Federal Funding Risk

Click the blue refresh button to the right, then move the slider from right to left (<-) to reduce Federal Funding

Risk Responses

Increase Revenues

Reduce Services

Increase Debt

Use Reserves


Economic Impact of Federal Funding Reduction ($ million)
NOTE: INDIRECT funding (eg, Social Security) appears as $0 Direct.
Jobs (thousands)
Indirect State Revenue ($M)
Direct Federal Funding ($M)

Use the Radio Button below to choose county level federal funding view
VIEW TABLE

How do I use the FFRM?

The Federal Funds Commission has built a public web-based dashboard powered by a Risk Analysis Modeling tool (the “RAM-t”). This innovative tool allows the public to view pre-populated risk scenarios, or to create their own, using a single risk scenario, or a combination of risk scenarios.

Pre-Populated Risk Scenarios:

The Federal Funds Commission has developed pre-populated ("example") risk scenarios that it believes are extreme but possible, to help audiences across the State understand the impacts from a loss of federal funding, economic duress or other federal government action such as sequestration.

The pre-populated example risk scenarios include:

  • Dollar Crash
    • Interest Rates rise by 5%
    • U.S. Budget Deficit closure through full Sequester
  • Sequester with Medicaid Cut
    • One (1) quarter Sequester (3% across the board cut) Medicaid administration programs cut (8% of total funding)
    • Personal Income rises by 10%
  • Federal Employment Cut
    • Civilian contractors furloughed for 3 months (8% cut)
    • Three air base wing components redeployed to mission partners (5% cut)

INSTRUCTIONS:

  • Step 1- In the first pull-down menu choose one of these pre-populated scenarios
  • Step 2- Look at the blue bars to the right to see the results
  • Step 3- You may now go to the Risk Response sliders to see how the state might manage these Federal Funding shocks
    1. Select any combination of Risk Responses, and slide the button(s) to the desired level.
    2. The model will update to reflect the Risk Response(s) the state may take in a given risk scenario (using the Update button is not required).
    3. You may hover your pointer over the bar graph lines to display the At Risk and Risk Response values for each of the Direct and Indirect programs listed in the graphs.

Create Your Own Risk Scenarios:

The FFRM dashboards also allow the public to examine various risk scenarios by choosing up to four scenario inputs from a list of various options.  A user can understand what types and levels of federal funding reductions are “At Risk” and what happens to the federal funding level or to the program affected by the federal funding decrease after the “Risk Response” is applied.

INSTRUCTIONS:

  • Step 1 – Select Risk Scenarios:
    1. On the upper left hand side, click on the drop-down menu, and select up to four (4) scenario factors (e.g., Interest Rate and Sequester).
  • Step 2 – Select Scenario Factor Adjustments:
    1. For each scenario factor chosen, select the Scenario Factor Adjustments by sliding the button(s) to the desired level, and then press the Update button.
    2. The total federal funding at risk across programs is now displayed, with the largest programs at risk being depicted in the far right chart.
  • Step 3 – Select Risk Response:
    1. Select any combination of Risk Responses, and slide the button(s) to the desired level.
    2. The model will update to reflect the Risk Response(s) the state may take in a given risk scenario (using Update button is not required).
    3. You may hover your pointer over the bar graph lines to display the At Risk and Risk Response values for each of the Direct and Indirect programs listed in the graphs.

County Level Visualizer:

The County-Level Visualizer allows seeing the effects of the risk scenarios in the previous tab, both graphically and at a greater level of localization.

INSTRUCTIONS:

  • Step 1 – Select Scenario Factors, Scenario Factor Adjustments, and Risk Responses as in the previous tab, or keep the scenario selected there.
  • Step 2 – Select County-Level Variable to display:   The options include all 10 of the federal funding streams, as well as the other economic variables shown on the previous tab.
  • Step 3 – Select County-Level Display Option, either Total or Per Capita.  Total will show the number of dollars or participants or jobs; Per Capita will show the dollars per person or percentage of people participating or employed.
  • Step 4 – Hover over an individual county to see its name and the number associated with it for the variable and option selected.


What is the Federal Funds Commission?

