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Analysts flag one‑time CIF spending and DPA accounting gaps as DBM defends rainy‑day strategy

Education, Business and Administration Subcommittee · February 17, 2026

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Summary

DLS recommended cutting a proposed $42M one‑time higher‑education research allocation from the Strategic Energy Investment Fund and urged tighter accounting for the Dedicated Purpose Account; DBM defended the proposed rainy‑day and CIF allocations and agreed to correct a $9.1M earmark via supplement.

Jacob Cash (DLS analyst) briefed the committee on the State Reserve Fund and dedicated purpose account issues in the governor’s FY27 plan. Cash said the FY27 allowance assumes a net increase to the rainy‑day fund balance and reflected a cut to a previously mandated $450 million rainy‑day transfer in the BRFAA. He identified $82 million in proposed Strategic Energy Investment Fund (CIF) uses, including $42 million for higher‑education research, $25 million to establish a new strategic energy planning office, and $15 million for grid‑enhancing transmission technologies; DLS recommended deleting the $42 million higher‑education research line because it is a one‑time infusion rather than a sustainable revenue stream.

Cash also detailed dedicated purpose account (DPA) transactions and a set of small balances DLS believes could be transferred to the general fund; he highlighted deficiencies (totaling $42 million) and a $9.1 million erroneous earmark that DLS recommended correcting. Because DLS could not reconcile several closeout balances from the last five years, the analysis recommended adding budget language requiring DBM and the comptroller to include the purpose or amendment number in annual closeout reports and restricting certain funds pending an accounting.

A DBM representative (Speaker 10) said the administration introduced the budget to maintain an 8% rainy‑day target (about $2.2 billion of FY27 general fund revenue) and defended the CIF allocations—disagreeing with DLS’s recommendation to delete the higher‑education research funds. DBM indicated partial agreement with some technical corrections (including resolving the $9.1 million earmark by supplement) but pushed back on proposals to withhold funds pending the DPA accounting request; the department said it can provide the requested information but asked that funds not be withheld from DBM or the comptroller’s budgets.

Senator Bailey raised an unrelated but urgent environmental concern about a large spill in the Potomac and asked DBM to coordinate follow‑up to protect affected businesses and marine resources; DBM agreed to facilitate that outreach. The committee recessed for legislative voting and will consider DLS and DBM recommendations in subsequent budget work and bill language.

What happens next: DLS’s suggested deletions, the BRFAA language altering the rainy‑day transfer, and proposed DPA reporting language are now matters for the legislature’s budget negotiations and any supplemental budget actions.