SAM - BUDGETING
CHAPTER 6000 INDEX
INTRODUCTION / 6000Availability Of Budget Instructions And Forms / 6005
OVERVIEW OF CALIFORNIA’S BUDGET PROCESS
Preface / 6110
Budget Development / 6120
Budget Enactment / 6130
Administration / 6140
Budget Process / 6150
The Traditional Concept / 6210
The Program Concept / 6220
DEVELOPMENT AND ENACTMENT OF THE ANNUAL
FINANCIAL PLAN, THE PROCESS IN BRIEF / 6300
Budget Policy / 6305
Agency Briefings And Governor’s Review / 6310
Preparation And Submittal Of Budgets / 6315
The Governor’s Budget – Publication, Distribution, Ordering,
And Public Sale / 6320
The Budget Bill / 6325
Legislative Analyst’s “Analysis Of The Budget Bill” / 6330
Budget Act / 6333
Legislative Fiscal Committee And Floor Actions / 6335
Budget Committee On Conference / 6340
(Continued)
(Continued) CHAPTER 6000 INDEX (Cont. 1)
The Budget Act/Final Budget Summary / 6350
The List Of Changes To The Governor’s Budget,
Final Change Book / 6355
THE DEPARTMENTAL BUDGET PRESENTATION / 6400
Responsibilities And Authority Of Fund Administrators
And Fund Users / 6401
Personal Services / 6403
Position/Personnel Years/Salary Cost Estimates Presentation / 6406
Estimated Salary Savings / 6409
Staff Benefits / 6412
Salaries And Wages (State Controller’s Office Role) / 6415
Schedule 7a-Budget Supplement Of Authorized Salaries
And Wages (Processing) / 6418
Submittal Of Schedule 7a Spreadsheet To Finance / 6419
State Controller’s Office Tabulations (Other Than Schedule 7a) / 6421
Schedule 8 Tabulation / 6424
Description Of Schedule 8 Tabulation / 6427
Verification And Completion Of Schedule 8 Tabulation / 6429
Conversion Code Listing / 6430
Expiring Filled Positions / 6436
Blanket Positions / 6439
Vacant Positions Report / 6445
Preparation Of Schedule 8 Summary / 6448
Operating Expenses And Equipment / 6451
(Continued)
(Continued) CHAPTER 6000 INDEX (Cont. 2)
Space Action Requests (Cruise Form 9) / 6453Preparation Of Supplementary Schedule Of
Operating Expenses And Equipment / 6454
Budget For Equipment / 6457
Supplementary Schedule Of Federal Funds / 6460
Reimbursements / 6463
Supplementary Schedule Of Reimbursements / 6466
Special Items Of Expense / 6469
Claims And Tort Liability Budget Procedure / 6472
Expenditures By Category / 6475
Detail Of Appropriations And Adjustments / 6478
Fund Condition Statements / 6481
Supplementary Schedule Of Appropriations – Schedule 10 / 6484
ADMINISTRATION OF THE OPERATING BUDGET / 6500
Legal Basis For Budgetary Control / 6503
Personal Services / 6506
Permanent Positions / 6509
New Positions / 6512
Limited Term Positions / 6515
Temporary Help Or Overtime Blankets / 6518
Certification For Continued Payment Of Established Positions / 6521
(Continued)
(Continued) CHAPTER 6000 INDEX (Cont. 3)
Revision Of Programs And Allotments / 6533
Request Of Necessity For Appropriation Augmentation / 6536
Transfer Of Budget Allotment, Std. Form 25 / 6539
Budget Revision, Std. Form 26 / 6542
Preparation Of Budget Revision, Std. Form 26 / 6545
Intraschedule Transfers, Section 26.00 Of The Budget Act / 6548
Sections 28.00 And Section 28.50 Reporting / 6551
Completion Of Section 28.00 And Section 28.50 Applications / 6554
Section 28.00 And 28.50 Application Approval / 6557
Emergency Services By State Agencies / 6560
PREPARATION OF LOCAL MANDATE DETERMINATIONS
AND COST ESTIMATES FOR EXECUTIVE REGULATIONS AND ORDERS
Standardized Regulatory Impact Assessment for
Major Regulations / 6600
General / 6601
Definition / 6602
Economic Impact Statement / 6603
