Better Fiscal Management Still Needed in Light of Unsupported Overdrafts

MacIver News Service | January 10, 2014

by Haley Sinklair

[Madison, Wisc…] Several state departments were carrying heavy unsupported overdraft totals in the millions of dollars at the end of fiscal year 2013 (FY13), according to a submission to the Joint Committee on Finance (JFC).

The report was released to the committee December 30th, as required by Wisconsin law. The law requires quarterly reports projecting revenues and expenditures for the following quarterly period, and a plan from departments with insufficient funds. Approval of departmental plans will pass automatically on January 21, 2014, unless JFC chooses to meet formally to discuss the plan.

Overdraft debts have accumulated over several years, some in the millions of dollars. Numbers provided in the report include total overdraft debt, as well as any spending increases or decreases in the total deficit for the fiscal year.

The Department of Corrections (DOC) accumulated a net cash overdraft total of $8.8 million at the end of the fiscal year. The Juvenile Operations appropriation, a division of DOC, has had an unsupported balance every year since FY06. A declining population in juvenile institutions that has “resulted in reduced revenues available for juvenile institution operations,” is the reason for the unsupported balance according to the report.

In dealing with these large deficits, DOC has submitted a plan to reduce the total by continuing to consolidate juvenile institutions and maintaining the rate add-on. The projected decrease in the next fiscal year due to these efforts is $1.8 million, still leaving $7 million in overall unsupported balances.

Explanations for such high deficits in different departments include: the cost of utilities, declining correctional populations, and training new military instructors.

The Department of Health Services (DHS) Appropriation 267 has $6.1 million in total unsupported overdrafts. That includes the $177,683 that the department overspent in FY13.

In combating these shortfalls, DHS has submitted a three-part plan:

  • Allocate all utility and maintenance costs to the various agencies that occupy campus facilities.
  • Identify any balances in the operating budget that can be applied against the deficit.
  • Seek approval from the Building Commission and Joint Committee on Finance to sell surplus land at the Northern Wisconsin Center.

The three-part plan, however, has remained the same for three years and the overdrafts continue. Reduced spending is also not addressed in the plan, which instead focuses on shifting revenue funds to deficit areas. The department overdrafted $154,082 in FY12 and $177,683 in FY13.

As compared to the Doyle Administration’s fiscal woes covered by MacIver News Service a few years ago, deficits are improving. Under Doyle, acquired deficits reached hundreds of millions of dollars. The Police and Fire Protection Fund cash balance as well as the Environmental Fund cash balance closed at a negative $10 million in June 2010. A Medical Assistance Trust Fund cash balance of negative $299.2 million was also recorded under Doyle’s administration.