Reinventing Government, a failure or a lesson learned?
September 6, 2016
In the latest issue of Governing Magazine, John Buntin asks, “25 Years Later, What Happened to ‘Reinventing Government’?” Reading his thorough analysis triggered several thoughts I want to explore.
John discusses how many people see performance-based and zero-based budgeting as ways to start with a clean slate and focus the budget process on desired results. He explains how many contrast this movement favorably with traditional approaches where total prior year costs were used with only incremental changes. Preserving existing programs was more valued than focusing on new priorities and trying ideas. However, in my experience, many of these new budget approaches feel more like passing fads than solid theoretical constructs.
Zero-based budgeting is a “pure” concept that, in my view, is not practical in the real world. Asking an entire government team to do fresh calculations for every account on the books flies in the face of time and resource constraints, budget deadlines, and other important priorities. 70 to 80 percent of operating costs directly relate to personnel. Staff have civil service protection from unreasonable changes in work rules, labor units actively negotiate for pay and benefits resulting in binding contracts, and these units have professional skills that must be acknowledged in compensation decisions.
More than once, I have explained to activists and others that it is very easy to save money in government – simply stop providing services. The only problem is governments exist precisely to provide services that the citizens want and are willing to pay for. Government services require people. The machines have not yet totally displaced the police officer, librarian, recreation leader, and landscaper. It is not rational to consider zero-basing the police department or the sewer plant, and it is usually a waste of time to go through the exercise.
Performance-based budgeting (“PBB”) may have value in large complex systems, but it is somewhat a red herring at the local level. Priorities are valuable; setting measurable goals and evaluating performance against them are important planning and management tools.
PBB takes a long step past those markers. Building a budget on PBB principles is very close to ZBB in closing out existing spending plans. Then it makes teams rebuild their work plans based on the relationship between funding levels and outcomes. There are endless papers written, and systems designed to direct governments through the complex processes of establishing performance measures, tracking them, associating costs with measures, and evaluating the results.
There is a certain dissonance in focus between these highly analytical and theoretical approaches and the actual results local governments seek to achieve for their communities. Government work is largely done in the field by skilled, hands-on, practical, and pragmatic people. They are used to achieving direct physical results: putting out the fire, preparing the softball field for the youth league, or clearing the storm drain. Tomorrow they will come in and do it again.
Great government managers from the executive office to the front-line supervisor are often working managers who use management-by-walking-around techniques and judge results by years of experience and applied common sense. Often the true range of options in budgeting activities the public needs done is relatively limited and has been well considered over the years.
The U.S. Post Office offers a good example of budgeting and service delivery in public vs. private organizations. Sometimes I think about how frustrating it must be for Postal Service managers: the mail gets delivered six days a week to every address in the country, for less than 50 cents an envelope (far less for bulk mailings). But thanks to rather bizarre legislation, they are the only organization in or out of government that has to recognize and fund long-term pension liabilities with current receipts, making the Post Office appear financially mismanaged and starving it of the funds needed to modernize and improve operations. In contrast, private services charge several dollars per delivery and do not have to deliver to every address. So which is actually the better deal for the public?
John makes the point that it has proven difficult to make complex management systems work consistently over the long term in budgeting and performance management. I would like to offer the idea that maybe simpler approaches to both issues are more workable and easier to live with. My thesis is that many of the issues these systems seek to solve are largely problems of data visibility.
During my career, I have encountered few individuals and fewer managers who do not desire to do good work, to use public resources wisely, or to operate efficiently. However, I have run into many managers who are left to work in dark by the lack of easily accessible tools in their accounting and management systems. Simply providing better transparency into the costs of services and the outputs and outcomes delivered by operating organizations may be the key to self-directed, flexible, and sustainable improvements in every area of government.
Managers are not unsophisticated about workplace dynamics or unwilling to make changes to improve the quality and quantity of the their work. They just need the tools. Famous management thinker Peter Drucker is often quoted as saying that “you can’t manage what you can’t measure.” Success is directly related to visible and measurable outcomes and costs.
Mike McCann moved into government service in Ukiah, then Monterey CA, after beginning his career in corporate (ADP, Wells Fargo Bank, Blue Shield of CA), not-for-profit (Blue Shield of Ca, Mendocino Private Industry Council), and start-up accounting. For the last 20 years, Mike has been hands-on with budget, financial reporting and accounting operations, including City budgets and CAFRs. He holds a B.S. in Accounting from SJSU and M.S. in Instructional Technology from CSUMB.
Category: Government Finance