New York State Accounting Operations Boot Camp

1. New York State Accounting Operations Boot Camp Debbie Hilson, Melody Goetz, Peter Clark and Mike Affinito

2. AGENDA New York State Accounting Operations Boot Camp A government’s primary objective is to provide services within budgetary constraints and be accountable to its citizens. • State’s Budget Cycle • Budget Authorizations • Revenue Deposits • Cash Accounts and Funds • New Outreach Process for Uncashed Checks • Federal Grants • Walkthrough of available resources      

3. Statewide Financial System (SFS) • The Statewide Financial System (SFS) is the ‘new’ integrated statewide accounting and reporting system. • The SFS is the hub of financial activity in the State • Accounts for all revenues of the State • Controls over agency appropriations and spending levels • Accounts for spending of over $176 billion in payments and near 7.7 million vouchers through October 2013 • Generates critical input to the audited financial statements for the State.

4. State’s Budget Cycle

5. Statutes That Guide Us • The State Constitution • State Finance Law • Article VII Appropriation Bills • Article VII Language Bills • Other Consolidated Laws • Federal Laws and Regulations

6. State Constitution • Requires Annual Budget Submission • Restricts Payments From State Treasury • Restricts Payments from Agency (sole custody) Accounts • Defines Appropriation/Reappropriation

7. State Finance Law – Key Fiscal Provisions • Article 2 - GENERAL FISCAL PROVISIONS§ 2 Definitions § 2A Additional Definitions § 3 Fiscal Year § 4 Payments, Transfers and Deposits § 7 Duties of Dept of Taxation & Finance § 8 Duties of the Comptroller § 8B Additional Duties of the Comptroller § 40Period of Appropriations • Article 6 - (§70 - 99-S) FUNDS OF THE STATE • Article 7 - (§100-122-A) ACCOUNTS & AUDITS

8. State Finance LawArticle 3 – The Budget • § 20. Division of the Budget • § 21. Auxiliary Powers of Executive Department • § 22. The Budget; Contents • § 22-a. Synopsis of Requests for Appropriations; Submittal by Budget Director • § 22-b. Report of the Legislature on the Enacted Budget • § 22-c. Capital Program and Financing Plan • § 23. Plans and Estimates • § 24. Budget Bills • § 25. Reappropriation Bills • § 26. Maintaining Capital Assets • § 27. Scheduled Maintenance Appropriations

9. The Budget Process • June – September/October: Agency Budget Preparation • September/October – December: Division of Budget Review • November – January: The Governor’s Decisions • January – March: Legislative Action • April – March: Budget Execution

10. New York state financial cycle • Establish Control • The use of various Commitment Control (KK) Ledgers provides controls to prevent overspending and allows for summary reporting. • These KK Ledgers include KK_APPROP, KK_SEG, KK_PRJP, KK_PRJC, KK_REV, KK_PBR, DOB Spending and Agency KK. • Execute • During this phase, revenues, encumbrances and expenditures are recorded. • Evaluate • During this phase, budgetary and financial reports are used to monitor progress • Plan • Agency budget requests are submitted and Executive & Legislative action/approval occurs. ,

11. BUDGET AUTHORIZATIONS

12. BUDGET AUTHORIZATIONS In this segment, we will: • Discuss Executive Budget Submission • Discuss Fundamental Principles for accounting and controlling authorized State spending • Examine the nature of an appropriation, its characteristics and underlying principles

13. Executive Budget Submission ‘Quick Start’ Budget Discussion • November 5 Legislative Session Begins • Legislature convenes on the first Wednesday after the first Monday in January. Budget Due • On or before the second Tuesday following the annual meeting of the legislature OR on or before the February 1 following the election of Governor and Lieutenant Governor Bottom Line • Third Tuesday after the first Monday in January, except in years following gubernatorial elections when it must be submitted by February 1.

14. Article VII Bills • As part of the Executive Budget, the Governor presents to the Legislature a number of appropriation and language bills which provides the legal authorization for spending from Funds of the State and the means to finance such spending. • Along with the submission of the Appropriation Bills, the Governor also submits legislation to amend State laws governing programs and revenues. • This Legislation is needed to implement the State’s Financial Plans for the upcoming fiscal year, and beyond.

