March 15, 2011

Auditor General Highlights Results Of Audits Identifying Billions In Savings

Auditor General Jack Wagner today repeated his laundry list of recommendations on how state government could reduce costs to the House Appropriations Committee by $1.3 billion in the first year and in four years save $6.3 billion by reducing the Medicaid error rate, finding effective alternatives to imprisonment, reforming DPW's special allowances program, offering voluntary retirements to state employees, consolidating prescription purchases, elimination of cost of living increases, verifying eligibility for the LIHEAP energy assistance program and other steps.
Medicaid Error Rate: Wagner stood by his agency's special audit of the Medicaid program which said the state has a 14 percent error rate, not a 4 or 5 percent error rate as the Department of Public Welfare suggested in the past.  If that error rate was reduced to just 10 percent, the state could save over $400 million in state funds and another $600 million in federal funds annually.
Prison Reform: Wagner said Pennsylvania could save $50 million in fiscal year 2011-12 and $350 million over four years if Gov. Corbett and the General Assembly better utilized existing alternative-sentencing programs and implement other reforms as a way to curb Pennsylvania’s unsustainable increases in prison costs.
Prescription Drug Purchases: Wagner said the Commonwealth could save at least $50 million a year just by consolidating all of its own prescription drug purchases. Pennsylvania could save an additional $200 million a year, or more, if it took the next step of pooling its prescription purchases with those of New York and New Jersey.
Competitive Bidding: Wagner said his department has uncovered systemic problems with the state’s $4-billion-a-year procurement process that, if corrected, would provide hundreds of millions of dollars in sustainable savings.
Auditor General Budget: Wagner noted his agency is setting an example for budget savings pointing to the fact his agency has reduced its staff from 755 to 619 and is $2 million less than it was just two years ago when the state General Fund budget increased by 22 percent.
Auditor General's Ideas For Reducing State Costs

First Year Savings 4-Year Savings
Charter & Cyber School Formula Changes$225 million $900 million
Voluntary Retirement$201 million$1.34 billion
Reduce Medicaid Error Rate$436 million$1.89 billion
Prescription Drugs - Merging Programs$50 million$200 million
Prescription Drugs - Joining NY, NJ$200 million$800 million
Eliminating 2011 Cost Of Living Increases$3 million$12 million
Competitive State Contracting$200 million$800 million
Criminal Justice/Prison Reforms$50 million$350 million
                                                   Totals$1.37 billion$6.29 billion