By Jason Sherman
The Defense Department ended fiscal year 2014 with a total of $105.7 billion in unobligated funds from prior years, according to new Pentagon figures. The final total is 26 percent more than the White House Office of Management and Budget forecast in March.
The Pentagon, OMB and the Treasury Department compiled the figure as part of an annual, end-of-fiscal-year spending analysis in late October, the “FY 2014 4th Quarter Unobligated Balances in Unexpired Accounts for Executive Branch Agencies Reported on SF 133s.” In March, OMB forecast that DOD would carry forward $83.4 billion in unobligated prior-year funds.
The Pentagon’s unobligated balances shifted from being an esoteric part of the Defense Department’s financial management to taking a more central role in managing resources following enactment of the 2011 Budget Control Act which requires unobligated balances to be cut in the event discretionary spending is sequestered.
In early 2013, the Pentagon tapped this huge reserve of cash on hand from earlier budgets to blunt the impact of mandatory cuts to its FY-13 weapon system modernization accounts, financing more than 40 percent of the sequester bill using unobligated funds.
While the FY-14 balances are not at risk of being sequestered, balances that accrue during FY-15 would be at risk if discretionary spending caps required by law remain in place in FY-16.
The FY-14 unobligated balances mark a significant increase over the amounts remaining at the end of FY-13: $65.4 billion, a figure 30 percent below that year’s OMB forecast. Those accounts have swelled back up to pre-sequester levels. In FY-12, the Pentagon carried $105.7 billion in its accounts.
Depending on the category of spending, the Pentagon has between one and five years to obligate funds appropriated in a fiscal year. For shipbuilding and military construction projects, the Defense Department has five years to put funds on contract, while weapon system procurement funding can be carried over for three years before it expires. Research and development funds are good for two years. Operations and maintenance and military personnel funding must be obligated in the year of appropriation.
The Pentagon’s FY-14 unobligated balances, according to the October report, include: $21.8 billion in operations and maintenance accounts; $13 billion in military construction; $2.1 billion in family housing and base closure and realignment accounts; $10.2 billion in revolving and working capital funds; and $471 million in military personnel accounts.
Aircraft procurement accounts have $19.9 billion in unobligated balances, including $2.8 billion for the Army, $6.5 billion for the Navy, and $10.4 billion for the Air Force, according to figures in the report.
Missiles and weapons procurement accounts have prior-year balances of $3.5 billion, including $1.2 billion for the Army, $677 million for the Navy and $1.6 billion for the Air Force, the October report states.
The Navy’s shipbuilding accounts are carrying forward $10.4 billion, and the “other procurement” appropriation accounts of the three military departments collectively had unobligated balances of $6.8 billion, according to the report.
The Army’s unobligated balances at the end of FY-14 in its investment accounts — weapons development and procurement — was $11.8 billion; the Navy and Marine Corps, $22.7 billion; and the Air Force, $17.8 billion, the report states.