FSSA privatisation and Buy Indiana

November 18th, 2005

The Associated Press is reporting that the privatization of state operations at the Indiana Family & Social Services Administration (FSSA) will cost at least $1 billion:

“The projected cost of this opportunity is more than $1 billion,” the Indiana Department of Administration said in a newsletter sent by e-mail to vendors this week…

The work is now done by more than 2,500 state employees in 107 county offices, but FSSA Secretary Mitch Roob Jr., an appointee of Gov. Mitch Daniels, said in July he hoped to reduce the number of eligibility offices to 18 to 40 by 2009…

The state’s largest current contract is for $490.8 million to Anthem Insurance Companies of Indianapolis for a state employee health maintenance organization for the four years that began Jan. 1, 2003. The next largest is $264.4 million to St. Louis-based Correctional Medical Services for prison health and mental health services over four years that began Sept. 1.”

In the 2004 session I introduced legislation (HB 1275) to implement a “Buy Indiana” program that would ensure a majority of Indiana tax dollars used for procurement and contracts were reinvested in Indiana companies. While my legislation did not pass, another version, of which I was a cosponsor (HB 1080, Representative Carolene Mays, D – Indianapolis), was eventually signed into law by Governor Kernan.

One of the key differences between the two was in the definition of “Indiana business.” HB 1275 defined one as:

(1) A business whose principal place of business is located in Indiana.
(2) A business that pays a majority of its payroll (in dollar volume) to residents of Indiana.
(3) A business that employs Indiana residents as a majority of its employees.
(4) A business that manufactures or assembles in Indiana the supplies that are the subject of the purchase.

HB 1080 deleted (4) and added the following two criteria:

(4) A business that makes significant capital investments in Indiana.
(5) A business that has a substantial positive economic impact on Indiana.

Governor Mitch Daniels issued Executive Order 05-05 in January 2005, which allowed the Department of Administration (DOA) to interpret those last two points and establish the “Buy Indiana” program criteria.

DOA Commissioner Earl Goode has since issued the policy with clarifications on the definitions of “Substantial Capital Investment” and “Substantial Indiana Impact”:

Substantial Capital Investment:
Any company that can demonstrate a minimum capital investment of $5 million or more in plant and/or equipment or annual lease payments of $2.5 million or more shall qualify as an Indiana business under category #4. If an out of state company does not meet one of these criteria, it can submit documentation/justification to the State for review for inclusion under this category.

Substantial Indiana Economic Impact:
Any company that is in the top 500 companies (adjusted) for one of the following categories: number of employees (DWD), unemployment taxes (DWD), sales tax (DOR), payroll withholding taxes (DOR), or Corporate Income Taxes (DOR); it shall qualify as an Indiana business under category #5. If an out of state company does not meet one of these criteria, it can submit documentation/justification to the State for review for inclusion under this category.

The form a company must fill out to certify their “substantial Indiana economic impact” can be found here.

With a contract as huge as the one being considered by FSSA, I certainly hope everything possible is being done to ensure that the “Buy Indiana” program will be put to use, and these tax dollars will be reinvested in Indiana businesses.

Entry Filed under: Jobs

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