Wyoming Government Spending and Efficiency Commission Report to the Governor, Management Council and the Joint Appropriations Committee 2017 Final Report on Activities Prepared by: The members of the Wyoming Government Spending and Efficiency Commission Senator Drew Perkins, Chairman Representative Joe MacGuire Don Claunch Kristi Racines William Schilling Gail Symons November 30, 2017 Section 1. Introduction: During the 2017 General Session, the Wyoming Legislature established the Wyoming Spending and Government Efficiency Commission ("Commission") through the passage of 2017 Senate File 156, 2017 Wyoming Session Laws, Chapter 183 ("Senate File 156"). Pursuant to the legislation, the Commission was comprised of six (6) members: one (1) senator, one (1) representative, and one (1) member of the public appointed by the Legislature's Management Council; two (2) members appointed by the Governor; and one (1) non-voting member appointed by the Chief Justice of the Wyoming Supreme Court. Section 1(d) of the legislation established the Commission's duties as follows: (i) Review the current configuration of the Wyoming state government and the duties and responsibilities of state agencies including identifying any potential areas of overlap and any programs that have accomplished their original objective or have otherwise become obsolete; (ii) Identify current opportunities for increasing efficiency and reducing costs through executive action or legislation; (iii) Identify areas for further study, including a recommendation of specific areas with a high likelihood for potential savings; (iv) Consider development and implementation of a program to incentivize the identification of potential efficiencies by state employees; (v) Review the plans provided under W.S. 28-1-115(a)(ii) for any state agency expending more than twenty million dollars ($20,000,000.00) in a biennium; (vi) Examine the opportunities for savings in the Medicaid program subject to the following: (A) The examination shall determine the error rates in Medicaid enrollment through the Medicaid eligibility system, error rates in continuing enrollment in Medicaid and the costs of these error rates; (B) The commission is authorized to cause an audit of a sample of Medicaid enrollees to determine the error rates in enrollment and continued enrollment and the potential savings from correcting the error rates. The audit may be done by state personnel or through a contract with a private firm, or both; (C) The examination shall include a review of the Medicaid system to detect and correct errors in billing for Medicaid services; 2 (D) The examination shall include an inquiry concerning how the Medicaid program could reduce expenditures by reducing unneeded utilization of Medicaid services. The Commission held its first meeting on June 29-30, 2017 in Cheyenne, Wyoming. Prior to the meeting, significant coordination took place between the Governor's Office, the Commission, and state agencies. Specifically, the Commission requested that the six (6) agencies with the largest state budgets [i.e. the Department of Education, the University of Wyoming ("U.W."), the Department of Transportation, the Department of Corrections, the Department of Health, and the Department of Family Service] prepare presentations for the Commission, addressing the following subjects: . Agency work to promote efficiency and reduce spending, including any prior studies completed or work done to improve agency inefficiencies; . Nonpriority programs and expenditures that may be statutorily required but which could or should be discontinued to promote efficiency; . Agency-related statutory provisions that lead to inefficiencies; . Suggestions for improvement in efficiency, i.e., describe your “perfect world scenario.” The Commission provided notice of the meeting to all agencies that spend more than $20 million per biennium and invited each of these agencies to testify. The Commission also invited comment on additional issues including: state audit functions, state procurement and contracting, technology integration, state debt collection, and Medicaid services. The Commission asked the Department of Audit, the Department of Enterprise Technology Services ("ETS"), the Attorney General's Office, the Department of Administration and Information ("A&I"), the State Auditor's Office, and the Department of Health to speak on these issues. In response to the Commission's notice and invitations, a number of agencies provided written responses to the information sought by the Commission. These responses are included in this report as Appendix A. At the Commission's June 29-30, 2017 meeting, the Commission received testimony on specific government operations from the Department of Audit, A&I, ETS, the Attorney General's Office, the Department of Revenue and the State Auditor's Office. The Commission also received detailed presentations about agency efficiency efforts, spending and efficiency proposals from the Department of Education, the Department of Corrections, U.W., the Department of Health, the Department of Family Services, and the Department of Transportation. The Department of Health provided a targeted discussion about Medicaid error rates and its efforts to prevent Medicaid errors. 3 Section 2. Retention of an Efficiency Consultant: Given only one interim to conduct the study required by 2017 Senate File 156, and a Commission meeting and expense budget of $11,000, 2017 Senate File 156 contemplated retaining a consultant to accomplish the tasks required by the legislation. Specifically, Senate File 156 authorized the Governor, in consultation with the Commission, to hire an efficiency expert. The legislation provided a $300,000 appropriation for that purpose. In May of 2017, the Governor's Office started working with the Commission and the Attorney General's Office to issue an RFP for the retention of an efficiency expert. The state's competitive procurement process was used and eventually yielded three candidate firms. Following interviews by the Commission with each of the firms and a recommendation by the Commission, the Governor's Office and the Attorney General's Office entered into contract negotiations with Alvarez & Marsal Public Sector Services, from Washington, D.C. ("A&M"). A contract with A&M was signed on August 4, 2017 for a total contract price of $298,500.00. Although 2017 Senate File 156 required a broad and comprehensive review of the state's spending and efficiency, A&M and the other firms that submitted proposals agreed that an all-encompassing review was not possible within the given time frame. Because of the lengthy contracting process and a final report due date in November, the contractor was allowed approximately three months to complete its work. For that reason, the contract between the Governor's Office and A&M was structured to require a rapid, but detailed, assessment of only four (4) Wyoming agencies: the Department of Administration and Information ("A&I"), the Department of Education ("Education"), the Department of Health ("Health), and the Department of Revenue ("Revenue"). A&M believed that these would be the agencies most likely to yield opportunities to reduce costs and operate more efficiently. Among other tasks meant to address the areas of study required by 2017 Senate File 156, A&M's contract also provided for a cross agency benchmark analysis of all agencies in Wyoming that spend more than $20 million per biennium. A&M was asked to identify efficiencies that could be achieved in the operation of Wyoming's government and to estimate the potential savings that might be realized if those efficiencies were implemented. A&M was also asked to review Medicaid error rates, to outline a strategy for completing a more comprehensive study pending further approval by the Legislature, and to propose a way to incentivize state employees to identify potential areas of improved efficiency and savings. Section 3. Alvarez & Marsal Efficiency Study: On August 14, 2017, A&M established an office in Cheyenne and started its work based on the foundation that was established at the Commission's June 29-30 meeting. A&M continued that work by interviewing agency personnel and reviewing performance, budgeting and other raw data. In addition to conducting a detailed review of A&I, Education, Health and Revenue, and performing a cross agency benchmark review of 4 every agency spending more than $20 million per biennium, A&M reviewed the plans submitted by state agencies in preparation for the Commission's June 29-30 meeting. Every week, A&M held a telephone conference to seek necessary guidance and to update the Governor's Office and a Commission working group on its progress. The Commission held a second meeting on October 18, 2017 in Casper, Wyoming to receive A&M's initial recommendations and review A&M's first, draft efficiency report. At that meeting, A&M's personnel reviewed the draft report in detail and all agencies were invited to comment on the report. After the meeting, A&M followed-up with agencies that recommended changes or additions to the report. A&M's final efficiency report was issued on November 6, 2017. A copy of the report is included in Appendix B. Attached as Appendix C is a summary of A&M's final report which contains an overview of the larger report. The final report is organized to mirror the analysis required by 2017 Senate File 156 and a brief summary of each relevant finding is included in the final report. Appendix B, p. 17. Generally, A&M's final report