Character Classification (MAX Schedules C, K, and R) 25.1. General. | Character classification is used to report investment activities |separately from non-investment. Data are classified as investment |when they finance activities yielding benefits largely in the future; |investment character classes include those for physical assets, the |conduct of research and development, and the conduct of education and |training. The character classification is also used to report data on |grants to State and local governments separately from direct federal |programs. | Budget authority and outlays are reported by character class for all |appropriation and fund accounts (except for credit financing accounts) |in MAX schedule C; offsetting receipts, which are also identified by |character class codes, are reported in MAX receipt data schedules (MAX |schedules K and R) (see sections 25.4 and 21.4). Amounts are required |for PY through BY. If the content of an account changes and revisions in the assigned classifications appear necessary, the agency's OMB representative should be consulted. 25.2. Definitions. The following definitions will be used for the purposes of reporting character classification data. State or local governments include: --the 50 States and the District of Columbia; --cities, counties, townships, school districts, special districts, and other local governmental units, as defined by the Bureau of the Census; --Puerto Rico, the Virgin Islands, and other U.S. territories; --the Federated States of Micronesia, Marshall Islands, and Palau, if the payments are a relatively small part of the accounts that have grants to State or local governments; --Indian tribal governments when: (1) the legislation authorizing the payment includes such entities within the definition of eligible State or local units, or (2) the tribal government acts as a nonprofit agency operating under State or local auspices; and --quasi-public nonprofit entities, such as community action agencies, when the boards of such entities must either be elected in State or local elections or must include significant representation of State or locally elected officials. | Grants to State and local governments.--For character |classification purposes, budget authority and outlays are reported as |grants to State and local governments if those resources of the |Federal Government support State or local programs of government |operations or provision of services to the public. These grants may be |formula or discretionary in nature. Grant data should be reported |for: --direct cash grants to State or local governmental units, to other public bodies established under State or local law, or to their designee; --payments for grants-in-kind, such as purchases of commodities distributed to State or local governmental institutions (e.g., school lunch programs); --payments to nongovernmental entities when such payments result in cash or in-kind services or products that are passed on to State or local governments (e.g., payments to the Corporation for Public Broadcasting or to the American Printing House for the Blind); --payments to regional commissions and organizations that are redistributed at the State or local level to provide public services; --Federal payments to State and local governments for research and development that is an integral part of the State and local governments' provision of services to the general public (e.g., research on crime control financed from law enforcement assistance grants or on mental health associated with the provision of mental rehabilitation services; see discussion below for exclusions related to research and development and payments for services rendered); --direct loan or loan guarantee subsidies to State or local governments; and --shared revenues. These payments to State or local governments are computed as a percentage of the proceeds from the sale of certain federal property, products, or services (e.g., payments from | receipts of Oregon and California grant lands) or are tax or | other collections by the Federal Government that are passed on to | State or local governments (e.g., internal revenue collections for | Puerto Rico). Excluded under this definition are: --Federal administrative expenses associated with these programs; --grants directly to profit-making institutions, individuals, and non-profit institutions not covered above (e.g., payments to Job Corps centers and trainees); --payments for research and development not directly related to the provision of services to the general public (e.g., basic research awarded via competitive grants); --payments for services rendered (e.g., utility services, training programs and expenses for federal employees, research and development for federal purposes conducted under contracts, grants, or agreements by such agencies as the National Institutes of Health, the National Science Foundation, the Department of Energy, the National Aeronautics and Space Administration, and the Department of Defense); and --Federal grants to cover administrative expenses for regional bodies and other funds not redistributed to the States or their subordinate jurisdictions (e.g., the administrative expenses of the Appalachian Regional Commission). Direct federal programs.