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Civic Bulletin
No.
41 May 2006
Iowa Charter Agencies: Streamlining State Government
Jim Chrisinger
Jim Chrisinger is Team Leader for Accountability and Results at the Iowa Department of Management. This bulletin is adapted from his presentation at the Manhattan Institute on March 16, 2006.
THE HON. STEPHEN GOLDSMITH
I'm with the Innovations in American Government Program at
Harvard and an alum of the Manhattan Institute. I was a consumer
of everything that the Manhattan Institute and the City Journal
put out for years. Then I was elected mayor in Indianapolis.
Harvard gives out about $700,000 a year in awards to the
best innovators and entrepreneurs in government around the
country. We're delighted to cosponsor with Larry the presentation
of one of those most interesting award winners today. So I'm
here in both hats in terms of the Manhattan Institute's Center
on Civic Innovation and Harvard's Innovations program.
Let me just begin by explaining why I think what Iowa has
done is so interesting. I was in the privatization battles
early on. So was Steve Savas, who writes about privatization.
I campaigned about privatization and won. We modified privatization,
the competition having public employees bid against private
sector. And the goal was to not necessarily to reduce the
scale of a particular service but to say, okay, if government's
going to deliver this public good it might as well do it efficiently.
So let's try to find the most effective and efficient delivery
system. Candidate George Bush appeared at the Manhattan Institute
and gave one of his most important and most controversial
campaign speeches in the first campaign. He addressed the
position that conservatives have said government is the problem
and liberals have said government is the solution. The President
said, we’re not going to run a campaign against government,
we need to change government, we need to modify government
but even those of us who believe in small government should
also believe in efficient government.
So fast forward that to today and the way I connect the dots
is as follows. Even if you inject privatization and competition,
if you don't enable the public sector to perform to its highest
and best level, the residual benefit of privatization and
competition can't accomplish very much. Rather, the purpose
of injecting a little bit of privatization or a lot of competition
is to create a structural hammer that allows the public sector
to perform. But if the public sector is imprisoned in the
traditional bureaucratic command and control system it can't
respond, it can't perform.
What is interesting about what Jim Chrisinger and Governor
Vilsack have done in Iowa is they've come up with a model,
which basically says we're going to give you the authority
to perform and we’re going to hold you accountable. And
if you perform you can have more and more discretion. And
the more discretion you have, the better you can perform,
which actually reverses 50 years of progressive government
that says you can’t trust city or state officials and
the best way to make sure that they don’t abuse their
discretion is to remove their discretion. So the Iowa model
says we’re going to give you discretion and we’re
going to hold you accountable. So Jim has taken his Phi Beta
Kappa background from Iowa State and has overcome his law
degree from Berkley, and he had run this Accountability and
Performance Center for the State of Iowa. The governor for
whom he works is a very talented, energetic and intelligent
fellow who is committed to improving government. His charter
program in Iowa won the Innovations award.
MR. JIM CHRISINGER
I am from the government. I’m here to help. What I'd
like to share with you today is Iowa's journey over the last
five or so years.
Iowa has a reputation for good, well-managed government so
that when our revenues started to go downhill in 2001 we thought
we could handle it. And we did the usual stuff: we moved some
money around between funds, deferred some maintenance, did
some across the board cutting and that got us through the
year. Well they went down again second year. We had to dig
a little deeper. We did the traditional top to bottom review.
We did some consolidations, restructured some departments,
sought suggestions from a wide variety of people, implemented
some good ideas like an early retirement incentive, and got
through that year. Revenues went down a third year. And the
fiscal year began with another significant across the board
cut for agencies that had already taken cuts the prior two
or three years. And all during this time we were doing a lot
of what we think are the best management practices. We were
doing strategic planning and performance measurement. We were
trying to be more results oriented. We were doing some activity-based
costing. We were doing all the right things, but it wasn’t
enough. We came to the conclusion that we had to do government
in a different way and we were probably going to need some
help to do it.
