MN Legislature 101: Understanding the November Forecast

07 Dec

Association of Metropolitan School Districts has an excellent overview of the MN Budget forecast and what it means.


MN Legislature 101: Understanding the November Forecast

Originally posted on 05 Dec 2011 07:05 AM PST

On December 1, 2011, the November budget forecast was released. This forecast is an initial budget forecast before the February forecast (the forecast that provides the budget numbers that the governor and legislators use to establish or adjust the biennial budget).  So while the November budget forecast does provide a glimpse into the economic status of the state, it has to be taken cautiously as numbers may change in the February forecast.

What does the November forecast tell us?

  • An estimated $876 million dollar balance is projected for 2012-2013 (revenues were $358 million higher and expenditures were $205 million below expectations).
  • A projected deficit of $1.3 billion is shown for 2014-2015.
  • Current law requires the surplus to go into the state’s reserves, so $255 million will go to the cash flow account to restore it to $350 million and $621 million to the budget reserve which would bring the reserve to $648 million-just short of the statutorily desired level of $653 million.   After the reserve is restored to $653 million, future surpluses would go toward repaying the school aid payment shift and then the property tax recognition shift.
  • State revenues are up by 1.2%
  • Expenditure reductions are driving the balance of the surplus with two-thirds of the reductions coming from the Health Human Services area.
  • K-12 expenditures are growing, but at a slower pace than expected.
  • School levies came in lower than projected in the February forecast resulting in lower than expected savings from the shift.
  • Minnesota’s economy is likely to do better than the U.S. economy in 2011 & 2012.


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