Distinguish mandatory and discretionary funding with an example.

• A. Discretionary funds are annual appropriations for procurement; mandatory funds are legally required for specific programs.
• B. Mandatory funds are annual appropriations; discretionary funds are legally required for specific programs.
• C. Mandatory funds are legally required for specific programs; discretionary funds are annual appropriations for procurement.
• D. Mandatory funds cover salaries; discretionary funds cover capital projects.

Answer: (C)

The key idea is that funding is either mandated by law for certain programs or decided anew each year through the appropriations process. Mandatory funds are legally required for specific programs, meaning the money must be paid out based on eligibility and entitlement formulas, not by annual budgeting decisions. For example, Social Security or Medicare payments are mandatory—they’re paid automatically according to law. Discretionary funds are annual appropriations chosen by Congress through the budget process and can be used for a wide range of needs, including procurement. An example is the annual defense procurement budget, where Congress sets the amount each year through the appropriations act. This aligns with describing mandatory funds as legally required for specific programs and discretionary funds as annual appropriations for procurement.