Governor Deval Patrick's Budget Recommendation - House 2 Fiscal Year 2009

Governor's Budget Recommendation FY 2009

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.
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 30.
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 LawsAppropriation 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 automatic 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.
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.
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 by category by fund, and spending by category by 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 conduct price negotiations.
Budgetary accounts Direct appropriation and retained revenue accounts
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 usually 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 ninety days thereafter.
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 the Budget Bureau 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 subsidiaries 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 AFDC.  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 expended.
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 by the state to defray the costs of employee benefits, which are paid for centrally.
FTE Full-time equivalent
Full-time equivalent A measure of work force 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.  Massachusetts by law 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, subsidiary, 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.
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 (notated)".  The preferred acronym is "GL".
Generally Accepted Accounting Principals A set of accounting rules which are widely accepted and used, and which are accrual-based.  (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.  A newly-elected governor 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.
HRMIS The payroll system through which UMass employees are paid.
Indirect cost Overhead expenses, 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 whereby 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 very large 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.
Intergovernmental Service Fund account Entity in MMARS which records the status of a certain type of appropriation, whereby 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.  Those 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.
ISA Interagency Service Agreement
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, an interface between HR/CMS and MMARS that allows agencies to assign employee payroll expenses amongst different accounts and programs. 
Line item Unit by which the Legislature appropriates money.  Line items consist of an account number, language that defines the purposes for which 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.
Major funds The General Fund and the Transportation Fund (formerly called the Highway Fund)
Master service agreement A blanket contract which covers services is often referred to as an MSA
Minor funds All budgetary funds except the General and Transportation Funds
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.
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 in AA can only be spent on salaries; money in KK can only be spent for equipment purchase.  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 are descriptive of the types of goods and services procured.  The hundreds of object codes can be summed into the 18 subsidiaries 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 that 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.)
Pre-Encumbrance Field in MMARS which indicates an amount which is in the preliminary stages of becoming an encumbrance.
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 ensuing 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%.
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 known 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 expend 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.
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 a specific percentage of the end-of-year surplus is deposited.
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 state employees are embodied 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 equal increments from the bottom to the top.  These are called step rates.  Each year, on their anniversary dates, and based on merit, 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 or pay raise laws 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 whereby 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 general revenues, as opposed to restricted revenue.
Veto Action taken by the Governor, in accordance with 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 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 money bills.  The House and Senate Committees on Ways and Means employee 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.

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