Economy & Business
8:23 am
Mon January 7, 2013

State Reports Savings, but Minuscule Compared to Budget

http://2cccd5dfe1965e26adf6-26c50ce30a6867b5a67335a93e186605.r53.cf1.rackcdn.com/Innovation Office Wrap_Emily Farah_SOC.mp3

A new state department is reporting it saved $84 million for the commonwealth since March.

The Corbett administration created the Office of Innovation in the spring of 2012 to take a closer look at state agencies' cost efficiency, spending, and productivity.  Dan Egan, a spokesman for the Pennsylvania's Administration Office said it's all about changing the mindset and inner workings of state government.

"What we really wanted to do with this office was to identify what agencies are doing, identify where they need to perhaps coordinate or where a good idea in one agency can be replicated in other places and therefore multiplying the savings over and over," Egan said.

The biggest cost savings the state saw was in renegotiating a pharmaceutical contract.  Egan said one year brought $55 million in savings and a projected $136 million over three years.

"We were able to do that without changing the benefits to employees or increasing their co-payments," Egan said.  "It was really a competitive bidding process, looking at the company we were doing business with at the time, seeing what else was out there, and being able to negotiate a better deal for the state and for the taxpayer."

However, the cost savings only amounts to about 0.3% of the budget, but Egan said every penny counts.

"$84 million in the context of a $27 billion budget, it's a small amount, but every little bit counts," Egan said.  "What we're really trying to do in the long term is create a culture in state government where the mindset is not 'this is how we do it,' but rather 'how can we do it better?'"

Egan added the state is always looking for new methods of saving money, and encourages residents to visit the Innovation Office's website and submit original ideas of ways to save.