We'd run out of ideas from our bag of tricks so we issued
an RFP for a reinvention partner. And we said we didn’t
have any money to pay for it so you need to propose a way
to pay for it. And we got on board with a group called the
Public Strategies Group from St. Paul, Minnesota. Several
of them are here today. And they became our reinvention partners
and guided us on the journey we were about to undertake. With
their help, we began to see that the fundamental problem is
the bureaucratic system—this paradigm of government that
we'd been using for the last 100 years, this centralized,
hierarchical, standardized, and most of all, rule-bound paradigm
of government that we adopted collectively in the early 20th
Century. We began to see how pervasive it is, how much it
gets in the way of everything we try to do, any kind of reform,
any kind of effectiveness, efficiency kind of efforts we were
undertaking. It’s part of our DNA. It was our DNA. One
of the ways you see this is by looking at how many people,
how many dollars you put into doing what. One of the characteristics
of bureaucracy is that by all means we're going to control
inputs. So look at how we control inputs, which are basically
dollars, how many accountants, how many auditors, how many
budgeters, how many people. We have hundreds of people in
our state government, millions of dollars devoted to tracking
every penny. How many people do we have tracking results?
How many people for whom their number one job is to make sure
all this activity and all these dollars are producing something
for people? I don't think we have one. And I think that's
true of most governments.
So that led us to the question: What are we going to do about
it? How are we going to attack bureaucracy? Most of our reform
efforts, most of our effectiveness efforts, take place in
a certain policy area. We're going to do welfare reform, we're
going to have school choice, we're going to do all these things.
And what we find is that all those things are hindered and
blunted by this bureaucratic culture and DNA that they have
to function in. So how can we take that on? How can we systematically
across the whole spectrum of what we do? How can we take that
on?
With Public Strategies Group's help we came up with this
idea of charter agencies. And we said we wanted some volunteers.
Who wants to volunteer for a different deal? You can continue
with the same bureaucratic deal, which is basically following
the rules, staying out of the newspaper, and we fund you.
But if you want to be a charter agency, we will offer you
a different deal. If you're a charter agency you have to produce
measurable results for people, improve those results, and
by the way, one of those results has to be helping us fill
our budget hole this year. You have to come up with some money
to help us with our budget problem. If you do those things
then we will free you from as much bureaucracy as we can muster.
And so we were essentially offering them a different trade
off. It's not like the old system doesn't care about results.
It’s just that in the old system the rules are the most
important thing. Yes, we want some results, but by all means
don't mess up. We wanted to flip that so the most important
thing is the results. Yes, we need some rules. Rules help
us, rules are good things, but they shouldn't be the most
important things. Or another way to look at it is to think
about it as a different kind of accountability. Agencies feel
plenty accountable today but what they’re accountable
for is following the rules and not messing up, not making
mistakes. We want them to feel a primary accountability towards
producing results. We want getting things done to be more
important than not doing anything wrong, which is a huge 180-degree
kind of culture shock.
So we had six agencies sign up. The Department of Natural
Resources reduced turnaround time for air quality construction
permits, from 62 days to 6 days, and eliminated a backlog
of 600 applications in 6 months. They reduced the turnaround
time for wastewater construction permits from 28 months to
4 and-a-half months. They reduced the turnaround time from
187 days to 30 days. And they did all this without sacrificing
any environmental quality.
Our Department of Human Services improved their success in
returning children who had had to be removed from their homes
back to their families. The rate of non-reentry into foster
care rose from 76% to almost 90% in the last quarter, while
stays in shelter care have been reduced from an average of
50 days to 40 days.
The Department of Corrections reduced their probation failure
rate by 17%. And our inmate community service hours are up
25% in the last 18 months.
Our Veterans Home, which is essentially a care facility,
reduced by half the number of residents who were experiencing
moderate to severe pain: 7.7% now versus 15.5% two and a half
years ago. Ninety percent of admissions are now completed
within 30 days as opposed to sixty-nine percent before.
The Department of Revenue improved their rate of income tax
returns filed electronically from 55% to 63%, and improved
the rate of individual income tax refunds issued within 45
days from 75% up to 94%.
Our Alcoholic Beverages Division's (we're one of about a
quarter of the states that still has a wholesale liquor monopoly)
performance measure is dollars to the general fund. And in
the last two years, they have increased that by 17%.
They also had to produce dollars. Collectively, charter agencies
have to come up with $15,000,000 a year ongoing. The first
year they came up with 22,000,000; the second year they came
up with 20,000,000. That's where we are. We're proud of those
results but I don't think they’re the end. I feel like
we’re really just scratching the surface.
