Department of Agriculture

During the audit period, the Department of Agriculture distributed $24.7 million in grants. Of this, $3.3 million was earmarked from the American Rescue Plan Act (ARPA) for various agricultural projects statewide. Additionally, the department received $7.5 million in ARPA funds from the Governor’s Office to enhance its Hail Insurance Program, providing support to farmers impacted by severe weather. This strategic use of federal and state resources underscores the department’s role in supporting agricultural projects.

An unmodified opinion mean the reader can rely on the information presented in the financial schedules.

Our audit work included obtaining an understanding of the department and its operations, as well as gaining an understanding of the department’s information systems. We performed analytical procedures and reviewed the underlying support of:

• Great expenditures
• Licenses and permits
• Investments Tax revenues
• Federal Revenues

In addition, we performed samples of the department’s grant expenditures and the related accruals, and the tax revenues received. We also reviewed the financial schedules and note disclosures to determine if they were presented accurately in accordance with state policy and applicable GASB standards.

We also reviewed the department’s federal revenues and transfers-in, including amounts received from American Rescue Plan Act (ARPA) funds the department used to supplement claims paid from the Hail Insurance Fund as directed by the legislature and approved by the governor.

The department primarily oversees the distribution of state and federal grants to applicants across Montana. State grants are mainly funded by refundable taxes on crop sales at elevators throughout the state as well as general revenue funds. Most of these grants are awarded through state special revenue funds. Oversight boards, such as the Wheat & Barley Committee and the Pulse Crop Committee, evaluate and recommend grant applications for awarding through these funds.

Grants awarded from state special revenue funds totaled $6,132,708 in fiscal year 2022 and $6,020,789 in fiscal year 2023. The remaining state grants were awarded from the General Fund.

Fiscal year 2021 saw a spike in grant expenditures because of an increase in grants awarded in response to COVID-19. For an in-depth discussion of this activity, see the 21-21 Department of Agriculture Financial Compliance Audit Report.

Due to the COVID-19 pandemic, the department received increased federal funds. In fiscal year 2022, federal grants totaled $3,455,052, rising to $6,580,672 in fiscal year 2023 due to American Rescue Plan Act (ARPA) funds. During the audit period, the department distributed $3.3 million of ARPA funds to 22 recipients. The department anticipates further federal grant opportunities in subsequent years.

Since 2014, the department has had an agreement in place with a reinsurer to provide additional hail insurance coverage as the department’s reserves had been depleted. In response, the department was awarded $7.5 million in ARPA funds in 2023 from the Governor’s office specifically to supplement previous claims made to the hail insurance fund. As of fiscal year 2023, $1.7 million of this funding had been recognized as revenue, supplementing $1.7 million of claims made from the department’s hail insurance fund since March 3, 2021. The authority to expend the ARPA Hail Insurance funds lasts until December 31, 2026.