Dear Editor – Accounting Jargon Called to Account

Dear Editor,

I am writing to point out an inaccuracy in your lead story about the monies related to the MOVE project. While you are correct that Metro “deobligated” the funds, you are inaccurately stating what that means.

Put simply, “deobligation” means “An agency’s cancellation or downward adjustment of previously incurred obligations. Deobligated funds may be reobligated within the period of availability of the appropriation. For example, annual appropriated funds may be reobligated in the fiscal year in which the funds were appropriated, while multiyear or no-year appropriated funds may be reobligated in the same or subsequent fiscal years.”

(see https://budgetcounsel.com/%C2%A7022-government-accountability-office-gao/lexicon/deobligation/#:~:text=An%20agency’s%20cancellation%20or%20downward,of%20availability%20of%20the%20appropriation.)

In lay person’s speak, this means that an agency had, in its budgeting process, said that it was going to money on something. It does not mean that the money was spent. Instead, it allows the funds set forth for such obligation to be reallocated to another project. It does not equate to a refund. In fact, the money was earmarked for a project that the city council, at the request of the community, modified, so Metro was within its rights to “deobligate” the funds. However, that is materially different than taking money out of the city coffers and paying it back to Metro.

Factually, the obligated funds were never provided to Culver City and, therefore, there is no money to return to Metro. There is no refund due to Metro. This is materially different than a payment that must be made by the city (along with the implications that may arise from such assertions).

Thank you.
Gary Zeiss, Esq.

Editor’s Note – The word ‘deobligated’ was taken directly from the Metro report, and was used as a quote, per standard journalistic process. 

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