Dec
22
U.S. Senate Majority Leader Harry Reid made a comment printed in today’s Washington Post that perfectly illustrates the adage comparing legislation to sausage-making:
Reid defended the long list of revisions to the bill, which were needed to secure the backing of moderate Democrats such as Sen. Ben Nelson (Neb.). Those changes contained additional Medicaid funding for specific states including Nebraska, exemptions for certain insurance companies and tighter restrictions on abortion coverage. “There are 100 senators here, and I don’t know that there’s a senator that doesn’t have something in this bill that isn’t important to them,” Reid told reporters. “If they don’t have something in it important to them, then it doesn’t speak well of them.”
Apparently it’s all about what’s in it for them. There’s no reason that a bill touted as a way of making health care fair and equal to all Americans should include all kinds of exemptions and special treatment, right?
Dec
21
When the State Board of Equalization meets tomorrow to make its preliminary estimate on revenues for FY 2011, there will be over a billion dollars less for the governor to base his budget on than a year ago. That means Oklahoma government will be running on less than was appropriated in FY 2005.
Needless to say, that means the state government as we know it will need to be restructured. Duplications of service have to be eliminated. Well-intentioned programs will likely be cut. There are no two ways around that.
Yes, the state does have money in the Rainy Day Fund and stimulus dollars that can be used to shore up the budget. But it’s important to remember a few facts: First, the state has used $233-million in cash reserves to fund government to this point and that money has to be paid back by June 30th. Second, the stimulus funds currently being used to shore up the budget won’t be available in FY 2012, so there will be an even bigger hole to deal with at that point. What all this means is that significant spending cuts are going to have to be made. Elected officials need to go over every agency budget in detail and find areas to cut first that will not affect services.
For those that want to play politics with this budget crisis, let’s remember it was a bipartisan effort. For those who think the state would not be in this position if tax cuts hadn’t been passed, remember the words of State Treasurer Scott Meacham, “If we had the money from the tax cuts, we would have just spent it and been in this same situation.”
Dec
18
The system is to blame
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A report by the National Conference of State Legislators is painting the state in a somewhat negative light because, along with Arizona, Oklahoma has one of the largest budget gaps as a percentage of the overall budget. The report is a bit misleading because the gap does not take into account the Rainy Day Fund or leftover stimulus funds as ways to close the gap.
Still, Oklahoma does have a large hole to fill. There are some who want to blame Republicans since that party controls both the House and Senate in Oklahoma. Of course if you look at the votes on the appropriations bills, you’ll see that it was a bipartisan effort and the Democratic Governor signed all the bills, so there’s no point in trying to politicize the blame game.
Instead, let’s blame the system. It’s the system that decides that the Governor bases the 2010 budget on projections made in December of 2008. It’s the system that decides that the legislature bases its 2010 appropriations on projections made in February of 2009. It’s the system that has the state’s budget decided in a back room and presented all at once to rank-and-file lawmakers who have very little, if any, say in the numbers that make it up.
Oklahoma needs to open up its budget process. Every agency needs to justify every expense and explain why it needs the administrative costs it has. All of this needs to be done in public hearings so that taxpayers can follow the process. At the same time, Oklahoma needs more transparency by upgrading Open Books to version 2.0 that will give real-time spending information and check registers for EVERY state tax dollar spent, including Common and Higher Education.
Instead of trying to make political hay by fixing blame, members of both parties should concentrate on fixing the system.
Dec
16
Tuesday’s announcement that state agencies will be getting 10% less money than planned this month and next comes after the most recent revenue figures were released. No one expected revenues to meet or exceed the amount called for in the budget, but even State Treasurer Scott Meacham called the collections “disappointing.”
Each month of this fiscal year, collections were 15-25% below predictions, yet agencies were only having allocations reduced by 5%. OFRG has been calling for larger cuts in allocations in previous blog posts using the argument that larger cuts earlier in the process would reduce the size of cuts needed later in the year. Already, the state has had to transfer $233.8-million in cash reserves to cover the difference between collections from taxes and allocations to state agencies. By law, that money must be paid back before the end of the fiscal year (June 30th).
If the Office of State Finance had started the fiscal year off with 10% cuts instead of 5%, the amount borrowed from cash reserves would have been reduced by about $86-million. That means less money would be needed from the Rainy Day Fund in order to pay it back by June 30th.
A larger cut earlier would also mean less pain over the second half of the year. During the House Appropriations and Budget Committee hearing later in the day on Tuesday, lawmakers said that targeted cuts once session starts would be larger than 10% for some agencies. Obviously those larger cuts would have been mitigated had state officials taken a more conservative view of the funding situation and made cuts that more accurately reflected the size of the problem.
