Let’s take another look at the State’s December 5th Forecast by breaking it down into two parts. Part 1 involves our current biennium, FY 2012-2013, which only has seven months remaining. Part 2 involves the upcoming biennium, FY 2014-2015. Each are separate and distinct budget periods but FY 2012-2013 significantly impacts FY 2014-2015.

FY 2012-2013

Let’s take FY 2012-2013 first. The Forecast for the remainder of FY 2012-2013 projects state general fund revenues to go up by $1.076 billion, while general fund spending is projected to go down by $262 million. This adds up to a $1.3 billion surplus. However, because, at the time of the Forecast, it cost $2.4 billion to get the K-12 Education Shift back to the 90/10 split, this extra $1.338 billion surplus is dedicated, by statute, to paying down the Shift. This eliminates the surplus for FY 2012-2013 and still leaves $1.1 billion of the Education Shift to be paid back.

FY 2014-2015 deficit is $1.095 billion

The second part of the forecast involves the upcoming biennium, FY 2014-2015. The budget outlook for this biennium has changed little since estimates given this past summer and the result is a projected deficit of $1.095 billion for next biennium.

What Happened to the K-12 Shift?

The deficit is officially $1.095 billion. Constitutionally and statutorily, this deficit has be fixed by the end of FY 2014-2015. The $1.1 billion remaining of the K-12 Education Shift is NOT considered part of the deficit. Rather, the state is required, by statute, to use any surplus identified in a future Forecast to pay back the shift to a 90/10 split. After Wednesday’s down payment, it will still cost another $1.1 billion to pay back the shift.