Implementing a Shared Services Policy

A few weeks ago, the House of Representatives Government Modernization Committee conducted an interim study to explore the possibility of realizing taxpayer savings through the implementation of shared services among agencies.

Several state agencies testified at the interim study about their ongoing efforts to streamline and consolidate services, efforts which they state have not only saved the state money, but have also improved service. The goal of the study was to analyze the best practices at agencies currently sharing similar services and see how those concepts could be exported to other agencies.

The opportunity for savings is significant because routine services can be centralized to a single entity that can be more efficient and effective, all at a lower cost. This frees up the agencies to focus on their core missions.

One of the areas in which these shared services could be implemented is that of payroll processing. The committee heard testimony that there are currently about 114 state employees trained to process payrolls, with about 68 full-time employees dedicated to payroll functions across state agencies. According to an official with the Office of State Finance, centralization of payroll services could save as much as $2.6 million in salary and benefits alone—even more, if higher education is included.

The State Department of Tourism testified that they have already begun participating in the shared services model for payroll. A Tourism Department official said the agency has saved an estimated $40,000 per year by working with the Office of State Finance on centralizing the agency’s payroll. In addition to saving money, this reform has also made it easier for the individual employee to be able to ensure his/her payroll is properly reported in a timely manner.

The shared services model should not be limited to items such as payroll. It could also be expanded to areas such as financial services.

It is important to note that the driver of these reforms is the evolution of technology during the past few years. Without the flexibility offered by recent technological advances, the centralization of service would be difficult, if not impossible. It is vital for legislators to realize the savings that can be realized because of technological advances, and we should take advantage of them as soon as possible. This year, I expect to propose legislation which will create a road map to a more aggressive implementation of the shared services model so taxpayer savings will be realized sooner than later.

I believe that private sector businesses have been engaging in efficient practices along these lines for years and it is time for our state government to catch up.