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Still No Third-Party Fiduciary In Place for Education Department

July 20, 2006–Questions about the Office of Management and Budget's $3.7 million budget request turned to more serious matters during Thursday's Finance Committee meeting, as senators asked OMB Director Ira Mills to justify various appropriations outlined in the miscellaneous section of the executive budget and explain why one government account is over-appropriated.
Much discussion also centered upon the status of the third-party fiduciary, which would be responsible for managing federal grants awarded to the local Education Department. According to testimony provided last week by Education Commissioner Noreen Michael, this entity has to be put in place by Sept. 30–otherwise, the territory stands to lose $22.5 million in U.S. Treasury grants awarded for fiscal year 2004.
Grant applications sent to the federal government for FY 2005 and FY 2006 could also be denied, she said.
During Thursday's meeting, senators said they were concerned because a contract for a third-party fiduciary has yet to be awarded, even though negotiations with one unspecified vendor have been ongoing for the past few months. "It seems as if we keep spending money on the same things all the time," Sen. Norman Jn Baptiste said. "Like the third-party fiduciary–we've made appropriations for this before, and yet we still don't know what's going on."
Jn Baptiste said that $1.5 million was appropriated for a third-party fiduciary the in FY 2006 executive budget. An identical request has been placed in the miscellaneous section of this year's executive budget.
Mills explained that the Third Party Fiduciary Selection Committee–a group of government officials from Education, Health, Human Services, Finance and Property and Procurement–is still in negotiations with an unspecified company.
"The negotiations have taken a bit more time than expected, but we will continue until we're sure that we can't make any more progress with this vendor," he added. "Once we've come to that decision, we will make a move to begin negotiations with the second vendor on our list."
Unsatisfied by Mills' response, senators said that a decision should be made as soon as possible, since September is "right around the corner."
Mills also fielded questions about the status of appropriations funded by the interest earned on bond proceeds–a government account OMB representatives say is over-appropriated. During the meeting, Sen. Usie R. Richards said he still had not received a list of the projects earmarked for the account, even though he had asked OMB to submit one "months ago."
While Mills said he would submit the information "shortly," Richards made a motion to have the list sent to the Senate by next Thursday. The motion was unanimously approved.
Senators additionally scrutinized various appropriations outlined in the miscellaneous section of the FY 2007 budget, which totals nearly $134.7 million.
Mills explained that the miscellaneous section of the budget is designed to promote "transparency" within government. The appropriations included in this section, he said, come outside what is needed by various departments and agencies to cover operational costs.
"The Division of Personnel, for example, needed about $10 million to cover insurance for retirees. Since that amount is something that they would not need in order to operate, it was placed in the miscellaneous section. That way, taxpayers also have an idea of what our larger appropriations are and where the money is going."
Notable appropriations included in the miscellaneous section of the FY 2007 executive budget are:
–$30 million for the Government Employees Retirement System unfunded liability;
–$20.6 million for negotiated union contracts and ongoing pending negotiations;
–$6 million for an effluent treatment facility on St. Croix to treat the "brown plume" emanating from the rum distillery on the island's south shore;
–$5 million for the establishment of a stabilization–or "rainy day"–fund; and
–$9.5 million for insurance for government buildings against windstorm, water, fire and earthquake damage.
Mills also broke down OMB's FY 2007 budget request, which includes approximately $2 million from the General Fund and $1.7 million from the Indirect Cost Fund. Another $882,343 would be provided from the Federal Emergency Management Agency (FEMA) to assist in the administration of disaster-related programs.
Of the requested General Fund amount, $1.3 million would go toward personnel services (including funding for 46 filled positions and eight vacancies); $15,375 for capital outlays; $320,154 for fringe benefits; $11,750 for supplies; $287,464 for other services and charges; and $23,206 for utilities.
Present during Thursday's meeting were Sens. Roosevelt C. David, Liston Davis, Pedro "Pete" Encarnacion, Juan Figueroa-Serville, Louis P. Hill, Neville James, Jn Baptiste, Ronald E. Russell and Richards.

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