Actions Related to State Finances & the Budget
The Operating Budget
The operating budget is typically enacted at the end of June in odd-numbered years after an executive preparation and legislative approval process that lasts about a year. The Office of Budget and Management works with requests submitted by state agencies and direction from the Governor's office to develop the executive budget proposal which is submitted to the General Assembly for consideration. The Governor's proposal is put into a bill format and is introduced into the legislative process. The legislature reviews the Governor's recommendations and make changes to the budget. The House and the Senate each make changes according to their own priorities. Differences between the proposals of the two chambers are resolved in a conference committee. The final version of the budget that is passed by both houses is then submitted to the Governor for his signature. The Governor may veto items in the budget bill.
Ohio budgets biennially-that is to say, each budget covers a two-year period. A budget act contains two columns of numbers, one for the first year of the biennium and one for the second year. Appropriations (i.e., authorization to spend money) are made to agencies through appropriation line items (ALIs) and from a variety of funds (Ohio has over 900 funds in the state treasury). In enacting the statutes that authorize the Board's powers, the General Assembly delegates to the Board the power to make relatively minor adjustments to the enacted operating budget. The Board's actions are restricted by the confines of the budget as approved by the General Assembly. Board actions that affect the operating budget include:
- Transfer of operating appropriations between line items within the same agency and fund
- Transfer of operating appropriations between fiscal years within the same line item
- For certain funds, increase appropriation authority based on available fund balances
- Provide additional resources to an agency in emergency situations through the Board's Emergency Purposes appropriation
- In certain instances provided in law, approve transfers of cash between funds
- Create new funds and establish appropriation authority in new line items
Ohio's Constitution prohibits the General Assembly from making appropriations that last more than two years. Also, state agencies are prohibited from obligating appropriations beyond the fiscal biennium. Accordingly, every appropriation expires at the end of the biennium. Controlling Board action is also confined by the two-year (biennial) limitation.
The Capital Budget
The capital budget is typically enacted in the spring of even-numbered years. While capital appropriations are also made for a two-year biennium, the appropriations are made by fund by line item and in one amount effective for the entire two-year period. Unobligated balances in previous capital appropriations acts are generally re-appropriated in a separate act of the General Assembly. Controlling Board actions facilitate some of the same types of adjustments to capital budgets as are available for operating budget. Additionally, the Controlling Board must release funds for capital construction. Controlling Board actions for capital budgets include:
- Transfer capital appropriations (or reappropriations) between line items Page 11 within the same fund.
- Release capital appropriations for construction-related projects (and in some cases for the acquisition of real estate).
- Waive competitive selection for architects' and engineers' contracts for amounts in excess of certain thresholds.
Unlike operating appropriations, the release of capital funds has no expiration. Once capital dollars are released, they remain released, even when reappropriated.
Actions the Purchasing - Waiver of Competitive Selection
Dept. of Administrative Services - State Purchasing Processes
The general principle at work in state purchasing is that, except for relatively small purchases of goods and services and other specific types of purchases that are statutorily exempted, purchases made by the agencies of state government should be procured using the competitive selection provisions of state law through the Department of Administrative Services (Revised Code Chapter 125.). However, it is acknowledged that this may not always be advantageous. The Controlling Board is authorized to waive these statutory competitive selection requirements.
The law allows agencies to procure goods and services without using the statutorily prescribed competitive selection process through DAS up to a certain cumulative dollar limit per supplier. Beyond that limit, the agency must seek the approval of the Controlling Board. The Board generally likes to see that agencies use other competitive processes and attempt to get the best price and best quality if competitive selection is not used.
Limiting fiscal and contractual activity to the biennium can create operational difficulties. Often contracts contain provisions that allow for renewals in subsequent biennia. Such renewals still require Controlling Board waivers of statutorily prescribed competitive selection through DAS.
Other Legislative Oversight
All the areas discussed above include elements of legislative oversight of actions of the executive branch. In addition to those areas, the Controlling Board exercises legislative oversight in a variety of areas. The following is a partial list of the major types of oversight exercised by the Board:
- Approvals of land purchases by institutions of higher education
- Transfers of appropriations to accommodate a reorganization of Government or the abolition of a state agency
- Approval of certain grants and loans made by the Department of Development
- Approval of operating loans sought by school districts
- Approval of fee increases requested by certain regulatory boards and commissions
- Approval of certain subsidy distributions