California Insurance Department Cuts Operating Budget 10%

January 14, 2009

California Insurance Commissioner Steve Poizner announced he will permanently reduce the size of the Department of Insurance’s discretionary budget by 10 percent.

“When I took office, CDI had a multi-million dollar structural imbalance and I was advised to raise insurance fees to address this problem,” Poizner said. “Instead, we undertook a detailed analysis of the Department’s operational structure with the goal of right-sizing, streamlining operations and increasing efficiencies. This is common practice in the private sector, and I believe it should be applied in government as well. The end result of our analysis was that we can reduce our operational spending by 10 percent without layoffs or reducing salaries.”

Commissioner Poizner said he achieved the savings in three steps. First, CDI created a strategic plan to clearly define its priorities. This is the first time such a plan was done. Next, the Department performed a top-down review to better align CDI’s resources with its priorities and to identify opportunities to streamline operations and increase efficiencies. Finally, the Department conducted a business process survey that discerned further efficiencies.

When these efforts were completed, the Commissioner concluded that reductions in overhead expenditures and vacant positions could be made to permanently reduce CDI’s operating budget by 10 percent. Given this, the Commissioner directed the executive staff to implement this reduction.

The 10 percent budget reduction will amount to approximately $13 million annual permanent savings through operational efficiencies. CDI said the reduction will not impact funding for statutorily mandated or critical program costs including grants distributed by the Department to local law enforcement governments to fight insurance fraud.

“Regardless of the state’s financial situation, I believe that every elected official should always be seeking ways to make government efficient,” Poizner said.

Source: CDI

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