Auditors criticize consultant costs

Auditors on Wednesday sharply criticized the state's handling of consultant contracts, citing examples such as the former medical professional paid $350 an hour to do what he did for $65 an hour as a state employee.

While auditors said former employees "provide a valuable resource to the state because of their knowledge and skills," they were critical of the huge increases in compensation some received under contract.

Another former employee had a $150-an-hour contract for work he did for $71 an hour as a state employee.

They were also critical of controls over existing employees who sign separate contracts with other agencies, saying there isn't enough oversight to make sure they aren't doing contract work on state time.

Auditors said the executive branch was circumventing a state law requiring many consulting contracts to be submitted to the legislative Interim Finance Committee by redefining and severely narrowing the definition of a consultant.

Director of Administration Andrew Clinger told the legislative audit subcommittee that definition was changed because having the Legislature approve contracts violates the separation of powers between the branches of government.

"There is a place to report to IFC but I don't believe it appropriate for IFC to approve contracts," he said.

Subcommittee Chairman Sen. Sheila Leslie, D-Reno, cited one example where an employee who was also contracting for services with a second agency reported working 25 hours in one day.

"Don't you think this is out of hand?" she asked.

"I do believe this is out of hand," said Clinger.

He also said the case where a former worker was paid $350 an hour is not justified and that he intends to fix the problems auditors laid out in their report.

"We will put controls in place," he said.

Clinger said he will implement the recommendations made by auditors. Other issues, he said, will be handled by a task force he is creating to review the recommendations and the state's current system for managing consulting contracts. But he emphasized that it still isn't the Legislature's place to have approval power over executive branch agency contracts.

Clinger said much of the problem is that existing reporting requirements aren't being followed by agencies doing the hiring.

Leslie noted that the largest number of these contracts are for professional services in medical fields ranging from doctors and nurses to psychiatrists and psychologists.

"Are our wages really too low?" she asked.

Health and Human Services Director Mike Willden said that's exactly the problem.

Like Clinger, he said he is instituting new controls and that every temporary employee or consulting contract in HHS will now go through the director's office for approval.

Both he and Clinger said contract employees including consultants are often a cost effective solution for the state even when they get paid somewhat higher hourly rates than state workers doing the same type of job. Clinger pointed out the state can much more easily get rid of contract workers and doesn't have to pay their benefits and retirement costs. Those costs are worth about 25 percent added on to state worker salaries.