Tuesday, October 11, 2011

No-bid naughtiness, Municipal style

Remember during the Bush administration (“do you miss me yet?”) how we were constantly hammered with news reports of no-bid contracts being given to Haliburton, the company once headed by Dick Cheney, VP to President Bush?  It goes without saying that government procurement activities, given the absurdly huge sums involved, and the political meddling always present, provide more than enough opportunity for mischief, or far worse.  More about that in upcoming posts.

Funny, then, how no one makes an issue of no-bid contracting by local government, in this case, the Town of Brunswick, and the Brunswick School Department.  Contracting that has clearly political implications.  There’s enough here of interest that you’d think any newspaper worth its salt would have an investigative reporter digging into the subject.  Which explains why The Ostrich hasn’t so much as mentioned the subject.

Let’s take things one at a time.  You may have heard of the Maine Municipal Association, a non-profit enterprise that is, in effect, a wholly owned subsidiary of all but one or two municipal governments in Maine. The MMA is a highly visible presence in Augusta, lobbying for the interests of said governments, most often in opposition to the interests of individual taxpayers who fund them.  They dig their heels in whenever the slightest challenge to government status quo arises.  Think TABOR and other recent initiatives.

We know a little about MMA operations.  Their operating revenue derives from two sources.  The first is dues charged to member municipalities,  which amounts to roughly $1 million per year.  The second is insurance operations, in which they provide various forms of coverage to member municipalities.  Profit from this activity is in the range of $8 million a year.

You can trust us on this; our numbers are in the right range.

The $8 million in profits from insurance operations has largely been used to fund a variety of partisan political activities.  Especially campaigns to defeat or approve citizen initiatives on behalf of their municipal government members.

One might reasonably ask, therefore, whether towns are getting the best possible deals on their insurance coverage.  Especially if they are not sending it out for bids on an annual basis, commensurate with the annual budget cycle.

We’re not sure how much Brunswick pays to the MMA for insurance products, but we will follow up and report to you when we get the answer.

Now let’s move on to the other face of this phenomenon.  The Maine Education Association is the statewide teachers’ union, and they are immensely powerful in matters that drive school department budgets.  Surprise, surprise; they also operate an insurance business in addition to basic member representation services.

We are not nearly as familiar with MEA operations as we are with those of the MMA, so we won’t make any estimates of their scope.  We note, however, that the Brunswick School Department employs many more than town government, and their budget is more than 60% of overall town spending.

We presume, then, that the School Department spends more on insurance products with the MEA than the municipal side does with the MMA.  Again, you have our word that we will do our best to run these figures to ground.

The teachers’ unions, at both the state and national level, are far more engaged in partisan political advocacy than is the MMA.  We conclude that their insurance operations are more lucrative.  And we can easily imagine that purchasing insurance through the union is a non-negotiable aspect of teachers’ contract discussions.

Where are we going with this?  We’re going to a conclusion that the financial interests of taxpayers are ill-served by the insurance purchase processes of both municipal government and the school department.  And that it’s time that both put the purchase of all insurance out to bid on the open market as a matter of course.

Each of you reading this should contact your town councilor and school board member to demand that they see that this happens.  If they won’t, you have evidence that being a good steward of taxpayer resources is not a priority for them.

Old and lazy as we are, you have our personal commitment to look into a statewide effort to stimulate rigorous competition, on an annual basis, for this insurance coverage.  If the MMA and MEA win that competition, fine.  They will have structured their pricing to win.  If not, they will have been displaced by private sector providers who offer a more competitive product.

Either way, taxpayers win.  Who can argue with the motivation and the outcome?

Other than those who believe government monopolies are a good thing.   And that local insurance agencies shouldn’t have a chance to save us money.

2 comments:

  1. I believe the MEA is more powerful in perception than reality, but as to their inner workings, I'd be happy to answer any questions you have. I worked for the organization for 14+ years as a UniServ Director (in Caribou), but left on less-then-pleasant terms. I did expect better from them than a single email demanding the office key and phone card, though.

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  2. With access to taxpayers funds to cover any required payouts government entities, however big or small, can be self insured like most very large corporations. Any spending on insurance is merely to reward their friends with the premiums and to secure votes.

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