DPS asks Appropriations to cover $1.1M indirect-cost shortfall, shift criminal-history expenses to general fund

The Department of Public Safety asked the Vermont House Appropriations Committee on Jan. 15 for budget adjustments to cover a projected deficit in the agency’s indirect cost pool and to shore up a shortfall in the Criminal History Record Check Fund.

For the record, Ray Hollenbeck, Director of Finance and Administration at the Department of Public Safety, told the committee the agency projects “a deficit at the end of the year of $1,100,000” in the indirect cost pool and just over $1,000,000 in the Criminal Justice Services special fund tied to the Vermont Crime Information Center. Hollenbeck said the department is asking to move existing line items into the general fund to avoid that deficit rather than to create new recurring spending.

Hollenbeck said two contract line items are the most visible examples: $75,000 to preserve access to legacy Spillman computer-aided dispatch records, and a larger Crosswind (vendor) contract payment that was underbudgeted in the current-year appropriation. “Spillman is the computer aided dispatch records management system that the Department of Public Safety and many state law enforcement entities previously used,” Hollenbeck said, adding the agency needs the legacy data because “none of the data from Spillman was able to be ported to Crosswind.” He described the funding moves as covering costs already incurred but currently paid from funds that can no longer sustain those lines.

Hollenbeck identified another requested transfer of $343,096 to cover the salary and benefits for the BCIC director and deputy director out of the general fund and said several internal service fees charged by other state units (liability insurance, the state financial system VISION, ADS allocated charges, and human resources services) are being shifted to avoid a deficit. He said those internal service costs are not new increases but are being reallocated because the interfund balance is “dwindling and fluctuating.”

Committee members pressed for explanations. Jim Harrison, Route 111 (Chittenden), asked whether the HR charge was an increase or a rerouting; Hollenbeck replied the amount “is pretty close to, if not the total cost of our HR” and that the department would provide more detailed fee breakdowns if the committee wanted them. A member asked how the shortage was missed during the original budget process; Hollenbeck said the department had expected the special fund balance to carry and that projections changed as expenses and revenues fluctuated.

Members also questioned whether the amount of federal grant funding subject to the indirect rate had fallen. Hollenbeck said federal dollars had not declined overall — “we’ve had a lot of federal money coming through” after recent flooding — but that some federal awards and subgrants restrict indirect-cost charges. He explained that the department’s federally negotiated indirect-cost rate is reviewed by the federal cognizant agency; rates have ranged “from 15.5 to 25.3.” He also noted the de minimis reduced-rate practice referenced in discussion had changed historically from 10% to 15%.

Committee members raised the statewide ADS charges and whether the pattern of filling holes through budget adjustments pointed to a systemic issue. One legislator suggested bringing representatives from Finance and Management back to explain recurring internal service fee allocations.

Hollenbeck also told the committee that emergency-management spending tied to recent floods had been handled through the excess receipts process to secure additional federal spending authority and that the department could provide those figures separately.

No formal committee vote on the requested adjustments was recorded during the hearing. Committee members indicated follow-up questions and asked the department to provide more detailed fee and fund-source breakdowns offline.

The committee recessed and planned to resume later in the afternoon with human services testimony.