State Budget Office
Accounts Payable. Amounts owed to others for goods and services received and assets acquired.
Accounts Receivable. Amounts due from others for goods furnished and services rendered. Such amounts include reimbursements earned and refunds receivable.
Activity. A specific line of work carried on by a governmental unit in order to perform its function as specified by constitutional, statutory, or administrative fiat.
Administrative Transfer. A transfer of appropriated funds within a department (or within capital outlay) between line items in an appropriation act to adjust for current cost and price variations, or to adjust amounts between federal or restricted sources of financing, or to pay court judgments or settlements. Administrative transfers may be made by the State Budget Director not less than 30 days after notifying the Senate and House Appropriations Committees. These transfers may be disapproved by either appropriations committee and, if disapproved within 30 days of submission, shall not be effective. Administrative transfers do not include adjustments that have policy implications or that have the effect of creating, expanding or reducing programs.
Allocation. A part of a lump-sum appropriation which is designated for expenditure by specific organizational units and/or for special purposes, activities or objects.
Allotment. A portion of an appropriation set aside for use during a certain period or for a particular purpose.
Appropriation. An authorization granted by the constitution or the legislature to make expenditures or to incur obligations for a specific purpose. An appropriation is usually limited in amount and as to the time when it may be spent, normally calendar or fiscal year.
Appropriation Line Item (ALI). The specific purpose of appropriations as authorized by law and accounted for within its fund.
Asset. Any item of economic value owned by a governmental unit. The item may be physical in nature (tangible) or a right to ownership (intangible) that is expressed in terms of cost or some other value.
Audit. The examination of some or all of the following items: documents, records, reports, systems of internal control, accounting procedures, and other evidence, for one or more of the following purposes: (a) determining the propriety, legality, and mathematical accuracy of proposed or consummated transactions; (b) ascertaining whether all transactions have been recorded; and (c) determining whether transactions are accurately reflected in the accounts and in the statements drawn wherefrom in accordance with accepted accounting principles.
NOTE: The term "audit" is sometimes applied to the examination of a single transaction; for example, the audit of an invoice; that is, the checking of an invoice and supporting evidence for the purpose of approving the invoice for payment and properly reflecting the transaction in the accounts. This is referred to as preaudit. On the other hand, even a limited special audit involves the examination of documents, records, reports, systems of internal control, and other evidence. The term "audit" is, thus, of little significance when used without a modifier.
Autonomous Agency. A State agency created by a Type I transfer pursuant to PA 380 of 1965, as amended.
Balanced Budget. A budget in which receipts are equal to or greater than outlays in a fiscal period.
Baseline Revenue. Total revenue excluding revenue derived from one-time revenue items and tax structure changes. One-time revenue items typically include such things as an accounting change that results in a one-time revenue gain during the period when the change is implemented or a one-time transfer of revenue from one fund to another fund. Tax structure changes include tax rate increases or decreases, and additions to or subtractions from the base of a tax.
Boilerplate. The language section of a bill or public act. With regard to an appropriation bill or act, typically provides for legislative intent or further legal clarification of the line-item appropriations. Boilerplate can also refer to the standardized or pro forma language that is used at the front of the bill or statute. Specific language sections in an appropriation bill which direct, limit, or restrict line item expenditures, express legislative intent, and/or require reports.
Bond Funds. Bond funds are used to account for the receipt and disposition of the proceeds of all bonds issued. A separate Bond Fund must be provided for each bond issue, and each such fund must have its own self-balancing set of accounts. The manner and degree in which the bond proceeds are allocated to specific expenditure purposes will vary depending on the original authorization and related statutory implementation.
Bond and Interest Redemption Funds. This type of a fund is established to account for financing and payment of matured serial bonds and interest of a specific bond issue. It serves principally as a receiving and disbursing device. Financing is provided by other State funds or designated sources. The cash in this fund is segregated from other State cash and can be used only for payment of interest coupons or redemption of matured bonds.
Budget. A plan of financial operation embodying an estimate of proposed expenditures for a given period or purpose and the proposed means of financing them. NOTE: The term "budget" is used in two senses in practice. Sometimes it designates the financial plan presented to the legislature for adoption and sometimes the plan finally approved by that body. It is usually necessary to specify whether the budget under consideration is preliminary and tentative or whether it has been approved by the legislature. The term is also sometimes confused with the budget document.
