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Operating Budget Data
($ in Thousands)
FY 02-04 FY 04-05
FY 02 FY 03 FY 04 Change FY 05 Change
Operations $102,510 $103,691 $101,606 -$905 $110,674 $9,068
Contractual Services 10,605 11,550 12,102 1,497 16,807 4,705
Grants 58,342 71,103 64,904 6,562 53,426 -11,478
FY 2004 Deficiencies 0 0 6,000 6,000 0 -6,000
Contingent & Back of Bill Reductions 0 0 0 0 -556 -556
Adjusted Grand Total $171,457 $186,345 $184,611 $13,154 $180,350 -$4,261
General Funds 28,390 29,131 18,769 -9,621 18,418 -351
FY 2004 Deficiencies 0 0 6,000 6,000 0 -6,000
Contingent & Back of Bill Reductions 0 0 0 0 -88 -88
Adjusted General Funds $28,390 $29,131 $24,769 -$3,621 $18,330 -$6,439
Special Funds 7,642 12,384 20,390 12,748 20,092 -298
Contingent & Back of Bill Reductions 0 0 0 0 -61 -61
Adjusted Special Funds $7,642 $12,384 $20,390 $12,748 $20,031 -$359
Federal Funds 135,425 142,426 135,713 288 139,586 3,873
Contingent & Back of Bill Reductions 0 0 0 0 -407 -407
Adjusted Federal Funds $135,425 $142,426 $135,713 $288 $139,179 $3,466
Reimbursable Funds 0 2,404 3,740 3,740 2,811 -929
Adjusted Grand Total $171,457 $186,345 $184,611 $13,154 $180,350 -$4,261
Annual %Change 8.7% -0.9% -2.3%
! Between fiscal 2002 and 2004 the department reduced its general fund appropriation by
$3.6 million. Part of this was due to the transferring of several programs from general funds to
special funds, which also partially explains the increase in special funds, and part was due to PIN
reductions.
Note: Numbers may not sum to total due to rounding.
For further information contact: Brian Baugus Phone: (410) 946-5530
Analysis of the FY 2005 Maryland Executive Budget, 2004
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P00 – Department of Labor, Licensing, and Regulation
! The fiscal 2005 allowance provides a $6,000,000 general fund deficiency appropriation for
fiscal 2004. The deficiency is requested to offset inappropriate charges to federal funds in prior
years.
! The fiscal 2005 allowance provides a $16.6 million increase to the Unemployment Insurance
Program.
! The fiscal 2005 allowance assumes a reduction of $13.9 million in federal Workforce Investment
Act funds.
Personnel Data
FY 02-04 FY 04-05
FY 02 FY 03 FY 04 Change FY 05 Change
Regular Positions 1,706.0 1,627.0 1,519.1 -186.9 1,502.1 -17.0
Contractual FTEs 176.2 113.7 159.3 -16.9 178.6 19.3
Total Personnel 1,882.2 1,740.7 1,678.4 -203.8 1,680.7 2.3
Vacancy Data: Regular Positions
Turnover Expectancy 57.68 3.84%
Positions Vacant as of 12/31/03 66.60 4.38%
! The department has deleted 187 regular positions since fiscal 2002. These reductions have
affected every division in the department.
! The fiscal 2005 allowance deletes 17 filled regular positions due to a reorganization in the job
services program.
! The fiscal 2005 allowance provides 19.32 new contractual positions.
Analysis of the FY 2005 Maryland Executive Budget, 2004
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P00 – Department of Labor, Licensing, and Regulation
Analysis in Brief
Major Trends
Customer Satisfaction Not Improving: The Department of Labor, Licensing, and Regulation
(DLLR) measures customer and user satisfaction for many of its programs, and the recent trends in
these measures are flat across the department.
The Commissioner of Financial Regulation Lowers Its Depository Institutions Goals: Various
measures of the strength of the State’s depository institutions are declining.
Downward Trends in Office of Employment Training: A broad range of measures for the Office of
Employment Training have been trending downward over the past few years.
Issues
Financial Reconciliation: DLLR has made progress on its long running audit issues but has not
solved a major underlying problem.
Jobs Services: DLLR is the primary provider of federally funded job and employment services.
These programs are often redundant and overlapping in both the services they deliver and the market
they seek to serve.
Recommended Actions
Funds
1. Add budget bill language to reduce general funds contingent on
legislation making two boards special funded.
