Developing a Freshman Budget

The following guidance is excerpted from Chapter 3, “Creating a First-Year Budget,” in Setting Course: A Congressional Management Guide. Information was accurate at the time of publication, but staff should always consult with their respective chambers to ensure you are following House and Senate rules. House staff should review the “Member’s Handbook” and consult with the House Finance Office (202-225-7474) and the Committee on House Administration (Democrats: 202-225-2061; Republicans: 202-225-8281). Senate staff should consult the “Senate Manual,” the Senate Disbursing Office (202-224-3205) and the Senate Rules and Administration Committee (202-224-6352).

Summary

Create a First-Year Budget

Crafting a budget early, even if it's only a rough estimate, has clear advantages over developing a budget after swearing-in. It will:

  • Help you avoid making financial commitments which you may later regret.
  • Force you to address the difficult trade-offs that are inherent in budgeting.
  • Let you know if your goals are feasible or serve as a useful check on your plans.
  • Give you confidence that major financial commitments you make will fit into a larger budgeting plan that reflects your priorities.

How to Develop a First-Year Budget

Your first-year budget will be the hardest to put together, with so little staff support, relevant information, or time. Seasoned veterans advise that it is nearly impossible to develop an accurate, detailed budget until 3 to 6 months into your first term. Still, it is important to start putting figures down on paper as soon as possible. The most commonly stated advice from Chiefs of Staff is to err on the side of caution. With that wisdom in mind, we offer a four-step process for developing a first-year budget:

  1. Collect expense information. See Sources for Collecting Useful Budget Data below.
  2. Budget for your major allocations. With expense information in hand, your financial team can assign general dollar amounts to major spending categories. By grouping expenses into broad categories, your team can quickly develop a usable budget. Working with veteran Chiefs of Staff, CMF has developed budget worksheets (Figures 3-3 and 3-4 in Setting Course chapter 3) to assist freshman House and Senate offices. Addititionally, we have provided a xlsxcomprehensive spreadsheet (26 KB) that includes formulas and averages of the last freshman class to help House freshman develop their first-year budget.
  3. Compare major allocations to your strategic plan. Once you have a rough budget, compare it with your allowances and your goals. This step is important in adjusting the plan to financial realities, further clarifying priorities, or developing creative ideas to meet your goals more economically. You may find that a major overhaul of your budget or plan is necessary or that just a few adjustments will do the trick.
  4. Build a month-by-month budget. Estimate as best you can when periodic expenses will be incurred, in addition to providing for fixed items that will appear each month. Each month, this process will yield the following: monthly expenditure figures, year-to-date expenditures, committed funds figures, and a net balance. Doing this creates a means of determining if you are on the right financial track as the year progress and serves as an early warning system.

Overview of House and Senate Allowances

While each chamber sets its own spending levels and regulations on the use of funds, they share some budgeting characteristics.

      1. Allocations are fixed. Unlike campaign funds, you cannot raise more.
      2. Members are personally responsible for finances. If an office overspends its allocation on official expenses, the Member, personally, must pay the difference.
      3. Funds are not actually given to you. You will submit payment requests (called “vouchers”) to the House Finance Office or the Senate Disbursing Office, which remits payments and reimbursements that draw down on you allocated funds.
      4. Funds are authorized annually. They must be obligated by the end of their authorized year or are lost to your use. Many offices use unexpended funds at the end of the year to stock up on supplies upgrade or pay off equipment, and give staff performance bonuses. Note that the House uses a legislative year (January 3 to January 2) and the Senate uses a fiscal year (October 1 to September 30).
      5. Funds have limited uses. They can only be used for categories of expenses sanctioned as “allowable” (i.e., “reimbursable).
      6. You don’t pay for employer taxes and some employee benefits. Staff salaries are deducted from your account, but your office is not charged for the government’s share of payroll taxes, pension/retirement plans, or health, life, disability and unemployment insurance.
      7. Your office is provided separate allocations for student loan repayment and paid interns. Each chamber authorizes specific amounts for their Student Loan Repayment Program (SLRP), and for paid interns through the House Paid Internship Program and the Senate Intern Compensation Fund. Offices may still pay interns out of their official resources (the MRA or the Senator's Account). Interns paid through the House Paid Internship Program do not count against the Member's employee staff ceiling.
      8. You are not charged for DC office space, standard furniture, limited parking spaces and many support services. Each Member gets one office suite in a House or Senate building. These offices, along with furnishings and support services, are provided at no cost to you.

