Legislative Oversight of Federal Funds

This survey examines the findings of a 50-state survey conducted by NCSL that details how legislatures control federal funds.

Table 1. Legislative Authorization of Federal Funds and Federally Funded State Employee Positions Authorization of Use of Federal Funds
State	Makes Specific Authorizations	Makes Open-Ended Authorizations	Does Not Authorize Use of Federal Funds	Limits Federally Funded FTEs
Alabama		X*		No
Alaska	X*	X*		No
Arizona			X	No
Arkansas	X			Yes*
California	X*			No
Colorado			X*	No
Connecticut			X*	No
Delaware			X	Yes
Florida	X			Yes
Georgia	X			No
Hawaii	X			Yes
Idaho		X*		Yes
Illinois	X*			No
Indiana		X		No
Iowa		X		No
Kansas	X*	X*		Yes*
Kentucky	X			Yes
Louisiana	X			No
Maine	X			Yes
Maryland	X			No
Massachusetts	X			No
Michigan	X			Yes
Minnesota	X*			No
Mississippi		X		Yes*
Missouri	X*	X*		Yes*
Montana	X			No
Nebraska	X*	X*		No*
Nevada	X			Yes*
New Hampshire	X			Yes
New Jersey	X			No
New Mexico	X*			Yes*
New York	X			No
North Carolina	X*			No
North Dakota	X			Yes
Ohio	X			No
Oklahoma			X*	Yes
Oregon	X*			Yes
Pennsylvania	X			No
Rhode Island	X			No
South Carolina	X*			Yes
South Dakota	X*			Yes
Tennessee	X*			No
Texas	X*			No
Utah	X*			No
Vermont	X*			Yes
Virginia	X			Yes
Washington	X			No
West Virginia		X		No
Wisconsin		X*		Yes
Wyoming	X			Yes*
Totals	38	11	5	Y=23 N=27

States appearing in bold face in Table 1 have a legislature that meets year round. Combined totals will exceed 50 because some states make both specific and open-ended authorizations.

Definition of terms:

Specific Authorization--The legislature authorizes the expenditure of a specific amount for a declared purpose and may impose an upper limit on state expenditure of federal funds for the fiscal period. In some states this is called an appropriation. Others use the word "authorization" to refer to the process.

Open-Ended Authorization--The legislature authorizes the state to spend federal funds received during the fiscal period without declaring a specific purpose or amount.

* Notes:

Alabama--Although the legislature generally continues to make open-ended authorizations of federal funds the general appropriation bill for the current year also includes language that provides that any grants or appropriations from Congress to the state or to state agencies for new programs or purposes, including but not limited to homeland security grants must be approved by a majority of the Chair of House Ways and Means-General Fund Committee, the Chair of Senate Finance and Taxation-General Fund Committee and the Governor prior to expenditure.

Alaska--The open-ended authorization referred to is a process by which agencies can request additional authorization with review by a committee instead of by the full legislature.

Arkansas--The legislature enacts appropriation of specific amounts by line item for most agencies (Performance Based Budgets only contain the total amount of federal funds) and specific numbers of positions by title and grade. These can be increased during the interim through the unanticipated federal funds process.

California--Any federal funds received above the set amount are subject to a notification requirement to the Joint Legislative Budget Committee.

Colorado--The general appropriations act reflects federal funds for information purposes only. Where state match is required, lawmakers get more say over how the executive will apply those dollars and such plans are reflected in the budget act.

Connecticut--Applies only to non-block grant federal funds (non-TANF and SBGs).

Idaho--Legislature provides specific appropriations for federal funds for a fiscal year, but if unanticipated federal funds come in during the time the Legislature is not in session, the Governor's budget office can authorize the expenditure of those funds without Legislative appropriation for one year only.

Illinois-- Federal funds are not appropriated separately but are included in the total appropriation for each program, by line item (e.g., personal services, retirement contributions, travel, etc.).

Kansas-- Some appropriations have a specific dollar limit while others are appropriated as "no limit." The legislature treats federally funded FTEs the same as any other state FTE. They can be placed under an FTE limitation or they could be treated as "special project employees" and be outside the limitation.

Minnesota--If federal funds are not specifically appropriated in the budget, they may be expended under an "open and standing" authorization in the statutes.