2. Reduce education expenses in Office of Professional Licensing. $ 20,000
3. Reduce funding for the Russian Immigrant Program. 75,000
4. Reduce federal funds. 2,998,000
5. Delete overbudgeted funds in the Unemployment Insurance 468,000
Program.
Total Reductions $ 3,561,000
Analysis of the FY 2005 Maryland Executive Budget, 2004
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Analysis of the FY 2005 Maryland Executive Budget, 2004
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Department of Labor, Licensing, and Regulation
Operating Budget Analysis
Program Description
The Department of Labor, Licensing, and Regulation (DLLR) includes many of the State’s
agencies and boards responsible for licensing and regulating various businesses, professions, and
trades. The department also administers a variety of federal funded employment service programs.
In addition to the Office of the Secretary, the department has six operating divisions:
! The Division of Labor and Industry is responsible for safety inspections of boilers, elevators,
amusement rides, and railroads. It also enforces certain protective labor laws and administers the
Maryland Occupational Safety and Health Act.
! Division of Workforce Development operates workforce development programs including job
services, Workforce Investment Act, and labor market information programs.
! Division of Unemployment Insurance operates the federally funded unemployment insurance
programs including paying benefits, collecting unemployment taxes and the Trade Adjustment
Assistance programs.
! The Division of Occupational and Professional Licensing works with 23 different boards and
commissions to license, regulate, and monitor a wide variety of professions and trades. All but
seven boards are supported by the general fund. For one of the seven special fund boards,
unspent money reverts to the general fund.
! The Division of Racing regulates thoroughbred and harness racing at tracks across the State.
Responsibilities include assigning racing days, regulating wagering on races, collecting the
wagering tax, licensing all race track employees, and operating a testing laboratory. The division
also pays the salaries and stipends of all racetrack employees who are appointed by the State
Racing Commission.
! The Division of Financial Regulation regulates commercial banks, trust companies, credit
unions, mortgage lenders, collection agencies, and consumer loan companies.
Each division has its own set of goals and objectives based on its mission, but the department’s
general goals are to:
! provide a worker safety net, protect workers’ rights, and foster work force development;
! improve workplace safety and worker health;
! prevent injuries and save lives of people using railroads, boilers, escalators, pressure vessels, and
amusement rides;
Analysis of the FY 2005 Maryland Executive Budget, 2004
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P00 – Department of Labor, Licensing, and Regulation
! assure the basic competence and regulation compliance of occupational and professional
licensees;
! maintain the integrity of the horse racing industry; and
! protect consumers of financial services.
Performance Analysis: Managing for Results
Customer Satisfaction Not Improving
DLLR has a broad range of programs and responsibilities, making it difficult to summarize its
performance with a few concise measures from the Managing for Results (MFR) report. However,
one indicator of DLLR’s mission accomplishment is the customer/client satisfaction surveys it
conducts for many of its programs. Exhibit 1 details the recent fiscal years (when available) and
fiscal 2005 estimates of survey results.
Exhibit 1 gives an overall measure of the department and how it is perceived in fulfilling many of
its duties. Most measures are relatively flat over the years. While one way to view these numbers is
that DLLR is very consistent, none of these measures indicate exemplary service. Several are barely
meeting the department’s stated goal for the particular measure, and only one measure scores over a
nine in four years.
DLLR can literally count hundreds of thousands of Marylanders as part of its customer base – job
seekers, employers, professionals, and riders of amusement rides and trains are only a few of the
groups DLLR affects.
DLLR should comment on whether it views these results as an acceptable level of
performance or if it has plans to improve its satisfaction ratings.
The Commissioner of Financial Regulation Lowers Its Depository Institutions Goals
The Commissioner of Financial Regulation has lowered its stated goals in its MFR. The
commissioner has lowered the number of depository institutions it expects to give a strong one or two
composite score. The composite score is a rating system developed by the Federal Financial
Institutions Council called the Uniform Financial Institutions Rating Systems (UFIRS). The UFIRS
measures an institution’s strength in the following six essential areas:
• adequacy of capital;
• quality of assets;
Analysis of the FY 2005 Maryland Executive Budget, 2004
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Exhibit 1
Customer and User Satisfaction Levels with Various DLLR Programs
Fiscal 2002 – 2005 Estimates
(Est.) (Est.)