Budget Stabilization Fund (BSF). A fund that sets aside revenue surpluses for use during periods of revenue shortfalls. A fund created to assist in stabilizing revenue and employment during periods of economic recession and high unemployment. Also known as the Rainy Day Fund and Countercyclical Budget and Economic Stabilization Fund.
Budget Year. The fiscal year for which the budget is being considered; the fiscal year following the current year.
CAFR. See Comprehensive Annual Financial Report.
Capital Outlay. A disbursement of money which results in the acquisition of or addition to fixed assets, i.e., land acquisition, building and construction, addition, renovation.
Carry-Forward. A portion or total of the unspent balance of an appropriation that is made available for expenditure in the succeeding fiscal year.
Comprehensive Annual Financial Report (CAFR). The official annual financial report of the State published by the State Budget Office, Office of Financial Management, in accordance with section 23 of Article IX of the Michigan Constitution of 1963.
Conference Committee. A committee of the Legislature, consisting of three members from each chamber, which is appointed to resolve differences in a bill or resolution that has been passed in different versions in each chamber.
Consensus Revenue Estimates. The official revenue estimates determined by the Revenue Estimating Conference (a joint Executive/Legislative committee) which are used as the forecasts for the fiscal year in which the conference is held and the ensuing fiscal year.
Consumer Price Index (CPI). A measure of the average change in prices over time in a fixed market basket of goods and services typically purchased by consumers. The CPI for all urban consumers covers about 80% of the total population.
Cost-Benefit Analysis. An analytical technique that compares the social costs and benefits of proposed programs or policy actions. All losses and gains experienced by society are included and measured in dollar terms. The net benefits created by an action are calculated by subtracting the losses incurred by some sectors of society from the gains that accrue to others. Alternative actions are compared to choose one or more that yield the greatest net benefits, or ratio of benefits to costs.
The inclusion of all gains and losses to society in cost-benefit analysis distinguishes it from cost-effectiveness analysis, which is a more limited view of costs and benefits.
Cost-Effectiveness Analysis. An analytical technique used to choose the most efficient method for achieving a program or policy goal. The costs of alternatives are measured by their requisite estimated dollar expenditures. Effectiveness is defined by the degree of goal attainment, and may also (but not necessarily) be measured in dollars. Either the net effectiveness (effectiveness minus costs) or the cost effectiveness ratios of alternatives are compared. The most cost-effective method chosen may involve one or more alternatives.
Countercyclical. Actions aimed at smoothing out swings in economic activity. Countercyclical actions may take the form of monetary and fiscal policy (such as countercyclical revenue sharing or jobs programs). Automatic (built-in) stabilizers have a countercyclical effect without necessitating changes in governmental policy.
Current Year. The fiscal year in progress
DMB Act. Public Act 431 of 1984, as amended (known as the Management and Budget Act).
Deficit. The excess of liabilities and reserves of a fund over its assets.
Deficit Financing. A situation in which the Federal government's excess of outlays over receipts for a given period is financed by borrowing from the public.
Disposable Income. Personal income less personal tax and nontax payments.
Encumbrance. A commitment related to unperformed contracts for goods and services which is recognized as a reservation of fund balance for financial reporting purposes.
Equipment. Durable goods such as computers, desks, chairs, or cars.
Executive Budget. The one-year spending plan for the financial operation of state government prepared on the behalf of the Governor by the State Budget Office. It represents the Governor's recommended appropriations for all operating funds, the proposed expenditures and estimated revenues of the State.
Executive Directive. Similar to executive orders, executive directives are issued by the Governor to establish basic internal policy or procedure for the executive branch. Executive directives often establish guidelines, rules of conduct, or rules of procedures for state departments and their employees. Executive directives are signed by the Governor and distributed to state departments, but not filed with the Secretary of State.
Executive Order. The Michigan Constitution of 1963 vests the executive power of the state in the Governor. That power is exercised formally by executive order. Executive orders may reorganize agencies within the executive branch of state government, reassign functions among executive branch agencies, establish an advisory body, commission, or task force, regulate conduct within the executive branch of state government, or proclaim or end an emergency. Once signed by the Governor, executive orders are filed with the Secretary of State, where the orders are sealed and retained by the Office of the Great Seal.
