July 10, 2006 – While Labor Commissioner Cecil R. Benjamin justified a $5.25 million General Fund budget request by touting several accomplishments made within the department over the past five years, senators were concerned that Labor officials were not managing federal grant money or keeping the Government Insurance Fund solvent.
During Monday's budget hearing, Sen. Louis P. Hill, chairman of the Finance Committee, said the fund, which pays workman's compensation claims, went "bankrupt" last year after various government departments and agencies failed to pay the required premium. He explained that the Legislature had to appropriate $3 million in a recent supplemental budget to cover the deficit.
To assuage Hill's concerns, Wanda Morris, director of Workman's Compensation, said government contributions are presently being paid, and that the department should have enough money to cover the cost of claims for the current fiscal year. Morris testified in support of a $1.8 million transfer from the fund to cover insurance costs for Fiscal Year 2007.
She added, however, that the fund's insolvency was due to the increased cost of medical care throughout the territory and on the mainland, and the passing of a local law establishing increased benefits to employees without establishing an increase in premiums. Morris said that if premiums are not increased, the fund does run the risk of insolvency in subsequent years.
In response to questioning from Sen. Usie R. Richards, Benjamin and Yvonne Webster-Price, the department's administration and business management director, said Labor is not mismanaging its federal funds. After the meeting, Benjamin said that Labor has not yet had to return any of its money to the federal government.
During the meeting, however, Richards disagreed, and questioned Webster-Price on the status of several grants. "On Oct. 1, 2005, you received a grant of about $1.6 million," he said. "And I see that you still have $1,292 of that amount unexpended," he said.
Richards added that the department has not spent or obligated $1.3 million awarded through another grant, and has $197,372 out of $251, 861 remaining from a grant awarded by the federal government on Sept. 1, 2005.
Webster-Price said that the grant money is specifically earmarked for certain items, and cannot be used for other purposes. She also said the department has up to three years to spend the funds. "So we still have time to use the money," she said.
Senators said another sore spot in the department was the Occupational Safety and Health Administration (OSHA) program, responsible for keeping government departments and agencies in compliance with federal health standards.
While Benjamin addressed the concerns by saying that the program was "moving along," he did ask senators to appropriate the money requested in the FY 2007 budget for additional equipment and staff. Though Benjamin said that the local government did give OSHA "unprecedented support" in FY 2006, he claimed the additional funding would "put us on the road to properly manage and improve the efficiency of the program."
Benjamin advocated for the establishment of a compliance unit within the department, which would assist government entities in meeting various Labor standards. While funding for such a unit is not reflected in this year's budget, he said senators should look at "appropriating more local funding" for federally run programs like OSHA.
Benjamin said that federal funds – which comprise 54 percent, or $8.3 million of Labor's overall $15.4 million budget for 2007 – are dwindling due to budget cuts, which has, in turn, caused the department to become more under-staffed, and has hindered the ability to produce timely reports or provide training for employees, among other things.
"Once a federal cut occurs, it's up to the territory to absorb the difference in costs if we wish to maintain our services and programs," Benjamin added. "The department will most likely be required to play a major role in absorbing these costs or program changes. Therefore, I urge you not to further cut our budget and to react positively to our supplemental budget request."
Benjamin said appropriations outlined in the supplemental budget are "absolutely necessary" and would go toward addressing staff shortages.
Senators said they would have to obtain more information on how the department is spending its federal grant money before they could consider an additional budget, and requested the department submit a list of programs and expenditures by the end of the week.
They also requested the department reduce its vacancies and cut down on the number of temporary employees.
Senators also received testimony from the V.I. Labor Management Committee representatives, who asked for a $145,000 budget request for FY 2007.
After the meeting, Sylvia Sargeant-Perry, the committee's executive director, said the request is $35,000 more than Gov. Charles W. Turnbull's recommendation, and would go toward improving the relationship between labor and management throughout the territory.
She added that a budget cut in FY 2005 hampered the committee's operations in 2006.
Senators said they would have to "seriously consider" the committee's request, and would have to decide whether the agency should instead be moved under Labor. "The feedback I'm getting is that the committee is useless and should be located under the department," Hill said in response to testimony given by Luis "Tito" Morales, the committee's chairman. "So we're going to have to consider what to do here."
Present during Monday's meeting were Sens. Craig W. Barshinger, Roosevelt C. David, Liston Davis, Pedro "Pete" Encarnacion, Juan Figueroa-Serville, Hill, Neville James, Norman Jn Baptiste and Usie R. Richards.
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