Program FY 2002 FY 2003 FY 2004 FY 2005
Usefulness of Program – Office of Program Analysis and Audit
(Goal: 7.0) 8.17 7.21 7.30 7.50
Satisfaction – Appeals Division (Goal: 5% increase each year) 5.39 5.52 5.67 5.80
Satisfaction – Office of Personnel Services (Goal: 7.75) 7.69 n/a 7.75 7.85
Employer Satisfaction – Employment Standards and Services
(Goal: 7.5) 7.24 7.30 7.50 7.50
Employee Satisfaction – Employment Standards and Services
(Goal: 7.5) 7.74 8.00 7.50 7.50
Program Sponsor Satisfaction – Maryland Apprenticeship and
Training (Goal: 8.0) 8.33 8.23 8.00 8.00
Participant Satisfaction – Maryland Apprenticeship and
Training (Goal: 8.5) 8.89 9.00 8.50 8.50
Satisfaction with Complaint Process – Occupational and
Professional Licensing (Goal: 7.3) 7.30 7.20 7.30 7.30
Business Satisfaction with Office of Employment Services
Workforce Development (Goal: 6.0) n/a 6.83 6+ 6+
Job Seeker Satisfaction with Office of Employment Services
Workforce Development (Goal: 6.0) n/a 6.99 6+ 6+
Satisfaction – Office of Unemployment Services (Goal: 6.0) 8.82 8.71 6+ 6+
All scales are 1 to 10 with 10 being best.
Source: Governor’s Budget Books
• capacity of management;
• level of earnings;
• adequacy of liquidity; and
• sensitivity to market risk.
Analysis of the FY 2005 Maryland Executive Budget, 2004
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An institution’s composite score is not a mathematical average of its rating in the individual
categories but more of a qualitatively adjusted weighted average. If a certain component seems to be
more important to a particular institution (i.e., an exceptionally strong management team) that
component is given more weight in the composite of that particular institution.
The commissioner’s goals show an expectation that fewer poor performing institutions will
improve their outcomes. The commissioner also expects to complete examinations for only half of
the institutions scheduled for an audit. Exhibit 2 presents the details.
Exhibit 2
Selected Measures from the Commissioner of Financial Regulation
Fiscal 2002 – 2005 Estimates
(Est.) (Est.)
Measure FY 2002 FY 2003 FY 2004 FY 2005
% of depository institutions rated above two* 90% 93.5% 85% 85%
% of depository institutions rated above three
that are expected to improve* 100% 50% 25% 25%
Scheduled exams 52 61 63 65
Completed exams 63 64 34 34
Number of complaints filed 2,964 3,610 3,610 3,610
* Target score is a one or two.
Source: Governor’s Budget Books
The decline in completed exams could be the result of understaffing. It is noted that in a separate
research project during the 2003 interim, the Department of Legislative Services (DLS) determined
that the commissioner is about seven examiners short of having the labor-hour capacity to complete
the required examinations within the designated amount of time.
The department should explain the cause of these trends, their significance to the financial
services industry in Maryland, and the department’s need to complete its audits.
Downward Trends in Office of Employment Training
Exhibit 3 presents a variety of measures from the MFR report for the Office of Employment
Training. Most of them show a downward trend.
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Exhibit 3
Selected Measures for the Office of Employment Training
Fiscal 2002 – 2005 Estimates
(Est.) (Est.)
Measure FY 2002 FY 2003 FY 2004 FY 2005
Entered employment rate (older youth) 60.1% 76.1% 65.0% 65.0%
Entered employment rate (dislocated workers) 95.2% 91.0% 75.0% 75.0%
Employment retention rate (older youth) 89.5% 87.3% 78.0% 78.0%
Employment retention rate (adults) 96.8% 91.9% 82.0% 82.0%
Employment retention rate (dislocated workers) 98.1% 95.6% 88.0% 88.0%
Note: “Entered employment” is the number of people who complete a job training program and obtain a job.
“Retention” is a measure of how many who find a job, keep it for six months.
Source: Governor’s Budget Books
There may be several reasons for these trends: the target population may be a harder to employ
demographic than in previous years or it could be that the slower economy has made it more difficult
to find employment for the lower-skilled. Regardless of the cause, fewer program participants (as a
percentage) are entering the workforce, and fewer of those are being retained longer than six months.
DLLR should be prepared to explain these trends, their significance, and what is required
to reverse them.
Fiscal 2004 Actions
Proposed Deficiency
The budget contains a $6,000,000 deficiency request. This deficiency is requested as a one-time
offset against the federal fund shortfalls the department has incurred over the past seven fiscal years.
Impact of Cost Containment
As a result of the Board of Public Works action in July 2003, DLLR took cost containment
actions totaling $1.19 million. The department achieved these reductions by the allocation shown in
Exhibit 4.
