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Conference committee sets contingency structure for federal fund reductions, defines JFC and governor triggers
Summary
Members of the conference committee working on the FY26 budget described and approved a contingency framework on May 9 to guide executive and legislative action if federal funds fall short, and proposed a one‑time pension transfer to meet actuarial requirements.
Members of the conference committee working on the FY26 budget described a contingency framework on May 9 to guide action if federal funds are reduced, and discussed several year‑end budget adjustments including a one‑time pension transfer.
The committee outlined a tiered response: the governor would have authority to act for small reductions, the Joint Fiscal Committee (JFC) would take the lead for midrange reductions, and the legislature would act for the largest shortfalls. Staff described numeric triggers and contingency set‑asides to cover potential federal funding losses.
Staff member, who walked the committee through the spreadsheet, said the governor can act for changes under 0.5% of unduplicated appropriations or $2 million (whichever is greater) for most functions and that current law lets the governor act for general fund revenue reductions of up to about 1% (roughly $24.6 million under the FY26 numbers). The staff presentation identified the lower bound for JFC action as 0.5% or $2 million and set the upper bound at 25% of unduplicated appropriations or $50 million, whichever is less. For agencies with smaller federal shares, 25% of unduplicated appropriations can fall below the $50 million ceiling — for example, 25% for the Department of Labor is roughly $12.6 million.
The committee also discussed contingency set‑asides. The plan would reserve about $50 million available to the Emergency Board (the transcript cites roughly $49.8 million as the board’s 2% transfer limit), plus $30 million specifically for federal fund reductions and another $30 million for other possible needs in FY26, producing a contingency pool of about $118 million; amounts above those set‑asides would follow statutory allocation processes.
On year‑end adjustments, staff said the Treasurer’s Office provided an updated unclaimed property estimate that added $4,000,000 to FY25 receipts and that the Department of Financial Regulation required a roughly $200,000 reduction in FY25. Those two items produce a net $3,800,000 of additional anticipated FY25 revenue; the proposal is to create a one‑time appropriation to transfer that amount to the pension fund to help meet actuarially determined employer contribution (ADEC) obligations and related pension payments, with any remaining funds carried forward for the same purpose in FY26. "So the net impact in '25 is effectively 0," the staff member said.
Committee members said they would receive the final language and a language packet later in the day and that staff would provide a web report and spreadsheets to support the floor presentation.
Next steps include circulating the finalized bill language and supporting documents before the session and, if needed, using the Emergency Board or a special session to unreserve and appropriate funds.
