Monday, October 31, 2011

City and County Realizing Savings for Taxpayers

If you have read very many of these updates in the past, you are familiar with the savings to taxpayers due to the modernization of state government processes. However, it is important to note that the commitment of the Legislature and Governor to make state government processes more efficient does not just result in savings in state government. Because of these reforms, the taxpayers are realizing a savings at the local level of government as well.

For example, one of the most important focuses of the efforts to streamline government processes has been the effort to reform the state central purchasing policies. Past legislation has made it possible for state purchasing officials to focus on managing contracts on behalf of the taxpayers and it has given them the ability to renegotiate contracts when taxpayers are no longer getting the best possible service.

Once these contracts are managed, purchasing officials are supposed to analyze the usage of the contract and leverage the buying power of the state to buy in bulk and continue to drive down costs.

Taxpayer savings under this new system is approximately $20M over the life of the managed contracts. It’s important to note that not all of this savings is from state government, however. City and county governments are also eligible to participate in contracts and receive the same pricing structure as state agencies. Sometimes vendors will just provide the product or service to the local government entity at the state contract rate. At other times, local governments will opt in to a state contract.

For instance, Logan County District 2 recently needed to replace three trucks. By using the state’s vehicle contract, District 2 saved approximately $20,000 on the purchase price. To put this in perspective, the $20,000 saved represents approximately one-ninth of the cost of the very important two mile Midwest Road repaving project that is set to commence shortly. Midwest Road is probably the worst road in Logan County and local residents have waited many years for this project.

The City of Guthrie recently opted into the state’s purchase card contract. This contract should allow the city to streamline their purchasing procedures and earn a rebate on each purchase made.

The City of Guthrie has also entered into a managed document service contract with the company that pioneered the state mandatory document service contract model and saved the state thousands of dollars. If the City of Guthrie replicates the state model, I would expect the savings to be considerable.

By taking advantage of or emulating state reforms, local officials are serving their taxpayers well by preventing the needless waste of tax dollars through inefficient processes.

Monday, October 17, 2011

The Positive Impact of the New Legislators

The Legislature has greatly benefited this year from the influx of a large number of freshmen members elected during the 2010 election cycle. Because they are a product of this important election cycle, they know firsthand how important it is for Oklahoma’s policy makers to cut government spending.

Here is one example:

For years, various attempts have been made in the Legislature to bring some common sense to the way the state allocated benefits to state employees. Believe it or not, with very limited exceptions, state policy mandated that state employees receive a rich health benefit allowance even if the state employee had health coverage with another source. It made absolutely no sense that the taxpayers were forced to pay for a duplicative benefit that was not even needed.

Attempts to allow otherwise covered state employees to opt out of health coverage met with opposition and were always defeated. Advocates of the status quo argued that the removal of these employee from the state’s self insurance PPO would risk prejudicing the makeup of the universe of participants, and they didn’t want to set a trend of allowing certain employees to opt out.

Of course this resulted in an absolute absurdity because taxpayers were forced to spend thousands of dollars providing coverage for those who didn’t even need it.

Legislation to fix this problem was assigned to the Government Modernization Committee where we would always support it and send it on to the rest of the Legislature. But it never made it through the entire Legislature, and eventually died every time.

So this year, when freshmen Representative Dustin Roberts and Senator Josh Brecheen sponsored House Bill 1062, a limited version of the opt out legislation, it looked like all the other past failed attempts. I doubt that many believed the legislation would be successful because after all, similar approaches had always been defeated.

This did not deter the freshmen legislators from not only continuing to advance the proposal, but expanding it to include all state employees. Because of their hard work, the law was approved by the Legislature and signed into law by the Governor.

Now, for the first time, as state employees are signing up for their benefits for next year, they can opt out of the system. Each employee who chooses to opt out saves the taxpayers thousands of dollars.

I believe this success is partially due to the fact that freshmen legislators did not know they were attempting a task that veteran legislators had already failed to accomplish. Their intent was to right an obvious wrong and save the taxpayers money. They did not care about the politics of the issue or the difficulty of the task.

In my view, the legislative freshmen serve as a good example of the importance of term limits and the value that newcomers bring to the legislative environment.

Monday, October 10, 2011

More About the 2011 Modernization Reforms

I wanted to write just one more article describing some of the reform in this year’s successful Government Modernization legislation. These reforms put into place a comprehensive framework to increase the transparency of state government process, lower the cost of government to the taxpayer, and significantly enhance the ability of the citizen to access government documents and records.

Reducing the need for small business owners to interact with the bureaucracy. Oklahoma business owners must navigate through a series of state bureaucracies to obtain licenses and permits. House Bill 1601 builds on Oklahoma’s existing business one-stop web portal to offer the state’s licensing and permitting from one convenient online location. This means that small business owners should spend less time in line at multiple bureaucracies, and more time building their business and strengthening Oklahoma’s economy.

