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Forum: Pennsylvania makes the grade Can you handle good news about Pennsylvania? Paul R. Flora examines the high marks that state government received in a nationwide study - and points to areas for improvement Sunday, March 21, 1999
Pennsylvania's citizens are conditioned to hearing - and unleashing - ceaseless criticism of state government, generated by pothole-plagued highways and Harrisburg shenanigans. That Pennsylvania's government actually may be managed well is a perception harbored by few.
But now the grades are in from a respected observer of state and local government, Governing magazine. Pennsylvania managed a surprising and respectable B for how well it performed in five areas of government management. In contrast, only five states received a better grade, 12 others received the same and 33 states fared worse.
The February issue of Governing - the professional journal for state and local government managers - reports these results from its two-year joint effort with researchers from Syracuse University's Maxwell School of Citizenship and Public Affairs.
The study was no mere checklist. It involved securing comprehensive answers to 35 questions, many of which only a policy junkie could love ("Is there a multiyear perspective on budgeting and the future fiscal impact of state actions?").
Probing for a thorough understanding to complete a fair evaluation of each state's management practices entailed face-to-face interviews of state personnel, auditors, controllers, citizen groups and rating agencies.
The researchers admit that any such process is difficult, "a mixture of science and art," and don't claim the grading is perfect. Jerry Feaser, a spokesman for Gov. Ridge affirmed that view, saying state officials were generally pleased with Pennsylvania's scores which were above the national average in every category, but had fundamental differences of opinion on certain issues. In particular, they felt that aspects of Gov. Ridge's initiative in tackling the Y2K problem and other information technology issues deserved more credit.
Yet an ongoing pursuit of achieving and maintaining an A-grade status, as innovators in state management, is Pennsylvania's best hope of creating an internal working environment by which public employees can finally fix many of the state's real and perceived problems, including potholes.
So with that open-minded attitude, here are Pennsylvania's results and some ideas gleaned from the grade-A states on how the state might improve.
Financial Management: The fiscal distress experienced by states during the last national economic recession spurred prudent financial reforms and continues to inform budget decisions in most states today. Pennsylvania was one of eight states that earned an A- for their recent investments in disciplined financial practices.
Pennsylvania was praised for prudent budgeting with conservative revenue forecasts and realistic expenditure estimates. Strong cash management practices have earned competitive yields and the state's major pensions are currently overfunded.
Pennsylvania also received credit for progress on growing its "rainy day fund" - surpluses held in reserve for recessionary periods which often trigger budget deficits. But the fund still lags other states.
Virginia and Utah earned top A grades by exercising more public accountability, more thorough analysis and greater flexibility. Innovations from these states, included issuing fiscal notes, or attaching fiscal impact statements to proposed legislation; giving agency heads flexibility to move money between line items; producing projections of future matching dollars needed to garner federal funds and using cost-accounting tools that reveal per unit costs of delivering government services. Next year, Utah's fiscal notes will also estimate legislation's impact on the private sector.
Capital Management: Sound planning for future capital outlays and attention to current maintenance needs that can prevent future capital expenditures takes political integrity and open, honest accounting and prioritizing. In its worst relative score, given 16 states earned higher grades, Pennsylvania rated a B for capital management. Top A-grades were rewarded to Virginia, Missouri, Utah and Washington.
Pennsylvania lacks the information system to monitor spending on routine maintenance, but budget authorities argued that their biennial survey of buildings have revealed no problems from deferring maintenance expenditures.
More problematic is the state's capital budget process, both peculiar and promiscuous, in that the political machinations of the General Assembly create an enormous wish list, stuffed with projects that will never get built. Since 1968, over $30 billion of projects has been authorized in state capital budgets, but only $9 billion has been appropriated. Well-intentioned projects costing over $20 billion remain largely forgotten; most were never a priority, but merely represented lip-service to some constituency.
Taking a longer view encourages legislators to be both more responsible and more visionary. And it earns high marks. Virginia prepares a six-year capital budget, updated every two years; Washington state's peers forward 10 years.
Both Virginia and Missouri divert some general revenues into a maintenance reserve fund; Virginia agencies must submit annual plans with maintenance needs, progress reports and priorities for their active work. Being proactive about routine maintenance - like a homeowner patching leaking roofs - helps prevent much larger capital spending on major repairs.