--Programs not classified as grants to State and local governments are classified as "direct federal programs." 25.3. Reporting the data and relationships with other data requirements. | (a) Reporting budget authority and outlay data.--Budget authority |and outlay data are reported by subfunction and assigned character |classification for PY-BY in MAX schedule C. Data will be reported net, |unless OMB determines otherwise. (For the treatment of grants, see section 25.3(c).) If an account is split between two or more functional or subfunctional classifications, amounts for each function or subfunction will be reported separately. (Note: Character class data are not required for credit financing accounts.) If a transaction fits into more than one classification, it should be recorded in the classification with the lowest numerical character classification code. For example, amounts for construction of research and development facilities should be recorded in the appropriate 13xx-xx grouping, not in the 14xx-xx grouping. Where accounts are split between two or more character classifications, a classification involving less than $1 million in each of the 3 fiscal years will be omitted and the amounts included in some larger classification for that account. Offsetting collections credited to appropriation and fund accounts will be applied as offsets to the gross budget authority and the disbursements that the collections will be used to finance in the calculation of amounts reported in each character class. For example, collections resulting from the sale of commodities will be offset against gross budget authority and disbursements for the purchase of commodities in character classes 1330-01 and 1330-02, respectively; fees collected to cover operating expenses will be offset against |gross budget authority and disbursements for operating expenses in |character classes 2004-01 and 2004-02, respectively. In credit |liquidating accounts, loan repayments will be offset against gross |budget authority and disbursements for loan programs in character |classes 2004-01 and 2004-02, respectively. Grants to State and local governments in some cases allow the recipient jurisdiction the option of using funds for current or investment-type purposes, such as in community development block grant programs. In such instances, all of the outlays for grants are to be recorded in the category where the majority of the funds are anticipated to be used. (b) Reporting receipt data.--Offsetting receipt data (i.e., offsetting collections deposited in receipt accounts) are reported in MAX schedules K and R by the line numbers indicated in section 25.4. | (c) Relationships with other data requirements.--For each account, |the totals for character class data in MAX schedule C must correspond |to the total net budget authority and outlays reported in MAX schedule |P on lines 8900 and 9000. | Grant budget authority and outlays should be reported gross (i.e., |budget authority and outlays from grants should include grants |financed by offsetting collections). Offsetting collections credited |to an account that finance grants will offset budget authority and |disbursements in character class 2004-01 and 2004-02, respectively. |Actual outlays for the past year for grants and for shared revenue |must also be consistent with the respective amounts reported to the |Department of Commerce, Bureau of the Census under the Consolidated |Federal Funds Reporting Act (Public Law 97-326). | Amounts for research and development reported for character classes |1311-xx, 1312-xx, 1321-xx, 1322-xx, and 14xx-xx must agree with |amounts reported under "Basic Research", "Applied Research", |"Development" and "R&D facilities" in exhibit 44A, Research and Development Activities. 25.4. Character classification. | Character class data reported in MAX schedules C, K, and R are |identified by a line number that consists of a four-digit number and a |two-digit suffix. | (a) Classification of budget authority, outlays and offsetting |receipts.--The four-digit number identifies data as investment or |non-investment. All investment activities are classified in the 1xxx series, while all non-investment activities are classified in the 2xxx series. In credit program accounts, the subsidies for direct loans and loan guarantees, and their administrative expenses, should be classified according to the purpose of the program. For example, credit subsidies for construction should be in the character class for construction and rehabilitation, and credit subsidies for the conduct of education should be in the character class for the conduct of education and training. | The two-digit suffix is used to differentiate between budget |authority, outlays, and offsetting receipts, as follows: | 01--Budget authority | 02--Outlays | 03--Offsetting receipts | Only certain of the following codes apply to offsetting receipts; |they are specifically noted below with an asterisk (*). All of the |codes are applicable to budget authority and outlays. (See also |section 21.4 on reporting