Portland

Thursday, September 20, 2012

DiMillo’s On the Water, 25 Long Wharf

Luncheon  12:00 p.m. to 1:30 p.m.

“Equipping for the Elections:

Government Transparency, Piglet Preview,

and Welfare Wins and Woes”

For more information, please contact Amanda Clark

by phone at 207-321-2550 or by e-mail at aclark@mainepolicy.org

Today, MaineOpenGov.org has been updated and expanded to show five years of salary and benefits data for employees of the Maine State Housing Authority (MSHA). The data from Maine Housing was provided in response to a Freedom of Access Act request made by The Maine Heritage Policy Center (MHPC). The data shows that in the past five calendar years (2005 – 2010) total payroll and benefits costs of Maine State Housing Authority employees grew by 30%, from $7,119,528 in 2005 to $9,370,550 in 2010. Current MSHA Executive Director, Dale McCormick, took over as head of MSHA in 2005.

Maine State Housing Authority Total Payroll Cost 2005 – 2010

“We’re excited to add another, brand new set of payroll data to MaineOpenGov.org,” said Sam Adolphsen, Director of Open Government at MHPC. “The Maine State Housing Authority handles a great deal of public money, and is responsible for providing critical services for our most vulnerable citizens. It’s vital that their operations are transparent, and that they are accountable to taxpayers for how they spend those public funds. This is particularly important at a time when 6,500 of our fellow Mainers find themselves on the waiting list for affordable housing.”

Other key findings from the MSHA payroll data include:

• Over the same time period (2005 – 2010) Maine State Housing Authority Payrolls have more than doubled the total payroll increases at the Maine Turnpike Authority, Maine State Government and the University of Maine System total payrolls.

An outside investigation into Maine’s Medicaid system reveals a shocking potential for fraud within Maine’s vast welfare bureaucracy, and it’s all on video.  Yet policy reforms to increase accountability and safeguard measures will help protect Maine’s welfare system from fraud, if officials act soon.

The Maine Heritage Policy Center (MHPC) and Americans for Prosperity-Maine (AFP) held a joint press conference in Augusta today, where the groups showed footage from a video-recorded interaction earlier this year between a Department of Health and Human Services employee at the Biddeford office, and an individual posing as a “pharmaceutical” importer seeking free, taxpayer-funded Medicaid health coverage.

The individual, who posed as a Mr. Ted Ceanneidigh, revealed the following to the DHHS worker:

• He has access to enough money to buy private health insurance
• He drives a Corvette
• His parent are unaware he has turned their failing fishing business into a “pharmaceutical imports” business that does its dealings in international waters
• His business card prominently features a marijuana leaf
• His income is strictly in cash and precious metals, because metals are “less traceable.”
• He has no pay stubs and none of his income is declared

After learning this information, the DHHS employee advised the individual to keep his income hidden.

“You don’t have a paycheck, you don’t file taxes, you have no income,” the employee said.

Applicants for Medicaid must earn below a certain level of income to qualify for the free taxpayer-funded health coverage.

“How many Ted Ceanneidighs out there were advised by DHHS workers to hide their income?  How many were never reported for suspected drug dealing?  How many Ted Ceanneidighs are receiving taxpayer-funded health care today because of unethical practices within Maine’s welfare bureaucracy?” AFP-Maine State Director Carol Weston asked at the press conference.

The explosive details in the video demonstrate the vulnerability of the welfare system to fraud and abuse, which may contribute to the growth in enrollment and cost for Maine’s welfare programs.  Today, almost one in three Mainers is on some form of welfare, and the state spent more than $2.5 billion on its welfare system in 2008 alone.

“Maine spends billions on its welfare system.  Is this potentially illegal behavior what those billions are funding?” Weston asked.

Prior to the press conference, Weston and MHPC chief executive officer Lance Dutson met with the Commissioner of Health and Human Services and staff from the Governor’s office to show them the video, and to discuss potential reforms to safeguard Maine’s welfare system from fraud and abuse.

MHPC has specifically suggested the creation of a divergence program that helps potential applicants find work or job training while making welfare benefits a last resort, establishing a Secret Shopper-type program to monitor the performance and practices of DHHS employees, and lifetime bans from receiving benefits and working in state government for applicants and employees, respectively, who are found to have knowingly engaged in fraudulent or illegal behavior.

“I hope that what we have revealed today motivates action from officials in all branches of our government.  Our system is clearly vulnerable to fraud and abuse, and we can no longer pretend these things only happen in other states,” Dutson said.

“I have shared our reform ideas with the Commissioner of Health and Human Services and members of the Governor’s staff at our meeting this morning,” Dutson continued.  “I have also pledged the full support of The Maine Heritage Policy Center to develop and promote welfare system reforms that root out fraud, waste and abuse, while preserving our safety net for those in need.  Action must be taken.”