But now that larger cuts are being made, it’s important to recognize that the state is in a better position going forward from here. There will be more cuts to come, but the more that is done now, the less severe the cuts will need to be down the road. And once the state’s economy does get back on track, state government will be leaner and more efficient which will benefit us all.
Dec
15
An independent analysis of how Oklahoma provides health benefits to state workers has found ways the state can save millions of dollars. In a time when the state is facing a possible billion dollar shortfall, every option needs to be considered, especially those that lower future costs as well.
You can read the report in its entirety here, but some of the highlights are:
- Consolidating the Oklahoma State Education and Employees Group Insurance Board (OSEEGIB) and the Employees Benefits Council (EBC) into one organization can save $2-million per year by eliminating duplication of efforts.
- The amount the state paid out in employee benefit allowance exceeded the cost of core benefits by $63.9-million.
- OSEEGIB and EBC do not have appropriated operational funds, but get a percentage of the premiums. Any left over money gets rolled over and currently, the agencies have a combined surplus of $113-million.
- Changing the way the state chooses benefit providers to a competitive bidding, winner-takes-all format could save by reducing administrative costs an increasing the group discounts.
- Reducing the cost of health premiums would allow the benefit allowance to be reduced by 23%
EBC states that it serves over 37,000 state employees, so if each is currently getting $574.37 in a benefit allowance (and the allowance increases if spouses and dependents are added), that means the state is currently spending $21,251,690 per month on the benefit allowance. Reducing that by 23% would mean a savings of $4.9-million per month or about $60-million per year. Again, that’s just at the base rate for the benefit allowance. The maximum allowance is over $1,500 per month for an employee who has a spouse and children on the insurance plan, so the savings would likely be far greater.
In a joint release by House and Senate Republicans and State Insurance Commissioner Kim Holland, a Democrat, all sides agree that the measures in the report will “save taxpayer money, lower costs and improve the health and health benefits of state employees.”
Sounds like something that should happen as soon as possible.
Dec
14
What happens on Tuesday will go a long way towards determining if state lawmakers will be called into session early and what will happen to the budgets of state agencies this year and next.
First up, State Treasurer Scott Meacham will release the revenue collection report for November. So far, the state has collected about 20% less money than expected. That has resulted in all state agencies taking a 5% cut in allocations and the state using cash reserves - which have to be paid back by the end of June - to make up the difference.
After that report is released (it’s usually around 2 pm), the House Appropriations and Budget Committee will have a meeting at 3 pm. It will include an update on the state’s finances and reports from all of the subcommittees which have been holding hearings this month. OFRG will be tweeting live from that hearing and you can follow along at www.ofrg.com/OFRGnews.
Dec
11
Budget Hearings Recap #5
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The last House Appropriations and Budget Subcommittee meeting OFRG attended this week was natural Resources and Regulatory Services on Thursday. The notes are printed below. A reminder that there will be a meeting of the full A&B Committee on Tuesday afternoon at 1 pm which will feature a State of the Budget presentation and reports from all of the subcommittee chairmen. OFRG will, of course, be attending the meeting and will provide a running commentary on Twitter for those unable to attend. go to www.twitter.com/OFRGnews and follow us to stay updated!
Dept. of Tourism - we continue to perform mission. 6.9% cut leading into this fiscal year. Ongoing efficiencies include: fewer seasonal employees, deferred equipment replacement, has shared service agreement with other agencies to save, deferring computer hardware replacement, energy savings, reduced marketing efforts.
We’re part of the solution, part of the economy and you don’t want that to disappear. $3.3M decrease included 42 position vacancies. Doing much more contracting. Furlough program initiated (1 day/month for next 4 months for those above $35K, fewer for those making less). 60 positions eligible for retirement, but some are critical and may not be offered. Deferring more maintenance (mowing reduced to less than once per week). More aggressive seasonal closing. We increased fees for second time in 18 months (first was to get OK more in line with surrounding states). We can’t continue to raise fees to make up for lost revenue because we’d become uncompetitive w/ surrounding states.
Rep. Dale DeWitt: you’re going to have more cuts, how do you deal with that? Answer: Buyouts will help.
We’re at the bone. If we go to 10% cut, we’d have to talk about closure of parks. Most of our parks are on land we lease from the Corps of Engineers. Many of our facilities have been improved with federal conservation funds. If we have a smaller park system, we would have to pay back those federal funds. There are processes to go through that would delay any savings. Reduce hours at visitor service centers.
