1. STATE CONTRACT TRAINING STATE BUDGET AGENCY: APPROVALS AND PROCESSES Jack Mynatt Michael Kos BUDGET ANALYSTS 7/13/11 AND 8/3/11

2. 2 Role of State Budget Agency Maintain and monitor the states financial structure Develop and analyze the states overall budget Analyze and review financial impacts of legislation and policy initiatives Review and approve various financial transactions related to the state

3. 3 SBAs Review and Approval of Contracts SBA is required by law to review and approve contracts related to the operation and administration of state programs and offices (including leases) SBA, through analysts, division directors, deputy directors and the SBA Director, review and approve contracts as part of the overall contract approval process established in the state

4. 4 SBAs Review and Approval of Contracts IC 4-12-1-13(d) The budget agency shall review all contracts for personal services or other services and no contract for personal services or other services may be entered into by any agency of the state before the written approval of the budget agency is given. No payment may be made by the auditor of state without such approval. IC 4-13-2-14.1 A contract to which a state agency is a party must be approved by the following persons: the commissioner of the Indiana department of administration, the director of the budget agency, the attorney general.

5. 5 Exceptions of SBAs Approval of Contracts Exceptions IC 4-13-2-14.1(a) The director of the budget agency is not required to approve a contract:(A) for supplies under IC 5-22, unless the budget agency is required to approve the contract under rules or written policies adopted under IC 5-22; or (B) for public works under IC 4-13.6, if the estimated cost of the contract is less than one hundred thousand dollars ($100,000). IC 4-12-1-13(d)(1) However, this subsection does not apply to a contract entered into by a state educational institution.

6. 6 Exceptions of SBAs Approval of Contracts Exceptions (continued) Financial Management Circulars (FMC) FMC 98-2 contracts for the purchase of goods or services, except for personal services and contracts involving State- sponsored meetings and conferences, where the total contract amount does not exceed $25,000, the SBA hereby delegates approval authority to the IDOA. contracts, QPA's, or requisitions for the purchase of equipment, the cost of which is less than twenty-five thousand dollars ($25,000), the SBA hereby delegates approval authority to the IDOA. FMCs located at: http://www.in.gov/sba/2512.htm

7. 7 Contract Approval Process at SBA Contracts enter and exit SBA through SBA Administrative Assistants Admin Assts. log contracts in and out for SBA and is the courier for SBA between IDOA/IOT and the AGs office Contracts always go directly to the budget analyst assigned to the agency the contract is affecting first If the contract is a high profile contract or is a significantly high dollar contract, SBA may have the Division Director, Deputy Director, or Budget Director sign the contract

8. 8 Approval of Contracts (flow depends up dollar amount) IDOA/IOTSBA Admin Asst Budget Analyst responsible for state agency reviews (and signs) Attorney General One of the Budget Agencys performance goals is to review contracts in an average of five days. SBA Admin Asst. Division Director reviews (and signs) Deputy Director reviews (and signs) Budget Director reviews and signs

9. 9 Items SBA considers in contracts Financial impact of the contract to the agency Fund being charged with the contract, i.e. FSSA Administration 54110 Total cost of contract, fiscal year by fiscal year impact, funding sources, etc Impact of contract to the agencys budget and spending plan, CFO sign off Cost per unit, per hour, per product, etc. SBA will work with agency financial staff or controllers to understand the financial impact of the contract

10. 10 Items SBA considers in contracts Language in the contract Funding cancellation – FMC 2007-1 requires that all contracts contain the following language: When the Director of the State Budget Agency makes a written determination that funds are not appropriated or otherwise available to support the continuation of performance of this contract, the contract shall be canceled. A determination by the Director of the State Budget Agency that funds are not appropriated or otherwise available to support the continuation of performance shall be final and conclusive.

11. 11 Items SBA considers in contracts Language in the contract Termination for convenience (not required but like to see in a contract) Out clause (normally with leases) Performance measures, outcomes, service levels, penalties Consideration and Term (make sure its clear and matches the EDS, other attachments) Renewal Options, Payments (arrears)

12. Items SBA considers in contracts Policy Issues of the contract, which may include: Substantial spending with an out of state vendor Duplication of effort by other contracts or personnel Unnecessary purchases or contracts Embarrassing purchases or contracts 12

13. 13 Executive Document Summary (EDS) SBA uses the EDS as a quick reference when initially examining contracts Information on the EDS needs to be accurate and correct as SBA makes its initial assessment Account Number (Fund - Account) Total action amount and Total contract amount Breakdown by Fiscal Year Contract Description Agency contact person

14. 14 Other Items Affects on the length of time to review contracts Large volume Other review and approvals by SBA: Personnel requests Transfer of funds Allotments Budget Committee Different priorities at different times: Legislative Session January through March – Even years January through April – Odd years Budget Development (Oct. through Dec.) Only during even years Close out and Set-up (June and July) – Every year

15. 15 Other Items Large policy or dollar amount contracts coming through for approval If the agency has a high priority contract coming through, or will be coming through for approval, advanced notice and information is helpful to SBA Working with SBA staff before a major contract, or high priority contract, comes through for approval can cut down on review time in SBA

16. 16 MOUs and SBA Approval A Memorandum of Understand (MOU) between two state agencies that has a fiscal transaction or fiscal impact must be reviewed and approved by SBA SBA review and approval of MOUs is required by FMC 2009-2 The same policies concerning approval of contracts by SBA apply to MOUs

17. Questions, Comments, Remarks Thanks!!!! Jack Mynatt: jmynatt@sba.in.govjmynatt@sba.in.gov Michael Kos: mkos@sba.in.govmkos@sba.in.gov