Privatization has become a buzzword for critics of government spending who espouse the principle that anything the state can do, the private sector can do cheaper. A report by the Texas state auditor offers contrary evidence: Awarding millions of public agency dollars to private corporations does not guarantee greater economy or efficiency.

The Texas Health and Human Services Commission launched a much ballyhooed restructuring plan last year, approving an $85 million contract with Ohio-based Convergys to run its human resources and payroll system serving 46,000 state employees. Although commission officials claimed the five-year pact would save the state more than $21 million, the state auditor's report questions whether Texas will realize any savings from the deal.

The report criticizes the agency for "errors and omissions" in its assumptions on the relative costs of a private vendor versus a consolidated system run by state employees. Proponents of the Convergys contract overestimated the cost of an in-house operation and failed to account for start-up costs created by outsourcing the work. The deal was approved even though Convergys did not have the highest rating among contractors. The auditor's report found that the commission failed to exercise adequate oversight as the plan was implemented.

The report is a warning signal for what could happen if the commission goes forward with a much bigger contract approved in June to privatize food stamp operations in Texas. The $899 million agreement with Accenture would lay off 2,500 state employees and close 99 food stamp offices around the state. Another 44 offices would be converted to satellite status to be used on a part-time, as needed basis. Accenture would set up four call centers with a staff of 1,700 workers to interview 140,000 food stamp applicants a month. State officials claim the Accenture deal will save the state $646 million over five years.

U.S. Rep. Gene Green, D-Houston, expressed concern about the plan in a letter to U.S. Department of Agriculture officials last month. Green said he did not believe the number of workers budgeted by Accenture could conduct complicated eligibility interviews with applicants in a manner that complies with federal regulations. According to Green, "the elderly, those with limited English or reading proficiency or those who simply find the complex system of applying for government assistance frustrating, will likely fall through the cracks if this number of employees is used." Green asked that the USDA withhold approval of the Accenture contract and require that Texas delay its implementation.

Meanwhile, the U.S. Senate has passed an amendment to the 2006 agricultural appropriations bill prohibiting states from using federal funds if they privatize more than 10 percent of food stamp program operations. The House counterpart does not include the amendment, and a conference committee will decide if it remains in the final legislation.

The documented erroneous cost estimates for the Convergys contract must not be repeated on a grand scale. Texas Health and Human Services commissioners should delay implementing the massive food stamp privatization originally slated to begin next month. The state auditor should analyze the deal to see if the reduction in food stamp workers damages program effectiveness and to determine if the same flawed criteria used to tout the Convergys contract was used to estimate savings from the Accenture pact.

Food stamps are an essential component of the safety net protecting the most vulnerable members of our society: the poor, the young and the elderly. If privatization of the program results in fewer food stamp recipients and a loss of federal funding, it will prove to be a drastic error.