Rainy Day Funds, Reserves and Transfers

A household has a checking account and a savings account. The state of Idaho has a general fund, which pays most of the bills, and a set of named savings accounts. Which account a dollar sits in decides who may spend it, when and for what. That is the point of this lesson. Money does not just exist in "the state budget". It sits in funds, each fund has a statute, and the budget fights of 2025 and 2026 were often fights about moving money from one fund to another.

Every number here is dated and tied to a document. The Legislature publishes two yearly books that carry the reserve table, the Legislative Budget Book (published at the start of the session) and the Legislative Fiscal Report (published after the session). They can disagree, and later in this lesson you will see why.

The map of the reserves

The Legislative Budget Book has a page titled "State of Idaho Major Reserve and Other Fund Balances." It lists seven columns. Here is what each one is.

Fund	What it is for	Where the rules are
Budget Stabilization Fund	Meeting general fund revenue shortfalls and costs of a major disaster declared by the governor	Idaho Code 57-814 and 57-814A
Public Education Stabilization Fund	Public school support when needs exceed the appropriation, such as when enrollment runs high	Idaho Code 33-907, with uses defined in 33-1018 and 33-1018A
Economic Recovery Reserve	A reserve column in the table; its balance has been zero or a few thousand dollars since 2011	Listed in the reserve table; check the Fiscal Sourcebook for its statute
Idaho Millennium Fund	Money from the national tobacco settlement, partly saved and partly spent	Idaho Code 67-1803 to 67-1806
Higher Education Stabilization Fund	A cushion for the state's colleges and universities, with separate accounts	Idaho Code 33-3726
Emergency funds	Governor's Emergency Fund and the Disaster Emergency Fund	Idaho Code 57-1601 and 46-1005A
Twenty-Seventh Payroll Fund	Pays the general fund share of payroll in years with a twenty-seventh pay period	Idaho Code 57-826

A separate account matters for the story but is not a rainy day fund. The Strategic Initiatives Program Fund belongs to the Idaho Transportation Department. Idaho Code 40-719 sets up a program for transportation projects, with 60 percent of newly transferred money going to projects proposed by the department's districts and 40 percent to local units of government through the Local Highway Technical Assistance Council, unless the transfer says otherwise. In 2025 the Legislature moved $275 million from the general fund into it in S1218 for road and bridge maintenance and for safety and capacity projects. That is a use of surplus cash, and the same fund later became a source of cash to the general fund in 2026. You will see both below.

The Budget Stabilization Fund

The Budget Stabilization Fund is the best known of the group. Subsection (1) of Idaho Code 57-814 creates it "for the purpose of meeting general fund revenue shortfalls" and for expenses from a major disaster declared by the governor. The statute has four working parts.

• The growth deposit. Subsection (2)(a): if general fund receipts for the fiscal year just ending exceed the prior year's by more than 4 percent, the State Controller transfers the collections above that 4 percent increase, up to 1 percent of the prior year's actual general fund collections. The transfer happens at the financial close of the year.
• The 15 percent cap. Subsection (2)(b): the fund balance may not exceed 15 percent of total general fund receipts for the fiscal year just ending. Subsection (2)(c): any amount above the limit goes back to the general fund.
• A way to reduce the deposit. Subsection (3): if a majority of each house adopts a concurrent resolution requesting it, the Controller must reduce the transfer in subsection (2).
• A spending brake. Subsection (4): once the balance reaches 10 percent of general fund receipts, appropriations from the fund in any year are limited to 50 percent of the balance.

The statute dates from 2015 (chapter 341) and was amended in 2020 (chapter 112). It replaced an older budget reserve fund that began with H747 of 1984. Interest on the fund does not stay in it. The Legislative Budget Book notes that since March 1990 the interest has accrued to the Permanent Building Fund, and the statute credits interest to the Permanent Building Fund as well. This is why the 2026 budget could talk about "Budget Stabilization interest" moving to the general fund: that is money that would otherwise go to the Permanent Building Fund, a different account.

