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Budget Structures Overview

By Robert Phillips,2014-12-13 10:03
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Budget Structures Overview

Budget Overview

    The annual budget process begins with the Governor's budget proposal (House 1) submitted the third week in January, and continues through the House and Senate versions, ending with a Conference Budget, ideally finalized in June, which becomes the General Appropriation Act (GAA) once the Governor signs it into law, minus any vetoes. At any time thereafter, however, the legislature can override any of the Governor’s vetoes with a two-thirds majority vote.

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Budget Concepts

    The GAA contains language specifying how departments may spend their appropriations. Department’s receive appropriations, which authorize a maximum amount that can be spent for the specific purpose identified and for a specific period of time, usually one fiscal year, from these appropriations, obligations (encumbrances) are incurred and expenditures made. No budgetary transactions or obligations can be made prior to the establishment of an appropriation account.

    The accounting year opens to pre-encumbrance and other activity in May. Since the GAA values are generally uncertain by this point, House 1 is used as a placeholder to enable encumbrance activity. Once the GAA becomes law, the House 1 figures are backed out of MMARS, and replaced with the authorized GAA figures.

    Once the GAA is approved, House 1 is backed-out and the GAA is loaded as the Original Budget amount. This amount is preserved and available on appropriation

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    inquiries throughout the fiscal year. In the event where a supplemental budget is passed, this amount is loaded in the Amendments field, which updates the Current Modified Budget field, preserving the original budget values.

    All monies collected by state departments are identified by a revenue source code. Revenues are classified for reporting purposes by category. The money received by a department can be either restricted or unrestricted.

    The Office of the State Comptroller (OSC/CTR) keeps the official records of the Commonwealth and to do this CTR uses a financial database known as MMARS - The Massachusetts Management Accounting and Reporting System.

    Budget Structures

    Budget structures consist of one to four budget levels that correspond to increasingly more detailed levels of budgeting in the structure. Each budget structure has its own attributes.

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    A budget level is part of a budget structure. Each budget structure must have at least one budget level. Each budget level is composed of one to many Chart of Account elements that are grouped together and define the individual budgets at that level.

    An example of a typical appropriation established under the GAA and setup in the Central Subsidiary Expense structure, is made up of three levels:

; Level 1: BFY, Appropriation, Fund, Sub Fund

    ; Level 2: BFY, Appropriation, Fund, Sub Fund, Department

    ; Level 3: BFY, Appropriation, Fund, Sub Fund, Department, Object Class

    MMARS budget levels are built at the lowest level and roll-up to the highest level. This allows tracking at the summarized (highest) level as well as at the more detailed lower levels. In this GAA example, the budget is appropriated at the subsidiary level (Object Class) and thus is loaded in MMARS to this level.

    Budget structures define framework in which individual budgets are established, maintained, tracked, and controlled. Each budget structure is composed of budget levels that define the budget hierarchy of the structure.

The Central Budget Structures are established and maintained by ANF and CTR.

    Refer to the Central Budget Structures eLearning module for more information.

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The Departmental Budget Structures are established and maintained by departments

    who choose to track encumbrances, expenditures, and revenue at a more detailed level than available in the Central structures. Refer to the Departmental Budget Structures Overview for more information.

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The Cost Accounting Budget Structures are established and maintained by

    departments, except for the Capital Spending structure, which ANF maintains. Refer to the Cost Accounting Structures eLearning module for more information.

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Event Types

    The Event Type defines the type of activity you want to process within a document in a budget structure. For example, if you want to establish an Interdepartmental Service Agreement with another department and thus need to transfer money to another department within the Central Subsidiary Expense budget structure, you would choose the document code of BGCS and the Event Types of BG06 (Transfer In) and BG07 (Transfer Out).

    Each budget structure has Event Types that allow departments to post different activities based upon the structure they are utilizing.

    The Event Types for the Central and Departmental Structures are listed below, but note that not all event types will be available for department usage.

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The Central and Departmental Revenue budget structure Event Type codes:

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Event Types for the Cost Accounting Structures:

Appropriation Types

    Appropriation Types are used to classify all accounts based on certain fund sources and

    processing attributes. MMARS will allow many controls to be established by

    appropriation type. Appropriation type is a roll-up of appropriation and may become a

    vehicle for summarizing activity.

Appropriation Types in MMARS:

    ; 1CN (Central Expense, Non-Subsidiarized)

    ; 1CS (Central Expense, Subsidiarized)

    ; 1RN (Retained Revenue, Non-Subsidiarized)

    ; 1RS (Retained Revenue, Subsidiarized)

    ; 1IN (Intergovernmental, Non-Subsidiarized)

    ; 1IS (Intergovernmental, Subsidiarized)

    ; 2CN (Capital)

    ; 3TN (Trusts)

    ; 3TX (Higher Education Trusts)

    ; 4FN (Grants)

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Multi-Dimensional Budgeting

    MMARS provides for multi-dimensional budgeting, meaning departments can budget at varying levels. The default is to budget at the appropriate department level. If more departmental control is necessary, a department can choose to budget by division or district. This requires advanced cost accounting setup, however. In the Program Budget structure, departments may budget to the program level, which also requires cost accounting set-up. Program level budgeting may span across multiple appropriation account numbers, allowing departments to track all activity in MMARS. Program budgets are also not fiscal year specific and can span multiple fiscal years. Chart of Account

    Each MMARS Chart of Account element has four roll-ups, two of which are defined centrally and two that are defined by the department. Roll-ups are inferred when the primary element is coded on the transaction. This allows the activity posted to be aggregated by the roll-up feature.

    An example of a primary Chart of Account category, which has roll-ups associated with it, is the Organizational Chart of Account. MMARS gives departments the opportunity to better define their organization.

    In MMARS, department and unit will need to be coded on each transaction. Each unit may be associated with roll-ups (Division, Group, Section, District, Bureau), which will be inferred when the department and unit codes are entered on a transaction and this information can be used for reporting purposes.

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