State agencies skirt law with deficit 'rollovers' Audit finds spending deferred to 1992

September 03, 1991|By C. Fraser Smith | C. Fraser Smith,Annapolis Bureau of The Sun Jolhn W. Frece of The Sun's Annapolis Bureau contributed to this article.

ANNAPOLIS — An article in yesterday's editions of The Sun regarding the rollover of more than $32 million in excess expenditures into the following fiscal year by certain state agencies incorrectly identified the fiscal year. Both the article and an accompanying graphic listing the agencies should have identified the year as fiscal year 1990.

+ The Sun regrets the errors.

ANNAPOLIS -- With their collective accounts more than $32 million overspent, several state agencies quietly avoided closing their books in the red at the end of the 1991 fiscal year by pushing the excess spending into the next year's budget.

The recordkeeping for these "rollovers" sometimes obscured what had actually happened and was not done "in accordance with budgetary laws, regulations and procedures and generally accepted accounting principles," says a report by the State Division of Audits and Compliance.

FOR THE RECORD - CORRECTION

The amounts rolled over June 30 ranged from $300,000 in the Department of Natural Resources to $8.4 million in the Department of Health and Mental Hygiene's Medicaid program.

The auditors recommended that state law be changed to remove any ambiguity about what they consider to be illegal budgetary practices.

Comptroller Louis L. Goldstein, who shares some responsibility for monitoring close-out budget balances, said the amounts were relatively small -- only 0.5 percent of the $6.04 billion general fund expenditures for that year.

His calculations were not comforting to William S. Ratchford II, the legislature's chief fiscal officer.

"If $32 million is OK," he said, "what about $300 million?"

Some may say the issue is only an auditing technicality, but Mr. Ratchford said he disagreed with that assessment as well.

"In good times," said Anthony J. Verdecchia, a legislative auditor, "the problem seemed manageable. In a tough year, the problem could be magnified because revenues were falling and agencies would have less money even before they were faced with retiring bills from the previous year."

Mr. Verdecchia said the auditors recognized that extenuating circumstances might have led to the rollover.

"We're not saying it should never happen. But we recommend a process, including punitive action when warranted, when overspending occurs," he said.

As costs grow because of court orders or mandated federal programs, Mr. Verdecchia said, bills can be submitted up to 12 months late. But he said a process is needed to keep a handle on the situation.

Budget Secretary Charles L. Benton Jr. said he generally agreed with the auditor's points. But he said he did not think his department was able to do an accurate, agency-by-agency review of year-end budgets.

Mr. Benton did say that under pressure of shortages projected as a result of the recession, his department had been able to identify agencies that needed additional allocations to close their books in the black in fiscal 1991.

John W. Frece of The Sun's Annapolis Bureau contributed to this article.

State agencies over budget

The following state departments have been cited for spending a total of $32 million more than was budgeted for them during fiscal year 1991, which ended June 30, and for "rolling" those expenses into the current fiscal year:

Agency . . . . . . . . . . . . . . Millions of dollars

Health

Medicaid . . . . . . . . . . . . . . . $8.4

Kidney disease program . . . . . . . . 2.5

Developmentally disabled . . . . . . . 3.8

Other. . . . . . . . . . . . . . . . . 3.9

Juvenile Services. . . . . . . . . . . 6.0

Education. . . . . . . . . . . . . . . 4.0

Economic Development . . . . . . . . . 1.7

Public Defender. . . . . . . . . . . . 1.0

Natural Resources. . . . . . . . . . . 0.3

Other. . . . . . . . . . . . . . . . . 0.4

Total. . . . . . . . . . . . . . . . . $32

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