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CLICK HERE to watch the footage shown at today’s press conference.

CLICK HERE to watch the complete, 48 minute video on YouTube.

Download the PDF of the full transcript here.

Download the PDF of business card and picture of boat shown to DHHS worker

For more information, or for an interview with Lance Dutson, please contact Chris Cinquemani at chris@mainepolicy.org, or at (207) 240-7090

______________________________________

Download PDF of remarks

Press Conference Revealing Evidence of Maine Medicaid System’s Vulnerability to Fraud

Remarks by Carol Weston, State Director

Americans for Prosperity-Maine

August 11, 2011

Good morning and thank you for joining us.  I am Carol Weston and I serve as State Director of Americans for Prosperity-Maine.  I am joined today by Lance Dutson, the newly-named chief executive officer of the Maine Heritage Policy Center.

Today, AFP and MHPC have partnered to share with you the shocking results of an investigation into the Maine Medicaid system’s vulnerability to fraud and abuse.  We will show you video footage from an interaction earlier this year between an employee at the Biddeford office of the Department of Health and Human Services, and an individual posing as a “pharmaceutical” importer seeking free, taxpayer-funded Medicaid health coverage.

The video you are about to see was produced and sent to me by James O’Keefe.  Mr. O’Keefe is best known for exposing on video how employees at multiple branches of the taxpayer-funded ACORN provided advice on how to avoid detection by authorities of tax evasion, human smuggling and child prostitution.

Just a few moments ago, we shared this video with the Commissioner of the Department of Health and Human Services and the Legal Counsel for Governor LePage.  They were as shocked as we were to see this footage.  Now, we are making this footage available to the public.

The unabridged footage, which is 49 minutes, is available on the Web.  A link has been provided in your press kits.

This video reveals explosive evidence of the potential for fraud within Maine’s Medicaid system.  It replaces what have been unverifiable anecdotes of welfare system fraud and abuse with a concrete example of unethical and potentially illegal behavior within Maine’s welfare bureaucracy.

In your press kit we have provided a transcript of the dialogue from this footage, as well as a profile of Ted Ceanneidigh, the individual seeking free health care.  This profile includes images of the business card he presents to the DHHS worker, as well as the boat he shows her.

This is what we, and the DHHS worker, know about Ted Ceanneidigh:

• Ted confirms to the DHHS worker he has access to enough money to buy private insurance
• He drives a Corvette
• Ted explains that his parents don’t know he has turned their failing fishing business into a “pharmaceutical imports” business that does its dealings in international waters
• His business card prominently features a marijuana leaf
• Ted’s income is strictly in cash and precious metals, because metals are “less traceable.”  He has no pay stubs and none of his income is declared
• Ted never verifies Maine residency

When asked if he will be questioned about his income, the DHHS worker responds, “You don’t have a paycheck, you don’t file taxes, you have no income.”

When Ted expresses concern that his Corvette might be noticed, the DHHS worker responds, “They probably won’t see your Corvette” and then councils Ted not to say anything about it.

Had Ted actually taken the advice of the DHHS worker and went on to submit an application for free health care based on that advice, fraud would have been committed.

How many Ted Ceanneidighs out there were advised by DHHS workers to hide their income?  How many were never reported for suspected drug dealing?  How many Ted Ceanneidighs are receiving taxpayer-funded health care today because of the unethical procedures within Maine’s welfare bureaucracy?

Maine taxpayers deserve better than this.  They deserve peace of mind that their tax dollars are funding a safety net only for the truly needy, not people who game the system.  Taxpayers should not be paying government employees to ignore obvious drug felonies.  And they should not be paying them to advise individuals to commit tax evasion and hide assets in order to qualify for free health care.

Every year, Maine spends billions on its welfare system.  Is this what those billions are funding?

Let me be clear.  I am not suggesting all recipients of Medicaid and welfare system benefits are engaged in illegal behavior or gaming the system.  For many of our most vulnerable neighbors, our welfare safety net helps them through tough times.

But this video does prove that welfare fraud is possible, and it might be fostered by a broken welfare system, and the employees tasked with keeping that system running.

Reform is needed.  The potential for fraud within our welfare system must be erased.  The parts of the system that allow for unethical and abusive practices must be fixed.  In our meeting this morning, it was quite clear the Commissioner of DHHS and the Governor’s administration agree.

Here to talk more about the policy reforms needed to root out abuse and fraud from our welfare system is Lance Dutson, chief executive officer of the Maine Heritage Policy Center.

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Download PDF of remarks

Press Conference Revealing Evidence of Maine Medicaid System’s Vulnerability to Fraud

Remarks by Lance Dutson, CEO

The Maine Heritage Policy Center

August 11, 2011

Good morning.  As Carol mentioned, my name is Lance Dutson, and I serve as chief executive officer of The Maine Heritage Policy Center.

