Fiscal Notes Review 2015 Legislative Session Becka Johnson Poppe January 7, 2015

What is a Fiscal Note? A fiscal note is an objective estimate of a bill’s fiscal impact. Provides a 6-year projection of impact Describes least expensive way to reasonably implement the bill Is always tied to a specific version of a bill Helps legislators evaluate a bill’s costs and merits Informs legislative staff, journalists, lobbyists, and others An objective estimate of a bill’s fiscal impact. Usually it’s an analysis of a proposed bill, but occasionally it’s a bill amendment or a bill that’s already been enacted. Provides a 6-year projection of impact, each year shows incremental change from current law/budget Has assumptions based on the least expensive way to reasonably implement the bill Is always tied to a specific version of a bill—meaning, each time it is revised, a new fiscal note is requested Help legislators evaluate a bill’s costs and merits before deciding whether to pass, reject, or amend it Inform legislative staff, journalists, lobbyists, and others involved in the legislative process

Why Should you Care About Fiscal Notes? Fiscal notes inform legislative decisions that impact the UW We need to be responsive and accurate The tricky part is… We have less than 72 hours to respond Fiscal notes cover a huge variety of topics We need your help to quickly prepare accurate fiscal notes. -They inform the legislative decisions that impact the UW. -We need to be responsive and we need to be accurate in our response. -If we don’t respond, legislators assume the bill doesn’t impact us, which could be a big problem. -For example, if the bill would actually be expensive for the UW to implement, we would want the legislators to know so they have an opportunity to amend the bill in a way that mitigates that impact. -The tricky part about being responsive and accurate is… -We usually have <72 hrs between the time we get a fiscal note request from Olympia and the time we need to get our fiscal note back to Olympia. -To complicate matters, the fiscal note requests we receive cover a huge variety of topics since the UW is engaged in a huge variety of activities and programs -We, your fiscal note analysts in OPB, try to be familiar with as many UW-relevant topics as possible -But, that can be challenging when we get fiscal note requests on everything from “shellfish aquaculture” to “interest arbitration for uniformed personnel.” Thus, we need your help to quickly prepare accurate fiscal notes

Fiscal Note Process Overview < 72 Hours OPB receives FN request from OFM OPB adds FN to Bill Tracker and notifies assessors Assessors prepare FN response in Bill Tracker OPB reviews FN for accuracy and completeness OPB adds FN to OFM’s system and submits it So you can see how your role fits into the bigger picture, here’s a quick overview of the fiscal note process. As you can see, a lot needs to happen in less than 72 hours… Occasionally OFM sends a revision request OFM distributes the final FN to legislators

Fiscal Note Process Overview < 72 Hours OPB receives FN request from OFM OPB adds FN to BillTracker and notifies assessors Assessors prepare FN response in BillTracker OPB reviews FN for accuracy and completeness OPB adds FN to OFM’s system and submits it This is the part of the process that directly relates to you, which is what I’ll focus on for the rest of the presentation. Occasionally OFM sends a revision request OFM distributes the final FN to legislators

Responding to a Fiscal Note Request

How To Respond to a Fiscal Note Request Check the due date and time in the email notification Check the due date and time in the email notification from Bill Tracker. At the bottom of the automatic emails from Bill Tracker, you’ll see a box that looks like this. If there is a line that says “Fiscal Assessment” with some red text next to it, then it’s a fiscal note request. Otherwise, no fiscal analysis is required and you’re being asked to provide a general assessment of the bill. The info in red is the date and time by which you must have your response submitted via Bill Tracker. Fiscal analyses should always take priority over general assessment. The due date will typically be less than 72 hours from the time you receive the email since (as you saw on the last slide) there are a number of other things that need to happen during those 72 hours. Sometimes it will be far less than 72 hours if there is a hearing for which they need the fiscal note.

How To Respond to a Fiscal Note Request Check the due date and time in the email notification Read the bill Review relevant laws and budgets (as needed) Coordinate your response with others (as needed) In Bill Tracker, describe the bill’s fiscal impact using all relevant narratives and tables You can access the bill via the link on the bill’s page in BillTracker Review relevant laws and budgets as needed When you log into Bill Tracker, you’ll see who else has been asked to assess the bill. Please coordinate with these other individuals, to ensure your response is comprehensive. In Bill Tracker, describe the bill’s fiscal impact using all relevant narratives and tables …we’re going to jump away from this for a moment to go into what you need to enter into Bill Tracker.

