11040 - Legislative Branch SUMMARY

11040 - Legislative Branch SUMMARY

Agency Biennium Comparison

The following table compares the 2021 biennium appropriated budget and the 2023 biennium budget request by type ofexpenditure and source of funding.


Budget ItemAppropriatedBudget 20-21

RequestedBudget 22-23

BienniumChange

Biennium% Change

Personal Services 26,134,687 27,743,757 1,609,070 6.16 %Operating Expenses 8,713,687 9,697,731 984,044 11.29 %Equipment & Intangible Assets 3,600,200 1,654,196 (1,946,004) (54.05)%Transfers 298,837 288,000 (10,837) (3.63)%

Total Expenditures $38,747,411 $39,383,684 $636,273 1.64 %

General Fund 33,736,148 34,458,045 721,897 2.14 %State/Other Special Rev. Funds 5,011,263 4,925,639 (85,624) (1.71)%

Total Funds $38,747,411 $39,383,684 $636,273 1.64 %

Total Ongoing $34,907,411 $39,343,684 $4,436,273 12.71 %Total OTO $3,840,000 $40,000 ($3,800,000) (98.96)%

Mission Statement

The mission of the legislature is to exercise the legislative power of state government vested by the Constitution of the State of Montana and to fulfill its constitutional duties. The mission of the agencies within the Legislative Branch, i.e., the consolidated legislative agency, is to provide the administration structure to support accomplishment of the powers and duties of the Legislature.

Please refer to the agency profile for the Legislative Branch at https://leg.mt.gov/lfd/state-agency-profiles/legislative-branch for additional information about the agency’s organization structure, historical expenditures, FY 2020 expenditure dashboard, and recent studies, audits, and legislation.

LFD Budget Analysis A-1 2023 Biennium

http://leg.mt.gov/lfd/state-agency-profiles/legislative-branch

http://leg.mt.gov/lfd/state-agency-profiles/legislative-branch


Legislative BranchMajor Budget Highlights

• The Legislative Branch’s 2023 biennium budget request isapproximately $0.6 million or 1.6% higher than the 2021 bienniumbudget. Significant changes include:

◦ Proposed changes for statewide present law adjustmentsfor personal services, fixed costs, and inflation/deflation

◦ Proposed increases for information technology costs◦ New proposals to address retention and recuitment and

information technology (IT) training

Legislative Action Issues

• The legislature may wish to designate the $1.2 million in generalfund that is being requested for upgrades and the Districting andApportionment Commission as one-time-only appropriations as theexpenditures are not considered ongoing

Agency Actuals and Budget Comparison

The following table compares the last full fiscal year actuals, previous biennium appropriations by year, and current annualbiennium budget request by type of expenditure and source of funding.


Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 141.89 141.89 141.89 141.89

Personal Services 12,445,539 12,983,524 13,151,163 13,838,931 13,904,826Operating Expenses 4,111,116 4,764,596 3,949,091 5,085,130 4,612,601Equipment & Intangible Assets 2,469,472 2,603,200 997,000 1,059,696 594,500Transfers 142,042 149,419 149,418 144,000 144,000

Total Expenditures $19,168,169 $20,500,739 $18,246,672 $20,127,757 $19,255,927

General Fund 16,659,486 17,672,574 16,063,574 17,487,529 16,970,516State/Other Special Rev. Funds 2,508,683 2,828,165 2,183,098 2,640,228 2,285,411

Total Funds $19,168,169 $20,500,739 $18,246,672 $20,127,757 $19,255,927

Total Ongoing $16,684,966 $17,580,739 $17,326,672 $20,107,757 $19,235,927Total OTO $2,483,203 $2,920,000 $920,000 $20,000 $20,000

Agency Discussion

FY 2020 Appropriation Compared to FY 2020 Actual Expenditures

The Legislative Branch expended 93.5% of its $20.5 million FY 2020 modified HB 2 budget. Personal services were 95.9%expended, operating expenses were 86.3% expended, equipment & intangible assets were 94.9% expended and transfers-out were 95.1% expended.


Agency Highlights


Personal services expenditures were lower than anticipated in the budget due to staff retention issues in the LegislativeFiscal and Audit Divisions. Operating expenses were lower mostly due to impacts of the COVID-19 pandemic on the abilityof:

• Legislative committees to meet during the interim• Staff to travel for training

FY 2020 Appropriations Compared to FY 2021 Appropriations

FY 2021 appropriations are $2.3 million lower than FY 2020 mostly due to biennial appropriations for information technologyprojects in the Legislative Services Division, which were included in operating expenses and equipment & intangible assetsin the first year of the biennium.

Comparison of the FY 2021 Legislative Budget to FY 2021 Base

Figure 1 illustrates the beginning FY 2021 budget as adopted by the 2019 Legislature compared to the finalized FY 2021base budget, which includes modifications made during the interim as authorized in statute. The FY 2021 base budget wasagreed upon by the executive and legislative branches to be the point from which any changes would be recorded for the2023 biennium budgeting process.

Figure 1

FY 2021 Legislative Appropriations - Legislative BranchExecutive % Change

Legislative Modifications Executive fromAction per Statutory Base Legislative

Authority Action20 LEGISLATIVE SERVICES61000 Personal Services 6,498,678 2,602 6,501,280 0.0%62000 Operating Expenses 2,987,245 - 2,987,245 0.0%63000 Equipment & Intangible Assets 97,000 - 97,000 0.0%68000 Transfers-out 149,418 - 149,418 0.0%20 LEGISLATIVE SERVICES Total 9,732,341 2,602 9,734,943 0.0%21 LEGIS COMMITTEES & ACTIVITIES61000 Personal Services 116,559 - 116,559 0.0%62000 Operating Expenses 636,777 - 636,777 0.0%21 LEGIS COMMITTEES & ACTIVITIES Total 753,336 - 753,336 0.0%27 FISCAL ANALYSIS & REVIEW61000 Personal Services 2,038,180 4,493 2,042,673 0.2%62000 Operating Expenses 110,198 - 110,198 0.0%27 FISCAL ANALYSIS & REVIEW Total 2,148,378 4,493 2,152,871 0.2%28 AUDIT & EXAMINATION61000 Personal Services 4,497,746 (7,095) 4,490,651 -0.2%62000 Operating Expenses 194,871 - 194,871 0.0%28 AUDIT & EXAMINATION Total 4,692,617 (7,095) 4,685,522 -0.2%11040 LEGISLATIVE BRANCH Total 17,326,672 - 17,326,672 0.0%

Legislative action includes the FY 2021 budget as adopted by the 2019 Legislature in HB 2 and changes included in the pay plan (HB 175).

The Legislative Branch had modification to the FY 2021 budget as shown in Figure 1.



The Legislative Audit Division transferred personal services appropriation authority to the Legislative Services and Legislative Fiscal Divisions to correct the allocation of the pay plan appropriation.

2023 Biennium Budget Request

The Legislative Branch’s 2023 biennium budget request is $600,000 or 1.6% higher than the 2021 biennium budget. The proposed changes are primarily due to:

• Statewide present law adjustments for personal services, fixed costs, and inflation/deflation• Present law adjustments for information technology projects• New proposals to address recruitment and retention issues

Further detail on the proposals are provided in the program narratives that follow.

5.0% Plan

Statute requires agencies submit plans to reduce general fund and certain state special revenue funds by 5.0%. TheLegislative Branch has provided a plan for a reduction of $718,000 general fund and $119,000 state special revenue. Theplan includes potential reductions in vacancy savings, the number of interim committee meetings, support costs associatedwith interim committees, and information technology expenditures.

A summary of the entire 2023 biennium 5.0% plan submitted for this agency can be found online at the Section Asubcommittee page on “Tab D Materials”.

Agency Personal Services

In order to explain the factors influencing personal services changes, the proposed statewide personal services presentlaw adjustment (DP 1) has been broken down into three categories, as follows:

1. Expected Changes - This category includes those adjustments explicitly approved by the legislature, such asexpected changes to annualize personal services costs including FY 2021 statewide pay plan adjustments,changes to benefit rates, and longevity adjustments related to incumbents in each position at the time of thepersonal services snapshot, plus rate changes for workers’ compensation and unemployment insurance.

2. Personal Services Management Decisions - Any agency management decisions that adjusted employee pay. Thisincludes raises or position changes that may increase or reduce a budget, such as hiring FTE at a lower rate toreplace retired senior staff, or moving FTE between programs.

3. Modifications to the Personal Services Base Budget - Other modifications to the FY 2021 personal services baselike operating plan transfers that occurred during the interim may impact the overall size of the personal servicespresent law adjustment (DP 1)

The figure below shows the analysis of the executive budget for personal services compared to the expected personalservices budget for each program.

Figure 2Personal Services Present Law

DP 1 - FY 2022Expected Management

Program Changes DecisionsBudget DP 1 Modification SWPL

Legislative Services 60,352 111,441 - 171,793Legislative Committees & Activities 88,536 - - 88,536Fiscal Analysis & Review 13,243 80,110 - 93,353Audit & Examination 81,484 202,107 - 283,591Agency Total $ 243,615 $ 393,658 $ - $637,273



Personal services were $13.2 million or 75.9% of the FY 2021 base budget. The Legislative Branch proposes an increaseof about $637,000 in FY 2022 and $619,000 in FY 2023. As reflected in Figure 2, expected changes and managementdecisions are contributing to the statewide present law adjustment to personal services.

In addition to the statewide present law adjustment, the Legislative Fiscal Division is requesting additional funding toaddress retention issues in a new proposal.

Funding

The following table shows proposed agency funding by source of authority.

Total Legislative Branch Funding by Source of Authority2023 Biennium Budget Request - Legislative Branch

FundsHB2

OngoingHB2OTO

Non-BudgetedProprietary

StatutoryAppropriation

TotalAll Sources

% TotalAll Funds

General Fund 34,434,845 23,200 0 0 34,458,045 87.49 %State Special Total 4,908,839 16,800 0 0 4,925,639 12.51 %Federal Special Total 0 0 0 0 0 0.00 %Proprietary Total 0 0 0 0 0 0.00 %Other Total 0 0 0 0 0 0.00 %

Total All Funds $39,343,684 $40,000 $0 $0 $39,383,684Percent - Total All Sources 99.90 % 0.10 % 0.00 % 0.00 %

The Legislative Branch is primarily funded with general fund. State special revenues support the costs associated with thestate broadcasting service; the preparation, publication, and distribution of the Montana Code Annotated; and a portion ofthe activities of the Legislative Audit Division.

While not shown in the figure above, the Legislative Branch has statutory appropriation authority for three accounts:

• Legislative Branch reserve account• Legislative audit specialist services reserve account• Legislative Branch retirement termination reserve account

The Legislative Branch reserve account receives unexpended and unencumbered money including funding remaining at the end of the biennium from the “feed bill” (HB 1, the bill that funds the legislative session each biennium) and remaining carryforward appropriations from the various divisions within the branch. The legislative audit specialist services reserve account receives remaining carryforward appropriations from the Legislative Audit Division. The Legislative Branch retirement reserve account has been funded with general fund transfers provided by the legislature or through deposit of carryforward appropriations.

The funds in the Legislative Branch reserve account may be used for major Legislative Branch information technology projects including hardware, software, consulting services for new initiatives, and replacement and upgrading of existing systems. All projects and funding from the Legislative Branch reserve account must be approved by the Legislative Council. In FY 2020, $85,000 in operating expenses and $281,000 in equipment & intangible assets were expended from the Legislative Branch reserve account. Fund balance at the beginning of FY 2021 was $992,088.

The funds in the legislative audit specialist services reserve account may be used for contracted services necessary to provide specialist expertise in support of audit activities. All allocations of funds must be approved by the Legislative Audit Committee. In FY 2020, $2,850 in operating expenses were expended from the legislative audit specialist services account. Fund balance at the beginning of FY 2021 was $47,832.

The funds in the Legislative Branch retirement termination reserve account may be used for staff retirement termination pay in the Legislative Branch. The funds may only be expended with the approval of the appropriate branch division director. In FY 2020, there were no expenditures from the Legislative Branch retirement termination reserve account. Fund balance at the beginning of FY 2021 was $396.



Budget Summary by Category

The following table summarizes the total budget by base, present law adjustments, and new proposals. For a descriptionof these categories, please see the glossary.

Budget Summary by Category------------------------------General Fund------------------------------ -------------------------------Total Funds------------------------------

Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of Budget2021 Base Budget 15,150,597 15,150,597 30,301,194 87.94 % 17,326,672 17,326,672 34,653,344 87.99 %SWPL Adjustments 485,451 882,203 1,367,654 3.97 % 813,580 1,027,866 1,841,446 4.68 %PL Adjustments 1,717,597 719,672 2,437,269 7.07 % 1,845,221 674,945 2,520,166 6.40 %New Proposals 133,884 218,044 351,928 1.02 % 142,284 226,444 368,728 0.94 %

Total Budget $17,487,529 $16,970,516 $34,458,045 $20,127,757 $19,255,927 $39,383,684

HB 2 Language

The Legislative Branch proposes the following language for inclusion in HB 2:

“All appropriations for the Legislative Branch are biennial.”


http://leg.mt.gov/content/Publications/fiscal/leg_reference/LFD-Glossary.pdf

11040 - Legislative Branch 20-Legislative Services Division

Program Biennium Comparison





BienniumChange

Biennium% Change

Personal Services 12,856,026 13,377,990 521,964 4.06 %Operating Expenses 6,378,690 7,226,627 847,937 13.29 %Equipment & Intangible Assets 3,600,200 1,654,196 (1,946,004) (54.05)%Transfers 298,837 288,000 (10,837) (3.63)%

Total Expenditures $23,133,753 $22,546,813 ($586,940) (2.54)%

General Fund 22,409,965 21,883,596 (526,369) (2.35)%State/Other Special Rev. Funds 723,788 663,217 (60,571) (8.37)%

Total Funds $23,133,753 $22,546,813 ($586,940) (2.54)%

Total Ongoing $19,633,753 $22,546,813 $2,913,060 14.84 %Total OTO $3,500,000 $0 ($3,500,000) (100.00)%

Program Description

The Legislative Services Division provides objective research, reference, legal, technical, information technology, andbusiness services to the House, Senate, and other divisions of the Legislative Branch.

Division services include:

1. Bill and amendment drafting, preparation of bills for introduction, and engrossing and enrolling bills;2. Publication and records management of legislative documents of record;3. Preparation, publication, and distribution of the Montana Code Annotated text and annotations;4. Provision of legislative research and reference services;5. Support for session and interim committees;6. Legal services and counseling on legislative matters and agency legal support;7. Review of the text of proposed ballot measures;8. Personnel and business services;9. Planning, installation, and maintenance of branch information technology;

10. Broadcasting of state government and public policy events; and11. Provision of legislative information to the public.

The Legislative Council provides policy guidance to the Legislative Services Division.



Legislative Services DivisonMajor Budget Highlights

• The Legislative Services Division’s 2023 biennium ongoing budgetrequest is approximately $2.9 million or 14.8% higher than the 2021biennium ongoing budget. Significant changes include:

◦ Proposed increases in general fund and state specialrevenue for statewide present law adjustments for personalservices and fixed costs

◦ Proposed increases in general fund for a present lawadjustment mainly comprised of information technologyservice costs

Legislative Action Items

• The legislature may wish to designate $1.1 million in general fundproposed for information technology upgrades as one-time-onlyappropriations, as the expenditures would not be considered ongoing

Program Actuals and Budget Comparison

The following table compares FY 2020 actual expenditures to the 2021 biennium appropriated budget and the2023 biennium budget request by type of expenditure and source of funding.


Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 67.67 67.67 67.67 67.67

Personal Services 6,332,061 6,354,746 6,501,280 6,673,073 6,704,917Operating Expenses 3,108,113 3,391,445 2,987,245 3,764,076 3,462,551Equipment & Intangible Assets 2,469,472 2,603,200 997,000 1,059,696 594,500Transfers 142,042 149,419 149,418 144,000 144,000


General Fund 11,542,649 11,972,417 10,437,548 11,131,659 10,751,937State/Other Special Rev. Funds 509,039 526,393 197,395 509,186 154,031

Total Funds $12,051,688 $12,498,810 $10,634,943 $11,640,845 $10,905,968

Total Ongoing $9,711,336 $9,898,810 $9,734,943 $11,640,845 $10,905,968Total OTO $2,340,352 $2,600,000 $900,000 $0 $0

Program Discussion -

FY 2020 Appropriations Compared to FY 2020 Actual Expenditures

The Legislative Services Division expended 96.4% of its $12.5 million FY 2020 modified HB 2 budget. Personal serviceswere 99.6% expended, operating expenses were 91.6% expended, equipment and intangible assets were 94.9% expendedand transfers-out were 95.1% expended. Operating expenses, budgeted at $3.4 million, had a slightly lower percentage


Program Highlights

LFDCOMMENT


expended because expenditures for the $200,000 biennial appropriation established for furniture for the House and Senateand were included in FY 2020 and will be expended in FY 2021.


Overall the FY 2021 appropriation is $1.9 million lower than the FY 2020 appropriation. In FY 2020 restricted biennialappropriations were established for the following projects without a corresponding level of appropriation in FY 2021:

• Bill drafting editor - $500,000• Digital vote boards - $700,000• Chamber design for session system replacement - $300,000• House and senate furniture replacement - $200,000

This makes up the majority of the differences in operating expenses and equipment between the two fiscal years.


The Legislative Services Division is requesting an increase above the 2021 biennium base budget of approximately $1.9million in FY 2022 and $1.2 million in FY 2023. The proposed increases are primarily due to present law adjustmentsfor information technology projects. This includes funding for legislative audit work paper automation and upgrades to thelaws, legislator portal, codification application, hearing room and broadcasting systems. Higher costs for State InformationTechnology Services Division assessments related to device authentication and network connectivity are also included.

Further detail on the Legislative Services Division’s proposals are provided in the Present Law Adjustments section on thefollowing page.

Program Personal Services

Personal services were $6.5 million or 66.8% of the FY 2021 base budget. The Legislative Services Division proposes astatewide present law increase for personal services of about $172,000 in FY 2022 and $204,000 in FY 2023. The majorityof the increase is due to annualizing the pay plan authorized by the 2019 Legislature and statutorily required increases inretirement costs and longevity, which are considered expected changes in the figure in the Agency Discussion.

The statewide present law adjustment for personal services includes a funding shift, reducing general fundand increasing state special revenue in FY 2022 to support personal services. The cyclical nature of thelegislature includes changes to statutes in the odd year, after the legislature finishes its work. Those

changes are codified by the Legislative Services Division. Once the codification is completed, copies of the revisedMontana Code Annotated (MCA) are sold to the public. Most sales occur in the even year of the biennium. As revenuesfor the sale of the MCAs deposited into the state special revenue fund fluctuate between fiscal years, the funding supportingadjustments to personal services also fluctuates.

Funding

The following table shows proposed program funding by source of authority.



Legislative Branch, 20-Legislative Services DivisionFunding by Source of Authority

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

01100 General Fund 21,883,596 0 0 0 21,883,596 97.06 %

02042 Legislative Audit 0 0 0 0 0 0.00 %02800 Reimbursable Activities 603,865 0 0 0 603,865 91.05 %02985 State Government Broadcasting 59,352 0 0 0 59,352 8.95 %

State Special Total $663,217 $0 $0 $0 $663,217 2.94 %

03615 LEG COVID19 EXP 0 0 0 0 0 0.00 %Federal Special Total $0 $0 $0 $0 $0 0.00 %

Proprietary Total $0 $0 $0 $0 $0 0.00 %

Total All Funds $22,546,813 $0 $0 $0 $22,546,813

The Legislative Services Division is mainly funded with general fund. State special revenue supports the costs associatedwith the state broadcasting services and the preparation, publication, and distribution of the Montana Code Annotated.

Figure 3 shows the fund balance, revenues, and expenditures for the reimbursable activities account between FY 2018 andFY 2023.

Figure 3Legislative Branch

Reimbursable ActivitiesActuals Actuals Actuals Budgeted Proposed ProposedFY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023

Beginning Fund Balance $51,753 $294,203 $97,078 $257,879 $209,859 $293,374

RevenuesSale of documents 638,009 126,287 580,577 125,000 575,000 10,000Grants/Transfers/Misc 0 0 100 0 0 0

Total Revenues 638,009 126,287 580,677 125,000 575,000 10,000

ExpendituresPersonal services 54,338 177,704 203,276 53,743 253,743 63,743Operating expenses 341,221 145,708 288,130 119,277 237,742 48,637

Total Expenditures 395,559 323,412 491,406 173,020 491,485 112,380

Adjustment 0 0 71,530 0 0 0

Ending Fund Balance $294,203 $97,078 $257,879 $209,859 $293,374 $190,994

State special revenue collections from the sale of the Montana Code Annotated and ancillary publications have decreased because fewer copies are printed and sold due to the availability of the publications digitally. While revenues are decreasing, costs to produce the MCA have not been declining.

Program Budget Summary by Category

The following table summarizes the total budget by base, present law adjustments, and new proposals. For a description of these categories, please see the glossary.




Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of Budget2021 Base Budget 9,537,548 9,537,548 19,075,096 87.17 % 9,734,943 9,734,943 19,469,886 86.35 %SWPL Adjustments 138,004 592,081 730,085 3.34 % 340,704 604,781 945,485 4.19 %PL Adjustments 1,450,218 616,419 2,066,637 9.44 % 1,559,309 560,355 2,119,664 9.40 %New Proposals 5,889 5,889 11,778 0.05 % 5,889 5,889 11,778 0.05 %

Total Budget $11,131,659 $10,751,937 $21,883,596 $11,640,845 $10,905,968 $22,546,813

As shown in the figure above, the 2021 base budget is $900,000 less than total FY 2021 budget reflected in the agencyactuals and budget comparison table. In FY 2021, one-time-only funding was provided to the Legislative Services Divisionfor information technology projects.

Present Law Adjustments

The "Present Law" Adjustments table shows the changes from the base appropriation to the proposed budget. "StatewidePresent Law" adjustments (DP 1, DP 2, DP 3) are standard categories of adjustments made to all agencies. Decisions onthese items were applied globally to all agencies.

Present Law Adjustments-------------------------------------Fiscal 2022------------------------------------- --------------------------------------Fiscal 2023-------------------------------------

FTEGeneral

FundState

SpecialFederalSpecial

TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds

DP 1 - Personal Services0.00 (28,207) 200,000 0 171,793 0.00 193,637 10,000 0 203,637

DP 2 - Fixed Costs0.00 166,237 2,700 0 168,937 0.00 398,460 2,700 0 401,160

DP 3 - Inflation Deflation0.00 (26) 0 0 (26) 0.00 (16) 0 0 (16)

DP 4 - Present Law Adjustment0.00 1,450,218 109,091 0 1,559,309 0.00 616,419 (56,064) 0 560,355

Grand Total All Present Law Adjustments0.00 $1,588,222 $311,791 $0 $1,900,013 0.00 $1,208,500 ($43,364) $0 $1,165,136

*"Total Funds" amount includes funding from sources other than General Fund, State Special, or Federal Special (i.e. Proprietary).

DP 1 - Personal Services -

The executive requests adjustments to the present law personal services budget. This request has been broken into thefollowing categories, and further detail is shown in the agency summary:

• Expected changes• Personal services management decisions• Modifications made to the personal services budget in the 2021 biennium

DP 2 - Fixed Costs -

The executive requests adjustments to provide the funding required in the proposed budget to pay increases in fixed costsassessed by other agencies within state government for the services they provide. Examples include: warrant writer, motorpool, etc. The rates charged for these services are approved in the section of the budget that provides the services.


LFDCOMMENT

LFDISSUE


DP 3 - Inflation Deflation -

The executive requests adjustments to reflect budgetary changes generated from the application of inflation and deflationfactors to specific expenditure accounts. Affected accounts include food, postage, gasoline, and others.

DP 4 - Present Law Adjustment -

This proposal includes changes from the FY 2021 base budget as follows:

• Legislative audit work paper automation - $360,000• Laws II upgrades - $125,000• Legislator portal - $40,000• Codification application upgrade – $50,000• Hearing room audio /video upgrades - $325,000• Broadcasting upgrades - $173,000

ITSD increased due to rate increases and increase in units

• Network connectivity increase 1 gigabyte (gb) to 10 gb connections - $93,000• Remote services (video conferencing licenses) - $17,000• Device authentication - $220,000• Enterprise rates (including Service Now) increased - $35,000

Contingency Services

• Programming - $210,000• Web development - $105,000

As shown in the present law adjustment table, the Legislative Services Division is proposing a fund switchof $56,064 in FY 2023 between state special revenue and general fund. By statute, fund switches are to beincluded in the budget as a new proposal. The legislature may wish to consider this portion of DP 4 as a

new proposal.

Legislature may wish to designate $1.1 million requested for proposed upgrades as one-time-only

Included in the proposal is $1.1 million in general fund for new automation system or upgrades to existingsystems. These expenditures are not ongoing in future biennia. The legislature may wish to designate the costs

of new automation systems and the system upgrades as one-time-only.

Legislative Option

• Designate the automation system and system upgrades of $1.1 million in the 2023 biennium as one-time-only• Adopt the Legislative Service Division proposal for funding the present law adjustment



New Proposals-------------------------------------Fiscal 2022------------------------------------- --------------------------------------Fiscal 2023-------------------------------------

FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds

DP 2005 - NRIS/GIS Fixed Costs0.00 5,889 0 0 5,889 0.00 5,889 0 0 5,889

Total 0.00 $5,889 $0 $0 $5,889 0.00 $5,889 $0 $0 $5,889


DP 2005 - NRIS/GIS Fixed Costs -

The 2019 Legislature enacted HB 633 requiring the Legislative Finance Committee (LFC) to conduct a study of the fundingof digital library services. The LFC recommended that the Office of Budget and Program Planning include an assessmentfor the natural resource information system (NRIS) and the geographic information system (GIS) as a fixed cost to stateagencies beginning in the 2023 biennium. The assessment is made to those agencies that utilize the NRIS/GIS.


New Proposals

The New Proposals table shows new changes to spending

11040 - Legislative Branch 21-Legis. Committees & Activities






BienniumChange

Biennium% Change

Personal Services 297,484 336,944 39,460 13.26 %Operating Expenses 1,664,232 1,756,876 92,644 5.57 %


General Fund 1,661,716 2,093,820 432,104 26.00 %State/Other Special Rev. Funds 300,000 0 (300,000) (100.00)%

Total Funds $1,961,716 $2,093,820 $132,104 6.73 %

Total Ongoing $1,661,716 $2,093,820 $432,104 26.00 %Total OTO $300,000 $0 ($300,000) (100.00)%

Program Description

The Legislative Committees and Activities Program supports the activities of legislators and legislative committees that areconducted during the interim between legislative sessions.

Program expenditures support :

1. The Legislative Council;2. Interim study activities, as defined in 5-5-202 through 5-5-217, MCA;3. Cooperative interstate, international, and intergovernmental activities, as outlined in 5-11-303 through 5-11-305,

MCA; and4. Other legislative activities for which appropriations are made.



Legislative Committees & Activities DivisionMajor Budget Highlights

• The Legislative Committee and Activities’ 2023 biennium budgetrequest is approximately $132,000 or 6.7% higher than the 2021biennium budget. Significant changes include:

◦ Proposed increase due to a statewide present lawadjustment for personal services

◦ Proposed increase due to present law adjustments forincreases in national organizational dues, increasedcommittee membership, and the addition of two committees


• The budget proposal for the Legislative Committee and Activities’includes about $101,000 to carry out the function of the Districtand Apportionment Commission during the 2023 biennium. Thelegislature may wish to designate appropriations for the Districtingand Apportionment Commission as one-time-only as the committeemeets only once every ten years




Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 0.97 0.97 0.97 0.97

Personal Services 153,274 180,925 116,559 205,095 131,849Operating Expenses 730,155 1,027,455 636,777 966,602 790,274

Total Expenditures $883,429 $1,208,380 $753,336 $1,171,697 $922,123

General Fund 750,958 908,380 753,336 1,171,697 922,123State/Other Special Rev. Funds 132,471 300,000 0 0 0

Total Funds $883,429 $1,208,380 $753,336 $1,171,697 $922,123

Total Ongoing $750,958 $908,380 $753,336 $1,171,697 $922,123Total OTO $132,471 $300,000 $0 $0 $0



Legislative Committees and Activities expended 73.1% of its $1.2 million FY 2020 modified HB 2 budget. Personal serviceswere 84.7% expended and operating expenses were 71.1% expended. Both categories show a lower percentage ofexpenditure due to the impacts of the COVID-19 pandemic on the ability of the interim committees to meet in person.


Program Highlights



The primary difference between FY 2020 appropriations compared to FY 2021 appropriations is the cyclical nature of thelegislative business cycle with the majority of the interim work of the legislature occurring in the first year of the biennium.


The Legislative Committees and Activities is requesting an increase of about $418,000 in FY 2022 and $169,000 in FY2023 above the FY 2021 base budget. Statewide present law adjustments for personal services make up about 21.2% ofthe increase in FY 2022 and 9.1% in FY 2023 while present law adjustments to operating expenses make up the majorityof the remainder. Included in the request for present law adjustments is about $101,000 for the District and ApportionmentCommission (DAC) which meets only every ten years once the federal census is completed. DAC uses the population datato draw the boundaries of congressional and legislative districts. Please see LFD Issues under the present law adjustmentsfor more information on this request.


Personal services were approximately $116,599 or 15.5% of the FY 2021 base budget. The Legislative Committees andActivities proposes a statewide present law adjustment of about $89,000 in FY 2022 and $15,000 in FY 2023.

The difference between the FY 2022 and FY 2023 proposed adjustments is due to the cyclical nature of the legislativecycle. The odd year in the biennium, which is the base budget year, has a lower budget because the interim committeeshave fewer meetings during the year due to the legislative session. Therefore, the adjustment for FY 2022 is largerbecause of additional funding required to go from the base budget with minimal interim committee meetings to FY 2022when the majority of the interim meetings occur.

Additionally, there are increases related to additional meeting days and increases in committee secretary hours, in part dueto the District and Apportionment Commission.

Funding


Legislative Branch, 21-Legis. Committees & ActivitiesFunding by Source of Authority

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

01100 General Fund 2,093,820 0 0 0 2,093,820 100.00 %

02573 Leg Interim Comm Activities 0 0 0 0 0 0.00 %State Special Total $0 $0 $0 $0 $0 0.00 %

Federal Special Total $0 $0 $0 $0 $0 0.00 %


Total All Funds $2,093,820 $0 $0 $0 $2,093,820

Legislative Committees and Activities is funded entirely with general fund.





LFDISSUE



Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of Budget2021 Base Budget 753,336 753,336 1,506,672 71.96 % 753,336 753,336 1,506,672 71.96 %SWPL Adjustments 88,536 15,290 103,826 4.96 % 88,536 15,290 103,826 4.96 %PL Adjustments 263,925 87,597 351,522 16.79 % 263,925 87,597 351,522 16.79 %New Proposals 65,900 65,900 131,800 6.29 % 65,900 65,900 131,800 6.29 %

Total Budget $1,171,697 $922,123 $2,093,820 $1,171,697 $922,123 $2,093,820




FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds

DP 1 - Personal Services0.00 88,536 0 0 88,536 0.00 15,290 0 0 15,290

DP 4 - Present Law Adjustment0.00 263,925 0 0 263,925 0.00 87,597 0 0 87,597

Grand Total All Present Law Adjustments0.00 $352,461 $0 $0 $352,461 0.00 $102,887 $0 $0 $102,887






This proposal includes changes from the 2021 base budget for the following:

• The Districting and Apportionment Commission occurs every 10 years. The 2023 biennium includes thiscommittee -$101,000

• Transportation Committee was established last biennium (5-5-223, MCA) with a limited budget attached -$32,000• Committee membership was increased for some committees - $53,000• Legislator activities dues increased 3.0% - $22,000

Legislature may wish to designate the funds for the Districting and Apportionment Commission one-time-only asthe DAC will not meet in the biennia following the 2023 biennium

Statute requires the Districting and Apportionment Commission met to prepare plans for redistricting andreapportioning the state into legislative and congressional districts based on the federal census which is taken every 10



years. As this is not an ongoing process the legislature may wish to designate the costs of the DAC of $101,000 generalfund as one-time-only.

Legislative Option

• Designate the DAC costs of $101,000 in the 2023 biennium as one-time-only• Adopt the Legislative Service Division proposal for funding the DAC

New Proposals



FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds

DP 2105 - Education Commission of the States (BIEN)0.00 65,900 0 0 65,900 0.00 65,900 0 0 65,900

Total 0.00 $65,900 $0 $0 $65,900 0.00 $65,900 $0 $0 $65,900


DP 2105 - Education Commission of the States (BIEN) -

This new proposal is requesting general fund appropriations for participation in the Education Commission of the States,pursuant to 20-2-501 through 505, MCA. The request includes funds for the following participation dues to the EducationCommission of the States and travel for two legislative members of the Education Compact to attend annual meetings ofthe commission.


11040 - Legislative Branch 27-Fiscal Analysis & Review






BienniumChange

Biennium% Change

Personal Services 4,058,377 4,462,612 404,235 9.96 %Operating Expenses 196,367 198,393 2,026 1.03 %


General Fund 4,254,744 4,661,005 406,261 9.55 %

Total Funds $4,254,744 $4,661,005 $406,261 9.55 %

Total Ongoing $4,254,744 $4,661,005 $406,261 9.55 %Total OTO $0 $0 $0 0.00 %

Program Description

The Legislative Fiscal Division provides the legislature with objective fiscal information and analysis relevant to Montanapublic policy and budget determination.

Division services include:

1. Fiscal analysis of state government and the furnishing of information bearing upon the financial matters of thestate;

2. Identification of ways to effect economy and efficiency in state government;3. Estimation of revenue and analysis of tax policy;4. Analysis of the executive budget;5. Compiling and analyzing fiscal information for legislators and legislative committees; and6. Staffing and support for legislative committees, including the preparation and processing of the appropriation bills

for the legislative, judicial, and executive agencies.

The Legislative Finance Committee provides guidance to the Legislative Fiscal Division.

Program Highlights

Legislative Fiscal DivisionMajor Budget Highlights

• The Legislative Fiscal Division’s 2023 biennium budget request isapproximately $406,000 or 9.6% higher than the 2021 bienniumongoing budget. Significant changes include:

◦ Proposed increase due to a statewide present lawadjustment for personal services

◦ Proposed decreases due to present law adjustments forcosts associated with the legislative session that are notneeded when the legislature is not in session

◦ A new proposal to address retention issues within thedivision






Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 20.50 20.50 20.50 20.50

Personal Services 1,932,771 2,015,704 2,042,673 2,186,521 2,276,091Operating Expenses 36,266 86,169 110,198 88,072 110,321


General Fund 1,969,037 2,101,873 2,152,871 2,274,593 2,386,412

Total Funds $1,969,037 $2,101,873 $2,152,871 $2,274,593 $2,386,412

Total Ongoing $1,969,037 $2,101,873 $2,152,871 $2,274,593 $2,386,412Total OTO $0 $0 $0 $0 $0



The Legislative Fiscal Division expended 93.7% of its $2.1 million FY 2020 modified HB 2 budget. Personal services were95.9% expended and operating expenses were 42.1% expended. Significant staff turnover in FY 2020 resulted in lowerexpenditures for personal services. Operating expenses show a lower percentage of expenditure due to the impacts of theCOVID-19 pandemic on the ability of the Legislative Finance Committee to meet in person, and curtailment of travel forstaff training.


Appropriations for FY 2021 appropriations for personal services are higher than FY 2020 due to the pay plan. Higheroperating expenses in FY 2021 reflect the anticipated costs associated with the 2021 legislative session.


The Legislative Fiscal Division’s 2023 biennium budget request is approximately $406,000 or 9.6% higher than the 2021biennium ongoing budget. Significant changes include:

• Proposed increase due to a statewide present law adjustment for personal services and fixed costs• Proposed decreases due to present law adjustments for printing, supplies, and travel that are not needed in the

interim• A new proposal to address retention issues within the division


Personal services were $2.0 million or 94.9% of the FY 2021 base budget. The Legislative Fiscal Division proposes anincrease of about $93,000 in FY 2022 and $99,000 in FY 2023 in the statewide present law adjustment. Expected changesand management decision are contributing to the statewide present law adjustment request. For a breakdown of theseamounts refer to Figure 2 in the agency narrative.

In addition, the Legislative Fiscal Division is requesting funding to address staff retention issues of about $50,000 in FY2022 and $135,000 in FY 2023.



Funding


Legislative Branch, 27-Fiscal Analysis & ReviewFunding by Source of Authority

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

01100 General Fund 4,661,005 0 0 0 4,661,005 100.00 %

State Special Total $0 $0 $0 $0 $0 0.00 %



Total All Funds $4,661,005 $0 $0 $0 $4,661,005

The Legislative Fiscal Division is entirely funded with general fund.




Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of Budget2021 Base Budget 2,152,871 2,152,871 4,305,742 92.38 % 2,152,871 2,152,871 4,305,742 92.38 %SWPL Adjustments 93,367 98,886 192,253 4.12 % 93,367 98,886 192,253 4.12 %PL Adjustments (22,140) 0 (22,140) (0.47)% (22,140) 0 (22,140) (0.47)%New Proposals 50,495 134,655 185,150 3.97 % 50,495 134,655 185,150 3.97 %

Total Budget $2,274,593 $2,386,412 $4,661,005 $2,274,593 $2,386,412 $4,661,005




FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds


DP 2 - Fixed Costs0.00 140 0 0 140 0.00 202 0 0 202


DP 4 - Present Law Adjustment0.00 (22,140) 0 0 (22,140) 0.00 0 0 0 0














This proposal includes changes from the 2021 budget starting point for cyclical reductions to the FY 2022 general fundappropriations for session related operating expenditures.

New Proposals



FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds

DP 2705 - LFD Additional Personal Services (BIEN)0.00 50,495 0 0 50,495 0.00 134,655 0 0 134,655

Total 0.00 $50,495 $0 $0 $50,495 0.00 $134,655 $0 $0 $134,655


DP 2705 - LFD Additional Personal Services (BIEN) -

The Legislative Fiscal Division (LFD) is having significant recruitment and retention issues relative to pay and requestsconsideration of this new proposal meant to address these challenges. This change package is submitted as a placeholderfor a broader discussion during session of legislative branch employee pay. The three directors are working with therespective administrative committees (Legislative Council, Audit Committee, and Finance Committee) to develop a payproposal for the branch to cover competitive and other pay concerns. In addition to the pay concerns, the directors will berequesting a $300,000 transfer from the general fund to the legislative branch retirement reserve fund to offset a portion ofthe anticipated retirement payout expense.

In the last year, five legislative fiscal analysts left the Legislative Fiscal Division for higher paying positions in executivebranch agencies or private industry. Experienced LFD staff are being hired by these entities for their advanced skills andknowledge developed during their tenure with LFD. Staff hired by executive branch agencies have received base salaryincreases averaging $8,100, or 11.2% above their base salary at the LFD.



Figure 4 shows the comparison between average Executive Branch base salaries and average Legislative Branch basesalaries for various fiscal analyst positions.

Figure 4Comparison Between LFD and Executive Branch Base Pay

LFD ExecutiveAverage Average

Position Base Salary Base Salary Difference % DifferenceFiscal Analyst I 63,073 68,562 (5,489) -8.7%Senior Fiscal Analyst 77,270 95,288 (18,018) -23.3%Lead Fiscal Analyst 80,100 96,470 (16,370) -20.4%Web Communications Tech 42,950 46,508 (3,558) -8.3%Fiscal/Operations Manager 102,404 126,755 (24,351) -23.8%Source: Legislative Services Division Human Resources

As shown, fiscal analyst positions within the Executive Branch have average base salaries significantly higher than thosewithin the LFD.

The Legislative Branch utilizes a salary survey and target market ratios to establish base salaries. Target market ratiosare a methodology that incrementally increases the base salary for a position with increasing years of experience. Inrecent biennia, budget constraints have not allowed the Legislative Fiscal Division to increase base salaries to the levelrecommended by the target market ratios. If LFD base salaries were to be raised to the level recommended by targetmarket ratios in the 2023 biennium a 10.5% increase in personal services funding for salaries would be required.

In an effort to start on an incremental path to address these retention issues over the next few biennia the LegislativeFiscal Division is requesting general fund for additional personal services of $50,500 or 3.0% in FY 2022 and an additional$84,200 or 5.0% in FY 2023 for a biennial total of $185,200. These amounts will not close the entire 10.5% gap withtarget market ratios but will be a meaningful step in the division’s efforts to move salaries closer to similar positions in theexecutive branch.


11040 - Legislative Branch 28-Audit & Examination






BienniumChange

Biennium% Change

Personal Services 8,922,800 9,566,211 643,411 7.21 %Operating Expenses 474,398 515,835 41,437 8.73 %


General Fund 5,409,723 5,819,624 409,901 7.58 %State/Other Special Rev. Funds 3,987,475 4,262,422 274,947 6.90 %

Total Funds $9,397,198 $10,082,046 $684,848 7.29 %

Total Ongoing $9,357,198 $10,042,046 $684,848 7.32 %Total OTO $40,000 $40,000 $0 0.00 %

Program Description

The division is the state's independent auditor and a key part of the Legislature's responsibility for strict accountabilityof public funds. The division's products and services provide legislative and executive managers of the public trust withfactual, objective and unbiased information on how state government works and how to make it work better. Theseproducts and services include the following:

• Auditing the state's Comprehensive Annual Financial Report and the biennial Federal Single Audit• Conducting performance audits to focus on agency or program operations and management, efficiency and

effectiveness in delivery of government services, or public policy outcomes and impacts• Conducting financial-compliance audits of each state agency at least every two years to assess adherence to

accounting principles, compliance with material laws, and internal controls• Conducting information systems audits to address the design, operation and maintenance of technology systems

and processes, and providing assurances on the quality and reliability of system data• Maintaining the state's hotline for reporting fraud, waste and abuse in state government and conducting work to

verify allegations and substantiate reported cases• Reporting violations of penal statutes, instances of misfeasance, malfeasance, or nonfeasence, and any instances

of apparent criminal violations of the state code of ethics discovered in an audit• Auditing records of entities under contract with the state• Assisting the Legislature, its committees, and its members by providing information related to the fiscal affairs of

state government

The Legislative Auditor is responsible for managing the division, and appointing and defining the duties of the division's employees. The Legislative Auditor is appointed by the Legislative Audit Committee, a twelve-member, bipartisan, bicameral permanent joint committee of the legislature.



Legislative Audit DivisonMajor Budget Highlights

• The Legislative Audit Division’s 2023 biennium budget request isabout $685,000 or 7.3% higher than the 2021 biennium budget.Significant changes include:

◦ Proposed changes for statewide adjustments for personalservices, fixed costs, and inflation/deflation

◦ Proposed increase for training on information technology forthe statewide accounting, budgeting, and human resourcesystem (SABHRS)




Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 52.75 52.75 52.75 52.75

Personal Services 4,027,433 4,432,149 4,490,651 4,774,242 4,791,969Operating Expenses 236,582 259,527 214,871 266,380 249,455


General Fund 2,396,842 2,689,904 2,719,819 2,909,580 2,910,044State/Other Special Rev. Funds 1,867,173 2,001,772 1,985,703 2,131,042 2,131,380

Total Funds $4,264,015 $4,691,676 $4,705,522 $5,040,622 $5,041,424

Total Ongoing $4,253,635 $4,671,676 $4,685,522 $5,020,622 $5,021,424Total OTO $10,380 $20,000 $20,000 $20,000 $20,000



The Legislative Audit Division expended 90.9% of its $4.7 million FY 2020 modified HB 2 budget. Personal services were90.1% expended and operating expenses were 91.2% expended. Significant staff turnover in FY 2020 resulted in lowerexpenditures for personal services.


Appropriations for FY 2021 appropriations for personal services are higher than FY 2020 due to the pay plan. Operatingexpenses are higher in FY 2020 due to appropriations established for:

• Legislative Branch audit• Government Accountability Office required peer review• Actuary services for other post-employment benefits


Program Highlights


The Legislative Audit Division is requesting an increase above the FY 2021 base budget of about $355,000 in FY 2022and $356,000 in FY 2023. The increases are mainly due to statewide present law adjustments for personal services and arequest to restore one-time-only training funds.


Personal services were $4.5 million or 95.8% of the FY 2021 base budget. The Legislative Audit Division proposes anincrease of $284,000 in FY 2022 and $301,000 in FY 2023 in the statewide present law adjustment. Expected changesand management decision are contributing to the statewide present law adjustment request. For a breakdown of theseamounts refer to Figure 2 in the agency narrative.

Funding


Legislative Branch, 28-Audit & ExaminationFunding by Source of Authority

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

01100 General Fund 5,796,424 23,200 0 0 5,819,624 57.72 %

02042 Legislative Audit 4,245,622 16,800 0 0 4,262,422 100.00 %State Special Total $4,245,622 $16,800 $0 $0 $4,262,422 42.28 %



Total All Funds $10,042,046 $40,000 $0 $0 $10,082,046

The Legislative Audit Division is funded with general fund and state special revenue. The state special revenue funds aregenerated through a charge to state agencies for legislative audit services. The charge is based on a billing rate calculatedin accordance with federal regulations for audit services.




Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of Budget2021 Base Budget 2,706,842 2,706,842 5,413,684 93.02 % 4,685,522 4,685,522 9,371,044 92.95 %SWPL Adjustments 165,544 175,946 341,490 5.87 % 290,973 308,909 599,882 5.95 %PL Adjustments 25,594 15,656 41,250 0.71 % 44,127 26,993 71,120 0.71 %New Proposals 11,600 11,600 23,200 0.40 % 20,000 20,000 40,000 0.40 %

Total Budget $2,909,580 $2,910,044 $5,819,624 $5,040,622 $5,041,424 $10,082,046

As shown in the figure above, the 2021 base budget is $20,000 less than total FY 2021 budget reflected in the agencyactuals and budget comparison table. In FY 2021, one-time-only funding was provided to the Legislative Audit Division fortraining on information technology related to SABHRS.








FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds

DP 1 - Personal Services0.00 164,483 119,108 0 283,591 0.00 174,764 126,554 0 301,318

DP 2 - Fixed Costs0.00 1,557 6,681 0 8,238 0.00 1,493 6,635 0 8,128

DP 3 - Inflation Deflation0.00 (496) (360) 0 (856) 0.00 (311) (226) 0 (537)

DP 4 - Present Law Adjustment0.00 25,594 18,533 0 44,127 0.00 15,656 11,337 0 26,993

Grand Total All Present Law Adjustments0.00 $191,138 $143,962 $0 $335,100 0.00 $191,602 $144,300 $0 $335,902






The executive requests adjustments to provide the funding required in the proposed budget to pay increases in fixed costs assessed by other agencies within state government for the services they provide. Examples include: warrant writer, motor pool, etc. The rates charged for these services are approved in the section of the budget that provides the services.


The executive requests adjustments to reflect budgetary changes generated from the application of inflation and deflation factors to specific expenditure accounts. Affected accounts include food, postage, gasoline, and others.


This proposal includes present law changes from the 2021 base budget for the Legislative Audit Division cyclical contracted services and for the Government Accountability Office required Peer Review.




FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds

DP 2805 - LAD IT Training (OTO)0.00 11,600 8,400 0 20,000 0.00 11,600 8,400 0 20,000

Total 0.00 $11,600 $8,400 $0 $20,000 0.00 $11,600 $8,400 $0 $20,000


DP 2805 - LAD IT Training (OTO) -

This new proposal is requesting one-time-only general fund and state special revenue fund appropriations for FY 2022 andFY 2023 for the information technology training and Legislative Audit SABHRS support.


New Proposals


11120 - Consumer Counsel SUMMARY






BienniumChange

Biennium% Change

Personal Services 1,340,486 1,367,909 27,423 2.05 %Operating Expenses 1,974,460 2,014,669 40,209 2.04 %Debt Service 2,916 3,332 416 14.27 %


State/Other Special Rev. Funds 3,317,862 3,385,910 68,048 2.05 %

Total Funds $3,317,862 $3,385,910 $68,048 2.05 %


Mission Statement

To represent the utility and transportation consuming public of the state of Montana in hearings before the Public ServiceCommission or any other successor agency, and before state and federal courts and administrative agencies.

Please refer to the agency profile for the Consumer Counsel at https://leg.mt.gov/lfd/state-agency-profiles/montana-consumer-counsel for additional information about the agency’s organization structure, historical expenditures, FY 2020expenditure dashboard, and recent studies, audits, and legislation.

Agency Highlights

Consumer CounselMajor Budget Highlights

• The 2023 biennium budget request for personal services is about$27,000 or 2.1% higher than the 2021 biennium budget. This isprimarily due to expected changes for annualizing personal servicescosts and changes in benefits

• The 2023 biennium budget request for operating expenses is about$40,000 or 2.0% higher than the 2021 biennium budget. This is dueto anticipated increases in rent, state information technology fixedcosts, and statewide indirect costs




http://leg.mt.gov/lfd/state-agency-profiles/montana-consumer-counsel

http://leg.mt.gov/lfd/state-agency-profiles/montana-consumer-counsel



Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 5.54 5.54 5.54 5.54

Personal Services 585,680 667,592 672,894 681,968 685,941Operating Expenses 487,460 986,895 987,565 1,007,278 1,007,391Debt Service 1,248 1,250 1,666 1,666 1,666


State/Other Special Rev. Funds 1,074,388 1,655,737 1,662,125 1,690,912 1,694,998

Total Funds $1,074,388 $1,655,737 $1,662,125 $1,690,912 $1,694,998


Agency Discussion


The Consumer Counsel expended 64.9% of its $1.7 million FY 2020 modified HB 2 budget. Personal services were 87.7%expended and operating expenses were 49.4% expended. Personal services make up 40.3% of the FY 2020 modified HB2 budget. Spending is lower than anticipated due to staff retention related to the half time position within the agency.

Operating expenses make up 59.6% of the FY 2020 modified HB 2 budget. The low level of spending in operatingexpenses is due to two main causes:

• The 2019 Legislature provided the Consumer Counsel with $150,000 in state special revenue funding in FY2020 as a contingency for variations in caseload. Public Service Commission filings and state and federal courthearings have not required use of these funds

• The operating expenses budget includes $840,000 for other services, which is 44.5% expended at fiscal yearend.The operating expenses include the $150,000 in contingency funding. In previous biennia, the Consumer Counselhas contracted for professional and consulting services for expert analysis of utility cases and issues. The costsfluctuate based on the utility filings with the Public Service Commission and the need for these contracted serviceshas been low in FY 2020.


FY 2021 appropriations for the Consumer Counsel are slightly higher than FY 2020 mostly due to the pay plan implemented by the 2019 Legislature.


Figure 1 illustrates the beginning FY 2021 budget as adopted by the 2019 Legislature compared to the finalized FY 2021 base budget, which included modifications as approved by the approving authority (as authorized in statute) during the interim. The FY 2021 base budget was agreed upon by the executive and legislative branches to be the point from which any changes would be recorded for the 2023 biennium budgeting process.


LFDCOMMENT


The Consumer Counsel did not have any modifications to the budget adopted by the 2019 Legislature.

Executive Request

The executive budget request for the Montana Consumer Counsel includes increases in state special revenue of about$29,000 in FY 2022 and $33,000 in FY 2023. The proposed increases are primarily due to statewide present law adjustments for personal services and a present law adjustment for operating expenses. These proposals are discussed in further detail in the Present Law Adjustments section below.

In previous biennia, the Montana Consumer Counsel has received a caseload contingency appropriation.This funding is provided for the potential of unusually large, controversial, or complicated cases that requireagency intervention. The 2019 Legislature approved $150,000 in each fiscal year for caseload contingency

funding and designated the appropriation as biennial. This funding is included in the Montana Consumer Counsel’s FY2021 base budget and as such is no longer designated as biennial or restricted. The legislature may wish to designate thefunding as a biennial appropriation in the 2023 biennium and restrict its use to caseload contingency.






The figure below shows the analysis of the executive budget for personal services compared to the expected personal services budget for each program.


Figure 1

FY 2021 Legislative Appropriations Consumer CounselExecutive % Change


Authority Action

672,894 0.0%01 ADMINISTRATIVE PROGRAM61000 Personal Services62000 Operating Expenses 989,231

- 672,894- 989,231 0.0%

01 ADMINISTRATIVE PROGRAM Total 1,662,125 - 1,662,125 0.0%11120 CONSUMER COUNSEL Total 1,662,125 - 1,662,125 0.0%


Funding


Total Consumer Counsel Funding by Source of Authority2023 Biennium Budget Request - Consumer Counsel

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

General Fund 0 0 0 0 0 0.00 %State Special Total 3,385,910 0 0 0 3,385,910 100.00 %Federal Special Total 0 0 0 0 0 0.00 %Proprietary Total 0 0 0 0 0 0.00 %Other Total 0 0 0 0 0 0.00 %

Total All Funds $3,385,910 $0 $0 $0 $3,385,910Percent - Total All Sources 100.00 % 0.00 % 0.00 % 0.00 %

The Montana Consumer Counsel is funded by state special revenue generated by fees imposed on all regulated entities under the jurisdiction of the Public Service Commission. The funding formula is specified in 69-1-223, MCA. Each year the Department of Revenue determines the total gross operating revenue generated by all regulated activities within the state for the previous year. The Department of Revenue then computes the percentage tax necessary to yield an amount equal to the current appropriation, with no excess funds. If collection of excess revenue occurs, the amount charged to the regulated utilities for the following year is reduced. Figure 3 shows the revenues, expenditures, and fund balance for the state special revenue fund between FY 2018 and FY 2023.


Personal Services Present LawDP 1 - FY 2022Expected Management Budget DP1

Program Changes Decisions Modifications SWPL01 ADMINISTRATIVE PROGRAM 5,933 3,141 0 9,074Agency Total $ 5,933 $ 3,141 $ - $ 9,074

Personal services were $672,894 or 40.5% of the FY 2021 base budget. The Montana Consumer Counsel proposes anincrease of about $9,000 in FY 2022 and $13,000 in FY 2023. The majority of these changes are due to expected changesfor annualizing personal service costs and benefit changes.

Figure 2



Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of Budget2021 Base Budget 0 0 0 0.00 % 1,662,125 1,662,125 3,324,250 98.18 %SWPL Adjustments 0 0 0 0.00 % 23,873 27,905 51,778 1.53 %PL Adjustments 0 0 0 0.00 % 4,914 4,968 9,882 0.29 %New Proposals 0 0 0 0.00 % 0 0 0 0.00 %

Total Budget $0 $0 $0 $1,690,912 $1,694,998 $3,385,910

HB 2 Language

The Consumer Counsel has not proposed any HB 2 language.


Montana Consumer CounselState Special Revenue Fund

Actual Actual ActualFY 2018 FY 2019 FY 2020

Budgeted Proposed ProposedFY 2021 FY 2022 FY 2023

$1,565,260 $1,271,544 $690,348 $1,363,610 $1,049,543 $970,588Beginning Fund Balance

Revenue 933,629 736,128 1,751,926 1,640,000 1,640,000 1,640,000

Expenditures564,450 575,351 585,071 672,894 681,968 685,941662,895 741,973 492,344 1,279,507 1,007,278 1,007,391

Personal ServicesOperating ExpensesDebt Service 0 0 1,249 1,666 1,666 1,666

Total Expenditures 1,227,345 1,317,324 1,078,664 1,954,067 1,690,912 1,694,998

Ending Fund Balance $1,271,544 $690,348 $1,363,610 $1,049,543 $998,631 $915,590

The higher expenditures reflected in FY 2021 are the result of carry forward appropriations of $142,000 and biennialappropriation authority of $300,000 for caseload contingency that was not required in FY 2020. Revenues are projected ata level slightly below the amount collected in FY 2020 thus reducing the fund balance in the 2023 biennium.



Figure 3

11120 - Consumer Counsel 01-Administration Program




FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds

DP 1 - Personal Services0.00 0 9,074 0 9,074 0.00 0 13,047 0 13,047

DP 2 - Fixed Costs0.00 0 14,957 0 14,957 0.00 0 14,957 0 14,957

DP 3 - Inflation Deflation0.00 0 (158) 0 (158) 0.00 0 (99) 0 (99)

DP 4 - Operating Expenses0.00 0 4,914 0 4,914 0.00 0 4,968 0 4,968

Grand Total All Present Law Adjustments0.00 $0 $28,787 $0 $28,787 0.00 $0 $32,873 $0 $32,873









DP 4 - Operating Expenses -

The Consumer Counsel proposes a present law adjustment to address anticipated rent, transcript, and recordsmanagement cost increases for the agency.


31010 - Governor's Office SUMMARY






BienniumChange

Biennium% Change

Personal Services 11,372,499 11,503,160 130,661 1.15 %Operating Expenses 2,816,011 3,023,514 207,503 7.37 %Debt Service 11,749 13,720 1,971 16.78 %


General Fund 14,200,259 14,440,394 240,135 1.69 %State/Other Special Rev. Funds 0 100,000 100,000 0.00 %

Total Funds $14,200,259 $14,540,394 $340,135 2.40 %


Mission Statement

The mission of the Governor's Office is to oversee and direct the activities of the Executive Branch of Montana stategovernment, consistent with statutory and constitutional mandates, in a manner that provides necessary and affordableservices to the citizens of Montana.

Please refer to the agency profile for the Governor’s Office at https://leg.mt.gov/lfd/state-agency-profiles/governors-officefor additional information about the agency’s organization structure, historical expenditures, FY 2020 expendituredashboard, and recent studies, audits, and legislation.

Agency Highlights

Governor's OfficeMajor Budget Highlights

• The Governor’s Office 2023 biennium budget request is about$340,000 or 2.4% higher than the 2021 biennium budget

• Overall, the Governor’s Office proposes general fund increases instatewide present law adjustments for personal services and fixedcosts




https://leg.mt.gov/lfd/state-agency-profiles/governors-office



Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 58.07 58.07 58.07 58.07

Personal Services 5,064,950 5,654,744 5,717,755 5,745,047 5,758,113Operating Expenses 1,168,453 1,437,684 1,378,327 1,552,879 1,470,635Debt Service 4,569 4,889 6,860 6,860 6,860


General Fund 6,237,972 7,097,317 7,102,942 7,254,786 7,185,608State/Other Special Rev. Funds 0 0 0 50,000 50,000

Total Funds $6,237,972 $7,097,317 $7,102,942 $7,304,786 $7,235,608


Agency Discussion


The Governor’s office expended 87.9% of its $7.1 million FY 2020 modified HB 2 budget. Personal services were89.6% expended, operating expenses were 81.3% expended, and debt service was 93.5% expended. Personal servicesexpenditures were lower than anticipated in the budget due to vacancies and turn over. Operating expenditure are belowbudgeted levels for several reasons including:

• $63,567 in biennial appropriations for legislative audit included in FY 2020 that were 29.9% expended• $135,000 in unallocated operating expenses in the Executive Program and the Office of Budget and Program

Planning were not used• Operating expenses for other expenses, supplies, and materials were lower than anticipated in the budget in the

Office of Indian Affairs• Expenditures for rent were lower than anticipated in the Mental Disabilities Board of Visitors


FY 2021 appropriations are higher than FY 2020 mainly due to the pay plan approved by the 2019 Legislature.


Figure 1 illustrates the beginning FY 2021 budget as adopted by the 2019 Legislature compared to the finalized FY 2021base budget, which includes modifications made during the interim as authorized in statute. The FY 2021 base budget wasagreed upon by the executive and legislative branches to be the point from which any changes would be recorded for the2023 biennium budgeting process.



Figure 1

FY 2021 Legislative Appropriations - Governor's OfficeExecutive % Change


Authority Action01 EXECUTIVE OFFICE PROGRAM61000 Personal Services 2,388,432 310,296 2,698,728 13.0%62000 Operating Expenses 705,571 23,510 729,081 3.3%69000 Debt Service - 3,750 3,750 0.0%01 EXECUTIVE OFFICE PROGRAM Total 3,094,003 337,556 3,431,559 10.9%02 EXECUTIVE RESIDENCE OPERATIONS61000 Personal Services 109,854 5,000 114,854 4.6%62000 Operating Expenses 66,847 13,000 79,847 19.4%02 EXECUTIVE RESIDENCE OPERATIONS Total 176,701 18,000 194,701 10.2%03 AIR TRANSPORTATION PROGRAM61000 Personal Services 143,631 - 143,631 0.0%62000 Operating Expenses 167,129 - 167,129 0.0%03 AIR TRANSPORTATION PROGRAM Total 310,760 - 310,760 0.0%04 OFC BUDGET & PROGRAM PLANNING61000 Personal Services 2,133,890 - 2,133,890 0.0%62000 Operating Expenses 293,649 (1,870) 291,779 -0.6%69000 Debt Service - 1,870 1,870 0.0%04 OFC BUDGET & PROGRAM PLANNING Total 2,427,539 - 2,427,539 0.0%05 OFFICE OF INDIAN AFFAIRS61000 Personal Services 182,002 - 182,002 0.0%62000 Operating Expenses 32,977 - 32,977 0.0%05 OFFICE OF INDIAN AFFAIRS Total 214,979 - 214,979 0.0%12 TBD - LIEUTENANT GOVERNOR'S OFFICE61000 Personal Services 315,296 (315,296) - -100.0%62000 Operating Expenses 40,260 (40,260) - -100.0%12 TBD - LIEUTENANT GOVERNOR'S OFFICE Total 355,556 (355,556) - -100.0%20 MENTAL DISABILITIES BD VISTORS61000 Personal Services 444,650 - 444,650 0.0%62000 Operating Expenses 78,754 (1,240) 77,514 -1.6%69000 Debt Service - 1,240 1,240 0.0%20 MENTAL DISABILITIES BD VISTORS Total 523,404 - 523,404 0.0%31010 GOVERNOR'S OFFICE Total 7,102,942 - 7,102,942 0.0%

The primary budget modification made by the Governor’s Office was the reorganization of the Lieutenant Governor’s Office, placing it under Executive Office Program rather than in a stand-alone program previously utilized in past biennia budgets. The reorganization transferred general fund for 3.00 FTE, $315,296 in personal services and $40,260 in operating expenses to the Executive Office Program, thus eliminating the Lieutenant Governor’s Office. In addition, the Executive Office Program transferred $5,000 in personal services and $13,000 in operating expenses to the Executive Residence Program to align budgets with anticipated expenditures.


31010 - Governor's Office SUMMARYExecutive Request

The Governor’s Office 2023 biennium budget request is about $340,000 or 2.4% higher than its 2021 biennium budget. The increases are mainly due to adjustments for personal services and fixed costs included in statewide present law adjustments.

5.0% Plan

Statute requires that agencies submit plans to reduce general fund and certain state special revenue funds by 5.0%. The Governor’s Office has provided a plan for general fund reductions of about $298,000. The plan includes reductions in personal services and operating costs, which could impact staffing, travel, contracted services, and supplies.

A summary of the entire 2023 biennium 5.0% plan submitted for the Governor’s Office can be found online at the Section A Subcommittee page on Tab D – materials.

COVID-19 Impacts

The Governor’s Office received $1.25 billion in federal coronavirus relief funds (CRF). Per federal requirements, the funds must be spent by December 30, 2020. As of November 15, 2020, about $1.1 million was transferred to state agencies for:

• Grant programs to Montana businesses or individuals impacted by the pandemic• Reimbursement to state agencies and local government for costs associated with the coronavirus

Further discussion on the grant programs can be found in the Agency Discussion of the various state agencies receivingCRF.









Personal services were $5.7 million or 80.5% of the FY 2021 base budget. The executive proposes an increase of about$27,000 in FY 2022 and $40,000 in FY 2023. Increases for expected changes and management decisions are offset by the inclusion of a 2.0% vacancy savings adjustment in several programs that were not assessed the adjustment in the 2021 biennium.

Funding


Total Governor's Office Funding by Source of Authority2023 Biennium Budget Request - Governor's Office

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

General Fund 14,440,394 0 0 0 14,440,394 99.31 %State Special Total 100,000 0 0 0 100,000 0.69 %Federal Special Total 0 0 0 0 0 0.00 %Proprietary Total 0 0 0 0 0 0.00 %Other Total 0 0 0 0 0 0.00 %


The Governor’s Office is mainly funded with general fund. State special revenue funds make up the balance of funding for the Governor’s Office and is for the purpose of training on tribal relations by the Office of Indian Affairs.





DP 1 - FY 2022Expected Management Budget DP1

Program Changes Decisions Modifications SWPL01 EXECUTIVE OFFICE PROGRAM 56,687 (130,844)02 EXECUTIVE RESIDENCE OPERATIONS 1,034 (5,286)03 AIR TRANSPORTATION PROGRAM 3,483 10,99004 OFC BUDGET & PROGRAM PLANNING 63,483 15,31205 OFFICE OF INDIAN AFFAIRS 517 1,41412 LIEUTENANT GOVERNOR'S OFFICE - -20 MENTAL DISABILITIES BD VISTORS 7,483 3,019

- (74,157)- (4,252)- 14,473- 78,795- 1,931-- 10,502

Agency Total $ 132,687 $ (105,395) $ - $ 27,292


Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of Budget7,102,942 7,102,942 14,205,884 98.38 % 7,102,942 7,102,942 14,205,884 97.70 %

150,057 80,816 230,873 1.60 % 150,057 80,816 230,873 1.59 %0 0 0 0.00 % 50,000 50,000 100,000 0.69 %

2021 Base BudgetSWPL AdjustmentsPL AdjustmentsNew Proposals 1,787 1,850 3,637 0.03 % 1,787 1,850 3,637 0.03 %

Total Budget $7,254,786 $7,185,608 $14,440,394 $7,304,786 $7,235,608 $14,540,394

HB 2 Language

The executive has not proposed any HB 2 language for the Governor's Office.


31010 - Governor's Office 01-Executive Office Program


The following table compares the 2021 biennium appropriated budget and the 2023 biennium budget request by type of expenditure and source of funding.




BienniumChange

Biennium% Change

Personal Services 5,372,046 5,251,624 (120,422) (2.24)%Operating Expenses 1,455,597 1,515,671 60,074 4.13 %Debt Service 6,421 7,500 1,079 16.80 %


General Fund 6,834,064 6,774,795 (59,269) (0.87)%

Total Funds $6,834,064 $6,774,795 ($59,269) (0.87)%

Total Ongoing $6,834,064 $6,774,795 ($59,269) (0.87)%Total OTO $0 $0 $0 0.00 %

Program Description

The Executive Office Program aids the Governor in overseeing and coordinating the activities of the Executive Branch ofMontana state government. The program includes the Office of the Lieutenant Governor which is responsible for carryingout duties prescribed by statute established by Article VI, Section 4 of the Montana Constitution, as well as those delegatedby the Governor. Statutory authority is Title 2, Chapter 15, part 3, MCA. The program provides administrative, legal, andpress support for the Office of the Governor. The Executive Office Program also administers programs with special impacton the citizens and governmental concerns of Montana. Special programs include the Office of Economic Development,which was created to strengthen the foundations of the state's business environment and diversify and expand existingeconomic endeavors to achieve long-term economic stability and the Office of the Citizens' Advocate.

Program Highlights

Executive Office ProgramMajor Budget Highlights

• The Executive Office Program’s 2023 biennium budget request isabout $59,000 or 0.9% lower than the 2021 biennium budget. This isdue to the assessment of a 2.0% vacancy savings against personalservices in the 2023 biennium






Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 27.00 27.00 27.00 27.00

Personal Services 2,349,549 2,673,318 2,698,728 2,624,571 2,627,053Operating Expenses 612,262 726,516 729,081 760,423 755,248Debt Service 2,496 2,671 3,750 3,750 3,750


General Fund 2,964,307 3,402,505 3,431,559 3,388,744 3,386,051

Total Funds $2,964,307 $3,402,505 $3,431,559 $3,388,744 $3,386,051




The Executive Office Program expended 87.1% of its $3.4 million FY 2020 modified HB 2 budget. Personal services were87.9% expended, operating expenses were 84.3% expended, and debt service was 93.4% expended.

Personal services expenditures were lower than anticipated in the budget due to vacancies. In addition to $482,562in appropriations allocated to specific operating expense categories, the 2019 Legislature provided the Executive OfficeProgram with $223,009 in unallocated operating expenses for FY 2020. About $69,000 of the unallocated operatingexpenses appropriations were not spent in FY 2020.


FY 2021 appropriations are slightly higher than FY 2020 appropriations due to the pay plan.

Executive Request

The Executive Office Program is requesting a decrease of $59,000 or 0.9% when compared to the 2021 biennium budget,primarily related to a reduction in personal services. In the 2021 biennium budget the Executive Office Program wasnot assessed vacancy savings. However, in the 2023 biennium a 2.0% vacancy savings is applied to personal services,resulting in the lower budget request.


Personal services were $2.7 million or 78.6% of FY 2021 base appropriations. The executive proposes a decrease ofabout $74,000 in FY 2022 and $72,000 in FY 2023. As discussed above, the difference is due to the assessment of 2.0%vacancy savings in the 2023 biennium.

Funding




Governor's Office, 01-Executive Office ProgramFunding by Source of Authority

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

01100 General Fund 6,774,795 0 0 0 6,774,795 100.00 %

02038 Governor's Office SSR 0 0 0 0 0 0.00 %State Special Total $0 $0 $0 $0 $0 0.00 %

03949 Coronavirus Relief Fund 0 0 0 0 0 0.00 %Federal Special Total $0 $0 $0 $0 $0 0.00 %


Total All Funds $6,774,795 $0 $0 $0 $6,774,795

The Executive Office Program is entirely funded with general fund.




Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of Budget2021 Base Budget 3,431,559 3,431,559 6,863,118 101.30 % 3,431,559 3,431,559 6,863,118 101.30 %SWPL Adjustments (43,022) (45,715) (88,737) (1.31)% (43,022) (45,715) (88,737) (1.31)%PL Adjustments 0 0 0 0.00 % 0 0 0 0.00 %New Proposals 207 207 414 0.01 % 207 207 414 0.01 %

Total Budget $3,388,744 $3,386,051 $6,774,795 $3,388,744 $3,386,051 $6,774,795




FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds

DP 1 - Personal Services0.00 (74,157) 0 0 (74,157) 0.00 (71,675) 0 0 (71,675)

DP 2 - Fixed Costs0.00 33,799 0 0 33,799 0.00 27,630 0 0 27,630

DP 3 - Inflation Deflation0.00 (2,664) 0 0 (2,664) 0.00 (1,670) 0 0 (1,670)

Grand Total All Present Law Adjustments0.00 ($43,022) $0 $0 ($43,022) 0.00 ($45,715) $0 $0 ($45,715)












New Proposals



FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds

DP 101 - NRIS/GIS Fixed Costs0.00 207 0 0 207 0.00 207 0 0 207

Total 0.00 $207 $0 $0 $207 0.00 $207 $0 $0 $207





31010 - Governor's Office 02-Executive Residence






BienniumChange

Biennium% Change

Personal Services 226,913 221,278 (5,635) (2.48)%Operating Expenses 159,572 151,658 (7,914) (4.96)%

Total Expenditures $386,485 $372,936 ($13,549) (3.51)%

General Fund 386,485 372,936 (13,549) (3.51)%

Total Funds $386,485 $372,936 ($13,549) (3.51)%

Total Ongoing $386,485 $372,936 ($13,549) (3.51)%Total OTO $0 $0 $0 0.00 %

Program Description

The Executive Residence Operations Program provides for the day-to-day operations of the official state executiveresidence.

Program Highlights

Executive Residence ProgramMajor Budget Highlights

• The Executive Residence Program's 2023 biennium budget requestis about $13,500 or 3.5% less than the 2021 biennium budget

• Proposed reductions are due to changes for personal services andoperating expenses as well as assessment of vacancy savingsincluded in the statewide present law adjustments






Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 1.57 1.57 1.57 1.57

Personal Services 111,385 112,059 114,854 110,602 110,676Operating Expenses 69,650 79,725 79,847 75,807 75,851

Total Expenditures $181,035 $191,784 $194,701 $186,409 $186,527

General Fund 181,035 191,784 194,701 186,409 186,527

Total Funds $181,035 $191,784 $194,701 $186,409 $186,527

Total Ongoing $181,035 $191,784 $194,701 $186,409 $186,527Total OTO $0 $0 $0 $0 $0



The Executive Residence Program expended 94.4% of its almost $192,000 FY 2020 modified HB 2 budget. Personalservices were 99.4% expended and operating expenses were 87.4% expended.


FY 2021 appropriation are higher than FY 2020 appropriations in personal services due to the pay plan approved by the2019 Legislature.

Executive Request

The Executive Residence Program's 2023 biennium budget request is $13,500 lower than the 2021 biennium budget.In the 2021 biennium budget the Executive Residence Program was not assessed vacancy savings. However, in the2023 biennium a 2.0% vacancy savings is applied to personal services, resulting in the lower budget request. Operatingexpenses are also lower for the 2023 biennium as the costs for the State Information Technology Services Division declinedbetween the two biennia.


Personal services in the Executive Residence Program were about $115,000 or 59.0% of the FY 2021 base budget. Theexecutive proposes a decrease of about $4,300 in FY 2022 and $4,200 in FY 2023. The decrease is due to vacancysavings that was not assessed in the 2021 biennium but are assessed at 2.0% in the 2023 biennium

Funding




Governor's Office, 02-Executive ResidenceFunding by Source of Authority

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

01100 General Fund 372,936 0 0 0 372,936 100.00 %




Total All Funds $372,936 $0 $0 $0 $372,936

The Executive Residence Program is entirely funded with general fund.




Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of Budget2021 Base Budget 194,701 194,701 389,402 104.42 % 194,701 194,701 389,402 104.42 %SWPL Adjustments (8,292) (8,174) (16,466) (4.42)% (8,292) (8,174) (16,466) (4.42)%PL Adjustments 0 0 0 0.00 % 0 0 0 0.00 %New Proposals 0 0 0 0.00 % 0 0 0 0.00 %

Total Budget $186,409 $186,527 $372,936 $186,409 $186,527 $372,936




FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds


DP 2 - Fixed Costs0.00 (3,723) 0 0 (3,723) 0.00 (3,797) 0 0 (3,797)














The executive requests adjustments to the present law personal services budget. This request has been broken into the following categories, and further detail is shown in the agency summary:

31010 - Governor's Office 03-Air Transportation Program






BienniumChange

Biennium% Change

Personal Services 284,018 316,321 32,303 11.37 %Operating Expenses 334,233 333,576 (657) (0.20)%

Total Expenditures $618,251 $649,897 $31,646 5.12 %

General Fund 618,251 649,897 31,646 5.12 %

Total Funds $618,251 $649,897 $31,646 5.12 %

Total Ongoing $618,251 $649,897 $31,646 5.12 %Total OTO $0 $0 $0 0.00 %

Program Description

The Air Transportation Program provides the Governor with air transportation.

Program Highlights

Air Transportation ProgramMajor Budget Highlights

• The Air Transportation Program’s 2023 biennium budget is $32,000or 5.1% higher than the 2021 biennium budget

• Increases are due to statewide present law adjustments for personalservices






Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 1.50 1.50 1.50 1.50



General Fund 281,991 307,491 310,760 325,724 324,173

Total Funds $281,991 $307,491 $310,760 $325,724 $324,173




Air Transportation Program expended 91.7% of its $307,000 FY 2020 modified HB 2 budget. Personal services were 78.8% expended and operating expenses were 102.5% expended. The 0.50 FTE pilot position was utilized 9.1% during FY 2020 resulting in lower personal services expenditures. Operating expenses related to repair and maintenance of the Governor’s plane resulted in higher than anticipated operating expenses.


FY 2021 expenditures are slightly higher than FY 2020 expenditures due to the pay plan approved by the 2019 Legislature.

Executive Request

The Air Transportation Program's 2023 biennium budget request is about $32,000 or 5.1% higher than the 2021 biennium budget. The increases are mainly included in the statewide present law adjustment for personal services. Refer to the following Program Personal Services section for additional information on the request.


Personal services in the Air Transportation Program were about $144,000 or 46.2% of the FY 2021 base budget. The executive proposes an increase of about $14,500 in FY 2022 and $14,600 in FY 2023. In the 2021 biennium the legislature reduced personal services by $8,439 in FY 2021. Because the legislature did not reduce FTE as part of the adjustment, the personal services process reinstated the funding. In addition, the executive proposes increasing the pay rate for the 0.50 FTE pilot position. The change is part of the differences between the two budgets.

Funding




Governor's Office, 03-Air Transportation ProgramFunding by Source of Authority

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

01100 General Fund 649,897 0 0 0 649,897 100.00 %




Total All Funds $649,897 $0 $0 $0 $649,897

The Air Transportation Program is entirely funded with general fund.




Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of Budget2021 Base Budget 310,760 310,760 621,520 95.63 % 310,760 310,760 621,520 95.63 %SWPL Adjustments 14,964 13,413 28,377 4.37 % 14,964 13,413 28,377 4.37 %PL Adjustments 0 0 0 0.00 % 0 0 0 0.00 %New Proposals 0 0 0 0.00 % 0 0 0 0.00 %

Total Budget $325,724 $324,173 $649,897 $325,724 $324,173 $649,897




FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds


DP 2 - Fixed Costs0.00 491 0 0 491 0.00 (1,173) 0 0 (1,173)






• Personal services management decisions• Modifications made to the personal services budget in the 2021 biennium






• Expected changes

31010 - Governor's Office 04-Office of Budget & Program Planning






BienniumChange

Biennium% Change

Personal Services 4,243,912 4,433,717 189,805 4.47 %Operating Expenses 646,109 729,055 82,946 12.84 %Debt Service 3,204 3,740 536 16.73 %


General Fund 4,893,225 5,166,512 273,287 5.59 %

Total Funds $4,893,225 $5,166,512 $273,287 5.59 %


Program Description

The Office of Budget and Program Planning (OBPP) assists the Governor in preparing the Governor's executive budgetand administering the state government budget. In addition, the OBPP prepares and monitors revenue estimates andcollections, prepares and publishes fiscal notes on proposed legislation and initiatives, and acts as approving authority foroperational plan changes, program transfers, and budget amendments in the Executive Branch, in accordance with Title17, Chapter 7, MCA. The OBPP acts as the lead Executive Branch agency for compliance with the federal Single AuditAct. The office also provides accounting, budgeting, human resource, procurement, safety, and information technologysupport for the entire Governor's Office.

Program Highlights

Office of Budget and Program PlanningMajor Budget Highlights

• The Office of Budget and Program Planning’s 2023 biennium budgetrequest is about $273,000 or 5.6% higher than the 2021 bienniumbudget

• Proposed changes in general fund are due to statewide present lawsadjustments for personal services, fixed costs, and inflation/deflation






Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 21.00 21.00 21.00 21.00



General Fund 2,260,851 2,465,686 2,427,539 2,618,339 2,548,173

Total Funds $2,260,851 $2,465,686 $2,427,539 $2,618,339 $2,548,173




The Office of Budget and Program Planning expended 91.7% of its $2.5 million FY 2020 modified HB 2 budget. Personalservices were 95.5% expended, operating expenses were 69.1% expended, and debt service was 94.2% expended.

Personal services expenditures were lower than budgeted in FY 2020 due to turn over. The FY 2020 modified HB 2 budgetincludes $64,000 in biennial appropriations in legislative audit costs of which $19,000 were expended in FY 2020. Also, inaddition to $274,000 in appropriations allocated to specific operating expense categories, the 2019 Legislature provided theExecutive Office Program with $82,000 in unallocated operating expenses for FY 2020. About $66,000 of the unallocatedoperating expenses appropriation was not used in FY 2020.


FY 2021 appropriations for personal services are higher than FY 2020 appropriations due to the pay plan. Appropriationsfor operating expenses are lower in FY 2021 than FY 2020 due to a biennial appropriation of $64,000 for legislative auditcosts that is not included in FY 2021.

Executive Request

The Office of Budget and Program Planning is requesting an increase in general fund appropriations of about $191,000in FY 2022 and $121,000 in FY 2023. The proposed changes are due to statewide present law adjustments for personalservices, fixed costs, and inflation/deflation. Additional information on the proposed adjustments are included in theProgram Personal Services and the Present Law Adjustments sections.


Personal services were $2.1 million or 87.9% of the FY 2021 base budget. The executive proposes an increase of about$79,000 in FY 2022 and $87,000 in FY 2023. The majority of this increase is due to management decisions for broadbandpay increases.

Funding




Governor's Office, 04-Office of Budget & Program PlanningFunding by Source of Authority

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

01100 General Fund 5,166,512 0 0 0 5,166,512 100.00 %

02038 Governor's Office SSR 0 0 0 0 0 0.00 %State Special Total $0 $0 $0 $0 $0 0.00 %

03001 Governor's Office FSR 0 0 0 0 0 0.00 %03949 Coronavirus Relief Fund 0 0 0 0 0 0.00 %03989 Gov Emergency Education Relief 0 0 0 0 0 0.00 %


06510 Personal Services Contingency 0 0 0 0 0 0.00 %Proprietary Total $0 $0 $0 $0 $0 0.00 %

Total All Funds $5,166,512 $0 $0 $0 $5,166,512

The Office of Budget and Program Planning is entirely funded with general fund.




Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of Budget2021 Base Budget 2,427,539 2,427,539 4,855,078 93.97 % 2,427,539 2,427,539 4,855,078 93.97 %SWPL Adjustments 189,220 118,991 308,211 5.97 % 189,220 118,991 308,211 5.97 %PL Adjustments 0 0 0 0.00 % 0 0 0 0.00 %New Proposals 1,580 1,643 3,223 0.06 % 1,580 1,643 3,223 0.06 %

Total Budget $2,618,339 $2,548,173 $5,166,512 $2,618,339 $2,548,173 $5,166,512




FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds


DP 2 - Fixed Costs0.00 110,458 0 0 110,458 0.00 31,869 0 0 31,869






31010 - Governor's Office 04-Office of Budget & Program PlanningDP 1 - Personal Services -







New Proposals



FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds

DP 401 - Subscription Increase0.00 1,580 0 0 1,580 0.00 1,643 0 0 1,643

Total 0.00 $1,580 $0 $0 $1,580 0.00 $1,643 $0 $0 $1,643


DP 401 - Subscription Increase -

The executive proposes increased funding for subscription costs related to economic data. The Office of Budget andProgram Planning maintains a contract for an economic data service on behalf of the OBPP, the Department ofTransportation and the Legislative Fiscal Division. An annual increase of 4.0% is anticipated.


31010 - Governor's Office 05-Office of Indian Affairs






BienniumChange

Biennium% Change

Personal Services 361,948 368,003 6,055 1.67 %Operating Expenses 65,720 175,407 109,687 166.90 %


General Fund 427,668 443,410 15,742 3.68 %State/Other Special Rev. Funds 0 100,000 100,000 0.00 %

Total Funds $427,668 $543,410 $115,742 27.06 %


Program Description

The Director of Indian Affairs serves as the Governor's liaison with state Indian tribes, provides information and policysupport on issues confronting the Indians of Montana, and advises and makes recommendations on these issues tothe Legislative and Executive Branches. The director also serves the Montana congressional delegation as an advisorand intermediary in the field of Indian affairs and acts as spokesperson for representative Native American organizationsand groups, both public and private, whenever that support is requested. The program is mandated by 2-15-217 and90-11-101, MCA.

Program Highlights

Office of Indian AffairsMajor Budget Highlights

• The Office of Indian Affairs’ 2023 biennium budget request is about$116,000 or 27.1% higher than the 2021 biennium budget

• Proposed increases in general fund are due to statewide present lawadjustments for personal services and fixed costs

• A proposal to appropriate tribal relations training in HB 2 supported inpart through state special revenue






Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 2.00 2.00 2.00 2.00



General Fund 140,273 212,689 214,979 220,077 223,333State/Other Special Rev. Funds 0 0 0 50,000 50,000

Total Funds $140,273 $212,689 $214,979 $270,077 $273,333




The Office of Indian Affairs expended 66.0% of its almost $213,000 FY 2020 modified HB 2 budget. Personal serviceswere 65.7% expended and operating expenses were 67.4% expended. Personal services expenditures were lower thananticipated in the budget due to vacancies. Operating expenses for other expenses, supplies, and materials were lowerthan anticipated in the budget.



Executive Request

The Office of Indian Affairs is requesting an increase above the FY 2021 base budget of about $55,100 in FY 2022 and$58,400 in FY 2023. The proposed increases are due to statewide present law adjustments for personal services and fixedcosts as well as a present law adjustment for tribal relations training. Additional information on the proposed adjustmentsare included in the Program Personal Services and the Present Law Adjustments sections.


Personal services were $182,000 or 84.7% of FY 2021 base budget appropriations. The executive proposes an increaseof about $1,900 in FY 2022 and $2,100 in FY 2023. The majority of the increase is due to management decisions forbroadband pay increases.

Funding




Governor's Office, 05-Office of Indian AffairsFunding by Source of Authority

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

01100 General Fund 443,410 0 0 0 443,410 81.60 %

02038 Governor's Office SSR 100,000 0 0 0 100,000 100.00 %State Special Total $100,000 $0 $0 $0 $100,000 18.40 %



Total All Funds $543,410 $0 $0 $0 $543,410

The majority of the Office of Indian Affairs Program is funded with general fund. The executive is proposing to have tribalrelations training administered by the Office of Indian Affairs rather than the Department of Administration. Funding for thistraining is provided by a state special revenue fund derived from participant attendance fees.




Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of Budget2021 Base Budget 214,979 214,979 429,958 96.97 % 214,979 214,979 429,958 79.12 %SWPL Adjustments 5,098 8,354 13,452 3.03 % 5,098 8,354 13,452 2.48 %PL Adjustments 0 0 0 0.00 % 50,000 50,000 100,000 18.40 %New Proposals 0 0 0 0.00 % 0 0 0 0.00 %

Total Budget $220,077 $223,333 $443,410 $270,077 $273,333 $543,410




FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds


DP 2 - Fixed Costs0.00 3,535 0 0 3,535 0.00 6,517 0 0 6,517


DP 501 - Tribal Relations Training0.00 0 50,000 0 50,000 0.00 0 50,000 0 50,000





31010 - Governor's Office 05-Office of Indian AffairsDP 1 - Personal Services -







DP 501 - Tribal Relations Training -

Tribal relations training is required per 2-15-143, MCA. Previously, the Professional Development Center administered thetraining by collecting attendance fees and registering participants while the Office of Indian Affairs conducted the training.In FY 2020 the fee was $125 per person for the all-day training. This request is intended to establish $50,000 appropriationin each year of the 2023 biennium as the administration of the training will now by conducted by the Office of Indian Affairs.


31010 - Governor's Office 20-Ment Disb Bd of Visitors & Mh Ombudsman






BienniumChange

Biennium% Change

Personal Services 883,662 912,217 28,555 3.23 %Operating Expenses 154,780 118,147 (36,633) (23.67)%Debt Service 2,124 2,480 356 16.76 %


General Fund 1,040,566 1,032,844 (7,722) (0.74)%

Total Funds $1,040,566 $1,032,844 ($7,722) (0.74)%


Program Description

The Mental Disabilities Board of Visitors is charged with formally reviewing patient care and assisting people who havecomplaints about services at Montana's licensed mental health centers, community hospital psychiatric units, children’sresidential treatment programs, and at the state facilities that serve people with mental illnesses and developmentaldisabilities. The board provides legal services to patients at Montana State Hospital. The Governor appoints six boardmembers who represent recipients of services and their families, and the mental health and developmental disabilityprofessions.The board employs administrative and legal staff and contracts with mental health and developmental disabilityprofessionals to carry out its responsibilities for patient representation and facility review. The Mental Disabilities Board ofVisitors Program was created by the Developmental Disabilities Act of 1975 and the Mental Commitment and TreatmentAct of 1975 and exists as a state mandate.

The Mental Health Ombudsman is statutorily directed to "represent the interests of individuals with regard to need for publicmental health services". The office funcions with 1.50 FTE responding to statewide requests for service. The Office of theOmbudsman was created by the legislature in 1999 and is appointed by the Governor for a four year term.

Program Highlights

Mental Disability Board of Visitors & Mental Health OmbudsmanMajor Budget Highlights

• The Mental Disabilities Board of Visitor/Mental Health OmbudsmanProgram's 2023 biennium budget is about $7,700 or 0.7% lower the2021 biennium budget

• Reductions for rent and State Information Technology ServicesDivision costs included in the statewide present law adjustment forfixed costs offset increases for personal services


The following table compares FY 2020 actual expenditures to the 2021 biennium appropriated budget and the 2023 biennium budget request by type of expenditure and source of funding.




Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 5.00 5.00 5.00 5.00

Personal Services 360,388 439,012 444,650 455,152 457,065Operating Expenses 48,301 77,266 77,514 59,101 59,046Debt Service 826 884 1,240 1,240 1,240


General Fund 409,515 517,162 523,404 515,493 517,351

Total Funds $409,515 $517,162 $523,404 $515,493 $517,351




The Mental Disabilities Board of Visitors expended 79.2% of its $517,000 FY 2020 modified HB 2 budget. Personalservices were 82.1% expended, operating expenses were 62.5% expended, and debt service was 93.4% expended.Personal services expenditures were lower than budgeted in FY 2020 due to vacancies. Expenditures for rent weresignificantly lower than anticipated in the budget resulting in the lower level of operating expenses expenditures.



Executive Request

The Mental Disabilities Board of Visitors and Mental Health Ombudsman is requesting a decrease of about $7,900 in FY2022 and $6,100 in FY 2023. The reduction is included in the statewide present law adjustment of fixed costs reflectinglower rent and State Information Technology Services Division costs. The reduction offsets increases in personal services.


Personal services were about $445,000 or 85.0% of FY 2021 base budget appropriations. The executive proposes anincrease of about $11,000 in FY 2022 and $12,000 in FY 2023. In addition to expected changes the increase is the resultof management decisions related to broadband pay adjustments.

Funding




Governor's Office, 20-Ment Disb Bd of Visitors & Mh OmbudsmanFunding by Source of Authority

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

01100 General Fund 1,032,844 0 0 0 1,032,844 100.00 %


03949 Coronavirus Relief Fund 0 0 0 0 0 0.00 %Federal Special Total $0 $0 $0 $0 $0 0.00 %


Total All Funds $1,032,844 $0 $0 $0 $1,032,844

The Mental Disabilities Board of Visitors and Mental Health Ombudsman Program is entirely funded with general fund.




Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of Budget2021 Base Budget 523,404 523,404 1,046,808 101.35 % 523,404 523,404 1,046,808 101.35 %SWPL Adjustments (7,911) (6,053) (13,964) (1.35)% (7,911) (6,053) (13,964) (1.35)%PL Adjustments 0 0 0 0.00 % 0 0 0 0.00 %New Proposals 0 0 0 0.00 % 0 0 0 0.00 %

Total Budget $515,493 $517,351 $1,032,844 $515,493 $517,351 $1,032,844




FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds


DP 2 - Fixed Costs0.00 (18,403) 0 0 (18,403) 0.00 (18,462) 0 0 (18,462)















32020 - Commissioner Of Political Practices SUMMARY






BienniumChange

Biennium% Change

Personal Services 1,069,551 1,113,787 44,236 4.14 %Operating Expenses 686,564 519,421 (167,143) (24.34)%


General Fund 1,756,115 1,633,208 (122,907) (7.00)%

Total Funds $1,756,115 $1,633,208 ($122,907) (7.00)%


Mission Statement

To monitor and to enforce in a fair and impartial manner: campaign practices and campaign finance disclosure; lobbyingdisclosure; business interest disclosure of statewide and state district candidates, elected state officials, and statedepartment directors; ethical standards of conduct for legislators, public officers, and state employees; and to investigatelegitimate complaints that arise concerning any of the above.

Agency Highlights

Commissioner of Political PracticesMajor Budget Highlights

• The Commissioner of Political Practices’ (COPP) 2023 bienniumbudget request is about $102,000 or 6.6% higher than the 2021biennium ongoing budget. Proposed changes include:

◦ Decrease in general fund for statewide present lawadjustments for personal services, fixed costs, and inflation/deflation

◦ Increases in general fund for the reauthorization of FTE forlegal counsel that was included as one-time-only in the 2021biennium






Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 6.00 6.00 7.00 7.00



General Fund 766,530 867,195 888,920 823,767 809,441

Total Funds $766,530 $867,195 $888,920 $823,767 $809,441

Total Ongoing $667,103 $767,410 $764,210 $823,767 $809,441Total OTO $99,427 $99,785 $124,710 $0 $0

Agency Discussion


The Commissioner of Political Practices expended 88.4% of its $867,195 FY 2020 modified HB 2 budget. Personalservices were 95.7% expended and operating expenses were 77.6% expended. Personal services are below budgetedlevels due to turn over. Operating expenses for other services are lower than anticipated in the budget.




Figure 1 illustrates the beginning FY 2021 budget as adopted by the 2019 Legislature compared to the finalized FY 2021base budget, which included modifications as approved by the approving authority (as authorized in statute) during theinterim. The FY 2021 base budget was agreed upon by the executive and legislative branches to be the point from whichany changes would be recorded for the 2023 biennium budgeting process.

Figure 1

FY 2021 Legislative Appropriations - Commissioner of Political PracticesExecutive % Change


Authority Action01 ADMINISTRATION61000 Personal Services 426,800 - 426,800 0.0%62000 Operating Expenses 337,410 - 337,410 0.0%01 ADMINISTRATION Total 764,210 - 764,210 0.0%32020 POLITICAL PRACTICES Total 764,210 - 764,210 0.0%

The Commissioner of Political Practices did not have any modifications to the budget adopted by the 2019 Legislature.

Executive Request

The Commissioner of Political Practices is requesting an increase of about $102,000 or 6.6% in its 2023 biennium budgetwhen compared to the 2021 ongoing biennium budget.



Personal services were $551,510 or 62.0% of total FY 2021 appropriations. The executive proposes an increase in generalfund of about $129,000 in FY 2022 and $131,000 in FY 2023 when compared to the FY 2021 base budget. The AgencyActuals and Budget Comparison shows the appropriations for FY 2021 which includes two one-time-only appropriations:

• $99,526 for a legal counsel• $25,184 for the implementation of Legislative Referendum 129, an act to establish the Montana Ballot Interference

Prevention Act

The one-time-only funding was removed from the FY 2021 base budget. An appropriation for 1.00 FTE for a legal counselis being requested in the 2023 biennium and makes up the majority of the increase in personal services measured from theFY 2021 base budget. This change is discussed in detail in the Program Personal Services and New Proposal sectionsthat follow.

Operating expenses were about $337,400 or 38.0% of total FY 2021 appropriations. The executive proposes a decreaseof about $69,000 in FY 2022 and $86,000 in FY 2023. The decrease is included in the statewide present law adjustmentsfor fixed costs associated with lower costs for State Information Technology Services Division services of about $73,000a year. The decrease inlcudes the completion of a software/database upgrade project. The reduction is offset by theinclusion of a biennial appropriation for legislative audit costs included in FY 2022.

5.0% Plan

Statute requires that agencies submit plan to reduce general fund and certain state special revenue funds by 5.0%.However, due to its small number of FTE, the Commissioner of Political Practices is exempt from the requirement.









Program Changes Decisions Modifications SWPL01 ADMINISTRATION 2,798 7,365 - 10,163Agency Total $ 2,798 $ 7,365 $ - $ 10,163

Personal services were about $551,510 or 62.0% of total FY 2021 appropriations, of this amount $124,710 was provided tosupport 1.0 FTE legal counsel as one-time-only. The one-time-only position was eliminated from the personal services FY2021 base budget. Changes included in the statewide present law adjustment are mostly due to management decisions.



Funding


Total Commissioner of Political Practices Funding by Source of Authority2023 Biennium Budget Request - Commissioner of Political Practices

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

General Fund 1,633,208 0 0 0 1,633,208 100.00 %State Special Total 0 0 0 0 0 0.00 %Federal Special Total 0 0 0 0 0 0.00 %Proprietary Total 0 0 0 0 0 0.00 %Other Total 0 0 0 0 0 0.00 %


The Commissioner of Political Practices is entirely funded with general fund.




Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of Budget2021 Base Budget 764,210 764,210 1,528,420 93.58 % 764,210 764,210 1,528,420 93.58 %SWPL Adjustments (59,192) (73,609) (132,801) (8.13)% (59,192) (73,609) (132,801) (8.13)%PL Adjustments 0 0 0 0.00 % 0 0 0 0.00 %New Proposals 118,749 118,840 237,589 14.55 % 118,749 118,840 237,589 14.55 %

Total Budget $823,767 $809,441 $1,633,208 $823,767 $809,441 $1,633,208

HB 2 Language

The executive has not proposed any HB 2 languge for the Commissioner of Political Practices.



32020 - Commissioner Of Political Practices 01-Comm of Political Practices




FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds


DP 2 - Fixed Costs0.00 (69,291) 0 0 (69,291) 0.00 (86,004) 0 0 (86,004)











New Proposals



FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds

DP 3201 - Lawyer1.00 118,749 0 0 118,749 1.00 118,840 0 0 118,840

Total 1.00 $118,749 $0 $0 $118,749 1.00 $118,840 $0 $0 $118,840



32020 - Commissioner Of Political Practices 01-Comm of Political Practices

DP 3201 - Lawyer -

This request reestablishes 1.00 FTE legal counsel for the Commissioner of Political Practices. The legislature established the 1.00 FTE for legal counsel as one-time-only in the 2017 and 2019 biennia. COPP is requesting the position as ongoing in its 2023 budget request.


34010 - State Auditor's Office SUMMARY






BienniumChange

Biennium% Change

Personal Services 13,481,369 13,021,556 (459,813) (3.41)%Operating Expenses 4,775,448 4,571,198 (204,250) (4.28)%Equipment & Intangible Assets 15,988 15,988 0 0.00 %Grants 88,058,696 88,062,286 3,590 0.00 %Debt Service 3,473 0 (3,473) (100.00)%


State/Other Special Rev. Funds 38,134,974 37,471,028 (663,946) (1.74)%Federal Spec. Rev. Funds 68,200,000 68,200,000 0 0.00 %

Total Funds $106,334,974 $105,671,028 ($663,946) (0.62)%

Total Ongoing $105,709,974 $105,671,028 ($38,946) (0.04)%Total OTO $625,000 $0 ($625,000) (100.00)%

Mission Statement

The State Auditor's Office (SAO) advocates for consumers while working to empower Montanans with more insurance options and timely information. SAO endeavors to protect consumers from fraudulent and illegal practices, and to improve Montana’s economy by ensuring the securities and insurance industries can operate in a fair and efficient regulatory environment. SAO is committed to serving all Montanans in a caring, professional, and ethical manner as they perform the duties of the office.

Please refer to the agency profile for the State Auditor’s Office at https://leg.mt.gov/lfd/state-agency-profiles/state-auditors-office for additional information about the agency’s organization structure, historical expenditures, FY 2020 expenditure dashboard, and recent studies, audits, and legislation.


http://leg.mt.gov/lfd/state-agency-profiles/state-auditors-office

http://leg.mt.gov/lfd/state-agency-profiles/state-auditors-office


State Auditor's OfficeMajor Budget Highlights

• The State Auditor’s Office 2023 biennium budget request is about$39,000 or 0.1% lower than the 2021 ongoing biennium budget

• Proposed changes are due to the statewide present law adjustmentsfor personal services, fixed costs, and inflation/deflation and apresent law adjustment reducing personal services and 2.00 FTE


• The fund balance in the insurance fee account was $3.4 million at theend of FY 2020. The legislature may wish to consider transferringfund balance from the insurance fee account to the general fund




Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 74.50 74.50 72.50 72.50

Personal Services 5,274,942 6,833,777 6,647,592 6,501,877 6,519,679Operating Expenses 1,469,559 2,410,802 2,364,646 2,316,627 2,254,571Equipment & Intangible Assets 9,685 7,994 7,994 7,994 7,994Grants 62,025 44,027,553 44,031,143 44,031,143 44,031,143Debt Service 3,175 3,473 0 0 0


State/Other Special Rev. Funds 6,787,361 19,183,599 18,951,375 18,757,641 18,713,387Federal Spec. Rev. Funds 32,025 34,100,000 34,100,000 34,100,000 34,100,000

Total Funds $6,819,386 $53,283,599 $53,051,375 $52,857,641 $52,813,387

Total Ongoing $6,725,840 $52,833,599 $52,876,375 $52,857,641 $52,813,387Total OTO $93,546 $450,000 $175,000 $0 $0

Agency Discussion


The State Auditor’s Office expended 12.8% of its $53.3 million FY 2020 modified HB 2 budget. Personal services were77.2% expended, operating expenses were 61.0% expended, equipment & intangible assets were 121.2% expended,grants were 0.1% expended, and debt service was 91.4% expended.

Vacancies within the various programs drove lower expenditures for personal services. In addition, the Insurance Programreceived a number of appropriations for operating expenses that were not needed in FY 2020. The 2019 Legislature


Agency Highlights


established the Montana Reinsurance Program with its first year of operation in FY 2020. The program was approved bythe federal government in August 2019 for operation beginning in January 2020. In its first six months of operation theprogram did not make premium assessments on health insurance providers to provide state funding and did not issue anyreinsurance grants.


Personal services are higher in FY 2020 due to a one-time-only, restricted, biennial appropriation for agency retirementbenefit payments included in FY 2020. Operating expenses are higher in FY 2020 due to a biennial appropriation forlegislative audit services included in FY 2020 appropriations.



Figure 1

FY 2021 Legislative Appropriations - State Auditor's OfficeExecutive % Change


Authority Action01 CENTRAL MANAGEMENT61000 Personal Services 1,503,363 (70,000) 1,433,363 -4.7%62000 Operating Expenses 639,441 - 639,441 0.0%63000 Equipment & Intangible Assets 1,683 - 1,683 0.0%01 CENTRAL MANAGEMENT Total 2,144,487 (70,000) 2,074,487 -3.3%03 INSURANCE61000 Personal Services 4,076,373 - 4,076,373 0.0%62000 Operating Expenses 1,399,336 - 1,399,336 0.0%63000 Equipment & Intangible Assets 5,109 - 5,109 0.0%66000 Grants 44,031,143 - 44,031,143 0.0%03 INSURANCE Total 49,511,961 - 49,511,961 0.0%04 SECURITIES61000 Personal Services 1,067,856 70,000 1,137,856 6.6%62000 Operating Expenses 150,869 - 150,869 0.0%63000 Equipment & Intangible Assets 1,202 - 1,202 0.0%04 SECURITIES Total 1,219,927 70,000 1,289,927 5.7%34010 STATE AUDITOR'S OFFICE Total 52,876,375 - 52,876,375 0.0%

State Auditor’s Office legislative action budget is higher than previous biennia due to the implementation of HB 715, enactedby the 2019 Legislature, which established $44.2 million in state and federal special revenue base budget authority for theMontana Reinsurance Association Act (MRAA). The purpose of the MRAA is to stabilize the individual health insurancemarket, maintain competition, and reduce health insurance premiums.

The State Auditor’s Office transferred 1.00 FTE and $70,000 in state special revenue for personal services from the CentralManagement Division to the Securities Division. The FTE was reclassified to a security examiner. The duties of thesecurities examiner were formerly completed by a contract examiner who is no longer available.



Executive Request

The State Auditor’s Office proposed 2023 biennium budget is $39,000 or 0.1% less than the 2021 biennium ongoingbudget.

Personal services were about $6.6 million or 12.6% of the FY 2021 base budget appropriations of $52.9 million. Theexecutive proposes a decrease of about $146,000 in FY 2022 and $128,000 in FY 2023 in personal services. The decreaseis due to changes included in statewide present law adjustments. These changes are discussed in detail in the AgencyPersonal Services narrative.

Operating expenses were $2.2 million or 4.1% of the FY 2021 base budget. The executive proposes a decrease of about$48,000 in FY 2022 and $110,000 in FY 2023 related to State Information Technology Services Division costs.

Both equipment and intangible assets and grants are unchanged from the FY 2021 base budget.

Elected Official Request

As a courtesy to elected officials, the LFD Budget Analysis includes any proposals they intend to bring to the legislaturethat are different and/or excluded from the executive budget. As of December 5, the State Auditor has not notified theLegislative Fiscal Division of any elected official requests.

5.0% Plan

Statute requires that agencies submit plans to reduce general fund and certain state special revenue funds by 5.0%. Forthe State Auditor’s Office, the 5.0% plan includes reductions totaling about $350,123 in state special revenue. The planincludes potential reductions in contracted services, travel, training, computer replacements, and legal costs. Impacts if thereductions were implemented include reductions in actuarial contracts and financial and market examinations.

A summary of the entire 2023 biennium 5.0% plan submitted for this agency can be found online at the Section Asubcommittee page on “Tab D Materials”.









Personal services were about $6.6 million or 12.6% of the FY 2021 base budget appropriations of $52.9 million. Theexecutive proposes a decrease of about $36,000 in FY 2022 and $18,000 in FY 2023 in personal services in the statewidepresent law adjustment. The decreases are mainly the result of turnover because the newly hired employees have lowersalary and benefit costs then the employees they replaced, especially in the Insurance Division. The reductions are offsetby increases for exempt staff and broadband pay adjustments within the Securities Division.

In addition to the statewide present law adjustment, the State Auditor’s Office proposes to eliminate 2.0 FTE in theInsurance Division that are vacant. The new proposal removes about $110,000 in personal services each year of the 2023biennium.

Funding


Total State Auditor's Office Funding by Source of Authority2023 Biennium Budget Request - State Auditor's Office

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

General Fund 0 0 0 81,691,000 81,691,000 43.53 %State Special Total 37,471,028 0 0 300,000 37,771,028 20.13 %Federal Special Total 68,200,000 0 0 0 68,200,000 36.34 %Proprietary Total 0 0 0 0 0 0.00 %Other Total 0 0 0 0 0 0.00 %

Total All Funds $105,671,028 $0 $0 $81,991,000 $187,662,028Percent - Total All Sources 56.31 % 0.00 % 0.00 % 43.69 %

HB 2 Funding

State Special Revenue

The operations of the State Auditor’s Office are funded with state special revenue and federal special revenue. There aretwo state special revenue funds that account for the majority of the funding for the office: the insurance fee account and thesecurities fee account. Figure 3 shows the fund balance, revenues, and expenditures for the insurance fee account fromFY 2018 through FY 2023 as requested by the State Auditor’s Office. Appropriations supported by the fees are included inproposed budgets of the Centralized Services and Insurance Divisions.




Program Changes Decisions Modifications SWPL01 CENTRAL MANAGEMENT 17,199 (29,449)03 INSURANCE (105,595) 6,972

- (12,250)- (98,623)

04 SECURITIES 2,937 71,245 860 75,04206 LOCAL ASSISTANCE TO COUNTIES - -Agency Total $(85,458) $ 48,767 $ 860 $ (35,831)

LFDISSUE


Figure 3State Auditor's Office

Insurance Fee AccountActuals Actuals Actuals Budgeted Proposed ProposedFY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023

Beginning Fund Balance $1,716,823 $1,818,619 $2,381,637 $3,402,844 $1,860,455 $1,766,456

Revenues 6,537,612 6,734,044 6,742,287 6,177,101 6,616,101 6,621,101

ExpendituresPersonal Services 4,720,800 4,750,732 4,546,684 5,488,917 4,770,578 4,784,439Operating Expenses 1,251,115 1,386,562 1,162,004 2,219,355 1,928,504 1,879,178Equipment & Intangible Assets 7,780 33,733 9,685 6,498 6,498 6,498Transfers 454,408 0 0 0 0 0Debt Service 0 0 2,445 4,720 4,520 4,520


Adjustments (1,713) 1 (262) 0 0 0

Ending Fund Balance $1,818,619 $2,381,637 $3,402,844 $1,860,455 $1,766,456 $1,712,922

As shown, revenues have exceeded expenditures in FY 2018, FY 2019 and FY 2020 resulting in an increased fundbalance. In FY 2021, $859,000 in authority including one-time-only biennial appropriations for operations adjustments,retirement pay, carry forward authority, and nonbudgeted authority for reviewing the Montana State Fund totaling areincluded in the expenditures. These appropriations are not included in the proposed appropriations for the 2023 biennium.

The legislature may wish to consider transferring fund balance from the insurance fee account to the generalfund

The fund balance for the state special revenue funded by insurance fees is increasing because revenues are greater than expenditures for the program. Under 33-2-708, MCA insurers pay to the State Auditor’s Office an annual licensing fee of $1,900 a year. The license authorizes the insurer to conduct business in Montana. Additional fees are charged for nonresidents, other types of insurance, reinstatements, original applications, and consultant’s licenses. Fees are set in statute and must be changed through legislation. Figure 4 shows the budgeted appropriations for FY 2018 through FY 2020, the expenditures and percentage of the appropriations expended.



As shown in Figure 4, SAO expended between 70.1% and 86.2% of budgeted appropriation in the last three years. Figure5 shows the fund balance projected for the insurance fee account if:

• Nonbudgeted expenditures for projected carryforward and the Montana State Fund review are included• The percentage expended is 80.0%


Insurance Fee AccountActuals Actuals Actuals Budgeted Proposed ProposedFY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023

Beginning Fund Balance $1,716,823 $1,820,332 $2,381,637 $3,403,106 $3,321,882 $4,145,903

Revenues 6,537,612 6,734,044 6,742,287 6,177,101 6,616,101 6,621,101

ExpendituresCarry forward 226,381 376,804 305,253 300,000 300,000 300,000HB 2 5,550,862 5,562,458 5,187,925 7,292,907 6,710,100 6,674,635Montana State Fund Review 212,290 227,007 232,288 230,000 230,000 230,000Nonbudgeted including transfers 444,570 4,758 (4,648) 0 0 0


Adjustments 0 (1,712) 0 0 0 0

Percentage Expended - 80.0% 6,258,325 5,792,080 5,763,708

Ending Fund Balance $1,820,332 $2,381,637 $3,403,106 $3,321,882 $4,145,903 $5,003,296



Insurance Fee AccountActuals Actuals ActualsFY 2018 FY 2019 FY 2020

Budgeted AppropriationsCarry forward $603,185 $682,057 $575,253

6,523,867 6,625,016 7,094,194339,569 366,563 363,983

HB 2Montana State Fund ReviewSenate Bill 125 0 0 127,100

Total Budgeted Appropriations 7,466,621 7,673,636 8,160,530

ExpendituresCarry forward 226,381 376,804 305,253

5,550,862 5,562,458 5,184,215212,290 227,007 232,288

0 0 3,710

HB 2Montana State Fund ReviewSenate Bill 125Nonbudgeted including transfers 444,570 4,758 (4,648)

$6,434,103 $6,171,027 $5,720,818Total Expenditures

Budget Remaining

% Expended

$1,032,518 $1,502,609 $2,439,712

86.17% 80.42% 70.10%


As shown in Figure 5, the beginning fund balance in FY 2018 was $1.7 million while, at the end of FY 2020 the fund balance was $3.4 million, a 100.0% increase in three years. While Figure 3 shows a reduction in fund balance beginning in FY 2021 the projection is dependent on the total appropriations established for FY 2021 through FY 2023 being 100.0% expended. Figure 5 shows the projected fund balance using the percentage of expenditures compared to budgeted appropriations of 80.0%. In this scenario, fund balance at the end of FY 2023 would be $5.0 million.

If the legislature wishes to maintain the license fees at their current levels, the fund balance in the insurance fee account will continue to grow as long as revenues continue to exceed expenditure levels. Currently, the securities fee account used by the State Auditor’s Office to support the Securities Division has excess revenues above the expenditures needed to operate the program. The excess is transferred to the general fund at the end of each year.

The insurance fees are mostly paid at the beginning of the fiscal year in July. This results in a portion of the fund balance being used for cash flow purposes. According to the State Auditor's Office as of December 2020 the State Auditor's Office was utilizing $400,000 of the fund balance in the insurance fee account for cash flow purposes. If the legislature wishes to sweep the insurace fee account, it should consider maintaining a level of fund balance for the agency to utilize for cash flow purposes.

The legislature may wish to consider:

• Changing statute to require that excess fund balance above a level established for cash flow in the insurance feeaccount be transferred to the general fund at the end of each year

• Reduce insurance fees included the annual licensing fee for insurers• Allow the insurance fee account to continue to accumulate fund balance

The Central Services and Securities Divisions are funded with state special revenue from the securities fee account,which receives its revenue from securities portfolio registration fees charged to investment advisors and investmentcompanies, as well as from security licenses and permits. In accordance with 30-1-115, MCA, unspent collections fromsecurity licenses and permits are deposited into the general fund. Deposits into the general fund were about $6.3 millionin FY 2020. Figure 6 shows the fund balance, revenues, and expenditures for the securities fee account. Therefore,appropriations to the program directly impact the general fund.


Securities Fee AccountActuals Actuals Actuals Budgeted Proposed ProposedFY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023

Beginning Fund Balance $191,348 $226,024 $189,314 $383,096 $125,590 $40,973

Revenues 8,343,532 8,289,630 7,903,667 7,528,937 6,887,640 7,178,509

ExpendituresPersonal Services 1,149,930 1,123,496 1,121,732 1,615,225 1,458,677 1,462,618Operating Expenses 266,870 247,968 326,913 273,532 279,125 266,395Equipment & Intangible Assets 1,945 16,483 0 1,496 1,496 1,496Transfers 6,890,111 6,938,393 6,260,514 5,894,972 5,231,741 5,526,183Debt Service 0 0 726 1,218 1,218 1,218


Adjustments 0 0 0 0 0 0

Ending Fund Balance $226,024 $189,314 $383,096 $125,590 $40,973 ($38,428)


LFDCOMMENT


Based on revenue projections developed by the State Auditor's Office and proposed appropriations, thesecurities fee account is over appropriated in FY 2023. The legislature may wish to discuss with the StateAuditor's Office it's revenue projections for the securities fee account and the agency's plans if the funding

is not sufficient for proposed expenditures in FY 2023.

Federal Special Revenue

Federal special revenues are received for the Montana Reinsurance Program. Under the Affordable Care and PatientProtection Act (ACA) states can apply for a section 1332 waiver. The State Auditor’s Office was granted this waiver inAugust 2020 allowing the state to utilize annual assessments on health insurance plan premiums to be used as a match forfederal funds to offset expenses of health insurers associated with high cost individuals who incur high cost medical claims.

Statutory Authority

The State Auditor’s Office is responsible for passing through funding for local police and firefighter retirement programs.The retirement programs are funded from general insurance (33-2-705, MCA) and firefighter insurance premium taxes(50-3-109, MCA). The premium taxes are deposited into the general fund and then a portion is transferred to the StateAuditor’s Office for distribution to local governments. Because these funds are statutorily appropriated, the appropriationsare not included in the general appropriations act (HB 2).




Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of Budget2021 Base Budget 0 0 0 0.00 % 52,876,375 52,876,375 105,752,750 100.08 %SWPL Adjustments 0 0 0 0.00 % 91,150 46,968 138,118 0.13 %PL Adjustments 0 0 0 0.00 % 0 0 0 0.00 %New Proposals 0 0 0 0.00 % (109,884) (109,956) (219,840) (0.21)%

Total Budget $0 $0 $0 $52,857,641 $52,813,387 $105,671,028

HB 2 Language

The executive has not proposed any HB 2 language for the State Auditor's Office.


The 2019 Legislature passed HB 694 which increased fees paid by investment firms. The increased revenues aredeposited directly into the general fund and are not reflected in Figure 6.


34010 - State Auditor's Office 01-Central Management






BienniumChange

Biennium% Change

Personal Services 2,920,035 2,845,272 (74,763) (2.56)%Operating Expenses 1,288,223 1,315,573 27,350 2.12 %Equipment & Intangible Assets 3,366 3,366 0 0.00 %Debt Service 485 0 (485) (100.00)%


State/Other Special Rev. Funds 4,212,109 4,164,211 (47,898) (1.14)%

Total Funds $4,212,109 $4,164,211 ($47,898) (1.14)%


Program Description

The Central Management Division is responsible for the administrative, personnel, budgeting, and accounting functions forthe office. The division also provides support to the commissioner in fulfilling the duties as a member of the Land Boardand Crop Hail Insurance Board.

Program Highlights

Central Management DivisionMajor Budget Highlights

• The Central Management Division’s 2023 biennium budget requestis about $48,000 or 1.1% lower than the 2021 biennium budget

• Proposed changes are those included in statewide present lawadjustments for personal services, fixed costs, and inflation/deflation






Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 16.00 16.00 16.00 16.00

Personal Services 1,152,244 1,486,672 1,433,363 1,421,113 1,424,159Operating Expenses 429,489 648,782 639,441 664,501 651,072Equipment & Intangible Assets 0 1,683 1,683 1,683 1,683Debt Service 436 485 0 0 0



Total Funds $1,582,169 $2,137,622 $2,074,487 $2,087,297 $2,076,914

Total Ongoing $1,582,169 $2,117,622 $2,074,487 $2,087,297 $2,076,914Total OTO $0 $20,000 $0 $0 $0



Central Management expended 74.0% of its $2.1 million in FY 2020 modified HB 2 budget. Personal services were 77.5%expended, and operating expenses were 66.2% expended.

Personal services are lower than anticipated in the budget due to vacancies within the office. Central Management has3.00 FTE vacant as of September 4, 2020. Of these positions, 1.00 FTE has been vacant since January 7, 2017 and theother since June 11, 2018. The vacancies are driving lower expenditures for personal services in FY 2020.

Operating expenses are below levels anticipated in the FY 2020 modified HB 2 budget due to lower costs for InformationTechnology Services Division services and reduced spending on office equipment and computer hardware.


FY 2021 appropriations are slightly lower than FY 2020. Personal services are higher in FY 2020 due to a one-time-only,restricted, biennial appropriations for agency retirement benefit payments included in FY 2020. Operating expenses arehigher in FY 2020 due to a biennial appropriation for legislative audit services including in FY 2020 appropriations.

Executive Request

The Central Management Division budget proposed by the executive is $48,000 or 1.1% less than the 2021 bienniumbudget.

Personal services were about $1.4 million or 69.1% of the FY 2021 base budget. The executive proposed a decrease ofabout $12,250 in FY 2022 and $9,204 in FY 2023. The decreases are included in the statewide present law adjustmentsfor personal services discussed in the following Program Personal Services narrative.

Operating expenses were about $639,000 or 30.8% of the FY 2021 base budget. The executive proposes an increase ofabout $25,000 in FY 2022 and $12,000 in FY 2023. The increases are part of the statewide present law adjustments forfixed costs and inflation/deflation and are mainly due to biennial legislative audit costs and increases in statewide indirectcosts allocated to the State Auditor’s Office.


Personal services were about $1.4 million or 69.1% of the FY 2021 base budget. The executive proposes a statewidepresent law decrease of about $12,000 in FY 2022 and $9,000 in FY 2023. In addition to the expected changes, the 2023biennium personal service statewide present law adjustment includes management decisions including:



• Broadband pay raises and wage changes due to employee turnover• FTE movement between the Central Services Division and the Securities Division that transferred 1.00 FTE and

$70,000 of personal services authority out of Central Services Division and into the Securities Division

Funding


State Auditor's Office, 01-Central ManagementFunding by Source of Authority

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

General Fund 0 0 0 0 0 0.00 %

02235 Insurance Fee Account 3,429,498 0 0 0 3,429,498 82.36 %02283 Securities Fee Account 734,713 0 0 0 734,713 17.64 %

State Special Total $4,164,211 $0 $0 $0 $4,164,211 100.00 %



Total All Funds $4,164,211 $0 $0 $0 $4,164,211

The Centralized Management Division is funded entirely with state special revenue. Insurance and securities fees are thetwo sources of funding, with the insurance fee account supporting the majority of the appropriations for the division.




Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of Budget2021 Base Budget 0 0 0 0.00 % 2,074,487 2,074,487 4,148,974 99.63 %SWPL Adjustments 0 0 0 0.00 % 12,810 2,427 15,237 0.37 %PL Adjustments 0 0 0 0.00 % 0 0 0 0.00 %New Proposals 0 0 0 0.00 % 0 0 0 0.00 %

Total Budget $0 $0 $0 $2,087,297 $2,076,914 $4,164,211







FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds

DP 1 - Personal Services0.00 0 (12,250) 0 (12,250) 0.00 0 (9,204) 0 (9,204)

DP 2 - Fixed Costs0.00 0 25,100 0 25,100 0.00 0 11,656 0 11,656












34010 - State Auditor's Office 03-Insurance






BienniumChange

Biennium% Change

Personal Services 8,287,525 7,747,156 (540,369) (6.52)%Operating Expenses 3,176,441 2,924,399 (252,042) (7.93)%Equipment & Intangible Assets 10,218 10,218 0 0.00 %Grants 88,058,696 88,062,286 3,590 0.00 %Debt Service 2,270 0 (2,270) (100.00)%


State/Other Special Rev. Funds 31,335,150 30,544,059 (791,091) (2.52)%Federal Spec. Rev. Funds 68,200,000 68,200,000 0 0.00 %

Total Funds $99,535,150 $98,744,059 ($791,091) (0.79)%


Program Description

The Insurance Division regulates the insurance industry in Montana. The Policyholder Services Bureau is responsible forresolving insurance consumer inquiries and complaints involving agents, coverage, and companies. The ExaminationsBureau is responsible for monitoring the financial solvency of insurance companies, collecting premium taxes andcompany fees, and auditing insurance company annual statements. Also housed in this bureau is the Captive InsuranceProgram, which promotes Montana as a captive domicile and regulates captive insurers in the state. The Rates Bureauand the Forms Bureau are responsible for reviewing rate and form filings, respectively, to ensure compliance with theapplicable insurance code. The Insurance Services Bureau is responsible for licensing and providing continuing educationto insurance agents, agencies, and adjustors. The Legal Bureau, which serves both the Insurance and Securities Divisions,provides legal support to the divisions. The Investigations Bureau, which is under the Legal Bureau, investigates code andrule violations, including possible criminal violations, and recommends referral of cases to county attorneys for prosecution.

Program Highlights

Insurance DivisionMajor Budget Highlights

• The Insurance Division’s 2023 biennium budget request is about$251,000 or 0.3% lower than the ongoing 2021 biennium budget

• Proposed changes are the result of statewide present lawadjustments for personal services, fixed costs, and inflation/deflation






Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 46.00 46.00 44.00 44.00

Personal Services 3,274,423 4,211,152 4,076,373 3,867,866 3,879,290Operating Expenses 802,174 1,602,105 1,574,336 1,481,491 1,442,908Equipment & Intangible Assets 9,685 5,109 5,109 5,109 5,109Grants 62,025 44,027,553 44,031,143 44,031,143 44,031,143Debt Service 2,100 2,270 0 0 0


State/Other Special Rev. Funds 4,118,382 15,748,189 15,586,961 15,285,609 15,258,450Federal Spec. Rev. Funds 32,025 34,100,000 34,100,000 34,100,000 34,100,000

Total Funds $4,150,407 $49,848,189 $49,686,961 $49,385,609 $49,358,450




The Insurance Division expended 8.3% of its $49.8 million FY 2020 modified HB 2 budget. Personal services were 77.8%expended, operating expenses were 50.1% expended, and grants were less than 1.0% expended.

As of September 4, 2020, the Insurance Division had 6.00 FTE vacant or 13.0% of its HB 2 positions. The vacancies are driving the lower expenditures for personal services. In addition, the 2019 Legislature provided the Insurance Division with $454,000 in appropriations for operating expenses for insurance contract examiners, market conduct examination contracts, captive insurance adjustments and to partially offset a reduction in FTE and associated personal services funding. The majority of this funding was not needed in FY 2020.

The 2019 Legislature established the Montana Reinsurance Program with SB 125. SB 125 established $44.0 million in appropriation authority for grants associated with providing a reinsurance option for Montana healthcare insurers. In April 2019 after SB 125 was signed into law, the Board of Directors for the program were appointed. A request for a waiver from section 1332 of the Affordable Care and Patient Protection Act allowing the Montana Reinsurance Program was submitted to the federal government and approved in August with an effective date of January 1, 2020. In FY 2020 the Montana Reinsurance Program did not assess members to generate funding for the program and did not have requests for grants. For further discussion please refer to the Executive Request narrative.


FY 2021 appropriations are slightly lower than FY 2020. Personal services are higher in FY 2020 due to a one-time-only, restricted, biennial appropriations for agency retirement benefit payments included in FY 2020. Operating expenses are higher in FY 2020 due to a biennial appropriation for legislative audit services included in FY 2020 appropriations.

Executive Request

The Insurance Division budget proposed by the executive is $251,000 or 0.3% less than the ongoing 2021 biennium budget.

Personal services were about $4.1 million or 8.2% of the ongoing FY 2021 base budget. The executive proposes a decrease from the FY 2021 base budget in both years, about $209,000 in FY 2022 and $197,000 in FY 2023. These changes are discussed in the following Program Personal Services narrative.

Ongoing operating expenses were about $1.6 million or 3.2% of the FY 2021 base budget. The executive proposes an increase of approximatley $82,000 in FY 2022 and $44,000 in FY 2023. Increases for the biennial legislative audit and


LFDCOMMENT

LFDCOMMENT


statewide indirect costs included in the statewide present law adjustments for fixed costs drive the proposed changes.

Grant appropriations were $44.0 million or 88.6% of the FY 2021 base budget and are proposed at the same level for the2023 biennium budget.

Appropriation levels for the Montana Reinsurance Program were established by the 2019 Legislature basedon information received from programs in other states and included in the fiscal note for the bill authorizingthe program. As of November 3, 2020, the State Auditor’s Office had only collected $75,000 in premiums

on health insurance policies that would establish the state special revenue supporting the program. The legislature maywish to discuss updated projections for the program during the Joint Appropriation Subcommittee on General Governmentbudget hearings.


Personal services were about $4.1 million or 8.2% of the ongoing FY 2021 base budget. The executive proposes astatewide present law adjustment decrease of about $209,000 in FY 2022 and $197,000 in FY 2023. As discussed inthe Agency Personal Services narrative, the State Auditor’s Office has experienced a high level of turn-over and vacantpositions in the 2021 biennium. In the Insurance Division, 7.00 FTE were vacant at the time the budget was developed.Between July 2018 and July 2020, 17.00 FTE turned over, with newly hired individuals at lower salary levels than thosepreviously in the positions. Included in the executive 2023 budget is a new proposal to remove 2.00 FTE and about$110,000 each year of the biennium. This is discussed further under New Proposals.

The Insurance Division personal services changes included in the statewide present law adjustments arenot funded at the same percentage as the FY 2021 base budget, creating what appears to be a fund shift.The positions in the Insurance Division are supported through state special revenue funds while grants are

supported through a combination of state and federal special revenue funds. This results in a difference between personalservices funding and funding at the division level.

Funding


State Auditor's Office, 03-InsuranceFunding by Source of Authority

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

01100 General Fund 0 0 0 0 0 0.00 %

02235 Insurance Fee Account 9,955,237 0 0 0 9,955,237 32.59 %02528 Captive Account 726,536 0 0 0 726,536 2.38 %02323 Reinsurance Assessment SB 125 19,862,286 0 0 0 19,862,286 65.03 %


03543 Reinsurance Federal SB 125 68,200,000 0 0 0 68,200,000 100.00 %Federal Special Total $68,200,000 $0 $0 $0 $68,200,000 69.07 %


Total All Funds $98,744,059 $0 $0 $0 $98,744,059

The Insurance Division is funded entirely with state special revenue. A portion of the funding is from the insurance feeaccount, which is supported by insurance licensure fees, examination fees, and penalties. The Insurance Division also hasappropriated funds from the captive account which support the administration of the Captive Insurance Program. Fees and



assessments from captive insurance providers are deposited into the state special revenue fund while fines and penaltiesare deposited into the general fund. At the end of the fiscal year, the balance of the captive account is transferred to thegeneral fund.

The 2019 Legislature established the reinsurance program account within the state special revenue funds in SB 125. Allassessments of 1.2% of total premium volume for members of the Montana Reinsurance Program, interest and incomeearned on the account, and any other funds accepted for the benefit of the account are deposited into the account toprovide support for the program. According to the statute the Board of Directors for the Montana Reinsurance Programwere to determine the timing of the assessments beginning in 2020. As of November 3, 2020, the State Auditor’s Officehad not assessed members on their premium volume for the Montana Reinsurance Program.




Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of Budget2021 Base Budget 0 0 0 0.00 % 49,511,961 49,511,961 99,023,922 100.28 %SWPL Adjustments 0 0 0 0.00 % (16,468) (43,555) (60,023) (0.06)%PL Adjustments 0 0 0 0.00 % 0 0 0 0.00 %New Proposals 0 0 0 0.00 % (109,884) (109,956) (219,840) (0.22)%

Total Budget $0 $0 $0 $49,385,609 $49,358,450 $98,744,059




FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds

DP 1 - Personal Services0.00 0 (98,623) 0 (98,623) 0.00 0 (87,127) 0 (87,127)

DP 2 - Fixed Costs0.00 0 82,360 0 82,360 0.00 0 43,701 0 43,701


Grand Total All Present Law Adjustments0.00 $0 ($16,468) $0 ($16,468) 0.00 $0 ($43,555) $0 ($43,555)












New Proposals



FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds

DP 4 - Remove Vacant Positions - Insurance Division(2.00) 0 (109,884) 0 (109,884) (2.00) 0 (109,956) 0 (109,956)

Total (2.00) $0 ($109,884) $0 ($109,884) (2.00) $0 ($109,956) $0 ($109,956)


DP 4 - Remove Vacant Positions - Insurance Division -

The executive proposes to remove two positions that are no longer needed in the Insurance Division. The first positionis a legal secretary in the Legal Section. The Legal Section currently has a legal secretary and a paralegal and does notrequire a second legal secretary. The second position is a license permit technician in the Insurance Services Bureau. Dueto efficiencies in daily processing, the duties of this vacant position have been absorbed by other bureau staff, and it is nolonger needed to provide service in this area.


34010 - State Auditor's Office 04-Securities






BienniumChange

Biennium% Change

Personal Services 2,273,809 2,429,128 155,319 6.83 %Operating Expenses 310,784 331,226 20,442 6.58 %Equipment & Intangible Assets 2,404 2,404 0 0.00 %Debt Service 718 0 (718) (100.00)%



Total Funds $2,587,715 $2,762,758 $175,043 6.76 %


Program Description

The Securities Division is responsible for the administration and enforcement of the Securities Act of Montana and theregistration of securities issuers, salespeople, broker-dealers, investment advisers, investment adviser representativesand multi-level marketing companies. The division is also responsible for the investigation of unregistered and fraudulentsecurities transactions. The division has sole jurisdiction for investment advisor firms with assets of under $100 million.The division investigates securities code and rule violations, including possible criminal violations, takes appropriateadministrative action and refers criminal cases to either federal authorities or county attorneys for prosecution.

Program Highlights

Securities DivisionMajor Budget Highlights

• The Securities Division’s 2023 biennium budget request is about$240,000 or 9.5% higher than the ongoing 2021 biennium budget

• Proposed changes include increases for statewide present lawadjustments for personal services and fixed costs






Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 12.50 12.50 12.50 12.50

Personal Services 848,275 1,135,953 1,137,856 1,212,898 1,216,230Operating Expenses 237,896 159,915 150,869 170,635 160,591Equipment & Intangible Assets 0 1,202 1,202 1,202 1,202Debt Service 639 718 0 0 0



Total Funds $1,086,810 $1,297,788 $1,289,927 $1,384,735 $1,378,023

Total Ongoing $1,086,810 $1,232,788 $1,289,927 $1,384,735 $1,378,023Total OTO $0 $65,000 $0 $0 $0



The Securities Division expended 83.7% of its $1.3 million FY 2020 modified HB 2 budget. Personal services were 74.7%expended, and operating expenses were 148.8% expended.

As of September 4, 2020, the Securities Division had 4.50 FTE vacant or 36.0% of its HB 2 positions vacant. The vacanciesare driving the lower expenditures for personal services. Operating expenses were higher than anticipated in the budgetdue to legal costs.


FY 2021 appropriations for personal services are slightly higher than FY 2020 appropriations due to the pay plan approvedby the 2019 Legislature. Operating expenses are higher in FY 2020 due to a biennial appropriation for legislative auditservices included in FY 2020 appropriations.

Executive Request

The Securities Division budget proposed by the executive is about $240,000 or 9.5% higher than the ongoing 2021biennium budget.

Personal services were about $1.1 million or 88.2% of the FY 2021 base budget. The executive proposes an increase ofabout $75,000 in FY 2022 and $78,000 in FY 2023. The increase is due to changes included in the statewide present lawadjustments which are discussed further in the Program Personal Services narrative.

Operating expenses were about $151,000 or 11.7% of FY 2021 base budget appropriations. The executive proposes anincrease of about $19,800 in FY 2022 and $9,700 in FY 2023 due to a biennial appropriation for legislative audit costsincluded in FY 2022 and increased costs for statewide indirect costs included in both fiscal years.


Personal services for the Securities Division were approximately $1.1 million or 88.2% of the FY 2021 base budget.The executive proposes statewide present law adjustment increases of $75,000 in FY 2022 and $78,000 in FY 2023. Inaddition to the expected changes, the 2023 biennium personal services statewide present law adjustment request includesmanagement decisions for broadband pay raises and wage changes due to employee turnover. Also included is themovement of 1.00 FTE and $70,000 in personal services funding from the Central Management Division into the SecuritiesDivision.


LFDCOMMENT


Funding


State Auditor's Office, 04-SecuritiesFunding by Source of Authority

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

General Fund 0 0 0 0 0 0.00 %

02091 Securities Restitution Fund 0 0 0 300,000 300,000 9.80 %02283 Securities Fee Account 2,762,758 0 0 0 2,762,758 90.20 %

State Special Total $2,762,758 $0 $0 $300,000 $3,062,758 100.00 %



Total All Funds $2,762,758 $0 $0 $300,000 $3,062,758

HB 2

The Securities Division is funded entirely with state special revenue from the securities fee account, which is supportedby portfolio notice filing fees and examination charges. The Securities Division pays for expenses associated with theregulation of portfolio activities.

The revenues collected in the securities fee account are driven by what is happening in the financial marketsand in the economy as well as statutory changes to the fees. The 2019 Legislature doubled the registrationfees for broker-dealer and investment advisors and the fees for out-of-state salespersons and investment

advisor representatives. These fees are deposited directly into the general fund and are not reflected in Figure 6 in theagency summary. Impacts from the COVID-19 pandemic have impacted the number of investment products available toinvestors. Since the investment products are dependent on the financial markets, as the economy has softened the numberof products has retracted and the revenues to the State Auditor have decreased.

There are two transfers of excess revenues from the securities fees account. The first transfer is 4.5% of portfolio fees tothe security restitution fund. These funds are used to reimburse victims of securities fraud. The transfers end June 30,2021. At the end of FY 2020 the ending fund balance in the securities restitution fund was $1,067,175.

The remaining excess revenues are transferred to the general fund. The estimated transfers from the account are includedin the Agency Funding narrative in Figure 6.

Statutory Appropriations

As discussed in the LFD Comment, 4.5% of portfolio fees are transferred to the security restitution fund to reimburse victimsof securities fraud.







Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of Budget2021 Base Budget 0 0 0 0.00 % 1,289,927 1,289,927 2,579,854 93.38 %SWPL Adjustments 0 0 0 0.00 % 94,808 88,096 182,904 6.62 %PL Adjustments 0 0 0 0.00 % 0 0 0 0.00 %New Proposals 0 0 0 0.00 % 0 0 0 0.00 %

Total Budget $0 $0 $0 $1,384,735 $1,378,023 $2,762,758




FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds


DP 2 - Fixed Costs0.00 0 19,870 0 19,870 0.00 0 9,787 0 9,787












58010 - Department Of Revenue SUMMARY






BienniumChange

Biennium% Change

Personal Services 90,933,624 95,725,742 4,792,118 5.27 %Operating Expenses 28,991,931 31,292,250 2,300,319 7.93 %Equipment & Intangible Assets 1,761,876 351,339 (1,410,537) (80.06)%Capital Outlay 386,179 0 (386,179) (100.00)%Local Assistance 2,000,000 0 (2,000,000) (100.00)%Transfers 120,816 3,000 (117,816) (97.52)%Debt Service 133,146 154,468 21,322 16.01 %

Total Expenditures $124,327,572 $127,526,799 $3,199,227 2.57 %

General Fund 114,622,470 117,476,758 2,854,288 2.49 %State/Other Special Rev. Funds 1,979,898 1,987,252 7,354 0.37 %Federal Spec. Rev. Funds 550,009 559,854 9,845 1.79 %Proprietary Funds 7,175,195 7,502,935 327,740 4.57 %

Total Funds $124,327,572 $127,526,799 $3,199,227 2.57 %

Total Ongoing $124,077,572 $127,276,799 $3,199,227 2.58 %Total OTO $250,000 $250,000 $0 0.00 %

Mission Statement

The Department of Revenue serves Montana by providing high quality services, ensuring equity and fairness, andconstantly improving efficiency.

Please refer to the agency profile for the Department of Revenue at https://leg.mt.gov/lfd/state-agency-profiles/department-revenue/ for additional information about the agency’s organization structure, historical expenditures, FY 2020 expendituredashboard, and recent studies, audits, and legislation.

Agency Highlights

Department of RevenueMajor Budget Highlights

• The Department of Revenue 2023 biennium budget request isapproximately $3.2 million or 2.6% higher than the 2021 bienniumbudget. The executive proposal includes:

◦ General fund increases in statewide present lawadjustments for personal services, fixed costs, and inflation/deflation

◦ A one-time-only request of $250,000 for anticipatedovertime and termination payout of personal services in theAlcoholic Beverage Control Division

◦ In the Property Assessment Division, an increase in statespecial revenue for the property valuation improvement fundand an increase in general fund for a new proposed NRIS/GIS usage fixed cost to be paid to the Montana State Library


https://leg.mt.gov/lfd/state-agency-profiles/department-revenue/

https://leg.mt.gov/lfd/state-agency-profiles/department-revenue/





Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 625.67 625.67 625.67 625.67

Personal Services 43,884,638 44,488,493 46,445,131 47,787,783 47,937,959Operating Expenses 13,816,375 13,977,811 15,014,120 15,735,459 15,556,791Equipment & Intangible Assets 1,731,317 1,731,322 30,554 135,256 216,083Capital Outlay 384,459 386,179 0 0 0Local Assistance 0 2,000,000 0 0 0Transfers 117,816 119,316 1,500 1,500 1,500Debt Service 50,714 55,899 77,247 77,239 77,229


General Fund 55,237,809 57,929,546 56,692,924 58,715,925 58,760,833State/Other Special Rev. Funds 989,947 989,944 989,954 993,626 993,626Federal Spec. Rev. Funds 275,085 275,086 274,923 279,920 279,934Proprietary Funds 3,482,478 3,564,444 3,610,751 3,747,766 3,755,169

Total Funds $59,985,319 $62,759,020 $61,568,552 $63,737,237 $63,789,562


Agency Discussion


The Department of Revenue (DOR) expended 95.6% of its $62.8 million FY 2020 modified HB 2 budget. Personal servicesexpenditures in FY 2020 were lower than anticipated in the budget due to employee turn-over. The 2019 Legislatureprovided $2.0 million in the 2021 biennial appropriation for the Department of Revenue to implement HB 636. HB 636revised the process for protesting taxes and requires DOR to reimburse local taxing jurisdiction if the State Tax AppealBoard or the courts determine that the final appraised value of centrally assessed or industrial property is 75.0% or morebelow the original assessed value determined by the Department of Revenue. In FY 2020 the Department of Revenue didnot reimburse any taxing jurisdictions for differences in taxable values. This appropriation is biennial and can be used inboth years of the biennium.


FY 2021 total appropriations are approximately $1.2 million less than FY 2020. The primary difference is attributed tothe reduction of local assistance for the one-time-only HB 636 appropriation. There is an increase of approximately $1.3million in personal services primarily due to a pay increase adjustment to meet the 85.0% market midpoint. In FY 2020the Department of Revenue transferred $1.5 million in operating expense appropriations to equipment and intangibleassets to upgrade the tax system, GenTax. Therefore, this has led to the $1.0 million increase in operating expensesand approximately $1.7 million decrease in equipment and intangible assets in FY 2021. Transfers were decreased byapproximately $118,000 due to transferring funds to finish projects that included parking lot and landscaping work at theliquor warehouse and investigative work in FY 2021.

Comparison of FY 2021 Legislative Budget to FY 2021 Base

Figure 1 illustrates the beginning FY 2021 budget as adopted by the 2019 Legislature compared to the finalized FY 2021base budget, which included modifications as approved by the approving authority (as authorized in statute) during the



interim. The FY 2021 base budget was agreed upon by the executive and legislative branches to be the point from whichany changes would be recorded for the 2023 biennium budgeting process.

Figure 1



Authority Action01 DIRECTORS OFFICE61000 Personal Services 8,032,393 (1,498,414) 6,533,979 -18.7%62000 Operating Expenses 6,722,162 (4,633,220) 2,088,942 -68.9%68000 Transfers-out 1,500 - 1,500 0.0%69000 Debt Service 4,500 5,913 10,413 131.4%01 DIRECTORS OFFICE Total 14,760,555 (6,125,721) 8,634,834 -41.5%02 TECHNOLOGY SERVICES DIVISION61000 Personal Services - 2,977,400 2,977,400 0.0%62000 Operating Expenses - 5,041,745 5,041,745 0.0%02 TECHNOLOGY SERVICES DIVISION Total - 8,019,145 8,019,145 0.0%03 ALCOHOLIC BEVERAGE CONTROL DIV61000 Personal Services 2,442,070 - 2,442,070 0.0%62000 Operating Expenses 585,110 (35,293) 549,817 -6.0%63000 Equipment & Intangible Assets 30,554 - 30,554 0.0%69000 Debt Service - 35,293 35,293 0.0%03 ALCOHOLIC BEVERAGE CONTROL DIV Total 3,057,734 - 3,057,734 0.0%05 INFORMATION MGMT & COLLECTIONS61000 Personal Services 6,280,422 (1,843,425) 4,436,997 -29.4%62000 Operating Expenses 2,681,530 (716,779) 1,964,751 -26.7%69000 Debt Service - 3,741 3,741 0.0%05 INFORMATION MGMT & COLLECTIONS Total 8,961,952 (2,556,463) 6,405,489 -28.5%07 BUSINESS & INCOME TAXES DIV61000 Personal Services 10,321,642 - 10,321,642 0.0%62000 Operating Expenses 1,694,244 (7,558) 1,686,686 -0.4%69000 Debt Service - 7,558 7,558 0.0%07 BUSINESS & INCOME TAXES DIV Total 12,015,886 - 12,015,886 0.0%08 PROPERTY ASSESSMENT DIVISION61000 Personal Services 19,245,275 362,768 19,608,043 1.9%62000 Operating Expenses 3,395,765 286,414 3,682,179 8.4%69000 Debt Service 6,385 13,857 20,242 217.0%08 PROPERTY ASSESSMENT DIVISION Total 22,647,425 663,039 23,310,464 2.9%58010 DEPARTMENT OF REVENUE Total 61,443,552 - 61,443,552 0.0%

The 2019 Legislature enacted HB 293, providing film tax credits, and SB 200, providing for equal classification of homes ona foundation. The Governor’s Office transferred from HB 715 authority 3.00 FTE and approximately $220,000 in personalservices to the Business and Income Taxes Division for film tax credits and 1.00 FTE and approximately $71,000 in



personal services to the Property Assessment Division for equal classification of homes on a foundation in FY 2021. HB715 required the funding to be included in the 2023 biennium base budget.

The Department of Revenue reorganized its organizational structure to create the Technology Services Division andtransfer the accounting, budgeting, and call center to the Director’s Office. To create the new division, the Director’s Officetransferred:

• 16.00 FTE• $2,977,400 in personal services• $5,041,745 in operating expenses

The Information Management and Collection Division transferred appropriations to the Director’s Office including:

• 18.00 FTE• $1,749,686 in personal services• $488,038 in operating expenses

These services were supported by:

• $9,205,194 in general fund• $245,307 in state special revenue• $281,183 in proprietary funds

In addition, the Department of Revenue made several program transfers of general fund between various programs as shown in Figure 1.

Executive Request

The executive proposes an increase above the FY 2021 base of approximately $2.2 million in FY 2022 and FY 2023. Proposed increases in general fund are primarily due to statewide present law adjustments for personal services and operating expenses.

The executive request will be discussed in further detail at the program level.

5.0% Plan

Statute requires that agencies submit plans to reduce general fund and certain state special revenue funds by 5.0%. The DOR 5.0% plan includes reductions totaling $2.8 million general fund and approximately $49,000 in state special revenue. The majority of these reductions are in personal services, with all programs impacted except the Alcoholic Beverage Control Division. Potential changes because of the 5.0% reductions include delayed hiring, slower response times for inquiries, increased processing times for tax refunds, and delays in reviewing and updating local market values used for property tax collections.

A summary of the entire 2023 biennium 5.0% plan submitted for this agency can be found online at the Section A subcommittee page on “Tab D Materials.”


In order to explain the factors influencing personal services changes, the proposed statewide personal services present law adjustment (DP 1) has been broken down into three categories, as follows:








DP 1 - FY 2022

ProgramExpectedChanges

ManagementDecisions

BudgetModifications SWPL1

01 DIRECTORS OFFICE 297,736 (204,154) - 93,58202 TECHNOLOGY SERVICES DIVISION 12,371 267,790 - 280,16103 ALCOHOLIC BEVERAGE CONTROL DIVISION 74,012 48,101 - 122,11305 INFORMATION MANAGEMENT & COLLECTIONS DIV 151,844 179,328 - 331,17207 BUSINESS & INCOME TAXES DIVISION 303,858 130,942 - 434,80008 PROPERTY ASSESSMENT DIVISION 842,177 (763,024) 1,671 80,824Agency Total $ 1,681,998 $ (341,017) $ 1,671 $ 1,342,652

Personal services were $46.4 million or 75.4% of total FY 2021 appropriations. In addition to the expected changes, theDepartment of Revenue had management decision changes that include pay changes related to employee turnover aswell as program reorganizations. As previously mentioned, the Technology Services unit was moved out of the Director’sOffice and into its own division and the call center, accounting, and budgeting unit from the Information Management andCollections Division moved into the Director’s Office.

The Department of Revenue estimates that it could experience up to $1.5 million in retirement payouts in the 2023biennium. Approximately half of these payouts are in the Property Assessment Division, along with approximately $372,000in the Business and Income Taxes Division and approximately $203,000 in the Director’s Office.

Additionally, the Department of Revenue estimates that there are 321 employees who are below the 85.0% marketmidpoint. The agency estimates that it will increase personal services cost by approximately $2.9 million to increase staffsalaries to meet the 85.0% market midpoint.

Funding


Total Department of Revenue Funding by Source of Authority2023 Biennium Budget Request - Department of Revenue

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

General Fund 117,476,758 0 0 297,112,021 414,588,779 75.22 %State Special Total 1,987,252 0 0 126,011,250 127,998,502 23.22 %Federal Special Total 559,854 0 0 0 559,854 0.10 %Proprietary Total 7,252,935 250,000 539,474 0 8,042,409 1.46 %Other Total 0 0 0 0 0 0.00 %

Total All Funds $127,276,799 $250,000 $539,474 $423,123,271 $551,189,544Percent - Total All Sources 23.09 % 0.05 % 0.10 % 76.77 %



HB 2 Funding

The Department of Revenue is primarily funded with general fund, which is 75.2% of total funds in the 2023 biennium.Proprietary funds are 1.5% of total funds and support the operation of the Alcoholic Beverage Control Division and otherdivisions that support alcoholic beverage control functions or the staff of the Alcoholic Beverage Control Division.

State special revenue accounts for 23.2% of total funds and supports:

• Tobacco tax compliance activities under the Tobacco Master Settlement Agreement• Appraisal, assessment, and taxation processes• Administration of the unclaimed property program• Administration of the medical marijuana tax

Federal special revenue accounts for 0.1% of total funds and supports federal mineral royalty audits.

Statutory Funding

Total funding for the agency also includes two large general fund statutory appropriations. The Director’s Office manages apass-through general fund appropriation for the state entitlement shares and is responsible for the statutorily appropriateddistributions of various tax revenues to local and tribal governments. These statutory appropriations are described in moredetail in the pertinent sections.


The following table summarizes the total budget by base, present law adjustments, and new proposals. For a description ofthese categories, please see the glossary.


Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of Budget2021 Base Budget 56,692,924 56,692,924 113,385,848 96.52 % 61,443,552 61,443,552 122,887,104 96.36 %SWPL Adjustments 1,817,143 1,753,788 3,570,931 3.04 % 1,959,827 1,903,889 3,863,716 3.03 %PL Adjustments 196,319 304,582 500,901 0.43 % 321,319 429,582 750,901 0.59 %New Proposals 9,539 9,539 19,078 0.02 % 12,539 12,539 25,078 0.02 %

Total Budget $58,715,925 $58,760,833 $117,476,758 $63,737,237 $63,789,562 $127,526,799

HB 2 Language

The executive requests the following language be included in HB 2: "The Alcoholic Beverage Control Division hasappropriated $170.0 million in each year of the 2023 biennium from the liquor enterprise fund to maintain adequateinventories necessary to meet statutory requirements, to pay freight costs, and to transfer profits and taxes to appropriateaccounts."



58010 - Department Of Revenue 01-Directors Office






BienniumChange

Biennium% Change

Personal Services 12,850,492 13,280,351 429,859 3.35 %Operating Expenses 3,973,795 4,480,475 506,680 12.75 %Capital Outlay 182,884 0 (182,884) (100.00)%Transfers 3,000 3,000 0 0.00 %Debt Service 18,363 20,826 2,463 13.41 %


General Fund 16,309,418 17,065,440 756,022 4.64 %State/Other Special Rev. Funds 408,199 408,308 109 0.03 %Proprietary Funds 310,917 310,904 (13) 0.00 %

Total Funds $17,028,534 $17,784,652 $756,118 4.44 %


Program Description

The Director’s Office (DO) supports the agency's director and is composed of the following units:

• The Citizen and Financial Services Office manages the department’s centralized accounting and budgetingfunctions, call center, e-Stop business licensing and unclaimed property distribution

• The Communication and Taxpayer Outreach Office communicates with internal and external stakeholders, andis responsible for media relations, digital communications, forms, design and branding, public education andoutreach, training and employee development

• The Enterprise Planning and Analysis Office manages projects to improve agency operations and ensure thatcritical enterprise functions are accomplished with more efficiency, higher quality, and lower costs

• The Executive Office provides administrative support services for the work units within the Director’s Office• The Human Resources Office manages organization and workforce development, policy and practice

interpretation, employee and labor relations, staffing, employment law, performance reviews, and compensation• The Legal Services Office supervises the overall legal efforts of the department, including rules, policies, and

bankruptcy• The Office of Dispute Resolution independently hears and/or mediates cases between the department and

taxpayers, liquor licensees, and other members of the public. The office provides an accessible, cost-effectivemeans for taxpayers and licensees to appeal agency determinations or proposed department actions

• The Procurement, Contracts, and Facilities Office manages the planning, procurement, contract negotiation,creation, and execution, performance measurement, conflict resolution and invoice verification for the department

• The Security Office serves as the department liaison with the IRS and is responsible for the security of all taxpayerinformation

• The Tax Policy and Research Office provides accurate, timely information for the Governor, the Legislature, andMontana citizens. This includes the compilation of basic tax data and the publication of the statutory BiennialReport



Directors OfficeMajor Budget Highlights

• The Directors Office 2023 biennium budget request is approximately$756,000 or 4.4% higher than the 2021 biennium budget. Theexecutive proposal includes:

◦ Increases in general fund and state special revenue dueto statewide present law adjustments for personal services,fixed costs, and inflation/deflation




Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 73.19 73.19 73.19 73.19

Personal Services 6,238,005 6,316,513 6,533,979 6,627,561 6,652,790Operating Expenses 1,782,862 1,884,853 2,088,942 2,344,157 2,136,318Capital Outlay 182,884 182,884 0 0 0Transfers 0 1,500 1,500 1,500 1,500Debt Service 3,449 7,950 10,413 10,413 10,413


General Fund 7,847,650 8,034,150 8,275,268 8,624,025 8,441,415State/Other Special Rev. Funds 204,085 204,085 204,114 204,154 204,154Proprietary Funds 155,465 155,465 155,452 155,452 155,452

Total Funds $8,207,200 $8,393,700 $8,634,834 $8,983,631 $8,801,021




The Director’s Office expended 97.8% of its $8.4 million FY 2020 modified HB 2 budget. Personal service expendituresare below budgeted levels due to turnover. The appropriations for operating expenses in the Director’s Office included a2021 biennial appropriation of $190,000 for legislative audit costs. Expenditures for audit were about $90,000 in FY 2020,driving the lower expenditures. This appropriation is biennial and can be used in both years of the biennium.


Personal services FY 2021 appropriations are higher than FY 2020 appropriations for two reasons:

• The pay plan approved by the 2019 Legislature• Transfer of $114,000 in FY 2020 personal services appropriations to the Technology Services Division

The Director’s Office transferred $205,000 in operating expenses to the Technology Services Division in FY 2020.


Program Highlights

LFDCOMMENT


House Bill 3

Supplemental appropriations in general fund are being requested for the Director’s Office of $6.3 million inFY 2021 for the establishment of the marijuana sales taxation. In 2020, the Montana I-190 Marijuana

Legalization Initiative was passed which legalizes the possession and use of marijuana for adults over the age of 21. Thestate of Montana will impose a 20.0% tax on marijuana sales, which requires the Department of Revenue to develop rulesand framework to regulate marijuana sales.

Executive Request

The Directors Office budget proposed by the executive is $756,000 or 4.4% greater than the 2021 biennium budget.

Personal services were $6.5 million or 75.7% of total FY 2021 appropriations. The executive proposes increases in generalfund above the FY 2021 base, totaling approximately $94,000 in FY 2022 and $119,000 in FY 2023. This change isprimarily due to increases from the statewide present law adjustment for personal services, which will be discussed in detailin the Program Personal Services section below.

Operating expenses were approximately $2.1 million or 24.2% of total FY 2021 appropriations. The executive proposesincreases in general fund and state special revenue appropriations above the FY 2021 base, totaling approximately$255,000 in FY 2022 and $47,000 in FY 2023. This change is primarily due to increases from the statewide present lawadjustment for fixed costs, which will be discussed in detail in the Present Law Adjustments section below.


Personal services were $6.5 million or 75.7% of total FY 2021 appropriations for the Directors Office. The executiveproposes a statewide present law increase of approximately $94,000 in FY 2022 and $119,000 in FY 2023.

The 2023 biennium personal service statewide present law request includes expected changes and managementdecisions.

The personal services management decisions include:

• Broadband pay raises and wage changes due to employee turnover• A reorganization occurred that moves the Information Technology unit, which includes 34.00 FTE, out of the

Director’s Office into its own division◦ This moved approximately $3.0 million in personal service funds to the Technology Services Division

• 18.00 FTE from the call center, accounting, and budgeting from the Information Management and CollectionsDivision were moved into the Director’s Office

◦ This transferred approximately $1.7 million in personal service funds to the Director’s Office

Funding




Department of Revenue, 01-Directors OfficeFunding by Source of Authority

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

01100 General Fund 17,065,440 0 0 297,112,021 314,177,461 71.28 %

02008 Tobacco And Cig. Tribal Agree. 80 0 0 9,000,000 9,000,080 7.13 %02025 Unclaimed Property 288,532 0 0 0 288,532 0.23 %02083 Oil & Gas Local Assistance 0 0 0 13,000,000 13,000,000 10.30 %02088 SSR Administrative Funds 34,372 0 0 0 34,372 0.03 %02168 MT Oil Production Tax 0 0 0 100,000,000 100,000,000 79.21 %02169 Bentonite Production Tax 0 0 0 1,300,000 1,300,000 1.03 %02511 Oil and Gas Natural Resource 0 0 0 1,000,000 1,000,000 0.79 %02790 6901-Statewide Tobacco Sttlmnt 85,324 0 0 0 85,324 0.07 %02966 Tribal Agreement - Alcohol 0 0 0 1,540,000 1,540,000 1.22 %

State Special Total $408,308 $0 $0 $125,840,000 $126,248,308 28.64 %

03802 CARES Act 0 0 0 0 0 0.00 %Federal Special Total $0 $0 $0 $0 $0 0.00 %

06005 Liquor Division 310,904 0 0 0 310,904 100.00 %Proprietary Total $310,904 $0 $0 $0 $310,904 0.07 %

Total All Funds $17,784,652 $0 $0 $422,952,021 $440,736,673

HB 2 Authority

General Fund

Funding for the Director’s Office HB 2 budget comes primarily from the general fund.


State special revenue funds the unclaimed property fund, administrative funds, and the tobacco settlement fund, which supports the dedicated attorney that supports tobacco tax compliance activities. As seen in the figure above, the Director’s Office is responsible for the statutorily appropriated distributions of various tax revenues to local and tribal governments. Further explanation for the unclaimed property fund is done in the Business and Income Taxes Division section of this document.

Proprietary Funding

Proprietary funding is from a direct appropriation of Alcoholic Beverage Control Division proprietary fund and is for the Alcoholic Beverage Control Division share of Director’s Office support costs. The allocation is calculated as a percentage of the program’s budget. Alcoholic Beverage Control Division proprietary funds are an indirect use of general fund since net liquor revenues are deposited in the general fund after operating costs are deducted.

Other Funding


Total funding for the Director’s Office also includes two general fund statutory appropriations. The largest of the statutory appropriations is a pass-through general fund appropriation for the state entitlement shares, as provided in 15-1-121, MCA. This distribution resulted from HB 124 in the 2001 Legislative Session, which reallocated revenue received by local governments, school districts, and some state special revenue accounts to the general fund and replaced foregone revenue with permanent state entitlement grants to counties and cities. A second general fund statutory appropriation included in the Director’s Office is a direct use by the department for out of state travel costs for tax audits and is provided for in 15-1-218, MCA.





Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of Budget2021 Base Budget 8,275,268 8,275,268 16,550,536 96.98 % 8,634,834 8,634,834 17,269,668 97.10 %SWPL Adjustments 348,757 166,147 514,904 3.02 % 348,797 166,187 514,984 2.90 %PL Adjustments 0 0 0 0.00 % 0 0 0 0.00 %New Proposals 0 0 0 0.00 % 0 0 0 0.00 %

Total Budget $8,624,025 $8,441,415 $17,065,440 $8,983,631 $8,801,021 $17,784,652




FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds


DP 2 - Fixed Costs0.00 255,789 40 0 255,829 0.00 47,721 40 0 47,761






1. Expected changes2. Personal services management decisions3. Modifications made to the personal services budget in the 2021 biennium


The executive requests adjustments to provide the funding required in the proposed budget to pay increases in fixed costsassessed by other agencies within state government for the services they provide. Examples include the following: warrantwriter, motor pool, etc. The rates charged for these services are approved in the section of the budget that provides theservices.






58010 - Department Of Revenue 02-Technology Services Division






BienniumChange

Biennium% Change

Personal Services 5,894,482 6,525,351 630,869 10.70 %Operating Expenses 9,790,950 10,402,759 611,809 6.25 %Equipment & Intangible Assets 1,673,385 290,231 (1,383,154) (82.66)%


General Fund 16,679,206 16,538,747 (140,459) (0.84)%State/Other Special Rev. Funds 167,714 167,710 (4) 0.00 %Proprietary Funds 511,897 511,884 (13) 0.00 %

Total Funds $17,358,817 $17,218,341 ($140,476) (0.81)%


Program Description

The Technology Services Division (TSD) serves as the technological foundation for the department’s business units.

• The Applications Bureau provides programming and maintenance to the department’s software applications• The Quality Assurance Bureau ensures the integrity and performance of department systems by providing

guidance, direction, and training for testing and maintaining systems• The Technical Operations Bureau provides support and training for department hardware and software systems

Program Highlights

Technology Services DivisionMajor Budget Highlights

• The Technology Services Division’s 2023 biennium budget requestis approximately $140,000 or 0.8% less than the 2021 bienniumbudget. The executive proposal includes:

◦ Proposed decreases in general fund due to a substantialdecrease in equipment and intangible assets






Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 33.00 33.00 33.00 33.00

Personal Services 2,914,928 2,917,082 2,977,400 3,257,561 3,267,790Operating Expenses 4,717,905 4,749,205 5,041,745 5,200,830 5,201,929Equipment & Intangible Assets 1,673,385 1,673,385 0 104,702 185,529



Total Funds $9,306,218 $9,339,672 $8,019,145 $8,563,093 $8,655,248




The Technology Services Division expended 99.6% of its $9.3 million FY 2020 modified HB 2 budget. The reorganizationcompleted by the Department of Revenue and discussed in the agency summary established the level of appropriations forexpenditures for the Technology Services Division.


Personal services FY 2021 appropriations are higher than FY 2020 appropriations mainly due to the pay plan approved bythe 2019 Legislature.

Executive Request

The Technology Services Division budget proposed by the executive is $140,000 or 0.8% less than the 2021 bienniumbudget. This decrease is primarily due to a substantial reduction in equipment and intangible assets.

Personal services were $3.0 million or 37.1% of total FY 2021 appropriations. The executive proposes increases in generalfund from the FY 2021 base, totaling approximately $280,000 in FY 2022 and $290,000 in FY 2023. This change is primarilydue to increases from the statewide present law adjustment for personal services, which will be discussed in detail in theProgram Personal Services section below.

Operating expenses were approximately $5.0 million or 62.9% of total FY 2021 appropriations. The executive proposesincreases in general fund from the FY 2021 base, totaling approximately $264,000 in FY 2022 and $346,000 in FY 2023.This change is primarily due to increases from the statewide present law adjustment for fixed costs and IT contractincreases, which will be discussed in detail in the Present Law Adjustments section below.


Personal services were $3.0 million or 37.1% of total FY 2021 appropriations for the Technology Services Division. Theexecutive proposes a statewide present law increase of approximately $280,000 in FY 2022 and $290,000 in FY 2023.





