PEER releases report to monitor pass-through funding in Mississippi and found most of which would not be monitored through SB 2824.
In the Legislative Session of 2021, the Legislature passed SB 2824 which was done to monitor the expenditure of pass-through funding within state agencies for the FY2021 and FY2022 budgets.
In FY2021 the legislature appropriated a budget of $22.3 billion, and $23.3 billion in FY2022. Pass-through funding between the two years totaled at $6.5 billion, with $3.4 billion in FY2021 and $3.1 billion in FY2022.
Most interested was that PEER determined 99% of the pass-through funding would not be subject to the monitoring as outlined in SB 2824. Only about $20.6 million or 1% of pass-through funding would be monitored.
PEER noted that the lack of a single entity responsible for providing guidance to funding recipients and responsible for collecting and reporting expenditure information hinders oversight and transparency.
They recommended that the Legislature amend Section 1 of SB 2824 to include all funds in the State General Fund and all state support special funds. They also recommended that recipient entities should provide quarterly reports detailing actual expenditures, establish a disbursement schedule, and a requirement of itemized expenditure reports before June 30 of that fiscal year to the Department of Finance and Administration.
Some of the Committee’s major findings include:
- PEER analyzed 222 appropriation bills enacted for fiscal years 2021 and 2022 to identify line-item language for pass-through funding. Pass-through funding, identified by PEER, totaled approximately $3.4 billion in FY 2021 and $3.1 billion in FY 2022, accounting for 15% and 13% of the total state budget, respectively.
- PEER used the definitions and exemptions identified in S.B. 2824 to determine how much of the $6.5 billion, identified as line-item pass-through funding for both FY 2021 and FY 2022, would be included or excluded in monitoring in compliance with S.B. 2824. In FY 2021 and FY 2022, less than one percent of total pass-through funding identified by PEER is subject to the monitoring requirements of S.B. 2824.
- After an analysis of state agency appropriation bills, PEER determined that over 99% of pass-through funding in FY 2021 and FY 2022 would not be subject to S.B. 2824’s monitoring requirements due to:
- exemptions specified in S.B. 2824;
- the funding does not meet the definition of state money or pass-through as defined in S.B. 2824; or,
- state agencies have existing controls in place to monitor the expenditure of pass-through funding.
- After reviewing the current requirements of S.B. 2824, PEER identified ways to improve the monitoring and reporting requirements of S.B. 2824, including selection of one entity to be responsible for providing guidance to agencies and entities, for developing standard report formats, and for consolidating and reporting to the Legislature and Governor the expenditure of pass-through funding.
- To improve the oversight and transparency of pass-through funding, the Legislature should consider amending the definition of state money defined in S.B. 2824 and selecting DFA’s Office of Budget and Fund Management (OBFM) to be the entity responsible for providing oversight to state agencies and recipient entities and for consolidating expenditure reports to be presented to the Joint Legislative Budget Committee.