. For GSA prospectus level projects,
centrally held funds are available for new audio systems to be installed in
each courtroom. Under current Conference policy, funding for other
courtroom technologies, e.g., evidence presentation and/or video
conferencing, is limited to 1 out of every 6 new courtrooms. Applying
this policy, if a new courthouse has 12 courtrooms, then it would be
funded for 2 complete courtroom technology systems. If the courthouse
had 3 or 14 new courtrooms, then it would be funded for 1 or 3 complete
systems, respectively. When planning for the use of centrally held funds,
local funds, or a combination of funds, the court is responsible for
ensuring that the installation provides an integrated system that
complements court operations. Information on courtroom technology is
available through the Space and Facilities Webpage on the J-Net.
14Budget Decentralization
Part 3
Centralized Administration
Until 1939, the executive branch had handled the Judiciary's budget, payroll,
and other administrative support services. In 1939, legislation gave the
Judiciary control over its own budget, financial affairs, and administrative
support. It created the AO and the circuit councils. The position of Director of
the AO was established as "the administrative officer of the courts," and the
incumbent was given statutory authority over various financial and
administrative matters for the Judiciary. The statute specifies that the Director
performs these functions — like all his duties — "under the supervision and
direction of the Judicial Conference." 28 U.S.C. § 604(a).
For its first 50 years, the AO operated largely on a centralized basis, handling
directly almost all payroll, procurement, contracting, and accounting functions.
Its staff purchased virtually all equipment, supplies, stationery, books, and
furniture, acting on requests and forms submitted by the courts.
The Switch to Budget Decentralization
Based on the recommendations of the "Devitt Committee" in 1986, then newly
appointed Director Leonidas Ralph Mecham established several broad goals for
the AO. They included improving service to the courts and decentralizing
operating functions to the courts where appropriate.
A pilot budget decentralization program was approved by the Budget
Committee and the Judicial Conference in five courts in October 1987. The
pilot courts were given substantial control over their share of the national
budget. They were allowed to reprogram funds among the various spending
categories, or budget object classifications (BOCs), with certain limitations.
(See Part 4, "A Court’s Reprogramming Authority," p. 31.) They could,
therefore, decide how best to meet their own salary and other operational needs
within the total dollars allotted to them by the AO.
15Understanding the Judiciary’s Budget Process
The pilot budget decentralization program proved to be very successful. It
became a national program in 1991 and was expanded progressively to all
courts. The operating rules for the program provide courts with great
flexibility to spend money according to a court's own priorities and
preferences. But in approving expansion of budget decentralization to all
courts, the Judicial Conference directed that "each court adopt procedures
governing the budget approval and reprogramming process prior to acceptance
into the program . . ." (JCUS—MAR 91, p. 13).
Benefits of Budget Decentralization
The budget decentralization program is unique in the federal government. It
has a number of important benefits, such as the following:
1. It maximizes the efficient use of limited resources by letting local court
managers determine how best to spend the resources given to them to
meet local needs.
2. It provides a fair and equitable distribution of resources to the courts.
c. It provides incentives to the courts for good financial management and
eliminates the traditional government incentive to spend dollars in one
year in order to maximize the level of funding in succeeding fiscal years.
4. It reduces the time and resources required to distribute resources to the
courts by having the allotment of funds accomplished mostly by formula.
5. It encourages courts to plan ahead by considering the impact of actions
they take in one fiscal year on their anticipated costs in succeeding fiscal
years.
16Budget Decentralization
Requirements of Budget Decentralization
While providing great autonomy in financial management for individual courts
and court units, a decentralized system also carries with it certain costs, risks,
and responsibilities. The success of budget decentralization clearly depends on
each court having in place a sound system of internal controls for local decision
making, record keeping, accounting, and training. The program therefore
requires:
1. A court unit budget organization plan that details local decision-making
processes and delegations of authority and responsibility;
2. Trained court staff with strong financial management skills to administer
the program;
3. Knowledgeable unit executives who can manage the budget on a
day-to-day basis;
4. Oversight by chief judges to ensure that court units spend wisely and
lawfully and do not exceed total allotment levels; and
5. Internal controls to facilitate effective and efficient operations, reliable
financial reporting, and compliance with applicable laws and regulations.
Budget decentralization does not relieve the court from its duty to adhere to all
statutory restrictions applicable to the judicial branch, national policies and
procedures established by the Judicial Conference, other pertinent personnel and
procurement regulations and policies, general laws governing use of appropriated
funds, the Anti-Deficiency Act (31 U.S.C. §§ 1341(a), 1350), and the AO Director's
regulations on control of administrative funds. The court should have in place a
reasonable organizational structure and planning process to guide the expenditure of
funds, as well as systems to prevent waste and abuse and ensure that important
decisions are elevated to appropriate levels in the court.
