One of the things that happens when a budget is structurally unbalanced, is unallotment by executive decree is more likely to happen.

2010 Unallotment Ruling - The question before us is whether the Legislature intended to authorize the executive branch to use the unallotment process in the circumstances presented here.... Because the legislative and executive branches never enacted a balanced budget for the 2010-2011 biennium, use of the unallotment power to address the unresolved deficit exceeded the authority granted to the executive branch by the statute. We therefore affirm the district court‘s conclusion that the unallotment of the Special Diet Program funds was unlawful and void, Supreme Court of the State of Minnesota.

What is unallotment and what are the Governor's unallotment powers?
(from the Minnesota Budet Project)

Unallotment authority refers to the power of the governor to reduce state spending independent of the legislature to bring the state budget into balance. The statute governing unallotment does not spell out many specifics, giving the executive branch broad authority to reduce spending. A few key guidelines include:

• The Commissioner of Finance (now known as the Commissioner of Minnesota Management and Budget) actually oversees the unallotment process, although the governor must approve the actions.
• In order to trigger the unallotment authority, the Commissioner must determine that the state’s revenue collections are lower than expected, and that the amount that is available will be less than is needed for the biennium.
• Before unalloting any appropriations or transfers, the Commissioner must first use any available balance in the state’s budget reserve account.
  If the amount in the budget reserve is not sufficient, then the remaining deficit can be resolved by “reducing unexpended allotments of any prior appropriation or transfer”.

There are few checks and balances built into the unallotment process. Before implementing any unallotment plan, the Commissioner must consult with the Legislative Advisory Committee (LAC). The LAC has four permanent members: the majority leader of the Senate, the speaker of the House, the chair of the Senate Finance Committee and the chair of the House Ways and Means Committee. Although the Commissioner is required to present the unallotment plan to the LAC prior to implementation, the committee has no authority to approve, amend or reject the unallotment proposals.

Learn more about Unallotment from the Minnesota Budget Project!

Capitol Resources

• January 2010 (Revised) - FY 2010-11 General Fund Budget Governor’s Unallotments and Administrative Actions - The biennial budget adopted by the Legislature establishes appropriations, which are the legally authorized limits on spending. Appropriations do not typically specify how each appropriation will be spent. Rather, following enactment of a biennial budget, agencies develop spending plans based on the legislatively determined appropriations. The spending plans are the basis for spending limits place on various expenditures, known as allotments, in the state accounting system. An unallotment is a reduction in the spending limit or allotment. While unallotments do not reduce appropriations, they do reduce the amount that is made available to be spent pursuant to an appropriation, Minnesota Senate Office of Counsel, Research and Fiscal Analysis.
  
  
• November 16, 2009 - House questions unallotment with a court brief - The House may use a recently filed court case to weigh in on the governor’s unallotment action last spring that trimmed nearly $2.7 billion from the 2010-2011 biennial budget, Session Daily.
  
  
• June 29, 2009 - Legislative History of Unallotment Power - A general history of unallotment authority and practice, Minnesota Senate Counsel.
  
  
• May 20, 2009 - Potential Economic Impacts of Governor’s Unallotment - Because the Governor cannot shift education payments in the same way the Legislature can, the $1.8 billion may be counted as an education funding cut. This may negatively affect school districts’ capacity to borrow money to make up for the shortfall caused by the shift, Minnesota State Senate.
  
  
• May 2, 2009 - At Issue: A little-used tool in the toolbox - Confronted with a projected $935 million biennial budget deficit projected from the February Economic Forecast, legislative leaders and the governor are trying to work out a budget solution. But the governor doesn’t have to wait for the Legislature to solve the deficit; he can use a little-used tool called unallotment to balance the budget, Session Weekly.
  
  
• March 2008 - Unallotment: Executive Branch Power to Reduce Spending to Avoid a Deficit - Conditions under which the executive branch can reduce expenditures to prevent an anticipated budget deficit, Minnesota House Research.

Related Articles

• February 2010 - 2009 Minnesota Legislative Report Card on Racial Equity - The 2009 Report Card includes a hard look at the real consequences of budget cuts, stimulus investment and unallotment on Minnesotans and Minnesotans of color, Organizing Apprenticeship Project.

Borrowing from Minnesota’s Children of Color and Poor Children
Despite the governor signing HF 2 to hold children harmless in tough times, the governor borrowed from our children’s future through unallotment. A major challenge for Minnesota’s 150 charter schools has been funding delays that were set off when the governor balanced Minnesota’s budget through unallotment. The governor switched the terms of school funding. Before unallotment, the timeline for schools getting their money was 90 percent up-front, 10 percent delayed until next fiscal year. After unallotment, the formula dramatically changed to 73 percent upfront, 27 percent delayed. Despite the funding stabilization, the new formula under unallotment will mean that charter schools will likely be the hardest hit. They have limited means to seek funding beyond state aid. One of Minnesota’s oldest charter schools will have to close before the school year ends, but analysts expect many more to close. This is troubling when considering the racial and economic dynamics. Charter schools are more likely than public schools to enroll poor students, English language learners and students of color. In 2008-09, 53 percent of charter students received free or reduced cost lunch, and 51 percent were students of color.  Minnesota’s most disadvantaged students–-students of color and low-income students—could unintentionally face fewer educational options.

• November 29, 2009 - Unallotment is at odds with the Minnesota Constitution - Pawlenty's actions have a federal parallel: Richard Nixon and 'impoundment,' Star Tribune.
  