We're really just turning the cultural corner here, but I
hope they are indicative of where we're headed.
So what about agencies that chose the flipside of the transaction?
What did they get? How are they freed from bureaucracy? One
of the ways is what I call stand in the shoes of authority.
Think of the central control agencies, the real keepers of
the
bureaucracy, personnel, and general services. General services
in our system are the nuts and bolts of things like procurement,
printing, the fleet, custodial services, etc. So for human
services, personnel, general services and IT, if you're a
charter agency you have all of the authority of the director
of personnel, general services and IT. So if they can do it,
you can do it. You need to follow the rules but you don't
have to go through them. So for example, there was a car of
the Department of Corrections. This car and a deer met on
a southern Iowa road around a curve at dusk and neither one
survived. Corrections went to general services and said well
we need to replace this car, it was totaled. They said okay,
we'll put you on the list. Here's where we are in the cycle
of buying cars and you'll have your car in 15 months. They
shook their heads, and because they're used to dealing with
the bureaucracy, they just walked away. And then all of a
sudden somebody said wait a minute, we're a charter agency.
If they can buy a car we can buy a car. So they went back
to general services and said wait a minute, we don't have
to wait 15 months. Low and behold they got their car in about
four or five days.
Another thing that the Corrections Department has been very
good at is using their personnel authority. Instead of hiring
out one private entity to do everything, they decided, we
think we can do a better job if we are essentially the general
contractor. And then we are going to sub with eight different
best-of-breed private companies to do each aspect. So we're
not stuck with this one company doing the whole thing. We
want the best of various parts of the private sector to do
that. And they were able to do that because of their procurement
authority.
They are also freed from FTE caps or employment caps. Our
legislature says the Department of Natural Resources can only
have so many employees regardless of what it has to do and
how much money it has from various sources to do it. So they
were required to contract out certain functions that they
felt would be better done in-house. They are now able to actually
hire some people and save money doing that.
We have something in Iowa called the Executive Council, which
is a board of all the statewide elected officials sitting
as a committee. So the governor, the attorney general, the
auditor, the treasurer, and that council has to approve every
state employee request for out of state travel, every public
or every professional membership request, and every conference
attendance. So we said that charter agencies don't have to
go through that process. You can imagine how much time is
wasted in council. In the old system there was one air ticket
contractor and everybody had to go through them. This way
charter agencies can say okay, what's your price? Now they
can go online check Orbitz or Expedia. They get a better price.
They buy them there, and that's that.
They also have the authority to waive any administrative
rule in the three areas of personnel, general services and
IT. Interestingly, they've been very ginger about trying that.
The only time they've used that so far is to correct mistakes
that they weren't able to correct otherwise.
They also had access to a $3,000,000 innovation fund, which
was essentially a forced reallocation of money. It provided
a source of money to fund innovative ideas that wouldn't have
been funded otherwise.
Those are just some examples. However, note that there's
not necessarily a direct relationship between not having to
purchase that travel ticket through the contractor and the
results or the savings that were produced for the charter
agencies. What we're trying is more systemic than that. It's
not as simple. And that's frustrating to some of our legislators
and other people who want to see those things directly qualified.
But the time and the energy that's saved by not spending and
not wasting time, all these non-value added consequences are
very hard to quantify. It's all about shifting the time and
energy. What are we focusing on? Following the rules? Not
making mistakes or achieving results for people? That’s
what it's really all about and that's what charter agencies
try to do.
Collectively, charter agencies have to come up with $15,000,000.
They could do that one of two ways. They could, first, forego
some of their budget, essentially giving back some of their
budget. And some people did that. For example, the Department
of Human Services gave up a million dollars and they are continuing
to give us a million dollars a year. Imagine how that sounds
to Human Services constituencies. You are taking food out
of the mouths of hungry children by giving up that money.
So it was a courageous thing for the director to do.
We also said that if you don't, or can't, take that budget
cut, you can still produce some additional revenue. But you
can’t do it in a non-entrepreneurial way. You can't just
jack up your rates or your fees or create a new fee. You have
to do it in an entrepreneurial way. So for example, the Department
of Revenue is actually collecting more taxes that were already
owed. These are not new taxes they are just doing a better
job of collecting taxes already owed.