Let me begin by saying that I never imagined my first week on the job would be this eventful.

The video you just watched is shocking.  It shows clearly what many of us have believed for some time – that Maine’s welfare system is exceedingly vulnerable to fraud, and that we have frontline stewards of taxpayer funds who are not adequately equipped to perform their duties.  What we have seen in this video is unacceptable, and calls for action.

Last year, The Maine Heritage Policy Center launched a major welfare reform initiative known as Fix the System.  Our research throughout that initiative found that between 2003 and 2010 welfare system enrollment grew 70 percent, that almost one in three Mainers is on some form of welfare, and that in 2008 alone, Maine spent more than $2.5 billion on our welfare system.

How much of that explosive growth is due to fraud and abuse?

In this era of limited funds and budget shortfalls, can Maine taxpayers afford to have that question remain unanswered?

In a small state like Maine, we like to think that something like this doesn’t happen.  Sadly, this video shows that the potential for fraud is real.  Action must be taken.

Part of the bipartisan budget that passed this year included several reforms MHPC called for as part of its Fix the System initiative.  Time limits for certain benefits, elimination of benefits for legal non-citizens, and greater accountability measures for convicted drug felons are among them.

One idea we proposed that was not adopted was the creation of a diversion program.  Such a program would have those seeking enrollment in the welfare system first be assisted in finding meaningful employment.  Welfare would be reserved as a last resort.

Had a diversion program been in place, this video would have shown a DHHS employee running through various employment or training opportunities.  What we saw instead was the employee assisting in a potentially fraudulent gaming of the system.  Diversion programs not only help well-intentioned individuals explore ways to become self-sufficient first, they also reduce the potential for fraud and abuse.

In light of the shocking details we all just saw in the video, we believe additional reforms must also be explored to identify and discourage fraud and unethical management within our welfare system.

Elected officials should explore what is best known as a Secret Shopper program for our welfare system.  State authorized “secret shoppers” would visit DHHS offices seeking enrollment in our welfare system, and would monitor the responses and practices of DHHS employees as they interact with potential applicants.

If DHHS workers are found to be unethical, incompetent, or engaged in fraudulent or illegal behavior, they would be reported to the state and face whatever penalties are deemed appropriate.  No one, including state employees, should be above the law.  Taxpayer-funded government workers must be held accountable and to a strict set of standards to protect state resources and the public at large

Maine should also further public trust with a series of strict penalties for individuals found to be knowingly engaged in illegal and fraudulent behavior.

If a welfare applicant or recipient is found to be hiding income, hiding assets, or committing fraud in any way in an attempt to receive taxpayer-funded welfare benefits, that individual should face a lifetime ban on all state benefits.  Our safety net should be reserved for the truly needy.  Those who willingly take advantage of taxpayers’ generosity should be penalized.

Similarly, if a state employee, particularly a DHHS employee, is found to be knowingly advising individuals to commit illegal or fraudulent behavior, or if known violations of law or policy are not immediately reported, that individual should face a lifetime ban from any position working in state government.  There are plenty of good-natured, law abiding individuals in Maine who would appreciate a job working in government.  Those positions should not be filled by known law-breakers.

I have shared each of these reform ideas with the Health and Human Services Commissioner and the Governor’s staff at our meeting this morning.  I also pledged the full support of The Maine Heritage Policy Center to develop and promote welfare system reforms that root out fraud, waste and abuse while preserving our safety net for those in need.

We have to keep in perspective the reason we have these programs in place. Maine is a generous state, and we share a strong commitment to taking care of those in society who are unable to take care of themselves. The real tragedy of waste, fraud and abuse in our social welfare programs is that it diverts much-needed funding from our most vulnerable. At a time when there is a limited amount of funding available for these programs, fraud like that demonstrated in this video takes services away from those who really need it. When an offshore drug dealer receives welfare benefits because he’s hidden his earnings, a Maine family in real need is deprived of the safety net taxpayers have sought to provide.

I hope that what we have revealed today motivates action by our officials in all branches of government.  The evidence this video investigation has revealed cannot be ignored.

Thank you for your attention.  Carol and I are happy to answer any questions at this time.

“Creating a twelve-person ‘super committee’ to do the job of 535 elected representatives is yet another indication of a broken political system in dire need of repair. That is why it will be critically important for virtually every vote, every hearing, and every deliberation to be completely transparent and available for the public to see,” Sen. Snowe said in a statement released today.

The so-called “Super Committee” was created by the debt-ceiling compromise recently enacted to increase the nation’s borrowing by $2.4 trillion.  The committee is tasked with identifying $1.2 trillion in deficit reductions by late-November.  Its recommendations, which could include a combination of spending cuts and tax increases, will be fast-tracked for votes in the House and Senate.

