According to a report released Jan. 30 by The Maxwell School at Syracuse
University and Governing magazine, efforts to get ready for Y2K are transforming
the way governments serve citizens by boosting the efficiency and performance of
management practices across the board and making the delivery of public services
smoother than ever before. Other trends show that most states have used the
prosperous economic climate of recent years to put in place the tools to help
them through the next economic downturn, yet have been forced to contend with a
crisis engendered by the strong economy-labor shortages in state government.
First published in 1999, "Grading the States: A Management Report
Card" grades state governments on how well they are managing the systems
that deliver public services and is based on the most comprehensive survey of
state government management ever completed. The survey is part of a multi-year
project of the Government Performance Project (GPP), a collaboration of The
Maxwell School and Governing magazine funded by The Pew Charitable Trusts.
Dale Jones, director of the GPP at The Maxwell School, comments, "The
computer bug that never materialized has ironically been working all this time
in ways we never expected. What started with upgrading hardware and software has
resulted in many states with well-managed information technology systems that
integrate services from agency to agency, and from the executive branch to
the legislature. On other fronts most states have used recent years of
economic prosperity to save money and manage their surpluses more carefully, to
use the labor shortage to develop creative approaches to hiring new employees,
and to use improved technological capacities to deliver services to citizens
more smoothly."
While the number of states receiving A's declined from four to three
between 1999 and 2001, a total of 23 states improved on their overall management
grades. This reflects a significant jump in management capacity across the
country not only in information technology, but also in areas like human
resources and managing for results.
"The up-tick in grades, after just two years, demonstrates that this
survey has helped government officials and managers share good ideas and make
improvements where they are needed by highlighting good models of public
management," says Peter Harkness, editor and publisher of Governing.
"By putting the spotlight on state government management the report also
gives citizens the tools for measuring how well their governments are running
and holding them accountable to appropriate standards."
But not all the news is rosy. With unemployment rates still low and salaries
higher in the private sector, states continue to have difficulty hiring and
retaining qualified employees. Just two years ago, the government worker
shortage existed only in information technology. Today, personnel for all kinds
of government positions, including engineers, nurses, corrections personnel,
accountants and clerks, are difficult to find. However, crisis has forced
progress in the human resources departments of state offices, and managers are
developing new ways to attract workers.
In fact, the 1999 and 2001 report cards show that states are responding to
rolling crises with long-term systemic changes rather than quick fixes. Two
years ago states scrambled to get ready for the Y2K bug; now statewide
compatibility and integration of software and hardware are common. Today states
are using the crisis in hiring to change leaden civil service rules and make it
easier to hire the right people for the right jobs, more quickly. Tomorrow's
crisis may be an economic downturn, and a central theme of the survey findings
is that most states - many with memories of getting burned in recent
recessions - have been taking fundamental steps like building rainy day funds
to get ready.
The 50 states received report cards on how well they did in five critical
areas: financial management, capital management, human resources management,
managing for results and information technology management. The grades provide
an easy-to-grasp assessment of states' management systems.
At the head of the class and moving up
Michigan, Utah and Washington brought home the best report cards, quite an
achievement with nearly half of the states improving their overall management
grades between 1999 and 2001. What sets them apart? "We looked closely and
there are no formulas, no two or three systems or approaches that light the way
for the front runners," says Jones. "The common denominator appears to
be strong leadership and well integrated systems to improve management across
all the categories, at times with some risk from changing old ways of doing
things."
Michigan, the sole newcomer to the top management group, scored A- in
financial, capital and information technology management. The former bad boy of
bond ratings, Michigan now has a triple-A rating, has a solid balance between
revenues and expenditures, is making leaps in the maintenance of buildings and
roads, and has a rigorous approach to building IT capacity. Washington state,
with spending limits and voter initiatives that complicate budgeting, still
brought in a B+ in financial management and A- or A in all other categories.
Utah's solid A's in financial and information technology management make it
a national model.
Carrying the banner for states with the most improved management systems
since the 1999 report are Alabama, California, Idaho, Maine, New Mexico and New
York. Alabama, which received the only D in 1999, has implemented long-term
fiscal planning into its budget process for the first time. The state is also
working on developing a comprehensive capital program to manage maintenance and
construction of projects and has started to manage for results, with three pilot
programs running in the agencies of Mental Health, Youth Services and Human
Resources. California's biggest leap has been in financial management, turning
a $3.6 billion deficit from 1997 into a $622 million surplus at the start of the
2000 fiscal year. Its rainy day fund, empty in 1997, is now 2.4 percent of
general fund revenues.
