U.S. Department of Commerce

Federal, State, and Local Governments
Government Finance and Employment Classification Manual
Chapter 4 - Functional Classification of Government Activities

Contents and Abstract:

4.1 Background
4.2 Primary vs Secondary Function
4.21 Public Institutions
4.3 Data Crossing Functional Lines
4.4 Relation to Federal and State Government Programs
4.5 Unique Special District Function Codes

4-1: Cross-Classification of Revenue, Expenditure, and Debt Codes by Function

4-A: Detailed Categories for Reporting Functional Expenditures and Employment, by Functional Grouping
4-B: Detailed Categories for Reporting Functional Expenditures and Employment, by Function Code

Expenditure Code Definition Pages

Viewed as a group, governments are multi-functional organizations, providing a wide range of services to a broad group of people. In recognition of this diversity, the Census Bureau has created a detailed classification scheme for reporting government activities according to their purpose.

To illustrate the functional interrelationship among different types of data, Table 4-1 provides a cross-classification of revenue, expenditure, and debt codes by function. Note that not every finance code is shown in this table; some codes are not functional per se (e.g., taxes and insurance trust data) while others are too broad to list (e.g., "all other" codes).

Also included in this chapter are two charts providing listings of all current function codes. Chart 4-A arranges these codes according to the functional groupings used for publication purposes ("Education," "Social Insurance and Income Maintenance," etc.) while Chart 4-B lists them in numerical order (01, 02, 03,etc.).

Completing this chapter are the Expenditure Code Definition Pages that provide detailed, one-page definitions of each function, including coverage of data collection information.

4.1 Background

Currently, the Census Bureau has identified nearly 70 major functions of government, several of which are used solely for the Federal Government. Others apply solely to state government data while a few pertain only to local government activities. Each of these functions falls into one of the four sectors of government described in Chapter 3: General Government, Liquor Stores, Utilities, and Insurance Trust. No function, however, spans more than one sector of government.

This classification schema is so pervasive that virtually all data on governments collected by the Bureau is categorized in part along functional lines. The few activities not classified by function are:

  • Interest on general debt is excluded from functional expenditures (but not interest on utility debt, which is included in utility expenditures). Retirement of debt is excluded also because it is reported in debt statistics rather than expenditure data.

  • Contributions to insurance trust systems administered by the same government are excluded from functional expenditures (and reported as insurance trust expenditures when disbursed to beneficiaries). Payments to systems administered by another government, on the other hand, are reported in functional categories.

  • Many administrative activities that support others are reported either in one of the government administration functions (e.g., Financial Administration) or in the Other and Unallocable category.

  • Some activities are too broad or multi-purpose to be included in a single-purpose function, such as lump sum contributions for employee fringe benefits, economic development, government-wide insurance policies, etc. These generally are classed in Other and Unallocable.

  • Some items defy being categorized by function, such as taxes and most cash and securities data.

4.2 Primary vs Secondary Function

Government agencies often provide services that encompass more than one function. For instance, airports may have their own police force, schools their own libraries, and large correctional institutions their own water supply or sewerage systems.

In these instances, the Census Bureau categorizes the entire activity according to its primary function rather than breaking it down into its smaller component or secondary parts. Using the examples cited above, the secondary activities would be classified along with their primary function--i.e., air transportation, education, and corrections, respectively.

4.21 Public Institutions

Public institutions comprise such facilities as hospitals, colleges and universities, adult and juvenile correctional facilities, welfare homes, and special schools for the handicapped.

The functional classification of these institutions for Census Bureau purposes is not done on an ad hoc basis, however. Rather, a separate unit within Governments Division identifies and categorizes them. For state and large local governments, these findings are reported in "Checklists of Institutions for Governments Division Surveys." Compilers of finance and employment data use these checklists to assign institutions to their proper function.

4.3 Data Crossing Functional Lines

The boundaries created by this classification system are not so rigid that they prevent activities from crossing functional lines. To illustrate, the receipt of Federal aid for medical care assistance to the needy (Medicaid) is classified as a public welfare intergovernmental revenue. These money often are spent, however, by public hospitals. By definition, all outlays of a public hospital are classified at a hospital function, so the transaction necessarily crosses over into the hospital category on the expenditure side. Payments to private vendors for medical care, in contrast, remain within the public welfare function.

4.4 Relation to Federal and State Government Programs

These functions, created for general statistical purposes, cannot be equated with any specific Federal or state government program. They are generally broader than even the most widely-based Federal or state programs. Major Federal and state programs may even cross over into more than one Census Bureau function, as illustrated above with the Medicaid program.

Instead, these functions represent broad activities of govern- ments that have remained virtually unchanged for years, thereby preserving their usefulness for analytical purposes even while specific Federal and state programs expand or contract.

4.5 Unique Special District Function Codes

Some, but not all, of the functional categories described in this chapter are used to classify not only government finances and employment, but also government organization. In conjunction with the regular function codes, the organization phase employs a set of function codes expressly for special district governments. These codes are limited to the organization area because, even though numerous special districts may exist for them (e.g., the 1,655 cemetery districts classified during the 1997 Census of Governments), their finances or employment are too small, they are concentrated in just a few states, or their activities are too narrow.

Finance and employment data for special district organization codes are converted into the regular functions for reporting purposes, as shown by the table below.

Special Districts - Standard Function Code
Organization Function Code Function Name Regular Code*
Single-Function Districts:
01 Air Transportation (Airports) 01
02# Cemeteries 89
09# Education (School Building Authorities) 12
24 Fire Protection 24
32 Health 32
40# Hospitals 36
41# Industrial Development 89
42# Mortgage Credit 89
44 Highways (Regular or Toll) 44
50 Housing and Community Development 50
51# Drainage 59
52 Libraries 52
59 Other Natural Resources 59
60 Parking Facilities 60
61 Parks and Recreation 61
63# Flood Control 59
64# Irrigation 59
79 Public Welfare Institutions 79
80 Sewerage 80
81 Solid Waste Management 81
86# Reclamation 59
87 Water Transport and Terminals 87
88# Soil and Water Conservation 59
89 Other Single-Function Districts 89
91 Water Supply Utility 91
92 Electric Power Utility 92
93 Gas Supply Utility 93
94 Mass Transit System Utility 94
Multi-Function Districts:
96# Fire Protection and Water Supply 24/91
97# Natural Resources and Water Supply 59/91
98# Sewerage and Water Supply 80/91
99# Other Multi-Function Districts Various
* Applies mainly to employment and expenditure data. Revenue and debt data may use different classification. Multiple-function special districts are sent questionnaires to report finance and employment data by major function.

# Code unique to organization survey; finance and employment data subsumed into regular function code as shown in table above.

Source: U.S. Census Bureau, Governments Division
Created: November 16 2000
Last revised: November 03 2011