15. ARTICLE VII Bills LANGUAGE BILLS • Public Protection & General Government • Education, Labor & Family Assistance • Health and Mental Hygiene • Transportation, Economic Development and Environmental Conservation • Revenue APPROPRIATION BILLS • Ch 50 State Operations • Ch 51 Legislature/Judiciary • Ch 52 Debt Service • Ch 53 Aid to Localities • Ch 54 Capital Projects

16. Budget Amendments The State Constitution permits the Governor to amend or supplement the Executive Budget within 30 calendar days after its submission or, with the consent of the Legislature, at any time before the close of the legislative session. Such revisions, additions or deletions, conveyed to the heads of the fiscal committees in a memorandum, reflect necessary corrections or responses to new situations or conditions arising after the preparation of the Executive Budget

17. Appropriation Bills Become Law Executive Budget Appropriations (those recommended by the Governor) are Law Immediately Upon Enactment by the Legislature These EXCEPTIONS must be signed by the Governor before becoming Law: • Legislature and Judiciary Bill • Additions by the Legislature

18. Appropriation - Defined An appropriation is a statutory authorization to make expenditures during a specific State fiscal year, and to make disbursements for the purposes designated, up to the stated amount of the appropriation: • By a State Dept or Agency • For a Named Program • Payable From A Specified Fund • For Specified Purposes, Account

19. Appropriation Periods • State Constitution – 2 Year Life Maximum • State Finance Law - Section 40 Provides Liability Periods, Appropriation Periods and Lapse Dates • Budget Bills Oftentimes NOTWITHSTAND State Finance Law and Permit Liabilities ‘Heretofore’ Or ‘Hereafter’ To Be Paid From Current Year Appropriations

20. Deficiency Appropriation • A deficiency appropriation is used to meet actual or anticipated obligations not foreseen when the annual budget and any supplemental budgets were enacted. • It might add to a previously authorized appropriation anticipated to be inadequate, or provide a new appropriation to finance an existing or anticipated liability for which no appropriation exists. • A deficiency appropriation typically applies to the fiscal year during which it is made.

21. BUDGET Management Budget Management consists of structuring the budget and allocating and controlling funds In Accordance With State Laws. The Budget Management function, through the use of the Commitment Control module, ensures that agencies do not obligate or disburse funds in excess of those appropriated and segregated. This function also provides agencies with tools for managing appropriations.

22. Commitment Control (KK) Overview Statewide KK Definitions (Required) Appropriations (Parent of Segregations) Segregation (Child of Appropriations) Cash Control (Loan Language) Project (Federal Grant Award) Appropriated Loan Receivable Public Authority Bonds DOB KK Definitions (Required) Spending Controls Agency KK Definitions (Optional) Lower level of control for Agency operational budgets

23. budgetary Account Coding

24. Statewide Program trees • Program Value Process: • The Bureau of State Accounting Operations will send new budgetary program list to SFS based on the newly enacted budget. • SFS will contact agencies for transactional value placement. • Agency responses will be sent to the Bureau of Financial Reporting and Oil Spill Remediation for review and approval. • SFS will make the transactional value available for use once it is placed on the tree. • Program values are maintained in KK and Reporting trees. The trees are located in tree manager with the name KK_SW_PRGM and RPT_SW_PROG.

25. Statewide Program trees

26. Statewide Program trees Transactional value Budgetary value

27. budgetary Account Coding

28. Budget Overview Budget Journal Load Budget in SFS Agency Approval (up to 3 levels) DOB (up to 3 levels) OSC (up to 2 levels) Monitor Budget During the Year Budget Transfer Interunit Budget Transfer

29. Appropriation types • State Operations • Local Assistance • Debt Service • Capital • Member Items

30. Types of appropriations – state operations Used for operational costs of New York State agencies: • Personal Service • Supplies and Materials • Travel • Contractual Services • Equipment and Maintenance • General State Charges, including Employee Fringe Benefits

31. State Finance Law: Section 24 • For all non-federal state operations appropriations…. • by fund type, which at a minimum shall include general fund, special revenue-other funds, capital projects funds, and debt service funds; • for personal service appropriations, separate appropriations shall be made for personal service regular, temporary service, and holiday/overtime compensation;

32. State finance law: Section 24 • for non-personal service appropriations, separate appropriations shall be made for supplies and materials, travel, contractual services, equipment, and fringe benefits, as appropriate.

