"Waste, Fraud & Abuse" in Arkansas' Budget
How much have we saved?
Just how much has Arkansas saved through Governor Sarah Sanders' Arkansas Forward project? The original project proposal from consultants McKinsey & Co. said they had "identified more than $500 million in annual savings and '10-30% effectiveness improvements,' based on a review of state data and consulting experience in other states" -- this after they were specifically tasked with focusing on five areas: information technology, procurement process, vehicles, state employees, and state-owned buildings/footprint.
But, McKinsey's 965-page report from December 2024 ratchets that number downward to about $300 million over six years. And, it's difficult right now to see where the State has really gotten much big savings going yet.
$5.5 Million Report
Back in February 2024, Arkansas contracted with McKinsey for $5.5 million to get that report, which also supported the Governor's continued enhancement of the state employee pay plan, another of her projects as included in her current state budget.
Cost? $5.5 million
Savings? Zero on the report itself
While we're still searching for updates on the various recommendations from that McKinsey report, Governor Sanders posted this video in early March as a cost-savings update. So, the State says we've recouped about $5.9 million:
State Employee Pay Plan
The McKinsey/Arkansas Forward report concluded that "the state's performance evaluation process is seen as "unfair" and there's a "feeling that it favors higher graded leaders over frontline staff. ... In sum, the state government’s current approach to performance and pay does not deliver its intended results. A systematic change is needed." The report recommended a new system that should address "compensation linked to market dynamics and reinforced by bonuses as well as performance driven; streamlining positions, skill development, and the career path; and a simplified semi-annual performance evaluation" plus one-time and "spot" bonuses.
Sanders' current project to "bring state government pay into alignment [with] a state employee pay plan overhaul that increased compensation for 14,539 state employees" was initially projected at $102 million (pay raises only), with $60 million coming from the general revenue and the remaining $42 million “from other sources.” That base cost is now $139 million ($113 million for pay raises only), requiring at least a $23 million match from each state agency, Office of Personnel Management Director Kay Barnhill said. Benefit costs come in at roughly $26 million.
State Senator Breanne Davis' SB392 that passed this legislative session codified that pay plan recommendation into existence:
Roughly two-thirds of state agencies’ workforce — more than 14,000 state employees — will receive pay raises that make their salaries competitive with the private sector, Sanders said in November when she announced the proposed pay plan. She said one of the main goals of the pay plan is to recruit and retain employees in hard-to-fill positions, particularly nurses, social services workers, corrections officers and state troopers.
Cost? At least $139 million, much of which is to come from existing fund sources
Savings? We don't see savings here.
Annual Savings Only .01%
Think of it this way: Against the Arkansas state budget of around $6.3 billion, that "$300 million over six years" number from the Arkansas Forward report can be expressed as $50 million/year -- that's only .01% of the annual state budget! Saving the entire $300 million in even one budget year still amounts to only .07% of the entire state budget.
Better than nothing at all? So much of this is peanuts, low-hanging fruit, and it seems like many of the recommended "efficiencies" (eliminating unused, old phone and fax lines, and implementing preventive maintenance schedules on fleet vehicles, as two examples) could have been pursued long ago by those with common sense, without paying a favorite state consultancy firm more than $5 million for a plan.
Spending Money to Somehow Save Money
Even though Sanders touts that $300 million savings (over 6 years) figure, one year later it looks like we spent money to somehow save money:
$5.5 million to get a plan
$139 million for employee pay plans (note Governor Sanders’ rejection of the originally proposed “broad-based” $80 million pay plan below)
limited or non-existent action on consolidating building space
no publicly reported action on state fleet vehicle recommendations
no known IT consolidation has been accomplished (45% of services are outdated, etc.)
what boards and commissions have been abolished or consolidated? (SB184 to move Republican hot button targets — the AETN Commission and State Library Board — to the Department of Education failed in the Arkansas House this spring; the Library Board was eventually reconstituted via SB640, now Act 903.)
What we see so far is over $5 million spent for a report with lots of good-sounding recommendations, and a new state employee pay plan that already costs around 36% higher than initially projected, plus a cute video listing around $5.9 million in “savings.”
With DOGE being all the rage and surrounding states like Texas, Louisiana, Oklahoma, Mississippi, and Missouri setting up their own official efforts, we expected Governor Sanders to be loudly touting Arkansas’ achievements. After all, we were one of the first states to publicize such an effort. But, except for that cutesy video ... crickets.
At this point, with the consultants’ $5.5 million plan and that $5.9 million “saved,” it looks like we’ve actually managed to decrease spending by a whopping $400,000.
It’s an old school way of doing things — those great-sounding proclamations from Governor Sanders would have you think Arkansas leads DOGE activity across the states.
When a certain state lawmaker was asked about Arkansas Forward, he replied he was “not familiar” with the plan nor had he heard anything about it during the recent legislative session.
Some DOGE plan! Where are the audits of various state programs to learn where the funds are really being spent? Where are the AI-enhanced comprehensive studies of spending against intended results?
Could it be we’re not accomplishing much in cutting waste, fraud, and abuse in Arkansas state government?