Budget Glossary

Account type: A type of account in the Commonwealth’s accounting system (“MMARS”) that can be either a direct appropriation, retained revenue, a capital account, a trust or other account, a federal grant (4FN), or an intragovernmental services account.

Capital account: An account in the Commonwealth’s accounting system (MMARS), which records the status of a spending authorization to be funded from the sale of bonds. Capital authorizations are usually for facility and infrastructure construction and maintenance, or large equipment purchases, and are usually authorized for 5 years.

Chargeback: A cost item for which payment is made by one state agency to another, for example paying for central computer services.

Deficiency: A shortfall in an existing appropriation, or an additional amount needed to accomplish a new or expanded purpose. It used to be that the former was always referred to as a “deficiency”, and the latter was always referred to as a “supplemental”, but the two terms have come to be used more or less interchangeably.

Direct Appropriation Account: An account in the Commonwealth’s accounting system (MMARS) which records the status of appropriations, which are financed by budgeted fund unrestricted revenues.

Earmarking: Language included in a line item which provides that a specific portion of the appropriation be spent for a particular purpose.

Expenditure Classification Handbook: A manual published by the Comptroller, which sets forth the official subsidiaries and object codes used for budgeting funds and recording expenses within accounts, along with definitions.

Federal Financial Participation: Reimbursement from the federal government for part of the cost of certain programs, such as Medicaid and AFDC. Often referred to by the acronym “FFP”.

Federal Grant Account: An account in the Commonwealth’s accounting system (MMARS) which records the status of grants authorized by the Legislature to be received from the federal government and expended.

Fiscal Year: The period of time from July 1, when the budget cycle begins, through June 30. when the budget cycle ends. (The federal fiscal year covers October 1 through September 30.)

Fringe Benefit Charges: Costs assessed against federal grants and other non-budgetary accounts by the state to defray the costs of employee benefits, which are paid for centrally.

Full-Time Equivalent: A measure of work force personnel equal to one position working full time. For example, two half-time positions equal one full-time equivalent. Often referred to by the acronym “FTE”.

General Appropriation Act: The main budget for a fiscal year which is passed by the Legislature and signed into law by the Governor.

Generally Accepted Accounting Principals: A set of accounting rules which are widely accepted and used, and which are accrual-based.

House 1 or House 2: The Governor's budget recommendations for the next fiscal year. According to the Constitution, it must be filed within 3 weeks of the convening of the Legislature in January. A newly-elected governor must file House 1 within 8 weeks. In the second year of a legislative session the Governor's budget is referred to as House 2.

Indirect Cost: Overhead expenses, including space rental and other administrative support costs, but not including employee fringe benefits

Interagency Service Agreement: A contract between two state agencies, where one agency agrees to perform specified services, and the other agency agrees to pay for those services. Often referred to as an ISA.

Local Aid (Cherry Sheet): Monies appropriated to be distributed to cities and towns. The cherry sheet is the list prepared annually by the Department of Revenue of certain local aid distributions, and which used to be published on cherry-colored paper

Maintenance Budget: The projected cost in the next fiscal year of maintaining the level of operations that will exist at the end of the current fiscal year.

Major Funds: The General Fund and the Transportation Fund (formerly called the Highway Fund), into which the most unrestricted revenue flows, and from which most appropriations are funded.

Minor Funds: All budgetary funds except the General and Transportation Funds.

MMARS: The Massachusetts Management Accounting and Reporting System, the official accounting system of the Commonwealth.

Non-Budgetary Accounts: Spending accounts other than direct appropriation and retained revenue.

Object Class: Sub-unit of a line-item account, indicated by a two-character code, such as AA, BB, or CC, which specify the purposes for which portions of appropriations are budgeted. For example, money in AA can only be spent on salaries; money in KK can only be spent for equipment purchase. Formerly known as “subsidiary” and often interchanged.

Outside Sections: Sections in a budget act following section 3, which contain specific provisions of law that govern the particular appropriations contained in the budget, make other special laws that usually apply for only one fiscal year, and amend the general laws to implement permanent changes included in the budget.

Prior Appropriation Continued: In general, the balance of unspent and unobligated appropriations reverts at the end of a fiscal year (see reversion). Each year some accounts are specifically exempted from this provision, and are authorized in budget acts to carry a balance into the ensuing fiscal year. Those accounts are called “prior appropriation continued accounts” or “PAC accounts”.

Proposition 2½: A Massachusetts referendum passed in 1980 that limits the growth of local property tax to an annual increase of 2.5%.

Reserve: A line item which appropriates an amount to be transferred to other line items to fund a particular cost which is not already included in those other line items. Reserves are usually set up to fund new collective bargaining agreements and other expenses, when the distribution of costs across accounts is not known at the time of the appropriation.

Restricted Revenue: Receipts which instead of being deposited to general or “unrestricted revenue”, are diverted for a specific purpose, usually for the purposes of a retained revenue or trust fund account.

Retained Revenue Account: An account in the Commonwealth’s accounting system (MMARS) which records the status of a certain type of appropriation where an agency is authorized to expend a specific amount of receipts from a particular revenue source for a particular purpose.

Reversion: Unexpended and unobligated money which returns at the end of a fiscal year to the fund from which it was appropriated. This money is no longer available for agencies to spend.

Spending Plan: A document submitted to Administration and Finance by all state agencies, which contains a detailed estimate of projected spending and revenue for the current year. The Spending Plan usually includes a detailed maintenance budget estimate for the following year as well.

Stabilization Fund: A “rainy day” fund into which a specific percentage of the end-of-year surplus is deposited.

Statutory Balance: The amount on the Balance Sheet which indicates the condition if excess revenue carried forward from the previous year is counted. See also Structural Balance.

Structural Balance: The amount on the Balance Sheet which indicates the condition, if excess revenue carried forward from the previous year is not counted. Also called operating or current account balance. See also Statutory Balance.

Terms Bill: A legislative bill authorizing terms and conditions of bond sales, which must be filed by the Governor and passed by the Legislature before previously authorized capital outlay bonds can be sold, and before bonded expenditures can be made.

Trust Account: Unit in MMARS which records the status of monies authorized to be spent by various statutes other than appropriations, capital outlay authorizations, and federal grants.

Unrestricted Revenue: Receipts which are deposited to general revenues, as opposed to restricted revenue.

Warrant: A report produced weekly (and for some items monthly) which lists all payments about to be made, and which must be approved by the Governor's Council before the payments are made.