1. 2009-2011 Continuation Budget NC Office of State Budget and Management State Budget Conference October 15, 2008 Office of State Budget and Management Elizabeth Grovenstein, Assistant State Budget Officer

2. Agenda Introductions Authorizing Legislation 2009-11 Continuation Budget Process 2009-11 Attachments and Examples Questions

3. Authorizing Legislation Chapter 143C, Article 3 G.S. 143C-3-5. (a) The Governor shall present budget recommendations at a mutually agreeable time fixed by joint resolution. G.S. 143C-3-5.(d) The budget shall include all Governmental and Proprietary (State) Funds.

4. Authorizing Legislation Chapter 143C, Article 3 G.S. 143C-3-5.(b)(1) Includes goals for improving the State and performance information for each program; and distinguishes continuation, reductions, eliminations, expansions, and all capital improvements.

5. Authorizing Legislation Chapter 143C, Article 3 G.S. 143C-3-5.(b)(2) Budget uses NCAS chart of accounts (2-digit level) with actual expenditures/receipts, certified budget, authorized budget, continuation budget with proposed increases and decreases for each year of the biennium.

6. Authorizing Legislation Chapter 143C, Article 3 G.S. 143C-3-5.(b)(2) Budget shall include accurate projections of receipts, expenditures, and fund balance. Receipts shall be adjusted to actual level of collections, unless there is a more reasonable basis upon which to budget.

7. What is the Continuation Budget The continuation budget is the part of the state budget necessary to continue the current level of services when adjusted for inflation, enrollment growth, mandated rate increases such as social security, annualization of programs, and operation of new facilities.

8. 2009-11 Continuation Budget Process Basis of budget is the 2008-09 BD307 certified after modifications by the 2008 Short Session of the General Assembly in HB2436. Type 11, 12, and 14 budget revisions are then added to the budget. One-time changes to the budget must be coded O to ensure they are not brought into the budget. Continuation budget = Worksheet I (generated by BPS) plus supporting attachments (Excel)

9. 2009-11 Continuation Budget Process Any fund and account titles errors must be corrected. 2007-08 actual expenditures and revenues are as reported to NCAS. These must match the certified June 2007-08 BD701 report. Actual position counts should be entered into BPS at purpose code and account levels.

10. 2009-11 Continuation Budget Process Agencies should review budgeted requirements for possible realignment via a type 14 606. Agencies should review budgeted receipts for over or under-realization. Type 11 or 12 606s should be submitted to make permanent receipt budget adjustments. Agencies must be able to justify when receipts are not budgeted to actual levels.

11. 2009-11 Continuation Budget Process Changes allowed in Worksheet I: 1. Adjustments for enrollment or population currently served in education, prisons, and entitlement programs. 2. Receipt-supported activities 3. Clothing, telephone service, textbooks and education supplies

12. 2009-11 Continuation Budget Process Changes allowed in Worksheet I (continued): 4. Personnel-related items – social security, retirement, health benefits, longevity 5. Annualization 6. Operating reserves for new facilities 7. Removal of nonrecurring items

13. 2009-11 Continuation Budget Process Changes allowed in Worksheet I (continued): 8. Replacement of existing equipment NOTE: replacement of office furniture/equipment and IT equipment are NOT allowable 9. Replacement of existing motor vehicles 10. Replacement of other vehicles

14. 2009-11 Continuation Budget Process Changes allowed in Worksheet I (continued): 11. Statutorily established salary increases 12. Office leases 13. Transfers to state management agencies 14. Allowable inflationary adjustments

15. 2009-11 Attachments 5-1 Explanation of Increases and Decreases 5-2 Equipment Schedule 5-3 Motor Vehicle Schedule 5-4 Other Vehicle Schedule 5-5 Building Reserves 5-6 Lease Schedule 5-7 Inflationary Schedule (except gasoline) 5-8 Inflationary Schedule for Gasoline

16. Attachment 5-1 Example

17. 2009-11 Attachments Replacement of Existing Equipment – (Attachment 5-2, was Attachment 9 in 07-09) An equipment schedule will be required only when the request is greater than the amount of the recurring authorized budget. Equipment requests must have sufficient justification. Justification should include the specific reasons why the equipment is essential and why the existing equipment is no longer usable. PRIORITIZE!

18. Attachment 5-2 Example

19. 2009-11 Attachments Licensed Motor Vehicles – (Attachment 5-3, was Attachment 10 in 07-09) > 110,000 miles < 110,000 miles must have sufficient written justification EXCEPT law enforcement. >70,000 miles Highway Patrol and DMV, 80,000 miles all other law enforcement Justification needs to include priority, safety issues, whether or not the vehicle is operational, and the specific nature causing the replacement request.

