WELCOME BUDGET MANAGERS AND CHIEF FISCAL OFFICERS OSBM State Budget Manual Update July 1, 2007 WELCOME BUDGET MANAGERS AND CHIEF FISCAL OFFICERS State Budget Manual Update Meeting June 2007 1

State Budget Manual Update Meeting, June 2007 OSBM State Budget Manual Update July 1, 2007 State Budget Manual Update Meeting, June 2007 Welcome Purpose of Meeting Updated Budget Manual Incorporates changes from HB914, State Budget Act Includes policies since July 2006 Improves format Adds links to related information

State Budget Manual Update Meeting, June 2007 OSBM State Budget Manual Update July 1, 2007 State Budget Manual Update Meeting, June 2007 Presentation Format Budget Development Budget Execution Capital Improvements Rule Analysis Q&A

Budget Development Organization of Budget Development Section OSBM State Budget Manual Update July 1, 2007 Budget Development Organization of Budget Development Section Authorities, roles, and responsibilities General requirements Process for developing the budget (including specific required elements) Components of the budget Results based budgeting Systems supporting budget development

Budget Development Budget Development in the new SBA OSBM State Budget Manual Update July 1, 2007 Budget Development Budget Development in the new SBA G.S. 143C Article 3 - Governor’s Recommended Budget Requirements for requests – legislative, judicial, state agencies, R&R, CI, IT Governor’s recommendations (documents), message in short/long sessions Funds included in the state budget G.S. 143C Article 4 – Budget Requirements Balanced budget, limitation on growth (operating budget and positions) 143C-1-3 Fund Types / GASB Fund Structure

OSBM State Budget Manual Update July 1, 2007 Budget Development Change: Results based budgeting information required in biennial budget - Program goals and performance - G.S. 143C-3-5(b)(1) - Goals and features of the Governor’s recommended budget - G.S. 143C-3-5(d) - Performance information described – G.S. 143C-1-1(d)(21) Impact: Continued emphasis on Governor’s results based budgeting initiative Legislative interest in government performance

OSBM State Budget Manual Update July 1, 2007 Budget Development Change: Receipts budgeted to prior year actual collections or other reasonable basis - G.S. 143C-3-5(b)(2)(c) Impact: Greater emphasis on fully projecting and budgeting anticipated federal, agency and other receipts

OSBM State Budget Manual Update July 1, 2007 Budget Development Change: Anticipated federal funds defined to include previous funding levels, current grant awards and applications - OSBM policy in Budget Manual Section 3.12 Impact: Fully anticipates and budgets receipts Creates authority to spend, potential challenges when awards vary from prior years or applications

OSBM State Budget Manual Update July 1, 2007 Budget Development Change: All Governmental and Proprietary Funds Budgeted - G.S. 143C-3-5 (d) Impact: GASB fund types - G.S. 143C-1-3 Budgeted v. unbudgeted codes Size of total state budget Budget preparation time Presentation of budget

Budget Development Questions? OSBM State Budget Manual Update July 1, 2007 Budget Development Questions?

Budget Execution Organization of Budget Execution Section OSBM State Budget Manual Update July 1, 2007 Budget Execution Organization of Budget Execution Section Authorities, roles, and responsibilities Budget by fund sources, structure of the budget General provisions for budget execution Amending the operating budget Allotment process Information technology policies and procedures Federal funds policies and procedures

Budget Execution Budget Execution in the new SBA OSBM State Budget Manual Update July 1, 2007 Budget Execution Budget Execution in the new SBA G.S. 143C Article 6 – Administration of the Budget Budget enacted by General Assembly; certified budgets of State agencies Budget adjustments authorized Compliance with Chapter and appropriations act by State agencies Use of State funds by non-State entities State grant funds: administration; oversight and reporting requirements Federal and other receipts

OSBM State Budget Manual Update July 1, 2007 Budget Execution Change: All Governmental and Proprietary Funds must be Budgeted – G.S. 143C-6-1 (c) Impact: To facilitate compliance, all Governmental and Proprietary Funds that were not included in the 2007-09 Governor’s Recommended Budget, will initially be established by submitting an 11-type budget revision based on prior year actuals. Budget revisions must be submitted for all Governmental and Proprietary Funds. In the future, the certified budget to agencies will include the amount appropriated from Governmental and Proprietary Funds.

OSBM State Budget Manual Update July 1, 2007 Budget Execution Change: Revisions to the Certified Budget are limited – G.S. 143C-1-1 (d)(7) Impact: Revisions to the certified budget can only be made for those circumstances outlined in above statute. Many budget revisions prepared as 11-types before will now be processed as 12-types (e.g., unanticipated gifts or grants, adjustments to existing federal grant programs, carry forwards). Creates deviation between the certified and the authorized budget (does not negatively impact the agency’s ability to make required changes).

