Eliminating the FY01 structural deficit will be an overriding factor in GPR spending decisions for the next budget. Because of the projected size of this structural deficit, there will need to be restraint in all types of GPR appropriations in the next budget: state operations, aids to individuals and local assistance.

• Agencies should assume there will be zero growth in overall state GPR appropriations in FY02, and specific program needs should be managed within this general constraint.

• Exceptions will occur only for K-12 equalization aids, the Department of Corrections, Medical Assistance, and housekeeping adjustments like standard budget adjustments and debt service.

While agency base resources should be reallocated to meet higher priorities, the overall FY02 GPR budget for most agencies and programs will not exceed the FY01 adjusted base level.

Agencies should limit their overall FY02 GPR budget request to 100% of their FY01 adjusted base level. For FY03, agency GPR budget requests should be limited to 101% of their FY01 adjusted base level.

• This policy will also apply to the SEG funded administrative operations appropriations of DOT, DNR and the Lottery.

• Funding requests for other types of appropriations and other funding sources in both years can reflect program needs, agency priorities and revenue availability.

Except for standard budget adjustments, routine budget items should be handled in agencies' base budgets regardless of fund source. Consistent with overall targets, limit requests to spending items associated with significant policy and operational changes. The State Budget Office will notify agencies by November 30 of any items to be funded out of the base budget.

PLANNING FOR OPERATIONS CUTS/DOWNSIZING THE STATE WORKFORCE

Reduced base budget plans are not required to be submitted at this time. However, agencies with GPR-funded state operations should anticipate that the final 2001-03 budget may require them to absorb up to a 5% unallocated base cut.

• Agencies should begin thinking how and where they can generate permanent savings of 5% annually from their adjusted base funding for operations.

• Unless there is extraordinary revenue growth during the remainder of 1999-2001 and in 2001-03, base cuts of this magnitude are likely to be needed to balance the next budget.

To prepare for possible cuts agencies should internally identify lower priority, discrete programs or organizational units that could be eliminated, rather than trying to absorb an across-the-board appropriation reduction.

• This should be viewed as an opportunity to reallocate resources to where they are more effective and focus resources on the most important parts of the agency's mission.

• This policy will apply to GPR funded operations and SEG funded administrative operations of DOT, DNR and the Lottery.

• Note that agencies should get approval from the State Budget Office before proposing to use funding sources in another agency to stay within budget targets, to absorb operations reductions or to fund any new initiatives.

Given expected increases in employe retirements and continued tight labor markets statewide, agencies should also expect to operate with a smaller workforce than they are currently authorized to have, regardless of their sources of funding or budget outlook.

• Agencies should anticipate they may need to take a 5% reduction in authorized positions, and should plan to accomplish this reduction without layoffs.

• Any areas needing additional staff must be met through base reallocations.

• An exception may be made for new federal positions, if adding federal positions results in generating more federal revenue for Wisconsin.

Increased employe retirements present an obvious challenge to program managers but also an opportunity to reduce state operations spending, reshape organizations to mesh with 21st century needs and free up funds for higher priorities.

PERFORMANCE MEASUREMENT IN BUDGETING

A continuing tight budget environment necessitates a shift in thinking away from requests for new money and toward achieving results. Performance measures can help to facilitate this shift.

• Agencies will be asked to develop two-to-four performance measures related to their broad Chapter 20 budget programs and begin reporting on their performance in meeting desired outcomes.

• Agencies should identify measures that are available over time, reliable, and most importantly, best represent the goals of a program.

• Agencies will be contacted by their budget analyst by the end of July to discuss agency proposed measures.

Appendix K in the detailed budget instructions will provide more information on performance measurement.

BUDGETING FOR INFORMATION TECHNOLOGY

Wisconsin is a leader in using technology to improve services. There are five principles that agencies should follow in developing budget requests for information technology.

• The goal of information technology innovation must be driven by business needs for the specific program area. The use of technology must improve the business process.

• All strategic IT projects and biennial budget requests must include a cost-benefit analysis. DOA's instructions for both the strategic planning and budget process provide a general methodology that can be adapted for this analysis.

