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Federal, State, and Local Governments
Government Finance and Employment Classification Manual
Chart 8-A - Description of Character and Object Categories
This chart lists and describes the various character and object categories used for classifying expenditure data. Note that a few categories use more than one code. Table 8-1 provides a cross-classification of these codes with the function codes.
Code Category Description
The following character and object codes can be divided into two main categories, those related to direct expenditure and those related to intergovernmental expenditure.
  Direct expenditure comprises all expenditure other than intergovernmental expenditure.
E Current Operations Direct expenditure for compensation of own officers and employees and for supplies, materials, and contractual services except any amounts for capital outlay (i.e., for personal services or other objects used in force account construction of permanent and for acquisition of property and equipment).
Includes repair and maintenance services (e.g., contracts and agreements, materials, and supplies) for the upkeep of buildings, infrastructure, and equipment to maintain required standards of compliance for their intended use. This covers the following activities:
Cleaning Refinishing
Fire repair Refurbishing
  (unrelated to new Removal construction)
Maintenance Repair
Painting Replacement
Patching Upkeep
Reconditioning Waterproofing
E-I-J Assistance and Subsidies Direct cash assistance to foreign governments, private individuals, and nongovernmental organizations (e.g., foreign aid, agricultural supports, public welfare, veteran bonuses, and cash grants for tuition and scholarships) not in return for goods and services nor in repayment of debt and other claims against the government. Excludes payments to private vendors for medical care or other services for the needy; cash benefits under insurance trust programs; intergovernmental expenditure, and administrative costs, assistance-in-kind, and payments for purchase of commodities or services to be furnished free to needy or other individuals (the latter classified as current operations).
Except for the Federal Government (for which virtually every function can have assistance and subsidies), this category is limited to just four codes: education grants, including scholarships to individuals and aid to private schools or colleges (code E19); public welfare cash assistance payments, either Federal categorical ones (code E67) or others (code E68); and bonuses to veterans (code E84).
Assistance and subsidies character and object codes "I" and "J" are used only for the Federal Government. (The "J" code is needed because "I89" is used for interest on general debt.)
I Interest on Debt Amounts paid for the use of borrowed money. Includes amounts for interest on debt of the government paid by all its accounting funds. No adjustment is made for premiums or discounts on debt issued or retired. Also excludes premiums paid on debt retired (report at code E89 for general debt retired and codes E91 - E94 for utility debt retired).
Where amounts to cover interest accruing on debt prior to date of sale are included in the proceeds from issuance of securities, such amounts are treated as offsets to interest expenditure for the year in which they were received.
There are five codes for interest expenditure, subdivided into interest on general debt (I89) and interest on utility debt, by type of utility (I91, I92, I93, and I94). This distinction is made on the basis of the classification of outstanding debt to which particular interest payments relate.
  Capital Outlay Categories: Direct expenditure for purchase or construction, by contract or force account, of buildings and other improvements; for purchase of land, equipment, and existing structures; and for payments on capital leases.
Certain terms (such as rehabilitate, remodel, resurface, renovate, etc.) can denote either construction or maintenance and repair (i.e., current operations). Their classification is based on the circumstances surrounding each situation. If the term refers to activities that materially extend the life or add value to the property, then they are classified under construction; otherwise, they are classified under current operations. No other practical standard (such as dollar amounts) can be uniformly applied to all levels of government.
Receipts arising from insurance adjustments, sales of equipment, reimbursements, and the like are classified as revenue rather than as offsets to capital outlay expenditure.
Capital outlay expenditures are subdivided into the three object classes below:
F Construction Production, additions, replacements, or major structural alterations to fixed works, undertaken either on a contractual basis by private contractors or through a government's own staff (i.e., force account).
Includes initial production of buildings and structures; initial permanent improvements (other than buildings) that add value to land; and subsequent improvements representing major permanent structural alterations that materially extend the useful life of fixed works. Covers all costs of materials, supplies, and labor that are reasonable and necessary to place an asset in its intended location and prepare it for its intended use, viz., professional fees or architects, engineers, appraisers, and attorneys associated with feasibility studies; preliminary engineering, planning, and design; and related developmental costs such as overhead, office costs, and other purchased construction-related services. Also includes centralized architecture, design, and planning offices whose main role is support of public construction projects, including related salaries and wages, insurance, professional services, etc.
INCLUDES for buildings and structures: initial or additional installation of equipment and facilities that are integral parts of the structure. Also includes largely site-fabricated equipment integral to enterprise operations, such as power, water, and sewage treatment plants (generators, reactors, boilers, storage tanks, steam engines, and the like).
Examples of activities included:
Additions Escalators
Alterations Heating
Clearing and grading of land Plumbing
Construction-related landscaping Modernization
Conversions Modifications
Demolition needed for construction New building
Expansion Reconstruction
Fire rebuilding Redevelopment
Improvements Rehabilitation
Installation Relocation
Machinery and equipment integral to structure  
Major replacements Remodeling
Mechanical-electrical installations:
  Central air conditioning
  Electric Work

Examples of labor and fees included:
Contract price Attorneys
Insurance during
Job order cost Engineers
Overhead and office costs Financial advisors
Professional fees:
Similar purchased services

