Implementing the Budget
The goal of budget implementation is to assure citizens that funds are used legally and efficiently, as directed by the Legislature and Governor, to provide effective public services for Oklahomans. Before the fiscal year begins on July 1, agencies are required by law to submit a budget work program to the Office of Management and Enterprise Services (OMES). This program allocates all spending, including appropriations, federal funds and revolving funds (which collect fees and other dedicated revenue) to programs and specifies planned spending by month of the fiscal year. The budget work program must be consistent with all budget actions by the Legislature, including limits on appropriations and how much can be spent from non-appropriated funds, as well as how spending must be allocated between agency programs and the maximum number of employees that can be hired. Whereas the Legislature used to approve separate budget bills for most agencies setting out limits on total spending and employees and allocating spending between programs, this now happens only very rarely.
OMES reviews budget work programs for compliance with appropriations laws and practicability. Once the budget work program is approved and the fiscal year begins, OMES allots money to each agency on a monthly basis and agencies are authorized to spend within the limits of the work program.
Budgets often need to be adjusted during the year. Agencies have some authority to adjust them on their own. They may transfer up to 25 percent of funds between line-items during the year.
Transfers exceeding the agency’s authority but up to 40 percent of funds may be approved by the Contingency Review Board, which consists of the Governor, President Pro Tempore of the Senate, and Speaker of the House. All transfers are subject to review of the Joint Legislative Committee on Budget and Program Review, which may determine that transfers are not consistent with legislative intent. All transfers, regardless of size or approval, keep funds within the agency and do not increase the agency’s overall budget.
Sometimes an agency cannot complete the fiscal year without additional funding. This can occur when caseloads exceed planned amounts, when other sources of funding are reduced unexpectedly, or when emergencies arise. In some instances, the Legislature intentionally underfunds an agency for the upcoming year, hoping the agency will absorb much of the shortfall during the year. In any of these case, agencies may request supplemental appropriations. A supplemental appropriation usually is considered in the next legislative session, which takes place during the final third of the original fiscal year. Supplemental appropriations are approved through the same process as regular budget bills (usually without the GCCA being involved). Funds for supplemental appropriations come out of the certified amounts available for appropriating to the next year’s budget. Supplementals typically are very small in relation to the regular budget amount.
Occasionally economic and fiscal conditions change so quickly that there will not be enough revenue to finance the approved budget. The Constitution requires actions be taken to keep the budget in balance. A revenue shortfall is declared if it appears revenue of a fund will be less than the 95 percent of the estimate that could be appropriated. OMES must then reduce all agency allotments by the same across-the-board percentage necessary to keep spending within the revised revenue estimate. OMES has unilateral authority to determine the timing and the amount of mid-year budget cuts.
As revenues fell below certified estimates during FY 2016, agency budgets were reduced by seven percent across the board. The Legislature also appropriated $77 million from the Rainy Day Fund to the State Department of Education and Department of Corrections make up for some of the revenue shortfall, as the Constitution allows. Final revenue collections ended up well above OMES’ projections, which resulted in a $140 million “surplus” that was returned to agencies at the start of the next fiscal year.
During the fiscal year, agencies are under a broad range of controls on how they spend their money. For example:
- Most decisions on hiring and promoting personnel are subject to civil service laws that are managed by the Human Capital Management Division within OMES;
- Agencies must fund employee benefits through payments to the state retirement and health insurance systems;
- The Division of Capital Assets Management (DCAM) oversees agency purchase of goods and services;
- Other boards and agencies review and approve agency spending on equipment, facilities, and lease-purchase financing;
- Agencies that collect revenue must account for all receipts and turn cash over to the State Treasurer for management and investment;
- Executive and legislative fiscal staff review agencies to be sure they are spending within legal limits and according to the restrictions placed on them by the Legislature;
- Most cash and transactions are handled centrally by the Treasurer and OMES to minimize errors and to be sure payments are made accurately and on time; an
- All agencies must account for all revenue and spending in a system supervised by the OMES.