Gov. Matt Mead’s office signed a one-year, $1.8 million contract with management consulting firm Alvarez & Marsal, furthering a Legislature-driven effort to stem some of the state’s fiscal woes through streamlining state government.

The New York-based consulting firm, Alvarez and Marsal, has been awarded two efficiency study contracts in Wyoming totaling $2.175 million through the Government Efficiency Commission. The way this is set up, A&M makes more money for each new efficiency study they conduct. And they get paid whether the state saves any money or not.

Former Gov. Matt Mead wanted to help the state become more efficient, and I believe he tried hard and I am thankful for his efforts. Now this monster task is in Gov. Mark Gordon’s hands and I wish him the best.

In testimony to the GEC on May 2, A&M recommended Wyoming spend $45-$55 million with the hope of saving over $200 million in the 2023-2024 budget, yet there doesn’t seem to be a single guarantee.

A&M has conducted similar multi-million dollar efficiency studies for Kansas, Louisiana and North Carolina and the savings there seem uncertain. Louisiana apparently discovered the devil was in the details, and nothing seems to have happened in Kansas after its study was completed.

During a previous GEC meeting, the Administration & Information Office reported that they had already spent 600 hours complying with A&M’s initial $280,000 study that included “Span of Control” recommendations. The final takeaway was an “ah ha” moment for the department (and no money was saved). For actual savings to be realized workers would need to retire, legislators would need to be educated, the culture of state government would need to change and all of it would need to be maintained through multiple administrations. Then we might realize savings.

During May 2nd’s GEC meeting, Dr. Pat Arp, Gov. Gordon’s chief of staff, pointed out that A&M’s current $2 million study has stopped short of showing if and how the savings can be implemented.

Mark Howard, Alvarez and Marsal’s Denver-based managing director of state and local government consulting then took the floor to remind us that we are right where we need to be (after we’ve spent $2 million). A&M has introduced a set of ideas to introduce savings, he said. Howard assured the room that he is confident savings exist and they are real. A&M said they had a very long list of ideas, but the next step would be to invest $10 million to recover savings.

Then Howard asked the GEC members what the State’s priorities were because doing everything would cost more than the $10 million allotted for identifying efficiencies. He added that hopefully soon they will be able to start telling us what we can do to actually cut money out of the budget. Mr. Howard also added that such studies are not new, but “the studies are done, you farm out all the recommendations, nobody knows what happens”.

With the new software A&M picked out and purchased, it will be the state’s responsibility to track any savings. Is this setting up Wyoming’s state employees to bear the blame if no savings are ever realized?

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Many of A&M’s recommendations do not seem feasible. Others are already being implemented. J.W. Rust, one of A&M’s consultants based in Washington D.C., suggested the state needs to find undeclared improvements that have been made to properties to increase tax revenues to pay for education. Senate President Drew Perkins (R-Casper) then said some counties are already doing this. I guess we need A&M to make it a statewide effort.

And how exactly would we learn of these improvements? Should we set up a hotline for Wyomingites to report their neighbors?

We’ve been told to chase Medicaid dollars, but for this to happen we would need to change legislation, implement new systems and more. The “investment” for A&M’s recommendation on this would cost $1.3 million.

Gail Symons, a GEC committee member, tried to explain some of the challenges in reeling in school funding based on the landscape of Wyoming, which seems appropriate since Rust is based in Washington D.C. But she then agreed that we could take a look at it and it might be worth it. Trying to decide if something is worth it seems to be my main point. We could very easily spend many millions of dollars and end up with no savings.

When responding to questions about educational savings, A&M offered up their Kansas study. Spoiler alert: According to the Kansas Board of Education, their recommendations seem to have never been acted on there. Yes, Rust used an example of a savings recommendation that was never implemented, but failed to mention that to the panel. Are we to believe it would then work in Wyoming?

One of their Kansas recommendations was to slash teacher benefits. Why would we need a consultant to tell us this would save us money?