The legislation Sen. Snowe has cosponsored would require all deficit-reduction committee meetings and hearings be open to the public, have advanced public notice, and be broadcast on live television.

Sen. Snowe’s decision comes after newly-named MHPC chief executive officer Lance Dutson sent a letter to her and Senator Susan Collins urging their support of the movement for open and transparent deficit-reduction committee meetings, and after an MHPC Action Alert urging its members to contact the two Senators, as well as Maine Representatives Mike Michaud and Chellie Pingree, with a message to cosponsor legislation to guarantee transparency measures.

“We consider Sen. Snowe’s co-sponsorship of this transparency legislation a tremendous victory for the open government movement in Maine and across the nation,” Dutson said.  “We are grateful for her leadership on this important issue.  Her support will be critical as transparency advocates seek to shine a light on the deliberations of this Super Committee.  Hopefully, the rest of Maine’s federal delegation will do what they can to expand and protect the public’s right to know what this Super Committee is up to.”

The Maine Heritage Policy Center (MHPC) is urging Maine Senators Olympia Snowe and Susan Collins to join a growing movement within the U.S. Senate to open up to the public all meetings and hearings held by the congressional deficit-reduction committee created by the Budget Control Act of 2011 signed by the president on Tuesday.

Earlier this week, several U.S. Senators sent a letter to Senate leaders of both parties calling on them to ensure the committee’s meetings have advance public notice, be broadcast on live TV, and be open to members of the public. Legislation requiring these transparency measures has also been introduced.

In a letter sent to both Maine Senators, MHPC’s newly-named chief executive officer Lance Dutson urged them to support the movement to have the committee’s meetings be open and transparent.

“The deficit-reduction committee is tasked with identifying $1.2 trillion in federal spending cuts by November. Some members of Congress are also calling for the committee to pursue tax increases. Raising taxes during this time of recession would be devastating. The results of the committee’s work could have a tremendous impact on taxpayers in Maine and across the nation. As such, our ability to know what takes place during these committee meetings should be guaranteed,” Dutson wrote.

Open government has been a signature issue for MHPC, and its efforts in the policy area have included the online transparency Web site MaineOpenGov.org, that lists state payroll and expenditures data, and its drafting and promotion of legislation to strengthen Maine’s Freedom of Access law. In assuming the role of CEO, Dutson has prioritized expanding the Center’s efforts to increase government transparency and accountability even further.

“Every citizen and taxpayer, in Maine and across the nation, has a right to know the actions of their government officials and how those officials are spending their hard-earned tax dollars,” Dutson said. “So much is riding on the results of this deficit-reduction committee’s work. We are urging Senators Snowe and Collins to help shine a light on its deliberations and ensure our right to know is guaranteed. This issue is too important to ignore.”

Scroll down to read a copy of the letter sent by MHPC CEO Lance Dutson to Senators Olympia Snowe and Susan Collins. Click here to view actual letter.

_______________________________________________________________________

August 5, 2011

The Honorable Olympia Snowe
United States Senate
154 Russell Senate Office Building
Washington, DC 20510

The Honorable Susan Collins
United States Senate
413 Dirksen Senate Office Building
Washington, DC 20510

Dear Senators Snowe and Collins:

The Maine Heritage Policy Center believes an open and transparent government is critical in a free and democratic society. Citizens have a right to know the actions of their government officials and how those officials are using our hard-earned tax dollars.

As an organization, we commit substantial resources to expand government transparency and protect citizens’ right to access public information. We created and maintain the MaineOpenGov.org Web site, which features salary information for some 90,000 taxpayer-paid Maine government employees, billions of dollars in state government contracts, and pension payment data for Maine government retirees. We have also partnered with other transparency advocates including the Maine Civil Liberties Union to promote legislation to strengthen Maine’s Freedom of Access laws.

Because of our steadfast commitment to expand government transparency, we were encouraged to learn of an effort by some of your Senate colleagues to make a newly-created congressional deficit-reduction committee open and accountable. In a letter to Senate Majority Leader Harry Reid and Senate Minority Leader Mitch McConnell, your colleagues have called for the committee’s meetings and hearings to have advance public notice, allow live television broadcasting, and be open to the public. Additionally, the Budget Control Joint Committee Transparency Act that has been proposed would amend the Budget Control Act of 2011 to require this critical transparency.

The deficit-reduction committee is tasked with identifying $1.2 trillion in federal spending cuts by November. Some members of Congress are also calling for the committee to pursue tax increases. Raising taxes during this time of recession would be devastating. The results of the committee’s work could have a tremendous impact on taxpayers in Maine and across the nation. As such, our ability to know what takes place during these committee meetings should be guaranteed.

