Glossary of Budget Terms
Allocation- Personnel funds which are apportioned or designated to a program, function, or activity.
Anniversary Pay - The increase in salaries based on the advancement of permanent employees to the next salary step in the salary classification system. There are seven steps for each salary grade. Each step is five percent higher than the previous step. Employees advance through these steps each year on the anniversary of their hire date. Employees can only move from step six to step seven after five years. Once in step seven, an employee will not receive an anniversary/merit increase.
Appropriation - A legislative authorization of money for a specific purpose, as contained in the Long Bill and special bills.
Arveschoug/Bird Limit - A statutory six percent limit on increases in General Fund appropriations. Exemptions from this limit include: spending increases based on a tax fee increase approved by the voters; spending increases caused by federal mandates for new programs or court orders; transfers to the Capital Construction Fund; Old Age Pension Payments; Cigarette Tax rebates; the Property Tax and Heat Credit; and Police/Fire Pension payments.
Base - Estimated level of funding before legislatively authorized changes.
Base Reduction Items - The OSPB has redefined efficiency items. They will now be referred to as "base reduction items" and will only include requests that result in a reduction of total funds in the request year and do not meet the criteria for an allowable base adjustment (e.g. a reduction to reflect elimination of one-time funding for capital outlay). These base reductions may be proposed regardless of whether or not they result from the targeted base review.
Baseline - Current trends and future expectations assuming no programmatic changes or adjustments to revenue and expenditure policies.
Budget Amendment - Requests that are submitted to make changes to the request year budget after it has been submitted to the JBC on November 1.
Budget Justification - Narrative which explains expenditures and services from prior years and supports the requested level of expenditure and services.
Capital Outlay - Capital outlay includes:
Cash Funds - Appropriated - Non-General Fund revenue sources which may include state cash funds established by statute, non-statutory cash accounts, tuition, overhead reimbursements, and certain fees, governmental and non-governmental "third party" payments and interagency transfers appropriated by the General Assembly.
Cash Funds - Exempt - Revenues that are exempt from the Taxpayers' Bill of Rights (TABOR) limitation such as: donations, collections from a previous year or revenues transferred from another agency.
Cash Funds - Non-Appropriated - Funds not appropriated to an agency by the General Assembly but otherwise authorized by statute for expenditure.
Continuing Appropriation - An appropriation available for incurring obligations for the life of the project and not subject to the usual restriction of the fiscal year.
Contractual Services - Services which state agencies purchase from other private or governmental entities under a contract. Most contracts are subject to a competitive bidding process.
Controlled Maintenance - Controlled maintenance includes:
Decision Items - Requests for an increase in spending and/or funds in the budget request year beyond the base operating request.
Discretionary Requests - All requests are discretionary except those necessary to continue programs and activities required by state or federal law.
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Effectiveness Measure - Estimation of quality of products provided and/or services performed.
Efficiency and Effectiveness Analysis - An analysis that evaluates how well a program performs and how effectively a program achieves its objectives and performance measures. Types of efficiency and effectiveness analyses include: benefit/cost analysis, switch-point analysis, and return on investment analysis.
Efficiency Measure - A measure describing how well a program performs based on inputs relative to outputs. Efficiency measures may include measures of value added.
Entitlement - The amount of payment to which a state or local government is entitled pursuant to an allocation formula contained in applicable statutes. An entitlement is an obligation to provide services to all persons in a class identified in law as eligible for a government-funded program.
Expenditures - Disbursements and payables for services rendered and goods received, including authorized encumbrances for a specified appropriated period.
Federal Funds - First-party moneys received directly from federal agencies.
Fiscal Year - The twelve-month financial period used for record keeping, budgeting, appropriating, revenue collecting, and other aspects of fiscal management. The fiscal year of the State of Colorado runs from July 1 to June 30. Unless otherwise noted, the term "fiscal year" always refers to the Colorado fiscal year and not the federal fiscal year.
FTE (Full Time Equivalent) - FTE means the budgetary equivalent of one permanent position continuously filled full time for an entire fiscal year by elected state officials or by state employees who are paid for at least 2080 hours per fiscal year, with adjustments made to:
General Fund - The fiscal entity in which receipts are not earmarked for dedicated purposes and which supports the general functions of state government.
Gifts - Funds voluntarily given to the State.
Goal - High level results which are the basis for the department's existence.
Health, Life, Dental Insurance - The dollar amount made available to the agency to cover the cost of the State's share of the employee's health and life insurance.
Highway Users Tax Funds (HUTF) Off-the-top - Off-the-top funds are removed from total available HUTF revenue prior to allocating the HUTF to cities, counties and the Department of Transportation.
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IMC and ADP Requests- Requests for additional funding for computers, information systems, software, and any ancillary costs associated with such requests.
Indirect Costs - Indirect costs are defined as costs incidental to the operation of the program and accrued by the State or an agency as a result of an agency utilizing a federal grant or a statutory cash fund. This term is interchangeable with overhead reimbursement.
