WV court system built up millions in surplus, spent it down and built it up again

CHARLESTON, W.Va. — Over just a few years, West Virginia’s court system built up a budget surplus of $29 million.

Almost as quickly, while the Legislature was giving the Supreme Court the side eye, the court spent down the money to a few hundred thousand dollars.

Now the state Legislative Auditor is trying to figure out how the money built up and what was the motivation for spending it down so quickly.

The Supreme Court oversees the budget for West Virginia’s entire judicial system.

“The Legislative Auditor is concerned with the Court’s accumulation of appropriated General Revenue Funds in the majority of the years reviewed, with particular regard to the fact that in five years they had re-appropriated funds that went from $1.4 million in 2007 to $29 million in 2012,” the Legislative Auditor concluded.

“There is also concern over how these funds were subsequently spent down.”

More spending should correlate to better results for citizens, the Legislative Auditor added.

“A focus for an increase in the spending of tax dollars should be on increasing the outcomes for those operations of the Court that benefit the citizens of the State.”

Justice Workman

Chief Justice Margaret Workman responded to the audit, speaking before legislators Sunday afternoon. Workman says court did not choose to write a response. “We don’t dispute any of the figures, obviously.”

Workman said she raised issues internally with court about why the balance was so low in 2015, compared to where it had been.

Some of the spending went to raises, investment in drug courts and, of course, the renovations that have been controversial over the past year.

“I’m not here to defend any of the renovations, particularly any of the outrageous ones,” Workman said, also noting that those were not hers.

As the court system has built its surplus back up again over the past few years, Workman said she has been concerned about some of cuts within the judicial system, viewing them as actually creating inefficiency.

“Yes, we’ve accumulated a lot of money,” she said. “Some of the ways we’ve accumulated it are perhaps ways that need to be addressed and fixed.”

She said it is important for the court system to have reserves, noting that the Legislature also carries over money from year to year for projects or unanticipated expenses.

Workman said she agrees with the Legislative Auditor’s conclusion that spending in the court system should be aimed at good outcomes for the public.

Eric Nelson

House Finance Chairman Eric Nelson briefly made reference to a proposed constitutional amendment to give the Legislature greater oversight of the Supreme Court’s budget. West Virginia citizens will vote on the proposed amendment next fall.

“What the Legislature has been screaming about is the need for greater transparency,” Nelson said. “I think this report demonstrates the need for that transparency.”

Legislative Auditor staff presented the first round of their findings to lawmakers on Sunday during interim meetings. More findings will be presented at an upcoming meeting, part of the Legislative Auditor’s ongoing look at the Supreme Court.

This is all part of ongoing controversies over the Supreme Court’s spending decisions and whether the Legislature should have greater oversight. A proposed amendment to the state Constitution that would give the Legislature more authority over judicial spending will be on the ballot in November.

The Legislative Auditor’s staff was looking at the issue of how justices were using state vehicles when they came across a memo that made them curious about the surplus that the Supreme Court had been running.

Auditors first became aware of the spend down when they were reviewing memos written by Justice Allen Loughry.

In an August 2016 memo to the other justices responding to their questions about his vehicle use, Loughry questioned the “depletion of the court’s so-called rainy day fund in the amount of $26 million.”

That sent Legislative Auditor staff in search of how the excess funds had accumulated until 2012 and then how it was spent down to just $333,514 only four years later.

Because of turnover on Supreme Court staff, the Legislative Auditor concluded, it wasn’t possible to gather institutional knowledge of how the funds had built up.

“However, simply stated, the Court was appropriated more General Revenue Funds than were needed every year since 1997.”

In 2007, the carryover was $1.4 million.

Just five years later, at the start of 2012, it was $29 million.

And then the spend down began.

In fiscal year 2012, judges justices and magistrates all received pay raises totaling about $6.1 million, which came from the reappropriated funds. There were other increased expenses amounting to $546,207. The court then carried over about $22.7 million into the next fiscal year.

In fiscal 2013, the spend down accelerated.

The Legislative Auditor cites a memo from former Supreme Court Administrator Steve Canterbury saying that year there was “scuttlebutt” about the court’s reappropriated funds that was prompting conversations of a constitutional amendment to take away the court’s budgetary autonomy.

As a result, the court absorbed about $4.4 million more from the prior year’s raises fro judges, justices and magistrates.

Besides that, more money went to the now-infamous construction and furniture purchases for Justices’ chambers, the business court, the City Center East server room with backup air conditioning and generators, the clerk’s office and the justices’ conference room.

There was also new Family Court space in several counties with more expense for technology, furniture and office equipment.

And a mandate that drug courts serve all West Virginia counties caused an additional $1.9 million in drug court expenditures.

So by the end of fiscal 2013, the court was pushing a smaller surplus of $15.25 million to the next fiscal year.

In fiscal 2014, the rapid spend-down continued.

The court chose to return about $4 million of its discretionary funds to the General Fund to help with the budget shortfall that year.

And, as the Legislative Auditor cited from Canterbury’s memo, “The Court did not seek appropriations for approximately $10 million in expenditures in an attempt to bring the year-end balance to as close to zero as possible, mainly to continue to forestall a constitutional amendment.

“The Court discussed the need to eliminate any carry-over money at the end of the year so that the Senate leadership would not continue down the path towards the sponsorship of such an amendment.”

So the court system increased spending in a variety of areas, such as new drug courts, the completion of remodeling and at City Center East and through raises for certain classifications of employees.

By the end of that fiscal year, the carryover was only $1.8 million.

The spend-down continued in fiscal 2015.

By the end of that year, the $333,514 was being carried over, essentially bottomed out.

In the years since then, the court system’s carry over has started to increase again.

The surplus at the end of the current fiscal year is expected to be nearly $19.5 million.






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