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State Budget Process

Budget Execution & Oversight

Allotment & Expenditure Process  | Fiscal Condition & Outlook Review
Budget Reduction & Surplus Expenditure Plans | Interim Budget Review & Revisions


AFTER A SESSION

Allotment & Expenditure Process

Allotments

  • The Finance and Administration Cabinet, at the direction of GOPM, establishes a schedule for allotting appropriation authority contained in the branch budget acts.
  • No allotment may exceed its appropriation unless authorized by interim provisions of the budget law.
  • Allotments are usually distributed over quarterly intervals during the fiscal year, in reflection of disbursement and cash flow requirements.
  • General Fund and Road Fund appropriations may be increased only by explicit authority granted in the budget act or law.
  • Several state laws permit unexpended fund balances to be carried forward at the end of a fiscal year and be made available for additional expenditure.
  • As a general standard, General Fund and unobligated Road Fund balances lapse to the credit of the respective surplus account when the fiscal year closes.
  • Limited emergency conditions permit the state budget director to increase the level of appropriation for a budget unit. If this action occurs, notice and documentation must be communicated to the Interim Joint Committee on Appropriations and Revenue.

Expenditures

Fiscal Condition & Outlook Review

to alert agency and branch officials, legislators and citizens of any forthcoming adverse fiscal condition which might require budget reductions, and

to enable officials to plan for such conditions in a timely and prudent manner.

Budget Reduction & Surplus Expenditure Plans

Budget Reduction

  • All budget figures used in appropriations and revenue forecasts are "estimates" predicated upon assumptions about likely conditions and future events.
  • The General Assembly has enacted statutes to govern interim circumstances in which the originally enacted General and Road Fund revenues are not achieved or may be exceeded.
  • The branch budget bills include a Budget Reduction Plan, which provides the legislative policy guidelines when a revenue shortfall is officially forecast by the Secretary of Finance for the General Fund or Road Fund.

Each branch head must observe these principles and priorities in determining specific allotment reductions for individual programs and budget units.

The Budget Reduction Plan is activated when a General or Road Fund revenue shortfall of five percent (5%) or less is certified by the Secretary of Finance and unobligated surplus funds are insufficient to resolve the potential deficiency.

Administrative actions implementing a budget reduction plan are reviewed by the Interim Joint Committee on Appropriations and Revenue.

Surplus Expenditure Plan

Interim Budget Review & Revisions

Budget allocations within the appropriation unit may be reprogrammed among services/activities or principal categories of expenditure, excluding debt service appropriations.

Allotment changes requested by agency heads must be authorized by the branch fiscal officer and notice of any budget revision, along with documentation of necessity and purpose, must be communicated to the Interim Joint Committee on Appropriations and Revenue prior to expenditure.

Emergency unbudgeted appropriations increases are allowed, when required, due to a declared natural disaster or calamity, judicial order, or an impending deficit in a mandatory expense, as certified by the Governor. Approval by the Finance Secretary and concurrent notice to the Interim Joint Committee on Appropriations and Revenue are stipulated in the law.

If an agency receives unanticipated restricted or federal funds or has available unbudgeted restricted or federal funds resources during the interim, spending authority may be requested of the Committee by an agency head.

This request must be accompanied by documentation of the source and proposed use of the moneys.

On a monthly schedule, the state budget director may recommend a revised appropriation for review and action by the Committee.

The Committee reviews a proposed expenditure of an unbudgeted appropriation for conformity with the purposes of the enacted budget bill, statutory budget memorandum and any relevant statute.

If the Committee disapproves of the proposed change, the budget adjustment may not be made, unless it is revised to comply with the Committee's objections, or the state budget director informs the Committee of a determination not to comply.

When interpretation matters arise, the Committee must be informed of, and act upon, determinations made by the branch official. Interpretation decisions must conform with the statutory budget memorandum.

If the Committee disapproves an interpretation, the decision may not be implemented, unless it is revised to comply with the Committee's objections or the Committee is informed of a determination not to comply with the objections.

The Committee and its joint budget review subcommittees also monitor implementation of the biennial budget bills and study fiscal issues and trends which may impact budget development for the forthcoming General Assembly.

The LRC has established a budget review office, with professional fiscal analysts and support staff, to assist LRC, the appropriations committees, and budget review subcommittees in performing their duties and functions throughout Kentucky's budget process and to provide an independent source of budget information for members.

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Budget Process | Legislative Process