The Alcoholic Beverages has been our single largest contributor
to this. They were able to do it by essentially abandoning
a very sort of rigid bureaucratic structure for the way they
did their wholesaling. Under the bureaucratic model, every
wholesale product had the same markup. Now they are able to
say, wait a minute, that's not very smart. If we vary our
markup we'll sell approximately the same amount, but we'll
bring in more money to the general fund. This is what they’ve
done, because there's obviously a downside politically to
just trying to sell more liquor.
Our Department of Natural Resources was entrepreneurial by
opening something they called The Nature Store, selling T-shirts,
sweatshirts, caps and whatnot with conservation and wildlife
preservation logos and slogans. That's pulling in a little
extra money for them. They also got more effective at collecting
fines. Under the bureaucratic system all those fines that
were collected just went into the general fund. There was
no benefit to them for collecting them. But now there is an
incentive. They can meet part of their obligation of the 15,000,000
by being more effective.
Not every positive outcome was directly attributable to the
charter agency authorities and flexibilities. This is the
halo effect. We found that it was so energizing for charter
agencies to get outside the box that all of a sudden they
thought about things they could do that didn't specifically
require charter agency authority. But they tell us they never
would have done otherwise before, because they were stuck
in the box. For example, our Department of Corrections partnered
with the local racetrack and created a thoroughbred retirement
fund. And it's a good thing for the inmates to work with animals.
And it's a good thing for the horses to have a good place
where they are retired to. There was nothing in charter agency
authority they had to have to do that but they wouldn't have
done it otherwise. Our Departments of Human Services and Corrections
are now consolidating their purchasers of pharmaceuticals.
And they are both large purchases of pharmaceuticals. That
saved a considerable sum, again, not necessarily required,
but very helpful.
We've learned that the bureaucratic paradigm is extremely
resistant to change. There are many barriers and they're difficult
to overcome. Maybe the biggest one is just inertia. Even though
our charter agencies have done wonderful things, they are
still just scratching the surface. They have approached this
very gingerly because the power of the paradigm and the downside
risk of mistakes are so acculturated. That means that those
of us who are undertaking this need to do a lot of handholding
and a lot of assurance. A lot of assuring that the statute
does say that, and you really can do that. For a while we
adopted the Nike slogan "Just do it." And we were
trying to get people to just do it, but that's difficult for
them.
Interestingly, I think the politics have been less of a barrier.
I think, as Mayor Goldsmith found out, these kinds of things
are not Republican or Democrat things. This is a good government
thing. And we've not had significant political opposition.
The only political opposition we’ve had, I think, is
people of the other party who don't want something the Governor
is proposing to succeed or look good. The media's "got
ya" culture is very much a barrier because that's the
primary source of the downside risk of trying something and
maybe making a mistake. So we've got to help and we've been
working with some of our reporters. And that's where the Innovations
in American Government award has been very helpful. It gives
us a lot of credibility with people and with legislators.
After winning the award, it's very hard for me to imagine
going in front of a legislative committee and really having
to defend ourselves like we did in the early days. That kind
of legitimacy is very important and it takes a lot of hard
work.
So what does it take to overcome those kinds of barriers?
I want to highlight four keys. First, changing the DNA begins
with and requires courageous leadership. We have been blessed
with Tom Vilsack as a governor, who has been willing to undertake
this and support us. Our charter agencies were courageous
as well. Six directors stepped up and volunteered. In almost
every case they did so over the almost uniform objection of
their senior staffs. It takes courageous leadership to overcome
that. In New York City, I understand the Mayor's talking results-based
and that's a good direction to move in. I also understand
that Martha Stark, who is the Commissioner of Finance, is
on this journey.
The second key to change is the value of outside help. Even
Tiger Woods needs a coach, and it was very helpful for us
to have Babak Armajani on board. It leverages our resources.
I can only do so much. The people who work with me can only
do so much. For example, I talked about handholding the charter
agencies. There was a Public Strategies person working with
every one of those agencies. Mary Levy was one of those people
and she was a super coach. They needed that. You can't just
say here's something that you can go do and expect them to
go do it; it's not going to work that way. They also gave
us credibility. As the 50-mile rule says, you can’t be
an expert within 50 miles of where you live. If I said it,
it just wasn't going to be credible. They’ve had successes
around the world that were credible. And lastly they took
some heat. Change causes friction, friction causes heat, and
thankfully Public Strategies Group was willing to take some
heat for some of what we were doing.
