Budget Glossary
- Account type
- There are six main account groupings for expenditure
accounts, which are designated in MMARS by the indicated codes: direct
appropriation (1CN, 1CS), retained revenue (1RN, 1RS), capital
(2CN), trust/other (3TN, 3TX), federal grant (4FN), and intragovernmental
services (1IN, 1IS).
- Accounts
- Accounting entities by which MMARS records the
status of expenditure authorizations and revenue estimates. There are 6 main
account types.
- Accounts Payable
- Payments owed for goods or services received before the
close of a fiscal year. Funds should be encumbered by June 30, and
paid before August 31, when unspent encumbrances lapse. Under certain
conditions, Administration and Finance may approve an extension until
September 15.
- Act
- A law passed by the Legislature. The legislative session
runs by calendar year and Acts are numbered consecutively in each session.
So the first law passed in January is called Chapter 1 of the Acts of 20__;
the next law is Chapter 2 of the Acts of 20__, etc. Unless an Act is of
limited scope or duration, it is usually written as an amendment to
the General Laws. Appropriation acts take effect immediately
upon approval by the Governor. All other acts take effect 90 days after the
Governor’s approval, except for acts which have an emergency preamble,
which take effect immediately.
- Allotment
- The process of making money that has been appropriated by
the Legislature available for expenditure. Although obligations can be
incurred without money being allotted, money must be allotted before money
can be paid out. A fraction of the money in budgetary accounts is
automatically allotted periodically: between 1/12 for one month and 1/3 for
four months. If an account needs to spend at a greater rate than the periodic
allotment, the agency submits an allotment request. Retained revenue
receipts, federal grants, and trust funds are automatically fully allotted. Capital
accounts are administered through a different process.
- American
Reinvestment and Recovery Act
- The American Recovery and Reinvestment Act of 2009,
abbreviated ARRA or Federal Stimulus, is an economic stimulus package enacted
by Congress in February 2009. The Act includes federal tax cuts, expansion of
unemployment
benefits and other social welfare provisions, and domestic
spending in education, health care, and infrastructure, including the energy
sector. The measures are nominally worth $787 billion.
- Annualization
- Positive annualization is the additional incremental
cost in the next fiscal year of new programs, program expansions, or
other efforts which are started sometime during the current fiscal year.
Negative annualization is the incremental cost reduction in the next fiscal
year resulting from savings efforts and other spending reductions begun
sometime during the current fiscal year. Annualization is not the
same as annualized cost/saving.
- Annualized cost/saving
- The full twelve-month cost or saving of an item.
This is not the same as annualization.
- Appropriation
- A specified sum of money authorized by the Legislature for
a specific period of time to accomplish a specific purpose. See Line Item.
- Appropriations Tracking
- The process of monitoring a budget bill through the
legislative process.
- ARRA
- See American Reinvestment and Recovery Act
- Assessment
- A statutorily mandated form of reimbursement or up-front
payment for state expenditures. Assessments are often mandated to charge
private sector businesses for state services that are of particular benefit
to them.
- AT
- Appropriations Tracking
- Balance
- See Balance Sheet, Statutory Balance, Structural
Balance.
- Balance Sheet
- A document produced by Administration and Finance, which
summarizes revenue and spending by category and fund, and displays the
resulting condition. Balance sheets are produced for prior years
based on actual receipts and expenditures, and for current and future years
based on projections.
- Blanket contract
- Contract between the state and a vendor, guaranteeing a
fixed price for a product. State agencies (and local governments) may buy
items under a blanket contract without having to negotiate price.
- Budgetary accounts
- Direct appropriation and retained revenue
accounts.
- Budgeted funds
- The funds that contribute to the commonwealth’s statutory
balance, currently the General Fund, Highway Fund and Health and Wellness
Fund. All other funds are considered non-budgeted funds.
- Capital account
- Entity in MMARS which records the status of a
spending authorization to be funded from the sale of bonds. Capital
authorizations are usually for facility and infrastructure construction and
maintenance or large equipment purchases, and are generally authorized for 5
years.