Additional Information for House Offices

  • There is a single account, the Members’ Representational Allowance, from which all expenses are paid.
  • All Members do not have the same MRA (determined by distance from DC, cost of district office space, and number of district postal drops).
  • The Committee on House Administration does the calculations and will inform you of your MRA. In 2020, MRAs typically ranged from $1.35 million to $1.56 million (Puerto Rico is higher), with an average of $1.45 million.

Additional Information for Senate Offices

Senators have many accounts, each with a different sum of money and spending limitations.
  • Senator’s Official Personnel and Office Expense Account “the Senator’s Account”). This main account ranges from $3.4 million to $5.4 million, with an average of $3.7 million, and depends on state population, distance from Washington, DC, and the number of postal addresses in the state. This account is used for salaries and all other “official office expenses.”
  • Economic Allocation Fund. Given in two three-year allotments for the purchase of IT and office equipment in all offices.
  • Constituent Services Systems (CSS) funds. This funding is for CSS hardware, software purchases and maintenance.
  • Home State Furniture and Furnishings. A lifetime allowance ranging from $52,000 to $73,000 for state offices.
  • Senator’s Allowance. A $5,000 allotment for furnishing a personal office, reception room and conference room in DC.
  • Other accounts allot things rather than money. Used for things like long distance telephone service, paper and envelopes, and printing/folding services.
  • Senate offices may pay for “Officially related expenses” with excess campaign funds. Contact the Senate Ethics Committee for guidance.
  • Senate budgets are prorated for partial years. Check with Senate Disbursing Office to confirm your budget allocations.

Sources for Collecting Useful Budget Data

The following resources are useful in compiling data specific to the unique characteristics of your district/state.

    1. Your predecessor’s budget(s). This is the best possible source of information tailored to your district/state. Review more than one year since election year and retiree budgets can differ significantly from regular years. Also understand how your priorities differ from your predecessor's.
    2. The budget(s) from an adjoining district or similar state. If you cannot obtain your predecessor’s budget(s), a district or state with similar demographic and geographic characteristics will help.
    3. Statement of Disbursements of the House and Report of the Secretary of the Senate. These massive multi-volume official reports, as required by law, publicly disclose office expenditures. The House report is published quarterly (disbursements.house.gov) by the Chief Administrative Officer (CAO) while the Senate report comes out twice a year (www.senate.gov). If you cannot obtain your predecessor's budget, you can still review their spending.
    4. Combined Airlines Ticket Office (CATO) or Airline Congressional Desks. For additional help in estimating travel expenses, consult CATO (703-522-2286; www.catotvl.com) or the congressional desks run by most major airlines. You’ll need to know how often you plan to travel back to your district/state.
    5. House Information Resources (HIR) and Senate Sergeant at Arms (SAA). Computer equipment may be a big ticket purchase during your first year or two. HIR (202-225-6002) and the SAA (202-224-0821) can help you estimate upgrade costs.
    6. Congressional Management Foundation (CMF). As the producer of Setting Course, as well as several reports on House and Senate employment practices, CMF is an expert on congressional budgets, compensation, benefits, and personnel policies. CMF can answer your questions on a range of operational and management issues, and has numerous resources and guidance.
    7. Outside third parties. Several off-the-Hill organizations, such as ProPublica, LegiStorm, and the National Taxpayers Union, have analyzed House and Senate expenditures, using publicly available data from the official House and Senate reports discussed earlier. Their analyses tend to focus on salaries, travel expenses, franked mail, or simply overall spending. They receive a good deal of press attention, bringing additional scrutiny on your expenditures.

