No Runny Eggs

The repository of one hard-boiled egg from the south suburbs of Milwaukee, Wisconsin (and the occassional guest-blogger). The ramblings within may or may not offend, shock and awe you, but they are what I (or my guest-bloggers) think.

Doyle staff used “Enron accounting” on their way out the door

by @ 23:18 on January 20, 2011. Filed under Politics - Wisconsin.

The Legislative Audit Bureau reviewed a few “questionable” decisions by the staff of former governor Jim Doyle (Democrat, for those of you just tuning in) that allowed the state to claim it was in compliance with the $65 million statutory minimum balance at the end of FY2010 by claiming the state general fund balance was $71.1 million. In order of, in my humble and non-expert opinion, increasing severity, here are the four items of “concern” that fell outside the scope of established Government Accounting Standards and thus outside last month’s “unqualified audit opinion”:

  • $10.6 million in “lapsed” amounts from program revenue appropriations to the general fund that were covered not by cash-on-hand, but by either accounts receivable or other assets – As the report notes, this is legal under Wisconsin law. However, it made cash available for FY2010 that was either not yet in hand or could only be put in hand by asset sales. I really would like to know how much of that was from accounts receivable (and how much of those receipts actually came in) versus how much was backed by illiquid assets, as that would determine how much of that represents a further hole in the state budget.
  • $25.9 million in funds spent in FY2010 but not reported as spent until FY2011 – This is a new twist on the “delayed payment syndrome” practiced by many states and advocated by some who want to avoid an increase in the federal debt limit. Usually, they’re “honest” enough to not spend the money until the new fiscal year “resets” things, but in this case, the money was gone in one fiscal year with only the recording of the expenditure delayed until the following one. Further, as it appears the fiscal year of the spending authority doesn’t match up with the fiscal year of expenditure, the LAB notes it appears to be inconsistent with the spirit of the portion of the state Constitution prohibiting expenditures without lawful-and-authorized appropriations.
  • $406,700 “lapsed” from the Unclaimed Property fund to the general fund – It may be but a drop in the bucket, but it’s a double-dipper for the Doyle administration. By state law, all the proceeds from the Unclaimed Property fund are to go to the Common School Fund, and under the state Constitution, the “clear proceeds” of property that comes under the custodianship of the state by escheat (e.g., unclaimed property) is to be used for educational purposes.
  • $8.8 million in “lapsed” amounts from program revenue appropriations to the general fund that were neither covered by cash nor by any assets – Now we get to the potentially-serious. There was, is, and will be no expectation of that $8.8 million ever existing, yet the Doyle administration claimed it did. In the private sector, that is a convictable felony.

Except for the heist from the Unclaimed Property fund, each of those other categories, especially the “whole-cloth” lapsing, is more than the difference between the reported closing FY2010 balance and the statutory minimum balance. I wonder what J.B. Van Hollen is doing these days.

To answer newly-minted Administration Secretary Mike Huebsch’s question of what this does to the over-$100 billion deficit in the current FY2010/2011 biennial budget (as quoted by the Milwaukee Journal Sentinel, which for some reason chose to focus instead on the up-to-$3.3 billion structural deficit the FY2012/2013 biennial budget needs to fill), my best guess as to how much of that $45.7 million is part of the expanded hole is somewhere between $9.2 million (the amount of the wholly-nonexistent lapses plus the improper raid on the Unclaimed Property fund) and $19.8 million (adding in the remainder of the potentially-nonexistent lapses). The $25.9 million in “delayed-reporting” spending, while odious, would have been spent prior to the end of FY2011 anyway and thus doesn’t appear to represent a further liability to the state.

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