PEF’s cost savers and legislative support

As the battle over state worker contracts unfolds, lawmakers are starting to run interference for the unions, backing a proposal that would force cost/benefit analysis regarding the use of outside contractors in the IT field.

Unions including the Public Employees Federation have long complained that these outside contractors are costing the state money, which they say could be saved by doing the work in-house.

The disputes and debates over outside contractors have raged for years, what’s notable is the bills by Sen. Joe Robach and Assemblyman Harry Bronson which, if passed, could give the issue a bit more traction. Both are from the Rochester area, Robach is a Republican and Bronson a Democrat.

Here’s the PEF release:

The New York State Public Employees Federation (PEF) released new research today that identifies savings of $300 million annually if the state takes reasonable steps to reduce the excessive use of consultants.
The state spent $2.8 billion on consultant services in SFY 2010-11. The majority of the billing went to information technology (IT) and engineering services for work that cost an average of 70 percent more than what it costs to have state employees do the same work, including the cost of state employee benefits.
“Too often state agencies rely on costly contractors for services due to the lack of sufficient in-house staff, even though in-house staff is usually the most cost effective solution,” said PEF President Ken Brynien. “The situation has been exacerbated by years of attrition and hiring freezes.
“The best example of the state’s wasteful spending on engineering consultants is the bridge inspection program. State and federal law require the inspections at least once every two years. The Department of Transportation complies with these requirements by using a blend of in-house staff and consultants even though their own studies show consultant inspectors cost up to 50 percent more than state employee
inspectors,” Brynien said.
The average hourly rate for an IT consultant is 77 percent more than the average state employee hourly rate.
“We have long acknowledged there is a need for private consultants on short term projects,” Brynien added. “But on continuing work such as bridge inspections and IT services the state is needlessly wasting millions of taxpayer dollars.
“The governor has announced several efforts to identify and reduce state waste through mergers and consolidations. The potential benefits of reducing the state’s reliance on consultants and contractors must be a part of the savings strategy,” said Brynien.
PEF is urging legislators to pass cost-benefit analysis legislation (S3093/A5128-A) sponsored by Senator Joe Robach and Assemblyman Harry Bronson. The bill would simply require state agencies to do a cost comparison to determine whether state employees could do the same work at a lower cost.
PEF is the state’s second-largest state-employee union, representing 56,000 professional, scientific and technical employees.

  1. ResidentX says:

    this is where things get dicey.

    - the detractors are going to say “PEF just wants more members”

    those in support will counter with..

    - there are an awful lot of people with their hand in the pot of contracting. Just look at Joe Bruno for the most recent proof. Many politicians and even directors/deputy directors get kick backs for contractors. The more you reduce the state work force (which is already the smallest that it has been in decades) the more reliant we become on contractors which in turn is more money for the politicians and others with their hand in the pot. Its also not easily traced money. Therefor most of the press dont bother following the money due to the effort involved.

    many politicians are getting BIG TIME financial campaign support etc for promoting the use of contractors. The state isnt even using a competitive process that might save money. They have a limited number of firms that they deal with and those firms coordinate to set rates. We wont get into the fact that many of the contractors have been here for years and years thus eliminating any benefit of going the contract route.

    would you rather pay a DB admin 75,000 a year throw in benefits etc to the tune of $105,000

    or would you rather pay a contract rate of $320,000 for 18 months that is pretty much automatically renewed every 18 months.

    10 years down the road youre looking at a little over 1 million in cost for the state employee and 3.2 million for the contractor

    lets not also mention how much of that money is funneled OUT OF THE STATE AND COUNTRY. Many IT contractors are foreign. If they do take another contract job they take the money with them often to another state. Some go back home taking that money out of the country. Some of the contract firms are international and that money is funneled out of the state and country.

  2. jack says:

    consultant services for IT are not even close to State employees, they make way more and some of these jobs go on for years. Has state employee bashing gotten so important that the Tax Payers must pay 70% more for the same ongoing work ? Why so afraid of a study, is it because it will show state workers get the same work done much cheaper for the tax payer ? Stop wasting our money on Consultants for on going work.

  3. Frequent Visitor John says:

    This is something that is long over due. Why have people accusing state employees of not doing their jobs; when it is clear the state employee can do the job if given the chance and at a considerable savings to the tax payers.

    In this I take my hat off to PEF for being on the forefront to get something done to get rid of these costly private consultants.

  4. ResidentX says:

    your private sector at work…

    THIS is what corporate America is pushing for. THIS is why the push is on to destroy any sort of benfits etc.

    You people think Unions arent necessary… they are as necessary now as ever. Big business is simply incapable of policing themselves and acting responsibly. If it will make then more $$ they will do it… regardless of the consequences.

  5. Jim says:

    If they use the prevailing wage + benefits for private sector employees and the prevailing wage + benefits for state employees there is still a gap in total compensation especially at the professional level. The fair and equitable way to compare is to look at comparable jobs. The lower cost of state employees will become apparent rather quickly.

