South Carolina Department of Motor Vehicles

1. South Carolina Department of Motor Vehicles FY 2019-20 Budget Hearing

2. Agency Attendees • Kevin Shwedo, DMV Executive Director • Trish Blake, Director of Administration • Krissi Wicker, Director of Finance • Ralph Bailey, Budget Director • Laura Bayne, Deputy Director of Legislative Affairs • Frank Rodgers, Director of Technology & Product Development

3. Agency Information • DMV has issued 450,000 Real ID credentials as of mid-October 2018. • DMV projects to issue 1.5M Real ID credentials by December 2020. • Real ID Central Issuance is projected to begin in the Spring of 2019. • Mailings to populations eligible for website purchase of Real ID’s is expected to begin in March 2019. • Phoenix III Migration Pilot has begun. The first deliverable from vendor is due November 5, 2018.

4. Accountability Report Highlights • SCDMV is proud of its partnership with the Donate Life organization. In January 2014, South Carolina had 1,122,446 registered donors compared to 2,060,670 registered donors as of July 31, 2018, – an increase of 938,224 donors. • In addition to our 66 statewide customer service centers, SCDMV utilizes two mobile Rapid Response capabilities with our Community Area Response and Emergency Services Vehicle (CARES) and Self-contained Hazard Area Response Kits (SHARKs). The CARES and SHARK capabilities deployed to numerous hard-hit areas across the state in the wake of Hurricane Matthew in 2017, and had several community outreach deployments to state agencies, the legislature, and public hubs (like airports) in FY18. • In FY18, the Agency successfully processed a total of 15,447,021transactions (including web, county, title, and registration services). Of these transactions, 6,536,960 were processed throughout the state in our 66 customer service centers and 4,483,398were processed in our Headquarters location. In addition to these numbers, the SCDMV Headquarters’ processed 31,979 licenses surrendered from out of state, 517,181 tickets/violations, and 16,192 financial responsibility suspensions. • The SCDMV went from 56% of convictions processed by the DMV within the federal turnaround standard of 10 days to a compliance rate of 90%.  This is important as a lesser compliance rate has the potential to negatively impact federal road funding for SC. • In FY18, the SCDMV collected, reconciled, and distributed $593,016,101.86 in revenue to other organizations, which was a marked increase from the $337,748,584.96 distributed in FY17. DMV anticipates FY19 revenue to be as high as $800M.

5. Current Year “New” Funding • $548,070 Non-Recurring funding for State-to State Verification Services (included in the $5M Real ID funding) • DMV has initiated the Analysis and Design phase of State-to-State. • $379,122 Recurring funding for State-to-State Verification Services • Supervisor and Lead positions are currently posted. • Customer Service Rep positions will be posted later this fiscal year. • $ 1,300,000 additional earmarked AUTHORITY for plate replacement • DMV began replacing our largest plate class, the Sunrise plate, in July 2018 • $428,000 Recurring funding for Moped Bill • System programming has been performed to accommodate mopeds as motor vehicles and a new license plate class has been created. • Two FTE’s will be hired during FY19.

6. Recurring Budget Requests • Exchange Earmarked Authority for General Funds - $4.2M (2nd Priority) • $4.2M of Earmarked Authority for FY19 • Option 1: Continue providing DMV $4.2M Earmarked Authority until Earmarked cash is exhausted (in FY21). For FY22, convert $4.2M to General Fund Authorization/Cash. • Option 2: Sweep Earmarked Cash remaining at end of FY19 (leaving only Plate Replacement and Capital Project Earmarked cash/authority) and replace $4.2M of Earmarked Authority with General Funds for FY20. • NOTE: DMV no longer retains any revenue with the exception of Plate Replacement. • Janitorial Contract Increases - $525,000 (4th Priority) • The Statewide Janitorial Contract implemented in FY18 increased DMV’s annual janitorial cost by $525,000 • Increased Cost for Two Leased Buildings – $79,100 (8th Priority) • DMV is required to vacate two of our leased field offices (Greenville 23 and Moncks Corner). After extensive research, we are unable to find adequate leased buildings at similar cost. The cost of suitable alternate buildings is significantly higher than the buildings being vacated. • Greenville 23 annual increase is $50,160 (from $95,700 to $145,860). • Moncks Corner annual increase is $28,995 (from $56,125 to $85,120).

