State asks consultants to ferret out fiscal fat

The outside firms will look at all aspects of government spending in hopes of trimming the deficit.

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The Minnesota Zoo likely will be among state agencies and operations that will be scrutinized by consultants looking to save the state money.

Photo: Jim Gehrz, Star Tribune

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Nearly two dozen consulting firms could soon be crawling over every inch of state government, looking for ways to save the state cash.

They could poke into the state's building efficiency, its tax collections or even the doings at the Minnesota Zoo to eke out changes.

"We need all to be looking at savings," Gov. Mark Dayton said. "How can we reform? How can we do things more efficiently? How can we use technology to provide services more cost effectively?"

Consultants have dangled the potential for $20 million in savings and told of saving $30 million to $140 million dollars in other states. Minnesota, which has undertaken its own data programs in several areas, may not see the upper echelons of savings.

Critics say the extra eyes may not be needed and could just grant private contracts for what state employees should already be doing, but Dayton said the examination could be key to forming a leaner, smarter Minnesota.

Much of the consultant focus will be on crunching existing state data to look for ways to do things better. As an incentive, all contracts include the option of payment only as a percentage of money saved.

It is an idea that has bipartisan support.

"This is both something of interest in the governor's office and the Legislature," said Administration Commissioner Spencer Cronk.

Dayton announced this spring that his administration would look to consultants for ways to streamline and improve state government. On a parallel track, the Legislature forwarded a data consultants' program that the governor signed into law this summer.

After a long process, Minnesota picked 22 consulting firms that agencies can tap for expertise. Now those agencies will assess more specifically what they want done and start project-by-project negotiations with the firms, Dayton said. How much the state will have to pay is unknown, since departments have not yet decided on specific projects and pay-outs will be tied to savings in most instances.

Those extra eyes come at a time when the state is under intense pressure to wring the most out of every dollar.

Already, state officials have used data to weed out fraud and abuse. Officials in the departments of revenue and human services routinely analyze data to find cheaters in their tax and public health care programs. Officials say they hope the consultant can fine-tune those checks.

The consultants also may crunch data that has never been fully crunched. With more than 1.3 million visitors to the Minnesota Zoo, the consultants could take a careful look at the information those visitors leave behind and help the Zoo adjust its program strategies, Cronk said.

The data program, known as data analytics, is more comprehensive than anything the state has undertaken before, he said. The state gathered proposals from consultants in a dozen categories, from unemployment insurance to fleet management.

Revenue Commissioner Myron Frans said his department has used data analytics for some time but is open to looking at new products that could improve audit efficiency or refunds. "If they work, then we will use them," he said.

Concerns

But the new venture does not come without concerns.

The idea of paying companies only if they save the state money can have a downside, particularly if private firms become overly aggressive about rooting out potential tax or welfare cheats.

"You just want to get what's due to the state, nothing more, nothing less," said Cronk. He said the state may opt out of the pay-for-savings model on some projects.

During a legislative session that ended only after a state government shutdown, Republicans wanted to rely on projected savings from data analytics programs to help close what had been a $5 billion projected deficit. But the Dayton administration said there was no proof savings of that magnitude could be realized.

Now the administration is doing the data dives but won't pre-book any projected savings.

Sen. Barb Goodwin, a Columbia Heights DFLer who criticized the legislative proposal, said she wants "to make sure that we don't already have the staff that can do those things."

Cronk said state employees are tapped and the outside firms may have technological expertise that would bring new light to the multibillion-dollar government enterprise.

"We do believe that there will be savings," Cronk said. But he had no estimate of how big those would be.

"We are just excited about doing this and seeing what happens," he said.

Rachel E. Stassen-Berger • Twitter: @rachelsb

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