VERIZON BUILDING: Transformation or not?


The Arkansas Democrat-Gazette’s Michael Wickline reported this morning on the Hutchinson administration’s claim that his deck-chair shuffling of state agencies, aka “transformation,” had saved $26.7 million in the first nine months.

A few nits to pick:

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  1. This is not an independent analysis.
  2. In a budget of $6 billion (not counting federal dollars) $26.7 million is nearly a rounding error, way less than a tenth of one percent.
  3. As a gag Twitter account above notes, $10 million, or almost 40 percent, of the savings came from cutting an employee raise fund. (Oh, people still get raises. Extra dough DID go to some of the poobahs elevated to secretary, vice secretary and assistant to the vice secretary positions.) Wickline’s article also highlighted some of the difficulties in claiming workforce reduction as part of transformation rather than just normal ebb and flow. Example: Were or were not 100 jobs lost in closing of a rehab facility in Hot Springs part of transformation or not? That’s the equivalent of several million in personnel costs.
  4. About those claimed rent savings — for example, $360,000 by the Department of Commerce. I’d earlier asked for a long-promised report on the savings of taking Commerce agencies out of various buildings around town and putting them in the Verizon building, which the state had acquired for $26 million for an economic development prospect, Raytheon, that fell through. Agencies were installed there to cover the bad decision to buy rather than option the building. I ran the state rent analysis by a real estate developer. He noted that the total rents had dropped, but the state has less space. Maybe they needed to scrunch those bureaucrats closer together. But still: the state was paying $16.84 per square foot in the old 199,633 square feet of space versus $17.88 in the new 158,283 square feet. Plus, the analysis didn’t seem to include moving costs (furniture, phones, computers). Plus, there’s still unoccupied space in the Verizon building. Plus, the state paid $26 million ($5 million more than its appraisal on tax books and an amount equal to ALL of this year’s claimed transformation savings) on a building it didn’t need. Plus, the agencies that moved left at least one building that the state had expensively remodeled not so long ago, the former Dillard’s headquarters on Capitol Avenue.

So I’ll hold transformation applause for now.  Wickline got the “money” quote from state Rep. Megan Godfrey, a Springdale Democrat:

“Whether or not we realized extensive direct savings in the first year is less important than the fact that a more streamlined government can better respond to the changing needs of Arkansans.

“In addition to savings, we should continue asking whether transformation is indeed improving services for Arkansans,” she said. “I know that the Act 565 report does not require it, but I would also be interested to know how services have improved, if there have been growing pains, and what adjustments need to be made to continue to improve services.”

Can the state now handle Medicaid processing without bungling it?

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It wasn’t quite ready to handle the surge in unemployment claims. More computer glitches, in addition to the understandably swamped call center.

 

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