INCLUDES for nonbuilding improvements: initial or additional improvements that add value to land, such as:
Airport runways Retaining walls
Bridges Roadways
Curbs, drains, and
Fences Swimming pools
Outdoor lighting Traffic signs/signals
Parking lots Tunnels
Pavements Utility connections
Piers Viaducts
Railroad tracks Wharves and docks

EXCLUDES expenditure for maintenance and repairs to existing structures or service facilities for the purpose of keeping property in an ordinarily efficient operating condition and which are not considered permanent structural alterations that materially extend the life of the asset--e.g., painting, cleaning, patching, refurbishing, reconditioning, etc. (report under current operations). Also excludes identifiable payments to other governments for construction work (classify under intergovernmental expenditure) as well as purchase or installation of machinery and equipment not integral to fixed structures. In addition, excludes costs attributable to the capitalization of net interest expense incurred during the construction period (report under interest on debt).
G Purchase of Land and Existing Structures Acquisition of these assets as such by outright purchase; payments on capital lease- purchase agreements or installment purchase contracts; costs associated with eminent domain (including purchase of rights-of-way); and tax or special assessment foreclosure. Covers all ancillary costs associated with the transaction such as legal and title fees, surveying fees, appraisal and negotiation fees, damage claims, and nonconstruction-related site preparation costs including clearing, filling, leveling, and razing unwanted structures.
The use of the "G" code for purchase of land and existing structures applies only during the original compilation of data for the state and largest city and county governments. When these data are inserted into the Bureau's computerized records, they are combined with purchase of equipment data ("K" codes) to produce a category called "Capital Outlay Other Than Construction." The equipment only category ("K" codes), therefore, becomes a subcategory under this one in all subsequent computer files, printouts, and publications. For all other governments, the "G" code represents the purchase of land, equipment, and existing structures-- i.e., all capital outlays other than construction.
K Purchase of Equipment Purchase and installation of apparatus, furnishings, motor vehicles, office equipment, and the like having a life expectancy of more than five years. Includes both additional equipment and replacements purchased outright or through capital lease or installment purchase contracts. Includes related expenditure necessary to place equipment in its intended state of operation (e.g., transportation charges, installation fees, taxes, etc.).
Excludes rental of equipment (report under current operations) and equipment and facilities that are integral parts of constructed or purchased structures (report under construction or purchase of land and existing structures, respectively).
X-Y Insurance Trust Social insurance payments to beneficiaries, employee retirement annuities and other benefits, and withdrawal of insurance or employee retirement contributions. Includes only monies paid to beneficiaries; administrative expenditure for insurance trust systems is classified as current operations.
The "X" codes are used for expenditure of employee retirement systems while the "Y" codes are used for expenditure of all other insurance trusts.
    Amounts paid to other governments for performance of specific functions or for general financial support. Includes grants, shared taxes, contingent loans and advances, and any significant and identifiable amounts or reimbursement paid to other governments for performance of general government services or activities. Excludes amounts paid to other governments for purchase of commodities, property, or utility services and for any tax levied as such on facilities of the government. See Section 6.43 for a more extensive discussion of this topic.
The functional classification of intergovernmental expenditure is determined by the nature of the activities to which the receiving government is required to apply it by the paying government, or by the functional classification of activities giving rise to particular items of reimbursement. By definition, all intergovernmental expenditures for activities administered by independent or dependent school systems are classified under education (e.g., school lunch and health programs).

The character and object codes for intergovernmental expenditure indicate the type of receiving government, as follows:
L To state government
M To local governments, N.E.C.
N To general purpose governments (county, municipal, or township)
Q To independent school districts
R To special district governments
S To the Federal Government
Exhibit Code:
Z00 Salaries and Wages Total expenditure during fiscal year for salaries and wages for all functions and activities, including the general government, liquor store, and utility sectors. Salaries and wages consist of gross amounts paid for compensation of own officers and employees (prior to deducting for withheld taxes, retirement contributions, charges for subsistence, or other purposes), including both current operations expenditure and capital outlay expenditure ("force account"). This category excludes employer contributions for any type of employee fringe benefit and the value of subsistence, quarters, or other payments-in-kind to military or other public employees.
  General Purpose Governments
CODE AND TYPE OF CHARGE Federal State DC Large city- county Other local Special District
  E - Current Operations Y Y Y Y Y Y
--Assistance and Subsidies:
  E -   do .... Y Y Y Y Y Y
  I -   do .... Y N N N N N
  J -   do .... Y N N N N N
--Capital Outlay:
  F - Construction Y Y Y Y Y Y
  G - Land and Existing Structures Y Y Y Y Y Y
  K - Equipment Y Y Y Y N N
--Insurance Trusts:
  X - Employee Retirement Systems Y Y Y Y Y Y
  Y - Other Insurance Trusts Y Y Y N N N
  L - State Government Y N N Y Y Y
  M - Local Governments, N.E.C. Y Y Y Y Y Y
  N - General Purpose Local Governments N Y N N N N
  Q - School Districts N Y Y Y Y Y
  R - Special Districts N Y N N N N
  S - Federal Government N Y Y Y Y Y
  Z00 - Salaries and Wages Y Y Y Y Y Y

 * Shows whether data are collected (Y) or not collected (N) for that type of government.
NOTE - This is a general guide to the coverage of the character and object codes. See Function Description Sheets in Chapter 4 for coverage of specific expenditure codes.

Source: U.S. Census Bureau, Governments Division
Created: November 16 2000
Last revised: October 31 2011