7. Recurring Budget Requests- Continued • Roads Bill - $221,000 (9th Priority) • The agency requests to hire five FTEs to administer the Roads Bill program with estimated personnel expenditures of $221,027 per year (including fringe benefits). • This requirement was identified in the DMV’s finalized fiscal impact statement for the Roads Bill (H.3516). In FY18, the revenues collected and distributed by the DMV increased by 85%. • Facilities Maintenance Trades Specialist – $266,400 (10th priority) • The DMV Facilities Management Department currently consists of 2 Trades Managers overseeing 5 Trades Specialists throughout the State. Each Trades Specialist is responsible for 13 buildings to include all interior/exterior maintenance along with emergency issues. This request would provide the SCDMV with the ability to complete projects in a timely fashion and provide better maintenance and service to our Field Offices. Cost includes salaries, fringe, cell phones, and leased vehicles. • Increase Plate Replacement AUTHORITY ONLY - $300,000 (13th Priority) • DMV will experience a very high volume of plates replaced during FY20. As such, DMV needs additional Earmarked Authority to facilitate the replacement. • Funded by $2 of each registration fee (for certain vehicle types).

8. Non-Recurring Budget Requests • Real ID – $5,089,920 (1st Priority) • This will be the final year of Real ID implementation. DMV expects a high volume of citizens visiting our Field Offices for Real ID’s as the federal deadline arrives October 1, 2020. • Cost includes our current Real ID temporary staffing and Saturday overtime required to manage high customer volume expected prior to the federal deadline. • End-to-End Encryption - $400,000 (3rd Priority) • The SSA Security Compliance Audit required DMV to provide end-to-end encryption from our field offices to our data center. DMV does not currently have this capability. • Business Continuity Plan - $170,000 (5th Priority) • DMV must develop an executable business continuity plan in case of a catastrophic event. DMV relies completely on our Phoenix System and IT infrastructure to operate our agency. In accordance with the Governor’s Statewide IT Strategic Plan, we are attempting to expand our ability to recover in the event of a disaster directly impacting our IT systems. While we have the ability to recover data, we do not currently possess, nor have the resident expertise, to develop a comprehensive business continuity plan with associated Business Impact Analysis.

9. Non-Recurring Budget Requests - Continued • Modular Furniture for Two New Leased Buildings - $180,000 (7th Priority) • Due to a different design/layout of the new office locations in the Greenville and Moncks Corner leased buildings, DMV must procure new modular furniture, as our current furniture will not physically fit into the new workspaces. • Orthorators (Vision Testers) - $94,000 (11th Priority) • When the SC Code of Laws eliminated vision-testing requirements for license renewals, DMV discontinued replacing faulty orthorators in our Field Offices and instead had our Customer Service Representatives share devices. With the reinstatement of vision testing requirements in 2020 for all licenses (as directed in law), DMV must purchase 135 orthorators to replace machines that are no longer operational. • Quality Analytics for Call Center - $50,000 (12th Priority) • This request will provide DMV’s Contact Center with a speech analytics product that will enhance the DMV call center experience for our customers and increase call center efficiency. This product recognizes key words and voice volume changes, then utilizes programming analytics to identify customer calls needing review. Our current system reviews call randomly. Quality analytics will aid in training and help DMV provide better customer service.

