$57M is touted as savings for state
Secretary lauds overhaul in 2019
State government’s 15 executive-branch departments have saved more than $57 million through transformation of their operations since they were merged from 42 agencies on July 1, 2019, Amy Fecher, secretary of the Department of Transformation and Shared Services, told lawmakers Thursday.
But some lawmakers questioned Fecher’s figures and others said the figures didn’t reflect bottom-line savings for departments.
Lawmakers had been pressing Fecher for information about the savings resulting from the reorganization. Their questions came up during hearings on the proposed budgets of state agencies for fiscal 2022 in advance of the regular session starting Jan. 11. The hearings started Oct. 13 and ended Thursday. Fiscal 2022 starts July 1.
In March, Fecher reported to lawmakers that the administration had saved $26.7 million from the overhaul during its first nine months.
In presenting his proposed general-revenue budget on Nov. 10, Gov. Asa Hutchinson said state officials identified $26.5 million in budget cuts in Category D of the Revenue Stabilization Act that state agencies didn’t ask to be restored in fiscal 2022.
“This $26.5 million savings is the result of good management, a team effort and accountability. That’s the goal of the transformation and efficiencies act which was passed by the General Assembly in 2019,” he said last week in present
ing his $5.84 billion budget proposal.
Fecher told lawmakers Thursday that her latest report showing more than $57 million in savings builds on her March report.
Transformation of executive-branch agencies has never been simply about dollars and cents, although it’s an important component, she said.
Hutchinson’s pillars of transformation are efficiencies in processes and funding; improved managerial support; and improved delivery of services to citizens, she said.
Fecher said her reports in both March and on Thursday focused on savings in facilities, budget reduction, personnel, reinvestment of savings and transformation efficiencies.
She said state departments have reinvested savings of more than $18 million to do more without asking for more money and without cutting programs and jobs.
“I like to say it is more bang for your buck,”Fecher said.
She said the state saved more than $12 million from 12 departments not needing to tap a state fund to pay for performance-based raises for employees; the agencies used their savings instead. The performance fund also has been cut by $10 million, she said.
Fecher said the departments have about 1,400 fewer filled positions since July 1, 2019. Six agencies saved $6 million by surrendering 166 positions and saved $1.4 million by renting about 92,000 fewer square feet.
She said the departments also had transformation-related efficiencies of more than $8 million. These are programs or initiatives that departments absorbed without additional funding and many of them are required under state law, she said.
Other initiatives included the implementation of a recommendation to recover unpaid state taxes; the recommendation came from an Arkansas Policy Foundation report, she said.
Since 2016, the state Department of Finance and Administration has collected more than $40 million in taxes by adding a second shift in a call center to contact people after hours, Fecher said.
“This number was not included in our total of the $57 million,” she said. “So I just want to point out again, it’s not all dollars and cents with transformation.”
Nine health boards have cut their licensing fees and a portal was developed at the Division of Emergency Administration for more than 900 fire departments to access and apply for grants on, she said.
“Just having the communication aspect that the 15 departments allows has been so essential during the pandemic,” Fecher said. “We have developed uniform policies across the departments that we did not have before transformation and departments would do things very differently from one department to another. We have reduced paper forms significantly and we have increased digital processes.
“We are striving for continuous improvement and saving and over this next budget cycle we look forward to even more savings,” she said.
Fecher said state officials have developed a dashboard “to show you real-time numbers by department” that will be made available on the transformation department’s website. The information available will include expenditures, employee numbers, square footage use and success stories since July 1, 2019.
“We have tried to tailor this to the requests that we have been hearing throughout the budget meetings,” she said.
Lawmakers asked Fecher for a laundry list of additional information, such as how many state employee positions have been created in exchange for surrendering 166 positions and details about the state Department of Commerce building in Little Rock — rent paid by each agency; the building’s annual operational costs; and annual bond payments for the building’s $26 million purchase.
Senate Democratic leader Keith Ingram of West Memphis said he and other state lawmakers are looking for “true savings” from the executive branch’s departments.
“In business, the true savings is what we are not expending and what our savings are,” he said.
“If you are looking at true savings as being money that is just turned back into the state and not expended, I don’t have a number for that and I never will,” Fecher said.
But Ingram said, “I think we are looking at hard cash savings.
“I think Rep. [Fran] Cavenaugh was trying to make that very point. That’s what we are after here, not blue sky in savings,” he said. Cavenaugh is a Republican from Walnut Ridge.
Budget Director Jake Bleed said the state budget system and manuals that his office produces aren’t built to provide that type of bottom-line information.
“I think what’s going on with the dashboard up here and the conversations that we are having here is really moving in that direction,” he said. “It will be a long discussion. … But I think it’s a good step in that we have this real-time data … and we have this sort of approach of looking at the data and trying to get down to that bottom line. I think that we are moving in the direction you’d like us to move.”
Rep. Jim Wooten, R-Beebe, questioned whether the state should be conducting zero-based budgeting every three or every five years, because he said the state has used the same budgeting system for 35 or 40 years.
Bleed said zero-based budget would be a very fruitful exercise for state government.
Rep. Michele Gray, R-Melbourne, said, “I know I feel like I am coming across here as being antagonistic or difficult.
“But as I look at this and I see $57 million in savings, as a legislator what I am looking to do is affect policy moving forward,” she said, “so I see this and what I think is great now I can vote on a tax reduction next year.
“But what I am hearing is that this isn’t real savings, so as a policymaker, I need you to give me the information that I need to make a decision for the people of Arkansas,” Gray said.
Gray said lawmakers need one report on budgeted savings and one report on actual cash savings.
“We have worked on it,” Fecher said. “I don’t know how to get you those exact numbers because what departments are doing if they have savings is they are spending it on further initiatives. They are doing more for the budgets that you all have appropriated for them. But to say that we have X amount of dollars in cash through transformation, I do not know how to get you that information because they are spending the money.”