Federal Funds Inventory

This week, the Government Committee will hear the last of our GOAT (Government Oversight, Accountability, and Transparency) bills. LB662, carried by Senator Andersen, is identified as a “Federal Funds Inventory.”  The bill would require annual reporting of federal funds received by agencies participating in the state budget process. 

The report would require the agency to identify: 

1. The percentage of the agency’s budget consisting of federal funds; 
2. Any maintenance of efforts (MOE) requirements that funding is contingent on. MOE refers to the requirement placed upon many federally funded grant programs that the recipient (state government or local sub-recipient governing bodies) demonstrate that the level of local funding for a particular program remains relatively constant from year to year—subject to loss of funding eligibility or requirement to repay, if it doesn’t. 
3. A contingency plan should federal funding be reduced by 10% or more for the agency.  

While the Legislature’s 2025-26 budget has yet to be sent to the floor, historically, federal transfers to the state amount to between 16% and 22% of the budget. Those dollars include money for roads, social services like Medicaid, and education funding.  

In an era of potential flux in federal funding and dollars, policymakers need to have a clear picture of where federal funding is flowing. Given states’ dependence on federal funding for specific functions, it’s also essential to “Be Prepared,” as the Scout motto suggests. While no one hopes for reductions in federal funding for crucial functions, a plan for how the state would handle reductions is a good idea. Changes in priorities may be needed.  

LB662 would mark a step in the right direction by requiring a full accounting of where federal funding is going, what the obligations associated are, and a plan for what happens if the funding no longer exists. 

Those who like data can find more information about Nebraska’s relationship with federal funding here and here.