tion bill or bills. 10 The printed budget and the budget appropriation bill or bills contain the recommended appropriations to be made to each institution in the State, including the other governmental units. Two important questions arise in connection with the deliberations and action of the State legislature upon the budget. One is whether the legislature is restricted in its right to alter the appropriations recommended for the institutions in the budget. In such case the legislature has been deprived of the freedom possessed by it prior to the establishment of the State budget system to make whatever appropriations it sees fit. The second question is whether the governing boards or representatives of the institutions have been restricted in appealing to the legislature for changes in the appropriations recommended for them in the budget. In nine of the States, restrictions of this character are in force.

Restrictions on legislature in altering appropriations recommended in State budget. Legal provisions of four States-Maryland, Nevada, New York, and West Virginia-restrict the State legislature in making certain alterations in the appropriations recommended in the budget."1

While the legislature in each of these States is permitted to strike out or reduce items in such appropriations, it has been denied the power to increase the amounts recommended in the budget.12 This means that the Governor or other State executive officers responsible for the budget exercise ultimate control in determining the maximum appropriations to be made to the institutions. In one of these StatesNew York-the legislature is empowered to add new items of appropriations not included in the budget provided that they apply to a single object or purpose. Nebraska is another State which has restricted to a degree at least the State legislature in altering the appropriations recommended in the budget. A two-thirds vote of the legislature is required in that State in order to increase any items included in the budget.

Restrictions on institution in appealing to State legislature for changes in budget appropriations.—There are six States in which the governing boards or representatives of the institutions have been restricted in one way or another in appealing to the State legislature for changes in the appropriations recommended for them in the budget. These States are Connecticut, Georgia, Iowa, Maryland, West Virginia,

10 The laws of all except 19 States prescribe that the Governor, budget board, or commission shall submit a draft of the budget appropriation bill or bills to the State legislature. In the States where such provision is not in effect, the finance or appropriation committee of the legislature draws up the appropriation bill or bills on a basis of the budget. The latter States are: Florida, Idaho, Illinois, Kansas, Louisiana, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, New Jersey, New Mexico, North Dakota, Ohio, Oregon, Pennsylvania, South Carolina, Vermont, and Wyoming.

11 In Maryland, New York, and West Virginia, this restriction on the State legislature is included in the State constitution.

11 This restriction in Maryland, New York, and West Virginia does not apply to appropriations for the legislative and judiciary branch of the State government which may be increased or altered by the State legislature at its discretion.

and Wisconsin. It will be observed that in two of the StatesMaryland and West Virginia-the legislature is also denied the right to increase items in the budget appropriations.

The extent of the restrictions in the several States varies. In Connecticut the institutions are prohibited from submitting requests or estimates for increased appropriations over those in the budget to the legislature unless with the approval of the Governor or at the request of either house of the legislature. A somewhat similar restriction applies in Iowa. The institutions in that State may only submit requests or estimates for increased appropriations when requested by either house of the legislature.

In Wisconsin the institutions are not permitted to attempt to procure any increased appropriations by argument or appeal other than through the ordinary budgetary channels. The institutions, however, may be heard by the joint committee of the legislature considering the budget and upon request by either house of the legislature. The restrictions in Georgia, Maryland, and West Virginia provide that only such representatives of the institutions as are designated by the Governor, budget board, or commission have the right to appear before the legislative committees holding hearings on the budget.

It is interesting to note that in three States the legal provisions expressly empower the institutions to seek larger appropriations from the State legislature than are recommended in the budget. In California the governing board of the State university may request increased appropriations from the legislature. In Mississippi any of the institutions, if aggrieved at the size of the appropriations allowed them in the budget, may appeal directly to the State legislature. The State university of Wisconsin makes it a practice to present its requests for appropriations directly to the State legislature after having previously submitted estimates to the Governor through the State commissioner of the budget.

ES

STABLISHMENT of control over appropriations after they have been approved by the legislature and the Governor represents another important phase of the reorganizations of State fiscal machinery.

Under this form of control, legal powers were vested in the Governor or other State central executive agencies not previously possessed by them. One consisted of the right to reduce the amounts of the appropriations of each of the various governmental units under certain circumstances. Another was the right to supervise or administer directly the disbursements of the appropriations. The powers in a number of the States applied to other funds collected by the units as well as their appropriations. In some States the procedures were closely connected with the budgetary system for the control of appropriations before made and provided for the executive of the State budget by the Governor or agency as finally adopted in the appropriation act.

Two general plans for enforcing control.-Although differing in several aspects, two general plans were adopted by the several States for the enforcement of this form of fiscal control. These plans may be classified as follows:

(1) Appropriations of the State legislature are made on a contingent or conditional basis subject to reduction by the Governor or State central executive agencies.

