Bureau of Legislative Research, 2012 Fiscal Services Division 1 Capitol Mall, 5 th Floor

1. Arkansas Budget and Appropriation Process Bureau of Legislative Research, 2012 Fiscal Services Division 1 Capitol Mall, 5th Floor

2. FUNDING The Budget Process

3. PREPARATION THE BUDGET PROCESS

4. The Preparation Phase Budget Calendars

5. FISCAL YEAR • The State Fiscal Year Begins on July 1 and Ends on June 30.

6. Budget Calendar – Regular Session Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Budget Requests Prepared Executive Review ALC/JBC Hearings Official Revenue Forecast Session Convenes Joint Budget Meetings Legislature Adjourns Operating Budgets Prepared

7. Budget Requests Prepared Budget Calendar – Fiscal Session Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Executive Review Official Revenue Forecast JBC Hearings Session Convenes Joint Budget Meetings Legislature Adjourns Operating Budgets Prepared

8. The Preparation Phase Budget Requests

9. A Budget Request - Commitment Item Format

10. The Preparation Phase Roles In Budget Preparation

11. Budget Request Line Items • Regular Salaries • Operating Expenses • Capital Outlay • Professional Fees

12. Roles in Budget Preparation Phase • Set Policy for Agency Requests • Forecast State Revenue • Recommend Budget For Each Fiscal Year of the Next Biennium to ALC/JBC • Recommend Revenues as Needed Governor/DFA

13. Roles in Budget Preparation Phase • Consider Agency Requests & Governor’s Recommendation • Recommend Budgets to General Assembly • Recommend State Employee Salary Levels • Have Bills Prepared for Introduction Legislative Council Joint Budget 83 Members

14. Roles in Budget Preparation Phase • Consider ALC/JBC Recommendations • Consider Governor’s Revisions and New Programs • Consider Member-Sponsored Bills • Recommend Fiscal Bills and Pay Levels to General Assembly • Prepare Revenue Stabilization Amendment • Prepare General Improvement Fund Bill Joint Budget Committee 56 Members

15. “Legislators get caught spending inordinate amounts of time trying to save relatively trifling sums.” (Changing State Budgeting: S. Kenneth Howard, 1973)

16. AUTHORIZATION THE BUDGET PROCESS

17. APPROPRIATION • AN APPROPRIATION GIVES THE AGENCY THE AUTHORITY TO SPEND MONEY IF AND WHEN IT BECOMES AVAILABLE.

18. The Authorization PhaseThe Constitutional Requirements

19. Constitutional Restrictions • 1 Year Limit on Appropriations • Single Subject • General Appropriation Bill must "embrace nothing but appropriations for the ordinary expenses of the executive, legislative and judicial departments of the state” & be passed first • Appropriations must be in dollars and cents • Appropriations

20. The Authorization Phase Types of Appropriation Bills

21. Introduced Appropriation Bills

22. Types of Appropriation Bills • Regular Appropriation • 1-year period • Effective July 1 • Supplemental Appropriation • Effective before July 1 & usually immediately • Usually adds to an existing authority • State Funds usually come from an Accumulated Surplus or Recovered Fund Balances

23. Construction • State Funds usually from General Improvement Fund (Surplus & Interest Earnings) • Reappropriations • Allows the Agency to spend the balance of an appropriation provided by another General Assembly. • Not new authority to spend • Usually for old construction projects

24. The Authorization Phase Elements of an Appropriation Bill

25. WHO? FROM WHERE? FOR WHAT? HOW MUCH?

26. The Authorization Phase FROM WHERE?

27. FUNDING The Budget Process

28. TOTAL STATE REVENUE FY 2012 General Revenue $ 5,936,050,737 Special Revenue 1,764,811,222 Cash Funds 3,126,493,738 Federal Funds 5,402,480,622 Trust & Other Non Revenue 3,012,580,403 TOTAL STATE REVENUE$19,242,416,722