The Federal Funds Commission was established by the Legislature through S.B. 70, Commission Relating to Federal Issues, which passed in the 2013 General Session. The commission is composed of legislators, gubernatorial appointees, and members of the public. The inaugural meeting of the commission was held May 14, 2013.

Commission Responsibilities include the following (see statutorily required duties here):

  • Studying and assessing
    • the financial stability of the federal government,
    • state and local dependency on federal funds,
    • the risk of a reduction in federal funds to state and local government, and
    • the impact of a reduction in federal funds to state and local government.
  • Recommending to the Legislature and Governor methods to
    • avoid or minimize the risk of a reduction in federal funds,
    • reduce the dependency on federal funds, and
    • prepare for and respond to a reduction in federal funds.

The commission’s first year of work was spent learning about the federal budget, receiving comments from entities negatively impacted by a reduction in federal funds, and identifying the state’s and local government’s risks associated with receiving federal funds. Ultimately, the commission decided to seek an appropriation from the Legislature to create a tool that could assist state and local government entities in assessing and mitigating the risks associated with receiving federal funds.

What is the Federal Funds Risk Model?

In the 2014 General Session, the Legislature appropriated $350,000 to the commission to create the state’s first Federal Funds Risk Model (FFRM). In November of 2014, the commission issued a Request for Proposals to build the FFRM. In January 2015, the commission awarded the contract to Alvarez & Marsal, a well-known global management and financial consulting firm. Work on the project began in March of 2015. For the past several months, the commission and Alvarez & Marsal have worked tirelessly to gather data and develop, design, and refine the FFRM.

The model allows the assignment of risk scenarios using 20 scenario factors, which can be used individually or in combination.  These scenario factors relate to both internal and external sources of risk including macroeconomic variables (e.g., interest rates, per capita income, and energy prices), direct federal funding (e.g., Medicaid, Child Nutrition, FSA Pell Grants) and indirect federal funding (e.g., Medicare, Social Security, Federal Civilian & Military Personnel).

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.
  • Gross State 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 indirect impact a federal funding shock could have on Utah’s ability to raise revenue through taxes and fees.
  • Personal Income–This measures individuals’ and proprietors’ earnings before taxes.

The FFRM also incorporates various risk response options (e.g., service level reductions, use of reserves, changes in taxes, etc.) the state may choose to pursue, either in part, in whole, or in combination with a risk scenario. Once risk response options are selected, the model calculates the extent to which the negative impacts of the selected risk scenario can be mitigated.

Commission members and staff envision numerous applications for the FFRM and the information it provides. For example, when the federal government contemplates changes to national fiscal policy, the state could use the tool to assess the potential impact of those changes on the state. The state could then discuss those impacts with its congressional delegation. The tool could also be used to model the effects of the next federal government shutdown, fiscal cliff, or sequester. The results could then be used by policymakers and their constituents to make better decisions for the state.

Additionally, in advance of any change in federal funding, the tool could 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.

Three Scenario Narratives

Here are some examples of scenarios as you think about the impact of Federal Funding cuts on you, your family, your business, and your locale.

Dollar Crash

In this situation four macroeconomic events would occur:

  1. The demand for dollars suddenly drops as more and more countries hold reserves in  non-dollar currencies, for example, the Chinese Yuan.
  2. The Federal Reserve begins to tighten the money supply by buying US Treasury securities which has the effect of increasing interest rates.
  3. In the short term an increase in interest rates translates into higher credit costs. These costs are passed on to consumers. Prices begin to rise.
  4. The Federal budget deficit widens enough to trigger sequestration of many Federally funded programs, including education, management of Federal lands, and transportation.

Medicaid Cut

Here several events would occur:

  1. Widening Federal budget deficits force across the board program cuts to forestall an impending sequestration.
  2. The Federal Department of Health and Human Services (HHS) starts to shut down administration and infrastructure funding that states use to manage Medicaid programs.
  3. The Federal Medical Assistance Percentage is a formula that HHS uses to determine how much a state would receive in Medicaid funding. HHS revises the formula so that states receive less funding.
  4. This same formula is also used to determine funding for many Federal Department of Education programs that flow to state and local municipalities. In a knock-on effect many education programs lose their funding.