35% of our reservations come from North Texas ZIP codes, so we’re part of the economic solution for the state.
We spend between $5.5 and $6-million on marketing. We get $50 for every dollar spent on marketing.
Scenic Rivers Commission - would like to be able to set commercial float licenses on Illinois River from the board and index them to cost of living. Burden now is on people that rent boats, not on those with private boats. There should be annual fee for those. Expand jurisdiction to include another 3.5 miles of the Illinois River. We will generate about $80K to the agency in this way. We issue about 600 citations per year, but we don’t get any of the fees. Perhaps a $5 or $10 assessment on each would help SRC pay for law enforcement.
Will Rogers Memorial - attendance at museum and birthplace ranch both trending upwards (counting system not accurate, so specific numbers can’t be detailed). Also showing increase in where visitors are from. 2/3 of those visiting museum are from out of state (45 states and 13 foreign countries). Museum sales are up as well after a dip in 2008.
Took steps before fiscal year to reduce costs in natural gas and custodial contracts. Reduced travel, maintenance costs. Since 5% cuts, eliminated overtime, reduced advertising by a third. Staff furloughs could be enacted, office furniture could be delayed and custodial contract cancelled.
Doesn’t charge admission, hard to say whether doing so would reduce attendance. A lot of time has passed since original statute passed saying the museum should be free. Rogers family may be amenable.
Horse Racing Commission- doing well considering the times. Pari-mutuel betting down 10%, but gaming up 10%.
Blue Ribbon now closed, but it did poorly compared to Will Rogers and Remington park. 50 new machines coming to Remington Park should more than make up for Blue Ribbon revenue.
Leaving positions unfilled. Returned lease vehicles to Central Services. Changed cellular service, limited travel. Could save $50K by taking pari-mutuel auditing in-house, but would need legislation to do that.
Cuts have put us at bare bones. Furloughs are last resort which would have consequences. Means fewer races and reduced/no gaming. My revenue to the state will cease if I can’t have my workers going the minimum days possible.
If we’re cut any more, ever dollar cut would eliminate $2.50 in state revenue. Had $92K in carryover, for next year it will be $0.
Department of Labor - didn’t have any equipment-related accidents at major fairs. Virtually everybody we have require certifications which are hard to find. We left three positions vacant in case of allocation reductions. Additional 5% cut will put us in a squeeze. We’d like to adjust fees to consumer price index.
Find ways to incentivize savings in agencies.
Dec
11
Budget Hearings Recap #4
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OFRG attended the House Appropriations and Budget Subcommittee on Education Wednesday morning. Here are some notes on the presentations.
Regents for Higher Education - Decreased the need for additional funds from 2009-2011 by over $73-million. Among that total: $2M reduction in travel, $4M in equipment, $15M in position vacancies, $20M in utilities and $20M in retirement. administrative costs over 17-year period lowered as a percentage of the total budget from 12% to 7.8%. Oklahoma is the 7th most affordable state for average total cost of attending a four year public college/university.
Fall enrollment is the highest ever this year, up 5.8% system-wide with 10% enrollment increase at community colleges.
Each campus would handle a 5% cut in funding for FY 2011 differently, but some of the options are: staff furloughs of 1-5 days in length, system-wide reduction in Graduate Assistants by 10%, full freeze on travel paid for by state dollars, staff reductions of 140, faculty reduction of 120, early retirements, reduction of student services, caps on class offerings, fewer scholarships, elimination of student work programs, compensation adjustments, reduction in acquisition of library materials and IT equipment, leaving full-time faculty positions vacant and/or using adjunct faculty.
Largest determining factor in whether tuitions get raised is the allocation received by the legislature. Those discussions start in January.
Career Tech- Enrollment is up. Looking at layoffs across the state, they’re coming to Career Tech to get retrained. 5% reduction doesn’t take into account unfunded mandates. Haven’t received increase in health care costs since 2002. That’s beginning to wear and tear on us. We’re going to have to reduce formula dollars to the centers. Loss of about 2,000 high school enrollments, waiting lists growing. Tech centers taking double hit because ad valorem tax collections are down, too, esp. in rural areas. Started voluntary buyout in hope of reclaiming 30 positions. If we don’t get to 30, we’ll have to eliminate jobs.
No longer offer stipend for professional development. Worried about three smallest tech centers in Altus, Kingfisher and Wetumka. You can only go to certain limit before they are no longer viable.
With a 10% cut, there would be tremendous drop in programs we have with businesses and high schools. We’ve got to see who we hurt the least and how many we’re hurting. We’ll lose a tremendous number of students.
The sooner you tell us what the cut is going to be, the better for us.
