Why We’re in This Mess

The NYS Comptroller revealed today that New York State overpaid Medicaid $26 million due to flaws in the computer system built to process claims. We should be pleased that the Comptroller’s auditors found the problem and that the NYS Dept. of Health is implementing the OSC recommendations. Unfortunately, however, this is another case of shutting the barn door after the entire herd escaped.

What the Comptroller’s press release does NOT tell us is why the mistake was made? Who developed the computer system? Was it a private contractor or an in-house system? Was political favoritism involved either in choosing the winner of a bid or deciding against letting a contract for the system? Why did it take so long to discover the problem? Will any heads roll as a result?

In a nutshell this is the problem with modern government––federal and state. No one takes responsibility or pays the price either for success or failure.

Andrew Mason, Groupon CEO, lost his job today. It probably should have happened in November of last year. He did a lousy job and he had to go.

In the public sector, you have to commit a crime to lose your job and, if you’re a teacher in the NYC school system, even that’s not assured.

In the public sector, no one pays the price when $26 million dollars are pissed away, just like no one is rewarded beyond their regular salary if they save the taxpayers money or exceed expected results.

That is why so many government run programs either fail or produce mediocre results. We rely on the good will of the public sector employee to care about the results. That’s nice when it works, but what about when it doesn’t work? What about when a person has been promoted above their level of competency? What about when someone consistenly makes bad decisions? What about the lack of oversight coming from the Executive Chamber and the White House?

Management in the public sector suffers because our elected officials seem to spend 99% of their time campaigning. Even Barack Obama spends most of his time campaigning and he can’t run again.

Who’s minding the store?

Sampling other recent audits from the Comptroller’s office we learn that many localities fail to employ proper procedures for monitoring expenditures. A few examples:

• Payments were made to the clerk-treasurer of the village of Richmondville without board approval.
• In the village of Forestville, “the clerk-treasurer’s records for the water fund were inaccurate and misrepresented the fund’s financial condition.”
• The Town of Finley board “did not develop and adopt accurate budgets…based on realistic estimates of revenues and expenditures.”
• The Village of Parish’ board “did not ensure that all claims were audited prior to payment…”
• There are significant weaknesses with the timeliness and accuracy of how the town of Livingston’s tax collector recorded, supported, deposited, disbursed and reported tax payments.
• Internal controls over cash receipts and disbursements were not appropriately designed or operating effectively for the Niagara County Soil and Water Conservation District.

In a year’s time, the Comptroller’s office finds dozens of examples of mismanagement and poor controls. They also find fraud and theft, which lead to criminal prosecution and conviction. But keep in mind that what is discovered is only the tip of the iceberg and all of the problems are discovered AFTER THE FACT.

All of the above explain why so few Americans––other than the ones who are going to be furloughed––are upset about sequester. Americans know in too many instances their local, state and federal governments are not being managed properly. They know too much of their money is being wasted. They know too many of those who should be benefiting from government programs are being short-changed.

That’s the part of the story some people don’t want to hear. It’s not because the public hates government or doesn’t think it’s needed. What we hate is mismanagement and waste––not the public sector employee. We hate that system doesn’t include the possibility that a bad job is punished and a good job is rewarded. We hate thinking this is the best there is. AND, we hate those who make excuses and blame the messenger. It’s time the apologists for mediocrity and failure took some responsibility or get out of the way. Let’s clean up this mess now.

Culture is Answer to Times Query

The NY Times wonders why no whistle blowers stepped forth to expose the massive defrauding of the public by employees of the Long Island Railroad.

Why indeed? Why is this not the only example of fraud in the public sector? Need a refresher? Read my post of September 19, 2010 for some other cases.

The problem is the culture of victim-hood and entitlement that permeates our society. Too many public sector employees apparently feel they are entitled to rip off the system. Too many are on “work-to-rule” when its to their benefit. Too many feel once you’ve been hired by the state, county or other government agency, you should be able to work their until you retire. Too many feel you need to commit murder in order to be fired from a public sector job and even then you get to keep your benefits.

That’s why people who see other people commiting fraud whether in such outrageous terms as the LIRR employees or just taking care of personal business on state time don’t blow the whistle…It’s because they think it’s okay. It’s because they’re doing it too.

There are exceptions of course. My hat’s off to those of you who resist ripping off the public, but the next time you see someone taking advantage of lax management, pick up your whistle and do the right thing.

Poll Questions Update

Last week we polled our readers on the “last in, first out” policy that some including Gov. Cuomo feel needs reform. Only 15% of our readers would retain the policy as is; 80% said replace or reform it.

This week we wonder if the Kruger/Boyland indictments will result in new ethics legislation in 2011. Vote your view on our home page

Public corruption in New York and what needs to be done

(This post is my contribution to an Empire Page Rountable discussion on Public Corruption in NYS. Click here to read other contributions and to learn how to submit comments or a longer opinion piece.)

You might have the perception that public corruption is on the rise. (If someone has statistics on this please, let me know.) My guess is that our awareness of public corruption has been heightened in recent years in part by the state’s fiscal crisis. At a time when there’s not enough money to cover basic expenses, to learn about fraud and malfeasance by public officers gets your attention. But there’s another factor at play I believe which explains why public corruption is high and why people who see it taking place don’t report it.

Working for government at one time was considered to be a sacrifice. People who worked for government – teachers, prison guards, motor vehicle clerks, etc – knew their wages were lower than people working in the private sector. That began to change in the 1970s and 1980s as states and municipalities began to increase benefits (in lieu of comparable salaries) followed by repeated increases in public employee salaries in the ensuing decades.

I saw the change first hand twice when secretaries for my company resigned to take state jobs – one for a lower salary than I was paying her. Her husband wanted her to take the state job for the benefits she explained. At the time I paid 100% of my employees’ healthcare and had offered a SEP IRA for retirement.

Despite the increase in pay and benefits to the point where people who work in the public sector today often earn more than their private sector counterparts, the attitude that one is sacrificing still persists. To some that attitude justifies practices such as taking home office supplies, padding expense reports by staying at the most expensive hotels possible and buying the most expensive meal on the menu, taking sick days just because you have them, and engaging in personal activities while at work.

I believe there is a scale of this kind of behavior in the public sector ranging from those who are scrupulously honest to those like the Corrections Department food director and the State Fair director who openly defrauded the public to the tune on hundreds of thousands of dollars. I don’t know whether the state’s whistle-blower law ought to be amended, but if those who see another person doing something that’s clearly illegal or unethical are also engaging in questionable behavior or believe the person is entitled to extra benefits because they work for the state, then they are much less likely to turn that person in.

Then there’s the question of why the Comptroller and Inspector General’s offices are not able to catch the wrong-doers sooner? Rather than too few people doing the policing, the problem is that there are too many agencies to be policed.

Corruption is another cost of living under a governmental structure built in and for the 19th century. If you read the reports issued by the Comptroller and IG carefully you will see that for every case of outright fraud, there are a dozen of cases of poor management practices and poor judgment. Too many people who are responsible for putting the tax-payers’ dollars to use are poorly trained and poorly supervised, resulting in frequent mistakes and missed opportunities achieving for better results for less.

That’s why government consolidation in New York is not something that maybe should be, could be considered if we get around to doing it, some year. It’s a must do now imperative if New York State is to avoid sinking into third-world conditions by mid-century or sooner.

If I was one of those public employees who are scrupulously honest – and I believe that covers most public employees, I’d be crying out for government consolidation. Get rid of the bad apples or watch the whole barrel turn rotten.