Opinion - by Gov. Arnold Schwarzenegger: Waste is killing California

Opinion
Gov. Arnold Schwarzenegger: Waste is killing California
Cutting fraud and waste won't solve the entire budget mess, but it needs to be done, the governor says.
By Arnold Schwarzenegger
July 3, 2009
In San Luis Obispo County, a 20-year-old drug abuser who was the sole caretaker for his seriously disabled father provided such poor care that, according to the grand jury in that county, the father frequently had bedsores, he was not properly cleaned, adult protective services had to be called in and, ultimately, he died before he was 60 years old. Incredibly, the son was being paid by the state, through the In-Home Supportive Services Program, for this substandard care.

Though this kind of abuse of taxpayer dollars is not rampant, we know it exists. So how could the Legislature in good conscience propose its latest budget fix -- one that would increase taxes, cut children off our healthcare rolls, reduce funding to education and put more strain on law enforcement -- without first eliminating this kind of fraud and waste?

Legislators are continuing to draft solutions to our now $26.3-billion state budget deficit. We're close to filling the gap, but I will not sign a package that raises taxes or fails to address the entire deficit. There is a need for compromise, and I have proposed a path forward that would include ensuring that tax dollars go to citizens in need of services and not to waste, fraud or excessive compensation for those who provide those services. These reforms won't entirely address falling revenues and rising costs, but they will help immediately, and especially in the years to come. It's time we take action on them.

Take the CalWorks program, for example, which is designed to give low-income Californians a helping hand, temporarily, as they get back on their feet. Of the approximately 525,000 cases that currently involve cash assistance from CalWorks, only 22% are meeting the minimum program requirements. That means 78% aren't trying to get on their feet at all. They're not working, not looking for work, not seeking job training, not performing community service and not pursuing an education.

So here is a simple, common-sense reform: Make sure every Californian getting a CalWorks check has to check in just twice a year so a supervisor can keep tabs on their progress. If they make zero progress, their benefits run out after two years rather than the current five. By doing this, we could save $850 million over the next two budget years, and ultimately $1.5 billion per year -- and we could also save the CalWorks program.

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Very important, they'll create immediate and future cost savings.
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Medi-Cal is another example. It's an essential program to nearly 7 million Californians, but it's growing by 8% per year because of rising healthcare costs, increased caseloads and various changes to the program. It's now unaffordable and unsustainable. I've proposed a couple of simple fixes, one of which is to centralize and modernize the outdated, pen-and-paper eligibility process that is currently run by 27,000 employees scattered throughout our 58 counties. This one change would save approximately $500 million per year.

These ideas are not new. But there has never been a Legislature willing to betray its masters and work for the benefit of the people over certain special interests. That's certainly true of reforming retirement promises to state employees. No long-term fix is more important to our state's solvency. That's why I've proposed -- for new hires only -- to change our unsustainable retiree pension formulas and to require proper funding of promises when they're made.

In 1999, state employees' pensions were increased to a point where some employees could retire after 30 years, at as young as 50 or 55, and continue to earn 90% of their highest salary plus cost-of-living increases for the rest of their lives. That's debt the state is obligated to pay although there is no money to pay for it. The debate on this increase on the floor of the state Senate in 1999 took only one minute. By simply taking another 60 seconds to return pension formulas for new hires to their pre-1999 rates, we would see a savings of nearly $95 billion in reduced pensions by 2040, with more billions to be saved beyond that.

When it comes to In-Home Support Services, grand juries in six counties have found that the program has no safeguard against fraud. Care providers are able to collect state checks under aliases, and some providers bill the state for far more hours than they worked -- with no oversight. The current state of the program puts clients "at risk of physical and financial injury," according to Ventura County's grand jury. Requiring background checks of providers and hiring more fraud investigators could save the state hundreds of millions of dollars this year alone.

Legislators want to save programs. Well, let's save them, but let's do it by getting rid of the fraud and waste, with common-sense reforms that will make government more efficient and reduce costs. Put together, the ideas I've laid out will save approximately $2 billion in this current year -- toward our $26.3-billion problem -- and phenomenally more in coming years.

The writer Arthur C. Clarke said good ideas come in three phases: 1) "It can't be done," 2) "Sure, it can be done, but it's not worth doing," and 3) "I said all along that it was a good idea." In Sacramento, legislators are still stuck at No. 2 when it comes to reforming some of state government's bureaucracy. But I'm confident it won't be very long until we're all agreed that these reform proposals have been good ideas all along.

Arnold Schwarzenegger is the governor of California.