Third, charter agencies are a great lever of change but alone
they aren't enough. We're doing a lot of other things that
are along this same reinvention road. For example, the new
accountable government act creates a performance and planning
framework for the state. A web page, ResultsIowa.org, makes
our results transparent to the world and puts pressure on
people to produce results. We're also doing a new budget system;
the budgeting process is probably the biggest lever of change
in government. We're doing something called purchasing results,
which is a market-based budgeting process that gets to a lot
of change that can be very reinforcing to charter agencies
and vice versa. We've borrowed some process improvement techniques
from the private sector. For example, we've used Kizan and
another smaller one called Zoom that has produced very dramatic
results in process improvement. And then there's something
we call entrepreneurial management with inside support services.
We’ve taken a market approach to those too, essentially
opening a bunch of them up to market competition. And still
others have been put in charge of a customer council where
the customers actually run the service and negotiate with
the providers over price and service levels. Most satisfying
is the synergy between these various kinds of initiatives.
For example, charter agencies have got that bug, have got
that spark. Then when they get involved in the purchasing
results budgeting process they make more creative, aggressive
offers in that process to provide more value. Charter agency
people sit on customer councils in entrepreneurial management.
They push our inside service providers harder. When those
things begin to happen, that’s when we really feel like
we've got culture change.
So even though I am very proud of all we've done, we’re
not there yet. In addition to courageous leaders, great coaches,
hard work, and persistent and comprehensive innovation over
time there is a fourth element that is needed: people who
are working with government—people like Public Strategies
Group—and other consultants are working on the supply
side. They are increasing the supply of reinvention, the supply
of a new way of doing government. But working the supply side
alone does't make it happen. We need a demand strategy as
well. Organizations like the ASH Institute, the Manhattan
Institute, and other groups out there have to work the demand
side. If we get to the point where we’ve got the supply
side cranking hard, and we’ve got a demand side pushing
us, then I would be able to stand up in front of a group and
say I am from the government, I am here to help, and nobody
will laugh. Thank you.
MALE VOICE:
In your list of observations at the end you mentioned bureaucracies
being resistant to change, but in most states you would also
have to add to that list the legislatures. They are resistant
to change and have the power to prevent the change regardless
of whether you can get bureaucracies to buy into it or not.
Question: there is an oncoming train for all states, and that’s
healthcare costs. Other Postemployment Benefits (OPEB) takes
effect in fiscal year 2008. The fact remains that healthcare,
not just OPEB, but also Medicare and Medicaid, is so monstrous
in size that it is going to hamstrung a very significant proportion
of the states in this country in terms of getting somewhere
else from where they already are without severe pressures.
I’m wondering how you think that ties into what you’re
trying to accomplish. Perhaps it’s the hammer that gets
the change that’s needed.
MR. CHRISINGER:
Yes. It's a crisis, but it's also an opportunity. Let me address
your last point first. Absolutely, not every state had the
kind of fiscal crisis we did. We actually had three successive
years of lower, nominal revenues. So only in this fiscal year,
fiscal '06, is our general fund spending again reaching FY
'01 levels. That kind of crisis brought us to the point of
realizing that we can’t keep doing business the usual
way. Even if states haven't experienced that yet, they will
for the reasons you site and more. The costs to educate, incarcerate
and medicate are going to drive people there even if they
aren't experiencing it now. And I think our task then is to
use that lever to change. To say we can't keep doing business
in the bureaucratic paradigm, we have to make this switch,
which leads me to your first point, which is legislatures.
When they come to you and they want the campaign check then
you need to say where you stand on reinvention. Unless there's
pressure on them, I don't think they're going to buy it from
us totally. We can do our part to educate and show them the
value of doing it this way, but that’s why we need to
work on this together.
MALE VOICE:
Did the charter agencies have the authority to look into outsourcing
for example, whether it be rubbish removal, or city or state
appraisals, or doing real estate valuations as opposed to
independent real estate firms or many other ways of outsourcing?
Was that within your authority, and if it was, did they look
into it or what were there opinions on it?
