Budget Breakdown – Waste, Fraud, and Abuse

July 26, 2011

Our series, Budget Breakdown, continues with a look at three boogey monsters of the budget process: waste, fraud, and abuse.  How much of Colorado’s financial problems could be fixed if lawmakers just kept a closer eye on the money?

You can find all the stories in our Budget Breakdown series here


Every lawmaker has a favorite example of waste, fraud, and abuse.  For Senator Kent Lambert, it’s state cars.  He found out last year some public employees commute in state cars, but don’t pay any mileage.  That didn't sit well with him.

LAMBERT: "We’ve had about three audits in the state that say we’re doing it in the wrong way.  I ran the bill, it passed the House and Senate last year about 98 to 2 and governor Ritter vetoed the bill." 

So Lambert’s bringing the idea back this year.  After two years of fighting -- even if he succeeds -- how much would that save?

LAMBERT: “Our best guess is about three million dollars a year.  That alone not  going to be enough to balance the budget.  But there are a lot of good ideas out there."

It would take A LOT of good ideas like that to make a dent in the budget.  The hole is more than a billion dollars -- that's four hundred two million dollar ideas. 

Now there is a whole office of people who’s job it is to root out waste, fraud and abuse in the government -- the state auditors. They work right across the street from the state capitol and they dig into the finances and operations of almost everything that gets state money.  Every two weeks, they present what they find to lawmakers.

AUDIT CMTE: “Would you like to begin?” “Thank you madam chair.  Please turn to page one.  The audit of the Colorado state veterans nursing home in Rifle was conducted pursuant...”

Today, the spotlight is on a the state nursing home in Rifle, which turns out to have some accounting problems, nothing major.  It’s seven in the morning, the lawmakers look a little sleepy.  But Jefferson county representative Jim Kerr says things can get exciting.

KERR: "Occasionally, it’s like deer in the headlights."

Kerr sounds almost gleeful thinking about it.

KERR: "I’m a fiscal conservative, I’m a budget hawk... and I’m proud of that."

Kerr is the sort of guy you’d expect to go on and on about how Colorado’s government is wasting money.   But he doesn’t.  He thinks the state runs pretty well -- and he’s the longest serving member of the audit committee.

KERR: "Being in the audit committee, we look at HCPF a lot, Health Care Finance and Policy.  Very little fraud.  Waste because things are duplicated.  Very little abuse, but some, and that’s basically because people trying to game the system."

HCPF is the department that doles out Medicaid … which other politicians around here usually love to accuse of waste. 

Here’s the big picture -- In a typical year, Colorado’s auditors investigate scores of agencies and entities.  How music waste fraud and abuse do they find?  Usually around 15 million dollars.  Just running the auditor’s office costs around half that.  So the savings are more like 7 or 8 million dollars.  That isn’t nothing, but remember, Colorado’s shortfall next year is more than a billion dollars.  So the savings auditors recommend come out to less than 1% of that.   

Still, there are plenty people who think there’s a lot more waste, fraud, and abuse out there.  Senate minority leader Mike Kopp is one of them.  And he think’s he’s got the way to find it.

KOPP: "‘The Blueprint for a Leaner Government’ Act."

Kopp’s bill would create a new task force -- something with a broader view than the audit committee.

KOPP: "It conducts a sweep, a survey of every single spending program in state government.  We haven’t done this since about 1960."

How much waste fraud and abuse does he think that sweep might turn up?

KOPP: "I think that it’s perfectly defensible to believe that you can find 10 to 15 percent savings."

15%?  That would solve the state’s budget problem and then some.  But here’s the thing -- Kopp defines waste pretty broadly.   The goal of the task force would be to come up with a list of things the state has to do.

KOPP: "And if we’re doing other things that are outside that core function, then we have to ask ourselves, should we continue to do them?  Should these be things that the private sector does or the non-profit sector does?"

That’s the problem with waste, fraud, and abuse -- they’re sometimes in the eye of the beholder.  And then you’re stuck with a more eternal question -- what should government be?



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