A state efficiency report presented Tuesday made 105 recommendations that consultants said could mean $2 billion for Kansas over the next five years.
The recommendations included ways to consolidate functions and increase revenues without tax increases but also suggested switching state employees to high-deductible health insurance plans.
Legislators hired Alvarez & Marsal last fall to conduct the $2.6 million study in hopes of finding relief for Kansas’ beleaguered budget, which is headed for a shortfall this fiscal year and a $170 million gap in the 2017 fiscal year, which starts July 1.
Savings in the 2017 fiscal year could be about $300 million, according to the report.
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“I will say I was shocked when I heard the $2 billion with a ‘b’ number,” said Rep. Ron Ryckman Jr., an Olathe Republican and chairman of the House Appropriations Committee, at the end of the presentation.
“The work is just beginning.”
The report issued Tuesday was preliminary, with the final report due next month. Ryckman said lawmakers would work this session to review and implement findings.
J.W. Rust with Alvarez & Marsal outlined several of the firm’s recommendations, noting there was more to be done on the 260-page report. He said the final report would include suggestions of how best to implement the recommendations.
The recommendation to offer state employees only a single, high-deductible health plan would save an estimated $124 million over five years.
“Some of the leading-edge research has been moving toward high-deductible plans to keep caps on costs,” Rust said.
Rebecca Proctor, executive director of the Kansas Organization of State Employees, called the recommendation “incredibly shortsighted.”
“The state has an aging workforce, whose health care needs cannot be adequately met by a high-deductible plan,” she said in an e-mail. “State employees are already paid below-market rates. This move would only further erode paychecks and make the state an even less attractive place to work.”
▪ $600 million in savings over five years in K-12 education, with such measures as moving school district employees to the state’s health insurance and benefits plan and consolidating purchasing under a statewide initiative. The health insurance shift accounts for about $360 million of the estimated $600 million in savings. School district employees would still be able to choose from several health plans under a statewide system, Rust said.
▪ $100 million in savings over five years by consolidating contracts, such as the state’s wireless service contracts.
▪ $80 million in savings and additional revenue over five years in the Transportation Department with such measures as consolidating offices, increasing sponsorships at rest stops and selling underused equipment.
▪ $381 million in increased revenue over five years by filling vacant revenue officer and auditor positions in the Revenue Department.
▪ $170 million savings over five years by changing the way the state bids and administers its insurance policies, including the creation of a central office of risk management.