Federal Employment Cut

  1. Federal Employment Cut Widening Federal budget deficits force program managers to furlough government employees and send contractors home.
  2. While not subjecting Hill AFB to a Base Realignment and C (BRAC), the Department of Defense scales down and redeploys several components of the Air Base Wing. The redeployments are all outside of the State of Utah.

Please let us know your thoughts about the impact of Federal Funding reduction on you, your family, your business, and your locale.


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How do I use the FFRM?

The Federal Funds Commission has built a public web-based dashboard powered by a Risk Analysis Modeling tool (the “RAM-t”). This innovative tool allows the public to view pre-populated risk scenarios, or to create their own, using a single risk scenario, or a combination of risk scenarios.

Pre-Populated Risk Scenarios:

The Federal Funds Commission has developed pre-populated ("example") risk scenarios that it believes are extreme but possible, to help audiences across the State understand the impacts from a loss of federal funding, economic duress or other federal government action such as sequestration.

The pre-populated example risk scenarios include:

  • Dollar Crash
    • Interest Rates rise by 5%
    • U.S. Budget Deficit closure through full Sequester
  • Sequester with Medicaid Cut
    • One (1) quarter Sequester (3% across the board cut) Medicaid administration programs cut (8% of total funding)
    • Personal Income rises by 10%
  • Federal Employment Cut
    • Civilian contractors furloughed for 3 months (8% cut)
    • Three air base wing components redeployed to mission partners (5% cut)

INSTRUCTIONS:

  • Step 1- In the first pull-down menu choose one of these pre-populated scenarios
  • Step 2- Look at the blue bars to the right to see the results
  • Step 3- You may now go to the Risk Response sliders to see how the state might manage these Federal Funding shocks
    1. Select any combination of Risk Responses, and slide the button(s) to the desired level.
    2. The model will update to reflect the Risk Response(s) the state may take in a given risk scenario (using the Update button is not required).
    3. You may hover your pointer over the bar graph lines to display the At Risk and Risk Response values for each of the Direct and Indirect programs listed in the graphs.

Create Your Own Risk Scenarios:

The FFRM dashboards also allow the public to examine various risk scenarios by choosing up to four scenario inputs from a list of various options.  A user can understand what types and levels of federal funding reductions are “At Risk” and what happens to the federal funding level or to the program affected by the federal funding decrease after the “Risk Response” is applied.

INSTRUCTIONS:

  • Step 1 – Select Risk Scenarios:
    1. On the upper left hand side, click on the drop-down menu, and select up to four (4) scenario factors (e.g., Interest Rate and Sequester).
  • Step 2 – Select Scenario Factor Adjustments:
    1. For each scenario factor chosen, select the Scenario Factor Adjustments by sliding the button(s) to the desired level, and then press the Update button.
    2. The total federal funding at risk across programs is now displayed, with the largest programs at risk being depicted in the far right chart.
  • Step 3 – Select Risk Response:
    1. Select any combination of Risk Responses, and slide the button(s) to the desired level.
    2. The model will update to reflect the Risk Response(s) the state may take in a given risk scenario (using Update button is not required).
    3. You may hover your pointer over the bar graph lines to display the At Risk and Risk Response values for each of the Direct and Indirect programs listed in the graphs.

County Level Visualizer:

The County-Level Visualizer allows seeing the effects of the risk scenarios in the previous tab, both graphically and at a greater level of localization.

INSTRUCTIONS:

  • Step 1 – Select Scenario Factors, Scenario Factor Adjustments, and Risk Responses as in the previous tab, or keep the scenario selected there.
  • Step 2 – Select County-Level Variable to display:   The options include all 10 of the federal funding streams, as well as the other economic variables shown on the previous tab.
  • Step 3 – Select County-Level Display Option, either Total or Per Capita.  Total will show the number of dollars or participants or jobs; Per Capita will show the dollars per person or percentage of people participating or employed.
  • Step 4 – Hover over an individual county to see its name and the number associated with it for the variable and option selected.