Budgetary process in need of transparency and accountability

As state agencies prepare to submit their annual budget requests, now is an opportunity to re-evaluate the budgetary process and encourage the governor and agencies to comply with state budget law. 

The process 

The first step in the process involves agencies receiving a set of guidelines from the state Executive Budget Office (EBO).  Agencies then fill out their budget requests in line with EBO guidelines and submit them by Nov. 1. 

In October, agencies meet with the Governor’s Office to review their budget requests. The governor’s proposed state budget version is published in January. 

However, there is one big problem with this process. Agencies have consistently neglected to follow budget law – specifically, failing to adhere to a concept called zero-based budgeting.    

Zero-based budgeting is a financial approach mandating that agencies justify every dollar requested for both new and existing programs. This method identifies areas of overspending, ensuring that agencies are utilizing tax dollars efficiently. 

State law requires agencies to adhere to zero-based budgeting principles to prevent wasteful spending and inflated budgets. However, despite these legal requirements, agencies have made a habit of only justifying expenditures for new initiatives and increased funding for existing programs. This neglects the comprehensive budgetary justification mandated by law. 

What the law says 

The law states that by November first, state agencies are required to submit their proposed annual budgets to the Executive Budget Office.  State law is clear: Agencies must justify their entire budget, including both new and existing requests. 

The law reads:  

“The Governor shall, prior to making annual recommendations to the General Assembly of the amounts to be appropriated to the various state agencies, departments and institutions, as required by Section 2-7-60 of the 1976 Code, require them to justify the entire amount of money they are requesting (emphasis added). It is the intent of this section that each state agency, department or institution shall be required to justify its recurring expenses, as well as any new or additional expenses (emphasis added).” 

State law also requires certain criteria to be presented in each budget request.   

“For the purpose of justification as set forth in this provision, the Budget and Control Board shall require each state agency, department and institution to submit for each program the purposes, objectives and such quantitative measurements regarding services provided... (emphasis added)” 

The problem 

These statutory requirements in state law are aimed at removing government waste and keeping costs low. In practice, however, agencies don’t justify their previous spending but only make new requests. 

This results in existing programs having no change in their base funding levels because agencies give the EBO no justification for that spending. 

For zero-based budgeting to work, agencies must follow the existing law. When agencies only justify new spending, existing multimillion-dollar programs go unexplained, leaving those at the EBO no way of determining if those programs are functioning as intended or worth funding at all.  

When the state budget is not created from scratch, agencies simply carry over current spending levels and ask for increases for the upcoming fiscal year. This results in accelerated spending growth for virtually every state agency – well beyond the expected increase for population growth plus inflation. 

The solution 

The answer is simple: Agencies must follow the existing state law and explain the entirety of their spending.  And the governor must enforce the law. 

Rather than using the previous year’s spending as the proposed base budget for the upcoming fiscal year, agencies must start at zero and justify the entirety of their spending. This includes each program's purposes, objectives and quantitative measurements of services provided for every program, not just new ones. 

We urge all state agencies to comply with state law – and directed by the governor to do so – by justifying all of their proposed spending for the upcoming fiscal year. Adhering to these requirements would undoubtedly reduce spending by revealing and addressing excessive spending for outdated or no longer effective programs.