Wednesday, October 05, 2005

The Privatization Scam Is Coming Home To Roost

About a week ago we found out that a soon to be released state auditor's office report would detail how the State's savings don't add up when it came to privatizing the Texas Health and Human Services Commission's payroll and human resources operations. This shouldn't come as a surprise to anyone:
The findings echo the concerns of legislators, state employee and public policy groups, which have long challenged the commission's savings claims and the process by which privatizing contracts have been awarded.
The object of this plan - the Republican theory, a myth as far as I'm concerned, that whatever government does the private sector can do better and cheaper - was pushed through the Legislature in '03 as a way to save the state money:
In 2003, the Texas Legislature passed House Bill 2292 into law, supposedly to balance the budget without raising taxes.

But it also satisfied two unquestioned articles of faith: that too many undeserving people get public assistance, and that the private sector inherently does things better and cheaper than government.

The bill cut deeply into the miserly social services Texas provided its most vulnerable citizens: the poor, old, disabled, sick and young. Most savings, testimony revealed, would come from making fewer people eligible for various programs, and making it harder for them to apply for them. And those that were enrolled would receive skimpier benefits.

But HB 2292's backers insisted that big savings would come from making the system more efficient. Texas' 12 health and human services agencies were reshuffled into five new ones that will operate fewer community field offices, and employ fewer state workers.

Those workers won't be needed, we were told, because new systems would replace the old inefficient ones, and state workers would be replaced with energetic private-sector workers motivated by market forces to get more work done!
The State Auditor's Report was released this week and we found out that something has changed in the report, Agency audit has big hole:
A dispute remains unsettled between the Texas Health and Human Services Commission and the state auditor's office over how much would be saved by privatizing the commission's human resources and payroll functions.

Last year, the commission, which oversees all of the state's health and welfare services, said it was beginning its effort to privatize some services now provided by state workers as a cost-saving move.

Because the commission disagreed with the auditors' preliminary analysis that only $1.1 million would be saved, the figure was dropped from the auditors' final report, released Tuesday.

Instead, the figure was replaced with a statement that auditors were unable to quantify what savings would come from outsourcing.

Responding to the critical audit, HHS Commissioner Albert Hawkins acknowledged "errors and omissions" in its cost analysis, but said the errors were not significant enough to change the commission's calculation.
Just because? Why the change in wording you ask? Maybe those on the Legislative Audit Committee would be able to tell us. Or as the Victoria Advocate put it:
It is important to note that the state auditor's office is not a wing of the Texas Democratic Party. In fact, it is a creature of the Texas Legislature, with both houses controlled by the Republicans.

"The Legislative Audit Committee appoints the state auditor," according to the 2005 "Texas State Directory." The auditor reports to the committee, whose members, including Lt. Gov. David Dewhurst and House Speaker Tom Craddick, are all Republicans. (Sen. Ogden, Sen. Williams, Rep. Pitts and Rep. Jim Keffer all Republicans make up the rest of the Audit Committee).

So when an office effectively controlled by Republican lawmakers concludes that Republican lawmakers two years ago committed what increasingly appears to be a fraud upon the public, today's Republican lawmakers and other state officials ought to pay attention.
We find out that now the total cost savings over 5 years in $32.7 million. Originally it was $63 million, then $45 million. The original savings estimate has pretty much been cut in half and what does the HHS Commissioner Albert Hawkins have to say?
Hawkins said its cost analysis was never intended to provide exact figures.
In the same ballpark would have been nice. At least they're doing it cheaper and they better right?
As the audit was finalized last week, one of the last -— and largest -— portions of the newly privatized services was rolled out, and it's not working, according to union officials, who say they've been inundated with complaints.

An e-mail to all HHSC employees on Monday acknowledged the problem.

Harris said additional costs associated with the rollout would be borne by Convergys, the contractor that submitted the winning bid, and not by the state.
Surely this is only a test case and the state's not going to try this on a bigger scale, right?
She urged the state auditor also to review the commission's contract with Accenture, which says it will save the state $646 million over five years as it replaces 2,500 state eligibility workers with a controversial and privately operated call-center system.

The state has awarded Accenture an $899 million call-center contract to screen applicants for food stamps, health insurance and cash welfare.

That privatization project remains on hold awaiting approval by the United States Department of Agriculture, which has raised questions.
This deal was done all above board though, wasn't it? Craddick describes influence he exerted to get call center:
Sometimes a casual approach achieves big results.

House Speaker Tom Craddick, R-Midland, was driving to work one day in Austin when he saw Bill Pewitt, a lobbyist representing the Accenture technology corporation, walking toward the Capitol and gave him a ride.

His motive was what you could call practical benevolence.

Both Accenture and IBM had included Midland in their proposals to create four call centers for the Texas Health and Human Services Commission's statewide modernization plan. And when IBM was eliminated, the focus fell on Accenture.

By the time the two men arrived, Craddick had finished his pitch for the Tall City and Pewitt was ready to carry the plea to his employers.

"I'm still a state representative and I represent my district," said Craddick before a Monday news conference where it was announced the Midland center will open this fall at the Texas Instruments building between here and Odessa. "I'm not statewide like a lot of people think."
Thankfully Chris Bell is on top of this, Help Chris Stop "Perry-care".


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