OSBM State Budget Manual Update July 1, 2007 Budget Execution Change: Certain budget adjustments can only be nonrecurring – G.S. 143C-6-4(b)(3)(iii) Impact: Changes to the authorized budget within a fund/center are still allowed on a recurring basis. Changes to the authorized budget that move funds between a fund/center can only be authorized on a nonrecurring basis (e.g., salary reserve, position transfers, and other movement of permanent funding). Changes to budget additional receipts can only be authorized on a nonrecurring basis. Changes processed as nonrecurring that agencies request to be permanent will be included in the continuation budget or the Governor’s Recommended Adjustments document.

Budget Execution Change: Approval of Receipt Supported Positions OSBM State Budget Manual Update July 1, 2007 Budget Execution Change: Approval of Receipt Supported Positions - G.S. 143C-6-6, G.S. 143C-6-4(3)(iii) Impact: Prior consultation with Gov Ops no longer required to establish receipt supported positions. Agency must continue to submit a budget revision to OSBM for approval prior to the establishment of new receipt supported positions. Positions funded from new receipts can only be processed as nonrecurring and will be included in the continuation budget or Recommended Budget Adjustments document for permanent funding if required. New positions funded from salary reserves within a fund/center are allowed on a recurring basis.

Budget Execution Change: Use of Lapsed Salary Funds – G.S. 143C-6-9 OSBM State Budget Manual Update July 1, 2007 Budget Execution Change: Use of Lapsed Salary Funds – G.S. 143C-6-9 Impact: Lapsed salaries can only be used for nonrecurring purposes. Lapsed salaries can not be used for the following: grant in aid (6XXX), agency reserves (7XXX), intra agency transfers (8XXX), and the establishment of time limited positions. Agencies are authorized to use 50% of generated lapsed salaries. Agencies may request use of lapsed salaries that exceed 50% to deal with unforeseen circumstances on a case by case basis with thorough justification. Type 14 budget revisions will continue to be processed for transfers among the 1XXX accounts with the exception of temporary wage accounts. 12 type budget revisions must be submitted for all other lapsed salary transfers.

OSBM State Budget Manual Update July 1, 2007 Budget Execution Change: Information Technology (IT) Funds do not revert until implementation – G.S. 143C-1-2(b)(iii) Impact: Reversion language amended to provide that funds for IT projects shall not revert until project is implemented or abandoned. Policy established to facilitate the new requirement. Nonrecurring funding in 2006-07 will be carried forward for transfer to a 2XXXX IT budget code only if the carry forward is consistent with current authority under the Executive Budget Act. Transfers to the 2XXXX IT budget codes will be approved only for projects submitted to the PPM tool. 2009-11 biennium, 2XXXX budget codes for IT projects will be incorporated into the Worksheet I.

Budget Execution Other Changes: OSBM Budget Manual Discussion Budget Execution Other Changes: Prior consultation with Gov Ops is required when total requirements for a department exceed 3% of the certified budget - there are no longer deviation thresholds for each fund/center. (G.S. 143C-6-4(b)). Allocations from the Contingency & Emergency Fund no longer require prior consultation with Gov Ops. All applications for new federal and other grant funds must be submitted to OSBM (G.S. 143C-7-1). Updates have been made to the procedures and forms for requesting a new fund/center and budget code.

Budget Execution Questions? OSBM State Budget Manual Update July 1, 2007 Budget Execution Questions?

Capital Improvements Consolidates Capital Information OSBM State Budget Manual Update July 1, 2007 Capital Improvements Consolidates Capital Information General Statutes Involving CIP, Capital Budget Preparation, and Budget Execution General Provisions from Appropriations Act COPs Procedures & Restrictions Clarifies Close-out Procedures

Capital Improvements New CIP Requirements Needs Estimates OSBM State Budget Manual Update July 1, 2007 Capital Improvements New CIP Requirements Needs Estimates Worksheet III Requirements (Description, Justification, OC-25 Cost Estimate, Operating Costs) Description of Space Needs & Physical Requirements Cash Flow Requirements

Capital Improvements New Reversion Requirements OSBM State Budget Manual Update July 1, 2007 Capital Improvements New Reversion Requirements Planning Must Begin in Same Fiscal Year as Funds are Appropriated Construction Must Begin Within 2 Fiscal Years Otherwise, Project Authorization Lapses Project Reserve Account Established Excess Appropriation Not Encumbered by Construction Contract Transferred to OSBM’s Project Reserve Account Used for Emergency Repairs, Cost Overruns

Capital Improvements Questions? OSBM State Budget Manual Update July 1, 2007 Capital Improvements Questions?

OSBM State Budget Manual Update July 1, 2007 Rule Analysis Electronic submission required and Internet posting of final analysis Small business impact information More analysis required for larger rules Fast-track approval for rules that are not significant Replacement of OSBM Form 4 with more flexible format for analysis

OSBM State Budget Manual Update July 1, 2007 Rule Analysis Questions?

Changes to the Budget Manual OSBM State Budget Manual Update July 1, 2007 Changes to the Budget Manual Questions or comments?