Government Streamlining Commissions: A Methodology for Measuring Effectiveness

Emily Washington, Carmine Scavo | Oct 15, 2012

Abstract

This paper proposes a methodology for evaluating the operation and success of state government streamlining commissions. These commissions—typically appointed by governors or state legislatures—became increasingly popular in the last decade as a way to identify potential savings in state government by reducing redundancies and increasing efficiencies in state spending. Such changes contribute to creating a more business-friendly environment in states resulting in increased state competitiveness in economic development.

The paper proposes a series of case studies conducted on a subset of nine of the thirty one states in which streamlining commissions are currently active. Qualitative analysis is being conducted to determine the degree of success that the commissions have had based on commission structure. A series of hypotheses about the relationship between commission structure and success is introduced and discussed.

Introduction

Efficiency is one of the core values in public administration.[1] Achieving policy goals with minimum resources has been emphasized in the public administration literature since the founding of the discipline. This is based on the principle that lawmakers must work toward their objectives in a world of budget and debt constraints. Most recently, as resources have dwindled and demands have grown, U.S. states have been sorely tested in this regard.

The financial impacts of the Great Recession of 2008–2009 on state governments do not need to be recounted in detail here. Suffice it to say that these impacts are much more profound and longer in duration than previous recessions. The National Governor’s Association sums this up: “State revenues . . . may not reach 2008 levels until late in fiscal 2012, at the earliest. . . . [S]tate budgets may not fully recover until near the end of the decade.”[2] Larger than this, this deep recession represented a fiscal shock for many states—an event that focused state policymaker attention on the broader issues of states’ general fiscal health and the policy areas in which state governments were spending money.[3] In this respect, the 2008–2009 recession was different from earlier recessions. When the 2000–2001 recession ended, states tended to “return to normalcy” in their spending patterns. Many increased expenditures in policy areas such as homeland security and emergency management, healthcare, and K–12 and higher education; some of these increases were mandated by the federal government, others were voluntarily adopted by states. Direct spending by state governments varied between 7 and 8 percent of GDP in the 1990s. It began the 2000–2010 decade at 7.6 percent of GDP, increasing until 2003, then hovering at around 8.5 percent until 2008 when direct spending began to increase dramatically, peaking at just above 10 percent in 2010.[4] Unlike the federal government, however, all states except Vermont must balance their budgets, meaning either new sources of revenue need to be located or budget reductions need to be undertaken. 5

During the recession of 2008–2009, the American Recovery and Reinvestment Act shored up state budgets as tax revenues dipped. These federal transfer payments began drying up in 2011. Since then, states have faced difficult tradeoffs as demand for public services has increased in the face of lowered state revenue. Specifically, some programs like Medicaid and retiree benefits are increasing faster than many states’ tax bases are likely to grow. As Eric Scorsone and Christina Plerhoples explain, “Government officials are being forced to adapt to an environment where service demands are rising even as both short- and long-term prospects for revenue are among the bleakest in modern history.”[6] Sensing that increasing taxes is both politically unacceptable and economically unsound (as such tax increases may put states at an economic disadvantage vis-à-vis other states), state policymakers are turning to innovative solutions to maintain government spending and services given fewer resources. Additionally, all states are looking for the best ways to attract investment for private sector growth.

Government streamlining commissions are one source for identifying potential savings and policy improvements. While the specific objectives of these commissions vary from state to state, their general purpose is to improve government, providing constituents with improved services at decreased costs. Governors or state legislators may appoint streamlining commissions to find opportunities for savings in state budgets to operate state programs more efficiently. Further, streamlining commissions can work to make the regulatory climate friendlier for business to improve the state’s competitiveness and improve transparency. Commission members typically include both public and private sector workers and craft recommendations for lawmakers with the objective of seeing these through to policy changes. Our paper will seek to examine both the overall success of streamlining commission efforts as well as the characteristics of commissions that make them most likely to succeed.

