We want to begin a discussion about updating the procedure for the return of unused budgets by governance boards.
From time to time, a governance body will be able to return OP that was unneeded for operating or mission expenses. For example, the Grants Council returned 116,116 OP from its grants budget and 50,000 OP from its operational budget in Season 7.
From a budgeting perspective, that OP had already been accounted for, making the returns a windfall. Current budgeting practices, however, do not account for this. In the past that was not an issue, but with the (positive) steps towards increasing fiscal discipline through a global OP budget cap, accounting for these previously-approved-but-unused-funds would be beneficial.
We believe it would be a positive next task to establish a policy of sending future unused funds to an address directly controlled by the governance contract. They could then be used to cover minor overruns in spending for a season or any other purpose deemed acceptable by governance.
We recommend this be set up during Season 8. Next steps should include setting up an address controlled directly and exclusively by the governance contract and testing the functionality.
We also recommend Season 8 see some discussion from the wider delegate and Citizen populations about whether any ongoing programs should be established for the management of those funds. For example, a portion could be converted to stables and conservatively LP’d or used to purchase tokenized tbill assets.
Establishing a fund for excess board budgets also gives boards some incentive to return a nonzero amount when possible, since those funds would be accessible without disintermediation by the Foundation.
This is an easy opportunity for governance to demonstrate to the Foundation – in a low-stakes way, given the amount of OP likely to be involved for the next few seasons – that it can be a good steward of its own funds. This would contribute meaningfully to ongoing debates about the speed of decentralization in control of sequencer revenue that is the property of governance, but still custodied by the Foundation.