- Chapter 29
- The General Laws chapter that relates to state
finance.
- Charge back
- A cost item for which payment is made by one state agency
to another, for example, paying for central computer services. See Intragovernmental
Service Fund Account.
- Cherry sheet
- A list, prepared annually by the Department of Revenue, of
certain local aid distributions. It used to be published on
cherry-colored paper, hence the name.
- Citation
- A reference to a specific statute or regulation.
- CIW
- Commonwealth Information Warehouse
- Clerks
- The Clerks of the House and Senate are the official
recorders of all proceedings in the respective chambers. The Clerks publish
the Journals, calendars, and other documents, and print copies of all
bills filed.
-
Comptroller
- The officer responsible for keeping the state’s books and
making rules to ensure that all the state’s financial transactions are
performed according to statute and regulation, and according to generally
accepted accounting principals (GAAP). The Comptroller manages
the state accounting system, which is called MMARS.
- Condition
- The result produced on the balance sheet when
revenues are compared to spending. A positive condition indicates that
revenues exceed spending.
- Conference Committee
- A group consisting of members from the House and members
from the Senate, appointed to work out a compromise version of a bill, when
the House-passed and Senate-passed versions of the bill differ.
- Current services budget
- Synonymous with “maintenance budget”.
- Deficiency
- A shortfall in an existing appropriation, or an
additional amount needed to accomplish a new or expanded purpose. It used to
be that the former was always referred to as a “deficiency” and the latter
was always referred to as a “supplemental”, but the two terms have
come to be used more or less interchangeably.
- Department code
- Three-letter identification field in MMARS, unique
to each agency.
- Direct appropriation account
- Entity in MMARS which records the status of appropriations
which are financed by budgeted fund unrestricted revenues.
- Earmarking
- Language included in a line item which provides
that a specific portion of the appropriation be spent for a
particular purpose.
- Effective date
- See Act.
- Emergency preamble
- Language inserted at the beginning of some Acts,
which declares that the Act is an emergency law. An emergency
preamble causes the Act to take effect immediately upon the Governor’s
approval, rather than after 90 days.
- Encumbrance
- The setting aside of money in MMARS by an agency to
meet known obligations. (Payroll is an exception. Even though it is a known
obligation, payroll costs are not encumbered, except for Accounts Payable
obligations at the end of a fiscal year.)
- Estimated Receipt Amount
- The field in MMARS that records the amount of money
that Administration and Finance believes will become available during the fiscal
year in retained revenue, Intragovernmental Service Fund,
and federal grant accounts. This amount is used by the Comptroller
as a limit to obligations.
- Expenditure Classification Handbook
- A manual published by the Comptroller which sets
forth the official object class and object codes used for
budgeting funds and recording expenses within accounts, along with
definitions.
- Federal Financial Participation
- Reimbursement from the federal government for part of the
cost of certain programs, such as Medicaid and TAFDC. Often referred to by
the acronym “FFP”.
- Federal grant account
- Entity in MMARS which records the status of grants
authorized by the Legislature to be received from the federal government and subsequently
expended.
- Federal Stimulus
- See American Reinvestment and Recovery Act
- FFP
- Federal Financial Participation
- Fiscal year
- Period that the Massachusetts budget covers: July 1
through June 30. (The federal fiscal year covers October 1 through September
30.)
- Fringe benefits
- Employee-related costs other than salary, e.g., insurance
and retirement costs.
- Fringe benefit charges
- Costs assessed against federal grants and other
non-budgetary accounts to defray the costs of employee benefits which are
paid for centrally.
- FTE
- Full-Time Equivalent
- Full-time equivalent
- A measure of workforce personnel, equal to one position
working full time. For example, two half-time positions equal one full-time
equivalent. Often referred to by the acronym “FTE”.