Mississippi--The Department of Finance & Administration is authorized to increase a budget authority for 100% federal funds. Policy is to place employees paid from federal sources in "time limited" status so that if funds are eliminated, so are the positions.

Missouri--Authorizations to spend federal grants may be open-ended or specific; practice varies. Authorizations are noted as estimates in the budget act, where appropriate, giving agencies sufficient authorization to accept and spend federal grants. FTE limits are usually set for organizational or program entities, but they are not set by fund source.

Nebraska--Authorizations to spend federal grants may be open-ended or specific; practice varies. Authorizations normally are estimates and bill language clarifies when unanticipated receipts over budget estimates may be spent. A limit is placed on salary expenditures in the budget, but FTE are not specified. During the interim, salary limits may be exceeded by the amount of new federal grants.

Nevada--State statutes require legislative authorization before state agencies may accept any gift or grant, including those that involve new positions.

New Mexico-- The general appropriations act reflects federal funds for information purposes only. Where state match is required, lawmakers get more say over how the executive will apply those dollars and such plans are reflected in the budget act. It is policy to place employees paid from federal sources in "term" status so that if funds are eliminated, so are the positions.

General Appropriation Act (GAA) defines Federal Funds and appropriates Federal Funds for agencies. The Act also defines the General Fund as including "payments made in accordance with the federal block grant." State court decisions limit legislative power of appropriations over Federal Funds authorized directly to agencies. Until 1995, GAA indicated that Federal Funds are included for information only but enactment of Federal Welfare reform and implementation of Temporary Assistance for Needy Families caused rethinking of this language and authority.

North Carolina--The Legislature authorizes the expenditure of a specific amount for a declared purpose and may impose an upper limit on state expenditure of federal funds for the fiscal period

Oklahoma--Appropriations bills limit the expenditure of federal funds. A recent constitutional amendment authorizes the appropriation of federal funds and statutory language to implement an appropriations process.

Oregon--Legislative authorization is required for an agency to apply for a grant. Expenditures are both authorized and limited.

South Carolina--South Carolina authorizes the expenditure of federal funds, but does not appropriate them, a distinction which in South Carolina means that the state is not obligated to make up any shortfall of receipts. The authorization is for total agency expenditure and does not itemize the federal sources of the revenue.

South Dakota--Authorization of expenditures up to a specified amount.

Tennessee--Line-item appropriations.

Texas--Appropriations are specific, but the amounts are estimates and language is intended to be broad enough to allow the use of unanticipated funds.

Utah-- Appropriations are specific, but the statute allows the use of unanticipated funds if no additional state matching funds are required.

Vermont--Administration has authority to accept excess receipts from pre-approved grants.

Wisconsin-- First, in terms of the type of appropriation used for the receipt and expenditure of federal funds by individual state agencies, almost all of those state appropriations in Wisconsin's state budget for this purpose are termed continuing appropriations. Under a continuing appropriation, what this means essentially is that an agency can expend any amount of federal money received in such appropriation, regardless of the expenditure level estimated in the budget.

However, there are a number of specific statutory provisions which provide limits in this regard for specific kinds of federal funds or for federal fund appropriations for certain agencies. The following are examples of some of the major provisons in this regard: (1) under a general statutory provision, the Governor is prohibited from administering, and any state agency is prohibited from expending, any federal funds from any federal block grant newly acted after August 31, 1995, without the approval of the Legislature's Joint Committee on Finance; (2) the Governor must submit a plan to the Joint Committee on Finance, for its approval, for the expenditure of any federal oil overcharge funds; (3) limitations are placed on the use of certain federal income augmentation services receipts without the approval of the Joint Committee on Finance; (4) subject to certain conditions, the approval of the Joint Committee on Finance is required before agency expenditure of unanticipated federal community mental health services and federal child care and development block grant funds may proceed; and (5) subject to certain conditions, for three state agencies (Departments of Justice, Public Instruction and Transportation), there is a requirement for each of those agencies to submit annually a plan for the Joint Committee on Finance's approval that details how the agency plans to adjust its federal appropriations (expenditure plans) to reflect the most recent estimate of anticipated federal funds as of December 1 of each year; and (6) the Department of Public Instruction is required to obtain Joint Committee on Finance approval of its plan for allocation of certain federal block grant funds to public schools in the City of Milwaukee.

