Newsom contracts Boston Group for $20 million to find government waste
SACRAMENTO, Calif. — California Gov. Gavin Newsom has authorized a contract worth up to $20 million with Boston Consulting Group (BCG), one of the world’s largest management consulting firms, as part of an effort to reduce wasteful spending in key state departments amid a multibillion-dollar budget deficit.
The initiative, modeled in part after the federal Department of Government Efficiency (DOGE) approach associated with Elon Musk, aims to identify efficiencies and cut spending in the departments of Corrections and Rehabilitation, Social Services, and Health Care Services. The original target was $2 billion in savings by the 2028-29 fiscal year.
According to the state’s Legislative Analyst’s Office, the projected savings have been revised downward to approximately $810 million, with potential for further reductions in the governor’s May budget revision. The consulting work now focuses primarily on administrative efficiencies in Corrections and Rehabilitation and Health Care Services, rather than including Social Services as initially planned.
BCG has employed Ana J. Matosantos, a former Newsom cabinet secretary and Department of Finance director, on the project. The contract has drawn scrutiny from some state lawmakers during legislative hearings. Republican Assemblymember Tom Lackey expressed confusion over the arrangement, stating it left him “mystified.”
Newsom signed an executive order directing spending reductions in a manner reminiscent of efficiency drives at the federal level. California faces ongoing structural budget pressures, including deficits projected in future fiscal years despite recent revenue gains.
The Department of Finance had previously engaged BCG for a smaller review related to procurement streamlining. Details of the current larger contract emerged as lawmakers examine options to address the state’s fiscal challenges, including potential impacts on social safety net programs.
Critics, including some legislators, have questioned the value of spending millions on external consultants to recommend cuts when the state already employs extensive internal expertise in budgeting and operations. Supporters of the approach argue that specialized outside analysis can provide objective recommendations for complex government efficiencies.
This development comes as California continues to grapple with high costs in corrections, health care, and social services, which rank among the state’s largest budget areas. The Legislative Analyst’s Office and other oversight bodies will continue monitoring the outcomes of the consulting engagement as part of the annual budget process.
No immediate comment from the Newsom administration on the revised savings figures was detailed in initial reports. The contract reflects broader debates over government efficiency and the role of private consultants in public sector cost-cutting efforts.
