Consolidate agencies, privatize, trim benefits

01/13/04

MONTGOMERY - A panel on state spending recommended Alabama consolidate agencies, pay private companies to manage some functions and trim employee benefits, a suggestion that got the group branded as anti-worker by the head of the state employees' union

The Governor's Commission on Efficiency, Consolidation and Funding, created by Gov. Bob Riley to find ways to save taxpayer money, gave the governor a long list of possible actions. Commission Chairman Mike Warren, CEO of Energen Corp. in Birmingham, said he hoped the recommendations would be a road map to guide the governor and lawmakers.

"These problems are not easy, nor are the solutions," Warren said.

The 37-member panel made up largely of politicians and business executives made a broad range of recommendations.

They included studying the possibility of: consolidating the Departments of Mental Health and Public Health; contracting with a private company to manage child support collections and the state motor pool; reducing the number of state holidays from 13 to 10; and starting an aggressive program to go after businesses that don't pay their taxes.

But it was a suggestion to rethink pay and benefits that drew immediate criticism and vows of a battle.

Mac McArthur, executive director of the Alabama State Employees Association and a member of the commission, said the report treated state employees "callously" and that commission members were determined before they started "to take a pound of flesh from employee benefits."

"The blinders they wore kept them from seeing the full picture," McArthur said.

The commission called exploding health insurance costs the biggest threat to the vitality of the General Fund. It called for a more comprehensive study into employee pay and benefits to be completed within the next 120 days.

The panel gave only a few specific suggestions on pay and benefits changes. Those included tiered-insurance coverage, which would ask employees who get the most comprehensive coverage to pay higher premiums. The group also suggested the state re-evaluate the merit system and study the age and time requirements for retirees to earn health insurance.

Other commission members disputed McArthur's assertion that the report was anti-employee.

Attorney General Bill Pryor said early retirement, allowed by the state's benefits package, not only costs the state money but valuable talent.

"We want to prevent the brain drain, frankly," Pryor said.

Birmingham lawyer Lenora Pate said McArthur's comments were premature.

`Financial crisis':

Pate, who headed a subcommittee on health and human services, said the group was focused on maintaining the quality of state services as well as saving money.

"The bottom line is we're in a financial crisis," Pate said.

Riley said he couldn't comment on the commission's findings because he hadn't seen them. Riley is considering calling a special session on state spending reforms, including employee benefits. He has estimated a $300 million shortfall in the state General Fund budget for fiscal 2005.

A separate commission is reviewing spending in the Education Trust Fund.

Pate and Business Council of Alabama President and CEO Bill Canary said Alabama voters made it clear in the failed Sept. 9 tax referendum that they did not want to pay more taxes without reforms.

The commission did not recommend any tax increases to fill out the budget. But Warren said that "any substantial cost cutting in the 50 percent range that has been mentioned would result in serious and detrimental impacts on state government's ability to provide core functions."

Other proposals suggested by the panel included considering:

Repealing a state law that mandates the Medicaid reimbursement rate for nursing homes, allowing the Alabama Medicaid Agency to adjust that rate, as it does for other providers.

Re-evaulating the medical and financial criteria for Medicaid-paid nursing home admission.

Creating a Department of Commerce to oversee industrial recruitment and tourism promotion by consolidating the Alabama Development Office, the state film office, the Bureau of Tourism and Travel, existing industry programs, and the state minority business program.

Studying the use of thousands of acres used by various state agencies.

Consolidating the Alabama Forestry Commission and state Conservation Department.

Consolidating the Alabama Surface Mining Commission, the State Oil and Gas Board, and the Geological Survey of Alabama into the Alabama Department of Environmental Management to combine environmental programs.

Consolidating all human services programs, including the Department of Human Resources, the Department of Senior Services, the Department of Children's Affairs, and the Department of Veterans Affairs.

Consolidating similar functions spread out in several agencies, such as consolidating legal services under the attorney general.

Reducing the days that some services are offered, such as food stamps and child support services.

Raising the limit on state purchases that can be made without getting bids.

Using a single application form for Medicaid and the state's subsidized health insurance program for children.

Making electronic payments to state employees and to private citizens to save on the cost of issuing checks.

The Associated Press contributed to this report.