Florida's FY 2014 Budget: Handling a Surplus and Spending in a Recovery
Published: May 06, 2013
What a difference a fiscal year makes! For the past two budget cycles (FY 2012 and FY 2013), Florida Governor Rick Scott has been requesting deep cuts to health care, education and public safety to curtail the state’s declining tax revenues and multibillion-dollar deficit. Now, Governor Scott is touting a $4 billion surplus, and the fiscal year 2014 budget recommendations Scott released on February 6 actually add funds to state programs for the first time in six years. Also, in a reversal from years passed, Scott’s top budget priorities for FY 2014 include health care and education, both of which were once on the chopping block.
The governor’s FY 2014 state budget recommendation, also called the Florida Families First budget, asks for a pay raise for K-12 teachers and state workers, an increase in funding for state universities, and, surprisingly, accepts federal funds to support the Affordable Care Act’s (ACA). If adopted, the Republican governor’s FY 2014 budget would be the largest in state history, at $74 billion.
This economic upswing has allowed Scott to tailor his budget around job creation by cutting business taxes, investing in workforce training programs, and calling for $8.3 billion in transportation projects. Scott has also added $3 billion to higher education, essentially restoring funds to pre-recession levels. Additionally, Florida’s unemployment rate dropped to 7.7 percent, signifying an increase in revenue from income taxes. The combination of less spending and larger revenues has resulted in this unexpected surplus.
Now that the state is seeing a fruitful recovery, there is more push from department heads to restore services and programs and take on new projects. Despite cries for relief, Scott’s budget largely resists large-scale funding restorations; instead, he has smartly decided to split the difference by recommending a smaller increase in spending while opting to replenish the state’s once-dry emergency fund.
The top vertical increases in Scott’s FY 2014 budget recommendations (compared to FY 2013) focus on higher education (66.2 percent), transportation (33.7 percent), and public finance (24.3 percent) verticals. The Highway Safety and Motor Vehicle Department within the transportation vertical received a $20.6 million increase compared to FY 2013. This increase includes a $4.9 million funding request to procure a new motorist service system that is expected to be implemented over multiple years.
The top vertical decreases in the FY 2014 budget recommendations are for natural resources (-5.8 percent), K-12 education (-7.3 percent) and social services (-9.6 percent) verticals. The bulk of losses for social services are represented by a $575 million decrease from the Elder Affairs and Children and Family Services departments, stemming from reduced public services and pending layoffs. However, the IT expenditures under the social services vertical actually see a 7.9 percent increase from FY 2013, due in large part to projects such as the state’s public assistance eligibility system and the child dependency information management system.
One of the bigger gaffes Florida faced during the 2013 fiscal year was the defunding and decommissioning of the Agency of Enterprise Information Technology (AEIT). Last year, Scott vetoed legislation that would have replaced AEIT with a new central information technology agency that would have focused more on the state’s data center consolidation effort. Scott justified the veto by stating he believed the new agency’s scope was too narrow. Even though both Scott and the legislature promised to work together for fiscal year 2014 to avoid another misstep, it seems the House and Senate have each introduced competing legislation – though each is requesting a new agency, the agencies would have differing scopes and oversight schemes. An aide in Senator Jeremy Ring’s office confirmed that, despite political maneuvering, the hope is to create a central agency to manage the state’s IT efforts and oversee nearly $51 billion in IT contracts, rather than have 19 different state agencies inefficiently managing their own.
There are two major differences in oversight and scope between the House and Senate bills. Senate Bill 1762 calls for the head of the new agency to report to the governor alone, while House Bill 5009 calls for the head of the new agency to report to the governor as well as the cabinet. There’s also a difference in scope, as the House bill would pare down the new agency’s ability to influence IT purchasing decisions, while the Senate bill would create a department with robust authority including oversight of all IT purchases that involved multiple state agencies. Ultimately, HB 5009 would really only allow the new agency to track and analyze IT purchases and draft IT strategic plans in more of an advisory role. Since Governor Scott has yet to throw his support behind either bill, this battle will likely continue into the summer.
The way in which Florida procures, implements, and manages their IT efforts could drastically change how vendors do business with the state depending on the outcome of the pending legislation. Though the Department of Management Services, which currently oversees all IT procurements, seems to support the House’s smaller and scaled-back IT agency, I believe the Senate’s more robust IT department, which would more closely resemble Texas or Virginia’s central IT agencies, would be the better approach. The Senate’s version would encourage larger enterprise-wide IT procurements with greater competition as more vendors vie for these consolidated opportunities. The House version would largely maintain the status quo of allowing continued inefficiencies in IT procurement.