Second, with regard to creation of federal positions, such position are generally created through the budget process. However, under the statutes, the Governor also has unilateral authority to create or abolish federally funded positions without the approval of the Legislature.

Wyoming--The current budget act eliminates all federally funded positions at the end of the current biennium so that agencies will have to seek reauthorization for them. This has not been done before.

Table 2. Interim Control Over Receipt of Unanticipated Federal Funds Controlling Authority
State	Executive	Legislative	General Degree of Legislative Authority
Alabama	X		None
Alaska		X	Advisory
Arizona	X		None*
Arkansas	X		Advisory*
California	X		Conditional
Colorado	X		Conditional*
Connecticut	X	X	Conditional*
Delaware	X		Joint*
Florida	X	X	Advisory*
Georgia	X		None
Hawaii	X		Conditional*
Idaho	X		Conditional*
Illinois	X		Conditional*
Indiana	X		None
Iowa	X	X	Conditional
Kansas	X	X	Joint*
Kentucky	X		Advisory*
Louisiana		X	Binding*
Maine	X		None
Maryland	X	X	Advisory*
Massachusetts	X		Advisory*
Michigan	X	X	Binding*
Minnesota	X	X	Advisory*
Mississippi	X		None*
Missouri		X	Binding*
Montana	X		None*
Nebraska		X	Binding*
Nevada	X	X	Binding*
New Hampshire	X		Conditional
New Jersey	X	X	Conditional*
New Mexico	X*	X*	Conditional
New York		X	Binding*
North Carolina	X*	X	Advisory*
North Dakota	X	X	Joint*
Ohio	X	X	Joint*
Oklahoma	X	X	Joint*
Oregon		X	Binding*
Pennsylvania		X	Binding
Rhode Island	X	X	Joint*
South Carolina		X	Binding*
South Dakota		X*	Binding*
Tennessee	X		Advisory*
Texas		X	Binding*
Utah	X		Conditional*
Vermont		X	Binding*
Virginia	X		None
Washington	X		None
West Virginia	X		Conditional
Wisconsin	X		Advisory*
Wyoming	X		None
Totals	39	26

States appearing in bold face in Table 2 have a legislature that meets year round. Totals may exceed 50 because some states have both the executive and legislature as controlling authorities.

Definition of Terms:

None: The executive has complete discretion over unanticipated federal funds received between legislative sessions.

Advisory: A legislative board may provide advice during the interim, but lawmakers have no control over unanticipated federal funds.

Conditional: Lawmakers defer to the executive for some spending decisions between legislative sessions. Practice may vary depending on the source, purpose or type of unanticipated federal funds received.

Joint: Executive and legislative branch sit together on a board and during the interim share the decision on spending unanticipated federal funds.

Binding: The executive branch may receive but cannot spend unanticipated federal funds without prior authorization or subsequent legislative approval.

* Notes:

Arizona--None with the exception of monies received under Title XIX of the of the Social Security Act (Medicaid). The general appropriation act sets a cap on total expenditures for Title XIX programs. Authority not referenced to appropriate Federal Funds under the Brown amendment for TANF.

Arkansas--The full legislature must ratify the governor’s decision during the next session or state participation in the program is withdrawn.

Colorado--A legislative role exists only when a specific state match is required.

Connecticut--Legislature has control for all block grants while the governor has control of other federal funds.

Delaware--The state Clearing House Committee for Federal Aid must approve any applications for federal grants by state agencies. Membership includes the chairs of the Joint Finance Committee, four other legislators, the secretary of finance, the state budget director, the director of the Office of Development, and the controller general.

Florida--Governor submits budget amendment and, by statute, fiscal committees have 14 days to respond if they disapprove of the spending plan.

Hawaii--In 2000, Act 234 was passed giving the Govenor the ability to increase expenditure ceilings set by the legislature for unanticipated impact aid and U.S. Dept. of Defense funds received by the State Department of Education

Idaho--Unanticipated federal funds approved by the Executive Branch may only be used for the current year, but must be re-authorized, once known, by the legislature.

Iowa--All block grant funds received by the state must be deposited in a special account subject to appropriation by the legislature. Block grant appropriations are contained in the block grant bill. The legislature has no interim authority over other kinds of federal funds.

Illinois--Nonappropriated spending is permissible if: (1) the purpose for which monies are to be spent are for purposes and/or resources that were not appropriated; (2) the spending does not commit the state to matching resources; (3) the General Assembly has not specifically denied the purpose; and (4) the agency has the statutory authority to carry on the activities of the program. Otherwise a state agency must seek a supplemental appropriation.

Kansas--State Finance Council includes the Governor, Speaker of the House, President of the Senate, House and Senate majority and minority leaders, and Ways and Means and Appropriations Committee chairs.

Kentucky--Provision is made for expenditure of excess receipts with notification and review by the Appropriations and Revenue Committee. Legislative objections may be overridden by the state budget director with written notification.

Louisiana--By statute, the Joint Legislative Budget Committee is the controlling authority. The governor may accept but cannot spend unanticipated federal funds without legislative approval.

Maryland--While lawmakers have the power to question how the executive plans to spend unanticipated federal funds, in practice, fiscal committees rarely become involved between legislative sessions. However, A process exists which requires every amendment to the budget which would increase federal funds approriations by more than $100,000 to be submitted to the budget committees for review and comment. Although the review period is limited to 45 days, as a matter of practice, the executive customarily does not process amendments with which the committees do not concur.

Massachusetts--Nonappropriated spending is permissable if: (1) the purpose for which monies are to be spent are for purposes and/or resources that were not appropriated; (2) the spending does not commit the state to matching resources; (3) the General Assembly has not specifically denied the purpose; and (4) the agency has the statutory authority to carry on the activities of the program. Otherwise a state agency must seek a supplemental appropriation.

Michigan--A supplemental appropriation is required from the full legislative body whenever unanticipated federal funds are received by a state agency.

Minnesota--A supplemental appropriation is required from the full legislative body whenever unanticipated federal funds are received by a state agency. For new programs, personnel level changes, or proposed increases in state match, an agency must secure the recommendation of the Legislative Advisory Commission. Members of the Legislative Advisory Commission include the finance commissioner, the speaker of the House and Senate majority leader (or designees), chairs of the House ways and means and Senate finance committees and on a rotating basis chairs of fiscal committees in the House and budget divisons of the Senate responsible for oversight of the items being considered. The Legislative Advisory Commission may review and comment on planned uses for unanticipated federal receipts between legislative sessions, but the executive is not obliged to follow its recommendations.

Mississippi--The state supreme court ruled in 1985 that Mississippi’s constitution prohibits legislative involvement in the execution of the budget after its adoption. However, the executive would need legislative approval when state matching funds are required.

Missouri--So long as prior legislative authorization exists for that federal source, the executive is free to accept and spend unanticipated federal revenue. When an agency expects but can only estimate the amount of federal revenue it will receive for the fiscal period, the budget bill reflects this fact. Estimates are sufficient authorization to spend actual receipts. Agencies must notify legislative fiscal staff when federal receipts exceed budget estimates.

Montana--The governor is the controlling authority for the executive branch, the chief justice for the judicial branch, the Board of Regents for the university system.

Nebraska--Typically, federal funds are shown in appropriations bills as an estimate, thus the amounts shown are generally not an absolute expenditure restriction. Allotments of federal funds received in excess of budget estimates are delegated to the executive branch via the appropriations bills, however this delegation is discretionary. Without language delegating such authority and providing an estimate, funds can be received by the executive branch but not spent.

Nevada--Between legislative sessions, the Interim Finance Committee must approve gifts over $10,000 and grants over $100,000 not included in the General Authorization Act. Grants that involve the approval of new positions require Interim Finance Committee approval regardless of amount. The Interim Finance Committee includes all members who served on the Assembly Ways & Means and Senate Finance Committee during the preceding session.

New Hampshire--Unanticipated federal funds may not be expended for personnel costs or consultants without prior approval of the Legislative Fiscal Committee and Governor and Council Committee (executive branch).

New Jersey--Prior authorization is required unless otherwise specified in the budget act. It has been the practice to extend to the governor the authority to accept and spend certain federal grants without limit as in the case of grants awarded to New Jersey universities on a competitive basis. Limits may be set in advance to accommodate unanticipated federal funds. For example, an agency may be authorized to spend unanticipated federal receipts up to 125 percent of current authorized levels. Or the governor may be given discretion over small grants under $300,000. Federal spending authority also can be transferred between programs upon request to the legislature.

