Sneak Preview: Firmer Budgeting Method Sought for SBDC Applications

Jerry Ashworth
July 2, 2020 at 07:20:00 ET
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(The following was excerpted from a recent article in the Federal Grants Development Handbook.) The Small Business Administration (SBA), in response to concerns raised in a recent Government Accountability Office (GAO) report, is considering moving the annual program year start date for all Small Business Development Center (SBDC) program recipients to Jan. 1. Such a transition would allow all SBDCs to operate on a calendar-year basis, and to develop budgets for the program’s funding application based on established congressional appropriations and not presidential budget requests.

The SBDC program provides training and counseling to small businesses through a nationwide network of 62 SBDC lead centers and more than 900 service centers. Around July of each year, SBA publishes a funding opportunity announcement for the SBDC program, which includes a program funding estimate because the final appropriation is not known at the time for the agency to make awards during the upcoming fiscal year. Each SBDC submits an initial application for funding based on its proportional share of the funding estimate. After appropriations are enacted for the full year, the funding amounts for the SBDC program are revised and recipients submit a final, revised budget.

In response to congressional requests, GAO reviewed SBDC’s funding opportunity announcements, presidential budget requests for the program and appropriations for federal fiscal years (FY) 2012-2020. GAO found that in FY 2016, SBA began using for recipient budgeting preparation the lowest funding estimate — which was the amount in the president’s budget request — rather than an estimate reflecting historical funding levels. In FY 2019, the amount in the president’s budget request was 15% lower than the prior year appropriation, and in FY 2020, it was 23% lower. “If SBA continues its practice for FY 2021, the funding estimate will be 35% lower than the 2020 appropriation,” GAO added.

SBA told congressional committees in a December 2019 letter that it changed the funding estimates to “help the program operate more effectively and be consistent with federal financial management standards” and used the lowest budget estimate in the absence of a full-year appropriation. However, GAO noted that SBA offices could not specify any regulations or guidance to support its statement. The Office of Management and Budget’s (OMB) uniform guidance states that estimates based on the previous year’s funding are acceptable if current appropriations are not yet available, which was the case when SBA issued its recent SBDC funding opportunity announcements.

(The full version of this story has now been made available to all for a limited time here.)

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