State to Save Millions Though Improved Asset Management

Tuesday, April 12, 2005

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Legislation Implements Recommendations of Commission for a New Georgia

ATLANTA – Governor Sonny Perdue signed into law three bills today to implement cost-saving strategies in the state government's management of billions of dollars in purchasing, properties, and other capital assets.  The legislation followed recommendations by the Governor's Commission for a New Georgia, which projected the state would begin saving $40 million per year for the next four years by adopting “best practices” used by businesses to increase cost-effectiveness and efficiency.

“The common theme of these three bills is moving our state government another step closer the benchmark I've set for my administration – making Georgia the best-managed state in America,” said Governor Sonny Perdue.  “We will save hundreds of millions of dollars for the taxpayers by applying best practices from the private sector and modernizing how state government manages its real estate assets, vehicle fleet, surplus property, and procurement of goods and services.  We can then apply this money to education, healthcare, and job growth for Georgians.”

The Governor signed a Senate bill and two House bills during ceremonies in the Capitol Rotunda.  He was joined by members of the General Assembly, the Commission for a New Georgia and heads of state agencies.

Management of State Inventory Consolidated Under State Property Officer

Senate Bill 158, sponsored by State Senator Jim Whitehead and State Representative Terry Barnard, unifies management of the state's $10.5 billion inventory of 11,000 facilities under the newly-created position of State Property Officer.  The move consolidates several positions with overlapping responsibilities in different agencies.

A statewide portfolio of government buildings and land will enable the state to identify vacant space to use or sell, over-priced leases, high maintenance costs and other possibilities for cost-cutting. The bill requires all agencies to report their inventory of properties, including 1,044 leased properties encompassing 11 million square feet of space.  The Commission estimates that improving space utilization and cost-efficient management will save more than $32 million over four years.

Statewide Procurement System Created to Better Manage Capital Assets

House Bill 312, sponsored by State Representative Allen Freeman and State Senator Casey Cagle, addresses three of the state's major areas of spending and capital assets: the purchase of supplies and services, which absorbed $5.7 billion in spending last year; the management of the 21,000 government vehicles; and the proceeds from the sale of surplus inventory from offices and agencies across the state.  The Commission estimates savings of at least $135 million over four years.

HB312 creates a modernized statewide procurement system, using the latest technologies to save money on contracting supplies and services for state operations.  The inventory ranges from tons of office paper, to service contracts on thousands of computers, to the purchase of road equipment and state patrol cars.  The new statewide system will take advantage of the government's clout as a volume-buyer to leverage more competitive bidding.  The law also allows purchasing agents more latitude to negotiate greater price breaks.

The act also consolidates scattered agency management of government-owned vehicles into to a statewide system under the Office of Planning and Budget and tightens restrictions on cars assigned to individual state employees.  The Governor has directed agencies to turn in over 2,000 under-utilized vehicles as surplus property to be sold.

To increase sales of surplus inventory of all kinds, the bill allows agencies more flexibility to keep proceeds from items turned back to the state for sale.  Surplus property is sold to local governments and auctioned to the public at the state warehouses and through online bidding on internet sites such as e-Bay.

Administration of State Retirement Plans Unified Under Employees' Retirement System

House Bill 275, sponsored by State Representative Jim Cole and State Senator Chip Rogers, transfers employee deferred compensation programs from the Georgia Merit System to the Employees' Retirement System of Georgia (ERS).  The transfer brings the administration of all state retirement plans under one entity, with the expertise and investment clout to improve growth of the individual accounts.  ERS manages $14 billion in total assets for 230,000 state employees and over 42,000 retirees.  ERS investment returns last year were over ten percent.

The bills were the first to emerge from commission recommendations.  Governor Perdue established the private-sector commission in 2003, enlisting 21 of the state's leading business executives to examine the management of state operations and propose private sector practices to save money and improve services.  Two recognized Georgia business leaders co-chair the Commission - Robert Hatcher, Georgia chairman of Branch Banking and Trust and Joe W. Rogers, Jr., chairman, president & chief executive officer of Waffle House, Inc.  More than 200 accomplished Georgia business leaders and dozens of state public servants worked on task forces that developed proposed improvements.  Additional information can be found at www.newgeorgia.org .