Higher Education Services Department

The enacted budget makes the following changes to the Executive Budget (analysis as of March 29, 2012).

·        Rejects the broad Executive Budget proposal to allow the Executive to have unlimited transfer and interchange authorization over all State Operations appropriations. Instead it creates specific transfer and interchange authorities for State Operation appropriations; for this agency they include: OGS/Back Office, Call Center and Information Technology.  This authorization allows the Executive to move appropriations between state agencies for these purposes. For additional detail please see page 5 of the Summary of the SFY 2012-13 Enacted Budget memo. There does not appear to be the authority to transfer or interchange HESC appropriations to move their debt collection responsibilities to the Department of Taxation and Finance. This issue should be clarified at labor-management.

The Senate and Assembly made the following changes to the Executive Budget (analysis as of March 12, 2012)

·        The Senate and Assembly reject the Executive proposal that would move debt collection responsibilities from HESC to the Department of Taxation and Finance. T&F). No specific authorization to transfer this function to T&F was included in the Executive Budget legislation and the Senate and Assembly includes no specific language to prevent such a transfer. We believe Executive was relying on the unlimited interchange language that was proposed as part of both HESC’s and Tax and Finance’s State Operations budgets which the Senate and Assembly did reject but there is doubt as to whether they have the power to change the language without the Governor’s approval.

The Executive Budget recommends (analysis as of January 19, 2012):

A SFY 2011-12 workforce of 495.  The adjusted FTE level for 2010-11 is a decrease of -21 FTEs from the level projected in last year’s budget. The following chart identifies adjustments in the current fiscal year FTEs along with the recommended differences in FY 2012-13 FTEs by program:

·  An All Funds appropriation of $93.05 million, a decrease of $11.17 million, (-10.7%).

·  In 2012-13, the Department of Taxation and Finance (DTF) will take over the debt collection function of HESC. No provision is provided for the transfer of any HESC employees to DTF although Division of Budget staff claim that this is still possible due to broad language contained in the State Operations appropriation bill. This language, which is contained in many State agency appropriations, allows the Executive almost unlimited authority to interchange State Operations appropriations between agencies for the “purpose of planning, developing and/or implementing the consolidation of administration, business services, procurement, information technology and/or other functions shared among agencies to improve the efficiency and effectiveness of government operations.” This language effectively negates legislative control over the use of funds and, since it is included in an appropriation bill, the Legislature cannot alter or delete it. This language combined with the Executive’s current power to transfer functions among Executive agencies through Executive Orders could enable the Governor to move both HESC appropriations and HESC staff to DTF without any further legislation.

·  The total appropriation for Personal Service is $30.75 million, a decrease of -$2.88 million, or (-8.6%. The total appropriation for Contractual Services is $34.22 million, a decrease of $2.24 million, or (-6.2%)

·  There is a $1.3 million difference between our All-Funds appropriation and Special revenue other appropriation because we include the appropriations for the College Choice Tuition Savings program in HESC’s state Operations budget and the Divisions of Budget keeps that program as a separate miscellaneous appropriation.

·  The Department employed an estimated 4 employees (or 3.5 FTEs) under consultant contracts in SFY 2011-12 at a cost of $240,000 or $68,571 per FTE consultant. It is estimated that the Agency will employ 6 consultants (5.3 FTEs) in SFY 2012-13 at a cost of $940,000, or $177,358 per FTE consultant.  This is a 292% increase in consultant spending, and the cost of each consultant is 159% more than what each HESC consultant cost in the previous fiscal year.  The expenditures may include more than personal service costs and is inconsistent with Office of State Comptroller data on consultant spending so it is difficult to draw definitive conclusions as to the actual cost per consultant employee.  The purpose of these consultants and the reasons for the increased spending on them should be discussed at statewide labor management.