Remodeling Project Among Questionable State Spending During Freeze

CALL7 Investigation Finds Spending On Personal Service Contracts

People and companies hired by the state for specific projects are called personal services contracts. With the budget crisis, Gov. Bill Ritter's administration made it clear that only contracts essential to keeping the government running would be continued.

But a CALL7 investigation found that remodeling projects for offices, contracts for e-mail marketing for state parks, and computer programming services for paperless meeting notes were approved. The projects might have some merit but are clearly not essential to keep the government functioning.

In October 2008, Ritter instituted a freeze on personal services contracts that was supposed to stop non-vital projects. The move was designed to close a massive state budget gap.

Despite the freeze, Ritter's budget office and his Chief of Staff Jim Carpenter approved several questionable projects, including tens of thousands for new cubicles at the state Department of Health Care Policy and Financing, an e-mail marketing program at the parks department and a consultant to set up paperless board meeting minutes at the Department of Regulatory Agencies.

"They don't sound essential to me," said Sen. Al White, a Hayden Republican who serves on both the Appropriations and Joint Budget committees. "I think the governor's office ... has been misled or misguided on the essential need for those requests."

CALL7 investigators reviewed personal services contract exemptions approved between Oct. 31, 2008 and June 30, 2009, finding more than 300 waivers that cost the state as much as $484 million.

Agencies were required to certify the reason for a needed exemption, including whether it was essential to the welfare or health of state residents or would likely get the state sued.

But our investigation found that most of the waivers -- 237 of them -- were marked to say that failing to implement the contract would "create a disruption to an essential state function."

Some waivers appear to be necessary, but others seem difficult to justify in one of the worst budget years in history.

"It was a morale issue so they could effectively work on the increased case load that they had to deal with," said Carpenter about $75,000 in state taxpayer money it cost to remodel two floors of the HCPF building at 1570 Grant St.

There was an additional $75,000 in federal taxpayer money used for the project. Half the project was completed during the last fiscal year when they had the contract freeze and the second half was in this fiscal year.

In the waiver, HCPF officials said morale would suffer if the project was canceled, and HCPF staff initially told 7NEWS the new cubicles were necessary to provide room for more staff. The department's staff is increasing to handle skyrocketing Medicaid claims.

But when CALL7 investigators requested figures about how many spaces were added, the numbers showed HCPF actually lost 11 cubicle spaces in the remodel. HCPF then said the remodel was necessary to make the space more efficient.

HCPF department officials said they reverted hundreds of thousands of dollars back to the state to help close the budget gap.

Carpenter also justified a $74,000 waiver for a computer consultant to set up paperless board meeting minutes for DORA. DORA officials said the money came from licensing fees, but DORA received $1.7 million in taxpayer money last year that the licensing fees could arguably be used to backfill taxpayer money.

"This was an effort to make these board minutes more efficient," Carpenter said.

"Is it essential to the function of state government?" CALL7 Investigator John Ferrugia asked.

"If it makes something more efficient and saves money in the long run, yes," Carpenter said.

Another waiver was about $10,000 for an e-mail marketing campaign to draw in visitors to the state parks. That expenditure also came out of cash funds, but Parks received $7.3 million last year from the general fund.

"Is this an essential service?" Ferrugia asked.

"I would say this is a project that allows better communication with people who use the parks and a good expenditure of dollars," Carpenter said.

Carpenter said Ritter's administration has worked hard to cut spending.

"We have squeezed this budget down in a very, very significant way," Carpenter said. "We have closed a budget gap of over $2 billion last year."

White said the mismanagement of both the hiring and contract freezes contributes to more painful cuts the state will have to make this year.

"Doesn't it makes sense that if (Ritter's staff) had managed this better, (the state) wouldn't be laying off as many people today?" Ferrugia asked.

"That's probably true," White said.

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