MONTPELIER — Government officials are considering contracting with a private company to oversee state workers’ compensation claims, and one Washington County senator is not happy about it.
Administration Secretary Justin Johnson and his staff are currently vetting requests for proposals from companies seeking to take over job duties from the state’s Risk Management Division, which Johnson says is an attempt to save money and Sen. Anthony Pollina, D/P-Washington, says will send jobs out of the state.
“In last year’s budget, I was instructed to find savings,” Johnson said. “I’m not looking to outsource jobs, but sometimes it’s the appropriate thing to do.”
The Office of Risk Management includes 12 employees with a budget of a little less than $2 million. Its job duties include handling workers’ compensation and liability claims for state employees.
Previously, the state issued a request for information from private companies to see how much they would charge to carry out the office’s duties. According to Johnson, responses came in showing private companies could do the job with savings ranging from 40 to 50 percent.
This potential savings was enough for the state to request proposals, and last week the state received eight of them, from companies based in Arizona, Tennessee, Massachusetts, New Jersey, Pennsylvania, Maine and New Hampshire.
“Remember, we are not eliminating the work. It needs to be done,” Pollina wrote in a letter to Gov. Peter Shumlin. “But, the Administration is planning to hire people in another state to do it. No matter who is chosen, our tax dollars will go out of state.”
State law prohibits the outsourcing of public functions to private companies unless there is a savings of at least 10 percent. Johnson he would want to see savings much greater than that before contracting with a private company.
“If we don’t see there will be savings of 10 percent, the whole thing will be moot. If it was 12 percent, I still wouldn’t want to do it,” Johnson said. “But, if we could see savings of $1 million, that would be significant.”
Pollina maintained that sending jobs out of state is a bad idea.
“It is just bad economic development policy,” Pollina said. “We create jobs somewhere else and end up with higher unemployment, less tax revenue and a weaker economy here at home.”
Pollina said he will introduce legislation to block the the state from contracting with a private company to carry out the duties of the state’s Risk Management Division until there is first a study to look at cost and benefits, and the effect upon the state budget and economy.
“It’s not really about privatization,” Johnson said. “It’s about seeing if we can still perform the same functions, but at a reduced cost.”