Agency Head and CFO Town Hall

October 1, 2013

Update on General Fund Reserves and Surplus

•$1,943.1 million in state reserves as of 6/30/13▫Roughly 13.1% of the GF appropriation for FY14▫Governor has indicated that 12.5% is the

minimum amount to be held in reserves▫Protects critical operations during the next

economic downturn•Projected surplus of $150 million (FY14 revenue

minus FY14 expenses) projected on 6/30/13▫Rating agencies (and the Governor) expect us to

hit this target

Executive Order 13-20• Establishes the Office of State-Based Initiatives (OSBI), replaces

Office of Federal Grants and Procurement (OFGP). http://www.in.gov/gov/files/EO_13-20.pdf

• OSBI reviews all federal grant opportunities, and each grant is subject to a cost-benefit analysis.

• Agencies are to receive approval from OSBI before applying for grants. OSBI’s approval will be needed before SBA creates funding sources.

• Agencies are to work with OSBI to develop a Block Grant Contingency Plan.

• David Johnson is your OSBI contact, Djohnson@gov.in.gov

Summary of FY2014 Q1 GF Revenue

•Through Q1, GF revenue collections are down 2.1% from the April forecast▫GF revenue is $73.5 million less than

expected according to Q1 targets. •Compared to Q1, FY13, revenue collections

are down nearly $32 million▫Mixed results within revenue categories

Sales is up 2.5%; Income down 4.8%; Corporate down 7.9%; Riverboat wagering down 25.8%; Racinos up 1.2%; ‘Other’ up 9.1%

Summary of FY2014 Q1 GF Revenue

•We continue to monitor revenue collections monthly, and update where we think we will end taking into consideration latest economic variable data.

•Mixed signals from economic variable data, still a great deal of uncertainty.

•Revenue forecast will be updated in December 2013, and will factor in legislative changes.

FY 2014 Reserve Policy

•Agencies are expected to hit the 3% reversion target as set by the Governor▫Applies to General Fund and dedicated

funds▫While not required, we hope that separate

branches of government and separately elected officials voluntarily participate.

▫Opportunity to earn relief based upon performance.

Atkins/Bailey Cost Savings Memo•Sent out to Agency Heads and CFOs

yesterday.•Replaces a similar memo sent out by Ryan

Kitchell and Chris Ruhl•Several cost savings initiatives to help

agencies meet or exceed reversion targets•Exceptions only granted for agencies

already exceeding reversion targets

Cost Savings Memo - Key Initiatives• Agencies should spend

dedicated and federal funds first in order to maximize GF reversions.

• Limit (or eliminate) expenses for media, advertising, associations, memberships, mail, printing, subscriptions, space, travel, furniture, overtime, vehicles, and refreshments.

IC 5-17-5-1 Penalty for late payments of amounts due on public contracts•Sets late payment penalty at 1%•Establishes 35 day payment terms•Monthly payment of interest

▫So, for standard payment terms, 1% is charged on the 65th day – 35 days payment terms + 30 day grace period

•Based on later of invoice date or received date

Minimizing Interest/Late Payments•Review Business Processes Regularly

▫Dates in AP▫Invoices going to wrong place▫Refunds recorded properly▫SOIAP 230 Report and Special Query

•Required performance measure for CFOs, Controllers, and AP employees

•Inherent problems in processing payments on time, work with SBA analyst to resolve

INDOT Late Payment Penalties: Terrible to Great

October 1, 2013

Dan BrassardCFO, Deputy Commissioner - Finance

LATE PAYMENT PENALTY

1 2 3 4 5 $-

$50

$100

$150

$200

$250

$300

$350

$400

$38K

$121K

$11K

$100K

$222K

$4K

$138K

$343K

$15K

Recovered

Total LPP

Prior to Call to Action

$202 $162

ProcessControl

PreventiveMeasures

These amounts include vendor assessed plus AOS imposed late fees

Keys to Reducing Late Payment Penalties• METRICS – Review Agency-wide LPP Metrics weekly

• COMMUNICATE – What is required to reduce LPP’sTimely Payment of InvoicesAcquire new updated invoices when errors are discovered

• TRAINING – Employees need to recognize payment terms that impact late fees35 Arrears = 64 days to payUpon Receipt = 30 days to pay

• QUERIES – Run 3 reports daily for early detection of potential issuesVouchers awaiting AP Manager approvalVouchers awaiting AOS approvalVouchers approved by AOS awaiting payment

Keys to Reducing Late Payment Penalties (continued)

• VENDOR ISSUES – If the vendor delays sending the invoice or back dates the invoice CONTACT THE VENDOR & have them send another invoice with the correct date.

• FAX / EMAIL – If the vendor can fax or email a copy of the invoice, the date of the fax or email may be used as the invoice date.

• RUSH PAYMENT – The Auditor of State can process a voucher for payment immediately if a special request is made and justified. THIS OPTION SHOULD BE USED SPARINGLY AND JUDICIOUSLY.

• LPP’s are your tax payer dollars – make it personal

2014 Open Enrollment DatesOctober 30th – November 20th @ noon

Executive SummaryThe 2014 projected Health Plan Trend is 40% lower than in

the previous year and below the national average!• 2014 projected increase is 5%, or about $17M• Last year’s projected increase of 8%, or about $28M• Significant portion of the increase due to new Patient

Protection & Affordable Care Act requirements

$ 4 M – Projected Mandatory PPACA Reinsurance Fees

$ 13 M – Projected increase in Medical & Pharmacy Claims

Medical & Rx Plan Overview

No plan design changes for medical or pharmacy benefits• No changes to state paid HSA amounts• No changes to Non-Tobacco Use Incentive (NTUI)• State contributing 50% of the increase in plan costs, or $

8.5M

Plan2013 Bi-

Weekly Rate(Assuming NTUI)

2014 Bi-Weekly Rate

(Assuming NTUI)

Bi-Weekly Increase Annual Increase

CDHP1 Single

$ 7.74 $ 11.94 $ 4.20 $ 109.20

CDHP1 Family

$ 24.78 $ 38.16 $ 13.38 $ 347.88

CDHP2 Single

$ 46.68 $ 54.72 $ 8.04 $ 209.04

CDHP2 Family

$ 134.52 $ 158.04 $ 23.52 $ 611.52

PPO Single $ 162.24 $ 178.74 $ 16.50 $ 429.00

PPO Family $ 459.30 $ 505.32 $ 46.02 $ 1,196.52