Sunday, November 20, 2016

Outsourcing state services doesn't save taxpayers money privateofficer.com

Nashville TN Nov 20 2016Randy Stamps
Saving taxpayer money is the main selling point behind every proposal to outsource a state service.
But, when analyzed, outsourcing is often found to be more expensive than promised.
For example, in January 2012 the state paid Jones Lang LaSalle $1 million to assess the condition and management of state properties.
That November, the state expanded JLL’s contract to include procuring outside leases, a job previously handled by state employees. JLL would also receive a 4 percent commission on any leases it procured.
By April 2013, funding for the contract had increased from $1 million to $7.6 million.
In June 2013, Tennessee signed a $330 million, five-year contract with JLL to outsource the facilities management of all state buildings.
In November of 2013, the state comptroller found JLL’s contract “created an organizational conflict of interest whereby Jones Lang LaSalle can profit from its own planning recommendations.”
Furthermore, as reported by WTVF in Nashville, the state has paid $1 million in secret settlements for lease cancellations and termination of contracts, presumably a result of JLL’s advice.
As another example, the state in 2011 outsourced the management of its motor vehicles to Enterprise. The 2011 budget for motor vehicles was $38 million. For 2016, their budget has increased to $46 million. Nonetheless, the department says they are under the annual budget and therefore saving taxpayer money.
But, as WTVF discovered, each year, after the Legislature passes the state budget and goes home, the Haslam administration increases the motor vehicle budget by several million dollars.
For instance, in 2012-2013, after the Legislature passed a budget that included $32 million for motor vehicles, the Haslam administration increased the department’s budget to $67 million. When the final numbers were tallied, the administration had paid Enterprise $43 million. The department claimed they were under budget, despite exceeding the original budget by $11 million.
In another example, in 2015 the state signed a $31 million contract with a private vendor to run a Medicaid eligibility call center. That vendor failed to perform its duties and was replaced by another private company for $56.5 million. This work used to be handled by state employees.
In addition, some contracts come with a catch.
In 2014, the state signed a $276 million contract with Trousdale County for a 2,400-bed private prison for Corrections Corporation of America. This contract also includes a 90 percent occupancy guarantee for CCA for per diem fees, which means if the private prison doesn’t remain above 90 percent occupied, taxpayers will pay per diem fees for empty beds. The contract also guarantees annual 2.5 percent operating per diem rate increases. In contrast, state employees do not receive guaranteed pay increases.
In some instances, the decision to use a private vendor is just bizarre.
To cite one well-publicized example, $46,000 in taxpayer dollars went to pay a private firm to create a new state logo, at a time when the state employed eight graphic artists and designers.
Sadly, costs aren’t always measured in dollars.
Tragically, in July, a man committed suicide by jumping off the Tennessee Tower in Downtown Nashville. According to a WSMV report, “Security at the tower falls under the state’s General Services division. They contract with private security companies Walden Security and Allied Barton.”
In August, an accident at a Tennessee county fair sent three children plummeting 45 feet to the ground, severely injuring one. The Associated Press reported, “The state relies on private inspectors hired by operators and other states’ regulators to determine whether roller coasters, zip lines and Ferris wheels are safe.” State employees used to handle this work.
In conclusion, as taxpayers, we must ask harder questions and demand more oversight on any contracts that outsource a state service. The notion of cost savings from outsourcing is simply no longer credible.

Randy Stamps is executive director of the Tennessee State Employees Association.
Knoxville News Sentinel 

No comments: