Going over budget: A routine practice for some S.C. agencies

By RICK BRUNDRETT

As S.C. lawmakers continue to slow-walk adopting a final state budget for the fiscal year already underway – which potentially could top $44 billion in state, federal and “other” funds – some state agencies likely are planning to seek mid-year spending hikes beyond their annual appropriations.

For the fiscal year that ended a month ago, the state Executive Budget Office (EBO), which is part of the S.C. Department of Administration, quietly approved nearly $3 billion in mid-year, federal and other fund spending-increase requests submitted by 42 agencies, The Nerve found in a review of records provided by the Department of Administration under the state Freedom of Information Act.

The collective $2.997 billion in spending-increase requests – $2.35 billion in federal funds and $647 million in other funds – were in addition to the $41 billion in overall approved appropriations for fiscal year 2025-26.

The mid-year increase requests worked out to be about $535 for every S.C. resident.

And those requests totaled $2.1 billion more than the $858 million in federal and other fund requests that the EBO approved during fiscal 2024-25, as The Nerve revealed last year.

The fiscal year starts July 1 and runs through the following June 30.

Under a little-known state law, S.C. agencies can spend more other or federal funds than what lawmakers appropriated in a fiscal year upon approval by the EBO.

State law prohibits agencies from using surplus money to “expand programs without legislative approval,” and requires that funds earmarked for specific purposes in the state budget or by federal law or regulation be used “for the same purpose.”

But current law doesn’t require the EBO or the Department of Administration to hold public hearings before spending increase requests are approved – which, according to the records provided to The Nerve, typically listed signatures only by an EBO analyst and its director.

In contrast, state law requires county councils to hold public hearings before those governing bodies can take final action on “supplemental” appropriations, defined as “additional funds which have come available during the fiscal year and which have not been previously obligated by the current operating or capital budget.”

Besides state law, an annually renewed state budget proviso authorizes the EBO to approve agency requests for other and federal fund “authorization adjustments” and requires the EBO to provide quarterly reports to the chairmen of Senate Finance and House Ways and Means committees.

"Other" funds include such things as college tuition, lottery proceeds, state gasoline taxes, part of the state sales tax earmarked for K-12 education, and court fees and fines. Agencies typically don’t spend all of their other fund appropriations by the Legislature in a fiscal year and generally are allowed to carry those surpluses into the next fiscal year.

Last month, The Nerve revealed that state agencies had at least $7.9 billion in other fund surpluses on hand when the 2025-26 fiscal year started on July 1, 2025.

The Nerve in 2024 revealed that a special joint legislative panel that had been recommending whether to approve mid-year requests by state agencies to increase their other fund spending was discontinued about four years earlier after 10 years in existence.

‘Supplemental’ spending

To get mid-year other and federal fund requests approved, agencies submit “Request for Authorization Increase” forms to the EBO – as of last year, “BD-100” forms for federal fund requests and “BD-101” forms for other fund requests – outlining the additional dollar amounts, the funding source or sources, and what expenses would be paid with the extra money.

The Nerve’s review of 71 approved federal or other fund increase requests for fiscal year 2025-26 found that the requests ranged from $31,567 for the Wil Lou Gray Opportunity School to $809 million for the Rural Infrastructure Authority.

Following are the top-10 collective requests submitted by state agencies, according to Department of Administration records:

*request submitted by the Department of Transportation

The Nerve’s review found that for a dozen agencies, approved mid-year federal spending increases were greater than what was originally appropriated; for eight of those agencies, the difference was at least $10 million, based on a comparison with an official budget record known as the “summary control document.”

The agencies with the four highest differences between appropriated and approved mid-year requested amounts were as follows, with the difference amounts in parentheses: Rural Infrastructure Authority ($808.2 million), Department of Social Services ($265.1 million), Department of Transportation ($133.7 million), and Office of Regulatory Staff ($127 million).

In a written response this month to The Nerve, Alex Clark, spokeswoman for the S.C. Department of Commerce, which handles media requests on behalf of the Rural Infrastructure Authority (RIA), said state lawmakers in 2021 approved spending federal funding for the RIA under the American Rescue Plan Act (ARPA), which she noted was “supplemental to annual appropriations” and “not part of the normal budget.”

The 2021 state law directed the RIA to use $900 million in ARPA funds to “administer and operate three grants programs designed to provide for improvements in water, wastewater, and storm water infrastructure throughout the State.” It also specified that those expenditures and other listed ARPA spending would be “supplemental” to the state budget for fiscal year 2021-22; the Legislature in 2023 included a similar provision in reauthorizing ARPA spending.

ARPA was passed during then-President Joe Biden’s administration in response to the COVID-19 pandemic. In April 2023, the RIA announced nearly $1.4 billion in ARPA funding to more than 200 communities statewide to “assist with improvements for clean drinking water, sanitary sewer and stormwater resilience,” according to an RIA release.

