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Finance Department Seeking Lump-Sum Budget

July 19, 2006 — Granting an almost $12.7 million lump-sum budget request for fiscal year 2007 would allow the Finance Department to "better manage" its resources and maintain control over the financial operations of the government, Finance Commissioner Bernice Turnbull told senators during the first round of budget hearings Wednesday.
Turnbull added that the department would not be asking for "a penny more than" what was recommended this year by Gov. Charles W. Turnbull, which includes: $8.9 million from the General Fund; approximately $2.4 million from the Indirect Cost Fund; $759,019 from the Government Insurance Fund; and $649,813 from unspecified, nonappropriated funds.
While much of the overall funding is slated for employee salaries and corresponding fringe benefits (which breaks down to 116 employees throughout the territory, along with 20 vacancies), Austin Nibbs, Finance's deputy commissioner, said a portion of the money coming from the Indirect Cost Fund would go toward conducting an audit and establishing an audit unit within the department.
During the meeting, Turnbull said that single and comprehensive financial audits for the government are conducted annually by Finance. While an audit has been completed for 2004, she said, audits are generally not generated on a timely basis.
"The audits continue to be late because many of the government's component units (the semi-autonomous agencies) do not submit their audits to the Department of Finance on a timely basis," Turnbull explained. "This means that federal grantor agencies may bring administrative actions against the government, such as the withholding of funds or noncertification of grant awards."
To combat the problem, Turnbull said the department would be establishing an audit unit responsible for auditing government revenues and reviewing data relevant to the completion of the single and financial audits.
In response to a question from Sen. Usie R. Richards about the government's ability to manage its federal and local funds, Turnbull also suggested that legislation be created requiring departments and agencies to give an account of how all appropriations are spent. She explained that the government has 85 bank accounts–including the General Fund and other special funds–which contribute money annually to government entities for specific purposes.
"All the law does right now is stipulate what percentage of those funds go to each department," she said. "There's nothing mandating them to come back and show where the money is going. We need to establish some accountability in this area and require the departments to submit some kind of report that shows whether the funds are being used as needed. "
Turnbull added that the implementation of the new Enterprise Resource Planning System (ERPS) — scheduled to replace the government's current Financial Management System (FMS) –would help promote accountability and would contribute to the decentralization of government.
To date, approximately $8.6 million has been appropriated for the implementation of the system, which is scheduled to go live Oct. 1, she said.
Another $1.5 million for the system is appropriated in this year's overall executive budget.
Turnbull estimated that it would cost $6 million to begin the implementation of the system, which would take "one to three years" to complete. "If we need more funding, then we'll submit a request," she added.
When questioned about the merits of the system, Turnbull said, "It is anticipated that the ERP system would transform the government into a lower-cost, higher-performance organization that focuses on continuous improvement and customer service."
However, Turnbull added that she does not yet know whether the implementation of the ERPS would cut the government's workforce. She also said the department would have to wait until the system launches before specific vacancies could be filled.
In response to a question from Sen. Louis P. Hill about the new system, Alvin E. Williams, the department's director of management information systems, said since most departments and agencies already plug into the current FMS system, they should be able to connect to the ERPS once it is implemented. However, he added that full connectivity would not be achieved until certain software advancements are made.
During the meeting, Turnbull also briefly touched on the status of the Government Insurance Fund–the pool of money used to pay Workmen's Compensation claims. She said the department is currently working to conduct an actuarial study, which would help the government "figure out" how to keep the fund solvent.
One method, she said, would include raising premiums to offset the rising cost of health care. Turnbull said a study on the fund had not been conducted since 1989.
Since Turnbull is a member of the government's financial team, senators also asked her opinion on the appropriations outlined in the proposed $749 million executive budget.
"I stand in agreement with what was put together," Turnbull said. "And if things continue the way they are [within the economy], then I also think we would be making enough to sustain the same kind of revenues."
Present during Wednesday's meeting were Sens. Roosevelt C. David, Liston Davis, Pedro "Pete" Encarnacion, Juan Figueroa-Serville, Hill, Neville James, Norman Jn Baptiste, Terrence "Positive" Nelson and Richards.
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