I write to urge you both to join this movement to open these meetings to the public. Government transparency is too important an issue to ignore. Your influence in the Senate is vital to protecting and expanding our right to know.

Thank you for your consideration of this critically important issue, and for your service to the people of Maine.

Sincerely,

Lance Dutson

Chief Executive Officer

—END—

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For questions, or to schedule an interview, please contact Communications Director Chris Cinquemani at chris@mainepolicy.org

Download Full Report (PDF)

The first part of this study examines Maine’s state government employment levels using data from the Bureau of Economic Analysis. In 2009, Maine state government employed 5.51 people for every 100 people employed by the private sector—hereafter referred to as the “employment ratio.” Relative to the national average of 4.74, Maine’s state employment ratio is 16 percent higher and is the 21st-highest ratio in the country.

Right-sizing the state government workforce to the national average would reduce taxpayer-funded positions by up to 3,880 jobs, saving up to $185,635,011 annually. This is not a herculean task as Maine’s state workforce was nearly at that level in 2000, its lowest employment ratio ever achieved. Maine’s employment ratio has steadily and significantly increased ever since.

The second part of this study examines where over-employment exists by examining 32 major state government functions using data from the Census Bureau. Among the 32 functions, Maine’s higher employment ratio relative to the national average is concentrated in 3 of the functions that almost exactly account for the difference: Highways (5th highest in the country), Public Welfare (2nd highest in the country) and Higher Ed—Other (25th highest in the country).

Governor Lepage’s recent budget proposal only eliminates 81 positions—of which only 12 will involve layoffs. His plan achieves a modest savings of at least $4,385,294—just 2.4 percent of what he could have achieved if he right-sized Maine’s state workforce to the national average. Clearly there is room to do a lot more.

Additionally, this over-employment problem is a significant driver of Maine’s unfunded pension crisis which the Lepage Administration will also have to confront.[1] [2] In a forthcoming study, The Maine Heritage Policy Center will explore how right-sizing Maine’s state government workforces is a necessary step to solving the unfunded pension crisis.

The Size of Maine’s State Government Workforce

According to the U.S. Department of Commerce’s Bureau of Economic Analysis, in 2009, Maine’s state government employed 27,656 people (full and part time), or 4.7 percent of the total state labor force (public and private). Between 1979 and 2009, the number of state government employees has grown by 31 percent from 21,069 people to 27,656.

However, aggregate statistics are not very useful when it comes to informing public policy. Rather, policymakers need relative metrics to judge whether or not Maine has too many state government employees—in order to gauge their level of productivity. As such, this study explores the employment ratio of private versus public sector employment over time and across states.

State Government Employment Ratios

The employment ratio is derived by dividing state government employment by private employment. Chart 1 and Table 1 shows that in 2009 Maine’s state government employed 5.51 people for every 100 people employed by the private sector.

Table 1 also shows that when compared with the other 49 states, Maine has the 21st-highest state government employment ratio in the country, up from the 24th spot in 1970. In addition, Maine’s state government employment ratio is 16 percent higher than the national average—5.51 versus 4.74 nationally.

Regionally, Maine’s rank is higher than nearly all neighboring states with only Vermont’s employment ratio of 6.45 (17th) being higher. The remaining four neighboring states all have lower ranks: Connecticut (5.33, 23rd), Massachusetts (4.38, 40th), New Hampshire (4.63, 36th) and Rhode Island (5.14, 28th).

Budget Savings

As shown in Chart 2, in 2009, adjusting Maine’s state government employment ratio to the national average would have saved taxpayers up to $185,635,011. The budget savings are lower in 2009 than they would have been in 2007 at $234,206,891 only because the growth in state government employment nationally, between 2007 and 2009, surpassed the growth in Maine’s employment ratio. As shown in Chart 1, the number of Maine’s taxpayer-funded state government positions has significantly spiked since 2000.

Employment Ratios by Function

The data shown in Table 2 is from the U.S. Census Bureau and yields a slightly higher state government employment ratio for Maine than the data from the Bureau of Economic Analysis (5.59 versus 5.51). The national employment ratio, however, is lower (4.65 versus 4.74). Overall, this data implies a higher level of budget savings.

The employment ratios shown in Table 2 are also calculated by dividing the number of state government workers by the total number of private sector workers. Maine state government employs 5.59 workers for every 100 private sector workers, which exceeds the national average of 4.65 workers by 20.2 percent.

Among the 32 functions, Maine’s employment ratio is among the highest in the country for the following functions:

• Financial Administration (6th): Includes officials and central staff agencies concerned with tax assessment and collection, accounting, auditing, budgeting, purchasing, custody of funds, and other finance activities.

• Other Government Administration (12th): Includes administrative functions not included in financial, social insurance, judicial and legal administration.