Expenditures. Payments against appropriations that reduce the cash balance after legal requirements have been met. A fiscal year's expenditures are payments actually made in that fiscal year, regardless of the state fiscal year in which the appropriations were reserved or encumbered for such payments.
FTE. See Full-time Equated Position.
FY. See fiscal year.
FYES. See Fiscal Year Equated Students.
Fiscal Year (FY). A 12-month accounting period that may not coincide with the calendar year. For the State of Michigan, the fiscal year begins October 1 and ends September 30. The year's title comes from the date that it ends, thus the fiscal year beginning October 1, 1999 and ending September 30, 2000 is fiscal year 2000.
Fiscal Year Equated Students (FYES). The representation of 30 semester credit hours per year or 46.5 quarter terms hours per year.
Fixed Charges. Repetitive expenditures of which the amounts are more or less constant. These may repeat at various intervals, weekly, monthly, annually, etc. Examples are insurance premiums, contributions to pensions, and land and building rentals.
Full-time Equated (FTE) Position. Full-time equated (FTE) position in the classified service of state government. One full-time equated position is based on 2,080 work hours (26 two-week pay periods times 80 hours).
Fund. In governmental accounting a fund may be described as representing a distinct phase of the activities of government and is controlled by a self-balancing group of accounts in which all of the financial transactions of the particular phase are recorded. NOTE: A fund is both a sum of resources and an independent accounting entity. A self- balancing group of accounts must be provided for each fund to show the assets and other resources, on one hand, and obligations, surplus, and other credits, on the other. Accounts must also be set up to permit the identification of revenues and expenditures and receipts and disbursements with the fund to which they apply. Although the General Fund is available for all legally authorized purposes, the definition also applies to it, for the fund can be used for governmental purposes only and expenditures cannot be made from it without legal authorization.
Fund Balance. The unencumbered cash remaining in a fund at the end of a specified time period, usually the end of the fiscal year.
Grant. In governmental terminology, a contribution to or from a unit of government for specific or general purposes. This may take the form of donations, bequests, payments to or for local units, aid, reimbursements, etc. According to the Constitution of the State of Michigan, grants must be passed by a 2/3 vote in the Senate and House.
Grants-in-aid. Payments made by one government unit to another government unit for specified purposes. They represent Federal support for a State or locally administered program, or State support for a local program.
General Fund (GF). The State General Fund covers all State appropriation, expenditure and receipt transactions, except those for which special constitutional or statutory requirements demand separate fund accounting. Most of the traditional State services are included in the General Fund.
The accounts of the General Fund reflect the major share of the State's fiscal transactions. It is the predominant element in the annual budget review and enactment from the viewpoints of both appropriations and taxes. This is evidenced by the frequent identification of the "General" Fund with the State of Michigan as a whole. The General Fund is financed by what are defined as general purpose and restricted revenues. General purposes are self-explanatory. Restricted revenues are those resources that, by constitution, statute, contract or agreement, are reserved to specific purposes, and expenditures that are limited by the amount of revenue realized.
General Fund-General Purpose (GF-GP). Revenues that are collected in the main State operating fund and are not dedicated to a specific purpose by statute. Unrestricted general fund revenue available to fund any activity accounted for in the General Fund; unused GF/GP revenue lapses to the General Fund at the end of a fiscal year.
GF. See General Fund.
GF-GP. See General Fund-General Purpose.
Headlee Amendment. Sections 25-34 (Article IX) provisions of the Michigan Constitution of 1963; also known as the Tax Limitation Amendment of 1978.
Interdepartmental Grant (IDG). Funds received by one state department from another state department- usually for service(s) provided.
Interdepartmental Transfer (IDT). Funding transferred from one appropriation unit to another within the same department.
JCOS. Joint Capital Outlay Subcommittee within the legislative branch.
Lapse. Appropriated amounts that are unspent or unobligated at the end of a fiscal year; appropriations are automatically terminated at the end of a fiscal year unless otherwise provided by law.