10. Capital Budget Requests • Roof Replacements - $198,000 (6th Priority) • Due to the age of roofs on several DMV Field Offices and recent damages from Hurricane Florence, we are requesting $198,000 to replace roofs on these SCDMV facilities: Charleston-Leeds Avenue, Conway, Kingstree, Lake City, and Newberry. • The SCDMV has 66 Field Offices statewide. The average age of our Field Offices is 37 years old. The structures are aged and in desperate need of renovations. Several of our Field Offices have roofs that have been patched several times and need total roof replacement. • DMV is requesting funding to replace the worn out asphalt shingle roofs with metal roofs. Although the cost of metal roofing is higher than asphalt shingles, the metal roof provides approximately 40 additional years to the roof’s lifespan.

11. Proviso Requests • 82.7 DMV Phoenix III Migration Pilot • The existing proviso allows DMV to spend the remainder of $1,000,000 authorized for Phoenix III Migration Pilot in Fiscal Year 2018-2019. • The requested revision seeks approval to reword the proviso to allow DMV to spend the remainder of the funds on Phoenix III Migration Pilot in Fiscal Year 2019-20, since the Pilot is taking longer than originally anticipated. • 82.8 Real ID • The current proviso allows DMV to expend any available earmarked cash reserves, with the exception of the funds designated for the Phoenix III Pilot, on REAL ID in 2018-2019. • The requested revision seeks approval to reword the proviso to allow DMV to spend the remainder of any available earmarked cash reserves, with the exception of the funds designated for the Phoenix III Pilot, on REAL ID in 2019-2020.

12. Cost Savings • If forced to take a 3% General Fund reduction, DMV would postpone equipment refresh in the amount of $887,500. Although unsustainable for multiple years, this would prevent a significant impact on customer services in the current year. • Secondly, DMV would eliminate temporary employees in the amount of $1,386,000. The temporary employee reduction, along with increased customer demand from Real ID, would shift wait times in the near term to potentially between 6 hours, up to days, in length. Please note, 70% of DMV’s cost is Salary/Fringe and any cuts would be detrimental to DMV’s core functions. • Finally, DMV would eliminate contract employees in the amount of $352,000. This cut would be detrimental to our services since the agency relies on contract employees for programming revisions to our Phoenix system. DMV would also be unable to implement any changes to laws where new coding is required.

13. Reducing Cost and Burden to Businesses and Citizens • When pursuing curbstoners (those who sell five or more cars per year without a dealer’s license) or dealers selling out of trust, the DMV refers cases to SLED, as the DMV has no enforcement authority. Other states, such as North Carolina, have enforcement authority within the DMV to lessen the burden on law enforcement. The DMV would like authorization to pursue this efficiency by having in house enforcement authority and pursuing those who violate laws within our purview in a timely manner. • DMV is interested in supporting our law enforcement community by pursuing the issuance of temporary license plates that have an identification number linked to an individual driver. Having a number on the plate linked to the purchaser will provide a greater level of security for our officers.

14. Reducing Cost and Burden to Businesses and Citizens • DMV receives proof of insurance information electronically through a system called ALIR. Prior to the electronic submission, a form called “SR-22” was required to be submitted by an insurance company for higher risk drivers to prove they were insured. This practice is outdated and unnecessary thanks to advances in technology (ALIR) and creates excess work for insurance companies and additional cost ($25 to the insurance company) for consumers. We would like to eliminate the practice of submitting “SR 22”. • The fine reduction we’re pursuing this year is the elimination of the $1 fee for the veteran’s designation on the ID cards. H.3358 (Real ID) deleted the $1 fee for veteran’s designation on the driver’s license last year, but we later discovered the equivalent fee for the ID card was located in a different section of law.

15. Wrap-up • DMV continues the implementation of Real ID compliant credentials ahead of the October 1, 2020 Federal deadline. • DMV collected and reconciledapproximately $593M in revenue in FY18 – an amount significantly higher due to the implementation of the Road’s Bill. • DMV dispersed approximately $587M to other agencies and organizations throughout the State. The difference between the amount collected and dispersed represents funds collected and retained by DMV for Plate Replacement and refundable deposits held as a “liability” until time of refund. • With the pending implementation of the 3rd phase of the Roads Bill in January 2019, DMV anticipates FY19 revenue to be as high as $800M.