Did the state of Kansas get its money’s worth from a $2.6 million “efficiency” study conducted by a private consulting firm?
The consultants, Alvarez & Marsal, issued their final report to state legislators earlier this week and most of the top recommendations highlighted in news reports don’t really fit the definition of “efficiency.” There are a couple of OK recommendations, a few that are likely to draw so much opposition they will never be implemented and at least one pretty bad idea.
That idea — requiring public school districts across the state to spend down their reserve funds — has drawn the biggest headlines across the state and, by no reasonable definition, qualifies as an “efficiency” move. It’s simply a matter of robbing Peter to pay Paul. The report suggests allowing school districts to maintain reserves of up to 15 percent of their operating budgets, but no more. Local districts argue that they need their reserves to make sure they can continue to operate during difficult financial times. Forcing districts to spend reserves above that 15 percent would provide about $40 million next year and $193 million over five years, the consultants said, but it would be only a short-term gain. Once that money is gone, it’s gone and the state will be faced with yet another budget hole to fill.
On the positive side of the report was the suggestion that the state fill vacant auditor and collection officer positions to allow the Department of Revenue to step up collection of unpaid state taxes. That provision has been included in the budget advanced to the governor’s desk and is estimated to result in $321.8 million in additional tax revenue over five years. If those estimates are realized it will benefit the state, but the idea of stepping up collections is something the state should have been able to identify without a $2.6 million consultants’ study.
The consultants also suggest the state could generate about $6.1 million this year and $9.6 next year by selling lottery tickets in vending machines. Again, it doesn’t qualify as an efficiency and it raises concerns about the machines attracting under-age buyers.
Some of the biggest savings identified in the report involved shifting and reducing health benefit plans for state employees, as well as school district employees across the state. The consultants said the state could save $13.7 million next year and $59.7 million over five years by shifting state employees to lower-cost, high-deductible health insurance plans. The consultants also would put all school employees in the state health plan, saving another $40 million next year and $360 million over five years. Such a move would shift more health expenses onto employees and take away teachers’ ability to negotiate their health plans as part of their employment package, neither of which is likely to be a popular move for state employees who view their health benefits as a way of offsetting substandard state salaries.
The point of looking for government “efficiencies” is to try to find less expensive ways to deliver equal or better services. Some of the consultants’ recommendations may do that, but many obviously do not. It’s pretty easy for the state to “save” money by taking it away from school districts and state employees, but that doesn’t really qualify as making government more efficient.