What is an Appropriation?

• A. A designated amount of public money authorized to be spent for specific purposes during a period
• B. A budget document outlining all revenues
• C. An accounting adjustment for encumbrances
• D. A separate capital improvement fund

Answer: (A)

Appropriation is the legal authorization by the governing body to spend a designated amount of public money for specific purposes within a defined period. It gives an agency the authority to incur obligations and make payments up to that limit for the purposes stated. This authorization is what turns a budget into actionable spending, and it sets the actual spending ceiling for the defined time frame and programs.

This differs from a budget document, which outlines expected revenues and planned expenditures but doesn’t by itself authorize spending. It also isn’t an accounting adjustment for encumbrances, which is bookkeeping to reserve funds for upcoming obligations. And it isn’t a separate capital improvement fund, which is a specific fund structure for capital projects rather than the act of authorizing spending.