Minnesota Management and Budget (MMB) announced that the FY 16-17 budget has a $1.871 billion surplus.  The bulk of this $1.871 billion surplus comes from $682 million carried over from the FY 14-15 biennium and $865 million left unspent in the FY 16-17 budget at the end of the 2015 Legislative Session.  A smaller piece of the forecast is due to revenue and expenditure changes.  Revenue collections since the FY 16-17 biennium began on July 1, 2015 have increased by $90 million while expenditures have decreased by $249 million over the same time period.

Under current law, 33 percent of any November forecast balance in the current biennium is to be allocated to the budget reserve until the recommended level of $2.032 billion for FY 2016-17 is reached. This forecast directs $594 million to the budget reserve, increasing it to $1.597 billion.

Health and human services spending is forecast to be $12.064 billion in FY 2016-17. This is a reduction of $416 million from the 2015 end of session estimates.   Medical Assistance (MA) spending is forecast to be $415 million lower than end of session estimates.  Lower rates paid to managed care organizations for families with children and adults without children result in a $350 million reduction in forecast MA expenditures. Of this, $158 million is attributable to general fund savings from competitive bidding. The cost of basic care for the elderly and people with disabilities has also experienced slower than expected growth in recent years. This leads to a $111 million reduction in forecast MA expenditures in the FY 2016-17 biennium.