• Broadband pay raises and wage changes due to employee turnover• The Technology Services Division was created through a reorganization, which moved 34.00 FTE and

appropriated funds from the Directors Office

Funding


Department of Revenue, 02-Technology Services DivisionFunding by Source of Authority

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

01100 General Fund 16,538,747 0 0 0 16,538,747 96.05 %

02790 6901-Statewide Tobacco Sttlmnt 167,710 0 0 0 167,710 100.00 %State Special Total $167,710 $0 $0 $0 $167,710 0.97 %


06005 Liquor Division 511,884 0 0 0 511,884 100.00 %Proprietary Total $511,884 $0 $0 $0 $511,884 2.97 %

Total All Funds $17,218,341 $0 $0 $0 $17,218,341

HB 2 Authority

The Technology Services Division is primarily funded from the general fund, which is used to support technologyrequirements and business operations.


The Technology Services Division receives state special revenue appropriations from the Tobacco Settlement funds fortechnology support provided to the Business Income Taxes Division.

Proprietary Funding

Appropriations from the Liquor Enterprise fund supports technology services for the Alcoholic Beverage Control division.




Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of Budget2021 Base Budget 7,679,348 7,679,348 15,358,696 92.86 % 8,019,145 8,019,145 16,038,290 93.15 %SWPL Adjustments 448,270 459,598 907,868 5.49 % 448,270 459,598 907,868 5.27 %PL Adjustments 95,678 176,505 272,183 1.65 % 95,678 176,505 272,183 1.58 %New Proposals 0 0 0 0.00 % 0 0 0 0.00 %

Total Budget $8,223,296 $8,315,451 $16,538,747 $8,563,093 $8,655,248 $17,218,341






FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds


DP 2 - Fixed Costs0.00 168,109 0 0 168,109 0.00 169,208 0 0 169,208

DP 201 - IT contract increase (FAST/GenTax)0.00 50,000 0 0 50,000 0.00 100,000 0 0 100,000

DP 202 - IT contract increase (Orion)0.00 54,702 0 0 54,702 0.00 85,529 0 0 85,529

DP 203 - ServiceNow Reduction0.00 (9,024) 0 0 (9,024) 0.00 (9,024) 0 0 (9,024)








DP 201 - IT contract increase (FAST/GenTax) -

The executive requests an increase in the general fund for a maintenance contract increase for the Department ofRevenue’s (DOR) integrated tax system called GenTax®. Through the system, DOR manages 91 taxes, licenses, and fees.

DP 202 - IT contract increase (Orion) -

The executive is requesting an additional general fund appropriation for an increase in maintenance costs for the Orionproperty valuation system.

DP 203 - ServiceNow Reduction -

The executive requests a decrease in funding because of the purchase of ServiceNow licenses and programs for the 2023biennium. The executive is anticipating operating efficiencies and other savings by using ServiceNow.



58010 - Department Of Revenue 03-Alcoholic Beverage Control Division






BienniumChange

Biennium% Change

Personal Services 5,013,689 5,386,512 372,823 7.44 %Operating Expenses 1,036,143 1,128,721 92,578 8.93 %Equipment & Intangible Assets 82,491 61,108 (21,383) (25.92)%Transfers 117,816 0 (117,816) (100.00)%Debt Service 68,998 70,560 1,562 2.26 %


Proprietary Funds 6,319,137 6,646,901 327,764 5.19 %

Total Funds $6,319,137 $6,646,901 $327,764 5.19 %

Total Ongoing $6,069,137 $6,396,901 $327,764 5.40 %Total OTO $250,000 $250,000 $0 0.00 %

Program Description

The Alcoholic Beverage Control Division (ABCD) provides effective and efficient administration of the Montana alcoholicbeverage code with an emphasis on customer service and public safety.

• The Licensing and Compliance Bureau protects the welfare and safety of the public by regulating alcoholicbeverage licensing laws in a uniform and fair manner

• The Liquor Distribution Bureau maintains a regulated channel of distribution to fulfill the public demand for distilledspirits and fortified wine through agency liquor stores

Program Highlights

Alcoholic Beverage Control DivisionMajor Budget Highlights

• The Alcoholic Beverage Control Division 2023 biennium budgetrequest is approximately $328,000 or 5.2% more than the 2021biennium budget. The executive proposal includes:

◦ Proposed increases in proprietary funds due to statewidepresent law adjustments for personal services, fixed costs,and inflation/deflation

◦ Proposed increases in spending due to anticipatedtermination payouts and overtime




LFDCOMMENT



Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 31.75 31.75 31.75 31.75

Personal Services 2,387,729 2,446,619 2,567,070 2,689,183 2,697,329Operating Expenses 463,545 486,326 549,817 564,727 563,994Equipment & Intangible Assets 51,937 51,937 30,554 30,554 30,554Transfers 117,816 117,816 0 0 0Debt Service 33,410 33,705 35,293 35,285 35,275


Proprietary Funds 3,054,437 3,136,403 3,182,734 3,319,749 3,327,152

Total Funds $3,054,437 $3,136,403 $3,182,734 $3,319,749 $3,327,152




The Alcoholic Beverage Control Division expended 97.4% of its $3.1 million FY 2020 modified HB 2 budget. The 2019Legislature provided the Alcoholic Beverage Control Division with $125,000 in personal services funding for overtime andretirement costs. In FY 2020 the division used about $66,000 of the appropriation.


Personal services FY 2021 appropriations are higher than FY 2020 appropriations due to the pay plan approved by the2019 Legislature. FY 2020 operating expenses are lower than FY 2021 due to transfers to other expenditure categories.The Alcoholic Beverage Control Division transferred about $138,000 out of operating expenses, mainly into personalservices, equipment & intangible assets, and debt service in FY 2020. In FY 2021 about $35,000 was transferred to debtservice.

House Bill 3

L.L Liquor v. State of Montana et al

Supplemental appropriations of $5.6 million in general fund are being proposed for the Alcohol Beverage Control Divisionfor a summary judgement in the case of L.L Liquor v. State of Montana et al, United States District Court District of Montana,Helena Division, Case No. CV 15-71-H-SHE.

In 2015, the Legislature passed Senate Bill 193 (SB 193), which repealed the old commission rate structure for agencyliquor stores. Lolo Liquor alleged that SB 193 did the following:

1. Violated contracts clauses of the United States and Montana Constitutions2. Breached the agency franchise agreements and breached the covenant of good faith3. Resulted in an unconstitutional taking4. Violated their due process rights

On April 25, 2017, the federal court ruled the changes to the commission rates resulted in a breach of the agency franchiseagreement with Lolo Liquor. Therefore, the State of Montana is responsible for paying Lolo Liquor $5.0 million in economicdamages and attorney fees. Additionally, Lolo Liquor sought post-judgement interest at 10.0% to be calculated from thedate of the breach of the Agency Franchise Agreement. Judge Haddon awarded interest at the rate of 1.8% from October2019. However, the parties have appealed to the 9th Circuit Court with oral arguments scheduled for October 7, 2020.



It is estimated that by the 2021 Legislative session interest could range anywhere from $0 to $100,000 at 1.8% or up to$625,000 at 10.0%, which the agency included the latter in the proposed appropriation.

Increased Liquor Sales

Supplemental appropriations are being proposed in proprietary funds of $8.0 million for the Alcohol Beverage ControlDivision due to a significant increase in liquor sales and license fee revenue during the Covid-19 pandemic. Liquor salesin the month of September 2020 were up 35.8% compared to sales in September 2019, equating to an increase ofapproximately $4.5 million in September alone. Due to the increase in demand for liquor, the Alcoholic Beverage ControlDivision is requesting additional authority to maintain adequate inventories. As liquor sales increase, liquor tax revenue andliquor profits concurrently increase which requires the Alcoholic Beverage Control Division to have the budget authority totransfer additional funds to the general fund.

Additionally, licensing fee revenues are also rising due to the 2017 Legislative Special Session passing legislation thatmakes certain available licenses to be issued through a competitive bidding process rather than a lottery. Initially, it wasuncertain what fiscal impact this change would have, but after several competitive bids the ABC Division has a betterunderstanding of the budget authority needed to be able to transfer the competitive bid revenue to the general fund.

Executive Request

The Alcoholic Beverage Control Division budget proposed by the executive is $328,000 or 5.2% greater than the 2021biennium budget.

Personal services were $2.6 million or 80.7% of total FY 2021 appropriations. The executive proposes increases inbudgeted proprietary funds above the FY 2021 base, totaling approximately $122,000 in FY 2022 and $130,000 in FY2023. This change is primarily due to increases from the statewide present law adjustment for personal services, which willbe discussed in detail in the Program Personal Services section below.

Operating expenses were approximately $550,000 or 17.3% of total FY 2021 appropriations. The executive proposesincreases in budgeted proprietary funds above the FY 2021 base, totaling approximately $140,000 in FY 2022 and$139,000 in FY 2023. This change is primarily due to increases from the statewide present law adjustment for fixedcosts and the Alcoholic Beverage Control Division overtime and termination payouts for personal services, which will bediscussed in detail in the Present Law Adjustments section below.


Personal services were $2.6 million or 80.7% of total FY 2021 appropriations for the Alcoholic Beverage Control Division.The executive proposes a statewide present law adjustment increase of approximately $122,000 in FY 2022 and $130,000in FY 2023.



• Broadband pay raises and wage changes due to employee turnover



Department of Revenue, 03-Alcoholic Beverage Control DivisionFunding by Source of Authority

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

01100 General Fund 0 0 0 0 0 0.00 %



06005 Liquor Division 6,646,901 250,000 0 0 6,896,901 100.00 %Proprietary Total $6,646,901 $250,000 $0 $0 $6,896,901 100.00 %

Total All Funds $6,646,901 $250,000 $0 $0 $6,896,901

HB 2 Authority

Proprietary Funding

The division is funded with a direct appropriation of Alcoholic Beverage Control Division proprietary funds. Net revenuesfrom liquor sales are transferred to the general fund after operating costs are deducted from gross revenues. Consequently,any proposals funded through this program are an indirect use of state general fund. The table below provides further detailabout the revenue and expenditures in the Liquor Division Fund. The HB 2 one-time-only (OTO) funding is for DPs 6 and 7for anticipated termination payouts and overtime funding.


Funding



Figure 3Department of Revenue

Liquor Division Fund - 06005

Actual FY 2020Estimated FY

2021Proposed FY

2022Proposed FY

2023Beginning Balance 6,515,275 6,685,195 (9,202,694) (36,830,226)

Revenue 149,237,171 143,637,481 147,525,667 148,173,667

ExpendituresDepartment of Revenue

Directors Office 155,465 155,452 155,452 155,452Technology Services Division 255,955 255,942 255,942 255,942Alcohol Beverage Control Division 147,159,180 157,682,734 173,319,749 179,886,402Information Management & Collections Div 16,621 16,623 16,623 16,623

Total Department of Revenue Expenditures 147,587,221 158,110,751 173,747,766 180,314,419

Department of JusticeCentral Services Division 55,272 36,832 35,827 35,827Gambling Control Division 1,417,626 1,370,655 1,362,474 1,368,352JITSD 7,132 7,132 7,132 7,132

Total Department of Justice Expenditures 1,480,030 1,414,619 1,405,433 1,411,311

Total Expenditures 149,067,251 159,525,370 175,153,199 181,725,730

Ending Fund Balance $ 6,685,195 $ (9,202,694) $ (36,830,226) $ (70,382,289)




Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent


Total Budget $0 $0 $0 $3,319,749 $3,327,152 $6,646,901

The executive proposed a one-time-only request of $250,000 for overtime and termination payout of personal services.This proposal is excluded in the FY 2021 base budget. For the 2023 biennium budget those historically OTO programs arebeing proposed by the executive as ongoing. For additional detail about those, refer to the new proposals following presentlaw adjustments below.







FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds

DP 1 - Personal Services0.00 0 0 0 122,113 0.00 0 0 0 130,259

DP 2 - Fixed Costs0.00 0 0 0 16,425 0.00 0 0 0 15,114

DP 3 - Inflation Deflation0.00 0 0 0 (1,523) 0.00 0 0 0 (955)

DP 307 - ABCD Overtime of Personal Services0.00 0 0 0 65,000 0.00 0 0 0 65,000

DP 308 - ABCD Termination Payout of Personal Services0.00 0 0 0 60,000 0.00 0 0 0 60,000

Grand Total All Present Law Adjustments0.00 $0 $0 $0 $262,015 0.00 $0 $0 $0 $269,418






The executive requests adjustments to provide the funding required in the proposed budget to pay increases in fixed costs assessed by other agencies within state government for the services they provide. Examples include the following: warrant writer, motor pool, etc. The rates charged for these services are approved in the section of the budget that provides the services.



DP 307 - ABCD Overtime of Personal Services -

The executive is requesting an additional proprietary fund appropriation to pay for overtime and temporary staff to meet the increase in demand for liquor products especially during peaks periods, holiday weeks, and to back fill personnel while out on vacation or sick leave. This request is to provide additional personnel services. Given the budget rules related to overtime and temporary employees’ expenditures, it must be requested each legislative session.


LFDCOMMENT


DP 308 - ABCD Termination Payout of Personal Services -

The executive is requesting an additional proprietary fund appropriation to provide funds to pay out accrued leave balances for employee’s retiring and/or leaving the department. This request would allow the department to efficiently distribute alcoholic beverages to the agency liquor stores and comply with the statutory requirement of 16-2-101(12), MCA, requiring the department to maintain a 97.0% monthly service level to the agency stores. If the department is required to use additional vacancy savings to pay for the termination payouts, the department will not be able to meet this statutory requirement.

The executive proposes overtime and termination payouts funding for staff within the Alcoholic BeverageControl Division as a present law adjustment. The 2017 and 2019 Legislature provided funding for overtimeand termination payouts as one-time-only in the 2019 and 2021 biennium’s, respectively. Based on statutory

requirements, items that are one-time-only are considered new proposals in the following budget.

The Legislature may wish to consider approving the proposed overtime and termination payouts funding with one-timefunding.


58010 - Department Of Revenue 05-Information Management & Collections Division






BienniumChange

Biennium% Change

Personal Services 8,504,394 9,548,765 1,044,371 12.28 %Operating Expenses 3,805,075 4,038,477 233,402 6.13 %Capital Outlay 150,426 0 (150,426) (100.00)%Local Assistance 2,000,000 0 (2,000,000) (100.00)%Debt Service 5,924 7,482 1,558 26.30 %


General Fund 14,325,615 13,454,504 (871,111) (6.08)%State/Other Special Rev. Funds 106,960 106,974 14 0.01 %Proprietary Funds 33,244 33,246 2 0.01 %

Total Funds $14,465,819 $13,594,724 ($871,095) (6.02)%


Program Description

The Information Management and Collections Division provides consistent service to Montana citizens, businesses, andnonresident taxpayers through business licensing coordination, collection of delinquent accounts, and data and remittanceprocessing operations.

The Other Agency Debts Program provides statewide collections services to other state agencies, local governments,universities, and colleges. The Collections Bureau manages collections of the department’s delinquent debts and providescollection services to other state agencies and local governments. The Information Management Bureau ensures securehandling and processing of taxpayer information, payments, and data in electronic or paper form. The bureau is organizedinto four units: Account Maintenance and Cashiering, Information Capture, Electronic Services (E-Services), and Mail andImaging.

Program Highlights

Information Management & Collections DivisionMajor Budget Highlights

• The Information Management & Collections Division’s 2023 bienniumbudget request is approximately $871,000 or 6.0% less than the 2021biennium budget. The executive proposal includes:

◦ Decreases are primarily due to capital outlay funds for HB636 being used entirely in FY 2020






Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 71.95 71.95 71.95 71.95

Personal Services 3,885,920 4,067,397 4,436,997 4,768,169 4,780,596Operating Expenses 1,839,792 1,840,324 1,964,751 2,014,828 2,023,649Capital Outlay 149,456 150,426 0 0 0Local Assistance 0 2,000,000 0 0 0Debt Service 2,181 2,183 3,741 3,741 3,741



Total Funds $5,877,349 $8,060,330 $6,405,489 $6,786,738 $6,807,986




Information Management & Collections Division expended 72.9% of its $8.1 million FY 2020 modified HB 2 budget.Personal services are lower than anticipated in the budget due to turnover. HB 636 changed the process and requirementsfor protested taxes beginning in FY 2020. HB 715 provided a 2021 biennial appropriation of $2.0 million to reimburselocal taxing jurisdictions if it was determined that the value of centrally assessed or industrial properties were less than75.0% of the original assessed value. In FY 2020, the Information Management & Collections Division did not make anyreimbursements to local taxing jurisdictions.



• The pay plan approved by the 2019 Legislature• Transfer of $268,000 in FY 2020 personal services appropriations to the Technology Services Division

Operating expenses are lower in FY 2020 than in FY 2021 mainly due to transfer of $152,000 in authority out of operatingexpenses and into capital outlay and debt service.

Local Assistance appropriations are lower in FY 2021 than in FY 2020. Appropriations of $2.0 million in local assistance forHB 636, which revised laws related to protested taxes, were provided to the Information Management Collections Divisionfrom HB 715 in FY 2020. The entire $2.0 million 2021 biennial appropriation, and although established in FY 2020 theappropriation may be used in either year of the biennium.

Executive Request

The Information Management and Collections Division budget proposed by the executive is $871,000 or 6.0% less than the2021 biennium budget.

Personal services were $4.4 million or 69.3% of total FY 2021 appropriations. The executive proposes increases in generalfund above the FY 2021 base, totaling approximately $331,000 in FY 2022 and $344,000 in FY 2023. This change isprimarily due to increases from the statewide present law adjustment for personal services, which will be discussed in detailin the Program Personal Services section below.

Operating expenses were approximately $2.0 million or 30.7% of total FY 2021 appropriations. The executive proposes



increases in general fund above the FY 2021 base, totaling approximately $50,000 in FY 2022 and $59,000 in FY 2023.This change is primarily due to increases from the statewide present law adjustment for fixed costs and rental and parkingincreases, which will be discussed in detail in the Present Law Adjustments section below.


Personal services were $4.4 million or 69.3% of total FY 2021 appropriations for the Information Management andCollections Division. The executive proposes statewide present law increases of approximately $331,000 in FY 2022 and$344,000 in FY 2023.



• Broadband pay raises and wage changes due to employee turnover• A reorganization and program transfer that moved 18.00 FTE and the corresponding budget appropriations from

the Information Management and Collections Division to the Directors Office• A program transfer of 6.00 FTE and approximately $364,000 in personal service funds to the Property Assessment

Division

Funding


Department of Revenue, 05-Information Management & Collections DivisionFunding by Source of Authority

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

01100 General Fund 13,454,504 0 0 0 13,454,504 95.19 %

02025 Unclaimed Property 52,272 0 0 0 52,272 48.86 %02088 SSR Administrative Funds 54,702 0 0 0 54,702 51.14 %02587 State School Oil & Gas Distrib 0 0 0 0 0 0.00 %



06005 Liquor Division 33,246 0 0 0 33,246 5.80 %06554 Bad Debt Collection Services 0 0 539,474 0 539,474 94.20 %

Proprietary Total $33,246 $0 $539,474 $0 $572,720 4.05 %

Total All Funds $13,594,724 $0 $539,474 $0 $14,134,198

HB 2 Authority

General Funding

The Information Management and Collections Division if funded primarily by the general fund.

State Special Revenue Funding

State special revenue funds the division’s administration of the livestock per capita fee and medical marijuana tax, and forsupport of the unclaimed property program. Further explanation for the unclaimed property fund is done in the Businessand Income Taxes Division.



Proprietary Funding

The finances of the bad debt collection services are funded with proprietary funds which will be discussed in the ProprietaryRates Section.




Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent


Total Budget $6,716,628 $6,737,876 $13,454,504 $6,786,738 $6,807,986 $13,594,724




FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds


DP 2 - Fixed Costs0.00 41,564 0 0 41,564 0.00 41,678 0 0 41,678


DP 504 - IMCD Rent (Non-DOA) Increase0.00 7,508 0 0 7,508 0.00 15,165 0 0 15,165

DP 506 - Parking Increase (50% of Donovan Parking)0.00 1,009 0 0 1,009 0.00 2,058 0 0 2,058












DP 504 - IMCD Rent (Non-DOA) Increase -

The executive requests an increase in general fund for the Department of Revenue, Information Management and Collections Division for the 2023 biennium to pay for contractual rent increases for existing lease obligations at the Donovan Building.

DP 506 - Parking Increase (50% of Donovan Parking) -

The executive requests an increase in general fund for the Department of Revenue, Information Management and Collections Division for the 2023 biennium to pay for increases in rates for downtown parking in Helena.

Other Issues -

Proprietary Rates

Fund 06554 – Collection Services Program

Proprietary Proposed Budget

The following 2023 Biennium Report on Internal Service and Enterprise Funds for fund 06554 shows the actual and projected revenues and expenses associated with the fund from FY 2020 through FY 2023. The report is provided as submitted by the executive, but the LFD has edited and reconfigured the figure for clarity.




Proprietary Program Description

Montana law authorizes the Department of Revenue to assist other agencies in the collection of delinquent accounts.The department retains a percentage of these collections for the costs of assistance in conjunction with 17-4-103 (3)(a),MCA. The department established the Collections Services Program, which includes 3.50 FTE, to administer its statutoryresponsibilities under Title 17, chapter 4, MCA. These responsibilities include providing collection services for the purposeof centralizing debt collection for the State of Montana.

Proprietary Program Narrative

Expenses

The Department of Revenue is currently authorized to charge a commission rate up to 5.0% for its collection services,excluding the collection of overpaid child support payments made to custodial parents and collection of delinquent childsupport payments from noncustodial parents. The commissions collected are used to pay the expenses of the Collection



Services Program. On average, approximately 74.0% of the expenditures are paid in salaries and benefits with theremaining expenditures representing operating expenses of the program.

Revenues

Administration of this program has required a minimum of a 9-month working capital balance due to the timing of programcollections through offset of other state monies, as the program collects the largest amount of revenues on delinquentaccounts during the income tax season and the hunting permitting season.

Proprietary Rates

For the 2023 biennium, the following rates are proposed by the executive. The rates are charged in the base year, andrates paid state agencies in FY 2020 and FY 2021 are shown for comparison purposes.

Requested Rates for Internal Service or Enterprise FundsFee/Rate Information

Actual Estimated Proposed ProposedFY 20 FY 21 FY 22 FY 23

Fee Description: 4.5% 3.0% 4.5% 4.3%

The executive requests a commission rate of 4.5% in FY 2022 and 4.3% in FY 2023. Based on the projections above,net position will be reduced by approximately $2,800 in FY 2023. This will provide the department with approximately ninemonths’ worth of working capital. It is necessary to maintain a nine-month working capital balance to pay expenses as theyare incurred as most of commission revenue is not collected until the income tax filing season each year, some six to ninemonths after the start of the fiscal year. The department will continue to evaluate the commission rate as actual revenuesand expenditures are received and incurred to maintain the working capital balance at the appropriate level.

Exemptions from this rate is collection of overpaid child support payments made to custodial parents or collection ofdelinquent child support payments from noncustodial parents. Commissions associated with child support payments arecharged against a separate general fund appropriation designated by the legislature in a prior legislative session.


58010 - Department Of Revenue 07-Business & Income Taxes Division






BienniumChange

Biennium% Change

Personal Services 20,233,456 21,542,911 1,309,455 6.47 %Operating Expenses 3,160,542 3,544,224 383,682 12.14 %Debt Service 13,095 15,116 2,021 15.43 %


General Fund 21,588,622 23,272,689 1,684,067 7.80 %State/Other Special Rev. Funds 1,268,462 1,269,708 1,246 0.10 %Federal Spec. Rev. Funds 550,009 559,854 9,845 1.79 %

Total Funds $23,407,093 $25,102,251 $1,695,158 7.24 %

Total Ongoing $23,407,093 $25,102,251 $1,695,158 7.24 %Total OTO $0 $0 $0 0.00 %

Program Description

The Business and Income Taxes Division (BIT) is responsible for the administration of and collection of nearly $2.5 billionannually from 40 Montana taxes and fees. BIT also values all industrial and centrally assessed property in the state, whichgenerates $250 million in state and local revenue annually. The division is responsible for equal tax administration, tax typeexpertise, taxpayer education, auditing, identification of non-filers, and overall tax compliance.

• The Income and Withholding Tax Bureau is responsible for the daily management and compliance of individual,passthrough entity, and withholding taxes. The bureau is organized into five units: Compliance, Pass-through,Field Audit, Taxpayer Accounting, and Withholding

• The Business Tax and Valuation Bureau manages over 25 tax programs and is responsible for the dailymanagement and compliance for the tax types associated with the large taxpayer tax types. Four units make upthe bureau including: Natural Resource, Corporation Tax, Miscellaneous Tax, and Utility and Industrial

Program Highlights

Business & Income Taxes DivisionMajor Budget Highlights

• The Business & Income Taxes Division’s 2023 biennium budgetrequest is approximately $1.7 million or 7.2% higher than the 2021biennium budget. The executive proposal includes:

◦ Proposed increases in general fund due to statewidepresent law adjustments for personal services, fixed costs,and inflation/deflation






Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 138.86 138.86 138.86 138.86



General Fund 10,375,387 10,481,881 11,106,741 11,628,284 11,644,405State/Other Special Rev. Funds 634,242 634,240 634,222 634,854 634,854Federal Spec. Rev. Funds 275,085 275,086 274,923 279,920 279,934

Total Funds $11,284,714 $11,391,207 $12,015,886 $12,543,058 $12,559,193




The Business and Income Taxes Division expended 99.1% of its $11.4 million FY 2020 modified HB 2 budget. Personalservices are lower than anticipated in the budget due to employee turnover.



• The pay plan approved by the 2019 Legislature• Transfer of $97,000 from the Business and Income Taxes Division to the Technology Services Division in FY 2020

In FY 2020 the Business and Income Taxes Division transferred $226,000 in operating expenses to the TechnologyServices Division.

Executive Request

The Business and Income Taxes Division budget proposed by the executive is $1.7 million or 7.2% greater than the 2021biennium budget.

Personal services were $10.3 million or 85.9% of total FY 2021 appropriations. The executive proposes increases ingeneral fund from the FY 2021 base, totaling approximately $435,000 in FY 2022 and $465,000 in FY 2023. This changeis primarily due to increases from the statewide present law adjustment for personal services, which will be discussed indetail in the Program Personal Services section below.

Operating expenses were approximately $1.7 million or 14.0% of total FY 2021 appropriations. The executive proposesincreases in general fund, state special, and federal special revenue from the FY 2021 base, totaling approximately $92,000in FY 2022 and $78,000 in FY 2023. This change is primarily due to increases from the statewide present law adjustmentfor fixed costs, which will be discussed in detail in the Present Law Adjustments section below.


Personal services were $10.3 million or 85.9% of total FY 2021 appropriations for the Business & Income Taxes Division.The executive is requesting a statewide present law increase of approximately $435,000 in FY 2022 and $465,000 in FY2023.


LFDCOMMENT




• Broadband pay raises and wage changes due to employee turnover• HB 293 added 3.00 FTE, which increased personal services base budget by approximately $220,000

Funding


Department of Revenue, 07-Business & Income Taxes DivisionFunding by Source of Authority

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

01100 General Fund 23,272,689 0 0 0 23,272,689 92.08 %

02025 Unclaimed Property 631,750 0 0 0 631,750 43.84 %02110 Accommodation Tax Admin 261,602 0 0 0 261,602 18.15 %02111 Accommodation Tax Account 0 0 0 0 0 0.00 %02116 Accommodation Tax Account 0 0 0 0 0 0.00 %02123 Sites & Signs 0 0 0 0 0 0.00 %02167 MT Oil & Gas Tax Clearing Fund 0 0 0 0 0 0.00 %02254 Regional Accommodation Tax 0 0 0 0 0 0.00 %02274 FWP Accommodations Tax 0 0 0 0 0 0.00 %02293 Film Production Credit 0 0 0 40,000 40,000 2.78 %02772 Tobacco Hlth and Medicaid Init 0 0 0 0 0 0.00 %02790 6901-Statewide Tobacco Sttlmnt 376,356 0 0 0 376,356 26.12 %02801 Dep Rev Consumer Cncl Tax 0 0 0 0 0 0.00 %02853 Accommodation Tax 0 0 0 0 0 0.00 %02990 69010-Nursing Home Utilization 0 0 0 0 0 0.00 %02795 TransADE Special Revenue 0 0 0 0 0 0.00 %02020 Cigarette Tax Stamps 0 0 0 131,250 131,250 9.11 %02284 Aquatic Invasive Species 0 0 0 0 0 0.00 %02939 State-Tribal Economic Devel 0 0 0 0 0 0.00 %02997 911 Distribution 0 0 0 0 0 0.00 %02998 911 Grants 0 0 0 0 0 0.00 %


03802 CARES Act 0 0 0 0 0 0.00 %03928 Royalty Audit - NRCT 559,854 0 0 0 559,854 100.00 %

Federal Special Total $559,854 $0 $0 $0 $559,854 2.22 %


Total All Funds $25,102,251 $0 $0 $171,250 $25,273,501

The Business and Income Taxes Division is primarily funded with general fund, with some state special revenue andfederal special revenue. State special revenue comes from the unclaimed property fund for program support, tobaccotax compliance activities, and the accommodations tax which funds expenses for administering that tax. Federal specialrevenue comes from reimbursements for performing mineral royalty audits.

The unclaimed property fund contributes to the state special revenue funds. The table below shows actualand estimated revenues and expenditures for FY 2020 through FY 2023. Expenditures for the unclaimedproperty fund are from the Director's Office, Information Management and Collections Division, and the

Business and Income Taxes Division. The Business and Income Taxes Division accounts for most the funds expenditures,with 65.0%.



Figure 3Department of Revenue

Unclaimed Property Funds - 02025

Actual FY2020

Estimated FY2021

Proposed FY2022

Proposed FY2023

Beginning Fund Balance - - 553 776Revenues 485,916 486,500 486,500 486,500Expenditures

Directors Office 144,233 144,266 144,266 144,266Information Management & Collections Div 26,128 26,136 26,136 26,136Business & Income Taxes Div 315,554 315,545 315,875 315,875

Expenditures Total 485,916 485,947 486,277 486,277Ending Balance $ - $ 553 $ 776 $ 999

Statutory appropriations include film tax credits, which was enacted in HB 293, and the Cigarette Tax Stamps.




Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of Budget2021 Base Budget 11,106,741 11,106,741 22,213,482 95.45 % 12,015,886 12,015,886 24,031,772 95.74 %SWPL Adjustments 521,543 537,664 1,059,207 4.55 % 527,172 543,307 1,070,479 4.26 %PL Adjustments 0 0 0 0.00 % 0 0 0 0.00 %New Proposals 0 0 0 0.00 % 0 0 0 0.00 %

Total Budget $11,628,284 $11,644,405 $23,272,689 $12,543,058 $12,559,193 $25,102,251




FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds


DP 2 - Fixed Costs0.00 88,636 632 4,997 94,265 0.00 74,024 632 5,011 79,667


Grand Total All Present Law Adjustments0.00 $521,543 $632 $4,997 $527,172 0.00 $537,664 $632 $5,011 $543,307













58010 - Department Of Revenue 08-Property Assessment Division






BienniumChange

Biennium% Change

Personal Services 38,437,111 39,441,852 1,004,741 2.61 %Operating Expenses 7,225,426 7,697,594 472,168 6.53 %Equipment & Intangible Assets 6,000 0 (6,000) (100.00)%Capital Outlay 52,869 0 (52,869) (100.00)%Debt Service 26,766 40,484 13,718 51.25 %


General Fund 45,719,609 47,145,378 1,425,769 3.12 %State/Other Special Rev. Funds 28,563 34,552 5,989 20.97 %

Total Funds $45,748,172 $47,179,930 $1,431,758 3.13 %


Program DescriptionThe Property Assessment Division administers Montana’s property tax laws, including the valuation of all taxable propertyfor property tax purposes. The division ensures property classes for agricultural and forest land, residential and commercialproperty, and business equipment are valued uniformly and equally throughout the state. PAD provides each tax jurisdictionwith the total taxable value of property in the jurisdiction and local governments use these certified values to determineproperty taxes used to fund important services such as public schools and road construction.

Program Highlights

Property Assessment DivisionMajor Budget Highlights

• The Property Assessment Division 2023 biennium budget request isapproximately $1.4 million or 3.1% higher than the 2021 bienniumbudget. The executive proposal includes:

◦ Proposed increases in general fund due to statewidepresent law adjustments for personal services, fixed costs,and inflation/deflation

◦ An increase in state special revenue for the propertyvaluation improvement fund

◦ An increase in general fund for a new proposed NRIS/GISusage fixed cost to be paid to the Montana State Library






Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 276.92 276.92 276.92 276.92

Personal Services 18,652,220 18,829,068 19,608,043 19,688,867 19,752,985Operating Expenses 3,538,929 3,543,247 3,682,179 3,831,859 3,865,735Equipment & Intangible Assets 5,995 6,000 0 0 0Capital Outlay 52,119 52,869 0 0 0Debt Service 6,138 6,524 20,242 20,242 20,242


General Fund 22,241,114 22,423,421 23,296,188 23,523,692 23,621,686State/Other Special Rev. Funds 14,287 14,287 14,276 17,276 17,276

Total Funds $22,255,401 $22,437,708 $23,310,464 $23,540,968 $23,638,962




The Property Assessment Division expended 99.2% of its $22.4 million FY 2020 modified HB 2 budget. Personal serviceswere less than anticipated due to employee turnover.


Personal services FY 2021 appropriations are higher than FY 2020 appropriations due to:

• The pay plan approved by the 2019 Legislature• Transfer of $261,000 in personal services to the Technology Services Division in FY 2020

FY 2020 operating expenses are lower than FY 2021 due to a transfer of $196,000 in authority to the Property AssessmentDivision from the Director’s Office and the Technology Services Division in FY 2021.

Executive Request

The Property Assessment Division budget proposed by the executive is $1.4 million or 3.1% greater than the 2021 bienniumbudget.

Personal services were $19.6 million or 84.1% of total FY 2021 appropriations. The executive proposes increases ingeneral fund from the FY 2021 base, totaling approximately $81,000 in FY 2022 and $145,000 in FY 2023. This changeis primarily due to increases from the statewide present law adjustment for personal services, which will be discussed indetail in the Program Personal Services section below.

Operating expenses were approximately $3.7 million or 15.8% of total FY 2021 appropriations. The executive proposesincreases in general fund and state special revenue from the FY 2021 base, totaling approximately $137,000 in FY 2022and $171,000 in FY 2023. This change is primarily due to increases from the statewide present law adjustment for fixedcosts and Property Assessment Division (PAD) rent and parking increases, which will be discussed in detail in the PresentLaw Adjustments section below.


Personal services were $19.6 million or 84.1% of total base appropriations. The executive proposes a statewide presentlaw increase of approximately $81,000 in FY 2022 and $145,000 in FY 2023.



The 2023 biennium personal service statewide present law request includes expected changes, management decisions,and budget modifications that affected the personal services budget.


• Broadband pay raises and wage changes due to employee turnover• A program transfer of 6.00 FTE and approximately $364,000 in personal service funds from the Information

Management and Collections Division

The budget modifications decisions include:

• Appropriation movement of $1,671 from personal services to operating expenses• SB 200 added approximately $71,000 for 1.00 additional FTE. However, this position and associated funds were

transferred to the Technology Services Division during the 2021 biennium

Funding


Department of Revenue, 08-Property Assessment DivisionFunding by Source of Authority

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

01100 General Fund 47,145,378 0 0 0 47,145,378 99.93 %

02088 SSR Administrative Funds 28,552 0 0 0 28,552 82.63 %02320 Property Value. Improv. Fund 6,000 0 0 0 6,000 17.37 %




Total All Funds $47,179,930 $0 $0 $0 $47,179,930

Funding for the Property Assessment Division is almost entirely from the general fund. State special revenue is for theadministration of the livestock per capita fee.




Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of Budget2021 Base Budget 23,296,188 23,296,188 46,592,376 98.83 % 23,310,464 23,310,464 46,620,928 98.82 %SWPL Adjustments 125,841 205,105 330,946 0.70 % 125,841 205,105 330,946 0.70 %PL Adjustments 92,124 110,854 202,978 0.43 % 92,124 110,854 202,978 0.43 %New Proposals 9,539 9,539 19,078 0.04 % 12,539 12,539 25,078 0.05 %

Total Budget $23,523,692 $23,621,686 $47,145,378 $23,540,968 $23,638,962 $47,179,930







FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds


DP 2 - Fixed Costs0.00 92,619 0 0 92,619 0.00 90,017 0 0 90,017


DP 803 - PAD Rent (Non-DOA) Increase0.00 89,420 0 0 89,420 0.00 106,568 0 0 106,568

DP 805 - PAD Parking Increase (50% Donovan + other county)0.00 2,704 0 0 2,704 0.00 4,286 0 0 4,286










DP 803 - PAD Rent (Non-DOA) Increase -

The executive requests an increase in general fund appropriation for the 2023 biennium to pay for contractual rentincreases for space currently occupied by property assessment division staff throughout the state. Many county leasesfollow the GSD rent rate increase. Those that do not were estimated at a 2.0% increase. The private lease contracts arenegotiated each time the contract is up for renewal.

DP 805 - PAD Parking Increase (50% Donovan + other county) -

The executive requests an increase in general fund appropriation for the 2023 biennium to pay for increases in rates fordowntown parking in Great Falls, Billings, and Helena.




New Proposals



FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds

DP 806 - Establish Authority for Property Valuation Improvement Fund0.00 0 3,000 0 3,000 0.00 0 3,000 0 3,000


Total 0.00 $9,539 $3,000 $0 $12,539 0.00 $9,539 $3,000 $0 $12,539


DP 806 - Establish Authority for Property Valuation Improvement Fund -

The executive requests an increase in state special revenue appropriations for the 2023 biennium. The property valuationimprovement fund established in 15-1-521, MCA, is a state special revenue fund to be used by the department toincrease the efficiency of the property appraisal, assessment and taxation process through improvements in technologyand administration. Any fees the department collects from entities who request information from the property valuation andassessment database are deposited into the fund (2-6-1007, MCA).


The executive requests an increase in general fund for a new proposed NRIS/GIS usage fixed cost to be paid to theMontana State Library. The 2019 Legislature enacted HB 633 requiring the Legislative Finance Committee (LFC) toconduct a study of the funding of digital library services. The LFC recommended that the Office of Budget and ProgramPlanning include an assessment for the natural resource information system (NRIS) and the geographic information system(GIS) as a fixed cost to state agencies beginning in the 2023 biennium. The assessment is made to those agencies thatutilize the NRIS/GIS.


61010 - Department Of Administration SUMMARY






BienniumChange

Biennium% Change

Personal Services 27,197,540 26,592,078 (605,462) (2.23)%Operating Expenses 17,680,727 13,464,084 (4,216,643) (23.85)%Equipment & Intangible Assets 372,398 100,000 (272,398) (73.15)%Local Assistance 53,558 57,958 4,400 8.22 %Transfers 0 17,531,460 17,531,460 0.00 %Debt Service 12,347 13,834 1,487 12.04 %


General Fund 18,413,424 30,197,082 11,783,658 63.99 %State/Other Special Rev. Funds 14,650,289 15,001,684 351,395 2.40 %Federal Spec. Rev. Funds 28,268 37,070 8,802 31.14 %Proprietary Funds 12,224,589 12,523,578 298,989 2.45 %

Total Funds $45,316,570 $57,759,414 $12,442,844 27.46 %


Mission Statement

The Department of Administration’s (DOA) mission is serving state government to benefit the citizens of Montana.

Please refer to the agency profile for the Department of Administration at https://leg.mt.gov/lfd/state-agency-profiles/department-administration/ for additional information about the agency’s organization structure, historical expenditures, FY 2020 expenditure dashboard, and recent studies, audits, and legislation.


http://leg.mt.gov/lfd/state-agency-profiles/department-administration/

http://leg.mt.gov/lfd/state-agency-profiles/department-administration/


Department of AdministrationMajor Budget Highlights

• Only 4.1% of the department’s budget is appropriated through HB2, with the remainder consisting of non-budgeted proprietary andstatutory appropriations

• Approximately 57.0% of the department’s appropriations are non-budgeted proprietary funds. Significant changes to the DOA non-budgeted proprietary funds include:

◦ The executive is proposing to increase state agencyinformation technology costs by $8.0 million in FY 2022 and$8.5 million in FY 2023 when compared to the FY 2021 base

◦ The executive is proposing to increase the rate for theHuman Resources Information System from $8.89 to $9.99per employee processed per pay period

◦ The executive is proposing to increase state agency riskmanagement and tort defense costs by $1.9 million in FY2022 and $1.9 million in FY 2023 when compared to the FY2021 base

• The Department of Administration’s 2023 biennium HB 2 budgetrequest is approximately $12.4 million or 27.5% higher than the 2021biennium

• The proposed increases in HB 2 general fund appropriations areprimarily due to HB 553, which was passed and approved by the2019 Legislature, and include:

◦ Present law increases in general fund of $8.6 million in FY2022 and $8.9 million in FY 2023 for major repairs projects

◦ Present law increases in general fund of $5.8 million in FY2022 and $8.2 million in FY 2023 for capital development.However, the executive budget proposes reductions to thisgeneral fund transfer in a new proposal, which eliminatesthe transfer for the capitol developments account for the2023 biennium

• The executive proposes decreases in HB 2 general fundappropriations of $3.0 million each fiscal year in order to movefunding for the Montana cybersecurity enhancement project to theproprietary rates




Agency Highlights



Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 153.66 153.66 154.66 154.66

Personal Services 12,431,465 13,303,296 13,894,244 13,272,197 13,319,881Operating Expenses 7,940,946 9,069,423 8,611,304 6,839,932 6,624,152Equipment & Intangible Assets 296,890 322,398 50,000 50,000 50,000Local Assistance 3,453 24,579 28,979 28,979 28,979Transfers 0 0 0 8,589,879 8,941,581Debt Service 5,188 5,430 6,917 6,917 6,917


General Fund 8,231,819 9,208,395 9,205,029 14,949,857 15,247,225State/Other Special Rev. Funds 7,091,360 7,293,038 7,357,251 7,490,095 7,511,589Federal Spec. Rev. Funds 7,093 14,134 14,134 18,535 18,535Proprietary Funds 5,347,670 6,209,559 6,015,030 6,329,417 6,194,161

Total Funds $20,677,942 $22,725,126 $22,591,444 $28,787,904 $28,971,510


Agency Discussion


The Department of Administration’s HB 2 budget is primarily funded with general fund, state special revenue andproprietary funds. The HB 2 modified budget of $22.7 million was 91.0% expended as of the end of FY 2020. Operatingexpenses of $9.1 million were 87.6% expended. Lower operating expenses were due to the decreased travel and trainingexpenses because of the COVID-19 pandemic, the Montana cybersecurity enhancement project, and the Montana StateLottery’s sports wagering program. Additional details can be found at the program level analyses.


Overall, the FY 2021 appropriation is approximately $134,000 or 0.6% lower than the FY 2020 appropriation. The FY 2020and FY 2021 appropriations are not significantly different.

While the total difference between FY 2020 and FY 2021 appropriations is minimal, the difference between expenditurecategories is larger. Many of these differences are due to transfers for the Montana cybersecurity enhancement project.The State Information Technology Services Division moved $372,000 from personal services to operating expenses forcybersecurity training, SANS certificates for training, additional licenses for the source code repository, and a customermanagement module for the governance, risk, compliance software. Additionally, the division moved $201,000 fromoperating expenses to equipment and intangible assets in order to purchase equipment that provides stability and securityto the State of Montana’s server and web-based environments.


Figure 1 illustrates the beginning FY 2021 budget as adopted by the 2019 Legislature compared to the FY 2021 basebudget, which included modifications as approved by the approving authority (as authorized in statute) during the interim.The FY 2021 base budget was agreed upon by the executive and legislative branches to be the point from which anychanges would be recorded for the 2023 biennium budgeting process.



Figure 1

FY 2021 Legislative Appropriations - Department of AdministrationExecutive % Change


Authority Action01 DIRECTORS OFFICE61000 Personal Services 375,708 109,292 485,000 29.1%62000 Operating Expenses 66,055 7,500 73,555 11.4%65000 Local Assistance 14,296 - 14,296 0.0%01 DIRECTORS OFFICE Total 456,059 116,792 572,851 25.6%03 STATE FINANCIAL SERVICES DIV61000 Personal Services 2,397,050 (8,687) 2,388,363 -0.4%62000 Operating Expenses 763,981 (2,906) 761,076 -0.4%69000 Debt Service - 2,906 2,906 0.0%03 STATE FINANCIAL SERVICES DIV Total 3,161,031 (8,687) 3,152,344 -0.3%04 ARCHITECTURE & ENGINEERING DIV61000 Personal Services 1,771,150 - 1,771,150 0.0%62000 Operating Expenses 635,957 (1,770) 634,187 -0.3%69000 Debt Service - 1,770 1,770 0.0%04 ARCHITECTURE & ENGINEERING DIV Total 2,407,107 - 2,407,107 0.0%07 STATE IT SERVICES DIVISION61000 Personal Services 1,532,580 (90,731) 1,441,849 -5.9%62000 Operating Expenses 2,354,608 - 2,354,608 0.0%07 STATE IT SERVICES DIVISION Total 3,887,188 (90,731) 3,796,457 -2.3%14 DIV OF BANKING & FINANCIAL INS61000 Personal Services 3,360,846 - 3,360,846 0.0%62000 Operating Expenses 952,808 (1,864) 950,944 -0.2%69000 Debt Service - 1,864 1,864 0.0%14 DIV OF BANKING & FINANCIAL INS Total 4,313,654 - 4,313,654 0.0%15 MONTANA STATE LOTTERY61000 Personal Services 2,665,616 - 2,665,616 0.0%62000 Operating Expenses 3,244,041 - 3,244,041 0.0%63000 Equipment & Intangible Assets 50,000 - 50,000 0.0%15 MONTANA STATE LOTTERY Total 5,959,657 - 5,959,657 0.0%23 STATE HUMAN RESOURCES DIVISION61000 Personal Services 1,274,181 (8,687) 1,265,494 -0.7%62000 Operating Expenses 440,492 (377) 440,115 -0.1%69000 Debt Service - 377 377 0.0%23 STATE HUMAN RESOURCES DIVISION Total 1,714,673 (8,687) 1,705,986 -0.5%37 MONTANA TAX APPEAL BOARD61000 Personal Services 515,926 - 515,926 0.0%62000 Operating Expenses 161,465 (8,687) 152,778 -5.4%65000 Local Assistance 14,683 - 14,683 0.0%37 MONTANA TAX APPEAL BOARD Total 692,074 (8,687) 683,387 -1.3%61010 DEPARTMENT OF ADMINISTRATION Total 22,591,443 - 22,591,443 0.0%



FY 2021 Legislative Appropriations - Department of AdministrationExecutive % Change


Authority Action01 General Fund 9,205,028 - 9,205,028 0.0%02 State/Other Spec Rev 7,357,251 - 7,357,251 0.0%03 Fed/Other Spec Rev 14,134 - 14,134 0.0%06 Proprietary 6,015,030 - 6,015,030 0.0%Grand Total 22,591,443 - 22,591,443 0.0%

The legislative action budget includes the FY 2021 budget as adopted by the 2019 Legislature, the pay plan, and transfersthat resulted from HB 715. As part of HB 715, the Governor’s budget director was provided the authority to allocateproprietary funds totaling $720,000 in FY 2021. This funding was allocated to the Montana State Lottery in order toimplement HB 725 which authorized sports wagering in Montana.

The Department of Administration had two budget modifications. There was one minor budget modification in severalprograms that moved a total of approximately $7,000 from operating expenses to debt service in order to correctly recordleases for copiers.

The more significant change moved general fund authority totaling approximately $117,000 to the Director’s Office fromthe State Financial Services Division, State Information Technology Services Division, State Human Resources Division,and Montana Tax Appeal Board. It also moved 1.00 FTE from the State Information Technology Services Division to theDirector’s Office. This transfer was made to the Office of the Labor Relations in the Director’s Office in order to facilitateand manage collective bargaining agreements within state government.

Executive Request

The Department of Administration is requesting an increase above the FY 2021 base for general fund, state specialrevenue, federal special revenue, and proprietary funds. This increase totals approximately $6.2 million in FY 2022 and$6.4 million in FY 2023. These increases are primarily due to HB 553 (2019 Legislature), which increased appropriatedgeneral fund transfers by $8.6 million in FY 2022 and $8.9 million in FY 2023 in the Director’s Office. This increase ispartially offset by a new proposal to move the Montana cybersecurity enhancement project general fund appropriations of$3.0 million each fiscal year from HB 2 to the State Information Technology Services Division’s internal service rates.

These requests will be discussed in further detail at the program level.

5.0% Plan

Statute requires that agencies submit plans to reduce general fund and certain state special revenue funds by 5.0%. Thegeneral fund reduction impact for the Department of Administration is approximately $250,000. The 5.0% plan includesreductions in the:

• Director’s Office of approximately $20,000. The office would reduce the hours of an internal auditor position,which would require reliance on other financial staff to help support internal audit functions

• State Financial Services Division of approximately $134,000. The division would likely use restricted state specialrevenue funds and proprietary funds to supplement this reduction. Additionally, the division may postpone systemupdates within the local government services program

• State Information Technology Services Division of approximately $10,000. These reductions would be to rentcosts

• State Human Resources Division of approximately $84,000. This would include reductions in the number of


LFDISSUE


position classifications, policy and rules updates, salary market analysis, and services to agencies in support ofappeals, grievances, disciplinary matters, and recruitment and selection processes

• Montana Tax Appeal Board of approximately $1,600. These reductions would be in the areas of supplies andcommunications

The 5.0% plans are required to be assessed on the current base budget, excluding certain items like legislativeaudit costs. The 5.0% plan submitted by the executive for the Department of Administration was not assessedon the current base budget. The appropriation for the cybersecurity enhancement project was not included.This appropriation is currently in the base budget and the executive has a new proposal that would move this

funding from general fund to the proprietary rates charged by the State Information Technology Services Division. If thelegislature does not approve this new proposal and continues to fund the cybersecurity enhancement project with generalfund, they may wish to request that the executive include this appropriation as part of the 5.0% reduction plan.

The state special revenue reduction impact for the Department of Administration totals approximately $240,000. The planincludes reductions in the:

• State Financial Services Division of approximately $9,000. The division would likely use restricted state specialrevenue funds and proprietary funds to supplement this reduction

• State Information Technology Services Division of approximately $22,000. The division would decrease wide areanetwork (WAN) circuit upgrades

• Banking and Financial Institutions Division of approximately $209,000. These reductions would be in the areas ofpersonal services and operating expenses. The reduction in personal services would likely result in the reductionof 2.00 FTE. The reductions in operating expenses would likely impact training and participation in regulatorroundtable discussions regarding industry trends and emerging issues in the regulatory landscape

A summary of the entire 2023 biennium 5.0% plan submitted for this agency can be found online at the Section Asubcommittee page on “Tab D Materials.”








https://leg.mt.gov/lfd/appropriations-subcommittee-section-a/

https://leg.mt.gov/lfd/appropriations-subcommittee-section-a/




Program Changes Decisions Modifications SWPL01 DIRECTORS OFFICE (541) (23,051) - (23,592)03 STATE FINANCIAL SERVICES DIV 72,001 127,244 - 199,24504 ARCHITECTURE & ENGINEERING DIV 10,749 (12,245) - (1,496)07 STATE IT SERVICES DIVISION (11,036) (146,934) - (157,970)14 DIV OF BANKING & FINANCIAL INST 24,850 34,491 - 59,34115 MONTANA STATE LOTTERY 14,616 (10,805) - 3,81123 STATE HUMAN RESOURCES DIVISION 40,587 32,032 - 72,61937 MONTANA TAX APPEAL BOARD 915 (2,233) - (1,318)Agency Total $ 152,141 $ (1,501) $ - $ 150,640

Personal services were $13.9 million or 61.5% of total FY 2021 HB 2 appropriations. The executive proposes an increaseof approximately $151,000 in FY 2022 and $199,000 in FY 2023. Additional details of significant factors included in thestatewide present law adjustment for personal services will be discussed at the program level.

Funding


Total Department of Administration Funding by Source of Authority2023 Biennium Budget Request - Department of Administration

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

General Fund 30,197,082 0 0 205,164,401 235,361,483 16.82 %State Special Total 15,001,684 0 0 44,517,000 59,518,684 4.25 %Federal Special Total 37,070 0 0 36,284,000 36,321,070 2.59 %Proprietary Total 12,523,578 0 797,636,418 258,349,151 1,068,509,147 76.34 %Other Total 0 0 0 0 0 0.00 %

Total All Funds $57,759,414 $0 $797,636,418 $544,314,552 $1,399,710,384Percent - Total All Sources 4.13 % 0.00 % 56.99 % 38.89 %

The majority of the Department of Administration is funded with non-budgeted proprietary funds. These funds supportthe operations of the Director’s Office, State Financial Services Division, General Services Division, State InformationTechnology Services Division, Healthcare and Benefits Division, State Human Resources Division, and Risk Managementand Tort Defense.

Statutory appropriations also comprise a significant portion of appropriations for the Department of Administration. Theseprimarily include appropriations related to transfers to the teachers’ retirement and public employees’ retirement system,and lottery prizes.

HB 2 appropriations of general fund, state special revenue funds, federal special revenue funds and proprietary funds willbe discussed in further detail at the program level.







Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of Budget2021 Base Budget 9,205,029 9,205,029 18,410,058 60.97 % 22,591,444 22,591,444 45,182,888 78.23 %SWPL Adjustments 173,624 120,027 293,651 0.97 % 396,653 221,284 617,937 1.07 %PL Adjustments 14,356,037 17,148,892 31,504,929 104.33 % 14,421,769 17,214,565 31,636,334 54.77 %New Proposals (8,784,833) (11,226,723) (20,011,556) (66.27)% (8,621,962) (11,055,783) (19,677,745) (34.07)%

Total Budget $14,949,857 $15,247,225 $30,197,082 $28,787,904 $28,971,510 $57,759,414

HB 2 Language

The executive is not proposing HB 2 language for the Department of Administration.


61010 - Department Of Administration 01-Director's Office






BienniumChange

Biennium% Change

Personal Services 941,161 924,084 (17,077) (1.81)%Operating Expenses 215,851 293,970 78,119 36.19 %Local Assistance 24,192 28,592 4,400 18.19 %Transfers 0 17,531,460 17,531,460 0.00 %

Total Expenditures $1,181,204 $18,778,106 $17,596,902 1,489.74 %

General Fund 1,160,190 18,752,692 17,592,502 1,516.35 %Federal Spec. Rev. Funds 21,014 25,414 4,400 20.94 %

Total Funds $1,181,204 $18,778,106 $17,596,902 1,489.74 %

Total Ongoing $1,181,204 $18,778,106 $17,596,902 1,489.74 %Total OTO $0 $0 $0 0.00 %

Program Description

The Director's Office provides overall leadership and management support to the Department of Administration’s divisionsand offers administrative support to attached boards and commissions. The office acts as a liaison among the agency'sdivisions, administratively attached boards and commissions, the cabinet, the legislature, and the Governor's Office.

The Director's Office has 4.50 FTE funded through HB 2 and 26.51 FTE funded by the revenues generated from the internalfees charged to the Department of Administration's divisions and its attached-to agencies. These FTE provide servicesin the areas of legal, human resources, financial management, labor relations, project management and communications,continuity of government, emergency management, and homeland security. There are several programs within theDirector’s Office, including:

• The Office of Legal Services, which advises the divisions on legal matters• The Office of Human Resources, which partners with DOA leadership and employees to enhance agency

performance through strategic human resource programs and effective administrative processes (e.g., payrolladministration, talent acquisition, policy development, etc.)

• The Office of Finance and Budget, which prepares and presents the biennial budget, processes budget changedocuments, monitors approved budgets for compliance with state law and legislative intent, and providesaccounting assistance

• Labor Relations, which provides labor relations services for managers and human resource officers and is theGovernor's designated representative in collective bargaining

• The State Continuity and Emergency Management Office, which provides leadership and support for theenterprise continuity of government, emergency management, and homeland security programs

• The Office of Program and Information Management, which provides communication and project managementservices

The customers served are internal to the department and its attached-to agencies, with the exception of the Office of Labor Relations and the State Continuity and Emergency Management Office, which serve the enterprise.



Director's OfficeMajor Budget Highlights

• The Director’s Office 2023 biennium requested appropriations areapproximately $17.6 million higher than the 2021 biennium

• The proposed increases in general fund are primarily due to HB 553,which was passed and approved by the 2019 Legislature

◦ The executive requested present law increases in generalfund of $8.6 million in FY 2022 and $8.9 million in FY 2023for major repairs projects

◦ The executive requested present law increases in generalfund of $5.8 million in FY 2022 and $8.2 million in FY2023 for capital development. Additionally, the executivebudget proposes reductions to this general fund transfer ina new proposal, which eliminates the transfer for the capitoldevelopments account for the 2023 biennium

• The Director’s Office has the management services internal servicefund and the continuity and emergency management internal servicefund that are approved as rates in HB 2. The executive is proposingrate increases for both funds




Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 4.50 4.50 4.50 4.50

Personal Services 364,242 456,161 485,000 461,408 462,676Operating Expenses 78,082 142,296 73,555 184,376 109,594Local Assistance 1,265 9,896 14,296 14,296 14,296Transfers 0 0 0 8,589,879 8,941,581

Total Expenditures $443,589 $608,353 $572,851 $9,249,959 $9,528,147

General Fund 442,324 600,046 560,144 9,237,252 9,515,440Federal Spec. Rev. Funds 1,265 8,307 12,707 12,707 12,707

Total Funds $443,589 $608,353 $572,851 $9,249,959 $9,528,147

Total Ongoing $443,589 $608,353 $572,851 $9,249,959 $9,528,147Total OTO $0 $0 $0 $0 $0



The Director’s Office HB 2 budget is primarily funded with general fund. The HB 2 modified budget of $608,000 was 72.9%


Program Highlights

LFDCOMMENT


expended as of the end of FY 2020. Lower expenditures were primarily in personal services and operating expenses.

Personal services appropriations of $456,000 were 79.8% expended. A labor relations specialist position was vacant in FY2020. The Director’s Office has had difficulties recruiting for this position. Additionally, the office did not fill positions for anaccounting technician and internal auditor immediately in an effort to achieve general fund savings.

Operating expenses appropriations of $142,000 were 54.9% expended. Lower expenditures were due, in part, to the timingof legislative audit costs. This appropriation is biennial and can be used in both years of the biennium. Additionally, theDirector’s Office reduced operating expenses such as travel, training, supplies and materials as much as possible due tothe COVID-19 pandemic.

Local assistance appropriations of $10,000 were 12.8% expended. These federal funds are received for flood controlpayments. The revenue received for these reimbursements totaled $1,265, which was the amount provided for localassistance.


Overall, the FY 2021 appropriation is approximately $36,000 or 5.8% lower than the FY 2020 appropriation. The significantdifferences are in personal services and operating expenses.

The difference in personal services is primarily due to the transfer of general fund from several other divisions in theDepartment of Administration to the Director’s Office. This change also included the transfer of 1.00 FTE from the StateInformation Technology Services Division. This transfer increased staffing in the Office of Labor Relations, which facilitatesand manages 60 collective bargaining agreements within state government. The general fund transfer in FY 2021 totaledapproximately $109,000, which was $23,000 higher than the transfer in FY 2020.

The difference in operating expenses is due to legislative audit costs. Legislative audit appropriations are included in thefirst year of the biennium and totaled $70,000 in FY 2020.

Executive Request

The Director’s Office is requesting an increase of approximately $8.7 million in FY 2022 and $9.0 million in FY 2023above the FY 2021 base appropriations. This increase is primarily due to the present law adjustment for general fundtransfers to the major repair projects account. There is also a present law adjustment to transfer general fund to the capitaldevelopment account; however, this transfer was eliminated in a new proposal.

The 2019 Legislature passed HB 553 that included two general fund appropriated transfers in theDepartment of Administration budget. According to the law, these transfers are to be included as presentlaw appropriations. The appropriations are as follows:

• Major repairs: Current law requires that the state invests 0.6% of the current replacement value (CRV) of LongRange Building Program (LRBP) eligible buildings for purposes of major repairs and maintenance of the buildings.The general fund appropriations are equal to the difference between 0.6% of CRV and the LRBP dedicatedrevenues of cigarette taxes and coal severance taxes

• Capital development: Current law requires an appropriation transfer for capital developments of an amount equalto 1.0% of general fund revenues less current and authorized but unissued general fund general obligationbond debt service. The legislature would have the ability to authorize the use of these funds for state or localgovernment infrastructure projects through new cash or bonded capital improvement programs, but only if theappropriations for maintaining existing state buildings has been funded at a level equal to or greater than the0.6% of CRV as described above. The appropriation is also available for use if there are general fund shortfallsexperienced in the state budget, or as a “working rainy day fund.” The Governor may propose to reduce orincrease the amount of the transfer, but it must be included in the executive budget request as a new proposal



Personal services were $485,000 or 84.7% of total FY 2021 appropriations. The executive proposes a decrease ofapproximately $24,000 in FY 2022 and $22,000 in FY 2023. The table below shows the total adjustments for each personalservices category.

Figure 3Department of Administration

Director's OfficeFY 2022 Statewide Present Law Adjustment for Personal Services

Expected Changes $ (541)Management Decisions (23,051)Budget Modifications -Total Present Law Adjustment $ (23,592)

Management decisions comprise the majority of the decrease in the statewide present law adjustment for personalservices. The Department of Administration moved 1.00 FTE from the State Information Technology Services Division andfunding from several programs into the Director’s Office. This position was vacant at the time of the personal servicessnapshot. Vacant positions are funded at 83.0% of the market midpoint for the job code of the position.

Funding


Department of Administration, 01-Director's OfficeFunding by Source of Authority

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

01100 General Fund 18,752,692 0 0 199,892,261 218,644,953 79.86 %

02858 Mineral Impact 0 0 0 12,972,000 12,972,000 100.00 %02936 2020C Bond Proceeds AcctHB652 0 0 0 0 0 0.00 %

State Special Total $0 $0 $0 $12,972,000 $12,972,000 4.74 %

03095 Taylor Grazing Act Dist. 0 0 0 250,000 250,000 0.69 %03369 Flood Control Payments 25,414 0 0 0 25,414 0.07 %03425 Forest Reserve Shared Revenue 0 0 0 36,034,000 36,034,000 99.24 %03675 Coronavirus Relief Fund DOA 0 0 0 0 0 0.00 %

Federal Special Total $25,414 $0 $0 $36,284,000 $36,309,414 13.26 %

06534 Management Services 0 0 4,300,899 0 4,300,899 73.56 %06535 Continuity Emergency Mgmt 0 0 1,545,586 0 1,545,586 26.44 %

Proprietary Total $0 $0 $5,846,485 $0 $5,846,485 2.14 %

Total All Funds $18,778,106 $0 $5,846,485 $249,148,261 $273,772,852

HB 2 Appropriations

The general fund appropriations provide 99.9% of the funding in HB 2. This is primarily comprised of the transfer to themajor repairs project account. General fund also supports the Burial Preservation Board and the Office of Labor Relations.

Federal special revenue provides the remaining 0.1% of funding in HB 2 and supports the allocation of federal flood controlpayments. These funds are received by the department from the U.S. Army Corp. of Engineers. Funds are directed tospecific counties for reimbursement for 75.0% of receipts from the leasing of lands acquired for flood control, navigation,and allied purposes pursuant to 33 U.S.C .701c-3.



LFDCOMMENT


Non-Budgeted Proprietary Appropriations

A portion of the Director’s Office functions are supported by non-budgeted proprietary funds. These funds are discussed in the Proprietary Rates section of the narrative.


In the Director’s Office, statutory appropriations account for 91.0% of appropriations from all sources of authority. The executive proposes statutory appropriation authority of approximately $122.9 million in FY 2022 and $126.2 million in FY 2023. The figure below provides FY 2020 actual expenditures, FY 2021 appropriations, and current HJ 2 estimates for FY 2022 and FY 2023 appropriations, which are $109.0 million and $112.1 million. HJ 2 estimates are slightly below the executive’s estimates at this time.

Figure 4

The Revenue Interim Committee adopted revenue estimates that impact the level of some of the statutoryappropriations in the figure above. LFD staff will update the information included in the figure to reflectcurrent HJ 2 estimates.


FY 2020 FY 2021 FY 2022 FY 2023Actual Appropriated Estimated Estimated

General Fund 8,225,527$ 10,534,915$ 15,252,707$ 17,064,950$

529,533 541,683 564,512 582,859621,944 646,959 663,027 684,575948,966 996,000 1,011,651 1,044,530

44,999,422 46,015,000 46,320,508 47,013,425138,817 200,000 200,000 200,000

Debt Service Local Government PERD Contribution School District PERS Contribution TRS GABA Contribution TRS Supplemental Contribution State Fund Division Public Employees Retirement Transfer 33,951,150 34,290,660 34,633,568 34,979,904

Total General Fund 89,415,359 93,225,217 98,645,973 101,570,242

7,077,769 8,186,000 6,486,000 6,486,000256,223 338,200 - -

7,333,992 8,524,200 6,486,000 6,486,000

113,718 125,000 125,000 125,00013,800,949 18,017,000 3,760,270 3,917,45013,914,667 18,142,000 3,885,270 4,042,450

State Special RevenueMineral Impact FeesDebt Service

Total State Special Revenue

Federal Special Revenue Taylor Grazing FeesForest Reserve Funds

Total Federal Special Revenue

Total Statutory Appropriations $ 110,664,018 $ 119,891,417 $ 109,017,243 $ 112,098,692

Department of Administration Director's Office





Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of Budget2021 Base Budget 560,144 560,144 1,120,288 5.97 % 572,851 572,851 1,145,702 6.10 %SWPL Adjustments 87,504 13,995 101,499 0.54 % 87,504 13,995 101,499 0.54 %PL Adjustments 14,356,393 17,149,352 31,505,745 168.01 % 14,356,393 17,149,352 31,505,745 167.78 %New Proposals (5,766,789) (8,208,051) (13,974,840) (74.52)% (5,766,789) (8,208,051) (13,974,840) (74.42)%

Total Budget $9,237,252 $9,515,440 $18,752,692 $9,249,959 $9,528,147 $18,778,106




FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds


DP 2 - Fixed Costs0.00 111,096 0 0 111,096 0.00 36,319 0 0 36,319

DP 3 - Inflation Deflation0.00 0 0 0 0 0.00 0 0 0 0

DP 4 - Allocate Department Indirect/Administrative Costs0.00 701 0 0 701 0.00 696 0 0 696

DP 5 - ServiceNow0.00 (976) 0 0 (976) 0.00 (976) 0 0 (976)

DP 103 - General Fund Transfer to Capital Development Authority0.00 5,766,789 0 0 5,766,789 0.00 8,208,051 0 0 8,208,051

DP 104 - Establish Minimum Funding for Major Repair Projects0.00 8,589,879 0 0 8,589,879 0.00 8,941,581 0 0 8,941,581

Grand Total All Present Law Adjustments0.00 $14,443,897 $0 $0 $14,443,897 0.00 $17,163,347 $0 $0 $17,163,347













DP 4 - Allocate Department Indirect/Administrative Costs -

The executive requests an increase in general fund to provide the funding to pay the Department of Administration's indirectcosts. These costs are charged to the department's programs for services provided, which include accounting, humanresources, and legal support.

DP 5 - ServiceNow -

The executive requests a decrease in general fund because of the purchase of ServiceNow licenses and programs for the2023 biennium. The Director’s Office is anticipating operating efficiencies and other savings by using ServiceNow.

DP 103 - General Fund Transfer to Capital Development Authority -

The executive requests an increase in general fund for a transfer to the capital developments long-range building programaccount as required by 17-7-208, MCA.

DP 104 - Establish Minimum Funding for Major Repair Projects -

The executive requests an increase in general fund for a transfer to the major repair long-range building program accountas required by 17-7-222, MCA.

New Proposals



FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds

DP 107 - Adjust Transfer for Capital Development Account0.00 (5,766,789) 0 0 (5,766,789) 0.00 (8,208,051) 0 0 (8,208,051)

Total 0.00 ($5,766,789) $0 $0 ($5,766,789) 0.00 ($8,208,051) $0 $0 ($8,208,051)


DP 107 - Adjust Transfer for Capital Development Account -

The executive requests a decrease in general fund transfers to the capital developments long-range building programaccount included in the present law decision package 103. This new proposal decreases the transfer because the fundingwill be used for debt service related to the bonding proposal in HB 14.

Other Issues -

Proprietary Rates

There are two proprietary funds in the Director’s Office, which include:



• Management Services Fund – the Director’s Office provides management services to other divisions within theagency

• Continuity and Emergency Management – the Director’s Office prepares to manage and coordinate stategovernment in the event of a major catastrophic disruption

These programs are funded with internal service type proprietary funds. As such, the legislature approves the maximumrates that the programs can charge during the biennium.

Management Services Fund – 06534


The Director’s Office provides the following functions with the management services fund:

• Office of Human Resources◦ Processes payroll◦ Assists with recruitment, selection, and orientation of new employees◦ Classifies positions◦ Develops policies for the department

• Office of Legal Services◦ Advises on legal matters

• Office of Finance and Budget◦ Prepares and presents the biennial budget◦ Processes budget change documents◦ Monitors budgets for compliance with state law and legislative intent◦ Provides accounting assistance

The management services fund supports 21.51 FTE.


The following 2023 Biennium Report on Internal Service and Enterprise Funds shows the actual and projected expendituresand related revenues associated with the management services fund.





Expenses

The executive proposes decreasing expenses in the management services fund by approximately $79,000 in FY 2022 andapproximately $74,000 in FY 2023 when compared to the FY 2021 base budget. The following figure shows the changesas proposed by the executive by function as reflected in the budgeting system.


Director's OfficeManagement Services Fund

Proposed Changes for the 2023 Biennium in the Budgeting SystemFY 2022 FY 2023

Director's OfficeStatewide Present Law Adjustment - Personal Services $ (5,234) $ (2,641)Adjust Management Services Personal Services (87,055) (87,119)Statewide Present Law Adjustment - Fixed Costs 13,760 10,569ServiceNow (1,084) (1,084)Total (79,613) (80,275)

Office of Legal ServicesStatewide Present Law Adjustment - Personal Services 11,763 13,126Adjust Management Services Personal Services (57,782) (56,986)Statewide Present Law Adjustment - Fixed Costs 517 516ServiceNow (397) (397)Total (45,899) (43,741)

Office of Human ResourcesStatewide Present Law Adjustment - Personal Services 27,568 29,645Statewide Present Law Adjustment - Fixed Costs 2,933 2,959ServiceNow (1,518) (1,518)Total 28,983 31,086

Office of Finance and BudgetStatewide Present Law Adjustment - Personal Services 25,351 27,395Adjust Management Services Personal Services (14,609) (14,619)Statewide Present Law Adjustment - Fixed Costs 8,269 8,317ServiceNow (1,666) (1,666)Total 17,345 19,427

Total Proposed Decrease $ (79,184) $ (73,503)

The statewide present law adjustment for personal services increases appropriations by approximately $59,000 in FY 2022and $68,000 in FY 2023 in the management services fund. This proposed increase is more than offset by a proposeddecrease in personal services of $159,000 in FY 2022 and $159,000 in FY 2023. This decrease is proposed to moreclosely align personal services expenditures with agency projections.

Revenues

All divisions of the agency and some administratively attached boards and agencies use the services provided by theDirector’s Office. Administratively attached agencies or boards are not charged a fee if they do not use some of the services



because they have staff to perform these functions.

The revenues for this program are allocated in three ways:

• A percentage of base year expenses by the division• The number of FTE within a program• The Office of Legal Services costs are allocated to divisions based on a time use study

Proprietary Rates

The figure below shows the rates proposed by the executive for the 2023 biennium. The executive is proposing a 6.4%increase to the total allocation of costs and a 17.5% increase to the FTE component when compared to the FY 2021 baserates.

Figure 6


Estimated Estimated Proposed ProposedFY 2020 FY 2021 FY 2022 FY 2023

Fee Description:

Total Allocation of Costs $1,408,903 $1,408,903 $1,498,454 $1,498,454FTE Component $947 $947 $1,113 $1,113

This program is funded with an internal service type proprietary fund. As such, the legislature approves the maximum ratethe program may charge during the biennium. They are not the rates the program must charge.

Continuity and Emergency Management – 06535


The Department of Administration is responsible for providing centralized management and coordination of the continuity,emergency preparedness, and security program for state agencies to ensure the ability to protect and recover stateessential functions of government at the time of an event. The emergency preparedness activities are no longer focusedonly on the Helena area but have been expanded to cover state government facilities and employees across the state.

There are currently 5.00 FTE in the State Continuity and Emergency Management Office (SCEMO).


The following 2023 Biennium Report on Internal Service and Enterprise Funds shows the actual and projected expendituresand related revenues associated with the continuity and emergency management fund.



Expenses

The executive proposes decreasing expenses in the SCEMO by approximately $4,500 in FY 2022 and approximately



$1,500 in FY 2023. The decrease is due to the present law adjustment for personal services and ServiceNow. Thefollowing figure shows the changes as proposed by the executive as reflected in the budgeting system.


Director's OfficeContinuity and Emergency Management Fund


Personal ServicesStatewide Present Law Adjustment - Personal Services $ (8,837) $ (4,721)Personal Services Total (8,837) (4,721)

Operating ExpensesStatewide Present Law Adjustment - Fixed Costs 3,103 1,973Allocate Indirect/Administrative Costs 2,277 2,271ServiceNow (1,085) (1,085)Operating Expenses Total 4,295 3,159


The statewide present law adjustment for personal services is primarily driving the proposed decrease in expenditures.The State Continuity and Emergency Management Office had 1.00 FTE retire. This position was reclassified, and a newstaff member was hired at a lower pay rate.

Revenues

The SCEMO bills the State Information Technology Services Division and the General Services Division quarterly for theirservices. Fees are collected by both divisions through their respective enterprise rates charged to all agencies.

The executive proposes that SITSD pays approximately $562,000 and GSD pays approximately $219,000 annually in the2023 biennium for this function.

Proprietary Rates

The figure below shows the rates proposed by the executive for the 2023 biennium. The proposed rates have increasedby 3.0% for the 2023 biennium. There are two primary reasons for the proposed increase. Proposed personal servicesexpenditures include a 2.0% vacancy savings. The SCEMO is currently fully staffed and there is a concern that the officemay not be able to meet the vacancy savings built into the budget. The rates included in the table below would allow forsufficient revenue should vacancy savings not be achieved. Additionally, the proposed rates below allow the office to buildits working capital closer to 60 days.



Figure 8



Fee Description:

Total Allocation of Costs $ 758,029 $ 757,972 $ 780,770 $ 780,713

This program is funded with an internal service type proprietary fund. As such, the legislature approves the maximum ratethe program may charge during the biennium. They are not the rates the program must charge.


61010 - Department Of Administration 03-State Financial Services Division






BienniumChange

Biennium% Change



General Fund 5,786,053 6,204,278 418,225 7.23 %State/Other Special Rev. Funds 370,648 402,438 31,790 8.58 %Federal Spec. Rev. Funds 7,254 11,656 4,402 60.68 %Proprietary Funds 110,746 164,476 53,730 48.52 %

Total Funds $6,274,701 $6,782,848 $508,147 8.10 %


Program Description

The State Financial Services Division performs many centralized functions and administers state and federal programs tostate agencies, local government entities, and Montana citizens and businesses. The division consists of four bureaus –Statewide Accounting, State Procurement, Financial Services Technology, and Local Government Services, which includesthe Social Security Administrator.

The Division Strategies and Solutions Team (DSST) provides resources at the division level and focuses on operationalbusiness strategies and technology solutions to support division-wide initiatives.

The Statewide Accounting Bureau (SAB) prepares and publishes the state’s annual comprehensive financial report (CAFR)and maintains a statewide accounting structure with related policies and procedures to allow all branches of government tomeet their individual reporting needs. The Daily Operations Unit includes both the Treasury and Warrant Writer services.The Treasury responsibilities include central banking functions and maintaining accountability of all money and securitiesbelonging to or held in trust by the state. The Warrant Writer services include management of the state payment processesand state vendor file, and issuance of 1099 miscellaneous and 1042 forms. The bureau also serves as the processowner of the Statewide Accounting Budgeting & Human Resources System (SABHRS) financial modules and assists stateagencies in operating the state’s accounting system. The Department of Administration and the Board of Investments (BOI)work jointly to manage the State of Montana’s cash. The Treasury within DOA reconciles the state’s banking activity andmovement of cash, manages bank contracts, and provides support to BOI and other agencies.

The State Procurement Bureau (SPB) provides professional procurement services to all state agencies for the acquisitionof supplies and services. SPB advocates for compliance with all state statutes and procurement requirements, establishesstatewide contracts for commonly used goods and services, manages the state’s fuel and procurement card programs, andoffers procurement and contract management training to state agencies. In addition, SPB promotes compliance with theMontana Procurement Act (MCA Title 18-4) and is the business process owner of the Montana Acquisition and ContractingSystem (eMACS).

The Financial Services Technology Bureau (FSTB) provides system analysis, support, configuration, development, andmaintenance of the state’s enterprise accounting and budgeting systems. The bureau also manages system architectureand provides database administration for the entire SABHRS application. FSTB partners with the Statewide AccountingBureau, Governor’s Office of Budget and Program Planning, Legislative Fiscal Division, and the State Human ResourcesDivision to gather business requirements and develop application strategies. In addition, FSTB supports the Montana



Acquisition and Contracting System (eMACS).

Local Government Services Bureau (LGSB) works with local governments (counties, cities and towns, school districts,and special districts) to support uniform financial accountability and to assist the local governments in complying with theirstatutory, financial, and budgetary reporting requirements, including provisions of the Montana Single Audit Act. LGSBreceives and makes the local government financial, budget, and audit reports available to the public.

The State Social Security Administrator is a part of the Local Government Services Bureau. The State Social SecurityAdministrator is responsible for administering Section 218 of the Social Security Act by providing education and outreachand ensuring proper application of Social Security coverage to all state and local government employees.

Program Highlights

State Financial Services DivisionMajor Budget Highlights

• The State Financial Services Division’s 2023 biennium requestedappropriations are approximately $508,000 or 8.1% higher than the2021 biennium

• The proposed increase in general fund is primarily due to thestatewide present law adjustment for personal services and a presentlaw adjustment for indirect costs paid to the Director’s Office

• The executive is proposing a fund switch from general fund to abudgeted proprietary fund to fund a position in the program entirelywith proprietary funding

• The majority of the funding in the division is from non-budgetedproprietary funds. The legislature approves the rates for theSABHRS and warrant writing internal service funds in HB 2 andreviews the local government services enterprise fund. Theexecutive is not proposing rate increases for either of the internalservice funds






Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 28.92 28.92 28.92 28.92



General Fund 2,688,683 2,877,133 2,908,920 3,096,068 3,108,210State/Other Special Rev. Funds 173,666 184,023 186,625 200,708 201,730Federal Spec. Rev. Funds 5,828 5,827 1,427 5,828 5,828Proprietary Funds 55,374 55,373 55,373 82,189 82,287

Total Funds $2,923,551 $3,122,356 $3,152,345 $3,384,793 $3,398,055




The State Financial Services Division is funded in HB 2 with general fund, state special revenue, federal special revenue,and proprietary funds. The HB 2 modified budget of $3.1 million was 93.6% expended as of the end of FY 2020. Lowerexpenditures were primarily in operating expenses.

Operating expenses of approximately $761,000 were 63.2% expended. Lower expenditures were due to the COVID-19pandemic. The division decreased travel and training expenses.


Overall, the FY 2021 appropriation is approximately $30,000 or 1.0% higher than the FY 2020 appropriation. The FY 2020and FY 2021 appropriations are not significantly different. The minor difference is primarily due to the pay plan allocationin each fiscal year.

Executive Request

The State Financial Services Division is requesting an increase of approximately $232,000 in FY 2022 and $246,000 inFY 2023 above the FY 2021 base appropriations. The increase primarily due to the statewide present law adjustment forpersonal services. Personal services are discussed in more detail in the next section.


Personal services were $2.4 million or 75.8% of total FY 2021 appropriations. The executive proposes a statewide presentlaw increase of approximately $199,000 in FY 2022 and $213,000 in FY 2023. The table below shows the total adjustmentsfor each personal services category.




State Financial Services DivisionFY 2022 Statewide Present Law Adjustment for Personal Services

Expected Changes $ 72,001Management Decisions 127,244Budget Modifications -Total Present Law Adjustment $ 199,245

Management decisions is the category that is primarily causing the increase in the statewide present law adjustmentfor personal services. These changes are primarily comprised of market adjustments, performance adjustments,reclassifications, a training assignment progression, and a supervisory adjustment.

