Federal fund reporting requirement advanced

Senators advanced a bill from general file Jan. 8 that would require annual reporting of federal funds received by state agencies that participate in the state budgeting process.

LB611, introduced last session by Gering Sen. John Stinner, would require that reports be submitted to the state Department of Administrative Services (DAS) by Sept. 15 of each year that a budget request is due.

Stinner said that federal funds comprised approximately 30 percent of the state’s total budget in the last fiscal year. Requiring state agencies to provide more complete information regarding those funds would improve lawmakers’ ability to plan and prioritize, he said.

“The intent behind this legislation is to provide a reporting mechanism to the state to hedge against fiscal stress further down the road,” he said. “As legislators, it is imperative that we understand the complexities that often surround federal programs and foresee any unintended consequences.”

Under the bill, reports would include:
• the aggregate value of federal funds received in the previous fiscal year and the amount of those funds appropriated by the Legislature;
• the percentage of the agency’s total budget constituted by federal funds;
• any requirement for a state match or promises made by the entity on condition of receipt of federal funds;
• the statutory objective that is being met by receipt of federal funds;
• an operating plan in the event that federal funds are reduced between 10 and 25 percent from the previous year;
• a second operating plan if federal funds are reduced by more than 25 percent; and
• a detailed list of federal funds with a foreseeable end date.

An Appropriations Committee amendment, adopted 26-10, excluded the University of Nebraska and the state college system from the bill’s provisions. The amendment also clarified that the bill would require that plans be submitted to DAS only.

Stinner said the amendment would reduce the bill’s fiscal note by approximately $630,000, down to roughly $130,000 in the first fiscal year and $156,000 in the second.

The university and state colleges receive thousands of federal grants, he said, and much of the information outlined in the bill already is reported by those entities.

Bellevue Sen. Sue Crawford supported the bill and the amendment, saying it is important to see where Nebraska could be missing out on available federal funds. The state currently is 47th in per capita federal spending, she said.

“It is critical for us – for our planning – to make sure we understand the sources of [federal] funds and obligations of those funds,” Crawford said, adding that the state needs to be sure that it is getting the “most bang for our buck” when it comes to investments.

Columbus Sen. Paul Schumacher supported the bill’s provisions requiring state agency operational plans in the event of a loss of federal funds.

“The federal government has just committed to $1.5 trillion less in revenue,” Schumacher said, “And we know that if sanity prevails in D.C. to any degree, they’re going to try to mitigate that $1.5 trillion loss by cutting money that is flowing to the states.”

Nebraska needs to be prepared, he said, and should have operating plans in place that will indicate to lawmakers how big a cushion the state will need if those federal funds are cut.

Sen. John Kuehn of Heartwell spoke in opposition, calling LB611 unnecessary. He said the information sought by the bill’s provisions is readily available through the Legislature’s fiscal office and the DAS website.

If senators have questions and concerns about the use of federal funds, he said, they should start by obtaining and aggregating existing information rather than creating another layer of bureaucracy.

Speaker Jim Scheer of Norfolk noted that no bill with a general fund impact will move beyond the second round of debate this session. The state is facing a $200 million projected budget shortfall, he said, adding that he cannot “in good conscience” allow senators to consider passing any measure that requires general funds for its implementation.

After adopting the committee amendment, senators advanced LB611 to select file on a 28-11 vote.