Agencies Bank Millions in General Fund Surpluses

September 5, 2011

Investigative Reports

Print Friendly, PDF & Email

The NerveWhile many state agencies have publicly cried poverty over the past several years, at least 16 agencies started fiscal 2011-12 with a general fund surplus of more than $1 million, The Nerve found in a review of a state financial report.

Some 47 agencies carried over a total of $70.6 million in general funds into this fiscal year, according to the report by S.C. Comptroller General Richard Eckstrom for the fiscal year that ended June 30.

That’s up $7.2 million, or 11 percent, over the previous fiscal year.

Carryover funds are the difference between actual appropriations and actual expenditures at the end of a fiscal year, according to Eckstrom’s office.

The $70.6 million is in addition to what Eckstrom described in his year-end report for fiscal 2010-11 as an “unobligated” state surplus of $122.7 million, Eckstrom spokesman R.J. Shealy told The Nerve last week.

State lawmakers already have authorized spending in this fiscal year a $71 million surplus from fiscal year 2009-10, plus another $173.8 million in better-than-expected general fund revenues from last fiscal year.

The state also has, as authorized by the S.C. Constitution, two large rainy-day funds: the general reserve fund, which stood at $166.3 million as of June 30; and the $110.8 million capital reserve fund, though lawmakers have appropriated $107.6 million, or 97 percent, of that amount for various projects and programs this fiscal year.

Under a bill (S. 207) sponsored by Sen. Tom Davis, R-Beaufort, general fund surplus revenue would be rebated to individual and corporate taxpayers through income tax credits if not needed to replenish the state’s general reserve fund or for natural disasters.

The bill never made it out of the Senate Finance Committee this year, though it could be considered when lawmakers reconvene in January.

The carry-over amounts listed in Eckstrom’s year-end report don’t include any agency reserves in federal and “other” funds. Those funds collectively make up about 73 percent of the state’s total $22.3 billion budget for this fiscal year.

The Nerve, for example, reported last week that year-end other fund surpluses at the S.C. Department of Transportation have plunged by about $217 million since fiscal year 2008.

As for year-end general fund surpluses, the S.C. Budget and Control Board, which handles much of the daily operations of state government and oversees the state retirement system, led all agencies last fiscal year with $12 million in carry-over funds, according to Eckstrom’s report.

The BCB is the same agency that at the start of last fiscal year tapped -with authorization from a five-member board chaired by then-Gov. Mark Sanford – into a little-known $13 million special account it controlled after Sanford vetoed the agency’s entire ratified $25.2 million general fund budget for last fiscal year.

The S.C. Supreme Court in January ruled that Sanford’s veto was unconstitutional, restoring the agency’s general fund budget.

At the start of last fiscal year, the BCB had $9.6 million in carry-over general funds and $11.6 million the year before that, records at Eckstrom’s office show.

Of the agency’s $12 million general fund surplus at the start of this fiscal year, $4.3 million is restricted under a state budget proviso to help offset future costs in  employer contributions to the state health plan, according to information provided by BCB spokeswoman Lindsey Kremlick.

Of another $7.6 million in carry-over funds under BCB control, nearly $6.7 million is designated for such things as water and sewer projects for local municipalities, a public safety radio system, deferred maintenance at the more than 80 state buildings managed by the agency, and “administrative support” for the Governor’s Military Base Task Force, Kremlick said.

The $7.6 million represents 30 percent of the agency’s ratified general fund budget of $25.2 million for last fiscal year, though according to information provided by Kremlick, the approximate $920,000 unobligated amount represents about 3.65 percent of the budget.

Including other and federal funds, the BCB’s total budget for this fiscal year is about $217.6 million, according to the Office of State Budget.

Legislative Slush Funds?

But it’s not just executive branch agencies that have relatively large reserves. The 124-member House of Representatives, for example, started this fiscal year with a $5.8 million general fund surplus – the fourth-highest among all state agencies, according to Eckstrom’s report.

The surplus is more than twice the amount the House had at the start of fiscal year 2010-11 and more than five times the amount the previous fiscal year, records from Eckstrom’s office show. The $5.8 million represents 30 percent of the chamber’s $19.2 million final adjusted appropriations for last fiscal year.

The Nerve reported in June that the House sought a $2.3 million hike in its budget for this fiscal year, which started July 1. The chamber received the increase, bringing its budget to about $18.7 million.

