Fiscal Highlights - November 2015

Prior to 2012 the possibility existed that an agency could estimate the salary and related benefit portion of their budget excessively high.  This, in turn, would result in the Legislature providing an agency extra funding for things like cost-of-living increases, retirement rate changes, and health benefit additions.  In 2012, the Executive Appropriations Committee (EAC) took action to limit an agency's ability to game estimated salary and related benefit amounts during the budget process. The original information presented, Vacancies, Turnover Savings, and Personnel Cost Changes, can be found at: http://le.utah.gov/interim/2012/pdf/00000756.pdf.  After discussing this issue, EAC passed a motion to have the Office of the Legislative Fiscal Analyst (LFA) calculate and apply a historical turnover savings (TOS) for each agency including Higher Education.  EAC also determined that the turnover savings factor should not be applied to agencies with less than 20 full-time staff because vacancies in these smaller agencies caused greater staffing fluctuations from year to year than in larger agencies. As a result, the LFA has calculated a two-year rolling average of turnover savings and applied those TOS factors to all agency salary and benefit changes since the 2013 General Session.  In the initial calculation, it could be seen that several large agencies had estimated salary and benefit budgets nearly 15 percent higher than their actual costs later turned out to be.  The TOS calculation for the 2016 General Session contained in the memo Update on the Turnover Savings Factor Calculation and dated November 17, 2015 can be found in: http://le.utah.gov/interim/2015/pdf/00005210.pdf.  The effect of the EAC motion passed in 2012 has been to reduce the aggregate percentage of calculated TOS factors and to implement a penalty (the TOS factor) for agencies when they do overstate their salary and related benefits budget estimate.