Funding of Constitutional Officers - Virginia Joint Legislative Audit ...

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It is a common misconception that the Compensation Board funds all non-personnel costs for Sheriffs, Commonwealth Atcorneys and Clerks, and 50% of Office Expenses and Mileage and 33% of capital costs for Treasurers and Commissioners. This misconception is furthered by the JLARC report Table 5, page 26 which contains this information. The JLARC report is technically correct because it states "approved" costs; what is not stated is that the Compensation Board is not funded to provide anywhere near 100% of che actual non-personnel costs for all but the smallest offices. In a recent court case, testimony by the Finance Director of Stafford County revealed that the County paid 45.19% of costs for the Sheriffs Department, 83.64% of the Commissioners costs, 41.18% of the Commonwealth Attorneys costs and 80.37% of the Treasurers costs. This is by no means unusual or an extreme example. Consequently, it would appear essential to determine "need" before consideration is given to the method of disbursement. The adoption of a grant/prepayment process would have an adverse fiscal impact on many localities because of level funding of non-personnel costs over the years. A grant/prepayment process should include a "hold-harmless" provision. A grant/prepayment process is a less conservative approach to funding than the current reimbursement process for a number of reasons. Under a grant process, there are only limited assurances that funds have been properly spent for the items requested unless exhaustive auditing is required. Also, no provision has been made for reverting unspent funds to the state at year end. The staff recommendation does not address two specific areas of concern to the Compensation Board. The question of who would have final approval of the procedures developed for any grant/prepayment method is not addressed, and the recommendation does not mention a specific requirement for a local match. Both of these points should be addressed. The Compensation Board DISAGREES with any grant approach to funding of constitutional officer non-personnel costs. Currently, the Compensation Board allocates non-personnel dollars (within the constraints of level funding) on the basis of the officer's request and demonstrated need. Comparisons between offices of similar size are made and consideration is given to any unusual circumstances which would require a change in level funding. Also, consideration is given to the level of funding (if any) provided by the local government. Once the budget is set, the Compensation Board reimburses the locality for expenses incurred by the Constitutional Officer and paid by the locality Erovided that funds are available and the expense is incurred for the budgeted category. JLARC assertions to the contrary, this level of fiscal control exceeds 88
that found in state agencies. Requests for reimbursement which are made for non-budgeted items are not allowed. Consequently, State funds are expended only for the specific purpose for which they were originally bUdgeted. The Compensation Board bUdgets by category (e.g., office expenses, capital outlay, part-time employment, etc.) and, after review, allows officers to transfer funds between categories. This process allows constitutional officers to fiscally manage their office and respond to changing priorities. A block grant approval would provide a lump sum dollar amount to the office to be expended for any purpose. The current Compensation Board appropriation for administration is $436,670; all other programs (i.e., funds going to constitutional officers) total $267,662,709, for an administrative overhead ratio of 1:613. It is doubtful if any grant program providing aid to localities has an equal or smaller ratio. WE AGREE that ability to pay, or fiscal stress, should be considered for funding of non-personnel costs, provided that total need is considered. Recommendation (6). The General Assembly may wish to consider establishing State and local shares for funding of the constitutional officers based on assignments of cost responsibility and local ability to pay. Cost responsibility can be based on the criteria developed for this study. Ability to pay can be based on an index of relative revenue capacity. WE AGREE with reservations. The Compensation Board clearly recognizes that there are functions performed by constitutional officers which inure to the benefit of the locality. The costs of these functions should be borne by the locality. The Compensation Board believes that the method to determine whether duties are a shared responsibility is a helpful guide. We question the method of assigning cost. The percentage allocation of duties between State and Local responsibilities is a major element of the staff's recommendations. The Compensation Board believes a detailed review of these percentages is necessary to be sure of an equitable distribution of funding. This allocation should not only consider who benefits from the service, but more importantly the basis of the requirement. These allocations should compare the staff's results with existing funding formulas. To base the percentage allocation solely on who benefits, ignores that there are services which indirectly serve the Commonwealth. One factor not considered by the JLARC staff is the ability of local law enforcement agencies to write traffic tickets on a state or local ordinance. If the locality adopts the state traffic code as a local ordinance, revenue from fines imposed goes to the locality. As demands on local governments increase for funding, more localities will employ this option. 89
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REPORT OF THE LEGISLATIVE AUDIT AND
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Preface State funding for constitut
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e local governments' relative abili
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the constitutional offispecific eva
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current process, some changes in sy
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Table of Contents I. INTRODUCTION 1
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ROLES OF THE STATE AND LOCAL GOVERN
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missioner of revenue, treasurer, an
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STUDY APPROACH JLARC staff develope
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differences in the ability of local
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cost responsibility for each catego
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Exhibit 1 Workload Factors Used in
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account for regional differences in
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Recommendation (3). The General Ass
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Recommendation (5). The General Ass
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cost re~;ponsJlbiJjty State should
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Exhibit 3, a "yes" has been placed
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For some other service categories,
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A variety of other revenue sources
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------------- Exhibit5-------------
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greater or equal to 1.0 can raise m
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are divided evenly between the Stat
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a COJmnlOIllW€:a!t;h ft..,Uy,,, .
Page 53 and 54: The reimbursement cycle begins when
Page 55 and 56: process occurs prior to the assessm
Page 57: Appendixes ~ Appendix A: Study Mand
Page 60 and 61: AppendixB Mathematical Formulas Use
Page 62 and 63: Appendix B (Continued) Personnel Co
Page 64 and 65: Appendix B (Continued) Revenue Capa
Page 66 and 67: Appendix B (Continued) Personnel Co
Page 68 and 69: Appendix: C Cost ResponsibilityAssi
Page 70 and 71: Appendix C (Continued) COST RESPONS
Page 72 and 73: Appendix C (Continued) COST RESPONS
Page 74: AppendixD Local Revenue Capacity fo
Page 77 and 78: Examples J.i"U.nClLlng 'O.J'U'..u''
Page 79 and 80: State and Support for Sheriffs Offi
Page 82 and 83: ~ ~ State and Local Support for Com
Page 84 and 85: Ou,a~ll;;; and for Local J:l,;xBI.m
Page 86 and 87: State and Local Support for Sheriff
Page 88 and 89: Local for Court Clerks: Example 2
Page 90 and 91: •••••••••••
Page 92 and 93: AppendixF Agency Response As partof
Page 94 and 95: Introduction The Compensation Board
Page 96 and 97: - DISAGREES that any stan rd should
Page 98 and 99: RECOMMENDATION 1. The General Assem
Page 100 and 101: determining judicial needs. As a re
Page 102 and 103: In the budget process currently use
Page 106 and 107: The development of state/local perc
Page 108 and 109: The Compensation Board AGREES with
Page 110 and 111: AppendixG JLARC StaffComments on th
Page 112 and 113: officers could maintain monthly rec
Page 114 and 115: expertise, level of automation, nat
Page 116 and 117: such as is available in education f
Page 118 and 119: etween workload indicators and the
Page 120 and 121: government operations. This is expl
Page 122: Recent JLARC Reports Organization o
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