Blueprint for changing Minnesota government

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Better, faster, cheaper.

This might serve as a motto for the 2011 session.

Over the past several years, lawmakers from both parties have emphasized the need to redesign state government for the 21st century. Judging by the steady trickle of reform bills moving through House committees, this could be the year it happens.

Whether everyone will be satisfied with the end results is another matter.

In the House, the new majority is moving forward with proposals on everything from cutting the number of state workers to consolidating backroom office functions like accounting. Some proposals, like a bill to spur private investment in social services programs, have bipartisan support. Others, like one that would establish a performance pay system for state workers, are seen by many DFLers as an attack on public employees’ collective bargaining rights.

But if there’s one thing both sides agree on, it’s the need for change. The

$5 billion deficit lawmakers are grappling with this year is only the beginning; structural budget gaps are predicted well into the state’s near future. Rep. Paul Marquart (DFL-Dilworth) said budget deficits are likely to be the “new normal” for Minnesota, and lawmakers are going to have to look beyond the traditional tools to fix the problem.

“We can no longer tax our way out of these things, we can no longer cut our way out. We have to look at doing things differently,” he said at a March 7 press conference.

Rep. Keith Downey (R-Edina) sponsors many of the reform bills progressing through House committees. He said legislators and state workers need to embrace the need for a leaner, more efficient state government.

“Everything we’ve done in this legislative session, every bill that I’ve offered, has been a way to intentionally and strategically and in a planful way prepare ourselves for that reality,” he told members of the House State Government Finance Committee.

But when that reality finally comes, what will it look like? Changes already underway in Beltrami County and the Department of Administration offer some clues.

Measuring results

If there is a model for redesigning government, it might be found in Beltrami County.

Four years ago, county officials found themselves in a predicament familiar to state lawmakers: a growing demand for services and not enough funding to provide them. But with the county’s relatively small tax capacity already stretched thin, they decided raising new revenues wasn’t an option.

Instead, they began a transformation into what County Administrator Tony Murphy calls “outcome-based government.” Rather than focus on funding services and programs, county officials began to ask how they can achieve the desired end results. The difference might sound slight, but it requires a dramatic rethinking of how services are provided.

“You have to go back and kind of ask the fundamental question again: What is it that we’re really trying to accomplish here?” Murphy said.

Murphy discovered that many county employees believed that their primary customers were not county residents, but rather state regulators. Their goals were not to ensure that county services produced good results, but rather to spend as much money and serve as many people as possible.

They began to change all that. Murphy and his colleagues began developing quantifiable goals they could use to measure their success. They began forcing different departments to coordinate with each other and combine their efforts. For the first time, they asked questions like, “How can we help families on welfare find a way out of poverty?” and “How can we make sure people who go through chemical dependency treatment stay sober?”

The results speak for themselves. Four years into their experiment, Murphy said they’re providing more effective services with 13 percent fewer employees; they’ve also cut property taxes and replenished their budget reserves.

To some, the notion of measuring results and tracking outcomes might seem obvious. But according to Murphy, it’s not the way government was designed.

“We weren’t asked to deliver results; we were asked to deliver services,” he said.

The county’s move to outcome-based government is still in its infancy, according to Murphy. Other counties are undertaking similar efforts, but they’re all running up against a big obstacle: the state. Since most of what counties do is carry out state-mandated services, Murphy said state statutes and rules don’t allow counties flexibility to innovate and try new approaches.

“We’ve got to get some new ideas into the pike, and the only way to do that is to take off some of the shackles, remove some of the barriers to innovation,” he said, adding that his and other counties are developing a list of proposed legislative changes that they will submit to lawmakers.

Finding inefficiencies

Beltrami County isn’t the only government trying to innovate. Officials from the Department of Administration have launched their own effort to eliminate waste and inefficiency in government. To do it, they’re enlisting the help of people most familiar with the inefficiencies in the system: the employees.

Tom Baumann, manager of the department’s Office of Enterprise Continuous Improvement, coordinates the state’s Enterprise Lean program. Launched in 2007, the program focuses on breaking down government processes and making them more efficient. Executive branch employees are brought together for “kaizen events” – a Japanese term meaning “improvement” – in which they work cooperatively to identify outdated, overly complex processes and simplify them. Bauman said the power of the program is in its reliance on workers.

“In a lot of ways, senior leaders really don’t understand where the improvement opportunities lie,” he said.

Enterprise Lean is particularly useful for streamlining processes that involve a lot of paperwork and multiple layers of bureaucracy. At one recent kaizen event, Revenue Department employees identified processes by which they could decrease their amount of mail returned by the U.S. Postal Service by 5 percent to 6 percent – a potential savings of $800,000 to the state.

Such incremental changes aren’t going to solve the state’s $5 billion budget shortfall this year, but over time they will accumulate and lead to better, more accountable government. Many of the reform bills in the House recognize the need to engage state employees in redesign. Rep. King Banaian (R-St. Cloud), who sponsors a bill that would require the state to use zero-based budgeting, said mid-level managers know best where to find the savings in government.

For some DFLers, the question is not whether state workers will be engaged in reforming government, it’s how they will be engaged. Rep. Kerry Gauthier (DFL-Duluth) criticized some of the Republicans’ more controversial reform plans at the March 9 House State Government Finance Committee meeting.

“We have sat here for two months and heard time after time that we have the leanest workforce, that the workforce is underpaid … and yet we come with bills with pay cuts, and contracting out and outsourcing,” he said.

But Downey argues proposals to change the way employees are compensated and spur new methods of delivering state services will ultimately be good for employees as well as taxpayers.

“This is about empowering people and valuing people – not the structures, not the organization, not the processes that we’ve locked them into,” he said.