State finance commissioner defends Haslam’s outsourcing plan
NASHVILLE — State Finance Commissioner Larry Martin on Wednesday zealously defended the Haslam administration’s continuing push to outsource services, suggesting to state senators the executive branch is “intellectually and morally” obligated to look at it.
“It has been said that the easiest thing to do in government is do nothing, maintain the status quo and everybody’s happy,” Martin told members of the Senate Investigations & Oversight Subcommittee. “Now, intellectually and morally, you know that is wrong.”
Martin said “we have a responsibility, we have resources to provide services to the most vulnerable of our citizens, and we have a clear responsibility to our taxpayers to spend their money wisely.”
Senators are examining ongoing administration outsourcing projects ranging from building management and services in higher education to a similar initiative at Fall Creek Falls State Park. That effort would put a for-profit company in charge of hospitality services there as well as being in charge of tearing down the existing inn and rebuilding it with $22 million in state funds.
But the Tennessee State Employees Association and the United Campus Workers union are battling Republican Gov. Bill Haslam’s privatization plans. They allege many employees risk losing their jobs or, if retained, seeing lower pay and fewer benefits.
Customer Focused Government Director Terry Cowles told senators large companies don’t have to fire state workers or skimp on pay or benefits in order to reduce costs.
He argued the majority of savings comes from facility management service providers’ ability to cut power costs, along with their size enabling them to achieve economies of scale in areas like equipment purchases, having trained in-house workers and ability to avoid relying as much on expensive sub-contractors and reducing repair and maintenance expenses.
That ultimately saves them and, ultimately, taxpayers money, Cowles and Martin said.
Martin’s slide presentation shows a “potential transition workforce” reduction of state-paid employees in higher education and general government at 2,976, with 1,011 positions at the University of Tennessee and another 429 at the Tennessee Board of Regents.
“This is not 10,000 employees across the state,” Cowles said.
Administration officials say the state saved $26 million in the first three years of its initial venture into building management outsourcing with Chicago-based real estate giant Jones Lang LaSalle.
Haslam has pledged to let higher education leaders make the decision on whether to outsource in areas such as food services, maintenance and groundskeeping.
Martin and other officials said Wednesday that state and higher education workers’ jobs would be protected in transitioning to a private vendor, but they would have to pass criminal background checks and drug tests.
The officials also said that employees’ pay and benefits will be protected through a “total equitable compensation” package involving salary, health insurance, a 401(k) employer match and education assistance.
Randy Stamps, executive director of the Tennessee State Employees Association, told senators that some of the information was only now being shared with them publicly after months of trying to get answers from the administration.
“We still feel like there needs to be more study,” Stamps said. “Our philosophy is that we need to put Tennessee first.”
He also said that although the administration touts actual savings of $26 million in its first round of state building management outsourcing several years ago, the “savings flow outside the state” because the large companies are headquartered in other states.
And, he said, “I still believe they’re going to have some labor costs” cut for companies to make their shareholders happy.
Dr. Malanie Barron with the United Campus Workers called outsourcing “bad for all of us” and accused the Haslam administration of conducting much of its efforts “behind closed doors.”
She said the administration now working with potential vendors on the higher education outsourcing has a “private seat at the table,” and she questioned why anyone wouldn’t believe “this is a sweetheart deal.”
The Senate panel’s chairman, Sen. Steve Dickerson, R-Nashville, said employee job protection and compensation are “foremost in our minds.”
She also questioned the administration’s claims for employee protection, saying the language of the request for proposals indicates otherwise.
Sen. Janice Bowling, R-Tullahoma, who is fiercely battling Haslam’s efforts to privatize hospitality operations at Fall Creek Falls State Park near Spencer, Tenn., questioned the stability of park employees’ jobs.
Bowling also questioned administration claims on cost savings for the state, saying the outflow of state funds to large corporations headquartered in other states will result in less money staying in Tennessee.
Haslam tried to outsource hospitality operations at a number of parks two years ago, issuing a request for proposals. But the administration got no responses because companies balked, citing the poor condition of park facilities.
Last year, Haslam provided $22 million to tear down the existing Fall Creek Falls Inn and rebuild it. Then, the administration in December moved approval through the State Building Commission to commence a request for proposals to privatize operations of the park’s inn, restaurant, gift shop, cabins and golf course. The vendor would get the $22 million to hire architects, engineers and building contractors to do the work.
The process was halted last week, however, because of concerns voiced by Tennessee architects and engineers and the Building Commission, Lt. Gov. Randy McNally, R-Oak Ridge, has said.
Contact Andy Sher at asher@timesfreepress.com or 615-255-0550. Follow him on Twitter @AndySher1.