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The California Performance Review: Creating the first 21st Century Government in America.
"We cannot afford waste and fraud in any department or agency. This unprecedented action will mean a total review of government; its performance, its practices, and its costs. Together with my dedicated team of experts, we will make California the first true 21st century government in America, a government that is as innovative and dynamic as the state itself." --Governor Arnold Schwarzenegger.
This vision and determination for change has led to the creation of the California Performance Review. The initiative was previewed in Governor Schwarzenegger’s budget summary and featured in his State of the State address.
The ultimate goal of the California Performance Review is to restructure, reorganize and reform state government to make it more responsive to the needs of its citizens and business community. Only by demonstrating through concrete action the responsiveness of state government can the public’s trust and confidence be regained.
The California Performance Review Components
The Review has four major components as documented in the Budget:
- Executive Branch Reorganization;
- Program Performance Assessment and Budgeting;
- Improved Services and Productivity; and
- Acquisition Reform.
1. Executive Branch Reorganization
The organization of California’s state government today does not facilitate rational decision-making in the public’s interest. Common functions and responsibilities that should be subject to common management have been split between multiple departments and agencies creating unnecessary duplication, confusion and waste. The sheer number of Agencies and departments, the existence of so many boards and commissions that have little or no direct accountability to the public and the awkward distribution of departments in the existing cabinet-level Agencies has made efficient and transparent governance of the Executive Branch virtually impossible. Additionally, the program departments must follow a labyrinth of control processes and requirements that add little value, reduce flexibility and too often frustrate staff and the program goals and objectives they manage. These organizational structures, unnecessarily complicated and fragmented, promote bureaucratic inertia and permit and sometimes encourage departments to focus more upon their own survival than the public’s needs and interest.
The California Performance Review will consolidate common functions and responsibilities in single departments, ensure departments with analogous subject matter responsibilities are grouped together for efficient and effective leadership by cabinet secretaries, eliminate and or restructure many boards and commissions, reduce the total number of departments and Agencies to facilitate more transparent and effective governance. Additionally, the Review will eliminate or modify control processes so that they facilitate, rather than strangle, innovation and improvements.
Because the Governor is responsible for ensuring accountability to the public in the Executive Branch, its organization must be dramatically simplified and rationalized.
2. Program Performance Assessment and Budgeting
Government restructuring, like any major organizational change, is not a simple process of drawing up a new organization chart. For restructuring to be truly meaningful and successful, the state must combine restructuring with a top to bottom review, assessment and modification to existing business operations to eliminate duplication and waste, improve responsiveness and transparency and make government more efficient. The path to success will depend on detailed and rigorous analysis of business processes, design of new and more efficient processes and the application of appropriate information technology solutions.
California needs to undertake regular, detailed and rigorous evaluations of program performance focusing on prioritization of program needs, return on program investment and effective program management. The state can then make program elimination and or modification decisions and budget decisions that reflect the California Performance Review’s evaluations.
California state government's annual baseline budget process and its complicated organizational structure, make it difficult to engage in routine evaluation of program performance where the results of those evaluations can, in turn, be properly reflected in decisions about program elimination or modification or in decisions about program budgeting. The current absence of routine program evaluation followed by effective decision-making about program budget and design makes government programs much less responsive to the public's needs and interests and more costly.
In Performance-Based Budgeting, the various activities of a program are actually “costed out” and those costs are then linked to the actual services provided and results achieved. This approach to budgeting brings sunshine to the true costs and benefits of a program which is the first step in conducting both a cost-benefit analysis of a program and a comparison of program performance in California to program performance elsewhere. It transforms the budget process into a genuine management tool.
California experimented briefly with Performance-Based Budgeting in the 1990s; however, that pilot project was not particularly well designed or implemented. Since that time, the federal government, through the Government Performance and Results Act, and other state governments have successfully implemented performance-based analysis and budgeting. California should look to those successful efforts for guidance in reforming its budgeting processes.
3. Improved Services and Productivity
California must pursue a customer-focused transformation in government operations to provide timely, convenient, responsive and cost-effective services, benefits and information to the public.
