Incentivize Savings Act
The Incentivize Savings Act creates a financial incentive system for federal agencies to operate under budget by establishing rules for how unexpended appropriations are handled. When a federal agency doesn't spend all of its allocated funds during the designated period, the bill divides the remaining money three ways: 49% stays with the agency for use in the following fiscal year, 49% goes toward paying down the national debt, and 2% is distributed as retention bonuses to agency employees. Additionally, agencies that underspend would have their next year's budget capped at the previous year's request amount, adjusted only for inflation. This approach aims to encourage fiscal responsibility across federal agencies while rewarding employees who contribute to cost savings.
Key Points
- 1Unexpended federal appropriations are split: 49% remains available to the agency for one additional fiscal year, 49% goes to debt reduction, and 2% funds employee retention bonuses
- 2Employee retention bonuses are capped at 10% of an employee's basic pay, with any remaining bonus funds redirected to debt reduction
- 3Agencies that underspend face budget caps in the following fiscal year, limited to the previous year's request adjusted only for Consumer Price Index changes
- 4The rules apply to Executive agencies and most federal entities, excluding the American National Red Cross
- 5Bonuses must be distributed within 30 days after the end of the funds' availability period