Legislative budget writers are making the overall decisions this morning that define the starting point for every agency’s budget bill that they will set this year, including one that makes the public school budget tighter than expected. After adopting the governor and joint Economic Outlook committee’s revenue projection as their budget target, members of the Joint Finance-Appropriations Committee have agreed unanimously on these assumptions:

• Every agency budget will include the 3 percent merit-based employee pay increase, as recommended both by the governor and the joint Change in Employee Compensation Committee. They also will include the recommended movement of the state’s pay schedule to bring the lowest-paid workers up from 68 percent of the policy level for their position to 70 percent.
• The state will cover the $650 per employee increase in health insurance costs next year, as recommended by both Gov. Butch Otter and the CEC Committee.
• Recommendations in the governor’s budget to fund replacement items and inflationary increases for state agencies will be left at the discretion of the JFAC members writing the budget bills; they won’t be automatically built-in.
•  Funding will be built in for pay increases for top elected officials in the coming year already required by state law that passed last year.
• And “non-discretionary adjustments,” adjustments to agency budgets required by state statute, will be built-in. That includes the anticipated growth in the student population for public schools, the enrollment workload adjustment for higher education, and caseload, utilization and federal match rate adjustments for Medicaid.

Within that final item looms a big change that will affect the public school budget: Idaho is seeing a much bigger increase in public school students this year than the governor’s budget anticipated. Otter anticipated an increase of 87 support units, or roughly 87 classrooms full of kids, next year. The new projection is 167 new support units. That translates to a need for about $7 million more in funding, just for the basics. Still to come in is the estimated cost for state-paid college classes for high school students, which also is running much higher than anticipated due to big participation. It will be up to JFAC to figure out how to accommodate those – and the joint committee isn’t seeing a lot of money elsewhere to make it up.

“That’s the discussion we’ll have,” said Rep. Wendy Horman, R-Idaho Falls, who is working on the school budget. “We’re already 50 support units over in fiscal year ’15. To not acknowledge that moving forward just puts us in a hole again next year.” She said, “It leaves a lot less room for line items. You have to take it from somewhere.” Those items in the school budget include everything from technology to teacher professional development to discretionary operational funds for school districts.

Part of the reason JFAC members aren’t anticipating much extra money as they try to balance next year’s budget: Cameron noted that going into fiscal year 2016, there’s an anticipated carry-over of $50 million to $60 million, but anticipated expenditures in 2016 use it all up. “That means you’re actually spending more than your revenue,” he said. “We know that going into ’17 we’re going to have the 27^th payroll,” a quirk of the calendar that will mean an additional $20 million expense for the state that year. “And we already know that we have fire suppression costs of about $24 million.” The governor’s budget didn’t account  for those bills that are due to come in, which the state pays a year and a half after they occur. “So our work’s cut out for us,” Cameron said. “Our work is cut out for us to find the revenue and make sure that we leave the state this year in good shape.”