Category Archives: Efficiency in government

Petersburg Now Has a Plan. Does It Have the Will?

Robert Bobb, of the Robert Bobb Group, outlines a five-year financial plan for Petersburg.

The Robert Bobb Group, a consulting firm hired to straighten out the city of Petersburg’s finances, has outlined a five-year plan to keep the city on the fiscal straight and narrow. Among the 15 recommendations is creation of a Financial Advisory Board tasked to make monthly reports on the budget and ensure that financial policies and procedures are being followed, reports the Progress-Index.

The board, comprised of individuals credentialed in finance and accounting, along with a newly created position of Internal Auditor, would give City Council independent insight into what’s happening in city government.

The Bobb Group report also recommended selling the city water system’s excess water capacity or privatizing the utility entirely, and disposing of parcels of city-owned real estate properties, including the Petersburg Hotel and the old Ramada Inn. Converting those properties to cash would help rebuild the city’s fund balance, which currently stands at negative $7.7 million.

The city, which experienced a $12 million budget gap last year and faced $19 million in unpaid bills, narrowly averted a default on its debt. The Bobb Group,  which assumed extraordinary budget powers in a $520,000 contract, rescued the city from insolvency. Among other contributions, the firm claims to have identified more than $10 million in savings and avoided costs. But its contract has expired, the consultants are leaving, and City Council and the apparatus of city government are on their own again.

In their parting report, the Bobb Group listed steps that Council “must take” to keep finances on track. The consultants’ report urged the city to “continue to develop solid financial and business policies, practices and procedures.”

Changing the culture of city government will be easier said than done. A recently released forensic audit of city finances found extensive evidence of abuse of city money and resources in the run-up to fiscal disaster. Reports the Progress-Index in a separate article: “Included in these allegations of misconduct are: misappropriations of fuel for city vehicles, falsification of overtime hours, vacation/sick leave abuse, use of city property for personal gain including lawn mowers and vehicles for travel, excessive or lavish gifts from vendors, and questionable hiring practices.”

“The perception that employees had was that the ethical tone had not been good for quite some time,” said chief auditor John Hanson. “The culture led employees to do things they might not otherwise do.”

How to Dismantle the Poverty-Industrial Complex

Marland Buckner

Marland Buckner

Richmond’s new mayor is young, energetic and bursting with ideas. At 36 years old, the James Madison University-educated Levar Stoney represents a new generation of African-American political leadership. He has one foot in the minority community and one in the creative class. His top priority to date has been to restore competence to a city administration plagued by corruption and ineptitude. Now there are signs that he may entertain refreshing ways of thinking about how to deal with poverty.

The traditional Democrat Party urban machine approach has been to spend more money on all manner of government “programs” and “urban renewal” projects that over the years have done little to reverse the scourge of inter-generational poverty and despair. Judging by an op-ed in today’s Richmond Times-Dispatch by Marland Buckner, who served on Stoney’s transition team, City Hall may be open to rethinking that paradigm.

Buckner, co-founder of MB² Solutions, a public policy strategy firm, writes of a “poverty-industrial complex” that encompasses the public housing sector, public schools, and the criminal justice system. It’s not clear exactly how he thinks these institutions have failed the poor, but he advocates four strategies that can help dismantle it.

Evidence-based decision-making. “Evidence-based decision-making,” writes Buckner, “means embracing the tough, costly work associated with evaluating city programs. This is turn requires technology tools and training to ensure that city employees can generate actionable intelligence for decision makers.” Unfortunately, he adds, the city administration is equipped with “technology firmly planted in the 20th century.”

Anti-poverty market research. “Businesses rarely succeed by failing to pay attention to customers,” Buckner says. “The same holds true in anti-poverty policy making. When well-intended programs are built without sufficient attention to what people seeking to lift themselves from poverty actually need, results fall short and disappointment abounds.”

Regional anti-poverty commitments. The Richmond region should pursue anti-poverty programs on a regional basis.

Impact investing. “We cannot tax, spend, or cut our way to helping households achieve self-sufficiency.” Tackling poverty, Buckner says, “demands policy innovation beyond simply asking, “which taxes do we raise or what services must be cut?” He sees impact investing as an alternative — using private dollars to fund social programs that, if successful, create economic value.

The idea of impact investing is appealing, but I would like to see more concrete examples. The only ones that come immediately to mind are not terribly encouraging, such as the privatization of public housing projects by non-profit entities. Still, Buckner is thinking differently, rather than wedding himself to a failed status quo.

Of the four strategies, evidence-based decision-making strikes me as the most important. A couple of weeks ago, I highlighted an example of how the Richmond city jail is using social-scientific analysis to guide its implementation of programs to reduce recidivism. If Stoney accomplishes just two things — restoring competent financial management to city government and instituting evidence-based decision-making — his tenure will be a success. Hopefully, Marland Buckner still has the mayor’s ear.

Study Expects More Productivity from Higher Ed

miller_center_higher_ed

Miller Center report on higher ed is business as usual with a twist — calls for increased productivity and low-cost approaches to delivering education.

A new report by the National Commission on Financing 21st Century Education, an initiative of the University of Virginia’s Miller Center, contains some pleasant surprises.

I was expecting the worst: a call for mo’ money from the federal government, state government, and probably the private sector, too. You know the logic: There’s no problem in higher ed that more resources won’t fix.

