Arkansas state agencies have nearly 200 cost-savings programs, but they fail to recognize other areas where they can save taxpayer money, according to a privately researched report released this week.
Nearly a year of research by the Arkansas Policy Foundation into the 21 largest state agencies found that the state could save up to $50 million a year by recognizing there is more room for efficiency, according to the report, released Wednesday. The majority of that savings, $43 million, would come from a series of recommendations targeting inefficiencies found in revenue collection and education programs.
The remaining $7 million in savings would come from agencies making efficiency a stated priority and seeking privatization options, according to Greg Kaza, the director of the foundation. Kaza is a former Republican state representative from Michigan.
The foundation received no state money to conduct the report, Kaza said, and relied heavily on volunteer researchers.
According to its website, the foundation is dedicated to "pro-growth" tax change and education change. Its board of directors includes members of Arkansas' Murphy and Rockefeller families.
Gov. Asa Hutchinson said in December 2015 that he would order state agencies to cooperate with the review and he would consider its recommendations.
However, agencies are not required to adopt the proposed policies outlined in the 70-page report.
"I have been anxiously awaiting this report. All of my agencies have been cooperating and providing information to support this review," Hutchinson said in a statement through a spokesman. "I look forward to studying the recommendations more closely and making transformation of state government one of the priorities of my administration."
The first series of cost-cutting recommendations was aimed at education funding, which the report found inefficiently distributed $27.5 million of the $3 billion sent annually to school districts. As much as $20 million could be saved by reapportioning National School Lunch Act funds so that more goes to districts with a higher number of free- and reduced-lunch recipients, Kaza said.
The Department of Finance and Administration could save $15.5 million a year by increasing by 5 percent its collection of outstanding money owed to the state, according to the report. Kaza said the foundation is recommending privatizing at least a portion of revenue collection if the 5 percent increase in collection cannot be met by state employees.
Spokesmen for the finance department and the Department of Education said Wednesday that they had not had time to review the report.
The foundation concluded many of its findings from a two-page questionnaire distributed to state agencies, eliciting answers about their challenges and solutions and how they identified efficiency in their services.
Based on responses to the questionnaire, the foundation's report concluded that only four of the agencies cite efficiency in their mission statement and six had a strategic plan referring to efficiency. Still, Kaza said the report found 184 programs across all 21 departments aimed at cutting costs, saving the state between $7.3 million and $13.5 million a year.
"Efficiencies exist in state government, but much more needs to be done," Kaza said. "We suspect that if you had state employees and the public more engaged, you'd be able to find more efficiencies."
Part of the problem, Kaza said, is that many state agencies operate in "silos" that prevent them from engaging in new ideas with employees, citizens and other agencies in the state and region. For example, researchers, after receiving a tip, concluded that most state employees don't know about or use an already-implemented suggestion program.
"When we started, there were people saying you'd never find efficiencies in Arkansas state government," Kaza said.
The foundation's findings were presented to agency heads in the third quarter of 2016 and to the governor in September, Kaza said. Directors were given a chance to give feedback on proposals to look into efficiency areas and options, Kaza said, but, save for the revenue and education proposals, the foundation did not recommend specific ways to cut costs.
The report also recommended that the state look into other areas of privatization, including state parks and prisons.
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