Department of Transportation and Motor Vehicle Commission FY
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1 Discussion Points Motor Vehicle Commission 24. In previous years, New Jersey Motor Vehicle Commission (MVC) annual reports were issued in September of the most recently completed fiscal year. The most current annual report on the MVC website is the 2013 annual report issued in September Preliminary budget data is provided for FY No data has been provided for FY 2015 or 2016 and there is no preliminary projections proposed for FY Question: Please provide a financial statement in the same format used for previous annual reports which describes the MVC budget request for FY 2017, the budget as adopted and as revised for FY 2016, and final results for FY NEW JERSEY MOTOR VEHICLE COMMISSION FY 2016 ANNUAL BUDGET REPORT FY 2015 ACTUALS RESOURCES Reappropriation Surplus/(Deficit) Adjustment 35,756 Transfer Adjustments In/(Out) 2,598 FY 2016 REVISED BUDGET FY 2017 BUDGET $ $ 74,857 $ 52,419 $ $ 7,600 $ 7,600 Operating Resources MVC Base Budget $ 301,664 $ 305,116 $ 309,320 Security Surcharge ($7) 43,176 42,912 $ 44,039 Digital Driver License Fee ($6) 13,295 13,383 $ 13,560 Sub Total Operating Resources $ 358,135 $ 361,411 $ 366,919 Dedicated Resources Commercial Vehicle Enforcement Fund $ 14,148 $ 14,409 $ 14,431 Commercial Bus Inspections $ 662 School Bus Inspections 1,268 1,362 $ 1,294 Motorcycle Safety Education Fund $ 469 Security Responsibility 21,664 21,780 $ 21,313 Texting While Driving 3,212 2,000 $ 2,000 Other Various Dedicated Revenues 2,149 1,879 $ 2,162 Sub Total Dedicated Resources $ 43,550 $ 42,466 $ 42,331 Bond Fund Bond Fund Reappropriation $ 36,586 $ 36,164 $ 16,874 Bond Fund Interest $ 20 Sub Total Bond Fund $ 36,597 $ 36,197 $ 16,894 Grant Funds Prior Year Grant Award Balances 1,798 $ 1,845 $ 1,295 Grant Awards 1,611 1,596 $ 1,816 Sub Total Grant Funds $ 3,409 $ 3,441 $ 3,111 TOTAL RESOURCES $ 480,045 $ 525,972 $ 489,274 1
2 EXPENDITURES Operating Expenditures Salaries & Fringe $ 141,735 $ 146,160 $ 160,722 Materials and Supplies 13,191 13,637 14,265 Services Other Than Personal 44,325 48,451 45,418 Parsons Inspection Contract 36,819 36,818 28,656 Maintenance and Fixed Charges 6,085 6,564 6,950 Claims and Indirect Additions, Improvements, Equipment 4,136 7,167 5,688 Sub Total Operating Expenditures $ 246,299 $ 259,304 $ 262,206 Dedicated Fund Supported Expenditures Commercial Vehicle Enforcement Fund $ 6,462 $ 5,380 5,219 Commercial Bus Inspections 1,685 2,264 2,119 School Bus Inspections 7,987 9,692 8,549 Motorcycle Safety Education Fund Texting While Driving 845 3,184 3,183 Security Responsibility 21,664 21,780 21,313 Sub Total Dedicated Expenditures $ 38,666 $ 42,337 $ 40,951 Capital Program $ 10,593 $ 23,474 $ 16,389 SUBTOTAL BASE OPERATING EXPENDITURES 295, , ,546 Bond Fund Expenditures $ 431 $ 19,553 $ 16,894 Grant Award Expenditures $ 1,271 $ 3,441 $ 3,111 TOTAL ALL EXPENDITURES $ 297,260 $ 348,109 $ 339,551 TOTAL RESOURCES: ALL FUNDS $ 480,045 $ 525,972 $ 489,274 TOTAL EXPENDITURES: ALL FUNDS $ 297,260 $ 348,109 $ 339,551 STATE BUDGET CONTRIBUTIONS $ 70,374 $ 108,800 $ 138,374 SURPLUS/(DEFICIT): ALL FUNDS $ 112,411 $ 69,063 $ 11,349 LESS:BOND & GRANT BALANCES $ 38,304 $ 16,644 $ SURPLUS/(DEFICIT): $ 74,107 $ 52,419 $ 11,349 Question: Please explain any major differences in operating expenses impacting the MVC in FY 2016 and FY What is the MVC s FY 2015 year-end surplus and estimated FY 2016 year-end surplus? The major difference in the Commission s Operating Expenditures between FY16 and FY17, exclusive of Bond and Grant awards, is $5.6 million. The difference is made up of an anticipated $8.2 million reduction in the new inspection contract, $7.1 million in the Capital program, a net 2
3 $3.5 million reduction for one time project initiatives, and $1.4 million reduction in Dedicated Fund expenses. These reductions are offset by an increase of $14.6 million in salary and fringe benefits primarily attributable to a fringe benefit rate increase from 45.25% to 53.95%. The FY15 year end surplus for the Commission s core operating budget was $74.1 million, while the FY16 year end surplus is projected to be $52.4 million. Question: Please explain why the publicly posted information on the MVC website has not been updated for at least two years. In 2014, the Commission amended the annual report to present information for the calendar year (as opposed to the fiscal year) which changes the lead time needed to present a calendar year of information. The Commission posted the FY14 MVC Fast Facts on its website last fiscal year. A Formal FY14 Annual Report was sent to the NJ State Library and has also been posted to the NJMVC website. The Commission has completed its FY15 Annual Report and is in the process of posting it to our website. 