• The State Budget Witching Hour Cometh

    November 9th, 2011 by admin Categories: Blogs Tags: , , , , ,

    From JTF Monologue on TechLeader.TV  on November 8, 2011:

    The so-called Witching Hour from Macbeth, to Washington Irving, to Wall Street has invoked a dreadful anxiety in anticipation of supernatural events. But the State of California faces its own very real witching hour next month when its budget realities come home to roost. This past summer the Governor and the legislature conjured up an additional $4 billion in tax revenues out of thin air to balance the state budget, along with a trigger mechanism to cut $2.5 billon should those revenues not materialize. On December 15th, the Administration and Legislative Analyst’s Office will in fact be forced to certify that the $4 billion projection was based upon, what Samuel Taylor Coleridge called, a “willing suspension of disbelief”.  Coined by the English romantic poet, these imagined or fantasy moments were traditionally reserved for literary fiction and the theater, but they are more and more prevalent these days in the woeful governance of our great state.

    As the phantom reality of these revenue figures is revealed, as much as $2.5 billion must be cut from the current FY budget over the next 30-45 days. As it stands now, 80% of those cuts target education, most of the rest at social programs, and less than 1 % from Corrections.

    However, the point of my remarks this morning is not to once again wring our hands, and mourn our predicament, but I want to again urge our elected leaders and our technology officials to demonstrate a sense of urgency and take action, to focus on innovative and yes, radical technology initiatives for addressing this budget problem, not just going back to the well for more education, social and healthcare program cuts.

    As we detailed in a comprehensive analysis for the incoming Brown Administration one year ago, we identified over $5 billion in IT related savings, a combination of major project cuts, consolidations and even terminations of non-performing and poorly planned IT projects, but more significantly we urged the application of new cutting-edge technology, unique data and advanced analytics which could vastly reduce the state’s improper payouts for benefit programs, tax refunds, and other programs, while improving the state’s collections processes. We’re only after $2.5 billion today, so let’s just look at improper payments and better collections:

    Federal payments made to the wrong person, at the wrong time, or in the wrong amount, last year totaled approximately $110 billion. Government agencies paid more than $1 billion to dead people. Most of these programs are administered and half funded by the states, and of course the biggest chunk is California’s. Fed OMB estimates California’s Medi-Cal fraud alone could be over $5 billion a year. However, the state recovered only a quarter billion dollars last year, so this is 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 who provide these services don’t get paid unless the money is recovered, then they take a small cut.

    Other areas besides Medi-Cal are ripe for aggressive, technology based investigation as well. 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. It is time to get serious about ending this profligacy.

    Oh, and I can hear the caterwauling now from the politicians and scribes who say you can’t eliminate the deficit by just cutting waste, fraud and abuse. Even if that were true, that’s no reason not to try, and trust me, there’s billions in play. Don’t believe me? Earlier this year TechLeader.TV broke the story that the Cal DOJ had reached a settlement with Quest Laboratories over Medi-Cal overcharges. Quest agreed to pay back the state, drum roll please, $241 million. And that’s the result of just one investigation. A quarter billion dollars recovered.

    So, let this witching hour mark more than just another round of budget cuts. Let the technology partnership between the state and vendor IT community work its special magic.




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