By John Celock
A long awaited government efficiency study has 105 recommendations for Kansas state government, which consultants say can deliver $2.04 billion in benefits to the state over five years.
The preliminary report from the consulting firm of Alverez & Marsal, delivered to the state House Appropriations Committee Tuesday morning outlines a series of recommendations, including new leasing operations for state buildings, combining local school districts into the state health insurance plan, consolidated state offices, new procurement plans and new programs for revenue generation. The report was commissioned by state lawmakers last year as part of the state’s on-going budget crunch.
Among the report’s suggestions is consolidating all school districts into the state health plan. The consulting firm says that if the school districts were to centralize health care under the state plan, a savings of $360 million can be achieved within five years. In the report, the consulting firm said that few of the state’s 286 school districts participate in the state plan due to the current structure, where the state employee contribution amounts do not equate with the district employee contribution amounts. The report says that a consolidated statewide plan for teachers would allow for cost savings to the individual districts. The plan says that with 44,000 state employees covered in the current plan, the addition of 69,000 school district employees would increase savings for insurance.
In the area of education, the report also recommends increased grant opportunities for school districts and the creation of new shared services programs for school districts. The education funding debate has been a major topic in Kansas politics in recent years, with the Kansas National Education Association and parent advocates calling for increases in school aid. Gov. Sam Brownback (R) and Republican legislative leaders have said that they have increased state aid to education. Last year, the state changed to a block grant system for funding schools while considering a new state aid formula.
The report contained a recommendation that the state change the health insurance plan for state employees to one that contains a higher deductible, as part of a cost savings, saying it would cost the state less. The health care recommendation also includes a proposal to move the administration of the state health plan from the Department of Health and Environment to the Department of Administration, which handles most of the state’s human resources functions.
The efficiency study recommends that the state consolidate all leasing operations under a single leasing coordinator in the Department of Administration, saying it would streamline practices and achieve cost savings in personnel. The report also recommends a study of state owned property for the sale of surplus property. The firm also recommends leasing space on state owned buildings and land for cell towers,
The report recommends a consolidation of the state’s printing office functions, along with outsourcing printing functions.
In the area of procurement, the report recommends looking at more bulk procurement practices and the updating of the state’s payment rules to move payment for goods and services to the 30th day of the bill instead of after 10 days. The report says the change in payment would allow for the state to achieve more in savings and interest on cash. Among these recommendations is one to fill 54 revenue officer slots and 14 auditor jobs in the state Department of Revenue, which the firm says will produce $321 million in new revenue for the state.
The firm also recommends a series of new sponsorship opportunities for programs in the state Department of Transportation, which it says can generate $8.5 million in five years. Currently the Kansas Turnpike Authority operates a sponsorship program for it’s roadside assistance program that the report cites. Also the firm recommends an expansion of the Kansas Correctional Industries program in the state Department of Corrections, which it says can bring in $7.5 million in revenue over the next five years.
Over view of cost savings in each area as stated by Alvarez & Marcel in report:
Procurement: $100 million over five years
Insurance: $170 million over five years
Corrections: $40 million over five years
Children and Families: $19 million over five years
Transportation: $80 million over five years
Revenue: Increase by $381 million in additional revenue
Technology: $40 million in five years
Education: $600 million over five year period
Updated 2:53 p.m.
The Kansas Organization of State Employees, a main public employee union, has expressed concern with the health care aspects of the study. KOSE executive director Rebecca Proctor told The Celock Report that with an aging workforce and lower wages for state workers, the higher deductibles would not help state employees recruitment.
“Obviously we believe that only a high deductible plan is a short sighted plan on the half of the state,” Proctor said.
Proctor said that she had heard rumblings that state lawmakers were considering such a plan but she is interested in seeing how far they will go with the recommendations. House Appropriations Committee Chairman Ron Ryckman Jr. (R-Olathe) has said the report would make up the bulk of the committee’s work this year.
“They have established nothing but their own unpredictability,” she said of state legislators.
Proctor indicated that she is also interested in the areas of consolidation being proposed in the report. She cited a section that calls for consolidating three Department of Children and Families service centers. She said the consolidation of the centers would make it harder for state residents to reach the services at the offices, noting the lack of public transportation in many Kansas counties.
She also said that a measure calling for consolidating several Department of Transportation centers would put DOT equipment for snow removal further from the roads and require employees to travel longer in inclement weather.
Proctor said that KOSE would be working to raise awareness of the areas of the report that lawmakers are interested in exploring this year. She said that the recommendations do not just impact state employees but also all residents of Kansas.
“There are several aspects of the report that we need to explore,” she said. “These are not just state employee issues these are public service issues that impact all citizens across our state.”
Updated 3:18 p.m.
The Kansas National Education Association is “less alarmed than we thought we would be” with the report, KNEA chief lobbyists Mark Desetti told The Celock Report. At the same time, Desetti said that parts of the report, including the health plan proposals are giving the association pause.
He said in terms of the proposal to move teachers to a statewide health insurance plan, he said the details in the report show it will not be implemented overnight. He noted the proposal calls for state lawmakers to conduct a study on the impact and how to implement it. Desetti said that if the final plan does not include all school districts it would not have the same fiscal impact as the report suggests.
“We appreciate the fact that they said don’t do this, do the study and analysis, include the stakeholder groups,” he said. “It is not a blanket you do this and save $400 million.”
Desetti said the proposal to shift state employees to a higher deductible health insurance plan is of concern to the group. He noted that would hurt recruitment of state employees and that if a similar plan were adopted in the future for teachers, it would cause issues for educators.
In terms of the other sections impacting education, he noted that shared services on business functions have been explored before. Of a proposal to limit the cash balance reserves that school districts can keep on hand, Desetti noted concerns with the possibility that excess cash reserves would impact future state aid.
Desetti said the KNEA plans to continue working with lawmakers on the plan and hopes that education stakeholders are included in the discussions.
“We’re interested in working with the committees to determine the best way forward,” he said.