Interest Earned - All funds deposited with the Treasury are invested and may earn interest. This interest is usually deposited in the General Fund unless otherwise specified in statute.
Justification - Explanation with supporting documentation and analyses demonstrating reason for action and linkage to strategic plan.
Leased Space - Office space expenses for state agencies not housed in state-owned office space.
Line Item - Funds requested and/or appropriated on a detailed or itemized basis in the annual Long Bill (e.g., personal services, operating, travel and subsistence, capital outlay, special purpose, etc.).
Mark Letters - Letters which summarize the Governor's decisions concerning the amount, type, and purposes for which each agency may request funds for the budget request year.
Memorandum of Understanding (MOU) - Agreements which are often used between state agencies in contracting for goods or services or for establishing policies and procedures. Legislative MOUs are sometimes used by agencies to formalize agreements with the Legislative Branch.
Object Codes - A system established by the State Controller for categorizing or classifying obligations or disbursements in terms of the types of services, articles, or items necessary to carry on an activity or program.
Objective - In preparing objectives, the OSPB recommends that departments use the following guidelines:
Operating Expenses - Operating expenses include:
Original Appropriation - The total amount of an agency's appropriation as it appears in the Long Bill or other original appropriations acts.
Pension Fund (earnings and contributions) - A fund type subclassification under trusts and agency funds used primarily to account for the activities of a government's single-employer public employee retirement system. The revenues needed to finance retirement benefits are accumulated through the collection of employer and member contributions and through income on investments. The primary expense of a retirement system is the disbursement of retirement and survivor benefits. These recurring benefit payments, along with refunds of contribution accounts to members who terminate employment, subsidies towards health care premiums, and the cost of administering PERA comprise the total expense.
Performance Based Budgeting - The process of linking resources to fulfill ranked objectives, which are expected to achieve specific and measurable results. The performance based budgeting process allows policymakers to track where budgetary resources have and will achieve prioritized objectives and generate efficiencies. Ultimately, outcomes are tied to funding decisions.
Performance Measures - Measures show progress toward the accomplishment of objectives and provide the yardstick by which programs are evaluated. Measures describe effectiveness, efficiencies, or output of programs.
Each measure should be explicitly linked to an objective and compared to targets. These targets set standards that a department expects to achieve. In addition, measures should be indexed to a baseline (e.g., actual performance data).
Measures are:
Each measure must include:
Personal Services - Personal services include:
"Pots" - Appropriations common to all departments which are appropriated to each Executive Director's office and then allocated out to divisions or programs within each department. Examples include Group Health and Life, and Workers' Compensation.
Priorities - Ranking of objectives based on department's mandate, mission and strategic plan.
Program - In defining programs, the OSPB recommends that departments use the following criteria:
Reclassification - Change in job title approved by the State Department of Personnel.
Reconciliation of Funds - Reconciliation of funds is used to explain the differences between appropriated funds and actual expenditures.
Refund - An amount paid and then recovered by the state because of an incorrect payment, adjustment of an advanced payment, or any other error that can be corrected by a return of funds.
Reimbursement - Cash received as payment for the cost of work or services performed or for other expenditures made on behalf of a state agency. Reimbursement also includes proceeds from the sale of obsolete equipment.
Reinvestment - Funds accrued from savings, efficiencies and/or performance changes which are then invested back into the department/program to further objectives.
Request Year - The fiscal year for which resources are being requested. Also synonymous with Budget Year.
Roll-Forward Appropriations - The amount of an appropriation that is extended beyond its normal period of authorization upon specific approval of OSPB and the State Controller.
Salary Act Appropriation - The amount appropriated to a department to cover the cost of salary survey increases.
Senior Executive Service (SES) - A classification for a fixed number of senior management positions who are not considered part of the classified workforce.
Special Bills - Bills other than the Long Appropriations Act which contain an appropriation amount.
Shift Differential - The adjustment made to salaries of employees to compensate them for work performed outside the regular Monday to Friday and 8:00 am to 5:00 pm work schedule.
Special Purpose - Funds appropriated for a special project covering personal services and related operating costs often appropriated as a lump sum.
Strategic Plan - Focused summary of department mission, vision, prioritized objectives, goals, key trends, stakeholders and critical performance measures over a four-year time horizon. The strategic plan should be based on the intent of statutory mandates.
Supplemental Appropriation - Legislation authorizing changes in appropriations for the current fiscal year. Each departmental "supplemental" is enacted through separate legislation, usually introduced in January.
Taxpayers' Bill of Rights (TABOR) - The TABOR limit (Article X, Section 20 of the Colorado Constitution) restricts the State's total revenue growth to the sum of inflation and population growth.
Workload Measure - An estimate of the quantity of service and/or product was delivered.
Zero-Based Budgeting - Includes but is not limited to the following (Section 2-3-207, C.R.S.):
Todd Saliman, Director
Governor's Office of State Planning and Budgeting
200 East Colfax, Room 111, Denver, Colorado 80203
Phone: 303.866.3317 Fax: 303.866.3044
Send comments or questions to: ospb@state.co.us