Guam- Some of the Special Revenue Funds appeared dormant, the Department of Administration said in an attempt to explain why they might have been tapped for non-related purposes.
“I think the important thing to remember is [if] these funds had been spent for their intended purpose, the money wouldn’t have been there for any intended transfer,” Department of Administration Director Edward Birn said Wednesday. “So, you have to ask why wasn’t that money spent when it was accumulated [for] the purpose for which the fund was set up?”
The Office of Public Accountability reported that a total of $45.5 million has been raided from Special Revenue Funds dating back to 2013. For years, the government of Guam has been tapping into SRFs to cover the general fund deficit.
According to Public Auditor Benjamin Cruz, DOA “borrowed” from 49 SRFs and 21 of the transfers were treated as permanent transfers.
Will any of those funds be returned?
“Well, we have already agreed to restore the fund under the 911 fund. That is a special case,” Birn said. “Under control of the PUC and we have an order to restore those funds and the administration will comply with that order. The other funds are not generally under that kind of control. These were permanent transfers that were made and permanent means permanent.”
As for the rest of the questioned transfers, Birn said he does not see any of those funds being repaid because “then they would not be permanent transfers.”
Cruz pointed out that agency directors were not consulted when the transfers were made. Instead, they were made aware after the fact.
Did DOA ask why the funds were not spent prior to taking them? While that does not appear to have been the case, the department heads did acknowledge the transfers were made.
“There was a standard letter sent asking them to acknowledge the transfers. Some responded in a different way,” Birn said.
OPA’s audit report indicated that only 21 of the SRFs were permanent transfers, which leaves a question as to the remaining 27. While that remains to be seen, Birn said no transfers have been made in fiscal year 2019 and only one transfer was made in FY 2018.
“All the other fund administrators the directors who have control over it have to take charge of that amount and start not so much encumbering it but at least make [the] Department of Administration know that it’s happening so that if a million or two is taken out, it’s going to jeopardize your E-911 system speak up. Everybody has a responsibility,” Cruz said.
“Using special revenue funds to pay for general government expenses is contrary to the purposes for which they were legally created,” Cruz said. “The improper use of these funds could negatively affect the public health, public safety, and other social and economic benefits for which they were created. There could be possible legal implications, if some provisions of federal laws, which may have oversight of the funds, are not complied with.
“SRF projects are at risk of failure if these borrowed funds are not repaid,” said Cruz.