Department of Insurance
The enacted budget makes no changes to the Executive Budget (analysis as of 4/2/2007)
The Senate recommends (analysis as of March 16, 2007):
Decreases the Department’s overall Special Revenue-Other appropriation by $5.8 million as follows:
- Cuts $4.5 million from a contractual services appropriation in the Regulation program related to a suballocation to DOH for services and expenses incurred for implementation of a forge-proof pharmaceutical prescription program.
- Cuts $1.235 million from a suballocation to the Department of State for services and expenses for developing and promulgating fire safety standards for cigarettes. The decrease is as follows: $250,000 personal services, $250,000 supplies/materials, $350,000 travel, $150,000 contractual services, $23,000 equipment, and $235,000 fringe benefits for the Fire Prevention and Control program
The 21-day amendments to the Executive Budget recommend the following changes (analysis as of February 22, 2007):
- Increases the Regulation Program appropriation by $1 million. This increase is due to the addition of a Maintenance Undistributed appropriation, which is for services and expenses related to the coordination of various working groups which will review and recommend system improvements and identify and collect necessary data related to workers’ compensation. Of this allocation $500,000 is for Personal Service and $125,000 is for Contractual Services, with the rest evenly distributed to fund supplies and materials, travel, and equipment.
The Executive Budget recommends (analysis as of January 31, 2007):
A FY 2007-08 workforce of 935. This is no change from the adjusted FTE level for FY 2006-07. The following chart identifies adjustments in current fiscal years FTEs along with the recommended differences in FY 2007-08 FTEs by program (if the FTE’s are the same the program is not listed):
Program
FY 2006-07 Adjustment
FY 2007-08 Difference
Administration
7
0
Consumer Services
(-6)
0
Regulation
11
0
- The total appropriation for Personal Service is $68 million, an increase of 3.2%.
- According to the Assembly analysis, $1.3 million in the Regulation Program is related to 45 new Insurance Investigation Trainees. More detail should be sought at statewide labor management as this increase in FTEs is not reflected in the Executive Budget proposal.
- An All Funds increase of $108 million, or 57% from SFY 2006-07. $100 million of this increase is in the General Fund non-personal service appropriation within the Regulation program which is to finance “Timothy’s Law” which was enacted in late 2006. Under this statute’s provisions, on or after January 1, 2007, the State is required to fully reimburse employers with 50 or fewer employees for the costs associated with providing broad-based mental health insurances coverage. It is unclear why this appropriation is classified as “contractual services” and whether any departmental staff will be used to administer this program. This issue should be clarified at statewide labor management.
- There is also a $5.5 million increase in the maintenance undistributed appropriation in the Insurance Department Account within the Regulation program. It is possible that this funding is used to hire outside consultant auditors to do insurance company examinations. The purpose of this appropriation and its increase should be discussed and clarified at statewide labor management.
- There is a $4.6 million increase in the appropriation for the Pharmaceutical program with the Regulation Program within which there is a large appropriation for contractual services. The purpose of this appropriation and its increase should be discussed and clarified at statewide labor management.
- A decrease of 2 in the estimated number of employees employed under consulting contracts for a total of 5 in SFY2007-08. The average annual cost per contract employee is estimated at $327,040 a 6% increase from SFY2006-07. This information points out a loophole in the contract disclosure law; it does not cover “direct pay” contracts in which the entity that is examined/audited makes direct payments to a firm under contract with a state agency to an examination/audit. This may also occur in the Banking Department. The Insurance Department provided PEF with information regarding the department’s contracting out of insurance company examinations/audits under direct pay contracts. According to Insurance Department records the total cost of these contracts over a three-year period from January 1, 2001 to December 31, 2004, was $15.2 million. Over that time period 15 separate companies were hired to do these examinations. This purpose of the disclosed contracting out by the Insurance Department and whether this work can be done by state employees should be clarified at statewide labor management.
