Oregon Should Follow the Example of Florida, Outsource Human Resource Services

Published February 1, 2004

A tax recall vote on Oregon’s February 3 ballot is just one indication that taxpayers nationwide prefer spending cuts, rather than tax increases, for balancing state budgets.

“175,000 taxpayers have made a dramatic statement to Oregon politicians that we will no longer tolerate business as usual,” said Oregon State Representative Jeff Kropf (R-Halsey). “They are demanding that government become efficient and do more with less.”

This attitude, growing among taxpayers nationwide, will force state leaders to focus on innovative ideas, as opposed to business-as-usual taxes and fees, while putting their states’ budgets back in balance.

Florida Example

Rather than cutting essential services or raising taxes, Florida state officials have looked for innovative and creative ways to introduce private-sector efficiency and effectiveness into operations the private sector can perform better than the state can.

In August 2002, Florida signed a contract with Cincinnati-based Convergys Corp. to administer almost all of its routine personnel functions, including payroll, insurance benefits, employee training, and recruiting for 189,000 state employees.

“Working with Convergys enables us to provide the highest quality human resources services possible to the men and women who dedicate their careers to public service,” said Governor Jeb Bush (R). “Leveraging Convergys’ service delivery expertise, resources, and technology, we can expand and improve the human resources services our employees receive while saving Florida taxpayers millions of dollars.”

According to the State of Florida’s Department of Management Services, the contract will save the state an estimated $173 million over seven years. Florida will not only avoid $80 million in capital spending to replace the state’s aging human resources computer systems, but will also cut millions of dollars in recurring expenses.

Human resources outsourcing allows Florida so spend fewer dollars on administrative tasks. The contract “allows state employees and managers to focus on their core mission of serving the citizens of Florida,” said Bush.

“State governments are in the unique position of serving two ‘customers’–their employees, who need and deserve excellent employee services, and their citizens, who want the best value for their tax dollars,” said Karen Bowman, president of Convergys Employee Care. “The HR specialists and systems Convergys deploys will allow Florida to retain excellent employees and operate more efficiently while delivering taxpayers a solid return on their investment.”

Florida, the fourth most populated state in the United States and the first major state to outsource human resources services, selected Convergys after completing an extensive competitive analysis of more than a dozen outsourced services providers.

Geoffrey Segal is director of privatization and government reform policy in Reason Public Policy Institute’s Privatization and Government Reform Center. His email address is [email protected].