A Compilation of State Entities’ Expenditures for Independent Contractors in FY 2006
Executive Summary
PEER reviewed state entities’ expenditures on independent contractors for Fiscal Year 2006, focusing on answering the following questions:
For purposes of this review, PEER defined an independent contractor as an individual, firm, corporation, or other service provider employed by a state entity through a contractual agreement who does not meet the definition of a contract worker. (A contract worker performs services subject to the direction and control of an employer, whereas this element of control is absent with an independent contractor.)
The report includes a series of exhibits presenting data reported by state agencies, public school districts, community and junior colleges, and public universities in response to a PEER survey. PEER identified only the amounts expended by each entity in these groups and the independent contractors receiving payments. PEER does not offer any opinion, positive or negative, regarding these expenditures.
Conclusions
PEER found that state entities are subject to varying degrees of centralized oversight of expenditures for independent contractors. State agencies are subject to requirements of the Personal Service Contract Review Board and the Board of Trustees of Institutions of Higher Learning must approve universities’ personal service contracts that exceed a cumulative total of $250,000. However, no centralized oversight exists for school districts’ and community and junior colleges’ procurement and utilization of independent contractors.
Overall, 328 entities reported that they spent $1,958,912,988 on independent contractors during FY 2006. The majority (56%) of entities’ FY 2006 expenditures for independent contractors were in the Construction or Building Repair Services Category. Landscape or Lawn Care Services was the second highest category. Within this category, the Department of Transportation reports to have spent approximately $159,000,000 (86% of the total spent in this category) on emergency relief measures, mainly due to Hurricane Katrina.
During Fiscal Year 2006, 225 independent contractors each received more than $1 million from all groups combined (i.e., state agencies, school districts, community and junior colleges, and universities).