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Lawmakers assume agencies will spend $120 million less than authorized
When is a budget cut not a budget cut? When agencies still have the authority to spend money but lawmakers assume agencies won't spend all of it. This budget "reversion" philosophy isn't built entirely on blind faith, however, but on historical trends.
Though the 2011-13 balance sheet shows total spending of $31.121 billion, the actual budgeted authority for agency spending is $31.241 billion. This is because the 2011-13 balance sheet assumes $120 million in reversions based on historical experience of actual agency spending, meaning the Legislature expects agencies will under spend their budgeted authority resulting in expected spending of $31.121 billion.
Without the anticipated $120 million in reversions, the already tenuous 2011-13 unrestricted ending fund balance would be upside down by $66 million (including the $238 million realized by an accounting change).
2011-13 Balance Sheet With Accounting Change and Anticipated Reversions
Total Resources = $31.175 billion (includes $238 million accounting change)
Total Spending = $31.121 billion (includes $120 million in reversions)
Unrestricted ending fund balance = $54 million
2011-13 Balance Sheet Without Accounting Change or Anticipated Reversions
Total Resources = $30.937 billion
Total Spending = $31.241 billion
Unrestricted ending fund balance = negative $304 million
As previously mentioned, the assumption of $120 million in reversions by lawmakers is not merely wishful thinking but instead reflects the historical experience of the past 15 years. Though reversions occur yearly, lawmakers typically don't book anticipated reversions on the balance sheet. This is because in the past these funds were automatically transferred to dedicated accounts. A change made via the budget this year (HB 2127 - Section 709) will now keep these funds in the Near General Fund. Here are the actual agency reversions since Fiscal Year 1997 according to the Office of Financial Management (all dollars in millions):
- FY 97 - $62
- FY 98 - $42
- FY 99 - $55
- FY 00 - $25
- FY 01 - $23
- FY 02 - $14
- FY 03 - $36
- FY 04 - $18
- FY 05 - $43
- FY 06 - $37
- FY 07 - $79
- FY 08 - $83
- FY 09 - $111
- FY 10 - $83
- FY 11 - $105
15-year Fiscal Year Average = $54 million
The majority of reversions in the past tended to happen in the Department of Social and Health Services and the Office of Superintendent of Public Instruction. Higher education agencies (universities) tend to spend 100% of their budgeted authority. The 2011-13 budget doesn't specify where these reversions are expected to occur but is based on the anticipated total amount statewide.
Governor Gregoire is expected to take action on the budget on May 2. She plans to issue several vetoes in an effort to increase the paltry $54 million unrestricted ending fund balance.