There is a second statute with a similar name. Idaho Code 57-814A, added in 1998 and amended in 2000, lets the State Board of Examiners transfer unencumbered Budget Stabilization Fund money to the general fund at the end of a fiscal year if the Board finds there is not enough general fund money to cover what the Legislature appropriated. The transfer is "the final accounting adjustment to close the fiscal year" and it cannot exceed the lesser of the insufficiency or one-half of one percent of the original general fund appropriations for the year just ending. The governor's next executive budget must address any such transfer. For FY2026 the 2026 Legislative Fiscal Report calculated that this gave the Board of Examiners access to $28,119,702.50.

How the balance moved

The reserve table is a history lesson. In 2008 the fund held $140.6 million. The recession then drew it down: transfers to the general fund in the FY2009, FY2010 and FY2011 balancing left $99,672 on June 30, 2011. After that it rebuilt through statutory deposits and one-time deposits. Here is the shape.

The veto that left the cap in place

The cap rule produced a fight in April 2026. With revenue forecast at $5,510.1 million, the fund looked to be about $53.7 million over the cap. The Legislature passed H975, which the fiscal note says would have blocked the transfer out of the Budget Stabilization Fund in FY2026 when the balance exceeded 15 percent (it would not have blocked a 57-814A transfer needed to balance the budget). The Joint Finance-Appropriations Committee voted 16 to 4 on April 1, 2026 to take that route, according to the Idaho Press. Senator Jim Woodward argued that the cap exists so that current taxpayers' dollars are used now. Senators Janie Ward-Engelking and Melissa Wintrow asked why the body would keep the money out of the general fund after a session of cuts. Keith Bybee of LSO told the committee that keeping the funds was a policy decision. H975 passed the House 43 to 23 and the Senate 19 to 13. Governor Little vetoed it in a letter dated April 8, 2026; the bill page records the return on April 28.

The effect was that 57-814's cap rule stayed in force. The Legislative Fiscal Report says so plainly in a footnote, and the September Budget Monitor shows the transfer, now $28.9 million. In his veto letter, the Governor said the bill would override the 15 percent framework in 57-814, noted that total reserves equal about 24 percent of general fund revenue, said he wanted flexibility given uncertain revenue, and said the veto frees money for an expected costly fire season after the Legislature declined to prefund the Fire Suppression Fund on an ongoing basis.

The Public Education Stabilization Fund

Idaho Code 33-907 creates this fund as a fund detail of the public school income fund. It receives money transferred under 33-1018 and 33-1018C and whatever the Legislature transfers or appropriates. The money is continuously appropriated for the purposes in 33-1018 and may be spent only for those and for the purposes in 33-1018A. Balances above 15 percent of the current year's total state appropriation for public school support move to the school district facilities fund. Interest stays in the fund. The statute was added in 2003 and amended in 2006, 2017, 2021 and 2024.

In plain terms the fund is a cushion for school funding. The Legislative Budget Book describes agencies and programs that are "eligible for distributions to and from" it, and it is the account the budget turns to when enrollment-driven costs exceed what was appropriated. The history shows both uses. It held $112.0 million in 2008 and dropped to $11.2 million in 2011 during the recession. It then grew to $254.2 million at the end of FY2025. The Legislative Fiscal Report estimates $265.3 million for June 30, 2026 and a draw in FY2027 (the Budget Book at the start of the session showed a $50.9 million withdrawal in FY2027 for public school needs; the after-session report shows $45.5 million, so check the current edition).

The other accounts

The Idaho Millennium Fund is Idaho's tobacco settlement account. Idaho Code 67-1803 puts in it 20 percent of the money Idaho receives under the master settlement agreement for money received on or after January 1, 2007, plus whatever the Legislature adds. Section 67-1804 sends a distribution to the Idaho Millennium Income Fund each July: 5 percent of the fund's average monthly fair market value over the first 12 months of the preceding 24 months. Section 67-1805 caps the Millennium Fund at $100 million, measured the day after that distribution, with any excess going to the Idaho Millennium Permanent Endowment Fund. Section 67-1806 says the uses of the Income Fund "shall be determined by legislative appropriation." In practice that means you can find Millennium Income Fund lines in appropriation bills. In H866, for example, the State Treasurer has an Idaho Millennium Income Fund line of $80,000 for operating expenditures (lesson 08 walks through that bill).

