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State Budget Update Scott Cummings Virginia Department of Planning and Budget 1.

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Presentation on theme: "State Budget Update Scott Cummings Virginia Department of Planning and Budget 1."— Presentation transcript:

1 State Budget Update Scott Cummings Virginia Department of Planning and Budget 1

2 Agenda Review of 2014 Appropriation Act Overview of HB 5010 Next steps 2

3 2014 Appropriation Act Provides appropriation for FY2015 and FY2016 Provided $156.1 million in FY15 and $248.0 million in FY16 in new general fund support to Direct Aid over the amount provided in FY2014 With Lottery and Literary Fund support added in, new state spending reaches $487.3 million for the biennium Revised K-3 Class Reduction Formula – Creates savings of $5.2 million each year – Uses a three-year average of free lunch eligibility rather than a one year snapshot Eliminated funding for the Opportunity Educational Institution (OEI) 3

4 2014 Appropriation Act Approved June 23, 2014 Prior to the budget’s passage, state revenues were not tracking with approved forecast Expected total of $1.55 billion shortfall Response: – $842.5 million in general fund resources left uncommitted in new biennium – $707.5 anticipated Rainy Day Fund withdrawal 4

5 Interim Reforecast Based on the FY2014 shortfall, the Governor called for an official reforecast Revised forecast presented August 15 Forecast assumed lower growth rates than were included in budget’s revised figures New anticipated shortfall of $881.5 million beyond that predicted in 2014 budget 5

6 HB 5010, 2014 Special Session I General Assembly still in session – Planned reconvene date of September 18 Governor and General Assembly money committees agreed on framework for action Provides sufficient time for state agencies to implement FY15 reduction strategies Gives bond rating firms assurance that Virginia is addressing its anticipated shortfall 6

7 Actions taken in HB 5010 Amends and reenacts 2014 budget – Governor’s proposed budget in December will include HB 5010 changes Updates revenue assumptions Appropriates $470 million in FY15 and $235 million in FY16 from the Rainy Day Fund Establishes four reversion accounts to close the remaining shortfall of $345.5 million in FY15 and $536 million in FY16 7

8 Net Effect of Revenue Shortfall and Interim Reforecast 8

9 HB 5010 Reversion Accounts 9

10 HB 5010 Agency Reductions Represents approximate cut on state agencies of four percent Includes Department of Education, but not Direct Aid budget On September 19, agencies submitted reduction plans of five percent for FY15 and seven percent for FY16 The General Assembly has authorized agencies to implement strategies, so they can begin once the plan is approved by the Governor 10

11 HB 5010 Aid to Locality Reductions Savings amount of $30 million each year – Represents 0.3 percent reduction in total local aid contained in the budget Localities will be given flexibility in determining impact of reduction DPB will establish a target for each locality – Depends on locality’s share of total aid, likely excluding K-12 and possibly car tax reimbursements 11

12 HB 5010 Miscellaneous Reversion Clearing Account Includes net spending adjustments of $40.6 million in FY15 and $284.9 million in FY16 – From a series of balance reversions, transfers and other actions Actions to achieve FY16 savings of $272 million will be submitted in the Governor’s introduced budget for consideration by the 2015 General Assembly All actions are on the table for consideration 12

13 Next Steps HB 5010 will be approved Governor will announce FY15 reductions strategies proposed by state agencies DPB will notify localities of their share of the reduction amount Governor will submit introduced budget to General Assembly on December 17 – Contain remaining actions to address budget shortfall – Include updates to Direct Aid based on latest enrollment figures and program participation levels – Be based on November revenue forecast 13

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