25. In the Governor s FY 2017 budget, evaluation data indicates that the MVC will be entering into a new inspection contract that will require drivers to use private inspection facilities to complete reinspections. Evaluation data also projects a 200,000 vehicle decrease in initial inspections conducted at MVC inspection facilities. Question: Please provide details concerning this contract, including the per driver cost to the MVC and to the car owner, the impact on MVC revenues, and the impact on MVC inspection facility utilization. The contract with Parsons Environment & Infrastructure Group, Inc., which began on May 6, 2008 was extended on May 5, 2013 for three (3) additional years and is due to expire on May 5, An RFP for the next enhanced Inspection/Maintenance (I/M) Program has been advertised. It is anticipated that the intent to award the contract will be made this spring. The next contractor will take over operations of the centralized lanes within 90 days of the award at the new contract price. Because the new contract will simplify emissions testing, the Commission estimates that the next contract rate will be at a lower per inspection cost performed at the Central Inspection Facilities (CIFs). The next I/M Program will remain a hybrid program with inspections performed at CIFs and PIF/PFFs but will differ from the current program in these important aspects: o Expensive and time consuming tailpipe testing will be eliminated and the gas cap test will be replaced with a visual gas cap check, resulting in a cost 3
4 savings for the purchase and maintenance of testing equipment and providing for greater throughput. The MVC expects up to 200,000 pre 1996 and older vehicles to be removed starting May 1, 2016; o All re inspections and all commercial inspections will be directed to the PIFs, eliminating approximately 300,000 inspections from the CIFs, resulting in both a cost savings and reduced wait times; o Vehicles model year 1995 and older will be exempt from an inspection. Question: Will the reduction in demand for inspections at MVC facilities result in the closing of any existing MVC inspection facilities? If so, which facilities will be closed? The impact of the new Inspection contract is that it will create cost savings and operational efficiencies for the Commission. It is too early to determine if there will be facility closings or reduced hours of operation until the new contract vendor is selected and the contract is operational. The new contract bid proposals are currently under review. Question: Is there a limit on the charges that can be imposed by a private inspection facility to a driver for an inspection? Has the MVC taken measures to ensure that private inspection facilities meet standards concerning the quality of inspections and to protect consumers? The price of an initial inspection is market driven. It currently averages $65. The price of reinspection is set by regulation. The re inspection fee is set depending on the average length of time required to re inspect a specific item at the shop s posted hourly rate. The amount of time to re inspect an item is set by MVC regulation. An example of this fee for an OBD reinspection would be.3 of the shop s hourly rate. The MVC routinely audits private inspection facilities (monthly) to ensure that they are following all rules and regulations currently promulgated concerning the conduct of the inspection process. 26. Information provided by the Executive indicates MVC appropriated revenue of $354.7 million for FY 2015, $320.9 million for FY 2016, and $297.7 million for FY This revenue corresponds to the amount of funding available to the MVC for its own operations. This decline in revenue corresponds roughly to the amount of increased MVC revenue appropriated for deposit into the General Fund. The reduction in MVC revenue appropriated to the MVC in FY 2016 for its purposes was largely attributed to cost savings resulting from a reduction in the federally approved fringe rate and savings associated with the termination of 4
5 the MATRX project. The MATRX project was intended to deliver a series of critical information technology upgrades that were essential for the modernization of the MVC. Question: What impact will the reduced level of MVC revenue retained by the MVC in FY 2017 have on MVC operations? What expenditures will be reduced as a result of the reduction in revenue? Since FY 2015, MVC actual operating program expenditures have come under budget, generating an operating budget surplus. The FY16 operating program expenditures are expected to come under budget due to project delays and processing of new hires. In addition other savings include the new inspection contract and one time project initiative costs from FY16. The MVC is applying these operating expenditure savings to the FY 2017 operating budget. The reduction of available revenues has no impact on the FY 2017 operating budget or in delivering motor vehicle services to the public. Question: Please identify the projects that are replacing MATRX, the expected cost of each project, the expected completion date, and the annual MVC expenditure to be associated with each project. The MVC Transformation Project addresses 5 immediate needs, of the Commission, which are the Commercial Driver s License Information System (CDLIS), Secure MVC Processing and Scanning (SMPAS/REAL ID), Agency System Replacement, Customer Abstract Information Retrieval (CAIR) and Multi Scheduling System. The MVC Transformation Project costs are provided below: 1. Commercial Driver s License Information System Mod 5.3 (CDLIS) a. Currently projected at $1.8 million FY 2016 b. Currently projected at $210,000 FY 2017 c. The FY 2018 CDLIS maintenance costs will be incorporated into the operating budget. 