Funding


Department of Administration, 03-State Financial Services DivisionFunding by Source of Authority

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

01100 General Fund 6,204,278 0 0 5,272,140 11,476,418 46.83 %

02211 Procurement Special Revenue 402,438 0 0 0 402,438 100.00 %State Special Total $402,438 $0 $0 $0 $402,438 1.64 %

03320 CMIA Funds 11,656 0 0 0 11,656 100.00 %03675 Coronavirus Relief Fund DOA 0 0 0 0 0 0.00 %

Federal Special Total $11,656 $0 $0 $0 $11,656 0.05 %

06042 Local Govt Svcs AuditRportng 0 0 1,666,712 0 1,666,712 13.21 %06511 SABHRS 0 0 9,247,981 0 9,247,981 73.30 %06527 Investment Division 164,476 0 0 0 164,476 1.30 %06564 Warrant Writing 0 0 1,537,443 0 1,537,443 12.19 %

Proprietary Total $164,476 $0 $12,452,136 $0 $12,616,612 51.48 %

Total All Funds $6,782,848 $0 $12,452,136 $5,272,140 $24,507,124

HB 2 Appropriations

HB 2 appropriations support 27.7% of the costs in the State Financial Services Division.

General fund is the primary funding source for the functions approved in HB 2. General fund supports the development ofstatewide accounting standards, treasury functions, procurement functions, accounting assistance for local governments,and the State Social Security Administrator function.

The procurement state special revenue fund receives revenue from all rebates credited to the department from using stateprocurement cards and term contracts. The revenue must be used to administer the state’s procurement card programs,administer term contracts established by the department, and reimburse applicable funds to the federal government. Theunreserved, unexpended balance of the funds collected must be deposited in the general fund by the end of the fiscal year.

Federal special revenues provide for cash management services related to the federal Cash Management ImprovementAct. These funds are deposited into the general fund.

Proprietary funding in HB 2 is a direct appropriation from the Board of Investments proprietary fund for services the



Treasury Unit provides to the BOI.

Non-Budgeted Proprietary Funds

Approximately 50.8% of the SFSD functions are supported with non-budgeted proprietary funds. These funds arediscussed in the Proprietary Rates section of the narrative.


Approximately 21.5% of the funding in SFSD is statutorily appropriated. The state treasurer may contract with a financialinstitution to provide general depository banking services. The cost of contracting for banking services is statutorilyappropriated from the general fund (17-6-101, MCA). In addition, the state treasurer has statutory authority to return anyfederal funds and the interest earned on the funds that may not be retained by the state according to federal law or theterms of the federal grant (17-3-106, MCA).




Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent


Total Budget $3,096,068 $3,108,210 $6,204,278 $3,384,793 $3,398,055 $6,782,848




FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds


DP 2 - Fixed Costs0.00 4,632 6,017 0 10,649 0.00 4,751 5,759 0 10,510

DP 3 - Inflation Deflation0.00 (96) (6) 0 (102) 0.00 (60) (4) 0 (64)

DP 4 - Allocate Department Indirect/Administrative Costs0.00 24,179 738 0 24,917 0.00 24,148 738 0 24,886

DP 5 - ServiceNow0.00 (6,272) (390) 0 (6,662) 0.00 (6,272) (390) 0 (6,662)

DP 301 - Treasury Position Funding Adjustment0.00 (16,679) 0 0 0 0.00 (16,729) 0 0 0

DP 303 - Increase CMIA authority0.00 0 0 4,401 4,401 0.00 0 0 4,401 4,401

Grand Total All Present Law Adjustments0.00 $187,148 $14,083 $4,401 $232,448 0.00 $199,290 $15,105 $4,401 $245,710



LFDISSUE

61010 - Department Of Administration 03-State Financial Services Division *"Total Funds" amount includes funding from sources other than General Fund, State Special, or Federal Special (i.e. Proprietary).









The executive requests an increase in general fund and state special revenue to provide the funding to pay the Departmentof Administration's indirect costs. These costs are charged to the department's programs for services provided, whichinclude accounting, human resources, and legal support.

DP 5 - ServiceNow -

The executive requests a decrease in general fund and state special revenue because of the purchase of ServiceNowlicenses and programs for the 2023 biennium. The State Financial Services Division is anticipating operating efficienciesand other savings by using ServiceNow.

DP 301 - Treasury Position Funding Adjustment -

The executive requests a decrease in general fund and an increase in budgeted proprietary funds for a position in thedivision. This change will ensure that this position is fully funded in the proprietary fund.

Fund Switches are New Proposals

The requested present law adjustment for the treasury position includes a fund switch that should be consideredas a new proposal.

DP 303 - Increase CMIA authority -

The executive requests an increase in federal special revenue for expenditures related to the federal Cash Management Improvement Act (CMIA) agreement. The federal government reimburses the costs for staff time spent reviewing the CMIA agreement.



Other Issues -

Proprietary Rates

The State Financial Services Division provides the following functions with proprietary funds:

• Statewide Accounting, Budgeting, and Human Resources System (SABHRS)• Warrant writer• Local government audit and reporting

SABHRS - 06511


The Financial Services Technology Bureau is responsible for the operational support and maintenance of the enterprisefinancial (SABHRS Financials) and budget development (IBARS) information systems and for supporting the enterpriseacquisition and contracting system (eMACS). FSTB is also responsible for providing database administration services,system architecture, and maintenance for the SABHRS HR information system for the HR Information Systems Bureau.

FSTB has a total of 21.00 FTE supporting these applications, including upgrades, enhancements, testing, user training,database maintenance, and system architecture.


The following 2023 Biennium Report on Internal Service and Enterprise Funds shows the actual and projected expendituresand related revenues associated with the SABHRS fund.





Expenses

The executive proposes decreasing expenses in the SABHRS fund by approximately $341,000 in FY 2022 andapproximately $244,000 in FY 2023 when compared to the FY 2021 base budget. The decrease is primarily due to anadjustment to more closely align personal service and operating expenditures with projections. The following figure showsthe changes as proposed by the executive as reflected in the budgeting system.


State Financial Services DivisionSABHRS Fund


Personal ServicesStatewide Present Law Adjustment - Personal Services $ (72) $ 7,061Adjust SABHRS Proprietary (103,695) (163,211)Personal Services Total (103,767) (156,150)

Operating ExpensesStatewide Present Law Adjustment - Fixed Costs 54,673 (32,969)Allocate Indirect/Administrative Costs 4,001 4,001ServiceNow (4,554) (4,554)Adjust SABHRS Proprietary (291,000) (54,000)Operating Expenses Total (236,880) (87,522)


Revenues

All state agencies are required to use the SABHRS program to ensure consistent, accurate, and transparent financial andbudgeting information. Revenues are based on the costs to operate.

Proprietary Rates

The figure below shows the rates proposed by the executive for the 2023 biennium. The rates charged in the base year areshown for comparison purposes. The executive is not proposing rate increases for SABHRS when comparing to the 2021biennium.

"Requested Rates for Internal Service or Enterprise Funds Fee/Rate Information" Actual Budgeted Budgeted Budgeted FY2020 FY 2021 FY 2022 FY 2023 SABHRS Services $4,168,579 $3,974,661 $4,168,579 $3,974,661

Figure 11


Actual Budgeted Budgeted BudgetedFY 2020 FY 2021 FY 2022 FY 2023

SABHRS Services $4,168,579 $3,974,661 $4,168,579 $3,974,661



The rates approved by the legislature are the maximum the program may charge during the biennium. They are not therates the program must charge.

Warrant Writer - 06564


The Warrant Writer Unit (WWU) provides payment processing services for most state agencies, including the universitysystem. The WWU generates, tracks, and reconciles each approved agency payment generated in SABHRS. Warrantprinting is provided to the WWU by Print and Mail Services within the General Services Division.

The services the WWU offers include direct deposit, warrant consolidation, stopping of payments, warrant cancellations,emergency warrants, duplicate warrants, warrant certification, warrant reissues, warrant research, supplier filemaintenance, stale-dated payment processing, and IRS 1099-MISC and 1042 tax reporting.

The program funds 4.33 FTE and is authorized through 17-8-305, MCA.


The following 2023 Biennium Report on Internal Service and Enterprise Funds shows the actual and projected expendituresand related revenues associated with the warrant writing proprietary fund.





Expenses

The executive proposes increasing expenses in the warrant writing fund by approximately $15,000 in FY 2022 and $16,000in FY 2023 when compared to the FY 2021 base budget. The following figure shows the changes as proposed by theexecutive as reflected in the budgeting system.


State Financial Services DivisionWarrant Writing Fund


Personal ServicesStatewide Present Law Adjustment - Personal Services $ 13,243 $ 14,966Personal Services Total 13,243 14,966

Operating ExpensesStatewide Present Law Adjustment - Fixed Costs (670) (1,438)Allocate Indirect/Administrative Costs 3,119 3,119ServiceNow (939) (939)Operating Expenses Total 1,510 742

Total Proposed Increase $ 14,753 $ 15,708

The proposed increases are primarily due to the statewide present law adjustment for personal services. These presentlaw adjustments include increases related to the reclassification of positions. There was a full classification reviewconducted in the WWU which resulted in classification changes to more accurately reflect duties performed. There wasalso a market adjustment for one position in the unit.

Revenues

Revenues are derived from monthly billing based on the number of actual warrants issued. Budget authority to pay thecosts is a fixed cost item in state agency budgets.

Proprietary Rates

The figure below shows the rates proposed by the executive for the 2023 biennium. The rates charged in the base yearare shown for comparison purposes. The executive is not proposing rate increases for the warrant writing proprietary fundwhen comparing to the 2021 biennium.



Figure 13


Actual Budgeted Budgeted BudgetedFY 2020 FY 2021 FY 2022 FY 2023

Mailer $0.83386 $0.83386 $0.83386 $0.83386

Non-Mailer $0.36059 $0.36059 $0.36059 $0.36059

Emergency $13.52212 $13.52212 $13.52212 $13.52212

Duplicate $9.01475 $9.01475 $9.01475 $9.01475

Payroll - Printed Warrants $0.15206 $0.15206 $0.15206 $0.15206

External - University System $0.12170 $0.12170 $0.12170 $0.12170

Direct Deposit Mailer $0.99162 $0.99162 $0.99162 $0.99162

Direct Deposit Non-mailer $0.13522 $0.13522 $0.13522 $0.13522UI - Warrant Printing Only $0.11847 $0.11847 $0.11847 $0.11847UI - Direct Deposit $0.02982 $0.02982 $0.02982 $0.02982


Local Government Audit and Reporting – 06042


The Local Government Audit and Reporting Program is responsible for administering the provisions of the Montana SingleAudit Act, which specifies the financial reporting and audit requirements for all Montana local government entities.

The work of the program is mandated primarily in Title 2, Chapter 7, Part 5, and funds 6.00 FTE. The program performsthe following services:

• Receives annual financial reports, budgets, audits and reviews local governments and posts them to thetransparency website for public viewing

• Provides technical assistance on accounting, reporting, auditing, and legal compliance matters to localgovernments and certified public accountants conducting local government audits

• Maintains the roster of independent auditors authorized to conduct local government audits• Maintains the legal compliance supplement for use by independent auditors in conducting local government audits• Verifies that all local governments that are required to have audits do so• Receives and reviews local government audit reports to determine whether the audits have been conducted in

accordance with required standards• Receives and reviews each local government's response to the audit report findings; follows up on corrective plans

as necessary


The following 2023 Biennium Report on Internal Service and Enterprise Funds shows the actual and projected expendituresand related revenues associated with the local government audit and reporting proprietary fund.





$48,000 in FY 2022 and $47,000 in FY 2023. The following figure shows the changes as proposed by the executive as reflected in the budgeting system.

Figure 14

Department of AdministrationState Financial Services DivisionLocal Government Services Fund


Personal ServicesStatewide Present Law Adjustment - Personal Services $ 41,599 $ 42,329Personal Services Total 41,599 42,329

Operating ExpensesStatewide Present Law Adjustment - Fixed Costs 6,962 5,859Statewide Present Law Adjustment - Inflation/Deflation (132) (83)Allocate Indirect/Administrative Costs 384 384ServiceNow (1,301) (1,301)Operating Expenses Total 5,913 4,859


The proposed increases are primarily due to the statewide present law adjustment for personal services. These presentlaw adjustments include increases related to the reclassification of positions. There was a full classification reviewconducted in the Local Government Audit and Reporting Program which resulted in classification changes to moreaccurately reflect duties performed. There was also a supervisory adjustment for one position in the program.

Revenues

The program is funded with enterprise funds, as it serves entities outside of state government. The fund receives revenuesfrom the following:

• A report filing fee as required by 2-7-514, MCA, and defined in ARM 2.4.402. All local government entities thatare required to submit audits pay the filing fee

• As provided by 2-7-503, MCA, a fee is collected from local governments that are required to submit financialreviews. The fee has been adopted in ARM 2.4.410. The current fee in the rule is $75

• A roster fee is collected from certified public accountants for inclusion on a roster of independent auditors whoare authorized to audit local government entities in Montana. The annual auditor roster fee has been adopted asARM 2.4.406. The current fee in the rule is $100 per year

• As provided by 2-7-517, MCA, when a local government entity fails to file a report as required by 2-7-503, MCA,or to make the payment within 60 days as required by 2-7-514, MCA, the department may charge a late paymentpenalty. The penalty has been adopted in ARM 2.4.404 and is currently 10.0% of the filing fee per month

• A fine for failure to file audits or reports required by 2-7-503, MCA, is also provided by 2-7-517, MCA. When alocal government entity fails to file an audit or report within 180 days of the required date, the department mustnotify the entity of the fine due and provide public notice of the delinquent report. The fine has been adopted inARM 2.4.403. The current fine in the rule is $75 per publication

Proprietary Rates

The figure below shows the rates proposed by the executive for the 2023 biennium. The rates charged in the base year areshown for comparison purposes. The executive is not proposing rate increases for the program.


Expenses

The executive proposes increasing expenses in the local government audit and reporting program by approximately


Figure 15


Actual Budgeted Proposed ProposedFY 2020 FY 2021 FY 2022 FY 2023

Fee Description:

Annual revenues equal to or greater than$750,000 but less than $1,000,0000 $550 $550 $550 $550

Annual revenues equal to or greater than$1,000,000 but less than $1,500,0000 $800 $800 $800 $800

Annual revenues equal to or greater than$1,500,000 but less than $2,500,0000 $950 $950 $950 $950

Annual revenues equal to or greater than$2,500,000 but less than $5,000,0000 $1,300 $1,300 $1,300 $1,300



Annual revenues equal to or greater than$50,000,000 $3,000 $3,000 $3,000 $3,000

Local Government Financial Review Fee $75 $75 $75 $75

Roster Fee $100 $100 $100 $100

The funding for this program is provided through an enterprise fund. As such, the legislature does not approve rates orappropriate funds for this proprietary fund.


61010 - Department Of Administration 04-Architecture & Engineering Pgm






BienniumChange

Biennium% Change




Total Funds $4,794,643 $4,877,746 $83,103 1.73 %


Program Description

The Architecture and Engineering Division manages remodeling and construction of state buildings. Its functions include:

• Planning new projects and remodeling projects• Advertising, bidding, and awarding construction contracts• Administering contracts with architects, engineers, and contractors• Disbursing building construction payments• Providing design services for small projects

The division also formulates a long-range building plan for legislative consideration each session. This division operatesunder the authority found in Titles 17 and 18, MCA, as well as other state mandates.

Program Highlights

Architecture and Engineering DivisionMajor Budget Highlights

• The Architecture and Engineering Division’s 2023 bienniumrequested appropriations are approximately $83,000 or 1.7% higherthan the 2021 biennium

• The executive requests a decrease in state special revenue fundingdue to statewide present law adjustments for fixed costs and inflation/deflation

• The executive requests an increase in state special revenue fundingfor licensing a new software system for the facility conditionassessment and indirect costs paid to the Director’s Office





Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 17.50 17.50 17.50 17.50




Total Funds $2,292,121 $2,387,536 $2,407,107 $2,432,522 $2,445,224




The Architecture and Engineering Division is entirely funded in HB 2 with state special revenue funds. The HB 2 modifiedbudget of $2.4 million was 96.0% expended as of the end of FY 2020. This is in line with anticipated expenditures at theend of the fiscal year.



Executive Request

The Architecture and Engineering Division is requesting an increase of approximately $25,000 in FY 2022 and $38,000 inFY 2023 above the FY 2021 base appropriations. The increase is primarily due to a requested software system that willassist with the facility condition assessment mandated in 17-7-202, MCA and indirect costs paid to the Director’s Office.This increase is offset by decreases in statewide present law adjustments for fixed costs and inflation/deflation and thepresent law adjustment for efficiencies gained through using ServiceNow.


Personal services were $1.8 million or 73.6% of total FY 2021 appropriations. The executive proposes a decrease ofapproximately $1,500 in FY 2022 and an increase of $5,000 in FY 2023. The table below shows the total adjustments foreach personal services category.





Architecture and Engineering DivisionFY 2022 Statewide Present Law Adjustment for Personal Services

Expected Changes $ 10,749Management Decisions (12,245)Budget Modifications -Total Present Law Adjustment $ (1,496)

Expected changes partially offset the decrease in management decisions in the statewide present law adjustment forpersonal services. The annualization of the legislatively approved pay plan and statutorily required adjustments forlongevity are the primary drivers for the increase in this category.

The decrease in management decisions is primarily driven by changes in staffing, which includes a retirement and hiring anew employee at a lower pay rate due to experience.

Funding


Department of Administration, 04-Architecture & Engineering PgmFunding by Source of Authority

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

General Fund 0 0 0 0 0 0.00 %

02030 Arch & Engin Construction 4,877,746 0 0 0 4,877,746 100.00 %State Special Total $4,877,746 $0 $0 $0 $4,877,746 100.00 %



Total All Funds $4,877,746 $0 $0 $0 $4,877,746

The Architecture and Engineering Division is funded entirely with state special revenue funds. Funds are transferred fromthe long-range building major repairs fund to the state special revenue fund, which was established for administrativeexpenses related to the support of the state Long-Range Building Program.







Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of Budget2021 Base Budget 0 0 0 0.00 % 2,407,107 2,407,107 4,814,214 98.70 %SWPL Adjustments 0 0 0 0.00 % (61,600) (57,006) (118,606) (2.43)%PL Adjustments 0 0 0 0.00 % 7,821 7,800 15,621 0.32 %New Proposals 0 0 0 0.00 % 79,194 87,323 166,517 3.41 %

Total Budget $0 $0 $0 $2,432,522 $2,445,224 $4,877,746




FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds

DP 1 - Personal Services0.00 0 (1,496) 0 (1,496) 0.00 0 4,942 0 4,942

DP 2 - Fixed Costs0.00 0 (56,496) 0 (56,496) 0.00 0 (59,685) 0 (59,685)

DP 3 - Inflation Deflation0.00 0 (3,608) 0 (3,608) 0.00 0 (2,263) 0 (2,263)

DP 4 - Allocate Department Indirect/Administrative Costs0.00 0 11,616 0 11,616 0.00 0 11,595 0 11,595

DP 5 - ServiceNow0.00 0 (3,795) 0 (3,795) 0.00 0 (3,795) 0 (3,795)

Grand Total All Present Law Adjustments0.00 $0 ($53,779) $0 ($53,779) 0.00 $0 ($49,206) $0 ($49,206)












The executive requests an increase in state special revenue to provide the funding to pay the Department of Administration's indirect costs. These costs are charged to the department's programs for services provided, which include accounting, human resources, and legal support.

DP 5 - ServiceNow -

The executive requests a decrease in state special revenue because of the purchase of ServiceNow licenses and programs for the 2023 biennium. The Architecture and Engineering Division is anticipating operating efficiencies and other savings by using ServiceNow.

New Proposals



FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds

DP 401 - Facility Condition Software0.00 0 79,194 0 79,194 0.00 0 87,323 0 87,323

Total 0.00 $0 $79,194 $0 $79,194 0.00 $0 $87,323 $0 $87,323


DP 401 - Facility Condition Software -

The executive requests an increase in state special revenue for software licensure and subscription costs. The Architectureand Engineering Division is required by statute (17-7-202, MCA) to provide:

• The location, agency, and usage of all of buildings within the state's building inventory• A statewide facility condition assessment for all buildings that are eligible for Long-Range Building Program

funds. The condition assessments must be provided in an itemized format of the deficiencies in every building, acalculation of the deferred maintenance backlog for each building, and the deficiency ratios for each building

There are currently no platforms available within the enterprise services offering or by other agencies that can provide thisfunctionality. The division has selected the Archibus platform as the most economical and efficient tool readily available tomeet the statute’s requirements.


61010 - Department Of Administration 06-General Services Division






BienniumChange

Biennium% Change

Personal Services 10,488,299 10,146,747 (341,552) (3.26)%Operating Expenses 34,553,982 35,196,109 642,127 1.86 %Equipment & Intangible Assets 826,330 826,330 0 0.00 %Transfers 802,897 444,000 (358,897) (44.70)%Debt Service 398,128 432,814 34,686 8.71 %


Proprietary Funds 47,069,636 47,046,000 (23,636) (0.05)%

Total Funds $47,069,636 $47,046,000 ($23,636) (0.05)%


Program Description

The General Services Division (GSD) is composed of two bureaus and one program responsible for providing certaininternal services to government agencies and the public:

• Capitol Facilities Management (CFM) manages the following services for state agencies in the capitol complex andseveral state-owned buildings in the Helena area, either directly or through the administration of service contracts:repair, maintenance, construction, energy consumption, disaster response and recovery, space allocation,security, janitorial, pest control, grounds maintenance, and garbage collection. CFM manages lease negotiationand administration for state agencies throughout the state

• State Print and Mail provides print and mail services to state agencies. Services include internal and external(contracted) printing, marketing and outreach, managed print services, mail preparation, central mail operations,and inter-agency (deadhead) mail. The bureau also operates the United States Post Office in the Capitol

• In addition to the two bureaus, the division manages the state and federal surplus property and recycling programs

Program Highlights

General Services DivisionMajor Budget Highlights

• The General Services Division’s 2023 biennium requestedappropriations are approximately $24,000 or 0.1% lower than the2021 biennium

• The executive requests present law decreases in proprietary fundsbecause of savings related to contracted services expenses

• The executive proposes increases in proprietary funds for office rentand non-office rent

LFD Budget Analysis GSD-1 2023 Biennium




Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 72.35 72.35 72.35 72.35

Personal Services 5,341,139 5,414,030 5,074,269 5,068,853 5,077,894Operating Expenses 16,510,818 17,037,921 17,516,061 17,608,770 17,587,339Equipment & Intangible Assets 101,774 413,165 413,165 413,165 413,165Transfers 390,250 559,897 243,000 243,000 201,000Debt Service 223,555 198,474 199,654 216,407 216,407



Total Funds $22,567,536 $23,623,487 $23,446,149 $23,550,195 $23,495,805




The General Services Division expended 95.5% of its $23.6 million budget as of the end for FY 2020. This is in line withanticipated expenditures at the end of the fiscal year.



Executive Request

The General Services Division is requesting an increase of approximately $104,000 in FY 2022 and $50,000 in FY 2023above the FY 2021 base appropriations. This increase is primarily due to the statewide present law adjustment for fixedcosts, indirect costs paid to the Director’s Office, and property assessment increases. These increases are partially offsetby requested decreases due to savings in contracted services.

Funding





Department of Administration, 06-General Services DivisionFunding by Source of Authority

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

01100 General Fund 0 0 0 0 0 0.00 %

02518 Capitol Security Contract 0 0 0 0 0 0.00 %State Special Total $0 $0 $0 $0 $0 0.00 %


06066 Surplus Property 0 0 1,491,052 0 1,491,052 3.17 %06528 Rent And Maintenance 0 0 23,431,211 0 23,431,211 49.80 %06530 Print & Mail Services 0 0 22,123,737 0 22,123,737 47.03 %


Total All Funds $0 $0 $47,046,000 $0 $47,046,000

Proprietary Funds

The General Service Division is entirely supported through proprietary funds. These funds are discussed in the ProprietaryRates section of the narrative.




Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of Budget2021 Base Budget 0 0 0 0.00 % 23,446,149 23,446,149 46,892,298 99.67 %SWPL Adjustments 0 0 0 0.00 % 370,668 353,277 723,945 1.54 %PL Adjustments 0 0 0 0.00 % (266,622) (303,621) (570,243) (1.21)%New Proposals 0 0 0 0.00 % 0 0 0 0.00 %

Total Budget $0 $0 $0 $23,550,195 $23,495,805 $47,046,000







FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds

DP 1 - Personal Services0.00 0 0 0 (5,416) 0.00 0 0 0 3,625

DP 2 - Fixed Costs0.00 0 0 0 376,094 0.00 0 0 0 349,658

DP 3 - Inflation Deflation0.00 0 0 0 (10) 0.00 0 0 0 (6)

DP 4 - Allocate Department Indirect/Administrative Costs0.00 0 0 0 45,744 0.00 0 0 0 45,744

DP 5 - ServiceNow0.00 0 0 0 (10,486) 0.00 0 0 0 (10,486)

DP 6 - SCEMO Increase0.00 0 0 0 6,367 0.00 0 0 0 6,368

DP 602 - Property Assessments Increase0.00 0 0 0 35,000 0.00 0 0 0 40,000

DP 605 - SBECP Adjustments0.00 0 0 0 16,753 0.00 0 0 0 (25,247)

DP 607 - Contracted Services Decrease0.00 0 0 0 (360,000) 0.00 0 0 0 (360,000)




The executive requests adjustments to annualize personal services costs including FY 2021 statewide pay plan adjustments, benefit rate adjustments, vacancy savings adjustments and longevity adjustments related to incumbents in each position at the time of the personal services snapshot.




The executive requests adjustments for budgetary changes in inflationary or deflationary adjustments of affected expenditure accounts, including food, postage, gasoline, and others.


The executive requests an increase in proprietary funding to provide the funding to pay the Department of Administration's indirect costs. These costs are charged to the department's programs for services provided, which include accounting, human resources, and legal support.

DP 5 - ServiceNow -

The executive requests a decrease in proprietary funding because of the purchase of ServiceNow licenses and programs for the 2023 biennium. The General Services Division is anticipating operating efficiencies and other savings by using ServiceNow.


61010 - Department Of Administration 06-General Services DivisionDP 6 - SCEMO Increase -

The executive requests an increase in proprietary funds for the General Services Division’s portion of the costs paid to the State Continuity and Emergency Office.

DP 602 - Property Assessments Increase -

The executive requests an increase in proprietary funding for assessment paid to the City of Helena.

DP 605 - SBECP Adjustments -

The executive requests an increase in proprietary funding in FY 2022 and a decrease in FY 2023 to adjust for payments

made by Capitol Facilities Management to the state building energy conservation program.

DP 607 - Contracted Services Decrease -

The executive requests a decrease in proprietary funding to reflect savings in contracted services expense. In FY 2021

Capitol Facilities Management took over the state's mechanical contract, which resulted in savings to this program.

Other Issues -

Proprietary Rates

The General Services Division provides the following functions supported by proprietary rates:• Capitol Facilities Management (rent and maintenance)• Print and mail services• Surplus property and recycling

Capitol Facilities Management – Rent and Maintenance (06528)


The Capitol Facilities Management is the custodian of all state property and grounds in the state capitol area, which isthe geographic area within a 10-mile radius of the state Capitol. Services include providing all utilities on the complex(including water, sewer, electricity, natural gas, and garbage collection), locksmith services, repair and maintenance,construction, construction management, grounds maintenance, leasing services, emergency response and management,and security. The bureau manages several service contracts for the capitol complex including security, pest control,mechanical maintenance, janitorial services, elevator repair and maintenance, fire sprinkler systems maintenance, andaccess control.

Operational authority for the bureau is provided by Title 2, Chapter 17, Part 8, Section 811, MCA. The bureau currently has34.00 FTE.


The following 2023 Biennium Report on Internal Service and Enterprise Funds shows the actual and projected expendituresand related revenues associated with the rent and maintenance proprietary fund.





Expenses

The executive proposes to decrease total expenses by approximately $78,000 in FY 2022 and $123,000 in FY 2023 whencompared to the FY 2021 base budget. The following figure shows the changes as proposed by the executive as reflectedin the budgeting system.


General Services DivisionCapitol Facilities Management


Personal ServicesStatewide Present Law Adjustment 39,395 43,401Personal Services Total 39,395 43,401

Operating ExpensesStatewide Present Law Adjustment - Fixed Costs 158,770 146,682Statewide Present Law Adjustment - Inflation (10) (6)Allocate Indirect/Administrative Costs 29,293 29,293ServiceNow (3,253) (3,253)Property Assessment Increase 35,000 40,000Contracted Services Decrease (360,000) (360,000)State Continuity and Emergency Management Fee Increase 6,367 6,368Operating Expenses Total (133,833) (140,916)

TransfersState Building Energy Conservation Program Adjustment - (42,000)Transfers Total - (42,000)

Debt ServiceState Building Energy Conservation Program Adjustment 16,753 16,753Debt Service Total 16,753 16,753

Total Proposed Decrease (77,685) (122,762)

The executive proposes increased expenditures due, in part, to the statewide present law adjustment for fixed costs. Capitol Facilities Management is responsible for paying the property insurance on the buildings within the capitol complex. The increase in fixed costs for this program are primarily because of the rate increase from Risk Management and Tort Defense.

The proposed increases are more than offset by proposed decreases in expenditures. The most significant decrease is due to contracted services. In FY 2021, CFM took over the state's mechanical contract, which resulted in savings of $360,000 each fiscal year.

Revenues

Revenues are based on square footage rental rates charged for office and non-office space billed to agencies occupying space in state owned buildings overseen by the Department of Administration.


61010 - Department Of Administration 06-General Services DivisionProprietary Rates

Rent is based on the number of square feet occupied and is assessed to each agency in the buildings controlled by the Department of Administration. The rates are established to cover the cost of personal services, operating expenses, maintenance and equipment. Grounds maintenance is included in the rate, with one exception.

The figure below shows the rates proposed by the executive for the 2023 biennium. The rates charged in the 2021 biennium are shown for comparison purposes. The executive is proposing rate increases of approximately 6.0% for office rent and 49.0% for non-office rent when compared to the base year of FY 2021.

Figure 18

Requested Rates for Internal Service FundsFee/Rate Information

Actual Actual Projected ProjectedFY 2020 FY 2021 FY 2022 FY 2023

Fee Description:Office Rent (per sq. ft.) $ 10.540 $ 10.736 $ 11.357 $ 11.369Non-office Rent (per sq. ft.) $ 5.546 $ 5.546 $ 8.247 $ 8.259Grounds Maintenance (per sq. ft.) $ 0.615 $ 0.615 $ 0.615 $ 0.615Project Mgmt. (In-house) 15% 15% 15% 15%Project Mgmt. (Consultation) Actual Cost Actual Cost Actual Cost Actual CostState Employee Access ID Card Actual Cost Actual Cost Actual Cost Actual Cost


Print and Mail Bureau - 06530


The State Print and Mail Bureau provides printing and mail services to all agencies within state government. The bureauhas seven components: 1) internal printing; 2) external (contracted) printing; 3) managed print; 4) mail preparation; 5)central mail operations; 6) inter-agency (deadhead) mail; and 7) the postal station in the Capitol. All printing or purchasingof printing is requested through print and mail services, which determines the most cost-effective method of projectcompletion. Approximately 47.7% of printing expenditures are procured through commercial vendors.

Section 18-7-101, MCA, requires the Department of Administration to supervise and attend to all public printing withinthe state and to contract for any printing used by the state. Section 2-17-301, MCA, charges the department with theresponsibility of administering the state managed print program. Section 2-17-301, MCA, also requires the department tomaintain and supervise any central mailing messenger service.

The State Print and Mail Bureau has authority for 32.60 FTE.


The following 2023 Biennium Report on Internal Service and Enterprise Funds shows the actual and projected expendituresand related revenues associated with the print and mail services proprietary fund.



Expenses

The executive proposes to increase expenditures by approximately $186,000 in FY 2022 and $177,000 in FY 2023 when compared to the FY 2021 base year. The following figure shows the changes as proposed by the executive as reflected in the budgeting system.



Figure 19

Department of AdministrationGeneral Services Division

Print and Mail ServicesProposed Changes for the 2023 Biennium in the Budgeting System

FY 2022 FY 2023Personal ServicesStatewide Present Law Adjustment 32,414 36,157Personal Services Total 32,414 36,157


Total Proposed Increase 185,594 176,619

Increases are primarily due to statewide present law adjustments for fixed costs. State Information Technology ServicesDivision (SITSD) costs are increasing by approximately $82,000 each fiscal year. The State Print and Mail Bureau isenhancing its print management information system and it is anticipated that more SITSD services will be required.

Revenues

All state agencies in Helena use the services of the State Print and Mail Bureau depending on their printing and mail needs.Printing revenue is based on the actual type and volume of printing provided and mail services is based on agency servicefrequency.

Proprietary Rates

All print and mail services projects are unique, and the State Print and Mail Bureau has many rates to provide services toagencies. Direct and administrative overhead is allocated to each program, and costs are recovered by charging for eachunit of service provided. External printing and the managed print program recover costs by charging a percentage markupon the invoice for the printing job and/or multi-function device.

The figure below shows the rates proposed by the executive for the 2023 biennium. The rates charged in the 2021 bienniumare shown for comparison purposes. The executive is proposing to keep the majority of the rates unchanged. The only ratethat the executive is proposing to increase is the interagency mail rate. This would be an increase of 3.8% when comparedto the base year of FY 2021 in order to adjust for an increase in personal services.



Figure 20



Fee Description:

Internal PrintingImpressions Cost + 25% Cost + 25% Cost + 25% Cost + 25%Large Format Color per ft. Cost + 25% Cost + 25% Cost + 25% Cost + 25%Ink Cost + 25% Cost + 25% Cost + 25% Cost + 25%Bindery work Cost + 25% Cost + 25% Cost + 25% Cost + 25%Variable data printing Cost + 25% Cost + 25% Cost + 25% Cost + 25%Pick and Pack Fulfillment $1.00 $1.00 $1.00 $1.00Overtime $30.00 $30.00 $30.00 $30.00Desktop $75.00 $75.00 $75.00 $75.00Scan Cost + 25% Cost + 25% Cost + 25% Cost + 25%IT Programming $95.00 $95.00 $95.00 $95.00File Transfer $25.00 $25.00 $25.00 $25.00Mainframe Print $0.071 $0.071 $0.071 $0.071Warrant Printing $0.250 $0.250 $0.250 $0.250CD/DVD duplicating Cost + 25% Cost + 25% Cost + 25% Cost + 25%Pre-Press work Cost + 25% Cost + 25% Cost + 25% Cost + 25%Inventory Mark Up 20.00% 20.00% 20.00% 20.00%

External PrintingPercent of Invoice Mark-Up 8.8% 8.8% 8.8% 8.8%

Managed PrintPercent of Invoice Mark-Up 15.9% 15.9% 15.9% 15.9%

Mail PreparationTabbing $0.023 $0.023 $0.023 $0.023Labeling $0.023 $0.023 $0.023 $0.023Ink Jet $0.036 $0.036 $0.036 $0.036Inserting $0.045 $0.045 $0.045 $0.045Waymark $0.069 $0.069 $0.069 $0.069Permit mailings $0.069 $0.069 $0.069 $0.069

Mail OperationsMachinable $0.043 $0.043 $0.043 $0.043Non-Machinable $0.110 $0.110 $0.110 $0.110Seal Only $0.020 $0.020 $0.020 $0.020Postcards $0.070 $0.070 $0.070 $0.070Certified Mail $0.620 $0.620 $0.620 $0.620Registered Mail $0.614 $0.614 $0.614 $0.614International Mail $0.510 $0.510 $0.510 $0.510



Flats $0.150 $0.150 $0.150 $0.150Priority $0.614 $0.614 $0.614 $0.614Express Mail $0.614 $0.614 $0.614 $0.614USPS Parcels $0.510 $0.510 $0.510 $0.510Insured mail $0.614 $0.614 $0.614 $0.614Media Mail $0.320 $0.320 $0.320 $0.320Standard Mail $0.200 $0.200 $0.200 $0.200Postage Due $0.061 $0.061 $0.061 $0.061Fee Due $0.061 $0.061 $0.061 $0.061Tapes $0.245 $0.245 $0.245 $0.245Express Services $0.500 $0.500 $0.500 $0.500Mail tracking $0.250 $0.250 $0.250 $0.250Cass letters/postcards $0.047 $0.047 $0.047 $0.047Cass flats $0.100 $0.100 $0.100 $0.100Flat sorter $0.250 $0.250 $0.250 $0.250

Interagency MailDollars-yearly $362,325 $362,325 $376,025 $376,025

Postal Contract (Capitol)Dollars-yearly $38,976 $38,976 $38,976 $38,976


Surplus Property – 06066


The surplus property and recycling program administers the sale of surplus property no longer needed by agencies. Thisproperty is distributed either to state agencies or other eligible organizations.

Section 18-4-221, MCA, requires the department to sell, trade, or otherwise dispose of surplus supplies belonging to thestate. The program sells property through online auction, fixed-price warehouse sales, public auction, and garage sales.Program services include extending the life of state property by providing a mechanism to transfer surplus property betweenagencies, providing accountability in the disposal of surplus state property, providing agencies with a surplus equipmentpick up service, and providing a screening service to locate federal surplus property for state and local agencies.

The program has authority for 5.75 FTE.


The following 2023 Biennium Report on Internal Service and Enterprise Funds shows the actual and projected expendituresand related revenues associated with the surplus property proprietary fund.





The executive proposes to decrease expenditures by approximately $4,000 in FY 2022 and $4,000 in FY 2023 whencompared to the FY 2021 base year. The following figure shows the changes as proposed by the executive as reflected inthe budgeting system.


General Services DivisionSurplus Property


Personal ServicesStatewide Present Law Adjustment (77,225) (75,933)Personal Services Total (77,225) (75,933)


Total Proposed Decrease (3,863) (4,201)

The proposed decrease is primarily due to the statewide present law adjustment for personal services. This decrease ismainly because of the inclusion of funding for a modified position in the 2021 biennium personal services. The snapshotfor personal services does not include funding for modified positions, so personal services appropriations for the 2023biennium is reduced.

The proposed decreases are partially offset by the statewide present law adjustment for fixed cost. This increase isprimarily due to increases in rent. Prior to FY 2020, surplus property paid their utilities and contracted their own janitorialservices. Any needed repairs were contracted and paid directly by surplus property. It was determined by the Departmentof Administration that it would be better to have regular maintenance on the building performed by CFM because of theage and condition of the building. CFM assumed all utility bills, janitorial services, security, and grounds and buildingmaintenance. In FY 2020 surplus property began paying the non-office rate to CFM.

Revenues

The surplus property and recycling program is an enterprise fund which sells property to the general public. The programoperates by charging up to $750 plus 5.0% per item sold. The fee was raised from $500 to $750 at the beginning of FY2020. There is some growth in the fund balance that occurs when taking into account nonbudgeted inventory adjustments.According to the department, the program needs to increase its working capital for future expenses. The lease on thecurrent property expires in four years. If the lease is not extended, the program will need to acquire a new facility.

Proprietary Rates

The surplus property and recycling program is funded with an enterprise fund, which is a type of a proprietary fund. Assuch, the legislature does not appropriate the funds or approve the rates for the program. Instead, the legislature reviewsthe report for the enterprise fund and identifies concerns with the financial position of the fund.


Expenses


Figure 22



Fee Description:

The State Surplus handling fees are: If property is sold for less than $750, theprogram retains the proceeds. The program retains $750 plus 5.0% and unusualexpenses for property sold for more than $750. The Federal Surplus PropertyProgram fees are an allocation of freight expenses and 14.0% of acquisitioncosts. This is included in the Federal Plan of Operation, which has beenapproved by the Federal General Services Administration.


61010 - Department Of Administration 07-State Information Technology Division






BienniumChange

Biennium% Change

Personal Services 2,524,275 847,274 (1,677,001) (66.43)%Operating Expenses 4,880,102 400,457 (4,479,645) (91.79)%Equipment & Intangible Assets 201,000 0 (201,000) (100.00)%

Total Expenditures $7,605,377 $1,247,731 ($6,357,646) (83.59)%

General Fund 6,709,153 385,661 (6,323,492) (94.25)%State/Other Special Rev. Funds 896,224 862,070 (34,154) (3.81)%

Total Funds $7,605,377 $1,247,731 ($6,357,646) (83.59)%

Total Ongoing $7,605,377 $1,247,731 ($6,357,646) (83.59)%Total OTO $0 $0 $0 0.00 %

Program Description

The State Information Technology Services Division (SITSD) is primarily a proprietary program that provides centralcomputing, data network, and telecommunications services to more than 100 government customers throughout the state.SITSD manages two data centers, a statewide data network, and provides information technology (IT) services to allbranches of state government, the Office of Public Instruction, and various city and county municipalities.

Program Highlights

State Information Technology Services DivisionMajor Budget Highlights

• The State Information Technology Division’s 2023 bienniumrequested appropriations are approximately $6.3 million or 83.6%lower than the 2021 biennium

• The proposed decreases in general fund are primarily due toexecutive moving the Montana cybersecurity enhancement projectfrom HB 2 to the proprietary rates

• The majority of the funding in the State Information TechnologyServices Division is from non-budgeted proprietary funds

◦ The executive is proposing to increase state agency costsby $8.0 million in FY 2022 and $8.5 million in FY 2023. Thelegislature approves the rates for the SITSD internal servicefund in HB 2

◦ The executive is proposing a new eGovernment servicesenterprise fund. The legislature reviews enterprise funds



The following table compares FY 2020 actual expenditures to the 2021 biennium appropriated budget and the 2023 biennium budget request by type of expenditure and source of funding.


Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 14.49 14.49 14.49 14.49

Personal Services 784,738 1,082,426 1,441,849 423,114 424,160Operating Expenses 2,325,182 2,525,494 2,354,608 200,476 199,981Equipment & Intangible Assets 200,979 201,000 0 0 0

Total Expenditures $3,310,899 $3,808,920 $3,796,457 $623,590 $624,141

General Fund 2,864,805 3,362,561 3,346,592 192,721 192,940State/Other Special Rev. Funds 446,094 446,359 449,865 430,869 431,201

Total Funds $3,310,899 $3,808,920 $3,796,457 $623,590 $624,141

Total Ongoing $3,310,899 $3,808,920 $3,796,457 $623,590 $624,141Total OTO $0 $0 $0 $0 $0



The State Information Technology Service Division is funded in HB 2 with general fund and state special revenue. The HB2 modified budget of $3.8 million was 86.9% expended as of the end of FY 2020. General fund expenditures comprisednearly the entire amount of that was under expended.

The primary contributor to the lower percentage expended was the Montana cybersecurity enhancement project. Thisproject, approved by the 2019 Legislature, was funded with approximately $3.2 million each fiscal year. In FY 2020, SITSDexpended $2.7 million or 84.4% of its appropriation. There are several reasons for the remaining authority, which includenot increasing salaries for cybersecurity staff in FY 2020 as planned and delayed hiring of positions to not overload existingstaff with training. There were also impacts from COVID-19 which included decreased travel and training and not hiring anapprentice position because recruitment on college campuses was impacted.



Executive Request

The State Information Technology Services Division is requesting a decrease of approximately $3.2 million in FY 2022 and$3.2 million in FY 2023 compared to the FY 2021 base appropriations. The decrease is primarily due to the request tomove the Montana cybersecurity enhancement project from HB 2 to the proprietary rates. This transfer will be discussedin further detail in the Proprietary Rates section of the narrative.


Personal services were $1.4 million or 38.0% of total FY 2021 appropriations. The executive proposes a statewidepresent law decrease of approximately $158,000 in FY 2022 and $156,000 in FY 2023. The table below shows the totaladjustments for each personal services category.





State Information Technology Services DivisionFY 2022 Statewide Present Law Adjustment for Personal Services

Expected Changes $ (11,036)Management Decisions (146,934)Budget Modifications -Total Present Law Adjustment $(157,970)

Management decisions are mainly causing the decrease in the statewide present law adjustment for personal services.HB 2 included funding for 10.00 FTE as part of the cybersecurity enhancement project. Of the 10.00 FTE, 6.00 FTE werevacant at the time of the personal services snapshot. This is primarily driving the decrease in personal services.

Funding


Department of Administration, 07-State Information Technology DivisionFunding by Source of Authority

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

01100 General Fund 385,661 0 0 0 385,661 0.26 %

02594 Statewide 911 Services Admin 862,070 0 0 0 862,070 2.67 %02997 911 Distribution 0 0 0 23,590,500 23,590,500 73.00 %02998 911 Grants 0 0 0 7,863,500 7,863,500 24.33 %

State Special Total $862,070 $0 $0 $31,454,000 $32,316,070 22.01 %

03276 DES Project Grants 0 0 0 0 0 0.00 %03254 Coronavirus Relief Fund DOA SI 0 0 0 0 0 0.00 %


06522 ISD Proprietary 0 0 109,838,991 0 109,838,991 96.27 %06004 Electronic Government Services 0 0 4,256,068 0 4,256,068 3.73 %


Total All Funds $1,247,731 $0 $114,095,059 $31,454,000 $146,796,790

HB 2 Appropriations

General fund appropriations provide funding for the administrative portion of the Public Safety Bureau. State specialrevenue appropriations provide support for the administrative costs related to 911 services. Fees are imposed on a permonth, per access line basis for each telephone subscriber in the state using either landline or wireless services.


The majority of the functions within SITSD are funded with non-budgeted proprietary funds. The executive has an internalservice fund that receives revenues from information technology costs charged to state agencies. The executive also hasa newly created enterprise fund for eGovernment Services. These proprietary funds are discussed in more detail in theProprietary Rates section of the narrative.


The majority of the state special revenue funding in the division is statutorily appropriated for 911 services. 911 surchargesare collected by the state and statutorily appropriated for distribution to counties and telecommunication providers.






Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of Budget2021 Base Budget 3,346,592 3,346,592 6,693,184 1,735.51 % 3,796,457 3,796,457 7,592,914 608.54 %SWPL Adjustments (129,627) (128,780) (258,407) (67.00)% (153,533) (152,350) (305,883) (24.52)%PL Adjustments (3,479) (3,479) (6,958) (1.80)% 1,431 1,427 2,858 0.23 %New Proposals (3,020,765) (3,021,393) (6,042,158) (1,566.70)% (3,020,765) (3,021,393) (6,042,158) (484.25)%

Total Budget $192,721 $192,940 $385,661 $623,590 $624,141 $1,247,731




FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds

DP 1 - Personal Services0.00 (127,736) (30,234) 0 (157,970) 0.00 (127,037) (29,259) 0 (156,296)

DP 2 - Fixed Costs0.00 (1,620) 6,328 0 4,708 0.00 (1,573) 5,689 0 4,116


DP 4 - Allocate Department Indirect/Administrative Costs0.00 (3,479) 4,910 0 1,431 0.00 (3,479) 4,906 0 1,427

Grand Total All Present Law Adjustments0.00 ($133,106) ($18,996) $0 ($152,102) 0.00 ($132,259) ($18,664) $0 ($150,923)









LFDCOMMENT

61010 - Department Of Administration 07-State Information Technology DivisionDP 3 - Inflation Deflation -



The executive requests a decrease in general fund and an increase in state special revenue to provide the funding to pay the Department of Administration's indirect costs. These costs are charged to the department's programs for services provided, which include accounting, human resources, and legal support.

New Proposals



FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds

DP 703 - Move SITSD Cybersecurity to Proprietary0.00 (3,020,765) 0 0 (3,020,765) 0.00 (3,021,393) 0 0 (3,021,393)

Total 0.00 ($3,020,765) $0 $0 ($3,020,765) 0.00 ($3,021,393) $0 $0 ($3,021,393)


DP 703 - Move SITSD Cybersecurity to Proprietary -

The executive is requesting a decrease in general fund to move the State Information Technology Services Division’scybersecurity costs to proprietary rates in the 2023 biennium.

The 2019 Legislature approved $3.2 million general fund in HB 2 for the Montana cybersecurityenhancement project. This included funding of $1.0 million for 10.00 FTE. HB 2 included language stating,“It is the intent of the legislature that funding for the Montana Cybersecurity Enhancement Project be moved

to the State Information Technology Services Division’s proprietary rates in the 2023 biennium if the project is successful.”The executive is currently proposing moving the funding to the proprietary rates, but they are not proposing moving FTE.The December 15th submission of the Governor’s budget will include a move of 10.00 FTE to the proprietary fund.

Other Issues -

Proprietary Rates

The State Information Technology Services Division provides the following functions with proprietary funds:

• State Information Technology Services• eGovernment Services

SITSD Proprietary Fund - 06522


SITSD is a proprietary program that provides central computing, data network, and telecommunications services to morethan 100 government customers throughout the state. SITSD manages two data centers, a statewide data network, andprovides information technology (IT) services to all branches of state government, the Commissioner of Higher Education,and various city and county municipalities. Responsibilities include:



• Information Systems Security◦ Manages solutions and services to ensure continuity of enterprise operations and security of data through

risk assessment and mitigation, planning and monitoring, detailed recovery planning, incident response,and periodic testing

◦ Coordinates security policies and procedures• Network Technology Services

◦ Manages the statewide network which connects 22,000 devices at over 600 locations andprovides prioritized voice, video, data, and wireless services

◦ Develops and implements network solutions that support customer needs for bandwidth and connectivity• Enterprise Technology Services

◦ Designs, implements and manages shared IT hardware and software infrastructure in a highly-efficientvirtualized environment

◦ Provides platforms for application and database hosting services using enterprise-class computing andstorage capacity

• Enterprise Support Services◦ Manages the service desk to assist customers regarding hardware and software applications, including

email and telecommunications◦ Manages desktop lifecycle for customers, including software and hardware ordering, deployment,

updates, remote control, and disposal• Montana Data Centers

◦ Manages state data center facilities in Helena (primary) and Miles City (disaster recovery)◦ Maintains the reliability, efficiency, security, and availability of computer processing and storage for all

customers• Application Technology Services

◦ Supports the state’s mt.gov websites◦ Assists customers with designing and deploying customized applications and online services, including

eGovernment applications• Public Safety Communications Services

◦ Supports the Statewide Interoperability Governing Board and 9-1-1 Advisory Council in the areas ofgovernance, policy, and planning

◦ Manages federal and state funding sources to support maintenance of public safety communicationssystems and equipment

◦ Manages statewide licenses for mutual aid frequencies• Strategic Planning Services

◦ Ensures IT operations are conducted in an organized, deliberative, and cost-effective manner throughplanning, periodic performance reports, and oversight of agency IT procurements and plans

◦ Publishes the State IT Strategic Plan and Biennial Report• Financial Management Services

◦ Manages budget, billing, acquisition, and contract management services for SITSD◦ Sets rates and manages the revenues and expenses for more than 200 enterprise services provided to

state and local government IT customers• State IT Project Management Services

◦ Provides expertise, assistance, tools, methodologies, and training to customers to ensure IT projects areconducted in an organized, deliberative, and cost-effective manner


The following 2023 Biennium Report on Internal Service and Enterprise Funds shows the actual and projected expendituresand related revenues associated with the SITSD proprietary fund.





Expenses

The executive proposes to increase total expenses by approximately $8.2 million in FY 2022 and $7.4 million in FY 2023when compared to the FY 2021 base budget. The following figure shows the changes as proposed by the executive asreflected in the budgeting system.


State Information Technology Services DivisionState Information Technology Services Division Fund


Personal ServicesStatewide Present Law Adjustment - Personal Services $ 1,191,301 $ 1,260,635Adjust SITSD Proprietary (550,000) (620,000)Move SITSD Cybersecurity to Proprietary 860,765 861,393Personal Services Total 1,502,066 1,502,028

Operating ExpensesStatewide Present Law Adjustment - Fixed Costs 182,168 116,391Statewide Present Law Adjustment - Inflation/Deflation (1,747) (1,096)Allocate Indirect/Administrative Costs 55,606 55,606Continuity and Emergency Management Increase 16,373 16,376Adjust SABHRS Proprietary 5,849,775 6,349,775Move SITSD Cybersecurity to Proprietary 2,160,000 2,160,000Operating Expenses Total 8,262,175 8,697,052

Debt ServiceAdjust SABHRS Proprietary (1,590,000) (2,780,000)Debt Service Total (1,590,000) (2,780,000)

Total Proposed Increase $ 8,174,241 $ 7,419,080

There are three primary factors contributing to the increase in expenses, which include:

• Statewide present law adjustment for personal services• Adjusting the SABHRS proprietary fund expenses• Moving the Montana cybersecurity enhancement project funding from general fund in HB 2 to non-budgeted

proprietary funds

The statewide present law adjustment for personal services increases appropriations by $1.2 million in FY 2022 and $1.3million in FY 2023. Increases in personal services are primarily due to the legislatively approved pay plan and managementdecisions regarding pay adjustments. Increases in pay were the result of market adjustments, reclassifications, andprogression in training assignments.

There is a present law adjustment that increases appropriations by $3.7 million in FY 2022 and $2.9 million in FY 2023.This adjustment decreases personal services and debt service and increases operating expenses. This adjustment wasmade to align expenses with established rates and budgetary need for SITSD.

There is a new proposal that moves the Montana cybersecurity enhancement project from HB 2 to the proprietary rates.This proposal increases appropriations by $3.0 million each fiscal year. The 2019 Legislature approved this project



in HB 2 and included language stating, “It is the intent of the legislature that funding for the Montana CybersecurityEnhancement Project be moved to the State Information Technology Services Division’s proprietary rates in the 2023biennium if the project is successful.” The executive is proposing reducing general fund appropriations in HB 2 and creatinga cybersecurity enterprise rate that will be charged to agencies.

Revenues

Budget authority to pay the SITSD allocation is a fixed cost item in each agency’s budget. The statewide fixed costs forinformation technology included in the executive proposal are $8.0 million higher in FY 2022 and $8.5 million higher in FY2023 when compared to the FY 2021 base year. This includes a new proposal that moves $3.0 million in each fiscal yearfor the Montana cybersecurity enhancement project from HB 2 to the proprietary rates. The table below shows the changesrequested from the FY 2021 base appropriation.



The State Information Technology Services Division has revised the rate structure for the 2023 biennium. In the 2021biennium there were three established rates:



• Enterprise rates:◦ Enterprise service allocation (ESA)◦ Microsoft enterprise agreement

• Service rates:◦ TechBudget

In the 2023 biennium, there will be five established rates:

• Enterprise Rates:◦ Enterprise service allocation◦ Microsoft enterprise agreement◦ Cybersecurity enterprise rate◦ ServiceNow enterprise agreement

• Service rates:◦ TechBudget

The table below provides a comparison of the 2023 biennium rates to the 2021 biennium rates (note: the FY 2021 totalfor the cybersecurity enterprise rate is the base appropriation of $3.2 million included in HB 2 less the statewide presentlaw adjustment for personal services). The table below shows the FY 2021 base year information technology costs to therequested FY 2022 and FY 2023 costs. The executive is requesting a $10.5 million or 10.8% increase when comparingthe FY 2021 base year to the 2023 biennium.


State Information Technology Services DivisionState Agency Fixed Costs for Information Technology by Rate Category

FY 2021 FY 2022 FY 2023Enterprise Services Allocation $ 9,438,887 $ 5,753,508 $ 5,753,508Microsoft Enterprise Agreement 4,523,966 4,090,531 4,117,370Cybersecurity Enterprise Rate* 3,020,765 8,744,581 8,744,581ServiceNow Enterprise Agreement - 2,405,133 2,405,133Service Rates 31,379,467 32,387,080 32,806,120Total $ 48,363,084 $ 53,380,833 $ 53,826,712

*The FY 2021 total for the cybersecurity enterprise rate is the base appropriation of $3.2 millionincluded in HB 2 less the statewide present law adjustment for personal services

The following sections will provide additional information on each of these rates.

Enterprise Service Allocation

Enterprise services are information technology services and staff time provided by SITSD that are used by and benefit the entire enterprise (all state agencies). State agencies are charged for their portion of the enterprise service allocation based on the active directory within an agency. The enterprise service allocation totaled $9.4 million in the FY 2021 base year. The executive is proposing that the ESA rate will be $5.8 million in each fiscal year of the 2023 biennium, which is a 39.0%decrease in the rate. However, according to SITSD, $6.2 million per fiscal year was moved from the enterprise service allocation to the newly created cybersecurity enterprise rate. When adjusting for this change, the FY 2021 base would have been $3.2 million and there is a proposed increase of $2.5 million each fiscal year. This is a 78.3% increase over the biennium.


61010 - Department Of Administration 07-State Information Technology DivisionMicrosoft Enterprise Agreement

The Microsoft enterprise agreement is primarily the cost of licensing agreement for Microsoft services. The Microsoft enterprise agreement totaled $4.5 million in the FY 2021 base year. The executive is proposing that the ESA rate will be$4.1 million in each fiscal year of the 2023 biennium, which is a 9.3% decrease in the rate over the biennium.

Cybersecurity Enterprise Rate

The Montana cybersecurity enhancement project was funded in HB 2 with $3.2 million general fund in each fiscal year of the 2021 biennium. The 2019 Legislature included language in HB 2 that stated, “It is the intent of the legislature that funding for the Montana Cybersecurity Enhancement Project be moved to the State Information Technology Services Division’s proprietary rates in the 2023 biennium if the project is successful.” SITSD has included a new proposal that reduces the general fund appropriation in HB 2 and increases proprietary funding.

The proposed cybersecurity enterprise rate is $8.7 million in each year of the biennium. According to SITSD, this is comprised of $6.2 million transferred from the enterprise service allocation and $2.5 million from HB 2. The table below provides a breakdown of the costs associated with each of the items included in the rate. The rate show below is for one fiscal year.

Figure 26

Department of AdministrationState Information Technology Services Division

Cybersecurity Enterprise RateCost per Fiscal Year in the 2023 Biennium

Application Development $ 24,000Cybersecurity Enterprise Services - ESP 1,010,155Cybersecurity Enterprise Services - IRTS 1,599,872Directory Services - Identity Management 167,068eGov Identity Management 56,642Expert Time - AHS 336,000Expert Time – Enterprise Security Risk Management 514,775Expert Time – Forensic Investigations or Technical Security 614,788Expert Time - NOSC 924,696Expert Time - Supervision CISO 458,383File and Object Storage 18,766Live Storage 94,722MFA Service 931,101Network Security 785,633Software Configuration Management 95,314Splunk Service 812,462Virtual Server 300,205Total $ 8,744,581

ServiceNow Enterprise Agreement

The ServiceNow enterprise agreement is a new enterprise rate for the 2023 biennium. The costs to agencies for theServiceNow enterprise agreement totals $2.4 million in FY 2022 and $2.4 million in FY 2023. This cost is allocated toagencies is based on FTE, excluding modified positions and FTE who only use the human resources function to enter time.

ServiceNow is intended to improve workflows for agencies, which leads to operating efficiencies and other cost savings foragencies. Some functions of ServiceNow include:



• Decreasing call volumes and quickly answering customer questions by using virtual agents• Digitizing professional licensing to reduce in person requests, decrease call volume, and eliminate manual effort• Scheduling in person meetings and requests to limit exposure by waiting in line• Improving onboarding and communication with new employees working remotely• Integrating with applications like Microsoft Teams, Zoom, and DocuSign for improved automation• Quickly collaborating and responding to complex security issues caused by employees working remotely

The Office of Budget and Program Planning in the Governor’s Office worked with agencies to identify operating efficienciesand other cost savings that may occur as a result of using ServiceNow. The table below shows the savings identifiedby agency and fund type over the 2023 biennium. Savings identified total $1.8 million in FY 2022 and $1.8 million in FY2023. As agencies continue to implement ServiceNow into their business processes additional operational savings may beidentified in future fiscal years.




ServiceNow Cost Savings Identified by State AgenciesHB 2, Non-Budgeted Proprietary, and Statutory Appropriations

FY 2022 FY 2023General FundDepartment of Justice $ (50,460) $ (50,460)School for the Deaf and Blind (15,698) (15,698)Montana State Library (3,930) (3,930)Department of Natural Resources and Conservation (57,768) (57,768)Department of Revenue (9,024) (9,024)Department of Administration (11,315) (11,315)Office of State Public Defender (50,246) (50,246)Department of Corrections (235,587) (235,587)Department of Commerce (2,945) (2,945)Department of Public Health and Human Services (240,413) (240,413)General Fund Total (677,386) (677,386)

State Special RevenueDepartment of Justice (90,330) (90,330)Public Service Commission (4,250) (4,250)Department of Transportation (391,941) (391,941)Department of Natural Resources and Conservation (38,997) (38,997)Department of Administration (11,559) (11,559)Department of Agriculture (21,200) (21,200)Department of Commerce (11,887) (11,887)Department of Public Health and Human Services (40,177) (40,177)State Special Revenue Total (610,341) (610,341)

Federal Special RevenueDepartment of Natural Resources and Conservation (5,090) (5,090)Department of Commerce (2,345) (2,345)Department of Public Health and Human Services (262,620) (262,620)Federal Special Revenue (270,055) (270,055)

Proprietary FundsSecretary of State (10,070) (10,070)Office of Public Instruction (33,997) (33,997)Department of Justice (4,143) (4,143)Department of Environmental Quality (77,794) (77,794)Department of Administration (37,231) (37,231)Department of Corrections (17,810) (17,810)Department of Commerce (21,417) (21,417)Department of Labor and Industry (49,842) (50,158)Propritarty Funds Total (252,304) (252,620)

Grand Total $ (1,810,086) $ (1,810,402)



Service Rates

TechBudget is an activity-based budgeting model that allocates costs to individual services. SITSD’s TechBudget modelemploys a separate unit for each service. The unit is the increment in which the agency buys the service or product.SITSD provides more than 200 services, resulting in a wide variety of units. The allocation of units of service is by agencyplanned utilization. The table below shows the FY 2021 base budget, requested changes for FY 2022 and FY 2023, andthe change between the 2023 biennium and the base year. The executive is requesting a $2.4 million or 3.9% increasewhen comparing the FY 2021 base year to the 2023 biennium.



Proprietary Rates

For the 2023 biennium the following rates are proposed by the executive. The rates charged in the base year are shownfor comparison purposes.


LFDCOMMENT

LFDCOMMENT


Figure 28



Fee Description:30-day workingcapital reserve

30-day workingcapital reserve




The legislature may wish to consider adding the following language to HB 2:

The 30-day working capital reserve used to establish state information technology services division rates forstate agencies included in HB 2 is based on personal services of $17,722,437 in FY 2022 and $17,722,399

in FY 2023, operating expenses of $34,843,778 in FY 2022 and $35,278,655 in FY 2023, equipment and intangible assetsof $370,861 in FY 2022 and $370,861 in FY 2023, and debt service of $2,360,000 in FY 2022 and $1,170,000 in FY 2023.The state information technology services division shall report to the legislative finance committee at its June 2021 meetingon how it implemented the state agency rates for information technology. The state information technology services divisionshall also report any adjustments to state agency rates for information technology or changes of 5.0% or greater to eachexpenditure category at each subsequent meeting of the legislative finance committee.

The legislature may wish to consider adding the following language to HB 2:

The office of budget and program planning shall establish a separate appropriation on the statewideaccounting, budgeting, and human resource system for the funding included in each executive branch

agency's budget to pay fixed cost allocations to the state information technology services division of the department ofadministration. The appropriations must be designated as restricted.

eGovernment Services - 06004


Digital government services include permitting, registration, licensing, inspections, financial reconciliation, reporting, pointof sale card swipe devices and mobile payments, monthly billing, and management and collection of customer accounts.Currently, Montana Interactive operates and maintains more than 400 digital government services for Montana agenciesand local governments.

The current contract with Montana Interactive will expire on December 31, 2020. Upon expiration, the transaction fund thatsupports digital government will transfer to the Department of Administration. The State Information Technology ServicesDivision has established an enterprise fund for the management of these fees.



61010 - Department Of Administration 07-State Information Technology DivisionProprietary Program Narrative

The following 2023 Biennium Report on Internal Service and Enterprise Funds shows the actual and projected expenditures and related revenues associated with the eGovernment services proprietary fund.



Fees earned will be used to help offset the costs for a new vendor, as well as for costs to administer the program and otherexpenses associated with the development of enterprise electronic government services.

Revenues

Revenues will be earned through a fee that is charged to each eGovernment transaction.

Proprietary Rates

Transaction fees can either be a set rate per transaction or a percentage of the total transaction costs. Once the StateInformation Technology Services Division takes over the administration of the eGovernment program, both possibilities willbe analyzed to determine the best rate to use.

The funding for this program is provided through an enterprise fund. As such, the legislature does not approve rates orappropriate funds for this proprietary fund.


Expenses

61010 - Department Of Administration 14-Banking and Financial Institutions Division






BienniumChange

Biennium% Change

Personal Services 6,629,328 6,851,930 222,602 3.36 %Operating Expenses 1,884,786 2,003,772 118,986 6.31 %Equipment & Intangible Assets 71,398 0 (71,398) (100.00)%Debt Service 3,262 3,728 466 14.29 %



Total Funds $8,588,774 $8,859,430 $270,656 3.15 %


Program Description

The Division of Banking and Financial Institutions licenses, supervises, regulates, and examines financial institutionsdoing business in Montana. Those institutions include 39 banks and trust companies, with 469 branch banks, 10 creditunions, 335 consumer finance companies, 161 sales finance companies, and 8 escrow businesses. The division alsolicenses and examines 5,245 residential mortgage loan service providers. All program functions are statutorily mandatedin Title 32, Chapters 1-11, and Title 31, Chapter 1, Parts 2 & 7, MCA.

The State Banking Board is administratively attached to the division. The board is responsible for making finaldeterminations on applications for new bank charters and trust companies, hearing appeals of division decisions on branchbank, merger, or relocation applications, and may also act in an advisory capacity with respect to the duties and powersgiven by statute to the department when requested by the division.

Program Highlights

Division of Banking and Financial InstitutionsMajor Budget Highlights

• The Banking and Financial Institutions Division’s 2023 bienniumrequested appropriations are approximately $271,000 or 3.2% higherthan the 2021 biennium

• The executive proposes increases in state special revenue fundingfor statewide present law adjustment for personal services and fixedcosts

• The executive proposes present law increases in state specialrevenue for contractual increases in rent and indirect costs paid tothe Director’s Office





Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 34.00 34.00 34.00 34.00

Personal Services 3,185,893 3,268,482 3,360,846 3,420,187 3,431,743Operating Expenses 920,792 933,842 950,944 1,003,945 999,827Equipment & Intangible Assets 71,396 71,398 0 0 0Debt Service 1,398 1,398 1,864 1,864 1,864



Total Funds $4,179,479 $4,275,120 $4,313,654 $4,425,996 $4,433,434




The Division of Banking and Financial Institutions is funded entirely with state special revenue. The HB 2 modified budgetof $4.3 million was 97.8% expended as of the end of FY 2020. This is in line with anticipated expenditures at the end ofthe fiscal year.



Executive Request

The Banking and Financial Institutions Division is requesting an increase of approximately $112,000 in FY 2022 and$120,000 in FY 2023 above the FY 2021 base appropriations. The increase is primarily due to the statewide present lawadjustments for personal services and fixed costs. The division is also proposing present law increases for contractualincreases in rent and indirect costs paid to the Director’s Office. These increases are slightly offset by proposed decreasesfor inflation/deflation and operational efficiency gained by using ServiceNow.


Personal services were $3.4 million or 77.9% of total FY 2021 appropriations. The executive proposes an increase ofapproximately $59,000 in FY 2022 and $71,000 in FY 2023. The table below shows the total adjustments for each personalservices category.





Banking and Financial Services DivisionFY 2022 Statewide Present Law Adjustment for Personal Services


Expected changes comprise a portion of the increase in the statewide present law adjustment for personal services. Theannualization of the legislatively approved pay plan and statutorily required adjustments for longevity are the primary driversfor the increase in this category.

Management decisions comprise the majority of the increase in the statewide present law adjustment for personalservices. These changes primarily consist of pay increases for career ladder and market adjustments.

Funding


Department of Administration, 14-Banking and Financial Institutions DivisionFunding by Source of Authority

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

General Fund 0 0 0 0 0 0.00 %

02077 Financial Institutions Div 8,859,430 0 0 0 8,859,430 100.00 %State Special Total $8,859,430 $0 $0 $0 $8,859,430 100.00 %



Total All Funds $8,859,430 $0 $0 $0 $8,859,430

The Division of Banking and Financial Institutions is funded entirely by state special revenues generated from assessments,application fees, and examination fees paid by the regulated financial institutions.




Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent


Total Budget $0 $0 $0 $4,425,996 $4,433,434 $8,859,430







FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds


DP 2 - Fixed Costs0.00 0 43,890 0 43,890 0.00 0 37,379 0 37,379


DP 4 - Allocate Department Indirect/Administrative Costs0.00 0 15,247 0 15,247 0.00 0 15,206 0 15,206

DP 5 - ServiceNow0.00 0 (7,374) 0 (7,374) 0.00 0 (7,374) 0 (7,374)

DP 1401 - Contracted Rent Increase0.00 0 7,766 0 7,766 0.00 0 7,766 0 7,766











The executive requests an increase in state special revenue to provide the funding to pay the Department of Administration's indirect costs. These costs are charged to the department's programs for services provided, which include accounting, human resources, and legal support.



DP 5 - ServiceNow -

The executive requests a decrease in state special revenue funds because of the purchase of ServiceNow licenses and programs for the 2023 biennium. The Banking and Financial Institutions Division is anticipating operating efficiencies and other savings by using ServiceNow.

DP 1401 - Contracted Rent Increase -

The executive requests an increase in state special revenue funds for an increase in rent. The Banking and Financial Institutions Division leases office space. The current contract term is December 1, 2019 through November 30, 2039, with an incremental rate increase beginning in year two and then occurring every fifth year for the duration of the agreement.


61010 - Department Of Administration 15-Montana State Lottery






BienniumChange

Biennium% Change

Personal Services 5,293,516 5,513,581 220,065 4.16 %Operating Expenses 6,720,327 6,745,521 25,194 0.37 %Equipment & Intangible Assets 100,000 100,000 0 0.00 %



Total Funds $12,113,843 $12,359,102 $245,259 2.02 %


Program Description

The Montana State Lottery was created in November 1986 by a referendum vote of the people of Montana. The generalpurpose is to allow lottery games in which players purchase from the state, through the administration of the lottery, achance to win a prize. A five-member Lottery Commission, appointed by the Governor, sets policy and oversees programactivities and procedures. Lottery’s operations are accounted for in an enterprise fund. Lottery is required to transferits net revenue to the general fund on a quarterly basis. The Montana State Lottery is attached to the Department ofAdministration for administrative purposes only.

Program Highlights

Montana State LotteryMajor Budget Highlights

• The Montana State Lottery’s 2023 biennium requestedappropriations are approximately $245,000 or 2.0% higher than the2021 biennium

• The executing proposes increases in proprietary funding forstatewide present law adjustment for personal services and fixedcosts and a present law adjustment for indirect costs paid to theDirector’s Office

• The executive proposes increases in proprietary funding for 1.00 FTEfor a network administrator position






Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 35.00 35.00 36.00 36.00

Personal Services 2,405,667 2,627,900 2,665,616 2,753,104 2,760,477Operating Expenses 2,862,114 3,476,286 3,244,041 3,444,124 3,301,397Equipment & Intangible Assets 24,515 50,000 50,000 50,000 50,000



Total Funds $5,292,296 $6,154,186 $5,959,657 $6,247,228 $6,111,874




The Montana State Lottery is funded entirely with proprietary funds. The HB 2 modified budget of $6.2 million was 86.0%expended as of the end of FY 2020. Operating expenses and equipment and intangible assets contributed to the lowerexpenditures.

Operating expenses appropriations of $3.5 million were 82.3% expended. Lower expenditures were partly due to thetiming of legislative audit costs. This appropriation of approximately $133,000 was 49.4% expended but is a biennialappropriation that can be used in both years of the biennium. Additionally, funding was transferred to Montana StateLottery for sports wagering. This transfer allocated $555,000 to operating expenses and was 28.6% expended. Thesports wagering program was implemented in early March 2020. The COVID-19 pandemic caused closures of nearly allestablishments that could host sports wagering and cancellations of many sporting events. This impacted the launch ofsports wagering in Montana and contributed to the lower percentage expended.

Equipment and intangible assets appropriations of $50,000 were 49.0% expended. The Lottery has regionalrepresentatives that travel across the state. Vehicles are replaced at a certain mileage or if there is an unforeseen needfor replacement (e.g. mechanical issue or accident). The Lottery only needed to replace one vehicle during FY 2020.


Overall, the FY 2021 appropriation is approximately $195,000 or 3.2% lower than the FY 2020 appropriation. Thesignificant differences are primarily in operating expenses. These differences include:

• Legislative audit appropriations, which are included in the first year of the biennium and totaled $133,000 in FY2020

• A transfer of proprietary funding included in HB 715 from the 2019 Legislative Session for sport wagering. Thetransfer in FY 2021 was $455,000, which was $100,000 lower than the transfer in FY 2020

Executive Request

The Montana State Lottery is requesting an increase above the FY 2021 base appropriations of approximately $288,000 in FY 2022 and $152,000 in FY 2023. The proposed increases in FY 2022 and FY 2023 are primarily due to the statewide present law adjustments for fixed costs, funding for 1.00 FTE, and indirect costs paid to the Director’s Office. The requested appropriations in FY 2022 are higher than FY 2023 because the legislative audit costs are included entirely in the FY 2022 appropriation.


61010 - Department Of Administration 15-Montana State LotteryProgram Personal Services

Personal services comprise $2.7 million or 44.7% of total FY 2021 appropriations. The executive proposes a statewide present law increase of approximately $4,000 in FY 2022 and $11,000 in FY 2023. The table below shows the total adjustments for each personal services category.

Figure 30

Department of AdministrationMontana State Lottery

FY 2022 Statewide Present Law Adjustment for Personal Services

Expected Changes $ 14,616Management Decisions (10,805)Budget Modifications -Total Present Law Adjustment $ 3,811

Expected changes comprise the increase in the statewide present law adjustment for personal services. The annualizationof the legislatively approved pay plan and statutorily required adjustments for longevity are the primary drivers for theincrease in this category.

Management decisions partially offset the increases from expected changes. These changes primarily consist of positionsbeing filled with less experiences individuals at a lower pay rate.

Funding


Department of Administration, 15-Montana State LotteryFunding by Source of Authority

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

General Fund 0 0 0 0 0 0.00 %

02029 Board of Horse Racing 0 0 0 0 0 0.00 %State Special Total $0 $0 $0 $0 $0 0.00 %


06001 State Lottery Fund 12,359,102 0 0 258,349,151 270,708,253 100.00 %Proprietary Total $12,359,102 $0 $0 $258,349,151 $270,708,253 100.00 %

Total All Funds $12,359,102 $0 $0 $258,349,151 $270,708,253

HB 2

The lottery is funded entirely with proprietary funds derived from lottery game revenues. Net revenue is transferred quarterly to the general fund.

The 2019 Legislature passed SB 60 which revised laws related to financial aid for resident Montana students. This bill clarified the funding and distribution of science, technology, engineering, and math (STEM) scholarships. The statutory appropriation for STEM scholarships continue to be funded with revenue from lottery proceeds; however, STEM scholarships are now funded with the first dollars before the remaining lottery proceeds are transferred to the general fund.


LFDCOMMENT


• Lottery prizes• Commissions paid to lottery ticket or chance sales agents• Lottery contractor fees

The statutory appropriation for the state lottery proprietary fund is too high. The executive will be correctingthis in its December 15th submission of the Governor’s budget.




Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of Budget2021 Base Budget 0 0 0 0.00 % 5,959,657 5,959,657 11,919,314 96.44 %SWPL Adjustments 0 0 0 0.00 % 187,960 52,709 240,669 1.95 %PL Adjustments 0 0 0 0.00 % 15,934 15,891 31,825 0.26 %New Proposals 0 0 0 0.00 % 83,677 83,617 167,294 1.35 %

Total Budget $0 $0 $0 $6,247,228 $6,111,874 $12,359,102




FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds


DP 2 - Fixed Costs0.00 0 0 0 184,160 0.00 0 0 0 41,472










The Montana State Lottery has statutory appropriations for expenditures in three main areas:








The executive requests an increase in proprietary funding to provide the funding to pay the Department of Administration'sindirect costs. These costs are charged to the department's programs for services provided, which include accounting,human resources, and legal support.

New Proposals



FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds

DP 1501 - Make Modified Lottery Position Permanent1.00 0 0 0 83,677 1.00 0 0 0 83,617

Total 1.00 $0 $0 $0 $83,677 1.00 $0 $0 $0 $83,617


DP 1501 - Make Modified Lottery Position Permanent -

The executive requests an increase in proprietary funding and 1.00 FTE for a network administrator. The 2019 Legislatureprovided funding for this position but eliminated 1.00 FTE. The position is responsible for the administration of network andcomputer systems, user support, system operation, documentation and testing in support of the Lottery. The position alsomanages the network infrastructure, computer systems and information technology equipment as well as provides technicalsupport and training to all Lottery users. The information technology department at the Lottery is made up of five peoplewith one position dedicated to network support.


61010 - Department Of Administration 21-Health Care & Benefits Division






BienniumChange

Biennium% Change

Personal Services 3,896,122 3,862,741 (33,381) (0.86)%Operating Expenses 30,859,701 30,145,392 (714,309) (2.31)%Benefits & Claims 412,514,460 513,622,929 101,108,469 24.51 %Debt Service 5,058 5,518 460 9.09 %


Proprietary Funds 447,275,341 547,636,580 100,361,239 22.44 %

Total Funds $447,275,341 $547,636,580 $100,361,239 22.44 %


Program Description

The Health Care and Benefits Division (HCBD) provides state employees, retirees, members of the legislature, judgesand judicial branch employees, and their dependents with group benefits in an efficient manner and at an affordable costby administering a solvent, prudent benefits program. The division administers benefits plans including health, dental,prescription drug, life, long-term care, vision coverage, long-term disability, flexible spending accounts, a sick leave fund,employee assistance services, health promotion, and a voluntary employee benefit health care expense trust. Finally, thedivision is responsible for the centralized oversight and management of workers’ compensation related matters impactingthe state as an employer.

Employee benefits are governed by 2-18-701 et seq., 2-18-801 et seq., 2-18-1301 et seq., and 33-2-712, MCA. TheMontana Safety Culture Act, as it applies to state government, is found in 39-71-1501 et seq.

The division is entirely funded from proprietary funds, which are not appropriated in HB 2. The various accounts provide fortwo programs and a third function within the division:

• Health Care Benefits Bureau provides oversight and administrative functions for the state employee group benefitplan, including administration of health, dental, vision, life insurance, and flexible spending accounts. It is fundedfrom the group benefits claims fund, which funds the administrative costs of the bureau and benefit and claimcosts

• Workers' Compensation Management Bureau is the central resource for state agencies in working to:◦ Enhance worker safety◦ Provide for loss-prevention◦ Develop and provide return-to-work programs◦ Coordinate workers’ compensation coverage and policy management issues

• Flexible spending funds accounts for employee deductions for flexible spending, including medical and childcare

LFD Budget Analysis HCBD-1 2023 Biennium


Health Care and Benefits DivisionMajor Budget Highlights

• The Health Care and Benefits Division’s 2023 biennium proposedappropriations are approximately $100.4 million or 22.4% higher thanthe 2021 biennium. Reasons for the difference between the 2021biennium and 2023 biennium appropriations include:

◦ The division reduced FY 2020 authority to more closelyreflect the reduced medical claims because of theCOVID-19 pandemic

◦ The division is proposing increased claims costs of $58.4million over the 2023 biennium

• The Health Care and Benefits Division is funded entirely withproprietary funds




Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 21.87 21.87 21.87 21.87

Personal Services 1,786,528 1,943,989 1,952,133 1,927,730 1,935,011Operating Expenses 14,091,821 15,436,283 15,423,418 15,043,985 15,101,407Benefits & Claims 178,367,045 184,807,230 227,707,230 250,590,441 263,032,488Debt Service 2,300 2,299 2,759 2,759 2,759



Total Funds $194,247,694 $202,189,801 $245,085,540 $267,564,915 $280,071,665




The Health Care and Benefits Division is funded entirely with proprietary funds and is not included in HB 2. The FY 2020budget of $202.2 million was 96.1% expended as of the end of the fiscal year.


Overall, the FY 2021 appropriation is approximately $42.9 million or 21.2% higher than the FY 2020 appropriation. Thedifference is primarily in benefits and claims. HCBD reduced appropriation authority in FY 2020 to more closely matchanticipated benefits and claims.


Program Highlights

LFDCOMMENT


Executive Request

The Health Care and Benefits Division is proposing an increase of approximately $22.5 million in FY 2022 and $35.0million in FY 2023 above the FY 2021 base appropriations. These proposed changes are primarily to align the budgetwith the division's administration and claims expense projections. Additional information on these proposed adjustmentsare included in the Present Law Adjustments section below.

