NNERMON State of Vermont [phone] 802-828-2376 Andrew A. Pallito, Commissioner Agency of Administration [fax] 802-828?2428 Deparnnent of Finance Management Pavilion Of?ce Building 109 State Street Montpelier, VT 05609-0201 From: Andrew Pallito, Commissioner, Finance Management To: Secretaries, Commissioner and Business Managers 121) .- . 9c? Date: May 30, 2017 RE: FY 2017 and FY 2018 Budget Update At the extended cabinet meeting on May 19, Finance Management presented a high-level overview of the FY 2017 and FY 2018 Budgets. Below is a summary of the information that was presented to the extended cabinet: FY 2017 Budget Update Total General Fund revenues collected through the end of April were $3.55 million below projections. The Administration will continue to monitor May and June receipts closely and to ?ne tune a plan that assures FY 2017 closes in balance. If this number does not change signi?cantly between now and the close of the ?scal year, Finance Management should have suf?cient options available to close out FY 2017 in balance without affecting agencies? or departments? FY 2017 budgets. If this number changes signi?cantly, we may need to consider other options such as reviewing carry forwards for possible reversion. Finance Management will contact agencies and departments as necessary. Fv gm Budget 1mm As part of the ?As Passed FY 2018 Budget?, the Secretary of Administration is charged with ?nding $5 million of Management Savings in the General Fund. The Secretary is currently reviewing areas for reductions to minimize direct impact on agency and department programs, but it is important that agencies and departments start planning to achieve some budgetary savmgs. The language as passed by the Legislature instructs the Administration to review the following items to achieve the management savings: 1. The elimination of exempt positions; 2. Savings identi?ed through improved business processes and administrative ef?ciencies; 3. Administrative or contractual reductions, including savings from improved systems of procurement; 4. Savings in State employee health care cost through increased price awareness; 5. The Agency of Human Services shall review and quantify savings from improved oversight and ?scal controls to prevent fraud and overpayment related to personal care services reimbursed by the departments; 6. Review statewide operating expenses that include: (A) Physical space needs statewide for potential reduction of leased space or divestment of owned real estate where appropriate; I (B) Examination of the alignment of the cost control incentives Or disincentives in the State?s largest internal service fund programs, including fee for space, and innovation and information charges; and (C) Telecommunication services, postage equipment, and other equipment rentals. Additionally, the Emergency Board will meet in July to adopt an updated consensus revenue forecast for the General, Education and Transportation Funds. This updated forecast will reset the available revenues for FY 2018 in each of those funds. The ?As Passed FY 2018 Budget? is predicated on available General Fund revenues of $1,517.9 million. It is possible as part of the Emergency Board action, there will be a downgrade in the amount of available General Fund. Therefore, this is further reason to start planning now should we need to ?nd savings in FY 2018. Agencies and departments should develop cost savings nlans for an amount up to a 4% reduction in General Funds. We are asking that your draft plan include scenarios for a 3% and 4% reduction. The Administration recognizes that this exercise occurs simultaneously with the work your staff is doing for the FY 2017 year-end close. However, to maximize savings in FY 2018, Finance and Management will plan meetings with agencies and departments on or around the week of June 19th to discuss savings plans. Please start the planning process immediately and begin to take whatever steps today to provide maximum ?exibility for FY 2018. Additional communication and instruction will be forthcoming as more information becomes available. In the meantime, if you have any questions please do not hesitate to contact Finance Management. Page 2 of 2