Firm Hired by Gianforte Has Long History of Bilking Public Institutions

FOR IMMEDIATE RELEASE
Thursday, April 14, 2022

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Firm Hired by Gianforte Has Long History of Bilking Public Institutions

Is Greg putting profits over people?

Helena, MT – Alvarez & Marsal, the multi-national consulting firm to which Gov. Gianforte’s administration has awarded a $2.2 million contract to take over the Montana State Hospital, has a history of mismanaging public institutions in the name of cost-cutting. 

Alvarez & Marsal appears to win these government contracts by promising stunning cost-cutting, and then leaves these public institutions and communities in worse shape than before they arrived. A common complaint from lawmakers in states where the firm has operated is that Alvarez & Marsal tried to run the public institutions, including public schools, like “businesses”. 

2003: The city of St. Louis awarded a $5 million contract to Alvarez & Marsal to help restructure the city’s financially-strapped school system. The consulting firm describes their work there as a “textbook turnaround,” resulting in $79 million in budget cuts. In reality, the firm left the city’s schools near bankruptcy with no improvement in student performance. They eliminated critical positions, shut 16 schools without sufficient notice, eliminated bus stops, and ignored the “human cost” of their decisions, including only offering bussing to students who lived within 1 mile from the school. “I think they made things far worse,” said William Purdy, the St. Louis school board vice president.

2005: Alvarez & Marsal was hired by the Louisiana state government to help reopen public schools in New Orleans in the aftermath of Hurricane Katrina. ​​Sajan George, the COO tasked with running the “turnaround,” billed $450 an hour. They were in charge when the state fired 7,000 teachers without due process. The teachers and their union sued successfully, and were awarded two years of back pay and benefits. “​​‘These employees suffered a dual tragedy: Once when the levees broke and another when their livelihoods were taken from them,’ said union attorney Larry Samuels.”

2007: Consultants Draw Fire in Bus Woes: New York City schools hired Alvarez & Marsal, without competitive bidding, with a $15.8 million contract to help bring down the costs of school bussing. The highest-paid consultants for Alvarez & Marsal charged the city up to $500 a day for expenses on top of billing $275 to $450 an hour for their services. The result? “The plan in New York combusted this week, leaving shivering students waiting for buses in the cold and thousands of parents hollering about disrupted routines.”

2014: Louisiana state government brought in Alvarez & Marsal to help them out of a $1.2 billion budget deficit. A state legislator expressed frustration that the “state is paying the consultant’s employees more than $400 an hour to suggest things that state employees could have suggested if their superiors had asked.”

2020: Rhode Island hired Alvarez & Marsal to study Rhode Island College’s finances, on a no-bid $76,000/a week contract. The consulting firm was paid more than $334,000 to “produce a seven-page draft report that offered unsurprising findings including that enrollment has been declining for several years, graduate programs are costly, and the COVID-19 pandemic has created challenges for the college.” 

“Did the Gianforte administration do their due diligence when identifying solutions for the Montana State Hospital? Handing over millions to a private out-of-state consulting firm known for putting profits over people is not the way to solve the problems at Montana State Hospital,” says Sheila Hogan, executive director of the Montana Democratic Party. “Montana’s taxpayers should not be on the hook for this, and Montana’s most vulnerable patients deserve far better.” 

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