The Health Care and Benefits Division will update its decision package for projected claims expenses in theDecember 15th submission of the Governor’s budget. Decision package 2101 will request a reduction inproprietary funding of $25.5 million in FY 2022 and $12.9 million in FY 2023.

Funding


Department of Administration, 21-Health Care & Benefits DivisionFunding by Source of Authority

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

General Fund 0 0 0 0 0 0.00 %



06027 Flexible Spending Funds 0 0 15,758,186 0 15,758,186 2.88 %06559 Group Benefits Claims A/C 0 0 531,168,926 0 531,168,926 96.99 %06575 Workers Comp Mgmt Program 0 0 709,468 0 709,468 0.13 %


Total All Funds $0 $0 $547,636,580 $0 $547,636,580

The Health Care and Benefits Division is funded entirely with proprietary funds which are not appropriated in HB 2. Thethree funds provide funding for two programs and a third function within the HCBD:

• Employee Benefits Program – provides oversight and administrative functions for the state employee group healthplan including administration of the health, dental, vision, and life insurance. It is funded from the group benefitsclaims proprietary fund, which is an account used for the administrative costs of the program as well as benefitsand claims costs

• Workers’ Compensation Management Bureau – is the central resource for state agencies in working to enhanceworker safety, provide loss preventions, develop and provide return-to-work programs, and coordinate workers’compensation coverage and policy management issues. It is funded from workers’ compensation managementprogram fees which are fixed costs allocated to each state agency

• Flexible Spending Funds – accounts for employee deductions for flexible spending including medical and childcare

These funds are discussed in the Proprietary Rates section of the narrative.







Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of Budget2021 Base Budget 0 0 0 0.00 % 245,085,540 245,085,540 490,171,080 89.51 %SWPL Adjustments 0 0 0 0.00 % (459,644) (457,733) (917,377) (0.17)%PL Adjustments 0 0 0 0.00 % 22,939,019 35,443,858 58,382,877 10.66 %New Proposals 0 0 0 0.00 % 0 0 0 0.00 %

Total Budget $0 $0 $0 $267,564,915 $280,071,665 $547,636,580




FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds

DP 1 - Personal Services0.00 0 0 0 (24,403) 0.00 0 0 0 (17,122)

DP 2 - Fixed Costs0.00 0 0 0 (434,870) 0.00 0 0 0 (440,378)


DP 4 - Allocate Department Indirect/Administrative Costs0.00 0 0 0 (5,107) 0.00 0 0 0 (5,107)

DP 5 - ServiceNow0.00 0 0 0 (4,062) 0.00 0 0 0 (4,062)

DP 2101 - Health Plan Claims0.00 0 0 0 22,941,288 0.00 0 0 0 35,445,507

DP 2102 - Workers Comp Management Bureau Operating Increse0.00 0 0 0 6,900 0.00 0 0 0 7,520

Grand Total All Present Law Adjustments0.00 $0 $0 $0 $22,479,375 0.00 $0 $0 $0 $34,986,125



The executive requests adjustments to annualize personal services costs including FY 2021 statewide pay planadjustments, benefit rate adjustments, vacancy savings adjustments and longevity adjustments related to incumbents ineach position at the time of the personal services snapshot.






LFDCOMMENT



The executive requests a decrease in proprietary funds to provide the funding to pay the Department of Administration's indirect costs. These costs are charged to the department's programs for services provided, which include accounting, human resources, and legal support.

DP 5 - ServiceNow -

The executive requests a decrease in proprietary funds because of the purchase of ServiceNow licenses and programs for the 2023 biennium. The Director’s Office is anticipating operating efficiencies and other savings by using ServiceNow.

DP 2101 - Health Plan Claims -

The executive requests an increase in proprietary funds to align the budget with projected claims expenses. The State of Montana employee benefits plan projects an average annual trend of 6.0% in medical claims and 9.0% in prescription drug costs. Additional budget authority requests totals $22.9 million in FY 2022 and $35.3 million in FY 2023 for healthcare coverage.

Claims administration and operating costs are also predicted to increase with contract renewals. The changes are due to increased third party administrator fees. The executive requests an additional $58,000 in FY 2022 and $120,000 in FY 2023 to administer the state’s benefit programs.

The Health Care and Benefits Division will update this decision package in the December 15th submissionof the Governor’s budget. The updated decision package will request a reduction in proprietary funding of$25.5 million in FY 2022 and $12.9 million in FY 2023.

DP 2102 - Workers Comp Management Bureau Operating Increse -

The Workers’ Compensation Management Bureau requests an increase in propriety funds for operating expenses.The requested increases are for an Occupational Safety and Health Administration (OSHA) training, rent and computerreplacement scheduled for the 2023 biennium.

Other Issues -

Proprietary Rates

The Heath Care and Benefits Division manages two proprietary programs:

• Employee benefits, which includes◦ State’s health and other benefit insurance plans◦ Contract administration of the flexible spending account

• Management of the state agency workers’ compensation insurance

Employee Benefits Program – Group Benefits and Claims – 06559


The employee benefits program is charged with providing state employees, retirees, members of the legislature, judges,Judicial Branch employees, and their families with adequate medical, dental, prescription drug, life, and other related groupbenefits in an efficient manner and at an affordable cost. The program operates a self-funded health, prescription drug,dental, and vision plan. Life and long-term disability are purchased from private sector vendors on a fully-insured basis.The program contracts with private companies to provide claims processing services, health screenings, and wellness planadministration.



The core service provided by the program is a medical plan, which includes prescription drug, vision exam coverage, dental,and basic life insurance benefits. The medical plan is administered by Allegiance, the pharmacy plan is administeredby Navitus, and the dental plan is administered by Delta Dental, through their provider networks. The life and long-termdisability are fully insured products offered through Standard Insurance.

The division has developed on-site employee health centers in Helena, Billings, Missoula, Butte, and Anaconda. Thedivision has contracted with CareHere to staff and operate the health centers.

The program is funded by the state contribution for group benefits and by contributions and fees paid by plan members.The program currently supports 18.73 FTE.


The following 2023 Biennium Report on Internal Service and Enterprise Funds shows the actual and projected expendituresand related revenues associated with the group benefits and claims proprietary fund.





The COVID-19 pandemic impacted expenses in FY 2020 and is causing uncertainty with determining claims in the relativelynear future. When the Governor ordered the stay at home order in March 2020, HCBD noticed an immediate impact onthe reduction of services and claims costs. There was an increase in medical claims for a few months in late summer andearly fall 2020; however, many hospital facilities are nearing capacity in late fall 2020, which may result in a decrease inmedical claims again. HCBD does expect those members that delayed procedures and services during this time will stillreceive them, and there may be a delayed increase in claims as a result.

The HCBD is also tracking COVID-19 related expenses to the plan and there have been additional costs. However, theseadditional costs have not outpaced the savings related to delayed procedures.

HCBD is seeing an increase in pharmacy trends which occurred slowly over 2019. The analysis showed that there wereadditional specialty medication utilizers. Since specialty medication are more expensive, this has had a large impact.Additionally, when the COVID-19 pandemic began and the shutdown started, the rules were relaxed regarding fillingprescriptions early and many members moved to 90-day prescription fills. This resulted in larger expenditures in March2020 but has since leveled off.

The Health Care and Benefits Division receives an actuarial analysis from Actuaries Northwest, LLC that analyzes bothmedical and prescription drug claims. The tables below show two trend scenarios that were included in the June 2020actuarial report. One scenario calculates projections based on an increase in medical costs of 6.0% and prescription costsof 9.0%. A second scenario calculates projections based on an increase in medical costs of 9.0% and prescription costsof 11.0%.

Figure 31Health Care and Benefits Division

Group Benefits Claims6.0% Medical Trend and 9.0% Prescription TrendTrend Assumptions by Actuaries Northwest, LLC

Projected Projected Projected Projected $ Change % ChangePlan Year 2020 Plan Year 2021 Plan Year 2022 Plan Year 2023 21B - 23B 21B - 23B

Medical Claims $ 136,132,654 $ 147,023,266 $ 155,844,662 $ 165,195,342 $ 37,884,084 13.4%Rx Claims 36,757,459 40,433,205 44,072,193 48,038,691 14,920,220 19.3%Part D (12,819,488) (14,101,436) (15,370,566) (16,753,917) (5,203,559) 19.3%Dental Claims 6,106,667 7,222,668 7,511,574 7,812,037 1,994,276 15.0%Change in IBNR 33,534 - - - (33,534) -100.0%

Total Claims Expense $ 166,210,826 $ 180,577,703 $ 192,057,863 $ 204,292,153 $ 49,561,487 14.3%

Health Care and Benefits DivisionGroup Benefits Claims

9.0% Medical Trend and 11.0% Prescription TrendTrend Assumptions by Actuaries Northwest, LLC

Projected Projected Projected Projected $ Change % ChangePlan Year 2020 Plan Year 2021 Plan Year 2022 Plan Year 2023 21B - 23B 21B - 23B

Medical Claims $ 137,074,626 $ 152,152,835 $ 165,846,590 $ 180,772,784 $ 57,391,913 19.8%Rx Claims 36,949,211 41,752,609 46,762,922 52,374,472 20,435,574 26.0%Part D (12,819,488) (14,101,436) (15,370,566) (16,753,917) (5,203,559) 19.3%Dental Claims 6,138,791 7,259,610 7,695,186 8,156,897 2,453,682 18.3%Change in IBNR 33,534 - - - (33,534) -100.0%

Total Claims Expense $ 167,376,674 $ 187,063,618 $ 204,934,132 $ 224,550,236 $ 75,044,076 21.2%


Expenses


Revenues

The state employee group benefit plan (SEGBP) is self-funded, and as such is responsible for medical costs incurredby its members. SEGBP is funded through a combination of state share paid by the State of Montana as an employerand member (employee and retiree) contribution payments. The state share is $1,054 per month and is establishedin 2-18-703(2), MCA. As a component of employee compensation, the state share contribution amount is a subject ofcollective bargaining and is negotiated as part of the overall pay package for state employees.

Plan revenues are estimated at approximately $220.0 million each fiscal year.

Proprietary Rates

For the 2023 biennium the following rates are proposed by the executive. The rates charged in the base year are shownfor comparison purposes.

Figure 32


Actual Budgeted Proposed ProposedFY 20 FY 21 FY 22 FY23

Fee Description:

State Share Contribution $1,054 $1,054 $1,054 $1,054

Rates are established to maintain adequate reserves. Actual state share rates are set foreach calendar year as opposed to a fiscal year. This table shows the average monthstate share rate for each fiscal year

The amounts shown as rates above are the state share contribution for each state employee each month. The state share contribution amounts are contained in statute. For the 2023 biennium the executive is not proposing any additional funding for the state share contribution in the pay plan. The various contribution costs for the program are not limited through the legislative process but are determined by the division based on actuarial estimates of the claim costs for each insurance type. Any difference between the state share contribution and actual costs are made up by employee and retiree contributions and investment income. As the plan year for the state employee health insurance is a calendar year, the revenues for the plans are a combination of contributions for two years.

Workers’ Compensation Management Program – 06575


The Health Care and Benefits Division manages the workers' compensation management program. The program assists employees and agencies in ensuring a safe working environment, reduces on-the-job injuries and accidents in the workplace, and assists employees who are injured in returning to meaningful and productive work. The program is the central resource in working with the state’s workers’ compensation insurer, Montana State Fund, to coordinate workers’ compensation coverage and policy management issues.

The program is funded through a fixed cost rate charged to state agencies. The program currently supports 3.14 FTE.




The following 2023 Biennium Report on Internal Service and Enterprise Funds shows the actual and projected expenditures and related revenues associated with the workers’ compensation management proprietary fund.



Expenses

The executive proposes an increase in expenses of approximately $24,000 in FY 2022 and $25,000 in FY 2023 whencompared to the FY 2021 base year. The following figure shows the changes as proposed by the executive as reflected inthe budgeting system.


Health Care and Benefits DivisionWorkers' Compensation Management


Personal ServicesStatewide Present Law Adjustment 12,953 13,513Personal Services Total 12,953 13,513

Operating ExpensesStatewide Present Law Adjustment - Fixed Costs 3,703 3,167Allocate Indirect/Administrative Costs 868 868Operating Increase 6,900 7,520Operating Expenses Total 11,471 11,555

Total Proposed Increase 24,424 25,068

The largest proposed increases are from statewide present law adjustments for personal services and a present lawchange for operating expenses. The statewide present law increases personal services by approximately $13,000 in FY2022 and $14,000 in FY 2023 and is primarily due to the legislatively approved pay plan, benefits changes, and themovement of 0.07 FTE into the program.

The present law adjustment proposed for operating expense increases totals approximate $7,000 in FY 2022 and $7,500in FY 2023. These increases are for an Occupational Safety and Health Administration (OSHA) training, an increase inrent, and scheduled computer replacement.

Revenues

The workers’ compensation management program fees are composed of a fixed cost rate allocated to each state agencybased on the average number of payroll warrants issued each pay period.

Proprietary Rates

For the 2023 biennium the following rates are proposed by the executive. The rates charged in the base year are shownfor comparison purposes. The executive is proposing a 2.1% increase in the rates in the 2023 biennium when comparedto FY 2021.



Figure 34



Fee Description:

Workers' Compensation Management $0.95 $0.95 $0.97 $0.97


Flexible Spending Account Program – 06027


State employees can elect to set aside a certain amount of their pay into accounts to pay dependent care and out-of-pocketmedical costs. The “set aside” funds are withdrawn from employee pay prior to assessment of taxes, effectively loweringemployee taxable pay. Employees must submit claims to use the funds deposited in the accounts for allowable expenses.

Federal rules govern the use of and the amount that can be contributed to flexible spending accounts. The currentcontribution maximums are $2,750 per year for medical and $5,000 per year for dependent care. In the fall of 2013, theInternal Revenue Service announced the ability for participants to roll over up to $500 from the medical flexible spendingaccount into the next benefit year. Employees forfeit any unspent funds beyond the $500 rollover for medical and anyremaining dependent care balance at the end of the year.

Approximately 4,500 state employees participate in the flexible spending account program.


The following 2023 Biennium Report on Internal Service and Enterprise Funds shows the actual and projected expendituresand related revenues associated with the flexible spending proprietary fund.



Expenses

The executive proposes that expenditures in FY 2022 and FY 2023 are unchanged from FY 2021.



Revenues

The flexible spending account program is funded from an administrative fee of $2.26 per month on each accountparticipating in the program. This fee is charged per participant whether the participant has a medical account, a dependentcare account, or both.

Proprietary Rates

For the 2023 biennium the following rates are proposed by the executive. The rates charged in the base year are shownfor comparison purposes. The executive is not proposing any changes to the rates.

Figure 35



Fee Description:

FSA Account $2.26 $2.26 $2.26 $2.26

The flexible spending account program is funded with an enterprise fund, which is a type of a proprietary fund. As such, thelegislature does not appropriate the funds or approve the rates for the program. Instead, the legislature reviews the reportfor the enterprise fund and identifies concerns with the financial position of the fund.


61010 - Department Of Administration 23-State Human Resources Division






BienniumChange

Biennium% Change

Personal Services 2,515,741 2,681,656 165,915 6.60 %Operating Expenses 879,547 782,213 (97,334) (11.07)%Debt Service 660 754 94 14.24 %


General Fund 3,395,948 3,464,623 68,675 2.02 %

Total Funds $3,395,948 $3,464,623 $68,675 2.02 %


Program Description

The State Human Resources Division provides statewide human resource services and programs under the authority ofTitle 2, Chapter 18, and 39-31-301, MCA. The division houses:

• The Human Resources Policy and Programs Bureau, which establishes the human resource rules, policies, andstandards for Montana’s executive branch

• The Professional Development Center, offering training and other professional development services to Montanastate government and other organizations

• The Human Resources Information Systems Bureau, which processes the biweekly payroll, and other humanresources information systems, for all branches of state government

Program Highlights

State Human Resources DivisionMajor Budget Highlights

• The State Human Resources Division’s 2023 biennium requestedappropriations are approximately $69,000 or 2.0% higher than the2021 biennium

• The executive proposes increases in general fund for statewidepresent law adjustment for personal services and a present lawadjustment for indirect costs paid to the Director’s Office

• The majority of the funding in the division is from non-budgetedproprietary funds. The legislature approves the rates for theProfessional Development Center and the human resourceinformation system internal service funds in HB 2. The executive isproposing a rate increase for the human resource information systeminternal service fund





Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 13.75 13.75 13.75 13.75

Personal Services 1,164,368 1,250,247 1,265,494 1,338,113 1,343,543Operating Expenses 505,910 439,432 440,115 391,064 391,149Debt Service 283 283 377 377 377


General Fund 1,670,561 1,689,962 1,705,986 1,729,554 1,735,069

Total Funds $1,670,561 $1,689,962 $1,705,986 $1,729,554 $1,735,069




The State Human Resources Division is funded in HB 2 with general fund. The HB 2 modified budget of $1.7 million was98.9% expended as of the end of FY 2020. This is in line with anticipated expenditures at the end of the fiscal year.



Executive Request

The State Human Resources Division is requesting an increase of approximately $24,000 in FY 2022 and $29,000 in FY2023 above the FY 2021 base appropriations. The proposed increases are due to the statewide present law adjustmentsfor personal services and indirect costs paid to the Director’s Office. The proposed increases are partially offset byrequested reductions in fixed costs, inflation/deflation, and operational efficiency gained by using ServiceNow.


Personal services comprise $1.3 million or 74.2% of total FY 2021 appropriations. The executive proposes an increase ofapproximately $73,000 in FY 2022 and $78,000 in FY 2023. The table below shows the total adjustments for each personalservices category.



LFDCOMMENT



State Human Resources DivisionFY 2022 Statewide Present Law Adjustment for Personal Services


Expected changes comprise the majority of the increase in the statewide present law adjustment for personal services.The remainder of the increase is due to management decisions.

The increase related to management decisions is partly due to 0.50 FTE being included in the HB 2 budgetand it should have been included in the HRIS proprietary fund. The executive will be correcting this in itsDecember 15th submission of the Governor’s budget.

Funding


Department of Administration, 23-State Human Resources DivisionFunding by Source of Authority

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

01100 General Fund 3,464,623 0 0 0 3,464,623 28.94 %



06525 Intergovernmental Training 0 0 921,579 0 921,579 10.83 %06559 Group Benefits Claims A/C 0 0 708,332 0 708,332 8.33 %06563 HR Info Services 0 0 6,878,510 0 6,878,510 80.84 %


Total All Funds $3,464,623 $0 $8,508,421 $0 $11,973,044

HB 2 Appropriations

The general fund appropriations in HB 2 support the Human Resources Policy and Programs Bureau. This bureauestablishes the human resource rules, policies, and standards for Montana’s executive branch.

Non-Budgeted Proprietary

The majority of the State Human Resources Division’s operations are supported by proprietary funds. This includes:

• Professional Development Center (PDC)• Human Resource Information Services (HRIS) Bureau

The PDC is supported through fees in the form of tuition paid by state agencies that enroll employees in various classes provided by the PDC and fees for other services offered by the PDC. The HRIS Bureau is funded through a fee charged to state agencies for each employee payroll processed in a pay period. Both funds are considered and approved as rates charged to other state agencies and are discussed in the Proprietary Rates section of the narrative.






Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent


Total Budget $1,729,554 $1,735,069 $3,464,623 $1,729,554 $1,735,069 $3,464,623




FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds


DP 2 - Fixed Costs0.00 (51,556) 0 0 (51,556) 0.00 (51,470) 0 0 (51,470)


DP 4 - Allocate Department Indirect/Administrative Costs0.00 5,420 0 0 5,420 0.00 5,404 0 0 5,404

DP 5 - ServiceNow0.00 (2,874) 0 0 (2,874) 0.00 (2,874) 0 0 (2,874)







The executive requests adjustments to provide the funding required in the proposed budget to pay increases in fixed costsassessed by other agencies within state government for the services they provide. Examples include: warrant writer, motor




pool, etc. The rates charged for these services are approved in the section of the budget that provides the services.




The executive requests an increase in general fund to provide the funding to pay the Department of Administration's indirectcosts. These costs are charged to the department's programs for services provided, which include accounting, humanresources, and legal support.

DP 5 - ServiceNow -

The executive requests a decrease in general fund because of the purchase of ServiceNow licenses and programs forthe 2023 biennium. The State Human Resources Division is anticipating operating efficiencies and other savings by usingServiceNow.

Other Issues -

Proprietary Rates

The State Human Resources Division provides the following programs funded through proprietary rates:

• Professional Development Center• Human Resources Information Services Bureau

Professional Development Center / Training Program - 06525


The Professional Development Center program provides training and related services throughout locations in the state ofMontana. The PDC offers training directed towards improving state practices, meeting state and federal regulations, andproviding professional services such as facilitation, mediation, or curriculum design. The statutory authority for this programcomes from 2-18-102, MCA.

The PDC also contracts with individual agencies to provide training for their staff. The agency schedules, promotes, andprovides the facility for training. The PDC provides the instruction and class materials.

The program is an internal service fund and has 3.00 FTE.


The following 2023 Biennium Report on Internal Service and Enterprise Funds shows the actual and projected expendituresand related revenues associated with the PDC/training program fund.





The executive proposes to increase total expenses by approximately $29,000 each fiscal year when compared to the FY2021 base budget. The following figure shows the changes as proposed by the executive as reflected in the budgetingsystem.

Figure 37Department of AdministrationState Financial Services Division

Professional Development Center FundProposed Changes for the 2023 Biennium in the Budgeting System

FY 2022 FY 2023Personal ServicesStatewide Present Law Adjustment - Personal Services $ 18,332 $ 19,235Personal Services Total 18,332 19,235

Operating ExpensesStatewide Present Law Adjustment - Fixed Costs 10,455 9,829Statewide Present Law Adjustment - Inflation/Deflation (73) (46)Allocate Indirect/Administrative Costs 1,006 1,003ServiceNow (651) (651)Operating Expenses Total 10,737 10,135


This proposed increase is primarily due to the statewide present law adjustment for personal services and fixed costs. Ofthe approximately $10,000 increase in fixed costs in FY 2022 and FY 2023, approximately $7,300 is due to SITSD costs.The PDC anticipates holding more virtual classes, which is causing the increase in SITSD costs.

The statewide present law adjustment for personal services increases appropriations by approximately $18,000 in FY 2022and $19,000 in FY 2023. There are primarily two reasons for this increase, which include:

• One position was vacant in the snapshot for the last biennium and filled for the 2023 biennium snapshot. Vacantpositions are not included in the budget at the full market rate, so when this position was filled the pay rateincreased

• One position received a market adjustment to align the pay rate for this position with peers having similar duties

Revenues

Funding for the PDC is generated through two rates:

• Open-enrollment fees, which are a per-person tuition charged for attendance. Tuition rates are based on twofactors: projected attendance and competitive pricing. Tuition rates for the 2023 biennium are based on theproportion of fixed and personal services costs to the overall anticipated program cost. The amount per personvaries by length of the course and number of people attending from a single agency

• Contract fees, which are a flat fee charged for providing a service. The amount per service varies by length of theservice and number of services arranged in a single contract

Proprietary Rates

The figure below shows the rates proposed by the executive for the 2023 biennium. The rates charged in the 2021 bienniumare shown for comparison purposes. The executive is not proposing rate change from the 2021 biennium.


Expenses


Figure 38



Fee Description:

Open Enrollment CoursesTwo-Day Course (per participant) $190 $190 $190 $190One-Day Course (per participant) $123 $123 $123 $123Half-Day Course (per participant) $95 $95 $95 $95Eight-Day Management Series (per participant) $800 $800 $800 $800Six-Day Management Series (per participant) $600 $600 $600 $600Four-Day Management Series (per participant) $400 $400 $400 $400

Contract CoursesFull Day Training (flat fee) $830 $830 $830 $830Half Day Training (flat fee) $570 $570 $570 $570

Computer Maintenance Charge (course specific) $10 $10 $10 $10


Human Resources Information System Bureau (HRIS) - 06563


The HRIS Bureau operates the SABHRS-HR payroll, benefits, and human resources system to process, distribute, report,and account for payroll, benefits, and associated withholding and deductions for almost 14,000 state employees in theexecutive, legislative, and judicial branches. The bureau is also responsible for the administration and maintenance of theState of Montana Recruitment System (SOMRS) which is used by all state agencies in the recruitment and selection ofapplicants.

The bureau establishes and maintains standards, processes, and procedures to be followed by state agencies in preparingand submitting payroll, benefits, and related HR data into the system. The system operated by the bureau providesinformation and processing in support of division and statewide functions and programs, including employee benefits (groupinsurance, FSA, ACA compliance, deferred compensation, and pension), classification, pay, labor relations, policy andtraining.

The program staff consists of 21.25 FTE. Statutory authority is 2-18-401, MCA, and 2-18-403, MCA.


The following 2023 Biennium Report on Internal Service and Enterprise Funds shows the actual and projected expendituresand related revenues associated with the HRIS fund.





The executive proposes a decrease of approximately $202,000 in FY 2022 and $283,000 in FY 2023 when compared tothe FY 2021 base year. The following figure shows the changes as proposed by the executive as reflected in the budgetingsystem.


State Financial Services DivisionHuman Resources Information System Fund


Personal ServicesStatewide Present Law Adjustment - Personal Services $ (104,574) $ (100,891)Personal Services Total (104,574) (100,891)

Operating ExpensesStatewide Present Law Adjustment - Fixed Costs 113,895 26,937Allocate Indirect/Administrative Costs (3,781) (3,807)ServiceNow (4,717) (4,717)HRIS Online Learning System 80,000 80,000Software Contract Increases 42,455 44,578Adjust HRIS Operating Budget (325,000) (325,000)Operating Expenses Total (97,148) (182,009)


The requested decreases are primarily due to:

• The statewide present law adjustment for personal services that reduces the budget by $105,000 in FY 2022 and$101,000 in FY 2023. The bureau had several positions that were vacant due to resignations and a retirement.These positions were reclassified, and new staff members were hired at a lower pay rate. Additionally, 1.50 FTEwere transferred out of the HRIS Bureau (Note: 0.50 FTE was included in HB 2 and should have been included inthis proprietary fund. The executive is correcting this in the December 15th budget submission)

• The present law adjustment to the operating budget that reduces appropriations by $325,000 each fiscal year.The HRIS Bureau no longer contracts with the Health Care and Benefits Division to provide certain payrollservices. This reduction in the operating budget reflects the costs associated with administering this contract

These decreases are partially offset by proposed increase due to:

• A statewide present law adjustment in FY 2022 of approximately $87,000 for audit costs• Present law increases of approximately $42,000 in FY 2022 and $45,000 in FY 2023 for the Oracle software

contract. A 5.0% increase in license fees and maintenance costs are projected. License, subscription, andmaintenance fees are needed for continued support and updates to the enterprise’s payroll, benefit administration,time and labor, human resources, recruitment, and talent management products supporting SABHRS-HR

• New proposal increases of approximately $80,000 in each fiscal year for an online learning system. The onlineenterprise learning management system costs are going to be paid for by the HRIS Bureau starting May 2021.The costs were previously paid for by SITSD but are going to be transferred to HRIS

Revenues

HRIS fees charged to state agencies are determined by projecting the cost of operating the HRIS program through thenext biennium. HRIS rates are set as a fixed cost and allocated out to each agency based on the number of paychecksprocessed during the two prior fiscal years.


Expenses


Proprietary Rates

The figure below shows the rates proposed by the executive for the 2023 biennium. The rates charged in the 2021 bienniumare shown for comparison purposes. The executive is proposing rate increases of approximately 12.4% when compared tothe base year of FY 2021.

Figure 40


Estimated Estimated Proposed ProposedFY 2020 FY 2021 FY 2022 FY 2023

Fee Description:

HRIS Fees (per employee process per pay period) $ 8.89 $ 8.89 $ 9.99 $ 9.99



61010 - Department Of Administration 24-Risk Management and Tort Defense






BienniumChange

Biennium% Change

Personal Services 3,396,718 3,591,723 195,005 5.74 %Operating Expenses 22,468,684 26,945,634 4,476,950 19.93 %Grants 1,040,226 1,040,226 0 0.00 %Benefits & Claims 28,470,174 30,470,174 2,000,000 7.02 %Debt Service 3,482 3,980 498 14.30 %



Total Funds $55,379,284 $62,051,737 $6,672,453 12.05 %

Program Description

The Risk Management and Tort Defense Division (RMTD) administers a comprehensive plan of property/casualtyinsurance protection on behalf of state government. The division purchases commercial insurance, where cost-effective,to cover catastrophic losses above high deductibles. State risks that are currently insured through commercial insurancecarriers include aircraft, airports, boilers & machinery, bonds (various), crime, cyber/information security, fine art, foreignspecialties, foster care, HIPAA, medical malpractice, property, professional liability, and miscellaneous.

The state self-insures most commercial insurance risks under $2.0 million per occurrence as well as auto, general liability,inland marine (i.e. property in-transit), and mobile/specialized equipment. The division also provides consultative servicesthat include training, inspections, program reviews, contract administration, claims administration, and legal defense toprevent or minimize the adverse effects of physical or financial loss.

The division investigates, evaluates, and resolves tort liability claims (i.e. personal injury or property damage to third parties)and coordinates the adjudication and settlement of other claims involving property damage. This division operates underthe authority of 2-9-101 through 2-9-305, MCA.

Program Highlights

Risk Management and Tort Defense DivisionMajor Budget Highlights

• The Risk Management and Tort Defense Division’s 2023 bienniumrequested appropriations are approximately $6.7 million or 12.1%higher than the 2021 biennium

• The executive proposes increases in proprietary funds for insurancepremiums. This increase is requested due to unfavorable marketconditions and significant loss in the recent past

• The majority of the funding in the division is from non-budgetedproprietary funds. The legislature approves the rates in HB 2. Theexecutive is proposing a rate increase






Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 17.00 17.00 17.00 17.00

Personal Services 1,717,924 1,686,480 1,710,238 1,793,989 1,797,734Operating Expenses 9,056,179 10,463,756 12,004,928 13,478,549 13,467,085Grants 236,350 520,113 520,113 520,113 520,113Benefits & Claims 12,899,826 13,235,087 15,235,087 15,235,087 15,235,087Debt Service 1,492 1,492 1,990 1,990 1,990



Total Funds $23,911,771 $25,906,928 $29,472,356 $31,029,728 $31,022,009



The Risk Management and Tort Defense Division is funded with proprietary funds and not included in HB 2. The FY 2020budget of $25.9 million was 92.3% expended as of the end of the fiscal year. Benefits and claims were 97.5% expendedand operating expenses were 86.5% expended.


Overall, the FY 2021 appropriation is approximately $3.6 million or 13.8% higher than the FY 2020 appropriation. Thedifference is primarily in operating expenses and benefits and claims. The difference between the two fiscal years isprimarily due to a catastrophic property loss on the MSU Bozeman campus in March 2019. Due to this claim and otherinsurance market factors, the commercial premium payments increased. Additionally, RMTD needed additional authorityin order to pay claims related to this loss from the commercial insurance proceeds received.

Executive Request

The Risk Management and Tort Defense Division is requesting an increase of approximately $1.6 million in FY 2022and $1.5 million in FY 2023 above the FY 2021 base appropriations. This increase is primarily due to the present lawadjustment for additional commercial insurance premiums of $1.4 million in FY 2022 and $1.4 million in FY 2023.

Funding




Department of Administration, 24-Risk Management and Tort DefenseFunding by Source of Authority

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

General Fund 0 0 0 0 0 0.00 %

02098 Insurance Proceeds - State Bld 0 0 0 91,000 91,000 100.00 %State Special Total $0 $0 $0 $91,000 $91,000 0.15 %


06532 Agency Insurance Int. Svc. 0 0 62,051,737 0 62,051,737 100.00 %Proprietary Total $0 $0 $62,051,737 $0 $62,051,737 99.85 %

Total All Funds $0 $0 $62,051,737 $91,000 $62,142,737


The majority of the RMTD’s budget is comprised of proprietary funds that are derived from premium assessments oninsurance risks paid by state agencies and the Montana University System. These funds are considered and approved asrates charged to other state agencies and are discussed in the Proprietary Rates section of the narrative.


Statutory appropriations comprise less than 1.0% of total appropriations for RMTD. The statutory appropriation is for thereceipt of insurance proceeds for claims that fall above the amount that the state self-insures.




Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of Budget2021 Base Budget 0 0 0 0.00 % 29,472,356 29,472,356 58,944,712 94.99 %SWPL Adjustments 0 0 0 0.00 % 181,649 173,951 355,600 0.57 %PL Adjustments 0 0 0 0.00 % 1,375,723 1,375,702 2,751,425 4.43 %New Proposals 0 0 0 0.00 % 0 0 0 0.00 %

Total Budget $0 $0 $0 $31,029,728 $31,022,009 $62,051,737







FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds


DP 2 - Fixed Costs0.00 0 0 0 99,208 0.00 0 0 0 87,276

DP 3 - Inflation Deflation0.00 0 0 0 (1,310) 0.00 0 0 0 (821)


DP 5 - ServiceNow0.00 0 0 0 (4,554) 0.00 0 0 0 (4,554)

DP 2401 - Increase Commercial Insurance Premium0.00 0 0 0 1,374,474 0.00 0 0 0 1,374,474




The executive requests adjustments to annualize personal services costs including FY 2021 statewide pay planadjustments, benefit rate adjustments, vacancy savings adjustments and longevity adjustments related to incumbents ineach position at the time of the personal services snapshot.






The executive requests an increase in proprietary funding to provide the funding to pay the Department of Administration'sindirect costs. These costs are charged to the department's programs for services provided, which include accounting,human resources, and legal support.

DP 5 - ServiceNow -

The executive requests a decrease in proprietary funding because of the purchase of ServiceNow licenses and programsfor the 2023 biennium. The Risk Management and Tort Defense Division is anticipating operating efficiencies and othersavings by using ServiceNow.

DP 2401 - Increase Commercial Insurance Premium -

The executive requests an increase in proprietary funding for anticipated increases in commercial insurance premiumcharges for FY 2022 and FY 2023.



Other Issues -

Proprietary Rates

Agency Insurance Fund - 06532


The Risk Management and Tort Defense Division administers a comprehensive plan of property/casualty insuranceprotection on behalf of state government. The division purchases commercial insurance, where cost-effective, to covercatastrophic losses above high deductibles.

State risks that are currently insured through commercial insurance carriers include aircraft, airports, boilers and machinery,bonds (various), crime, cyber/information security, fine art, foreign specialties, foster care, HIPAA, medical malpractice,property, professional liability, and other miscellaneous risks. The state self-insures most commercial insurance risks under$2.0 million per occurrence as well as auto, general liability, inland marine (i.e. property in-transit), and mobile/ specializedequipment. The division also provides consultative services that include training, inspections, program reviews, contractadministration, claims administration, and legal defense to prevent or minimize the adverse effects of physical or financialloss.

The division investigates, evaluates, and resolves tort liability claims (i.e. personal injury or property damage to third parties)and coordinates the adjudication and settlement of other claims involving property damage. This division operates underthe authority of 2-9-101, MCA, through 2-9-305, MCA.


The following 2023 Biennium Report on Internal Service and Enterprise Funds shows the actual and projected expendituresand related revenues associated with the agency insurance fund.




LFDCOMMENT


Expenses

Overall, the executive is proposing an increase in personal services and operating expenses of $1.5 million in each fiscalyear. The increases in personal services totals approximately $84,000 in FY 2022 and $87,000 in FY 2023. This increaseis primarily due to the legislatively approved pay plan and management decisions for market increases

The increase in operating expenses is due to an increase in insurance premiums. The state’s commercial excessinsurance premiums are projected to increase due to unfavorable market conditions. In addition, state government and theuniversity system have experienced historically significant events such as the Montana State University - Bozeman roofcollapse which is expected to increase the states premium by at least 30.0%.

The Risk Management and Tort Defense Division anticipates reserves to be $5.7 million in FY 2020, $4.6million in FY 2021, $10.6 million in FY 2022, and $16.5 million in FY 2023. The actuarial target reserve is$30.9 million for this time period. At the end of the 2023 biennium the reserve will be approximately $14.4

million below the target reserve amount.

Revenues

Montana self-insures its insurance risks for automobile, aviation, general liability, and property via this program. Allstate agencies pay insurance premiums to the Risk Management and Tort Defense Division. The following figure showsinsurance premiums for state agencies in the 2021 biennium and the 2023 biennium and changes in the costs betweenbiennia.




Risk Management and Tort Defense DivisionState Agency Insurance Costs

State Agency 2021 Biennium 2023 Biennium Change % ChangeLegislative Branch $ 97,449 $ 104,710 $ 7,261 7.5%Consumer Counsel 2,897 2,919 22 0.8%Judicial Branch 325,337 329,961 4,624 1.4%Governor's Office 58,519 57,040 (1,479) -2.5%Secretary of State's Office 30,393 27,743 (2,650) -8.7%Commissioner of Political Practices 3,302 3,291 (11) -0.3%State Auditor's Office 47,566 48,329 763 1.6%Office of Public Instruction 93,937 95,050 1,113 1.2%Department of Justice 1,681,643 1,672,951 (8,692) -0.5%Public Service Commission 33,908 34,028 120 0.4%Board of Education 1,835 1,884 49 2.7%Commissioner of Higher Education 15,985,932 18,837,260 2,851,328 17.8%School for Deaf & Blind 134,509 152,703 18,194 13.5%Montana Arts Council 4,572 4,560 (12) -0.3%Montana State Library 30,805 29,838 (967) -3.1%Montana Historical Society 205,827 217,968 12,141 5.9%Department of Fish, Wildlife, & Parks 1,100,857 1,229,719 128,862 11.7%Department of Environmental Quality 696,181 688,972 (7,209) -1.0%Department of Transportation 11,036,162 11,099,855 63,693 0.6%Department of Livestock 183,680 179,563 (4,117) -2.2%Department of Natural Resources and Conservation 981,006 991,319 10,313 1.1%Department of Revenue 502,011 509,830 7,819 1.6%Department of Administration 1,552,819 1,872,819 320,000 20.6%Montana State Fund 1,074,562 1,096,181 21,619 2.0%Public Employees Retirement Board 33,480 33,245 (235) -0.7%Teachers Retirement Board 13,257 12,955 (302) -2.3%Public Defenders Office 201,731 207,918 6,187 3.1%Department of Agriculture 172,945 174,297 1,352 0.8%Department of Corrections 3,555,391 3,721,687 166,296 4.7%Department of Commerce 409,044 536,492 127,448 31.2%Department of Labor & Industry 621,233 621,178 (55) 0.0%Department of Military Affairs 594,709 668,540 73,831 12.4%Department of Public Health and Human Services 5,924,033 5,959,826 35,793 0.6%

$ 47,391,532 $ 51,224,631 $ 3,833,099 8.1%

Overall, revenues generated through premiums allocated to state agencies increased by 8.1%. Depending on the numberand types of assets owned and/or the agency’s loss history, insurance premiums paid by agencies may vary. Premiumamounts for state agencies are determined based on the predicted costs of losses the state may incur as a result ofclaims and the costs for operating the division. The division utilizes industry standards and practices employed by othermunicipalities and municipal risk pools in setting rates. Budgeted authority to pay insurance premiums is a fixed cost itemin agency budgets.

Premiums for the 2023 biennium are apportioned based upon exposure and loss experience as follows:

• Automobile – comprised of two separate components 1) comprehensive and collision based upon total values



of reported vehicles; and 2) auto liability premium based on agency losses over the past 4 years and number ofvehicles reported

• Aviation – allocated to those agencies that have aircraft based on charges on commercial insurance carriers foreach aircraft, depending on the year, make, model, and value of the aircraft. Airport premium is apportioned tothose agencies that have airports based upon the number of airports

• General Liability – comprised of commercial coverage negotiated with commercial insurance carriers and self-insurance for those risks that are not insurable through commercial coverage based on number of exposures

• Property – allocated to each agency based on its percentage of reported exposures (e.g. building replacementcost values, boilers and machinery, etc.)

Proprietary Rates

The figure below shows the rates proposed by the executive for the 2023 biennium. The rates charged in the 2021 bienniumare shown for comparison purposes. The executive is proposing rate changes for premiums related to automobile, generalliability and property/miscellaneous insurance.

Figure 42



Fee Description:

Auto - Comprehensive/Collision $2,022,570 $2,022,570 $1,820,313 $1,820,313Aviation $169,961 $169,961 $169,961 $169,961General Liability $14,573,235 $14,573,236 $14,613,042 $14,613,042Property/Miscellaneous $6,930,000 $6,930,000 $9,009,000 $9,009,000

The changes in rates, when compared to the base year of FY 2021, result in a:

• Decrease of 10.0% for automobile premiums• Increase of 0.3% for general liability premiums• Increase of 30.0% for property and miscellaneous premiums



61010 - Department Of Administration 37-Montana Tax Appeal Board






BienniumChange

Biennium% Change

Personal Services 1,024,968 1,030,395 5,427 0.53 %Operating Expenses 307,746 330,067 22,321 7.25 %Local Assistance 29,366 29,366 0 0.00 %


General Fund 1,362,080 1,389,828 27,748 2.04 %

Total Funds $1,362,080 $1,389,828 $27,748 2.04 %


Program Description

The Montana Tax Appeal Board (MTAB) was established by the authority granted in Article VIII, Section 7 of the Montana Constitution and operates under statutes found in 15-2-101 of the MCA. MTAB is an administrative court that is independent of the Montana Department of Revenue (DOR). The board consists of three members, who hear appeals as full-time state employees, with two support staff. Board members are appointed by the Governor to rotating six-year terms and are subject to Legislative confirmation after a hearing before the Senate Taxation Committee and a recorded vote of the full Montana Senate.

MTAB executes the only state tax appeal system for citizens to dispute any action of the Montana DOR or other state agencies with taxing authority. It is the only fact-finding court of record in tax disputes, and as such holds formal hearings in cases to find facts and resolve the disputes through written opinions which can be appealed to Montana District Courts. The board hears appeals from decisions of the 56 county tax appeal boards, primarily involving residential and commercial property valuation and classification. It also takes original jurisdiction cases in matters involving income taxes, corporate taxes, severance taxes, centrally assessed property, new industry property, motor fuels taxes, vehicle taxes, and cabin site leases.

The duties of the board also include funding, administering and training the county tax appeal boards required by the Constitution. The Montana Tax Appeal Board trains and supports the 56 county tax appeal boards, reimbursing counties for expenses associated with the county tax appeal function. Specifically, secretary wages, office supplies, and mileage/per diem for county board members are reimbursed from the MTAB budget approved by the legislature.



Montana Tax Appeal BoardMajor Budget Highlights

• The Montana Tax Appeal Board’s 2023 biennium requestedappropriations are approximately $28,000 or 2.0% higher than the2021 biennium

• The executing proposes increases in general fund for statewidepresent law adjustment for fixed costs and a new proposal for fixedcosts




Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 5.50 5.50 5.50 5.50

Personal Services 440,693 509,042 515,926 514,608 515,787Operating Expenses 122,565 154,968 152,778 164,971 165,096Local Assistance 2,188 14,683 14,683 14,683 14,683


General Fund 565,446 678,693 683,387 694,262 695,566

Total Funds $565,446 $678,693 $683,387 $694,262 $695,566




The Montana Tax Appeal Board is funded entirely with general fund. The HB 2 modified budget of $679,000 was 83.3%expended as of the end of FY 2020. Personal services were 86.6% expended, operating expenses were 79.1% expendedand local assistance was 14.9% expended.

The COVID-19 pandemic impacted Montana Tax Appeal Board expenditures. The hearings that were scheduled fromMarch through May 2020 were rescheduled for July through September 2020. MTAB pays the salaries for the countysecretaries and the per diem for the County Tax Appeal Board members, so the delayed hearings impacted expenditures.In addition to the impacts of COVID-19, there was a position that was not fully utilized and a short vacancy in the law clerkposition.




Program Highlights


Executive Request

The Montana Tax Appeal Board is requesting an increase of approximately $11,000 in FY 2022 and $12,000 in FY2023 above the FY 2021 base appropriations. The proposed increases are primarily due to the statewide present lawadjustments for fixed costs and a new proposal for a fixed cost related to natural resource information system (NRIS) andthe geographic information system (GIS). The proposed increases are partially offset by requested reductions in personalservices and operational efficiency gained by using ServiceNow.


Personal services $516,000 or 75.5% of total FY 2021 appropriations. The executive proposes a decrease ofapproximately $1,300 in FY 2022 and $140 in FY 2023. The table below shows the total adjustments for each personalservices category.

Figure 43Department of AdministrationMontana Tax Appeal Board

FY 2022 Statewide Present Law Adjustment for Personal Services

Expected Changes $ 915Management Decisions (2,233)Budget Modifications -Total Present Law Adjustment $ (1,318)

The management decisions category is the cause of the decrease in the statewide present law adjustment for personalservices. This decrease is primarily due to the law clerk position being vacant at the time of the personal servicessnapshot. Vacant positions are funded at 83.0% of the market midpoint for the job code of the position.

Funding


Department of Administration, 37-Montana Tax Appeal BoardFunding by Source of Authority

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

01100 General Fund 1,389,828 0 0 0 1,389,828 100.00 %




Total All Funds $1,389,828 $0 $0 $0 $1,389,828

The MTAB is fully funded with general fund. General fund provides support for travel expenses, compensation, and all other incidental expenses of the country tax boards. Office space and equipment for the county tax appeal boards must be furnished by the county.






Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of Budget2021 Base Budget 683,387 683,387 1,366,774 98.34 % 683,387 683,387 1,366,774 98.34 %SWPL Adjustments 8,805 10,116 18,921 1.36 % 8,805 10,116 18,921 1.36 %PL Adjustments (651) (658) (1,309) (0.09)% (651) (658) (1,309) (0.09)%New Proposals 2,721 2,721 5,442 0.39 % 2,721 2,721 5,442 0.39 %

Total Budget $694,262 $695,566 $1,389,828 $694,262 $695,566 $1,389,828




FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds

DP 1 - Personal Services0.00 (1,318) 0 0 (1,318) 0.00 (139) 0 0 (139)

DP 2 - Fixed Costs0.00 10,152 0 0 10,152 0.00 10,273 0 0 10,273


DP 4 - Allocate Department Indirect/Administrative Costs0.00 542 0 0 542 0.00 535 0 0 535

DP 5 - ServiceNow0.00 (1,193) 0 0 (1,193) 0.00 (1,193) 0 0 (1,193)














The executive requests an increase in general fund to provide the funding to pay the Department of Administration's indirect costs. These costs are charged to the department's programs for services provided, which include accounting, human resources, and legal support.

DP 5 - ServiceNow -

The executive requests a decrease in general fund because of the purchase of ServiceNow licenses and programs for the 2023 biennium. The executive is anticipating operating efficiencies and other savings in the Montana Tax Appeal Board by using ServiceNow.

New Proposals



FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds


Total 0.00 $2,721 $0 $0 $2,721 0.00 $2,721 $0 $0 $2,721





65010 - Department Of Commerce SUMMARY






BienniumChange

Biennium% Change

Personal Services 8,218,497 8,364,140 145,643 1.77 %Operating Expenses 9,598,832 10,432,112 833,280 8.68 %Local Assistance 92,000 92,000 0 0.00 %Grants 48,254,371 47,862,080 (392,291) (0.81)%Transfers 1,602,247 1,202,248 (399,999) (24.96)%Debt Service 2,753 0 (2,753) (100.00)%


General Fund 11,226,991 11,483,501 256,510 2.28 %State/Other Special Rev. Funds 14,386,989 14,544,709 157,720 1.10 %Federal Spec. Rev. Funds 42,154,720 41,918,378 (236,342) (0.56)%Proprietary Funds 0 5,992 5,992 0.00 %

Total Funds $67,768,700 $67,952,580 $183,880 0.27 %

Total Ongoing $63,055,154 $67,752,654 $4,697,500 7.45 %Total OTO $4,713,546 $199,926 ($4,513,620) (95.76)%

Mission Statement

The Department of Commerce through its employees, community partners, public outreach, and media contacts enhances economic prosperity in Montana; fosters community lead diversification and sustainability of a growing economy; maintains and improves Montana infrastructure, housing and facilities; and promotes and enhances Montana’s positive national and international image.

Please refer to the agency profile for the Department of Commerce at https://leg.mt.gov/lfd/state-agency-profiles/department-commerce/ for additional information about the agency’s organization structure, historical expenditures, FY 2020 expenditure dashboard, and recent studies, audits, and legislation.


https://leg.mt.gov/lfd/state-agency-profiles/department-commerce/

https://leg.mt.gov/lfd/state-agency-profiles/department-commerce/


Department of CommerceMajor Budget Highlights

• The Department of Commerce 2023 biennium budget request isapproximately $184,000 or 0.3% more than the 2021 bienniumbudget. The executive proposal includes:

◦ Increases in general fund due to statewide present lawadjustments for personal services and fixed costs

◦ New proposals to make ongoing the general fundappropriations funded with one-time-only appropriations forseveral biennia for the following programs:

▪ Primary Sector Workforce Training Grant Program▪ Indian Country Economic Development Program▪ Native Language Preservation Program▪ State trade and export promotion

◦ A decrease in state special revenue for the elimination of theHB 2 biofuels appropriation from the big sky trust fund paidto MSU Northern and an increase in state special revenuefor the Delivering Local Assistance Program (DLA) and theHistoric Preservation Grant Program




Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 46.05 46.05 50.05 50.05

Personal Services 3,273,554 4,079,355 4,139,142 4,175,578 4,188,562Operating Expenses 2,637,637 4,654,264 4,944,568 5,267,618 5,164,494Local Assistance 0 46,000 46,000 46,000 46,000Grants 15,651,122 24,300,310 23,954,061 23,932,003 23,930,077Transfers 800,000 801,123 801,124 601,124 601,124Debt Service 2,754 2,753 0 0 0


General Fund 5,357,478 5,647,735 5,579,256 5,744,191 5,739,310State/Other Special Rev. Funds 4,097,458 7,194,766 7,192,223 7,309,377 7,235,332Federal Spec. Rev. Funds 12,910,131 21,041,304 21,113,416 20,965,759 20,952,619Proprietary Funds 0 0 0 2,996 2,996

Total Funds $22,365,067 $33,883,805 $33,884,895 $34,022,323 $33,930,257

Total Ongoing $20,202,199 $31,476,929 $31,578,225 $33,922,360 $33,830,294Total OTO $2,162,868 $2,406,876 $2,306,670 $99,963 $99,963

Agency Discussion


The Department of Commerce’s HB 2 modified budget of approximately $33.9 million was 66.0% expended as of the end


Agency Highlights

LFDCOMMENT


of FY 2020 leaving about $11.5 million in unspent budget authority at the end of the fiscal year. The primary reasons forthe low percentage expended are:

• Vacant positions• Lower operating expenses• Grant activity

Personal services are 12.0% of the HB 2 modified budget at $4.1 million and were 80.2% expended in FY 2020. As ofAugust 21, Department of Commerce had 6.70 FTE or 14.5% of its FTE budgeted in HB 2 vacant. In FY 2020, Departmentof Commerce had 87.0% of its positions filled, resulting in vacancy savings of $0.8 million.

Operating expenses are 13.7% of the HB 2 modified budget and were 56.7% expended at the end of FY 2020, leaving$2.0 million in unexpended appropriation authority. Lower expenditures for federal grants in the Community DevelopmentDivision were the primary reason for the lower expended percentage in FY 2020.

Grants totaling $24.3 million were 64.4% expended. The low percentage is primarily due to the timing of accruing validobligations, timing related to grant disbursements, and fluctuations in the amount of federal grant funds received.

Due to the Covid-19 pandemic the Department of Commerce received additional funds to support sectors ofthe economy that were especially impacted. This includes funds for business stabilization, tourism support,housing assistance, and loan deferments. The figure below provides further detail of what programs received

funds from the coronavirus relief funds (CRF) or the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

Figure 1Department of Commerce

COVID-19 Funds- May 7th, 2020 through November 29, 20202021 Biennium

Division Funding Budget ExpendituresOffice of Tourism and Business Development

Business Stabilization Coronavirus relief funds $264,000,000 $188,529,999Tourism Education Coronavirus relief funds 15,000,000 10,639,247COVID East Glacier Coronavirus relief funds 2,000,000 856,792Census Promotion Coronavirus relief funds 660,500 511,154Small Business Development CARES Act 1,280,000 172,474

Housing DivisionHousing Assistance Coronavirus relief funds 17,000,000 6,972,905Submittal grant program Coronavirus relief funds 149,258 148,500Section 8 Housing Choice CARES Act 1,244,721 29,413Tenant based housing vouchers CARES Act 461,462 0Moderate Rehabilitation Program CARES Act 142,811 0

Board of InvestmentsLoan Deferment Coronavirus relief funds 71,000,000 56,318,138

Director's OfficeCares Administration Coronavirus relief funds 660,745 0

Total Funding for COVID-19 $373,599,497 $264,178,622

Overall, the Department of Commerce received approximately $373.6 million from May 7th, 2020 through November 29th,2020 and expended approximately $264.2 million.




While overall total appropriations between the two fiscal years are almost identical, appropriations for operating expensesare higher in FY 2021 while those for grants are lower due to a transfer of authority between the two categories that occurredin FY 2020. This transfer is discussed further in the program discussion narrative for the Office of Tourism and BusinessDevelopment.



Figure 2

FY 2021 Legislative Appropriations - Department of CommerceExecutive % Change


Authority Action51 MT OFFICE OF TOURISM & BUS DEV61000 Personal Services 1,665,031 (1,990) 1,663,041 -0.1%62000 Operating Expenses 2,999,664 (317,250) 2,682,414 -10.6%65000 Local Assistance 46,000 - 46,000 0.0%66000 Grants 677,524 318,116 995,640 47.0%68000 Transfers-out 200,000 1,124 201,124 0.6%51 MT OFFICE OF TOURISM & BUS DEV Total 5,588,219 - 5,588,219 0.0%60 COMMUNITY DEVELOPMENT DIVISION61000 Personal Services 2,266,858 - 2,266,858 0.0%62000 Operating Expenses 1,998,480 - 1,998,480 0.0%66000 Grants 20,922,921 - 20,922,921 0.0%60 COMMUNITY DEVELOPMENT DIVISION Total 25,188,259 - 25,188,259 0.0%78 BOARD OF HORSE RACING61000 Personal Services 20,459 - 20,459 0.0%62000 Operating Expenses 181,288 - 181,288 0.0%78 BOARD OF HORSE RACING Total 201,747 - 201,747 0.0%81 DIRECTORS OFFICE66000 Grants 600,000 - 600,000 0.0%81 DIRECTORS OFFICE Total 600,000 - 600,000 0.0%65010 DEPARTMENT OF COMMERCE Total 31,578,225 - 31,578,225 0.0%

Legislative action for the Department of Commerce includes base appropriations contained in HB 2, plus otherappropriations passed by the 2019 Legislature that were designated to be included in the base. The 2019 Legislatureenacted HB 292 which temporarily extended the increase of coal severance tax allocation for the Coal Board. Theallocation continues at 5.8% until FY 2024 when it is reduced to 2.9%. In FY 2021, appropriation authority of $1,657,000 instate special revenue for the extension of the 5.8% allocation was transferred by the Office of Budget and Program Planningfrom HB 715. HB 715 required the funding to be included in the 2023 biennium base budget.

The Office of Tourism and Business Development transferred approximately $2,000 in personal services and $316,000 inoperating expenses to grants for the Primary Business Sector Training Program. The remaining approximately $1,000 was



transferred from operating expenses to debt services for capital lease payments.

Executive Request

The executive proposes an increase above the FY 2021 base in general fund and federal special revenue appropriationsof approximately $184,000 in FY 2022 and FY 2023. The proposed increase in the general fund is primarily due to theexecutive requesting funding for the Primary Business Sector Training Program, Indian Country Economic DevelopmentProgram, and the Native Language Preservation Program.

The executive requests will be discussed in further detail at the program level.

5.0% Plan

Statute requires that agencies submit plans to reduce general fund and certain state special revenue funds by 5.0%. TheDepartment of Commerce has provided a plan for a reduction of approximately $164,000 general fund and $41,000 statespecial revenue funds. The plan includes reductions in funds available for business and community development activities.

A summary of the entire 2023 biennium 5.0% plan submitted for this agency can be found online at the Section Asubcommittee page on “Tab D Materials.”


In order to explain the factors influencing personal services changes, the proposed statewide personal services present lawadjustment (DP 1) has been broken down into three categories, as follows:






DP 1 - FY 2022


ManagementDecisions

BudgetModifications SWPL1

51 OFFICE OF TOURISM & BUS DEVELOPMENT 40,278 (6,529) 1,990 35,73960 COMMUNITY DEVELOPMENT DIVISION 14,107 (161,800) - (147,693)78 BOARD OF HORSE RACING 106,627 4,589 - 111,216Agency Total 161,011 (163,739) 1,990 (738)

Personal services were $4.1 million or 12.2% of total FY 2021 HB 2 appropriations. The executive proposes a decrease ofapproximately $700 in FY 2022 and an increase of $10,400 in FY 2023. Expected changes and management decisions arecontributing to the statewide present law adjustment for personal services.



Details of significant factors included in the statewide present law adjustment for personal services will be discussed at theprogram level.

Funding


Total Department of Commerce Funding by Source of Authority2023 Biennium Budget Request - Department of Commerce

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

General Fund 11,483,501 0 0 3,600,001 15,083,502 5.05 %State Special Total 14,344,783 199,926 0 73,243,284 87,787,993 29.41 %Federal Special Total 41,918,378 0 0 2,088,925 44,007,303 14.74 %Proprietary Total 5,992 0 145,176,536 6,470,788 151,653,316 50.80 %Other Total 0 0 0 0 0 0.00 %

Total All Funds $67,752,654 $199,926 $145,176,536 $85,402,998 $298,532,114Percent - Total All Sources 22.70 % 0.07 % 48.63 % 28.61 %

Over 75.0% of the overall funding in the Department of Commerce is not budgeted through HB 2, but provided as eithernon-budgeted proprietary funding or as statutory appropriations. HB 2 appropriations of general fund, state special revenue,and federal special revenues comprise the remaining funding for the Department of Commerce and will be discussed infurther detail at the program level.

Statutory appropriations are explained in further detail within each program receiving and spending those funds.




Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of Budget2021 Base Budget 3,354,256 3,354,256 6,708,512 58.42 % 31,578,225 31,578,225 63,156,450 92.94 %SWPL Adjustments 67,278 63,347 130,625 1.14 % 144,613 48,174 192,787 0.28 %PL Adjustments 47,705 46,756 94,461 0.82 % (58,825) (55,837) (114,662) (0.17)%New Proposals 2,274,952 2,274,951 4,549,903 39.62 % 2,358,310 2,359,695 4,718,005 6.94 %

Total Budget $5,744,191 $5,739,310 $11,483,501 $34,022,323 $33,930,257 $67,952,580

HB 2 Language

The executive is not proposing HB 2 language for the Department of Commerce.



65010 - Department Of Commerce 51-Office of Tourism & Business Development






BienniumChange

Biennium% Change

Personal Services 3,677,250 3,796,196 118,946 3.23 %Operating Expenses 5,247,630 5,796,328 548,698 10.46 %Local Assistance 92,000 92,000 0 0.00 %Grants 5,261,529 4,846,576 (414,953) (7.89)%Transfers 1,602,247 1,202,248 (399,999) (24.96)%Debt Service 803 0 (803) (100.00)%


General Fund 9,373,406 9,555,118 181,712 1.94 %State/Other Special Rev. Funds 4,815,609 4,456,146 (359,463) (7.46)%Federal Spec. Rev. Funds 1,692,444 1,722,084 29,640 1.75 %

Total Funds $15,881,459 $15,733,348 ($148,111) (0.93)%

Total Ongoing $11,167,913 $15,733,348 $4,565,435 40.88 %Total OTO $4,713,546 $0 ($4,713,546) (100.00)%

Program Description

The Montana Office of Tourism and Business Development (MOTBD) markets Montana’s spectacular unspoiled nature,vibrant and charming small towns, breathtaking experiences, relaxing hospitality, and competitive business climate topromote the state as a place to visit and do business. Its goal is to sustain and enhance the quality of life for all Montanansand their communities by strengthening the economy through job creation and business development. In conjunction withother divisions of the Montana Department of Commerce and partners around the state. MOTBD’s programs aim to supportbusinesses through technical assistance, research, and access to grants and loans while inspiring visitation to maximizethe economic impact of tourism, encourage private sector investment and ensure that Montana is a great place to live, workand play today and for future generations.

The mission of the Office of Tourism and Business Development Division is to provide the tools to create good jobs, buildstrong communities, and grow Montana’s economy.

The division is comprised of five bureaus funded by House Bill 2 and statutory appropriations:

• Budget and Operations Bureau• Marketing Bureau• Industry Services and Outreach Bureau• Business Assistance Bureau• Research & Information Services Bureau

The Office of Tourism and Business Development Division responsibilities are mandated primarily in Title 15, Chapter 35, Section 108; Title 15, Chapter 65, Sections 121-122, Title 17, Chapter 6, Part 4, Title 39, Chapter 11, Title 90, Chapters 1 and 3; Title 15, Chapter 65, and Title 2, Chapter 15, MCA.



Office of Tourism and Business DevelopmentMajor Budget Highlights

• The Office of Tourism and Business Development’s 2023 bienniumbudget request is approximately $148,000 or 0.9% less than the 2021biennium budget. The executive proposal includes:

◦ Decreases in state special revenue primarily due toreductions in grants and transfers

◦ Increases in personal services and operating expensesfrom the general fund, state special revenue, and federalspecial revenue are due to statewide present lawadjustments for personal services, fixed costs, and OTBDadministrative cost adjustments

◦ Requests for ongoing general fund appropriations for thePrimary Sector Workforce Training Grant Program, IndianCountry Economic Development Program, Native LanguagePreservation Program, and state trade and exportpromotion

◦ A decrease in state special revenue for the elimination of theHB 2 base level Biofuels appropriation from the big sky trustfund paid to MSU Northern




Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 19.35 19.35 21.35 21.35

Personal Services 1,703,783 1,825,425 1,851,825 1,894,794 1,901,402Operating Expenses 1,804,439 2,482,830 2,764,800 2,938,372 2,857,956Local Assistance 0 46,000 46,000 46,000 46,000Grants 2,585,776 2,830,389 2,431,140 2,424,251 2,422,325Transfers 800,000 801,123 801,124 601,124 601,124Debt Service 804 803 0 0 0


General Fund 4,449,145 4,723,097 4,650,309 4,777,959 4,777,159State/Other Special Rev. Funds 1,637,955 2,424,472 2,391,137 2,263,491 2,192,655Federal Spec. Rev. Funds 807,702 839,001 853,443 863,091 858,993

Total Funds $6,894,802 $7,986,570 $7,894,889 $7,904,541 $7,828,807

Total Ongoing $4,731,934 $5,579,694 $5,588,219 $7,904,541 $7,828,807Total OTO $2,162,868 $2,406,876 $2,306,670 $0 $0



The Montana Office of Tourism and Business Development expended 86.3% of its $8.0 million HB 2 modified budget in FY 2020. Operating expenses were 72.7% expended, primarily due to:


Program Highlights


• Microbusiness loan account, which was 0.0% expended because all loan funds were already dispersed inprevious biennia

• GAP Financing Program was 55.0% expended in FY 2020, as requests for funding were below levels anticipatedin the budget

• Private promotion was 37.3% expended. Promotional activities were budgeted at $285,000. The collection ofprivate funds was below the level estimated in the budget


Differences between FY 2020 and FY 2021 appropriations are primarily in operating expenses and grants. Appropriationsfor operating expenses are $339,000 higher in FY 2021 than in FY 2020 due to a series of transactions including:

• Transfer of approximately $298,000 in operating expenses supported by state special revenue appropriations fromthe Microbusiness Loan Program to the Primary Sector Workforce Training Program. This transaction nets to zeroand thus does not appear in the figure above

• Transfer of approximately $312,000 in operating expenses from the Primary Sector Workforce Training Programto grant appropriations reducing operating expenses in FY 2020

Grant expenditures in FY 2020 are higher than FY 2021 due to these transactions.

Executive Request

The Office of Tourism and Business Development's budget proposed by the executive is $148,000 or 0.9% less than the2021 biennium budget. The decrease is primarily due to a reduction in grants and transfers.

Personal services were $1.9 million or 23.5% of total FY 2021 appropriations. The executive proposes increases in generalfund, state special, and federal special revenue appropriations above the FY 2021 base, totaling approximately $36,000 inFY 2022 and $40,000 in FY 2023. This change is primarily due to increases from the statewide present law adjustment forpersonal services, which will be discussed in detail in the Program Personal Services section below.

Operating expenses were approximately $2.8 million or 35.0% of total FY 2021 appropriations. The executive proposesincreases in general fund, state special, and federal special revenue appropriations above the FY 2021 base, totalingapproximately $123,000 in FY 2022 and $41,000 in FY 2023. This change is primarily due to increases from the statewidepresent law adjustment for fixed costs and increases from a new proposal for the OTBD administrative cost adjustments,which will be discussed in detail in the Present Law Adjustments section below.


Personal services were $1.9 million or 23.5% of total FY 2021 appropriations for the Office of Tourism & Business Division.The executive proposes a statewide present law increase of approximately $36,000 in FY 2022 and $40,000 in FY 2023.

The 2023 biennium personal service statewide present law request includes expected changes, management decisions,and budget modifications. The personal services management decisions include broadband pay raises and wage changesdue to employee turnover. The budget modification is a transfer of about $2,000 from personal services to grants.

Funding



65010 - Department Of Commerce 51-Office of Tourism & Business DevelopmentDepartment of Commerce, 51-Office of Tourism & Business Development

Funding by Source of Authority

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

01100 General Fund 9,555,118 0 0 3,600,001 13,155,119 14.51 %

02090 Business Asst-Private 189,562 0 0 0 189,562 0.26 %02100 Distressed Wood Products RLF 0 0 0 1,147,560 1,147,560 1.56 %02116 Accommodation Tax Account 73,486 0 0 42,099,977 42,173,463 57.23 %02154 MT Promotion-Private 570,000 0 0 0 570,000 0.77 %02210 Microbusiness Admin Acct 359,526 0 0 0 359,526 0.49 %02212 Microbusiness Loan Acct 997,768 0 0 0 997,768 1.35 %02229 MT SSBCI Servicing Fees 68,560 0 0 0 68,560 0.09 %02254 Regional Accommodation Tax 0 0 0 17,926,526 17,926,526 24.33 %02271 L&C Bicentennial Plate Fund 0 0 0 21,400 21,400 0.03 %02293 Film Production Credit 0 0 0 30,000 30,000 0.04 %02444 Census Voting District Project 17,950 0 0 0 17,950 0.02 %02771 Big Sky Economic Dev Program 0 0 0 8,055,606 8,055,606 10.93 %02848 SBDC Private Revenue NonFed 93,950 0 0 (46,975) 46,975 0.06 %02939 State-Tribal Economic Devel 376,478 0 0 0 376,478 0.51 %02344 Primary Sector Training 1,358,866 0 0 0 1,358,866 1.84 %02672 GAP Financing Program 350,000 0 0 0 350,000 0.47 %

State Special Total $4,456,146 $0 $0 $69,234,094 $73,690,240 81.29 %

03092 Distressed Woods Federal 0 0 0 2,088,925 2,088,925 54.81 %03172 CARES Business Stabilization 0 0 0 0 0 0.00 %03207 Small Business Dev. Centers 1,722,084 0 0 0 1,722,084 45.19 %03331 OIT STEP 0 0 0 0 0 0.00 %03069 CARES Tourism Education 0 0 0 0 0 0.00 %03584 SBDC CARES Act 0 0 0 0 0 0.00 %03685 CARES ACT Census 0 0 0 0 0 0.00 %

Federal Special Total $1,722,084 $0 $0 $2,088,925 $3,811,009 4.20 %


Total All Funds $15,733,348 $0 $0 $74,923,020 $90,656,368

HB 2 Authority

General FundGeneral fund appropriations comprise approximately 43.4% of proposed HB 2 appropriations. The figure below providesadditional information regarding the programs funded with general fund.


Montana Office of Tourism and Business DevelopmentProposed HB 2 General Fund Appropriations

FY 2022 FY 2023Small Business Innovation Research/

Small Business Technology Transfer (SBIR/STTR) 375,000 375,000Montana Manufacturing Extension Center (MMEC) 100,000 100,000Research & Information Services 1,178,132 1,177,740Made in Montana Program 146,543 146,494Small Business Development Center (SBDC) 275,739 275,489State Tribal Economic Development 334,702 334,619Commerce Loan Fund 92,891 92,866NP 5101 - Primary Business Sector Training 600,000 600,000NP 5102 - Indian Country Economic Development 874,952 874,951NP 5103 - Montana Indian Language Preservation 750,000 750,000


50,000 50,000NP 5105 - Export Trade

Total $ 4,777,959 $ 4,777,159

LFDCOMMENT



State special revenue appropriations comprise 41.5% of proposed HB 2 appropriations. These appropriations includeauthority for microbusiness loans, primary business sector training, private contributions for joint private/state targetedtourism advertising campaigns, Big Sky Economic Development program, and the State-Tribal Economic DevelopmentProgram.

The big sky economic development (BSED) trust fund is established by statute and requires 25.0% of thecoal severance tax available to the coal severance tax permanent trust be segregated into the BSED trustfund. The income from the BSED trust is deposited into the BSED income fund within the trust and is

available for transfer to the BSED state special revenue fund.

The purpose, as defined in statute, of the Big Sky Economic Development Program is to:

• Create good-paying jobs for Montana residents• Promote long-term, stable economic growth in Montana• Encourage local economic development organizations• Create partnerships between the state, local governments, tribal governments, and local economic development

organizations that are interested in pursuing these same economic development goals• Retain or expand existing businesses• Provide a better life for future generations through greater economic growth and prosperity in Montana• Encourage workforce development, including workforce training and job creation, in high-poverty counties by

providing targeted assistance

The BSED state special revenue account further defines the uses of the fund. Except for money used for administrativeexpenses:

• 75.0% must be allocated for distribution to local governments and tribal governments to be used for job creationefforts

• 25.0% must be allocated for distribution to certified regional development corporations, economic developmentorganizations that are in a county that is not part of a certified regional development corporation, and tribalgovernments

Statutory appropriations for the Big Sky Economic Development Program will comprise all expenditures from the statespecial revenue fund. The figure below provides information on the fund balance for the three BSED funds.


Big Sky Economic Development Funds

Actual FY 2020Estimated FY

2021Proposed FY

2022Proposed FY

2023Big Sky Economic Development Trust Fund - 09051Beginning Fund Balance $ 110,802,106 $ 116,745,560 $ 122,284,012 $ 129,605,994Revenues (Transfers In)** 5,940,508 5,579,000 5,498,000 5,411,000Transfers Out 2,946 (40,548) (40,548) (40,548)Ending Fund Balance $ 116,745,560 $ 122,284,012 $ 129,605,994 $ 136,558,094



Big Sky Economic Development Trust Income Fund - 09052Beginning Fund Balance $ 4,586,726 $ 6,369,137 $ 7,596,732 $ 9,017,163Revenues (Transfers In)** 3,782,411 3,927,595 4,120,431 3,404,834Transfers Out (2,000,000) (2,700,000) (2,700,000) (2,700,000)Ending Fund Balance $ 6,369,137 $ 7,596,732 $ 9,017,163 $ 9,721,997

Big Sky Economic Development Trust Fund - 02771Beginning Fund Balance $ (1,718,706) $ (2,724,117) $ (3,066,126) $ (3,467,381)

Revenues 2,001,853 3,946,000 3,827,000 3,627,000

ExpendituresPersonal Services (228,810) (303,760) (299,528) (299,463)Operating Expenses (86,381) (117,851) (116,209) (116,184)Grants (2,551,893) (3,130,260) (3,086,640) (3,085,980)Debt Services (421) (99) (96) (97)Transfers Out (198,559) (736,039) (725,782) (725,627)

Total Expenditures (3,066,064) (4,288,009) (4,228,255) (4,227,351)

Other Adjustments 58,800

Ending Fund Balance $ (2,724,117) $ (3,066,126) $ (3,467,381) $ (4,067,732)* FY 2021 statutory appropriation grants are estimated using historical data**Updated with preliminary revenue estimate as of November 2020

(excludes unrealized investment gains and losses)

The big sky economic development trust fund state special revenue account - 02771 shows over expenditures ofapproximately $3.5 million and $4.0 million in FY 2022 and 2023, respectively, in the figure above. This is primarily due toexpenditures being accrued but funding for grants not being disbursed until grantees fulfill requirements for reimbursement.Grant funding from the big sky economic development trust income fund 09052 will be disbursed as recipients fulfil grantrequirements.


Federal special revenue appropriations comprise 15.1% of total proposed HB 2 appropriations and are for small businessdevelopment centers.


The majority of statutory appropriations are from lodging and facility taxes and are used to support tourism and filmpromotion in the state. Statutory appropriations also include funding for the Distressed Wood Products Program and theBig Sky Economic Development Program.







Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of Budget2021 Base Budget 2,425,309 2,425,309 4,850,618 50.76 % 5,588,219 5,588,219 11,176,438 71.04 %SWPL Adjustments 34,299 34,755 69,054 0.72 % 117,756 38,727 156,483 0.99 %PL Adjustments 43,399 42,144 85,543 0.90 % 40,582 42,903 83,485 0.53 %New Proposals 2,274,952 2,274,951 4,549,903 47.62 % 2,157,984 2,158,958 4,316,942 27.44 %

Total Budget $4,777,959 $4,777,159 $9,555,118 $7,904,541 $7,828,807 $15,733,348

One-time-only requests for the Primary Sector Workforce Training Grant Program, Indian Country Economic DevelopmentProgram, Native Language Preservation Program, and the 2020 Decennial Census are excluded in the FY 2021 basebudget. For the 2023 biennium budget those historically OTO programs are being proposed by the executive as ongoing.For additional detail about those, refer to the new proposals following present law adjustments below.




FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds

DP 1 - Personal Services0.00 31,487 1,382 2,870 35,739 0.00 35,624 1,564 3,247 40,435

DP 2 - Fixed Costs0.00 3,554 75,876 3,329 82,759 0.00 (404) 194 (1,033) (1,243)


DP 4 - ServiceNow0.00 (1,637) (1,724) (656) (4,017) 0.00 (1,637) (1,724) (656) (4,017)

DP 5108 - OTBD ADMINISTRATIVE COSTS ADJUSTMENTS HB20.00 45,036 (4,542) 4,105 44,599 0.00 43,781 (853) 3,992 46,920

Grand Total All Present Law Adjustments0.00 $77,698 $70,992 $9,648 $158,338 0.00 $76,899 ($819) $5,550 $81,630




1. Expected Changes2. Personal services management decisions3. Modifications made to the personal services budget in the 2021 biennium







DP 4 - ServiceNow -


DP 5108 - OTBD ADMINISTRATIVE COSTS ADJUSTMENTS HB2 -

This change package augments the 2023 biennium appropriation request for the Office of Tourism and BusinessDevelopment to match the amount of anticipated private funds to be received as a result of more public/private partnershipsand enhancements to the State Tribal Tourism Program. Adjustments are also made for computer equipment, and forindirect costs charged by the Director's Office for services provided to the division.

New Proposals



FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds

DP 5101 - OTBD PRIMARY BUSINESS SECTOR TRAINING HB2 BASE1.00 600,000 83,032 0 683,032 1.00 600,000 84,007 0 684,007

DP 5102 - OTBD INDIAN COUNTRY ECONOMIC DEVELOPMENT HB2 BASE1.00 874,952 0 0 874,952 1.00 874,951 0 0 874,951

DP 5103 - OTBD MT INDIAN LANGUAGE PRESERVATION HB2 BASE BIEN0.00 750,000 0 0 750,000 0.00 750,000 0 0 750,000

DP 5105 - OTBD INCREASE EXPORT TRADE PROGRAM FUNDING HB20.00 50,000 0 0 50,000 0.00 50,000 0 0 50,000

DP 5107 - OTBD ELIMINATE MSUN BIOFUELS APPROPRIATION HB20.00 0 (200,000) 0 (200,000) 0.00 0 (200,000) 0 (200,000)

Total 2.00 $2,274,952 ($116,968) $0 $2,157,984 2.00 $2,274,951 ($115,993) $0 $2,158,958


DP 5101 - OTBD PRIMARY BUSINESS SECTOR TRAINING HB2 BASE -

The Primary Sector Workforce Training Grant (WTG) is codified in Title 39, Chapter 11, MCA. The WTG is a state-funded program that provides grant funds to new and existing primary sector Montana businesses for training their employees in newly created full-time and part-time jobs. The executive requests that this program be included as part of the Department's base funding under HB 2. The program has been funded in the legislative budget as an OTO item for multiple biennia.

DP 5102 - OTBD INDIAN COUNTRY ECONOMIC DEVELOPMENT HB2 BASE -

This executive proposal would move Indian Country Economic Development (ICED) Program into the general fund base and includes funding for an existing FTE. The ICED program has been OTO, general funded for 16 years starting in fiscal year 2006. The program was established to fulfill statutory obligations denoted in 90-1-132, MCA. ICED provides small equity grants, business advisory host funds, and tribal government business planning resources. Funding is distributed to the eight tribal nations, tribal economic development organizations, and tribal member businesses.



DP 5103 - OTBD MT INDIAN LANGUAGE PRESERVATION HB2 BASE BIEN -

The Montana Indian Language Preservation Program (MILP) was established to address the rapid language loss of Native American languages in the state and to preserve this rich aspect of Montana and tribal heritage. Each tribal nation develops and makes accessible curricula, audio, and video recordings and reference materials to assist in preserving and perpetuating Indian languages.

DP 5105 - OTBD INCREASE EXPORT TRADE PROGRAM FUNDING HB2 -

The executive proposes an increase in the general fund to leverage more state trade and export promotion (STEP) grant dollars from the Federal Small Business Administration (SBA) (a 3 federal:1 state match), subscription to international market data resources for consulting with clients on international markets, and increased professional development to improve staff’s proficiency for counseling clients on international trade.

DP 5107 - OTBD ELIMINATE MSUN BIOFUELS APPROPRIATION HB2 -

The executive proposes this change package to remove the 2023 biennium HB 2 base level biofuels appropriation from the big sky trust fund paid to MSU Northern. In the 2017 and 2019 sessions the legislature added HB 2 appropriations from the big sky trust fund (BSTF) for a biofuels project at MSU Northern. Because the fund balance in BSTF is projected to be exhausted by June 30, 2021 the department proposes to eliminate this appropriation.


65010 - Department Of Commerce 60-Community Development Division






BienniumChange

Biennium% Change

Personal Services 4,501,800 4,524,390 22,590 0.50 %Operating Expenses 3,988,617 4,266,596 277,979 6.97 %Grants 41,842,842 41,815,504 (27,338) (0.07)%Debt Service 1,950 0 (1,950) (100.00)%


General Fund 1,853,585 1,928,383 74,798 4.04 %State/Other Special Rev. Funds 9,169,348 9,681,813 512,465 5.59 %Federal Spec. Rev. Funds 39,312,276 38,996,294 (315,982) (0.80)%

Total Funds $50,335,209 $50,606,490 $271,281 0.54 %

Total Ongoing $50,335,209 $50,406,564 $71,355 0.14 %Total OTO $0 $199,926 $199,926 100.00 %

Program Description

The Community Development Division strengthens Montana communities by supporting sustainable development of ourcharming, vibrant towns. Our staff are experts in the growth and development of communities to promote affordablehousing, improved public infrastructure, economic resilience, and downtown revitalization through comprehensive planningand locally determined goals and objectives.

Alongside our community, local and tribal government partners we are building vibrant places where people want to liveand visit.

The missions of the Community Development Division (CDD) are set forth in Title 90, Chapters 1 and 6, MCA. CDDis funded primarily through federal funds and state-special revenue account grant programs with additional directappropriations provided in HB 2. CDD administers seven programs directly:

• Community Development Block Grant Program (CDBG)• Community Technical Assistance Program (CTAP)• HOME Investment Partnerships Program (HOME)• Montana Main Street Program• Housing Trust Fund• Historic Preservation Grant Program• Broadband for Montana Schools Program• Treasure State Endowment Program (TSEP)

Two citizen boards, appointed by the Governor, are attached to CDD for administrative purposes. The division providesoffice facilities, staff, and administrative support for the:

• Montana Coal Board• Montana Hard Rock Mining Impact Board



Community Development DivisionMajor Budget Highlights

• The Community Development Division 2023 biennium budgetrequest is approximately $271,000 or 0.5% more than the 2021biennium budget. The executive proposal includes:

◦ Increases in general, state special, and federal specialfunds due in part to statewide present law adjustments forfixed costs and administrative cost adjustments

◦ Increases in state special funds for the Delivering LocalAssistance Program (DLA) and the Historic PreservationGrant Program




Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 25.45 25.45 27.45 27.45

Personal Services 1,562,011 2,234,942 2,266,858 2,258,979 2,265,411Operating Expenses 740,885 1,990,137 1,998,480 2,144,648 2,121,948Grants 12,628,987 20,919,921 20,922,921 20,907,752 20,907,752Debt Service 1,950 1,950 0 0 0


General Fund 908,333 924,638 928,947 966,232 962,151State/Other Special Rev. Funds 2,359,430 4,570,009 4,599,339 4,842,479 4,839,334Federal Spec. Rev. Funds 11,666,070 19,652,303 19,659,973 19,502,668 19,493,626

Total Funds $14,933,833 $25,146,950 $25,188,259 $25,311,379 $25,295,111

Total Ongoing $14,933,833 $25,146,950 $25,188,259 $25,211,416 $25,195,148Total OTO $0 $0 $0 $99,963 $99,963



The Community Development Division expended 59.4% of its $25.1 million HB 2 modified budget in FY 2020. Personalservices were 69.9% expended, operating expenses were 37.2% expended, and grants were 60.4% expended.

