Uncategorized Budget Brief: Workforce Development, Transportation & Professional Licensing

Budget Brief: Workforce Development, Transportation & Professional Licensing

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Hearing Date: December 7, 2010

Testifying Agencies:

DWD

  • Presentation
  • Agency Overview
  • Performance Measures
  • Organization Chart
  • Operating Budget Request
  • BMV

  • Presentation
  • Transmittal Letter
  • Performance Measures
  • Operating Account Summary
  • Operating Budget Request
  • PLA

  • Transmittal Letter
  • Performance Measures
  • LA Working Groups Handout
  • Organization Chart
  • Operating Budget Request
  • INDOT

  • Presentation
  • Transmittal Letter
  • Performance Measures
  • Capital Budget Request
  • Operating Budget Request
  • DOE (covered in a separate Budget Brief>>)

    Presentation Highlights:

    * NOTE: The “base rate” is the annual appropriation recommended by the State Budget Agency. This year, the base rate reflects cuts made under the governor’s 15% budget reduction target, not the amount last appropriated by the General Assembly.

    Department of Workforce Development (DWD) – The Indiana Department of Workforce Development is charged with administering the state’s unemployment insurance program as well as a variety of workforce development and training programs that assist unemployed and underemployed individuals secure sustainable employment. The state unemployment insurance program is governed through a coordinated effort of the federal and state governments while funding for the program is provided through unemployment insurance premiums collected from Indiana employers.

    Although DWD officials were able to report success with various programs and initiatives, legislators were most concerned with the problems and funding challenges that DWD will be facing in the future. As 2010 came to a close, Indiana’s Unemployment Insurance Trust Fund remained underfunded and insolvent. Although the economic downturn has caused Indiana’s UI Trust Fund balance to spiral downward rapidly over the past two years, the UI trust fund balance has been steadily declining since the year 2000 and has been in need of a funding reform plan for several years. To add to the UI Trust Fund’s growing insolvency issues, Indiana, along with many other states, has received federal advances of more than $1.7 billion (get the current amount>>) to pay unemployment benefits. DWD officials said at the December 7th budget meeting that legislative action will be necessary in order to repay this debt and correct the continuing funding shortfall.

    Indiana employers will experience a $21 per employee federal tax penalty in calendar year 2011 as a result of the state’s outstanding advance and will continue to experience increasing federal penalties until the solvency issue is resolved. Furthermore, in September 2011, Indiana must begin repaying interest on the federal loan. DWD officials estimated that Indiana’s interest payments could exceed $80 million dollars in calendar year 2011, all of which must be paid with state revenues other than traditional unemployment insurance premiums.

    Indiana legislators must develop a funding mechanism not only to repay their federal loan, but also to develop a long term solvency plan that would supplement the UI Trust Fund in normal economic times.

    Bureau of Motor Vehicles (BMV) –The BMV conducts more than 12 million transactions annually through various service options including branch locations and internet transactions. According to BMV’s Operating Budget Request, the agency was able to flat line or reduce their budget needs in all areas except for the fund that helps pay for the costs of license plate materials.

    Professional Licensing Agency (PLA) – The Indiana Professional Licensing Agency (PLA) is charged with providing license processing for regulated professionals. In attempts to lower costs and improve efficiency, the PLA relies heavily on technology and online services, and they have been looking for ways to streamline and reduce unnecessary regulations. The PLA’s FY2011-2013 Biennium budget requests of $4,982,978 is equal to the base rate* recommended by the State Budget Agency and is 6.73% less than the actual amount that was appropriated in FY2009-2010.

    Indiana Department of Transportation (INDOT) –Personnel costs represent the largest part of INDOT’s operating budget (58%), followed by the maintenance work program (17%) and administration operating costs (14%).

    Although Indiana has successfully instituted multiple new construction and improvement projects in the past five years, INDOT’s highway fund revenue sources have been declining dramatically since FY2005. Indiana’s toll road revenue, which has primarily been used to fund Major Moves projects, is expected to decline by 88% in FY 2011-2013. Indiana has received the last payment from the 75 year toll road lease agreement, and the majority of the toll road lease funds received are already obligated to Major Moves construction projects.

    Although a portion of the funds from the toll road lease contract was set aside to accumulate interest and will become available to reinvest every five years, INDOT is still looking for ways to operate with a significantly reduced budget. Revenue forecasts for state fuel tax revenues, vehicle license fees and other highway funds paid by federal fuel taxes have declined and their rebound depends greatly on levels of economic recovery. Finally, since the American Recovery and Reinvestment Act (ARRA) funds are expiring in 2011, the INDOT administration reported uncertainty about what sorts of federal spending authority will come available in the future.

    Aware of these funding shortfalls, INDOT management has attempted to use technology and innovation to cut costs. Some successful cost cutting measures and successful initiatives include:

    • Overtime expenses were reduced by 46% despite record levels of construction activity.
    • Fuel usage was reduced by 11%.
    • Expenses per winter hour (labor costs, salt consumed, overtime expenses, fuel costs, etc) were reduced by 30% in FY 2010.
    • 84% of Major Moves projects on the schedule for 2006-2011 have been completed or are under construction right now.
    • Indiana leads the country in the number of ARRA funded projects currently in action, and all ARRA funds have been appropriated to at least one capital project in every county (purposely directing funds to the state’s most economically challenged areas).

    The Department of Transportation does not receive any money from the State’s General Fund. All funding and support is derived from Dedicated and Federal Funds.