2. Securing MVC Processes & Scanning (SMPAS) $9.610 total estimated cost a. Currently projected at $1.5 million FY 2016 b. Currently budgeted at $3.584 for FY 2017 c. Preliminary FY 2018 Budget need of $4.526 million 3. Agency System Replacement $4.485 million estimated cost a. Currently projected at $750,000 FY 2016 b. Currently budgeted at $1.2 million FY
6 c. Preliminary FY 2018 Budget need of $2.535 million 4. Customer Abstract Information Retrieval (CAIR) $7.022 million estimated cost a. Currently projected at $1.0 million FY 2016 b. Currently budgeted at $4.0 million FY 2017 c. Preliminary FY 2018 Budget need of $2.022 million 5. Multi Scheduling $2.166 million estimated cost a. Currently projected at $500,000 FY 2016 b. Currently budgeted at $1.666 million FY 2017 These 5 projects are part of our Transformation initiative to begin to modernize our services and eventually replace the legacy system. 27. The MVC has the authority to increase certain fees and surcharges without legislative approval. Question: Please note any new fees or fee changes that have taken place in the last year or are planned for the upcoming year. If there are any changes, please identify the amount of revenue expected to be generated by that change. The Commission has not increased any fees in the last year and none are planned for the upcoming year. 28. The MVC collects a variety of revenues for the State General Fund, itself, and other departments. In prior responses to Office of Legislative Services discussion points, MVC provided information listing a breakdown in MVC revenues between amounts collected for other State departments, amounts collected for MVC operations, and amounts collected from MVC based fees, but directed to the General Fund have been provided. Question: Please provide a display similar to the one provided in response to question #32 in the FY 2016 OLS discussion points which updates the FY 2016 projections and for FY 2017 detailing total MVC revenues. See below 6
7 NEW JERSEY MOTOR VEHICLE COMMISSION MVC REVENUES (Dollars in 000's ) 7 FY 2016 FY 2017 Revised Projected Collections for Other State Departments $ $ Environmental Protection $ 3.7 $ 3.0 Health $ 14.8 $ 15.4 Law and Public Safety $ 38.5 $ 39.2 Transportation $ 81.0 $ 82.4 Special Cause Plates Organizations $ 3.2 $ 3.4 Treasury Dedicated $ $ Treasury General Fund $ $ Treasury Proportional Split $ $ MVC Base Revenues $ $ Registrations $ 87.5 $ 90.4 Registration Add On Fess $ 37.2 $ 38.2 Driver Licenses $ 17.7 $ 18.0 Titles $ $ Abstracts $ 1.5 $ 1.6 Customer Service Information $ 1.3 $ 1.3 Information System Sales $ 20.1 $ 20.5 License Plates $ 0.3 $ 0.3 Business Licensing $ 0.9 $ 1.2 Inspections: Salvage $ 0.6 $ 0.6 Fines MVC $ 10.9 $ 10.4 Fines AOC $ 1.4 $ 1.6 International Registration Plan $ 10.7 $ 11.0 Reflectorized/Cause Plates $ 0.2 $ 0.2 Refunds/Returned Checks $ (0.2) $ (0.2) Other Dedicated Revenues $ 3.2 $ 3.4 MVC Dedicated Revenues $ 98.9 $ Security Surcharge Registrations $ 42.9 $ 44.0 Driver License Photo Fee $ 13.4 $ 13.6 Security Responsibility Fund $ 21.8 $ 21.3 Commercial Vehicle Enforcement Fund $ 14.4 $ 14.4 Commercial Bus Program $ 0.6 $ 0.7 School Bus Program $ 1.4 $ 1.3 Motorcycle Safety Education Fund $ 0.4 $ 0.5 Market Transition Facility $ 1.5 $ 1.5 Texting $ 2.0 $ 2.0 Other Revenue $ 0.5 $ 0.7 Omnibus Safety Enforcement $ 0.03 $ 0.03 Total Revenue Collections $ 1,194.2 $ 1,204.3
8 29. In response to FY 2016 OLS discussion points, the MVC stated that in order to modernize computer systems and provide necessary services, the MVC will need to enact four major projects: Agency Replacement System, Multi-Scheduling System, Customer Abstract Information Retrieval System, and Securing MVC Processes and Scanning (collectively, the new computer projects ). Question: Please provide an explanation of each of these major projects and what impact each project will have on MVC operations. The Transformation project addresses the 5 immediate needs of the Commission by focusing on improving productivity, customer service, security, revenue enhancements and cost efficiencies through process re engineering and process automation. The Commercial Driver s License Information Systems (CDLIS) Modernization project was mandated by the Federal Motor Carrier Safety Administration (FMCSA) to upgrade commercial driver programs and information systems resulting in better message transmission and enable the MVC to improve highway