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July 1, 2010

DiNapoli: State Agencies Could Save Millions
By Cutting Service Contracts, Maximizing Revenue

New York State agencies could save millions of dollars annually by maximizing available revenues and by eliminating unneeded personal and miscellaneous service contracts, according to three audits released today by State Comptroller Thomas P. DiNapoli.

“In tough fiscal times, state agencies have to remember every dime counts, especially when they’re taxpayer dimes,” DiNapoli said. “Small amounts can produce big savings for taxpayers. We can’t afford to miss any opportunity for cost savings. And we can’t afford to pay for consultants the state doesn’t need.”

DiNapoli’s auditors found that the Department of Transportation (DOT) did not always obtain federal reimbursements for state expenditures in a timely manner, and in some instances is unable to recover all eligible costs. The Federal Highway Administration (FHWA) may reject portions of a reimbursement request because of errors. Such rejections must be corrected and resubmitted, but DOT sometimes delayed resubmitting the requests. In one instance, auditors identified two rejections totaling $3 million that took between one and two months to correct and resubmit.

Auditors also found that DOT officials were only submitting reimbursement requests weekly during the audit period of April 1, 2007 through August 31, 2009, instead of twice a week as allowed. By submitting claims more often, the state could better meet its financial obligations by gaining more interest income and improving its cash flow.

DiNapoli’s auditors also found that DOT did not properly account for $257 million in reimbursements that were disallowed. Even though its books list the reimbursements as pending, DOT acknowledges that none of the money will be reimbursed. That means there is even less funding available in the Dedicated Highway and Bridge Trust Fund than is shown by state records.

In a separate audit, DiNapoli’s auditors found that DOT missed out on collecting $2.8 million in revenue for the state from April 1, 2006 to March 31, 2009. That includes $2.6 million in fees that could have been charged to localities for maintaining traffic signals and $184,200 in non-utility work permit inspection fees.

In a review of the Department of Motor Vehicles (DMV), auditors examined a sample of 25 service contracts and found that the agency did not provide documentation to justify three service contracts valued at $7.3 million.

DMV was able to show it had evaluated and justified the need for 22 contracts totaling $106.6 million. The contracts cover credit card processing, information technology, janitorial, and other services.  

The audit, which covered the period of April 1, 2006 to Sept. 11, 2009, also found that DMV did not provide documentation to support its claims that it had reassessed all of its service contracts as ordered by the Division of the Budget and the Governor’s Office, and may be missing opportunities to reduce costs. While DMV officials claimed their overall cost reduction efforts yielded $26.5 million in savings, auditors could find the reassessments of just five service contracts for savings of $1.6 million.

Click here for a copy of the DOT audit on federal reimbursements.

Click here for a copy of the DOT audit on revenue contracts and fees.

Click here for a copy of the DMV audit.


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