|Date Requested:March 18, 2005
Time Requested:03:48 PM
| FUND(S) |
2220 and two new FIMS fund under Auditor's Office
Sources of Revenue
Legislation creates:A New Fund
Effect this measure will have on costs and revenues of state government.
| Within the next two fiscal years there will be no net increase in costs and no net increase in state revenues. Current cost structure and revenue stream will simply move from one special revenue fund under the Department of Administration to a newly created special revenue fund under the State Auditor’s Office.
Although we have conservatively estimated the immediate fiscal impact to the State to be cost / revenue neutral, the potential for immediate and meaningful savings will occur as a result of better communication and more responsiveness to state agency’s needs. More timely and accurate information will result in better management decision-making.
|Effect of Proposal||Fiscal Year|
|1. Estmated Total Cost||0||0||-3,000,000|
|Repairs and Alterations||0||0||-500,000|
|2. Estimated Total Revenues||0||0||0|
3. Explanation of above estimates (including long-range effect):
Within the first two years an independent consultant under the guidance of the newly created Financial Services Oversight Committee (see Memorandum below) will be utilized to provide detailed ROI (Return on Investment) calculations for developing and/or procuring the successor software to the current centralized accounting system.
Anticipated saving upon completion of the consolidation of the state wide accounting system on a single platform are estimated to be several million in cost reductions. These savings are anticipated through:
• Savings on hardware/ software / license agreements
• Elimination of current duplicate systems
• Efficiencies realized by system integration
• Standardization of data classification throughout the state
• Decreased reliance on shadow systems
• Personnel and related benefits
• Elimination of risk of legacy system failure
| Legislation creates new “Financial Service Oversight Committee” which formally brings together the necessary individuals from the Governors’ Office, State Auditor’s Office, State Treasurers Office, Sec. of Administration, Sec. of Revenue, Sec. of Health and Human Resources, Sec. of Transportation, Higher Education Policy Commission, representatives from three institutions of higher education and one public citizen which will form the foundation for the development and coordination of effective and efficient financial services for state government.
Issues from Administration’s fiscal note –
Audit and Bond cost – Bonding companies have represented that the change will not affect the state’s bond ratings. Additionally, we believe both audit cost and bond issue cost should (if anything) decrease as a result of this transfer. The changes in the control structure and control environment should provide an opportunity to negotiate lower audit fees and bond issue fees since the coordination, documentation, and testing related to the centralized accounting system will be reduced to one office and one platform.
Actual dollars to transfer to be included in the bill - Billings for the support and operation of the centralized accounting system are not static, therefore can NOT be included in the statute. Each month the billing changes according to usage, accounts maintained, and dollar volume of expenditures. Language in the bill allows for the continued methodology used by the Dept. of Administration.
Transferred responsibilities – All responsibilities as defined by the Dept. of Administration on the Finance Division’s web site under the WVFIMS subsystems are considered direct and/or integral to the management of the centralized accounting system, and as such, transfer upon the effective date. This does include both 1099 and W-9 processing.
Civil service of affected employees – All current employees under the civil service classification which are dedicated to the support or operation of those function integrally related to the centralized accounting system, will upon the effective date, become employed at the will and pleasure of the State Auditor. This was the case when the Chief Inspector’s Division transferred, without issue, and we would anticipate this transfer of these employees to be as successful.