The New York-based consulting firm, Alvarez and Marsal, has been awarded two efficiency study contracts in Wyoming totaling $2.175 million through the Government Efficiency Commission. The way this is set up, A&M makes more money for each new efficiency study they conduct. And they get paid whether the state saves any money or not.
Former Gov. Matt Mead wanted to help the state become more efficient, and I believe he tried hard and I am thankful for his efforts. Now this monster task is in Gov. Mark Gordon’s hands and I wish him the best.
In testimony to the GEC on May 2, A&M recommended Wyoming spend $45-$55 million with the hope of saving over $200 million in the 2023-2024 budget, yet there doesn’t seem to be a single guarantee.
A&M has conducted similar multi-million dollar efficiency studies for Kansas, Louisiana and North Carolina and the savings there seem uncertain. Louisiana apparently discovered the devil was in the details, and nothing seems to have happened in Kansas after its study was completed.
During a previous GEC meeting, the Administration & Information Office reported that they had already spent 600 hours complying with A&M’s initial $280,000 study that included “Span of Control” recommendations. The final takeaway was an “ah ha” moment for the department (and no money was saved). For actual savings to be realized workers would need to retire, legislators would need to be educated, the culture of state government would need to change and all of it would need to be maintained through multiple administrations. Then we might realize savings.
During May 2nd’s GEC meeting, Dr. Pat Arp, Gov. Gordon’s chief of staff, pointed out that A&M’s current $2 million study has stopped short of showing if and how the savings can be implemented.
Mark Howard, Alvarez and Marsal’s Denver-based managing director of state and local government consulting then took the floor to remind us that we are right where we need to be (after we’ve spent $2 million). A&M has introduced a set of ideas to introduce savings, he said. Howard assured the room that he is confident savings exist and they are real. A&M said they had a very long list of ideas, but the next step would be to invest $10 million to recover savings.
Then Howard asked the GEC members what the State’s priorities were because doing everything would cost more than the $10 million allotted for identifying efficiencies. He added that hopefully soon they will be able to start telling us what we can do to actually cut money out of the budget. Mr. Howard also added that such studies are not new, but “the studies are done, you farm out all the recommendations, nobody knows what happens”.
With the new software A&M picked out and purchased, it will be the state’s responsibility to track any savings. Is this setting up Wyoming’s state employees to bear the blame if no savings are ever realized?
Many of A&M’s recommendations do not seem feasible. Others are already being implemented. J.W. Rust, one of A&M’s consultants based in Washington D.C., suggested the state needs to find undeclared improvements that have been made to properties to increase tax revenues to pay for education. Senate President Drew Perkins (R-Casper) then said some counties are already doing this. I guess we need A&M to make it a statewide effort.
And how exactly would we learn of these improvements? Should we set up a hotline for Wyomingites to report their neighbors?
We’ve been told to chase Medicaid dollars, but for this to happen we would need to change legislation, implement new systems and more. The “investment” for A&M’s recommendation on this would cost $1.3 million.
Gail Symons, a GEC committee member, tried to explain some of the challenges in reeling in school funding based on the landscape of Wyoming, which seems appropriate since Rust is based in Washington D.C. But she then agreed that we could take a look at it and it might be worth it. Trying to decide if something is worth it seems to be my main point. We could very easily spend many millions of dollars and end up with no savings.
When responding to questions about educational savings, A&M offered up their Kansas study. Spoiler alert: According to the Kansas Board of Education, their recommendations seem to have never been acted on there. Yes, Rust used an example of a savings recommendation that was never implemented, but failed to mention that to the panel. Are we to believe it would then work in Wyoming?
One of their Kansas recommendations was to slash teacher benefits. Why would we need a consultant to tell us this would save us money?
I was relieved that when A&M was asked how to handle some of their other recommendations they didn’t suggest one of their consultants gain a government position, as happened in North Carolina. The Raleigh News & Observers reports that Rudy Dimmling, who is a consultant for A&M, was being paid roughly $800,000 per year for his consultancy services before being appointed as the state’s Medicaid Finance Director at an annual salary of $175,000. And now it looks like he is back to consulting for A&M.
The anticipated “investment” for A&M’s “consolidated benefits” recommendation is around $1 million and it would require two separate elements. First, A&M would need to make an assessment program for evaluating benefits (Kansas, anyone?) and then we would need to work with an actuary.
When looking at page 16 of A&M’s “Shared Services” handout, it appears that A & M is also recommending we spend $10 million more for a few other recommendations. This is not a typo. The “investment” for a recommendation would cost around $10 million dollars. Yes. And then if we actually do some of this, we are possibly looking at spending more money.
This report reminds me of the one conducted in Louisiana.
Right now Wyoming is exactly where Kansas was in 2015 when The Topeka Capital-Journal wrote this article about recommendations for that state. It seems Kansas never actually implemented many of the recommendations. Why it would be any different here in Wyoming than the other states?
And what about A&M’s North Carolina study? How did that go? How much money was saved?
Chris Cowley was introduced at the GEC hearing as A&M’s “supply chain and logistics” person and seems to be based in Seattle. He is also their “Wyoming guy” but I could not find him listed on the A&M website. Of everyone who talked at the GEC meeting, I had the least faith in this guy. He mentioned that hard dollars are not the only thing A&M is looking for. (Uh oh! I am starting to view statements like this as a disclaimer for later when no savings are realized).
In their initial $280,000 study, A&M barely mentioned strategic sourcing, suggesting that $126 million in current state contracts — copier purchases for example — could benefit from being strategically sourced. Now it seems they have someone ready to explore this field at taxpayers’ expense. When asked, Mr. Cowley said he did not want to “oversell” the savings potential, but I had just endured three hours of discussion that felt like a mega-oversell!
For the past three years, I have been advocating for only a strategic sourcing proposal where payment is based on the percentage of savings. It was probably foolish to think A&M would have watched a revenue stream walk out the door.
Also, according to A&M, it sounds like “everyone has to be on board” or this won’t work out. How will we know if future elected officials will even be committed to this?
Hopefully we are all starting to understand how elusive $45 million in savings can be. Maybe this realization is what happened in some of the other states.
Why don’t we wait and see if the current $2 million study ends up savings us any money before biting off another $45 million?