On May 5, 2014, the Office of Management and Budget (OMB) sent the attached guidance memo to the heads of federal departments and agencies regarding the FY 2016 budgets that they will be submitting to OMB. OMB Deputy Director Brian Deese states that the Bipartisan Budget Agreement Act of 2013 set spending caps at levels that make it difficult to fund investments necessary to accelerate economic growth and ensure national security. In order to make room in the FY 2016 budget for priorities including education, innovation, infrastructure and security, federal agencies are asked to leave room in their proposed FY 2016 budget submissions for increased investment in these priorities.
Thus the Administration instructs department and agency heads to reduce spending in FY 2016 “on lower priority programs in order to create room for effective investments in areas that remain critical to securing our nation’s future.” The OMB memo states:
Unless your agency has been given explicit direction otherwise by OMB, your FY 2016 budget submission to OMB should reflect a 2 percent reduction below the net discretionary total provided for your agency for FY 2016 in the FY 2015 Budget , for each of the defense and non-defense discretionary categories. Your budget submission will provide the President with the options needed to make the hard choices necessary to provide room for critical investments in priority areas, and focus limited funding on programs and approaches that work.
While submitting a budget that is two percent below the planned amount, agencies are also to identify priority investments that are up to five percent above the submission level and to rank the proposals in priority order.
Agencies are to also take into account ways that might reduce fragmentation, overlap and duplication of programs. When appropriate, FY 2016 budget proposals are to be responsive to the January 30, 2104, Presidential Memorandum to the Secretaries of Labor, Commerce, and Education directing them to develop a workforce and training system that is more job-driven, integrated and effective.
With regard to mandatory spending, agencies are encouraged to identify stand-alone mandatory savings proposals as part of the FY 2016 budget submission. In addition, new mandatory proposals which are not budget neutral should be accompanied by mandatory savings proposals.
Agency proposals for FY 2016 budgets are to exclude: across-the-board reductions; reductions to mandatory spending in appropriations bills; shifts of funding to other parts of the budget; reclassifications of existing discretionary spending to mandatory; and enactment of new user fees to offset existing spending. Agencies may, however, submit these proposals separately from the budget submission. Thus if the Administration decides to propose that contract support costs, which are now discretionary funding in the Indian Health Service and Bureau of Indian Affairs budgets, be classified as mandatory funding, the proposal would be separate from the budget proposal.
Please let us know if we may provide additional information regarding the Office of Management and Budget memorandum.