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P00 – Department of Labor, Licensing, and Regulation
Exhibit 4
Allocation of Board of Public Works Cost Containment
Fiscal 2004
FY 2004
Action Savings
Reduce STEP Program $500,000
Eliminate vacant positions/maintain other vacant positions 421,633
New hires at lower salaries 70,000
Fund switch – DLLR is using special funds in lieu of general funds in the
Division of Labor and Industry 200,000
Total $1,191,633
STEP = Skills-based training for employment promotion
Source: Department of Budget and Management
Governor s Proposed Budget
=
Exhibit 5 presents the details of the Governor’s fiscal 2005 allowance. DLLR’s allowance
decreases by $4.3 million (2.3%) over the fiscal 2004 working appropriation. However, this decrease
is somewhat misleading, inasmuch as most of the changes are focused in a few programs.
Impact of Cost Containment
DLLR has eliminated the Skills-based Training for Employment Promotion (STEP) program from
the fiscal 2005 allowance, which represents a $500,000 decrease. Other ongoing cost containment
actions include an increase in turnover ($241,000), rent reductions ($273,000), PIN reductions
($223,000), and $769,000 in departmental wide reductions.
Personnel
The fiscal 2005 allowance provides a $1.3 million increase over the fiscal 2004 working
appropriation for personnel. This increase is a function of several factors. The single largest increase
in personnel is $1.2 million in increments, but there are also significant increases in health insurance
($1.1 million), turnover ($948,000), and job reclassifications in the UI Program ($922,000).
Analysis of the FY 2005 Maryland Executive Budget, 2004
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P00 – Department of Labor, Licensing, and Regulation
Exhibit 5
Governor's Proposed Budget
Department of Labor, Licensing, and Regulation
($ in Thousands)
FY 03 FY 04 FY 05 FY 04-05 FY 04-05
Actual Approp. Allowance Change % Change
General Funds $29,131 $18,769 $18,418 -$351 -1.9%
FY 2004 Deficiencies 0 6,000 0 -6,000
Contingent & Back of Bill Reductions 0 0 -88 -88
Adjusted General Funds $29,131 $24,769 $18,330 -$6,439 -26.0%
Special Funds $12,384 $20,390 $20,092 -$298 -1.5%
Contingent & Back of Bill Reductions 0 0 -61 -61
Adjusted Special Funds $12,384 $20,390 $20,031 -$359 -1.8%
Federal Funds $142,426 $135,713 $139,586 $3,873 2.9%
Contingent & Back of Bill Reductions 0 0 -407 -407
Adjusted Federal Funds $142,426 $135,713 $139,179 $3,466 2.6%
Reimbursable Funds $2,404 $3,740 $2,811 -$929 -24.8%
Adjusted Grand Total $186,345 $184,611 $180,350 -$4,261 -2.3%
Where It Goes:
Personnel Expenses
Increments and other compensation....................................................................... $1,228
Employee and retiree health insurance .................................................................. 1,108
Turnover and cost containment adjustments .......................................................... 948
Increase in federal funds due to reclassification of claims examiners in the UI
Program ................................................................................................................ 922
Reduction in funds related to 39 PINs deleted in fiscal 2004 by the Board of
Public Works ........................................................................................................ -1,702
Abolition of 17 positions....................................................................................... -955
Retirement ............................................................................................................ -135
Other fringe benefit adjustments............................................................................ -65
Analysis of the FY 2005 Maryland Executive Budget, 2004
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P00 – Department of Labor, Licensing, and Regulation
Where It Goes:
Other Changes
UI Program
Increase in federal grants for the Information Technology Service Centers to
develop information technology applications for the processing and monitoring of
unemployment insurance data ............................................................................... 4,800
Contractual fees for programming services, system upgrades, and work stations
for the Maryland Imaging Data Access System (MIDAS) ..................................... 6,241
Purchase 300 personal computers, 76 laptop computers, 2 printers, and various
other technological equipment............................................................................... 1,332
Purchase of office equipment and data processing hardware.................................. 1,025
Increase in licenses for forms processing, scanning, and workflow software ......... 973
Increase in phone and communication expenses .................................................... 785
Computer upgrades ............................................................................................... 727
Printing expenses for pamphlets, literature, etc...................................................... 211
Contractual payroll for seasonal staff at offices around the State ........................... 122
Maintenance for current imaging system until new one is operational ................... 108
Rental costs of copiers and postage machines........................................................ 101
Numerous small repairs to offices around State and travel..................................... 130
Racing Commission