“Due to the unusual size and the nature of the funds, a request for additional authorization outside the normal appropriations act is necessary since these are pass through federal funds that are designated for a specific purpose under the Act,” RIA Executive Director Bonnie Ammons said in the agency’s July 1, 2025, BD-100 request to spend $809 million in ARPA funds, noting that the “one-time program funding must be expended by 12/31/26.”

In its $133.7 million federal-spending-increase request submitted on July 29, 2025, the Department of Transportation said when the agency submitted its 2025-26 state budget request, “the ARPA reallocations were not included.” The summary control document for the adopted 2025-26 state budget listed no federal appropriations for DOT.

Separately, DOT on Feb. 19 of this year submitted a mid-year, $100 million other-fund increase request to the EBO on behalf of the County Transportation Committee (CTC) Program, DOT spokeswoman Jennifer Timmons and Department of Administration spokeswoman Brooke Bailey confirmed in written responses Thursday to The Nerve, with Timmons describing it as a “supplemental budget request.”

“While SCDOT oversees the program as required by state law, the request was made to use available funds carried over from previous years,” said Timmons, who cited a state budget proviso allowing the spending of carried-over CTC funds.

Counties use part of the state gasoline tax to fund local road projects; under state law, the projects are managed either by CTCs or DOT.

Records show that EBO Director Kevin Etheridge approved that request, as well as the federal ARPA funding requests by DOT and the RIA.

Budget end runs

The Nerve’s review also found that some state agencies contended their mid-year increases in federal spending were needed to make up for shortfalls in federal appropriations authorized by lawmakers in the 2025-26 state budget.

For example, when asked to explain a $265 million difference between what lawmakers authorized for DSS and its total mid-year increase requests, agency spokeswoman Connelly-Anne Ragley in a written response to The Nerve replied, “DSS had no control or say in what the House and Senate put in for the federal authorization amounts” for last fiscal year. She referenced other media reports about the Senate’s plans to cut $2 billion in federal and other fund spending across all state agencies receiving those funds.

State budget records show that the overall federal spending authorization in the final fiscal 2025-26 budget dropped by $1.1 billion; total base other-fund appropriations were reduced by $800.8 million, though the final net reduction for those funds was $204.7 million when all revenue sources were included.

As for DSS, its authorized total federal appropriations dropped by more than $315 million from fiscal 2024-25 to last fiscal year, according to the summary control document, which listed a $345.1 million line-item reduction in the 2025-26 budget.

In submitting three BD-100 requests to the EBO last fiscal year to increase mid-year federal spending by a total of $505.8 million, DSS listed a number of supported programs, including childcare vouchers, child and adult food programs, TANF (Temporary Assistance for Needy Families) expenditures, and regular foster care and adoption programs.

In a related matter, Ragley directed The Nerve to submit a state open-records request in response to written questions about unspecified $54.7 million and $25.1 million in payroll expenses and employee benefits, respectively, listed in one of the BD-100 requests for $238 million. The Nerve last week submitted a Freedom of Information Act request for those records.

Asked to explain its $585.7 million in collective federal and other fund spending-increase requests in fiscal 2025-26, Jackson Wilkens Burnaugh, spokeswoman for the S.C. Department of Health and Human Services, which is the state’s Medicaid agency, said in a written response to The Nerve that “increased utilization and acuity have resulted in an increase in expenditures across the Healthy Connections Medicaid program, necessitating additional authorization to spend revenue generated as part of the agency’s operations to supplement state general funds, and to account for the associated federal match.”

“Of note,” Burnaugh added, “SCDHHS’s federal and other funds authorization was decreased last year as part of a statewide federal and other funding authorization reduction.”

Summary control documents showed a $90.6 million line-item reduction in authorized federal spending for last fiscal year, though the agency’s overall federal appropriations increased by $138 million from fiscal 2024-25.

The Department of Juvenile Justice in its BD-100 request in February this year sought approval to spend $1.1 million more in federal funds – the exact amount of the reduction in its federal authorization in the 2025-26 state budget, budget records show – noting the money was needed to “meet the continued expenses of staff for the educational goals of the students in our school and the USDA (U.S. Department of Agriculture) nutrition of the same students.”

The S.C. Arts Commission, in its September 2025 request to spend $752,866 more in federal funds, said the agency’s federal authorization in fiscal year 2024-25 and previous years was $1.3 million but was cut to $535,341 last fiscal year, noting the increase was needed to “cover our NEA (National Endowment for the Arts) partnership grant award” for fiscal year 2025-26 and “carryforward” funds from the previous fiscal year.

In its July 2025 request to spend $325,000 more in federal funds, the S.C. School for the Deaf and Blind said it had five grants closing as of September 2025 and totaling $598,416 in “obligations and commitments,” but the agency was allotted $276,912 in “operating budget.”

“These grants are used to purchase supplies and services for our deaf, blind and multi-handicapped students,” according to the request.

All of the above requests for increased federal spending were approved by the EBO, records show.

Nerve interns Laura Anne Kay and Max White contributed to this story. Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394-8273 or [email protected]. Follow The Nerve on Facebook, Instagram and X (formerly Twitter) @thenervesc.

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