CONTINUING RESOLUTIONS: THE INFLUENCE OF TEMPORARY SPENDING RESTRICTIONS ON MONTHLY EXPENDITURE PATTERNS OF FEDERAL AGENCIES

The federal fiscal year runs from October 1 to September 30, and many federal agencies rely on annual appropriations to fund activities and programs. Nonetheless, the federal government often enters a new fiscal year without a fully approved budget, which actuates the requirement for a temporary means of funding government operations. Congress and the president provide provisional resources by way of continuing resolutions which enable the operation of government programs until regular appropriations are enacted. However, continuing resolutions are restrictive by design and may have unintended effects on government spending behavior beyond the timeframe to which the resolutions apply. This study explores the relationship between the uncertainty generated by the implementation of continuing appropriations and the modification of expenditure behavior in federal agencies. After a summary of the federal budget process and a survey of the literature related to continuing resolutions, a model of agency spending is presented. The associated theory explores suppositions related to ex ante and ex post reactions of agency officials to: (1) a one-time occurrence of continuing resolutions, and (2) an environment of regularly occurring continuing resolutions. Afterward, event study methods are applied to a subset of federal monthly obligation data to reveal patterns of spending which are suggestive of: (1) a saving-dissaving approach to compensate for the restrictive nature of continuing resolutions, and (2) the presence of signaling mechanisms between higher echelons of the federal government and subordinate agencies. A second quantitative chapter builds on the idea that federal agencies engage in expense shifting in anticipation of the enactment of continuing resolutions. An agenda setting framework is used to demonstrate how agencies monitor particular sources of the federal budget process to gain insight to the likelihood of continuing appropriations being enacted. Findings show that decision-makers may be able to determine the relevancy of particular budgetary signals within the congressional budgetary scheme