OBM Wraps Up a Momentous Year in 2013
Achieving a Budget Surplus, Providing Room for an Income Tax Cut and Bringing the State's Rainy Day Savings Account to an All-Time High
With the Office of Budget and Management in the lead role, Gov. John Kasich's administration closed fiscal year 2013 with the state budget not only in balance, but also with a significant surplus. As a result, the state's new biennial budget (Jobs Budget 2.0) was able to accommodate a $2.7 billion tax cut and rebuild the state's rainy day fund to $1.48 billion - the strongest emergency savings account in Ohio history.
The budget approved by lawmakers in 2013 achieved Governor Kasich's goal of keeping Ohio's foot on the accelerator to create more economic growth. Among the budget's accomplishments:
- A commitment of $1.6 billion in new funding to meet the needs of students in our elementary- and secondary-school classrooms - ensuring that every child has the resources to achieve regardless where they live.
- A new funding formula for Ohio's public colleges and universities that rewards graduation and completion, as opposed to enrollment in order to incentivize those who graduate more students.
- A tax deduction of 50 percent for small businesses, the drivers of our economy, who make up about 98 percent of all Ohio businesses and employ half of our state's private-sector workforce.
- A $2.7 billion net tax cut over the next three years for Ohio taxpayers.
- An additional $1.5 billion to meet Ohio's pressing bridge and highway infrastructure needs - a crucial factor for a growing economy - all made possible by leveraging the value of the Ohio Turnpike.
- A budget surplus that allowed us to fill Ohio's rainy day savings account to its $1.47 billion statutory goal, with enough left over for to allow an additional income tax reduction. This particularly noteworthy considering that the state's rainy day fund (Budget Stabilization Fund) held just 89 cents when the Kasich Administration took office in January 2011and the budget faced a $7.7 billion shortfall.
While preparation and oversight of the state's operating budget, capital budgets and the mid-biennium budget review are among its most visible functions, the Office of Budget and Management performs a number of other important roles to ensure the fiscal integrity and efficiency of state government operations. OBM has worked in many ways over the past three years to strengthen all of its operations, reduce costs and improve the delivery of services. In each instance, these initiatives are also having positive impacts on the efficiency and effectiveness of OBM's client agencies.
Among key transformational accomplishments made by the Office of Budget and Management in 2013:
- Ohio Fiscal Academy: The Ohio Fiscal Academy, initiated by OBM in 2012 to develop greater financial literacy within state government, is a professional certification program open to state agency fiscal officers, fiscal specialists, budget analysts and budget/management analysts. The academy's nine-month curriculum provides participants with professional skills and high-level learning on topics vital to fiscal office leadership and administration, laying the groundwork for consistent application of fiscal theory and practice across state government. The first cohort of 24 graduates completed the program in May 2013 and 49 new participants, representing 27 state agencies, began their training in August.
- Office of Internal Audit - Service Expansion: In July 2013, OBM's Office of Internal Audit extended its audit and consulting services to include five new agencies (Department of Medicaid, Opportunities for Ohioans with Disabilities, Ohio Lottery Commission, Public Utilities Commission of Ohio and the Ohio Adjutant General). This expansion was achieved without adding new staff resources. In addition to the 26 agencies now under the Office of Internal Audit's direct oversight, statutory language was added to allow agencies outside the office's purview to request audit services.
- Invoice Automation: OBM State Accounting's requirements and configuration management team (RACM), in conjunction with the Ohio Shared Services Division (OSS), worked to develop an in-house solution to replace outdated and increasingly problematic optical character recognition technology used to process accounts-payable invoices. The RACM team's solution, called Verify On-Line Transactions or VOLT, is at start-up able to automate approximately 45 percent of all invoice processing - more than triple the efficiency of the previous system. This has resulted in improved accuracy, speed, and performance, while also allowing OSS to expand volume and improve customer service without a corresponding increase in staffing levels.
- Ohio Marketplace: Ohio Marketplace is a comprehensive online ordering and delivery system for state agencies, designed to offer goods and services from various business vendors. OBM's Ohio Shared Services Division, in partnership with the Ohio Department of Administrative Services, developed Ohio Marketplace to increase the efficiency and effectiveness of the state's procurement process. Other benefits include reduced purchasing costs through implementation of a streamlined, more efficient purchasing process and expedited vendor payments that enable the State of Ohio to better leverage prompt-pay discounts. In addition, local governments are able to access Ohio Marketplace to leverage purchasing options, which supports the administration's goal to promote shared services at the local level.
- State Accounting Restructuring: In December 2012, OBM charged new leadership of its State Accounting and Reporting Section with conducting an overall assessment of that section's functions and recommending changes to policy, process, and/or organizational structure in order to increase its effectiveness and efficiency. Over the course 2013, the resulting restructuring has transformed State Accounting from a processing center into a strategic oversight and monitoring function that adds value to the enterprise. This has included the hiring of an additional manager to focus on accounting policies, payment card administration, transaction monitoring, and coordination of communications with state agency CFOs. Other improvement areas underway include development of an online State Accounting policy manual; modernization of the expenditure account codes; improvement of financial reporting release timeline of the State Comprehensive Annual Financial Report (CAFR) to December; and reduction of budget fund groups.
- OSS Accounts Payable / Tiered Pricing: At its start four years ago, OBM's Ohio Shared Services Division was processing accounts-payable invoices for three state agencies. With advances made in 2013, OSS now partners with all cabinet-level agencies for invoice processing. In addition, with the launch of the Participation Rebate Program, OSS client partners are now able to realize increased savings through economies of scale, i.e., as partner compliance increases through volume, the individual transaction rate decreases. This model has increased savings to customers and increased agency participation rates by 32 percent. With more agencies now utilizing OSS offerings, additional efficiencies are gained by standardizing the processes through which the state makes payments for goods and services.
- OSS Accounts Receivable / Pre-Collections Services: To make processing of state agencies' accounts-receivable transactions more efficient and cost-effective, OBM's Ohio Shared Services Division is implementing an accounts-receivable management system and new pre-collections services that will offer receivable and collections transaction processing and support. Within the pre-collections service offering, account receivables not collected by the specified due date will be transferred to a pre-collections platform that specializes in the recovery of these debts. If the debt remains uncollected after 45 days, this service will provide a single integration and certification point into the Ohio Attorney General's collection system for multiple government entities. These complementary services provide an ability to forecast revenue due the State of Ohio, support adoption of the state's enterprise resource planning (ERP) platform, eliminate costly redundant and competing technologies, and integrate and simplify the Attorney General's certification process. In the future, OSS will seek to provide pre-collection services to local government entities requiring this support.
Going forward, major Kasich Administration initiatives - implemented with OBM's leadership - will continue to build on pro-growth policies of the Fiscal Year 2012-2013 budget, which closed a $7.7 billion fiscal imbalance without raising taxes, and the Fiscal Year 2014-2015 budget, which takes further steps to transform Ohio for jobs and growth.
Early in 2014, OBM will lead state agencies through a comprehensive Mid-Biennium Review (MBR), a top-to-bottom analysis of state agency budgets, operations and programs. This follows a pattern set by Ohio's first-ever MBR, which was undertaken by the Kasich Administration in 2012 and produced hundreds of recommendations for efficiencies and reforms to reduce the cost of government and revitalize Ohio's ability to keep and attract jobs. In February 2014, Governor Kasich will introduce his capital budget proposal for the 2015 and 2016 fiscal biennium, identifying spending priorities to maintain and improve the state's educational and public service infrastructure in ways that help keep Ohio a leader in the competitive world economy.