  
• November 23, 2009 - Next budget forecast to show shortfall — Unlike a year ago, Gov. Tim Pawlenty says he doesn't foresee a need to take corrective action on his own to balance the books, Minnesota Public Radio.
  
  
• November 16, 2009 - Pawlenty's power to cut state budget lands in court - A Ramsey County District Court judge is considering whether she should temporarily reverse budget cuts made by Gov. Pawlenty, Minnesota Public Radio.
  
  
• November 13, 2009 - Minnesota House to consider joining unallotment lawsuit - A committee in the Minnesota House will meet on Monday to consider whether the House should join a lawsuit challenging Gov. Pawlenty's budget cuts, Minnesota Public Radio.
  
  
• October 29, 2009 - Lawsuit challenges Pawlenty's budget cuts — A lawsuit filed in Ramsey County District Court says Gov. Tim Pawlenty exceeded his constitutional authority by making unilateral spending cuts, Minnesota Public Radio.
  
  
• November 2009 - Sorting Out the Education Aid Payment Shift - Education aid payments return to the 90/10 configuration in the 2012-13 biennium absent any action by the Governor and Legislature. Provides some alternatives which could be considered if the Governor and the Legislature are not able to arrive at a budget agreement that funds forecast expenditures in the 2011 legislative session, Association of Metropolitan School Districts (page 4).
  
  
• September 8, 2009 - Unprecedented: Governor’s Unallotments Cut $2.7 Billion from State Budget - Governor uses unallotment powers to delay payments to school districts; no provision was made to pay school districts back, Minnesota Budget Project.

• 	FY 2010	FY 2011	FY 2010-11
  K-12 Education* (Total)	-$1.1 billion	-$702 million	-$1.8 billion
  Negative number indicates reduction in size of the deficit

  
  

• June 30, 2009 - Estimated 3,300 to 4,700 jobs lost due to Governor’s unallotments - School districts: 300 – 600 jobs lost, Minnesota Budget Project.
  
  
• June 19, 2009 - Legislature challenges Governor’s unallotment decisions - Does the Governor have the authority to enact the school aid payment shift? The $1.8 billion proposal to shift aid payments to schools really has two components – a payment deferral ($1.2 billion) and a change in when property tax receipts are recognized ($600 million). Pogemiller strongly asserted that the Governor does not have the authority to enact the property tax recogniztion component of his plan, leaving a $600 million gap in his unallotment proposal. Pogemiller threatened legal action if the Governor continued to pursue this part of his unallotment plan.
  
  Senator Pogemiller and other legislators also argued that while the Governor may have the authority to carry out the delay in payments to school districts (the $1.2 billion part), he does not have the authority to pay the shift back to schools in the future. So, he argued, the Governor’s proposed school payment shift is really a $1.2 billion cut to school districts unless the legislature authorizes the payment to schools in the future. However, pointed out Pogemiller, since the Governor vetoed the tax bill, there will be no additional revenue available to make schools whole again.
  
  Commissioner Hanson and the staff from the Department of Education insisted that the Governor has the necessary authority to carry out everything he proposes, Minnesota Budget Project.
  
  
• June 3, 2009 - Q&A: Unallotment and its discontents - Answers on governor’s controversial plan to single-handedly balance Minnesota’s budget, Finance and Commerce.
  
  
• May 20, 2009 - No deal wasn't best session outcome - Executive branch budgeting will set worrisome precedent, Star Tribune.
  
  
• May 19, 2009 - Governor will unallot to balance the state budget - On Tuesday morning, the day after the legislature adjourned, the Governor held a press conference to announce that he is already in discussions with state commissioners to put together an unallotment plan to bring the state’s budget back into balance for FY 2010-11, Minnesota Budget Project.
  
  
• May 19, 2009 - The use of unallotment looms. DFLers say it's an abuse of power. The governor says it's a duty - As DFLers toured the state to blame Gov. Tim Pawlenty for the legislative session's budget breakdown, Pawlenty on Tuesday defended his decision to unilaterally cut state spending and downplayed its impact on health, welfare and education, Star Tribune.
  
  
• May 14, 2009 - Governor says he will unallot to balance budget - The Governor held a press conference on Thursday afternoon to announce that he will use his line item veto and unallotment authority to balance the budget, thus avoiding any government shutdown, Minnesota Budget Project.
  
  
• December 19, 2008 - Facing budget shortfall, Pawlenty targets cities, counties and human services - Gov. Tim Pawlenty announced his budget cuts today to address a $426-million deficit for 2008. When facing budget shortfalls, state law allows for unallotment, a process through which the governor makes the final decision on what parts of the budget he wants to cut, Minnesota Independent.
  
  
• December 19, 2008 - Cuts to city, county aid coming fast - Minnesota's city and county governments are going to be hit hard by projected state budget deficits -- and the pain could be felt sooner rather than later. Gov. Tim Pawlenty and legislative leaders said Tuesday that aid to cities and counties is likely be one of the first items on the chopping block as the state struggles first with a short-term $426 million budget deficit for the budget period that ends next summer and then with a looming $4.8 billion projected deficit for the two years beginning July 1, Star Tribune.
  
  
• December 19, 2008 - Pawlenty plans to cut funds for local governments - Gov. Tim Pawlenty announced  $271 million in state budget cuts Friday, mostly at the expense of cities, counties, human services programs and higher education, Star Tribune.
  
  
• March 31, 2008 - What if they can’t agree? Unallotment - The Governor must balance the budget by unallotment, a process limited to spending down the budget reserve and cutting spending, Minnesota Budget Project.