State government wastes $500 million annually THE Governor's Cost Control Task Force issued its long-awaited report in July. Charging that state government wastes $500 million annually, it recommended 678 ways of saving money. The 206-page report has already drawn criticism from both the political and private sectors on the merits of the proposals, their timing and ultimate practicality. One year ago Gov. James R. Thompson called for a voluntary formation of the task force from the ranks of corporate executives to study the efficiency of the executive branch under his jurisdiction. The same approach has been used with some success in over 20 other states, and leaders of private enterprise in Illinois responded quickly by offering their services and expertise to the proposed task force. In all, over 80 corporate executives were loaned and over $420,000 in private business money was contributed to study state government management and to recommend cost control methods. Originally, the task force report was to be issued April 15, and a controversy developed in the General Assembly when it wasn't. The businessmen explained they were still reviewing major recommendations with agency heads and adding documentation. But Democrats accused the governor of intentionally delaying release of the final report for political advantage. Democratic leaders delayed appropriations bills for several weeks to protest. They said the governor was holding up the report so that he could decide for himself which proposals would be implemented rather than letting the Democrat-controlled legislature make the decision. After the legislature adjourned and the report was officially released July 25, House Speaker William A. Redmond (D., Bensenville) essentially repeated the charges: "Millions of dollars have been picked from taxpayers' pockets." "Hogwash," replied task force chairman Gaylord Freeman, honorary chairman of The First National Bank of Chicago. Freeman said that task force members were all volunteers, with other commitments besides the cost control study. "We still finished within 11 months of when we started. I think that's very good," he said. Gov. Thompson's Democratic opponent, Michael J. Bakalis, blamed the governor for not eliminating in his first 18 months in office the waste uncovered by the task force. Bakalis pointedly said he "deplored the $500 million in Thompson administration waste and mismanagement that is detailed in the final report." Gov. Thompson explained he inherited most of the waste from the administration of his Democratic predecessor, Gov. Daniel Walker. Thompson said Walker left the state in "a precarious fiscal situation by steady overspending." Specific recommendations Gov. Thompson agrees with the task force recommendation that many state jobs should be eliminated, but he wants this done by phasing out positions vacated because of retirements. The task force said 4,000 state workers should be fired at once, out of 6,500 jobs marked for elimination. The report said eight agencies should be totally abandoned, and inventories in many agencies should be lowered by sales of state property. In addition, production and work incentives should be set up and administrative programs centralized in many agencies. Without criticizing the governor, the group also reiterated the need for implementation of the recommendations of the Illinois Task Force on Governmental Reorganization issued in November 1976. Gov. Thompson and his 1976 campaign opponent Michael J. Hewlett jointly appointed that advisory group, but none of its major recommendations has yet been enacted. The delay in reorganization tends to underline the weakness of advisory task forces. They have no real power to see that their proposals are implemented, despite the fact that their proposals do generate a lot of publicity for the governor. For example, the governor has not yet embraced any of the major recommendations of his Cost Control Task Force. He has, according to Freeman, given his personal guarantee that he will eventually institute "the great majority" of recommendations. And he has appointed an attorney, Michael V. Hasten, to his staff to coordinate implementation of the report's recommendations. And many are very simple, such as expanding the staff of the Bureau of Medical Audits and Review under the Department of Public Aid and thus improving control of recipient abuse of medicaid. This proposal alone, according to the task force, "should provide a net annual saving of $6.9 million in state and $6.9 million in federal funds." On August 9 the governor ordered his agency directors to assess each of the 678 recommendations and give him quarterly reports on their progress. Gov. Thompson says he accepts future responsibility for reducing the $500 million in waste. "The hard cold fact of life is that this administration is now 19 months old and it is now our waste, our inefficiency, our duplication," he told his agency directors in August, He said he would be judged by voters on how fast he could implement the cost saving ideas, and in turn, he would judge his lieutenants.
2/September 1978/Illinois Issues It may not be possible or necessary to implement all of the task force's recommendations. Some may prove to be impractical, impolitic or bad for government operations. For example, the call for centralizing printing operations in most agencies into a single state unit may delay publication of important documents and create an incredibly confused and complex agency that in the long run could raise costs and hurt efficiency. Or, the proposal that the Department of Corrections increase commissary prices "on a selective basis to cover all direct costs including salaries plus 7 per cent" to save $600,000 could end up angering prisoners, worsening the already explosive situation in Illinois' overcrowded prisons. Very little of the proposed savings can be expected soon, even if the governor and legislature enact the recommendations. Freeman himself admits that the full savings of $500 million may not be available for several years if implementation begins now. But, he adds, savings would reach $180 million annually by fiscal year 1982. Freeman says immediate action could be taken to cut costs by selling the Illinois National Guard Armory property in Chicago for $11.8 million and the farmland around Stateville prison near Joliet for $7.5 million. Other quick returns could be gained through complete reimbursement by the federal government for all eligible state programs and by better management of the Bureau of Employment Security and the Department of Public Aid to stop fraud. The task force report recommends important changes to cut costs in the management of 52 of the 59 agencies under the governor's control. The result would be an anticipated savings of $322 million a year for operational expenses. The total includes $178 million in state revenue, $75 million in unemployment insurance federal dollars and $69 million in restricted federal monies. Added to this savings in yearly operations would be $27 million in one-time savings. Besides reducing expenditures, the state should receive additional income totaling $123 million annually and a one-time boost of $54.5 million if all recommendations are implemented. This additional income would result from suggested fee adjustments, increased federal reimbursements and sales of assets such as unneeded property. There would also be "savings" through cost avoidance of certain appropriated budget items, totalling $3 million annually and about $1 million the first year. But implementation of many of the recommendations would require some new spending: $1.9 million annually plus a one-time startup cost of $35.8 million. Thus the total net savings come to $447.3 million annually plus a one-time $46.3 million sum. This all makes one wonder how much money could be saved in the other branches of government, including offices of legislators, judges and the other executive state officials, especially in the education establishment — none of which were studied by this task force. September 1978/Illinois Issues/13
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