29. TOTAL STATE REVENUE – 2012 $19.2 Billion Trust & Other Non Revenue 16% General Revenue 31% Federal 28% Special 9% Cash 16%

30. GENERAL REVENUE - 2012 $5.9 Billion

31. SPECIAL REVENUES – 2012 FUNDED BUDGET $ 1.7 Billion

32. CASH FUNDS 2012 FUNDED BUDGET $3.1 Billion Constitutional Officers 8% Total State Agencies 21% Boards & Commissions 3% Higher Education Institutions 78%

33. FEDERAL FUNDS – 2012 FUNDED BUDGET $5.4 Billion

34. TRUST AND OTHER NON-REVENUE FUNDS 2012 FUNDED BUDGET $3.2 Billion

35. FUNDING SPENDING IS LIMITED BY THE AVAILABLE APPROPRIATION OR THE AVAILABLE MONEY - WHICHEVER IS LESS!

36. Three Methods of Funding Available • DEDICATED SOURCE • GENERAL IMPROVEMENT FUND • REVENUE STABILIZATION LAW

37. Three Methods of Funding Available • DEDICATED SOURCE

38. DEDICATED SOURCES OF FUNDS • State Dedicated Tax or Fee (Special Revenue) • Federal Grant-in-Aid • Cash Funds • Trust Funds • Non-revenue Receipts

39. UAMS Biosciences $2.2 M ASU Biosciences $1.8 M School of Public Health $1 M 33% School of Public Health 22% Delta AHEC 22% Center on Aging; 23% Minority Health Initiative

40. Three Methods of Funding Available • DEDICATED SOURCE • GENERAL IMPROVEMENT FUND

41. General Improvement Fund

43. Recovered Fund Balances $7.6 M General Revenue Allotment Reserve Fund $103.7 M Ed Facilities Partnership Fund Transfer (ADTEC) $2 M Governor’s Discretionary Biennium $61.6 M Set Aside Projects $36.4 M Legislative Biennium $10M Excess Old GIF Projects $3.3 M Previous GIF Session Account/Balances Budget Reserve Fund $53.4 M 1/2 Interest Earnings $8.8 M GENERAL IMPROVEMENT

44. Three Methods of Funding Available • DEDICATED SOURCE • GENERAL IMPROVEMENT FUND • REVENUE STABILIZATION LAW

45. A B C Revenue Stabilization Law Revenue Flow

46. The Steps The Legislature, with consultation with the Governor: • Determines the Maximum General Revenue support to be distributed over the next year • Determines the maximum amount each general revenue fund is to receive from general revenues for the next year • Determines the number of priority categories (A,B,C…) • Sets the minimum level of support required for each general fund and designate it as “A” • Sets the next level of support for each fund and designates it as the next priority (A-1 or B) • Continues the steps until the maximum level is reached

47. Refunds/Claims $561.9 M Debt Service $32.5 M Public School Desegregation $68.0 M Educational Excellence $280.0 M City/County Tourist Promo $5.3 M Central Services & Constitutional Officers $195.4 M Aging Transport $0.16 M Educational Adequacy $24.8 M General Revenues 2011-12 FY Other 1.1% Income 56.2% Insurance 1.6% $5,936.1 Million Sales/Use 36.0% Luxury 5.1% Take Out $1,184 Million Economic Development Incentive $16.5 M

48. $4.75 Billion Net Available Gen Gov 3.7% Hi Ed 16% Public School 42.3% DHHS 24.4% Gen Ed 2.2% Corr 8% Other 3.4% A + B $4.6 Billion

49. For the 2011-2012 year the Stabilization looked like this:

50. Revenue Stabilization Law A • Take all General Revenue collected • Take out $1,184 Million for Claims, Refunds, Desegregation Costs, Educational Excellence and various Processing Fees • Distribute $4.6 Billion as follows:$1,942 million to Public Schools$1,105 million to Health & Human Services$72.6 million to Higher Education Institutions • $367.2 million to Corrections $101.7 million to General & Workforce Education • $32.2 million for Other General Government & Local Aid