Record $4.2 billion spent on state contractors, $2 billion more approved this month


Over the past 20 years, the number of state employees has gone from more than 44,000 in 1998 to less than 35,000 today.  In the same time period, money paid to contractors to perform state services has doubled, going from about $1 billion per year to over $2 billion per year. (Editor’s note: The general fund part of the budget is about $11 billion per year.)

In the two-year period that ended last month, Kentucky state government spent a record $4.2 billion on personal service contracts, memoranda of agreement (MOA), and film tax incentives.

Additionally, at its July meeting, the first of the new biennium, the Legislature’s Government Contract Review Committee approved over $2 billion of state agreements.  That one-month total exceeds the $1.8 billion spent on those agreements in the entire fiscal year which ended June 30, and is the most ever approved in a single month.

Of the $2 billion approved this month, $1.2 billion will pay for 730 MOAs, which are contracts between the state and public or private providers that carry out government functions, and many are for the two-year biennium. 

The committee also approved $790 million in personal service contracts and increases to existing contracts.  These are agreements between the state and private contractors who perform professional services for state agencies, and many are also for a two-year period. Over $62 million in film tax incentives were also approved at the July meeting.

Some of the largest personal service contracts include:

  • $110 million from the Dept. of Corrections to Correct Care Solutionsof Nashville to provide medical services for the next two years to inmates in more than 30 public and private correctional facilities;
  • $50 million from the Dept. of Personnel to Cannon Cochran Managementof Louisville to administer the self-insured Workers Compensation Program for two years;
  • $50 million from the University of Kentucky to Huron Consulting Services of Chicago to provide healthcare related consulting services for two years;
  • $21.3 million for two years to Res-Careof Louisville to manage Outwood Intermediate Care Facility, an 80-bed facility in Dawson Springs;
  • and $14.6 million for two years from the Dept. for Medicaid Services to Myers and Staufferof St. Louis to establish Medicaid rates of reimbursement.

Other large contracts include:

  • $10.5 million for one year from the Kentucky Lottery Corp. to IGT Global Solutions(formerly GTECH) to provide for an online gaming system;
  • $10 million from UK Healthcare to Deloitte Consultingof Omaha to provide healthcare related consulting services for two years;
  • $10 million from UK to Cornett Integrated Marketing Solutionsof Lexington to provide all marketing and advertising for UK Healthcare for one year;
  • $7 million for six months from the Dept. of Education to NCS Pearsonof Iowa City to provide academic content testing;
  • and $6.85 million for one year from the Dept. of Veterans Affairs to Med CarePharmacyof Glasgow to provide pharmacy services to the Dept. of Veterans Affairs and its four veterans nursing homes.


From the Ethics Reporter newsletter put out by the Kentucky Legislative Ethics Commission, John Schaaf, director