Legislative Transfer. A transfer of funds between appropriations as enacted into law for reasons other than cost and price variation which shall not be made by the state budget director unless approved by both the senate and house appropriations committees. If the state budget director does not approve transfers adopted by both the senate and house appropriations committees he or she shall notify each member of both the senate and house appropriations committees of his or her action within 15 days after the senate and house appropriations committees' final approval.
Transfers shall not be authorized under any of the following circumstances:
(a) To create a new line-item appropriation or to create a new state program.
(b) To or from an operating appropriation line-item that did not appear in the fiscal year appropriation bills for which the transfer is being made.
(c) To or from a work project as designated under section 451a.
(d) Between state governmental funds.
Liabilities. Amounts owed for items received, services rendered, expenses incurred, assets acquired, construction performed (regardless of whether invoices have been received), and amounts received but as yet unearned. Included are amounts owed for goods in the hands of contractors under the constructive delivery concept (when the records of the agency provide such information), and amounts owed under grants, pensions, awards, and other indebtedness not involving the furnishing of goods and services. The two classifications occurring most frequently are the following:
LONG-TERM AND UNFUNDED LIABILITIES:
Liabilities that will not be due for a comparatively long time (usually more than one year). However, as they come within the one-year range, and are to be paid, such liabilities become current. Includes bonded debt, notes payable, and liabilities that will not become obligations until a later time (e.g., accrued annual leave in the case of appropriation accounts).
Line Item. An entry in an appropriations act which provides for expenditure authorization.
Lump Sum Appropriation. An appropriation made for a stated purpose, or for a named department or program without specifying further the amounts that may be spent for specific activities or for particular objects of expenditure.
MAIN. See Michigan Administrative Information Network.
MDA. Michigan Department of Agriculture.
MDCH. Michigan Department of Community Health.
MDELEG. Michigan Department of Energy, Labor & Economic Growth.
MDHS. Michigan Department of Human Services.
MDNRE. Michigan Department of Natural Resources & Environment.
MDOC. Michigan Department of Corrections.
MDOE. Michigan Department of Education.
MDOT. Michigan Department of Transportation.
MDTMB. Michigan Department of Technology, Management & Budget.
MDOT. Michigan Department of Transportation.
MEAP. Michigan Education Assessment Program. The Michigan Education Assessment Program provides annual data on student achievement through the administration of standardized tests in the areas of mathematics, reading, writing, science, and social studies. The tests are taken by all public school students from elementary school to middle/junior high school. High school students take the Michigan Merit Exam.
MEDC. Michigan Economic Development Corporation.
MSP. Michigan State Police
MVA. Department of Military and Veterans Affairs
Maintenance. Expenditures for expendable goods and supplies such as utilities, gasoline, postage, paper, pens, repairs, telephone, and travel.
Management Plan. A document developed by a state department consisting of program descriptions, financial needs, program alternatives, and performance data; used to develop the Governor's budget proposal.
Michigan Administrative Information Network (MAIN). The Michigan Administrative Information Network is a fully- integrated automated financial management system for the State of Michigan.
Negative Appropriations. An appropriation consisting of negative dollar amounts which has as its purpose the reduction of appropriation expenditures of funds that have already been appropriated.
Negative Supplemental Appropriation. A supplemental request or act that provides for a negative appropriation.
OFM. Office of Financial Management located within the State Budget Office.
ORS. Office of Retirement Services located within the Department of Technology, Management & Budget.
Obligations. Amounts that the State may be required legally to meet out of its resources at a particular date.
Operating Budget. A budget that applies to all outlays other than capital outlays.
Operating Expenditures. In Michigan's accounting procedures, all charges incurred during a fiscal period for supplies, materials, services, grants-in-aid, debt service, and capital outlay that will affect the fund surplus or deficit of that period. It is immaterial whether payment has been made. The benefits of such expenditures may extend into subsequent periods.
Outlays. Obligations are generally liquidated when checks are issued or cash disbursed. Such payments are called outlays. In lieu of the issuance of checks, obligations also may be liquidated (and outlays may occur) by the maturing of interest coupons in the case of some bonds, or by the issuance of bonds or notes (or increases in the redemption value of bonds outstanding).
With respect to the Federal budget, outlays during a fiscal year may be for payment of obligations incurred in prior years (prior-year outlays) or in the same year. Outlays, therefore, flow in part from unspent balances of prior year budget authority and in part from budget authority provided for the year in which the money is spent.
Personal Services. Expenditures for payroll, including fringe benefits and related services such as consultants, physicians, and temporary services.
Prior Year. The fiscal year immediately preceding the current year.
Program. A narrower, more targeted focus on a specific aspect of the general objective addressed by an agency's program series. There are various numbers of programs grouped under each agency program series.
Program Series. A governmental activity for an agency or a closely related group of activities intended to address an identified need, problem, or objective. A program series corresponds with a major area of focus or goal for a state agency and in most cases is composed of two or more programs.
Rainy Day Fund. See Budget Stabilization Fund.
Refundable Tax Credits. Certain tax credits are refundable to the taxpayer. The tax credit is first to be applied against tax liability. If the amount of the credit is greater than the tax liability, the excess is treated as an overpayment of taxes and is refunded to the taxpayer. An example is the Homestead ("circuit-breaker") Property Tax Credit provided by Public Act 20 of 1973, as amended.
Reserves. While the State operates on the principle that unspent appropriation balances are canceled at the end of the fiscal year, constitutional and statutory provisions create a number of deviations from this general rule. These exceptions include appropriations for capital additions, repair and alternations; special projects; and purchase orders on which the State is obligated, but on which delivery has not been made at September 30. In addition, included are amounts received from certain revenue sources that, by law, may be used only for specified purposes.
Restricted Funds/ Restricted Revenue. Appropriated funding earmarked by law to finance some specific activity or group of related activities.
Revenue. The income attributable to a designated fiscal accounting period that will affect the balance (surplus) or deficit resulting from the operations of that period. Certain items earned during that period are also considered revenue of that period even though the cash is not received until a subsequent period.
Revenue Estimating Conference. The Revenue Estimating Conferences held in January and May of each year play a major role in the budget process. During the conference, national and state economic variables are used to publish official forecasts of revenue available for the current and ensuing fiscal years. This conference first convened in 1992, pursuant to Act No. 72 of the Public Acts of 1991. The principal participants in the conference are the State Treasurer Budget Director and the directors of the Senate and House Fiscal Agencies or their respective designees. Any principal may request the conference to convene at any time.
Revolving Fund. Revolving funds are those employed to finance industrial, commercial, and service activities of the State, the expenses of which are to be met by operating income; or to finance supply inventories for State institutions.
Three distinct types of enterprises are financed through revolving funds; the most important from the standpoint of volume of transactions consist with those of a public service character. These serve the general public, and their income is derived principally from sales of products or services. The Liquor Purchase Revolving Fund and former Mackinac Ferry Revolving Fund (now terminated) are examples of this type. Another class consists of those which serve State agencies. The Motor Transport Revolving Fund and the Paper and Stationery Revolving Fund are examples of this type. The third is the Inventory Revolving Fund.
SDC/BIDC. The State Data Center/Business and Industry Data Center (SDC/BIDC) is Michigan's official source of demographic and economic statistics.
SERS. State Employees Retirement System.
Special Program. A regular recurring activity that is segregated in the accounts to control a special annual appropriation, or to establish a control for reporting purposes.
Special Revenue Funds. These are funds used to finance particular activities from the receipts of specific taxes or other revenue. Such a fund is created by constitution or statute to provide certain activities with definite and continuing revenues. After the fund is created, it usually continues year after year until discontinued or revised by equivalent authority. Accounting transactions are treated the same as they are in the General Fund.
Supplemental or Supplemental Appropriations. A State law appropriating funds in addition to those contained in an original budget bill for a given fiscal year. Supplemental appropriations provide additional spending authority beyond the original amount appropriated estimates for programs or activities. Supplemental appropriations may also provide spending authority for new programs commencing before the end of the fiscal year.
Surplus. The excess of assets of a fund over its liabilities and necessary reserves. While the liabilities represent amounts owed or payable or in process of payment, the reserves are segments set aside for special use, due to constitutional or statutory provisions, or contracts and agreements with other governmental units or private grantors.