New York moved from its deficits of the mid-to-late 1990s to an unreserved
balance of $1.8 billion at the end of fiscal year 2000 and was divvying up a
$1.5 billion current surplus with an eye to the future: about $1 billion for
various reserve funds and the rest for relatively safe one-time expenditures.
How different types of management systems are faring
Financial Management
States are as prepared as never before for the next economic dip that may be
around the corner. Based on lessons learned from the last recession in the early
1990's, state budget managers are attempting to husband their resources by
making sure that permanent spending remains at sustainable levels and avoiding
use of one-time revenue for on-going expenditures. Also, more states have
established rainy day funds to prepare for less economically fruitful periods.
Fifteen states, including Michigan, Florida, Massachusetts, Minnesota, Ohio and
Pennsylvania, have set aside over 5 percent of general fund expenditures, and
California has for the first time begun setting aside cash. A growing number of
states are engaged in long-term strategic planning, which helps them allocate
resources more efficiently. Things to watch while the economy makes up its mind:
Downward creepage of rainy day fund levels and budget surpluses; increased
expenditures and tax cuts; and accuracy in estimating revenues.
Capital Management
The economic good times of these past years have provided many states with
the resources to make long overdue repairs to buildings, roads, bridges and
other capital projects while also planning for long-term capital improvement
needs. For example, Texas has created a five-year plan, which is helping state
officials make fiscally effective choices. Some states are finding new sources
of funding for capital improvements, including Utah, which has tapped its
general fund revenue for maintenance, and Indiana which has developed
replacement fund reserves for new buildings. And finally, states are doing a
better job at understanding the value and condition of their capital assets to
help them plan for and prioritize repairs. Come a downturn, capital improvement
budgets are among the first to come under pressure. Stay tuned for staying power
of some of these reforms.
Human Resources Management
The only management category that is hurt by a strong national economy is
human resources. Prosperous times mean that hiring and retaining qualified
workers is much more difficult for government agencies that simply cannot
compete with private sector salaries. The good news is that states are using
this crisis to force changes in rigid personnel systems and to get buy-in to
ideas that will help solve the problem. For example, workforce planning-a
strategic approach to assessing a state's future personnel needs-is becoming
the norm compared to two years ago when it had only a handful of practitioners.
One in four states now has a formal workforce plan. Some states, such as
Vermont,
New Mexico and Washington, have eliminated rules that require applicants to
meet certain qualifications in order to give managers more flexibility and speed
in the hiring process. Others are raising pay scales to attract quality
employees. Almost every state is using tax revenues to boost investments in
training new workers.
Managing for Results
While states are taking different approaches to managing for results, all
states recognize that measuring performance is important and are working to
improve how they measure outcomes and put the process to work. Virginia's
managing for results process, for example, links strategic planning, performance
measurement, program evaluation, and performance budgeting. Louisiana puts a
high priority on performance measurement accuracy. Missouri, Washington, Iowa,
Utah and Texas each bring uniquely strong approaches to managing for results.
Few states, however, have taken the challenging next step - communicating
performance results to their citizens.
Information Technology
Among all the management categories, change has been greatest in IT,
primarily because the threat of the Y2K bug drove states not only to replace
outmoded technology but also to rethink almost every aspect of IT planning on a
state-wide basis. As a result, the grades in IT management went up in 30 states,
a major driver of the rise in overall management grades. For example, Kansas
(whose grade rose from C+ to A-) has developed standards for purchasing new
technology which helps all three branches of government stay compatible in both
software and hardware. Increasingly, states are centralizing responsibility for
overseeing IT projects to make sure standards are met, costs are controlled and
breakdowns are averted. And most exciting for citizens is how accessible state
governments have become through the Internet. Most states are making electronic
commerce a priority, compared to two years ago when states provided only a few
transactions online. Now, from Alaska to Washington to Virginia to New York with
its brand new portal, citizens can renew their driver's licenses, apply for
jobs, purchase fishing permits, make reservations at state-run facilities, and
much more.
Average Grades for the States*
*Each state's average grade for 2001 is listed in the first column; its
average grade for 1999 is listed in parentheses in the second column.
About the Government Performance Project
The Government Performance Project (GPP) is a multi-year project created to
rate the effectiveness of government management systems that support public
service delivery. Funded by a grant from The Pew Charitable Trusts, The Maxwell
School's Alan K. Campbell Public Affairs Institute administers the project.
The GPP links The Maxwell School with Governing magazine, one of the nation's
leading magazines dedicated to fostering better public management. In 1999, the
GPP reported on all 50 states and 15 high profile federal agencies. In 2000, the
report focused on the 35 largest cities by revenue in the United States. The
2001 report re-examined all 50 states to chart progress made in improving
management systems. In 2002 the GPP will report on county government management.
