Monday, October 10, 2011

More About the 2011 Modernization Reforms

I wanted to write just one more article describing some of the reform in this year’s successful Government Modernization legislation. These reforms put into place a comprehensive framework to increase the transparency of state government process, lower the cost of government to the taxpayer, and significantly enhance the ability of the citizen to access government documents and records.

Reducing the need for small business owners to interact with the bureaucracy. Oklahoma business owners must navigate through a series of state bureaucracies to obtain licenses and permits. House Bill 1601 builds on Oklahoma’s existing business one-stop web portal to offer the state’s licensing and permitting from one convenient online location. This means that small business owners should spend less time in line at multiple bureaucracies, and more time building their business and strengthening Oklahoma’s economy.

Placing state documents and reports in a single online location. Countless reports and studies are relegated to state archives, never to be seen again. You may remember from my update two weeks ago that I wrote about the effort to centralize access to state government forms. This reform is similar in that it places reports and studies online where they can be indexed and searched by keyword or term. The transparency impact should be significant. For instance, the 2005/2006 IBM study that was key to reforming the state's purchasing system, had received little attention prior to being discovered by a House interim study in 2007. It appears that prior to the House study, the document had already been shelved and was mostly ignored by the bureaucracy. These types of oversights should occur less frequently when the studies are integrated inside the one-stop documents.ok.gov portal where everyone can see them.

Integrating school district spending data with OpenBooks. During the 2010 legislative session, Oklahoma's local school district transparency data was mandated for online placement. However, the data was placed online through the Department of Education’s site and not co-located with other state spending data. House Bill 1086 co-locates the common education spending data with the state spending data through the OpenBooks web site.

Bringing transparency to state revolving funds. The state maintains a series of revolving funds that are not subject to limitation by fiscal year. The public and state policy officials have limited easy access to the status of these funds. House Bill 1086 mandates the ongoing publication of the fund balances through the data.ok.gov web portal. As with all data.ok.gov data feeds, this data is to be published in a standardized format.

Allowing the public to see the current condition of state Information Technology projects. State officials have the ability to engage in costly IT related projects with little oversight from the public, the press or policy leaders. House Bill 1086 creates a project management platform that is publicly accessible. Project updates must be publicly posted, allowing the public and policy leaders to quickly ascertain when a project experiences a cost or time overrun, or a deterioration in the projected value of project deliverables.

Ending the practice of incentivizing state travel. State employees have been incentivized to travel on the state’s dime because frequent flyer miles awarded for taxpayer-funded travel could be retained for personal use by the employee. The continued use of state travel expenditures during the economic downturn has been especially disturbing. House Bill 1086 develops a policy similar to policies implemented in other states that stops this practice.

Consolidating payroll services. Past testimony before the Government Modernization Committee has described how state government could save about $2 million each year through the consolidation of the state’s payroll system. House Bill 1086 consolidates the state’s payroll processing system into a single offering.

Over the past three weeks I have been able to talk about many of this year’s government modernization reforms. To see a more detailed listing, visit hd31.org/151.

Monday, October 3, 2011

Consolidating State Agencies

Last week I wrote about the large number of modernization initiatives that were approved this year by members of the Government Modernization Committee, the Legislature and Governor. In that article I described a small sampling of these initiatives. These efforts were designed to result in cost savings and greater transparency. In this week’s update I have described House Bill 2140 and House Bill 1304. These two modernizations bills are designed to transform Oklahoma state governance and result in millions of dollars of savings to the taxpayer.

Until passage of House Bill 2140, Oklahoma’s central service functions such as procurement, human resources and financial services were divided into seven different agencies. In some cases, these bureaucracies offered competing shared services services. State employees were forced to navigate a gauntlet of central service bureaucracies to obtain services for their agency. HB 2140 consolidated five of these agencies into one and created a central services one-stop shop for state employees. A multi-million dollar savings mandate was attached to the legislation.

This consolidation should allow the state to focus its policy efforts and yield considerable additional savings to the taxpayer. Here is one example of an absurdity created by the fact that so many agencies overlap on policy. State employee benefits policy has historically been divided between two separate state agencies. This year, one of these state agencies subsidized the state employees’ PPO health care premium costs by using income from that agency’s investments. This means that the employees’ cost for their PPO health plan premium did not increase.

A second state agency awarded HMO contracts that reflected an increase in premium. Because the state employee benefit allowance is tied to a formula that accounts for the price of the HMO plans, the employees' benefit allowance is set to increase.

