State of Wisconsin
Legislative Audit Bureau
October 18, 2005
The Honorable, The Legislature:
The State's Annual Fiscal Report for fiscal year (FY) 2004-05, which was issued on October 17, 2005, shows an unreserved, undesignated General Fund surplus balance of $4.1 million. I am writing to inform you of accounting changes by the Department of Administration that led to the reported surplus balance. These changes also resulted in the continuation of a deficit balance in the Medical Assistance Trust Fund at the end of FY 2004-05.
Throughout much of FY 2004-05, the Medical Assistance Trust Fund had a deficit balance because expenditures exceeded anticipated revenues. To address the shortfall,
2005 Wisconsin Act 2 directed that $50.0 million be transferred from the General Fund to the Medical Assistance Trust Fund.
2005 Wisconsin Act 15 subsequently directed that an additional $75.0 million be transferred to the Medical Assistance Trust Fund to cover the full deficit by the end of FY 2004-05.
On June 28, 2005, the Department of Administration transferred $75.0 million from the General Fund to the Medical Assistance Trust Fund. On June 29, 2005, it reported to the Legislature on deficit cash balances, as required by s.
20.002(11)(f), Wis. Stats. In explaining the deficit in the Medical Assistance Trust Fund during May 2005, the Department of Administration indicated that "(t)his deficit will decline by $125.0 million in June when revenue is transferred from the general fund to the Medical Assistance Trust Fund as required by
2005 Wisconsin Act 2 and
2005 Wisconsin Act 15."
Last week, it became apparent that because of errors we identified in the Department of Revenue's accounting for individual income tax revenues, the General Fund's unreserved, undesignated balance at the end of FY 2004-05 would have been reported as a deficit of $50.9 million in the Annual Fiscal Report. However, as the report was finalized, the Department of Administration made the following accounting changes. First, it reversed the June 28, 2005 transfer of $75.0 million from the General Fund to the Medical Assistance Trust Fund. Second, it divided the $75.0 million between two fiscal years, so that $20.0 million was reported during FY 2004-05 and the remaining $55.0 million was reported during FY 2005-06.
Because of these changes, the Annual Fiscal Report included a positive unreserved, undesignated General Fund balance of $4.1 million as of June 30, 2005. However, because the entire $75.0 million transfer specified in
2005 Wisconsin Act 15 was not made as of the end of FY 2004-05, a deficit balance of $53.9 million was reported in the Medical Assistance Trust Fund.
Representatives of the Department of Administration believe that the reversal of the initial $75.0 million transfer and subsequent division of funds between two fiscal years is allowable under s.
16.52(12), Wis. Stats., which allows that agency's Secretary to determine the timing of interfund transfers when the Legislature does not specify a date. Agency representatives also indicate that if the Department of Revenue's accounting errors had been known, the Department of Administration would not have transferred $75.0 million from the General Fund on June 28, 2005, because sufficient funds would not have been available.
We are concerned because the Department of Administration's action is in conflict with the Legislature's intent that the Medical Assistance Trust Fund be balanced at the end of FY 2004-05. We are also concerned that the Department of Administration's interpretation of s.
16.52(12), Wis. Stats., could allow it to delay indefinitely the legislatively mandated transfers to the Medical Assistance Trust Fund under Act 15, as well as any other transfer the Legislature may authorize without specifically stating the date by which it is to be made.
We review the financial statements included in the Annual Fiscal Report because the unreserved, undesignated General Fund balance represents funds available for general appropriation. However, we do not audit those financial statements. The audited financial statements for FY 2004-05 prepared in accordance with generally accepted accounting principles will be included in the State's Comprehensive Annual Financial Report, which is expected to be issued in December 2005.
Please contact me if you have any questions.
Sincerely,
JANICE MUELLER
State Auditor
State of Wisconsin
Ethics Board
October 18, 2005
The Honorable, The Senate:
The following lobbyists have been authorized to act on behalf of the organizations set opposite their names.
For more detailed information about these lobbyists and organizations and a complete list of organizations and people authorized to lobby the 2005 session of the legislature, visit the Ethics Board's web site at
http://ethics.state.wi.us
Brooks, Bryan E.I. du Pont de Nemours & Co.
Burke, Brian Partnership to Preserve Our Entertainment Resources, Inc.
Franken, Andrew Delta Dental Plan of Wisconsin Inc
Gordon, Fredrick G. Partnership to Preserve Our Entertainment Resources, Inc.
Halbrooks, David Partnership to Preserve Our Entertainment Resources, Inc.
