Wisconsin's Shrinking Surplus
Wisconsin’s budget surplus is about $2 billion smaller than it was last year because less money is coming-in from Washington, D.C. and the state is spending more.
The Legislative Audit Bureau earlier this month released its annual Comprehensive Financial Report that shows the state’s total fund balance fell from over $6. billion to over $4 billion over the past year.
“On a GAAP basis, the General Fund total fund balance decreased by $2.1 billion, from $6.6 billion as of June 30, 2023, to $4.5 billion as of June 30, 2024,” the auditors wrote.
The Audit Bureau said the drop was expected.
One of the biggest reasons for the $2 billion drop was a loss of federal money.
“General Fund revenue decreased by $258.1 million and totaled $38.4 billion for FY 2023-24. This decrease was largely attributed to a decrease of $1.0 billion in federal revenues. The decline in federal revenues was largely the result of the phase out of the temporary increase to the Federal Medical Assistance Percentage (FMAP) that resulted from the public health emergency and spending other federal revenues the State received as a result of the public health emergency,” the audit found.
Wisconsin also spent more over the past year according to the report.
“General Fund expenditures increased by $1.5 billion and totaled $36.0 billion for FY 2023-24. This increase was attributed to a $525.0 million payment to the Wisconsin Housing and Economic Development Authority to establish and administer revolving loan programs, as well as to increases in payroll costs for correctional staff, increases in Medical Assistance (MA) Program expenditures and increases in aids to schools,” according to the audit.
The Department of Administration also transferred out about $2 billion to everything from the state’s Capital Improvement Fund, Transportation Fund, and Building Trust Fund.
Wisconsin did see some gains.
The Audit Bureau noted that Wisconsin saw revenue gains in both “tax revenues of $535.1 million, and an increase in investment and interest income of $161.7 million.”
The audit also noted that Wisconsin’s state debt also fell during the past year.
“The State’s long-term debt decreased from $12.3 billion as of June 30, 2023, to $11.6 billion as of June 30, 2024,” the report explained. “The State repaid long-term debt in excess of new debt issuances during FY 2023-24, resulting in a decrease in overall debt. The $1.1 billion in new general obligation bonds and notes issued during FY 2023-24 included $304.3 million for UW System academic facilities and $203.0 million for transportation projects.”
The biggest issues, however, in the audit may be the criticisms of the Department of Administration. The audit said it found six “deficiencies” at the DOA during the audit.
“We found that DOA did not complete sufficient bank reconciliation procedures to identify in a timely manner that an automated process used to record bank deposits in the accounting records in STAR duplicated recording certain deposits and missed recording other deposits,” the audit wrote. “Finally, we identified a significant deficiency related to DOA’s reporting of interest earned on advanced federal funding. DOA did not correctly report the interest earnings on federal funding advanced to the State under the Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) grant program. After we identified the error, DOA adjusted the financial statements to reflect the interest earnings as earned revenue, but in doing so misstated both unassigned and restricted fund balance.”
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