General Appropriations Bill H. 4700 for the fiscal year beginning July 1, 1998
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11 SECTION 12
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13 TO AMEND CHAPTER 65, TITLE 2, OF THE 1976 CODE, RELATING TO THE SOUTH CAROLINA FEDERAL AND OTHER
14 FUNDS OVERSIGHT ACT, SO AS TO DEVOLVE THE FUNCTIONS OF THE GOVERNOR UNDER THE ACT TO THE
15 BUDGET AND CONTROL BOARD, ELIMINATE THE REQUIREMENT THAT THE STATE BUDGET AND CONTROL BOARD
16 SHALL FOLLOW THE RECOMMENDATIONS OF THE GOVERNOR WITH RESPECT TO THE APPLICATION OF THE
17 ACT, AND TO MAKE GRAMMATICAL AND OTHER TECHNICAL CHANGES.
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19 A. Chapter 65, Title 2 of the 1976 Code is amended to read:
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21 "CHAPTER 65
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23 South Carolina Federal and Other Funds Oversight Act
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25 Section 2-65-10. This chapter may be cited as The South Carolina Federal and Other Funds Oversight Act'.
26 Section 2-65-15. As used in this chapter:
27 (1) Appropriations act' means the annual general appropriations act.
28 (a)(2) Agency' means any state office, department, institution, board, commission, council, committee, or other entity of the
29 executive, judicial, or legislative branch.
30 (b)(3) Block grant' means federal funds distributed to the State in accordance with a statutory formula for use in a variety of
31 activities within a broad functional area.
32 (4) Board' means the State Budget and Control Board.
33 (c)(5) Federal funds' means financial assistance made to a state agency by the United States Government in any form, including,
34 but not limited to, a grant, loan, subsidy, reimbursement, contract, donation, or shared federal revenues, or noncash federal assistance in
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1 the form of equipment, buildings, and land. Financial assistance which originates with the U. S. United States Government, but which is
2 received by a state agency from another state or local agency in any form, is considered federal funds'.
3 (d)(6) Indirect costs' means those costs of supportive services within an agency or provided by another agency which benefit
4 more than one program and which may be charged to federal programs in accordance with Office Management and Budget Circular A-87 or
5 A-21.
6 (e)(7) Matching funds' means a specific amount of general fund monies identified by a state agency, and required by the federal
7 government, as a cash contribution for a federal program.
8 (f)(8) Other funds' means any revenues received by an agency which are not federal funds and are not general funds
9 appropriated by the General Assembly in the annual General Appropriation Act appropriations act.
10 (g)(9) Research grant' means an award of funds from the United States Government or other entity for the principal purpose
11 of systematic study and investigation undertaken to discover or establish facts or principles. The principal purpose of a research grant' is not
12 to provide services to the public or to the employees or clients thereof.
13 (h)(10) Major federal program' means a program which:
14 (1)(a) represents a transfer of program responsibility from the federal to the state level;
15 (2)(b) is available to the State on a noncompetitive basis;
16 (3)(c) is financially significant in relation to its proportion of the administering agency's budget.
17 Any new block grant or any form of federal turnback program is considered a major federal program'.
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19 Section 2-65-20. The General Assembly shall appropriate all anticipated federal and other funds for the operations of state agencies
20 in the annual General Appropriation Act appropriations act and must include any conditions on the expenditure of these funds as part of the
21 General Appropriation Act appropriations act, consistent with federal laws and regulations. Increases in project amounts as appropriated in
22 the act must be authorized in accordance with procedures set forth in Section 2-65-40, consistent with policies as provided in the annual General
23 Appropriation Act appropriations act and other applicable laws and regulations.
24 (a)(1) All agencies must shall provide to the State Budget and Control board, as part of their budget submissions, detailed
25 statements of the sources of all federal and other funds contained in their budgets.
26 (b)(2) All state agencies must shall submit programmatic and financial information for each federal project to the Governor board
27 in a manner prescribed by the Governor board. The information must be submitted in a timely manner so as to permit review of the projects
28 as part of the budget process.
29 (c)(3) The Governor's Office board shall provide to the Ways and Means Committee and the Senate Finance Committee at
30 appropriate times during the budget review process its recommendations on all federal projects.
31 (d)(4) The appropriation of federal funds must be decreased to the extent that receipts from these sources do not meet the
32 estimates reflected in each section of the General Appropriation Act appropriations act.
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1 (e)(5) With the exception of funds defined as exempt' in Section 2-65-100, no agency may receive or spend federal or other
2 funds that are not authorized in the annual General Appropriation Act appropriations act, but unanticipated federal or other funds may be
3 received and spent upon authorization pursuant to Section 2-65-30 or 2-65-40, as applicable.