Streamlining commissions are part of the long American history of a businesslike approach to government and the search for efficiency in governmental operations. This goes back at least to the Progressive Era in the late 1800s and early 1900s. As historian Mordecai Lee writes, “The holy grail of public-sector efficiency emerging during the Progressive Era continues to dominate the American political lexicon into the twenty-first century.”[7] The more recent intellectual pedigree of streamlining commissions can be traced back to David Osborne and Ted Gaebler’s book, Reinventing Government (REGO), which had dramatic effects on state and local government after its publication in 1992.[8] Richard Kearney and Carmine Scavo write that in the late 1990s REGO, “expanded into a broad, holistic approach to reforming government and public administration through decentralizing administrative authority, downsizing government employment, increasing managerial flexibility, and applying market-based techniques to government service problems.”[9]

State streamlining commissions may also choose to recommend that some services will be provided more effectively and efficiently by the private sector. If programs are identified as inefficient—having not just expensive results but outcomes that are not beneficial to state residents—the commission may recommend that the program be cancelled without expectation that the private sector will pick up service provision. However, that recommendation will most likely be made only after thorough study of different policies and different methods of reducing state expenditures. Streamlining, as it is defined here, is larger than privatization. The elimination of some government programs may mean that some services may not be provided at all, but streamlining commissioners may find this is a desirable outcome in the case of, for example, licensing requirements. As such, streamlining sidesteps the early observation made on privatization by E. S. Savas: “It must always be borne in mind that privatization is more a political than and economic act.”[10]

As Table 1 on page 21 indicates, policymakers in a majority of states have used streamlining commissions in recent years. Maurice McTigue of the Mercatus Center at George Mason University has worked with streamlining commissions in Louisiana and Virginia. Anecdotally, he has observed that these two commissions succeeded both in finding cost savings and helping their respective states achieve more business-friendly policies. While McTigue’s experiences give evidence for the potential success of government streamlining commissions, little previous academic work has examined the factors that determine streamlining commissions’ efficacy. We seek to develop a measure for comparing the success of government streamlining commissions to determine under what circumstances they are a worthwhile use of resources in the effort to maximize the use of tax dollars and to improve states’ competitive standing for attracting business investment and residents. The Council of State Governments recognized some 17 state streamlining commissions operating as of 2012, while the National Governors Association recognized 24. 11 Table 1 lists 34 currently operating or recently concluded streamlining commissions in 31 states.

In order to compare the impacts of government streamlining commissions, we will conduct several case studies and report on them in a forthcoming paper. Each case study will be based on the measurement system that this paper develops, outlining what we see as the primary objectives of streamlining commissions and our evaluation of whether they achieve the objectives they set for themselves. Our framework provides a method for evaluating which commission designs are best-suited to develop effective streamlining recommendations and succeed in seeing these streamlining targets through to policy changes. Commissions can vary across several dimensions, including the number and type of members they have and if they were appointed by the governor or the legislature. Our case studies will shed light on which commission structures are best able to achieve the objectives before them.

Empirical research into the relationship between the size of government and economic growth indicates that nearly all countries and states would experience greater prosperity with somewhat smaller governments.[12] Even given this insight, determining which state programs to cut remains a challenge because the literature does not provide consensus on which aspects of government spending should be reduced.[13] Streamlining commissions will need to develop a vision for their states’ core government functions to determine which government programs remain budgetary priorities given the need to cut spending.

While government streamlining commission members should weigh the theory of what constitutes a core government function in their decision making, they should also seek efficiencies within the set of services currently being provided in their states. Given the ambiguity of what core government functions are, streamlining commissions can achieve clear successes when they identify government objectives that can be achieved at lower costs per unit of success. They are well suited to cut across the silos of state bureaucracies to identify agencies that are working on similar programs. From there, they can determine which programs are succeeding at lower costs and redirect resources accordingly.

It is also clear that states have different “starting points” in their streamlining efforts. A state beginning with a particularly inefficient government service delivery system may be able to achieve much larger streamlining successes than a state beginning with a more efficient system. Therefore, the factors influencing state starting points become somewhat of a focus. For example, compare two hypothetical states—one with a large bureaucracy that enjoys relatively high pay and good retirement benefits with a state with a smaller bureaucracy that is paid relatively less and whose retirement benefits are less generous. One might expect greater improvements toward efficiency to be possible in the first state compared to the second given the less efficient starting point. However, one must also bear in mind how each state arrived at its particular starting point. Questions of the relative power of public sector labor unions, how state law addresses collective bargaining, early state history of labor-management interactions and so on thus become topics of interest, although one must be careful in so expanding the analysis that the only conclusions possible are “each state has its own path.”[14] As such, the use and potential success or failure of streamlining commissions may be path dependent since “where we go next depends not only on where we are now, but also upon where we have been." [15]

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