and driver safety by ensuring commercial drivers are properly tested and licensed. The Commission is current with CDLIS version 5.3. The Securing MVC Processes and Scanning (SMPAS) project will provide a secure process for scanning identity documents and capturing a photo first when customers apply for a driver s license, permit and/or non driver identification card. The Agency System Replacement project will replace the current core system producing driver licenses, vehicle/vessel title and registration documents running on special servers that translate data between the system and desktop software. A web based solution will replace this antiquated method, and will be faster and more reliable. The Customer Abstract Information Retrieval (CAIR) project will make needed improvements to the system that provides motor vehicle information to businesses, agencies and attorneys that need to purchase driver abstracts include customized reports of bulk data. The Multi Scheduling System project requires an overhaul of the antiquated system used to book appointments for the public on road tests (auto/motorcycle/cdl), suspension and restoration hearings, and inspections for specialty vehicles was shut down for security purposes. The new system will be user friendly to reduce wait times and increase customer convenience, and will be used for internal staff scheduling as well as customer appointments. 8
9 The MVC is moving forward in the pursuit of new technologies and project approaches to achieve the modernization of our IT infrastructure. These planned upgrades will result in improved customer service, security, revenue enhancements, and cost efficiencies. Question: Please compare the new computer projects with the former MATRX project. Will these new computer projects provide all of the services and functionality that was in the scope of work for the former MATRX project? Upon completion of these new computer projects will the MVC have completed its computer system modernization goals? If not, what services and functionalities are being delayed? The Transformation project is intended to build a platform and begin modernizing through the first 5 projects. The projects, as designed, can deliver immediate needs of the Commission based on our development methodology to deploy functionality on a 7 month cycle rather than wait until the entire project is complete. This project is also intended to update manual processes, making the Commission more efficient and keeping the MVC current in technology and standards. 30. The Federal REAL ID Act requires states to implement more stringent standards and processes in the issuance of driver s licenses and identification. These standards are being implemented in phases. For states that are not compliant by pre-determined deadlines, the federal government will not accept driver s licenses from those States as proof of identification for admission into federal buildings and facilities, and eventually to board domestic aircraft. Currently there are 23 States compliant with REAL ID. New Jersey is not yet compliant but has received an extension until October 2016, meaning that the federal government will continue to accept State driver s licenses until that date. If New Jersey is not compliant by the extension date, a State driver s license will no longer be acceptable identification to access federal facilities and military bases. Question: Please provide information about the State s progress in meeting the standards required under the REAL ID Act. Will the State be compliant by the October 2016 extended deadline? There are inaccuracies in the question. If a state is not yet compliant with stated deadlines, it may apply to the federal Department of Homeland Security (DHS) for an extension. A state does not have to be in compliance by an extension date; states have to be in 9
10 compliance by January 2020 or else those states driver licenses will not be acceptable identification to access certain federal facilities and used as identification for boarding commercial aircraft. The State has been granted an extension to the compliance deadline until October However, the State is permitted to apply for another extension beyond October The MVC is on track with compliance efforts and is confident it will demonstrate significant progress toward implementation of REAL ID. MVC is implementing information technology changes needed for REAL ID compliance, and is promulgating necessary regulatory changes to comply with the REAL ID Act. If the State deems it necessary to apply for an extension, it will demonstrate the significant progress, which combined with demonstrated commitment, is what DHS looks for when considering whether to grant another extension. If the State receives another extension, New Jersey licenses will continue to be accepted at federal facilities and as identification to board commercial airlines. The federal Department of Homeland Security s final deadline for using non REAL ID compliant documents to enter certain