All authority to accept and expend federal funds is provided through the annual appropriations act (including supplements thereto). The annual appropriations act makes specific appropriations of federal funds in specific amounts, but also appropriates and allows the expenditure of the following unanticipated federal funds:

Emergency disaster aid funds;

Pass-through grants to political subdivisions of the state for which the state has no discretion in the use or distribution of the funds and for which no state matching funds are required;

The first 25 percent of unanticipated grant awards, and increases of up to 25 percent above the previously anticipated grant amount;

Federal financial aid for higher education student above the amount specifically appropriated;

Any Low Income Home Energy Assistance Program (LIHEAP) funds received in excess of the amount appropriated; and

All other grants of $500,000 or less that have been awarded competitively.

Transfers of federal appropriations authority ceilings among unrelated programs will be allowed only with legislative approval and only under emergency or special conditions.

New Mexico--General Appropriation Act authorizes budget increases of unforeseen federal funds to agencies. There is some uncertainty or dispute whether this applies to the 2003 Federal flexible grant.

New York--Payments from any funds, including federal monies, of the state or under state management are prohibited without legislative appropriation.

North Carolina-- A 1982 North Carolina Supreme Court advisory opinion found unconstitutional the delegation of the authority to approve/disapprove interim federal receipts to North Carolina’s Joint Legislative Committee to Review Federal Funds that had been provided for in a 1981 law.

Controlling Authority: Primarily the Executive Branch with broad spending parameters set by the Legislature in the Executive Budget Act.

Advisory: During its 2001 Session, the N.C. General Assembly enacted a statutory requirement that, while the Legislature is not in session, agencies requesting to establish new positions to be financed with unanticipated revenue, be reviewed by its joint legislative oversight commission prior to establishment.

North Dakota-- An emergency commission (the Governor, Secretary of State, chair of the Legislative Council and chairs of the House and Senate appropriation committees) proposes how to spend unanticipated federal funds. That allocation plan must be approved by the budget section of the Legislative Council.

Ohio--The State Controlling Board (six legislators and the director of the Office of Budget and Management) can adjust appropriations authority for other than general fund line items in the interim.

Oklahoma--The Contingency Review Board (the two presiding officers of the Legislature plus the Governor) can permit the expenditure of federal funds that exceed expenditure limitations included in appropriations acts.

Oregon--The Emergency Board (the Joint Ways and Means Committee plus presiding officers) controls use of unanticipated federal funds in the interim.

Rhode Island--An agency can spend federal funds received up to the amount specified in an appropriation. Receipts in excess of the amount cannot be spent without express consent by the governor and the two presiding officers.

South Carolina--The State Budget and Control Board has the authority to review and approve the expenditure of unanticipated funds

South Dakota--Interim Committee on Appropriations (the appropriations committee out of session) must approve the governor’s recommendation for the expenditure of unanticipated funds.

Tennessee--The governor’s use of funds received in the interim is reviewed in the appropriations process in the following session.

Texas--Efforts are made to use language broad enough to allow unanticipated funds to be used; the Legislative Budget Board (presiding officers, four fiscal committee chairs, four other legislators) may authorize the expenditure of unanticipated funds in the interim.

Utah--Executive may accept federal funds if no matching state funds are required. In the latter case, the legislature reviews a summary of all grant applications 3-4 times during interim. An additional new report will track those applications through receipt, including any modifications.

Vermont--Grants require legislative interim committee approval or legislative approval. Excess receipts from existing grant can be accepted by the administration.

West Virginia--Under a bill passed during the 1982 session, the governor must submit a statement to the legislative auditor explaining why the unanticipated funds could not be reasonably have been anticipated in the budget process and describing how the funds will be spent. If the legislature is in session, unanticipated federal funds must be appropriated. Unanticipated funds received during the interim may not be spent for the creation of a new program or for a significant alteration of an existing program.

Wisconsin--The Legislature, through the Joint Committee on Finance, has some review/approval authority over expenditure of such unanticipated federal funds in certain situations.

Source: National Conference of State Legislatures survey of legislative fiscal offices, 2003.

Posted September 2004.
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