California must fix management and money

California Performance Review

Sweeping changes that aim to improve California's government are outlined in a new report, but they will only truly transform the state if officials make more than the cosmetic changes that will be visible to citizens, experts said.

Coming in at more than 2,000 pages and more than 1,200 recommendations, the California Performance Review's report incorporates a wide range of best practices used in the public and private sectors.

Those include many of the practices cited in the Government Performance and Results Act, the President's Management Agenda and other federal management reform efforts.

The changes cited in the California report include a complete restructuring of the state government, which would involve consolidating similar services and functions, such as information technology, and eliminating more than 50 departments and agencies statewide.

They also focus on smaller, specific changes to particular programs, such as improving the tracking of Medicaid recipients.

In total, California could save almost $32 billion during the next five years if officials make all the recommended changes, according to the report.

"This is a typical review of state government operations," said Richard Keevey, director of the Center for Improving Government Performance at the National Academy of Public Administration (NAPA). "It has good information and good detail and a lot of suggestions that people would look at and say, 'Yeah, why aren't you doing that already?' "

In raising and addressing all of those issues, however, it would be easy to lose track of initiatives that would lead to lasting change in how services are provided because attention will naturally focus on the shorter-term initiatives to bring the budget books back into the black, said Thom Rubel, vice president of government strategies at Meta Group Inc.

"Where they get measured is in what they deliver, not in driving down the budget," he said. "That's not as sexy, but it's what citizens are looking for over the long run."

Changing those policies and procedures will require further changes, Rubel said. Addressing the cultural issues and providing retraining for state workers will be some of the most critical issues.

"You can't take [people doing] old functions, stick them into new jobs without that kind of support and expect the culture to change for the better," he said.

Many of the changes to IT and other state operations aim to cut costs. Through consolidating IT contracts, using federal contracts and reorganizing IT operations, the state can save more than $6 million during the next five years, according to the report.

Savings from the majority of changes in statewide operations, however, could not be estimated. Those changes include consolidating the state's many e-mail systems and developing a centralized financial management system.

Steps to strengthen the state's infrastructure will require upfront investments, but they are critical for long-term savings and for improving operations, according to Clark Kelso, special adviser to the governor on IT.

Kelso was already planning to move forward in some of the areas that officials had identified before they released the report. Those areas include network consolidation and interoperable radio communications.

However, other changes focus on bringing in more money, not driving down costs, Keevey said. Before joining NAPA, he served as the top financial and budget official for the departments of Defense and Health and Human Services as well as for the state of New Jersey.

The report cites possible savings of more than $12 billion in general government spending. The majority of that — more than $8 billion — would come from California's getting its share of federal funding, he said. That number comes primarily from estimates of the number of people eligible for Medicaid or other federal benefits — statistics the state is not currently tracking.

Improving the financial and benefits systems that would do the tracking could help improve many basic management processes within state agencies, but "you can do a lot without fixing the core systems," Keevey said.

Making the deeper changes will, in many cases, require action on the part of lawmakers, and those efforts will likely turn into political battles because they represent "a lot of risk-taking on the part of the legislature," Rubel said. "It takes tremendous leadership."

California Gov. Arnold Schwarzenegger "has shown that in doing this review, now comes the real test of leadership for him and other leaders in the state who want to change how the state operates for the better."

***

A penny here, a penny there

The California Performance Review makes many proposals for consolidation, policy changes, and cuts in the information technology and statewide operations arena. Some of the savings estimated through those changes include:

Action Five-year estimated cumulative savings
Reorganizing the IT organization and governance structure $168,750,000
Consolidating IT contracts wherever possible$9,841,000
Using the General Services Administration's schedule contracts $211,500,000
Using reverse auctions for many contracts$285,000,000
Modernizing the state procurement system $47,000,000
Increasing the use of performance-based contracting$969,760,000
Source: California Performance Review

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