According to the Department of Commerce:

• The lower expenditures in all categories are due to a delay in receipt of federal funds• The federal fiscal year begins October 1st, but Congress approves the federal budget at various times during the

year, usually the grants are received 10 months after the Congressional budget is passed• Once grants are received, the Community Development Division begins the public comment and competitive

applications processes• Projects funded through the federal grants are often large construction projects that leverage other federal or state

funds, adding to the timing of the expenditures


Program Highlights



The FY 2021 appropriations are not significantly different from the FY 2020 appropriations.

Executive Request

The Community Development Division budget proposed by the executive is $271,000 or 0.5% more than the 2021 bienniumbudget.

Personal services were $2.3 million or 9.0% of total FY 2021 appropriations. The executive proposes appropriationincreases in general fund and state special revenue appropriations. The executive also proposes a large decrease infederal special revenue appropriations from the FY 2021 base, totaling approximately $148,000 less in FY 2022 and$141,000 less in FY 2023. This change is primarily due to decreases from the statewide present law adjustment forpersonal services, which will be discussed in detail in the Program Personal Services section below.

Operating expenses were approximately $2.0 million or 8.0% of total FY 2021 appropriations. The executive proposesincreases in general, state special, and federal special revenue from the FY 2021 base, totaling approximately $73,000 inFY 2022 and $50,000 in FY 2023. This change is primarily due to increases from the statewide present law adjustmentfor fixed costs and increases from a new proposal for the CDD administrative cost adjustments, which will be discussed indetail in the Present Law Adjustments section below.


Personal services were $2.3 million or 9.0% of total FY 2021 appropriations for the Community Development Division. Theexecutive proposes statewide present law adjustment decreases of $148,000 in FY 2022 and $141,000 in FY 2023.

The 2023 biennium personal service statewide present law request includes expected changes and managementdecisions. The personal services management decisions include broadband pay raises and wage changes due toemployee turnover.

Funding


Department of Commerce, 60-Community Development DivisionFunding by Source of Authority

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

01100 General Fund 1,928,383 0 0 0 1,928,383 3.78 %

02049 Hard Rock Mining 498,571 0 0 368,736 867,307 8.63 %02116 Accommodation Tax Account 220,346 0 0 0 220,346 2.19 %02218 School Facility & Tech Account 0 0 0 0 0 0.00 %02270 Treasure State Endowment 1,453,294 199,926 0 0 1,653,220 16.45 %02445 Coal Board 7,309,676 0 0 0 7,309,676 72.73 %02217 Historic Preservation Grants 0 0 0 0 0 0.00 %

State Special Total $9,481,887 $199,926 $0 $368,736 $10,050,549 19.72 %

03059 Community Development Block 14,950,435 0 0 0 14,950,435 38.34 %03061 EDA Revolving Loan Fund 945,974 0 0 0 945,974 2.43 %03300 Home Grants 16,533,653 0 0 0 16,533,653 42.40 %03932 CDBG RLF 566,232 0 0 0 566,232 1.45 %03585 HTF 6,000,000 0 0 0 6,000,000 15.39 %

Federal Special Total $38,996,294 $0 $0 $0 $38,996,294 76.50 %


Total All Funds $50,406,564 $199,926 $0 $368,736 $50,975,226



HB 2 Authority

General Fund

General fund appropriations comprise approximately 3.8% of total proposed appropriations. General fund is used to providematching funds for the Community Development Block Grant Program and support the Community Technical AssistanceProgram. Approximately 50.0% of the general fund appropriation is used to fund each program.


State Special Revenue appropriations comprise approximately 19.7% of total proposed appropriations. Theseappropriations are primarily comprised of funding for the Coal Board and the Treasure State Endowment Program. TheCoal Board provides grants to governmental units to assist them in providing governmental services or facilities that areneeded as a direct consequence of an increase or decrease in coal development or in the consumption of coal by a coal-using energy complex. The Treasure State Endowment Program is funded with interest earnings from the treasure stateendowment fund, a sub-fund of the coal tax trust. Revenue from the income account within the trust is transferred to thestate special revenue fund for administrative costs (appropriated in HB 2) and grants (typically appropriated in HB 11).


Federal special revenues comprise the majority of appropriations at approximately 76.5%. The majority of the federal fundsare community development block grants, HOME grants, and the Housing Trust Fund (HTF) Program.




Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of Budget2021 Base Budget 928,947 928,947 1,857,894 96.34 % 25,188,259 25,188,259 50,376,518 99.55 %SWPL Adjustments 32,979 28,592 61,571 3.19 % (84,359) (101,871) (186,230) (0.37)%PL Adjustments 4,306 4,612 8,918 0.46 % 10,149 10,982 21,131 0.04 %New Proposals 0 0 0 0.00 % 197,330 197,741 395,071 0.78 %

Total Budget $966,232 $962,151 $1,928,383 $25,311,379 $25,295,111 $50,606,490







FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds

DP 1 - Personal Services0.00 15,773 1,143 (164,609) (147,693) 0.00 17,841 2,199 (161,400) (141,360)

DP 2 - Fixed Costs0.00 17,315 22,020 24,976 64,311 0.00 10,820 17,046 12,236 40,102

DP 3 - Inflation Deflation0.00 (109) (519) (349) (977) 0.00 (69) (326) (218) (613)

DP 4 - ServiceNow0.00 (1,308) (1,979) (1,501) (4,788) 0.00 (1,308) (1,979) (1,501) (4,788)

DP 6003 - CDD ADMINISTRATIVE COSTS ADJUSTMENTS HB20.00 5,614 25,145 (15,822) 14,937 0.00 5,920 25,314 (15,464) 15,770

Grand Total All Present Law Adjustments0.00 $37,285 $45,810 ($157,305) ($74,210) 0.00 $33,204 $42,254 ($166,347) ($90,889)









DP 4 - ServiceNow -


DP 6003 - CDD ADMINISTRATIVE COSTS ADJUSTMENTS HB2 -

Includes adjustment for indirect costs paid to the Director's Office for support services provided to supported divisions,bureaus, and programs; and an adjustment for the fluctuation of federal grant amounts in Community Development BlockGrant Program.

New Proposals



LFDCOMMENT

LFDCOMMENT



FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds

DP 6001 - CDD CONTINUE 1.00 HB 652 DLA FTE BIEN/OTO HB21.00 0 99,963 0 99,963 1.00 0 99,963 0 99,963

DP 6002 - CDD 1.00 HISTORIC PRESERVATION GRANT FTE SA1.00 0 97,367 0 97,367 1.00 0 97,778 0 97,778

Total 2.00 $0 $197,330 $0 $197,330 2.00 $0 $197,741 $0 $197,741


DP 6001 - CDD CONTINUE 1.00 HB 652 DLA FTE BIEN/OTO HB2 -

House Bill 652 passed in the 2019 legislative session and appropriated $21.5 million to the Community DevelopmentDivision in the Department of Commerce for grants to local governments through the Delivering Local Assistance Program(DLA). The 1.00 FTE in this decision package will support the grant program through completion.

The 1.00 FTE for the Delivering Local Assistance Program was initially requested for the 2021 biennium.The Office of Budget and Program Planning approved this FTE as a modified position. This changepackage requests that the FTE described above and associated operating costs from the state special

revenue fund be made for the 2023 biennium.

DP 6002 - CDD 1.00 HISTORIC PRESERVATION GRANT FTE SA -

The Community Development Division was tasked by the 2019 Legislature with administering the Historic PreservationGrant Program. The executive is requesting a 1.00 FTE Historic Preservation Grant Program specialist position to standup/staff the Historic Preservation Grant Program. The program is meant to preserve historic sites, historical societies or historymuseums.

The 1.00 FTE for the Historic Preservation Grant Program was initially requested for the 2021 biennium.The Office of Budget and Program Planning approved this FTE as a modified position. This changepackage requests that the FTE described above, and the associated operating costs become permanent for

the 2023 biennium and beyond.


65010 - Department Of Commerce 71-Facility Finance Authority






BienniumChange

Biennium% Change

Personal Services 625,047 638,149 13,102 2.10 %Operating Expenses 416,557 438,308 21,751 5.22 %Grants 660,000 300,000 (360,000) (54.55)%Transfers 82,000 70,000 (12,000) (14.63)%Debt Service 370 0 (370) (100.00)%


Proprietary Funds 1,783,974 1,446,457 (337,517) (18.92)%

Total Funds $1,783,974 $1,446,457 ($337,517) (18.92)%

Program Description

The Facility Finance Authority (Authority) was created by the 1983 Legislature to assist health care and related facilitiescontain future health care costs by offering debt financing at low-cost, tax-exempt interest rates for capital constructionand improvements. The Legislature extended eligible facilities to include community pre-release centers and for-profitmanufacturing facilities. Cost savings are shared with consumers in the form of lower fees.

The Facility Finance Authority is funded entirely by proprietary funds with revenues collected from interest, fees, andcharges from participating institutions. There are no direct appropriations provided in HB 2.

The Authority is primarily mandated in Title 90, Chapter 7 and Title 2, Chapter 15, MCA.

Program Highlights

Facility Finance AuthorityMajor Budget Highlights

• The Facility Finance Authority 2023 biennium budget request isapproximately $338,000 or 18.9% less than the 2021 bienniumbudget

• The executive proposal includes decreases in non-budgetedproprietary funds primarily attributed to reductions in grants for theEnergy Efficiency Program grant






Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 3.00 3.00 3.00 3.00

Personal Services 303,975 310,350 314,697 318,121 320,028Operating Expenses 175,706 216,173 200,384 227,923 210,385Grants 136,139 330,000 330,000 150,000 150,000Transfers 28,885 40,000 42,000 35,000 35,000Debt Service 371 370 0 0 0


Proprietary Funds 645,076 896,893 887,081 731,044 715,413

Total Funds $645,076 $896,893 $887,081 $731,044 $715,413



The Facility Finance Authority expended 71.9% of its FY 2020 budget. Operating expenses were 81.3% expended, grantswere 41.3% expended, and transfers-out were 72.2% expended. Lower expenditures were due to the following:

• Lower than anticipated participation by the Montana hospital community for the Energy Efficiency Program led tolower expenditures in grants. Due to the Covid-19 lockdowns, many required onsite visits by engineers to establishcapital planning processes were delayed or cancelled

• Operating expenses were primarily under expended due to an authorized increase in MFFA travel and educationbudgets that was largely underutilized due to Covid-19 impacts


There are differences between FY 2020 and FY 2021 appropriations primarily in operating expenses of approximately$16,000 less, while personal services and transfers-out are increased by approximately $4,000 and $2,000, respectively inFY 2021. Changes in appropriations are due to the following:

• Decreases in operating expenses are attributed to the 2021 biennial audit appropriation being allocated to FY2020

• Increases in personal services are due to the state employee pay plan• Transfers out were increased to adjust for payments to the Board of Investments for support services

Executive Request

The Facility Finance Authority is requesting a decrease in proprietary fund appropriations of approximately $156,000 in FY2022 and $172,000 in FY 2023. This proposed decrease is primarily due to a reduction in grant program appropriations forthe energy efficiency audits of eligible facilities.

Funding




Department of Commerce, 71-Facility Finance AuthorityFunding by Source of Authority

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

General Fund 0 0 0 0 0 0.00 %



06015 Facilities Finance Authority 0 0 1,446,457 0 1,446,457 100.00 %Proprietary Total $0 $0 $1,446,457 $0 $1,446,457 100.00 %

Total All Funds $0 $0 $1,446,457 $0 $1,446,457

The Facility Finance Authority is entirely supported through non-budgeted proprietary funds. These funds are discussed inthe Proprietary Rates section of the narrative.




Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of Budget2021 Base Budget 0 0 0 0.00 % 887,081 887,081 1,774,162 122.66 %SWPL Adjustments 0 0 0 0.00 % 26,119 9,205 35,324 2.44 %PL Adjustments 0 0 0 0.00 % (182,156) (180,873) (363,029) (25.10)%New Proposals 0 0 0 0.00 % 0 0 0 0.00 %

Total Budget $0 $0 $0 $731,044 $715,413 $1,446,457




FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds


DP 2 - Fixed Costs0.00 0 0 0 22,749 0.00 0 0 0 3,908


DP 4 - ServiceNow0.00 0 0 0 (564) 0.00 0 0 0 (564)

DP 7101 - FFA ADMINISTRATIVE COSTS ADJUSTMENTS NAPROP0.00 0 0 0 (181,592) 0.00 0 0 0 (180,309)

Grand Total All Present Law Adjustments0.00 $0 $0 $0 ($156,037) 0.00 $0 $0 $0 ($171,668)




65010 - Department Of Commerce 71-Facility Finance AuthorityDP 1 - Personal Services -







DP 4 - ServiceNow -


DP 7101 - FFA ADMINISTRATIVE COSTS ADJUSTMENTS NAPROP -

The budget includes increases for rent, accounting software, and indirect costs paid to the Director's Office for supportservices provided to supported divisions, bureaus, and programs. There are reductions related to the expiration of certaingrant programs, and support services provided by BOI.

Other Issues -

Proprietary Rates

Facility Finance Authority – 06015

HFA Loan Program – 06012


The Facility Finance Authority provides debt financing or refinancing at low-cost, tax-exempt interest rates through anumber of programs. The Authority has established reserve requirements for:

• Master Loan Program – The Authority provides qualified borrowers financing through tax exempt bond issuances.Loans can be used for eligible projects including equipment purchases, reimbursement of capital expendituresmade during the current fiscal year (as approved by the bond counsel), new facility construction, renovation ofexisting facilities, and refunding or refinancing of outstanding debt

• Permanent Coal Tax Trust Loan Program – Statute allows the Authority to administer $15.0 million of thepermanent coal tax trust fund for capital projects. Individual loan amounts may not exceed 10.0% of the amountadministered by the Authority

• Direct Loan Program – Statute allows the Authority to make direct loans to eligible facilities for eligible projectsincluding construction and renovation, facility acquisition, refinancing of qualified outstanding debt, or purchase of



equipment. Funding for the loans is derived from the revenues deposited in the Facility Finance Authority accountthat is transferred to the HFA Loan Program

• Working Capital – National bond rating agencies, national bond insurers, and institutional investors expect theFacility Finance Authority to maintain a working capital reserve of two years’ operating capital to assure that it canfinancially operate between legislative sessions

As shown in the figure, the amount of the reserves as of the beginning of FY 2021 is 45.4% of the reserve requirements established by the authority. This is a decline from the November 2019 funded ratio of 60.6%.


The following 2023 Biennium Report on Internal Service and Enterprise Funds shows the actual and projected expenditures and related revenues associated with the Facility Finance Authority and HFA Loan Program proprietary funds.



Expenses

The executive is proposing an increase in personal services and operating costs. Increases in personal services are relatedto increases in the statewide present law adjustments. Operating expenses are projected to decline from FY 2021 primarily



due to internal efficiencies and through a correction from a FY 2019 overcharge for services.

Revenues

Revenues are projected to decrease in the Facility Finance Authority. Annual fees are anticipated to decline as they arebased on the current outstanding balance of the bond, which is currently paid down. Additionally, revenues for FY 2018were dominated by a one-time-only recognition of indentured funds. Since 2018, interest rates and rates for new financingshave declined.

Proprietary Rates

The table below provides information on the fees charged by the Facility Finance Authority.


Fee Description:Application Fee:Loan Amount FeeUp to $5,000,000 30 basis points (bp) (0.0030)Up to $10,000,000 the > of 25 bp or $15,000Up to $25,000,000 the > of 15 bp or $25,000Up to $50,000,000 the > of 12.5 bp or $37,500Up to $100,000,000 the > of 7.5 bp or $62,500Over $100,000,000 the > of 6.5 bp or $75,000

Annual Fee: FeeStand Alone Bond Issues 5 bp X the outstanding principal amountPrivate Placement Bond Issues 5 bp X the outstanding principal amountMaster Loan Program 10 bp X the outstanding principal amountTrust Fund Loan Program 50 bp X the monthly balance

(incorporated into loan interest rate)Fee Revenue: 90-7-202 and 90-7-211, MCAInvestment Earnings: 90-7-202, MCA

The Facility Finance Authority is funded with an enterprise fund, which is a type of a proprietary fund. As such, thelegislature does not appropriate the funds or approve the rates for the program. Instead, the legislature reviews the reportfor the enterprise fund and identifies concerns with the financial position of the fund.


65010 - Department Of Commerce 74-Housing Division






BienniumChange

Biennium% Change

Personal Services 8,671,936 9,038,282 366,346 4.22 %Operating Expenses 10,591,806 11,989,391 1,397,585 13.19 %Equipment & Intangible Assets 468,000 624,000 156,000 33.33 %Grants 420,000 0 (420,000) (100.00)%Benefits & Claims 97,141,979 101,377,157 4,235,178 4.36 %Debt Service 5,414 0 (5,414) (100.00)%



Total Funds $117,299,135 $123,028,830 $5,729,695 4.88 %


Program Description

The Housing Division includes the U.S. Department of Housing and Urban Development (HUD) Section 8 Housing programs and Board of Housing and its programs. Together, these programs are known as Montana Housing.

Montana Housing supports the development of affordable and vibrant communities for all Montanans. By building affordable and vibrant communities where people want to live, the Housing Division is also creating a place people want to visit. Strengthening our communities is at the core of Montana’s economic challenge and opportunity. To support a growing economy, hardworking Montanans need an affordable place to live, and a vibrant Main Street experience.

Housing Division responsibilities are mandated primarily in Title 2, Chapter 15; Title 90, Chapter 1, and Chapter 6, MCA; 24 CFR 5, 792, 813, 887, 982, and 984; and the Governor’s Executive Order 27-81.

Program HighlightsHousing Division

Major Budget Highlights

• The Housing Division 2023 biennium budget request isapproximately $5.7 million or 4.9% higher than the 2021 bienniumbudget. The executive proposal includes:

◦ Increases in non-budgeted proprietary funds primarily dueto statewide present law adjustments for personal services,fixed costs, inflation/deflation, and ServiceNow

◦ Increases in non-budgeted proprietary funds due to a newproposal, which adds 2.00 new FTE due to an increase inworkload in the Homeownership work unit for single familyhousing and the Housing Choice Voucher (HCV) program

LFD Budget Analysis HD-1 2023 Biennium




Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 55.33 55.33 58.33 58.33

Personal Services 4,169,894 4,344,735 4,327,201 4,512,189 4,526,093Operating Expenses 4,414,277 5,404,313 5,187,493 6,020,532 5,968,859Equipment & Intangible Assets 0 156,000 312,000 312,000 312,000Grants 230,027 420,000 0 0 0Benefits & Claims 44,805,061 47,705,100 49,436,879 50,261,722 51,115,435Debt Service 5,414 5,414 0 0 0



Total Funds $53,624,673 $58,035,562 $59,263,573 $61,106,443 $61,922,387




The Housing Division expended 92.4% of its HB 2 modified budget as of the end of FY 2020. Personal services were 96.0% expended, operating expenses were 81.7% expended, equipment and intangible assets were 0.0% expended, and grants were 54.8% expended. Under expenditures were due to the following:

• Operating expenses were reduced primarily due to cancellations of trainings, conferences, meetings, and theassociated travel during the Covid-19 pandemic

• Equipment and intangible assets moved appropriations funding for capitalized software to operating leases.However, this part of the budget was never used in FY 2021

• Grant authority was established in May, in response to Covid-19 for a housing assistance grant program, which isbeing reimbursed through Coronavirus Relief funds (CRF). Grants were awarded and disbursed in both FY 2020and 2021


There are differences between FY 2020 and FY 2021 appropriations primarily in operating expenses, equipment andintangible assets, grants, and benefits and claims. These differences are attributed to the following:

• Benefits and claims were increased to accommodate rising rent and lease agreements for the federally fundedSection 8 program

• A housing assistance grant program was established with existing resources in response to the Covid-19pandemic. Grants were awarded and disbursed at the end of FY 2020 and in FY 2021. However, the division isbeing reimbursed for this program though the CRF

• Operating expenses decreased due to 100% of the biennial appropriations being allocated in FY 2020 and arevision in FY 2020 in the operating expenses plans that reallocates the unused budget from equipment andintangible assets into the Housing Division

• Equipment and intangible assets budget moved half of their budgeted amount to operating expenses to moreaccurately account for capitalized software expenditures




The Housing Division budget is requesting an increase in proprietary fund appropriations from the FY 2021 base ofapproximately $1.8 million in FY 2022 and $2.7 million in FY 2023. This proposed increase is primarily due to increases instatewide present law adjustments for personal services and operating costs as well as new proposals for increased FTE.

Funding


Department of Commerce, 74-Housing DivisionFunding by Source of Authority

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

General Fund 0 0 0 0 0 0.00 %


03180 CARES Submittable SW 0 0 0 0 0 0.00 %03233 CARES ACT Housing Grants 0 0 0 0 0 0.00 %


06030 BOH Financial Program Fund 0 0 6,781,661 0 6,781,661 5.51 %06031 Housing Trust Fund 0 0 20,000 0 20,000 0.02 %06032 Mortgage Loan Servicing 0 0 4,196,673 0 4,196,673 3.41 %06074 SEC 8 Project Based 0 0 52,496,583 0 52,496,583 42.67 %06075 Section 8 Vouchers 0 0 54,317,226 0 54,317,226 44.15 %06078 Housing Montana Fund 0 0 20,000 0 20,000 0.02 %06079 Revolving Loan Fund - TANF 0 0 20,000 0 20,000 0.02 %06085 Section 8 Mod Rehab 0 0 5,176,687 0 5,176,687 4.21 %


Total All Funds $0 $0 $123,028,830 $0 $123,028,830

Non-Budgeted Proprietary Funding

The Housing Division is funded entirely by proprietary funds. These funds are discussed in the Proprietary Rates section ofthe narrative.




Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of Budget2021 Base Budget 0 0 0 0.00 % 59,263,573 59,263,573 118,527,146 96.34 %SWPL Adjustments 0 0 0 0.00 % 190,964 71,806 262,770 0.21 %PL Adjustments 0 0 0 0.00 % 1,380,098 2,311,216 3,691,314 3.00 %New Proposals 0 0 0 0.00 % 271,808 275,792 547,600 0.45 %

Total Budget $0 $0 $0 $61,106,443 $61,922,387 $123,028,830


The "Present Law" Adjustments table shows the changes from the base appropriation to the proposed budget. "Statewide Present Law" adjustments (DP 1, DP 2, DP 3) are standard categories of adjustments made to all agencies. Decisions on these items were applied globally to all agencies.


Executive Request




FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds

DP 1 - Personal Services0.00 0 0 0 (12,741) 0.00 0 0 0 (1,489)

DP 2 - Fixed Costs0.00 0 0 0 205,344 0.00 0 0 0 74,324

DP 3 - Inflation Deflation0.00 0 0 0 (1,639) 0.00 0 0 0 (1,029)

DP 4 - ServiceNow0.00 0 0 0 (10,975) 0.00 0 0 0 (10,975)

DP 7403 - HD ADMINISTRATIVE COSTS ADJUSTMENTS NAPROP0.00 0 0 0 45,368 0.00 0 0 0 46,670

DP 7404 - HD SECTION 8 HOUSING ASSISTANCE ADJUSTMENTS NAPROP0.00 0 0 0 1,345,705 0.00 0 0 0 2,275,521










DP 4 - ServiceNow -


DP 7403 - HD ADMINISTRATIVE COSTS ADJUSTMENTS NAPROP -

The executive requests an adjustment for personal services for recruitment of new operations manager, and market ratepay adjustment for quality control specialist. The request also adjusts for indirect costs paid to the Director's Office forsupport services provided to supported divisions, bureaus, and programs.


LFDCOMMENT


DP 7404 - HD SECTION 8 HOUSING ASSISTANCE ADJUSTMENTS NAPROP -

The executive requests an adjustment for personal services for recruitment of new operations manager. The request also adjusts for indirect costs paid to the Director's Office for support services provided to supported divisions, bureaus, and programs; increases Project Based Section 8 Housing Assistance payments based on HUD's Fair Market Rents which traditionally increase each year; increases contracted services in Tenant Based Section 8 program; and increases administrative services for VASH Program and higher administrative fee rates paid by HUD.

New Proposals



FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds

DP 7401 - BOH 1.00 COMPLIANCE SPECIALIST FTE NAPROP1.00 0 0 0 90,687 1.00 0 0 0 91,955

DP 7402 - HD SINGLE FAMILY & TENANT BASED SECT 8 FTE NAPROP2.00 0 0 0 181,121 2.00 0 0 0 183,837

Total 3.00 $0 $0 $0 $271,808 3.00 $0 $0 $0 $275,792


DP 7401 - BOH 1.00 COMPLIANCE SPECIALIST FTE NAPROP -In FY 2021 the Board of Housing in the Housing Division established 1.00 FTE for a multifamily compliance specialist toaddress the workload increase within the Multifamily unit. An increased workload in the Multifamily Program has occurredover the last few years. In December of 2002, Congress increased the amount of federal tax credits that State HousingFinance Agencies could allocate in 2003. The executive is requesting to make this FTE permanent.

The 1.00 FTE for a Multifamily Compliance Specialist was initially requested for the 2021 biennium. The Office of Budget and Program Planning approved this FTE as a modified position. This change packagerequests that the FTE described above and associated operating costs become permanent for the 2023

biennium and beyond.

DP 7402 - HD SINGLE FAMILY & TENANT BASED SECT 8 FTE NAPROP -

The executive is requesting an additional 1.00 F TE for the Board of Housing due to increases in workload in the Homeownership work unit for single family housing. In order to implement new programs, to remain compliant with mortgage industry regulations and program requirements, and to keep up with the increase in workload created by the higher volume of loans to Montana homebuyers, an additional 1.00 FTE is requested.

The executive is requesting an additional 1.00 F TE for the Rental Assistance Bureau (tenant-based section 8) due to increases in workload in the Housing Choice Voucher (HCV) program. An additional 1.00 FTE is requested in order to provide services to vulnerable populations, to accommodate for an increase in workload created by HUD’s requirements and reporting, and to file audit reviews.



• The Montana Board of Housing• Project Based Section 8 Program• Tenant Based Section 8 Program

Montana Board of Housing – 06030, 06031, 06032, 06078, 06079


The Montana Housing Act of 1975 created the Montana Board of Housing. The board is an agency of the state andoperates within the Department of Commerce for administrative purposes. The Board of Housing is primarily mandated inTitle 2, Chapter 15; and Title 90, Chapter 1, and Chapter 6, MCA. The powers of the board are vested in a seven-memberboard, appointed by the Governor, subject to the confirmation of the state Senate. The board provides direction to theagency staff for its programs that include the Homeownership Program, Multifamily Loan Program, Low Income HousingTax Credit Program, Housing Montana fund, and the Reverse Annuity Mortgage (RAM) Program.

The Board of Housing is funded by enterprise funds with revenues derived from an administrative charge applied to projectsand mortgages financed.


The following 2023 Biennium Report on Internal Service and Enterprise funds shows the actual and projected expendituresand related revenues associated with the Montana Board of Housing’s proprietary funds.


Other Issues -

Proprietary Rates

The Housing Division has three programs that are funded through proprietary funds, which include:




ExpensesThe figure below shows the proposed expenditures for the Board of Housing and loan servicing.

Figure 7Housing Division

ProgramActual FY

2020Appropriated FY

2021Proposed FY

2022Proposed FY

2023Board of HousingPersonal Services 1,419,240 1,481,377 1,564,744 1,571,091Operating Expenses 1,198,695 1,737,373 1,870,847 1,834,976Grants 230,027 - - -Debt Service 2,827 - - -Total Expenditures $2,850,789 $ 3,218,750 $ 3,435,591 $ 3,406,067

Loan ServicingPersonal Services 1,155,633 1,137,012 1,176,240 1,178,697Operating Expenses 684,678 863,313 939,703 902,033Debt Service 1,413 - - -Total Expenditures $1,841,724 $ 2,000,325 $ 2,115,943 $ 2,080,730

Overall, the executive is proposing an increase in personal services and operating expenses in the Board of Housing. Thisincludes:

• Personal services – The Board of Housing is proposing proprietary funding for 2.00 FTE due to the increasedworkload in the Homeownership work unit and the Housing Choice Voucher program

• Operating expenses – Increases in operating expenses are primarily due to the statewide present law adjustmentfor fixed costs, including audit fees. Additionally, there was an increase in operating costs associated with theadded FTE as proposed in NP 7401 and NP 4702, as well as an increase in the rate charged by the Director’sOffice for support services

The Loan Servicing Program is proposing an increase in expenditures, primarily in personal services and operatingexpenses. This includes:

• Personal services – Increases are primarily due to the statewide present law adjustment• Operating expenses – Increases are primarily due to the statewide present law adjustment for fixed costs, which

includes audit fees, as well as an increase in the rate charged by the Director’s Office for support services

Revenues

The Board of Housing’s income is derived primarily from mortgage investment income. Mortgage income is the interest people pay on Board of Housing loans and is limited by the Internal Revenue Service as a condition of using tax-free bonds as a financing source. Mortgage income is also controlled by the national markets, which set both mortgage rates and bond financing rates. Investment income comes from interest earned on investing reserves the Board of Housing is required to hold and bond and program moneys not yet used to buy mortgages and pay bondholders. Both future mortgage and investment income depends on the interest rate environment, which is determined by the national financial markets.

Proprietary Rates

The Board of Housing recovers costs from charging application and compliance fees for the Low-Income Tax Credit Program and from charging a spread on loan programs.



The Board of Housing is funded with an enterprise fund, which is a type of proprietary fund. As such, the legislature does not appropriate the funds or approve the rates for the program. Instead, the legislature reviews the report for the enterprise fund and identifies concerns with the financial position of the fund.



HUD Section 8 – Project Based Housing – 06074


The Project Based Section 8 Program is the U.S. Department of Housing and Urban Development contract administrator for low-income rental properties HUD subsidizes throughout the state. The program provides rental assistance to projects at fixed locations instead of direct assistance to tenants. Landlords perform administrative tasks at the local level. The agency performs annual property reviews, oversees property management, and makes rent subsidy payments to owners. The agency earns fees from HUD under a performance-based contract for the tasks performed. The Project Based program renews rent contracts to project owners as they expire. Contract managers prepare special damage claims, annual rent increases, respond to emergencies, check compliance for fair housing and waiting lists, on-site management reviews, follow-up to physical inspections, review of management decisions, and provides budget assistance to local property owners.


The following 2023 Biennium Report on Internal Service and Enterprise funds shows the actual and projected expenditures and related revenues associated with the Project Based Section 8 Program proprietary fund.



Expenses

The following figure shows the proposed expenditures for the Project Based Section 8 Program.


65010 - Department Of Commerce 74-Housing DivisionFigure 8

Overall, the executive is proposing an increase primarily in personal services and benefits and claims. The increase inpersonal services is due to the statewide present law adjustment for personal services. The increase in benefits and claimsis based on the U.S. Department of Housing and Urban Development’s fair market rents, which traditionally increase eachyear.

Revenues

Revenues are generated in the Project Based Section 8 Contract Administration under a HUD performance-based contractusing 17 incentive-based performance standards, which are calculated by HUD monthly, quarterly, and annually. Revenuesgenerated are required to be used for contract administration. Rental assistance payments are made based on contractsnegotiated by program staff and tenant income data. Payments are paid and reimbursed monthly by HUD, based on actualprogram benefits paid to owners.

Proprietary Rates

The Project Based Section 8 Contract Administration is funded through a performance-based contract with HUD, based ona 5-year renewable request for proposal. Retained earnings are to be used for operations of this program. Funding for rentsis paid by HUD, based on actual contracts negotiated between the department and the individual owners of the projects,set up on a procedure dictated by HUD.

Requested Rates for Enterprise FundsFee/Rate Information


Administration ContractRate 2.50% 2.50% 2.50% 2.50%

Base fee rate paid by HUD = 2.5% times the two-bedroom Fair Market Rent for all projects under ACCcontract for standard performance, as judged by HUD monthly, quarterly and annually.

Administration ContractRate 1.00% 1.00% 1.00% 1.00%

Performance fee incentive rate based on 17 Incentive Based Performance Standards (IBPS), graded monthly,quarterly, and annually by HUD. Can be either positive or negative, based on whether time standards andperformance requirements are met on each of the 17 IBPS standards. Rate 3 (per unit)

Rents ContractRate 100.00% 100.00% 100.00% 100.00%


Amounts for rentals are based on 100% of contracted amounts per unit each month, less tenant share of rents.

Housing Division

Program Actual FY

2020 Appropriated FY

2021 Proposed FY

2022 Proposed FY

2023

Project Based Section 8 Housing

843,625 847,890 847,293 849,877

336,139 397,766 437,093 413,021

156,000 156,000

23,018,776

- 156,000

23,566,950 24,391,793 25,245,506

587 - - -

Personal Services

Operating Expenses

Equipment & Intangible Assets

Benefits & Claims

Debt Service

Total Expenditures $ 24,199,127 $ 24,968,606 $ 25,832,179 $ 26,664,404


The Project Based Section 8 Program is funded with an enterprise fund, which is a type of proprietary fund. As such, the legislature does not appropriate the funds or approve the rates for the program. Instead, the legislature reviews the report for the enterprise fund and identifies concerns with the financial position of the fund.

HUD Section 8 – Tenant Based – 06075

HUD Section 8 – Mod Rehab – 06085


The Tenant Based Section 8 Program provides rent assisted units for very low-income families (including elderly and disabled) to ensure they have decent, safe, and sanitary housing, using the HUD Section 8 Housing Choice Vouchers and Moderate Rehabilitation programs. The program operates on a first come, first serve basis statewide, through a network of field agencies the department contracts with for administration of local operations in the program. Leases are entered on the open rental market between tenants and private landlords. The program makes a subsidy payment to the property owner on behalf of the tenant. Payments are based on applicable unit rent limits, and tenants generally pay 30.0% of their income towards rent and utilities.


The following 2023 Biennium Report on Internal Service and Enterprise Funds shows the actual and projected expenditures and related revenues associated with the Tenant Based Section 8 Program proprietary fund.



Expenses

The following figure shows the proposed expenditures for the Tenant Based Section 8 Housing Program.


2023 Biennium Report on Internal Service and Enterprise Funds Agency # Agency Name: Program Name:

65010 Department of Commerce Housing Division

Fund

06085

06075

Fund Name

Section 8 Mod Rehab Section 8 Vouchers

Actual Budgeted Proposed Proposed

FY 20 FY 21 FY 22 FY 23

Operating Revenues

Fees and Charges

Investment Earnings 76,895 64,858 76,895 76,895

25,323,549 28,931,190 29,943,781 30,991,814

25,400,444 28,996,048 30,020,676 31,068,709

751,396 860,922 923,943 926,461

23,981,637 28,214,970 28,801,151 28,847,091

24,733,033 29,075,892 29,725,094 29,773,552

Federal Sources

Total Operating Revenues

Expenses

Personal Services

Other Operating Expense

Total Operating Expense

Operating Income (Loss) 667,411 (79,844) 295,582 1,295,157

Change in Net Position 667,411 (79,844) 295,582 1,295,157

4,480,914 5,148,325 5,068,481 5,364,063

667,411 (79,844) 295,582 1,295,157

5,148,325 5,068,481 5,364,063 6,659,220

Beginning Net Position - July 1

Change in Net Position

Ending Net Position - June 30

Net Position (Fund Balance) Analysis Restricted Net Pos (Enterprise Fund Only) 5,148,325 5,068,481 5,364,063 6,659,220


Figure 9Housing Division

ProgramActual FY

2020Appropriated

FY 2021Proposed FY

2022Proposed FY

2023Tenant Based Section 8 Housing ProgramPersonal Services 751,396 860,922 923,912 926,428Operating Expenses 2,194,765 2,189,041 2,772,889 2,818,829Equipment & Intangible Assets - 156,000 156,000 156,000Benefits & Claims 21,786,285 25,869,929 25,869,929 25,869,929Debt Service 587 - - -Total Expenditures $24,733,033 $29,075,892 $29,722,730 $29,771,186

Overall, the executive is requesting increases in personal services, operating expenses, and benefits and claims. Thesechanges are due to the following:

• The Board of Housing is proposing proprietary funding for 1.00 F TE for a multi-family compliance specialist• Operating expense increased primarily due to an increase in contract costs for administrative services for the

Veterans Affairs Supportive Housing (VASH) program and higher administrative fees paid by the Housing andUrban Development (HUD). Other increases are due to the statewide present law adjustment for fixed costs,including audit fees and the increase in the supportive service rate charged by the Director’s Office

• A request for proprietary funding for benefits and claims, which is based on the U.S. Department of HUD fairmarket rents. This traditionally increases each year

Revenues

The Tenant Based Section 8 Program is supported by an enterprise fund with revenues derived from performance-basedAnnual Contribution Contracts with HUD. Revenues for the Tenant Based Section 8 Program are generated per unit foreach rental unit under lease each month.

Proprietary Rates

Fund revenues are derived from competitively awarded, performance-based Annual Contribution Contracts with HUD,and the program is completely self-supporting. The department is the only statewide housing authority in Montana andspecifically budgeted for in HUD’s ongoing appropriation for Tenant Based Section 8.



Administration ContractRate $83.48 $86.40 $89.42 $92.54

Base fee rate paid by HUD = $83.48 (before proration) per unit per month under lease, which is HUD's column B ratefor units beyond the first 600 Housing Choice Vouchers (or 7,200 unit months per year) for the majorityof leases. Mod Rehab earned fee rate is $89.44 per lease per month (HUD's column A rate, no proration).Estimate increases of 3.5% per year for FY 2021, FY 2022 and FY 2023

Rents ContractRate 100.00% 100.00% 100.00% 100.00%

Amounts for rentals are based on 100% of contracted amounts per unit each month, less tenant share of rents.



The Tenant Based Section 8 Program is funded with an enterprise fund, which is a type of proprietary fund. As such, the legislature does not appropriate the funds or approve the rates for the program. Instead, the legislature reviews the report for the enterprise fund and identifies concerns with the financial position of the fund.


65010 - Department Of Commerce 75-Board of Investments






BienniumChange

Biennium% Change

Personal Services 8,580,669 8,775,540 194,871 2.27 %Operating Expenses 6,665,484 7,041,816 376,332 5.65 %Debt Service 2,099 0 (2,099) (100.00)%



Total Funds $15,248,252 $15,817,356 $569,104 3.73 %

Program Description

Article VIII, Section 13 of the Montana Constitution created the Unified Investment Program, which includes all state agencyfunds. The Board of Investments (the “Board”), by law, invests the Unified Investment Program. Local governments mayalso invest with the Board. As of June 30, 2018, the Board managed over $18.5 billion in pension funds, trust funds,insurance reserves, state operating funds, and certain local government funds. To facilitate management of the UnifiedInvestment Program, a combination of investment pools and separate accounts are utilized to meet the financial goals andexpectations of the agencies and entities which entrust these funds to the Board. Investments not managed in pools areincluded in All Other Funds-Direct Holdings.

Name of Pool Eligible Participants1. Consolidated Asset Pension Pool Retirement systems funds only2. Trust Funds Investment Pool Various state trust funds3. Short Term Investment Pool Eligible local & state agencies4. All Other Funds–Direct Holdings Non-pool state agency investments

The Board issues a “consolidated” financial statement for the investment pools and All Other Funds -Direct Holdings thatprovides a comprehensive view of total pool and All Other Funds-Direct Holdings’ assets.

In addition to the Board’s investment responsibilities, it is charged with creating solutions to financial issues facing newand expanding businesses in the state of Montana. To accomplish this goal, the Board administers several different loanprograms that can be specifically tailored to meet an individual business' or local government's needs. The In-StateInvestment Program consists of commercial loans funded by the coal tax trust, low interest loans for first time home buyingMontana veterans, and loans for the development and preservation of homes and apartments to assist eligible low andmoderate-income applicants.

The Board also issues tax-exempt bonds and lends the proceeds to Montana state agencies, universities, and localgovernments for various projects.

The Board of Investments is funded with both enterprise and internal service type proprietary funds, with no directappropriations provided in HB 2.

The Boards of Investments’ responsibilities are mandated primarily in Article VIII, Section 13 of the Montana Constitution,Title 2, Chapter 15, and Title 17, Chapters 5 and 6, MCA.



Board of InvestmentsMajor Budget Highlights

• The Board of Investments 2023 biennium budget request isapproximately $569,000 or 3.7% higher than the 2021 bienniumbudget

• The executive proposal includes increases in the non-budgetedproprietary fund primarily due to statewide present law adjustmentsfor personal services, fixed costs, and an administrative costadjustment




Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 32.00 32.00 33.00 33.00

Personal Services 4,089,325 4,248,536 4,332,133 4,382,881 4,392,659Operating Expenses 2,977,251 3,381,160 3,284,324 3,540,702 3,501,114Debt Service 2,100 2,099 0 0 0



Total Funds $7,068,676 $7,631,795 $7,616,457 $7,923,583 $7,893,773



The Board of Investments expended 96.3% of its $7.6 million FY 2020 budget. Operating expenses were 88.1% expendeddue to cancellations of trainings, conferences, meetings, and the associated travel.


There are differences between FY 2020 and FY 2021 appropriations in personal services, operating expenses, and debtservices. Significant differences include:

• Personal services - $83,597 increase due to the state employee pay plan• Operating expenses - $96,836 decrease as a result of 100.0% of the biennial audit appropriation being allocated

in FY 2020

Executive Request

The Board of Investments is requesting an increase above the FY 2021 base in proprietary funds for personal services andoperating expenses of approximately $307,000 in FY 2022 and $277,000 in FY 2023. The proposed increase is primarilydue to statewide present law adjustments for personal services, fixed costs, and an administrative adjustment.


Program Highlights


Funding


Department of Commerce, 75-Board of InvestmentsFunding by Source of Authority

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

General Fund 0 0 0 0 0 0.00 %


03048 BOI Montana Loan Deferment Pro 0 0 0 0 0 0.00 %Federal Special Total $0 $0 $0 $0 $0 0.00 %

06014 BOI Municipal Finance Programs 0 0 1,316,593 6,470,788 7,787,381 34.94 %06527 Investment Division 0 0 14,500,763 0 14,500,763 65.06 %

Proprietary Total $0 $0 $15,817,356 $6,470,788 $22,288,144 100.00 %

Total All Funds $0 $0 $15,817,356 $6,470,788 $22,288,144

The Board of Investments is entirely supported through non-budgeted proprietary funds and statutory appropriations. Thesefunds are discussed in the Proprietary Rates section of the narrative.




Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent


Total Budget $0 $0 $0 $7,923,583 $7,893,773 $15,817,356







FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds


DP 2 - Fixed Costs0.00 0 0 0 133,952 0.00 0 0 0 (8,629)


DP 4 - ServiceNow0.00 0 0 0 (6,208) 0.00 0 0 0 (6,208)

DP 7502 - BOI ADMINISTRATIVE COSTS ADJUSTMENTS NAPROP0.00 0 0 0 128,804 0.00 0 0 0 231,733










DP 4 - ServiceNow -


DP 7502 - BOI ADMINISTRATIVE COSTS ADJUSTMENTS NAPROP -

Based on historical trends, operational costs have increased 3.0% per year for items including contracted services, travel,rent, and indirect costs. The executive requests authority to compensate for these increases.

New Proposals





FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds

DP 7501 - BOI 1.00 ADMINISTRATIVE ASSISTANT FTE NAPROP1.00 0 0 0 0 1.00 0 0 0 0

Total 1.00 $0 $0 $0 $0 1.00 $0 $0 $0 $0


DP 7501 - BOI 1.00 ADMINISTRATIVE ASSISTANT FTE NAPROP -

Since June 30, 2018, the investment pool has increased by almost $3.0 billion. In addition, the board’s accounting andinvestment operations have continued to grow more and more complex. The size and diversity of the investment portfolio,participant transactions, reporting standards, outside regulatory requirements, and GASB changes all contribute to theincreased complexity. The executive requests 1.00 FTE to aid in complying with these requirements.

Other Issues -

Proprietary Rates

The Board of Investments has two programs funded with proprietary fund, which include:

• The Industrial Revenue Bond, which funds the INTERCAP Program• The Investment Division Program, which funds the investment programs

The Board of Investments’ customers include state agencies, the university system, local governments, financialinstitutions, and local economic development organizations.

Industrial Revenue Bond 1-95 – 06014


The Industrial Revenue Bond proprietary fund is used to fund the INTERCAP Program. The INTERCAP program only loansfunds to eligible governmental units as defined under 17-5-1604, MCA. The Board sells tax-exempt bonds and lends theproceeds to eligible governments for various projects. Loan terms range from one to 15 years, and short-term loans tofinance cash flow deficits or bridge financing are also available.


The following 2023 Biennium Report on Internal Service and Enterprise Funds shows the actual and projected expendituresand related revenues associated with the Industrial Revenue Bond proprietary fund.





Expenses

Overall, the executive is proposing increases in personal services and operating expenses. These increases are primarilydue to statewide present law adjustments for personal services and operating expenses.

Revenues

Nearly all bond program revenues are generated by the difference between interest rates on bonds sold and the interestrate charged on loans to borrowers. Since these revenues are only received from the trustee on an annual basis, a 270-dayfund balance is required to provide adequate funding for the bond program between draws. Remaining revenues arereceived monthly from the board’s contract with the Montana Facility Finance Authority.

Proprietary Rates

The Board of Investments recovers its costs from the entities that use its services. Typically, this has been done byrequesting a maximum level of expenditures and setting a fee at that level. Fees proposed for the INTERCAP Program areshown below.


Actual FY2020

Budgeted FY2021

Proposed FY2022

Proposed FY2023

Budgeted RevenuesFees & Investment Revenues $ 3,382,843 $ 4,119,987 $ 2,502,154 $ 4,117,987

The INTERCAP Program is funded with an enterprise fund, which is a type of a proprietary fund. As such, the legislaturedoes not appropriate the funds or approve the rates for the program. Instead, the legislature reviews the report for theenterprise fund and identifies concerns with the financial position of the fund.

Investment Division – 06527


The Investment Division proprietary fund, an internal service fund, funds the Investment Program. The Board ofInvestment’s customers include state agencies, the university system, local governments, financial institutions, and localeconomic development organizations.


The following 2023 Biennium Report on Internal Service and Enterprise Funds shows the actual and projected expendituresand related revenues associated with the Investment Division proprietary fund.



Expenses

Overall, the executive is proposing increases in personal services and operating expenses. These increases are primarily due to statewide present law adjustments for personal services and operating expenses.


65010 - Department Of Commerce 75-Board of InvestmentsRevenues

Nearly all Investment Program revenues are generated from charges to each account that the board invests. The revenue objective of the Investment Program is to fairly assess the costs of operations while maintaining a 60-day working capital reserve.

Proprietary Rates

The Board of Investments recovers its costs from the entities that use its services. Typically, this has been done by requesting a maximum level of expenditures and setting the fee at that level.


Approved Approved Requested RequestedFY 20 FY 21 FY 22 FY 23

BOI Administrative FeeRate 7,198,414 7,198,414 7,471,401 7,695,543

Authority / Allocation Methodology: The revenue objective of the Board of Investments isto assess the costs of operations to each portfolio the Board invests while attempting tomaintain a reasonable and prudent 60 day working capital reserve.



65010 - Department Of Commerce 78-Board of Horse Racing






BienniumChange

Biennium% Change

Personal Services 39,447 43,554 4,107 10.41 %Operating Expenses 362,585 363,196 611 0.17 %


State/Other Special Rev. Funds 402,032 406,750 4,718 1.17 %

Total Funds $402,032 $406,750 $4,718 1.17 %


Program Description

The Board of Horse Racing is responsible for:

1. Regulating the live, simulcast, and advance deposit wagering horse racing industry;2. Ensuring compliance by approximately 900 licensees with state laws and board rules;3. Licensing all racing personnel, establishing race dates for various communities, and establishing veterinary

practices and standards in connection with horse racing meets; and4. Auditing, supervising, and conducting investigations related to the pari-mutuel racing system in Montana

The program work is mandated in Title 2, Chapter 15, and Title 23, Chapter 4, MCA.

The Board of Horse Racing is funded with state special revenue derived from licenses and fees, as well as the collection ofa percentage of wagering on live and remote racing events.

Program Highlights

Board of Horse RacingMajor Budget Highlights

• The Board of Horse Racing’s 2023 biennium budget request isapproximately $4,700 or 1.2% higher than the 2021 biennium budget

• The executive proposal includes:◦ Increases in state special fund due to a present law

adjustment for personal services◦ A present law adjustment to decrease personal services to

account for a contracted executive secretary position




LFDCOMMENT



Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 1.25 1.25 1.25 1.25



State/Other Special Rev. Funds 100,073 200,285 201,747 203,407 203,343

Total Funds $100,073 $200,285 $201,747 $203,407 $203,343




The Board of Horse Racing expended 50.0% of its approximately $200,000 HB 2 modified budget in FY 2020. Underexpenditures were primarily due to the cancelation of live horse racing events during the Covid-19 pandemic which reducedexpenditures appropriated for the racetrack management and travel.


The FY 2021 appropriations are not significantly different from the FY 2020 appropriations.

Executive Request

The Board of Horse Racing budget proposed by the executive is $4,700 or 1.2% more than the 2021 biennium budget.

Personal services were $20,000 or 10.1% of total FY 2021 appropriations. The executive proposes increases in statespecial revenue above the FY 2021 base, totaling approximately $111,000 in FY 2022 and in FY 2023. However, sincethe executive secretary position has been contracted for several fiscal years and is already accounted for in the operatingbudget, the board is proposing a present law adjustment to reduce the personal services budget.


Personal services were approximately $20,000 or 10.1% of FY 2021 appropriations. The majority of this adjustment isincluded in the reinstatement of personal services base budget.

The Board of Horse Racing has 1.00 FTE for its executive secretary position. This position has beencontracted for several biennia but because there is 1.00 FTE for this position, it is captured in the executivesnapshot, which is used to calculate the statewide present law adjustment for personal services. Since this

position was contracted in the 2021 biennium, the operating costs are included in the base budget, so the executive hasincluded a present law adjustment to reduce the personal services by a corresponding amount. This adjustment is includedin the Present Law Adjustments section below.

Funding




Department of Commerce, 78-Board of Horse RacingFunding by Source of Authority

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

General Fund 0 0 0 0 0 0.00 %

02029 BOHR Operation Fund 406,750 0 0 770,000 1,176,750 100.00 %State Special Total $406,750 $0 $0 $770,000 $1,176,750 100.00 %



Total All Funds $406,750 $0 $0 $770,000 $1,176,750

The Board of Horse Racing is funded entirely from state special revenue funds.




Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of Budget2021 Base Budget 0 0 0 0.00 % 201,747 201,747 403,494 99.20 %SWPL Adjustments 0 0 0 0.00 % 111,216 111,318 222,534 54.71 %PL Adjustments 0 0 0 0.00 % (109,556) (109,722) (219,278) (53.91)%New Proposals 0 0 0 0.00 % 0 0 0 0.00 %

Total Budget $0 $0 $0 $203,407 $203,343 $406,750




FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds


DP 7801 - BOHR ADMINISTRATIVE COSTS ADJUSTMENTS HB20.00 0 (109,556) 0 (109,556) 0.00 0 (109,722) 0 (109,722)









DP 7801 - BOHR ADMINISTRATIVE COSTS ADJUSTMENTS HB2 -

This change package reduces the Board of Horse Racing's 2023 biennium personal services budget to current estimatesfor the 2023 biennium. The Board of Horse Racing currently is contracting for its executive secretary, which is fundedthrough an operating expense category. This change package simply removes the 2023 biennium personal servicesfunding for the position without removing the board's executive secretary position.


65010 - Department Of Commerce 80-Montana Heritage Commission






BienniumChange

Biennium% Change

Personal Services 1,073,840 1,090,433 16,593 1.55 %Operating Expenses 1,710,504 1,756,021 45,517 2.66 %Equipment & Intangible Assets 24,000 24,000 0 0.00 %



Total Funds $2,808,344 $2,870,454 $62,110 2.21 %


Program Description

In 1997, the 55th Montana Legislature established the Montana Heritage Preservation and Development Commission(MHC) to acquire and manage historic properties for the State of Montana. This legislation approved the purchase ofVirginia and Nevada City which comprised 248 buildings, 1.2 million Americana artifacts residing on 260 acres. Theselarge historic town sites were the first properties managed by the MHC.

Since 1997, the Montana Board of Land Commissioners approved two additional acquisitions of historic Reeder’s Alley andthe Pioneer Cabin in Helena. Reeder’s Alley was received through a private donation on November 19, 2001. The PioneerCabin at the front of Reeder’s Alley was received from a private donation on June 19, 2006.

The Montana legislature authorizes MHC to care for heritage resources “in a manner that protects the properties andencourages economic independence” (MCA 22-3-1001). MHC's statutory purpose is to acquire and manage, on behalfof the state, properties that possess outstanding historical value, display exceptional qualities worth preserving, and aregenuinely representative of the state’s culture and history. MHC has worked hard to expand the economic and revenuegenerating uses for our state buildings. MHC is responsible for the management and economic use of these historicproperties including; building improvements, structural stabilization, site maintenance, artifact conservation, and protectionof diverse historic features. MHC serves as a resource for the public and professionals interested in learning more aboutMontana history, historic building preservation, archaeology, conservation of artifacts, education, living history, and historicsite management.

Program Highlights

Montana Heritage CommissionMajor Budget Highlights

• The Montana Heritage Commission 2023 biennium budget requestis approximately $62,000 or 2.2% higher than the 2021 bienniumbudget. The executive proposal includes:

◦ Increases in state special revenues for statewide presentlaw adjustments for personal services and fixed costs, aswell as for other services, travel, rent, utilities, and indirectcosts paid to the Director’s Office for support services

LFD Budget Analysis MHC-1 2023 Biennium





Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 8.00 8.00 8.00 8.00

Personal Services 498,223 531,940 541,900 544,530 545,903Operating Expenses 826,014 857,874 852,630 881,460 874,561Equipment & Intangible Assets 5,000 12,000 12,000 12,000 12,000



Total Funds $1,329,237 $1,401,814 $1,406,530 $1,437,990 $1,432,464



The Montana Heritage Commission is funded entirely with statutory appropriations. As such, the legislature does not approve either the expenditures or the funding of the program.


The Montana Heritage Commission expended 94.8% of its FY 2020 budget of approximately $1.4 million. Personal services were 93.7% expended, operating expenses were 96.3% expended, and equipment and intangible assets were 41.7%expended. The MHC relies on revenue earned from visitor concessions to support its operations. Due to a drop-in tourism revenue, the MHC reduced its spending in FY 2020.


There are small differences between the FY 2020 and FY 2021 budgets in personal services and operating expenses. Increases in personal services are attributed to the state employee pay plan, while decreases in operating expenses are due to 100.0% of the biennial audit appropriations being allocated in FY 2020.

Executive Proposal

The Montana Heritage Commission budget proposed by the executive is $62,000 or 2.2% more than the 2021 biennium budget.

Personal services were $542,000 or 38.5% of total FY 2021 appropriations. The executive proposes increases in state special revenue appropriations from the FY 2021 base, totaling approximately $3,000 in FY 2022 and $4,000 in FY 2023. This change is primarily due to increases from the statewide present law adjustment for personal services.

Operating expenses were approximately $853,000 or 60.6% of total FY 2021 appropriations. The executive proposes increases in state special revenue appropriations from the FY 2021 base, totaling approximately $29,000 in FY 2022 and$22,000 in FY 2023. This change is primarily due to increases from the statewide present law adjustment for fixed costs and increases from a new proposal biennium indirect costs paid to the Director's Office for support services, which will be discussed in detail in the Present Law Adjustments section below.



Funding


Department of Commerce, 80-Montana Heritage CommissionFunding by Source of Authority

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

General Fund 0 0 0 0 0 0.00 %

02102 Montana Heritage Commission 0 0 0 2,870,454 2,870,454 100.00 %State Special Total $0 $0 $0 $2,870,454 $2,870,454 100.00 %



Total All Funds $0 $0 $0 $2,870,454 $2,870,454

The Montana Heritage Commission is funded entirely with statutorily appropriated funding. The MHC receives funding fromthe lodging facility use tax, which is fixed at $400,000 each fiscal year. The remainder of the funding includes revenuesfrom Virginia and Nevada cities and Reeder’s Alley, as well as light vehicle registrations.




Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent


Total Budget $0 $0 $0 $1,437,990 $1,432,464 $2,870,454




FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds


DP 2 - Fixed Costs0.00 0 26,911 0 26,911 0.00 0 19,810 0 19,810

DP 4 - ServiceNow0.00 0 (1,505) 0 (1,505) 0.00 0 (1,505) 0 (1,505)

DP 8001 - MHC ADMINISTRATIVE COSTS ADJUSTMENTS SA0.00 0 3,424 0 3,424 0.00 0 3,626 0 3,626




65010 - Department Of Commerce 80-Montana Heritage Commission *"Total Funds" amount includes funding from sources other than General Fund, State Special, or Federal Special (i.e. Proprietary).






DP 4 - ServiceNow -


DP 8001 - MHC ADMINISTRATIVE COSTS ADJUSTMENTS SA -

The executive requests an adjustment for 2023 biennium indirect costs paid to the Director's Office for support servicesprovided to supported divisions, bureaus, and programs.


65010 - Department Of Commerce 81-Directors Office






BienniumChange

Biennium% Change

Operating Expenses 0 5,992 5,992 0.00 %Grants 1,150,000 1,200,000 50,000 4.35 %


Federal Spec. Rev. Funds 1,150,000 1,200,000 50,000 4.35 %Proprietary Funds 0 5,992 5,992 0.00 %

Total Funds $1,150,000 $1,205,992 $55,992 4.87 %


Program Description

The Director’s Office provides overall leadership, communication, and management support to the Department of Commerce staff, programs, bureaus, divisions and administratively attached boards. The office provides executive, administrative, legal, and policy direction, along with offering problem-solving guidance. The office keeps abreast of department-related issues and acts in a public relations and informational capacity to ensure the public is informed of the important services provided by the department. The office works closely with economic and community development organizations, businesses, communities, governmental entities, elected officials, and the public to diversify and expand the state’s economic base. The office also acts as the liaison with private business, local governments, administratively attached boards, public and private interest groups, the Legislature, Indian tribes, individuals, other governmental agencies, and the Governor’s Office.

The Director’s Office also provides internal support to Department of Commerce staff, programs, bureaus, divisions and administratively attached boards in a positive, customer service-oriented manner. Services are provided by the Offices of Accounting and Budget, Legal Affairs, Human Resources, Information Technology, and Communications.

Every division, bureau, and program in the agency uses the support services in the Director’s Office in some capacity. Staff act as the administrative contacts for the agency, and the "central services" aspect enhances the overall effectiveness and efficiency of the agency by standardizing business processes and employing best practices in as many areas of the agency as possible while keeping the costs to supported programs as low as possible.

The Director's Office analyzes, with department managers, the statutory, administrative, and programmatic objectives of their programs to develop performance measures, where appropriate, that maximize the benefits of the services provided to the citizens of Montana while minimizing the resources required achieving those objectives.

The Director’s Office responsibilities are mandated primarily in Title 2, Chapter 15 and Title 90, Chapter 1, MCA.

Montana Council on Developmental Disabilities (MCDD):

The Montana Council on Developmental Disabilities is a citizen-based advocacy group. Its members, appointed by the Governor, work to provide increased independence, integration and productivity for persons with developmental disabilities.

The Council administers federal funds in three major areas; 1) assistance in the provision of comprehensive services to persons with developmental disabilities; 2) assistance to the state in appropriate planning activities; and 3) contracting with public and private agencies to establish model programs, demonstrate innovative habilitation techniques and to train professional and paraprofessional personnel in providing services to persons with developmental disabilities. MCDD responsibilities are mandated primarily in Title 53, Chapter 20, MCA.



Program Highlights

Directors OfficeMajor Budget Highlights

• The Directors Office 2023 biennium budget request is approximately$56,000 or 4.9% higher than the 2021 biennium budget

• The executive proposal includes:◦ Increases in federal special revenue to match anticipated

available federal funds◦ Increase in proprietary funds for NRIS/GIS usage fixed cost

to be paid to the Montana State Library• The majority of the Director’s Office is funded with non-budgeted

proprietary funds




Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023

Operating Expenses 0 0 0 2,996 2,996Grants 436,359 550,000 600,000 600,000 600,000


Federal Spec. Rev. Funds 436,359 550,000 600,000 600,000 600,000Proprietary Funds 0 0 0 2,996 2,996

Total Funds $436,359 $550,000 $600,000 $602,996 $602,996



The federal Development Disabilities Assistance and Bill of Rights Act of 2000 requires each state to designate a state agency to administer the federal funds as long as the designated state agency does not provide or pay for services for individuals with development disabilities.

Since 2005 the department has had a contract with the Montana Council on Development Disabilities, a nonprofit corporation that carries out the responsibilities of the Developmental Disabilities Planning and Advisory Council (DDPAC). DDPAC still remains administratively attached to the department, with the agency acting as a go-between for disbursing federal funds to the nonprofit under the terms and conditions of the contract.


65010 - Department Of Commerce 81-Directors OfficeFY 2020 Appropriations Compared to FY 2020 Actual Expenditures

The Director’s Office expended 79.3% of its $550,000 HB 2 modified budget in FY 2020. Appropriations in HB 2 support the Montana Council on Developmental Disabilities which had lower expenditures for grants due to the timing of the receipt of federal grants.


The 2019 Legislature increased the FY 2021 federal special revenue appropriations for the Montana Council on Developmental Disabilities by $50,000 over the FY 2020 appropriations to match anticipated federal funds.

Executive Request

The Director’s Office is requesting an increase in proprietary funds above the FY 2021 base of approximately $3,000 in FY 2022 and FY 2023.

Funding


Department of Commerce, 81-Directors OfficeFunding by Source of Authority

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

General Fund 0 0 0 0 0 0.00 %


03441 MCDD 1,200,000 0 0 0 1,200,000 100.00 %Federal Special Total $1,200,000 $0 $0 $0 $1,200,000 19.70 %

06015 Facilities Finance Authority 0 0 0 0 0 0.00 %06542 Commerce Centralized Services 5,992 0 4,883,893 0 4,889,885 100.00 %

Proprietary Total $5,992 $0 $4,883,893 $0 $4,889,885 80.30 %

Total All Funds $1,205,992 $0 $4,883,893 $0 $6,089,885

HB 2 Authority

The Montana Council on Developmental Disabilities is funded entirely with federal special revenues that pay for the contract for the nonprofit that carries out the responsibilities of DDPAC.

Non-Budgeted Proprietary

The Director’s Office is funded by an internal service type proprietary fund from indirect costs charged to programs in the Department of Commerce. This fund will be discussed in further detail in the Proprietary Rates section below.

Program Budget Summary by CategoryThe following table summarizes the total budget by base, present law adjustments, and new proposals. For a description

of these categories, please see the glossary.





Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of Budget2021 Base Budget 0 0 0 0.00 % 600,000 600,000 1,200,000 99.50 %SWPL Adjustments 0 0 0 0.00 % 0 0 0 0.00 %PL Adjustments 0 0 0 0.00 % 0 0 0 0.00 %New Proposals 0 0 0 0.00 % 2,996 2,996 5,992 0.50 %

Total Budget $0 $0 $0 $602,996 $602,996 $1,205,992

New Proposals



FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds

DP 8104 - NRIS/GIS Fixed Costs0.00 0 0 0 2,996 0.00 0 0 0 2,996

Total 0.00 $0 $0 $0 $2,996 0.00 $0 $0 $0 $2,996




Other Issues -

Proprietary Rates

Commerce Centralized Services – 06542


The Director’s Office provides overall leadership, communication, and management support to the Department ofCommerce's staff, programs, bureaus, divisions, and administratively attached boards. The office provides executive,administrative, legal, and policy direction, along with offering problem-solving guidance. The office keeps abreast ofdepartment-related issues, and acts in a public relations and informational capacity. The office works closely with economicand community development organizations, businesses, communities, governmental entities, elected officials, and thepublic to diversify and expand the state’s economic base. The office also acts as the liaison with private business, localgovernments, administratively attached boards, public and private interest groups, the legislature, Indian tribes, individuals,other governmental agencies, and the Governor’s Office.

Services are provided by the Offices of Accounting and Budget, Legal Affairs, Human Resources, Information Technology,and Public Information.


The following 2023 Biennium Report on Internal Service and Enterprise Funds shows the actual and projected expendituresand related revenues associated with the centralized services proprietary fund.





Expenses

Overall, the executive is proposing slight increases in personal services and operating expenses. These increases areprimarily due to statewide present law adjustments for personal services and operating expenses.

Revenues

The Director’s Office is funded by revenues from charges allocated to all divisions, bureaus, and programs supported bythe division's indirect cost plan. Indirect costs are allocated to supported programs based upon federally calculated, andlegislatively approved, indirect cost rates applied to actual personal services expenditures.

Proprietary Rates

Indirect costs for the Director’s Office are allocated to supported programs via a federally calculated indirect cost plan forfederally funded programs and a legislatively approved rate for state funded programs. Indirect cost rates are charged tosupported programs based upon actual personal services expenditures.

The Director’s Office calculates a federal indirect cost rate on an annual basis. This rate is a fixed rate for federally fundedprograms. This rate is then applied against actual federally funded personal services expenditures within the department.

The federally calculated rate requires that a carry-forward amount be built into the rate. This carry-forward amountrepresents the amount the Director’s Office under-recovered or over-recovered in a given fiscal year. This computationcompares what was originally calculated to what actually occurred. The difference is then carried forward into the followingyear’s rate.



Fee Description: 14.22% 14.22% 14.78% 14.78%

The executive proposes reduced rates for FY 2020 and FY 2021. The rates approved by the legislature are the maximumthe program may charge during the biennium. They are not the rates the program must charge.

Due to the proposed rate increase, the following table shows the estimated increase in cost to each division usingCommerce Centralized Services.

Figure 10Directors Office

Estimated Increase in Cost for Commerce Centralized ServicesFY 2022 FY 2023

51 Office of Tourism and Business Development Div 73,118 75,36860 Community Development Division 11,542 12,49271 Facility Finance Authority 2,268 2,55074 Housing Division 51,229 53,28575 Board of Investments 30,275 31,71878 Board of Horse Racing 314 30680 Montana Heritage Commission 3,424 3,626Total $ 172,170 $ 179,345


66020 - Department Of Labor And Industry SUMMARY






BienniumChange

Biennium% Change

Personal Services 98,236,906 103,448,243 5,211,337 5.30 %Operating Expenses 55,054,073 57,521,695 2,467,622 4.48 %Equipment & Intangible Assets 841,208 989,698 148,490 17.65 %Grants 19,848,191 19,645,272 (202,919) (1.02)%Benefits & Claims 200,778 200,778 0 0.00 %Transfers 1,070,797 834,666 (236,131) (22.05)%Debt Service 536,929 482,348 (54,581) (10.17)%


General Fund 3,996,198 4,230,221 234,023 5.86 %State/Other Special Rev. Funds 104,842,975 109,667,672 4,824,697 4.60 %Federal Spec. Rev. Funds 66,949,709 69,224,807 2,275,098 3.40 %

Total Funds $175,788,882 $183,122,700 $7,333,818 4.17 %

Total Ongoing $175,618,882 $183,122,700 $7,503,818 4.27 %Total OTO $170,000 $0 ($170,000) (100.00)%

Mission Statement

The purpose of the Department of Labor and Industry is to promote the well-being of Montana's workers, employers, andcitizens, and to uphold their rights and responsibilities.

The department is divided into six divisions:

• The Workforce Services Division• The Unemployment Insurance Division• The Commissioner's Office/Centralized Services Division• The Employment Relations Division• The Business Standards Division• The Technology Services Division

The Office of Community Services, Workers' Compensation Court, and three additional boards are administratively attached.

Please refer to the agency profile for the Department of Labor and Industry at https://leg.mt.gov/lfd/state-agency-profiles/department-labor-and-industry/ for additional information about the agency’s organization structure, historical expenditures, FY 2020 expenditure dashboard, and recent studies, audits, and legislation.


http://https//leg.mt.gov/lfd/state-agency-profiles/department-labor-and-industry/

http://https//leg.mt.gov/lfd/state-agency-profiles/department-labor-and-industry/


Department of Labor and IndustryMajor Budget Highlights

• The Department of Labor and Industry 2023 biennium budget requestis approximately $7.3 million or 4.2% higher than the 2021 bienniumbudget. The executive proposal includes:

◦ Increases in statewide present law adjustments for personalservices, fixed costs, and inflation/deflation

◦ Increases in state special revenue for the Montana CareerInformation System due to expiring federal funding

◦ Increases to facilitate payment of the anticipated increasesto the maintenance contract for the UnemploymentInsurance Tax System

◦ An increase in federal special funds to continue operationsfor the Occupational Health and Safety SurveillanceProgram

◦ Increases in state special revenue for general operatingadjustments and new technology

◦ Increases in state special revenue to purchase new vehiclesfor weights and measures field inspectors and for the fieldinspectors on several professional boards


• A proposed funding switch for the MCIS in the Work Force ServicesDivision and requests to update software and to purchase newvehicles for the Business Standards Division are more appropriatelycategorized as a new proposal




Agency Highlights



Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 668.48 668.48 670.48 670.48

Personal Services 44,527,004 48,587,640 49,649,266 51,656,219 51,792,024Operating Expenses 23,901,829 27,426,252 27,627,821 28,778,063 28,743,632Equipment & Intangible Assets 419,764 447,884 393,324 505,849 483,849Grants 8,047,986 10,025,555 9,822,636 9,822,636 9,822,636Benefits & Claims 33,950 100,389 100,389 100,389 100,389Transfers 494,535 663,464 407,333 417,333 417,333Debt Service 246,389 295,755 241,174 241,174 241,174


General Fund 1,984,135 1,985,868 2,010,330 2,111,162 2,119,059State/Other Special Rev. Funds 47,481,849 52,241,253 52,601,722 54,818,151 54,849,521Federal Spec. Rev. Funds 28,205,473 33,319,818 33,629,891 34,592,350 34,632,457

Total Funds $77,671,457 $87,546,939 $88,241,943 $91,521,663 $91,601,037


Agency Discussion


The modified HB 2 budget of $87.5 million for the Department of Labor and Industry, which is primarily comprised ofstate and federal special revenues, was 88.7% expended through the end of FY 2020. Under-expenditures were largelydue to Covid-19. The Unemployment Insurance (UI) Division saw a substantial increase in demand for services duringCovid-19, whereas many other divisions within the department saw large decreases in service demand. To meet theneeds of the UI Division, many other divisions temporarily shifted their employees to work under the UI Division.However, this employee shift and increase in UI Division needs was largely funded by the Federal Coronavirus Aid,Relief and Economic Security (CARES) Act. Additionally, in response to Covid-19 the divisions reduced their travel,services, and some delayed rehiring in the early stages of the pandemic with the hopes to hire when they could onboardand train in person.


FY 2021 total appropriations are approximately $695,000 higher than FY 2020. This difference is attributed to anincrease of approximately $1.1 million in personal services and $202,000 in operating expenses. However, there isapproximately a $203,000 decrease in grants attributed to a decline in funding for federal grants, as well as decreasesin transfers and debt services of approximately $256,000 and $55,000, respectively.


Figure 1 illustrates the beginning FY 2021 budget as adopted by the 2019 Legislature compared to the finalized FY2021 base budget, which included modifications as approved by the approving authority (as authorized in statute)during the interim. The FY 2021 base budget was agreed upon by the executive and legislative branches to be thepoint from which any changes would be recorded for the 2023 biennium budgeting process.

Figure 1





Authority Action01 WORKFORCE SERVICES DIVISION61000 Personal Services 16,935,962 - 16,935,962 0.0%62000 Operating Expenses 6,853,487 18,800 6,872,287 0.3%63000 Equipment & Intangible Assets 12,908 - 12,908 0.0%66000 Grants 6,722,914 - 6,722,914 0.0%68000 Transfers-out 101,814 - 101,814 0.0%69000 Debt Service 154,387 (30,000) 124,387 -19.4%01 WORKFORCE SERVICES DIVISION Total 30,781,472 (11,200) 30,770,272 0.0%02 UNEMPLOYMENT INSURANCE DIV61000 Personal Services 10,335,147 - 10,335,147 0.0%62000 Operating Expenses 6,813,650 193,400 7,007,050 2.8%69000 Debt Service 29,905 6,600 36,505 22.1%02 UNEMPLOYMENT INSURANCE DIV Total 17,178,702 200,000 17,378,702 1.2%03 COMMISSIONERS OFFICE & CSD61000 Personal Services 906,904 - 906,904 0.0%62000 Operating Expenses 370,087 235,835 605,922 63.7%68000 Transfers-out - 20,000 20,000 0.0%69000 Debt Service 2,394 965 3,359 40.3%03 COMMISSIONERS OFFICE & CSD Total 1,279,385 256,800 1,536,185 20.1%04 EMPLOYMENT RELATIONS DIVISION61000 Personal Services 9,925,284 - 9,925,284 0.0%62000 Operating Expenses 5,219,548 (458,440) 4,761,108 -8.8%63000 Equipment & Intangible Assets 10,941 - 10,941 0.0%67000 Benefits & Claims 100,389 - 100,389 0.0%69000 Debt Service 17,089 6,340 23,429 37.1%04 EMPLOYMENT RELATIONS DIVISION Total 15,273,251 (452,100) 14,821,151 -3.0%05 BUSINESS STANDARDS DIVISION61000 Personal Services 10,544,211 - 10,544,211 0.0%62000 Operating Expenses 7,862,561 (5,870) 7,856,691 -0.1%63000 Equipment & Intangible Assets 369,475 - 369,475 0.0%66000 Grants 5,000 - 5,000 0.0%68000 Transfers-out 34,869 - 34,869 0.0%69000 Debt Service 43,487 5,870 49,357 13.5%05 BUSINESS STANDARDS DIVISION Total 18,859,603 - 18,859,603 0.0%07 OFFICE OF COMMUNITY SERVICES61000 Personal Services 359,161 - 359,161 0.0%62000 Operating Expenses 279,403 (220) 279,183 -0.1%66000 Grants 3,094,722 - 3,094,722 0.0%68000 Transfers-out 250,650 - 250,650 0.0%69000 Debt Service 952 220 1,172 23.1%07 OFFICE OF COMMUNITY SERVICES Total 3,984,888 - 3,984,888 0.0%09 WORKERS COMPENSATION COURT61000 Personal Services 642,597 - 642,597 0.0%62000 Operating Expenses 154,730 5,850 160,580 3.8%



69000 Debt Service 2,315 650 2,965 28.1%09 WORKERS COMPENSATION COURT Total 799,642 6,500 806,142 0.8%66020 DEPARTMENT OF LABOR AND INDUSTRY Total 88,156,943 - 88,156,943 0.0%

The legislative action budget includes the FY 2021 budget as adopted during the 2019 session. The Department ofLabor and Industry had several executive modifications to the legislative budget. The most notable changes were programtransfers from the Employment Relations Division of $250,000 to the Commissioner’s Office/Central Services Division toaccommodate a projected increase in technological services and $200,000 to the Unemployment Insurance Division due toa decline in federal revenues.

Executive Proposal

The executive proposes an increase above the FY 2021 base of approximately $3.4 million in both FY 2022 and FY 2023.Proposed increases in the general fund are primarily due to statewide present law adjustments for personal services andoperating expenses.

The executive request will be discussed in further detail at the program level.

5.0% Plan

Statute requires that agencies submit plans to reduce general fund and certain state special revenue funds by 5.0%.For the Department of Labor and Industry, the 5.0% plan includes reductions totaling approximately $1.4 million. Thisamount consists of $99,000 in general fund and $1.3 million in state special revenue. The plan includes potential reductionsin funding for administrative hearings for uninsured employer fund cases and human rights cases, travel to Workers’Compensation court hearings, sunsets boards in the Business Standards Division, five positions in the Safety Bureau, onehuman rights investigator position, and AmeriCorps program oversite and training.

A summary of the entire 2023 biennium 5.0% plan submitted for the Department of Labor and Industry can be found onlineat the Section A subcommittee page on “Tab D Materials.”


In order to explain the factors influencing personal services changes, the proposed statewide personal services present lawadjustment (DP 1) has been broken down into three categories, as follows:






DP 1 - FY 2022


ManagementDecisions

BudgetModifications DP1 SWPL

01 WORKFORCE SERVICES DIVISION (98,522) 906,478 - 807,956



02 UNEMPLOYMENT INSURANCE DIV 64,531 170,349 - 234,88003 COMMISSIONERS OFFICE & CSD 6,151 108,806 - 114,95704 EMPLOYMENT RELATIONS DIVISION 93,247 300,691 - 393,93805 BUSINESS STANDARDS DIVISION 73,112 248,802 - 321,91407 OFFICE OF COMMUNITY SERVICES (36,147) 16,709 - (19,438)09 WORKERS COMPENSATION COURT 6,095 (2,009) - 4,086Agency Total $ 108,467 $ 1,749,826 $ - $ 1,858,293

Personal services were $49.6 million or 56.3% of total FY 2021 appropriations for the Department of Labor and Industry.The executive proposes a statewide present law increase of approximately $2.0 million for FY 2022 and $2.1 million for FY2023. In addition to the expected changes, the statewide present law adjustments are mainly due to management decisionsincluding pay increases. Additional details of significant factors included in the statewide present law adjustment for personalservices will be discussed at the program level.

The Department of Labor and Industry added 2.00 FTE in the Employment Relations Division and Office of CommunityServices.

The Department of Labor and Industry will have 322 employees or 43.0% of staff who are eligible for retirement in the 2023biennium. The departments estimate $2.6 million in retirement payout liability, with the majority of that liability being in theWork Force Service Division. However, it should be noted that not all 322 employees eligible for retirement will necessarilyretire in the 2023 biennium.

A comparison to the 2020 market shows that the current pay scale for the Department of Labor and Industry will be below85.0% of market in 25 occupations next year, due to a rise in market rates in these occupations. The department estimatesthat 160 employees or approximately 21.0% of staff will fall below 85.0% of market if no adjustments are made. Therefore,the Department of Labor and Industry has proposed an increase in personal services in the 2023 biennium to account forthese changes.

Funding


Total Department of Labor and Industry Funding by Source of Authority2023 Biennium Budget Request - Department of Labor and Industry

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

General Fund 4,230,221 0 0 0 4,230,221 0.79 %State Special Total 109,667,672 0 0 1,900,716 111,568,388 20.81 %Federal Special Total 69,224,807 0 0 0 69,224,807 12.91 %Proprietary Total 0 0 350,292,939 744,095 351,037,034 65.48 %Other Total 0 0 0 0 0 0.00 %

Total All Funds $183,122,700 $0 $350,292,939 $2,644,811 $536,060,450Percent - Total All Sources 34.16 % 0.00 % 65.35 % 0.49 %

HB 2 Authority

General Fund

• The general fund comprises less than 1.0% of the total funding for the Department of Labor and Industry• The general fund supports activities in the Commissioner’s Office and Centralized Services Division, Employment

Relations Division, and the Office of Community Services


LFDCOMMENT


• Approximately 20.8% of the total funding for the Department of Labor and Industry is from state special revenueappropriated in HB 2

• State special revenue funds include the employment security account, accounts for professional licensing boardsor programs, and the uninsured employers fund

• The majority of state special revenue used by the department is from the employment security account, whichgenerates revenue from an administrative assessment against the payrolls of Montana employers


• Approximately 12.9% of the total funding for the Department of Labor and Industry is from federal special revenue• The uses and requirements for these funds are determined by the federal agencies granting the funding


Proprietary funding is 65.5% of all funding for the Department of Labor and Industry. A majority of this funding is non-budgeted proprietary funding for unemployment benefits.

The employment security account is one of the major state special revenue accounts in the Department ofLabor and Industry, and it provides funding to several different divisions within the department.

Statute outlines the allowed uses of the fund as follows:

• Unemployment insurance benefits• Administration of the unemployment insurance• Costs for collecting special administrative assessment• Cost for employment offices including expenses for providing services to the business community• Apprenticeship and training programs• Displaced homemaker services• Department of Labor and Industry research and analysis programs• Wage and hour laws, prevailing wages, and collective bargaining expenses• Principal, interest, and redemption of employment security revenue bonds

The following figure shows the revenues, expenditures, and fund balance for the account for the 2021 and 2023 biennia.