OCAST - We will report return on investment of 19-1. Saved almost $250K just on unfilled vacancies. Total savings close to $300K.
Our budget request reflects demand. There is a demand for $42M in funding, but we understand the problems the state is facing.
OETA - Made strides with digital conversion, tremendous reaction to our website and podcasts, too. We began to pull back and not start new initiatives and not hire new staff. We can make it though this year w/o public thinking there have been cutbacks. No plans right now for furloughs or reduction in staff. Two resignations and an impending retirement that won’t be filled. We have about $32M in foundation. It’s a separate organization. State money goes towards people, everything else is paid for through donations, foundation, etc. More than 50% of budget comes from non-state dollars.
Our staff is so “at capacity” we don’t feel we can trim any more. May have to eliminate entire programs (documentary unit, news unit, Tulsa unit as examples)
Dec
11
Budget Hearings Recap #3
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On Tuesday, OFRG attended the House Appropriations and Budget Subcommittee on General Government. Here are the highlights of the testimony by agency representatives:
The Subcommittee Chairman, Rep. Guy Liebmann, opened the meeting by saying there are no economic indicators that state economy is going to improve any time soon. He went on to say the state could face a billion dollar shortfall and even deeper cuts than we’ve experienced so far.
If we do this right, we can come out w/ efficient govt. that does core services expected by the public.
State Treasurer - we always think things will stay the way they are now, the economy will get better. We’ve been making cuts for years at the Treasurer’s office. We’re always looking for ways to do things efficiently and cheaper. Cut FTE by 20% in his term. We’ve been able to absorb 12% cut with savings we’ve generated. We are pretty thin, when we have people out sick, it can be difficult.
Not much room to reduce staff, so we may have to reduce services. Reduce hours at service window at State Capitol. Charging fees for services Treasurer provides to other state agencies.
We’re projecting increase in rate of return on state investments which is very low right now. This year is exactly the type of environment that the Rainy Day Fund was created for. Rep. Mike Reynolds commented that next year might be even worse and that the Rainy Day Fund should perhaps be saved for that.
Authorized for 90 FTE, have 61 on staff.
Because oil/gas is major revenue source, it’s volatile. We need to diversify economy so we’re not dependent on price of gas and oil.
At a point with Insure Oklahoma where we either have to stop adding new people or add more revenue to finance it.
Not fair to blame tax cuts for the situation we’re in today. If we had the money from the tax cuts, we would have just spent it and been in this same situation.
Department of Transportation - we’ve taken position that as we receive more funds, we would put those into hard assets. Over last few years, $ was put into roads while # of employees has remained stagnant. There are around 800 fewer employees over the last 10 or 15 years. Private sector can help us a great deal, we do a lot of outsourcing.
Regarding the contract for the Twitter account that cost $7,500: Any of you going to OU-Texas game know about the traffic, we’ve looked for ways to let people know about traffic problems and alternate routes. We’ve focused on two things: focusing maintenance efforts to open as many lanes as possible leading up to game day (fewer disruptions) and public information to get the word out. We’ve used TV, press releases. A segment of the population gets their news from their cell phones. I really don’t know what a Twitter is. We jumped at the chance (to set up Twitter account) and we’re glad we did it. We’re not continuing the contract, it will be done in-house. There’s a policy vacuum about how govt. is supposed to interact with social media networks.
We hire around 100 seasonal employees, but this summer, we only hired 60, let them go in August and will not hire them next year. Generally put 175,000 miles on our light trucks before turning them in. We decided not to buy any new ones, so we’ll have to get more out of our current ones. Managing overtime better, limiting travel.
If further cuts needed, hard assets would have to be cut. Engineering contracts are five or six years out, so the impact may not be felt for awhile, but you do have to be careful. If cuts are deep, no place left to go but to delay or eliminate projects on the 8-year plan.
We’re starting to turn the corner on infrastructure. Replaced or fixed over 400 bridges, more than any time since Interstate system was built in the 60’s. Can’t let things get any worse than they are.
We can handle a 5% cut. We can delay projects and purchases. Any deeper and we’re doing things we’d rather not do. Our intent is to continue 5% cuts through the end of the fiscal year. Staff will be reduced by 20-25 people by end of June.
We were put in unmanageable state 4 years ago. If we’d stayed focused on bridges alone, 12-15 years we’d be in a manageable state. We’re on target with that commitment.
Office of Personnel Management - leaving a couple jobs vacant and using carryover funds to make ends meet with 5% cuts. We’ve reached a point where further reductions will affect services. 4 or 5 positions would have to be eliminated with another 5% cut. That could be a voluntary buyout, but it would cost about $200K.
