AUGUSTA (AP) – Since the Legislature adjourned, Maine’s bond rating has been dropped a notch by a Wall Street rating agency and Human Services Department officials have disclosed that persistent accounting problems there may result in a $12 million shortfall.

Appropriations Committee members got a status report Wednesday, as well as an update on the development of Maine’s new Dirigo Health program and the latest on a federal investigation of the state’s migrant education program.

Nothing stunned the panelists, as most of the details had already been the subject of media reporting. But administration officials had to do their best to simultaneously project candor and optimism.

“It does look as though … we can minimize the impact of that … on providers” for the final weeks of the current fiscal year, Commissioner of Finance and Administration Rebecca Wyke reiterated in explaining the administration’s short-term response to the DHS accounting problems.

Pointing to what she said were improvements in internal controls, Wyke acknowledged that, “It’s been a difficult year-and-a-half.”

State Treasurer Dale McCormick, who is elected in her own right but on this issue is an ally of the Baldacci administration, said Maine officials believe the bond rating downgrade will probably cost the state little more than $100,000 over 10 years on its latest bond issue.

“It was a good sale,” she said, based in part on the state’s past track record.

Maine’s Standard & Poor’s rating dropped from AA+ negative outlook to AA stable outlook. The state had been placed on “negative outlook” status by S&P in November of 2002.

Other rating agencies held Maine’s status steady.

Legislators on Wednesday, whose morning session ran over schedule before they headed off for a committee luncheon, took the various reports with various expressions of concern.

Republican Rep. Richard Rosen of Bucksport called the looming DHS shortfall “a major setback” if, as he said he hoped, only a temporary one.

A couple of other panelists, led by Democratic Rep. Sean Faircloth of Bangor, pressed Education Department officials including Commissioner Susan Gendron for more details on how the state will seek to ensure supplemental services for children from the families of migrant workers whose regular program is being curtailed.

Committee members were told the administration is still expecting a General Fund revenue surplus of around $40 million when the fiscal year ends on June 30.

Roughly one-third would go to a budget stabilization fund and roughly another third would go toward the unfunded actuarial liability of the state retirement system.

Replenishing state reserve funds could help allay Wall Street concerns, McCormick said.

Plans call for state finance officials to address the potential DHS shortfall in the new fiscal year.

AP-ES-06-16-04 1510EDT