RALEIGH — James Hyler, Jr., vice chairman and COO of First Citizens Bank and chairman of the Governor’s Commission to Promote Efficiency and and Savings on State Spending, spoke at a Shaftesbury Society luncheon at The John Locke Foundation on Feb. 3 about the panel’s work in identifying ways the Easley administration could reduce cost and improve servce in state government. Below are excerpts from a question-and-answer period that followed Hyler’s talk on the panel’s work:
Q: What is the current health care plan for state employees and what do you recommend for a more cost-efficient plan?
Hyler: On the issue on dependence care, today the state pays fully the health insurance of the state employee. But it does not pick up any of the dependents’ side of it. So what we recommend is to look at having the employee pay a portion of theirs like we do in the private sector. You know, if its 10 dollars a month, 20 dollars a month, or whatever, and then the state picking up the dependent coverage. And what that does is it increases the risk pool, it lowers the age in the risk pool, and actually the losses to the state would be less.
Q: Is the governor prepared to go forward with all this?
Hyler: He seems to be behind it at this point. We are going to give him some very proactive things to think about and to implement these kinds of recommendations. I think you are going to see a lot of interest in the business community to take these things seriously. And if he does not, I think there will be some encouragement to do so.
Q: In the course of your study, was any effort made to come up with the definitive characteristic that defined how items get into the base budget from the expansion budget? And once those items get into the base budget how they’re there and continue to be funded regardless of their performance.
Hyler: We could only do so much [laughing] with the time and resources we had. We didn’t get into how things get into the budget. We were looking more at processes and then structural suggestions about how to look at that budget as relation to the budget process prospective of it. The zero-based-budget approach worked to eliminate duplication of programs. Worker development programs — there are some 50 worker development programs that the state spends right at a billion dollars a year on. A billion. A lot of that goes into the community college system, but it is still about a billion dollars.
Q: Would you say that based on your professional and personal experience that lack of competition seen in this state’s government over the last 100 years probably makes “automatic political patronage” more dictated to the status quo?
Hyler: Absolutely. Absolutely. I mean I certainly agree with that. But to quantify the impact of that is pretty difficult to do.
Q: It is certainly true that government bureaucracy tries to maximize their budgets. And they can usually do that by showing how ineffective their programs are. Basically they are saying, “We are not succeeding in what we are supposed to do, so give us more money.” This is unlike the private sector where if you are not succeeding you don’t get more money. You don’t get rewarded for failure. But there is an internal culture to always maximize your budget. And, it seems to me that the governor has to somehow over come this culture. Do you have recommendations for him in that regard?
Hyler: Well, what we are going to be working on over the next few weeks is to try and come up with some very definitive things to say: Here are some things that you can try to do as the executive branch to really try and bring about the beginning of shifting of the culture. I mean this is built up over, you know, a hundred years. This isn’t something you turn around in six months. First of all, I think you have to have a champion. I think you have to have somebody to really make this work. To enhance the effectiveness of this, you’ve gotta have a champion that is out there everyday in the media, in front of groups, going around to the various state agencies and departments, talking with the legislature to bring about change. You’ve gotta have a champion who is wildly passionate about bringing about change.
Q: Earlier you said that you and your committee did not get into policy questions, but does that mean that you did not consider for an option privatization as an efficiency measure?
Hyler: We did not get into specific things, but we do have a section that speaks to privatization. Our suggestion, again, was very broad in nature, but it said something like we encourage you [the governor] to look at any opportunity to privatize things. We also encourage you to look at other states to find best practices that we could implement here. And there are several other states that I’ve been told — and I have not researched this, so this is hearsay — I’ve been told that there are several other states that have done good work in privatizing things and in also bringing about some changes in the way government services are delivered to get more efficient. Right now in Virginia, the governor of Virginia is a Democrat, but he is a business person. He appointed former Governor Wilder to head a similar group, like our group, but he also has given them the funds to bring in KPMG to really get to it and get into the details and come up with amounts that can be saved.