The budget surplus changes the tone of Florida’s expenditure discourse by removing highly politicized talk of “necessary cuts.” Governor Scott’s budget is an indication that Florida will slowly restore funding to agencies affected by the recession while minimizing further cuts in the future, unless warranted. In coming budget cycles, expenditures will likely expand a half step behind projected revenues to sustain the state’s economic momentum.
Additionally, Florida seems to be seeking additional cost savings by making efficiencies via technology to stabilize future spending. This is seen by a 26.7 percent increase in IT spending compared to FY 2013, which includes 40-plus new IT budget line items in this year’s executive budget recommendations. This seems to be a widespread effort, with IT line items scattered across multiple agencies and departments, offering an abundance of IT opportunities for vendors.
In addition to a formal budget analysis, Deltek also wants to give clients concrete business leads. Below are four projects from the governor’s 353-page budget with potential solicitation releases within 6-12 months. Deltek will be tracking these opportunities in the GovWin IQ database over the next several months. Note that funding and procurement of these opportunities is pending the adoption of the final FY 2014 state budget.
Florida Accountability Contract Tracking System - Deltek recommends this opportunity because it is listed in the Governor's Budget Recommendation for Fiscal Year 2013-14 with $713,167 of nonrecurring funding to enhance the existing Florida Accountability Contract Tracking System (FACTS). The funding will allow for the upload of contract documents and the transmittal of purchase orders from the MyFloridaMarketPlace e-procurement system (MFMP) within the Department of Management Services to FACTS. The ability to upload images of contract documents requires $200,000 to purchase network controllers and disk space. The remaining funding will provide budget in the contracted services appropriation category to allow the department to link FACTS with MFMP and provide daily maintenance and support of the system. This enhanced system will provide for greater transparency and accountability for state dollars, contracts and purchase orders.
FileNet P8 Documents Management Implementation and Migration - Deltek recommends this opportunity because it is listed in the Governor's Budget Recommendation for Fiscal Year 2013-14 with $749,844 in funding for the Department of Financial Services to implement the migration of three separate document management systems to a single enterprise document management system. This increase is after transfers of $51,301 from the Risk Management budget entity and $145,867 from the Workers' Compensation budget entity. The department indicates that the current file management systems are incongruent, outdated, and require major effort to maintain. This causes delays and sometimes stops the business processes these systems support. This funding is necessary so that the work processes of several agency divisions do not continue to experience a deterioration of response times.
All-Payer Claims Database - Deltek recommends this opportunity because it is listed in the Governor's Budget Recommendation for Fiscal Year 2013-14 with $1 million in nonrecurring funding for an all-payer claims database. An all-payer claims database utilizes price information based on claims data, allowing consumers to look up prices for all providers across the state. This information fosters competition among providers and provides transparency for consumers. It enables consumers to make decisions based on price and provides them with an ability to negotiate rates.
Motorist Services Modernization - Deltek recommends this opportunity because it is listed in the Governor's Budget Recommendation for Fiscal Year 2013-14 with $4.9 million to fund the modernization of Motorist Services programs. This is a multiyear project with a recurring request for additional software maintenance and salary/rate authority to recruit and retain qualified staff for development and support. The Motorist Services programs are critical to the agency as they collect approximately $2.4 billion annually from drivers’ license and motor vehicles registrations. This project seeks to reduce the risk of delayed or lost revenue, increased operating costs of fixing an antiquated program, loss of productivity, inability to issue credentials or incorrectly issued credentials, and possible non-compliance with state and federal mandates.
Vendors looking for opportunities with a potential procurement release date beyond the next 12-18 months should look at these identified IT line items:
Education Technology Modernization Initiative - Deltek recommends this opportunity because it is listed in the Governor's Budget Recommendation for Fiscal Year 2013-14 with $100 million in funding for school districts to acquire devices for students to support digital learning, and to enhance classroom-level digital infrastructure and broadband access. Districts will be required to submit a technology plan to the State Board of Education indicating how the funds will be used for these purposes.
Disaster Recovery Services - Deltek recommends this opportunity because it is listed in the Governor's Budget Recommendation for Fiscal Year 2013-14 with $250,000 in nonrecurring funds for Contracted Services, appropriated to allow the Southwood Shared Resource Center (SSRC) to partner with the Northwood Shared Resource Center in the development of a plan for the provision of enterprise disaster recovery services. The data centers currently provide disaster recovery services through an outside vendor. Agency customers purchase disaster recovery services to provide operational integrity and continuation of services for business systems operating at the Northwood Shared Resource Center (NSRC) in the event of a disaster.