• Highways (5th): Includes the maintenance, operation, repair, and construction of highways, streets, roads, alleys, sidewalks, bridges, tunnels, ferry boats, and related structures, including those operated on a toll basis.

• Public Welfare (2nd): Includes employees engaged in all public welfare activities, including the administration of public assistance and providing direct assistance such as Medicaid and TANF cash assistance (Temporary Assistance to Needy Families).

• Natural Resources (12th): Includes the conservation, promotion, and development of natural resources (soil, water, energy, minerals, etc.) and the regulation of industries which develop, utilize, or affect natural resources.

• Other and Unallocable (12th): Includes employees engaged in activities that are not applicable to other employment functions or are multifunctional such as voter registration and elections, economic development and code enforcement.

While “Higher Ed—Other,” which include all non-instructional employees, does not fall into the highest rankings in the country (25th); the absolute difference between the national average and Maine is one of the largest of all functions at 0.26. Combined with the difference found in Highways (0.26) and Public Welfare (0.40) nearly the entire difference with the national average is explained.

Employment Changes by Function

Table 3 transforms the employment ratios in Table 2 into actual employment levels. The total employment numbers are taken from the BEA data discussed previously which found that Maine’s state government workforce has approximately 3,880 too many employees.

By focusing on just the three functions with the largest absolute employment problem—”Highways,” “Public Welfare” and “Higher Ed—Other”—the state government workforce could be more than right-sized. In fact, right-sizing those three areas would eliminate 4,252 positions, which is significantly more than the required 3,880 necessary to achieve the national average.

Of course, there are other areas of significant over-employment that could be trimmed as well such as “Other and Unallocable” (771 positions), “Financial Administration” (619 positions) and “Natural Resources” (513 positions).

Conclusion

Overall, the one state government function that accounts for half of Maine’s over-employment problem is Public Welfare. Public welfare includes programs that directly aid individuals such as Medicaid and TANF cash assistance. This is not entirely surprising given that previous research has also pointed out that Maine has the most expensive Medicaid program in the country.[3]

Gov. Lepage’s recent budget proposal only eliminates 81 positions—of which only 12 will involve lay-offs—likely saving approximately $4,385,294. This falls far shorter than the nearly $186 million to be saved by bringing Maine’s state government workforce in line with the national average. In a forthcoming study, The Maine Heritage Policy Center will explore how right-sizing Maine’s state government workforce is a necessary step to solving the unfunded pension crisis.

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Notes and Sources

[1] J. Scott Moody, “More Bonds? Not with Maine’s Ballooning Unfunded Retiree Liabilities,” Path to Prosperity, Issue 17, May 18, 2010.  http://maine.thelibertylab.com/wp-content/uploads/More-Bonds-Not-with-Maines-Ballooning-Unfunded-Retiree-Liabilities.pdf

[2] J. Scott Moody, “The Cost of Doing Nothing: Maine’s Pension Payments are Crowding Out Other Spending,” Path to Prosperity, February 3, 2011.  http://www.mainepolicy.org/wp-content/uploads/Path-to-Prosperity-The-Cost-of-Doing-Nothing.pdf

[3] Tarren Bragdon, “Maine’s Choice: Have Medicaid Take Care of the Truly Vulnerable or Give Away Medicaid to the Middle Class,” Medicaid Watch, Vol. 5, Issue No. 1, February 25, 2008.

An analysis of the payroll data reveals an explosive growth in MTA’s total payroll costs (base pay, benefits and overtime) between 1998 and 2010.  In 1998, MTA payroll costs totaled $16,764,928.  In 2010, MTA’s total payroll costs grew dramatically to $28,770,835—an increase of 72 percent in just 12 years.  By comparison, private sector salaries and benefits during that same time span grew by only 46 percent.

At the individual employee level, the number of highly paid MTA employees skyrocketed as well.

In 1998, just two MTA employees received more than $80,000 in total compensation.  By 2010, 75 took home compensation at or above $80,000.  The number of highly paid toll collectors has spiked as well, with only one toll collector receiving more than $60,000 in total compensation in 1998, compared to 85 in 2010.

And while MTA has reduced the number of toll collectors since 1998, from 315 to 288, total toll collector payroll has grown more than 70 percent—from $7,752,760 in 1998 to $11,067,587 in 2010.

“Only using MTA math could you have 27 fewer toll collectors, but still have a multi-million dollar increase in total toll collector pay,” said Sam Adolphsen, Director of the Center for Open Government at The Maine Heritage Policy Center.

The new data also reveals that the very highest MTA earners received staggering raises over the twelve year span.  MTA executives received pay increases totaling as much as 123 percent since 1998, even though they did not advance to a new position.  Some executives received pay increases more than three times what the average private sector worker received.  Seven MTA executives even earned more than the Commissioner of Maine’s Department of Transportation.