Department of Insurance Program Details-State Operations Enacted Proposed Enacted Change in Percent Program 2006-07 Budget 2007-08 Budget 2007-08 Budget Appropriation Change All Funds $190,403,000 $300,182,000 $300,182,000 $109,779,000 57.7% General Fund $0 $101,000,000 $101,000,000 $101,000,000 100.0% Special Revenue-Other (SRO) $190,403,000 $199,182,000 $199,182,000 $8,779,000 4.6% Personal Services $65,931,000 $68,049,000 $68,049,000 $2,118,000 3.2% Administration (SRO) $14,780,000 $14,864,000 $14,864,000 $84,000 0.6% Personal Services $9,080,000 $9,145,000 $9,145,000 $65,000 0.7% Regular $9,145,000 $9,145,000 Nonpersonal Services $5,700,000 $5,719,000 $5,719,000 $19,000 0.3% Supplies and materials $40,000 $40,000 Travel $128,000 $128,000 Contractual Services $885,000 $885,000 Equipment $61,000 $61,000 Fringe benefits $4,268,000 $4,294,000 $4,294,000 $26,000 0.6% Indirect Costs $318,000 $311,000 $311,000 ($7,000) -2.2% 0 Consumer Services (SRO) $12,298,000 $12,691,000 $12,691,000 $393,000 3.2% Personal Service $7,789,000 $8,057,000 $8,057,000 $268,000 3.4% Regular $8,057,000 $8,057,000 Nonpersonal Service $4,509,000 $4,634,000 $4,634,000 $125,000 2.8% Supplies and materials $35,000 $35,000 Travel $110,000 $110,000 Contractual Services $405,000 $405,000 Equipment $26,000 $26,000 Fringe Benefits $3,660,000 $3,784,000 $3,784,000 $124,000 3.4% Indirect Costs $273,000 $274,000 $274,000 $1,000 0.4% $0 Regulation Program $187,873,000 $268,635,000 $268,635,000 $80,762,000 43.0% Nonpersonal Service $0 $100,000,000 $100,000,000 $100,000,000 100.0% Contractual Services $100,000,000 $100,000,000 $100,000,000 100.0% Maintenance Undistributed $0 $1,000,000 $1,000,000 $1,000,000 100.0% Personal Services $500,000 $500,000 Regular $500,000 $500,000 Nonpersonal Services $500,000 $500,000 Supplies and materials $125,000 $125,000 Travel $125,000 $125,000 Contractual Services $125,000 $125,000 Equipment $125,000 $125,000 Special Revenue-Other (SRO) $163,325,000 $171,627,000 $171,627,000 $8,302,000 5.1% Insurance Department Acct - (SRO) $163,325,000 $171,627,000 $171,627,000 $8,302,000 5.1% Personal Service $49,062,000 $50,847,000 $50,847,000 $1,785,000 3.6% Regular $50,194,000 $50,194,000 Temporary Service $653,000 $653,000 Nonpersonal Service $45,102,000 $46,161,000 $46,161,000 $1,059,000 2.3% Supplies and materials $780,000 $780,000 Travel $2,690,000 $2,690,000 Contractual Services $15,716,000 $15,716,000 Equipment $1,368,000 $1,368,000 Fringe benefits $22,831,000 $23,878,000 $23,878,000 $1,047,000 4.6% Indirect costs $1,717,000 $1,729,000 $1,729,000 $12,000 0.7% Maintenance Undist. $69,161,000 $74,619,000 $74,619,000 $5,458,000 7.9% $0 MU - Holocaust Claims $465,000 $465,000 $465,000 $0 0.0% Personal Service $250,000 $250,000 Regular $250,000 $250,000 Nonpersonal Service $215,000 $215,000 Fringe benefits $200,000 $200,000 Indirect costs $15,000 $15,000 MU - State Building Code $7,351,000 $7,351,000 $7,351,000 $0 0.0% Personal Service $4,000,000 $4,000,000 Regular $4,000,000 $4,000,000 Nonpersonal Service $3,351,000 $3,351,000 Supplies and materials $300,000 $300,000 Travel $300,000 $300,000 Contractual Services $300,000 $300,000 Equipment $201,000 $201,000 Fringe benefits $2,000,000 $2,000,000 Indirect costs $250,000 $250,000 MU - Inpatient Hospital Rates $381,000 $381,000 $381,000 $0 0.0% Personal Service $200,000 $200,000 Regular $200,000 $200,000 Nonpersonal Service $181,000 $181,000 Supplies and materials $20,000 $20,000 Travel $20,000 $20,000 Contractual Services $20,000 $20,000 Equipment $20,000 $20,000 Fringe benefits $90,000 $90,000 Indirect costs $11,000 $11,000 MU - Managed Care Programs $300,000 $300,000 $300,000 $0 0.0% Personal Service $150,000 $150,000 Regular $150,000 $150,000 Nonpersonal Service $150,000 $150,000 Supplies and materials $10,000 $10,000 Travel $10,000 $10,000 Contractual Services $35,000 $35,000 Equipment $10,000 $10,000 Fringe benefits $75,000 $75,000 Indirect costs $10,000 $10,000 MU - Managed Care Implementation $300,000 $300,000 $300,000 $0 0.0% Personal Service $150,000 $150,000 Regular $150,000 $150,000 Nonpersonal Service $150,000 $150,000 Supplies and materials $35,000 $35,000 Travel $10,000 $10,000 Contractual Services $10,000 $10,000 Equipment $10,000 $10,000 Fringe benefits $75,000 $75,000 Indirect costs $10,000 $10,000 MU - Urban Search and Rescue $536,000 $536,000 $536,000 $0 0.0% Personal Service $100,000 $100,000 Regular $100,000 $100,000 Nonpersonal Service $436,000 $436,000 Supplies and materials $100,000 $100,000 Travel $100,000 $100,000 Contractual Services $100,000 $100,000 Equipment $61,000 $61,000 Fringe benefits $50,000 $50,000 Indirect costs $25,000 $25,000 MU - State Fire Reporting Control Pgm $12,355,000 $12,590,000 $12,590,000 $235,000 1.9% Personal Service $6,000,000 $6,000,000 Regular $6,000,000 $6,000,000 Nonpersonal Service $6,590,000 $6,590,000 Supplies and materials $1,000,000 $1,000,000 Travel $1,000,000 $1,000,000 Contractual Services $1,000,000 $1,000,000 Equipment $340,000 $340,000 Fringe benefits $3,000,000 $3,000,000 Indirect costs $250,000 $250,000 MU - NYC Fire Training Academy $1,036,000 $1,036,000 $1,036,000 $0 0.0% MU - OIG Services and Expenses $250,000 $250,000 $250,000 $0 0.0% Nonpersonal Service $250,000 $250,000 Supplies and materials $60,000 $60,000 Travel $60,000 $60,000 Contractual Services $60,000 $60,000 Equipment $70,000 $70,000 MU - Fire Safety Standards $1,160,000 $2,183,000 $2,183,000 $1,023,000 88.2% Personal Service $500,000 $500,000 Regular $500,000 $500,000 Nonpersonal Service $1,683,000 $1,683,000 Supplies and materials $500,000 $500,000 Travel $500,000 $500,000 Contractual Services $300,000 $300,000 Equipment $83,000 $83,000 Fringe benefits $250,000 $250,000 Indirect costs $50,000 $50,000 MU - Rehab State Fire Training Academy $523,000 $523,000 $523,000 $0 0.0% Nonpersonal Service $523,000 $523,000 Supplies and materials $125,000 $125,000 Travel $125,000 $125,000 Contractual Services $125,000 $125,000 Equipment $148,000 $148,000 MU - Fire Safety Training Colleges $1,104,000 $1,104,000 $1,104,000 $0 0.0% Personal Service $400,000 $400,000 Regular $400,000 $400,000 Nonpersonal Service $704,000 $704,000 Supplies and materials $100,000 $100,000 Travel $100,000 $100,000 Contractual Services $100,000 $100,000 Equipment $179,000 $179,000 Fringe benefits $200,000 $200,000 Indirect costs $25,000 $25,000 MU - No Fault Auto Insurance $6,500,000 $6,500,000 $6,500,000 $0 0.0% Personal Service $3,250,000 $3,250,000 Regular $3,250,000 $3,250,000 Nonpersonal Service $3,250,000 $3,250,000 Supplies and materials $400,000 $400,000 Travel $400,000 $400,000 Contractual Services $400,000 $400,000 Equipment $300,000 $300,000 Fringe benefits $1,625,000 $1,625,000 Indirect costs $125,000 $125,000 MU - Center for Community Health $14,600,000 $14,600,000 $14,600,000 $0 0.0% Personal Service $6,000,000 $6,000,000 Regular $6,000,000 $6,000,000 Nonpersonal Service $8,600,000 $8,600,000 Supplies and materials $1,250,000 $1,250,000 Travel $1,500,000 $1,500,000 Contractual Services $1,500,000 $1,500,000 Equipment $1,600,000 $1,600,000 Fringe benefits $2,500,000 $2,500,000 Indirect costs $250,000 $250,000 MU - Investigating Broker/Insurer $3,000,000 $3,000,000 $3,000,000 $0 0.0% Personal Service $1,000,000 $1,000,000