Agency of Administration outlines FY2026 central-office budget; racial equity office split out, clean-water match set aside

Nick Kramer, chief operating officer of the Agency of Administration, told the Appropriations Committee Feb. 6 that the agency’s FY2026 central‑office budget is largely “business as usual” but includes several targeted changes: the Office of Racial Equity has been moved into its own appropriation; the governor’s recommended budget includes a new statewide chief communications officer funded by a general‑fund increase; the submission shows an $850,000 Clean Water Fund set‑aside to serve as a flexible non‑federal match for competitive grants; and the budget includes a $3 million one‑time allocation for the municipal technical assistance program (MTAP).

The budget matters for municipalities and service delivery because the Agency of Administration serves as a central “backbone” for statewide programs and for short‑notice funding opportunities. Kramer said the agency often “is the place where things land when there’s an urgent need to be responded to or a new legislative initiative often it gets stuck in the secretary’s office if there’s no other quit home for it.” The Clean Water Fund change, he said, is intended to help the state pursue federal competitive grants that require matching funds and that arise off the regular budget cycle.

Kramer said the central office budget totals are modest in the context of the state budget: roughly $2.9 million in general funds, about $2.9 million in interdepartmental transfers (IDTs), and about $2.3 million in internal service funds for the central office components. The Office of Racial Equity — which previously sat inside the secretary’s office and was established in February 2019 — has grown and now appears as its own budget unit; six positions were shifted into that new appropriation and one new limited‑service position in the office is federally funded via an MOU and shows up as an IDT.

The new chief communications officer is a general‑funded position that will live in the Department of Human Resources but operate with a statewide communications mandate; Kramer said the role will focus first on compliance with federal digital‑accessibility requirements and on coordinating communications work across agencies. Kramer also described a roughly $700,000 net transfer tied to language‑access work in the Office of Racial Equity.

On water funding, Kramer described the Clean Water Fund process as a statutorily codified board process that reviews needs and recommends investments to meet Total Maximum Daily Loads (TMDLs) and other clean‑water goals. The FY2026 recommendation includes an $850,000 Clean Water Fund increase to be held as a flexible match for prospective competitive federal grants under recent federal programs. Kramer said the set‑aside is intended for fast‑moving federal opportunities that may not fit neatly into existing agency budgets and could be used where a match is needed to secure federal funds.

Kramer and staff also described smaller items and one‑time allocations in the recommendation. The budget carries the final municipal stormwater utility incentive payment for an eligible utility under an existing statutory incentive (a $25,000 annual payment for a set number of years, as referenced in testimony). The agency’s Office of Risk Management was discussed as a set of positions funded through multiple internal service funds (workers’ compensation, general liability, and an “all other insurance” fund). Kramer cited a total workers’ compensation fund size of roughly $14.4 million and noted volatility year to year driven by claims and market conditions.

Financial Services Division chief Holly Farad told the committee the division prepares an annual report titled “demystifying internal service funds,” which explains the major internal service funds, how they are calculated and allocated, and the billing structure that allocates shared costs across state departments.

Kramer described three one‑time items in the governor’s recommendation housed in the agency: continued funding for the (pilot) municipal program run from the Office of Racial Equity that works with municipalities on equity and inclusion; one‑time funding for the Truth and Reconciliation Commission to continue through FY26 and to support drafting a report expected in February; and $3 million for MTAP, a technical‑assistance program that helps smaller municipalities manage federal funds and disaster recoveries. Kramer said MTAP was conceived for ARPA support and later expanded to help towns respond to FEMA and other disaster funding needs.

No formal committee votes or motions were recorded during the presentation. Kramer closed by noting a fuller, 64‑page document is available with detailed line items and attachments for members who want to review departmental breakdowns.