Texas State Auditor
SAO: Reports:
An Audit Report on the Health and Human Services Commission's Consolidation of Administrative Support Functions
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John Keel, CPA Texas State Auditor SAO: Reports: An Audit Report on the Health and Human Services Commission's Consolidation of Administrative Support Functions |
September 2005
Report Number 06-009
The Health and Human Services Commission (Commission) should use a consistent, comprehensive methodology to analyze the key business processes within its administrative support functions. The Commission reported that it achieved a salary savings for the 2004-2005 biennium of $15.3 million in General Revenue as a result of centralizing the management of the administrative support functions and eliminating 567 positions within those services. However, the Commission needs a more comprehensive methodology to streamline processes, quantify workloads to establish staffing levels, set performance measures, and establish accurate baseline costs for outsourcing decisions. The Commission used most of these methods for establishing its Office of the Inspector General and Civil Rights Office but has not used them consistently to consolidate its other administrative support functions.
The Commission's decision to outsource its human resources and payroll services management function was not based on accurate cost data. The Commission's analyses estimated that outsourcing this function would achieve a five-year cost savings as high as $21.7 million when compared with its optimized in-house model. However, because of significant errors and omissions in the Commission's cost data for both the outsourced and optimized in-house models, auditors were not able to determine whether the Commission's decision to outsource was cost-effective when compared with performing these services under the optimized in-house model. As of August 2005, the Commission reported that it had not yet achieved any cost savings from outsourcing this function. The Commission also lacks sufficient documentation needed to demonstrate compliance with statute regarding its best-value decision in awarding the human resources and payroll services management contract.
The Commission also needs to establish better performance measures for its purchasing function. The Commission and the health and human services agencies it oversees reported experiencing significant delays in ordering and receiving goods and services using the consolidated purchasing and payment process. A number of these delays were associated with goods and services that supported health and human services agencies' delivery of client services. For example, health and human services agencies reported instances in which goods and services such as cell phone services for bioterrorism staff and patient and food supplies were either delayed or disrupted. Although the Commission recognized and corrected a number of the problems that caused the delays and disruptions, it still needs to establish performance measures that assess the overall efficiency and effectiveness of the purchasing and payment function.
The State Auditor's Office's Classification Office also reviewed 408 property management and purchasing positions at health and human services agencies and found that 373 (91 percent) of these positions were classified correctly. In comparison, the average percent of properly classified positions from the previous five statewide classification reviews was 90 percent. Agencies took appropriate action in resolving misclassified positions and have reported that they will spend $14,545 to properly classify these positions.
The State Auditor's Office continues to audit the Commission's consolidation of human resources, financial services, and information resources.
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