Figure 3Department of Labor and Industry

Employment Security Account (02258)Actual FY

2020Budget FY

2021Proposed FY

2022Proposed FY

2023Beginning Fund Balance $ 6,205,230 $ 7,084,115 $ 5,843,361 $ 6,031,076

RevenuesCharges for Services - 6 6 6Investment Earnings 145,430 73,890 75,358 76,855Contributions/Premiums 20,857,837 21,352,252 21,776,436 22,209,103Grants/Transfers/Misc - 11,272 11,496 11,725Total Revenues 21,003,267 21,437,420 21,863,296 22,297,689

HB 2 Budgeted ExpendituresWorkforce Services Division 11,796,585 12,697,818 13,344,759 13,369,696Unemployment Insurance Division 5,492,714 5,575,857 5,724,990 5,781,481




Commissioner's Office 829,306 554,184 623,662 624,032Employment Relations Division 1,988,900 1,914,256 1,982,170 1,988,165Technology Services Division - - - -Total Expenditures 20,107,505 20,742,115 21,675,581 21,763,374

Other ExpendituresEmployment Relations 432 - - -Workforce Services Division 85,000 100,107 - -Unemployment Insurance Division - 1,835,852 - -Commissioner's Office - 100 - -Total Other Expenditures 85,432 1,936,059 - -

Adjustments 67,674 - - -

Ending Fund Balance $ 7,083,234 $ 5,843,361 $ 6,031,076 $ 6,565,391




Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of Budget2021 Base Budget 2,010,330 2,010,330 4,020,660 95.05 % 88,156,943 88,156,943 176,313,886 96.28 %SWPL Adjustments 100,832 108,729 209,561 4.95 % 2,236,411 2,343,289 4,579,700 2.50 %PL Adjustments 0 0 0 0.00 % 505,902 476,398 982,300 0.54 %New Proposals 0 0 0 0.00 % 622,407 624,407 1,246,814 0.68 %

Total Budget $2,111,162 $2,119,059 $4,230,221 $91,521,663 $91,601,037 $183,122,700

HB 2 Language

The executive is not proposing HB 2 language for the Department of Labor and Industry.



66020 - Department Of Labor And Industry 01-Work Force Services Division






BienniumChange

Biennium% Change

Personal Services 33,447,561 35,526,655 2,079,094 6.22 %Operating Expenses 13,444,731 14,351,295 906,564 6.74 %Equipment & Intangible Assets 25,816 25,816 0 0.00 %Grants 13,648,747 13,445,828 (202,919) (1.49)%Transfers 444,128 203,628 (240,500) (54.15)%Debt Service 278,774 248,774 (30,000) (10.76)%


State/Other Special Rev. Funds 28,260,867 29,564,455 1,303,588 4.61 %Federal Spec. Rev. Funds 33,028,890 34,237,541 1,208,651 3.66 %

Total Funds $61,289,757 $63,801,996 $2,512,239 4.10 %

Total Ongoing $61,119,757 $63,801,996 $2,682,239 4.39 %Total OTO $170,000 $0 ($170,000) (100.00)%

Program Description

The Workforce Services Division (WSD) works to help Montana employers understand the labor market and have a skilledand ready workforce that meets their needs. The WSD also helps Montana workers understand the job market and haveaccess to skills development opportunities and job search assistance services. The division provides businesses, jobseekers, workforce and economic development partners, educators, students, and the general public a place to learn aboutthe workforce and connect with each other.

The Workforce Services Division operates through four bureaus:

• The Job Service Operations Bureau coordinates and guides the delivery of workforce development services tocommunities through a network of 16 Job Service Centers across the state

• The Strategic Initiatives and Workforce Programs Bureau operates the Registered Apprenticeship & TrainingProgram, the Jobs for Montana Graduates Program, as well as the Work Opportunity Tax Credit (WOTC) Program

• The Research and Analysis Bureau works in partnership with the US Department of Labor to provide labormarket information that is used at the national and state level by businesses, policy makers, and educators. Thebureau also provides kindergarten-through adult career resources for use by educators, students, and workforcedevelopment agencies, and job seekers

• The Division Management Services Bureau performs fiscal and policy oversight operations for the division

Also housed within WSD are incumbent Worker Training Program and State Workforce Innovation Board (SWIB).



Workforce Services DivisionMajor Budget Highlights

• The Workforce Services Division’s 2023 biennium budget request isapproximately $2.5 million or 4.1% higher than the 2021 bienniumbudget. The executive proposal includes:

◦ Increases in state and federal special revenue for statewidepresent law adjustments for personal services, fixed costs,and inflation/deflation

◦ Increases in state special revenue for the Montana CareerInformation System (MCIS) due to expiring federal grantfunding


• A proposed funding switch for the MCIS is more appropriatelycategorized as a new proposal




Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 244.50 244.50 244.50 244.50

Personal Services 15,224,289 16,511,599 16,935,962 17,743,918 17,782,737Operating Expenses 5,249,468 6,487,444 6,957,287 7,171,182 7,180,113Equipment & Intangible Assets 0 12,908 12,908 12,908 12,908Grants 5,053,245 6,925,833 6,722,914 6,722,914 6,722,914Transfers 235,480 342,314 101,814 101,814 101,814Debt Service 111,847 154,387 124,387 124,387 124,387


State/Other Special Rev. Funds 12,139,917 14,053,049 14,207,818 14,769,759 14,794,696Federal Spec. Rev. Funds 13,734,412 16,381,436 16,647,454 17,107,364 17,130,177

Total Funds $25,874,329 $30,434,485 $30,855,272 $31,877,123 $31,924,873




The Work Force Services Division expended 85.0% of its $30.4 million HB 2 modified budget in FY 2020. Unspent funds were largely due to Covid-19 as the Workforce Services Division experienced a decrease in demand for certain programs and shifted focus to assist the Unemployment Insurance division. Additional decreases can be attributed to special workforce projects ending, a decline in the number of eligible participants for Trade Act funding, and a reduction in Wagner -Peyser and Bureau of Labor Statistics funding from a federal level.


Program Highlights



The Work Force Services Division FY 2021 appropriations were approximately $451,000 or 1.5% higher than FY 2020.This increase is due to an increase in personal services, primarily for the pay plan, of approximately $424,000. Operatingexpenses were increased by approximately $421,000 due to fund transfers from grants and transfer expenses.

Executive Request

The Workforce Service Division budget proposed by the executive is $2.5 million or 4.1% greater than the 2021 bienniumbudget.

Personal services were $16.9 million or 54.9% of total FY 2021 appropriations. The executive proposes increases instate and federal special revenue appropriations from the FY 2021 base, totaling approximately $808,000 in FY 2022 and$847,000 in FY 2023. This change is primarily due to increases from the statewide present law adjustment for personalservices, which will be discussed in detail in the Program Personal Services section below.

Operating expenses were approximately $7.0 million or 22.5% of total FY 2021 appropriations. The executive proposesincreases in state and federal special revenue appropriations from the FY 2021 base, totaling approximately $241,000 inFY 2022 and $240,000 in FY 2023. This change is primarily due to increases from the statewide present law adjustment forfixed costs and increases from a new proposal for the Montana Career Information System (MCIS), which will be discussedin detail in the Present Law Adjustments section below.


Personal services were $16.9 million or 54.9% of total FY 2021 appropriations for the Work Force Services Division. Theexecutive proposes a statewide present law increase of approximately $808,000 for FY 2022 and $847,000 for FY 2023.

These increases are largely a result of personal services management decisions made by the agency including:

• Broadband pay raises and wage changes due to employee turnover• Pay adjustments related to reclassifications of 13.00 FTE

Funding




Department of Labor and Industry, 01-Work Force Services DivisionFunding by Source of Authority

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

General Fund 0 0 0 0 0 0.00 %

02242 Contracts From PHHS 0 0 0 0 0 0.00 %02258 Employment Security Account 26,714,455 0 0 0 26,714,455 90.36 %02067 Montana HELP Act 2,850,000 0 0 0 2,850,000 9.64 %02949 Earn Grant 0 0 0 0 0 0.00 %


03124 Employment Trng Grants 15,356,282 0 0 0 15,356,282 44.85 %03128 L & I Federal Funding 748,094 0 0 0 748,094 2.19 %03194 Research & Analysis BLS 1,661,389 0 0 0 1,661,389 4.85 %03297 Labor and Industry Veteran Gra 1,445,427 0 0 0 1,445,427 4.22 %03338 Contracts From PHHS 0 0 0 0 0 0.00 %03682 Wagner Peyser 11,622,758 0 0 0 11,622,758 33.95 %03692 Alien Labor Certification(ALC) 572,839 0 0 0 572,839 1.67 %03693 Wrk Opportunities Tx Crdt/WOTC 136,000 0 0 0 136,000 0.40 %03694 Trade Adjustment Assist/NAFTA 1,285,212 0 0 0 1,285,212 3.75 %03954 UI Administrative Grants 49,105 0 0 0 49,105 0.14 %03982 RESEA 1,360,435 0 0 0 1,360,435 3.97 %


06051 Montana Career Info System 0 0 16,322 0 16,322 100.00 %Proprietary Total $0 $0 $16,322 $0 $16,322 0.03 %

Total All Funds $63,801,996 $0 $16,322 $0 $63,818,318

HB 2 Authority


• State special revenue comprises of 46.3% of the total funding for the Work Force Services Division• State special revenue funding for the Workforce Services Division is from the Employment Security Account and

the Montana HELP Act• The revenue for the Employment Security Account is generated from an administrative assessment against the

payrolls of Montana Employers. Statute enumerates the use of the fund, including the operating expenses of theJob Services offices


• Federal special revenue comprises of the majority of total funding or the Work Force Services Division at 53.7%• The majority of federal special revenues are from two federal programs: Wagner-Peyser Act and Workforce

Innovation and Opportunity Act (WIOA) employment training grant. The uses and requirements for these fundsare determined by the federal agencies granting the funding


Proprietary funding is received from rates charged to entities participating in the Montana Career Information System andis discussed in the Proprietary Rates section of the narrative.







Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of Budget2021 Base Budget 0 0 0 0.00 % 30,770,272 30,770,272 61,540,544 96.46 %SWPL Adjustments 0 0 0 0.00 % 1,020,916 1,068,666 2,089,582 3.28 %PL Adjustments 0 0 0 0.00 % 85,935 85,935 171,870 0.27 %New Proposals 0 0 0 0.00 % 0 0 0 0.00 %

Total Budget $0 $0 $0 $31,877,123 $31,924,873 $63,801,996

One-time-only funds for state special revenues for the Montana Career Information System are excluded in the FY 2021base budget.




FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds

DP 1 - Personal Services0.00 0 467,834 340,122 807,956 0.00 0 487,609 359,166 846,775

DP 2 - Fixed Costs0.00 0 108,397 132,956 241,353 0.00 0 107,883 131,815 239,698

DP 3 - Inflation Deflation0.00 0 (15,225) (13,168) (28,393) 0.00 0 (9,549) (8,258) (17,807)

DP 101 - MCIS Funding To Continue Free Website Access0.00 0 85,935 0 85,935 0.00 0 85,935 0 85,935

Grand Total All Present Law Adjustments0.00 $0 $646,941 $459,910 $1,106,851 0.00 $0 $671,878 $482,723 $1,154,601








LFDCOMMENT

66020 - Department Of Labor And Industry 01-Work Force Services DivisionDP 3 - Inflation Deflation


DP 101 - MCIS Funding To Continue Free Website Access -

The executive is requesting state special revenue appropriation to continue general operation and maintenance of the Montana Career Information System (MCIS). MCIS is a comprehensive career information delivery system that is accessible online and has been available at no cost to Montanans through grant funding. The division is requesting state special revenue appropriation in order to continue providing the basic service to Montanans free of cost.

The MCIS was previously supported by the Trade Adjustment Assistance Community College and CareerTraining (TAACCCT) federal grant. Because the TAACCCT grant has expired, it will not be a funding sourcefor the MCIS in the future.

In the 2017 Regular Session, the executive proposed ongoing state special revenue authority from the employmentsecurity account for the MCIS, but due to a tight budget the request was not approved. In the 2019 biennium, theDepartment of Labor and Industry unexpectedly had carryforward authority from the Workforce Improvement Grant (WIG)which was used to support the MCIS.

Through DP 101 the executive is requesting this funding again in the 2021 legislative session as a present law adjustment.This request is more appropriately categorized as a new proposal and should be evaluated by the legislature as they wouldconsider a new proposal.

Other Issues -

Proprietary Rates

Fund 06051 – Montana Career Information System


The following 2023 Biennium Report on Internal Service and Enterprise Funds for fund 06051 shows the actual andprojected revenues and expenses associated with the fund from FY 2020 through FY 2023. The report is provided assubmitted by the executive, but the LFD has edited and reconfigured the figure for clarity.




The Montana Career Information System (MCIS) has been active in Montana since 1980. The purpose of MCIS is to delivercurrent career and labor market information to Montanans in an easy-to-use and easy-to-understand format. The MCIS isthe only career information delivery system in the country that has specific Montana labor market information included ineach file.

The MCIS is currently being funded by federal funds through the Workforce Information Grants (WIG) from the Employmentand Training Administration for a wide variety of users:

• Job service offices• Vocational rehabilitation offices• High schools• Community colleges



• Universities• Tribal colleges• Educational and training agencies• Home use• Adult education programs

There are currently optional components of MCIS not funded by WIG funds such as the Interest Determination, Explorationand Assessment System (IDEAS), Peterson Practice Tests, and Dependable Strengths that requires the program to collectfees associated with each optional component.


Expenses

The expenses of the proprietary program are limited to the operational expenses of the optional features. These aretypically site-specific licensing fees.

Revenues

Revenue is generated through fees for purchase of a one-year optional component license. The department collects thefees from the sites purchasing the license or assessment, and then pays those fees to the service provider on a one-to-oneratio.

Proprietary Rates

For the 2023 biennium, the following rates are proposed by the executive:

Requested Rates for Internal Service or Enterprise FundsFee/Rate InformationFee/Rate Information


Fee Description:IDEAS Assessment @ $100/test ($125 SFY 18) 250 3,750 3,750 3,750Dependable Strengths Assessment @ $200/test - - -Peterson's Academic Practice Tests - Pkg 1 @$225/test ($250 SFY 18) 2,250 2,250 2,250Peterson's Academic Practice Tests - Pkg 2 @$175/test ($200 SFY 18) 1,050 1,050 1,050Peterson's Civil Service Practice Tests @ $175/test ($200 SFY 18) 1,000 1,000 1,000Misc. 111 111 111Total 250 8,161 8,161 8,161*Fees are collected from schools and transferred to MCIS contractor on a 1:1 ratio

This program is funded with an enterprise type proprietary fund. As such, the legislature does not appropriate funds orapprove rates for the program. Instead, the legislature reviews the report for the enterprise fund and identifies any concernswith the financial position of the fund.


66020 - Department Of Labor And Industry 02-Unemployment Insurance Division






BienniumChange

Biennium% Change

Personal Services 20,246,318 21,167,518 921,200 4.55 %Operating Expenses 14,204,082 14,264,433 60,351 0.42 %Debt Service 74,707 73,010 (1,697) (2.27)%


State/Other Special Rev. Funds 11,768,008 12,205,909 437,901 3.72 %Federal Spec. Rev. Funds 22,757,099 23,299,052 541,953 2.38 %

Total Funds $34,525,107 $35,504,961 $979,854 2.84 %


Program DescriptionThe Unemployment Insurance (UI) Division administers the state unemployment insurance law and related federalprograms, which provide temporary, partial wage replacement to unemployed workers.

The Unemployment Insurance Division operates through three bureaus:

• The Contributions Bureau is responsible for UI employer registration, contribution rate assignments, tax and wagereport collection, wage revisions, and employer audits

• The Claims Processing Bureau has claims processing centers in Helena and Billings that process UI claims(monetary eligibility, issue investigation, adjudication, and employer charging), assist with claim filing, and respondto all UI claim-related inquiries. The Claims Processing Bureau is also responsible for Trade ReadjustmentAssistance, military, federal, and multi-state claims

• The Program Support Bureau manages the division budget and accounting and the UI trust fund. The ProgramSupport Bureau is also responsible for federal reporting, benefit compliance, tax and benefit quality and programintegrity oversight, and operations support, including administrative support of the Unemployment InsuranceAppeals Board

Program Highlights

Unemployment Insurance DivisionMajor Budget Highlights

• The Unemployment Insurance Division’s 2023 biennium budgetrequest is approximately $980,000 or 2.8% higher than the 2021biennium budget. The executive proposal includes:

◦ Increases in state and federal special revenue for statewidepresent law adjustments for personal services, fixed costs,and inflation/deflation

◦ Increases in state special revenue to facilitate payment ofthe anticipated increases to the maintenance contract forthe Unemployment Insurance Tax System


LFDCOMMENT





Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 148.61 148.61 148.61 148.61



State/Other Special Rev. Funds 5,817,714 5,842,432 5,925,576 6,074,709 6,131,200Federal Spec. Rev. Funds 9,785,891 11,303,973 11,453,126 11,643,301 11,655,751

Total Funds $15,603,605 $17,146,405 $17,378,702 $17,718,010 $17,786,951




The Unemployment Insurance Division expended 91.0% of its $17.1 million HB 2 modified budget in FY 2020. In order toincrease fund balance, the Unemployment Insurance Trust fund received $204.0 million from the Coronavirus Aid, Relief,and Economic Security (CARES) Act.

During the Covid-19 lockdown orders there was a large influx of Montanan’s filing for unemploymentinsurance, which resulted in the following pressures:

• An increase in personnel working for the Unemployment Insurance Division to meet the increasedunemployment insurance demand• A substantial reduction in the unemployment insurance trust fund

During Covid-19 the Unemployment Insurance Division received emergency federal funding, which was used to covermuch of the additional personal services and operating expenses.


The FY 2021 appropriations were $232,297 or 1.4% higher than FY 2020 appropriations. The most notable increase is inpersonal services of approximately $424,000, due to the pay plan adjustment. However, both operating expenses and debtservices were reduced.

Executive Request

The 2023 biennium Unemployment Insurance Division budget proposed by the executive is $980,000 or 2.8% greater thanthe 2021 biennium budget.

Personal services were $10.3 million or 59.5% of total FY 2021 appropriations. The executive proposes an increase instate and federal special revenue appropriations from the FY 2021 base, totaling approximately $235,000 in FY 2022 and



$262,000 in FY 2023. This increase is primarily due to the statewide present law adjustment for personal services, whichwill be discussed in detail in the Program Personal Services section below.

Operating expenses were approximately $7.0 million or 40.3% of total FY 2021 appropriations. The executive proposes anincrease in state and federal special revenue appropriations from the FY 2021 base, totaling approximately $56,000 in FY2022 and $47,000 in FY 2023. This increase is primarily due to the statewide present law adjustment for fixed costs anda new proposal for the unemployment insurance tax system maintenance, which will be discussed in detail in the PresentLaw Adjustments section below.


Personal services were $10.3 million or 59.5% of total FY 2021 appropriations for the Unemployment Insurance Division.The executive proposes a statewide present law increase of approximately $235,000 for FY 2022 and $262,000 for FY2023.



• Broadband pay raises and wage changes due to employee turnover• Pay changes related to 9.00 FTE reclassifications of positions

Funding


Department of Labor and Industry, 02-Unemployment Insurance DivisionFunding by Source of Authority

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

General Fund 0 0 0 0 0 0.00 %

02258 Employment Security Account 11,506,471 0 0 0 11,506,471 94.27 %02315 DLI Info Exchange/Rental 49,438 0 0 0 49,438 0.41 %02067 Montana HELP Act 650,000 0 0 0 650,000 5.33 %


03278 UI Penalty & Interest 1,513,050 0 0 0 1,513,050 6.49 %03954 UI Administrative Grants 21,786,002 0 0 0 21,786,002 93.51 %03967 UI Reed Act 0 0 0 0 0 0.00 %03983 COVID-19 Admin Grant 0 0 0 0 0 0.00 %03984 COVID-19 PEUC 0 0 0 0 0 0.00 %03986 COVID-19 FPUC 0 0 0 0 0 0.00 %03987 COVID-19 PUA 0 0 0 0 0 0.00 %


06069 UI Tax Benefit Fund 0 0 307,824,041 0 307,824,041 100.00 %Proprietary Total $0 $0 $307,824,041 $0 $307,824,041 89.66 %

Total All Funds $35,504,961 $0 $307,824,041 $0 $343,329,002

HB 2 Authority

The HB 2 funds support the administrative and operational functions of the Unemployment Insurance Division.




The majority of the state special revenues used by the division are derived from an assessment charged to employers as a percentage of their payroll and deposited into the employment security account.


Unemployment insurance administrative grants are federal funds that Montana receives for the administration of the Unemployment Insurance Division. Montana businesses pay a federal unemployment tax that is partially used to fund these grants.


State unemployment taxes (SUTA) are paid into a proprietary account to fund unemployment benefits for claimants. The amount of the tax depends on the ratio of the unemployment insurance trust fund balance to the total covered wages in Montana and the employer’s experience. Montana uses 11 schedules with 10 contribution rates in each schedule to assess SUTA. These funds will be discussed in the Proprietary Rates section of the narrative.




Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent


Total Budget $0 $0 $0 $17,718,010 $17,786,951 $35,504,961




FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds

DP 1 - Personal Services0.00 0 80,483 154,397 234,880 0.00 0 89,894 172,450 262,344

DP 2 - Fixed Costs0.00 0 19,257 36,941 56,198 0.00 0 16,110 30,905 47,015

DP 3 - Inflation Deflation0.00 0 (607) (1,163) (1,770) 0.00 0 (380) (730) (1,110)

DP 201 - UI Tax Maintenance0.00 0 50,000 0 50,000 0.00 0 100,000 0 100,000

Grand Total All Present Law Adjustments0.00 $0 $149,133 $190,175 $339,308 0.00 $0 $205,624 $202,625 $408,249




66020 - Department Of Labor And Industry 02-Unemployment Insurance DivisionDP 1 - Personal Services -







DP 201 - UI Tax Maintenance -

The executive requests a base appropriation adjustment to facilitate payment of the anticipated increases to themaintenance contract for the UI Tax System. The request is for ongoing state special revenue funding.

Other Issues -

Proprietary Rates

Fund 06069 – Unemployment Insurance (UI) Tax Benefit Fund





Program Description

The Department of Labor and Industry collects the contributions paid by employers, based on their industry or individual experience rate, to pay for their unemployment insurance. The department expends the funds by paying unemployment insurance benefit claims.


Expenses

Significant costs for the program are unemployment insurance benefits paid to claimants while unemployed, including federal withholding tax and child support payments the claimants have elected to be taken out of the benefit check.



Revenues

The revenues received in the proprietary fund are from unemployment insurance tax collections, federal reimbursement for claims on federal employees, military personnel, claimants in other states, and interest earnings to the unemployment insurance trust fund. Other operating revenues in FY 2020 and FY 2021 are substantially higher than in years prior due to the Covid-19 pandemic. The large influx in other operating revenues is due to the additional CARES and other federal funding.

Proprietary Rates

The Unemployment Insurance Division administers the state unemployment insurance law. There is no proprietary rate but a collection of contributions from employers that are used to pay the unemployment insurance benefits to claimants who have involuntarily become unemployed. The rate calculation is set in statute under 39-51-1217, MCA.


66020 - Department Of Labor And Industry 03-Commissioner's Office & C S D






BienniumChange

Biennium% Change

Personal Services 1,790,382 2,045,950 255,568 14.27 %Operating Expenses 1,487,815 1,216,075 (271,740) (18.26)%Transfers 40,000 40,000 0 0.00 %Debt Service 5,941 6,718 777 13.08 %


General Fund 579,220 662,342 83,122 14.35 %State/Other Special Rev. Funds 1,577,219 1,415,253 (161,966) (10.27)%Federal Spec. Rev. Funds 1,167,699 1,231,148 63,449 5.43 %

Total Funds $3,324,138 $3,308,743 ($15,395) (0.46)%


Program Description

The Commissioner’s Office and the Centralized Services Division (CSD) provide program direction, legal, administration,and support services to the department’s six programs and two administratively attached entities.

Program Highlights

Commissioner's Office/Centralized Services DivisionMajor Budget Highlights

• The Commissioner’s Office/CSD’s 2023 biennium budget request isapproximately $15,000 or 0.5% less than the 2021 biennium budget.The executive proposal includes:

◦ Decreases in state special revenue due to statewidepresent law adjustments for personal services, fixed costs,and inflation/deflation






Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 10.50 10.50 10.50 10.50

Personal Services 791,444 883,478 906,904 1,021,861 1,024,089Operating Expenses 819,504 881,893 605,922 607,974 608,101Transfers 20,000 20,000 20,000 20,000 20,000Debt Service 2,518 2,582 3,359 3,359 3,359


General Fund 264,866 264,969 314,251 330,825 331,517State/Other Special Rev. Funds 855,330 943,191 634,028 707,361 707,892Federal Spec. Rev. Funds 513,270 579,793 587,906 615,008 616,140

Total Funds $1,633,466 $1,787,953 $1,536,185 $1,653,194 $1,655,549




The Commissioner’s Office and Centralized Services Division expended 91.4% of its $1.8 million HB 2 modified budget in FY 2020. Funding for the Human Rights appeals had the largest under expense due to a lower number of cases during the pandemic. However, the division redirected their employees to help with the unemployment insurance efforts.


FY 2021 appropriations were approximately $252,000 or 14.0% less than FY 2020 appropriations. This decrease is primarily attributed to approximately a $276,000 decrease in operating services. In 2020, the Commissioner’s Office and Centralized Services Division had an increase in IT services that exceeded the appropriated budget for operating expenses. Therefore, appropriations were moved from other divisions to cover the additional expenses.

Executive Request

The Commissioner’s Office and Centralized Services Division budget proposed by the executive is $15,000 or 0.5% less than the 2021 biennium budget.

Personal services were approximately $907,000 or 59.0% of total FY 2021 appropriations. The executive proposes an increase in general fund, state special revenue, and federal special revenue appropriations from the FY 2021 base, totaling approximately $115,000 in FY 2022 and $117,000 in FY 2023. This increase is due to the statewide present law adjustment for personal services, which will be discussed in detail in the Program Personal Services section below.

Operating expenses were approximately $606,000 or 39.4% of total FY 2021 appropriations. The executive proposes an increase in general fund, state special revenue, and federal special revenue appropriations from the FY 2021 base, totaling approximately $2,000 in FY 2022 and FY 2023. This increase is due to the statewide present law adjustment for fixed costs, which will be discussed in detail in the Present Law Adjustments section below.


Personal services were approximately $907,000 or 59.0% of total FY 2021 appropriations for the Commissioner’s Office/CSD. The executive proposes a statewide present law increase of approximately $115,000 for FY 2022 and $117,000 for FY 2023.

The 2023 biennium personal service statewide present law request includes expected changes and management decisions.




• Broadband pay raises and wage changes due to employee turnover• Two positions reclassified from lawyers to hearings officers

Funding


Department of Labor and Industry, 03-Commissioner's Office & C S DFunding by Source of Authority

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

01100 General Fund 662,342 0 0 0 662,342 3.40 %

02233 BSD Hearings 147,419 0 0 0 147,419 10.42 %02258 Employment Security Account 1,247,694 0 0 0 1,247,694 88.16 %02315 DLI Info Exchange/Rental 2,142 0 0 0 2,142 0.15 %02941 Uninsured Employer Fund 17,998 0 0 0 17,998 1.27 %


03122 EEOC 68,720 0 0 0 68,720 5.58 %03954 UI Administrative Grants 1,162,428 0 0 0 1,162,428 94.42 %


06546 Commissioner's Office/CSD 0 0 9,736,660 0 9,736,660 60.15 %06552 Admin Services 0 0 6,451,806 0 6,451,806 39.85 %


Total All Funds $3,308,743 $0 $16,188,466 $0 $19,497,209

HB 2 Authority

The majority of the funding appropriated by HB 2 supports the Hearings Unit.


• Approximately 88.2% of the state special revenue for the Commissioner’s Office is derived from the assessmentsof employers deposited into the employment security account

• The BSD Hearings fund makes up most of the remaining state special revenue. This fund is used by the Office ofAdministrative Hearings when hearing cases are from the Business Standards Division


Federal special revenue is primarily made up of unemployment insurance administrative grants.


The Commissioner’s Office and Centralized Services Division have two different proprietary funding sources for the operations of the various functions within the office. A discussion of the proposed uses and funding for each of the functions is included in the Proprietary Rates section of the narrative. These funds are considered and approved as rates charged to other divisions within the agency.






Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of Budget2021 Base Budget 314,251 314,251 628,502 94.89 % 1,536,185 1,536,185 3,072,370 92.86 %SWPL Adjustments 16,574 17,266 33,840 5.11 % 117,009 119,364 236,373 7.14 %PL Adjustments 0 0 0 0.00 % 0 0 0 0.00 %New Proposals 0 0 0 0.00 % 0 0 0 0.00 %

Total Budget $330,825 $331,517 $662,342 $1,653,194 $1,655,549 $3,308,743




FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds


DP 2 - Fixed Costs0.00 699 494 1,143 2,336 0.00 705 499 1,153 2,357

DP 3 - Inflation Deflation0.00 (85) (60) (139) (284) 0.00 (53) (38) (87) (178)













Other Issues -

Proprietary Rates

The Commissioner’s Office and Centralized Services Division provide two functions funded with non-budgeted proprietaryfunds. These programs are described separately along with a discussion of the program expenses, revenues, and ratesbeing requested to finance the program.

Fund 06546 – Commissioner’s Office/CSD






Supportive services provided by the Commissioner’s Office and the Centralized Services Division (CSD) are funded through an indirect cost rate whereby the department programs are assessed a fee equal to a percentage of their personal service costs.


66020 - Department Of Labor And Industry 03-Commissioner's Office & C S DProprietary Program Narrative

Expenses

Major expenses for this program consist of the personal services costs for the Commissioner’s Office and CSD. Significant costs for the program are for:

• Personal service costs for 34.00 FTE, including $2.8 million or 62.7% of the total costs for FY 2021• Other operating costs, including:

◦ Department-wide fixed costs such as the statewide cost allocation plan (SWCAP), legislative audit fees,and the Human Resources Information System (HRIS) service fees

◦ Charges for legal services that benefit the entire department◦ Charges for IT applications that benefit the entire department

Revenues

The Commissioner’s Office and Centralized Services Division is funded by revenues from charges allocated to all divisions,bureaus, and programs supported by the division’s indirect cost plan. Revenue for this fund is collected via an indirect costrate that is charged against department services expenses. The services provided in exchange for this fee include:

• Human resources• Accounting• Budgeting• Payroll processing• Mail processing• Other department-wide management and administration

All program which utilize these services have a present law adjustment in the proposed budget to account for the proposedadjustment in the rate. If the rate approved by the legislature differs from the rate proposed, program budgets will need tobe adjusted accordingly to maintain alignment with decisions made for this program.

Proprietary Rates




Fee Description: 8.10% 8.10% 8.75% 8.85%

The executive requests a rate of 8.8% for FY 2022 and 8.9% for FY 2023. The cost allocation plan (CAP) must be approved by the U.S. Department of Labor. The rate, which is assessed to personal services expenditures, is determined by calculating the total costs of providing the services divided by the projected department personal services expenditures.

The rates approved by the legislature are the maximum that the program may charge during the interim. They are not the rates the program must charge.

Fund 06552 – Administrative Services






The Office of Legal Services provides legal assistance to the department’s six programs and two administratively attachedentities, whereby an hourly rate for attorney fees is established.


Expenses

Major expenses for this program are comprised of salaries and overhead costs of agency legal staff. Significant costs forthe program are for:



• Personal services cost for 20.75 FTE, including $2.6 million or 85.0% of the total costs for FY 2021• Other operating costs

Revenues

Revenues for the Office of Legal Services are derived from charges for attorney time incurred by Department of Labor andIndustry divisions. The rate is a direct hourly rate, charged to each division based on number of hours of legal service theyreceive. The rate per hour is calculated on actual costs of services divided by actual direct hours of service provided in FY2020.

If the rate approved by the legislature differs from the rate proposed, program budgets will need to be adjusted accordinglyto maintain alignment with decisions made for this program.

Proprietary Rates

For the 2023 biennium, the following rates are proposed by the executive. The rates are charged in the base year, andrates paid state agencies in FY 2020 and FY 2021 are shown for comparison purposes. There are no significant changesto the methodology for calculating the rate for the Office of Legal Services from the last biennium.



Fee Description: 102 102 102 102



66020 - Department Of Labor And Industry 04-Employment Relations Division






BienniumChange

Biennium% Change

Personal Services 19,950,397 20,860,257 909,860 4.56 %Operating Expenses 9,326,908 9,646,955 320,047 3.43 %Equipment & Intangible Assets 21,882 21,882 0 0.00 %Benefits & Claims 200,778 200,778 0 0.00 %Transfers 0 20,000 20,000 0.00 %Debt Service 61,710 46,858 (14,852) (24.07)%


General Fund 3,104,959 3,273,494 168,535 5.43 %State/Other Special Rev. Funds 24,139,714 25,057,124 917,410 3.80 %Federal Spec. Rev. Funds 2,317,002 2,466,112 149,110 6.44 %

Total Funds $29,561,675 $30,796,730 $1,235,055 4.18 %


Program Description

The Employment Relations Division (ERD) provides a variety of services to the public:

• The Compliance and Investigations Bureau (C&I) inspects, audits, investigates, and ensures compliance withwage and hour laws, prevailing wage obligations, independent contractor status, and workers’ compensationrequirements. The C&I also provides mediation services for Workers’ Compensation and collective bargaining

• The Operations Bureau administers the Independent Contractor/Contractor Registration (ICCR) program, housesthe Data Management Section (DMS), which is responsible for analyzing outcomes of the Workers’ Compensationsystem and ensuring a steady flow of accurate information on policy and claim data. The Operations Bureau alsoprovides administrative support to all programs warehoused in the Employment Relations Division

• The Workers’ Compensation (WC) Section provides management information on the workers’ compensationsystem, assists claimants, employers, and insurers in the navigation of the claims process, and provides medicalregulation support for the WC system

• The Safety and Health Bureau administers federal and state industrial safety laws for the public sector, providesfree consultation services for all employers, and delivers free safety education

• The Human Rights Bureau enforces the Montana Human Rights Act and Governmental Code of Fair Practicesthrough investigations, conciliation, hearings, and education

The Employment Relations Division is administratively attached to the Board of Personnel Appeals and the Human Rights Commission. The division also provides support for the Labor Management Advisory Council.



Employment Relations DivisionMajor Budget Highlights

• The Employment Relations Division 2023 biennium budget requestis approximately $1.2 million or 4.2% higher than the 2021 bienniumbudget. The executive proposal includes:

◦ Increases in general, state special, and federal specialfunds due to statewide present law adjustments for personalservices, fixed costs, and inflation/deflation

◦ An increase in federal special funds to continue operationsfor the Occupational Health and Safety SurveillanceProgram




Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 118.98 118.98 119.98 119.98

Personal Services 8,994,129 10,025,113 9,925,284 10,410,715 10,449,542Operating Expenses 4,147,167 4,565,800 4,761,108 4,818,955 4,828,000Equipment & Intangible Assets 0 10,941 10,941 10,941 10,941Benefits & Claims 33,950 100,389 100,389 100,389 100,389Transfers 0 0 0 10,000 10,000Debt Service 37,996 38,281 23,429 23,429 23,429


General Fund 1,559,084 1,560,714 1,544,245 1,633,264 1,640,230State/Other Special Rev. Funds 10,958,571 11,963,138 12,176,576 12,509,919 12,547,205Federal Spec. Rev. Funds 695,587 1,216,672 1,100,330 1,231,246 1,234,866

Total Funds $13,213,242 $14,740,524 $14,821,151 $15,374,429 $15,422,301




The Employment Relations Division expended 89.6% of its $14.7 million HB 2 modified budget for FY 2020. Underexpenditures were primarily due to the Equal Employment Opportunity Commission (EEOC) utilizing pandemic relatedsavings from other areas instead of EEOC funds. Additionally, Coal Mine Safety grant funding did not become availableuntil after the fiscal year end.


FY 2021 appropriations were approximately $81,000 or 0.5% higher than FY 2020 appropriations. Appropriations forpersonal services decreased by approximately $100,000, due to a transfer in federal grant expenses. However, operatingexpenses increased by approximately $195,000, primarily due to an increase in funds to better align with unanticipatedunemployment insurance expenses.


Program Highlights


Executive Request

The Employment Relations Division budget proposed by the executive is $1.2 million or 4.2% greater than the 2021biennium budget.

Personal services were approximately $9.9 million or 67.0% of total FY 2021 appropriations. The executive proposes anincrease in general fund, state special revenue, and federal special revenue appropriations above the FY 2021 base,totaling approximately $394,000 in FY 2022 and $433,000 in FY 2023. This increase is due to the statewide present lawadjustments for personal services, which will be discussed in detail in the Program Personal Services section below.

Operating expenses were approximately $4.8 million or 32.1% of total FY 2021 appropriations. The executive proposesan increase in general fund, state special revenue, and federal special revenue appropriations above the FY 2021 base,totaling approximately $49,000 in FY 2022 and $58,000 in FY 2023. This increase is due to the statewide present lawadjustment for fixed costs, which will be discussed in detail in the Present Law Adjustments section below.


Personal services were $9.9 million or 70.0% of total FY 2021 appropriations for the Employment Relations Division. Theexecutive proposes a statewide present law increase of approximately $394,000 for FY 2022 and $433,000 for FY 2023.



• Broadband pay raises and wage changes due to employee turnover• Pay changes related to reclassifications of 8.00 FTE

Funding


Department of Labor and Industry, 04-Employment Relations DivisionFunding by Source of Authority

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

01100 General Fund 3,273,494 0 0 0 3,273,494 9.24 %

02258 Employment Security Account 3,970,335 0 0 0 3,970,335 14.91 %02263 Subsequent Injury Admin 139,135 0 0 0 139,135 0.52 %02315 DLI Info Exchange/Rental 12,178 0 0 0 12,178 0.05 %02346 Contractor Registration 3,843,654 0 0 0 3,843,654 14.43 %02455 Workers' Comp Regulation 10,373,879 0 0 0 10,373,879 38.95 %02941 Uninsured Employer Fund 1,994,899 0 0 1,579,942 3,574,841 13.42 %02347 Safety Administration Fund 4,723,044 0 0 0 4,723,044 17.73 %


03122 EEOC 587,299 0 0 0 587,299 23.81 %03130 Coal Mine Safety 300,148 0 0 0 300,148 12.17 %03131 OSHA Stat Prgm Fed.St Sdy 259,767 0 0 0 259,767 10.53 %03195 On-Site Consultation 1,098,084 0 0 0 1,098,084 44.53 %03985 Data Management Unit Grant 220,814 0 0 0 220,814 8.95 %


06040 Subsequent Injuiry-Trust Fund 0 0 3,056,752 0 3,056,752 100.00 %Proprietary Total $0 $0 $3,056,752 $0 $3,056,752 8.63 %

Total All Funds $30,796,730 $0 $3,056,752 $1,579,942 $35,433,424



HB 2 Authority

General Fund

General fund supports the personal services and general operating costs of the Human Rights Bureau and a small percentage of the overall administration of the Employment Relations Division.


State special revenue funds comprise the majority of the funding utilized by the Employment Relations Division.Worker compensation regulation funds make up 39.0% of state special revenue. These funds are generated by an annual administrative assessment of 4.0% on all compensation and medical benefits (excluding costs above $200,000 per claim) paid during the previous calendar year.

Approximately 14.9% of state special revenue consists of employment security funds, which are generated through an assessment charged to employers as a percentage of their payroll.

Contractor registration funds make up 14.4% of state special revenue. These funds are generated from registration fees for independent contractor exemptions and construction contractor application fees. These funds support the Worker’s Compensation Regulations Bureau and a portion of administration.

Uninsured employer fund assessments, which are statutorily set at the premium uninsured employers would have paid had they been carrying workers’ compensation insurance, make up 13.4% of all state special revenue. The funds are used to provide benefits to employees injured on the job while working for an employer that does not carry workers’ compensation insurance as required by law.

Safety administration funds make up 17.7% of state special revenue. This revenue is generated from penalties assessed on inspection violations, recovery of costs for onsite safety and industrial health consultation services to mine operators, all fees paid by an assessment on paid losses plus administrative fines and interest, and any grants of funds from private entities or the federal government intended for defraying occupational safety and health costs.


The division oversees the subsequent injury fund, a proprietary account that assists disabled persons in becoming employed by offering a financial incentive to employers who hire them. The fund rate is based on the total amount of paid losses reimbursed by the fund in the preceding calendar year.

Statutory Funding

Payments for indemnity and medical benefits for workers injured while working for a business that does not carry workers’ compensation insurance are statutorily appropriated to the Employment Relations Division. However, the costs of administering the program are included as part of HB 2 appropriations.




Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of Budget2021 Base Budget 1,544,245 1,544,245 3,088,490 94.35 % 14,821,151 14,821,151 29,642,302 96.25 %SWPL Adjustments 89,019 95,985 185,004 5.65 % 442,871 490,743 933,614 3.03 %PL Adjustments 0 0 0 0.00 % 0 0 0 0.00 %New Proposals 0 0 0 0.00 % 110,407 110,407 220,814 0.72 %

Total Budget $1,633,264 $1,640,230 $3,273,494 $15,374,429 $15,422,301 $30,796,730







FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds


DP 2 - Fixed Costs0.00 6,011 64,572 2,629 73,212 0.00 6,045 64,606 2,620 73,271

DP 3 - Inflation Deflation0.00 (433) (22,570) (1,276) (24,279) 0.00 (271) (14,155) (800) (15,226)










New Proposals



FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds

DP 401 - Occupational Health and Safety Surveillance Grant1.00 0 0 110,407 110,407 1.00 0 0 110,407 110,407

Total 1.00 $0 $0 $110,407 $110,407 1.00 $0 $0 $110,407 $110,407




DP 401 - Occupational Health and Safety Surveillance Grant -

The Employment Relations Division is requesting 1.00 FTE and a corresponding increase in federal special revenue forthe Occupational Health and Safety Surveillance Program grant. The program works to identify, track, and monitor work-related fatalities, injuries, and illnesses.

Other Issues -

Proprietary Rates

Fund 06040 – Subsequent Injury Trust Fund






LFDCOMMENT


It should be noted that the negative fund balance is related to liabilities established for long-term claims payable. By statute, insurers assess the costs of the benefits, claims, and administration from the preceding year.


The Subsequent Injury Fund (SIF) was established in 1973 to assist disabled persons in becoming employed by offeringa financial incentive to the employers who hire them. In the event a SIF certified individual is injured on the job, theiremployer’s workers’ compensation carrier is only liable for the first 104 weeks of benefits paid. Any benefits paid afterthat point are reimbursed by the fund, thus minimizing the workers’ compensation expenses for the employer’s insurer.Beginning July 1, 1999, the fund is maintained by an annual assessment of all Montana employers, including self-insuredemployers, private insurers, and the State Fund.


Expenses

The expenses of the program consist of the administration costs and benefits for certified workers. Expenses are paid outwhen reimbursement requests are submitted to the department if there are sufficient monies in the fund to cover thoseexpenses.

Revenues

The program is funded through an annual assessment on Plan 1 (self-insured) workers’ compensation employers and asurcharge on premium paid for Plan 2 (private sector) and Plan 3 (Montana State Fund) employers. The assessment isbased on a percentage of the compensation and medical benefits paid in Montana by each insurer the preceding calendaryear (39-71-915, MCA) and amounts actually paid out from SIF. The revenue to the fund comes during five time periodsthroughout the year.

Proprietary Rates

The SIF rate is set by the Employment Relations Division based on the total amount of paid losses reimbursed by the fundin the preceding year. Because the rate is based upon the previous years’ experience, future rates beyond one year areunknown. The estimated rates for the program are shown below:



The rates are based on the workers' compensation (WC) insurance plans' share of the workers’ compensation market ascompared to the net outlay of the subsequent injury fund in a calendar year (39-71-915, MCA).

This program is funded with an enterprise type proprietary fund. As such, the legislature does not appropriate funds orapprove rates for the program. Instead, the legislature reviews the report for the enterprise fund and identifies any concernswith the financial position of the fund.


66020 - Department Of Labor And Industry 05-Business Standards Division






BienniumChange

Biennium% Change

Personal Services 20,773,868 21,759,317 985,449 4.74 %Operating Expenses 15,722,432 16,940,736 1,218,304 7.75 %Equipment & Intangible Assets 793,510 942,000 148,490 18.71 %Grants 10,000 10,000 0 0.00 %Transfers 85,369 69,738 (15,631) (18.31)%Debt Service 107,691 98,714 (8,977) (8.34)%


State/Other Special Rev. Funds 37,452,052 39,779,687 2,327,635 6.21 %Federal Spec. Rev. Funds 40,818 40,818 0 0.00 %

Total Funds $37,492,870 $39,820,505 $2,327,635 6.21 %


Program Description

The Business Standards Division consists of two bureaus:

• The Building and Commercial Measurements Bureau establishes and enforces minimum building, plumbing,mechanical, electrical, energy, elevator, and boiler codes; licenses, inspects, tests, and certifies all weighing andmeasuring devices used in making commercial transactions in Montana; and provides support for five licensingprograms and Underground Facility Protection Advisory Council

• The Professional Licensing Bureau provides operational administrative support for all functions of 33 licensingboards, two programs, and the Prescription Drug Registry



Business Standards DivisionMajor Budget Highlights

• The Business Standards Division’s 2023 biennium budget request isapproximately $2.3 million or 6.2% higher than the 2021 bienniumbudget. The executive proposal includes:

◦ Increases in state special revenue fund due to statewidepresent law adjustments for personal services, fixed costs,and inflation/deflation

◦ Increases in state special revenue for general operatingadjustments and new technology

◦ Increases in state special revenue to purchase new vehiclesfor weights and measures field inspectors and for the fieldinspectors on several professional boards


• Requests to update software and to purchase new vehicles are moreappropriately categorized as new proposals




Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 134.89 134.89 134.89 134.89

Personal Services 9,303,682 10,229,657 10,544,211 10,866,125 10,893,192Operating Expenses 7,210,038 7,865,741 7,856,691 8,517,461 8,423,275Equipment & Intangible Assets 419,764 424,035 369,475 482,000 460,000Grants 0 5,000 5,000 5,000 5,000Transfers 24,964 50,500 34,869 34,869 34,869Debt Service 51,908 58,334 49,357 49,357 49,357


State/Other Special Rev. Funds 17,002,825 18,612,858 18,839,194 19,934,403 19,845,284Federal Spec. Rev. Funds 7,531 20,409 20,409 20,409 20,409

Total Funds $17,010,356 $18,633,267 $18,859,603 $19,954,812 $19,865,693



Program Highlights




The Business Standards Division expended 91.3% of its $18.6 million HB 2 modified budget in FY 2020. Personal services and operating expenses were both within the typical spending range for the division. Transfers out were only 49.0% expended. This under expenditure is attributed to a large decrease in the number of Business Standards Division hearings in fiscal year 2020.


FY 2021 appropriations were approximately $226,000 or 1.2% higher than FY 2020 appropriations. Appropriations for personal services are approximately $315,000 higher than FY 2020, primarily due to the pay plan adjustment. However, appropriations for operating expenses, equipment and intangible assets, transfers, and debt services all have small decreases compared to FY 2020.

Executive Request

The Business Standards Division budget proposed by the executive is $2.3 million or 6.2% greater than the 2021 biennium budget.

Personal services were $10.5 million or 55.9% of total FY 2021 appropriations. The executive proposes an increase in state special revenue appropriations above the FY 2021 base, totaling approximately $322,000 in FY 2022 and $349,000 in FY 2023. This increase is due to the statewide present law adjustment for personal services, which will be discussed in detail in the Program Personal Services section below.

Operating expenses were approximately $7.9 million or 41.7% of total FY 2021 appropriations. The executive proposes an increase in state special revenue appropriations above the FY 2021 base, totaling approximately $426,000 in FY 2022 and$308,000 in FY 2023. This increase is primarily due to the statewide present law adjustment for fixed costs and a present law adjustment for general operating expenses, which will be discussed in detail in the Present Law Adjustments section below.


Personal services were $10.5 million or 55.9% of total FY 2021 appropriations for the Business Standard Division. The executive proposes a statewide present law increase of approximately $322,000 for FY 2022 and $349,000 for FY 2023.



• Broadband pay raises and wage changes due to employee turnover• Pay changes related to reclassifications of 10.00 FTE

Funding




Department of Labor and Industry, 05-Business Standards DivisionFunding by Source of Authority

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

General Fund 0 0 0 0 0 0.00 %

02024 Blasters Program 29,323 0 0 0 29,323 0.07 %02078 Occupational Therapists 184,333 0 0 0 184,333 0.46 %02079 Fire Protection & Permitting 114,795 0 0 0 114,795 0.29 %02080 Prescription Drug Registry 658,820 0 0 0 658,820 1.64 %02082 Real Estate Recovery Account 0 0 0 2,506 2,506 0.01 %02103 Capital Assets 0 0 0 0 0 0.00 %02109 Board Of Outfitters 1,262,265 0 0 0 1,262,265 3.15 %02155 Boilers Program 1,120,418 0 0 0 1,120,418 2.79 %02207 Cranes Program 211,281 0 0 0 211,281 0.53 %02446 Board Of Psychologist Exam 319,531 0 0 0 319,531 0.80 %02448 Building Codes State Spec Rev 8,793,203 0 0 0 8,793,203 21.93 %02580 Board of Athletic Trainers 64,859 0 0 0 64,859 0.16 %02679 Massage Therapists 437,052 0 0 0 437,052 1.09 %02764 Private Alt. Adol Programs 0 0 0 0 0 0.00 %02767 Elevator Licensing Program 1,123,431 0 0 0 1,123,431 2.80 %02805 Weights & Measures Bureau 2,772,913 0 0 0 2,772,913 6.91 %02808 Board Of Landscape Architects 0 0 0 0 0 0.00 %02809 Board Of Speech Pathologists 177,432 0 0 0 177,432 0.44 %02810 Bd Of Radiologic Technologists 255,142 0 0 0 255,142 0.64 %02811 Clinical Lab Science Pract. 193,709 0 0 0 193,709 0.48 %02812 Physical Therapists 343,849 0 0 0 343,849 0.86 %02813 Bd Of Nursing Home Admin 153,984 0 0 0 153,984 0.38 %02814 Bd Of Hearing Aid Dispensers 126,351 0 0 0 126,351 0.32 %02816 Board Of Sanitarians 111,439 0 0 0 111,439 0.28 %02818 Electrical Board 951,088 0 0 0 951,088 2.37 %02819 Board of Realty Regulations 2,011,139 0 0 0 2,011,139 5.02 %02820 Architects/Landscape Architect 334,355 0 0 0 334,355 0.83 %02821 Board Of Funeral Service 445,283 0 0 0 445,283 1.11 %02822 Board Of Chiropractors 256,148 0 0 0 256,148 0.64 %02823 Professional Engineers 850,554 0 0 0 850,554 2.12 %02824 Board Of Medical Examiners 3,527,293 0 0 0 3,527,293 8.80 %02826 Cosmetology Board 1,559,606 0 0 0 1,559,606 3.89 %02828 Board Of Plumbers 738,855 0 0 0 738,855 1.84 %02829 Private Investigator 591,753 0 0 0 591,753 1.48 %02830 Board Of Dentistry 978,215 0 0 0 978,215 2.44 %02831 Board Of Optometrists 158,881 0 0 0 158,881 0.40 %02832 Board Of Pharmacy 2,211,117 0 0 0 2,211,117 5.51 %02833 Board Of Nursing 3,810,566 0 0 0 3,810,566 9.50 %02834 Board Of Veterinarians 392,352 0 0 0 392,352 0.98 %02840 Board Of Behavioral Health 1,288,917 0 0 0 1,288,917 3.21 %02841 Athletic Licensing Program 0 0 0 0 0 0.00 %02852 Bd. Of Alternative Health Care 218,744 0 0 0 218,744 0.55 %02854 Bd. Of Real Estate Appraisers 864,413 0 0 125,000 989,413 2.47 %02855 Bd Of Respiratory Care 136,278 0 0 0 136,278 0.34 %02460 Underground Facility Protect 0 0 0 193,268 193,268 0.48 %


03293 Country of Origin Labeling 40,818 0 0 0 40,818 100.00 %Federal Special Total $40,818 $0 $0 $0 $40,818 0.10 %

06040 Subsequent Injuiry-Trust Fund 0 0 0 0 0 0.00 %06552 Admin Services 0 0 0 0 0 0.00 %06086 Board of Public Accountants 0 0 0 744,095 744,095 100.00 %

Proprietary Total $0 $0 $0 $744,095 $744,095 1.82 %

Total All Funds $39,820,505 $0 $0 $1,064,869 $40,885,374

HB 2 Authority


State special revenue accounts are maintained for each type of license and professional board. Charges and fees paid bylicensees are deposited to the accounts and administrative and operational expenses of the division are charged directly tothe funds.



The largest of these accounts is the building codes account, which makes up approximately 21.9% of the division’s statespecial revenue funds.


The Business Standards Division receives a small amount of federal funding, which accounts for less than 1.0% of its totalfunds.


The Board of Public Accountants enterprise fund receives licensing fees, money collected by the department on behalf ofthe board and interest or earnings on money deposited. This fund was originally a state special revenue account, but it wasestablished as a proprietary fund by the 2015 Legislature.




Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of Budget2021 Base Budget 0 0 0 0.00 % 18,859,603 18,859,603 37,719,206 94.72 %SWPL Adjustments 0 0 0 0.00 % 378,242 366,627 744,869 1.87 %PL Adjustments 0 0 0 0.00 % 369,967 290,463 660,430 1.66 %New Proposals 0 0 0 0.00 % 347,000 349,000 696,000 1.75 %

Total Budget $0 $0 $0 $19,954,812 $19,865,693 $39,820,505




FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds


DP 2 - Fixed Costs0.00 0 65,701 0 65,701 0.00 0 23,525 0 23,525


DP 501 - General Operating Increase0.00 0 257,442 0 257,442 0.00 0 199,938 0 199,938

DP 502 - Equipment Replacement Request0.00 0 68,525 0 68,525 0.00 0 22,000 0 22,000

DP 505 - Vehicle Request0.00 0 44,000 0 44,000 0.00 0 68,525 0 68,525





66020 - Department Of Labor And Industry 05-Business Standards DivisionDP 1 - Personal Services -







DP 501 - General Operating Increase -

The executive is requesting spending authority for three bureaus in the division to cover increases to base operating costs, including anticipated increases to building rent, an increase in online fee collection expenses due to increased online activity, increases in the cost of the annual Building Codes Conference (which continues to grow in size, and general increases in the costs associated with travel, training, protective equipment, and supplies for staff and board members.

DP 502 - Equipment Replacement Request -

The executive requests an increase in state special revenue in FY 2022 only for four plan reviewer set ups. The executive requests an increase for the Weights and Measures Program in state special revenue to replace outdated and worn equipment. Equipment to be updated or replaced includes hoists, generators, slip units, and Echelon scales.

DP 505 - Vehicle Request -

The executive requests state special revenue appropriation for the Business Standards Division, Weights and Measures Program in FY 2023 for scheduled replacement of vehicles. Vehicles to be purchased include a scale test truck, a pick-up truck, and a van truck body. The appropriation requested would cover the difference between the program's base equipment budget, and the anticipated cost of the vehicle purchase. The Building Codes Bureau purchases vehicles for 40+ field inspectors with a replacement schedule of approximately every four years. The bureau has current authority of $216,000, or $21,600 per vehicle. During the FY 2020 replacement cycle, 10 vehicles cost $24,194 per vehicle. The executive is also requesting additional authority to account for inflation in the cost of the vehicles. It is estimated by FY 2023 that 10 vehicles per annual replacement cycle will run $26,000 per vehicle or above, and therefore the executive requests an adjustment to their authority of the difference in purchase price, or $44,000, in each year of the biennium.




FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds

DP 503 - Information Technology0.00 0 274,500 0 274,500 0.00 0 276,500 0 276,500

DP 504 - Contracted Professional Services0.00 0 72,500 0 72,500 0.00 0 72,500 0 72,500

Total 0.00 $0 $347,000 $0 $347,000 0.00 $0 $349,000 $0 $349,000


DP 503 - Information Technology -

The executive requests an increase for the Business Standards Division Professional Licensing Bureau in state specialrevenue for additional authority to add information technology solutions for increased efficiency and transparency, includingstreaming of board meetings online and online help for licensees.

DP 504 - Contracted Professional Services -

The executive is requesting an increase for the Business Standards Division, Board of Dentistry in state special revenueappropriations to contract with a dentist to provide required anesthesia inspections of dental offices and clinics. The boardbelieves that with a regularly contracted dentist, they can avoid any backlog in inspections and provide more timely andconsistent services.

Other Issues -

Proprietary Rates

Fund 06086 – Board of Public Accountants




New Proposals






The Board of Public Accountants is statutorily appropriated. The enterprise fund receives licensing fees, money collectedby the department on behalf of the board, and interest or earnings on money deposited.

Proprietary Rates

The executive did not submit proposed rates for the 2023 biennium.


66020 - Department Of Labor And Industry 06-Technology Services Division






BienniumChange

Biennium% Change

Personal Services 9,118,592 9,764,560 645,968 7.08 %Operating Expenses 13,965,046 13,401,702 (563,344) (4.03)%Debt Service 43,917 41,096 (2,821) (6.42)%



Total Funds $23,127,555 $23,207,358 $79,803 0.35 %

Program Description

The Technology Services Division (TSD) provides information technology services and support for the department includingIT project management, application development and network services.

Program Highlights

Technology Services DivisionMajor Budget Highlights

• The Technology Services Division is funded entirely with non-budgeted proprietary funds, which are not appropriated in HB 2




Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 51.00 51.00 51.00 51.00




Total Funds $12,112,832 $12,252,120 $10,875,435 $11,597,017 $11,610,341





The Technology Services Division did not have any HB 2 appropriations in the 2021 biennium. The division expended94.8% of its FY 2020 budget. Personal services were 81.2% expended due to employee turnover.


The Technology Services Division did not have any HB 2 appropriations in the 2021 biennium. The division’s budget for FY2021 is approximately 11.2% less than FY 2020.

Executive Request

The Technology Services Division proposed budget is approximately $80,000 or 0.4% greater than the 2021 bienniumbudget. Requested adjustments will be discussed in further detail in the Present Law Adjustments section below.

Funding


Department of Labor and Industry, 06-Technology Services DivisionFunding by Source of Authority

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

General Fund 0 0 0 0 0 0.00 %



06568 Technical Services 0 0 11,568,849 0 11,568,849 49.85 %06578 Technical Services Direct 0 0 11,638,509 0 11,638,509 50.15 %


Total All Funds $0 $0 $23,207,358 $0 $23,207,358


The Technology Services Division is funded entirely with proprietary rates. The two proprietary funds utilized by the divisionare the technical services account and the technical services direct account. These funds will be discussed in further detailin the proprietary rates section below.




Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of Budget2021 Base Budget 0 0 0 0.00 % 10,875,435 10,875,435 21,750,870 93.72 %SWPL Adjustments 0 0 0 0.00 % 134,122 144,028 278,150 1.20 %PL Adjustments 0 0 0 0.00 % (49,842) (50,158) (100,000) (0.43)%New Proposals 0 0 0 0.00 % 637,302 641,036 1,278,338 5.51 %

Total Budget $0 $0 $0 $11,597,017 $11,610,341 $23,207,358







FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds


DP 2 - Fixed Costs0.00 0 0 0 (6,013) 0.00 0 0 0 (6,129)

DP 602 - ServiceNow0.00 0 0 0 (49,842) 0.00 0 0 0 (50,158)








DP 602 - ServiceNow -


New Proposals



FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds

DP 601 - TSD Proprietary Enterprise Rate Change0.00 0 0 0 626,902 0.00 0 0 0 630,636

DP 603 - NRIS/GIS Fixed Costs0.00 0 0 0 10,400 0.00 0 0 0 10,400

Total 0.00 $0 $0 $0 $637,302 0.00 $0 $0 $0 $641,036


66020 - Department Of Labor And Industry 06-Technology Services Division *"Total Funds" amount includes funding from sources other than General Fund, State Special, or Federal Special (i.e. Proprietary).

DP 601 - TSD Proprietary Enterprise Rate Change -

The division's proprietary fund (06578) is a pass-through entity for tracking information technology (IT) expenditures. Thisfund pays the department’s IT expenditures and then collects revenue from the divisions to reimburse the fund. This fundnets to zero from revenue collected. The department had an increase in expenditures due to Cybersecurity and ServiceNowexpenditures, and the executive is requesting an increase in proprietary funds.


This request is for a new proposed NRIS/GIS usage fixed cost to be paid to the Montana State Library. The 2019Legislature enacted HB 633 requiring the Legislative Finance Committee (LFC) to conduct a study of the funding of digitallibrary services. The LFC recommended that the Office of Budget and Program Planning include an assessment for thenatural resource information system (NRIS) and the geographic information system (GIS) as a fixed cost to state agenciesbeginning in the 2023 biennium. The assessment is made to those agencies that utilize the NRIS/GIS.

Other Issues -

Proprietary Rates

The Technology Services Division (TSD) provides information technology services and support for the department includingtechnical services, network services, help deck, project management, and application services including computerprogramming and database management. There are two funds, the technical and application services fund and thetechnical services direct fund. These funds are discussed in further detail below.

06568 – Technical and Application Services


The following 2023 Biennium Report on Internal Service and Enterprise Funds for fund 06568 shows the actual andprojected revenues and expenses associated with the fund from FY 2020 through FY 2023. The report is provided assubmitted by the executive, but the LFD has edited and reconfigures the figure for clarity.




The Technical Services Section provides support for information technology infrastructure such as the network, servers,the help desk, project management, and application services including computer programming and database management.The Application Section provides services related to staff that are programming, testing, and analyzing the department’sapplications.




Expenses

The major expenses for this fund consist of the personal services for 54.00 FTE, which accounted for $4.7 million or 81.7%of the total costs in FY 2021.

Revenues

Supportive services provided by the Technology Services Division (TSD) are funded through indirect cost rates. The rate fortechnical services is assessed based on division FTE. Revenues for the Technical Services Section are billed to divisionsand based on a monthly rate approved by both the legislature and the U.S. Department of Labor.

The rate for application services is assessed based on a direct hourly charge to the benefiting division. Revenues for theApplication Section are billed to divisions also approved by the legislature and the U.S. Department of Labor.

All programs which utilize these services have a present law adjustment in the proposed budget to account for the proposedrate. If the rate approved by the legislature differs from the rate proposed, program budgets will need to be adjustedaccordingly to maintain alignment with decisions made for this program.

Proprietary Rates




Fee Description:Application Rate 84 84 84 84Technical Services Rate 266 266 266 266


06578 – Technical Services Direct






This fund has two rates that are direct pass thru costs to the department divisions. The rate for enterprise services providedby State Information Technology Services Division (SITSD) is allocated on total cost by division FTE. The other direct rateis for actual cost of contracted and SITSD services that are directly attributable to a specific division.


Expenses

The Technical Services Direct fund includes expenses for pass through information technology expenditures that could bedirectly related to a division. These include SITSD charges, software purchases, and contract payments.



Revenues

The Enterprise Services rate is all SITSD charges that directly benefit the department. Those total costs are distributedbased on department FTE. The direct rate includes actual expenditures that can be identified as directly benefiting aspecific program such as contracts and specific SITSD services.

All programs that utilize these services have a present law adjustment in the proposed budget to account for the proposedrate. If the rate approved by the legislature differs from the rate proposed, program budgets will need to be adjustedaccordingly to maintain alignment with decisions made for this program.

Proprietary Rates

For the 2021 biennium, the following rates are proposed by the executive. The rates are charged in the base year, andrates paid state agencies in FY 2020 are shown for comparison purposes.



Fee Description:Enterprise 819,755 819,755 1,446,657 1,450,391Direct Services Actual Cost Actual Cost Actual Cost Actual Cost

The Enterprise Services Rate is calculated on specific SITSD services that benefit the department. The total budgetedSITSD rate for a portion of asset broker, enterprise services, equipment hosting, operational support, server, and storagehosting services are allocated back to divisions based on FTE percentages. The direct services rate is calculated on allother SITSD services and department contracted services and allocated back to the benefiting division based on actualexpenditures. The rates approved by the legislature are the maximum the program may charge during the biennium. Theyare not the rates the program must charge.


66020 - Department Of Labor And Industry 07-Office of Community Services






BienniumChange

Biennium% Change

Personal Services 751,076 794,063 42,987 5.72 %Operating Expenses 530,350 782,146 251,796 47.48 %Grants 6,189,444 6,189,444 0 0.00 %Transfers 501,300 501,300 0 0.00 %Debt Service 2,826 2,344 (482) (17.06)%


General Fund 312,019 294,385 (17,634) (5.65)%State/Other Special Rev. Funds 24,776 24,776 0 0.00 %Federal Spec. Rev. Funds 7,638,201 7,950,136 311,935 4.08 %

Total Funds $7,974,996 $8,269,297 $294,301 3.69 %


Program Description

The Governor's Office of Community Service (OCS) and the Governor-appointed Montana Commission on CommunityService were created in 1993 to promote and expand National Service and community volunteer opportunities in Montana.OCS administers federal funding to AmeriCorps state programs in Montana. The federal funding is provided by theCorporation for National and Community Service, an independent federal agency. OCS provides a comprehensive array oftechnical assistance and supports national service programs and service organizations throughout Montana.

Program Highlights

Office of Community ServicesMajor Budget Highlights

• The Office of Community Services’ 2023 biennium budget requestis approximately $294,000 or 3.7% more than the 2021 bienniumbudget. The executive proposal includes:

◦ Changes in general fund and federal special revenue dueto statewide present law adjustments for personal services,fixed costs, and inflation/deflation

◦ A new proposal to increase federal funding for theCorporation for National and Community Service (CNCS)AmeriCorps program grants






Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 4.00 4.00 5.00 5.00

Personal Services 288,299 391,915 359,161 396,890 397,173Operating Expenses 130,182 251,167 279,183 391,049 391,097Grants 2,994,741 3,094,722 3,094,722 3,094,722 3,094,722Transfers 214,091 250,650 250,650 250,650 250,650Debt Service 1,654 1,654 1,172 1,172 1,172


General Fund 160,185 160,185 151,834 147,073 147,312State/Other Special Rev. Funds 0 12,388 12,388 12,388 12,388Federal Spec. Rev. Funds 3,468,782 3,817,535 3,820,666 3,975,022 3,975,114

Total Funds $3,628,967 $3,990,108 $3,984,888 $4,134,483 $4,134,814




The Office of Community Services expended 91.0% of its $4.0 million HB 2 modified budget in FY 2020. Personal services and operating expenses were under spent due to a suspension of all projects during Covid-19.


FY 2021 appropriations were approximately $5,000 less than FY 2020 appropriations. This small decrease is attributed to a reduction in personal services of approximately $33,000, but an increase in operating expenses of approximately $28,000, due to an appropriation shift between personal services and operating expenses.

Executive Request

The Office of Community Services budget proposed by the executive is $294,000 or 3.7% greater than the 2021 biennium budget.

Personal services were $359,000 or 9.0% of total FY 2021 appropriations. The executive proposes a decrease in general fund and federal special revenue appropriations from the FY 2021 base, totaling approximately $19,000 in FY 2022 and FY 2023. This decrease in general fund and federal special fund is primarily due to a statewide present law adjustment for personal services, which will be discussed in detail in the Program Personal Services section below.

Operating expenses were approximately $279,000 or 7.0% of total FY 2021 appropriations. The executive proposes an increase in general fund and federal special revenue appropriations from the FY 2021 base, totaling approximately $4,000 in FY 2022 and FY 2023. This increase is due to the statewide present law adjustment for fixed costs, which will be discussed in detail in the Present Law Adjustments section below.


Personal services were $359,000 or 9.0% of total FY 2021 appropriations for the Office of Community Services Division. The executive proposes a statewide present law decrease of approximately $19,000 for FY 2022 and FY 2023.






Funding


Department of Labor and Industry, 07-Office of Community ServicesFunding by Source of Authority

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

01100 General Fund 294,385 0 0 0 294,385 3.56 %

02190 OCS - Training 24,776 0 0 0 24,776 100.00 %State Special Total $24,776 $0 $0 $0 $24,776 0.30 %

03322 MT Community Service FSR 7,950,136 0 0 0 7,950,136 100.00 %Federal Special Total $7,950,136 $0 $0 $0 $7,950,136 96.14 %


Total All Funds $8,269,297 $0 $0 $0 $8,269,297

HB 2 Authority

General fund and state special revenue combined provide approximately 3.9% of the program revenues and fund most ofthe administrative expenses for the program.


• The majority of the funding for the program is provided through AmeriCorps grants• Federal revenue provides the remainder of funding for administrative expenses including the funding for grant and

special projects administered by the program




Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of Budget2021 Base Budget 151,834 151,834 303,668 103.15 % 3,984,888 3,984,888 7,969,776 96.38 %SWPL Adjustments (4,761) (4,522) (9,283) (3.15)% (15,405) (15,074) (30,479) (0.37)%PL Adjustments 0 0 0 0.00 % 0 0 0 0.00 %New Proposals 0 0 0 0.00 % 165,000 165,000 330,000 3.99 %

Total Budget $147,073 $147,312 $294,385 $4,134,483 $4,134,814 $8,269,297







FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds

DP 1 - Personal Services0.00 (5,971) 0 (13,467) (19,438) 0.00 (5,759) 0 (13,437) (19,196)

DP 2 - Fixed Costs0.00 1,266 0 2,955 4,221 0.00 1,272 0 2,968 4,240

DP 3 - Inflation Deflation0.00 (56) 0 (132) (188) 0.00 (35) 0 (83) (118)

Grand Total All Present Law Adjustments0.00 ($4,761) $0 ($10,644) ($15,405) 0.00 ($4,522) $0 ($10,552) ($15,074)









New Proposals



FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds

DP 701 - Training and Technical Assistance Grant1.00 0 0 165,000 165,000 1.00 0 0 165,000 165,000

Total 1.00 $0 $0 $165,000 $165,000 1.00 $0 $0 $165,000 $165,000


DP 701 - Training and Technical Assistance Grant -

The Office of Community Service (OCS) administers federal funding to AmeriCorps state programs in Montana. For the lastfour years, OCS has received a Training and Technical Assistance grant to provide assistance to AmeriCorps programs.Because the funding will be ongoing in nature, the executive is requesting that the appropriation and corresponding FTEbecome a part of the HB 2 budget.


66020 - Department Of Labor And Industry 09-Workers Compensation Court






BienniumChange

Biennium% Change

Personal Services 1,277,304 1,294,483 17,179 1.34 %Operating Expenses 337,755 320,055 (17,700) (5.24)%Debt Service 5,280 5,930 650 12.31 %

Total Expenditures $1,620,339 $1,620,468 $129 0.01 %

State/Other Special Rev. Funds 1,620,339 1,620,468 129 0.01 %

Total Funds $1,620,339 $1,620,468 $129 0.01 %

Total Ongoing $1,620,339 $1,620,468 $129 0.01 %Total OTO $0 $0 $0 0.00 %

Program DescriptionThe Workers' Compensation Court, created on July 1, 1975, provides a forum for Montana employees, employers, and theinsurance industry to resolve disputes arising from work-related injuries and occupational diseases. The court is attachedto the department for administrative purposes only.

Program Highlights

Workers Compensation CourtMajor Budget Highlights

• The Workers’ Compensation Court’s 2023 biennium budget requestis $129 higher than the 2021 biennium budget. The executiveproposal includes:

◦ Increases in state special revenue fund due to statewidepresent law adjustments for personal services, fixed costs,and inflation/deflation






Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 7.00 7.00 7.00 7.00

Personal Services 539,919 634,707 642,597 646,683 647,800Operating Expenses 165,309 177,175 160,580 159,964 160,091Debt Service 2,264 2,315 2,965 2,965 2,965


State/Other Special Rev. Funds 707,492 814,197 806,142 809,612 810,856

Total Funds $707,492 $814,197 $806,142 $809,612 $810,856




The Workers Compensation Court expended 86.9% of its $814,197 HB 2 modified budget in FY 2020. Personal serviceswere 85.0% expended due to a vacancy and a pause on hiring related to Covid-19.


FY 2021 appropriations was $8,055 or 1.0% less than FY 2020 appropriations. This small decrease is attributed to a declinein operating expenses of approximately $17,000 due to fund appropriations being moved to the Employment RelationsDivision to cover technology expenses. Personal services were increased by approximately $8,000 due to the pay planadjustment.

Executive Request

The Workers’ Compensation Court budget proposed by the executive is $129 greater than the 2021 biennium budget.

Personal services were $643,000 or 79.7% of total FY 2021 appropriations for the Worker’s Compensation Court. Theexecutive proposes an increase in state special revenue appropriations from the FY 2021 base, totaling approximately$4,000 in FY 2022 and $5,000 in FY 2023. This increase is due to the statewide present law adjustment for personalservices, which will be discussed in detail in the Program Personal Services section below.

Operating expenses were approximately $161,000 or 19.9% of total FY 2021 appropriations. The executive proposes adecrease in state special revenue appropriations from the FY 2021 base, totaling approximately $600 in FY 2022 and $400in FY 2023. This decrease is due to the statewide present law adjustment for fixed costs and inflation/deflation, which willbe discussed in detail in the Present Law Adjustments section below


Personal services were $643,000 or 79.7% of total FY 2021 appropriations for the Workers Compensation Court Division.The executive proposes a statewide present law increase of $4,000 for FY 2022 and $5,000 for FY 2023.






Funding


Department of Labor and Industry, 09-Workers Compensation CourtFunding by Source of Authority

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

General Fund 0 0 0 0 0 0.00 %

02455 Workers' Comp Regulation 1,620,468 0 0 0 1,620,468 100.00 %State Special Total $1,620,468 $0 $0 $0 $1,620,468 100.00 %



Total All Funds $1,620,468 $0 $0 $0 $1,620,468

HB 2 Authority


• The court is entirely funded with state special revenue derived from a fee charged to workers’ compensationcarriers in Montana

• The fee is passed on to Montana businesses when their workers’ compensation premiums are determined by thecarriers




Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of Budget2021 Base Budget 0 0 0 0.00 % 806,142 806,142 1,612,284 99.50 %SWPL Adjustments 0 0 0 0.00 % 3,470 4,714 8,184 0.51 %PL Adjustments 0 0 0 0.00 % 0 0 0 0.00 %New Proposals 0 0 0 0.00 % 0 0 0 0.00 %

Total Budget $0 $0 $0 $809,612 $810,856 $1,620,468







FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds


DP 2 - Fixed Costs0.00 0 (335) 0 (335) 0.00 0 (313) 0 (313)












67010 - Department Of Military Affairs SUMMARY






BienniumChange

Biennium% Change

Personal Services 32,519,743 36,160,749 3,641,006 11.20 %Operating Expenses 41,736,697 42,983,188 1,246,491 2.99 %Equipment & Intangible Assets 310,792 301,072 (9,720) (3.13)%Grants 24,432,268 23,622,602 (809,666) (3.31)%Transfers 4,344,354 5,286,520 942,166 21.69 %


General Fund 14,228,544 15,110,191 881,647 6.20 %State/Other Special Rev. Funds 2,345,245 3,113,610 768,365 32.76 %Federal Spec. Rev. Funds 86,770,065 90,130,330 3,360,265 3.87 %

Total Funds $103,343,854 $108,354,131 $5,010,277 4.85 %


Mission Statement

The mission of the Department of Military Affairs has three components:

• Federal - To serve as the primary federal reserve force in support of the national security objectives when calledupon by the President of the United States

• State - Protection of life property, preservation of peace, order, and public safety for Montana’s citizens, whencalled upon by the Governor

• Community - Participate in local, state, and national programs that add value to America

Please refer to the agency profile for the Department of Military Affairs at https://leg.mt.gov/lfd/state-agency-profiles/department-military-affairs for additional information about the agency’s organization structure, historical expenditures, FY 2020 expenditure dashboard, and recent studies, audits, and legislation.


http://leg.mt.gov/lfd/state-agency-profiles/department-military-affairs

http://leg.mt.gov/lfd/state-agency-profiles/department-military-affairs


Department of Military AffairsMajor Budget Highlights

• The Department of Military Affairs’ biennium budget request is about$5.0 million or 4.9% higher than the 2021 biennium budget

• Proposed changes are included in the statewide present lawadjustments for personal services, fixed costs, and inflation/deflation

• In addition, the Department of Military Affairs is requesting anadditional 5.00 FTE and about $457,000 each year in personalservices, mainly in federal funds in the ChalleNGe and Army NationalGuard Programs


• The legislature may wish to consider reducing operating expensesand transfers appropriations in programs requesting budgets notsupported by historic spending levels

• Transferring authority from personal services to operating expensesin the FY 2021 base budget increases the 2023 biennium budget

• State special revenue accounts within the Veterans’ Affairs Divisiondo not have enough revenues or fund balance to support proposedappropriations in 2023 biennium budget

• The legislature may wish to consider expanding the uses of searchand rescue funds due to the accumulating fund balance




Agency Highlights



Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 213.25 213.25 220.25 220.25

Personal Services 15,444,871 16,265,865 16,253,878 18,054,862 18,105,887Operating Expenses 19,658,418 20,823,445 20,913,252 21,559,942 21,423,246Equipment & Intangible Assets 94,983 160,256 150,536 150,536 150,536Grants 8,793,091 12,620,967 11,811,301 11,811,301 11,811,301Transfers 538,060 1,701,094 2,643,260 2,643,260 2,643,260


General Fund 6,667,654 7,097,551 7,130,993 7,574,617 7,535,574State/Other Special Rev. Funds 855,971 1,166,650 1,178,595 1,555,526 1,558,084Federal Spec. Rev. Funds 37,005,798 43,307,426 43,462,639 45,089,758 45,040,572

Total Funds $44,529,423 $51,571,627 $51,772,227 $54,219,901 $54,134,230


Agency Discussion


The Department of Military Affairs expended 86.3% of its $51.6 million FY 2020 modified HB 2 budget. Personal serviceswere 94.9% expended, operating expenses were 94.4% expended, equipment & intangible assets were 59.3% expended,grants were 69.7% expended, and transfers were 31.6% expended.

Personal services are below levels anticipated in the budget due to turn over and related vacancies. Operating expensesand transfers were lower than budgeted levels, in part due appropriation levels in several divisions that are above historicspending levels. See the Program Discussion for LFD Issue on these appropriation levels. Equipment & intangible assetsare included in the Army National Guard Program and mainly used for the purchase of vehicles. Purchases fluctuate basedon the replacement cycle of the vehicles. FY 2020 vehicle replacements were extended into future fiscal years to conservegeneral fund.

Grants were 69.7% expended. The low percentage is primarily due to the timing of accruing valid obligations, timing relatedto grant disbursements, and fluctuations in the amount of federal grant funds received.


Differences between FY 2020 and FY 2021 appropriations are mainly due to operating plan or program transfers. Theseare detailed in the various divisions under Program Discussion.





Figure 1

FY 2021 Legislative Appropriations - Department of Military AffairsExecutive % Change


Authority Action01 DIRECTORS OFFICE61000 Personal Services 1,120,932 - 1,120,932 0.0%62000 Operating Expenses 207,030 - 207,030 0.0%68000 Transfers-out 50,655 - 50,655 0.0%01 DIRECTORS OFFICE Total 1,378,617 - 1,378,617 0.0%02 CHALLENGE PROGRAM61000 Personal Services 3,394,182 (267,456) 3,126,726 -7.9%62000 Operating Expenses 1,200,100 267,456 1,467,556 22.3%02 CHALLENGE PROGRAM Total 4,594,282 - 4,594,282 0.0%03 SCHOLARSHIP PROGRAM62000 Operating Expenses 207,362 - 207,362 0.0%03 SCHOLARSHIP PROGRAM Total 207,362 - 207,362 0.0%04 STARBASE61000 Personal Services 248,365 - 248,365 0.0%62000 Operating Expenses 464,828 - 464,828 0.0%04 STARBASE Total 713,193 - 713,193 0.0%12 ARMY NATIONAL GUARD PGM61000 Personal Services 4,020,621 - 4,020,621 0.0%62000 Operating Expenses 14,936,225 - 14,936,225 0.0%63000 Equipment & Intangible Assets 150,536 - 150,536 0.0%68000 Transfers-out 25,000 - 25,000 0.0%12 ARMY NATIONAL GUARD PGM Total 19,132,382 - 19,132,382 0.0%13 AIR NATIONAL GUARD PGM61000 Personal Services 3,881,614 - 3,881,614 0.0%62000 Operating Expenses 1,902,428 - 1,902,428 0.0%13 AIR NATIONAL GUARD PGM Total 5,784,042 - 5,784,042 0.0%21 DISASTER & EMERGENCY SERVICES61000 Personal Services 1,942,440 - 1,942,440 0.0%62000 Operating Expenses 1,357,748 - 1,357,748 0.0%66000 Grants 11,776,301 - 11,776,301 0.0%68000 Transfers-out 2,522,605 - 2,522,605 0.0%21 DISASTER & EMERGENCY SERVICES Total 17,599,094 - 17,599,094 0.0%31 VETERANS AFFAIRS PROGRAM61000 Personal Services 1,913,180 - 1,913,180 0.0%62000 Operating Expenses 370,075 - 370,075 0.0%66000 Grants 35,000 - 35,000 0.0%68000 Transfers-out 45,000 - 45,000 0.0%31 VETERANS AFFAIRS PROGRAM Total 2,363,255 - 2,363,255 0.0%67010 DEPARTMENT OF MILITARY AFFAIRS Total 51,772,227 - 51,772,227 0.0%



• HB 158, a bill revising purple heart scholarship requirements and expanding the combat service-related medalsthat qualify a recipient for a scholarship

• HB 172, a bill that establishes county and multi-county service offices and provided a state grant program

Both bills contained appropriations and language that the legislature intended the appropriations to be considered part ofthe ongoing base in the 2023 biennium budget. The legislative action in Figure 1 includes $45,000 in transfers out authorityand $30,000 in grant authority in the Veterans’ Affairs Division as a result.

