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Getting a Leash
on Leviathan

A Legislative Agenda for State Government Reform

Getting a Leash on Leviathan, Part 3

by Robert Tauber

ast month, we looked at a gubernatorial and legislative agenda for bringing about important transformation in Nevada’s state government. Proposed was an approach that imposes upon the state bureaucracy an energetic executive agenda for competitive sourcing and privatization (CS&P), along with legislative mandates for CS&P and government reform—all driven by a strong fiscal imperative. In that article, we confined our presentation of a legislative agenda to one which supports CS&P. Deferred until this issue were the other aspects of the legislative mandate: those items dealing specifically with government reform. So let us now address those.

The Goal

Any worthwhile government reform legislation has to force institutional changes that will be preserved through the law, but will not destroy effective government through micro-management. It’s a challenge, because by their nature legislatures have but two corrective instruments: mandates and prohibitions.

The problem that Governor Guinn addressed above is the lack of planning. I would suggest, however, that what underlies this is a deficiency in agencies’ performance accountability—when executing both their budgets and their basic agency missions. Evaluating government effectiveness in this context, the question that must be answered in regard to both of these aspects is, "Performance compared to what?" Hence, the need for plans.

The Federal Model

Though infinitely larger and more complex than the State of Nevada, the federal government is currently undergoing radical change brought about by congressional mandates for performance accountability. Beginning in 1990 with the Chief Financial Officer’s Act, and then following with a fusillade of other reform legislation, Congress trained its sights upon the federal executive branch with sweeping and often painful requirements for performance accountability.

It is not uncommon for states to take their lead from legislation passed at the federal level. For example, the implementation of Virginia’s CS&P statute reads like something right out of OMB Circular A-76. Here in Nevada, the federal enactments specific to our needs—with concepts we can adapt for specific reform legislation in the next legislature—are the following:

  • Chief Financial Officer’s (CFO) Act of 1990,
  • Government Performance and Results Act (GPRA) of 1993,
  • Government Management Reform Act (GMRA) of 1994, and
  • Federal Financial Management Improvement Act (FFMIA) of 1996.

The CFO Act was designed principally to accomplish four objectives:

  • Establish a single focal point within each executive department and direct-reporting agency for all aspects of financial management and accountability,
  • Require a financial strategic plan,
  • Require specific financial reporting permitting data to be better used by decision-makers, and
  • Establish an inter-agency means of coordination for fiscal policy and its implementation.

This foray into the fiscal accountability arena was then complemented by the enactment nearly a half-decade later of the Government Management Reform Act. Among other things the GMRA mandated audited annual financial statements for all CFO agencies. Next the Federal Financial Management Improvement Act was enacted to compel all CFO agencies to meet federal financial management standards as laid out by the Federal Accounting Standards Advisory Board. The law also requires audits of each agency to ensure compliance. Where noncompliance is found, formal remediation plans have to be implemented to bring the agency into compliance within three years.

The Government Performance and Reform Act had four objectives:

  • Require each agency to formulate and report to Congress performance-based five-year strategic plans that focus upon agency results and outcomes,
  • Make each agency accountable for implementing these strategic plans by also requiring annual performance plans and annual performance reports to Congress,
  • Give agencies some relief from administrative procedures and controls in order to allow innovation and management flexibility so that agency goals can be pursued and accomplished more efficiently—in other words, to re-engineer agency procedures, and
  • Implement performance-budgeting concepts to achieve planned outcomes.

Implementing change in the federal government is akin to changing the course of an aircraft carrier—because of its immense momentum, three miles are required to turn the vessel. But the General Accounting Office (GAO) says that because of these legislative initiatives, change is indeed afoot, slowly perhaps but nonetheless surely. This federal model, along with lessons learned about the laws’ implementation, allows us now to propose some very useful legislation.

Fiscal Performance Accountability

The passage this year of Assembly Bill 255—improving reporting—and Senate Bill 550—creating a division of internal audit reporting for state government in the Nevada Department of Administration—are laudable accomplishments for the legislature and for Governor Guinn. Like their federal counterpart, the Federal Financial Management Improvement Act, these new laws go a long way toward establishing rigorous reporting requirements. They also mandate that government financial management practices conform to an agreed-upon set of uniform standards and procedures.

Both bills, however, need to be strengthened in three areas: strategic planning, accountability for fiscal performance and inter-agency coordination. Moreover, as with pre-existing Nevada law, they leave the burden of financial management and accountability squarely at the door of the department or agency chief—as if he or she doesn’t have enough to do.

Therefore, during the next legislative session, a Nevada Financial Accountability Act (NFAA) should be enacted to do the following:

  • Establish the position of Chief Financial Officer within each department and direct-reporting agency of the executive branch. The CFO would report to the department or agency director and be responsible for all aspects of financial management and accountability within the department.
  • Require the director of the Department of Administration to work with each CFO to develop a five-year financial management plan, which would be submitted to the governor and the legislature. The plan would then be updated annually, and every year a status report made to the governor and, biennially at least, to the legislature.
  • Require audited annual financial statements from all departments and direct-reporting agencies within the executive branch to assure compliance with agreed-upon accounting and financial management standards. Moreover, upon the determination of the chief of the financial audit division that a department or agency is not in compliance, the department or agency CFO shall work with the director of administration to provide a formal remediation plan to the governor and the legislature to bring the agency into compliance within three years. Furthermore, the agency CFO shall work with the director of administration to provide annual progress reports to the governor, and at least biennially to the legislature, until the deficiencies are rectified.
  • Establish the Chief Financial Officers Council, composed of executive branch CFOs, the director of internal audits, and the deputy director of administration. The purpose of this council is to coordinate fiscal planning, management policy, reporting and accountability standards and budget execution and modernization issues between the various executive branch departments and agencies.