Elements of a Fiscal Note Summary: overview of how the bill impacts the UW Four types of impact that may be relevant… Cash Receipts: the bill’s estimated impact on the UW’s cash receipts (taxes & fees) Expenditures: expenditures necessary to implement the bill, including all assumptions FTEs: list of additional staff time FTEs (by job title and annual salary) required to implement the legislation Capital: acquisition and construction costs not reflected elsewhere and describes potential financing Here’s what’s included in those narratives and tables. There’s a textbox for a Summary, which provides an overview of how the bill impacts the UW. You should always complete this section. There are 4 categories of impact that you may need to describe. Typically only one or two are relevant for a given fiscal note: Cash Receipts: If the bill has an impact on the UW’s cash receipts, you should describe that estimated impact in (guess what) the ”Cash receipts” narrative textbox and table! This section is typically only relevant to bills regarding the collection of a tax or fee. For the UW, that would be things like tuition or library fees. Expenditures is where you would describe what it would cost to implement the bill’s requirements. We need you to include all assumptions made in your estimate and show your work as much as possible. OFM needs to be able to duplicate your work and understand why you calculated things the way you did. We also need you to call out what the workload drivers are. In other words, why does the bill cost money and what’s driving that cost?—is it the need for upgraded software? Is it additional personnel? FTE: If additional staff time would be required to implement the bill, please list that in the FTE section. What’s confusing is the cost of additional staff time (salaries and benefits) should actually be shown in the Expenditures section, the FTE section is more of a list of the number and type of FTE that would be needed. OFM’s method of reporting FTE and related expenditures is not the most intuitive. We’ll go into that more in a moment. Capital: Lastly, there’s the “Capital” section, which is very rarely used. Most capital costs (like a new printer, or new software) actually belong under “expenditures,” so chances are you won’t use this section. As I mentioned, FTE tend to be the most confusing, so I’m going to spend a couple minutes talking through an example.

FTE - example Job Title, Full-time Salary FY16 FY17 FY18 FY19 FY20 Wizard, $200,000 0.5   TOTAL Let’s say the legislature decides to introduce a bill that would require the UW to ensure that the One Ring is taken to Mordor and destroyed in Mount Doom. If that were the case, we might want to hire a few specialists, one of which would probably be Gandolf. After doing a little research, we find out that he doesn’t come cheap. We decide, though, that we probably wont need him to be full-time -- he can go off and do his own questing here and there -- so we estimate 0.5 FTE. And, since this is a pretty epic undertaking, we estimate it’ll take about 2 years. So this is how we’d represent that in the table. Just remember, we still write the FULL-TIME salary amount, even though Gandolf wouldn’t be full time, and that salary amount should NOT include benefits.

FTE - Example Job Title, Full-time Salary FY16 FY17 FY18 FY19 FY20 Wizard, $200,000 0.5 Ring Bearer, $90,000 1.0   TOTAL 1.5 In addition to Gandolf, we’d need a ring bearer and, unlike Gandolf, we’d really need the ring bearer to be there full-time. Based on some research, it looks like we wont have to pay him as much as Gandolf.

FTE - Example Full-time salary (not including benefits) Job Title, Full-time Salary FY16 FY17 FY18 FY19 FY20 FY21 Wizard, $200,000 0.5 Ring Bearer, $90,000 1.0 Project Manager, $80,000 0.1   TOTAL 1.6 Full-time salary (not including benefits) Number of FTE required for that job title/salary And, lastly, just practically speaking, we decide that we’ll need to expand the duties of an existing Project Manager to coordinate things. But it probably wont take too many hours. Then we enter it the same way, title, FULL-TIME salary amount not including benefits, and, for this we’re estimating 0.1 FTE. If this seems like a weird way to show this information, that’s because it is. Just try not to think of the FTE table as a place where you show the costs associated with the FTE, but rather as a place where you list the FTE that will be needed.