17Understanding the Judiciary’s Budget Process
Under budget decentralization, court managers may not exceed their total allotments,
obligate funds beyond the fiscal year for which they are allotted, or obligate funds for
any purpose other than facilitating the court's performance of daily operations or
improving the court's methods of operation. In addition, court managers may not
obligate or expend non-appropriated funds from sources such as fees, monetary gifts
or bequests, sales of goods or services, sanctions or unresolved settlement funds. The
only two exceptions allowing expenditure of non-appropriated funds involve the
attorney admission fees used to benefit the bench, bar, and public and the circuit
conference fees managed by the circuit councils.
Under 31 U.S.C. § 1514, every federal government entity is required to maintain a
system of administrative control that ensures the expenditure of appropriated funds
only for designated purposes, within allowable amounts, and within specified times.
A new Handbook on the Administrative Control of Appropriated Funds, scheduled
for publication in 2001, sets forth the documented system of funds controls within the
Judiciary and the policies that court managers must follow. It will be available
electronically on the J-Net and in hard copy from the AO's Office of Finance and
Budget.
Allotment Simplification
Allotment simplification was implemented in 1998 to replace the
labor-intensive and complex process formerly used to calculate and distribute
funding to court units in 64 separate expense categories (budget object
classifications or BOCs). Essentially, funds are now transmitted to all court
units at the beginning of each fiscal year in just three broad categories: (1)
salaries; (2) operating expenses; and (3) automation expenses funded through
the Judiciary Information Technology Fund. Court units must then sub-allot
the funds into BOCs, such as travel, office supplies, and equipment
maintenance and repairs.
A new, simplified methodology allots funds for non-salary, day-to-day
operating expenses, using such factors as the number of authorized "work
units" ( a budgetary measure of work needing to be performed by court staff)
for court unit staffing, weighted case filing for bankruptcy courts, the number
of staffed offices maintained, and a court unit's historical spending patterns. As
for automation expenses, the Committee on Automation and Technology of the
Judicial Conference has approved formulas for allotting funds for office
automation and for support of national and local data communications
18Understanding the Judiciary’s Budget Process
networks.
Two new allotment formulas were implemented in FY 2001. The first provides
funding for capital goods (i.e., general office equipment, copiers, and
furniture). The second funds the cyclical space maintenance and replacement
needs of court units, covering the costs of painting, replacing worn carpets,
cleaning of wall coverings and courtroom paneling, cleaning or repairing
window treatments and floor coverings, rejuvenating damaged millwork and
architectural metalwork, and repairing damaged walls, floors, and ceilings.
Delegations of Authority to Chief Judges
The Director is the chief administrative officer for the federal courts. All
authorities of the Administrative Office are vested in the Director, who may
delegate them to others. 28 U.S.C. § 602(d). The Director has delegated to the
courts substantial administrative authority for financial management, personnel
management, contracting and procurement, and travel administration. Among
these are several general (or blanket) delegations to chief judges.
Together, the chief judge and the unit executive must ensure that the court
provides appropriate guidance in the exercise of budget decentralization
responsibilities. Chief judges should not be involved in every business
decision: They should hire qualified staff, entrust them with day-to-day
management decisions, and ensure accountability.
The chief judge has a stewardship role in the management of resources under
budget decentralization. In order to carry out the breadth of his or her
responsibilities, a chief judge relies heavily on senior court staff and routinely
re-delegates many of his or her authorities to the court unit executives. Any
re-delegations from the chief judge should reflect a conscious choice of placing
administrative decision-making authority with a qualified and competent
official. All delegated authorities should be reviewed, validated, and (where
appropriate) changed whenever there are changes among the parties to the
delegation.
Decentralization of Personnel Management
Management of the Court Personnel System (CPS) was largely decentralized to
19Understanding the Judiciary’s Budget Process
the individual courts in 1995. Chief judges have the authority to make CPS
classification, compensation, and job qualification determinations. 28 U.S.C. §
604. As a result, each court unit is now given a total annual allotment of salary
dollars for personnel, rather than a specific number of "slots" or positions.
Accordingly, unit executives can determine the number of supporting staff and
the salary of each staff member–as long as they stay within their total budget
allotments and follow national classification and qualifications guidelines.
Cost Control Monitoring System
The Cost Control Monitoring system (CCMS), which was also implemented
beginning in 1995, is a formula-based, dollar-driven tool for allotting a court
unit's budget for staff salaries. It sets the salary dollars for each court unit,
based on the staffing levels determined by the national staffing formulas.
Incorporating workload and other factors, the staffing formulas are used to
calculate the authorized number of "work units" to which each court unit is
entitled, based on workload and other factors authorized which are then
converted into dollars. As long as they stay within their total annual dollar
allotments, court managers have considerable latitude to hire, pay, and promote
their employees.