I was relieved that when A&M was asked how to handle some of their other recommendations they didn’t suggest one of their consultants gain a government position, as happened in North Carolina. The Raleigh News & Observers reports that Rudy Dimmling, who is a consultant for A&M, was being paid roughly $800,000 per year for his consultancy services before being appointed as the state’s Medicaid Finance Director at an annual salary of $175,000. And now it looks like he is back to consulting for A&M. 

The anticipated “investment” for A&M’s “consolidated benefits” recommendation is around $1 million and it would require two separate elements. First, A&M would need to make an assessment program for evaluating benefits (Kansas, anyone?) and then we would need to work with an actuary.

When looking at page 16 of A&M’s “Shared Services” handout, it appears that A & M is also recommending we spend $10 million more for a few other recommendations. This is not a typo. The “investment” for a recommendation would cost around $10 million dollars. Yes. And then if we actually do some of this, we are possibly looking at spending more money.

This report reminds me of the one conducted in Louisiana.

Right now Wyoming is exactly where Kansas was in 2015 when The Topeka Capital-Journal wrote this article about recommendations for that state. It seems Kansas never actually implemented many of the recommendations. Why it would be any different here in Wyoming than the other states?

And what about A&M’s North Carolina study? How did that go? How much money was saved?

Chris Cowley was introduced at the GEC hearing as A&M’s “supply chain and logistics” person and seems to be based in Seattle. He is also their “Wyoming guy” but I could not find him listed on the A&M website. Of everyone who talked at the GEC meeting, I had the least faith in this guy. He mentioned that hard dollars are not the only thing A&M is looking for. (Uh oh! I am starting to view statements like this as a disclaimer for later when no savings are realized).

In their initial $280,000 study, A&M barely mentioned strategic sourcing, suggesting that $126 million in current state contracts — copier purchases for example — could benefit from being strategically sourced. Now it seems they have someone ready to explore this field at taxpayers’ expense. When asked, Mr. Cowley said he did not want to “oversell” the savings potential, but I had just endured three hours of discussion that felt like a mega-oversell!

For the past three years, I have been advocating for only a strategic sourcing proposal where payment is based on the percentage of savings. It was probably foolish to think A&M would have watched a revenue stream walk out the door.

Also, according to A&M, it sounds like “everyone has to be on board” or this won’t work out. How will we know if future elected officials will even be committed to this?

Hopefully we are all starting to understand how elusive $45 million in savings can be. Maybe this realization is what happened in some of the other states.

Why don’t we wait and see if the current $2 million study ends up savings us any money before biting off another $45 million?

Rebecca Bextel

Rebecca Bextel is a Jackson-based entrepreneur. She can be reached at RebeccaBextel@gmail.com

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  1. At July 15th’s Government Efficiency Commission meeting, we once again listened to New York-based consultants, Alvarez and Marsal, explain why they needed more state contracts. The panel of A&M consultants kicked things off by presenting a handout entitled, “Summary of Efficiencies Implemented To Date” where they attempted to loosely tie their firm to anything that could even be remotely considered a savings or efficiency in the state of Wyoming. The report also mentioned other ways to save (“consultant fees” were oddly missing from the list), and their ultimate recommendation was to hire A&M to implement strategic sourcing (at a cost of $1.6 million), in addition to listing out around $45 million worth of other recommendations. A&M’s Denver-based consultant, Mark Howard, concluded their initial presentation by telling the commission that the state could “get started” on saving money whenever they were ready.

