Budgeting and Financial Management

The following guidance is excerpted from Chapter 12, “Budgeting and Financial Management,” in Setting Course: A Congressional Management Guide.

Summary

Operating a congressional office is like operating a small business. All small businesses require two things:

  1. A mission or purpose (a reason for existing); and
  2. Resources to support that mission.

In Congress, you are largely responsible for developing your mission—your reason for coming to Washington, DC—and for deciding what you want to accomplish and contribute while here. This must be communicated in your strategic plan.

Your resources are given to you by Congress and paid for by the American taxpayer. Spent wisely, those resources can greatly boost your chances of success and achievement in Congress.

House offices are allocated approximately $1.45 million annually for official uses. Senate office budgets range from $3.4 million to $5.4 million. Decisions for uses of this money include:

  • How many staff to hire;
  • What staff positions to fill;
  • How much to pay each staffer;
  • How many district/state offices to maintain;
  • What technology and equipment to buy;
  • How often the Member and staff will travel between the district/state and Washington, DC;
  • Whether to send any unsolicited mailings to constituents; and many, additional smaller items.

Avoiding Problems

In some ways, your budget is a double-edged sword. Your official funds can help you meet your legislative and representational goals, but, if mismanaged, they can constrain your office’s activities and even lead to public embarrassment. Three budget problems you may encounter are:

  • Spending on the wrong things (non-priorities). Many offices lose sight of their goals in the rush of normal legislative business. They often make major spending decisions (e.g., hiring a new staffer, sending out a mass mailing to constituents) to solve short-term problems, without considering how the decision will affect their long-term agenda. Such decisions (e.g., hiring the wrong type of staffer), can be difficult to undo, and take resources away from achieving the Member’s strategic plan. The best way to avoid this problem is simply by asking, "How does this investment affect my long-term goals?" whenever you consider a major expenditure.
  • Overspending. There are two types of "overspending." If your office overspends its official allocation of funds, the Member is personally liable for the excess expenditures. But there is another far more frequent type of overspending — overspending your budget early in the year, forcing the office to forgo items that were in the budget for later in the year (e.g., cancel some Member travel, eliminate an important mailing to your constituents, or put off hiring another Legislative Assistant). Financial planning can also help prevent this mid-year ad hoc rearranging of priorities.
  • Media scrutiny of your expenditures. The media (and the public) will have access not only to information on your total allocations, but also to a detailed quarterly or biannual summary of your office’s expenditures. Many reporters and activists will plumb the depths of your expenses for a story on your "fiscal mismanagement" or "political corruption." The media views two types of spending patterns as inherently suspect: (1) dealings with the Member's family, business associates, or campaign contributors, and (2) expenditures that are out of line with the norms of other Members. The Member and staff need to be aware of these considerations when authorizing major expenditures such as district/state office rent, a computer system, or a printing and mailing job.

Budgeting Toward Your Goals, Year After Year

Creating a first-year congressional budget differs in one obvious way from the second year and beyond; after the first year, an office can look at its own spending patterns to develop the budget for the following year. This information becomes more valuable when it is used to evaluate whether a budget truly reflects an office’s priorities.

Congressional offices have two choices when budgeting. They can take last year’s budget and make the obvious changes, adjusting for inflation, staff turnover, and increased/decreased allotments. Or, they can take a route that is demanding and often resisted yet has much to offer and is more rewarding. This path requires evaluating whether their budget spends in a way that reflects their priorities.

CMF recommends that Members and senior staff keep in mind the strategic potential of a budget. Below we offer an approach to updating your current budget to ensure that this important management exercise becomes an effective, strategic instrument rather than a rote process.

Step 1: Note any changes to your strategic plan or office priorities. First, look at your goals, update them if needed, and then use money as a tool to achieve those goals.

Step 2: Brainstorm what resources it will take to accomplish the revised priorities. Be as specific as you can, and list a couple of options rather than limiting yourself to one course of action. Be aware that you may find glaring inconsistencies between your goals and your budget allocations.

Step 3: Look at last year’s budget with an eye toward surprises. Note how you intended to spend your money then compare it to what you actually spent it on. These are your de facto priorities.

Step 4: Take note of rules changes and other factors that could affect budgeting. Look out for changing circumstances in all of your offices that could affect how much money and other resources you will get, and where your costs might increase.

