Government finds new ways to provide services. 

Private enterprise finds new ways to make a profit.

click to enlarge PUBLIC-PRIVATE PARTNERSHiIP: You can find them on-line.
  • PUBLIC-PRIVATE PARTNERSHiIP: You can find them on-line.
It was an axiom of old-time conservatives that government should be run like a business. (New-time conservatives say that government should be run like a church.) Those old-timers would be pleased today. Government and private business have never been more intertwined. In some respects, it seems that business is running the government — that is, private entrepreneurs, for a fee, are providing government services. Lots of them. The biggest player in this field in Arkansas is the Arkansas Information Consortium, which is a wholly-owned subsidiary of NIC, headquartered in Olathe, Kan. Through such subsidiaries, NIC built and manages the official state government Web sites in 17 states, including Arkansas. In 2003, NIC had revenues of $50.8 million. About 4 percent of that — $2,050,418 — came from Arkansas, according to an audit. The structure here is fairly complicated. The state of Arkansas’s official Web site — Arkansas.gov — is overseen by the Information Network of Arkansas, which was established by the legislature in 1995 for the purpose of creating a state Web site. The INA is governed by a board of 12 members, from both the public and private sectors. For INA, the creation of a Web site entailed taking bids from private companies and contracting with the winning bidder, which was NIC’s Arkansas Information Consortium. Arkansas had at the time, and still has, a state Department of Information Systems that does some of the same kind of work as Arkansas Information Consortium. But electronic-government expertise was in much shorter supply in 1995, according to Preston Means, the chairman of the INA Board, and DIS couldn’t provide all the services that were needed. DIS works with INA on some projects, he said. (Means is assistant commissioner of revenue for the state Department of Finance and Administration. The law creating INA made the DFA director or his designee a member of the Board. Means is the designee of DFA Director Richard Weiss.) Essentially, the state pays the Information Consortium nothing for building and maintaining the state Web site and developing home pages for the various state agencies. The Information Consortium, and ultimately the parent firm, NIC, make their money through transaction fees. For example: Arkansas news media recently received a news release announcing the introduction of online inmate banking deposits at the state Department of Correction. Relatives and friends of prison inmates can now deposit money for the inmates by using credit cards. There’s a 5 percent transaction fee for each deposit. Before, relatives and friends could send inmates money only by wire or by mailing a cashier’s check or money order. Delivery could be slow or, if overnight delivery was specified, costly. The credit card deposits are made immediately. Or say an employer wants to check with the State Police for the possible criminal record of a job applicant. The fee is $22 for each request. To renew a professional license on-line — doctor, lawyer et al — costs $2 more than the person would pay if he renewed in person. Not every service requires payment. Janet Grard is the network general manager for INA. She and the other 13 INA employees are private employees, not public. Their office is in the Metropolitan Bank Building in downtown Little Rock. Grard likes to say that about 350 services are provided through the Arkansas Web site, and only about one-third have any revenue associated with them. Grard also said that the parent company, NIC, had to comply with federal regulation. “There are plenty of controls,” she said. For what it’s worth, Democratic bloggers have called NIC “a Republican company.” The NIC Board of Directors includes two men who have served as Republican governor and senator in their home states, Daniel J. Evans of Washington and Pete Wilson of California. Another board member is associated with the McCarthy Group, which has Republican connections and is the parent company of the most prominent election systems vendor, ES&S. U.S. Sen. Chuck Hagel (R-Neb.) owns stock in the McCarthy group. Grard dismissed the bloggers’ remarks. “We deal with Republican governors and legislators and Democratic governors and legislators in 17 states,” she said. “We’re nonpartisan. It wouldn’t be smart to serve one party.” MCI has contracts to provide long-distance telephone service for state prison inmates in several states, including Arkansas. In some of those states, the MCI contracts are controversial, with families of inmates protesting what they say are the excessively high rates they must pay. (Inmates are allowed to make only collect calls to people pre-approved by prison administrators.) In California, where MCI pays the state $26 million for the right to provide inmate telephone service, children in Catholic schools have begun a letter-writing campaign to lower the cost of inmate calls, saying there are children who can’t afford to talk to their mothers in prison. Last month, a columnist for the New York Daily News fulminated about what he called New York’s “immoral policy” of forcing the families of prisoners — mostly low-income families — to pay “inflated” rates. “New York families have to cough up a flat fee of $3 per call plus 16 cents a minute — the highest rates of any prison system in America,” he wrote. He was wrong. The families of Arkansas inmates pay more — a $3 connection fee plus 24 cents a minute for in-state calls, $3.95 plus 89 cents a minute for out-of-state calls. In California, an inmate call has a connection fee ranging from $1.50 to $3.95 and a