General Assembly, associated agencies sit on $95 million in reserve funds

General Assembly, associated agencies sit on $95 million in reserve funds

Author: Jason Gottesman/Wednesday, November 15, 2017/Categories: News and Views

The Legislative Audit Advisory commission released the audit of the General Assembly’s finances for FY 2016-2017, reporting that the legislature and its associated agencies have combined reserves of $95 million. 


The reserves represent surpluses over the $325 million appropriated to the General Assembly in FY 2016-2017. 


Specific to the House and the Senate, the two chambers of the legislature currently sit on a combined reserve of just over $46 million with the House having a reserve of $35.7 million as of June 30, 2017, and the Senate having a reserve of $10.5 million as of the same time period. 


The 13 legislative agencies—organizations like the Legislative Reference Bureau, Legislative Budget and Finance Committee, Capitol Preservation Committee, and Independent Fiscal Office—have combined reserves of around $49 million. More than half of that amount sits with the Legislative Data Processing Center—the legislative agency responsible for maintaining the legislature’s intranet and computer-based information—where there is a surplus of nearly $24 million in anticipation of an upcoming overhaul of the center’s systems. 


In the past, the amount of the reserves has been defended as a necessary component of maintaining an independent legislative branch, particularly with the recent history of protracted budget impasses that have left the General Assembly’s operations unfunded for months. 


“As evidence recently, it is important to maintain an adequate reserve to ensure the independent and continued operation of the General Assembly in the event of a government shutdown, including one created by a budget stalemate,” said Commission Chairman Mark Keller (R-Perry). 


The current amount of combined reserves is lower than the previously reported amount of $118 million when the 2015-2016 audit was released earlier this year. That amount was about $8 million lower than the 2014-2015 audited amount. 


According to House Republican Caucus spokesperson Steve Miskin, the level of reserves has been declining due to tough budget years and increases in post-employment retirement costs which the General Assembly has been back-filling with reserve amounts. 


“Last year we were not appropriated as much because of the budget fiasco,” he said. “For all intents and purposes we’ve been in a three-year budget battle with this governor.” 


While the legislature’s $46 million reserve has been defended as necessary to remain an independent branch of government that can operate outside of executive influence, the remainder of the reserve dollars was less clearly defended. 


While Miskin noted that some of the reserve funds—like those in the Legislative Data Processing Center—are dedicated for upcoming or ongoing projects or are merely the result of unspent appropriated funds, other legislative agencies’ reserves have less of a clear purpose. 


He said that is why House Republicans sought to eliminate five of the 13 agencies in the budget they passed in early April. 


At the time, the elimination of the Legislative Budget and Finance Committee; Local Government Commission; Joint Legislative Air and Water Pollution Control and Conservation Committee; the Sentencing Commission; and the Center for Rural Pennsylvania was portrayed as a caucus-driven move to “reinvent government” from within the legislature itself and move the functions of these agencies to already-existing governmental entities within the legislature and move their reserves and appropriations back to the General Fund or to the agencies undertaking the new work. 


However, the final budget passed at the end of June kept the five agencies and their associated reserves intact for the current fiscal year. 


The release of the report Wednesday was not without some controversy as Capitol gadfly and perennial critic of the reserve and advisory commission process, Eric Epstein from Rock the Capital, once again slammed the surpluses and the transparency of the audit process. 


“We are urging you to stay in town, reconvene a public meeting on the legislative audit, with a pre-published agenda, allow public speaking and implement your auditor’s recommendations. The committee should recommend the permanent closure of “non-lapsing surplus accounts, and codify this recommendation [in statute],” he said in written testimony submitted to the commission. 


“To date, these funds have been sued to pay for alcohol, ‘floral purchases,’ ‘continuing education,’ meals, and in 2005, lawmakers underwrite an illegal midterm pay raise using ‘surplus funds.’ No caucus has created an internal policy that caps the size of the surplus or says how large it should be, even though the legislature’s own auditor makes the same recommendation on an annual basis.” 


Chairman Keller defended the transparency and work of the audit advisory commission. 


“We strive to be as open and transparent with the citizens of Pennsylvania as possible about the findings of the annual audit, which are fully accessible and easy to comprehend,” he said. 


Unlike other portions of Pennsylvania state government, the General Assembly is not subject to audit by the Pennsylvania Auditor General. 


However, Act 151 of 1970 created the LAAC, which is responsible for ensuring the General Assembly is audited in conformance with Section 10 of Article VIII of the Constitution of Pennsylvania, which requires all government entities receiving tax dollars to be “subject to audits made in accordance with generally accepted auditing standards." 


The audit released Wednesday was conducted by the accounting firm Boyer & Ritter, LLC, and presented by firm Principal Matthew Wildasin. 


The firm on Wednesday was retained to conduct the next audit, for the same amount as the current audit of $162,500.