On Thursday, the Utah State Legislature’s Federal Funds Commission unveiled the state’s newly created Federal Funds Risk Model dashboard.
Citizens can find the new tool at federalrisk.le.utah.gov.
Commission Co-Chair and State Representative Ken Ivory stated that "Utah, like most states, is increasingly dependent on federal funds at a time when the federal government finds itself in increasingly poor financial shape. For this reason the Utah Legislature formed the Federal Funds Commission to develop the model unveiled today. Its purpose is to assess the growing likelihood of diminished federal funding coming to Utah and how we can better respond to those risks and assure that we can meet the education, public safety and human service needs of our state, regardless of what transpires in D.C."
Utah receives $3.8 billion in federal funds, which is 26 percent of the state's operating and capital budget. Federal funding is now tied with income taxes as the state’s largest single revenue source.
Commission Member and CEO of the Utah Association of CPAs, Susan Speirs explained "This dashboard can be used to model the effects of the next federal government shutdown, fiscal cliff, or sequester. When the federal government contemplates changes to national fiscal policy, we can use the FFRM dashboard to assess potential impacts and prepare. The state could discuss those impacts with federal officials and elected leaders. The results could then be used by policymakers and their constituents to make better-informed decisions for the state."
In advance of any change in federal funding, the dashboard will be used to model potential loss scenarios and help the state develop strategies to mitigate such loss through expectation setting, debt capacity management, and contingency fund development.
The model shows the effects on Utah’s economy from potential losses of federal funds. It includes 18 risk scenarios, which can be used individually or in combination. These scenarios show the effects of direct federal funding (e.g., Medicaid, SNAP payments, Pell Grants), indirect federal funding (e.g., Medicare, Social Security, federal employment), and macroeconomic variables (e.g., interest rates, per capita income, and energy prices).
Taking into account these risk factors, the FFRM calculates economic impacts to the following:
• Jobs – This measures the level of employment in Utah’s labor force.
• State-specific Gross Domestic Product – This measures the size of Utah’s economy. It measures the total dollar value of all goods and services produced in Utah in a one-year-period.
• State Revenues – This measures the direct impact in lost federal funding to the state, and the indirect impact on Utah’s ability to raise revenue through taxes and fees.
The FFRM shows how the State can respond to these risks through service level reductions, use of reserves or changes in taxes, among other possible options. Once risk response options are selected, the model calculates how the negative impacts of the selected scenario can be mitigated. The model also displays the current amounts of federal funding and the effects of funding losses by county, with an interactive map.
This dashboard was built in partnership with Alvarez & Marsal – Insurance and Risk Advisory Services (IRAS).