I criticized Governor Brown last time on our TechLeader.TV (TLTV) Webcast for only identifying a paltry $200 million in budget savings through government efficiencies in a $100+ billion state budget. However, he formally asked the Bureau of State Audits and the Little Hoover Commission to provide a list of “Top 10 Actions” California can take to cut government waste and increase efficiency.
In response, TLTV kicked off a campaign to identify a billion dollars of IT related savings each business day, one billion each day, for five days, that’s $5 billion leading up to the March 4th deadline.
Today is the 5th day and here are our $5 billion, probably more like $6 billion in IT savings, a combination of major cuts, consolidations and even terminations of non-performing and poorly planned IT projects, and the application of new cutting-edge technology, unique data and advanced scoring analytics which could vastly reduce the state’s improper payouts for benefit programs, tax refunds, and other programs.
Eliminate $1.8 billion Financial Information System for California (FI$Cal) Project.
There is no greater, nor longer-standing proponent of a new, robust financial system for the State of California than I, ever since I walked into the State Capitol in 1995. If you can’t measure it, you can’t reform it. And it took more than a dozen years before the Department of Finance’s luddites left and the new leadership got the message.
The nearly $2 billion FI$CAL Project as it now stands is an over-planned, over-scheduled, over-budgeted monstrosity of a computer projected which by the FI$CAL team’s own estimates will take another decade to fully implement. I can attest that this project schedule alone is an absolute formula for failure, and I dare anyone outside the FI$CAL team to contradict me.
In addition, a three year or so postponement will cause little indigestion except within the vendor community. Then, in just a few years, the project could be resurrected with a more rational, abbreviated, rapidly deployable cloud-based alternative for one-quarter the cost.
Terminate California Court Case Management System (CCMS) Immediately – Savings: $1.5 billion
The full cost of the project when, and if, deployed by 2016 will reach nearly $2 billion, by some estimates $2.5 billion.
I am confident that the State Auditor Elaine Howle will concur with this termination given the highlights from her report last month which stated that:
- Cost have increased by over 700%
- There have been 102 contract amendments increasing the vendor’s contract from $33 million to $310 million.
- The complete deployment has been pushed back by seven years, and sounding the death knell
- A majority of the courts believe their current case management systems will serve them for the foreseeable future.
Just pull the switch. OK, That’s two days – total savings of $3.3 billion
Intensify Fraud and Waste investigations of Medical and other state benefit and revenue programs – Savings: $1.5 billion
Federal payments made to the wrong person, at the wrong time, or in the wrong amount, last year totaled approximately $110 billion. Federal agencies paid more than $1 billion to dead people. President Obama has set an aggressive goal to eliminate $50 billion in improper payments between 2010 and the end of FY 2012.
Each of these actual headlines involves programs most of which are administered and half funded by the states, and of course the biggest chunk is California’s. Fed OMB estimates California’s Medical fraud alone could be over $5 billion a year.
Ironically, a program championed by the Governor Brown during his Attorney General days could be a model for an expanded, state-wide effort potentially recouping billions. The AG investigates problems in the state’s $40 billion Medical program whose state share is nearly one-quarter of the state’s entire budget. The AG recovered nearly a quarter billion dollars last year, a 400% increase under AG Brown. However, this may be only the tip of the iceberg. By expanding the utilization of new technology based business intelligence analytics, improper payments can be substantially eliminated.
And the best part is the technology companies and vendors who provide these services, don’t get paid unless the money is recovered, or better yet not paid at all, then they take a small cut. I know that smacks of capitalism and market forces, terms sometimes anathema to many of our elected officials in Sacramento. But believe me, I’ve seen this, it works. OK, That three days – total savings of $4.8 billion
Finally, Getting the balance of our $5 billion was pretty easy, with plenty of options.
The state’s 75 IT project in its portfolio even after removing FI$CAL and the Courts Case Management system stands well over $5 billion. Serious re-examination of scope, schedules, and procurement strategy, even cancelling several non-performing projects could easily shave 10-20%. There’s another $500+ million savings.
Other areas besides MediCal are ripe for aggressive, technology based investigation. Unpaid California state taxes are nearly $7 billion a year, a cumulative total of over $100 billion. Similar error rates apply to other state programs across the board.
Take your choice, Governor, and get serious about ending this profligacy.