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SB 113 – Review of Privatization Plans

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Here is a bill I like. Senator Lanane has introduced SB 113 which requires a state agency to develop a privatization plan before privatizing any state agency.

Before a state agency privatizes a program, the state agency must prepare a privatization plan that includes the following:

  • A description of the program to be privatized, including a reference to the legal authority under which the program was created.
  • Detailed budget information that includes a list of revenues and expenditures for the two (2) most recent fiscal years.
  • A list of all state employees currently employed by the state agency to administer the program; and the estimated effect of the privatization on the employment status of each employee.
  • A list of the assets of the program; and proposed disposition of the assets.
  • An estimate of cost savings or additional costs resulting from privatizing the program compared to the costs of the existing program. Cost estimates must include the estimated cost to the state of inspection, supervision, and monitoring of the program if the privatization is implemented. The estimate must also include an estimate of any costs that would be incurred if the privatization contract is discontinued.
  • An estimate of the current and future economic impact of privatization on other state programs, including public assistance programs, unemployment insurance programs, retirement programs, and agency personal services budgets designated to pay accrued vacation and sick leave benefits.
  • An estimate of the increases or decreases in the cost and quality of services or goods provided to the public that will result from the privatization.
  • An estimate of the changes in individual wages and benefits that will result from the privatization.
  • Descriptions and plans for ways the privatization will deliver the same or better services at a lower cost.

    This bill demonstrates a good understanding of the hidden costs of privatization. If an agency is privatized, even though the initial costs may be off the books, suddenly we might have the potential of poorer quality service coupled with the children of former state employees increasing the burden on our Medicaid programs while the top executives of the private company take large profits out of state. Or maybe not. That’s why it’s a study, rather than a prohibition of privatization.

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