CCMS gives flexibility to court managers both to make immediate personnel
decisions and to plan for future years. It assists them in identifying the impact
that current-year personnel decisions will have in the following fiscal year. For
planning purposes, it calculates a second-year cost ceiling, which is the annual
salary allotment for the current year, plus anticipated cost-of-living
(Employment Cost Index) and locality pay increases, plus a salary progression
additive for the next fiscal year.
The second-year cost ceiling is an important element of planning and cost
control. The annualized cost of personnel decisions made in the current year
should not exceed the amount of the second-year ceiling.
To assist in cost management, court units are provided an automated software
tool that allows budget analysts to run "what if" scenarios to determine the cost
of personnel decisions and compares them to the second-year cost ceiling.
20Understanding the Judiciary’s Budget Process
Contracting and Procurement Authority
The Director has delegated the following general contracting and procurement
authorities to chief judges:
NON-AUTOMATION PROCUREMENT — Authority to award new
contracts and purchase orders for non-information technology products
and services at values up to $25,000 per transaction. Also, authority to
place orders of non-information technology products and services under
existing contracts previously awarded by GSA for this purpose
(commonly referred to as "GSA Schedule" purchases) in amounts up to
the maximum ordering limitation per transaction as specified in the GSA
contract. 28 U.S.C. § 604.
AUTOMATION PROCUREMENT — Authority to award new contracts and
purchase orders for information technology products and services at
values up to $25,000 per transaction. Also, authority to place orders for
information technology products and services under existing GSA
schedule contracts at values up to $50,000 per transaction. 28 U.S.C. §
604.
LAWBOOK PROCUREMENT — Authority to award new contracts and
purchase orders and to place orders under GSA schedule contracts for
lawbooks at values up to $100,000 per transaction.
SPECIAL PROCUREMENT DELEGATIONS — Authority to award
contracts or place orders for certain services in dollar amounts exceeding
the above delegations, provided that procedures specified in the special
delegations are followed. These services include: halfway houses,
treatment services, transit passes or voucher, copy center licensing
agreements, and court reporter services.
PROCUREMENT OF COURTROOM TECHNOLOGY — Authority to award
contracts and purchase order for courtroom technologies for
non-prospectus level projects using the nationwide design and
installation services contract.
21Budget Decentralization
Travel Management
The Director of the Administrative Office promulgates travel regulations for all
Judiciary officers and employees. The travel regulations applicable to judges
are promulgated with the approval of the Judicial Conference. Official travel
expenses for judges and chambers staff are paid from centrally–held (i.e., not
decentralized) funds. No advance authorization is generally necessary for
judges to travel to hold court, for chambers staff to accompany their judges to
court sessions, or for judges to attend "authorized judicial meetings" as defined
in the travel regulations (Guide to Judiciary Policies and Procedures, Volume
III-A, Section C, Chapter V, Exhibit A). Travel plans, authorization for travel,
and payment vouchers for court unit staff must be approved by court unit
executives or their designees.
Government travel is a highly visible activity. Court unit (e.g., clerk's office,
probation) employees travel on a regular basis between divisional offices to
attend training and participate in a wide variety of meetings, conferences, and
working groups. It is good management to know where court staff members
are traveling and why. Mistakes can be costly, and any appearance of abuse of
regulations can be damaging to the individual traveler and the reputation of the
court unit. Establishing a reasonable system for planning travel, authorizing
travel, reporting on travel, and reviewing travel vouchers will help ensure the
proper use of travel funds. Recommendations on how to establish a system to
assure that all official travel is properly authorized and conducted is provided
in the new Handbook on Management Oversight and Stewardship.
Funds Not Decentralized to Court Units
There are important exceptions to the budget decentralization program. In
order to preserve sufficient funding for mandatory costs, the following items
are administered directly by the AO and are not administered through each
court's decentralized budget:
· Salaries, travel, and training of judges and chambers staff;
· Benefits for judges and court employees;
22Understanding the Judiciary’s Budget Process
· Professional liability insurance;
· GSA space rental;
· Psychiatric services for pre-sentence investigations;
· Jury fees and expenses;
· Contract court interpreters;
· Payments for transcripts;
· FTS long-distance telephone services;
· Major automation systems;
· Criminal Justice Act funds; and
· Travel and expenses for change of duty station.
Information Technology Fund
Congress has authorized a special Judiciary Information Technology Fund
(JITF) to support the Judiciary's information resource management activities,
including the collection, management, manipulation, dissemination, and
protection of Judiciary information used by courts and other judicial branch
entities, the bar, and the public. 28 U.S.C. § 612. Because the JITF provides a
discrete source of funding that carries over automatically from one fiscal year
to the next at the national level, the fund makes it possible for the Judiciary to
plan, budget, and use appropriated money for multi-year projects and initiatives
more effectively and efficiently. A court may not transfer money out of the
JITF or move money in the fund between different court units without the
approval of the AO.
