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Government Reform Can Yield Large Savings

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Let me outline some areas of government reform that Virginians might want to look at before deciding there aren’t many areas where our state government can find significant savings.

Three years ago after Forbes designated Virginia as the best run state in the country, a Cabinet Officer for Governor Tim Kaine commented to me that he saw how much money was wasted each day in Richmond and if Virginia was the best run state he would hate to see the waste in other states. That’s a clear indication that management reform of our state government could save a lot of money.

I worked with Governor Mark Warner’s and Kaine’s chief of staff, Bill Leighty, on various government reform ideas.

One effort worked with state agencies and state legislators on 10 areas where better management could literally find hundreds of millions of dollars in savings. These included energy management, fleet management and eight other areas where techniques applied in the private sector could produce hundreds of millions of dollars in savings for state government.

Nothing was done with these ideas after Leighty left government service. These can and should be implemented today.

Three years ago, Leighty, former Del. Chris Saxman and I participated in a day-long session with current and past state agency heads discussing government reform. The idea was simple: if these folks with literally hundreds of years of state service were “king for a day” what changes would they implement to make state government better.

Scores of good ideas were brought forward, from the need to make sure agencies understood how they fit into the broader goals of government, to changing the way agencies worked together — and even suggestions that government consider a defined contributions retirement system rather than the current defined benefits system.

Eleven years ago the state’s own Commonwealth Competition Council surveyed agencies, asking which government positions could be considered for outsourcing to the private sector.

The agency heads identified 37,555 full time equivalent (FTE) positions that should be considered. This was not done by some outside group of “experts” but by agency heads – those who work each and every day managing state government.

If only one third of these positions could be sent to the private sectors — and if the same 30 percent savings can be found as the federal government maintains is the case if government jobs are carefully transferred to the private sector — then this alone would save the state $243 million a year or $486 million in a two year budget cycle. And the work would still be done – just in the private sector and not by state government.

This listing should be updated by the current agency heads — and the McDonnell administration should pursue outsourcing as many of these jobs as possible.

During former Attorney General Bob McDonnell’s efforts to reform and update state regulations, the Infrastructure Task Force had an analysis completed on the cost of construction on two major campuses compared to construction off campus.

The differential was close to 30 percent more on campus than off-campus. This means the taxpayers are paying hundreds of millions of dollar more for construction on our campuses than needs to be the case. So here’s another huge potential savings that needs to be focused upon if we are serious about reducing the cost of government.

More than ten years ago, Virginia Tech analyzed the savings when VDOT contracted out 251 miles of interstate highway maintenance to a private company. That analysis showed a savings of about $4 million a year.

The General Assembly agreed a couple of years ago that all 1,100 miles of interstate highways should be contracted out for maintenance. But nothing similar has been done with the state’s 9,000 miles of primary roads and 55,000 miles of secondary roads.

If private maintenance can save the same amount of money on our primary roads as on our interstate system, the potential savings are $144 million a year. Similar savings on our secondary roads would be another $220 million a year.

If only 50 percent of those savings were found, it would be $182 million a year. Virginia needs to move in this direction just a quickly as feasible.

And of course, Virginia could gain billions of dollars by selling or leasing such commercial enterprises as the ABC stores, the state lottery, the state’s pre-paid college tuition program, and the Virginia Retirement System.

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