Contents Of Fiscal Impact Statement (FIS) / 6604
Fiscal Impact On Local Government / 6605
Funding For Reimbursable Local Costs / 6606
Cost Estimating Methodology / 6607
(Continued)
(Continued) CHAPTER 6000 INDEX (Cont. 4)
Savings To Local Governments / 6609
Increases Or Reductions In Local Revenues / 6610
Costs To State Agencies / 6611
Savings To State Agencies / 6612
Fiscal Impact On Federal Funding Of State Programs / 6613
Signature Requirement For Fiscal Impact Statement (FIS) / 6614
Estimates Which Require Department Of Finance Action / 6615
Development Of Fiscal Estimates / 6616
INFORMATION TECHNOLOGY BUDGETING
INFORMATION TECHNOLOGY EXPENDITURES / 6700
Definitions / 6710
Exclusions / 6720
Requirements / 6730
Expenditure Support / 6750
Information Techology Audits / 6760
Cost Allocation / 6770
Data Center Financial Management / 6780
OVERVIEW OF CAPITALIZED ASSETS / 6801
Capitalized Assets: Who Does What / 6805
(Continued)
(Continued) CHAPTER 6000 INDEX (Cont. 5)
Minor Capital Outlay / 6807
The Capital Outlay Process In Brief / 6808
Legal Citations For Capitalized Assets And Financing / 6809
CAPITALIZED ASSETS PLANNING AND BUDGETING / 6810
Capitalized Assets Budget Development Highlights / 6812
Budget Preparation And Enactment Timetable / 6814
Documents Required To Request Capital Outlay Funding / 6816
Capital Outlay Budget Change Proposals (COBCP) / 6818
Five-Year Capitalized Assets Plan / 6820
Prototype Development/Changes / 6821
Historical Resources / 6822
Use Of Consultants / 6823
DGS’ Feasibility Review / 6824
Scope Meetings / 6826
Budget Package Preparation, Budget Estimates / 6828
Budget Hearings, Final Budget Document Preparation / 6830
Governor’s Budget And Legislative Approval / 6832
Capital Outlay Reappropriations / 6834
Ten-Year Survey Of Capital Outlay And Infrastructure Needs / 6837
(Continued)
(Conttinued) CHAPTER 6000 INDEX (Cont. 6)
ADMINISTRATION OF CAPITAL OUTLAY PROGRAM / 6840
Methods Of Project Delivery / 6841
State Public Works Board (PWB) Overview / 6842
Monthly Public Works Board Process / 6844
Standard Information Required When Requesting
PWB Or DOF Action / 6845
Typical Project Phases, Related Forms And Board Items / 6846
Starting Projects / 6847
Studies / 6848
Site Selection And Acquisition / 6849
Environmental Impact Review Process / 6850
Preliminary Plans Review / 6851
Approve Working Drawings And Proceed To Bid / 6852
Award Construction Contract / 6853
Construction / 6854
Equipment / 6855
Project Completion / 6856
Board Items For Interim Financing And Bond Sale / 6860
Augmentations, Additional Costs (Within Appropriation)
And Recognition Of Deficits / 6861
Bid Savings, Project Savings, And Reversions / 6862
(Continued)
(Continued) CHAPTER 6000 INDEX (Cont. 7)
Quarterly Report / 6864
Inmate Day Labor / 6865
Condemnations (Exercise Of Eminent Domain) / 6866
Transfer Of Funds To The Architecture Revolving Funds (ARF) / 6868
CAPITALIZED ASSETS FINANCING / 6870
General Obligation (GO) Bonds / 6871
Lease-Revenue Bonds / 6872
State Public Works Board (PWB) Lease-Revenue
Bond Programs / 6873
Joint Powers Authority (JPA) Lease-Revenue
Bond Programs / 6874
Financing Leases Versus Operating Leases/Contracts / 6876
Interim Financing / 6878
The Bond Sale / 6880
Post-Sale Activities / 6882
Continuing Disclosure / 6884
Client Department’s Responsibilities / 6886
Budget Treatment Of Lease-Revenue Debt Service Payments / 6888
GLOSSARY AND INDEX FOR CAPITAL OUTLAY TERMINOLOGY
AND FORMS / 6899
(Continued)
(Continued) CHAPTER 6000 INDEX (Cont. 8)