requirements for receipt accounts). | | |---------------------------------------------------------------------- | Code Definition |---------------------------------------------------------------------- |1xxx INVESTMENT Budget authority, outlays, or offsetting | ACTIVITIES receipts that yield benefits largely in | the future. |---------------------------------------------------------------------- | 13xx Physical assets: Amounts for the purchase, construction, | or rehabilitation of physical assets | regardless of whether the assets are | owned or operated by the Federal | Government, States, municipalities, or | private individuals. These include (but | are not limited to) those kinds of | assets that would normally be shown in | the balance sheet of a private business | enterprise. | Construction and Amounts for construction and | rehabilitation: rehabilitation including both grants and | direct federal programs. Construction | and rehabilitation means the design and | production of fixed works and structures | or substantial alterations to such | structures or land. Included are new | works and major additions, alterations, | improvements to and replacements of | existing works. Excluded are preliminary | surveys, maintenance, repair, | administration of such facilities and | other federal operating expenses. | Research and Amounts for the construction and | development rehabilitation of research and | facilities: development facilities. (See category | 14xx for the definition of research and | development.) Amounts in this | subcategory plus subcategory 1321 and | 1322 shall equal the corresponding | amounts reported under "R&D facilities" | in exhibit 44A. | 1311-xx Grants to State and | local governments | 1312-xx Direct federal | programs | Other construction Amounts for all other construction and | and rehabilitation: rehabilitation. | 1313-xx Grants to State and | local governments | 1314-xx Direct federal | programs | | Major equipment: Amounts for identifiable items of major | equipment, including ships, machine | tools, aircraft, tanks, and nuclear | weapons. Routine purchases of ordinary | office equipment or furniture and | fixtures are normally excluded. However, | where there are major programs for | acquisition of equipment, all equipment | purchases should be included. | Research and Amounts for major equipment for research | 1321-xx development and development. (See category 14xx for | 1322-xx equipment: the definition of research and | Grants to State and development.) Amounts in this | local governments subcategory plus subcategory 1311 and | Direct federal 1312 shall equal the corresponding | programs amounts reported under "R&D facilities" | in exhibit 44A. | Other major Amounts for all other major equipment. | equipment: | 1323-xx Grants to State and | local governments | 1324-xx Direct federal | programs | | Commodity | inventories: | 1330-xx* Direct federal Amounts for federally owned commodities | programs held for resale or in stockpiles. | Proceeds from the Offsetting receipts collected from the | sale of commodities sale of federally owned commodities that | were previously purchased by the | government or from reduction in | stockpiles. | | Purchases and sales Amounts for purchase, including | of land and lease-purchases, of land and structures | structures for for use by the Federal Government and | federal use: sales of such land and structures. | 1340-xx* Direct federal Includes office buildings and park and | programs forest lands. Does not include land or | structures acquired as temporary | inventory, such as collateral on | defaulted loans. | Receipts from sales Offsetting receipts collected from sales | of property or of federally owned property or assets | assets used by the Federal Government. Includes | office buildings and park and forest | lands. | | Other physical Amounts for all other physical assets, | assets: such as conservation, reforestation and | 1351-xx Grants to State and range improvements, improvements to | local governments private farms, land and structures | 1352-xx* Direct federal acquired as collateral on defaulted | programs loans, and sales of such land and | structures. Does not include operation | and maintenance of land and structures. | Receipts from other Offsetting receipts collected from the | physical assets sale of physical assets not used by the | Federal Government. Includes sales of | assets obtained by the Federal | Government as collateral on defaulted | loans. | |---------------------------------------------------------------------- | 14xx Conduct of research Amounts for research and development, | and development: except for additions to research | facilities (which are classified under | 13xx). As defined in section 44.2, | research is systematic study directed | toward fuller scientific knowledge or | understanding of the subject, and | development is systematic use of the | knowledge and understanding gained from | research for the production of useful | materials, devices, systems, or methods, | including the design and development of | prototypes and processes. Excluded are | routine product testing, quality | control, mapping, collection of | general-purpose statistics, experimental | production, routine monitoring and | evaluation of an operational program, | and the training of scientific and | technical personnel. | Basic research: Amounts for basic research. Basic | 1411-xx Grants to State and research (see section 44) is defined as | local governments systematic study directed toward greater | 1412-xx Direct federal knowledge or understanding of the | programs fundamental aspects of phenomena and of | observable facts without specific | applications towards processes or | products in mind. Amounts in this | subcategory shall equal corresponding | amounts reported under "Basic Research" | in exhibit 44A. | Applied research: Amounts for applied research. Applied | 1421-xx Grants to State and research (see section 44) is defined as | local governments systematic study to gain knowledge or | 1422-xx Direct federal understanding necessary to determine the | programs means by which a recognized and specific | need may be met. Amounts in this | subcategory shall equal corresponding | amounts reported under "Applied | Research" in exhibit 44A. | Development: Amounts for development. Development | 1431-xx Grants to State and (see section 44) is defined as | local governments systematic application of knowledge | 1432-xx Direct federal toward the production of useful | programs materials, devices, and systems or | methods; including design, development, | and improvement of prototypes and new | processes to meet specific requirements. | Amounts in this subcategory shall equal | the corresponding amounts reported under | "Development" in exhibit 44A. | |---------------------------------------------------------------------- | 15xx Conduct of | education and | training: | 1511-xx Grants to State and Amounts for programs whose primary | local governments purpose is education, training, and | 1512-xx* Direct federal vocational rehabilitation. Included are | programs veterans' education and training, | operating assistance for elementary, | secondary, vocational, adult, and higher | education; agricultural extension | services; and income support activities | directly contingent upon participating | in such programs. Excluded are the | training of military personnel or other | persons in government service. | Receipts from Offsetting receipts for loan repayments, | education and negative subsidies, and downward | training reestimates of loan subsidies that are | associated with the conduct of education | and training. | |---------------------------------------------------------------------- |2xxx NON-INVESTMENT Amounts that are not classified as | ACTIVITIES investment activities. | | Grants to State and Grants amounts that are not classified | local governments: as investment activities. | 2001-xx Other than shared | revenues | 2003-xx Shared revenues | 2004-xx* Direct federal Amounts for all other non-investment | programs activities. | All other Offsetting receipts collected and | offsetting receipts deposited in receipt accounts that are | not otherwise classified. |---------------------------------------------------------------------- | | | (b) Crosswalk between new and old character classification |codes.--The character classification coding scheme has been revised to |accommodate the collection of information on budget authority, as well |as data on outlays and offsetting receipts. The following table |provides a bridge between the new and old codes. | | |---------------------------------------------------------------------- |New Code Old Code Classification |---------------------------------------------------------------------- |1311-xx 1311-01 Research and development facilities: Grants |1312-xx 1311-04 Research and development facilities: Direct federal | programs | |1313-xx 1312-01 Other construction and rehabilitation: Grants |1314-xx 1312-04 Other construction and rehabilitation: Direct | federal programs | |1321-xx 1321-01 Research and development equipment: Grants |1322-xx 1321-04 Research and development equipment: Direct federal | programs | |1323-xx 1322-01 Other major equipment: Grants |1324-xx 1322-04 Other major equipment: Direct federal programs | |1330-xx 1330-04 Commodity inventories: Direct federal programs | |1340-xx 1340-04 Purchases and sales of land and structures: Direct | federal programs | |1351-xx 1350-01 Other physical assets: Grants |1352-xx 1350-04 Other physical assets: Direct federal programs | |1411-xx 1410-11 Basic research: Grants |1412-xx 1410-14 Basic research: Direct federal programs | |1421-xx 1420-21 Applied research: Grants |1422-xx 1420-24 Applied research: Direct federal programs | |1431-xx 1430-31 Development: Grants |1432-xx 1430-34 Development: Direct federal programs | |1511-xx 1510-01 Education and training: Grants |1512-xx 1510-04 Education and training: Direct federal programs | |2001-xx 2000-01 Non-investment activities: Grants--other than shared | revenues |2003-xx 2000-02 Non-investment activities: Grants--shared revenues |2004-xx 2000-04 Non-investment activities: Direct federal programs ----------------------------------------------------------------------