MR. CHRISINGER:
I don't think there are any huge barriers in our system. That
has not been the philosophy of our current administration.
So I don't think there has been an interest in outsourcing
in general but that might change.
MALE VOICE:
I think it's a wonderful scenario you paint but Iowa is a
good government state. And all of this when you took away
all the restrictions, all the rules and regulations to free
them up, it works fine in a good government state. I used
to live in Wisconsin. This worked there as well. What if this
was applied to New Jersey? Now certainly, you must have addressed
the problem in Iowa. No state is 100% squeaky clean, but can
we say this would work in New York City where corruption is
a way of life? Or work in New Jersey? In the south, where
it would be most needed, you have long histories of corrupt
government, in Louisiana, for example.
MR. CHRISINGER:
Yes, and Louisiana's looking at it because they're under pretty
severe pressure right now. I don't think we know the answer
because it hasn't been tried. But I want to emphasize that
despite the way some people talk about it, it's not like the
rules all go away. It's not like the accounts aren't audited.
It's not like nobody's watching. It's a matter of emphasis.
Government, even in some of the lesser clean states, does
a remarkable job of not misspending funds. I think the question
is if the cost is worth it. So it's not about no rules. It's
about emphasis. It’s about what's most important here.
And there is room for customization. You wouldn't have to
do this exactly the way we did it. In fact, what I'd recommend
is if some jurisdiction wanted to undertake this, they should
ask where are the big barriers, and where are you spending
the most non-value added time?
MALE VOICE:
Just wondering if Iowa is doing anything about the demand
side right now?
MR. CHRISINGER:
I'm out here doing this kind of talk. I'm going to every Rotary
of any size trying to enlist people and educate people. But
I think it's going to be more effective. Editorial boards,
for example, are generally more receptive. It's hard to get
beat reporters interested because this is not the kind of
thing that makes news. But I think we just have to use all
the levers we have. Good government groups are the ones I
think who are going to have to drive it.
DR. LARRY MEAD:
Larry Mead from NYU. Say a bit more about the reaction of
the bureaucracy to this initiative. Was there enthusiasm?
Was there massive resistance? How did the leadership get the
lower level bureaucrats on board?
MR. CHRISINGER:
It's been very mixed. Some people take to it like ducks in
water, thinking this is great. We have watched the transformation
of some long-time dyed in the wool bureaucrats, with their
whole lives in the system and all of a sudden it's like they've
come alive, they blossomed. You have other people whose heels
are still dug in and are out-waiting us. They're the "be"
team, the team that was there when we got there and will be
there when we leave. But it's very exciting that you're getting
people moving and you don't have to have everybody bought
on. You just need a critical mass and it’s nowhere near
50%. We just have to keep working those people and bringing
them in. When I'm addressing a group of them, I try to talk
about what's in it for them: here's how your work life is
better, here's how things can be more satisfying. And ultimately
here's how we get out from under the "starve the beast
crowd." In the long run where does that get us?
MR. STANLEY GOLDSTEIN:
Stanley Goldstein, New York Hedge Fund Roundtable. About 70
years ago the federal government forced all the states to
adopt unemployment insurance laws by saying that you're going
to pay for it whether you adopt it or not. Is there a role
for the federal government to use their purse strings to encourage
states to do what you're doing right now?
MR. CHRISINGER:
I don't know. I would hope so. And I would hope that there
is a better way of doing it, but I'm feeling like that’s
beyond my competence. That's a good question.
MALE VOICE:
If you strip out integration since 1970, New York State has
had the worst population performance of any state in America.
If you add it back in we're 47th worst, but there are three
states ahead, one of them is Iowa. Is population an issue
in Iowa?
MR. CHRISINGER:
Our demographics are like we're heading off a cliff and it's
really hard to get people to do something about it. We have
an aging population. Our biggest export is not agricultural
products; it's our college graduates. We're a state of less
than 3,000,000, and we lose 10,000 to 15,000 a year. We don't
have young families, so we don't have the kids. I live in
a town where we've closed three elementary schools in the
last five years, which was very painful. In an environment
like that we can't just keep doing business as usual. We just
have to get better; we have to get more efficient. But it's
a huge problem for Iowa.
MR. HENRY STERN:
Henry Stern. What other states have done what Iowa has done?
