State Comptroller warns “self-inflicted problems” might threaten federal funding
Urges immediate enactment of closeout supplementary budget
The inability of the Democrat controlled legislature to close out the books on the prior fiscal year is developing as a major threat to the continued flow of federal funding to the Commonwealth, according to letters written by the state comptroller addressed to Beacon Hill leaders.
“Given that the Fiscal Year 2025 closeout supplementary budget has yet to be enacted, I am unable to provide a target date for issuance of the SBFR or other Fiscal Year 2025 reports,” Comptroller William McNamara wrote to Governor Healey and legislative leaders Tuesday, “I am required to submit the Statutory Basis Financial Report (SBFR) to you by October 31 of each year. Instead, I hereby report that the deadline has been missed.”
“The Commonwealth is now four months past our June 30 year-end,” the Comptroller continued, “When the closeout passes, we will do our best to complete the reporting and audit processes as quickly as possible. I urge that the Fiscal Year 2025 closeout supplementary budget be enacted immediately to allow this work to move forward.”
The closeout supplementary budget was sent to conference committee October 30th.
The Comptroller is especially concerned about the potential impact a delay in either the Annual Comprehensive Financial Report due in December and the federal Single Audit due in March, may have on federal funding flows.
“The consensus is that strict compliance with legitimate federal rules – such as the timely completion of the Single Audit – is especially important now, to avoid potential penalties. States are working hard to comply with federal requirements to prevent self-inflicted problems.”
“The Single Audit reports on every federal dollar used by the Commonwealth, from the largest social safety net programs to small-scale grants. In addition to this broadbased reporting, it includes in-depth auditing of a subset of federally funded programs.”
Key audiences for the Annual Comprehensive Financial Report include “bondholders and credit rating agencies; it is also required by the federal government.”
“In discussions among state comptrollers, the administration of federal funds has been a key topic since early 2025. Earlier in the year, there were process changes and information requests emanating from Washington about federal grants. Generally, that activity was distinct from longstanding federal reporting requirements.”