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Thursday, October 29, 2009

State Budget Cutback Frenzy Ignores Performance

By Charles W. Johnson
President, The Johnson Strategy Group, Inc.
      “Off with their heads” ordered the Queen of Hearts in Alice in Wonderland and now state and local governments are using the same technique to balance public budgets with across-the-board spending cuts that ignore the needs, priorities or performance of public services and programs.
       Unfortunately for taxpayers and citizens, “off with their heads” (or percentages of the head) is a mindless way out with no consideration of performance, value, or impact. It assumes that every program or service performs at the same level. It doesn't address the root causes of our problems, such as:
       n Trying to be everything to everybody by addressing all special interest group demands, while failing to distinguish essential from non-essential services. This is “government by the people, for the people, and what everyone wants.”
       n Treating government as an employment program instead of an investment in essential services. In this case, the “culture of entitlement” trumps the “culture of performance”.
       n Focusing on the amount of money available to be spent (the input) while failing to understand the quality, efficiency or outcome of services performed (the output).
       â–  Failing to address accountability in terms of formal, high-visibility performance benchmarks and tracking systems.
       â–  Eating the seed corn in times of plenty and failing to set aside enough for lean times.
       There are other budget cutting methods that also ignore the performance of public programs, including:
       1. Cutting Everything But Jobs, also known as the “we are family” budget cutback approach. It saves the most jobs, but leaves the staff without the tools to do their jobs, and it doesn't change expected levels of service.
       2. Shifting Costs. This shell game moves money meant for one purpose, such as capital improvements, to balance budgets in another area, such as the operating budget. This is usually accompanied by deferred maintenance that reduces the efficiency and useful life of valuable equipment and buildings.
       3. Cutting the Fat. This “Slim Fast” approach belies the facts that policymakers — regardless of party or philosophy — approved the fat in previous budget years, cannot come up with an operational definition of fat — one person's fat is another's U.S. political prime — and the fat may be lurking up and down the organization.
       4. Hold Harmless. This approach protects “sacred cow” services, programs, or projects without regard to performance, needs, legal requirements or measurable financial returns.
       5. Consolidating Programs and Functions. “Realignments” are government's equivalent of mergers and acquisitions. And just like the private sector, the alignments improve efficiency without improving quality, and the ill-conceived reorganizations are often no more effective than rearranging deck chairs on the Titanic.
       In 35 years as a planning and budgeting consultant to public and private sectors, I have witnessed variations on all of these. Unfortunately, these are too often done in a stopgap or crisis mode at the 11th hour. We are now facing the reality of managing the economic downslope. In New Mexico, shortsighted decisions and policies during times of economic growth on the uphill climb have paved the way for a wild ride on the downslope, playing on the margins of cutback approaches without addressing how the core of state and local government programs and services perform.
       I believe we are focusing on the dollars without paying attention to performance. If the governor, legislators, county commissioners and city councils don't realize that the performance “deficit” is as important as the fiscal “deficit” we will find that each budget year will be, in the words of Yogi Berra, “déjà vu all over again.”
       Charles W. Johnson has served as a planning and budgeting consultant for organizations ranging from the Office of Management and Budget of the White House to local jurisdictions throughout the United States, including the city of Albuquerque and Albuquerque Public Schools.
       

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