Some aspects of state government have been impacted by the frozen funds. This has led to delays in public services and additional bureaucracy, as well as unanticipated spendings. Mississippi Today conducted a comprehensive review of the effects of the Budget Transparency and Simplification Act, commonly known as the “sweeps bill”. It found that some special funds were left in limbo by the blocking of Attorney General Jim Hood. In the final days of 2016, the law was passed. It was intended to transfer many special funds into the general account and eliminate inter-agency fees. The law, according to agency heads, has had a positive effect on state agencies. It forces them to spend more time on spending and budget priorities. It has created major problems for some agencies. * The Department of Health could have to spend as much as $9 million more this fiscal due to problems caused by the law for the state’s trauma system. According to Erin Barham, a Medicaid spokesperson, the Division of Medicaid missed out on $2 million in federal matching funds due to the law. * The Department of Education had to employ an outside firm to perform an audit that would have been performed by the State Auditor’s Office. Lt. Gov. Tate Reeves, House Speaker Philip Gunn, and both proponents of this bill, have repeatedly said that the law’s problems can be solved in the next legislative session. Governor Phil Bryant appointed a working group to evaluate the law’s problems and report back to him in January. The majority of agency heads and department spokespeople who spoke to Mississippi Today about this article said that the Legislature could resolve the problems during the next session, provided they address the issues early in the session. The bill was introduced late in 2016 by Buck Clarke, the current Senate Appropriations Chair and former House Appropriations chairman Herb Frierson. It was intended to increase the general fund’s expected amount due to lower-than-expected state tax revenue. The law was to transfer $54 million in special money to the general funds last fiscal year and $130 million to the general funds this fiscal year. It took effect July 1. Inter-agency transfers were also eliminated. This included state agencies charging others for rent, technological aid and phone bills. The law was subject to intense debate before it was passed. A majority of legislators felt that they were completely ignorant of the details of the bill and did not vote for its passage. Legislative budget staffers tried to calculate the impact of Bryant’s law but were delayed by over a month. Agency heads from across the state struggled to figure out how the law would affect their budgets and internal budgeting. After several agencies asked for formal opinions on whether special funds could legally be swept, Attorney General Jim Hood highlighted the problems with this law. Media reports documented the frustrations of many lawmakers and agency heads as they tried to figure out how much money they could spend for fiscal 2017. Hood stated that $79.4 million of $184 million in special funds sweeps cannot legally be carried out under state law. She also wrote 11 opinions and had “several informal conversations” with agency heads. Laura Jackson, the Department of Finance and Administration Executive director, took over the agency’s reins on July 1. She said that she would follow Hood’s opinions. This decision effectively froze many funds so that lawmakers could introduce technical amendments in January. Chuck McIntosh of the state finance department said that there are funds that were intended by the Legislature to be transferred to general fund at the close of Fiscal Year 2016. However, they have not been transferred as of now. “There are some revenues that should go to the general fund in fiscal 2017 that are still flowing into special funds.” Six state agencies had special funds frozen by finance agency to allow lawmakers to solve the problem when they meet in January. The six agencies, Attorney General, Secretary of States, Department of Insurance and Worker’s Compensation Commission as well as the Public Service Commission, cannot access special funds except for specific spending tasks. The Legislature must authorize moneys for special funds. Because it passed the bill that originally scheduled the funds to go into the general fund, special funds can’t be used until lawmakers pass legislation to allow them to be spent. McIntosh stated that while the sweeps law was clear in its intention to redirect some revenues to the general funds, McIntosh did not mention any of the relevant code sections. “The agencies holding these ‘trapped special funds’ cannot spend the money since they don’t have a special funding appropriation,” McIntosh said. The Mississippi Tort Claims Board is an insurance provider that covers state employees who are brought to court regarding matters that occurred while they were employed by the state. The Tort Claims Board typically pays the damages from a special fund if a state employee is involved in an accident that results in a vehicle being damaged. Michelle Williams, chief staff for Lynn Fitch, stated that the Tort Claims Board so far this year has not had to pay any settlements out of the frozen fund. Fitch is a member of the Tort Claims Board. The Legislature must resolve the problem this session to pay