Resources: Pop-Up Windows If you get a fiscal note request and feel a little lost, we have several tools available to help you compile your fiscal note. We have pop-up “Help” windows, which we introduced last year. They appear next to each table and text box, like this. So, for example, if you’re at the Expenditure table and you click on “What to enter in the table”…

Resources: Pop-Up Windows You’ll see a description of what to enter into the table and, since the salaries and benefits lines tend to cause the most confusion, we’ve given some extra details about how to calculate those.

Resources: Fiscal Note Example In addition, this year we’ve added a new resource, full fiscal note example. At the top of the “Fiscal Assessment” fields, you’ll see a link that says “View Fiscal Assessment Example.” If you click on that, you’ll see

How To Respond to a Fiscal Note Request Check the due date and time in the email notification Read the bill Review relevant laws and budgets (as needed) Coordinate your response with others (as needed) In Bill Tracker, describe the bill’s fiscal impact using all relevant narratives and tables To save and return later, hit “Submit Feedback” (every 3hrs) When finished, check “this is my final response” and hit “Submit Feedback” Now that you know what to enter into Bill Tracker, we can get back to the process: Hit “Submit Feedback” to save and return later (as needed). The webpage will time-out after 3 hours—that’s longer than the 30min we had last session. In the last 30minutes of those 3 hours, a timer should pop up with a countdown. If you aren’t able to complete your response within 3hours, hit “Submit Feedback” at the bottom of the page to save your work and return later. When you’re read to submit your final response, select “This is my final response” and hit “Submit Feedback.” This will let us know that you’re done. It looks like this…

When the Fiscal Impact is Indeterminate If there are too many unknowns to make a reasonable estimate, you can say impact is “indeterminate” However, we must still: Explain why the impact is indeterminate Give a rough estimate of the fiscal impact (either “Less than $50,000 per fiscal year” or “Greater than $50,000 per fiscal year”) Provide a range of scenarios that provide a sense of scale, indicate which scenario is most likely For example, if a bill relates to tuition revenue, we may not be able to determine the cash receipts impact prior to the setting of annual tuition increases by the Board of Regents. However, to provide a general idea, we would describe how much revenue we would expect to receive under a few different scenarios, such as a 0% tuition increase, a 3% tuition increase and a 5% tuition increase.

When Cost is Small and Can Be Absorbed In such cases, we can cite ‘no fiscal impact,’ However, we must still: Provide information about the scale of the costs Explain what existing activities/efforts might be displaced in order to accommodate the legislation For example, if a bill would require that certain UW faculty serve on an advisory board for the State, we might be willing to absorb that expenditure with existing resources, particularly if the board member is reimbursed for direct participation expenditures by the State.

When You Have Concerns About a Bill A fiscal note must be objective, so please communicate your opinions separately Reminder: Fiscal assessments must take priority over general assessments Remember, a fiscal note must take priority over a general assessment of a bill.

Tips and Reminders Write for a general audience, avoid jargon Only report the incremental impact of the bill Report current dollars, don’t build in inflation Identify costs/receipts as one-time or on-going Identify and explain ALL assumptions Use realistic implementation dates and account for them Separate cost of benefits from cost of salaries In the FTE section, report the number of FTE needed Respond! please  Base your assumptions on least expensive way to implement bill With regards to implementation dates, you cannot have a center running at 100% on July 1, 2013 no matter how great of a planner you are. Include a buffer between the start of the FY and when you’ll have things running. Regarding responding, if we don’t submit a response by the due date, legislators have to assume the bill has no impact on us… although that’s true for some bills, many bills have HUGE financial implications for the UW.

Additional Fiscal Note Resources OFM’s 2014 Fiscal Note Instructions: http://ofm.wa.gov/budget/ instructions/other/agencyfiscalnoteinstructions.pdf OFM’s Fund Look-up: http://www.ofm.wa.gov/fund/ OFM’s Fiscal Note Look-up: https://fortress.wa.gov/ofm/fnspublic/ WA Legislature Home (bill and law search): www.leg.wa.gov

Fiscal Note Assistance Becka Johnson jbecka@uw.edu (206) 616-7203 Miranda Leidich leidich@uw.edu (206) 685-7449 Sharyl Morris sharylb@uw.edu (206) 543-4679 If you don’t know who your fiscal note analyst is, or if you have general questions, contact Becka.

Questions?