Ohio steps toward “economic competitivenes”: A look at the state’s priorities for FY 2014 and 2015

According to Ohio Governor John Kaisch, “economic competitiveness” will be the focus for Ohio’s upcoming fiscal years, in which the state will be placing heavy emphasis on job creation. In Ohio’s latest budget, Governor Kaisch outlined several goals expected to drive this transformation, including:

-          Improving education for all children: Creating a “world-class” education system that increases achievement and provides high-quality opportunities for all students.

-          Helping more students get degrees: Increasing the current percentage (25 percent) of Ohioans with a bachelor’s degree, so they are able to get on an expedited course to long-term success and stability.

-          Cutting and reforming taxes: Cutting small business taxes in half for the first $750,000 in net income, income taxes by 20 percent, and state sales tax rate from 5.5 percent to 5.0 percent to help low-income Ohioans who pay no income taxes.

-          Making Medicaid work better: Helping more low-income and working Ohioans have access to health care through Medicaid. This is expected to improve the health of vulnerable Ohioans, and helps free up local funds for enhanced mental health and addiction services.

-          Meeting Ohio’s crucial transportation needs: Investing $3 billion into the Ohio Turnpike in order to strengthen the transportation network. Additional highway dollars raised by the sale of the new Turnpike bonds will help accelerate other highway projects in Northern Ohio.

-          Creating a smarter, more efficient state government: Making sure state agencies are providing sustainable value to Ohioans, a high level of care for the state’s most vulnerable citizens, and a jobs-friendly environment for future prosperity.

Health care seems to be taking the budget lead for both FY 2014 and 2015 (see Figure 1). If approved, the Ohio Department of Health alone could receive more than $650 million in general funding during both FY 2014 and FY 2015. This does not include all the other major health-related agencies within the state, such as the Department of Mental Health, the Department of Aging, and the Department of Medicaid. When these entities are included, health care in Ohio could be receiving approximately $26 billion in general funding in FY 2014, and $28 billion in FY 2015.

As mentioned, one of Ohio’s goals for the upcoming years is improving Medicaid. Funding will be used to tackle issues such as fraud, waste and abuse in order to enhance Medicaid’s efficiency. Payment processes are also expected to improve as the state rewards hospitals based on quality instead of volume. Medicaid is the largest program in the state budget and has a recommended General Revenue Fund (GRF) of $15.1 billion for FY 2014, and $16.8 billion FY 2015.

General government appears to be leading the charts for information technology spending for FY 2014 and FY 2015 (see Figure 2). The state has recommended approximately $215 billion for FY 2014 and $209 billion for FY 2015. This funding will be used for IT projects related to development, governance, security infrastructure, services delivery, licensing, and other major IT purchases. The Ohio Administrative Knowledge System (OAKS) is the state’s leading enterprise resource planning (ERP) system designed to assist the state with central business functions such as accounting, procurement, budgeting, asset management and reporting. It has a recommended budget of about $35 million for FY 2014 and $23 million for FY 2015. This funding will be used to support the ongoing operation and development of the system. Moreover, expenses for OAKS increased from FY 2013 to FY 2014 due to needed upgrades.

The Ohio Business Gateway is another major IT system that will be receiving a considerable amount of funding (more than $4 million) in both FY 2014 and FY 2015. The system allows businesses to file and pay taxes and fees. The state plans to establish the capability for bulk-file upload through the gateway system in order to allow third-party payroll processors to electronically file employer withholding tax returns.

 Figure 1

General government appears to be leading the charts for information technology spending for FY 2014 and FY 2015 (see Figure 2). The state has recommended approximately $215 billion for FY 2014 and $209 billion for FY 2015. This funding will be used for IT projects related to development, governance, security infrastructure, services delivery, licensing, and other major IT purchases. The Ohio Administrative Knowledge System (OAKS) is the state’s leading enterprise resource planning (ERP) system designed to assist the state with central business functions such as accounting, procurement, budgeting, asset management and reporting. It has a recommended budget of about $35 million for FY 2014 and $23 million for FY 2015. This funding will be used to support the ongoing operation and development of the system. Moreover, expenses for OAKS increased from FY 2013 to FY 2014 due to needed upgrades.

Figure 2

Ohio’s mission for the upcoming fiscal years is to become more efficient to better serve its citizens. The largest portion of funding is expected to go to health care-related priorities as the state strengthens major programs, such as Medicaid. These appropriations will help drive enhancement and development of various technologies used to deliver health services. It will also help eliminate the siloed environment of the state’s health and human services agencies – a major goal of Governor Kaisch.

Since the current eligibility determination processes are fragmented, there will be a push for integrated, streamlined technology. Vendors can expect increased procurement for technologies that help fight fraud and improve overall program integrity of health and human service delivery. There will also be a huge focus on cost savings and merging of technologies across agencies. As a result, numerous opportunities will be available across all verticals.  

Here’s a look at a few potential upcoming Ohio projects that Deltek is closely monitoring:

 

-          Management of Central Computer System for Video Lottery Terminal Tracking: Intralot currently runs the state’s $2.4 billion online lottery games, including Mega Million and Pick 4. In September 2011, the state was awarded a contract to develop a central monitoring system to track the activity of thousands of video lottery terminals. The contract expires in June 2013, but still holds one, two-year renewal option.

-          Child Support Systems Application: The Ohio Department of Administration contracted with HP in November 2008 for the development of a child support systems application for the state’s Department of Job and Family Services (ODJFS). The contract expires late June 2013, in which the state may seek services relating to ongoing maintenance and/or enhancement.

-          Pharmacy Benefits Management (PBM) for the Bureau of Workers’ Compensation Pharmacy Program: The Ohio workers’ compensation system is the largest, exclusive state-based system in the United States, with assets totaling $22.3 billion, and annual insurance premiums and assessments of $2.1 billion. SXC Health Solutions provides PBM services for the system’s program, in which the contract will expire in October 2014.

-          Third-Party Liability: The Ohio Department of Job and Family Services (ODJFS) currently contracts with HMS Technologies for these services, in which the $12 million contract was recently renewed for another two-year period and will expire in June 2015.