Donate to Hurricane Recovery

2019 - 21 Budget Instructions - Executive Summary

Overview of the Budget Process

The State of North Carolina appropriates operating and capital funds on a biennial, or two-year cycle. An approved budget includes annual amounts for each of the two fiscal years that make up the biennium. The General Assembly, convening in January 2019, will consider the Governor’s recommended budget as well as other changes presented for legislative review before passing a two-year budget to be certified by the Office of State Budget and Management (OSBM) in summer 2019. In accordance with the State Budget Act, the Governor’s Recommended Budget for the 2019-21 biennium will be finalized and presented to the General Assembly early in the legislative session.

The process for preparing the 2019-21 biennial budget recommendations is now underway. Agencies will work with OSBM staff to prepare Base Budgets and Change Budget requests for the upcoming biennium in a manner consistent with that prescribed in the State Budget Act. Agencies should plan to engage internally and with OSBM and Governor’s policy staff in a collaborative effort to complete the tasks laid out in the accompanying budget instructions.

Assembling Your Budget Development Team

For agencies, the process should include not only budget and financial staff but also program directors, CIOs, and other members of agency senior leadership. As part of the Common Sense Government initiative, OSBM has increased focus on evidence-based budgeting, data-driven decisions, and strategic management of the state's resources and has realigned staff responsibilities to better assist agencies with these goals. Analysts will now be able to offer more technical assistance to agencies in developing the Base Budget and Change Budget requests, and more time has been provided for each component of the budget development process to ensure a recommended budget that accurately reflects agency operations and critical future needs. OSBM Budget Execution Analysts will work with agencies on Base Budget development, and OSBM Budget Development Analysts will work with agencies on Change Budget requests.

Timeliness and deadlines are critical to budget development. Deadlines are established to ensure the Governor has adequate time to review information and finalize a recommended budget as required by the State Budget Act. Agencies need to focus on budget planning and policy decisions early to ensure all deadlines are met. Following are key dates and deliverables in the 2019-21 budget development process. A more detailed timeline can be found on the OSBM website.

Major Policies and Requirements for Development of the 2019-21 Budget

The budget development process is an opportunity to

  1. realign Base Budgets to maximize efficiency and transparency, and to
  2. propose Change Budget requests to modify or eliminate ineffective programs, increase funding to better deliver existing services and meet operational needs, and to expand programs or services to address critical needs and functions of state government.

The Base Budget provides the funding necessary to continue the existing, authorized level of services for the next biennium. The Base Budget development process gives agencies the opportunity to adjust budgets to better reflect operations, align budget authority with actual expenditures and revenue projections, and establish a realistic spending plan for the upcoming biennium. OSBM Budget Execution Analysts will work with agencies to prepare Base Budgets.

The Change Budget consists of all proposals for expansion or reduction from the Base Budget. This includes requests for meeting critical needs, expanding or creating programs, repurposing funding for new priorities, and addressing issues that cannot be accommodated in the Base Budget realignment process. For the 2019-21 biennium, Change Budget proposals should focus on addressing the following priorities identified by Governor Cooper:

  1. Positioning North Carolina to create new jobs and grow middle class paychecks;
  2. Making North Carolina a top ten educated state;
  3. Promoting healthier and safer communities; and
  4. Ensuring an effective, accountable, well-run state government.

Outlook for the 2019-21 Biennium

Although OSBM anticipates continued economic growth in the current fiscal year and into the next biennium, further reductions in individual and corporate income taxes taking effect in 2019 will limit revenue growth. Due to this expected moderation in revenues coupled with fiscal pressures stemming from statutory requirements and enrollment growth in key programs, agencies should limit total General Fund expansion requests to no more than two percent (2%) of their FY 2018-19 BD 307 certified recurring appropriation. Agencies should:

  • Prioritize requests to focus on delivering critical services;
  • Identify opportunities for efficiencies and savings to enable reallocation of resources to high priority needs; and,
  • Ensure expansion requests have a clear link to the agency’s strategic plan.

Although reduction options are not required, agencies are encouraged to look for opportunities to improve program delivery and agency operational efficiency. Expansion requests should include thorough and well-documented narrative explanations of the problem or opportunity addressed, the details of the proposed solution, the expected outcomes and impacts and should be clearly linked to agency strategic plans. OSBM Budget Development Analysts will work with agencies to assist and advise in the preparation of budget requests to present and make recommendations to the Governor.

Increased Emphasis on Strategic Planning

OSBM is continuing efforts to integrate and utilize strategic planning information in the budget development process. For the 2019-21 biennium, all agencies are required to submit select strategic planning information in conjunction with their budget requests. This information will be used to review spending requests during the budget development process in conjunction with the Governor’s recommended budget. Budget expansion requests must clearly support goals included in the agency’s strategic plan to be considered in the Governor’s 2019-21 recommended budget. Please see Agency Strategic Planning Guidelines for additional information.

Instructions

The following instructions and related job aids and attachments provide detailed guidelines for preparing base, expansion, reduction, and capital improvement budget requests with accompanying deadlines for completing key steps. This instruction document is much shorter than it has been in the past, but within the following pages you will see hyperlinks that will take you to more detailed instructions (job aids) and relevant attachments and reference materials. Also, there is a new Budget Instructions section on the OSBM website that organizes documents by Base Budget, Change Budget and Capital Budget and has buttons directly to job aids, attachments and reference materials; along with a calendar detailing the key dates that items are due to OSBM.

Budget Kick-off on September 20th

OSBM will host a budget kick-off for agency staff on Thursday, September 20th beginning at 2:00 in the Albemarle Building. The kick-off will include a review of the 2019-21 budget instructions, focused on key changes to the process and timeline, and an opportunity to address your questions. Key staff members who will be involved in the biennial budget development process for your agency are encouraged to attend. Additional details regarding this kick-off, including an RSVP, will be sent to agency CFOs shortly following the release of these instructions.