- Associated Press - Friday, January 24, 2014

BATON ROUGE, La. (AP) - A consultant hired to devise money-savings ideas for Gov. Bobby Jindal’s administration has generated recommendations that would pay for the $4 million cost of its contract, the governor’s top budget adviser assured lawmakers Friday.

Lawmakers have questioned the administration’s deal with Alvarez & Marsal, asking whether the contract was a waste of money or would generate politically unfeasible ideas that don’t translate into real savings.

But Commissioner of Administration Kristy Nichols said the governor’s budget proposal for the fiscal year that begins July 1 includes $4 million in health care savings tied to recommendations from the consulting firm.

She said she expects many more ideas to come.

“We’ve already covered the cost of the contract,” Nichols told the Joint Legislative Committee on the Budget.

Among the savings ideas included in the governor’s spending plan are eliminating the duplicative claims processing in health care programs and using a computerized verification system to check billings for in-home care services, Nichols said.

After lawmakers criticized the contract, the administration amended its agreement to require the firm to find $500 million in savings ideas. Nichols had said those were the agreed-upon terms in negotiations with the consulting firm, but the requirement wasn’t included in the original contract.

“I know that legislators felt they would be more comfortable if it was just explicit and in black and white in the contract that they had to get the savings, and so we did that,” she said. “And that was fine because they knew that was a deliverable that we would hold them to.”

The company was hired to look at ways to make state government programs more efficient without cutting services and to devise ideas for raising state revenue or tapping into existing federal financing streams without raising taxes.

Its recommendations are due by mid-April, after four months of work.

Nichols said if Alvarez & Marsal doesn’t reach the savings target, the state can withhold $600,000 of the $4.2 million contract payment.

“We also have a way to stop if the process isn’t working,” she said.

The company’s contract with the state runs through 2016. However, if the Jindal administration wants more work beyond the final set of recommendations due in April, the price tag would grow larger.

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