Indeed, the executive summary of “Investing in the Future: Sharing Responsibility for Higher Education Attainment” unfolded largely as expected in the first two of nine recommendations:

  • Increase federal and institutional support. Mo’ money!
  • Enhance state revenue to support higher education. Even mo’ money!

Then, lo and behold, I came to Recommendation Three: “Stimulate the development and implementation of low cost education delivery models.” That sounded promising. Lower cost models are exactly what higher ed needs. The report elaborates:

New approaches alter or supplement the traditional approach in one or more of the following ways:

• They eliminate the uniform pace of learning and replace it with individually paced instruction.

• They provide alternatives to classroom-based instruction.

• They offer opportunities to work and apply skills while learning.

• They award credentials based on students acquiring and demonstrating specific skills rather than completing a set number of credits. In addition, some new models use data analytics to design support tactics to help students successfully navigate and complete their education.

Recommendation Four was even more encouraging: “Encourage productivity in the postsecondary system.” You don’t often hear the word “productivity” uttered in association with the words “higher ed.”

“Higher education productivity” refers to the number of degrees conferred per dollar of spending. The Commission believes that most public institutions can improve their productivity and graduate more students while lowering or holding steady the cost per degree. We think that a reasonable goal for most colleges and universities is to increase productivity by at least 1.5 percent per year over the next decade to yield an average annual savings of $5 million from all public institutions between 2017 and 2025.

Specifically, states should (1) reward colleges and universities that increase productivity; (2) negotiate tailored productivity agreements with individual colleges and universities, and (3) provide competitive grants to institutions to help them build data systems that track student readiness and performance.

Recommendation Five recommended creating incentives for students to graduate on time. One common sense idea was to reform financial aid policies to enable students to take courses in the summer.

There’s more to the report, mostly suggestions on how to find more money and how to help low-income kids. All told, it’s thin gruel for those who, like me, regard higher education as an institution geared to exploit America’s middle class. While many of the report’s ideas are worthwhile, college and universities have little reason to implement them. It’s much easier to pass on higher costs than transform the organizational culture. Still, the study does make clear that there are alternatives to Business As Usual.

A Public Sector Success Story

Image credit: Motorola Solutions

Image credit: Motorola Solutions

When Richmond-area jurisdictions decided to collaborate in purchasing a region-wide radio communications system for police, fire and rescue, the project was estimated to cost about $165 million — with a chance of overruns. The final price tag: $114.7 million.

Henrico County led the procurement effort, leveraging “group pricing” with other jurisdictions to negotiate a lower cost from Motorola Solutions, according to the Richmond Times-Dispatch. 

It is encouraging to see examples of government run competently and efficiently. In this instance, taxpayers benefited to the tune of about $50 million.

At the risk of sounding like a broken record… government should focus on a few core functions and do them exceptionally well. Fire, police and rescue are a core government function. Henrico, Chesterfield and Hanover counties along with the cities of Richmond and Colonial Heights handled the procurement of this critical infrastructure exceptionally well. Let them serve as an example for others to emulate.

Medicaid, the Blob that Ate the Budget

Medicaid, the blob that ate the budget

The Medicaid blob swallows all in its path.

Details on that runaway Medicaid budget…

Spending per Medicaid enrollee has been relatively flat the past five years, having increased less than 0.4% annually (adjusted for inflation) between FY 2011 and FY 2015. The cost driver has been enrollment, which increased 16.5% over the same period, according to a Joint Legislative Audit and Review Commission (JLARC) report, “Managing Spending in Virginia’s Medicaid Program.”

JLARC summarizes the consequences for Virginia’s General Fund budget:

Medicaid general fund spending has grown by an average of 8.9 percent annually over the past 10 years, while total general fund spending increased by just 1.3 percent. Medicaid spending comprised 22 percent of the general fund budget in FY16, increasing from 14 percent in FY07.

Chart source: JLARC

Chart source: JLARC

No wonder the Commonwealth can’t afford to give employees a pay raise and shore up their pension benefits (see previous post).

But there is potentially good news. The state still has room to squeeze costs by as much as $40 million per year.

In FY16, Virginia could have saved $17–36 million by not paying [Managed Care Organizations] for the inefficient provision of services. [Medicaid] also does not adjust administrative spending for enrollment increases, and these adjustments would have reduced spending by as much as $8 million in FY16.

Feds Spend $80 Billion a Year on IT to Maintain Status Quo

is_it_worth_itThe IT revolution has transformed the private sector with radical business models seen in companies as diverse as Amazon, Facebook and Uber. But government keeps plugging along, doing the same thing the same way, just a little more efficiently. Says a new report, “Transforming Government Through Technology” published by ACT-IAC and the Institute for Innovation:

Despite spending over $80 billion annually on information technology, most federal agencies have seen little change in how they perform their work or interact and transact with citizens, businesses, and other governments. Where change has happened, it has typically been the automation of current processes or providing information through websites. The lack of change is caused by federal laws, processes, and culture that inhibit or even penalize risk taking, change, and innovation.

Although there have been tentative efforts to open up state data for the private sector to do creative things with, I suspect that the critique applies equally to the Commonwealth of Virginia’s use of information technology.

The paper offers seven major recommendations: Allow agencies to attract a high-performance workforce; reward success; focus on the customer, not the agency; and deal seriously with cyber-security; among others. Sadly, the cultural transformation is too profound for anyone to think that these recommendations, as well meaning as they are, will go anywhere.

— JAB