Wednesday, March 26, 2008

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Privatization failure is taxpayers' burden

Because of an effort five years ago to run part of state government more like a business, the Texas Health and Human Services Commission is struggling to provide food and medical services to some of the state's poorest people. It's a disaster that ought to be remembered every time a legislator or lobbyist starts babbling that "privatization" of this or that state service will boost efficiency, lower costs to taxpayers and cure all fraud and waste.
As the American-Statesman's Corrie MacLaggan outlined in a Sunday story, the commission's staff of about 6,500 workers — down from about 10,400 in 1998 despite the state's population growth — who determine the eligibility of applicants for aid is heavily overworked and increasingly inexperienced. Since September, the commission has hired 1,010 workers, even as 733, including veterans who know the system, quit.
These employees process applications for food stamps and Medicaid for about 3.7 million people. To do so, they must master both the rules for qualifying and the computer systems to track applicants. Because of the staff's workload and inexperience, many applicants are having to wait too long for help.
Those tempted to shrug off the departures as "good-bye, good riddance" should understand that such turnover hits taxpayers in the pocketbook. It costs $7,500 to train an eligibility worker, so when one leaves, the investment in training is not only lost, more must be spent for the next worker.
Not surprisingly, part of the problem is pay. Starting workers make $26,000. The agency is trying to attract and keep more eligibility workers with raises averaging 5 percent and faster promotions, which also bring raises. And to reduce the workload, the agency is adding 600 employees.
The agency, though, really is engaged in damage control. The damage was inflicted by the Legislature, which for years slashed away at the ranks of the eligibility workers and, in 2003, ordered the commission to consider farming out its work to a private company. The theory was that a profit-seeking company would do a better of job wringing out inefficiencies than any state bureaucracy. And Health and Human Services Commissioner Albert Hawkins decided to try.
An $899 million contract was signed with a business alliance led by a major consulting company, Accenture. Hundreds of state eligibility workers were told to prepare to lose their jobs; some did and others began leaving rather than wait. To make a long story short, the experiment failed. In fact, it failed so badly that the state and Accenture agreed to end the contract last spring, and the Legislature later made provisions to try to salvage the state's eligibility work force.
You can argue that the privatization theory is correct but, in this case, was badly carried out; or that the theory is wrong and no amount of competence could have saved it; or that the theory is wrong and it was incompetently carried out.
What's not debatable is that this attempt to run state government more like a business failed. And the price for that failure is being paid by taxpayers, the state workers and poor people who truly need the help.

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