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Board reports deficit and testifies before legislature; staff proposes FY26 budget with projected shortfall
Summary
The board reported it attended a self-sufficiency hearing with the Joint Government Operations Committee after two consecutive deficit years, and staff presented a proposed FY2026 budget forecasting a $187,485 shortfall absent changes in revenues or cost allocation.
Chairman Gilbert told committee members the Tennessee State Board of Accountancy and Department of Commerce and Insurance staff attended a statutorily required self-sufficiency hearing before the Joint Government Operations Committee on Jan. 27 after the board reported two consecutive years of small deficits. No legislative action followed the hearing, but the committee's questions highlighted reserve levels and possible options the board may consider.
Reid Witcher, assistant commissioner for the Division of Regulatory Boards (Department of Commerce and Insurance), and other department representatives appeared with the board. Staff reported the board's reserve level is within commonly referenced ranges (the department had noted 1 to 2.5 times annual revenues as a general guideline); the board's reserves were described in committee materials as roughly $1.5–1.6 million against about $1.0 million in annual expenses.
Executive Director Jen Binkley walked the committee through the proposed fiscal year (FY) 2026 budget. Key points:
- Proposed FY26 licensing revenue projections are flat relative to recent years; the staff memo excluded case/complaint revenue in conservative projections. The board's November/December renewal receipts are typically recognized with a month lag.
- Personnel and benefit costs reflect recent statewide market adjustments (a multi-year compensation review referenced by staff) and the current staffing structure: licensing staff of four, an executive director and a dedicated investigator. Travel and conference line items include investigator travel and attendance at NASBA and TSCPA events.
- Cost-backs charged by the department (administration, legal, centralized complaints and customer service center) are significant; committee members noted that the total cost-backs for investigations and legal support exceed nominal fine amounts in some cases.
- The proposed FY26 budget shows a projected operating deficit of $187,485. Staff emphasized the board often sees renewal revenue hit the statement a month in arrears and that FY25 year-end results may improve once December/January receipts are posted.
Committee members discussed options including (a) reviewing fees, (b) attempting to recover investigation and administrative costs as part of consent orders, and (c) engaging the department and the board's stakeholders before proposing fee increases. Staff recommended consulting with the Department of Commerce and Insurance and Department counsel before any fee changes and to return to the board with potential fee, cost-recovery or budget adjustments. Committee members asked staff to present recommendations at a future board meeting.