And what's the experience around the country with your particular
program?
MR. CHRISINGER:
I don't know of anybody doing the charter agency thing. The
budgeting we're doing is more widely experimented with right
now. The first state that tried it was the State of Washington.
We are right behind them and I think we're kind of trying
to build on and evolve what they started. There's a nice book
called The Price of Government by David Osborne and Peter
Hutchinson that lays this out. Michigan and South Carolina
are both pursuing this. It's a very market-oriented budgeting
model. And it tries to get away from the traditional budget.
Government budgeting basically is you take last year's numbers
and then make them incremental. Then you fight incrementally
around the cuts and the adds. We tried to do away with that
completely and say okay, we've got X amount of money to spend.
How do we best spend those dollars and create a marketplace
so that the buyers, the political leaders, the legislature,
and the governor, make the best choices about how to spend
that money as opposed to just using this incremental approach.
So that's very exciting. We're seeing more experimentation
around the country, not only at the state level but also in
certain cities and counties. So if you'll go out and spread
the word we’ll get some more.
This is obviously a zero-based approach, but it's a different
approach and it'll be interesting to see how it plays out.
MALE VOICE:
I think many mayors have complained about the fact that the
state governments inhibit their ability to get things done
within the cities. I don't know if that's a problem in Iowa.
It is certainly a problem in New York. And I've heard rumors
that even in Indiana it's been a problem.
MR. CHRISINGER:
You know, it is a problem in Iowa. And another project we
undertook that didn't work very well was essentially along
the same lines as charter agencies. We know this problem existed
between local government and state government, so we tried
to set up the same kind of deal. We said, because this was
the third year of the budget cuts and it was very clear that
the local governments, who hadn't taken a hit yet, were going
to take a hit in the amount of local aid that was passed to
them. They were going to take a hit. They didn't want to admit
it, but they were. So we said, instead of just taking the
hit let's try to get them something for it. So we went to
the legislature with a package like that; this amount of cuts,
this amount of freedom. And by the time the legislature got
done with it the cuts had gone up to here and the freedoms
had gone to practically zero. So they are very unhappy about
reinvention. Local governments perceive reinvention in Iowa
as this horrible debacle. I think that was an area where it
didn’t work because the legislature didn't buy it.
FEMALE VOICE:
Given the population issue in Iowa, what are you doing about
healthcare costs?
MR. CHRISINGER:
Well so far our healthcare costs are not eating us as badly
as they are in a lot of other states. Our Medicaid costs are
only about 18% of our budget, which is several points lower
than in most states. I think we've been very aggressive. And
the Iowa Medicaid Enterprise has been pretty effective and
we're still trying to expand services. So far we feel like
we’re doing okay with that battle but I think there's
more to come. And I think we're going to have to keep after
that. But again, charter agency authority gives them a little
more freedom and a little more confidence that they have the
tools to deal with it and that's what I think is important.
FEMALE VOICE:
Could you talk a little bit about the ways that you're measuring
performance? Whether the agencies themselves are free to determine
on their own what their performance measurements are? Whether
you as the sponsor of this program are overseeing and therefore
becoming a new oversight agency in terms of the reporting?
Who determines what is worth reporting and who checks that
the reports are accurate?
MR. CHRISINGER:
Our measurement framework begins with a performance agreement.
The department director on one hand, and governor and lieutenant
governor on the other hand, negotiate a performance agreement
annually. And there are some boilerplate kinds of stuff on
there. But then there are the measurable performance expectations.
Those are the ones that also form the core of what we would
call the charter agency agreement, because we have a performance
agreement with each charter agency. But we want those aligned
so the key performance measures are the same generally as
they are for charter agencies. And then we try to work down
from there. We have a quarterly meeting with the governor
and lieutenant governor and we do them in teams by general
policy area. They sit down and we project the Results Iowa
website up on the screen. People are sitting in a semicircle
around it and discuss the new data. How are we doing? What's
going well? What do we need to do to improve? So that's the
way our system works. Those key performance measures are negotiated.
We want their input. We don't want to just dictate to them.
On the other hand, we don't want to just blindly accept what
they give us. So there has to be some give and take there.
And we're continuing to work on improving these measures.
I don't think we're totally there yet and that's okay.
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