State Agencies Flush with Surplus Money

September 3, 2013

Investigative Reports

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MoneyWhile many South Carolina families are still struggling to climb out of financial holes created by the Great Recession, more than a few state agencies are basking in multimillion-dollar, taxpayer-funded budget surpluses.

For the fiscal year that started July 1, state agencies and a state fund used to pay off taxpayer-funded bonds collectively had $381.1 million in general fund reserves – more than the twice the amount of reserves recorded on July 1, 2012, according to a year-end report released last week by S.C. Comptroller General Richard Eckstrom.

Take the state House of Representatives, for example.

The 124-member chamber recorded $15.1 million in general fund expenditures last fiscal year, but still had $16.1 million left over – the largest-percentage reserve among state agencies that received general fund appropriations, according to an analysis by The Nerve of Eckstrom’s report.

Combined with an appropriation this fiscal year of more than $21.5 million, the House will have nearly $37.8 million at its disposal, which works out to be about $305,000 per House member.

The 46-member Senate started this fiscal year with more than $6.4 million in general fund reserves, which represented more than half of the chamber’s $11.8 million in expenditures in fiscal 2013, Eckstrom’s report shows. When added to its total appropriation this fiscal year of about $13.3 million, the chamber will have more than $19.7 million, or approximately $429,000 per member, to spend.

Both chambers routinely carry over millions of tax dollars annually and have doled out hefty pay raises to staff in recent years, as The Nerve has previously reported.

A state budget proviso allows the Senate and House to carry forward all unspent general funds into the following fiscal year. Generally, state agencies are allowed to carry forward up to 10 percent of their original general-fund appropriation.

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

Other state agencies also started this year with relatively large reserves. The S.C. Department of Commerce, for example, carried over more than $9.2 million into this fiscal year, which represented nearly  a third of the agency’s fiscal 2013 general-fund expenditures of approximately $29 million, according to Eckstrom’s report.

Commerce spokeswoman Amy Love did not respond Friday to written questions from The Nerve about the agency’s surplus.

Following is a list of the state agencies with the top-10 largest surpluses as of July 1, according to Eckstrom’s report. Some agencies with similar functions or agency divisions that are listed separately in the state budget are combined in Eckstrom’s report.

  • Department of Health and Human Services – $232.5 million;
  • House of Representatives – $16.1 million;
  • Department of Education – $15.7 million;
  • Budget and Control Board – $13.6 million;
  • Governor’s Office – $10.8 million ($200,692 of which lapsed);
  • Department of Corrections – $10 million;
  • Department of Commerce – $9.2 million;
  • Department of Health and Environmental Control – $7.4 million;
  • Stand-alone schools – $7.1 million ($159,005 of which lapsed);
  • Senate – $6.4 million

The Department of Health and Human Services’ surplus of $232.5 million represents 61 percent of the total $381.1 million in general funds carried over as of July 1. In a written response Friday to The Nerve, HHS spokeswoman Colleen Mullis said part of HHS’ carry-over funds are “one-time surpluses and a portion we have now determined are recurring surpluses.”

“The one-time surpluses will be used to complete rounding out of our Medicaid reserve fund to approximately $180 million, as requested by the Legislature,” Mullis said. “The recurring surpluses will be used to swap out one-time money in the FY15 budget, reducing the waiting lists for individuals with disabilities (which currently exceed 10,000 persons), and reinstate emergency dental services for Medicaid eligibles.”

In total, $381,144,883 in general funds was carried into this fiscal year – more than twice the total $165.8 million in general-fund surplus money available to agencies as of July 1, 2012, Eckstrom’s report shows. The report listed 49 agencies or functions with fiscal 2013 year-end surpluses, 25 of which had reserves totaling at least $1 million each.

Besides individual agency surpluses, the state also has three multimillion-dollar reserve funds. Following are those accounts and their balances for this fiscal year, according to Eckstrom’s report:

  • General Reserve Fund (mandated by the S.C. Constitution) – $281.6 million;
  • Capital Reserve Fund (mandated by the S.C. Constitution, though lawmakers typically drain it annually, including this fiscal year, ) – $112.6 million; and the
  • Contingency Reserve Fund (available unspent general-fund surplus revenues from fiscal 2013) – $68.3 million (includes $6.6 million in unspent Capital Reserve funds available for transfer to the Contingency Reserve Fund).

Eckstrom’s report doesn’t cover federal and “other” surplus funds, which make up 72 percent of this fiscal year’s total state budget of more than $24.2 billion (including $1.5 billion in federal food-stamp-assistance funds transferred to an “unbudgeted account”). Given past practices by the Office of State Budget, the amount of federal and other fund surpluses carried over by state agencies into this fiscal year likely won’t be released publicly until after the start of the legislative session in January.

 The Nerve reported in March that 18 non-college agencies with the largest agency budgets collectively had $889 million in other fund surpluses as of July 1, 2012.

In his year-end report, Eckstrom said the state’s general fund took in about $6.4 billion in revenues last fiscal year, with revenues growing about $525.1 million, or 8.2 percent, over the prior fiscal year. The state’s chief accountant said in a press release that despite “improved economic conditions, the state has continuing challenges with funding retirement benefits,” noting shortfalls of about $14 billion in its pension benefit plans and $10 billion in the state retiree health-benefit plan.

Although state government is swimming in surplus money, there has been little serious discussion in the S.C. General Assembly about returning any of it to taxpayers. A state budget proviso renewed for this fiscal establishes a “Tax Relief Reserve Fund,” though budget records show that lawmakers didn’t commit any agency surplus funds to it.

Which means struggling South Carolina families will have to manage yet another year without any significant tax relief.

Reach Brundrett at (803) 254-4411 or rick@thenerve.org. Follow him on Twitter @thenerve_rick. Follow The Nerve on Facebook and Twitter @thenervesc.