Monday, September 26, 2011

23 Modernization Initiatives Going Into Law

This year was by far the most successful year for legislative state government modernization reform proposals. In all, 23 significant government modernization initiatives have been identified. Each of this initiatives was considered by either the House Government Modernization standing or conference committee and all were approved by the Legislature and signed into law by the Governor.

These changes are comprehensive and will have a far-reaching effect in monetary savings, creating new transparencies and driving down the cost of state government. The first of these new laws has already gone into effect and the state has already started to experience the savings.

A description of five of these initiatives is as follows:

Online Electronic Payments - An estimated 230,000 of the state’s payments are made through traditional paper transactions. Governor Fallin asked the Legislature to approve a component of House Bill 1086 to transitions the state to an e-commerce payment system. The State Office of State Finance has indicated that by using traditional paper conveyances, the state could be spending up to $13.50 per vendor payment. This compares to electronic payments which costs the state approximately 5¢ per transfer. House Bill 1086 creates a mandate to convert the system to electronic payments. This mandate should save state taxpayers millions of dollars each year. House Bill 1086 contained this, and a number of the other modernization initiatives.

Health Savings Accounts - House Bill 1062 put in place a law to drive down state employee and state agency insurance costs through the implementation of health savings accounts. Very few state employees are enrolling in the state’s free market-oriented health savings accounts, partly because the accounts are post-tax. This provides little incentive to the employee to sign up. House Bill 1062 allows pre-tax enrollment and is a step towards the successful Indiana state employee health insurance plan that stabilized the cost of state employee health insurance. If the Oklahoma HSA program follows the Indiana example, the savings will be significant.

Agency Consolidation - Each year, Oklahoma's non-appropriated state agencies take about $900 million out of the Oklahoma economy. These fees punish businesses and disincentivizes new economic growth. Senate Bill 772 empowers a task force to study consolidation opportunities for these agencies. Consolidation could lessen the burden placed on Oklahoma businesses, incentivize economic growth, and allow the state to benefit from new business activity.

Centralized Online Forms - Oklahoma taxpayers are forced to spend time searching through state agency web pages to find the necessary forms to interact with state government. Some of these forms may not even be available online. House Bill 1086 allows citizens to access state government forms from one location. The Web portal should be searchable by keyword, allowing for the speedy retrieval of forms by number or description.

Reducing State Agency Office Footprint - State agencies can enter into contracts for expensive office space without documenting efforts to use innovate approaches such as telework to reduce the amount of office space needed. House Bill 1086 places a check and balance on the ability of agencies to expand their office footprint by requiring them to certify that they cannot reduce the number of square footage needs through the application of innovative telework approaches. I believe this is an important step in the effort to mandate that state government quit financing new buildings with expensive bond issuances. We need to change the focus of state government to where many of the physical assets of the state are liquidated and the state’s capital infrastructure footprint is greatly reduced.

Next week it is my intent to write about the two big Government Modernization state agency and process consolidation initiatives that are taking effect and will be the target of a Government Modernization interim study on November 10.

Monday, September 19, 2011

Too Many Tuition Increases

Later this month, State Representatives Corey Holland, Leslie Osborn and I, in conjunction with the Oklahoma Council on Public Affairs (OCPA), will conduct a study of the state’s higher education system.

During the past few weeks, OCPA (, and have written a series of articles detailing the spending practices of Oklahoma’s higher education institutions.

The reports have found that nearly all of these organizations have increased spending even during an economic downturn. At a time when government should be downsizing, almost all of these groups are increasing tuition to finance a type of spending arms race with each other and institutions in other states.

Make no mistake, these increases in tuition and spending don’t exist just at the University of Oklahoma, but appear to be institutionalized across the higher education system. For example, a report by OCPA, released in June, shows that in the time period from 2004 to 2009, inflation-adjusted revenues per full time student increased by 40.5% at UCO, 34.3% at ECU and 29.2% at the OSU main campus.

One of the foremost concerns involves the number of professorships that appear to receive an excessive salary when those employees have very limited in-classroom responsibilities.

For instance, I recently attended a meeting with OSU officials. This year, OSU has implemented yet another tuition increase. They point to a well-meaning and aggressive effort to build the size and scope of the university’s research capabilities. The idea is that if the university can bring in enough money through research revenues (such as patent revenue), perhaps they can keep tuition down.

However, my fear is that unless a clear plan is laid out and institutionalized with a definitive time period to channel this revenue into tuition reduction, the temptation to empire build by using both the additional revenues and the student's tuition will be too strong. Worse yet, the mission of the institution risks becoming varied and unfocused. Is the mission of OSU to hire employees to build a patent library or is it to provide an education at an affordable price?

This systems creates two classes of employees. The first is charged with the important responsibility of the classroom teaching environment, while the second may rarely be required to interact with students.

As is the case with so many government entities, the heavy investment in these high paying government jobs may not result in the desired effect. It may pad the state government payroll at the taxpayer and student’s expense. Unlike businesses in the private sector, state-owned universities do not go out of business when they become inefficient. They simply pass on the cost to the taxpayers and students.

In a recent study, Oklahoma State Professor Vance Fried posited that as part of an effort to reduce the cost of college education to $6,700 per year, universities should separate their research and teaching functions. This would avoid placing the bill for the research on the student and allow the research to receive funding based on its own merit.

At the very least, the ability to set tuition should be returned to the Legislature. This would allow Oklahoma's policy makers to serve as a check and balance on higher education’s temptation to empire build and to veer away from its core mission while sending the bill to Oklahoma’s students.

It is my belief that our study will bring attention to this and other concerns.