A Private Obsession

Source: PAUL KRUGMAN, New York Times (subscription required), Nov 18, 2005

…… Earlier this year Senator Rick Santorum introduced a bill that would have forced the National Weather Service to limit the weather information directly available to the public. Although he didn’t say so explicitly, he wanted the service to funnel that information through private forecasters instead. Mr. Santorum’s bill didn’t go anywhere. But it was a classic attempt to force gratuitous privatization: involving private corporations in the delivery of public services even when those corporations have no useful role to play. The Medicare drug benefit is an example of gratuitous privatization on a grand scale. ….. A number of studies have found that managed-care plans, which have much higher administrative costs than government-managed Medicare, end up costing the system money, not saving it. But privatization, once promoted as a way to save money, has become a goal in itself. The 2003 bill that established the prescription drug benefit also locked in large subsidies for managed care.

Bridge inspection called too costly / Union says work force cuts driving state reliance on contractors

Source: Albany Times Union (NY)
Date: Monday, November 21, 2005

Hiring private contractors to inspect New York’s bridges is costing the state at least 50 percent more than using state employees on the job, according to a new study by the Public Employees Federation. What’s more, PEF analysts say, internal Department of Transportation memos show that the agency’s increasing reliance on consultants hasn’t been fueled by a desire to save money, increase efficiency or improve quality. Rather, the memos indicate that consultant contracts are seen as a way to replace bridge inspectors lost due to early retirements and freezes on hiring and promotions.

Editorial: State contracts aren’t saving enough money

Source: Appleton Post Crescent, November 22, 2005

The state of Wisconsin has broken the bottom-line rule about awarding contracts: They have to be a good deal. But some of the contracts the state has issued as part of Gov. Jim Doyle’s Accountability, Consolidation and Efficiency Initiative aren’t a good deal because they don’t save the state as much money as they could. The Associated Press found state employees — particularly those in the University of Wisconsin System — who say they can buy products such as office equipment and janitorial supplies cheaper than they’re required to buy them under the state’s mandatory contracts.

Report: Firm was advised to inflate fees

Source: Associated Press (OH), Nov 21, 2005

COLUMBUS – A consulting firm analyzing the state Bureau of Workers’ Compensation was advised by a bureau lawyer to inflate its hourly fees to get around a law that requires consultants to be reimbursed for expenses at the same rate as state employees, a newspaper reported Sunday. The agency has been overhauling its financial strategy since revelations last spring that it lost more than $300 million in investments, including $13 million in rare coins and $215 million in a hedge fund. Ennis Knupp & Associates has billed the state $1.2 million for its work analyzing and stabilizing the bureau’s investments. The bill included $1,695 for three hours traveling, $470 for two hours copying documents and almost $1,300 for a couple of hours spent reading and writing e-mail messages, according to records analyzed by the Columbus Dispatch.

State food stamp contract worth $1 billion

Source: Associated Press (IN), November 18, 2005

Privatizing the state operations for determining who is eligible for food stamps, Medicaid and other welfare benefits will cost at least $1 billion, or more than twice the state’s largest currently active contract, the Daniels administration has told vendors. Such a contract would cover a term of five to seven years, state Family and Social Services Administration spokesman Dennis Rosebrough said today in confirming the potential size of the contract.

Privatization of refuse removal and labor costs

Source: Gary A. Hoover, James Peoples, Journal of Labor Research, Volume 24, Issue 2, Spring 2003
(subscription required)

From the abstract:
We examine the labor-cost savings associated with privatization by comparing earnings and employment trends of public and private sector refuse workers. Findings suggest that high union earnings for workers in the public sector are a source of labor-cost savings in the refuse industry. Evidence on job changers does not indicate that earnings for this group of workers are a compensating differential. Metropolitan area employment findings suggest that municipalities are less likely to use union refuse workers in the public sector when a relatively small percentage of area residents belong to a union.

To Market, to Market: Legislating on Privatization and Subcontracting

Source: Ellen Dannin, Maryland Law Review, Vol. 60 no. 2, 2001

From the abstract:
So enervated is our opinion of public service today, it is a shock to conceive of building this sort of edifice for mere government workers – bean counters and paymasters at that. … We need to ask: when markets are not competitive, can the private sector improve on public sector performance even as it falls short of the competitive ideal? Although it is possible to attempt to create a market by dividing a public service into smaller units, doing so may lead to greater inefficiency, lack of coordination, duplication, and, as a result, greater expense. … Massachusetts is not at the opposite end of Arizona; it does not forbid subcontracting. … Arizona’s privatization legislation mandates that the Office for Excellence in Government develop a model to estimate the total costs for providing a state function and develop a method for comparing those costs to private sector costs. … Arizona, for example, charges its Office of Management and Budget with designing standardized methodology for how the state identifies and evaluates state functions to subcontract and with determining if future competitive contracting with the private sector and other government agencies is in the best interest of the state. … They content that public workers have an unfair advantage because they are familiar with the work and because agencies, as governmental entities, are not required to pay taxes. …

Collecting delinquent child support a deadbeat effort in El Paso County

Source: Bob Campbell, Colorado Springs Independent, June 29, 2000

…According to local ACES head Denise Stinson, Colorado is one of the lowest-rated states in terms of enforcing federal child support laws and guidelines. El Paso County, meanwhile, is the lowest-rated county in Colorado. …. Numerous statistics and publications bear her out. With more than 20,000 open child support cases involving 39,000 children, the county is ranked last or next-to-last in four of 10 performance-measurement categories published by the State Office of Child Support Enforcement. …Until 1996, El Paso County contracted with the District Attorney’s office to enforce child support services. According to DA Jeanne Smith, the county opted to privatize the service in 1996 because caseloads were proliferating faster than the DA office could manage. In response, the Board of County Commissioners solicited contract bids for child support services and selected Maximus, a Virginia-based company that provides the service to eight states and employs 4,000 people in 130 offices nationwide. ACES claims that child support services have deteriorated in El Paso County ever since. The organization notes that last year’s state auditor’s report faulted Maximus in the areas of understaffing, poor management, large numbers of errors and substandard enforcement. Taxpayers, Stinson insists, are paying more for less under Maximus. ….