23Understanding the Judiciary’s Budget Process Budget Decentralization
Federal Public Defenders
Federal Public Defender offices are funded under a separate appropriations
account, and each defender office manages its own budget independently of the
court. The district clerk disburses funds and collects any receipts on behalf of
the Federal Public Defender's office in that district.
24Managing the
Part
Court’s
4 Budget
Phases of the Local Budget Cycle
There are four phases in a court’s local budget cycle:
1. Budget Planning – Court units should begin planning well in
advance of the fiscal year. The AO’s budget call is sent to the
courts electronically in early summer. It provides court units with
an opportunity to request funding for non-recurring operating
expenses for one-time events and special projects expected to occur
during the next fiscal year. Advanced planning is required to
respond effectively to the budget call.
2. Allotment Process – Court units request and receive their
allotments from the AO.
About 95% of the allotments
to court units are determined
by formulas, and the
remaining 5% is either zero-
based or event-driven funding.
3. Managing the Local Budget – This is an on-going process that
essentially involves continued development, execution, and
monitoring of the budget after court units receive their allotments.
The primary budget management functions with which all court
managers must be concerned are planning, estimating and
projecting, monitoring and reviewing, and reporting. Court unit
executives have the opportunity to request supplemental funding for
unforseen circumstances arising after the initial allotment process
begins.
254. Year-end Evaluation – Court units should evaluate their budget
performance during the course of the year, which should lead to
identifying areas for improvement. This also leads directly into
planning for the next fiscal year. Changes in current-year spending
patterns and assessment of long-term and short-term goals and new
enhancements must be considered during this phase. Court
managers also have to take into account the second-year costs of
current year discretionary spending decisions.
Court Unit Budget Organizational Plans
The Judicial Conference has approved the budget decentralization program for
all court units on the express understanding that each court unit must adopt
procedures governing the budget approval and reprogramming processes before
acceptance into the program.
All court units are required to have a documented “Budget Organization Plan”
in place that delineates its financial organization, planning, and decision-
making structure and specifies the financial roles and responsibilities of court
officials. The plans must be approved by the chief judge and sent to the AO.
The Court Unit Budget Organization Plan guidelines, available on the J-Net,
provide guidance to court units in preparing their documented plans. Model
plans also are posted on the J-Net for court unit use. Some plans establish a
local court budget committee, while others rely on the chief judge or the clerk
of court to make final decisions. The model plans are merely examples and are
not intended to be limiting or restrictive. No single model of a budget
organization plan is necessarily better than others or will suit all court
organizations.
What is important is that each court have a clearly defined and documented
decision-making structure for managing its budget. Moreover, although budget
decisions may be made differently in each court, ultimate responsibility rests
with the chief judge. Chief judges may choose to retain some budget
authorities, delegate specific authorities to court budget committees, or
delegate all or specific authorities to unit executives.
26Managing the Court’s Budget
Annual Spending Plans
Court units should develop an annual spending plan for each fiscal year. It is
important for “buy-in” purposes that all the judges and court unit executives
participate to some extent in preparing or approving the spending plans. All
should have the opportunity to request what they need and to have their needs
considered in light of the total amount of funds allotted. For instance, some
court-wide and chambers needs, such as furniture, general office equipment,
and tenant alterations, are funded by the clerk. These needs should be reflected
in the spending plan and not addressed later on an ad hoc basis. Moreover, all
should understand the pertinent ground rules for budget decentralization and
the pertinent financial limitations. Transparency in the process tends to foster
greater acceptance and cooperation, since participants have a sense that their
needs have been taken into account and will be handled fairly and openly.
In addition, annual spending plans should dovetail with the court’s automation
plan, its long-range plan, and other local planning instruments.
In conjunction with the annual budget call process each spring (see Part 1,
“The Budget Call and Special Court Needs,” p. 8.), court units should prepare
an initial annual spending plan that covers their operations for the next fiscal
year, taking into account both the allotments they expect to receive by formula
and any special needs they have identified. At the beginning of the fiscal year,
each court unit must have at least an interim plan in place that shows how
available resources will be spent.
Assuming final congressional action on the Judiciary’s appropriations has
occurred, each court unit must have in place a final spending plan for the year
by the end of the first quarter of the fiscal year, i.e., by January 1. The final
plan normally will reflect its initial spending plan, but it should be revised and
updated to fit the level of resources actually allocated by the AO for the fiscal
year.
The revised plan should be reviewed and approved by the chief judge (and by
other judges, depending on a court’s internal administrative organization). It
should set forth in detail how the unit plans to obligate available resources
during the coming fiscal year for each BOC. It also should take into account
the short-term and long-term financial goals of the unit and any special events
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