Decrease in grants, uncashed ticket revenues, previously channeled through the
Maryland Economic Development Corporation and back to the racing
commission........................................................................................................... -2,168
Division of Workforce Development
Increase to replace data processing equipment per departmental schedule ............. 131
Increase in funding for Workforce Investment Board Coordination agreements..... 65
Decrease in grants due to a reduction in the federal appropriation for WIA ........... -13,900
Decrease in expenditure on Mid-Atlantic Career Consortium ................................ -175
One-time decrease in data processing contracts related to web site work for the
Mid-Atlantic Career Consortium ........................................................................... -450
Decrease in software upgrade expenses ................................................................. -68
Analysis of the FY 2005 Maryland Executive Budget, 2004
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Where It Goes:
Division of Administration
Increase in State computer usage for various programs.......................................... 199
Elevator maintenance, security locks, and building maintenance ........................... 60
Departmental reductions in rent paid to the Department of General Services ......... -545
Decrease in software licenses ................................................................................ -136
Miscellaneous Changes
Department of Budget and Management telecommunications charges................... 724
Rental for copiers, postage machines, and office cleaning equipment .................... 90
Communication expenses for programs other than UI ........................................... 48
Decrease due to one time deficiency in fiscal 2004................................................ -6,000
Replacement computers, printers, and monitors mostly for the Occupational
Safety program and Financial Regulation.............................................................. -109
Other ........................................................................................................................... 69
Total -$4,261
Note: Numbers may not sum to total due to rounding.
These increases are offset by a few significant decreases as well. The largest decrease is the
deletion of funds associated with 39 PINs that were deleted in previous cost containment actions.
The other large decrease in personnel is the abolishment of 17 PINs. These are currently filled
positions and represent layoffs the department is making as part of reorganization of its Division of
Workforce Development. Exhibit 6 presents the details of these positions.
Analysis of the FY 2005 Maryland Executive Budget, 2004
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P00 – Department of Labor, Licensing, and Regulation
Exhibit 6
Abolished PINs in the Department of Labor, Licensing, and Regulation’s
Fiscal 2005 Allowance
Program Position Salary
Office of Employment Services Administrator I $50,535
Administrator III 59,358
Administrator I 45,029
Office Secretary III 33,814
Administrative Officer III 47,779
Administrative Officer III 47,779
Administrative Officer II 40,656
Administrator I 51,027
Management Specialist IV 48,627
Office Secretary I 27,291
Office of Employment Training Agency Grants Specialist II 48,238
Administrator II 46,287
Administrator II 55,564
Administrator II 55,027
Administrative Specialist II 36,428
Administrative Specialist I 32,863
Administrator II 55,564
Total $781,866
Source: Department of Labor, Licensing, and Regulation
UI Program
The changes to the UI Program dominate DLLR’s fiscal 2005 allowance. While the total fiscal
2005 allowance decreases by 2.3%, the UI Program increases by 42.8% ($16.6 million) over the
fiscal 2004 working appropriation and 16.4% over the fiscal 2003 actual expenditures, all in federal
funds. Almost all of this increase is driven by large scale technology acquisitions. The largest item
the UI Program plans to purchase is a new imaging system. The department reports that the
Maryland Imaging Data Access System was created in 1995, and its technology is no longer
Analysis of the FY 2005 Maryland Executive Budget, 2004
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P00 – Department of Labor, Licensing, and Regulation
supported. DLLR reports that the new system is needed to maintain reliability, speed, and
serviceability.
In addition to the imaging system, the UI Program also plans to purchase 370 new computers, a
variety of data processing equipment, and software upgrades for 540 personal computers.
Division of Workforce Development
The Workforce Development Program decreases by $14.4 million. This is almost entirely due to
the reduction the federal government has made to the WIA. Maryland’s WIA grant is $13.9 million
less than it was in (State) fiscal 2004. This reduces the amount of funds that will be passed through to
the local workforce development programs. It is expected that this reduction will result in less job
training and employment services.
Other Changes
Significant decreases in other programs include a $2.2 million reduction in the facility
redevelopment fund of the racing commission and a $545,000 decrease in rent. These reductions, in
addition to the elimination of the $6 million deficiency for fiscal 2004 and the reductions in the
division of workforce development, offset the increase in the UI Program.