  6. Dave says:

    Oh yes..Government in NY can do it better..Thats why 49 other states can do the “businesses of the people” at a fraction of the cost of NY and we have the highest taxes in the nation and the biggest bloated most expensive dysfunctional government in the nation..

  7. twopondsnorth says:

    PEF strongly supports the converting of consultants to state worker status, without taking a civil service test. Why, you ask? Because they get new members. PEF cares only about membership numbers and nothing about individuals.

  8. Sri says:

    @ Frequent Visitor John and Jim,

    You both make a very good point.

  9. b sarbane says:

    No, Jim, the fair analysis is: outside contractor fees actually charged versus (wages + benefits + lifelong pension + lifelong benefits during retirement) costs of state workers to do the same job.

    We crossed the point years ago where private sector workers were less expensive than government workers. If there is an accurate analysis which includes the fully-loaded costs of state workers (not just wage vs wage, but including all costs) the PEF people will always wind up making more. That is the problem with NYS government today — it is fundamentally inefficient compared to having private sector workers do the same work. What would be most efficient would be a bid process for virtually every aspect of state government work. The most comparable example is the construction industry, where non-union labor is about 30 percent cheaper and more people wind-up having jobs.

  10. optivity says:

    Most of the IT workers being hired into NYS civil service items today come from India or China.

    If we cannot export our jobs over seas we import foreign labor instead.

    Wake up America… Corporations are selling us out, lock, stock & barrel.

  11. bgbytoys says:


    funny when you have to pay a union prevailing wage to non union workers i think it works out to be the same.

  12. BarbaraNNY says:

    Just do the study. Get rid of the consultants, as much as possible.

    While you are at it, have each department do a cost effective analysis of their entire department. Reorganize, save money. Basic economics.

    If I am stressed by my household budget, I have to reevaluate and make changes. The reevaluation needs to take place in NYS.

  13. Council82 says:

    Consultants are also retired state workers who normally held MC positions and are well connected with Commissioners of various state agencies. The work they are given can easily be performed by the Agency itself. However, patronage is well entwined within state agencies and the use of “consultants” to assist these individuals in boosting their earning on top of their retirement pensions is basically a form of high income welfare. I with the leadership of PEF the best of luck. I would start with the NYS Power Authority. That normally is the Governor’s baby to hide his “consultants.” NYS Homeland Security must also have some “waiver” consultants. PEF’s $300 million sounds a little on the low side when you add up every type of “consultant” hiding in a patronage job.

  14. orangecounty says:

    Comapring wages to wages is not always accurate. When you work as a consultant you may be a ‘free agent’ or, and this is more likely, working for a consulting firm who will get x amount of dollars for their worker. The worker in turn is paid by the agency and believe me is not getting the full amount. If the same consulting firms are placing workers with the state year after year they get rich, we get the bill. There is no savings there, kickbacks maybe but no savings.

  15. Dave says:

    The only point is ..if governmenr did its job effectively..NY would have the lowest taxes in the nation instead of the highest..NY is one of only two states to lose 2 House of Rep Seats because NY has lost half the population of its upstate cities..We do not need and can’t afford NY’s bloated most expensive and totally dysfunctional government..No other state gets to tax the world economy (Wall Street) at NY’s highest tax rates in the nation either..All that and NY is so tax expensive and its government so dysfunctional we have the highest taxes in the nation instead??.. 49 other states manage the peoples business at a fraction of the cost in NY.. NY government it the picture post card of bankruptcy and failure and what not to do!!! Government failure for dummies!!! I am sure there is a Country Western song in there and a book..

  16. Joking? says:

    Remember, though… hire a state employee potentially for “life.” Consultants are finite contracts that can be easily discontinued. Not so with a regular employee.
    Long-term cost vs. short-term.

  17. Rolio says:

    Pef is sounding very desperate these days. How about we cut both union, and non union.

  18. upstate says:

    Interesting to see all the analogies, but take this from someone who has been a state employee and contractor. Why in the first place would you need contractors, are you suggesting that there’s not enough state employees to handle the work or that these employees don’t need the challenge in the first place? Sure, pay for another study to point out the obvious. There might be an instance when a contractor has special expertise but these situations are very rare and besides what are you left with? Most of the time the contractor just has to stay a little bit ahead of the average state employee to justify their existence, say by actually reading a manual. Probably the worst abuse is hiring contractors to facilitate meetings, really, out of an entire agency workforce they can’t get someone to run a meeting? Thanks for listening.

  19. G says:

    CSEA needs to join PEF in highlighting this issue.

  20. upstate ny'er says:

    the Gov said he would announce which prisons are closing within 30 days from the date the budget was passed. it has been more then 30 days and still no word. Just more head games from Albany?

  21. Ohreally says:

    I work for the state and believe me we couldn’t do without consultants. The “PEF” workers aren’t skilled, agencies don’t pay to train them, IT is ever changing and the pace that government works at is so slow, we’d never get anything done without them.

    Yes, we should do a full blown cost analysis, we’d see just where we stand.