Rep. Liebmann commented that it appears the state will have a $6-billion budget which comes after a $7-billion budget. But we’ve lived on $6-billion before.
Merit Protection Commission - leaving two positions open. Could fill one and still make it, but with health benefits and further cuts possible, leaving both open is best option. Not easy, we do have a certain level of service we have to provide. We don’t have control over number of merit cases filed. We’re expecting an increase this year. It would be extremely difficult to perform our mission with deep cuts. I can’t close the door to the courtroom simply because of a lack of funding.
Lt. Governor - our budget doesn’t have a lot of moving parts. Last year we had 9 employees, we’re now down to 5. We are 80%+ payroll, so deeper cuts would mean more employee cuts.
Secretary of State - state appropriations have been flat or declined since I got here. But the office is mostly fee-based. My philosophy is to be in concert with what other agencies are experiencing, though. Everything this agency does is mandated by law. We’ve not increased fees but rather absorbed costs. Fees have not been increased on our part since 1980. There was a notary fee increase requested by counties. Keep employees trained in many areas to cover for sickness and vacations, makes them more valuable.
General Revenue was $353K and our fees exceed expenses. I believe fees are necessary and useful.
One of the most useful things legislature could do is stop all unfunded mandates to state agencies, study obsolete, useless and unnecessary laws that require staff time. We have law requiring hard copies of every law passed and mail that to every county clerk. Cost in time is immense, cost in funds is around $25K. Every agency has such examples. This could save hundreds of thousands if not millions of dollars.
I will bet every agency can identify half a dozen such laws that, if eliminated, would save money.
Oklahoma Tax Commission- we have a hiring freeze except in critical areas like IT. 1150 FTE authorized, but we have 838. Offices in Lawton and Ardmore have been closed. Reducing travel as much as possible, but continued travel reductions will hurt collections. Won’t have temp employees during income tax processing season. Trying to do publicity on e-file to reduce workload of opening envelopes.
We can’t stop opening mail and depositing checks. At 15% cut, we’re furloughing people, laying them off and taking other such actions. Out of 3M tag renewals, only about 300K are mailed in.
State Election Board - will need 8.5M to conduct elections properly.
Single largest portion of budget is pass-through to county budgets (salaries and benefits of county election offices). That cannot be reduced by law.
We currently have three vacancies that we are leaving open as long as possible. Two may be needed for 2010 election cycle. Eliminated all out-of-state travel this year. Curtailed in-state travel as well: only for training election officials and maintaining voting machines. Utilized video conference technology to help train county election officials, reducing costs from 30K to 7K. Eliminated paper newsletter. Trying to do as much communication electronically as possible.
Election Board pays 50-cents for every voter registration form tag agents send in, no federal requirement that we pay them. Eliminating that would save $40K.
Filing fees for gov and legislature not changed since 1974, others since 1978.
State Bond Advisor - half of budget is state appropriations, half is from fees associated with issuing bonds. Has $441K in revolving fund to get through this year and next as well.
Reduced travel expenses. Will delay hiring of permanent bond advisor which will eliminate cost of advertising and travel cost of candidates. If cuts are larger, the reduced travel and delay in hiring should be enough to make ends meet.
Dec
10
A statement on Oklahoma’s website devoted to the American Recovery and Reinvestment Act reads:
Governor Henry ordered this web site be created to ensure Oklahomans have the most up-to-date information available. In weeks to come Oklahoma’s funding will be available in a variety of search formats.
To this point, there is no searchable database on the state’s recovery website. OFRG was told during meetings with the Office of State Finance that the level of reporting for stimulus dollars was going to be so much better than what is reported in Open Books. We used that as a basis for our call for an Open Books 2.0 that would have all state spending at the same level of detail.
But 10 months after the stimulus bill was passed and more than two months after the first reporting period ended (September 30th), the state Recovery website still does not have a way for Oklahoma taxpayers to track stimulus dollars in the state. We know from other websites how much state agencies are getting, but exactly what the money is being spent on remains a mystery.
The last information we received from the Office of State Finance came on November 9th. OFRG was told that the data should be up sometime that week with continuing improvements in the search capabilities in the weeks to follow. It was also mentioned that there were concerns about the cost of licensing some of the reporting software and that another vendor may have to be found.
We’ve called and written e-mails since, but received no answers about when the state’s searchable database for stimulus funds would be up and running. Oklahoma taxpayers were promised “complete transparency to ensure public confidence” by Governor Henry and so far that has been more fantasy than reality. Not only is the promised database absent, there has been no public statement explaining why.
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