State cost savings targeted

A top executive with the private firm contracted by the Jindal administration to find savings in state government told legislators Wednesday that about a quarter of a billion dollars could be saved by changing Louisiana’s procedures for purchasing goods and services.

Louisiana spends $2.5 billion annually on procurement covering everything from the purchase of supplies to contracts for accountants, lawyers and other professionals, said Bill Roberti, managing director at Alvarez & Marsal, to the House and Governmental Affairs Committee.

However, he cautioned, “You are not going to get to the bottom of that well in a short period of time.”

The management firm’s $4.2 million contract runs for three years, although the contract requires submission of a final report in mid-April — four months after the Jindal administration entered into the contract.

Any work performed past then will require more money from the state.

The contract has been expanded by $800,000 to include the Office of Group Benefits, the agency that handles health insurance for about 250,000 state employees, their families and retirees. The firm is to find ways to make the agency more efficient, with a goal of lowering costs for taxpayers and limiting premium increases for those covered.

Roberti said another area of firm work that should yield dividends is an analysis of where the state could attract additional federal funds.

“You get a lot of federal money,” said Roberti. “Are you maximizing that? Are you getting the most you can get and utilizing it in the best way?”

Roberti said more than 15,000 man hours will have been spent by the firm involving 53 employees who are experts in various areas.

It was a challenge to develop a catalog of all contracts for goods and services where the firm could look at the facts and analyze what was going on, Roberti said.

For instance, he said the check found $211 million being spent on engineering services. “The prices you pay vary. If you cut to the median you take $15 million to $20 million out,” he said.

Commissioner of Administration Kristy Nichols said many recommendations can start immediately after acceptance.

“The majority will occur over the next 18 to 24 months. Some may require a full three years,” she said, such as procurement.

Some of the firm’s early recommendations are being incorporated into the administration’s proposed $25 billion state budget for the fiscal year that opens July 1.

House and Governmental Affairs Committee chairman Rep. Tim Burns, R-Mandeville, asked how much weight the firm was giving to what functions and services of government Louisiana residents value as they look at services for potential reduction or elimination.

“We are absolutely vetting every single recommendation,” said Roberti. “It’s got to make sense.”

“I don’t see this in any way as a service reduction process,” Nichols said. “We have done a lot in terms of service delivery where we could be more efficient.”

State Rep. John Schroder, R-Covington, said he wanted the firm to share information it developed with legislators “so we will have a fuller understanding of government.”

Legislators have been critical of the administration entering into the contract — wondering what the firm could come up with that has not been tried in the past.

They also criticized the administration expenditure when the state could not afford to expand services for the developmentally disabled.