• The presumption is that electronic government efforts must have a benefit, such as streamlining processes and reducing on-going costs. If an upfront investment is necessary, innovative funding for that up-front investment is essential.

• Given fiscal realities, statewide or enterprise provision or implementation of technology will be the preferred method of deployment. Citizens cannot afford the luxury of each agency developing an individually tailored method of implementing the technology that supports e-government. Agency staff and DOA are working to put plans for this effort into place.

• All efforts in electronic government will be implemented with the security of personally identifiable information and the aggregate information resources as a fundamental priority. Success in e-government efforts will be judged by how well the privacy of citizens is maintained and how well public investments in automated systems is protected.

INCREASING PRODUCTIVITY/ADDING VALUE FOR STATE TAXPAYERS

Budget requests should strive to assess and remove barriers to employe and agency productivity.

• Agencies should identify excessive reporting requirements and administrative tasks that don't add value for taxpayers. Decision items which can achieve these outcomes within overall budget policies will be given a higher priority.

• Agencies should consider consolidating similar appropriations within each appropriation type (state operations, local assistance or aids) where it would be more efficient to do so, consistent with legislative and executive intent. It would be especially helpful to identify state operations consolidations that can achieve budget savings in the 2001-03 budget.

• Note that consolidations must be proposed as a budget decision item and not part of base reconciliation. Please check with your assigned budget analyst before proposing a consolidation as part of your budget submission.

INCREASING FEDERAL FUNDS

Agencies are reminded the state has a goal of increasing the receipt of federal funds where consistent with state program goals.

• Wisconsin continues to rank very low in terms of the per capita federal funds received.

• It is the responsibility of all agencies to strive to maximize the federal funds their programs are eligible for.

• Program managers should also pursue federal categorical grant opportunities that would benefit Wisconsin.

The DOA Division of Housing and Intergovernmental Relations will be working with agencies to increase the receipt of federal funds.

STATUTORY LANGUAGE GUIDELINES

Agencies should not submit policy items unrelated to appropriation changes for inclusion in the Governor's budget. Please contact your DOA budget analyst to discuss whether a particular initiative is appropriate for submission as a budget request.

Agencies should not submit extensive lists of technical or housekeeping changes for inclusion in the Governor's budget. Proposed changes for separate non-budget legislation can be submitted to the Department of Administration for review and approval, separate from the budget request. Please contact your DOA budget analyst if these types of changes are sought.

As in past budgets, prior to September 15 agencies may work directly with the Legislative Reference Bureau in preparing statutory language items related to the budget. After September 15 all drafting and redrafting requests related to the budget must come from the State Budget Office.

The Legislative Reference Bureau strongly discourages agencies from submitting budget bill drafts that agencies have drafted. Instead, agencies should submit memoranda identifying what they are seeking to accomplish.

Appendix I in the detailed budget instructions will provide more information on statutory language.

BUDGET SUBMISSION DUE DATES AND PROCEDURES

Formal budget requests including statutory language related to decision items are due September 15, 2000. Send four (4) copies to the State Budget Office and two (2) copies directly to the Legislative Fiscal Bureau.

Agency budget directors will be required to include with their budget submissions a signed Budget Checklist of budget elements completed. This will help ensure all required materials have been included in the budget. The formal instructions for 2001-03 will include this checklist.

State Budget Office staff will present a technical workshop on budget instructions and "best practices" on July 20. This will cover basic budgeting and things to note when developing budgets. It may be of particular interest to smaller agencies and new staff of all agencies.

State Budget Office staff will also meet with individual agencies to explain budget policies and procedures and discuss any agency concerns.

INFORMATION ON THE WEB

The 2001-03 Budget Instructions manual contains a subject index at the end, listing topics and page numbers where the topics are found. Many of the items in bold type are included in the subject index.

The Budget Instructions, along with various budget forms, will be available on the State Budget Office website at http://www.doa.state.wi.us/debf/sbo/index.asp

• Periodic information updates will be posted to this website so agencies should check it regularly.