Agency Outcome Accountability

There’s an old adage: "If you don’t know where you are heading, you won’t like where you end up."

By and large, organizational lethargy and waste result when leadership fails to provide meaningful strategic vision and a sense of mission. The absence of specific accountability with substantive rewards and consequences for performance compounds the problem. Add in the legendary tendencies in government culture to encourage risk avoidance and discourage innovation, and waste and vacuous results are guaranteed.

Performance accountability is precisely the tonic required to ensure effective results. Yet, as mentioned earlier, performance must be measured in relation to some standards. Thus the need for a plan. And as the governor has noted, there is a need in Nevada state government for strategic planing. But before specific legislation is crafted in this regard, we need to consider the actual, on-the-ground utility of strategic planning.

As I tour the country teaching government reform workshops, the subject of strategic planning is often addressed. Frequently I ask the students in my classes how many of them have ever been involved in writing a strategic plan. Many hands go up. I then ask how many have ever seen a strategic plan successfully implemented, or even seen one describe something that even resembles their organization. Rarely do I get raised hands—usually I get cynical giggles. Such also was my own experience in 15 years of federal civil service.

In his book The Rise and Fall of Strategic Planning professor Henry Mintzberg of McGill University in Montreal eloquently explains that in the direct sense, strategic planning is neither strategic nor planning. That is, it has little to do with forming successful strategies and rarely produces useful plans. Mintzberg mocks strategic planning as "a planning process designed or supported by planners, to plan in order to produce plans." The whole phenomenon might be called a self-licking ice cream cone.

Though strategic planning is supposed to produce a document to guide an organization’s destiny, the real successful outcomes are actually syntheses of deliberate strategies and emergent strategies. The latter come from anywhere within the organization, not from a "plans shop," and allow the inevitable unforeseen obstacles to be overcome "on the fly."

Since real approaches are crafted by people involved in the thick of battle as they guide events toward performance-based goals in support of some mission or vision, strategic plans are actually obsolete right at their inception.

In Mintzberg’s view, strategic planning should be properly viewed as the formalizing and synthesizing of deliberate and emergent strategies. In other words, the strategic plan document should be used to communicate the organization’s mission, vision and crafted strategies. It should also program those strategies into resources, budgets, goals and performance metrics.

It is this clarified understanding of strategic planning that will allow us to implement effective agency outcome accountability. During the next session of the legislature, the Nevada Performance and Results Act (NPRA) should be enacted to do the following:

  • Require that each executive branch department and direct-reporting agency prepare and submit to the governor and the legislature a performance-based strategic plan. Each such plan will articulate mission-related goals and objectives and formalize strategies to accomplish desired results and outcomes. A comprehensive mission statement covering the major functions and operations of the agency should be included in the plan. Each plan should cover a minimum of five years and be updated and revised at least every three years.
  • Require that within one year after submission of the first strategic plan, each executive branch department and direct-reporting agency prepare an annual performance plan that addresses each budgeted program activity within the department or agency. Within the plan, performance-based goals shall be stated in terms that define objective, observable and measurable results or outcomes. The plan shall also state an overview of the methodologies by which results and outcomes shall be measured and compared to the stated goals. Additionally, the plan shall briefly describe the operational processes, human resources, technology and budgetary requirements necessary to accomplish the stated goals.
  • Require that beginning one year after preparation of the first annual performance plan, each executive branch department and direct-reporting agency prepare and submit a performance report annually to the governor and at least biennially to the legislature, reporting on program performance for the previous year. This report should evaluate agency effectiveness in meeting stated performance-based goals and metrics as detailed in the annual performance plan for that reporting year. It should also identify those areas where performance goals were not met and explain why, and also describe remedies to be implemented to either correct or mitigate those shortfalls. Subsequent reports should also compare performance for the current reporting year to that reported for at least the previous year.
  • Require to the maximum extent possible that agencies tie their program budgets to performance-based outcomes.
  • Provide that waivers on administrative procedures and controls may be approved by the director of administration to allow executive branch agencies greater management flexibility. The goal is to facilitate reengineering of organizational process and maximize agency effectiveness.

A Man, A Plan

This series of articles over these last three months was presented to show how our governor and reform-minded legislators can revolutionize state business practices to secure the fiscal integrity of Nevada for generations to come. To implement most of these ideas—in whatever form they wind up—will be a challenge, as many interests will vie for dominance. Any change in bureaucracy—especially in a declining budget environment where agency missions are, however, expanding—sets up pain, confusion, and downright chaos. Yet if done skillfully, it is a controlled chaos—willfully induced and then utilized. In my experience in the federal bureaucracy I’ve seen that it often is necessary to set up the shock of change to awaken the beast from its slumber. Then, in that jungle of chaos, the one with a plan is king. People ultimately will clear a pathway for the one who knows where he or she wants to go and has sufficient conviction and determination to get there. NJ

Robert C. Tauber (rtauber@aol.com) is a government reform expert and consultant. He lives in Las Vegas.


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