Analysis of the FY 2005 Maryland Executive Budget, 2004
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Issues
1. Financial Reconciliation
As has been noted in a variety of DLS’ documents over the past few years, DLLR has had
significant problems managing and reconciling its federal funds. In the Statewide Review of Budget
Closeout Transactions for Fiscal Year 2003, released in January 2004, the Office of Legislative
Audits reported that DLLR recorded $5.9 million in unsubstantiated federal funds. This is a
continuation of a previously reported finding of $17.3 million in unsubstantiated federal funds
recorded in fiscal 2001. In negotiations since 2001 with the U.S. Department of Labor, DLLR was
able to reduce the amount from $17.3 million to $7.8 million (as reported in the 2003 session). The
balance is now a non-negotiable $5.9 million. DLLR proposes to address the remaining balance with
a fiscal 2004 deficiency appropriation provided in the fiscal 2005 allowance.
Of DLLR’s other major audit issues, the department was able to reconcile the $19.9 million in
un-reverted federal funds with a plan approved by the budget committees, and the department was
able to reconcile its $9.8 million in disallowed indirect costs reimbursements with the U.S.
Department of Labor.
This leaves one audit issue yet unresolved: the improper use of $4.7 million of Special
Administrative Expense Funds. DLLR, upon advice of counsel, maintains that it used these funds in
accordance with the law while DLS, also upon the advice of counsel, respectfully disagrees.
Resolution of this issue is pending an Attorney General’s opinion.
DLLR has made progress on its audit issues and obtained more training for its staff regarding
federal funds management, but one fundamental problem remains – DLLR has not developed a
reliable way to reconcile its federal funds to R*STARS, the State accounting system. DLLR
conducted its most recent reconciliation by hand. This is a most difficult way to manage and track
$140 million and is prone to error. Improper reconciliation may cost the State $5.9 million in
fiscal 2004 plus lost interest and use of funds for carrying improper balances. A reliable
reconciliation system is an urgent need.
The department needs to explain its plan to develop or obtain a system that will enable it to
accurately and quickly reconcile its federal funds.
2. Jobs Services
A large part of what DLLR does is job service related. Through primarily two programs, the
Office of Employment Services and the Office of Employment Training, the fiscal 2005 allowance
provides $55.1 million in funding for job services programs. In addition to these major programs,
there are also smaller job service programs such as the Russian Immigrants Program. These
programs contain redundant functions and often provide overlapping services. In addition to the
many job service programs within DLLR, the Department of Human Resources offers a variety of
Analysis of the FY 2005 Maryland Executive Budget, 2004
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P00 – Department of Labor, Licensing, and Regulation
State and federal funded job service programs. This presents a rather complex maze for the job
seeker and employer to navigate.
One example of the problems that DLLR faces is a failure to meet a deadline in the Welfare-to-
Work Program. The Welfare-to-Work Program failed to receive $5 million in federal fiscal 1999
matching funds because DLLR’s local grantees did not budget the pace of their spending in such a
way as to guarantee the matching grant would be allocated. The deadline to qualify for these funds
just recently passed. These types of problems can and should be avoided. By streamlining the
delivery of job services and knowing the target populations, problems can be avoided. DLLR
recognizes these problems and has begun the process of reorganizing its job services programs. The
abolition of the general funded skills based training for employment promotion program is an
example of one action DLLR has taken. However, it must be pointed out that since many of these
programs are federal funded, the federal government has placed certain restrictions and restraints on
how the funds may be used. This will limit DLLR’s ability to conduct wholesale revisions to the
programs but still allows flexibility to make some important changes.
In its response to the 2003 Joint Chairmen’s Report, the department briefly discussed the
reorganization of the Division of Employment and Training into two entities to help with services
delivery and fund management. DLLR should explain what other changes it is undertaking. The
department should also explain the impact of the deletion of the 17 filled positions and how all
these changes will improve services to the labor force and employers of Maryland, and how the
changes will provide for a more efficient use of resources.
Analysis of the FY 2005 Maryland Executive Budget, 2004
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Recommended Actions
1. Add the following language:
, provided that $1,397,000 of this general fund appropriation is reduced contingent upon the
enactment of House Bill 144. Further provided that $434,000 of this general fund
appropriation is reduced contingent upon the enactment of House Bill 110.
Explanation: House Bill 144 would change the Real Estate Commission from a general
funded commission to a special funded commission. House Bill 110 would change the Board
of Public Accountancy from a general funded board to a special funded board.
Amount
Reduction
2. Reduce education expenses in the Office of $ 20,000 GF
Professional Licensing to fiscal 2004 working
appropriation level.