    I took the floor during the first public comment period to point out that the state had already spent several years and $2.175 with their firm, so I felt like we had already “gotten started” (but I know it is hard to point to any concrete savings). Next I presented A&M’s slide deck back to them, and I pointed out many red flags. For example, slide #4 alluded to $6.2 million worth of unverified savings (I’ll come back to this in a minute), and yet none of the committee members even questioned this claim. I felt A&M was really digging for handout materials when the slides contained bullet points like, “Helped to clean up Rawlins prison and prepare it for sale”. Did A&M consultants actually show up with a mop and bucket and start cleaning, or just tell us to clean it? According to A&M, the bulk of the state’s actual savings were from the $4.6 million attributed to “Home and Community Based Services” where it was alleged that someone [not clear who, but hopefully we got the feeling it was A&M] “drove reductions of 231 members in the nursing home waiver in 2018/2019”. I know Wyoming’s population has decreased and people prefer to stay home versus going to a nursing home when possible, but I am not sure what this has to do with A&M. I spoke with multiple people at the Wyoming Department of Health, and they also seemed to be just as confused. Some of the other “savings” came from selling surplus assets, the motor pool, hiring auditors, and Indian Health Services. But as I mentioned to the GEC members, if I tell my brother to go to work tomorrow, and he was already headed to work anyway, I do not consider myself as having just contributed to his family’s income. This basically summarizes my feelings regarding A&M’s first presentation. Remember that in their initial report, the only recommendation for immediate savings was to “sell surplus assets”, but just because they tell us this on some expensive report, it does not give them the credit every time we sell something. We were already selling things, and we will continue doing so. And I’m guessing A&M presented these alleged “savings and efficiencies” to the panel because they needed to sit in front of a presentation that claimed to have something, anything to do with efficiencies and savings before they asked for more state contracts to “review” and “recommend” more things. Of note is that Chris Cowley, who was introduced as “the Wyoming guy” and their “strategic souring guy” at May 2nd’s GEC meeting, was absent from this meeting.

    During the last A&M segment of the day, JW Rust, a DC-based consultant for A&M, finished up by commenting that it would not be fair to state employees to not move forward with more studies with A&M. During the public comment period that followed, I attempted to question the sanity of this remark right before I realized that I had misplaced my first amendment rights. Drew Perkins, the Senate President from Casper, told me that they were not going to listen to me call the consultant’s comments stupid. I actually called them “witty”, and not “stupid”, but I guess this is a great example of “what I said” versus “what you heard”.

    I cannot understand how the committee members can ask Patricia Bach, the Interim Director for the Department of Administration & Information, and her staff dozens of follow up questions regarding the department’s policies without a formal presentation even being given to be confused about, yet they took $6.2 million in “savings and efficiencies” as fact from the consultants.

    Fortunately there was some sanity in all of this since Kevin Hibbard, the Deputy Director of Budget & Economic Analysis, was present. He was called on to clarify things throughout the day, so I still feel like we are in good hands with an administration that seems to understand what is really going on here.

    At the end of the day, the GEC voted to formally request that Governor Gordon’s office consider around $11 million more worth of projects recommended by A&M. There is still $8.2 million left in the Governor’s hands to spend on efficiencies in the state, but this won’t last long if A&M has anything to do with it.

    I requested that the GEC understand that we could easily spend $45 million with A&M, and their consultant could still look straight back at the commission and ask them “when are they ready to get started”. I pointed out that it is important to remember that A&M’s priority is to generate more contracts for more reports, and it is the state’s job to turn that into savings. I just hope they were listening, but I guess only time will tell.

    Links:

    https://www.wyoleg.gov/InterimCommittee/2019/SGE-20190715AM_TestimonyPresentation15July2019.pdf

    https://www.wyoleg.gov/InterimCommittee/2019/SGE-20190715PublicComment_GECCommentsRebeccaBextel.pdf

    https://www.wyoleg.gov/InterimCommittee/2019/SGE-20190715PrelimEfficCommPortfolioRecs20190710.pdf

  2. 1. In the world’s oldest profession, there always seems to have terms: rate, duration, specific performance, subsequent alternates/phases (if any…) are similarly price-posted, estimated for time elapsed, etc. etc. No surprises or unknown expectations for buyer and seller. Serves that hallowed business remarkably well., no?? Here, now, a consultancy comes with exorbitant fees, in-exact ideas–replete with no concrete measures?, “fuzzy” allusions as to your desired outcomes, and the future schedule of really huge costs for elaborating that preliminary ideology…….and again-no warranty as to success… Where do i get that kind of job?? sign me up!

