Continue Streamlining State Government

State spending can be controlled by constantly improving the organization of state government and the way it delivers services. Lean is a tool used often in the private sector to create customer value while using the fewest resources possible. It increases efficiency and removes waste.

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Some state agencies have used lean principles to streamline operations but much more could be accomplished if lean were to be adopted government-wide. Connecticut’s DEEP, DOL, and DRS are in various stages of implementing lean practices, with positive results in many aspects of their operations. Lean can help reduce redundant layers of management, restructure functions, and adopt new ways of budgeting to improve efficiency and effect savings.

In September 2012, the Office of Policy and Management issued a report  detailing numerous ways state agencies have been reducing their fiscal footprint. For example, since 2011, the administration has reduced the number of state agencies, through consolidations and eliminations, from 81 to 59.

The executive branch trimmed its permanent workforce by approximately 2,500 positions over an 18-month period.

Best Practices

• Minnesota: “Enterprise Lean” is a coordinated effort with businesses to improve state government. Through it, 200 projects have saved the state $18 million dollars. General Mills has been a key contributor in the effort, training more than 500 state managers on how to optimize their departments. The Minnesota Business Partnership, which represents the 100 biggest companies in the state, pairs interested businesses with state agencies to help them work better and more cost-effectively.
• Washington State: Gov. Christine Gregoire viewed lean as central to her effort to transform state operations, and she reached out to Boeing for help. As a “major employer in the state,” said a statement from the aerospace company, “we pay taxes and our employees pay taxes. Therefore, we have a vested interest in seeing our state and local governments run as efficiently as possible so they can be successful.”
• Iowa: This state was first (2003) to launch lean efforts. It established an Office of Lean Enterprise to “promote and facilitate continuous improvement through the use of a specific set of proven tools and methodologies collectively known as Lean.” Its website provides a clear accounting of specific programs and results.

Performance-Based Budgeting

Performance-based budgeting rewards efficient, effective programs and alters those that cannot meet specific goals. One tool that can help the state become both more effective and cost-efficient is the Performance Management Framework for State and Local Government.

The framework, a project of the National Performance Management Advisory Commission, emphasizes achieving improvements through sweeping organizational and cultural changes that enable results-based budgeting. Each of the framework’s Principles of Performance Management supports an overriding principle: “Performance management transforms the organization, its management and the policy-making process.”

Specifically, the desired goal is transformation from a traditional budgeting model that focuses on inputs and outputs to a more effective, result-based management and decision-making model. What’s more, the framework is designed to change an organization’s culture to one that values evidence, learning, and accountability.

Best Practices

Many states have employed the use of performance measures in the budgeting process. A study by the National Association of State Budget Officers  found that 39 states included performance measures in agency budget requests, and 42 states reported some level of performance measures online.

A more recent report from the National Performance Management Advisory Commission  highlighted programs in Florida, Idaho, Maryland, Oregon, Virginia, Massachusetts, and Washington State.

• “Virginia Performs” is the commonwealth’s performance measurement program. It tracks the key performance measures of state agencies and provides critical analysis. State government agencies in Virginia develop and implement strategic and service-area plans to help achieve long-term goals and objectives.
• In Massachusetts, the Executive Office of Health and Human Services (EOHHS) in 2007 launched a performance-management program called EHSResults “to foster transparency, accountability, and cross-agency collaboration” in order to achieve its goals. The office is making “client outcome data a very real part of our day-to-day conversations and using it as a key input for policy and programmatic decisions. EHSResults provides senior staff [and the public] with easy access to meaningful data, enabling more informed decision-making.”
• Washington State’s Transportation Improvement Board has implemented results-based budgeting and created an information dashboard on its website that shows the results the agency has achieved after two years of implementing the program.

Zero-Based Budgeting

Zero-based budgeting describes a system that begins every budget cycle at zero, avoiding any assumption that activities funded previously will be continued. By comparison, in traditional incremental budgeting, department managers justify increases over the previous year’s budget by making what has been already spent automatically sanctioned.

Zero-based budgeting comprehensively reviews every department’s function and requires approval for all expenditures, requiring the budget request to be justified in complete detail by each division manager starting from the zero-base.

According to the National Council of State Legislatures, zero-based budgeting “appeals to a serious and widespread desire to look at public budgeting in a fresh new way, free of old assumptions, not letting past experiences control the future.”  NCSL says that 17 states in recent years have used zero-based budgeting in some form, and several more have made serious efforts to do so.