five year projections - Utah State Legislature

May 9, 2013 - portion included best‐fit projections for nine broad expenditure ... contributions and payroll rates. ...... Analysis Software (SAS) or Forecast Pro analysis software. ... The Governmental Accounting Standards Board (GASB) is an ..... business cycle, with jumps in federal funds in FY 2009 and FY 2010 and ...
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U TAH  S TATE  L EGISLATURE  



2013   I NTERIM

F IVE  Y EAR  P ROJECTIONS  



LFA

EXECUTIVE APPROPRIATIONS COMMITTEE

ISSUE BRIEF 

L EGIS LATIV E FIS CA L ANA LYS T STAFF: THOMAS YOUNG, PH.D., ANDREA WILKO, PH.D., ANGELA J. OH, & STEVEN ALLRED



EXECUTIVE SUMMARY This study presents a five year outlook of cash inflow, cash outflow, financial obligations, and debt service commitments of the State of Utah based upon a methodology proposed by the Governmental Accounting Standards Board (GASB). It is intended to provide legislators with useful information to make long term revenue and expenditure decisions, while simultaneously testing to see if GASB’s guidelines are practicable. The study concludes that the General and Education Funds are on sustainable trajectories and that Utah is on target to meet long‐term financial obligations like debt service and retirement. It finds that projected transportation outlay levels are not sustainable over the five year period given associated income projections. The study notes that the single largest component of cash inflow – federal grants and aid – is currently at risk due to federal deficit reduction. Finally, the study compares GASB’s proposed methodology to observed experience in FY 2013 and recommends using the GASB methodology only when done so in conjunction with Utah’s existing consensus processes. Five Year Budget Position Projection FY 13 - FY 17 Area

Fund Type / Area General Fund

Cash Outflow

Cash Inflow

Cash Outflow

15,977,593,000

Cash Inflow

339,946,000

10B

Cash Outflow

11,070,061,000

17,857,856,000

20B

619,897,000

Amount

30B

18,477,753,000

40B

Cash Inflow

36,986,470,000

50B

Budget Position

Transportation

37,326,416,000

Education Fund

-4,907,532,000

0B

-10B

Budget Position

Budget Position

Cash Inflow

Cash Outflow



Source: LFA

OFFICE OF THE LEGISLATIVE FISCAL ANALYST 

Budget Position



M A Y   9,   2013,   10:15   AM 

IN‐DEPTH BUDGET REVIEW The projections contained in this study are based upon historical experience adjusted for known factors, such as earmark adjustments or tax policy changes. On the cash inflow side of the balance sheet, best‐fit models for 14 broad revenue source categories deposited into five funds were forecast. The cash outflow portion included best‐fit projections for nine broad expenditure categories. The major cash outflow areas include public education, human services, health and environmental quality, higher education, and all other governmental expenditures. Historical trend models indicate that cash inflow associated with the General Fund and Education Fund will be more than enough to cover anticipated cash outflow, with an estimated General Fund budget position at the end of FY 2017 of +$340.0 million on $37.0 billion in cash outflow and an estimated Education Fund budget position at the end of FY 2017 of +$620.0 million on $17.9 billion in cash outflow. The opposite holds true for transportation related expenditures, with the cumulative projected shortfall from FY 2012 to FY 2017 of $4.9 billion on projected cumulative cash outflow of $16.0 billion. This may be related to higher levels of debt financed investment over the past five years. A recent redefinition of the Transportation Investment Fund as a capital project fund may change the treatment of transportation expenditures under GASB proposed guidelines. If current trends and legislative practices hold, Utah should also be on track to pay our constitutionally