    2. If you pay for what you want to hear, any smart consultant will tell you what you want to hear…..via well-spun idealistic dressings, pro-forma projections ( with the omnipresent caveat of no guarantee…) , attractive/pretty charts, dancing-ball-power-point-symphonic-overtures that dazzle any unknowing fool……and, boy howdy, when they see that soft belly, consultants sharpen the knives and pull the trigger……

    3. I made the “crazy” offer 20+ years ago to: give me 90 days, complete license, and I would save UW $10 mil. in first year with no loss of service–actually an increase of per-person allocated gain of productivity in several (not all ) reportable units…
    I believe it still can be done. My offer still stands. My fee of 8% of ACTUAL/ONLY savings would be donated back to my choice of a UW segment, directly- not through foundation gerrymandering, etc. This will never happen at a publicly funded institution, for the feed trough is never-ending and UW is funded through “gubmint” resources, which 87-94% of people believes is not THEIR money, rather some ambiguous, rich entity loaded elsewhere……

    4. I am embarrassed for trustees and what components of leadership that confesses to having to go elsewhere to “find, discover or otherwise engineer” savings . An immediate declaration of incompetence, fear, denial of culpability, etc. if ever was one….
    Isnt that their job at that lofty level with 6-figure salary too boot? ( not trustees here…) Seriously, is there no marketing funtion, CBA, internal efficiency measures at this time in UW storied claim of global academic performance? What administration IS supposed to do this? Lotta V.P.s and NONE of them have budgetary expertise at all? wow…..
    5. to top it all…..in the difficult, yet successful, re-trenchment of state-wide mandate of across-the-board 20% (IIRC?…) budget shrink due to extractive-industry , momotheistic- revenue- base shortfalls…..where UW Pres. Nichols diligently
    steered that difficult process on-campus—not at all an easy voyage given all those disparate, aggrandizing parties—…………………………………….wait for it………………………….
    The athletic dept. asks for $51 mill. for westside stadium remodel for a lack-lustre football industry that never will regain expenditures or pay surplus…..and a new swimming pool where a new one is questionably necessary. Really, is that $51 mil. a timely, genuine need? wow……..
    6. Not to bash the new interim appointed pres., but the dismissal of L. Nichols in such fashion gently reminds me of 20+ years ago….when UW was down to 2 final, on-campus Pres. candidates…..and at the last hour some trustee action threw Tom Buchanon into the mix as a 3rd option—without much prior qualification or due process….and those 2 others withdrew and fled immediately, as any respectful person would. And we ended up with a nepotist reputation (post long, expensive search protocol…) and a limited-view, tired banker……..
    Nichols ‘firing’ smells the same…..and guess what? betcha UW ends up with an internal, infernal choice again—–vis-a-vis every generation, history-good or bad-repeats……

  3. “For actual savings to be realized workers would need to retire, legislators would need to be educated, the culture of state government would need to change and all of it would need to be maintained through multiple administrations. Then we might realize savings.” Aha! What is otherwise known as an “amazing grasp of the obvious”.

  4. This sounds like the Green New Deal being proposed by radical Democrats. A bunch of pie in the sky savings based on what ifs.

    1. Bruce-
      Your level of cognitive dissonance in hard welding a consultant efficiency in Wyoming study to the global Green New Deal is beyond my ability to confabulate it . **

      ** from the Oxford OED online dictionary in my Mac: Confabulate, definition 2…. ( Psychiatry) to fabricate imaginary experiences as compensation for loss of memory.

  5. I have no specific facts, but I believe this writer is correct. My son lives in Kansas and says the general consensus there is that these “consultant studies” were a big ripoff and now Kansas State is about to jump on the bandwagon to hire someone to tell them what to do about declining enrollment among other things. Seriously, an institution full of academics has no one smart enough to put forward a few ideas?

  6. In Louisiana, they interviewed a bunch of state employees and asked them for efficiency ideas, then compiled them into their report without any attribution. They got paid millions of dollars for reporting the ideas that the state essentially already had, back to the state. This is one big grift if I ever saw one, and the Wyoming good ol’ boys club is all too happy to fall right into it because it offers them a convenient out.

    They get to pretend they are doing something to fix Wyoming’s budget crisis that doesn’t involve raising taxes, then when it turns out to be completely fruitless and a complete waste of time and money, they can immediately throw anyone and everyone else under the bus for “not carrying out the recommendations” or whatever else.