This means the cost of purchasing health insurance will stay the same for many of the employees who use the PPO plan. This is at time when their benefit allowance is increasing. Many employees already have 100% of their benefits paid for, so the excess allowance will be taken in the form of direct monetary compensation. In other words, state agencies must now pay their employees thousands of dollars in benefit allowance that is not needed to purchase benefits. This is a pay increase without a vote of the Legislature or approval of the employees’ agency-level employers.

House Bill 2104 consolidated both of these agencies, and should put an end to these types of absurd outcomes.

House Bill 1304 consolidates much of Oklahoma state government’s information technology processes. Currently, millions of dollars of information technology spending is segregated across countless state agencies. Information technology is not coordinated, strategized or planned on an enterprise-wide basis. A 2011 study found that Oklahoma spends over $40 million more than comparable organizations in IT spend each year. HB 1304 cuts through the bureaucracies and views information technology activities from the perspective of a single entity. Once completely implemented, the legislation is designed to save about $80 million each year.

The Department of Education volunteered for inclusion in the IT consolidation even before the law takes full effect. This one state agency alone is estimated to experience an approximate savings of $600,000 per year because of the consolidation.

This article has just began to scratch the surface of the impact that these bills will have on state policy in the years to come. If properly implemented, the savings and efficiency will be considerable.

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 forms.ok.gov 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 (OCPAThink.com), OklahomaWatchdog.com and CapitolBeatOK.com 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.

Monday, August 29, 2011

How Many State Employees Are Paid More Than the Governor?

There is no question that when properly used, technology provides the public with insight into government as never before. All too often, people will express dissatisfaction with the size of government and state their belief that there is too much waste in government, but fail to provide a concrete example of substantive government waste.

Technology changes this. In my view, new technologies should be quickly deployed to allow the public to see government spending, analyze government performance, and expose wasteful and inefficient processes.

I am a big believer in the fact that government should use technology to push out as much government performance raw data as possible. All too often, when the government simply creates transparency tools without releasing the underlying data, the data used by the tool is filtered in a way that is not user friendly or, worse, is designed to prevent data viewers from being able to gain a complete understanding of what they are seeing.

I have enjoyed being a part of the effort to push out raw data feeds through the data.ok.gov portal. I believe that free market-oriented organizations will use this data to develop transparency tools that are far more advanced than those tools internally developed by the government. These new tools will not only provide the public with the means to see government performance, they will also be used by policy makers and government officials to understand the strengths and weakness of government processes (something that legislators do not currently have the ability to do).

The Oklahoma Council for Public Affairs recently provided a fantastic example of this type of service. OCPA requested several raw data sets from state government through Open Records requests. They used this data to develop a transparency website located at AccountabilityOK.com. The site allows the public to query and see individual state expenditures, tax credit recipients, pension systems and revenue data. The site’s user interface is more user friendly and comprehensive than the state’s Open Books transparency portal. This site is free to use and I would encourage you to visit the site and see just a few of the areas where state government is spending your money.

This new tool is providing journalists with a fantastic method for sourcing new stories about government inefficiencies. For example, last week, on the blog CapitolBeatOK.com (hd31.org/153), writer Patrick McGuigan used the OCPA data as the foundation for an article detailing that 877 state employees earn a higher salary than the Governor’s salary of $147,000 per year. In June, writing on NewsOK.com (hd31.org/155), writer Paul Monies used the OCPA data to point out that 60 former state employees make more than $100,000 each year from state retirement payments. These are concrete examples of government waste.

I believe that journalists will write many such stories based on queries of the OCPA data, and think this type of tool will be a catalyst for transforming Oklahoma government.

I also believe that the data requested from the state by OCPA should have never needed to come through an Open Records request. It should have already been available through the data.ok.gov portal. I plan to continue the effort to place additional and more comprehensive raw data sets to be published online.

Sunday, August 21, 2011

Staying Focused

Earlier this year, I wrote about my decision to help bring attention to the need for a federal balanced budget amendment. I enjoyed the opportunity to document the significant amount of support in the Oklahoma Legislature for ratifying the amendment if Congress would just give us the opportunity to do so.

I also mentioned my hesitance to take on new tasks. Over the past few years I have become very focused on finding inefficient government processes and helping write and pass the legislation to transform those processes. It is my belief that this effort could result in massive tax reduction for Oklahoma taxpayers. I think it is immoral for state government to take your money and waste it in unbelievably inefficient and dysfunctional processes.

