CRI Focus Areas

Delaware's $7.5 billion "Shadow Budget" Dominates Total Spending in the First State

Charlie Copeland | 4/14/2021

Delaware will spend around $12.5 billion over the next year despite a widely-reported "General Fund Budget" of around $5 billion. The $7.5 billion "Shadow Budget" is 1.5X larger than the "General Fund" and has almost no legislative oversight or citizen input. The General Assembly should provide more accountability and transparency to this spending to better align it with Delaware public policy and minimize the risks of cronyism or corruption.
 
 
Every year in February and March, the Delaware Legislature's Joint Finance Committee (JFC) holds a six-week series of hearings at which the Executive Branch agencies present their spending priorities. At the conclusion of the hearings, the JFC - a 12-member committee composed of 6 legislators from each the House and the Senate - begins the process of composing the State's annual "General Fund Budget."
 
It is expected that Delaware's "General Fund Budget" will be around $5 billion.
 
But Delaware's government actually will spend around $12.5 billion, if not more. As a matter of fact, over the last decade, every year, Delaware has spent 1.5 times more money than was approved in the "General Fund Budget." This spending comes from a "Shadow Budget" - officially called "Special Funds."
 
Why does this "Shadow Budget" matter?
 
First, size matters. The "Shadow Budget," as mentioned above, has averaged 61% of Delaware's total government spending over the last decade. Restated, two-thirds of every dollar spent by Delaware's government is spent from the "Shadow Budget."
 
 
Second, transparency matters. The creation of the "General Fund Budget" begins with the Governor's proposed budget; proceeds through six weeks of the JFC public hearings; continues through the spring with numerous public votes by the JFC on specific spending decisions, and ends with an up-or-down vote by the entire General Assembly sometime in late June followed by a Governor's signature.
 
In short, Delaware's "General Fund Budget" goes through a detailed and thorough process of public legislative vetting every year, providing a decent level of legislative accountability and transparency.
 
However, for the "Shadow Budget," there is little-to-no transparency of or accountability to government priorities, spending levels, or even fund recipients. The only entity that seems allowed to "weigh-in" on these funds publicly is the opaque "Clearinghouse Committee."
 
The Clearinghouse Committee
 
This Committee is not listed on the General Assembly's website; one must look on the Executive Branch Office of Management and Budget webpage to find it. A screenshot of the Committee's March 2021 homepage is pictured below. As can be seen, the information on it was last updated for Fiscal Year 2015.
 
 
 
 
Digging further, the committee "officially" consists of six members of the General Assembly, the Controller General (who works for the General Assembly), and three members of the Executive Branch. However, a quick search of meeting minutes from the last 14 meetings shows that attendees are almost exclusively staffers.
 
 
 
 
Delaware law does allow each Committee member to appoint a designee to attend in their place, but no legislator seems to have designated an alternate. Even worse for accountability and transparency, the General Assembly wrote into law that, in order to achieve a quorum, "fiscal and policy staff of the Office of the Controller General shall serve as designees sufficient for [that] quorum." In short, if a quorum is needed, and it is always needed, pack the room with staff.
 
The committee's meetings do follow open meeting laws, as much as that helps. For example, the March 2021 meeting agenda (pictured above) consists of a minimalist listing of grants to be considered. The information only includes the applicant agency, a project title, funding amounts, and an SAI (State Application Identifier, which references back to over 2,000 Federal grants) code, which is a password-protected link to some other webpage. It seems that taxpayers are not supposed to know the details of where their money is being spent.
 
Summary
 
The chart below consists of data from the Department of Finance showing the real size and growth of Delaware's government. Given trends, in FY22, Delaware will spend well over $12.5 billion, which is over $12,500 per person in Delaware - larger than former Democratic Presidential candidate Andrew Yang's proposed "Universal Basic Income" of $1,000 a person. If this money came directly to citizens, each family of 4 would have an additional income of $50,000 per year.
 
And most of this money, over 60 cents of every dollar, flows through an opaque process with little to no taxpayer or legislative oversight. Plus, most of these grants and amounts are not an overt part of the General Assembly's budget-making process (some small percent do require State matching funds), which certainly could lead to duplicative spending, cronyism, or corruption.
 
It is a system in need of more Legislative oversight and sunshine.
 
 
 


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