Lebakken, Jeffrey Wisconsin Rental Dealers Association
O'Connor, Alice Wisconsin Coroners and Medical Examiners Association
S398
Peters, Catherine American Cancer Society
Peterson, Craig Partnership to Preserve Our Entertainment Resources, Inc.
Reese, Gina Musculoskeletal Transplant Foundation
Springer, Thomas J E.I. du Pont de Nemours & Co.
Strosahl, Mark Northern Counties Legislative Consortium
Vaughan, Michael Wisconsin Coroners and Medical Examiners Association
Viohl, Bridget Partnership to Preserve Our Entertainment Resources, Inc.
Also available from the Wisconsin Ethics Board are reports identifying the amount and value of time state agencies have spent to affect legislative action and reports of expenditures for lobbying activities filed by organizations that employ lobbyists.
Sincerely,
R. Roth Judd
Executive Director
State of Wisconsin
Department of Administration
October 17, 2005
The Honorable, The Legislature:
Attached please find the Department of Administration's contractual service procurement report for fiscal year 2005 pursuant to Section
16.705(8), Wis. Stats.
Your review of this report may benefit from understanding the historical context of State contracting. During the 1990's, State Government grew at an unprecedented rate. Consistent with this, State contracting grew by 123% between FY94 and FY03. Upon taking office, Governor Doyle directed his Cabinet to be conscientious about contracting for services. In FY04, State agencies reduced the overall amount spent on contracting by almost 6% between fiscal years 2003 and 2004.
When compared to the same set of data as previous years, I am pleased to report that State agencies again reduced the overall amount spent on contractual services in fiscal year 2005 by 6.65%, for a total reduction of 12.08% since Governor Doyle took office.
As we more forward, contractual service contracts will continue to be closely scrutinized. The Department of Administration recently re-bid a contract for Information Technology Services. For the first time, rate cards for a wide range of IT positions have been developed. These rate cards are based on market conditions and are the maximum rates that agencies will pay for these services. This contract is projected to generate 17% savings or $9,647,410 over the biennium. The State intends to award similar contracts for temporary services and consulting services in fiscal year 2006.
Moreover, as part of the ACE Initiative, Governor Doyle directed that the State look strategically at how it contracts for goods and services in all areas and on an enterprise-wide basis. In particular, the Governor directed that:
• The State deploy the needed IT systems to allow for tracking and monitoring all state contracts. The state has completed the development of business requirements for a statewide enterprise resource system that, for the first time, will enable all state agencies to utilize a single procurement system. This will empower the State to find opportunities to consolidate, eliminate or re-bid contracts to save taxpayer dollars. In addition, it will increase protections to ensure that terms of the contracts are properly carried out. The request for proposal is expected to be released in late October of 2005.
• State agencies complete a uniform, rigorous cost benefit analysis when making contracting decisions for services. The cost benefit analysis was fully implemented in 2005. It requires the State to take into account all relevant factors including quality and nature of services required, capacity and expertise of the State workforce, whether the work is a core service of State government, and whether it is a short-term service or an on-going need.
• The State streamline its contracting process and procurement organization to make it more efficient, effective and responsive. Agency procurement staff has been streamlined by 23% and the procurement function is largely consolidated at the Department of Administration. The State is implementing new strategic sourcing techniques to consolidate contracts, leverage state spend and streamline solicitations. Recently the Governor announced contracts in seven categories that were strategically sourced and anticipated to result in almost $80 million of saving for the State over the life of the contracts.
If you have questions about this report, please direct them to Patrick Farley in the Department of Administration, Division of Enterprise Operations, at 266-0779.
Sincerely,
STEPHEN E. BABLITCH
Secretary
State of Wisconsin
Department of Revenue
October 18, 2005
The Honorable, The Legislature:
I am submitting the quarterly report of the Wisconsin Lottery for the quarter ending September 30, 2005. As required by s.
565.37(3), Wis. Stats., the attached materials contain unaudited Wisconsin Lottery year to date Revenue and Expenditure information.
Net operating income was $34.6 million for the quarter, up 6.1 percent, compared to the same quarter last year.
The information reported here is a summary and is not intended to be a complete financial accounting of Wisconsin Lottery operations.
If you have any questions or comments regarding this report, please feel free to contact me at (608) 266-6466.
Sincerely,
MICHAEL L. MORGAN
Secretary
Wisconsin Housing and Economic
Development Authority
October 15, 2005
The Honorable, The Legislature:
Pursuant to Wisconsin Statute 234.93(5), enclosed please find the following reports relating to the Wisconsin Development Reserve Fund:
Annual Report of Guarantee Funds as of June 30, 2005
Should you have any questions or comments on the reports, please feel free to call me at 266-1640.
Sincerely,
LAURA B. MORRIS
Chief Financial Officer
