FISCAL NOTE
FUND(S):
Various state funds
Sources of Revenue:
General Fund,Special Fund,Other Fund
Legislation creates:
A New Program
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The purpose of this bill is to establish requirements for prior review of all privatization proposals when public sector jobs are outsourced to the private sector. It requires agencies to provide a written statement to the Department of Administration advising of the proposed services wanting to be outsourced. It requires agencies to competitively bid for those services. It requires the Department of Administration to certify in writing to the State Auditor that the agency has complied with all requirements of law and that the proposed privatization contract is in the public’s best interest and meets the quality and fiscal standards set forth. The bill also requires the State Auditor to approve the privatization contracts.
The Department of Administration cannot determine the fiscal impact of this legislation as we do not have adequate knowledge of how many privatization proposals will be brought fourth for approval. However, there would be administrative costs associated with the review and monitoring of each proposal. The administrative costs would include, but not be limited to, additional staff, office space, equipment, etc. We cannot accurately determine the number of additional staff that would be required, however, we conservatively estimate an annual cost of $240,000.00 for the Department of Administration. The Department of Administration cannot determine the costs that will be incurred by the agencies in preparing the proposals or the cost to the State Auditor for reviewing and approving the privatization contracts.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2014
Increase/Decrease
(use"-") |
2015
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
240,000 |
220,000 |
220,000 |
| Personal Services |
150,000 |
150,000 |
150,000 |
| Current Expenses |
20,000 |
20,000 |
20,000 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
25,000 |
5,000 |
5,000 |
| Other |
45,000 |
45,000 |
45,000 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
The legislation requires the entities who enter into privatization contracts to pay their employees less than the state employee who performed the services previously, requires employees who work more than twenty (20) hours to be paid benefits, and requires the entity to offer positions to the state employee if they will be terminated as a result of the privatization contract. This could potentially reduce the number of employees on the state’s payroll and thus reduce the budget of the state. However, it is unknown how many state employees this could affect, if any.
Due to the definition of “privatization contract”, the Department of Administration is unable to determine the nature of any proposals that would be brought forth by the agencies or the impact to the state. Many of the things that could perhaps be outsourced are exempt and not considered a privatization contract in the proposed legislation.
Memorandum
By placing this legislation in §5A of the West Virginia Code, entities who are exempt from this section would not be required to follow the processes for executing privatization contracts.
Additionally, it gives the State Auditor final control over decisions that the Executive Branch wish to make.
Person submitting Fiscal Note: Donna Lipscomb Spano
Email Address: donna.m.lipscombspano@wv.gov