H.R. 5438: Incentivize Savings Act

This bill, titled the Incentivize Savings Act, proposes changes to how federal agencies manage their unspent budget appropriations. Here are the key features of the bill:

Federal Agency Budget Management

The bill introduces new rules regarding unspent funds within federal agencies.

• Retention of Unexpended Funds: If a federal agency has leftover funds that it does not spend during a certain period, 49% of those funds can be carried over for use in the next fiscal year.
• Public Debt Payments: Another 49% of the unspent funds must be allocated for payments on the national debt.
• Retention Bonuses: The bill allows 2% of the unspent funds to be used for retention bonuses to reward employees within the agency, subject to a maximum limit of 10% of the employee’s basic pay.

Constraints on Future Budget Requests

Under the new provisions, if a federal agency has unspent funds from a previous fiscal year, its subsequent budget request for the next fiscal year cannot exceed the previous year's budget, adjusted for inflation based on the Consumer Price Index.

Definition of a Federal Agency

The term Federal agency is defined in the bill to include executive agencies and other agencies within the executive branch of the federal government, but it excludes the American National Red Cross.

Implementation and Oversight

The bill requires that the changes be monitored and considered in the budget processes of federal agencies, guided by the oversight of the Office of Management and Budget and Congress.

Clerical Amendments

The bill also includes a provision for clerical updates to the official documentation of federal financial regulations to reflect this new section on unspent appropriations.

Conclusion

Overall, the Incentivize Savings Act is designed to create incentives for federal agencies to manage their budgets more effectively, encouraging savings and more prudent financial practices while providing some rewards for employees who help achieve those savings.

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