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Reason Foundation

Indianapolis Star

Don't Put Undue Burden on Governor's Efficiency Efforts

Indiana's proposed "privatization plan" would slow reforms

Geoffrey Segal
January 15, 2006

State Sen. Timothy Lanane has introduced legislation that he claims will provide greater transparency into Indiana's privatization initiatives. In reality, the bill establishes a set of bureaucratic hurdles that state agencies would have to jump through before privatizing functions.

The legislation calls for the creation of a "privatization plan" for public review. An added layer of transparency is generally a positive thing for government operations. However, the legislation assumes the Daniels administration has entered into privatization agreements without a plan. In fact, there is little doubt that it has done its homework.

One of Gov. Mitch Daniels' first acts in office was to create an office responsible for administration of efficiency initiatives, including development of a business case or other public-private comparison tool.

Perhaps most troubling would be creation of an additional layer of legislative oversight. If signed into law, any privatization plan would be subject to hearings by the budget committee just 30 days before project implementation. The committee would also submit a recommendation to the governor, highly politicizing a management decision.

An added level of legislative review in this instance would create new opportunities for political interference by opponents of reform and supporters of public employee interests. Furthermore, under the state Constitution, the legislature is not responsible for the day-to-day operations of government or the execution of laws. Those responsibilities are reserved for the executive branch.

Privatization ultimately is a management decision and remains the purview of the chief executive. The legislature does have an oversight role but should not place burdensome hurdles.

Indeed, Indiana is already saving millions of dollars because of initiatives the Daniels administration implemented in its first year in office. The Department of Correction is able to save nearly $12 million by contracting with Aramark to provide food services to inmates.

Indiana has some of the best public employees in the nation. Rather than protect them from competition, they've been challenged to excel. And excel they have. The dietary department at Logansport State Hospital identified nearly $1 million in annual savings to win the public-private competition.

Bringing sound management practices and spending taxpayers' money in an efficient manner should be at the top of every governor's agenda. Privatization, outsourcing and competitive sourcing are proven management tools. The Daniels administration spends considerable resources to weigh all options against Indiana's needs.

The governor should be allowed to execute the job he was elected to do. If the public is unhappy with the result, they'll have a chance to boot him from office in a few years. Until then, privatization must remain a viable option, free from legislative interference.

Geoffrey F. Segal is the director of government reform at Reason Foundation.



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