per-minute rate of 15 cents to 89 cents, according to the Los Angeles Daily News. The Arkansas contract for inmate telephone service was bid through the state Procurement Division and is subject to state purchasing laws and regulations. The present seven-year contract has three more years to run, but it’s reviewed annually. Under the contract, the Department of Correction gets 51 percent of MCI’s revenue from inmate calls. That 51 percent amounts to about $3 million a year, according to Dina Tyler, a Correction Department spokesperson. “We use that money to make life better inside the institutions,” Tyler said. “We give each inmate $100 — ‘gate money’ — when he or she goes home. That amounts to about $750,000 a year. I think it’d be difficult for us to get an appropriation for that.” “We’ve used the telephone money to install more cameras, for security, and more fencing to separate inmates, also for security. We’ve used it to buy recreation equipment, and to remodel barracks. MCI pays for all the telephone equipment, and they also have to provide recording and monitoring equipment that we use for investigative purposes. I think it’s a pretty good deal.” Before the MCI contract, the prisons had very few telephones, Tyler said. An inmate had to submit a formal request to make a call and it might not be granted. If it was granted, the inmate was taken to the warden’s office to make his call. A lot fewer calls were made, meaning less contact between inmates and their families, she said. Security was poorer. The cost of the inmate calls is higher than calls made on the outside, Tyler concedes — because of the additional security required, she said — and the prisons have had a few complaints from inmates’ families. “Usually, when someone complains, it’s about a $600 monthly phone bill,” Tyler said. “I tell them, ‘Why did you take all those calls? Take one a week. That’s $20.’ ” Nancy Warren of Little Rock is one who’s concerned about the cost of inmate calls, and suspects that it’s higher than it has to be. She’s a member of the Arkansas chapter of a group called CURE (Citizens United for Rehabilitation of Errants). Outside the prisons, telephone calling cards can be purchased that have a rate of 3 cents a minute, Warren said. She also thinks that advising people to talk less to their family members in prison is not necessarily good advice. “Recidivism rates are better for inmates who stay in contact with their families,” she said. So far, Arkansas has not seen the organized opposition to the MCI-prison contract that some other states have. But it may be coming, according to Warren. John Bethel, director of the state Public Service Commission, notes that the kind of calling inmates must do — collect, person-to-person — is the most expensive kind of telephone service, because it requires operator assistance. MCI’s prison rates are on file with the PSC, although the PSC doesn’t specifically “approve” telephone tariffs any more. The theory is there are so many carriers now, that if a customer thinks he’s being overcharged, he can negotiate with somebody else. All roads lead to Wal-Mart. Now you can renew your automobile registration there. You can still renew your registration the older ways too — in person at the local revenue office, by mail, by telephone, and on-line. Registration renewal is available in the Tire & Lube Express section or the Customer Service section of 52 Wal-Marts around Arkansas. Registrants must meet the same requirements as if they were renewing elsewhere, including having assessed their vehicles and paid all the property taxes they owe. For consumers, Wal-Mart renewal means that people can get their new auto license decals at a place where many of them would be going anyway, and that they get the decals immediately, rather than having to wait for them to be mailed, as is the case with mail, telephone and on-line registration. For Wal-Mart it means, perhaps, that they can sell some merchandise to people who come in to renew their registration, although a Wal-Mart spokesperson had no information on how much, if any, additional business Wal-Mart might have done because of auto registration. Wal-Mart began providing the service as a convenience to its customers, she said. So far, Wal-Mart is providing the service only in its home state of Arkansas. For state government, Wal-Mart registration renewal is a means of “cost avoidance” — as well as giving another option to taxpayers — even though the state pays Wal-Mart $1 for each license renewed, according to Revenue Commissioner Tim Leathers. Wal-Mart buys all the equipment that’s needed for the renewals. Every person who renews at Wal-Mart reduces the load on the revenue offices, and lessens the time that people have to stand in line at those offices, Leathers said. And the Wal-Mart service is essentially 24-7, he said. The revenue office remains by far the most popular place to renew. In 2004, 79.7 percent of the 1,846,539 renewals were walk-ins. The Internet was the next most popular form of renewal, with 8.2 percent. Only 1.9 percent renewed at Wal-Mart. “My recollection is that the state had a discussion with Wal-Mart about kiosks that would offer multiple services,” Leathers said. “After study, it appeared vehicle registration was the only one feasible.” Following a small pilot program, Wal-Mart began offering registration renewal statewide in May 2002. The concept isn’t new, Leathers said. Sporting goods stores and other establishments have been issuing state fishing licenses for many years. Wal-Mart’s contract with the state does not give it a monopoly on registration renewals, Leathers said. The state would welcome any other company that wanted to do renewals on the same terms Wal-Mart does them.


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