I firmly believe that these reforms could allow Oklahoma to completely eliminate its state income tax. This is one of the most important reforms that could happen because studies have shown that the absence of an income tax has been a key factor in incentivizing economic growth.

As you might imagine, this work has taken time. One of my biggest challenges has been to stay focused and not take on too many major efforts. This isn’t easy because there are so many areas in state government that need reform. At any moment, I am likely to take on a new major reform effort.

For instance, I am tempted to focus on welfare reform each time I observe someone using an access card (your money) to purchase junk food while using their own money to purchase cigarettes.

Each time higher education institutions raise tuition on students yet again, while their own budgets skyrocket upwards, even during an economic downturn, I feel the temptation to invest my energy in reforming the higher education system. I think the actions of higher education over the past few years have proven that the Legislature should have never turned over the right to raise tuition to higher education. Technology should be driving down the cost of education. The increases do a great disservice to Oklahoma students.

I am tempted to focus my efforts on human services reform whenever I see reports of DHS placing a child in a dangerous environment or see them remove a child from a safe environment. I have a series of ideas for human services reform that I plan to write about in the future.

Of course, common education reform represents one of the greatest areas of need for reform. There are far too many school districts, way too much red tape, and limited freedom of parental choice. The Legislature's refusal to act more proactively over the years on education reform has trapped thousands of students in failing school systems. I have a great distaste for the actions of politicians who grandstand on the education issue while constantly blocking attempts to enact reform.

And, then there is the antiquated system for addressing the state’s road needs. From an antiquated funding formula to a bureaucracy-heavy, top-down approach to paving local roads, too much money is soaked up in costly bureaucratic processes that are feeding a government bureaucracy and taking money away from paving roads. I could commit a great deal of focus on this issue.

These are just a few of the efforts, each of which one could spend their entire time in the Legislature seeking to accomplish. At this time, I am determined to stay focused on the effort to reduce the size of state government. However, I am also subject to taking on one or several of these efforts -- and others I haven't mentioned yet. And of course, I am always prepared to vote in support of my colleagues in the House and Senate who are working to accomplish these and other reforms. I also very much appreciate your continued feedback and suggestions. My views on the need for these reforms have been heavily influenced by the input I have received.

Monday, August 8, 2011

Consideration of Bills in Committee

In last week’s article, I articulated my support for the proposal to change House rules so that all bills receive a hearing in committee. I strongly believe in the principle that each proposal should receive an on-the-record vote so the constituents of each Representative will know where their legislator stands on each issue.

It has been my challenge to reconcile this belief with the fact that as a Government Modernization Committee Chairman, it is my responsibility to filter the good and bad legislation and give the good legislation a hearing in committee.

The Government Modernization Committee is the destination point for legislation that seeks to modernize and streamline government. I enjoy working with bills that seek to accomplish this goal and usually give them a quick hearing and our committee sends them off to the full House with our support.

Legislation that conflicts with previous modernization reforms, however, is also assigned to the committee. Under the current system, it is regarded as my responsibility to stop this bad legislation. Simply denying a hearing to these bills would be the easy way out. Instead of taking this approach, I have attempted to work with the authors of the bills to understand their reasons for their sponsorship of bills. My practice is to work with the author to refine the proposal and potentially use their bill to actually advance new modernization concepts. In fact, earlier this year, a bill that started out as an effort to reverse an important efficiency reform successfully implemented one of the most important pieces of the year’s modernization agenda.

This process is time consuming, but it has allowed me to build stronger relationships with those legislators. Most of the time, the legislators appreciate the fact that their bill was not simply rejected, and they are usually willing to work together to substantively address their concerns without reversing previous modernization and efficiency reforms.

If I were to deny these bills a hearing, I would miss the opportunity to build these relationships and to advance additional reforms.

In my three years as chairman, I can’t recall a single time when a legislator refused to work with me on addressing the issues of concern in their bill. I think you would be hard pressed to find someone whose bill was rejected by our committee who felt there was not an attempt to give the bill life.

I believe there are several committee chairmen who follow this approach. They take their jobs as gatekeeper seriously, but do not reject legislation out of hand.

Of course, there are also chairmen who invest little time and effort into analyzing the true merits of a proposal. All too often they simply take the word of the bureaucracy that would be affected by a proposal and kill the bill based on feedback from the bureaucracy. This kills creative proposals that would inject a new approach. In my opinion, this is the lazy way to chair a committee and is one of the primary reasons why the status quo is maintained.

Thank you for reading this week's update. Next week I plan to provide an update on the recent state and county redistricting processes.