3. Reduce funding for the Russian Immigrant Program. 75,000 GF
The need for this program continues to wane. Since
the collapse of the Soviet bloc, the immigration from
the former republics has decreased. In fiscal 2003
records show that 412 clients were aided by the
programs these grants funds. In fiscal 2004 the
Department of Labor, Licensing, and Regulation
reports that 185 clients are being helped. In both
years all the grant was exhausted which means that
the cost per client more than doubled in one year.
4. Reduce federal funds. The department has shown 2,998,000 FF
that it has significant difficulties managing its federal
funds. This reduction reduces the department’s
federal fund fiscal 2005 appropriation to
approximately the fiscal 2004 working appropriation.
The department may submit budget amendments for
the federal funds subject to the provision in section
24 subparagraph 3 of House Bill 200/Senate Bill 125
(the fiscal 2005 budget bill) which requires any
federal fund budget amendment in excess of
$100,000 must be accompanied by documentation
certifying that the funds are available.
Analysis of the FY 2005 Maryland Executive Budget, 2004
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P00 – Department of Labor, Licensing, and Regulation
5. Delete over budgeted funds in the Unemployment 468,000 FF
Insurance Program. The department states that this
appropriation increase was made in error and should
be deleted.
Total Reductions $ 3,561,000
Total General Fund Reductions $ 95,000
Total Federal Fund Reductions $ 3,466,000
Analysis of the FY 2005 Maryland Executive Budget, 2004
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Appendix 1
Current and Prior Year Budgets
Current and Prior Year Budgets
Department of Labor, Licensing, and Regulation
($ in Thousands)
General Special Federal Reimb.
Fund Fund Fund Fund Total
Fiscal 2003
Legislative
Appropriation $29,351 $11,029 $151,765 $2,189 $194,333
Deficiency
Appropriation 0 0 0 0 0
Budget
Amendments 1,479 6,335 6,498 1,135 15,446
Cost Containment -1,618 0 0 0 -1,618
Reversions and
Cancellations -312 -5,011 -15,909 -1,417 -22,649
Actual
Expenditures $28,900 $12,353 $142,354 $1,906 $185,512
GWIB 230 31 73 499 833
Adjusted Total $29,131 $12,384 $142,426 $2,404 $186,345
Fiscal 2004
Legislative
Appropriation $20,011 $11,699 $135,713 $3,817 $171,240
Cost Containment -1,243 -6 0 -77 -1,326
Budget
Amendments 8,697 8,697
Working
Appropriation $18,769 $20,390 $135,713 $3,740 $178,611
Note: Numbers may not sum to total due to rounding.
Analysis of the FY 2005 Maryland Executive Budget, 2004
20
P00 – Department of Labor, Licensing, and Regulation
Fiscal 2003
During the 2003 interim, the Governor’s Workforce Investment Board (GWIB) was transferred to
DLLR. As a result, the Department of Budget and Management made a retro-active adjustment to the
appropriation numbers so the inclusion of GWIB did not skew any increases and decreases. The
GWIB numbers are included in the fiscal 2004 working appropriation figures.
In fiscal 2003 DLLR had $6.3 million in special fund budget amendments. This amount is
primarily due to additional takeout revenue for the Racing Commission ($4.3 million) but also
includes the cost of professional exams for the Office of Professional Licensing ($1 million) and
several other smaller expenses. DLLR also reverted $5 million in special funds. This amount
includes $1.8 million for the Racing Bond Fund and $1.2 million for the Maryland Economic
Development Corporation. There is also a reversion related to Special Administrative Expense Fund
($800,000).
DLLR also had $6.5 million in federal fund budget amendments which were primarily federal
Reed Act (unemployment insurance-related) money that had accumulated since fiscal 1998 in small
amounts. DLLR decided to appropriate these funds in fiscal 2003. DLLR also had $15.9 million in
federal fund reversions. This amount includes reversions in the Welfare-to-Work Program
($6.8 million), UI Program ($5.7 million), and the Job Service Program ($2.4 million).
The fiscal 2004 special fund amendments are due to Chapter 277, Acts of 2003 which made the
five design boards within Occupational and Professional Licensing special funded.