  22. Tiny says:

    Mr. sarbane you are just making stuff up because you don’t know the facts. There is plenty of information on how much benefits are worth. Unless a state employee started in the early 1970s, they have contributed to their pension. I contributed over $80K to my pension over many years. The new tiers will also contribute – that said – the benefits are good, but retired workers are not living large. Their medical insurance is subsidized by the state, but they still have to pay their portion of the premium. If the retiree was lucky enough to have been relatively healthy during their career, they can use the value of their sick time (up to around 8 months) to pay for their share.
    Outside contractors (programmers) cost the state over $100 hour – that’s $200,000 a year minimum. Tell me that the $75,000 state programmer costs more – are you saying that the benefits are worth $125,000? They are more likely worth $30-$35K.
    I have heard first hand that some very talented and hard working consultants have accepted state positions – the agencies were happy to get them at a reduced cost. Since consultants work for companies which only pay the workers a portion of the amount charged the state, the savings were even greater.
    Construction work is not a good comparison – farm workers were also cheaper when they were not unionized.

  23. Connie says:

    @ ResidentX

    Your typical DB admin IT consultant is being paid only when she/he works – no vaction, sick days, personal days, family leave, etc. The state is not paying to recruit, train or manage payroll and benefits for this person. The consultant can be discharged at any time for any reason without the state fearing a lawsuit which can cost more than continuing to pay the person for not working. The state does not owe the consultant any present or future health care, disability, unemployment, workers compensation or pension benefits which are sinking the Empire State.
    And your typical DB admin IT consultant who is pretty much renewed every 18 months is not making $320,000 for 18 months or $213,000 for 12 months, not today.

  24. Hudsonian says:

    Just a thought that has probably been brought up before – Is it possible that the State hires more of these consultants because it’s exponentially easier to get rid of bad ones? Think about it – you have two employees sitting side by side. After a period of time – say two years – they both proved to be slugs. Which one would be easier to fire – the State worker or the consultant? I think we all know the answer to that one.

    Maybe the state should hire more consultants? How does all employees of DMV being hired by a firm who then sends them to work at DMV sound to everyone. No more obnoxious “public servants” scowling at you because you interrupted their solitaire game of Facebook conversation.

    Wouldn’t that be nice?

  25. b sarbane is misrepresenting the facts. Pure and simple.

    Yes State Employees get pensions after they retire. But, did you happen to notice, THEY PAY INTO THAT PLAN. Get real people. This is a red herring, a straw man, a false line of debate.

    Having seen the numbers, I can state b sarbane’s position that PEF employees make more than consultants is, again, false. Where are your numbers coming from b sarbane? The committee to defraud New York? Or, possibly, are you one of the contractors (“consultants”) getting rich off of the honest State Employees and other tax-paying New Yorkers?

  26. BRealistic says:

    B Sarbane, more then a few regulars here to these forums with FAR more knowledge in these matters then you obviously do with your over generalized partisan attack post have crunched the actual numbers and have proven you wrong many a time here.

  27. question says:

    @b sarbane

    How do you figure . Using Residenx X numbers , 10 years of a state worker with benifits =1 million , 10 yrs of a contractor..3.2 million . A state worker at that level after 35 years if they live until 85 would be work approx 1.3 million . It looks like you will see the retirement savings within the first decade of the outsourcing.
    As for the ineffinecy , when you have contractors all over the place doing YOUR work , how can you be effecient? I know many it professionals that are willing and capable to work but everytime there is a new project , the consultants come rolling in …. once again , the state workers are not the villans here..

  28. BRealistic says:

    I also happen know for a fact a whole lot of contractors were given the OPTION of joining the state or continuing in their contract work and the vast vast majority choose their private contractor position over the state because they were making FAR more money then the state workers and got sizable regular raises to boot !

  29. ResidentX says:

    “b sarbane”, your opinion is false. Something YOU dont take into account is that 80+% of a pension is funded by INVESTMENT RETURNS. This is not coming out of tax payer’s pockets and thus should not be included in the numbers. Of course facing reality is tough for some of you and you will believe only what you want to believe.

    and Dave, by your own statements the contract issue is real. We use an insane amount of money in contracting that could be better spent. Would you rather pay a state employee 75k a year (110k total in benefits, 165k for 18 months) or would you rather pay a contract amount of 320k per 18 months? The argument is that contractors are short term. The reality is that they are actually renewed at almost a 90% rate. Many contractors currently working for the state have been here for a decade or more.

    if you think we make more… why is it that when most of these contractors were offered state items they flatly refused because of the significant pay cut?

    ill say it again so that perhaps it sinks in. Current average pension is around 18,000-22,000. I would say that this is FAR from rolling in dough. 16,200-19,800 of that pension money comes from investment returns and NOT OUT OF THE TAX PAYER’S WALLET. This is a fact that so many of you either cant understand or refuse to accept.

    politicians get HUGE kickbacks from contracting firms and some directors/deputy directors do as well. Heck, some have partial ownership/financial interest in the contracting firms.

  30. ResidentX says:

    that 80% should 90+%

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