“It is almost inconceivable to think that our toll dollars are funding such massive increases in pay, while Maine citizens continue to draw attention to the very real need to fund repairs to make our roads safer,” Adolphsen said.  “It would appear fiscal management at the MTA is severely lacking.”

MHPC released the MTA data as members of the Legislature’s Government Oversight Committee prepare for a public hearing on Feb. 11 to discuss an Office of Program Evaluation and Government Accountability (OPEGA) report which found questionable expenses made between 2005 and 2009.

Findings within the OPEGA report relating to MTA’s toll-funded expenditures include:

• $157,000 in gift card purchases
• $27,000 donated to Maine Preservation Foundation
• $10,000 donated to the Maine Center for Economic Policy
• $6,100 donated to Women Unlimited

“As legislators investigate the fiscal practices of the Maine Turnpike Authority, it’s critical they have a more complete picture of how MTA spends our toll dollars,” said Tarren Bragdon, Chief Executive Officer of The Maine Heritage Policy Center.  “This data raises a series of questions about how MTA uses our toll dollars to compensate its employees, and why that total compensation is completely out-of-balance with the private sector.  I urge legislators and the public to be vigilant in their questioning of MTA, and to refer to MaineOpenGov.org to fill in the holes about MTA’s spending.”

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The problem with that fair-sounding approach is that not all state programs are equally responsible for the state’s budget woes. Rather, a handful of programs are driving the bulk of state spending growth. A number of state programs, in fact, are actually spending less today than they were ten years ago. Administrative spending by the Maine State Library, for instance, fell 64 percent over the past decade. Spending by the Department of Corrections, by comparison, has risen by more than 33 percent. Simply put, some programs are more responsible for ongoing budget shortfalls than others.

Which state agencies and departments are most responsible for increased state spending? Of the 40 fastest-growing programs in this report, 25 are in either the Department of Health and Human Services or the Department of Corrections. Three other programs are related to law enforcement. Spending on various social and health programs continues to climb rapidly, yet, contrary to the promises of those who advocate for more social services spending, criminal justice costs continue to climb as well.

Just as we found in our 2009 report, average spending growth by the Top 40 programs far outpaces the General Fund average. While General Fund spending grew just 8.8 percent over the past ten years, spending by the Top 40 state programs shot up 35 percent. Spending by General Fund programs not among the Top 40 actually dropped 8.5 percent over the same period.

If they are looking for ways to balance the General Fund budget, lawmakers would do well to carefully scrutinize those programs – and there are a relative few – that have seen the most dramatic spending growth in recent years. Here are 40 of them:

Total General Fund spending: Total General Fund spending for all programs rose and fell during the last ten years, but is up 8.8 percent overall.

The Department of Health and Human Services: Total General Fund spending by the largest state department is actually lower today than it was ten years ago, but spending by some DHHS programs has risen dramatically. Administrative spending has skyrocketed and state spending on the TANF program alone is up 72 percent.

The Department of Corrections: While the General Fund budget for DHHS is actually less than it was ten years ago, the General Fund budget for the Department of Corrections has grown by more than 33 percent. The Department’s administrative costs have risen 90 percent in just ten years, and medical spending has more than doubled.

Public Safety and Criminal Justice costs: Corrections costs are up, but so are other costs related to public safety and criminal justice. Among the Top 40 fastest-growing state programs are the following three, which include spending by the Department of Public Safety and the Attorney General’s Office:

Department of Education: General Purpose Aid for Local Schools, the largest single General Fund account, rose 25 percent over the last ten years, but spending on Retired Teachers’ Health Insurance shot up nearly 140 percent.

Defense and Veterans Services: Though few would dispute the need to provide these services, General Fund spending for veterans’ services and disaster assistance has risen dramatically.

Department of Administrative and Financial Services: Some of this department’s programs have seen large spending increases. Debt service spending by the Government Facilities Authority has more than doubled.

Natural Resources: Though they make up a small part of the overall budget, the state’s natural resources agencies have seen significant spending growth in some areas. Four of the Top 40 programs are in these departments.

Miscellaneous programs: While the budget for the Governor’s office rose and then fell over the past ten years, the Legislature’s budget has steadily increased. The administrative budget for the Treasurer’s office has risen as well.

New programs: Despite ongoing budget shortfalls, new programs have been created and funded. Examples of what appear to be new programs (which are not included among the Top 40), are the following:

The changing composition of the General Fund. The 40 fastest-growing General Fund programs are consuming an ever larger share of the overall General Fund budget. As indicated in the chart below, during the 2002-2003 biennium, the 40 fastest-growing programs made up 40 percent of all General Fund spending. By the 2010-2011 biennium, those same 40 programs made up nearly half of the General fund budget. If the massive spending increases of these 40 programs are not dealt with in a responsible and sustainable manner, this handful of programs will ultimately consume all General Fund spending.

