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Senator Judith Zaffirini: District 21
Press Release
October 11, 2004
Contact: Gabe Valenzuela
(512) 463-0121
Senator Zaffirini, Subcommittee Investigate State Health Contracts

(AUSTIN) - The Senate Finance Subcommittee on State Contracting Practices on Monday (Oct. 11) heard testimony from the Health and Human Services Commission and its agencies regarding their current contracts and contracting practices. Senator Judith Zaffirini, D-Laredo, subcommittee chair, said she and her colleagues were troubled by recent reports outlining egregious errors in judgment on some state contracts.

"In recent months, we have learned of fiscal inefficiencies and some truly disturbing health and safety concerns relating to contracts aimed at helping children," Senator Zaffirini said. "It is difficult to understand how any state agency could allow this to happen, especially in light of how hard we fought last session to ensure needy children would be taken care of through these programs."

A July, 2004 report by the SAO indicated that HHSC made approximately $20 million in unnecessary or excessive payments to Clarendon National Insurance Company, the exclusive provider organization for the Children's Health Insurance Program. According to the SAO, HHSC had, "serious deficiencies in contracting practices and contract monitoring, [that] constitute an abuse of the Commission's fiduciary responsibility" in managing the CHIP program. A variety of factors contributed to the overpayments, including inadequate financial reporting requirements and contract terms that enabled Clarendon to use $15.96 million of CHIP funds for corporate purposes.

The State Comptroller released a report in April, 2004, detailing serious problems in nearly every area of the state's foster care system. The state currently pays, for example, on average more than $36,000 a year per child to outdoor camp operators despite numerous safety and health concerns and lax oversight by caseworkers in regard to these camps. The Comptroller's recommendations included that the state no longer operate foster care homes.

"My Senate colleagues and I are committed to eliminating any deficiencies in the state's contracting practices," Senator Zaffirini said, vice chair of the Senate Finance Committee, "as well as ridding ourselves of any unscrupulous contractors that endanger the health and safety of our constituents."

Lt. Gov. David Dewhurst directed all Senate committees to address this critical issue, and Senator Steve Ogden, Senate Finance Committee chair, charged the subcommittee with making recommendations to the full committee. Subcommittee members are Senators Gonzalo Barrientos, D-Austin; Kim Brimer, R-Fort Worth; Robert Deuell, R-Greenville; Kyle Janek, R-Houston; Eliot Shapleigh, D-El Paso; and Tommy Williams, R-The Woodlands. The subcommittee will submit its report on Tuesday, Nov. 9.