- Fund
- An accounting entity in MMARS to which all receipts
are credited and against which all expenditures and other liabilities are
charged. By law, Massachusetts uses a fund accounting system, where all
financial activity is recorded by fund. The law specifies which receipts
shall be deposited to which funds. Budget acts specify which expenditures
shall be charged to which funds. Fund accounting is an overlay on
accounting, which is also done by account, object class and object
code.
- GAA
- General Appropriation Act
- GAAP
- Generally Accepted Accounting Principals
- General appropriation act
- The budget for a fiscal year which is passed by the
Legislature and signed into law by the Governor. The Massachusetts General Laws require that
annual budgets are in balance.
- General Court
- The Legislature.
- General Laws
- The codified collection of laws passed by the Legislature,
organized into Chapters and Sections by subject. Often referred to by one of
the following acronyms: “GL”, “MGL”, “MGLA(nnotated)”.
- Generally Accepted Accounting Principals
- A set of accounting rules which are accrual-based and
widely accepted and used. Often noted as GAAP. (The statutory
accounting that the state primarily uses is largely cash-based.)
- Governor’s Council
- A body of elected officials which, according to the state
constitution, must approve all expenditures except those for debt service and
salaries for legislators and the Supreme Court justices. The Governor’s
Council meets weekly to approve warrants of expenditures.
- Governor’s message
- A letter to the Legislature from the Governor that covers legislation
submitted by the Governor.
- Grade
- See Step Rate.
- House 1; House 2
- The Governor’s budget recommendations for the next fiscal
year. According to the Constitution, it must be filed within 3 weeks
of the convening of the Legislature in January. Newly-elected governors must
file House 1 within 8 weeks. In the second year of a legislative session,
the Governor’s budget is referred to as House 2.
- HR/CMS
- Human Resources Compensation Management
System, the payroll system through which all non-UMass state employees
are paid.
- HRMS
- The payroll system through which UMass employees are paid.
- Indirect cost
- Overhead expense, including space rental and other
administrative support costs, but not including employee fringe benefits.
- Indirect cost rate
- A percentage that the state charges to federal grants for
overhead costs which are incurred by the state.
- Incremental budgeting
- A budgeting technique where a base budget is established
using uniform criteria for all agencies, and additions or deletions are added
to or subtracted from that base. See also performance-based budgeting, program
budgeting and zero-based budgeting.
- Information Warehouse
- A sizeable database which contains an extensive and
expanding set of financial and payroll data. State agency personnel can
extract data to construct analytical and management summary reports and
spreadsheets. Also referred to as the Commonwealth Information Warehouse,
CIW.
- Interagency service agreement
- A contract between two state agencies where one agency
agrees to perform specified services, and the other agency agrees to pay for those
services. Often referred to as an ISA.
- Intragovernmental Service Fund account
- Entity in MMARS which records the status of a
certain type of appropriation where an agency is authorized to make
payments for goods, services, and other obligations on behalf of other
agencies, and to receive reimbursement from the accounts of those other
agencies. These reimbursements are called chargebacks. Normally,
Intragovernmental Services Fund spending and revenue are not included in
statewide totals, since doing so would result in a double count. Also
referred to as an ISF account.
- ISA
- Interagency Service Agreement
- ISF account
- Intragovernmental Service Fund account
- Journal
- The official record of proceedings in each chamber of the
Legislature. The House Journal and Senate Journal are published by the Clerks
of the respective chambers.
- LCM
- Labor Cost Management system, an
interface between HR/CMS and MMARS that allows agencies to assign
employee payroll expenses among different accounts and programs.
- Line item
- Unit by which the Legislature appropriates money.
Line items consist of an account number, language that outlines how
the money may be spent, the amount, and the fund designation. Where
no fund designation is given, the appropriation is charged to
the General Fund.
- Line item veto
- See Veto.
- Local aid
- Monies appropriated to be distributed to cities and
towns. See also Cherry Sheet.
- Maintenance budget
- The projected cost in the next fiscal year of
maintaining the level of operations that will exist at the end of the current
fiscal year.
- Master service agreement
- A blanket contract which covers services, often
referred to as an MSA.
