March 4, 2008 — Money sitting unused in the government coffers can be redirected to take care of some of the territory's "priority" needs, senators said during Tuesday's Finance Committee hearing.
In particular, senators pointed to a column in the government's financial records labeled "encumbrances" — funds claimed by various departments and agencies for purchases, contracts or other expenditures. Much of the money has not been spent, resulting in pending expenditures that date back some 13 years, they added.
As in past Senate hearings, members of the governor's financial team disagreed, and explained that the encumbrance list has been pared down over the past year, with current pending payments totaling about $69 million. That figure changes on a day-to-day basis, as departments and agencies request that money be allotted, or released, for a particular expenditure. Only when the expenditure is canceled can the money go back into the General Fund, financial team members said.
There are a few kinks in the system, however. As the government works to put old financial records onto the newly installed Enterprise Resource Planning System (ERP), it is not clear in many cases which department or agency made a particular funding request, explained Finance Commissioner Claudette Watson-Anderson. Her department is working on reconciling the government's financials — which include purchase and requisition orders — to determine which encumbrances have been paid, pending or can be removed from the system.
Currently there is no law regulating how long an encumbrance can remain on the books, said Office of Management and Budget Director Debra Gottlieb.
Despite the team's statements, senators still had their concerns.
"It seems that when an encumbrance is paid, there is no specific recording as to where the money goes," Sen. Liston Davis said. "So when you're trying to figure out whether a particular payment has been taken care of, it's like looking for a needle in a haystack."
Fiscal team members explained that when a payment request, or encumbrance, is made, the money still remains in the General Fund until a department or agency asks for the money to be released.
"It's not that the money is taken out or put somewhere else," said Nathan Simmonds, the governor's senior policy advisor. To track a particular expenditure, he said, Finance would have "to go back and match each purchase order on the encumbrance list to the same purchase order on the payment list."
Simmonds' explanation didn't fly with the committee chairman, Sen. Terrence "Positive" Nelson, who said that that the government should want to keep an accurate accounting of "where the money is going."
"There needs to be a better system of checks and balances here," he said. "These are the same problems we've been experiencing in government for years now. We have to figure out the flow of the money. I think it's fair for us to want to know every penny that's being spent, how it's spent and if it's being spent appropriately. The sense of urgency doesn't seem to be there in the recording process … that leaves the door open for things like corruption and the misuse of government funds."
Gottlieb added after the meeting that some encumbrances are pending appropriations made by the Legislature in which funds set aside for various departments, agencies and organizations remain "available until expended."
During the meeting, Watson-Anderson said she plans to get the government up to date with its financial reporting requirements by the end of June.
Senators subpoenaed members of the financial team to appear at Tuesday's meeting, along with a variety of financial documents.
Earlier in the day, Finance Committee members approved a $600,000 federal grant application for the Law Enforcement Planning Commission to continue local programs that help female victims of domestic violence, sexual assault, stalking and dating violence.
Present during Tuesday's meeting were Davis and Nelson, along with Sens. Carlton "Ital" Dowe, Juan Figueroa-Serville, Neville James and James Weber III.
Sen. Ronald E. Russell was absent.
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