In response to declining budgets, state entities must find ways of doing more with less even as an increasing number of Californians require and demand access to governmental services. The state can meet this challenge in part by making a smarter use of current and future technologies to provide services to the public. Through strategic automation and consolidation of cross-departmental processes, while simultaneously harnessing the power and convenience of the Internet, staff can reduce the cost of many routine government operations and dramatically improve service to the public.
E-government, appropriately designed, enables government to better meet its business needs as a whole by delivering timely and efficient services, greater transparency and better access to information needed.
There are at least three key challenges to overcome before the State productivity can be significantly improved:
- Staff needs to transform the fundamental conception of the interactions between government departments and members of the public. Simply put, government needs to treat all members of the public as customers of government services to promote and become a customer-centric culture.
- The state must expand dramatically cross-departmental and inter-governmental collaborations in designing, building and operating smart government services to make it easier for members of the public to interact with government. For example, requiring a start-up business to deal with three or more separate levels of government and many departments within each level of government does not facilitate business development. Local, state and federal governments must join collaboratively to design a more seamless, integrated process for delivering routine services to the public.
- Once smart services are designed and built, they must be marketed aggressively to secure public adoption. The benefits of smart services to the public and the associated cost savings to government will be lost unless the state ensures that the public is aware of these services and actually uses them in place of the existing traditional services.
In addition to smarter services, California must replace the duplicative and conflicting financial, human resources and procurement systems with a common set of management tools that are interoperable across state government. California has multiple accounting and financial systems across the departments and there are duplicative, conflicting legacy systems supporting the major back office operations of the state. Additionally, the payroll system is nearing the end of its useful life. All these outdated stove-pipe systems increase the cost of government, seriously complicate any efforts to build cost-effective, inter-departmental enterprise-wide e-government applications and result in basic information about state operations being unavailable to policy makers and the public when and where it is needed.
Controller Steve Westly is going to replace the California’s legacy payroll system; because this system has connections to many other back office systems throughout the state, it will be necessary to put all existing systems on the table now to ensure interoperable and functional enterprise-wide financial management systems.
4. Acquisition Reform
The state’s acquisition process – which today includes, at a minimum, detailed identification of the business need, development of contract requirements, efficient and effective procurement methodologies to ensure the state receives best value and timely availability of funding – is in desperate need of a complete overhaul. The acquisition problems are not limited to complex information technology procurements. As documented repeatedly in reports by the Bureau of State Audits and the Legislative Analyst’s Office (LAO), systemic failures can be found in virtually every area of California’s acquisition practices.
The procurement process – a major part of acquisitions – is so fragmented, complex, opaque and confused, that not even the most sophisticated vendor who routinely deals with the state can claim to have a clear understanding of how all the processes work. Legal and process traps abound, and the lack of transparency in the process creates risks of abuse and unfairness. It is a process laden with multiple layers of bureaucracy that add substantial delays to the acquisition of goods, services and information technology without adding significant value.
The private sector does it better and other governments do it better. Even though there are clearly differences between private sector and public sector procurements, there is much to be learned by examining how sophisticated businesses manage risks and secure best value in their procurements. There is no reason why California today should be lagging behind other governments in acquisition methodologies including, but not limited to, increased use of performance-based contracts, fee-based contracts, strategic sourcing and competitive sourcing.
The need for procurement reform has been well documented for many years; however, the state has so far been unable to make the necessary reforms. The time to adopt more strategically focused procurement and sourcing methodologies has now arrived.
The California Performance Review and You
The California Performance Review has an ambitious reform agenda to address the above needs and challenges. The Review is putting into place a robust mechanism and process by which the ideas to implement its reform agenda can be developed in detail and made ready for action.
The California Performance Review has employed over one hundred state analysts and managers to do the needed research and analysis necessary to turn good ideas, no matter their source, into organizational reality for California.
Thank you for providing the California Performance Review your best ideas for improving government by thinking about the four general areas identified in Governor Schwarzenegger’s budget and in his State of the State speech: executive branch reorganization, program performance assessment and budgeting, improved services and productivity and acquisition reform.
The California Performance Review will only be successful with your participation, support and commitment.