Human Resources: The research team emphasized the importance of personnel: Payrolls are the largest part of a state's budget; well-trained employees are critical to project success and human encounters between state employees and the public shape fundamental impressions of the quality, efficiency and responsiveness of state government.
A well-trained work force with the flexibility to adapt to changing practices and service needs is the goal. Centralized statewide personnel information, streamlined hiring procedures, aggressive training and retraining efforts, incentive pay programs and a reduction of myriad, specialized job titles to a few broad, flexible categories are the methods. And Civil Service regulations, unions, outdated management styles and an intransigent culture are the barriers to progressive change.
Governing magazine awarded Pennsylvania a B (for barriers?). South Carolina received an A- to lead the other seven states that were heads above Pennsylvania.
Pennsylvania remains saddled with too many job titles, after a failed effort 10 years ago to consolidate some 3,000 categories. Overabundant, too-narrow job titles plague large bureaucracies, like state governments, with the same inflexibility with which union rules burden factories. Productivity can stall while waiting for, and arranging for, staff with the correct job description to change a light bulb.
Critical note was also made of a lack of central work force planning and pay schedules based on pay grade and longevity, rather than performance.
To its credit, Pennsylvania is whittling away job titles on a continuous review basis and frequent communication helps the central personnel office respond to disparate agency needs. An emphasis on job retraining was also noted as a strong point.
Managing for Results: Like outcome-based education, this category has its detractors who denigrate the need and the motives of the process, or who find it too touchy-feely to work. But states with strong-governor systems can produce results. If they're not ignored, the measures guide management and legislative decisions with factual information, rather than ideologically based beliefs.
Given a tendency to ignore actual outcomes, Pennsylvania received its lowest mark, a B- as an outcome. Virginia and Missouri, each earning a grade of A-, were among 13 states with higher marks.
A 25-year history of performance measurement counted for something in Pennsylvania's score, but the team's researchers assert the state has been relying on outputs, rather than outcomes, as its measure for success.
What the difference is between outputs and outcomes - and why it is important - is rather esoteric. Output measures are often ambiguous. If Pennsylvania increases the number of enforcement actions against industrial polluters, does it indicate a more effective state crackdown on violators, or does it reflect growth of polluters, and of pollution? Outcome measures would gauge changes in actual emissions and pollution levels, and attempt to relate them to the relevant government strategies.
Governing's assessment notes that strategic planning is limited in Pennsylvania; the governor's budget includes a mission statement and several broad goals, but neither statewide, nor department level planning is required.
In Virginia, which monitors 514 outcomes, new funding requests must identify expected outcomes and target goals. And legislative decisions are more informed when, for example, they can cite comparative recidivism rates for the methods used to deal with troubled teens ranging from probation to boot camps.
Information Technology: Rapid technology shifts make sound management of information systems a moving target. Still, Pennsylvania tagged a B, bested by only four other states, lead by Washington and Virginia with scores of A and A-, respectively.
Credit Pennsylvania for requiring agencies to submit cost-benefit analysis and performance measures for investments in excess of $20,000 for information technology. They are subsequently audited and must perform, else risk losing future funds. Educational initiatives, like the Link to Learn program, and a push to ensure Y2K-compliance, were also recognized as strengths in Pennsylvania.
As in other areas, Pennsylvania lacks an overall strategic plan, but supports the development of individual agency plans and sets some goals for agencies to meet.
In the Pacific Northwest, bastion of Microsoft and other things high-tech, Washington is blazing a trail with its centralized Performance Measure Tracking System, in which agencies track progress against their own standards, and by requiring its Department of Information Services to compete with the private sector.
Project funding in Washington is rarely guaranteed beyond two years without evidence of success, and future project approvals stand or fall on the basis of how the effort fits within a portfolio of technologies, rather than its individual approach to a specific problem.
Closer to home, Virginia's appointed chief information officer is responsible for economic development efforts aimed at attracting technology companies, as well as coordinating a highly centralized information technology system.
If Pennsylvania goes to school on these other states' innovative practices, state leaders can aspire to bask in the recognition of becoming a leading innovator in the future. And state residents will certainly reap the benefits of receiving finely targeted quality services - even fewer potholes - delivered with lower taxes.
Stay tuned. Governing magazine will grade again in two years and undertake a similar project next year for the nation's largest cities.
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