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Weeding Out Abuse

One reason why running government at any level is harder than it looks is that saving money can cost money.

News that the state of New York had been blowing perhaps$ 25 million a year buying health insurance for people who were not entitled to it—in some cases because they were dead—follows hard on the report that Buffalo City Hall had poured $2 million down the same rat hole.

In the case of the Buffalo scandal, the problem was uncovered by the city’s independently elected comptroller. That office, though, lacked the institutional oomph to force necessary changes in the Human Resources Department, and the problem continued to fester for months. Eventually, another City Hall department fixed the hole, and Human Re-sources Commissioner Karla Thomas is being fired.

In Albany, the budget leak was uncovered by an outside auditing firm that was hired on a promise to find triple its fee in savings for state taxpayers. The firm, Budco Health Service Solutions, has more than delivered on its promise, though a long-term fix to make sure the problem does not go on has not yet been installed and accountability remains an open question.

The service provided by Budco has justly attracted the attention of Buffalo Mayor Byron W. Brown and some members of the Common Council. That interest should soon take the form of a formal request for proposals from any and all firms that think they can do for the city what Budco is doing for the state.

It is maddening, but it is an unavoidable fact of life. People who spend other people’s money need to be watched by other people. And that costs money.

That is not only true in government. Budco got its start performing health care audits for big corporations such as Boeing and AT&Tbefore deciding that the public sector was ripe for its services.

In a system based on checks and balances, different levels of government have different ways of making sure that no one person, or office, is able to spend the public’s money without anyone watching. In New York, the state, counties and cities have their own separate comptroller’s offices—independent of both the legislative body and the chief executive— whose job it is to count the money coming in, the money going out, and match it to the public purposes for which it was supposedly spent.

This is not a universal situation. Many state and local governments have budget offices or audit divisions that are incorporated into their executive or legislative branches. That can mean they are smaller bureaucracies with smaller budgets. It can also mean that they lack the independence necessary to find wrongdoing, much less put a stop to it.

One way to economically split the difference is the use of outside audit firms such as Budco. They don’t create a permanent bureaucratic footprint, they can bring experienced and focused resources into the snarl of entrenched practices, collect a fraction of the savings they uncover as their well-earned fee, and then ride off into the sunset.

Until they are needed again.