Arizona sweeps 150% of state veterinary board’s funds

As states look for additional dollars to make up budget shortfalls, Arizona provides a novel approach: Sweep the budgets of individual state boards — and take more than is actually there. This year, the state OK’d an appropriation of more than $600,000 from the Arizona Veterinary Medical Examining Board fund for the state’s general fund.

But here’s the kicker:

“They’re sweeping about 150 percent of our budget,” said Arizona VMEB Chairman Richard Crisler, DVM. “We’re struggling just to keep things going.”

Crisler said the board only has about $450,000, so the fund sweep will leave the board completely broke, and likely crippled into 2010.

A spokesperson for Arizona Gov. Janet Napolitano said the $609,500 appropriation from the VMEB fund reflects the dollar amount to be taken over the course of the entire fiscal year (July 1, 2008-June 30, 2009).

“There is an ebb and flow, on any particular day they may not have the particular amount in their bank account,” said Jeanine L’Ecuyer, deputy chief of staff for communications.

L’Ecuyer said the money could eventually be repaid to the fund, but it all depends on the economy. For now, with the state’s budget shortfall of more than $1 billion, more appropriations are probably coming.  

“More sweeps are likely, frankly,” L’Ecuyer said. “There is no doubt that all state agencies are going to face continued and very painful cuts.”

L’Ecuyer said that although the sweep of the VMEB fund was greater than what the board has on hand right now, the board will still be able to function.

“No agency was left with less than they need to operate,” she said.

But Crisler disagrees. Veterinary state boards are funded by licensing and other fees, which helps pay for services and oversight that the boards provide. The Arizona board collects license renewal fees every two years, Crisler said, and this was a renewal year, so the board’s coffers won’t be replenished for another 24 months.

The board has already increased licensing fees for veterinarians and technicians up to the statutory limit, Crisler said. He said he hopes to avoid laying off any of the board’s five staff members, but might have to eventually. They have tried to cut costs by cutting out three monthly meetings, which will increase the workload at each meeting, and will also increase the response time for any issues that need resolution.

A national problem
Arizona Gov. Janet Napolitano issued a statement in October saying the Fiscal Year 2009 budget was facing a gap of anywhere from $320 million-$800 million, but now the deficit is predicted to be closer to $1.2 billion, according to news sources. And Arizona is not alone.

More than half of all states are facing budget gaps this year, according to the Center on Budget & Policy Priorities, a nonprofit policy think tank. The center estimates that 27 states are facing about $12 billion in budget shortfalls, and the problem is only going to get worse.

Jason Levitis, a policy analyst with the Center on Budget & Policy Priorities, said that fund appropriations by state governments are not rare, especially these days.

“Nationwide, ‘fund sweeps’ are pretty common – either as a loan or a straight transfer,” he said. “With the growing state fiscal crisis, we’re likely to see more of them in the near future.” 

The Arizona VMEB is one  of the state’s “90/10” boards, where 90 percent of funds collected by the organization are for the board’s operating expenses, and 10 percent goes to the state’s general fund. At least that is how it is supposed to work.

Crisler said several other 90/10 boards that had their funds swept are pursuing lawsuits against the state, so the VMEB will wait to see how those cases are resolved. The VMEB is not a part of the lawsuit right now, because they can’t afford it, Crisler said. But, if the sweeps are found to be illegal, the board could get some of the swept money back. Until then, the board will have to make do.

“We’re going to keep trying to hang on,” Crisler said. “Keep cutting costs as much as we can.”