November 18, 2004
Letters to the Editor
Democrat and Chronicle
55 Exchange Boulevard
Rochester, New York 14614
Dear Editor:
Since the Rochester Democrat and Chronicle has embarked on a “Fix Albany” campaign, it is important that your Editorial Board become more fully informed. In order to assist with that effort, please find copies of the two Office of the State Comptroller’s reports and the KPMG study that were referenced in my recent letter on the DOT reorganization as well as a related DOT memorandum.
We share your concerns regarding the State’s chronic debt and deficit. However, State employees and their unions are not to blame. As you can see from the enclosed material, there is a substantial amount of evidence indicating that millions of tax dollars could be saved annually simply by hiring more in-house staff at DOT. Rarely is there such a simple common sense solution to a problem. However, rather than address the issue, DOT has wasted millions more “reorganizing”.
The back story on the attached KPMG study is quite fascinating and yet another example of the depth of the problems in State government as our leaders continue to waste tax dollars pursuing an agenda that does not serve the public. In any event, in an effort to diffuse the mounting pressure caused by the two OSC audits, the Department of Transportation hired the international accounting firm of KPMG to perform an “independent and objective” study using the state of the art cost comparison methodology known as activity based costing (ABC). It was widely believed that the purpose of this study was to discredit the two OSC reports.
To perform this study, auditors for KPMG billed DOT at a rate in excess of $160 per hour (three to four times the rate of OSC auditors, including benefits). The total cost to taxpayers for this study exceeded $350,000, yet DOT refused to release the results. Why would DOT spend over $350,000 and refuse to publish the results? Fortunately, a PEF lawsuit compelled DOT to release the study. Rather than disproving the two OSC reports, the KPMG study essentially confirmed their prior conclusions.
Recently, DOT wasted another $3 million on consultants to help with a reorganization plan. While these consultants billed at a rate of $1,800 per day, the reorganization plan apparently did not take into account any of the exceedingly relevant prior reports. Is it any wonder that New York State faces chronic debt and deficit?
Enclosed is a DOT memo dated June 11, 2003 that clearly shows the harmful effects of our State’s political “leadership”. The memo refers to a bridge inspection program in which DOT staff inspected all State and local bridges in Regions 3 and 7 for the last ten years. This was a hugely successful program that saved the State millions of dollars by using in-house staff rather than costly consultant inspectors. Now due to “severe constraints on internal hiring” (read hiring freeze), consultant bridge inspectors will be employed in these regions for the first time in at least ten years. In this case, the politicians use the hiring freeze in order to fake fiscal conservatism, when in reality they are spending more. Thus, in the same year that DOT spent over $3 million on a reorganization plan, a successful cost effective program was allowed to shrivel and die. Is it any wonder that New York State faces chronic debt and deficit?
Unfortunately, DOT is but one example of how our elected leaders willfully mislead the public by using the hiring freeze and a reduced State employee workforce to fake fiscal conservatism. For example, the Insurance Department hires accounting firms to perform routine examinations of insurance companies. The average hourly rate charged by these accounting firms exceeds $200 per hour, while the average hourly rate of State employee insurance examiners (including benefits) is less than $50 per hour. The Office of General Services, due to understaffing, routinely hires architectural and construction inspection firms, to perform work that could be done by OGS employees. These private contractors bill at twice the rate paid to State employees. The reality is that services once performed by State employees are now performed by private contractors at increased cost to the tax payer. Sadly, the public and credulous editorial boards cannot or will not believe that State employees are a bargain and privatization more costly.
Currently, both state and federal policy is to outsource as many government functions as possible. What is appalling is that there is little or no debate about whether this outsourcing serves the public interest. Research shows that this shift not only costs more tax dollars, but provides less accountability. However, since it is easy to demonize “big” government and public employees, the public seems to be unaware that rising costs are attributed to contracting out of government services.
Based on your editorial on DOT’s reorganization, it appears that your editorial board believes that the State can spend its way out of debt and deficit by studying an issue for 20 years, ignoring the results, and spending millions more creating an environment resulting in continued waste, all while blaming public employees and unions. If this is your recipe for “a reasonably good, budget conscious notion,” then it is no wonder the State is in its current fiscal condition.
New York State may be buried in debt and budget deficit, but the cause is not State employees and their unions. The blame must be laid at the feet of the politicians who blindly follow the rush to privatize services while ignoring documented facts and costs and pander to the electorate by proclaiming to be shrinking the size of the State workforce, when they are contracting out for services at twice the cost.
New York State needs rational reform and the citizens need to hold their government accountable. A degree of rational reform and government accountability will be achieved when the Legislature and the Governor sign legislation such as A.1726A/S.198, a bill which requires a cost benefit analysis before outsourcing government services. If your editorial board truly supports reasonably, good budget conscious notions, then perhaps it will also advocate for support of this legislation.
Sincerely,
Roger E. Benson
President
Enclosures:
DOT Memo June 11, 2003 RE: Bridge Inspections
KPMG Study
OSC Report 2000-F-25 (follow-up to 97-S-12)
OSC Report 97-S-12
OSC Report 89-S-45
cc: George E. Pataki, Governor (w/o enc.)
William Howard, Deputy Secretary to the Governor (w/o enc.)
George Madison, Director, GOER (w/o enc.)
Joseph Boardman, Commissioner, DOT
New York State Legislature (w/o enc.)
Executive Board (w/o enc.)
Council Leaders (w/o enc.)
Executive Staff (w/o enc.)
Tom Privitere, Director of Field Services (w/o enc.)