Personal Service Contracts

Executive Order 2002-1334 directed the Finance and Administration Cabinet to immediately establish a moratorium on new and amended contracts, allowing the secretary to provide exceptions for reasons such as public health and safety. Contracts not meeting these criteria have been rejected, so the number of new contracts or modifications sent to the legislative contract review committee has been drastically reduced. Additionally, the number of non-competitive, or “sole source” contracts awarded by the state has been reduced by 93 percent.

Vehicle reduction

A 500-vehicle reduction was directed by the Executive Order. These vehicles were sold at auctions in February and March, generating $1.5 million for the state treasury. House Bill 269 then required an additional 500 vehicles be eliminated from agency fleets. That goal was far exceeded when executive agencies and universities agreed to remove 698 vehicles from their inventories. Auctioning these vehicles should bring in at least another $1.5 million at auction. Removing these nearly 1,200 vehicles from the state fleet is estimated to save nearly $3 million in annual operating costs. Also avoided over the next several years will be the estimated replacement costs of more than $19 million for the 1,200 cars and trucks. 

Utilities

The Cabinet was directed by executive order and the budget bill to reduce utility costs by 10 percent. A number of energy consumption reduction initiatives have been implemented, significantly reducing the energy cost per square foot. However, through the first 11 months of calendar year 2003, spending on utilities has increased by 8.3 percent. This increase is directly attributable to three major factors: increased energy costs, severe weather, and the opening of two major new state buildings.

Travel

All state agencies were directed by executive order and HB 269 to reduce out-of-state travel expenses by 25 percent and in-state travel by 10 percent. During the 11 months since the order, the required reductions have been exceeded. Total 2003 travel expenses are down 16.8 percent over calendar year 2002, representing a savings of $6.5 million.

Printing

The executive order and the budget bill directed state agencies to submit all printing requests to the state’s division of printing for review to ensure cost effectiveness. From January through November 2003, statewide printing costs were cut by 26.8 percent, a savings of just over $3 million.

State leases

The governor’s order placed a moratorium on agencies expanding into new or increased lease space. Improvements to leased space were also prohibited. HB 269 continued the moratorium. All lease expansions were immediately halted and no new leases or expansions have been allowed, with the exception of a very few small offices specifically authorized in the budget.

Furniture and equipment

By executive order, a moratorium was imposed on all purchases of furniture and equipment. The budget bill amended the moratorium to allow for replacement due to loss or damage. Any agency with special equipment needs was required to provide written justification to the Secretary of Finance and Administration. If approved, agencies were required to make such purchases from Correctional Industries. Through November 2003, purchases for furniture and equipment from the operating budgets of executive branch agencies have been cut by 27.4 percent, a savings of $20.3 million.

Discretionary expenditures

HB 269 specified that the Secretary of the Finance and Administration Cabinet shall direct all state agencies to review and implement cost saving actions on all discretionary expenditures, such as telecommunications, supplies, commodities, membership dues and periodical subscriptions. A number of these expenditures had been reduced or eliminated during previous budget cuts. Although specific data is not available to analyze the total savings of these cost saving measures, in the single category of office supplies, costs were reduced in 2003 by 11.1 percent, a savings of $1.1 million. 

Surplus property sales

Executive Order 2002-1334 directed all state agencies to immediately review their inventories of state-owned assets, such as real property, equipment, furniture or vehicles, and to dispose of any surplus property to generate revenue for state government operations. Since January 1, 2003, the division has generated a total of $5.6 million in revenue for the commonwealth, an increase of $2.2 million over calendar year 2002 sales.

A copy of the letter sent to the chairs of the Interim Joint Committee on Appropriations and Revenue is available at http://finance.ky.gov/MoberlySander.doc.

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