Efficiency panel recommends $229M in savings proposals

The panel charged with finding new ways to streamline state government spending issued a final report today endorsing new cost-cutting measures worth about $229 million this fiscal year.

The Commission on Enhancing Agency Outcomes’ proposals, which would be worth more than $241 million by 2011-12, called for a dramatic reduction in non-union managers and other professional posts while making no specific recommendations regarding unionized labor costs. That contrast prompted Gov. M. Jodi Rell’s lone representative on the panel to cast the only opposition vote.

The report also recommended bulk purchasing and other cooperative agreements to reduce health care and social service costs, various agency consolidations, and new energy savings goals.

“We can’t run government as usual,” Sen. Gayle Slossberg, D-Milford, who co-chairs the panel, said after the final plan was adopted 12-1 with bipartisan support. “We need to make fundamental changes in the way state government is organized and run and I believe we offered a plan today to help accomplish that.

“I do think it is a fantastic report,” Sen. John A. Kissel, R-Enfield, said. “I definitely see a great opportunity.”

The commission, which was created last year by the legislature, was charged with identifying at least $50 million in annual budget savings by Dec. 31. Slossberg and the group’s other co-chairman, Rep. James F. Spallone, D-Essex, insist they met it this past spring when they endorsed more than $70 million in annual savings tied to Medicaid benefits for state welfare clients – a change the legislature built into the current budget.

But they also said members wanted to far exceed that mandate given the budget crisis Connecticut faces. he legislature’s nonpartisan Office of Fiscal Analysis estimates that the next fiscal year, which begins July 1, faces a built-in shortfall of $3.67 billion, an amount equal to nearly one-fifth of all current spending.

But Michael J. Cicchetti, deputy secretary of the Office of Policy and Management, voted against the plan, arguing that the group weakened what otherwise was a strong report by estimating more than $119 million could be saved by eliminating what some members described as “non-union management” positions.

Cicchetti said the numbers behind that savings projection involved far more than political appointees in state government. It also includes dozens of non-supervisory, professional posts, such as fiscal analysts, associate attorneys general and others not involved in partisan issues. “These are hard-working, dedicated state employees who are necessary and are being unfairly scapegoated,” he said.

Cicchetti also noted that the Democrat-controlled commission recognized the struggles state government faces in trying to fund benefits for both existing workers and retirees, but balked at endorsing any specific concession proposals – a move seen as effort not to antagonize state employee unions.

“If you’re going to look at restructuring agencies, you’ve got to look at them in their entirety, and that means looking at the entire workforce,” he said.

Former state budget director William J. Cibes Jr., a Democrat serving on the commission, also had raised concerns that the projected $119 million savings couldn’t be achieved without eliminating vital policy and other positions that have little to do with management. But Cibes agreed to support the plan after the commission agreed to acknowledge that the next legislature might want to seek a lesser savings and preserve these types of positions.

Slossberg said the goal behind this recommendation was not to scapegoat any specific group of workers, but rather to encourage lawmakers and Gov.-elect Dan Malloy to pursue savings by reducing management and giving more responsibility to rank-and-file employees. “This recommendation was designed to empower the workforce and recognizes the ability of value of all our employees in the trenches,” she said.

The commission also concluded that $77 million in one-time savings could be achieved immediately by pursuing extra federal welfare funding its researchers insist the state Department of Social Services missed earlier this year.

But a department spokesman said earlier this month that it hasn’t made a mistake, and Connecticut isn’t eligible for that money, which specifically involves a portion of $5 billion in federal stimulus aid allocated for Temporary Aid to Needy Families, a federal welfare program that largely serves single women with children.

At issue is whether Connecticut can demonstrate additional costs for state government involving increased caseloads. But since the Rell administration leaves office on Jan. 5, Malloy and whomever he appoints to head the social services department will decide whether to pursue that money.

Other key savings projections included in the report are:

  • $70 million from annual prescription drug costs for Medicaid patients by converting to a system similar to the managed-care networks that have been used to control costs in health insurance programs for the poor.
  • $38 million by relying more heavily on multi-state purchasing cooperatives and “reverse auctions.” The latter suggestion involves a form of competitive bidding in which approved vendors are given a limited time frame during which they can view their competitors’ contract bids and lower their own, in hopes of submitting the cheapest price and winning the award.
  • $37.6 million by restoring funding for the State Contracting Standards Board and other entities charged with reviewing government contracts to weed out waste and inefficiency.
  • $34 million by providing new incentives to more nursing home patients out of facilities and into assisted living programs in their homes. Nursing home care represents more than $1.3 billion in a statewide Medicaid budget that exceeds $4 billion.
  • $24.5 million by promoting increased generic drug use among patients by at least 5 percent.
  • $20 million by requiring all agencies to reduce energy costs next fiscal year by 10 percent.

All recommendations by the group are expected to be reviewed by the General Assembly during the 2011 session, which begins Jan. 5.

The commission gained GOP votes when it agreed to a request from minority Republicans to attach a letter suggesting further savings, on top of the report’s bottom line, might be achieved by exploring some controversial consolidations rebuffed by past legislatures.

These include new agencies created by the merger of economic development offices; human service and health care-related departments; and public works, transportation and motor vehicles services staff.

“We incorporated some good suggestions in this report but the extra ones we suggested are important issues that need to get some more attention,” Rep. Vincent J. Candelora, R-North Branford, said.