Legislative Calendar / 6905
Legislation / 6910
Bills (AB/SB) / 6915
Constitutional Amendments (ACA/SCA) / 6920
Joint Resolutions (AJR/SJR) / 6925
Concurrent Resolutions (ACR/SCR) / 6930
House And Senate Resolutions / 6935
Rules Committee Resolutions / 6940
The Legislative Process / 6945
Departmental Proposed Legislation / 6950
Hearings / 6955
Bill Analysis / 6960
Enrolled Bill Report / 6965
Rev. 411 SEPTEMBER 2010
SAM - BUDGETING
INTRODUCTION TO THE BUDGETING CHAPTER 6000
(Revised 09/10)
The budgeting chapter of SAM provides an overview of the state’s budget process as well as a description of the events, actions and documents that make up the state's annual financial plan. It also provides instructions and examples for the preparation of the forms, documents, and schedules critical to the preparation, enactment, and administration of the annual financial plan.
Because of the dynamic nature of budgeting in California, this manual does not provide all the instructions which are necessary for the development, enactment or administration of the budget. Budget policy and supplemental instructions are generally issued by the Department of Finance (Finance) through Budget Letters, budget related Management Memos, and other memoranda to supplement this manual. Electronic mail notices to departmental budget officers and Finance’s Internet website are also used.
AVAILABILITY OF BUDGET INSTRUCTIONS AND FORMS 6005
(Revised 09/10)
The following information is available to departments on Finance’s Internet Website. The address is http://www.dof.ca.gov/budgeting/budget_letters/.
1. eBudget
2. Budget Letters
3. Historical budget information
The Finance budget forms are available at the same Internet address. Standard state budget forms may be obtained from the Department of General Services, Forms Management Office.
Publications prepared by Finance such as the Governor’s Budget, Governor’s Budget Summary, Salaries and Wages Supplement, Final Budget Summary, Final Change Book, May Revision to the Governor’s Budget, Final Budget highlights, and anwswers to “Frequently Asked Budget Questions” may be accessed via http://www.dof.ca.gov/.
OVERVIEW OF CALIFORNIA'S BUDGET PROCESS
Preface 6110
(Revised 09/10)
The budget process for California defies a simple concise definition. It is a process rather than a product. It is not the development of the Governor's Budget, the Legislature's enactment of a budget, or the executive branch's administration of the budget. Rather, it is the combination of all of these phases with all the ramifications and influences of political interactions, relationships with federal and local governments, public input, natural events, legal issues, the economy, initiatives and legislation, etc.
Although the size and complexity of California and the dynamics of the process make it difficult to establish and maintain an orderly process, these very reasons necessitate an orderly formalized process. The following sections summarize the major steps and procedures of California's budget process.
Rev. 411 SEPTEMBER 2010
SAM - BUDGETING
Budget Development 6120
(Revised 09/10)
The State Constitution, Article IV, Section 12, requires that the Governor submit a budget to the Legislature by January 10. The budget must contain itemized statements for expenditures and revenues. It provides for a balanced budget in that, if the proposed expenditures for the budget year exceed available resources, the Governor is required to recommend the sources for the additional funding.
The Director of Finance, as the chief financial advisor to the Governor, directs the effort for preparation of the Governor's Budget and the update in the May Revision. Under the policy direction of the Governor, the Director of Finance issues instructions and guidelines for budget preparation to agencies and departments. This effort typically gets underway even before the Legislature has passed the budget it is currently considering.
Although California has and does utilize concepts such as Zero-Based Budgeting, Management by Objectives, and Total Quality Management, the basic approach utilized is a mixture of incremental budgeting, zero-basing and special reviews. This approach uses the current departmental/program level of funding as a base amount to be adjusted by change proposals, including zero-basing of some items/programs and subjecting others to special reviews to determine the proper funding level. The Budget Change Proposal (BCP) has been the traditional decision document for departments to propose a change to the existing budget level. BCPs are submitted to Finance for review and analysis. (Specific instructions for preparation of BCPs are issued annually in a Budget Letter.)
The general goal in the budget decision process is to resolve budget issues at the lowest level possible. For those departments that are under an Agency Secretary, departments must clear their proposals through their respective Agency. For non-Agency departments, proposals are presented directly to Finance. Issues which are not resolved between departments and Finance staff are discussed at hearings with the Finance Program Budget Manager. Issues not resolved at this level are discussed at appeals conducted by the Director of Finance. The most sensitive issues are ultimately presented to the Governor for a decision.
After all decisions are completed, Finance coordinates the printing of the following publications which comprise the Governor's Budget package. The Budget Summary is also available from the Finance Website, http://www.dof.ca.gov.
Governor's Budget Summary–A summary volume which includes the Governor's goals and objectives for the forthcoming year, and the policy perspectives and highlights of the changes in the Governor’s Budget.
(Continued)
(Continued)
Budget Development 6120 (Cont. 1)
(Revised 09/10)
Governor's Budget–A detailed presentation for each department for the past, current, and budget years.
Salaries and Wages Supplement–A detailed presentation of authorized staffing and related salaries.
The Governor annually unveils the budget at a formal press conference. The Governor's State of the State address typically includes a general presentation of the Administration’s budget policies and priorities.
By constitutional requirement, the Governor's Budget must be accompanied by a Budget Bill itemizing recommended expenditures which shall be introduced in each house of the Legislature. The Constitution also requires that the Legislature pass a balanced Budget Bill by June 15 and that the Budget Bill signed by the Governor be balanced.
Rev. 411 SEPTEMBER 2010
SAM - BUDGETING
BUDGET ENACTMENT 6130
(Revised 09/10)
The Senate Budget and Fiscal Review Committee and the Assembly Budget Committee are the two committees that hear the Budget Bill. See SAM 6945, Legislative Process. They assign the items in the bill to several subcommittees (by major subject areas such as Education or Health and Welfare) which conduct budget hearings. These hearings generally begin in late February soon after the Legislative Analyst issues the "Analysis of the Budget Bill." The Legislative Analyst is appointed by the Joint Legislative Budget Committee and is charged with providing a nonpartisan analysis and recommendations for changes to the Governor's budget plan.
In addition to the Legislative Analyst, Finance and departments typically provide testimony at the subcommittee hearings. In recent years, there has been increasing input by partisan fiscal committee consultants of both the majority and minority parties. Additionally, lobbyists and the public may provide testimony at the hearings.
Finance proposes adjustments to the Governor's Budget through "Finance Letters." By statute, Finance is required to give the Legislature all proposed adjustments, other than Capital Outlay and May Revision, to the Governor’s Budget by April 1. Capital Outlay adjustments are due by May 1. The traditional May Revision adjustments are due by May14, and consist of an update of General Fund revenues and changes in expenditures for school funding requirements pursuant to Proposition 98, caseload, enrollment, or population. The Legislature typically waits for the May Revision update before final budget decisions are made on major programs such as Education, Corrections, and Health and Human Services.