4
5 Section 2-65-30. (a)(A) A state agency may receive and spend unanticipated federal funds, and funds from private foundations
6 or industries, which are not included in the General Appropriation Act appropriations act, but state agencies must submit expenditure proposals
7 to the Governor board before submission of the proposal to the grantor agency; and further provided, that the state agency shall receive
8 authorization of from the Governor board before receipt and expenditure of funds. No authorization shall must be made without first securing
9 and considering the Governor's board's recommendation on each expenditure proposal. Any such authorization is subject to all of the following
10 standards:
11 (1) The unanticipated nature of the project precluded it from consideration and approval as part of the state appropriations process
12 as described in Section 2-65-20.
13 (2) The project assists the applicant state agency to achieve objectives or goals in keeping with the recognized powers and
14 functions of the state agency.
15 (3) The applicant state agency is the appropriate entity to conduct project activities and no duplication of services is created by
16 the authorization.
17 (4) State matching funds, if required, are available within the existing resources of the applicant state agency.
18 (5) The project benefits the health or welfare of the people of the State.
19 (b)(B) Notwithstanding any other provisions of this chapter, no authorization of unanticipated federal or private foundation or
20 industry funds may involve a commitment of future legislative enactment to provide additional state funds to support the project.
21 (c)(C) The Governor must board shall provide the House Ways and Means Committee and the Senate Finance Committee with
22 periodic reports which describe actions taken under the provisions of this section.
23 (d)(D) Notwithstanding any other provisions of this chapter, a state agency may not implement an unanticipated major federal
24 program without prior approval of the General Assembly, except:
25 (1) that to the extent that the unanticipated program replaces existing services currently provided by a state agency, other
26 governmental entity, private nonprofit organization, or other service provider, the services may be authorized by the Governor board to continue
27 at an equivalent level, within the constraints of federal law and funding, until the General Assembly acts.;
28 (2) In the event if the unanticipated program creates services not currently provided, and the Governor board agrees that delayed
29 implementation would result in a significant loss of federal funds to the State, the program may be authorized by the Governor board to proceed
30 at a minimal level, until such time as the General Assembly may act.
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32 Section 2-65-40. (a)(A) A state agency may spend other' funds above the amount in the General Appropriation Act
33 appropriations act and increases in anticipated federal programs if the expenditure of the funds receives the prior authorization of the Governor
34 board.
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1 (b)(B) Authorizations under this section are subject to the following standards, as applicable:
2 (1) the proposed use of the funds do not result in a fund of surplus money which may be used by the agency to expand programs
3 without legislative approval;
4 (2) if the funds are earmarked for specific use in the General Appropriation Act appropriations act, or by federal law or regulation,
5 any additional funds must be used for the same purpose;
6 (3) if the increase results from a fee or charge for service, the agency has the legal authority to impose the fee, and has secured
7 any approvals required by applicable law or regulations;
8 (4) the proposed use of funds assists the state agency to achieve objectives or goals in keeping with the recognized powers and
9 functions of the state agency;
10 (5) if the funds are generated from a new revenue source:
11 (i)(a) the proposed use of funds covers only a minimum amount of administrative costs necessary to support the revenue
12 collection, and any excess must be remitted to the general fund of the State;
13 (ii)(b) it is determined that the requesting state agency is the appropriate entity to carry out the proposed activities and no
14 duplication of services is created by the authorization;
15 (6) if the increase in federal funds requires a corresponding increase in state matching funds, the state match is available from
16 existing resources.
17 (c)(C) The Governor must board shall provide the House Ways and Means Committee and the Senate Finance Committee with
18 periodic reports which describe actions taken under the provisions of this section.
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20 Section 2-65-50. Agencies must include estimates of research and student aid funds in the detailed budget statements required in
21 Section 2-65-20(a) (1) of this chapter. Agencies may not be required to submit the detailed programmatic and financial information required
22 in Section 2-65-20(b)(2) of this chapter, except that the agencies must furnish to the Governor board notices of actual awards and allocations
23 of research and student aid funds within fourteen days of receipt of such the notices from funding agencies. The Governor must board shall
24 maintain quarterly reports of the funds received by the agency, and must, upon request, provide copies thereof to the House Ways and Means
25 Committee or the Senate Finance Committee, or both.
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27 Section 2-65-60. The Comptroller General must account for and control expenditures of individual federally funded projects for
28 all agencies using the Statewide Accounting and Reporting System. For continuing federal projects, the Governor must board shall certify to
29 the Comptroller General the actual funds approved for each project pursuant to Section 2-65-20 of this chapter, and any further adjustments
30 to this amount, based on grant award documentation and pursuant to Section 2-65-40 of this chapter. For new federally funded projects, the
31 Governor must board shall inform the Comptroller General of funding levels authorized pursuant to Section 2-65-30 of this chapter.