- MMARS
- Massachusetts Management Accounting
and Reporting System, the official accounting system of the
Commonwealth.
- Model budget
- A preliminary budget estimate developed in-house, by Administration
and Finance, prior to the formal budget development process.
- MSA
- Master Service Agreement
- Non-budgetary accounts
- Spending accounts other than direct
appropriation and retained revenue.
- Non-budgeted funds
- All funds except the General, Highway and Health
and Wellness Funds, which are considered budgeted funds.
- Object Class
- Formerly known as subsidiary, and often interchanged.
Sub-unit of an account, indicated by a two-character code, AA, BB, CC,
etc. Appropriations are recorded in MMARS by object classes
within an account. Object classes specify the purposes for which
portions of appropriations are budgeted. For example, money budgeted in
the AA can only be spent on salaries; money in KK can only be spent for equipment
purchases. Monies in some budgetary accounts, and in most non-budgetary
accounts, are not subsidiarized, and expenditures in those accounts
are not limited by object class controls. See also Expenditure
Classification Handbook.
- Object code
- Three-character identifier used in MMARS to
classify all expenditures. Object codes describe the types of goods and
services procured. The hundreds of object codes can be summed into the 18 object
classes, and are described in detail in the Expenditure Classification
Handbook.
- Official Statement
- A legally required disclosure document prepared at the
time of bond offerings of the Commonwealth or of entities whose bonds are
guaranteed by the Commonwealth, frequently referred to as an “OS”.
- One-time cost
- An expenditure by an agency that would not normally be
expected to recur in the next year, e.g., an expenditure for the installation
of a computer network.
- Operating budget
- A budget making appropriations for the ordinary
maintenance or administration of activities for the fiscal year,
i.e., it does not include capital outlay authorizations.
- OS
- Official Statement
- Outside sections
- Sections in a budget act following section 3, which
contain specific provisions of law which govern the particular appropriations
contained in the budget, make other special laws that usually apply for only
one fiscal year, and amend the General Laws to implement
permanent changes included in the budget.
- PAC
- Prior Appropriation Continued
- Performance-based budgeting
- A budgeting technique which defines units of service,
calculates a cost-per-unit, and makes recommendations based on the desired
level of service. See also incremental budgeting, program
budgeting and zero-based budgeting.
- Pocket veto
- Legislative bills sent to the Governor for signature at
the end of a legislative session are considered to be vetoed if he does not
sign them within 10 days. This is called a pocket veto. (While the
Legislature is still in session, a bill held unsigned by the Governor becomes
law after 10 days.)
- Prior appropriation continued
- In general, the balance of unspent and unobligated appropriations
reverts at the end of a fiscal year (see reversion). Each
year, some accounts are specifically exempted from this provision, and
are authorized in budget acts to carry a balance into the next fiscal
year. Those accounts are called “prior appropriation continued
accounts” or “PAC accounts”. Sometimes “PAC” is used as a verb, and accounts
are said to be “PAC’d”. Capital accounts, at the end of their normal 5-year
life span, may be subject to the same process.
- Program budgeting
- A budgeting technique which consolidates programs with
similar or overlapping goals, gives managers broad discretion in the use of
funds, and sets long-term goals based on the effect of the service provided
rather than on the quantity of service units provided. See also incremental
budgeting, performance-based budgeting and zero-based budgeting.
- Proposition 2 1/2
- A Massachusetts referendum passed in 1980 that limits the
growth of local property tax to an annual increase of 2.5%.
- Rainy Day Fund
- Common name for the Stabilization Fund.
- Receipt Ceiling
- See Retained Revenue Account.
- Reserve
- A line item which appropriates an amount to be
transferred to other line items to fund a particular cost which is not
already included in those other line items. Reserves are usually set
up to fund new collective bargaining agreements, and other expenses when the
distribution of costs across accounts is not know at the time of the appropriation.
- Resolve
- A document promulgated by the Legislature, expressing its
intent.
