Sussex GOP
Budget”dominates total spending in the first state
An exclusive interview with former state legislator Charlie Copeland
Did you know that Delaware will spend nearly $12.5 billion over the next year despite a widely-reported “General Fund Budget” of around $5 billion? Did you also know that the difference, $7.5 billion “Shadow Budget,” has almost no legislative oversight or citizen input? Could this be an invitation to cronyism and corruption?
The Caesar Rodney Institute (CRI) interviews former State Senator and Co-Chair of CRI’s Center for the Analysis of Delaware’s Economy & Government Spending Charlie Copeland for an exclusive insight into this “Shadow Budget.”
CRI: Hi Charlie. Thanks for joining us. It is widely reported that Delaware’s “General Fund” budget is around $5 billion. Yet, you tell us that Delaware will spend another $7.5 billion above and beyond what is in the “General Fund” in a “Shadow Budget.” Why do you call this additional spending a “Shadow Budget,” and what is it?
COPELAND:   Thank you for having me. I could have called it the “Secret Budget” or “Stealth Budget” since it’s pretty invisible to Delaware citizens. In Dover, this spending is officially referred to as “Special Funds” or “Appropriated Special Funds,” and it is almost entirely comprised of Federal funds in the form of grants for hundreds of projects in dozens of our state agencies as well as our colleges and universities. Almost none of this money passes through the General Assembly’s Joint Finance Committee’s budgeting process. It is very opaque.
CRI: $7.5 billion is a massive amount of money – 1.5 times larger than the “General Fund.” Could you give us some examples of these funds?
COPELAND:   First, let me state that the “Shadow Budget” has been this massive for at least a decade, likely far longer.
As for a couple of examples, last June, the Clearinghouse Committee approved a grant to the Department of Health and Social Services titled “Child Care Development – Discretionary,” in the amount of $14,202,295. What piqued my interest with this grant was the term “discretionary.” Whose discretion is being used? $14 million is a lot to leave to someone’s discretion…
Or in October 2020, when the same department received an almost $5,000,000 block grant simply titled “Social Services Block Grant.” How is this block grant being used? I have no idea. These are but two examples from last year. But there are hundreds of expenditures – large and small – to dozens of agencies as well as the University of Delaware, Delaware State University, Delaware Tech. None of these grants seem to have any detailed public information as to their actual use.
Equally concerning is that the lion’s share of the Covid stimulus money will NOT be reviewed by the Legislature. These funds could add billions to the “Shadow Budget” with zero transparency or public oversight. This has a huge potential for fraud, theft, or corruption.
CRI: The “General Fund Budget” is an open and fairly rigorous process. Can you
explain the legislative review of this “Shadow Budget?”
COPELAND:   Well, as you know, for the “General Fund,” every year in February and March, the Delaware Legislature’s Joint Finance Committee (JFC) holds a six-week-long series of public 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” in a series of public meetings.
By the end of June, the “General Fund Budget” goes to an up-or-down vote by the entire General Assembly and to the Governor for signature. You can download the entire budget from the Legislature’s website.
This process concludes a thorough public legislative vetting and provides a decent level of legislative accountability and transparency.
For the “Shadow Budget,” however, there exists little-to-no transparency of or accountability to government priorities, spending levels, or even fund recipients. The only entity that reviews these funds publicly is the opaque Clearinghouse Committee.
CRI: Clearinghouse Committee? I’m not familiar with them.
COPELAND:   The Clearinghouse Committee is hard to find. It’s 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.
CRI: Who’s on the Clearinghouse Committee?
COPELAND:   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, they simply pack the room with staff.
CRI: If Legislators don’t attend, can members of the public weigh-in and participate – we are talking about $7.5 billion?
COPELAND:   The committee’s meetings do follow open meeting laws, as much as that helps. For example, the March 2021 meeting agenda (https://budget.delaware.gov/clearinghouse/abm.shtml) consists of a simple listing of grants to be considered. The information only includes the applicant agency, a project title, funding amounts, and an SAI (State Application Identifier) code.
The SAI code is a hyperlink to a password-protected webpage. It seems that taxpayers are not supposed to know the details of where their money is being spent.
CRI: Why should this “Shadow Budget” matter to the citizens of Delaware?
COPELAND:   Given trends, in Fiscal Year 2022, Delaware will spend well over $12.5 billion, which is over $12,500 per person in Delaware.
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. The two grants I previously mentioned have no detail as to the rules and oversight for spending those funds – who gets the money, who measures success or failure, how do these funds relate to other spending, etc.…
The pie chart below from the Department of Finance shows the true size of Delaware’s government and the size of the “Shadow Budget.”
CRI: Thanks, Charlie, for your exclusive insight. We hope our readers found this as troubling as we did! It looks like the “Shadow Budget” needs to come out of the shadows!
COPELAND: Thank you. Yes. This spending – much larger than the official “budget” – needs to have real oversight and accountability.
For more information, or if you would like to comment on this topic, please email us at info@CaesarRodney.org