33. Each of these is a separate Appropriation

34. Each of these is a separate Appropriation

35. Appropriation Types – Local Assistance Used for GRANT Payments to: • Local Governments • School Districts • Not-for-Profit Organizations • Financial Assistance To, Or On Behalf Of, Individuals

36. Local Assistance Appropriation ADMINISTRATION PROGRAM…………….... 467,000 General Fund / Aid to Localities Local Assistance Account For services and expenses of stabilization grants of up to $50,000 to support the operating expenses of small and mid-sized arts organizations …………………………………… 467,000

37. Appropriation Types – Debt Service • Principal & Interest on State Debt • Principal & Interest on Public Authority Debt • Lease-Purchase and Contractual Obligations for State Facilities and Programs Financed with Non-State Debt • Debt-Related Expenses

38. Debt Service Appropriation DEBT SERVICE FUND-GENERAL DEBT SERVICE FUND For payment to the Housing Finance Agency and the Urban Development Corporation for payment of bonds issued to finance the State's housing programs………………………………….……..63,000,000

39. Appropriation Types – Capital Projects • State Construction Projects • State Assistance for Local Government Projects • Construction Management (e.g. Design & Supervision)

40. Capital Projects Appropriation Federal Capital Projects Fund Hazardous Waste Purpose DEPARTMENT OF ENVIRONMENTAL CONSERVATION For the federal share of the cleanup of hazardous waste sites pursuant to the provision of the federal comprehensive environmental response, compensation and liability act of 1980 reauthorization or amendments thereto including personal service (and other incidental expenses) and suballocation to other state departments and agencies (09FS04F7)……………………………………………10,000,000

41. Lined Out Member Items • Lined Out per Appropriation Bill Copy • DOB provides approval for line out member items (outside of the SFS to OSC) • OSC creates segregation for member items (only OSC approvals required) • Once the transactions are posted, agencies may enter transactions against available segregation DOB Approves Lineouts OSC Segregates in the SFS Budget Journals Posted Agencies Transact

42. Lump Sum Member Items • This includes member items appropriated to Miscellaneous State Agencies and Agency specific lump sum appropriations per Bill Copy • OSC loads Member Items per appropriation bill copy • Outside of SFS, DOB provides OSC an excel file with lump sum member item allocations • OSC requests new programs as needed from SFS • OSC creates segregations for member items (only OSC approvals required) • Once the journals are posted, agencies may enter transactions against available segregations OSC Loads Lump Sum Member Items DOB Provides Excel File to OSC OSC Creates Program as Needed OSC Segregates Agencies Transact

43. BudgetJournalsRequired • Pursuant to State Law – No Spending From an Appropriation Can Occur Until Approved by The Budget Director • Exceptions – Courts & Legislature

44. TYPES OF BUDGET JOURNALS • Budget Journal • Used by OSC to post enacted appropriations • Used by Agencies to increase or decrease segregations • KK_SEG must be used on segregation Budget Journals • Budget Transfer • Initiated by Agencies to move appropriation authority within a BU • Budget Entry types – Interchange, Departmental Suballocation, Apportionment, Transfer and Consolidated Transfer • KK_APPROP must be used on Budget Transfer Journals • InterUnit Budget Transfer • Initiated by Agencies to move appropriation authority between BUs • Budget Entry types –Suballocation, Apportionment, Transfer and Consolidated Transfer • KK_APPROP must be used on InterUnit Budget Transfers

45. Budget journal – APPROPRIATION AID TO LOCALITIES 2013-14 …made pursuant to section 367-b of the social services law may be set aside by the state comptroller in an interest bearing account with such interest accruing to the credit of the locality in order to ensure the orderly and prompt payment of providers under section 367-b of the social services law pursuant to an estimate provided by the commissioner of health of each local social services district's share of payments made pursuant to section 367-b of the social services law ........................................................ 150,000,000 Program account subtotal .................. 150,000,000

46. Budget Journal – Segregation

47. Appropriation – Overview

48. Movement of Appropriation Authority There are 6 types: • Interchange • Departmental Suballocation • Apportionment • Transfer • Consolidated Transfer • Suballocation It is important to understand the difference between these and the proper way to reappropriate the available funds if necessary.

49. Interchanges • Movement of authority between appropriations within an agency and fund. • Appropriation authority which has been interchanged takes on the identity of the receiving appropriation. • To continue the availability of funds, the appropriation receiving the interchange must be reappropriated (rather than the donor appropriation).

50. Interchanges • State Operations and Aid to Localities interchanges are authorized by Section 51 of State Finance Law. • Allows for interchanges within the same business unit, fund and “major” bill copy program without limit. • Allows for interchanges between “major” programs within the same business unit and fund as long as the total amount appropriated for any program does not increase or decrease by more than the aggregate of 5% of the first $5 million, 4% of the second $5 million and 3% of the amounts in excess of $10 million.