The ChalleNGe Program transferred $267,456 in personal services to operating expenses in FY 2021. See the LFD Issuein the Program Personal Services narrative for a discussion of the impacts of this transfer.

Executive Request

The Department of Military Affairs’ 2023 biennium budget is $5.0 million or 4.9% higher than the 2021 biennium budget.

Personal services were about $16.3 million or 31.4% of the FY 2021 base budget. The executive proposes an increasein general fund and state special revenues totaling about $336,000 in FY 2022 and $376,000 in FY 2023 in the statewidepresent law adjustments. The increase is due to adjustments for expected changes, management decisions, and budgetmodifications contained in the statewide present law adjustments for personal services. In addition, the Department ofMilitary Affairs is requesting an additional 5.00 FTE and about $457,000 annually, mainly in federal funds in the ChalleNGeand Army National Guard Programs.

Operating expenses were approximately $20.9 million or 40.4% of the FY 2021 base budget. The executive proposes anincrease of about $39,000 in FY 2022 and a decrease of about $60,000 in FY 2023 for fixed costs and inflation/deflationchanges included in the statewide present law adjustments. The executive is also proposing additional operating expensesfor operation and maintenance of facilities, support for airlift wing drop zone lease, and disaster mitigation efforts totalingabout $608,000 in FY 2022 and $570,000 in FY 2023. These changes are discussed in detail in the Program Discussionnarratives.

5.0% Plan

Statute requires that state agencies submit plans to reduce general fund and certain state special revenues by 5.0%.For the Department of Military Affairs, the 5.0% plan includes general fund reductions totaling about $266,000. Theplan includes potential reductions in funding for the Army and Air National Guard grounds and maintenance operations,eliminating FTE in the Director’s Office, reduction of 20 cadets served in the ChalleNGe Program, veteran’s affairs localsupport and training, and National Guard scholarships. In addition, since many of the program match general fund withfederal special revenues, the reductions could result in reductions of up to $411,000 in federal funds.

A summary of the entire 2023 biennium 5.0% plan submitted for the Department of Military Affairs can be found online atthe Section A subcommittee page on “Tab D Materials”.



1. Expected Changes - This category includes those adjustments explicitly approved by the legislature, such as expected changes to annualize personal services costs including FY 2021 statewide pay plan adjustments, changes to benefit rates, and longevity adjustments related to incumbents in each position at the time of the personal services snapshot, plus rate changes for workers’ compensation and unemployment insurance.

2. Personal Services Management Decisions - Any agency management decisions that adjusted employee pay. This includes raises or position changes that may increase or reduce a budget, such as hiring FTE at a lower rate to replace retired senior staff, or moving FTE between programs.

3. Modifications to the Personal Services Base Budget - Other modifications to the FY 2021 personal services base like operating plan transfers that occurred during the interim may impact the overall size of the personal services present law adjustment (DP 1)


The 2019 Legislature enacted:



Figure 2

Personal Services Present LawDP 1 - FY 2022

Expected Management Budget DP1Program Changes Decisions Modifications SWPL

01 DIRECTORS OFFICE 93,650 (84,841) - 8,80902 CHALLENGE PROGRAM (19,014) 37,480 267,456 285,92203 SCHOLARSHIP PROGRAM - -04 STARBASE (65,963) 11,054 - (54,909)05 MT MILITARY FAMILY RELIEF FUND - -12 ARMY NATIONAL GUARD PGM 42,837 203,483 - 246,32013 AIR NATIONAL GUARD PGM (502,903) 84,412 - (418,491)21 DISASTER & EMERGENCY SERVICES 20,336 56,780 - 77,11631 VETERANS AFFAIRS PROGRAM 22,317 168,902 - 191,219Agency Total $ (408,739) $ 477,269 $ 267,456 $ 335,986

Personal services were about $16.3 million or 31.4% of the FY 2021 base budget. The executive proposes an increasein general fund and state special revenues totaling about $336,000 in FY 2022 and $376,000 in FY 2023 in thestatewide present law adjustments for personal services. In addition to expected changes, the statewide present lawadjustment includes management decisions for broadband pay increases, wage changes associated with staff turnover,and reinstatement of personal services budget authority in the ChalleNGe Program that was shifted to operating expensesin a budget modification. The impacts of the budget modification are discussed in the Program Discussion narrative.

Funding


Total Department of Military Affairs Funding by Source of Authority2023 Biennium Budget Request - Department of Military Affairs

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

General Fund 15,110,191 0 0 90,000 15,200,191 13.79 %State Special Total 3,113,610 0 0 1,756,643 4,870,253 4.42 %Federal Special Total 90,130,330 0 0 0 90,130,330 81.79 %Proprietary Total 0 0 0 0 0 0.00 %Other Total 0 0 0 0 0 0.00 %

Total All Funds $108,354,131 $0 $0 $1,846,643 $110,200,774Percent - Total All Sources 98.32 % 0.00 % 0.00 % 1.68 %

HB 2 Funding

General fund comprises about 13.9% of total HB 2 funding in the 2023 biennium. General fund supports a portion of most programs in the Department of Military Affairs and the entire cost of the National Guard scholarships.


LFDCOMMENT

LFDCOMMENT


State special revenue makes up about 2.9% of the HB 2 funding in the 2023 biennium. The funding is used predominately in the Disaster and Emergency Services and Veterans’ Affairs Divisions. The Veterans’ Affairs Division receives a large portion of the state special revenues with funding generated through vehicle registration fees, specialty license plates, and donations.

Dominating the funding is federal special revenues at 83.2% of the HB 2 funding in the 2023 biennium. Federal government initiatives, programs and objectives guide the funding requirements for the Department of Military Affairs.

The November 15th budget submission included a funding shift, moving statewide present law adjustmentsto general fund in several programs. The Department of Military Affairs and the Office of Budget andProgram Planning have notified the Legislative Fiscal Division that the funding will be corrected in the

December 15th final budget submission.


The Montana Military Family Relief Fund (MMFRF) receives statutory appropriations to provide monetary grants to familiesof Montana National Guard and Reserve Component members who on or after April 28, 2007 are on active duty for federalservice in a contingency operation. MMFRF grants are intended to help Montana families defray the costs of food, housing,utilities, medical services, and other expenses that become difficult to afford when the wage-earner has temporarily leftcivilian employment to be placed on active military duty. Costs for the program in FY 2020 were about $140,000. Theprogram was originally funded by a transfer of $1.0 million in general fund. Ongoing revenues included interest anddonations of about $40,000 a year. The fund balance at the end of FY 2020 was $456,673. This statutory appropriation isnot reflected in the preceding table.

The Veterans’ Affairs Division has a statutory appropriation for the operation of the Montana Veterans’ Cemetery Program.The state special revenue funds associated with this appropriation are generated from license registration fees, cemeteryplot allowances, and donations. The statutory appropriations for the Cemetery Program make up the majority of the statespecial revenue funds reflected in the preceding table.

The Governor is also provided a number of statutory appropriations in the event of a declared emergency or disaster.The most notable of these is the authority to authorize up to $16.0 million from the general fund for disaster relief. Theseexpenditures are authorized through executive orders.

In recent biennia a number of executive orders for disasters and emergencies have been issued by theGovernor. The appropriations for these orders are authorized until the disaster is mitigated, unlike HB 2temporary appropriations. A review of the appropriation authority for the executive orders shows that

general fund authorized in previous biennia still has unused authority including:

• $1.1 million for executive order 5-2011 flooding in 2011• $0.3 million for executive order 11-2016 storm in 2016

The legislature may wish to discuss the status of the executive orders with the agency to determine if unneeded generalfund authority from past biennium should be reverted to the general fund.







Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of Budget2021 Base Budget 7,130,993 7,130,993 14,261,986 94.39 % 51,772,227 51,772,227 103,544,454 95.56 %SWPL Adjustments 270,795 242,533 513,328 3.40 % 363,120 309,589 672,709 0.62 %PL Adjustments 0 0 0 0.00 % 667,821 678,536 1,346,357 1.24 %New Proposals 172,829 162,048 334,877 2.22 % 1,416,733 1,373,878 2,790,611 2.58 %

Total Budget $7,574,617 $7,535,574 $15,110,191 $54,219,901 $54,134,230 $108,354,131

HB 2 Language

The executive has not proposed any HB 2 language for the Department of Military Affairs.


67010 - Department Of Military Affairs 01-Director's Office






BienniumChange

Biennium% Change

Personal Services 2,240,414 2,263,708 23,294 1.04 %Operating Expenses 415,665 423,146 7,481 1.80 %Transfers 101,310 101,310 0 0.00 %


General Fund 1,668,865 1,686,981 18,116 1.09 %Federal Spec. Rev. Funds 1,088,524 1,101,183 12,659 1.16 %

Total Funds $2,757,389 $2,788,164 $30,775 1.12 %


Program Description

The Director's Office provides departmental administration through the Office of the Adjutant General and department-wide support for accounting, fiscal management, personnel, labor relations, and purchasing and property managementoversight. The program operates in accordance with Title 2, Chapter 15, part 12 and Title 10, MCA.

Program Highlights

Director's OfficeMajor Budget Highlights

• The Director’s Office’s 2023 biennium budget request is about$31,000 or 1.1% higher than the 2021 biennium budget

• Proposed changes are included in statewide present law adjustmentsfor personal services, fixed costs, and inflation/deflation


• The legislature may wish to consider reducing operating expensesappropriations in the Director’s Office to historic spending levels




LFDISSUE



Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 12.32 12.32 12.32 12.32

Personal Services 988,973 1,119,482 1,120,932 1,129,741 1,133,967Operating Expenses 116,942 208,635 207,030 215,871 207,275Transfers 32,400 50,655 50,655 50,655 50,655


General Fund 724,733 835,597 833,268 846,690 840,291Federal Spec. Rev. Funds 413,582 543,175 545,349 549,577 551,606

Total Funds $1,138,315 $1,378,772 $1,378,617 $1,396,267 $1,391,897




The Director’s Office expended 82.5% of its $1.4 million FY 2020 modified HB 2 budget. Personal services were 88.3%expended, operating expenses were 56.1% expended, and transfers were 64.0% expended. Personal services wereslightly lower than anticipated in the budget due to vacancies and related turnover. The Director’s Office spending foroperating expenses is consistent with levels in previous biennia.

The legislature may wish to consider reducing operating expenses appropriations to historic spending levels

In the 2023 biennium, the FY 2021 budgeted ongoing appropriations are used to establish the budget startingpoint for the 2023 biennium budget. The same method to establish the base budget has been used since FY

2016. The FY 2020 and FY 2021 operating expenses budget levels were enhanced by the addition of $74,572 inadditional authority from SB 9, enacted by the 2017 Legislature, above historic funding levels. Figure 3 shows the actualexpenditures for operating expenses between FY 2014 and FY 2020, the percentage change in the level of expenditures,and the seven-year average.



Figure 3Department of Military Affairs

Director's OfficeOperating Expenses

FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020Operating ExpensesOther Services $51,679 $31,261 $87,764 $21,129 $26,276 $50,671 $45,895Supplies and Materials 11,533 28,967 30,360 40,430 8,598 19,918 12,636Communications 12,320 13,211 17,354 24,873 27,511 23,360 23,812Travel 7,717 12,863 11,315 6,579 7,878 6,652 14,240Rent 0 20,849 0 0 0 0 177Repair & Maintenance 0 22,710 0 4,566 250 96 95Other Expenses 13,353 5,872 19,677 25,492 26,729 14,705 20,087Goods Purchased for Resale 234 6,325 15,374 0 904 0 0

Total Operating Expenses $96,836 $142,058 $181,844 $123,069 $98,146 $115,402 $116,942

% Change from Previous Fiscal Year 46.7% 28.0% -32.3% -20.3% 17.6% 1.3%7 year Average Operating Expense $124,900

As reflected in Figure 3, spending on operating expenses has hovered around $120,000 since FY 2017 or about $89,000lower than the base budget for operating expenses in the 2023 biennium. The $207,030 base budget for the 2023 bienniumis approximately $82,000 higher than the seven-year average of operating expenses in the Director’s Office.

General fund supports 60.4% of the FY 2021 base budget while federal special revenue funds support 39.6% of theDirector’s Office FY 2021 base budget.

Legislative Options:

• Reduce operating expenses in the Director’s Office to align more closely with historic spending patterns• Adopt the executive proposal for operating expenses appropriations



Executive Request

The Director’s Office 2023 proposed budget is $31,000 or 1.1% higher than the 2021 biennium budget.

Personal services were about $1.1 million or 81.3% of the FY 2021 base budget. The executive proposes an increase ingeneral fund and federal special revenue of about $8,800 in FY 2022 and $13,000 in FY 2023. The increases are part ofthe statewide present law adjustments which are discussed in the Program Personal Services narrative.

Operating expenses were about $207,000 or 15.0% of the FY 2021 base budget. The executive proposes to increaseoperating expenses by $8,800 in FY 2022 and $200 in FY 2023. The increases are proposed as part of the statewidepresent law adjustments for fixed costs due to biennial legislative audit costs and information technology charges.

Equipment and intangible assets were approximately $51,000 or 3.7% of the FY 2021 base budget. The executive doesnot propose any adjustments to the base budget for the 2023 biennium.




Personal services were about $1.1 million or 81.3% of the FY 2021 base budget in the Director’s Office. The executiveproposes a statewide present law increase of about $8,800 in FY 2022 and $13,000 in FY 2023. In addition to expectedchanges, the 2023 biennium personal services statewide present law request contains management decisions that includebroadband pay raises and wage changes due to employee turnover.

Funding


Department of Military Affairs, 01-Director's OfficeFunding by Source of Authority

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

01100 General Fund 1,686,981 0 0 0 1,686,981 60.51 %


03132 National Guard 706,936 0 0 0 706,936 64.20 %03134 DES Emergency Mgmt Perf 97.042 135,993 0 0 0 135,993 12.35 %03453 Air National Guard 226,050 0 0 0 226,050 20.53 %03143 DES Homeland Security 97.067 32,204 0 0 0 32,204 2.92 %



Total All Funds $2,788,164 $0 $0 $0 $2,788,164

General fund supports the majority of the program in accordance with federal-state agreements. Under the agreements,federal support is provided for the costs of positions and activities that meet the requirements for federal operations.




Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of Budget2021 Base Budget 833,268 833,268 1,666,536 98.79 % 1,378,617 1,378,617 2,757,234 98.89 %SWPL Adjustments 13,422 7,023 20,445 1.21 % 17,650 13,280 30,930 1.11 %PL Adjustments 0 0 0 0.00 % 0 0 0 0.00 %New Proposals 0 0 0 0.00 % 0 0 0 0.00 %

Total Budget $846,690 $840,291 $1,686,981 $1,396,267 $1,391,897 $2,788,164







FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds

DP 1 - Personal Services0.00 4,581 0 4,228 8,809 0.00 6,778 0 6,257 13,035

DP 2 - Fixed Costs0.00 8,872 0 0 8,872 0.00 265 0 0 265












67010 - Department Of Military Affairs 02-Youth Challenge Program






BienniumChange

Biennium% Change

Personal Services 6,464,425 6,980,711 516,286 7.99 %Operating Expenses 2,669,357 2,949,592 280,235 10.50 %


General Fund 2,283,666 2,482,727 199,061 8.72 %Federal Spec. Rev. Funds 6,850,116 7,447,576 597,460 8.72 %

Total Funds $9,133,782 $9,930,303 $796,521 8.72 %


Program DescriptionThe Montana National Guard Youth ChalleNGe Program is a volunteer program for youth ages 16 to 18 who have stoppedattending secondary school before graduating. ChalleNGe is a 17-month, voluntary, two-phased military modeled trainingprogram targeting unemployed, drug-free, and crime-free high school dropouts. The program provides an opportunity forhigh school "at risk" youth to enhance their life skills and increase their educational levels and employment potential. PhaseI of the program is a 22-week residential stay on the campus of Western Montana College of the University of Montanain Dillon focusing on physical training, classroom instruction, personal development, and life skills. Phase II is a year-longmentoring relationship with a specially trained member of the community where the youth resides to provide a positive rolemodel and to assist the student in gaining employment or enrolling in post-secondary schooling.

Program Highlights

Youth ChalleNGe ProgramMajor Budget Highlights

• The Youth ChalleNGe Program’s 2023 biennium budget request isabout $797,000 or 8.7% higher than the 2021 biennium budget

• Proposed changes include adjustments in general fund and federalspecial revenue for statewide present law adjustments for personalservices, fixed costs, and inflation/deflation


• Transferring authority from personal services to operating expensesin the FY 2021 base budget increases the 2023 biennium budget





Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 53.15 53.15 53.15 53.15

Personal Services 3,265,165 3,337,699 3,126,726 3,487,491 3,493,220Operating Expenses 1,087,477 1,201,801 1,467,556 1,481,899 1,467,693


General Fund 1,018,018 1,135,020 1,148,646 1,242,423 1,240,304Federal Spec. Rev. Funds 3,334,624 3,404,480 3,445,636 3,726,967 3,720,609

Total Funds $4,352,642 $4,539,500 $4,594,282 $4,969,390 $4,960,913




The Youth ChalleNGe Program expended 95.9% of its $4.5 million FY 2020 modified HB 2 budget. Personal serviceswere 97.8% expended and operating expenses were 90.5% expended. Personal services expenditures are below levelsanticipated in the budget due to turn over. Expenditures for rent were about $200,000 less than budgeted driving the lowerlevel of expenditures in operating expenses.


FY 2020 appropriations are higher than FY 2021 for personal services due to a transfer of $267,456 from personal servicesto operating expenses made for FY 2021. Refer to the LFD Issue under personal services in the agency narrative on thebudget impacts of this transfer. Operating expenses appropriations are higher in FY 2021 due to the transfer.

Executive Request

The Youth ChalleNGe Program budget proposed by the executive is $797,000 or 8.7% higher than the 2021 bienniumbudget.

Personal services were $3.1 million or 68.1% of the FY 2021 base budget. The executive proposes an increase in generalfund and federal special revenue of $285,922 in FY 2022 and $291,651 in FY 2023 as part of the personal servicesstatewide present law adjustments are discussed in the Program Personal Services narrative.

Operating expenses were $1.5 million or 31.9% of the FY 2021 base budget. The executive proposes increases in generalfund and federal special revenue of $17,780 in FY 2022 and $2,292 in FY 2023 in the statewide present law adjustments forfixed costs and inflation/deflation. Increases for the biennial legislative appropriation and information technology servicesare partially offset by lower costs for motor pool vehicles and statewide indirect costs.


Personal services in the Youth ChalleNGe Program were $3.1 million or 68.1% of the FY 2021 base budget. The executiveproposes a statewide present law adjustment of about $286,000 in FY 2022 and $292,000 in FY 2023. In addition to theexpected changes, the 2023 biennium statewide present law adjustment for personal services is due to:



LFDISSUE


• Management decisions for broadband pay raises and wage changes due to employee turnover• Modification to the personal services base budget of $267,000. Youth ChalleNGe Program transferred FY 2021

base budget authority out of personal services and into operating expenses

The ChalleNGe Program is proposing 1.00 FTE and $75,000 a year for additional staff.

Transferring Authority from Personal Services to Operating Expenses in the FY 2021 Base Budget Increases the2023 Biennium Budget

In FY 2021, the Youth ChalleNGe Program transferred $267,000 in personal services appropriations throughmodifications that transferred authority out of personal services and into operating expenses. The Youth ChalleNGeProgram did not eliminate FTE as part of the modifications. Personal services appropriations for the 2023 biennium usethe salary and related benefits associated with FTE to establish the level of appropriation required for personal services.Since the Youth ChalleNGe Program did not reduce FTE when it eliminated personal services funding in FY 2021, thepersonal services reduction automatically returns when the personal services snapshot is used to establish the level offunding required for the 2023 biennium. As a result, the Youth ChalleNGe Program 2023 biennium budget has a basebudget that is $267,000 higher each year than it would have been had the appropriation remained in personal servicesinstead of being transferred to operating expenses. Or, as an alternative, if FTE have been reduced for the transfer ofauthority from personal services to operating expenses.

Legislative Options:

• Reduce personal services funding and related FTE in the Youth ChalleNGe program to offset the transfer ofpersonal services funding in FY 2021

• Reduce operating expenses in the Youth ChalleNGe Program by $267,000• Gain an understanding from the Youth ChalleNGe Program of underlying funding requirements for personal

services and operating expenses and adjust the budget as needed

Funding


Department of Military Affairs, 02-Youth Challenge ProgramFunding by Source of Authority

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

01100 General Fund 2,482,727 0 0 0 2,482,727 25.00 %


03132 National Guard 7,447,576 0 0 0 7,447,576 100.00 %Federal Special Total $7,447,576 $0 $0 $0 $7,447,576 75.00 %


Total All Funds $9,930,303 $0 $0 $0 $9,930,303

The Youth ChalleNGe Program is funded with general fund and federal special revenue at a 25/75 state to federal funding ratio for most costs. Some travel and special projects required by the federal/state cooperative agreement are funded entirely with federal funds.




https://leg.mt.gov/content/Publications/fiscal/leg_reference/LFD-Glossary.pdf



Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent


Total Budget $1,242,423 $1,240,304 $2,482,727 $4,969,390 $4,960,913 $9,930,303




FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds


DP 2 - Fixed Costs0.00 4,445 0 13,335 17,780 0.00 573 0 1,719 2,292

DP 3 - Inflation Deflation0.00 (859) 0 (2,578) (3,437) 0.00 (539) 0 (1,616) (2,155)












New Proposals



FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds

DP 202 - CHALLENGE Modified to Permanent FTE0.00 18,711 0 56,132 74,843 0.00 18,711 0 56,132 74,843

Total 0.00 $18,711 $0 $56,132 $74,843 0.00 $18,711 $0 $56,132 $74,843


DP 202 - CHALLENGE Modified to Permanent FTE -

The executive is proposing to add 1.00 FTE at the Montana Youth Challenge Academy (MYCA). The position is 75.0%federally funded and 25.0% general fund.


67010 - Department Of Military Affairs 03-Ng Scholarship Program






BienniumChange

Biennium% Change

Operating Expenses 414,724 414,724 0 0.00 %

Total Expenditures $414,724 $414,724 $0 0.00 %

General Fund 414,724 414,724 0 0.00 %

Total Funds $414,724 $414,724 $0 0.00 %

Total Ongoing $414,724 $414,724 $0 0.00 %Total OTO $0 $0 $0 0.00 %

Program DescriptionThe Montana National Guard Scholarship Program provides scholarships to eligible Montana National Guard personnelenrolled as undergraduate students in Montana colleges, universities, or training programs. The program assists Montanain recruiting and retaining personnel in both the Army and Air National Guard and in enhancing its operational readiness toassume both state and federal active duty missions. Scholarships also reward guard members for their service to the stateby helping defray their educational costs at Montana post-secondary institutions.

Program Highlights

NG Scholarship ProgramMajor Budget Highlights

• The National Guard Scholarship Program’s proposed 2023 bienniumbudget is identical to the 2021 biennium budget




Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023

Operating Expenses 140,200 207,362 207,362 207,362 207,362


General Fund 140,200 207,362 207,362 207,362 207,362

Total Funds $140,200 $207,362 $207,362 $207,362 $207,362



67010 - Department Of Military Affairs 03-Ng Scholarship Program



The NG Scholarship Program expended 67.6% of its $207,362 FY 2020 modified HB 2 budget, all in operating expenses.The program distributed scholarships at the level requested for the fiscal year.


FY 2020 appropriations for scholarships are identical to the FY 2021 appropriations.

Executive Request

The National Guard Scholarship Program 2023 biennium budget proposed by the executive is unchanged from the FY2021 base budget.

Funding


Department of Military Affairs, 03-Ng Scholarship ProgramFunding by Source of Authority

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

01100 General Fund 414,724 0 0 0 414,724 100.00 %




Total All Funds $414,724 $0 $0 $0 $414,724

The National Guard Scholarship Program is funded entirely from general fund.




Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of Budget2021 Base Budget 207,362 207,362 414,724 100.00 % 207,362 207,362 414,724 100.00 %SWPL Adjustments 0 0 0 0.00 % 0 0 0 0.00 %PL Adjustments 0 0 0 0.00 % 0 0 0 0.00 %New Proposals 0 0 0 0.00 % 0 0 0 0.00 %

Total Budget $207,362 $207,362 $414,724 $207,362 $207,362 $414,724



67010 - Department Of Military Affairs 04-Starbase






BienniumChange

Biennium% Change

Personal Services 493,731 387,747 (105,984) (21.47)%Operating Expenses 930,562 931,498 936 0.10 %


Federal Spec. Rev. Funds 1,424,293 1,319,245 (105,048) (7.38)%

Total Funds $1,424,293 $1,319,245 ($105,048) (7.38)%


Program DescriptionThe Montana STARBASE Program is a United States Department of Defense (DoD) premiere education program, sponsored by the Office of the Assistant Secretary of Defense for Reserve Affairs. The DoD funded STARBASE Program in Montana currently hosts two of the nation’s 70 STARBASE academies, which are located on military installations. STARBASE Montana currently offers fifth grade students an opportunity to visit the Montana Air National Guard 120th Airlift Wing in Great Falls and the Montana Army National Guard at Fort Harrison. While at STARBASE, students engage in hands-on activities designed to increase their knowledge and understanding of science, technology, engineering, and mathematics (STEM). The STARBASE experience promotes teamwork, collaboration, positive self-esteem, helps students set and achieve personal goals, raises higher education and career awareness and elevates student confidence in problem solving. The five-day program covers 25 hours of challenging and engaging STEM curriculum that meets or exceeds national standards.

Program Highlights

STARBASEMajor Budget Highlights

• The STARBASE Program’s 2023 biennium budget request is about$105,000 or 7.4% lower than the 2021 biennium budget request

• Proposed changes are included in the statewide present lawadjustments for personal services and fixed costs






Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 2.00 2.00 2.00 2.00



Federal Spec. Rev. Funds 656,126 711,100 713,193 660,640 658,605

Total Funds $656,126 $711,100 $713,193 $660,640 $658,605




STARBASE expended 92.3% of its $711,100 FY 2020 modified HB 2 budget. Personal services were 85.6% expended and operating expenses were 95.6% expended. Personal services expenditures were below budgeted levels due to turn over.


Personal services FY 2021 appropriations are higher than FY 2020 appropriations mainly due to the pay plan approved by the 2019 Legislature.

Executive Request

The STARBASE Program budget proposed by the executive is about $105,000 or 7.4% lower than the 2021 biennium budget.

Personal services were about $248,000 or 34.8% of the FY 2021 base budget. The executive proposes a decrease of about $55,000 in FY 2022 and $54,000 in FY 2023. The decrease is included in the statewide present law adjustment and is discussed in the Program Personal Services narrative.

Operating expenses were about $465,000 or 65.2% of the FY 2021 base budget. The STARBASE Program budget proposed for operating expenses is about $2,400 higher in FY 2022 and $514 lower in FY 2023. The changes are included in the statewide present law adjustments for fixed costs and inflation/deflation. Increased appropriations for biennial legislative audit costs and information technology charges are partially offset by reductions for statewide indirect costs in FY 2022. In FY 2023 increases included in fixed costs for information technology are offset by the reductions in the statewide indirect costs.


Personal services were about $248,000 or 34.8% of the STARBASE Program FY 2021 base budget appropriations. The executive proposes a decrease of $55,000 in FY 2022 and $54,000 in FY 2023 in the statewide present law adjustments for personal services. The 2019 Legislature provided $72,566 in unallocated personal services to provide funding for an office manager/financial specialist for the Great Falls site. The legislature did not authorize FTE for the position. While the funding is included in the FY 2021 personal services base budget, because there is not FTE the statewide present law adjustment is decreased to the level of funding needed for the salaries and benefits associated with the authorized FTE.




Department of Military Affairs, 04-StarbaseFunding by Source of Authority

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

General Fund 0 0 0 0 0 0.00 %


03453 Air National Guard 1,319,245 0 0 0 1,319,245 100.00 %Federal Special Total $1,319,245 $0 $0 $0 $1,319,245 100.00 %


Total All Funds $1,319,245 $0 $0 $0 $1,319,245

The STARBASE Program is funded entirely with federal special revenues from the Air National Guard.




Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of Budget2021 Base Budget 0 0 0 0.00 % 713,193 713,193 1,426,386 108.12 %SWPL Adjustments 0 0 0 0.00 % (52,553) (54,588) (107,141) (8.12)%PL Adjustments 0 0 0 0.00 % 0 0 0 0.00 %New Proposals 0 0 0 0.00 % 0 0 0 0.00 %

Total Budget $0 $0 $0 $660,640 $658,605 $1,319,245




FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds

DP 1 - Personal Services0.00 0 0 (54,909) (54,909) 0.00 0 0 (54,074) (54,074)

DP 2 - Fixed Costs0.00 0 0 2,356 2,356 0.00 0 0 (514) (514)

Grand Total All Present Law Adjustments0.00 $0 $0 ($52,553) ($52,553) 0.00 $0 $0 ($54,588) ($54,588)



Funding


67010 - Department Of Military Affairs 04-StarbaseDP 1 - Personal Services -






67010 - Department Of Military Affairs 12-Army National Guard Pgm






BienniumChange

Biennium% Change

Personal Services 7,750,333 9,302,533 1,552,200 20.03 %Operating Expenses 30,164,835 30,095,806 (69,029) (0.23)%Equipment & Intangible Assets 301,072 301,072 0 0.00 %Transfers 50,000 50,000 0 0.00 %


General Fund 3,471,801 3,526,388 54,587 1.57 %State/Other Special Rev. Funds 840 840 0 0.00 %Federal Spec. Rev. Funds 34,793,599 36,222,183 1,428,584 4.11 %

Total Funds $38,266,240 $39,749,411 $1,483,171 3.88 %


Program DescriptionThe Army National Guard (ARNG), until federalized, is a state military organization that provides trained and equippedmilitary units for use in the event of a state or national emergency. The federal/state cooperative agreement providesfunding for facilities management, environmental, and communications support to the organization by: 1) providingprofessional and skilled personnel for the administration, planning, and execution of statewide repair and maintenancefunctions on facilities and training areas; 2) planning, programming, and contracting for construction; 3) ensuring allactivities and facilities comply with environmental regulations; and 4) providing statewide communication services, securitycontracts, and leases for buildings and land used by the Army National Guard. The program is mandated by the U.S. andMontana Constitutions and Title 10, Chapters 1-3, MCA.

Program Highlights

Army National Guard ProgramMajor Budget Highlights

• The Army National Guard Program’s 2023 biennium budget requestis $1.5 million or 3.9% higher than the 2021 biennium budget.Proposed changes include:

◦ Changes in general fund and federal special revenue forstatewide present law adjustments for personal services,fixed costs, and inflation/deflation

◦ New proposals for 5.00 FTE and personal servicessupported by federal special revenue






Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 51.30 51.30 56.30 56.30

Personal Services 3,583,079 3,729,712 4,020,621 4,645,564 4,656,969Operating Expenses 15,120,305 15,228,610 14,936,225 15,066,984 15,028,822Equipment & Intangible Assets 85,264 150,536 150,536 150,536 150,536Transfers 0 25,000 25,000 25,000 25,000


General Fund 1,735,935 1,745,741 1,726,060 1,767,879 1,758,509State/Other Special Rev. Funds 100 420 420 420 420Federal Spec. Rev. Funds 17,052,613 17,387,697 17,405,902 18,119,785 18,102,398

Total Funds $18,788,648 $19,133,858 $19,132,382 $19,888,084 $19,861,327




The Army National Guard Program expended 98.2% of its $19.1 million FY 2020 modified HB 2 budget. Personal services were 96.1% expended, operating expenses were 99.3% expended, equipment & intangible assets were 56.6% expended, and transfers were 0.0% expended. Personal services expenditures are below levels anticipated in the budget due to turn over. Equipment & intangible assets included in the Army National Guard Program, are mainly use for the purchase of vehicles. Vehicle purchases fluctuate based on the replacement cycle of the vehicles. FY 2020 vehicle replacements were extended into future fiscal years to conserve general fund.


In FY 2020, the Army National Guard Program transferred $224,050 in personal services appropriations to operating expenses. This is the main reason for the differences in appropriation authority between FY 2020 and FY 2021.

Executive Request

The Army National Guard Program 2023 biennium budget proposal is $1.5 million or 3.9% higher than the 2021 biennium budget.

Personal services were about $4.0 million or 21.0% of the FY 2021 base budget. The executive proposes increases of about $246,000 in FY 2022 and $257,000 in FY 2023 supported by general fund and federal special revenue in the statewide present law adjustments and is discussed further in the Program Personal Services narrative. In addition, the Army National Guard Program is proposing an additional 5.00 FTE and $379,000 annually in personal services supported by federal special revenue.

Operating expenses were approximately $14.9 million or 78.1% of the FY 2021 base budget. The executive proposes increases of $131,000 in FY 2022 and decreases of about $93,000 in FY 2023. A portion of the increases are included in the statewide present law adjustments for fixed costs and inflation/deflation. In FY 2022 increases are mainly due to a biennial appropriation for legislative audit costs and information technology costs. In FY 2023 the changes are mainly due to adjustments for information technology costs. New proposals increase operating expense appropriations by $124,000 annually for operations and maintenance of Army National Guard Program facilities.

Equipment & intangible assets were about $151,000 or 0.8% of the FY 2021 base budget. The executive is not proposing any adjustments to the FY 2021 base budget.

Transfers were about $25,000 or 0.1% of the FY 2021 base budget. The executive is not proposing any adjustments to the FY 2021 base budget.




Personal services were about $4.0 million or 21.0% of the FY 2021 base budget. The executive proposes increases ofabout $246,000 in FY 2022 and $257,000 in FY 2023 in the statewide present law adjustment. In addition to the expectedchanges, the 2023 biennium personal services adjustment includes management decisions for broadband pay raises andwage changes due to employee turnover.

The Army National Guard Program is proposing 5.00 new FTE and $379,000 in federal special revenue annually for a:

• Natural resource officer• Environmental compliance specialist• Ground maintenance• Construction manager• Contract oversite

Funding


Department of Military Affairs, 12-Army National Guard PgmFunding by Source of Authority

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

01100 General Fund 3,526,388 0 0 0 3,526,388 8.87 %

02343 Armory Rental Funds 840 0 0 0 840 100.00 %02002 Purple Heart & Higher Schlshp 0 0 0 0 0 0.00 %


03132 National Guard 36,222,183 0 0 0 36,222,183 100.00 %Federal Special Total $36,222,183 $0 $0 $0 $36,222,183 91.13 %


Total All Funds $39,749,411 $0 $0 $0 $39,749,411

The funding ratio between general fund and federal funds depends on the nature of the activity, the uses or location ofthe facility being funded, and the goals of the operation. While the descriptions below discuss state funds, for the ArmyNational Guard Program, state fund support is provided by the general fund. Different funding scenarios include:

• When a facility is owned by the state and located on state land, maintenance and utility costs are split 50/50 withthe federal government

• When a facility is state owned, but located on federal land, the maintenance and utility costs are funded 75.0%with federal funds and 25.0% with state funds

• When a facility is classified as a logistics facility, the funding is 100.0% federal for the entire facility• When a facility is owned federally and located on federal lands and when a facility serves training missions,

funding is mainly 100.0% federal, except when the building is used as an armory• When an armory is constructed with federal funds and located on federal land, maintenance and utility costs

are funded 75.0% federal funds and 25.0% state funds. When armories are rented to groups, the state specialrevenue funds generated from the rental fees are used to augment general fund support of the facilities





Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of Budget2021 Base Budget 1,726,060 1,726,060 3,452,120 97.89 % 19,132,382 19,132,382 38,264,764 96.27 %SWPL Adjustments 11,819 2,449 14,268 0.40 % 253,079 226,051 479,130 1.21 %PL Adjustments 0 0 0 0.00 % 0 0 0 0.00 %New Proposals 30,000 30,000 60,000 1.70 % 502,623 502,894 1,005,517 2.53 %

Total Budget $1,767,879 $1,758,509 $3,526,388 $19,888,084 $19,861,327 $39,749,411




FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds


DP 2 - Fixed Costs0.00 2,000 0 4,898 6,898 0.00 (7,829) 0 (23,487) (31,316)

DP 3 - Inflation Deflation0.00 (34) 0 (105) (139) 0.00 (21) 0 (66) (87)














New Proposals



FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds

DP 1201 - Natural Resource Manager FTE1.00 0 0 77,262 77,262 1.00 0 0 77,318 77,318

DP 1202 - Environmental Compliance Specialist FTE1.00 0 0 77,262 77,262 1.00 0 0 77,318 77,318

DP 1203 - CFMO Grounds Maintenance FTE1.00 0 0 58,403 58,403 1.00 0 0 58,442 58,442

DP 1204 - O&M Branch FTE1.00 0 0 58,402 58,402 1.00 0 0 58,442 58,442

DP 1205 - CFMO Division Modified to Permanent FTE1.00 0 0 107,294 107,294 1.00 0 0 107,374 107,374

DP 1206 - CFMO Spending Operation and Maint of Facilities0.00 30,000 0 94,000 124,000 0.00 30,000 0 94,000 124,000

Total 5.00 $30,000 $0 $472,623 $502,623 5.00 $30,000 $0 $472,894 $502,894


DP 1201 - Natural Resource Manager FTE -

This proposal is for 1.00 FTE for a Natural Resources Manager for the Environmental Office to maintain compliance with the Sikes Act and manage natural resources on Montana Army National Guard training lands at Fort Harrison and Limestone Hills. This is 100.0% federally funded.

DP 1202 - Environmental Compliance Specialist FTE -

This request is for 1.00 FTE for an Environmental Compliance Specialist to perform regulatory driven tasks under the Resource Conservation and Recovery Act, Executive Order 13834: Efficient Federal Operations, and Toxic Substances Control Act. This request is 100.0% federally funded.

DP 1203 - CFMO Grounds Maintenance FTE -

This request is for 1.00 FTE for a grounds maintenance position. The Construction and Facilities Management Office is responsible for the maintenance services, including regularly scheduled adjustments and inspections, preventative maintenance, landscaping, mowing, snowplowing, and similar municipal services on facilities used to support the mission of the Montana Army National Guard. This request is 100.0% federally funded.

DP 1204 - O&M Branch FTE -

This request is for 1.00 FTE for the Operations & Management Branch of the Construction and Facilities Management Office. The addition of this FTE will increase the staffing level to 1.00 FTE per 150,000 SF. This request is 100.0%federally funded. If added, the FTE would eliminate the need to hire two temporary FTE during the summer months and would be responsible for regular maintenance on 100.0% federally funded facilities, which includes an additional 31,000 SF of facility space constructed at Fort Harrison and brought online in federal FY 2021.



DP 1205 - CFMO Division Modified to Permanent FTE -

This request is for 1.00 FTE in the Construction and Facilities Management Office (CFMO.) The position is 100.0% federally funded. The FTE would maintain state contracting documents, develop and implement CFMO contracting policies and procedures, evaluate and ensure contractor performance, and ensure compliance with state and federal regulations. The position would assist the CFMO to align the structure of the CFMO with the procedures and guidance issued by the National Guard Bureau.

DP 1206 - CFMO Spending Operation and Maint of Facilities -

The Army National Guard Program proposes an increase in operating expenses to operate and maintain eight new facilities. The operation and maintenance costs for the additional 72,249 square feet of facility space include utilities, janitorial services, ground maintenance and fire protection costs. Of the eight facilities, only the Malta Readiness Center has a state share, which is $30,000 per year. The other seven facilities are 100.0% federally operated and maintained, therefore the remaining $94,000 is federally reimbursed.


67010 - Department Of Military Affairs 13-Air National Guard Pgm






BienniumChange

Biennium% Change

Personal Services 7,622,051 8,281,449 659,398 8.65 %Operating Expenses 3,857,258 3,901,137 43,879 1.14 %Equipment & Intangible Assets 9,720 0 (9,720) (100.00)%


General Fund 865,050 825,384 (39,666) (4.59)%Federal Spec. Rev. Funds 10,623,979 11,357,202 733,223 6.90 %

Total Funds $11,489,029 $12,182,586 $693,557 6.04 %


Program DescriptionThe Air National Guard, until federalized, is a state military organization that provides trained and equipped military unitsfor use in the event of a state or national emergency. The federal/state cooperative agreement provides for administrative,facilities maintenance, security, and fire protection support to the Air National Guard base at Gore Hill near Great Falls. TheAir National Guard program operates under both federal and state mandates in accordance with its dual missions and ismandated by the United States and Montana Constitutions and Title 10, Chapter 1-3, MCA.

Program Highlights

Air National Guard ProgramMajor Budget Highlights

• The Air National Guard Program’s 2023 biennium budget request isabout $694,000 or 6.0% higher than the 2021 biennium budget

• Proposed changes are included in:

◦ Statewide present law adjustments for personal servicesand fixed costs

◦ Present law adjustments for firefighter pay adjustments

◦ New proposal for an airlift wing drop zone lease related tothe 120th Airlift Wing mission






Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 46.00 46.00 46.00 46.00

Personal Services 3,344,918 3,740,437 3,881,614 4,130,944 4,150,505Operating Expenses 1,947,766 1,954,830 1,902,428 1,957,271 1,943,866Equipment & Intangible Assets 9,719 9,720 0 0 0


General Fund 430,453 430,943 434,107 416,212 409,172Federal Spec. Rev. Funds 4,871,950 5,274,044 5,349,935 5,672,003 5,685,199

Total Funds $5,302,403 $5,704,987 $5,784,042 $6,088,215 $6,094,371




The Air National Guard Program expended 92.4% of its $5.7 million FY 2020 modified HB 2 budget. Personal serviceswere 89.4% expended, operating expenses were 99.6% expended, and equipment & intangible assets were 100.0%expended. Personal services are lower than anticipated in the budget due to vacancies in firefighter positions.



Executive Request

The Air National Guard Program 2023 biennium budget proposed by the executive is $624,000 or 5.6% higher than the2021 biennium budget.

Personal services were $3.9 million or 67.1% of FY 2021 base budget appropriations. The executive proposes a netchange in general fund and federal special revenue of approximately $249,000 in FY 2022 and $269,000 in FY 2023 in thestatewide present law adjustment and present law adjustment for personal services. Further information on the proposedchanges are included in the following Program Personal Services narrative.

Operating expenses were about $1.9 million or 32.9% of FY 2021 base budget appropriations. The executive proposesan increase of about $20,000 in FY 2022 and $6,400 in FY 2023 to support the biennial legislative audit and informationtechnology costs included in the statewide present law adjustments for fixed costs and inflation/deflation. The Air NationalGuard Program proposes $35,000 a year for an airlift drop lease related to the mission of the 120th Airlift Wing mission asa new proposal.


Personal services were $3.9 million or 67.1% of FY 2021 base budget appropriations. The executive proposes a netchange in general fund and federal special revenue of approximately $249,000 in FY 2022 and $269,000 in FY 2023 in thestatewide present law adjustment and present law adjustment for personal services. Included in the statewide present lawadjustment are expected changes and management decisions. Management decisions include broadband pay raises andwages changes due to employee turnover.

The Air National Guard Program has a number of fire firefighters that work 24 hour shifts due to the 24/7 nature of the Fire



Protection Services at the Montana Air National Guard. Hours over 2,080 per FTE are zero-based and are removed in thestatewide present law adjustment. The Air National Guard proposes the additional salaries and benefits for the hours over2,080 in present law. The Air National Guard is also requesting additional personal services for hourly pay scale increasesfor the 30 state firefighters.

Funding


Department of Military Affairs, 13-Air National Guard PgmFunding by Source of Authority

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

01100 General Fund 825,384 0 0 0 825,384 6.78 %


03453 Air National Guard 11,357,202 0 0 0 11,357,202 100.00 %Federal Special Total $11,357,202 $0 $0 $0 $11,357,202 93.22 %


Total All Funds $12,182,586 $0 $0 $0 $12,182,586

The Montana Air National Guard is predominately funded through federal funds. General fund supports some building andground maintenance activities, a portion of administrative expenses, and a portion of personal service costs.




Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of Budget2021 Base Budget 434,107 434,107 868,214 105.19 % 5,784,042 5,784,042 11,568,084 94.96 %SWPL Adjustments (17,895) (24,935) (42,830) (5.19)% (398,648) (403,207) (801,855) (6.58)%PL Adjustments 0 0 0 0.00 % 667,821 678,536 1,346,357 11.05 %New Proposals 0 0 0 0.00 % 35,000 35,000 70,000 0.57 %

Total Budget $416,212 $409,172 $825,384 $6,088,215 $6,094,371 $12,182,586







FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds

DP 1 - Personal Services0.00 (20,924) 0 (397,567) (418,491) 0.00 (25,845) 0 (383,800) (409,645)

DP 2 - Fixed Costs0.00 3,029 0 16,814 19,843 0.00 910 0 5,528 6,438

DP 1301 - ANG Firefighter Federal Authority Pay Increase0.00 0 0 103,424 103,424 0.00 0 0 105,673 105,673

DP 1302 - ANG Fire FLSA Salaries Federal Authority0.00 0 0 564,397 564,397 0.00 0 0 572,863 572,863

Grand Total All Present Law Adjustments0.00 ($17,895) $0 $287,068 $269,173 0.00 ($24,935) $0 $300,264 $275,329







DP 1301 - ANG Firefighter Federal Authority Pay Increase -

The executive is requesting federal special revenue for hourly pay scale increases for the 30 state firefighters employed at the 120th Airlift Wing, Montana Air National Guard base in Great Falls. MANG firefighters are also Emergency Medical Technicians. They are required to complete a higher level of training and certification than their civilian counterparts across the state yet are paid less. The current hourly pay offered to state firefighters at MANG ranks in the bottom 25.0% of pay across the fire departments in Montana. These pay issues have resulted in staff recruitment and retention problems, and turnover. The executive proposes a 5.4% overall increase in the salary and benefits for the MANG fire department. This plan has been approved by the National Guard Bureau to bring MANG firefighter pay scales in line with Montana market pay rates.

DP 1302 - ANG Fire FLSA Salaries Federal Authority -

The executive is reqeusting additional federal spending authroity for firefighter salaries and benefits that exceed those of a traditional FTE, due to the 24/7 nature of the fire protection services at the Montana Air National Guard. Hours over 2,080 per FTE are not cpatured in the personal services snapshot used for initial budget preparation.




FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds

DP 1303 - ANG Airlift Wing Drop Zone Lease Federal Authority0.00 0 0 35,000 35,000 0.00 0 0 35,000 35,000

Total 0.00 $0 $0 $35,000 $35,000 0.00 $0 $0 $35,000 $35,000


DP 1303 - ANG Airlift Wing Drop Zone Lease Federal Authority -

This request for $35,000 annually in federal special revenue to fund a new 640-acre drop zone land lease near FortBenton, Montana and located on farm and ranch property. The operating lease is essential to the 120th Airlift Wing mission,supported by the National Guard Bureau. The 640-acre drop zone lease supports the 120th Airlift Wing federal flyingmission. The corresponding operating license for this lease falls under the state of Montana Adjutant General's authority.


New Proposals


67010 - Department Of Military Affairs 21-Disaster & Emergency Services






BienniumChange

Biennium% Change

Personal Services 4,090,008 4,382,739 292,731 7.16 %Operating Expenses 2,607,438 3,262,733 655,295 25.13 %Grants 24,362,268 23,552,602 (809,666) (3.32)%Transfers 4,103,044 5,045,210 942,166 22.96 %


General Fund 2,759,844 3,146,983 387,139 14.03 %State/Other Special Rev. Funds 413,360 413,360 0 0.00 %Federal Spec. Rev. Funds 31,989,554 32,682,941 693,387 2.17 %

Total Funds $35,162,758 $36,243,284 $1,080,526 3.07 %


Program DescriptionThe Disaster and Emergency Services Division (DES) duties and responsibilities are provided for under Title 10, Chapter 3, MCA. The division is responsible for the coordination, development and implementation of emergency management planning, mitigation, response, and recovery statewide. This responsibility includes the administration and disbursement of federal homeland security and emergency management funds to eligible political subdivisions and tribal nations across the state. The division maintains a 24 hour a day point of contact to coordinate the volunteer, state, and federal response for assistance to political subdivisions and tribal nations in the event of an incident, emergency, or disaster.



Disaster and Emergency ServicesMajor Budget Highlights

• The Disaster and Emergency Services Division’s 2023 bienniumbudget request is about $1.1 million or 3.1% higher than the 2021biennium budget

• Proposed changes include:

◦ Statewide present law adjustments for personal services,fixed costs, and inflation/deflation

◦ New proposals for additional emergency managers, FederalEmergency Management Administration (FEMA) hazardmitigation plans, and fixed costs for the Montana StateLibrary


• The legislature may wish to consider reducing operating expensesand transfers appropriations to historic spending levels

• The legislature may wish to consider expanding the uses of searchand rescue funds due to the accumulating fund balance




Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 22.89 22.89 24.89 24.89

Personal Services 2,138,859 2,147,568 1,942,440 2,188,267 2,194,472Operating Expenses 573,890 1,249,690 1,357,748 1,659,328 1,603,405Grants 8,763,091 12,585,967 11,776,301 11,776,301 11,776,301Transfers 505,660 1,580,439 2,522,605 2,522,605 2,522,605


General Fund 1,273,742 1,370,054 1,389,790 1,579,035 1,567,948State/Other Special Rev. Funds 30,855 206,680 206,680 206,680 206,680Federal Spec. Rev. Funds 10,676,903 15,986,930 16,002,624 16,360,786 16,322,155

Total Funds $11,981,500 $17,563,664 $17,599,094 $18,146,501 $18,096,783



Program Highlights

LFDISSUE



The Disaster & Emergency Services Program expended 68.2% of its $17.6 million FY 2020 modified HB 2 budget.Personal services were 99.6% expended, operating expenses were 45.9% expended, grants were 69.6% expended, andtransfers were 32.0% expended.

The legislature may wish to consider reducing operating expenses and transfers appropriations to historicspending levels

In the last several biennia, budgeted appropriations were used to establish the budget starting point for thebudget. Figure 4 shows the budget and actual expenditures for operating expenses between FY 2014 and FY 2020, thepercentage of the budget expended, and the seven-year average of operating expenses.


Disaster and Emergency ServicesOperating Expenses

FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020Budgeted $575,541 $927,148 $1,102,605 $985,654 $1,217,874 $1,044,683 $1,249,690Actual 462,334 708,791 508,026 402,239 496,288 (229,208) 560,599Budget Remaining $113,207 $218,357 $594,579 $583,415 $721,586 $1,273,891 $689,091

% Expended 80.3% 76.4% 46.1% 40.8% 40.8% -21.9% 44.9%7-year Average $415,581

As reflected in Figure 4, spending on operating expenses has been between 40.8% and 46.1% of the budgetedappropriation level since FY 2016. In FY 2019 a credit of $689,175 in supplies and materials offsets other expenditures ofabout $460,000 in operating expenses. The percentage of the budget that was expended for FY 2019 would have been44.0% without the credit for supplies and materials.

General fund supports 7.9% of the FY 2021 base budget, state special revenue supports 1.2%, and federal special revenuefunds support 90.9% of the Disaster and Emergency Services Division FY 2021 base budget.

Figure 5 shows the budget and actual expenditures for transfers between FY 2014 and FY 2020, the percentage of thebudget expended, and the seven-year average of the transfers.


Disaster and Emergency ServicesTransfers

FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020Budgeted $3,006,674 $2,532,674 $2,542,904 $2,533,919 $2,522,605 $2,021,361 $1,580,439Actual 761,548 861,184 950,119 571,620 438,540 561,141 550,693Budget Remaining $2,245,126 $1,671,490 $1,592,785 $1,962,299 $2,084,065 $1,460,220 $1,029,746

% Expended 25.3% 34.0% 37.4% 22.6% 17.4% 27.8% 34.8%7-year Average $670,692

As shown in Figure 5, spending on transfers has been historically below the level of the budgeted appropriations, less than




40.0% of the appropriations in all cases and less than 20.0% in FY 2018. This level of unneeded appropriation authorityallows the Disaster and Emergency Services Division the flexibility to transfer the unneeded authority to other expenditurescategories. For example, in FY 2020 $942,166 was moved out of transfers and into personal services and grants.

Disaster and Emergency Services Division proposes to reduce appropriations for operating expenses by $300,000 andtransfers by $1.0 million annually and increase appropriations for grants by $1.3 million each year of the biennium to alignthe appropriations with projected division needs.

As discussed under the narrative for operating expenses, general fund supports 7.9% of the FY 2021 base budget, statespecial revenue supports 1.2%, and federal special revenue funds support 90.9% of the Disaster and Emergency ServicesDivision FY 2021 base budget.

Legislative Options

• Realign appropriations in the Disaster and Emergency Services Division to meet projected division needs• Adopt the executive proposal for transfers appropriations

The lower percentage expended for grants is due to receiving authority for federal grants which are expended over severalfiscal years, resulting in expenditures in FY 2020 which are lower than the budgeted amount.


In FY 2020, Disaster and Emergency Services Division transferred:

• $250,237 into personal services• $117,737 out of operating expenses• $809,666 into grants• $942,166 out of transfers

These transfers are the main reason for the differences between appropriations in FY 2020 and FY 2021.

Executive Request

The Disaster and Emergency Services Division’s 2023 biennium budget proposal is about $1.1 million or 3.1% higher thanthe 2021 biennium budget.

Personal services were $1.9 million or 11.0% of the FY 2021 base budget. The executive proposes changes in generalfund and federal special revenue, totaling about $53,000 in FY 2022 and $47,000 in FY 2023 in the statewide present lawadjustments for personal services. These changes are discussed in detail in the Program Personal Services narrative.In addition, the Disaster and Emergency Services Division is requesting 2.00 FTE and about $149,000 for emergencymanagers.

Operating expenses were about $1.4 million or 7.7% of the FY 2021 base budget. The executive proposes reductions ofabout $24,000 in FY 2022 and $37,000 in FY 2023. The reductions are included in the statewide present law adjustmentsfor fixed costs and inflation/deflation. Reductions for statewide indirect costs and motor pool leased vehicles drive the lowerexpenditures. New proposals to implement FEMA hazardous mitigation plans and establish a fixed cost for the MontanaState Library increase operating expenses by $326,000 in FY 2022 and $282,000 in FY 2023.

Grants were about $11.8 million or 66.9% of the FY 2021 base budget. The executive is not proposing any adjustments tothe FY 2021 base budget in this category.

Transfers were about $2.5 million or 14.3% of the FY 2021 base budget. The executive is not proposing any adjustmentsto the FY 2021 base budget in this category.


LFDISSUE



Personal services were $1.9 million or 11.0% of the FY 2021 base budget. The executive proposes changes in generalfund and federal special revenue, totaling about $53,000 in FY 2022 and $47,000 in FY 2023 in the statewide presentlaw adjustment for personal services. In addition to expected changes, the 2023 biennium personal services statewidepresent law adjustments include management decisions with changes for broadband pay raises and wage changes due toemployee turnover.

Disaster and Emergency Services is requesting 2.00 FTE for emergency managers and $148,000 annually. The proposalincludes about $37,000 in general fund and $112,000 in federal special revenue.

Funding


Department of Military Affairs, 21-Disaster & Emergency ServicesFunding by Source of Authority

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

01100 General Fund 3,146,983 0 0 90,000 3,236,983 8.91 %

02156 SAR DES DFWP Fees 139,848 0 0 0 139,848 33.83 %02170 SAR DES Off Road Vehicle 264,308 0 0 0 264,308 63.94 %02335 DES Training Conference 9,204 0 0 0 9,204 2.23 %02847 Fire Supression Fund 0 0 0 0 0 0.00 %


03134 DES Emergency Mgmt Perf 97.042 10,120,186 0 0 0 10,120,186 30.96 %03143 DES Homeland Security 97.067 15,210,732 0 0 0 15,210,732 46.54 %03166 DES Hazard Mitigation 97.039 2,601,426 0 0 0 2,601,426 7.96 %03191 DES Pre-Disaster Mit 97.047 3,413,875 0 0 0 3,413,875 10.45 %03208 DES Hazardous Materials 20.703 360,136 0 0 0 360,136 1.10 %03239 DES Flood Mitigation 97.029 862,326 0 0 0 862,326 2.64 %03429 Disaster & Emergency Services 2,204 0 0 0 2,204 0.01 %03267 Nonprofit Security 97.008 99,914 0 0 0 99,914 0.31 %03717 Nat Earthquake Haz Red Prg 12,142 0 0 0 12,142 0.04 %



Total All Funds $36,243,284 $0 $0 $90,000 $36,333,284

HB 2 Funding

Funding for Disaster and Emergency Services is broken down into three functional areas:

• Administration and coordination• Search and rescue• Grant programs

Administrative and coordination functions are primarily funded with 50.0% general fund and 50.0% federal funds. Disastercoordination functions are typically funded 100.0% with federal funds. Search and rescue activities are funded throughstate special revenue funds derived from surcharges on conservation licenses and off-road vehicle licenses. Grantactivities typically utilize federal funds. The amount of this funding budgeted in HB 2 can vary greatly depending on thefederal source and available amounts known at the time of budget submission.

Legislature may wish to consider expanding the uses of search and rescue funds due to the accumulating fundbalance



A review of the fund balances in the three state special revenue accounts that are set aside to assist local governmentswith the costs of conducting search and rescue missions shows that the accumulated fund balance in the three accounts isover $1.5 million at the end of FY 2020.

To support search and rescue operations within the various counties across Montana statute requires that:

• 0.04% of the motor vehicle revenue deposited into the general fund each year be transferred into a state specialrevenue account

• $0.25 of each wildlife conservation license is termed a search and rescue surcharge and must be deposited intoa state special revenue account administered by the Disaster and Emergency Services Division

10-3-801, MCA requires that not less than 50.0% of the money in the account be used be used to defray the costs oflocal search and rescue units for search and rescue missions conducted through a county sheriff’s office. The maximumreimbursement for each rescue mission, regardless of the number of counties or search and rescue missions is $6,000and the maximum any county sheriff’s office can receive per mission is $6,000. Up to 5.0% of the funds may be used toadminister the search and rescue funds and allocations to counties. The remaining funds may be used to:

• Match local funds for the purchase of equipment for use by local search and rescue units at a maximum of $6,000for each unit each year. Equipment purchases must be matched with 35.0% local funds

• Reimburse training expenses for search and rescue volunteers

Additional Limitations on Reimbursement

The Department of Fish, Wildlife, and Parks (FWP) has established an account in the state special revenue fund forthe deposit of the $0.25 search and rescue surcharge of each conservation license. According to 87-1-601, (10) (a),MCA, FWP reimburses the Department of Military Affairs for search and rescue missions involving individuals who werehunting, fishing, or trapping. Many of the search and rescue missions that are conducted are for individuals who havebeen outdoors recreating – hiking, back packing, rafting, cross country skiing for example. These search and rescuesare not reimbursable under the current restrictions outlined in statute. It should be noted that while the vast majority offees for conservation licenses are purchased to allow individuals to obtain hunting and fishing licenses, FWP also requiresindividuals who are applying for floating permits on the Smith River to obtain a conservation license thus expanding theusage of conservation licenses. While federal statutes restrict the use of revenues from hunting and fishing licenses, itsdoes not restrict the use of funds derived from the search and rescue surcharge included in conservation licenses.

The same statute further restricts the reimbursement available for training and equipment costs. Under 87-1-601, (10)(c),MCA matching for reimbursement of training and equipment are limited to the proportion that the number of search andrescue missions involving persons engaged in hunting, fishing, or trapping bears to the statewide total of search and rescuemissions. The combination of this restriction and the $6,000 per search and rescue unit results in a very limited amount oftraining and equipment reimbursements to local governments.

The result of the reimbursement limitations is that the fund balance in the state special revenue account in the Departmentof Fish, Wildlife, and Parks has been accumulating, growing an average of 11.8% a year over the last 9 years.

Figure 6 shows the fund balance, revenues, and expenditures of the FWP state special revenue account established tosupport local search and rescue operations.



Figure 6Department of Fish, Wildlife, and Parks

Search and Rescue AcccountFY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020

Beginning Fund Balance$507,802$574,181$681,190$782,486 $893,138$1,006,647$1,034,536$1,169,075$1,253,438

Revenues 120,285 125,547 123,499 134,502 137,235 126,808 134,915 131,960 150,804

ExpendituresTransfers Out 53,906 18,538 22,202 23,850 23,726 98,919 377 47,596 10,925

Toal Expenditures 53,906 18,538 22,202 23,850 23,726 98,919 377 47,596 10,925

Adjustments 0 0 (1) 0 0 0 1 (1) (1)

Ending Fund Balance $574,181$681,190$782,486$893,138$1,006,647$1,034,536$1,169,075$1,253,438$1,393,316

As shown in Figure 6, the fund balance associated with search and rescue funding in FWP has been growing, from$574,181 in FY 2012 to $1,393,316 in FY 2020. In contrast, reimbursement to local sheriff’s departments as reflected in thetransfers out in Figure 6 has averaged $33,338 a year, far below the revenues generated through conservation licenses.

Figure 7 shows the total funding available for reimbursement of local search and rescue missions, equipment purchases,training, and administration based on revenues generated between FY 2012 and FY 2020. For this discussion, the fundbalance available at the end of FY 2012 is allocated in FY 2012. Remaining funding after allocated 50.0% of the funds tomission reimbursement and 5.0% to administration is allocated 50/50 between equipment purchases and training.

Figure 7Search and Rescue Funding

Funding Available for ReimbursementFY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020

RevenueFWP conservation licenses $120,285$125,547$123,499$134,502$137,235$126,808$134,915$131,960$150,804DMA - off road vehicles 39,906 39,658 40,386 42,527 43,441 43,630 62,200 43,711 43,408Beginning Fund Balance FY 2012 708,718 0 0 0 0 0 0 0 0Total revenue available 868,909 165,205 163,885 177,029 180,676 170,438 197,115 175,671 194,212

Funding AllocationReimbursement of Local SAR 434,455 82,603 81,943 88,515 90,338 85,219 98,558 87,836 97,106Equipment purchases 195,505 37,171 36,874 39,832 40,652 38,349 44,351 39,526 43,698Training 195,505 37,171 36,874 39,832 40,652 38,349 44,351 39,526 43,698Administration 43,445 8,260 8,194 8,851 9,034 8,522 9,856 8,784 9,711Total Available Funding $868,909$165,205$163,885$177,029$180,676$170,438$197,115$175,671$194,212

Legislative Options

The legislature may wish to expand the reimbursements of local search and rescue missions to include those conducted



for individuals recreating in Montana and limit restrictions on the level of reimbursement of training and equipment to thelevel established in 10-3-801, MCA of $6,000 per search and rescue unit.

Statutory Funding

Statutory appropriations available to the Disaster and Emergency Services Division include:

• Federal special revenue payments for disasters and fire suppression – 10-3-203, MCA• General fund for local incidence response by the state – 10-3-310, MCA• General fund for a Governor declared emergency or disaster – 10-3-312(1), MCA• State special revenue for contingencies to address environmental problems – 75-1-1101, MCA

Statutory funding is provided in the event of a declared emergency or disaster. The expenditures are authorized throughexecutive order.




Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent


Total Budget $1,579,035 $1,567,948 $3,146,983 $18,146,501 $18,096,783 $36,243,284




FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds


DP 2 - Fixed Costs0.00 (9,380) 0 (9,379) (18,759) 0.00 (16,638) 0 (16,637) (33,275)

DP 3 - Inflation Deflation0.00 (2,609) 0 (2,608) (5,217) 0.00 (1,636) 0 (1,636) (3,272)

Grand Total All Present Law Adjustments0.00 $65,127 $0 ($11,987) $53,140 0.00 $64,821 $0 ($18,273) $46,548




67010 - Department Of Military Affairs 21-Disaster & Emergency ServicesDP 1 - Personal Services -







New Proposals



FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds

DP 2103 - Mitigation Plans0.00 85,838 0 257,514 343,352 0.00 75,000 0 225,000 300,000

DP 2104 - Mitigation FTE2.00 37,178 0 111,533 148,711 2.00 37,235 0 111,702 148,937

DP 2199 - NRIS/GIS Fixed Costs0.00 1,102 0 1,102 2,204 0.00 1,102 0 1,102 2,204

Total 2.00 $124,118 $0 $370,149 $494,267 2.00 $113,337 $0 $337,804 $451,141


DP 2103 - Mitigation Plans -

The Federal Emergency Management Administration requires states and counties to each have a FEMA approved hazardmitigation plan to apply for or receive federal mitigation funds either pre or post disaster. FEMA has prioritized mitigation,increasing the funding available and allowing the state to apply for up to $35.0 million in federal funding each buildingresilient infrastructure communities grant cycle. To reduce redundancy, costs, and man hours required for each county tomaintain a plan, regional plans will be done to cover counties with similar hazards. Plans are good for five years. Thisfunding request is 75.0% federal and 25.0% general fund. State matching funds are required to be eligible for federalmitigation funds.

DP 2104 - Mitigation FTE -

The executive requests 2.00 FTE as emergency managers in the Disaster and Emergency Services Division. DES isresponsible for ensuring the state is able to deal with disasters or emergencies in order to protect public health and safety,and to preserve lives and property of the people of Montana. This includes mitigating anticipated weaknesses, developingplans to effectively respond when an incident occurs, and helping communities recover from disasters by repairing publicinfrastructure to a pre-disaster condition.






67010 - Department Of Military Affairs 31-Veterans Affairs Program






BienniumChange

Biennium% Change

Personal Services 3,858,781 4,561,862 703,081 18.22 %Operating Expenses 676,858 1,004,552 327,694 48.41 %Grants 70,000 70,000 0 0.00 %Transfers 90,000 90,000 0 0.00 %


General Fund 2,764,594 3,027,004 262,410 9.49 %State/Other Special Rev. Funds 1,931,045 2,699,410 768,365 39.79 %

Total Funds $4,695,639 $5,726,414 $1,030,775 21.95 %


Program DescriptionThe Veterans Affairs' Division assists discharged veterans and their families, cooperates with state and federal agencies, promotes the general welfare of veterans, and provides information on veterans' benefits. The program also administers the veterans' cemeteries located at Miles City, Fort Harrison in Helena, and Missoula. The Board of Veterans' Affairs is administratively attached to the Department of Military Affairs and operates under a state mandate provided in Title 10, Chapter 2, MCA.



Veterans' Affairs DivisionMajor Budget Highlights

• The Veterans’ Affairs Division’s 2023 biennium budget request isabout $1.0 million or 22.0% higher than the 2021 biennium budget

• Proposed changes are included in:

◦ Statewide present law adjustments for personal services,fixed costs, and inflation/deflation

◦ New proposals for additional spending authority from theveterans’ services account including $110,000 annually thatis dependent on legislation


• The veterans’ services account does not have enough revenuesor fund balance to support proposed appropriations in the 2023biennium

• The patriotic license plate account does not have sufficient revenuesor fund balance to support budgeted and proposed appropriations inFY 2021 and both years of the 2023 biennium

• The purple heart and higher medal scholarship account does nothave ongoing funding to support the $100,000 of appropriationsincluded in the 2023 biennium budget




Budget ItemActuals

Fiscal 2020Approp.

Fiscal 2020Approp.

Fiscal 2021Request

Fiscal 2022Request

Fiscal 2023FTE 0.00 25.59 25.59 25.59 25.59

Personal Services 1,913,217 1,945,601 1,913,180 2,279,399 2,282,463Operating Expenses 226,372 306,783 370,075 504,043 500,509Grants 30,000 35,000 35,000 35,000 35,000Transfers 0 45,000 45,000 45,000 45,000


General Fund 1,344,573 1,372,834 1,391,760 1,515,016 1,511,988State/Other Special Rev. Funds 825,016 959,550 971,495 1,348,426 1,350,984

Total Funds $2,169,589 $2,332,384 $2,363,255 $2,863,442 $2,862,972



Program Highlights

LFDCOMMENT




The Veterans Affairs Division expended 93.0% of its $2.3 million FY 2020 modified HB 2 budget. Personal services were98.3% expended, operating expenses were 73.8% expended, grants were 85.7% expended, and transfers were 0.0%expended. Personal services were slightly below levels anticipated in the budget due to turnover. Operating expensesbudgeted appropriations included $135,000 in unallocated operating expenses for FY 2020. The Veterans’ Affairs Divisiondid not require $80,411 of the additional authority in operating expenses in FY 2020.

The 2019 Legislature enacted HB 158, to revise and fund purple heart scholarships and including eligibility for thescholarship if the recipient received a higher medal for combat-related service in the armed forces. In FY 2020, Veterans’Affairs Division did not award any scholarships which would have resulted in transfers to the Montana University System.


In FY 2020 the Veterans’ Affairs Division transferred $65,000 out of operating expenses and into personal services. Thistransfer is the main difference between the appropriation levels of FY 2020 compared to FY 2021.

Executive Request

The Veterans’ Affairs Program’s proposed 2023 biennium budget is about $1.0 million or 22.0% higher than the 2021biennium budget.

Personal services were about $1.9 million or 81.0% of the FY 2021 base budget. The executive proposes an increasein general fund and state special revenue appropriations of about $191,000 in FY 2022 and $194,000 in FY 2023 in thestatewide present law adjustments for personal services and discussed in the Program Personal Services narrative. TheVeterans Affairs Division is also proposing to increase personal services by $175,000 annually above the level required forsalaries and benefits for permanent FTE in two new proposals to increase state special revenue appropriations.

As the Department of Military Affairs is not requesting permanent ongoing positions as part of the proposalto increase state special revenue funds supporting personal services, the funds can be used for:

• Modified positions• Broadband pay increases for existing staff• Retirement or termination payouts required in statute• Other miscellaneous personal service expenditures

Operating expenses were approximately $370,000 or 15.7% of the FY 2021 base budget. The executive proposes a decrease in the statewide present law adjustments for fixed costs and inflation/deflation of $1,000 in FY 2022 and $5,000 in FY 2023. The decrease is mainly due to reductions for insurance and motor vehicle leases. The Veterans Affairs Division is requesting an additional $135,000 annually in unallocated operating expenses as part of two new proposals. Unallocated operating expenses are not budgeted to a specific category such as supplies and materials or communications.

Grants were $35,000 or 1.5% of the FY 2021 base budget. The executive does not propose any changes to the FY 2021 base budget for grants to counties that have established veterans’ service offices.

Transfers were $45,000 or 1.9% of the FY 2021 base budget. The executive does not propose any changes to the FY 2021 base budget for purple heart scholarships.


LFDISSUE

67010 - Department Of Military Affairs 31-Veterans Affairs ProgramProgram Personal Services

Personal services were about $1.9 million or 81.0% of the FY 2021 base budget. The executive proposes increased general fund and state special revenue totaling approximately $191,000 in FY 2022 and $194,000 in FY 2023 in the statewide present law adjustments. In addition to expected changes, the 2023 biennium budget personal services statewide present law adjustment request includes management decisions for broadband pay raises and wage changes due to employee turnover.

Funding

The following table shows proposed program funding by source of authority.Department of Military Affairs, 31-Veterans Affairs Program

Funding by Source of Authority

FundsHB2

OngoingHB2OTO



TotalAll Sources

% TotalAll Funds

01100 General Fund 3,027,004 0 0 0 3,027,004 40.89 %

02214 Veterans Affairs Cemeteries 0 0 0 1,576,643 1,576,643 36.03 %02222 Patriotic License Plate Fees 400,848 0 0 100,000 500,848 11.45 %02548 Veterans Affairs SB401 2,198,562 0 0 0 2,198,562 50.24 %02002 Purple Heart & Higher Schlshp 100,000 0 0 0 100,000 2.29 %




Total All Funds $5,726,414 $0 $0 $1,676,643 $7,403,057

HB 2 Funding

General fund supports the Veterans’ Affairs Program functions. State special revenue includes three accounts:

• Veterans’ services account (shown in the table as the veterans’ affairs SB 401 account), enacted by the 2003Legislature, allocating proceeds from the sale of veterans’ specialty plates and a portion of all motor vehicleregistration revenues that are deposited into the general fund each year. The 2013 Legislature increased thepercentage of motor vehicle fees into this fund from 0.64% to 0.81%.

The veterans’ services account does not have enough revenues or fund balance to support proposedappropriations in FY 2023

The veterans’ services account is a state special revenue account intended for use of the Board of Veterans’Affairs and its purposes. Funds may be use to advocate for fair treatment of veterans, development of a services andbenefits directory, assist with health screenings and treatments related to depleted uranium exposure, maintain a website,seek grants to help fund veterans’ programs, and otherwise promote the general welfare of veterans and their families.

Figure 8 shows the fund balance, revenues, and expenditures for the veterans’ services account from FY 2018 through FY2023. The Department of Military Affairs is proposing legislation to increase the percentage of motor vehicle registrationrevenues that are transferred from the general fund to the veterans’ affairs SB 401 account each year. The proposedadditional revenues are included in Figure 8.


LFDISSUE



Veterans' Affairs DivisionVeterans' Services Account

Actual Actual Actual Budgeted Proposed ProposedFY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023

Beginning Fund Balance $174,216 $219,601 $227,994 $216,891 $156,734 ($168,268)

RevenuesCurrent revenue 668,768 667,885 664,447 663,000 663,000 663,000Increased revenue proposed 0 0 0 0 110,000 110,000

Total Revenues 668,768 667,885 664,447 663,000 773,000 773,000

ExpendituresPersonal Services 615,509 656,277 638,310 660,289 904,199 905,332Operating Expenses 7,874 3,215 37,240 62,868 193,803 195,228

Total Expenditures 623,383 659,492 675,550 723,157 1,098,002 1,100,560

Ending Fund Balance $219,601 $227,994 $216,891 $156,734 ($168,268) ($495,828)

As reflected in Figure 8, the fund balance of about $217,000 that is available at the beginning of FY 2021 is reduced by$60,000 in FY 2021 and eliminated completely in FY 2022 due to higher ongoing expenditures. As shown, the account isover-appropriated in both years of the 2023 biennium with a projected ending fund balance of ($168,268) in FY 2022 and($495,828) in FY 2023 if all budgeted appropriations were expended.

Statute does not allow state agencies to over expend state special revenue funds. Without available funding, the divisionwill be forced to reduce personal services and operating expenses in FY 2022 by up to about $168,500 and $496,000 inFY 2023. The legislature may wish to direct the level of reductions in each expenditure category.

Legislative Options

• Reduce personal services and operating expense appropriations supported by the veterans’ service account by$168,500 in FY 2022 and $496,000 in FY 2023

• Adopt the executive proposal

• Patriotic license plate fees account receives revenue from a $15 surcharge on original licensing and renewal ofpatriotic license plates issued in Montana

The patriotic license plate account does not have sufficient revenues or fund balance to support budgeted andproposed appropriations in FY 2021 and both years of the 2023 biennium

The patriotic license plate fee account is a state special revenue account intended for use of the Board ofVeterans’ Affairs and its purposes. Funds may be use to advocate for fair treatment of veterans, development of a servicesand benefits directory, assist with health screenings and treatments related to depleted uranium exposure, maintain awebsite, seek grants to help fund veterans’ programs, and otherwise promote the general welfare of veterans and theirfamilies.

Figure 9 shows the fund balance, revenues, and expenditures for the patriotic license plate fee account from FY 2018


LFDISSUE


through FY 2023.


Veterans' Affairs DivisionPatriotic License Plate Fee AccountActual Actual Actual Budgeted Proposed Proposed

FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023Beginning Fund Balance $162,995 $118,264 $130,953 $57,497 ($70,648) ($198,793)

Revenues 90,080 79,380 76,455 72,279 72,279 72,279

ExpendituresPersonal Services 0 49,947 64,814 0 0 0Operating Expenses 134,811 16,744 85,097 200,424 200,424 200,424

Total Expenditures 134,811 66,691 149,911 200,424 200,424 200,424

Ending Fund Balance $118,264 $130,953 $57,497 ($70,648) ($198,793) ($326,938)

As shown, the account is over-appropriated beginning in FY 2021 with a projected ending fund balance of ($70,648) if allbudgeted appropriations were made and ending FY 2023 with ($326,938).

Statute does not allow state agencies to over expend state special revenue funds. Without available funding, the divisionwill be forced to reduce operating expenses. In the 2023 biennium, this would require the Veterans’ Affairs Division toreduce budgeted operating expenses by about $128,000 each year.

Legislative Options

• Reduce operating expense appropriations supported by patriotic license plate fees by $128,000 each year of the2023 biennium

• Adopt the executive proposal

• Purple heart and higher medal scholarship account was revised by the 2019 Legislature. The legislaturetransferred $50,000 of general fund into the account and required that the state special revenue appropriation beincluded in the base budget for the 2023 biennium

The purple heart and higher medal scholarship account does not have ongoing funding to support the $100,000of appropriations included in the 2023 biennium budget

HB 158, enacted by the 2019 Legislature, included a transfer of $50,000 in general fund to the state specialrevenue account for purple heart and higher medal scholarships. The transfer was made only in FY 2020. The bill alsoprovided a biennial appropriation of $50,000 of state special revenue. In FY 2020, the Veterans’ Affairs Division did notdistribute any scholarships leaving $50,000 available for FY 2021.

HB 158 required that the Veterans’ Affairs Division include $50,000 for the scholarship program in its base budget for the2023 biennium, but the bill did not require an additional transfer of $100,000 of general fund to fund the program. As ofNovember 15, 2020, 4 and ½ months into FY 2021, no scholarships have been awarded.



The legislature may wish to:

• Discuss anticipated usage of the scholarship funds with the Veterans’ Affairs Division and adjust appropriationsfor the account to the level of scholarships anticipated to be awarded in the 2023 biennium

• Adopt the proposed level of appropriations included in the executive proposal


The Veterans’ Affairs Division has a statutory appropriation for the operation of the Montana Veterans’ Cemetery Program.The state special revenue account is funded through a portion of motor vehicle registration fees, cemetery plot allowances,and donations.




Budget ItemBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of BudgetBudget

Fiscal 2022Budget

Fiscal 2023Biennium

Fiscal 22-23Percent

of Budget2021 Base Budget 1,391,760 1,391,760 2,783,520 91.96 % 2,363,255 2,363,255 4,726,510 82.54 %SWPL Adjustments 123,256 120,228 243,484 8.04 % 190,187 189,717 379,904 6.63 %PL Adjustments 0 0 0 0.00 % 0 0 0 0.00 %New Proposals 0 0 0 0.00 % 310,000 310,000 620,000 10.83 %

Total Budget $1,515,016 $1,511,988 $3,027,004 $2,863,442 $2,862,972 $5,726,414




FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds


DP 2 - Fixed Costs0.00 2,788 0 0 2,788 0.00 (2,171) 0 0 (2,171)








LFDCOMMENT







New Proposals



FTEGeneral

FundState


TotalFunds FTE

GeneralFund

StateSpecial

FederalSpecial

TotalFunds

DP 3101 - MVAD License Plate Increase0.00 0 110,000 0 110,000 0.00 0 110,000 0 110,000

DP 3102 - SB401 Additional Authority0.00 0 200,000 0 200,000 0.00 0 200,000 0 200,000

Total 0.00 $0 $310,000 $0 $310,000 0.00 $0 $310,000 $0 $310,000


DP 3101 - MVAD License Plate Increase -

The Veterans Affairs Division is proposing legislation to increase the percentage of motor vehicle registration feestransferred from the general fund from 0.81% to 0.94% providing an additional $110,000 a year in state special revenuefunding.

The legislature may wish to consider making the appropriation contingent on the passage and approval ofLC 0546, Revise allocation of vehicle license revenue for Veterans Affairs Division.

DP 3102 - SB401 Additional Authority -

As Montana is a rural state, a large portion of Montana veterans do not live in close proximity of a regional office. As alarge portion of the division’s operations are outreach to rural communities, Veterans Affairs Division requests additionalauthority to provide new locations to serve Montana veterans.


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11040 - Legislative Branch SUMMARY

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