(2) Appropriations are disbursed subject to supervision or administration by the Governor or State central executive agencies.

Both of these plans have materially altered the methods under which State higher educational institutions are permitted to expend their appropriations. Prior to the inauguration of the first plan the full amounts of the appropriations as made by the State legislature to the governing boards of the institutions became available for expenditure by them. Under the revised arrangement, the Governor or some State central executive agency is empowered to reduce the amounts of appropriations under stipulated conditions.

The second plan involves changes in authority over the disbursing of the appropriations. Before its adoption the institutions presented vouchers to the State auditor covering disbursements for salaries, operations, maintenance, equipment, etc. After properly auditing the vouchers, the State auditor issued warrants on the State treasurer

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for their payment.' The new plan provides for the establishment of fiscal-control practices under which the Governor or some other State central executive agency is frequently vested with the right of prior approval or disapproval of the disbursements, and with other supervisory and administrative powers. Moreover, certain of the disbursements, such as those for purchasing, printing, construction, and the like, are taken out of the hands of the institutions and actually made by the State central agencies themselves.

In showing the States which have adopted this form of fiscal control, the two plans will be treated separately. Variations exist among the States as to the character and extent of the powers vested in the Governor or State central executive agencies. Of the States where the Governor has not been given the powers, differences are also found in the particular agencies, such as executive boards, commissions, heads of finance departments, fiscal or budget officers designated to exercise the control. In many instances, they are the same boards, commissions, or officers assisting the Governor or having charge of the budgetary systems described in the preceding chapter. The application of the control to the appropriations of State higher educational institutions likewise varies among the States.

Contingent or Conditional Appropriations Subject to Reduction by Governor or Other State Agency.

The plan under which the State legislature makes its appropriations on a contingent or conditional basis subject to reduction by the Governor or some State central executive agency is of recent genesis. It is largely the outgrowth of financial stringencies suffered by the States during the industrial depression.

The main feature of the plan is that the full amounts of the appropriations for the annual or biennial periods are made or are payable to the institutions only in the event that sufficient revenues are collected by the State to meet them. In other words, the appropriations are contingent or conditional upon the State's income. The Governor or agency in general is charged with the responsibility of maintaining a constant check on the incoming revenues during the course of the annual or biennial period. Whenever it is discovered or estimated that the revenues will not be equivalent to the full amounts of the appropriations, the Governor or agency is authorized to reduce them accordingly.

Legal provisions of the States prescribe the basis, limitation, and procedure for reducing the appropriations. In some States the Governor or agency is vested with general power to reduce any or all

1 For a complete description of State practices covering disbursements of appropriations and funds of the institutions through the State auditor and State treasurer, see Higher Educational Institutions in the Scheme of State Government, by John H. McNeely. (Office of Education Bulletin 1939, No. 3, pp. 85-98.)

appropriations at any time and in such amounts as is deemed necessary to avert a State deficit. The appropriations of each governmental unit commonly must be reduced uniformly in such proportion as the total sum of all appropriations bears to the total revenues. Other States have adopted a more explicit procedure under which the appropriations are reduced by quarterly periods of the fiscal year to avert a deficit. According to this procedure the Governor or agency is empowered to reduce the amount of appropriations of the institutions for each quarterly period when it is found or estimated that the revenues will be insufficient to meet the total appropriations of the fiscal year. All told, there are 21, or approximately 44 percent, of the 48 States that have adopted the plan of making contingent or conditional appropriations by the State legislature.

General power of reducing appropriations at any time. Of these States, 10 have vested general power in the Governor or some State central executive agency to reduce appropriations at any time in order to avert a State deficit. Table 2 shows such States. The particular State agency together with its composition vested with the power where the Governor has not been so designated is also given for each of the States in the table.

Table 2.-States in which Governor or some State central executive agency is vested with general power to reduce appropriations at any time in order to avert a State deficit

State

Arkansas

New Jersey

Ohio..

Rhode Island_
Florida..

Idaho...

Maryland...

New Mexico___.

South Carolina...

Vermont...

Governor.

General power vested in—

Both Governor and State Budget Commission composed of Governor, secretary of state, comptroller, treasurer, attorney general, commissioner of agriculture, and superintendent of public instruction.

State Board of Examiners composed of Governor, secretary of state, and attorney general.

Governor with approval of State Board of Public Works composed of Governor, comptroller, and treasurer. State Board of Finance composed of Governor, auditor, and 3 members appointed by Governor with consent of senate for 6-year terms.

State Budget Commission composed of Governor, chairman of senate finance committee, and chairman of house ways and means committee.

Both Governor and State emergency board composed of Governor, chairman of senate finance committee, chairman of senate appropriation committee, and chairman of house ways and means committee.

'The legal provisions of some of the States refer to such appropriations as proportionate appropriations. 248343°-40- -4