Departmental Budgets. Not only is there variation in spending growth from one program to another, but from one department to another. A number of state departments have seen major spending cuts over the past decade. The biennial budget for the Department of Economic and Community Development, for instance, has been cut by 41.4 percent. Spending by the Department of Public Safety, by contrast, is up 57.8 percent over the same period.

Conclusion. As this simple analysis shows, dealing in a meaningful way with the rapidly rising costs of the 40 programs outlined here would do far more to sustainably solve the state’s budget woes than implementing yet another round of across-the-board cuts. A relative handful of state programs are driving most state spending increases. State budget writers should therefore devote a good deal of their time and energy to reviewing them.

Sources: The Legislature’s Office of Fiscal and Programs Review is the source for all budgetary data in this report.

Download the full report (PDF)

Under the Statehouse Dome

Becoming an Effective
Activist in Augusta

During the summer and fall, The Maine Heritage Policy Center (MHPC) and Americans for Prosperity-Maine (AFP) teamed up with State Senator Carol Weston to train more than 600 free market activists at 12 different “Building Your Activist Tool Kit” workshops across the state. The skills they obtained were put to work. Activists used the campaign, communications, and new media skills they learned at our trainings to impact the outcome of elections up and down the ticket.

Now that Election Day has passed, our focus must shift toward engaging government to advance liberty and real economic growth. That means we must learn what tools are available to us to maximize our success in the debates over important policy reforms. That’s why MHPC, AFP and Carol Weston are teaming up once more.

On Tuesday, December 14, we will hold an “Under the Statehouse Dome” training session in Augusta. During an insider’s tour of the Capitol, participants will learn how to successfully testify at a legislative committee’s public hearing, where to obtain research and historical records relating to public policy, and how to maximize your time when engaging your elected officials. This is a high-value one-time event, and we hope you will register to attend right away.

Under the Statehouse Dome

Becoming an Effective Activist in Augusta

Tuesday, December 14, 2010

10:00 a.m. – 12:00 p.m.

State Capitol

Statehouse Welcome
Center

State House Station | Augusta, Maine 04330

The Maine Heritage Policy Center (MHPC) held a press conference in Brewer today to unveil new updates to its transparency Web site MaineOpenGov.org. Now featuring retirement pension data for the 25,727 current Maine state and local government retirees, the updates allow taxpayers to finally understand and personalize Maine’s government pension challenges, and their impact on Maine families.

The 25,000-plus individuals currently enrolled in the Maine Public Employees Retirement System will received a combined $15,383,315,649—an amount equivalent to $11,834 for every man, woman and child in Maine. Of that nearly $15.4 billion total, retirees have paid in a combined $882,274,785—less than six percent of the total pension cost.

On average, for every $1.00 withheld for their paycheck while working, government retirees will get back $17.00 in lifetime pension benefits. For some government retirees, for every $1.00 paid into the retirement system, they will get back more than $300.00.

“For decades, we have been hearing how politicians have made promises to those retiring from government,” said MHPC Chief Executive Officer Tarren Bragdon. “Now, the taxpayer is on the hook to pay for those lofty, sometimes multi-million dollar, pension promises.”

Other facts presented in Brewer:

• 2,101 – number of government retirees set to receive lifetime pension benefits of $1 million or more

• 9,193 – number of government retirees set to receive lifetime pension benefit of $500,000 or more

• 50 percent – percent of current government retirees who worked for government 25 years or less

• 213 percent – increase in total pension payments since 1991 (from $165 million to $516 million)

• $916 million – taxpayers’ share of retiree costs for state employees and teachers in the first budget of the next governor

“The next governor and next Legislature face a critical decision,” Bragdon explained. “Do taxpayers continue paying these soaring costs—nearly $1 billion per budget, beginning next year—or do we diffuse the ticking time bomb by making changes to the current system to make it more affordable and fair for everyone?”

Now celebrating its second year, MaineOpenGov.org has opened government to Maine taxpayers by putting online government payroll for more than 90,000 public employees, billions in government payments to vendors and individuals, spending and salary data for the Maine Transportation Authority, a property tax calculator, and much more.

“We have added this additional data to MaineOpenGov.org for the same reason we created the site; to provide Maine citizens with a better understanding of how government spends their hard-earned tax dollars,” explained Sam Adolphsen, director of MHPC’s Center for Open Government. “We hope this new government retiree pension data will help folks better understand this important issue, and how it will affect them, their families and their wallets.”

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Visit MaineOpenGov.org for more information.

Additional Documents:

Pension Fact Sheet

Total Pension Contributions from Employees vs. Total Projected Pensions

Top 10 Largest Government Pensions

Growth in Total Pensions ’91-’09