Mysterious state office retooled, issues first report

INDIANAPOLIS - A retooled state office, questioned by the Call 6 Investigators, has issued its first report, highly critical of the federal government and states' dependence on federal grants .

"Indiana is leading the way on saying no to federal funding," read the report, written by David Johnson, Office of State-Based Initiative's only employee. "Since September, 2013, Indiana has declined to either apply for or accept nearly $1 million in federal funds. While that represents a small portion of the funding that comes to Indiana annually, it is a start toward greater financial independence and responsibility."

The state of Indiana launched the Office of State-Based Initiatives after a Call 6 Investigation exposed a state office spending hundreds of thousands of tax dollars without clear results, Call 6 Investigator Kara Kenney has learned.

Read about that investigation here .

"Hoosier ingenuity is the solution to untangling Indiana from burdensome federal regulations that stifle our economy and hinder growth," said Gov. Mike Pence in a statement. "In its annual report, the Office of State-Based Initiatives has taken steps to detail these costly policies and identify areas for improvement. I commend the office's leadership for their efforts, and I am confident they will continue to promote the principles of federalism for the betterment of Hoosier businesses, families, and innovation in the years ahead."

The report said Indiana receives about $12 billion for programs.

"But this is not 'free' money or money returned to Indiana to spend as Indiana sees fit; rather, it comes with strings attached," read the report.

Pence dismantled the Office of Federal Grants and Procurement, created by the administration of former Gov. Mitch Daniels in 2005 to bring Hoosiers more federal dollars.

Call 6 Investigator Kara Kenney could not find any annual reports for the Office of Federal Grants and Procurement under Daniels.

On July 30, 2013, Pence announced the establishment of the Office of State-Based Initiatives through an executive order. In September, Call 6 Investigators found that the new office was raising questions of its own. For one thing, it had no website.

The state did launch a website in October for OSBI:

The state says the ultimate goal of the office is for Hoosiers to get the most out of federal dollars, to lower taxes for Hoosiers and to lessen the negative impact of federal mandates.

"We want this office to be the place, the central clearing house where we can find the right kinds of strategic partnerships for the State of Indiana with the federal government," said Chris Atkins, director of the Office of Management and Budget. "We're still seeking federal money for many programs, but we're also trying to catalog where the negative impacts come in the long term."

The Office of State-Based Initiatives has an annual budget of $88,984 and one employee on its payroll, executive director David Johnson.

Johnson works within the OMB offices at 1 N. Capitol Ave.

In 2011, the Call 6 Investigators found the Office of Federal Grants and Procurement under Daniels spending hundreds of thousands of dollars without clear results , and the OFGP website did not list a phone number, address or person in charge.

Instead, the website included a list of government liaisons that was so out of date, some of the contacts had not worked for the state in years and others told RTV6 they didn't work with federal grants at all.

At least nine Republican lawmakers told Kenney in 2011 they had not heard of OFGP or did not know what it had been doing.

Records show OFGP spent about $600,000 since 2005, and the Call 6 team could not determine how those dollars helped secure more federal dollars for Indiana.

Kenney asked Atkins where OFGP failed.

"They were in a much different place than we are now," said Atkins. "When Gov. Daniels entered office in 2005 the state was broke. We find ourselves in a much different place today. The state's in very strong financial condition and we have $20 billion in reserves."

This summer, Indiana House Democratic leader Scott Pelath told RTV6 he's skeptical OSBI will be any different.

"We saw an issue of neglect with the previous administration," said Pelath. "You can call something whatever you want, but it's what you do once you've created the name."

Atkins denies it's just a name change.
"The governor has really expanded the mission," said Atkins, who worked under Daniels from 2007 to 2011.

According to the governor's office, the federal government collected $51.2 billion from Hoosier taxpayers and businesses in 2012.

"This year, 49 state departments and agencies will receive almost 20 percent of that money in the form of federal grants, stipends, and programs that often come with expensive, burdensome mandates and regulations that stifle ingenuity, cost Hoosier taxpayers and hamstring Hoosier businesses," read a July 30, 2013, news release from the governor's office.


new Office of State-Based Initiatives aims to ensure Hoosiers are getting their fair share in return.

The annual report will also be shared with Indiana legislators.

"We believe it will be a success," said Atkins. "David and his team will work with our congressional delegation to make them aware of these mandates."

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