Step 5: Determine which expenses are flexible and which are longer-term commitments. Focus on gathering information about the degree of flexibility of your expenditures, and on the costs and timeframe required to make changes in spending. Remember, some spending decisions and commitments are harder to undo than others without incurring financial or political costs.

Step 6: Critically review and update the major allocations in your budget. Ask yourself, “Can each major allocation in our current budget be justified and linked to accomplishing one or more of our revised office goals? Are there alternative ways to spend the money to better accomplish those goals?” You also must consider if the answers to these questions negatively impact the interests of your staff, constituents or other “stakeholders.”

Step 7: Build a new month-by-month budget reflecting your changes. Allocating your budget monthly will allow you to review it regularly as the year progresses and determine whether your spending to date is where you expect it to be.

Establishing Financial Procedures for Your Office

Written Office Policies

Offices should establish policies and procedures that ensure money is spent as intended and promote the fiscal philosophy and financial management practices that you want. Your office must also meet the financial regulations of the Committee on House Administration and the Senate Rules and Administration Committee. Your accounting and record-keeping requirements should be established in writing. These requirements are explained in the Member’s Handbook and Senate Manual but can be met using a variety of methods that are often guided by your budgeting and financial accounting software.

The Accounting System

To decide whether your office is overspending or developing a surplus you should regularly compare expenditures with budget projections and year-to-date position. The House Finance Office and Senate Disbursing Office will also be doing projections for you. The House's Congressional Staff Academy (202-226-3800) and the Senate Office of Training and Development (202-224-7628) offer classes and general guidelines for staff who will be part of your system.

Record Keeping

The House and Senate aren't paperless, though they are making improvements. In the meantime, you will need to develop a system for keeping track of paperwork, including vouchers and receipts. Each chamber’s intranet offers financial advice, forms and (with the proper clearances) access to your accounts. The House Finance Office also offers an online system that allows you to see up-to-date reports on your office’s finances. 

Payment Processing

Avoid embarrassment by asking in advance whether or not an expenditure will be allowed. Make sure that all your staff understands (1) who in the office can approve expenditures, and (2) office rules on travel spending. Offices should be sensitive to how allowable expenditures will be listed in the House’s Statement of Disbursements or the Secretary of the Senate’s Report. They should also learn the standard budget categories and common expenditure language to avoid using language that may give the “appearance of impropriety.”

Reconciliation

Every month, the House Finance and Senate Disbursing Offices will send your office a financial statement to help ensure that your numbers match the official numbers. These statements include a detailed listing of expenditures made the prior month, sorted by category, expenditures to date, balance available, and funds committed that have not yet been paid. Your office can then determine how often to perform the task of reconciling any differences.

Auditing

Audits are already built into the congressional system. The House Finance Office processes vouchers under the guidance of the Committee on House Administration, while in the Senate, the Disbursing Office and the Senate Rules and Administration Committee ensure each voucher meets that chamber’s regulations. Some guidelines for conducting your internal audit are:

  1. Have someone other than the record keeper perform it.
  2. Do not announce in advance when you are going to conduct the audit.
  3. Perform it at a time of month that would not interfere with your normal voucher and payroll processing.
  4. Look only at a random sample of transactions.
  5. Do not give the perception that the audit is any reflection of the record keeper’s work. It is a good business practice to audit the books regardless of the experience of your record keeper.

Monthly Financial Review

Budgets are living documents and they can only support your efforts if they are subjected to an ongoing evaluation process. We recommend that you conduct a monthly financial review that will help ensure that you have stayed within your allowances, that resources are available to meet new challenges, and will provide the necessary flexibility to respond to changes in priorities, workload, or political climate. Regularly comparing your goals and spending activities will help you determine whether your strategies and goals are being achieved and if you need to devote more energy towards meeting a goal or another priority that has superseded it.

Cost-cutting Advice and Tips

Congressional offices are facing an unprecedented management challenge—cutting their annual expenditures sharply in successive years. To help offices manage this difficult process, CMF produced a short manual for House offices that provides a broad list of strategies and cost-cutting advice and tips. This advice can be applied to Senate offices as well. The link to the manual is below:

Managing the 2012 Budget Cuts in House Offices