https://crsreports.congress.gov
March 17, 2017
Defense Primer: The National Defense Budget Function (050)
The budget function classification system provides a
framework for examining spending patterns of the federal
government by category of activity, rather than by agency
or type of financing. Within the system, spending categories
are called functions, and each is coded with both an
explanatory title and numeric code ending in zero (and
shown in parenthesis). This defense primer addresses the
National Defense Budget (050), which is frequently used to
explain trends in military spending but which also includes
some activities not conducted by the Department of
Defense.
What Is the Purpose of the Budget Function
System?
The budget function classification system organizes the
spending of the federal government into categories, or
‘functions,’ that describe the public purpose of each
activity. When spending among all agencies is summarized
topically in this way, patterns may be revealed that help
analysts identify the overall priorities of the federal
government. For instance, in FY2016, spending for
National Defense (050) represented 15% of all federal
expenditures. This was, for example, only slightly more
than the government spent on activities in the Health (550)
function, which accounted for 13% of all federal spending.
Since federal agencies often have diverse, overlapping
responsibilities, it is not uncommon for them to be
associated with multiple categories of activity. In the
functional classification system, this can sometimes lead to
unexpected results. For example, though most DOD
spending is associated with the National Defense Function
(050), in some years, agency expenditures can be found in
such divergent functions as International Affairs (150),
Education, Training, Employment, and Social Services
(500), and Health (550).
How Are Budget Functions Organized?
The budget function classification system primarily
organizes federal spending into broad activities and smaller
elements called subfunctions, which describe individual
policy activities. Subfunctions are assigned a numeric
identifier (ending in a single digit) related to the function to
which they belong. For instance, function 050 is composed
of the subfunctions 051, 053, and 054. Function 250 is
composed of subfunctions 251 and 252. In common usage,
an analyst might employ budget functions and subfunctions
to describe federal spending by explaining, “In FY2016,
budget authority for National Defense (050) was $615
billion. Within that, the Department of Defense-Military
(051) comprised $587 billion.”
How Are Budget Functions Managed?
The Office of Management and Budget (OMB) is
considered the official custodian of federal budget data and
plays the largest role in managing and updating the
categories. Changes to the scheme can be made by the
President only in consultation with the House and Senate
Appropriations Committees and Budget Committees.
In addition to its role reviewing agency budgets to ensure
they conform to presidential priorities, OMB requires that
agencies prepare and submit their budget requests in
functional categories. These are organized and presented to
Congress each year in the President’s Budget Request
(PBR).
How Are Budget Functions Used in the Budget
Process?
The PBR is organized according to budget function when it
is submitted to Congress. After receiving the PBR,
Congress sets spending and credit amounts by function and
by total spending level in an annual Concurrent Resolution
on the Budget (commonly referred to as the ‘Budget
Resolution’). For Congress, the amounts indicate an
expression of overall spending priorities, not a binding
requirement. Using the Budget Resolution as a guide, each
chamber separately assigns binding spending limits—called
302a allocations—to its respective appropriation
committee. A 302a allocation represents the total amount of
discretionary budget authority to be made available in the
upcoming fiscal year. The appropriation committees then
subdivide their allocated budget authority among the twelve
appropriation subcommittees (302b allocations).
Figure 1. Congressional Consideration of
Discretionary Spending Levels
The National Defense Function (050)
The DOD is the agency responsible for approximately 96%
of spending within the National Defense Budget (050).
Because nearly all DOD spending is also included within