The Twenty-Seventh Payroll Fund exists for years in which the state incurs a twenty-seventh payroll. Section 57-826 says it covers general fund payroll costs in those years. Its balance was $38.873 million at the end of FY2025. In 2026, H968 gave the Governor and Board of Examiners a path to use it to balance FY2026 if revenue fell short. The Governor line-item vetoed the words "sufficient funds" in that section, which the Legislative Fiscal Report reads as a signal that he would rather not use it, possibly calling the Legislature back instead.

The Higher Education Stabilization Fund held $23.565 million at the end of FY2025, and the emergency funds held $29.315 million.

Date	Budget Stabilization	Public Education Stabilization	Millennium	Higher Ed Stabilization	Emergency	27th Payroll	Total (all columns)
June 30, 2011	$0.100	$11.154	$74.589	$0.000	$3.339	$0.000	$89.235
June 30, 2019	$373.161	$81.729	$41.028	$7.730	$27.559	$0.000	$531.229
June 30, 2023	$847.826	$205.700	$53.144	$15.037	$34.942	$35.803	$1,192.453
June 30, 2024	$880.189	$243.622	$67.825	$16.060	$31.082	$37.306	$1,276.084
June 30, 2025 (actual)	$880.189	$254.186	$72.085	$23.565	$29.315	$38.873	$1,298.213
June 30, 2026 (estimate, April 2026 Fiscal Report)	$880.189	$265.300	$75.415	$24.565	$29.315	$40.505	$1,315.289

In millions of dollars. Sources: 2026 Legislative Budget Book and 2026 Legislative Fiscal Report reserve tables. The Economic Recovery Reserve column is zero or a few thousand dollars in these years and is included in the totals for 2011 ($0.054) and 2019 ($0.022) but left out of the columns for space. The total row for 2011 and 2019 adds in those small amounts. The Fiscal Report's printed sentence under the table gives a different FY2026 total ($1,265.3 million) from what the columns add to ($1,315.289 million), so treat the FY2026 total as unsettled until an updated table is published.

How FY2026 was balanced

Here is the part most readers saw only in pieces. The 2026 Legislative Fiscal Report's Budget Issues Summary tells it in order.

1. The original FY2026 revenue projection, after law changes, was $5,929,118,200. In August 2025 the revised forecast was $5,553,623,800. That left a $375.5 million gap and a projected budget deficit of $36,852,200.
2. The Governor ordered a 3 percent temporary reduction in spending for all general fund agencies except Public School Support. Updated spending forecasts for Correction and Medicaid were short $109,970,800, which would grow the deficit to $146,823,000.
3. Congress passed the federal law known as HR1 (the One Big Beautiful Bill Act), and the Legislature conformed with most of it in H559. The report says that adds $155 million to the projected deficit, which then stood at $190,346,800. The printed figures do not add straight across ($146,823,000 plus $155,000,000 is $301,823,000, not $190,346,800), and the report does not show the steps between them, so treat $190.3 million as the report's own total.
4. S1331, signed March 16, 2026, reduced most general fund agency budgets by about 4 percent, adding 1 percent to the Governor's holdback, for savings to the general fund of $131,321,800.
5. The remaining deficit of $59,025,000 was covered by cash transfers of $106,745,000 from existing balances in S1332 and H968, leaving an estimated ending balance of $67,294,700.