Tax Credits. Tax credits include any special provision of law that results in a dollar-for-dollar reduction in tax liabilities that would otherwise be due. In some cases, tax credits may be carried forward or backward from one tax year to another, while other tax credits lapse if not used in the year earned. Tax credits may result in a reduction of tax collections or an increase in the value of tax refunds.
Tax Expenditures. The tax revenue losses foregone as a result of preferential provisions such as credits, deductions, exemptions, deferrals, exclusions, or lower tax rates. Like appropriations, they allocate resources for specific public purposes, but do so through the tax system rather than the expenditure system.
Taxes. Sums imposed by a government authority upon persons or property to pay for government services. The power to impose and collect taxes is given to the legislature in Article 9, Section 1 of the State Constitution of 1963.
Transfer. An authorized transfer of funds between line items of a budget act. Appropriation transfers are categorized as either an administrative transfer or a legislative transfer pursuant to the DMB Act.
Transfer Payments. Payments to individuals by government and business for which no goods or services are currently rendered. Examples are benefits from social insurance funds, relief payments, military pensions, and corporate gifts to nonprofit institutions.
Transfer Request. A request submitted to the Legislature to transfer funds between appropriation line-items within a budget act.
Trust and Agency Funds. Trust funds consist of assets received and held by the State in a capacity similar to that of a trustee. Agency funds consist of money received by the State as agent for other governmental units. Most of the trust funds are of the expendable type, i.e.; the total resources are available for expenditure in accordance with provisions of the trust or other restrictions. Most trust and agency funds have receipts and make expenditures and it is necessary to set up accounts to show the kind of receipts and the nature of expenditures. At the end of a fiscal period, receipts and expenditures are closed out and the difference is used to increase or decrease the fund balance. All receipts and expenditures of trust and agency funds are of a nonoperating nature.
Type I Agency. A State agency which was created by a Type I transfer pursuant to PA 380 of 1965, as amended.
Type I Transfer. The intact transfer of an existing department, board, commission or agency to a principal department established under PA 380 of 1965. When any board, commission or other agency is transferred to a principal department under a type I transfer, that board, commission or agency shall be administered under the supervision of that principal department. Any board, commission or other agency granted a type I transfer shall exercise its prescribed statutory powers, duties and functions of rule-making, licensing and registration including the prescription of rules, rates, regulations and standards and adjudication independently of the head of the department. Under a type I transfer all budgeting, procurement and relate management functions of any transferred board, commission or agency shall be performed under the direction and supervision of the head of the principal department.
Type II Transfer. The transfer of an existing department, board, commission or agency to a principal department established under PA 380 of 1965. Any department, board, commission or agency assigned to a type II transfer shall have all its statutory authority, duties and functions, records, personnel, property, unexpended balances of appropriations, allocations or other funds, including the functions of budgeting and procurement, transferred to that principal department.
Type III Transfer. The abolishment of an existing department, board, commission or agency with all its statutory authority, powers, duties, functions, records, personnel, property, unexpended balances of appropriations, allocations or other funds, being transferred to a principal department as specified under PA 380 of 1965.
Unallotted Balance of Appropriation. An appropriation balance available for allotment.
Unencumbered Balance of Allotment. That portion of an allotment not yet spent or encumbered; the balance remaining after deducting from the allotment the accumulated expenditures and outstanding encumbrances.
Work Order Account. An account established by, or from, an appropriation for a project for the construction, alteration, addition, or major repair, of a building or structure, including site.
Work Project. A one-time, nonrecurring undertaking for the purpose of accomplishing a specific objective, the appropriation for which remains available until the work is completed. This does not include Work Orders.
A work project shall meet all of the following criteria:
(a) The work project shall be for a specific purpose.
(b) The work project shall contain a specific plan to accomplish its objective.
(c) The work project shall have an estimated completion cost.
(d) The work project shall have an estimated completion date.
Year-End Closing. The period necessary for all accounting transactions to be completed from the previous fiscal year until the Comprehensive Annual Financial Report (CAFR) is audited and published within 6 months after the end of the fiscal year.
Zero-Base Budgeting. A process emphasizing management's responsibility to plan, budget, and evaluate. Zero-base budgeting provides for analysis of alternative methods of operation and various levels of effort. It places new programs on an equal footing with existing programs by requiring that program priorities be ranked, thereby providing a systematic basis for allocating resources.