Jindal budget surplus questioned

Gov. Bobby Jindal’s administration reports a $178.5 million budget surplus for the state fiscal year that ended June 30.

But the Legislature’s financial advisers are questioning a new element in the equation used to produce the rosy picture, and state Treasurer John Kennedy said Friday the administration is skewing the real state financial picture, which isn’t as pretty.

“If we use the methodology we have always used, we don’t have a surplus. We have a $141 million deficit,” Kennedy said.

The administration late Thursday announced the $178.5 million surplus from last fiscal year. It is required to report what is called the “general fund balance” to the Legislature’s budget committee in October. The announcement did not disclose how the figure was derived or the source of the leftover cash.

On Friday, Commissioner of Administration Kristy Nichols’ office confirmed that $319 million carried over from prior state fiscal years had been added to last fiscal year’s revenues to produce the year-end $178.5 million surplus.

“A portion of the revenues were not previously included in the (revenue) forecast or the year-end balance calculation,” Nichols said. “Our obligation is to report the year-end balance — all funds available when taking into account actual expenditures.”

She said the money is from “a variety of funds.”

The money has not previously been counted by the Revenue Estimating Conference, “but it appears they have always been available … at least for the last 12 years,” Nichols said.

Nichols later slammed Kennedy for questioning the surplus number.

“I’m surprised the treasurer is not reporting this. The treasurer’s obligated to see that revenue available is reported to the public,” she said. “The money is available, and it’s cash on hand.

“He should probably do a review of the accounts to ensure there are no more outstanding revenues he is not reporting,” Nichols said.

The administration advised legislative financial experts as well as the state Treasurer’s Office of the new approach in a conference call before Thursday’s announcement, she said.

She said the Legislature’s representatives “agreed with us.”

Legislative Fiscal Officer John Carpenter said the actual availability of the cash is the key. “We don’t yet understand how they got there,” he said.

“All I’d say is that it’s a preliminary number subject to adjustment,” Carpenter said. He said sufficient information has not been provided “to tell whether it’s the correct approach.”

Legislative Auditor Daryl Purpera said his office has not yet been provided with the data on how the administration came up with the surplus number.

Purpera’s office reviews the administration’s findings for accuracy for the Legislature. Its reviews have led to changes in calculations both up and down on surpluses.

“My understanding is that they have changed the formula, but we have not been able to go through all the details,” he said.

Purpera said the administration, the auditor’s office, the fiscal office and treasurer agreed on the methodology for surplus calculation some time ago “to produce the most accurate amount of money that can be used in the future period.” The change must be evaluated in that light, he said.

Kennedy said the Treasurer’s Office is trying to figure out what prompted the change and why the old method was wrong.

“The commissioner says the calculation has been inaccurate for years and it needs to be changed,” Kennedy said. “They have to explain why we have been doing it wrong all these years and why the Revenue Estimating Conference is doing it wrong. … I’m willing to listen.”

Kennedy said it appears the administration is moving to a cash balance form of accounting away from the modified accrual basis used by state governments.

“I hope we have a surplus, but I want to make sure we don’t have a manufactured surplus here,” he said.

Meanwhile, a state legislator already is eyeing the surplus funds to help the ailing finances of the state Office of Group Benefits — Louisiana’s health insurance program.

“It is questionable whether there is actually a surplus, but should it be determined that there actually is $178.5 million, it should go toward the manufactured crisis created by this administration,” said state Rep. Kenny Havard, referring to Jindal’s handling of Group Benefits, which insures some 230,000 state employees, teachers, retirees and their dependents.

If the surplus is nonrecurring revenue, it can be used only to boost the Budget Stabilization Fund, to improve state retirement system liabilities and to decrease debt, which would free up state money for Group Benefits, said Havard, R-St. Francisville.

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