Placing state documents and reports in a single online location. Countless reports and studies are relegated to state archives, never to be seen again. You may remember from my update two weeks ago that I wrote about the effort to centralize access to state government forms. This reform is similar in that it places reports and studies online where they can be indexed and searched by keyword or term. The transparency impact should be significant. For instance, the 2005/2006 IBM study that was key to reforming the state's purchasing system, had received little attention prior to being discovered by a House interim study in 2007. It appears that prior to the House study, the document had already been shelved and was mostly ignored by the bureaucracy. These types of oversights should occur less frequently when the studies are integrated inside the one-stop portal where everyone can see them.

Integrating school district spending data with OpenBooks. During the 2010 legislative session, Oklahoma's local school district transparency data was mandated for online placement. However, the data was placed online through the Department of Education’s site and not co-located with other state spending data. House Bill 1086 co-locates the common education spending data with the state spending data through the OpenBooks web site.

Bringing transparency to state revolving funds. The state maintains a series of revolving funds that are not subject to limitation by fiscal year. The public and state policy officials have limited easy access to the status of these funds. House Bill 1086 mandates the ongoing publication of the fund balances through the web portal. As with all data feeds, this data is to be published in a standardized format.

Allowing the public to see the current condition of state Information Technology projects. State officials have the ability to engage in costly IT related projects with little oversight from the public, the press or policy leaders. House Bill 1086 creates a project management platform that is publicly accessible. Project updates must be publicly posted, allowing the public and policy leaders to quickly ascertain when a project experiences a cost or time overrun, or a deterioration in the projected value of project deliverables.

Ending the practice of incentivizing state travel. State employees have been incentivized to travel on the state’s dime because frequent flyer miles awarded for taxpayer-funded travel could be retained for personal use by the employee. The continued use of state travel expenditures during the economic downturn has been especially disturbing. House Bill 1086 develops a policy similar to policies implemented in other states that stops this practice.

Consolidating payroll services. Past testimony before the Government Modernization Committee has described how state government could save about $2 million each year through the consolidation of the state’s payroll system. House Bill 1086 consolidates the state’s payroll processing system into a single offering.

Over the past three weeks I have been able to talk about many of this year’s government modernization reforms. To see a more detailed listing, visit

Monday, October 3, 2011

Consolidating State Agencies

Last week I wrote about the large number of modernization initiatives that were approved this year by members of the Government Modernization Committee, the Legislature and Governor. In that article I described a small sampling of these initiatives. These efforts were designed to result in cost savings and greater transparency. In this week’s update I have described House Bill 2140 and House Bill 1304. These two modernizations bills are designed to transform Oklahoma state governance and result in millions of dollars of savings to the taxpayer.

Until passage of House Bill 2140, Oklahoma’s central service functions such as procurement, human resources and financial services were divided into seven different agencies. In some cases, these bureaucracies offered competing shared services services. State employees were forced to navigate a gauntlet of central service bureaucracies to obtain services for their agency. HB 2140 consolidated five of these agencies into one and created a central services one-stop shop for state employees. A multi-million dollar savings mandate was attached to the legislation.

This consolidation should allow the state to focus its policy efforts and yield considerable additional savings to the taxpayer. Here is one example of an absurdity created by the fact that so many agencies overlap on policy. State employee benefits policy has historically been divided between two separate state agencies. This year, one of these state agencies subsidized the state employees’ PPO health care premium costs by using income from that agency’s investments. This means that the employees’ cost for their PPO health plan premium did not increase.

A second state agency awarded HMO contracts that reflected an increase in premium. Because the state employee benefit allowance is tied to a formula that accounts for the price of the HMO plans, the employees' benefit allowance is set to increase.

This means the cost of purchasing health insurance will stay the same for many of the employees who use the PPO plan. This is at time when their benefit allowance is increasing. Many employees already have 100% of their benefits paid for, so the excess allowance will be taken in the form of direct monetary compensation. In other words, state agencies must now pay their employees thousands of dollars in benefit allowance that is not needed to purchase benefits. This is a pay increase without a vote of the Legislature or approval of the employees’ agency-level employers.

House Bill 2104 consolidated both of these agencies, and should put an end to these types of absurd outcomes.

House Bill 1304 consolidates much of Oklahoma state government’s information technology processes. Currently, millions of dollars of information technology spending is segregated across countless state agencies. Information technology is not coordinated, strategized or planned on an enterprise-wide basis. A 2011 study found that Oklahoma spends over $40 million more than comparable organizations in IT spend each year. HB 1304 cuts through the bureaucracies and views information technology activities from the perspective of a single entity. Once completely implemented, the legislation is designed to save about $80 million each year.

The Department of Education volunteered for inclusion in the IT consolidation even before the law takes full effect. This one state agency alone is estimated to experience an approximate savings of $600,000 per year because of the consolidation.

This article has just began to scratch the surface of the impact that these bills will have on state policy in the years to come. If properly implemented, the savings and efficiency will be considerable.