Finance Department Presentation 1/27/2014 1 Budget Terminology - PowerPoint PPT Presentation

Finance Department Presentation 1/27/2014 1

Budget Terminology (Basics) • State Fiscal Year – July 1 through June 30 • General Funds - consists of any revenues collected by the State that are not dedicated by law to a specific purpose. • The individual income tax, retail sales tax, and State Lottery are the three largest sources of general fund revenue. • Special Funds - consist of revenues collected by the State, the use of which is statutorily limited to certain purposes. • Special funds may be derived from fees (e.g., car and boat registration and child support applications), taxes levied for a specific purpose (e.g., State property taxes, motor fuel and vehicle taxes, and property transfer tax), local government payments for services, and gifts or donations. • Federal Funds - are made available to State and local governments under programs administered by agencies of the Unites States Government • Reimbursable Funds - represent payments received by a State agency for services it provides to another State agency Source: Department of Legislative Services, Legislative Handbook Series, Volume IV 2010 2

Budget Terminology (Basics cont.) • Request – Budget submitted to Department of Budget and Management for review (usually October 1) • Allowance – Budget submitted to Legislature by Governor through annual Budget Bill (3 rd week in January, per Maryland Constitution) • Budget must be balanced - total estimated revenues must equal or exceed total appropriations. • Revenues may either be General, Special or Federal Funds. • Budget Reconciliation and Financing Act (BRFA) – BRFA is a separate piece of legislation passed by the General Assembly in addition to the Budget Bill. • To avoid legislating in the budget bill, it is used to implement a variety of actions, such as raising revenues, altering statutory formulas and mandates, and transferring various monies in special funds to the general fund to allow their use for other purposes, such as balancing the budget. • Often appropriations in the budget will be contingent on the enactment of a Budget Reconciliation and Financing Act. 3 Source: Department of Legislative Services, Legislative Handbook Series, Volume IV 2010

Budget Terminology (Basics cont.) • Legislative Appropriation – Legislative Approved Budget (due seven days before the expiration of legislative session) • Determines the authority to spend in the upcoming fiscal year. • Appropriation is synonymous with “authority.” It does guarantee revenue receipt, i.e. anticipated grants may fall short of authority to spend. • Working Appropriation (also known as the Budget Book Appropriation) – Reflects any approved changes to the Legislative Appropriation • Budget Amendment or Deficiency Appropriation may change legislative appropriation. • Actual – Reflects closed fiscal year expenditures as well as approved encumbrances and accruals. Source: Department of Legislative Services, Legislative Handbook Series, Volume IV 2010 4

Budget Terminology (Mechanisms to Retain Appropriation) • Encumbrance – allows agency to carry over appropriation authority from prior fiscal year into next fiscal year • A service does not have to be rendered and an invoice does not need to be received. • A purchase order must be in place and dated prior to next fiscal year in which appropriation is carried over to. • Review annually by DBM during fiscal year closeout to determine legitimacy. • Accrual – also allows agency to carry over appropriation authority from prior fiscal into future next fiscal year • No invoice is received. • Major distinction between an encumbrance and an accrual is that with an accrual the service has already been rendered (e.g. a Medicaid recipient may visit a hospital in one fiscal year and the Department of Health and Mental Hygiene may receive the invoice in the next fiscal year). 5

Budget Terminology (Mechanisms to Alter Spending) • Budget Amendment – process allows an agency to change funding in the Working Appropriation. • Reserved for one of the following reasons: • the transfer of funds within an agency or department between work programs; • the transfer of funds between agencies as specifically authorized by statute or in the budget bill; • the utilization of additional federal or special funds with legislative review, as specifically authorized in the budget bill. • Fund authority is available immediately following Governor’s approval. • General Funds may not be created by a budget amendment. • Deficiency Appropriation – Appropriation that may either increase or decrease working appropriation. • Typically submitted along with Budget Request • Funding is not available until April and is subject to legislative approval. • General Funds may be created by a deficiency appropriation. • Supplemental Budget - permits the Governor to correct errors and omissions in the original budget. • Supplemental budgets are also used to reallocate funds deleted by the General Assembly. 6 Source: Department of Legislative Services, Legislative Handbook Series, Volume IV 2010

Budget Cycle Agency closes out current Budget and possible fiscal year. Retains deficiency appropriations appropriation with are prepared and encumbrances or accruals. submitted to DBM (Oct- Reverts remaining Nov) appropriation. New fiscal year begins. (July 1) DBM reviews budget, Deficiency Appropriations are conducts hearings with realized (April) agencies (Oct-Dec) Budget is passed by Governor formally submits legislature (83 rd day of budget to Legislature (3 rd Session) Wednesday in January) DLS reviews budget, Legislature conducts hearings with agencies (Jan-Mar) 7

Budget Overview Total Appropriated Budget ($000's) $350,000 $300,000 17.6% $250,000 Inclusive of 22.7% $33.5M $200,000 Deficiency $150,000 59.7% $100,000 $50,000 $0 FY11 FY12 FY13 FY14 FY15 Total CCIIO Medicaid State Resources 8

Budget Overview Appropration vs Expenses Through December 31,2013 $250,000,000 $232.75M $200,000,000 $150,000,000 $111.03M $100,000,000 State Resources $50,000,000 Medicaid $0 Appropriation FY12 Expenditures Appropriation FY13 Expenditures Appropriation FY14 Expenditures Appropriation Total Expenditures CCIIO Total FY12 FY13 FY14 9

Budget Overview FY13 Encumbrances ($000's) Berry Dunn Eventus GP Strategies Maximus Noridian Various Xerox Total $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 $45,000 $50,000 10

Budget Overview Breakdown of Incurred Costs by Category Through December 31, 2013 2.8% 1.2% 4.4% Information 1.1% Technology Noridian, 84.8% [PERCENTAGE] 8.3% 0.4% 6.6% 1.4% 8.6% 2.9% 3.4% 5.1% Call Center Communications Connector Entities Consulting Intergovernmental Misc Operations Personnel Policy Training Noridian Xerox Other IT 11

Budget Overview Noridian Contract ($000's) $250,000 $200,000 $150,000 $100,000 $50,000 $0 Invoices Remainder of Contract Full Contract Paid Unpaid 12

FY 15 Budget FY15 Total Fund Budget By Budget Program ($000's) $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 Operations Major IT Projects Total CCIOO Medicaid Special Fund General Fund 13

FY 15 Budget FY15 Total Fund Budget By Fund Type 18% 35% 22% 25% CCIIO Medicaid General Fund Special Fund 14

FY 15 Budget FY14 Total Fund Budget By Fund Type (for comparison purposes) 12% 21% 67% CCIIO Medicaid General Fund 15

FY 15 Budget Details (Administration) • Total FY15 funding for MHBE is $72M ($15.5M GF, $13M SF, $43.5M FF) • $7M for 72 positions, funded by federal funds for July-December, special funds beginning January 2015 • $3.6M for other administrative costs funded by federal for 6 months, special funds beginning January 2015 16

FY 15 Budget Details (Grants) • $8.6M for Navigator grants for both private sector ($3.1M) and Medicaid ($5.5M) enrollees • $8.5M for Assister grants for both private sector ($4.9M) and Medicaid ($3.6M) enrollees 17

FY 15 Budget Details (Operations & Communications) • $7.3M for consolidated service center contract for private sector ($2.7M) and Medicaid ($4.65M) • $3.2M for training contracts for private sector ($1.62M) and Medicaid ($1.54M) • $1.7M for advertising/outreach contracts for private sector ($0.9M) and Medicaid ($0.75M) 18

FY 15 Budget Details (Information Technology) • $15.7M for Medicaid portion of IT systems development and operation ($5.4M GF, $10.36M FF) • $10.6M for IT systems development and operation for private sector funded by federal funds (CCIIO) • $5.9M for IT systems operations for private sector funded by State funds beginning January 2015 19

Any Questions? Allan Pack, MPA Chief Financial Officer allani.pack@maryland.gov 20