Each year the Governor submits a revenue estimate. Spending by the state cannot exceed that estimate. This estimate is an educated guess on anticipated revenues. But the expenditures are firm. The state of Georgia is constitutionally obligated to have a balanced budget. 

Once the Governor submits the estimate and his expenditure requests, the House and Senate debate and eventually send a budget to the Governor. The Governor has 40 days to sign it before it automatically becomes law. But the Governor can veto portions of the bill [a line-item veto power.] This process usually ends in April. 

That budget runs from July 1 of a year to June 30 of the next year. This is called the fiscal year budget [FY]. 

The Georgia legislature convenes each year in January for a mandated 40-day session. The first order of budget business each session is to adjust the current fiscal year budget. This allows lawmakers to react to actual revenues that have come in. This is called the amended fiscal year budget [AFY].

The state budget generally comes from 35% from sales tax and 45% from income tax with the rest from a variety of other sources. 

The state generally spends its budget on: 

• K-12 education [35%] 

• Higher education [15%] 

• Transportation [5%]

• Health care [25%]

• Other agencies [15%]

These percentages have held fairly constant for the past 60

years. 

All state agencies are required to submit budget requests to the Office of Planning and Budget (OPB) in September of each year using guidelines issued by the Governor earlier in the year. Using these, the Governor sets the revenue estimates and formulates recommendations for the General Assembly. 

The University System of Georgia begins its budget process a few months earlier. Over the summer the USG and its institutions create budget requests for the next fiscal year. By September the BOR approves the USG budget request. 

Like all state agencies, the USG presents recommendations to the legislature's Joint Appropriations Committee in January. 

There are two budget elements for the USG: operations and capital improvements. The latter includes all building and construction projects. 

The university system operates under a formula funding that dates back to the 1980s, though the system has been under a formula since the 60s. 

According to the USG, student credit hours generates about 80 percent of the total budget plan and operation costs account for the rest. But those credit hours are not treated equally. They are ranked by cost to the system and level of student [type of program and undergrad, grad, etc]. A system-wide algorithm adjusts funding based on credit hours.

Due to the lengthy state and system budget cycle, funding lags credit hours by two years. 

In general, the USG budget comes from tuition and state funds. Since 2010, the ratio of those two has been about 50-50. Steep cuts in state funds began in early 2000s. 

Here is a 2011 USG budget slideshow that shows the budget process and patterns while arguing for a "performance" budget.