Look at the arithmetic. $190.3 million of deficit minus $131.3 million of cuts leaves $59.0 million. The report credits $106.7 million of transfers to S1332 and H968, which is more than the $59.0 million remaining, but $106.7 million is exactly the S1332 total, and the two H968 transfers listed below ($13.0 million and $8.8 million) came on top of it. Adding all three (106,745,000 plus 13,000,000 plus 8,764,500 is 128,509,500) and subtracting the remaining deficit (128,509,500 minus 59,025,000) gives 69,484,500, within about $2.2 million of the report's $67.3 million balance. The report does not show the remaining lines, and this lesson does not reconcile that difference. Also note the report's own wording: the transfers come from "existing cash balances from several accounts." The S1332 transfers were: $45,000,000 from the Strategic Initiatives Program Fund, $3,000,000 from the Idaho Opportunity Scholarship Fund, $33,745,000 from the Permanent Building Fund, $15,000,000 from the Water Pollution Control Fund and $10,000,000 from the In-Demand Careers Fund, all in FY2026, plus another $10,000,000 from the In-Demand Careers Fund in FY2027. H968 added $13,000,000 from the Idaho Broadband Fund and $8,764,500 from the School District Building Account in FY2026. The statement of purpose for H968 says the bill transfers funding "to augment General Fund balances in fiscal years 2026 and 2027."

Then the year ended. The LSO year-end Budget Monitor of August 10, 2026 reports:

• Final FY2026 general fund revenue: $5,675.5 million, which was $165.4 million above the Sine Die estimate and $201.8 million (3.4 percent) below FY2025.
• General fund expenditures: $5,613.3 million, $34.1 million below what was anticipated.
• Ending cash balance: $275.4 million. After setting aside $17.4 million for reappropriation and executive carry forward, the unobligated cash balance was $258.0 million, $190.7 million above the $67.3 million projected at Sine Die.

That $258.0 million became the starting cash for FY2027. In the September 2026 monitor, the projected FY2027 ending balance is $696.0 million, built from the $258.0 million, $291.1 million from the DFM August revised forecast, $90.3 million of revenue above forecast through September, and smaller items. The contingent interest transfers did not appear as cash in that table. The cash transfers line shows $10.0 million, the In-Demand Careers Fund transfer, and the Budget Stabilization Fund line shows the $28.9 million statutory transfer.

Three kinds of transfer

The word "transfer" covers different things, and the 2026 budget used all three.

• A statutory transfer is required by Idaho Code. The 57-814 cap transfer is one. It moves without a new bill.
• A cash transfer in an appropriation bill is a section of an act that tells the Controller to move a stated sum. S1332 is that kind. It changes the cash balances of two funds and does not change a tax.
• A contingent transfer moves only if a condition is met. In H968, sections 8 to 14 move interest and closeout money to the general fund in FY2027 if the estimated ending balance is below the trigger; the fiscal note totals the potential FY2027 amount at $95,900,100. The Fiscal Report footnote gives the trigger as an ending balance of less than $150 million. The Idaho Press, reporting JFAC's action, also gives $150 million. The narrative in the Fiscal Report mentions $155 million in one sentence, so quote the bill text, not the summary, when it matters. Interest sources include the Budget Stabilization Fund ($35,207,600), the Public Education Stabilization Fund ($10,201,300), the Water Pollution Control Fund ($5,308,000), the Permanent Building Fund ($15,232,400) and two Strategic Initiatives funds.

JFAC co-chair Representative Josh Tanner described the cash transfers as a cushion to ensure an end-of-year surplus rather than a structural basis for building the budget, according to the Idaho Press. The same article quotes him calling earlier one-time transfers in the Governor's "Enduring Idaho" plan "gimmicks" that left the budget "structurally unsound." I did not find the Governor's own written response to that criticism in a primary source, so it is not characterized here.

Questions and answers

Who decides how much goes into the Budget Stabilization Fund?

The Legislature, by statute and by bill. Subsection (2) of 57-814 sets a formula (collections above 4 percent growth, up to 1 percent of the prior year's collections), and the Legislature has also made one-time deposits by bill, such as the $214 million in S1214 of 2021 and $120 million in S1428 of 2022. The Controller carries out the formula transfer.