Key First-Year Budget Questions

1. What is the fundamental orientation of your office?

  • How much emphases will be on legislation vs. casework vs. constituent mail?
  • How often does the Member want/need to be in the district/state?
  • Political realities: is the district/state electorally safe or marginal?
  • If your plan calls for all the action to be in the district/state, are you allocating the appropriate staff and resources there?

2. What commitments and campaign promises have you made?

  • Have you promised anyone a specific salary?
  • Have you promised to open several district/state offices?
  • Have you promised a high level of communication with constituents?
  • Have you promised not to spend your entire budget each year?

3. Do your constituents have expectations based on your predecessor?

  • Can you close an existing district/state office without causing an outcry?
  • Are certain practices worth retaining (e.g., quarterly town hall meetings, etc.)?

4. What expectations do you have?

  • Do you expect to be in constant contact with staff and will this mean purchasing an increased number of handheld devices?
  • Are you accustomed to a high level of media attention and do you wish to maintain visibility in office?

5. To what extent do you intend to use outreach mail as a means of communication with your constituents?

6. Do you intend to spend your entire allowance on office expenses or do you want to report that you returned a substantial amount of unspent funds at the end of the year?


Advice from Veterans on Your First-Year Budget

    1. Learn the rules and regulations and ask for help. Sometimes the rules are counterintuitive. Seek assistance from the House Finance Office, the House Administration Committee, the Senate Disbursing Office, the Senate Rules and Administration Committee, and the respective Ethics Committees for each chamber.
    2. Keep your options open when it comes to spending leftover funds. Many offices have a multi-purpose cushion fund for contingencies, to pay off computer equipment, to stock up on supplies at year-end, to give staff bonuses, or simply be left unspent.
    3. Get to know the staff in the House Finance Office and the Senate Disbursing Office, especially the ones assigned to work with your office. They know the tricks of the trade.
    4. Use the buddy system. Most Chiefs of Staff recommend that new office team up with a veteran office for the first year. The House and the Senate Chiefs of Staff Associations can also help.
    5. Estimate your transportation costs as soon as possible. Distance from DC does not always correlate with transportation costs.
    6. Budget at the highest level of detail that still allows you to keep sight of the big picture.

Additional Advice for House Offices

  • District offices are expensive. You will pay for virtually everything associated with a district office out of your MRA, and once you open it, closing it may be politically and contractually difficult.
  • Pay attention to specials that won’t last. When introductory offers expire, the increased costs can drastically alter your budget.

Additional Advice for Senate Offices

  • Learn about the “things” allocated to your office, such as the paper allotment.
  • Purchase computer equipment out of the Senator’s Account in the first year, when an office surplus is likely, rather than deplete your Economic Allocation Fund, which has to last several years.
  • Decide early if you’re going to send out mass mailing and whether you’ll spend up to the $50,000 franking limit. This money can be used for other priorities, such as salaries, so management must agree on how it should be spent.
  • Pay close attention to budgeting in August. It’s near the fiscal year-end and a time when a lot of staff travel to the state takes place. Don’t let surprise travel expenses upset your budget.
  • Know that changes in allocations can influence the rest of your budget. If the Senate decides to pay for a popular service through the institution, office budgets might be cut that amount the following year. These changes are tough to predict, but be aware they can occur.

Comprehensive Workbook for House Offices to Develop a First-Year Budget

As stated above in the section "How to Develop Your First-Year Budget," it is important that offices budget for major allocations. The workbook below will assist House offices in this task, by walking you through the major spending categories and subcategories. For reference, it also includes information on the average spending of the previous freshman class in their first year in office.

 
budget, congressional operations, freshman, planning, Strategy & Planning