Fiscal Highlights - October 2016

Why Do Restricted Fund Types Matter? - Clare Tobin Lence ( PDF)

Most state agencies receive revenue from multiple funding sources. These sources include "state funds" -- the General, Education, and Uniform School Funds --  which are discussed the most during the General Session appropriations process because they can be spent in a variety of ways, but sources also include "non-state funds." Non-state funds include federal funds, dedicated credits, and restricted funds. Restricted funds in particular often receive less legislative attention because their revenue streams and permissible expenditures are more limited. However, they make up an important part of the overall state budget and even comprise the entire budget for a few agencies.
Restricted fund accounts can be organized in different ways, depending on how they were created in statute. These account specifics can significantly impact the Legislature's authority over the account during the annual appropriations process. Restricted account types include:
  1. Restricted accounts that require an annual legislative appropriation.
  2. Restricted accounts that can be expended by agencies without an appropriation. These funds are known as "expendable special revenue funds." Agencies can access funds as needed, but expenditures must be consistent with statute.
  3. Fiduciary funds that are overseen and managed by an agency but may also be appropriated to the agency for specific purposes.
Restricted accounts that require an appropriation (type 1 above) have three sub-types, which identify how unexpended funds are treated at the end of the fiscal year:
  1. Funds lapse to the General Fund.
  2. Funds lapse to the restricted account.
  3. Funds carry forward in the agency's budget. Some funds that can be carried forward have "nonlapsing" authority in statute. Others are granted nonlapsing authority during the General Session for the current budget year, on a one-time basis.
Lastly, some accounts earn interest and some do not. Sometimes interest is deposited in the account; other times it is remitted to the General Fund.
Fund characteristics are set in statute when the account is created and then adhered to by the Division of Finance and the respective agency. The designated fund type should be consistent with the nature of account revenues and expenditures and associated agency responsibilities. However, the type can constrain the Legislature's opportunity for budgetary oversight.
In recent years, historically "off-budget" expendable special revenue funds have been brought "on-budget" by being shown in appropriations acts each year. Agencies still have full spending authority but provide estimates of fund revenues and expenditures to include in the acts. Including expendable special revenue funds in appropriations acts has not changed how those funds are administered, but it has increased transparency and legislative awareness of the funds.
In addition to awareness of accounts that do not require an appropriation, another challenge for legislators is awareness of the impact of proposed legislation that creates new or modifies existing accounts. Statute determines how accounts will operate and the extent of future legislative authority, and thus the specific fund type, from among the types identified above, is worth considering along with other aspects of a proposed policy.
For examples of the different fund types, drawn from agencies under the purview of the Business, Economic Development and Labor Appropriations Subcommittee, see here.
October 2016 Content ( PDF)
An Update on Sales Tax Revenue Set-Asides and the Gas Tax - Thomas E. Young
On October 18th, the Executive Appropriations Committee heard an update on sales tax revenue set-as...
Division of Fleet Operations General Fund Borrowing Follow-up - Brian Wikle
Since its inception in FY 1997, the Division of Fleet Operations has been in debt to the General Fu...
EOCJ Meeting Summary: October 20, 2016 - Gary R. Syphus
The Executive Offices and Criminal Justice (EOCJ) Appropriations Subcommittee met on October 20th a...
FY 2018 Education Budget Process Begins - Ben Leishman
October is an important month when it comes to developing next year's public education budget. This...
Higher Education Appropriations Subcommittee Meets - Spencer C. Pratt
The Higher Education Appropriations Subcommittee met on October 20, 2016 at the Capitol.Several bil...
Justice Efforts for the 2017 General Session - Alexander R. Wilson
With the 2017 General Session just around the corner, the Utah Commission on Criminal and Juvenile ...
Revenue Update - October 2016 - Andrea Wilko
Utah closed FY 2016 with a $7.4 million General and Education Fund revenue surplus. The Education F...
Utah College of Applied Technology Custom Fit, FY 2011 - FY 2015 - Jill L.Curry
The Custom Fit program funds training for Utah employees that is tailored to meet specific employer...
What Happened in the October 20, 2016 Social Services Appropriations Meeting? - Russell T. Frandsen
Call to Order /Approval of Minutes - Approved the minutes from the September 22nd meeting.Highlight...
Where did the FY 2016 General Fund Revenue Surplus Go? - Steven M. Allred
Fiscal Year 2016 ended with a General Fund revenue surplus of $13.6 million. What happened to that ...
Why Do Restricted Fund Types Matter? - Clare Tobin Lence
Most state agencies receive revenue from multiple funding sources. These sources include "state fun...

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