20. Attachment 5-3 Example

21. 2009-11 Attachments Other Motor Vehicles – (Attachment 5-4, was Attachment 11 in 07-09) A request should be made only when it exceeds the recurring authorized budget. Only replaced on an irregular basis like tractors, front-end loaders, lawn mowers, back-hoes, etc. Only with sufficient justification emphasizing priority, necessity to agency mission, use, and safety.

22. Attachment 5-4 Example

23. 2009-11 Attachments Building Reserve – (Attachment 5-5, was Attachment 12 in 07-09) Operating costs to make facilities operational and functional are allowed in the continuation budget for authorized capital projects scheduled for completion during the 2009-11 biennium A detailed account breakdown of each reserve must be submitted separately, with the estimated completion date of the facility provided by the Office of State Construction, number of positions required, proposed classification of each position, and other operating costs.

24. Attachment 5-5 Example

25. 2009-11 Attachments Building Lease – (Attachment 5-6, was Attachment 13 in 07-09) A building/office lease schedule is required only when the request is greater than the amount of the authorized budget.

26. Attachment 5-6 Example

27. 2009-11 Attachments Allowable Inflationary Factors Water and Sewer, Electricity, Natural Gas, Subsistence, and Library Books (2007-08 Actual Expenditures X Inflationary Rate) minus (2008-09 Authorized Budget) = allowable change Example: The 2007-08 Actual Expenditures are $500,000, the 2008-09 Authorized Budget is $520,000, and the water/sewer rate is 1.087 for 2009-10 and 1.125 for 2010-11 2009-10: $500,000 x 1.087 = $543,500 - $520,000=$23,500

28. Attachment 5-7 Example

29. 2009-11 Attachments Allowable Inflationary Factors Gasoline (Rate per Gallon) (2007-08 Actual Gallons X Inflationary Rate Per Gallon) minus Authorized Budget = allowable change Example: Actual Gallons = 100,000 Inflationary Rate/Gallon = 2.976 Authorized Budget = $100,000 (100,000 X 2.976) - $100,000) = $197,600

30. Attachment 5-8 Example

31. 2009-11 Budget Instructions Fringe Benefits Social Security: 7.65% < $102,000 Use 7.65% for all salaries < $102,000 Use 1.45% for all salaries > $102,000 Retirement: Teachers & State Employees: 8.14% State Law Enforcement Officers: 13.14% University Employees Optional Retirement: 11.46% Health Benefits: $4,157 per year or $3,165 if Medicare-eligible Continuation Budget Submission 10-31-08 2 hard copies and all attachments electronically

32. 2009-11 Budget Instructions Useful Websites For WSI budget attachments and system manuals http://www.osbm.state.nc.us To download X/TND or see X/TND documentation: http://sccb.its.state.nc.us/sysware/sysware. htm http://sccb.its.state.nc.us/sysware/sysware. htm NC Budget Systems (BRS/BPS/Allotments) http://www.osbm.state.nc.us/budget_syste ms.html http://www.osbm.state.nc.us/budget_syste ms.html

33. Questions

34. 2009-11 Results-Based Budgeting (RBB) Requirements Most RBB elements should already be complete Agency overviews, missions, goals, strategies, key indicators, fund purposes, services, and measures were due June 27, 2008 Submissions that are still incomplete or require changes need to be finalized as soon as possible Remaining requirements are due October 17 Service analysis data Key agency indicator data Fund-level performance measure data

35. 2009-11 Results-Based Budgeting (RBB) Requirements Key agency indicator and fund-level performance measure data Enter data for three fiscal years (2005-06, 2006-07, 2007-08) For previously reported measures, verify that historical data are complete and accurate and provide data for 2006-07 and 2007-08. For newly reported measures, provide all available historical data. If data are not available for all three years, data must be entered for the most recent year (2007-08) in order for the indicator/measure to be printed.

36. 2009-11 Results-Based Budgeting (RBB) Requirements Service Analysis Enter 2007-08 actual requirements and FTEs for each service statement. Actual requirements should be allocated using the methodology agreed upon with your OSBM analyst. FTE identified for each service should include staff supporting the service function, as well as positions that are vacant or were vacant for part of the year.

37. Why is RBB important? Communicates your budget in terms of the services and programs you provide. Provides the foundation for the expansion budget process. Priority consideration will be given to expansion requests that: Clearly support agencies goals, and Demonstrate a positive impact on key agency indicators and performance measures Promotes greater transparency and accountability