- Restricted revenue
- Receipts which, instead of being deposited to general or “unrestricted
revenue”, are diverted for a specific purpose, usually for the purposes
of a retained revenue account.
- Retained revenue account
- Entity in MMARS which records the status of a
certain type of appropriation where an agency is authorized to spend a
specific amount of receipts from a particular revenue source for a particular
purpose. The amount specified in the line item is entered into the “Receipt
Ceiling” field in MMARS, and revenues deposited up to that amount may
be retained and spent.
- Reversion
- Unexpended and unobligated money which returns at the end
of a fiscal year to the fund from which it was appropriated.
This money is no longer available for agencies to spend.
- Salary chart
- See step rate.
- Source code
- A four-digit code used in MMARS to designate the
specific type of activity from which revenue is generated. The last four
digits of a revenue account number comprise the source code.
- Spending plan
- A document, submitted to Administration and Finance by all
state agencies, which contains a detailed estimate of projected spending and
revenue for the current year. The Spending Plan usually includes a detailed maintenance
budget estimate for the following year as well.
- Stabilization Fund
- A “rainy day” fund into which the end-of-year surplus is
deposited up until the limit of 15 percent of budgeted revenues is reached.
- Statutory balance
- The amount on the Balance Sheet which indicates the
condition, if excess revenue carried forward from the previous year is
counted. (The laws, or statutes, allow a certain percentage of prior year
excess revenue to be counted in the balance.) See also Structural Balance.
- Step rate
- Salary rates for unionized state employees are outlined in
salary tables which contain grades and steps. Grades are determined by
position title, e.g., a clerical position gets paid at a relatively low pay
grade compared to a senior management position. Each grade contains several
salary rates, increasing in increments from the bottom to the top. These are
called step rates. Each year on their anniversary dates, and based on
satisfactory performance, employees get a salary increase to the next step
rate. When they reach the top step, they can proceed no further within a grade,
unless specific collective bargaining agreements provide otherwise.
- Structural balance
- The amount on the Balance Sheet which indicates the
condition, if excess revenue carried forward from the previous year is
not counted. Also called operating or current account balance. See also Statutory
Balance.
- Sub
- Short for Subsidiary.
- Subsidiary
- See Object Class.
- Supp
- Short for Supplemental.
- Supplemental
- See Deficiency.
- Tax Exempt Lease Purchase
- A program where state agencies may lease-purchase equipment,
and which includes tax benefits for the vendor and price breaks for the
state. Usually referred to by the acronym “TELP”.
- TELP
- Tax Exempt Lease Purchase
- Terms bill
- A legislative bill authorizing terms and conditions of
bond sales, which must be filed by the Governor, and passed by the
Legislature, before previously authorized capital outlay bonds can be
sold, and before bonded expenditures can be made.
- Trust/other account
- Unit in MMARS which records the status of monies
authorized to be spent by various statutes, other than appropriations,
capital outlay authorizations and federal grants.
- Unrestricted revenue
- Receipts which are deposited to the commonwealth’s general
revenues, as opposed to restricted revenue.
- Veto
- Action taken by the Governor, authorized by the
Constitution, to disapprove a legislative bill. For appropriations
bills, the Governor may disapprove line items, or in some instances
portions of line items, and outside sections.
- Veto override
- Legislative power to nullify a Governor’s veto.
Requires a two-thirds vote of both the House and Senate.
- Warehouse
- Commonwealth Information Warehouse
- Warrant
- A report produced weekly (and for some items monthly)
which lists all payments about to be made, and which must be approved by the Governor’s
Council before the payments are made.
- Ways and Means Committees
- Legislative bodies in the House and Senate, which consist
of members of the respective branches appointed by the House Speaker and
Senate President. These bodies make recommendations to their respective
chambers on all funding bills. The House and Senate Committees on Ways and
Means employ budget staff, including analysts.
- Zero-based budgeting
- A budgeting technique that begins at zero and justifies
every expenditure. See also incremental budgeting, performance-based
budgeting and program budgeting.