Crime lab costs may be significant
Massachusetts officials disclosed to potential bond investors late last month that misconduct at a state drug testing lab may give rise to significant costs to address the problem, to defend against civil complaints alleging state liability, and to pay judgments.
“As neither the criminal investigation nor the determination of the number or specific cases affected has been completed, there is not sufficient information to estimate these additional state costs at this time,” the bond prospectus states.
An addendum regarding the crime lab was added to the prospectus three days before its release on September 27. The addendum clearly indicates state officials are worried not just about the legal fallout from the drug lab misconduct but about the potential costs that could arise. Investigators have been focusing their attention on a drug lab chemist named Annie Dookhan, who allegedly doctored lab results to more quickly process evidence and is now facing criminal charges. There are indications her actions may jeopardize the reliability of drug evidence used in 34,000 criminal cases over a nine-year period.
The bond prospectus and several hundred pages of accompanying documents rarely get much attention, but they often reveal a great deal about the inner workings of state government. The legal documents provide a snapshot of the state’s financial situation and anything that might impact it. The material is written in a just-the-facts manner without the public relations spin that normally accompanies such discussions. Here are a few interesting tidbits gleaned from the latest prospectus:
The state’s revenues come 56.7 percent from taxes, 28.2 percent from the federal government, and 15.1 percent from fees and other state charges. Tax revenues are forecast to rise this fiscal year in every category (income, sales, meals, cigarette, etc.) except for bank taxes, although revenues after three months are lagging estimates by $90 million. On the spending side, the state’s Medicaid program and Commonwealth Care together account for a third of the budget. The budget for Commonwealth Care, the state-subsidized health insurance program, is forecast to rise from $777 million in FY12 to $904 million this fiscal year. (Some of Commonwealth Care’s cost is reimbursed by the federal government.)
1) The number of state employees rose slightly between fiscal 2008 and fiscal 2012, but only because 6,600 workers in higher education, at the former Turnpike Authority, and various sheriffs’ offices were shifted on to the state payroll. The overall number of employees on the state payroll rose from 83,663 in FY 2008 to 84,512 in FY13. Separating out the employees shifted from other public accounts to the state payroll, a report issued by the comptroller indicates there was a reduction of 6,166 full-time-equivalent positions between the end of fiscal 2008 and fiscal 2011.
2) Between June 2009 and March 2011, the state paid out $21 million more than it should have under a federal food stamp program that funnels $112 million a month to low-income families and individuals. The prospectus says the overpayments came about because of the state’s inability to meet “statutory case recertification requirements.” The prospectus states the program’s caseload has grown 364 percent since fiscal 2002 while staffing levels have gone down 30 percent. The prospectus indicates the state will probably have to repay the $21 million to the federal government.3) The tax on a pack of cigarettes rose 66 percent on July 1, 2008 (going up $1 to $2.51), but cigarette tax revenues rose only 4.5 percent the following year, to $456.8 million. Since then, cigarette tax revenues have remained remarkably stable. The projection for the current year is $455.5 million. Meanwhile, a November 1998 legal settlement with tobacco companies continues to be a bonanza for the state. It has brought $3.5 billion into the state’s coffers so far, $253.6 million in FY12.
4) Private debt collectors hired by the state brought in $3.8 million in FY11 and pocketed $678,000, or about 17.5 percent, in fees.