Analysis of the FY 2005 Maryland Executive Budget, 2004
21
Object/Fund Difference Report
Department of Labor, Licensing, and Regulation
FY04
FY03 Working FY05 FY04 - FY05 Percent
Object/Fund Actual Appropriation Allowance Amount Change Change
Positions
01 Regular 1627.00 1519.05 1502.05 -17.00 -1.1%
P00 – Department of Labor, Licensing, and Regulation
02 Contractual 113.70 159.26 178.58 19.32 12.1%
Total Positions 1740.70 1678.31 1680.63 2.32 0.1%
Objects
01 Salaries and Wages $ 85,948,005 $ 84,807,141 $ 86,719,022 $ 1,911,881 2.3%
02 Technical & Spec Fees 4,799,679 4,655,506 4,818,389 162,883 3.5%
03 Communication 3,423,273 2,761,763 4,344,199 1,582,436 57.3%
04 Travel 877,747 1,208,343 1,266,180 57,837 4.8%
06 Fuel & Utilities 650,113 551,256 634,954 83,698 15.2%
07 Motor Vehicles 359,682 465,992 480,093 14,101 3.0%
08 Contractual Services 11,550,379 12,101,653 16,806,504 4,704,851 38.9%
22
09 Supplies & Materials 1,904,133 2,045,205 2,754,437 709,232 34.7%
10 Equip - Replacement 598,754 1,067,493 4,197,596 3,130,103 293.2%
11 Equip - Additional 490,737 237,187 2,057,017 1,819,830 767.3%
12 Grants, Subsidies, and Contracts 71,103,244 64,904,000 53,426,000 -11,478,000 -17.7%
13 Fixed Charges 3,235,372 3,805,643 3,329,706 -475,937 -12.5%
14 Land & Structures 1,403,859 0 72,263 72,263 N/A
Total Objects $ 186,344,977 $ 178,611,182 $ 180,906,360 $ 2,295,178 1.3%
Funds
01 General Fund $ 29,130,554 $ 18,768,534 $ 18,417,941 -$ 350,593 -1.9%
03 Special Fund 12,383,553 20,390,053 20,091,698 -298,355 -1.5%
05 Federal Fund 142,426,372 135,712,644 139,585,590 3,872,946 2.9%
09 Reimbursable Fund 2,404,498 3,739,951 2,811,131 -928,820 -24.8%
Total Funds $ 186,344,977 $ 178,611,182 $ 180,906,360 $ 2,295,178 1.3%
Appendix 2
Note: The fiscal 2004 appropriation does not include deficiencies, and the fiscal 2005 allowance does not reflect contingent reductions.
Fiscal Summary
Department of Labor, Licensing, and Regulation
FY04 FY04
FY03 Legislative Working FY03 - FY04 FY05 FY04 - FY05
Unit/Program Actual Appropriation Appropriation % Change Allowance % Change
0A Office of the Secretary $ 11,731,262 $ 17,384,079 $ 10,767,471 -8.2% $ 10,651,814 -1.1%
P00 – Department of Labor, Licensing, and Regulation
0B Division of Administration 15,667,966 0 17,023,000 8.6% 17,611,567 3.5%
0C Division of Financial Regulation 4,761,586 4,642,749 4,592,365 -3.6% 4,875,818 6.2%
0D Division of Labor And Industry 11,242,795 4,024,663 11,959,098 6.4% 12,670,105 5.9%
0E Division of Racing 10,751,598 10,599,859 10,513,546 -2.2% 8,234,253 -21.7%
0F Div. of Occupational & Professional Licensing 7,387,028 7,081,318 7,300,541 -1.2% 7,589,869 4.0%
0G Division of Workforce Development 76,485,169 126,770,877 77,067,163 0.8% 59,340,692 -23.0%
0H Division of Unemployment Insurance 48,317,573 0 39,387,998 -18.5% 59,932,242 52.2%
Total Expenditures $ 186,344,977 $ 170,503,545 $ 178,611,182 -4.2% $ 180,906,360 1.3%
23
General Fund $ 29,130,554 $ 19,807,079 $ 18,768,534 -35.6% $ 18,417,941 -1.9%
Special Fund 12,383,553 11,699,403 20,390,053 64.7% 20,091,698 -1.5%
Federal Fund 142,426,372 135,712,643 135,712,644 -4.7% 139,585,590 2.9%
Total Appropriations $ 183,940,479 $ 167,219,128 $ 174,871,231 -4.9% $ 178,095,229 1.8%
Reimbursable Fund $ 2,404,498 $ 3,284,417 $ 3,739,951 55.5% $ 2,811,131 -24.8%
Total Funds $ 186,344,977 $ 170,503,545 $ 178,611,182 -4.2% $ 180,906,360 1.3%
Note: The fiscal 2004 appropriation does not include deficiencies, and the fiscal 2005 allowance does not reflect contingent reductions.
Appendix 3