Can the Legislature turn off the formula deposit?

Yes. Subsection (3) requires the Controller to reduce the transfer if a majority of each house adopts a concurrent resolution requesting it.

Where does the interest go?

To the Permanent Building Fund by statute, which is why moving Budget Stabilization interest to the general fund took an act of the Legislature (H968 section 8, $35,207,600 for FY2027, conditional).

Why did the Budget Stabilization Fund stay at exactly $880.189 million?

The balance was unchanged from June 30, 2024 through the FY2026 estimate. The 2026 Fiscal Report lists H482 of 2025 for FY2025 with no change. Because interest does not stay in the fund and the cap applies, a flat balance is what you would expect when no deposit or withdrawal is made.

What is the difference between the Governor's holdback and a rescission?

A holdback is the Governor's temporary reduction in spending authority by executive order. A rescission is the Legislature removing appropriation by law, as S1331 did. The Legislative Budget Book and the Fiscal Report call the first a "Temporary Reduction in Spending." The General Fund Summary in the Budget Book cites Executive Order 2025-02 for it, while one agency page in the same book cites Executive Order 2025-05, so check the order itself before citing a number.

What counts as "ongoing" versus "one-time" in this story?

Ongoing spending repeats every year, so it needs ongoing revenue. One-time money, like a cash transfer or a revenue beat, can pay for one-time things. The Fiscal Report says budget setting for most FY2027 agency budgets began with a 5 percent ongoing reduction from the FY2026 original appropriation, with Public School Support, Medicaid, Correction, State Police and the Secretary of State among the exceptions. It adds that the difference between projected revenue and ongoing appropriations for FY2027 was $26,634,000.

How can I find the latest reserve numbers?

Open the General Fund Budget Monitor on the LSO site for the month, and the reserve table in the newest Legislative Budget Book or Fiscal Report. Compare dates. The State Controller also publishes year-end reports.

Hard questions

"Why does a state with $850 million in a rainy day fund cut agency budgets?"

Because the fund has rules. It is for revenue shortfalls, it is spent by appropriation, and the Legislature chose in 2026 to balance FY2026 with cuts and transfers from other accounts and leave the Budget Stabilization Fund balance intact. Senator Woodward's argument at JFAC was that the cap exists so current taxpayers' dollars are used now. The opposing argument, made by Senators Ward-Engelking and Wintrow, was that after deep cuts the excess over the cap should flow to the general fund. Both positions are about what the cap is for, and the statute settled the mechanics when the veto left it in place.

"Are one-time transfers just a gimmick?"

JFAC's co-chairs used that word about the Governor's earlier plan, according to the Idaho Press, and then adopted their own cash transfers as a cushion. A fair reading is that one-time money is not wrong when it covers a one-time gap, and a problem when it covers a recurring gap. The test is whether the same amount of ongoing spending is still being funded next year without it. The Fiscal Report says the FY2027 budget needed an ongoing reduction to bring ongoing spending near ongoing revenue.

"Revenue ended up $190.7 million above the plan. Were the cuts unnecessary?"

That is knowable only after the fact. Cuts were made in March 2026 when the Sine Die estimate showed a $67.3 million cushion with considerable risk (Correction and Medicaid were short, and H559 had cut revenue). The year ended with $258.0 million of unobligated cash. Supporters of the cuts point to the uncertainty at the time and to the structural gap in FY2027; others point to the cash that arrived. The same year-end monitor shows revenue 3.4 percent below FY2025, so the beat was relative to a forecast, not to the prior year.

"Is keeping money in a reserve better than returning it in tax cuts?"

That is a values question and this lesson takes no side. The record supports a few facts: the Budget Stabilization Fund was at 15.0 percent of FY2025 revenue, at the statutory cap; the statute sends any excess to the general fund; and the Legislature in 2025 and 2026 made tax changes whose costs are in the fiscal notes. Lesson 07 sets those costs out.