State Programs: Let’s Improve the Product and Lower the Costs

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“What programs would you cut to balance the state budget?” the reporter asked me. But what if he asked, “What changes in management would you make so dollars can be saved and more people can be served?”

 

This is a more difficult question. Answering requires attention to details, knowledge of how things are not working and motivation to get things right.

 

Details really do matter. Details like $2 billion, which is the amount in Medicaid costs that auditors couldn’t link to any specific program.

 

Almost a million people rely on Medicaid for vital health services. At over $7.5 billion it is the costliest and fastest growing program. Yet, it is poorly run. It is easier for those in charge to save money by cutting people off health care than to change management practices.

 

The full audit of Medicaid shows that we don’t know on which programs money is spent.  Private contractors, under broadly written contracts, do much of the program administration. There are more contract employees running Medicaid than state employees. Over $50 million in contract amendments were not competitively bid, were not tracked, and did not specify the sources of money used to pay for the amendments. The accounting, procurement and budgeting offices did not even know about the changes. Loose oversight led to a $2.7 million fine by the federal government.

 

Medicaid is not the only program that needs fixing. We need a new way of governing, a way that pays attention to detail and cares about performance and results.

 

We need to change management practices. I’d like to start with the management, budgeting and accounting systems. For too many years the state composted one system on top of another and pieced together systems that don’t provide the information we really need to effectively manage. We need to turn this around and connect dollars with specific results.

 

Recent press stories of fraud and abuse highlight problems with routine monitoring and recovery of fraudulent payments. Systems should be established to better monitor waste, fraud and abuse and more quickly recover improper payments.

 

Wisconsin is top heavy on administration. We have a Department of Administration with almost 1,000 employees. Responsibility and authority over spending, contracting, hiring and rulemaking should be returned to individual agencies. Those agencies and directors need to do their jobs and be responsible for results.

 

Too many are in state government because of their political connections, not their expertise. This must change. Too many contracts are not competitively bid. This also must change. The public should be able to look into the process of letting and paying for state contracts.

 

Contract deliverables, performance standards, and deadlines for completion should be included in all contracts. What is and is not delivered by contractors should be monitored and enforced.

 

Before soliciting bids, the cost effectiveness of contracting-out state services must be evaluated. Details of all contracts bid and entered into should be posted on the state website. Results and performance measures should be posted upon completion of contracts.

 

Wisconsin needs to encourage and reward suggestions from employees about ways to improve outcomes or lower costs. Much of the wisdom to solve complex state problems lies within the expertise of state staff. Let’s begin to solve the problems by rewarding these people for innovative solutions.

 

We also need to improve the ease of understanding state budgeting. Right now details are hard to track and easily manipulated for political purposes. The state budget does not provide a complete representation of the state’s financial health. 

 

Budget documents and the budget process should be made easier to understand. All funds and expenditures should be included and an accurate picture of state finances should be public.

 

We must pay attention to critical indicators including financial statements prepared following generally accepted accounting principles. The budget analysis should include both long- and short-term fiscal measures.

 

Finally, the people need to know they are getting what they pay for. We need an Office of Program Evaluation focused on finding better, more effective ways of getting the job done.

 

State government can change. But we need leaders willing to make those changes.