out the money if settlements or litigation expenses were required. Kathy Waterbury, spokeswoman for the Department of Revenue, stated that the sweeps law delayed the Department of Revenue from issuing the Public Utilities Regulatory Tax. The tax is an annual assessment that Mississippi’s public utility companies pay for support of the Public Service Commission staff and its members. The Public Utilities Regulatory Tax was previously used to fund all of the daily operations of the Public Service Commission, including salaries and operating expenses. The delay in issuing the tax, which was funded by the Legislature this year, has not had an impact on the daily operations of the commission. However, it has raised a technical question, forcing revenue officials to postpone levying the tax. Cecil Brown, central district Public Service Commissioner, stated that it was a “mechanical issue” — not a legal problem — that the Legislature must fix. “Presumably, it is the Department of Revenue that would levy the tax. It would be deposited into a special fund. “If that happens now, the money will be frozen there until Congress takes action.” Missed funds, unanticipated expenses The law has prevented the Division of Medicaid from receiving more than $2 million in federal matching funds. Erin Barham, a Medicaid spokeswoman, said the law had resulted in the Division of Medicaid missing out on over $2 million. The state expenses such as rent payments and central services that were incurred after the sweeps law was in effect led to a large portion of the money being lost. Barham stated that these expenses are typically covered by federal funds. Similar to private insurance providers Medicaid has a major role in reimbursing health care facilities for the services they provide their clients. Medicaid clients, unlike other private providers, are often low-income and rely on clinics funded through the Mississippi Department of Health. The Division of Medicaid provides a large portion of funding for these clinics. These reimbursements are known as inter-agency transfers and were therefore technically removed by the sweeps laws. The Division of Medicaid relies heavily upon Medicaid payments. Because of this, it has continued to operate the same way as before the sweeps laws went into effect. It continues to initiate inter-agency transfer. It was a challenge to understand and follow the law, and to figure out how it applied to our operation. Barham stated that we have done our best to provide these services to eligible beneficiaries and still keep in mind our mission. “We didn’t have any guidance from the Legislature. “We read the law and tried to follow it as written,” Dr. Mary Currier, state health officer, said. The law could force the Department of Health to spend up to 9 million more in fiscal year 2019. These expenses are due to the problems that the law created for the state’s trauma system. More than $4.5million in trauma-related state fees has been transferred to the state general fund since the sweeps law was in effect in July. Currier stated that if the Legislature does not address the issue during the next session Currier warned that the department would be responsible for an additional $4.5 million in August. This will give the department a total of $9,000,000 annually. The funding for Mississippi’s Trauma Care system is unique in that it was created by the Legislature to be independent from annual appropriations through collection and registration of speeding tickets. This was done so that “they could ensure future resources would be available specifically for a system referred to as Trauma care,” according Bill Oliver, chairman of the ad-hoc task force. These fees are collected by other agencies, and they are paid into the trauma system. The Department of Health was not responsible for them. The total $9 million for trauma would amount to approximately 15% of the 2017 fiscal year state appropriation. Currier stated, “When we first saw the sweeps law), it was terrifying.” We still hope they will fix the trauma fund. If they do, then I’ll be happy every day. It can’t come from just one place if you take $9million out of the Department of Health’s state budget. “I don’t know how we would do it.” There are some problems that may not be as severe as originally thought. Agency heads spoke to Mississippi Today before the law was implemented. Many predicted widespread problems, but they have not appeared to have materialized. One agency that could be affected by the law is Mississippi Emergency Management Agency. Lee Smithson, MEMA Director, blasted the removal of inter-agency transfer, claiming he would lose $334,000 per year in funds from other state agencies. He expressed concern about being able respond to major natural disasters like Hurricane Katrina and a large tornado outbreak. Smithson stated this week that MEMA was able to respond to all disasters with the funding in place. However, he would like to see salaries increased on a merit-based basis. Smithson stated that MEMA is losing talented people to state agencies that are able to pay them more. “So MEMA is not to be used as a training ground for state agencies. I want to retain and hire good quality people, and right now, we have good quality personnel and I want them to stay.” Dr. Mary Currier, state health officer, predicted that the law would