32 The Comptroller General shall authorize expenditures on each project not to exceed the amount certified by the Governor board. Upon
33 request of the Governor, the Budget and Control Board, board, the House Ways and Means Committee, or the Senate Finance Committee,
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1 the Comptroller General must shall provide periodic reports of authorization levels, expenditures, revenues, and other data related to such the
2 federal projects. Upon request of the Governor the Budget and Control Board, board, the House Ways and Means Committee, or the Senate
3 Finance Committee, state agencies must shall provide grant award and related actual funding information.
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5 Section 2-65-70. (a)(A) All agencies receiving federal grants or contracts must shall recover the maximum allowable indirect costs
6 on those projects, subject to applicable federal laws and regulations. All indirect cost recoveries shall must be credited to the general fund of
7 the State, with the exception of recoveries from research and student aid grants and contracts.
8 (1) Each agency receiving grants or contracts to which indirect costs may be charged must have an approved indirect cost rate or
9 cost allocation plan. Agencies must shall prepare the indirect cost proposals and submit them to the Governor board for review. The Governor
10 must board shall submit the proposals to the appropriate federal agencies, negotiate the agreements, and transmit approved agreements to the
11 state agencies. The Governor board, upon request, must also shall provide a report on the proposals to the House Ways and Means Committee
12 or the Senate Finance Committee, or both.
13 (2) The Governor board annually shall prepare annually the Statewide Cost Allocation Plan for allocation of central service costs
14 to federal and other programs. The Governor must board shall ensure that state agencies recover costs approved in the plan through federal
15 grants and contracts, subject to federal laws and regulations.
16 (3) The Budget and Control Board and the State Comptroller General must shall assist the Governor board in ensuring compliance
17 with this section.
18 (b)(B) If it is determined to be in the best interest of the State and the agency receiving the federal funds, the requirements of this
19 section may be waived; except that indirect cost waivers may not be granted for unanticipated federal projects authorized pursuant to Section
20 2-65-30 of this chapter. Requests for indirect cost waivers for continuing federal projects must be made by the applicant agency as a part of
21 its budget request and must be reviewed in accordance with the provisions of Section 2-65-20 of this chapter.
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23 Section 2-65-80. (a)(A) The General Assembly shall designate through the annual General Appropriation Act appropriations
24 act an agency to operate each block grant. Should If a new block grant be is approved by the United States Congress after the annual General
25 Appropriation Act appropriations act has been approved, it must be approved in accordance with the provisions of Section 2-65-30(d) (D)
26 of this chapter.
27 (b)(B) The Governor must agency operating each block grant shall conduct public hearings for those block grants for which federal
28 laws and regulations require legislative public hearings, and any other block grants for which legislative public hearings are deemed considered
29 necessary. Public comments must be taken into consideration by the Governor board in review and authorization of federal funds according
30 to the procedures set forth in Section 2-65-20 of this chapter.
31 (c)(C) The Governor board shall issue, in accordance with the South Carolina Administrative Procedures Act Chapter 23 of Title
32 1, shall issue administrative regulations and cost principles for block grants.
33 (d)(D) The Budget and Control Board board shall ensure that audits of block grants are conducted in accordance with federal laws
34 and regulations.
35 Section 2-65-90. The Governor board shall design and operate a state process for review and coordination of proposed federal
36 financial assistance and direct federal development by state and local officials as required by Section 401(a) of the federal Intergovernmental
37 Cooperation Act of 1968 and federal regulations and executive orders. The Governor must board shall seek the advice of the South Carolina
38 Advisory Commission on Intergovernmental Relations and the Regional Councils of Government in the development and implementation of
39 the state process.
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41 Section 2-65-100. Funds from the following sources are exempt from the requirements of this chapter:
42 (1) general fund appropriations.;
43 (2) funds appropriated by a South Carolina local government.;
44 (3) research and student aid grants, except as otherwise provided in this chapter.;
45 (4) donated materials, supplies, in-kind services, buildings, land and equipment, if the donations do not create a future obligation
46 of state general fund monies. If a donation does create a future obligation of state general fund monies, the donation is subject to review and
1 approval, in accordance with Section 2-65-30 of this chapter.;
2 (5) federal funds used in connection with capital improvement bond funds subject to authorization pursuant to Act 1377 of 1968.
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4 Section 2-65-110. In developing the budget format and procedures, the Budget & Control Board shall follow the recommendations
5 of the Governor in accordance with the procedure as set forth in Section 2-65-30. RESERVED
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7 Section 2-65-120. Notwithstanding any other laws provisions of law, all agencies and institutions of the State shall cooperate fully
8 with the board and the Governor in the implementation of this chapter."
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10 B. This section takes effect July 1, 1998.
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