federal facilities and as identification to board commercial aircraft is January a. Recent legislation providing for the issuance of dedicated cause special license plates has had the goal of being revenue neutral to the MVC. Entities benefiting from license plate sales revenue are required to provide the MVC with up to $25,000 and collect pre-paid applications for 500 plates at $50 per application. The MVC has been shifting over to a new system of license plate production known as flat plate technology. During previous budget testimony, the chief administrator noted that this technology, which began being implemented with the sports plate program, was providing the State with the ability to produce plates at a much lower cost per plate, and allowed for on-demand plate production, which reduced the need for minimum printing runs. Question: Please provide information about the per plate costs for printing specialty license plates. Also please discuss the impact that flat plate printing process has had on those costs. Please explain why a requirement of $25,000 up front and $50 per plate to cover the initial costs is appropriate, when responses to FY 2014 OLS discussion points indicated average per plate costs of between $8 and $12 per plate for existing dedicated cause plates. The Commission expends approximately $65,000 to create a new plate series based upon costs such as IT and design, and that amount is explained to each special plate applicant in a Memorandum of Understanding, which limits payment to $50,000. The $8 to $12 cost (which has been reduced from previous years with flat plate technology) is solely the production cost per plate (in addition to the $65,000 cost to create a new plate series). 10
11 Question: In the event that an organization does not raise the $25,000 cost or obtain at least 500 applications within a one year time limit, what provisions has the MVC made for people to be refunded their application fee or the return of any donations made by individuals towards the $25,000 fee? Has the MVC adopted any regulations permitting an extension of that time limit if an organization is making progress towards that goal? The organization collects the individual applications and raises the required up front cost, then submits them to the MVC. The Commission can refund all fees received after offering the organization additional time to meet the requirements. Please note that the MVC has not encountered this situation, nor does the Commission anticipate a need for regulations in order to provide additional time needed by the applicant. Question: For the plate programs established pursuant to N.J.S.A 39: for Omega Psi Phi plates, and N.J.S.A 39: for Alpha Kappa Alpha plates, please identify the progress of these organizations towards meeting the contribution and application requirements. The Commission has received the initial fee from Omega Psi Phi and is awaiting the 500 applications. The Commission understands that Alpha Kappa Alpha (AKA) has the initial fee, and the Commission and AKA have agreed that the Commission will accept the initial fee and 500 applications at AKA s convenience. 31.b. Current law provides that non-profit organizations may obtain organizational plates pursuant to N.J.S.A. 39: if they provide the MVC with 500 applications (175 for service organizations) with a payment of no more than $75 per plate. Question: When is the last time the Chief Administrator approved an organization for issuance of organizational plates? How many applications have been received by the MVC since the last approval? Please describe the deficiencies in those applications that prevented them from being approved. The Commission has a moratorium on creating special organizational license plates. The latest approval of an organizational plate was at the end of 2014, for the Alpha Kappa Alpha sorority. The license plate for this organization was created by separate legislation, not 11
12 under the cited statute. Since then, MVC has not received any applications from other organizations. 32. Uber and Lyft are ride-sharing services that are growing quickly in the State. Legislative hearings have been held in the past year in an attempt to determine how to regulate the services provided by these companies, which are different in certain ways from traditional taxi services, car services, and limousine companies. One proposal is to have the MVC regulate these ride sharing services at the State level. Creating this new responsibility for the MVC will likely entail additional staffing and administrative costs. Question: Please comment on the MVC s current capacity to regulate such activity. If there is an inspection component to possible regulatory responsibility, what burdens will that place on the MVC? If the MVC is required to collect fees, what additional staffing and computer system changes would be necessary? The Commission respectfully declines answering questions on pending legislation. 12
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