lead to the department “sending people home” in June. Currier stated last week that the law didn’t cause those layoffs. Reeves and other legislators have repeatedly stated that the department has changed how it spends funds and that they are now more careful about spending. Currier stated last week that “we have really cut back in what we spend, and we have pinched every dollar so much that our districts are upset over it.” “We have always been responsible for the tax dollars of our citizens. I’m a taxpayer. I don’t want taxpayers to spend my tax dollars buying bubblegum. So what we did this year was look at every penny we spent. Department of Insurance Commissioner Mike Chaney sought the opinions of Attorney Generals for at least one of his special funds. Chaney stated in an August interview that “it will take us 10 years [to undo the damage]” but when Chaney was reached last week, he said the law did not create any real problems for his agency. Chaney stated last week that the Mississippi Insurance Department had no problems with the sweeps law and worked with the Governor’s Office, Lieutenant Governor Speaker of the House and Attorney General, DFA, and legislative leadership to resolve any concerns or problems. More bureaucracy but also savings. After mismanaging funds for a federal after-school program, the Department of Education officials led to the closure of programs for low income students. The state Auditor Stacey Pickering ordered additional audits of the federal programs. Pickering informed Education officials that he could not conduct the audits. Pickering reached Out to Hood for a Legal opinion regarding the audits and transfer. Hood stated that collecting fees for such an audit would be against the sweeps law. This prompted Pickering to write to state Education officials. Pickering stated in his letter that agencies have been billed for audit work done by their staff. Pickering wrote that the state budget for fiscal 2017 has made interagency payments illegal and may prohibit us from being paid for audit work performed by our staff. Although audit contracts do not have to go through formal bidding, the Education Department accepted bids for the contract. Although additional work was required by Education Department employees, the cost of the contract with an outside CPA firm was lower than what the auditor’s office had charged previously. The agency was charged $458,225 by the State Auditor’s Office last year for one year’s audits. Because of sweeps law, the Department of Education had to hire an outside CPA firm. It charges $293,930 for two years of work. Patrice Guilfoyle, a department spokeswoman, stated that there was a significant savings in audit costs by using the contracted firm. “We bid for the procurement in order to ensure MDE received fair and reasonable prices for the services.” Resolving issues during the 2017 session. Hood and Reeves were infamously arguing about the sweeps laws and their impact. In the final minutes of his long legislative career this summer, Frierson, former House Appropriations chairman, and co-author, apologized for some problems. Bryant compared the law’s impact to the Apollo space program. He cited “early glitches” which would be fixed later. Even those agency heads that do not have to deal directly with special funds are still puzzled by the law’s effect. As lawmakers gather under the Capitol dome to begin the regular legislative session on Jan. 3, fine-tuning law will be a top priority. Many “technical” amendments to the law are expected to be introduced by lawmakers, which should address the issues agencies have had to deal with in recent months. Reeves, in a June interview with Mississippi Today, attacked agency heads for complaining about the law. He stated that any problems caused due to the bill were not worthy of a special legislative session, and would be addressed during the 2017 regular session. Reeves stated in June that there have been agency heads who cry to the media, while others are working with the executive branch and legislative branches to find solutions. Bryant formed a group of “lawmakers and accountants” to work on budget issues over the summer.
In his Executive Budget Recommendation, released in November, he stated that a review had identified issues with the bill. Emails seeking information about the workgroup and its conclusions were not returned by the governor’s office. Although not all of the officials interviewed for this article spoke with executive or legislative officials about the issues they faced, the majority said that they were optimistic that the problem could be resolved when the Legislature meets in January. McIntosh stated that “we have been in constant contact with the legislative leaders (and the governor’s) office since (the sweeps laws) went into effect on July 1,”. “Collectively we are working towards resolution.” Mississippi Today reporters Larrison Camp, R.L. This report was contributed by Nave, Kate Royals and Zachary Oren Smith. Ashley Norwood, Gabriel Austin, Ashley Norwood, Zachary Oren Smith, Kendra Ablaza and Ashley Norwood also contributed. Note: An earlier version of this story claimed that the Mississippi Community College Board had reduced the salaries of its employees due to the sweeps laws. In order to avoid salary cuts, the MCCB used special funds to offset general funding cuts.