State department saves money in cuts

by Liz Sidoti
The Associated Press

COLUMBUS — The Ohio Department of Job and Family Services is doing something no other agency has done to save money. It is replacing dozens of private contractors with state employees to save at least $39 million over two years.

"It just seemed to me that there were too many people and we were spiraling our way down in a dark hole," said Tom Hayes, the department's director. "We were getting more and more dependent on contractors."

State employees make an average of $42 an hour including benefits compared with an average of $105 an hour that contractors working in the department's Office of Management Information Services bill the state.

The office, which maintains computer systems for Medicaid, welfare, child support and unemployment compensation, had 613 contracted workers and 298 public employees last July. Hayes has terminated 190 of the contracted computer programmers and systems analysts and is in the process of hiring 176 state staffers to replace them.

"We expect some people to be starting by the end of the month," Dennis Evans, a department spokesman, said yesterday.

The department has canceled contracts with computer programmers and systems analysts from 30 companies, including American Management Systems and other industry giants, which saw the bulk of the contract terminations. Several local companies, including Maximation and Babbage Simmel, were affected less, which each losing only a few of its contracts.

Gov. Bob Taft ordered state agencies to cut spending by 6 percent last fall because declining state revenues left a $1.5 billion hole in the state's two-year budget. Many departments responded by laying off workers, not filling vacant positions and cutting services.

Hayes wanted to cut in areas that had high expenses so he could make up for the department's $15 million cut.

No other state agency is in a situation similar to that of the Department of Job and Family Services, which relied heavily on contractors, Tim Keen, the state's assistant budget director said.

Carol Bowshier, an operations director for the Ohio Civil Service Employees Association, the state's largest public employees union, said that could explain why no other state agency has replaced such a high number of contract staff with state employees.

"The department is the poster child for the evils of contracting out," Bowshier said. "The contractors were telling the state what they would or would not do, instead of the state telling the contractors what it wanted done."

At its peak, the department's MIS office had three contractors for every one state employee. Hayes said he eventually wants to flip that ratio.

"We're unique in the unfortunate situation that we got ourselves into," Hayes said.

Before Hayes took over the troubled agency last year, the department had spent much of the 1990s hiring contractors to manage the computer systems.

Bowshier said the union approached previous department directors about using more state employees for computer work, but was told that in-house workers did not have the information-technology skills needed.

Instead of training state employees, the department "took the easy way out," and hired contractors, Bowshier said.

Hayes said that many of the contractors whose contracts were canceled had worked in the office for more than five years.

"The problem was that a lot of our state employees who are very capable were shoved aside," Hayes said.

Last year, the union and the department negotiated a work force development program during contract talks. The program is funded in part by the state and union to train public employees to work with the computer systems, Bowshier said.