Is privatization saving Texas money? Who knows?!

Posted in Around The State, Commentary, Privatization at 11:42 am by wcnews

This AAS article over the weekend, Private firms do government work with little scrutiny, is the “First in an occasional series on the privatization trend in state government”.

Over the years, Texas legislators have ordered state agencies to hire private firms to build and maintain the state’s roads, operate its parks, oversee its prisons, sign up its welfare recipients and develop its information technology systems, among other things.

Each time the government signs another deal with these companies to take over jobs it has traditionally performed itself, politicians promise it will save tax dollars by bringing the efficiencies of the private sector to the cumbersome bureaucracies of government.

So how much money has outsourcing actually saved Texans?

No one knows.

Elected officials have proposed outsourcing even more having private companies run Texas’ toll roads, operate its lotteries and administer child protective services. Meanwhile, some outsourcing ventures have fallen by the wayside.

So how much of the state’s work is now done by for-profit companies?

No one knows.

But some of the few available statistics suggest the state is outsourcing more and more of its work.While the state budget has grown over the past decade, the number of full-time state employees excluding those at its fast-growing institutions of higher education has dropped about 4 percent. At the same time, the value of the state’s contracts with outside vendors increased 55 percent between 2003 and 2007, a period during which state spending overall increased 24 percent.

That would seem to suggest that the privatization schemes aren’t saving us the money we were told they would. The DMN has an in depth series on the web of money and privatization in Texas called State of Neglect.

Texas has long been hard on the weak and vulnerable. It fares badly in national surveys of child poverty, food assistance and care for the mentally ill and disabled.

But it isn’t only the poor and afflicted who need help; everyone relies on state government for some protection.

Not everyone receives it.

Business interests and lobbyists exert strong influence on the writing of laws and the workings of state government.

Who benefits from that? Frequently, not ordinary Texans.

As today’s editorial that followed that article stated:

However, the state has not gone about shifting work to outside sources in a systemic way, nor has it implemented any consistent program to determine whether outside contracting has performed as expected and promised.

The headlines, however, have not been encouraging. To name two: Last October, Gov. Rick Perry temporarily stopped an $863 million contract with IBM Corp. to consolidate state computer data centers, affecting 27 state agencies, many of which had complained that they were seeing no benefit. And in December the state finally ended an $899 million contract with Accenture LLP, which had been hired to handle social services enrollment.

Last fall, state Sen. Steve Ogden, R-Bryan, chairman of the Senate Finance Committee, told us that those failures indicated the state needed significant improvement to how it goes about negotiating contracts with outside, private parties. For example, he said, the state could develop job classifications for state employees specifically trained and experienced in writing and overseeing such contracts.

State Rep. Dawnna Dukes, D-Austin, has proposed legislation to require the state auditor to evaluate the cost of any state contract, including any savings, of more than $10 million or that leads to the loss of at least 100 state workers.

As most agree, some state services — law enforcement, for example — should never be contracted out. But those services that are contracted out should provide demonstrable benefits to taxpayers, not just service to an anti-government ideology or to service the bottom lines of corporations and consultants.

Privatization may work in certain circumstances, but if it is used proper oversight, which the GOP usually shuns, must be in place.

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