Blue Sky Savings

A plan to break up the state Department of Management Services is being called a "rational reorganization" or, in less glowing terms, "rearranging deck chairs on the Titanic."

Senate Bill 1238 would disperse the 1,266-employee DMS by shifting many of its functions into the Department of Financial Services, while creating a new Agency for Asset Management to be housed temporarily under the Department of Environmental Protection.

The measure by Sen. Jeremy Ring, D-Margate, cleared his Committee on Governmental Oversight and Accountability on Wednesday. It next goes to the Ways and Means Committee.

But, Ring encountered stiff opposition from fellow Democrats along the way.

Sen. Al Lawson, D-Tallahassee, repeatedly asked for -- but did not get -- a financial analysis of the reorganization.

"This will have enormous financial impact. There's been tremendous improvement in the department in the past two years. We need to allow them to do better," Lawson said.

He alleged that Ring's plan, rather than saving money, would cost $50 million more in transition costs.

Ways and Means Chairman J.D. Alexander, R-Lake Wales, promised that a fiscal impact report will be completed before his panel hears the bill.

Ring said his "Government Effectiveness and Efficiency" legislation does not specify layoffs, but he added that layoffs are possible whether or not his bill is enacted.

"This state has not had a significant reorganization since the 1960s, and no agency has been reorganized in 20 years," he said. "DMS has doubled in size, and other agencies have similar purviews."

Alexander has expressed frustration that he hasn't been able to gather a complete inventory of state-owned and managed real-estate holdings from DMS.

 

Florida TaxWatch last month identified more than $45 million in state properties it said should be sold immediately.

But, while praising SB 1238's intent, TaxWatch Chairman Dominic Calabro said the Legislature should look to maximize assets and lower costs instead of attempting to engineer structural changes.

"The challenge is how much time do you spend on infrastructure. It's easy to get lost in the weeds," Calabro told Sunshine States News after the hearing. "Dismantling or re-engineering agencies isn't the way to do it."

Channeling Lawson -- who related that DMS managers have achieved $420 million in savings -- Calabro said, "The upper level of DMS is talented. But, you're not going to get more talent by rearranging deck chairs on the Titanic. Bureaucracy begets more bureaucracy."

Calabro was equally skeptical about claims of anticipated long-term savings without specific personnel numbers.

"Reducing costs inevitably affects someone's job. To get really significant reductions, you have to target benefits and personnel."

Calabro also questioned the timing of the legislation and an apparent shortage of due diligence.

Noting that the bill just rolled out a week ago, he said, "It may be too much to do this in 45 days. Unless we know exactly where money is being saved, we probably won't get there."

Calabro said any successful cost-savings agenda requires the leadership of the governor.

"This needs engagement by the governor. The new governor should have the opportunity to design a better system for the next four or eight years."

Every four years, concurrent with the gubernatorial election, incoming legislative leaders and the governor convene a Productivity Improvement Commission to spend up to a year looking for ways to streamline state government.

"A comprehensive and integrated assessment is needed," Calabro concluded.

Gov. Charlie Crist's budget proposes to add 32 positions at DMS while allocating $600 million for the next fiscal year, a $1.4 million reduction.

Ring, in defending his bill, said, "'Government waste' sounded like a cliche before I got on this committee. The fact is, we don't know what assets we own now."

DMS provides centralized management services for purchasing, real estate development and management, and fleet management. The department also manages insurance benefits and the state retirement system in addition to high-level information-technology support for state agencies.

Leaving DMS' human resources function essentially intact, SB 1238 would distribute selected other responsibilities to the agencies that handle those tasks.

In this way, the bill resembles a private-sector model that reduces administrative overhead. Retail giant Wal-Mart, for example, has one-tenth the number of workers in its HR department than does the Miami-Dade school district, Republican lawmakers note.

DMS officials, who declined to comment on Wednesday's hearing or the legislation, said their contract renegotiations have already netted a $420 million savings for fiscal years 2008-2009 and 2009-2010. That total -- which ranges from modest savings on items such as software support and copy machine leases to a $75.4 million HMO rate reduction -- equals roughly 35 percent of the department's operating budget for those two years.

Ring said he expected that a reorganized system should be able to attain an "identical or better deal."