With carry-over funds, the House has nearly $24.5 million available for this fiscal year.

Like the House, the 46-member Senate also had a relatively large general fund surplus to start this fiscal year – slightly more than $4 million, or 27 percent of its approximate $14.7 million final adjusted budget for last fiscal year, according to Eckstrom’s report.

Adding in carry-over funds would bring the Senate’s total available revenues for this fiscal year to $16.4 million. The Senate last fiscal year received a $5 million overall budget increase compared to the previous year, The Nerve reported earlier.

The chamber’s $4 million surplus going into this fiscal year, which ranks as the sixth-highest among all state agencies, was nearly twice the amount carried over at the start of last fiscal year, though nearly $1.3 million less compared to the start of fiscal year 2009-10, according to records from Eckstrom’s office.

Under a state budget proviso (70.12), both the Senate and House are not restricted in the amount of general funds carried over each year. Generally, state agencies can carry forward up to 10 percent of general fund appropriations for the current fiscal year, though a budget proviso (89.26) bans them from withholding services in doing so.

In addition, other provisos allow agencies to carry over certain unspent general funds for specific purposes. Of the total $70.6 million in carry-over funds at the beginning of this fiscal year, $56.8 million, or 80 percent, was listed in Eckstrom’s year-end report as “special” carry-forward amounts, including the entire surplus amounts for the Senate and House.

But the proviso for the Legislature doesn’t limit how either chamber can use its surpluses.

The Nerve recently submitted written questions to House Clerk Charles Reid and Senate Clerk Jeffrey Gossett about their respective chamber’s budget surpluses, but received no response.

Biggest Reserves

At least 16 state agencies started this fiscal year with a general fund surplus of more than $1 million, according to Eckstrom’s report, which combined certain categories that are listed separately on the General Assembly’s budget website.

Following is a list of the top 10, according to Eckstrom’s report:

  • Budget and Control Board – $12,045,028;
  • Department of Education – $10,589,022;
  • Department of Health and Environmental Control – $6,725,543;
  • S.C. House of Representatives – $5,800,547;
  • Department of Commerce – $5,024,716;
  • S.C. Senate – $4,037,265;
  • Department of Transportation – $3,921,557;
  • Department of Probation, Parole and Pardon Services – $2,166,095;
  • Adjutant General’s Office – $1,615,025; and
  • Governor’s Office (executive office and other divisions) – $1,612,028.

The carry-over amounts for some agencies represented significant portions of their final adjusted general fund appropriations for last fiscal year, The Nerve’s review found.

For example, the S.C. Aeronautics Commission carried over $890,646 into this fiscal year, which represents 44 percent of its final adjusted general fund appropriations of $2 million for 2010-11, according to records from Eckstrom’s office.

In a written response to The Nerve, Paul Werts, the Aeronautics Commission director, said $740,000 of his agency’s general fund surplus is earmarked as a match for federal grants for airport construction. The balance of the reserves was proceeds from the sale of an aircraft, which will be used to maintain two existing planes, he said.

“Operationally, we have no reserve funds,” Werts said.

The agency’s general fund budget for this fiscal year is  $1.13 million; the carry-over amount would bring its total available general fund revenues to $2 million.

Including federal and other funds, the Aeronautics Commission’s total budget for this fiscal year is $7.6 million, according to the Office of State Budget.

For the Adjutant General’s Office, its $1.6 million general fund surplus represents 25 percent of the agency’s $6.4 million final adjusted general fund appropriations for 2010-11, records show.

S.C. National Guard spokesman Col. Pete Brooks told The Nerve in a written response that the surplus money derives from “enterprise account” funds generated by the guard’s dining facility at the McCrady Training Center, the armory rental program and organizations that use the guard’s training facilities.

Brooks said the reserve account is needed to help offset a $2 million shortfall in the agency’s operations budget.

“By 2015 the agency will be out of ‘enterprise’ funds if we do not generate more than we currently do,” Brooks said. “With the current rentals of our facilities down, this will be of concern to the Legislature and budget writers.”

The agency’s general fund budget for this fiscal year is about $4.5 million; with the carryover amount, available general fund revenues would total about $6.1 million.

Including federal and other funds, the agency’s total budget for this fiscal year is $66.8 million, according to the Office of State Budget.

Reach Brundrett at (803) 254-4411 or rick@thenerve.org.