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THE STATES AND LOCALITIES
Management Matters
About half the states are now in some form of fiscal distress, and the roster seems to be growing by the week. Deterioration in the states' revenue is likely to continue through the end of this year, and probably longer. And as conditions worsen, governors and legislatures will respond as they have before — with cuts in social services, travel bans, hiring freezes and layoffs. Rainy-day funds will be depleted, projects postponed and ambitious plans for addressing problems in infrastructure, education and health care abandoned, at least for now.
But there is one redeeming benefit to the downturn: The pressure to improve how governments are administered will only increase. The fact is that most states have improved the quality of their management in recent years, allowing them to perform better in bad times as well as good. But downturns tend to accelerate the pace of improvement.
A fiscal "crisis is a terrible thing to waste," quips Jennifer M. Granholm, the Democratic governor of Michigan. "Instead, it's a huge opportunity to make management changes that would otherwise be impossible."
She ought to know. Michigan has been in a continual fiscal crisis since the beginning of the last recession in 2000. Since then, the state has lost 400,000 jobs, most of them in manufacturing. Yet Michigan can boast one of the best-managed state governments in the country. This isn't to argue that a necessary ingredient in improving government performance is a lousy economy; in Michigan's case, a tradition of good political leadership from both parties over some time has played a role. But in most states it is a catalyst.
I can speak with some authority on this question, because for the past decade Governing, CQ's magazine on state and local government, has worked with the Pew Center on the States in an ambitious program — the Government Performance Project — to grade each state in how well it manages in four key areas: its employees, finances, infrastructure and information. The latest grades were issued last month, after almost a year of research and reporting by journalists, academic experts and their graduate-student assistants — about 40 people in all, who conducted 1,400 interviews and gathered and analyzed mountains of information.
So the conclusions I'm reporting here are hardly off-the-cuff, and they point to one overarching fact. It has been uneven and sometimes halting, but states have been steadily improving their management capacity in most key areas over the past decade or longer. More governors are paying attention to the quality of management, and more are setting measurements of performance, pressuring top managers to meet them and then reporting the results. Party and ideology seem to have little to do with it; in fact, the language of management reform increasingly seems to unify chief executives when ideology does not.
A Rising Bar
In Washington, amazingly little attention traditionally has been paid to management. The old adage is that no one cares about the "M" in the Office of Management and Budget. But there is much more concern in many states, counties and cities, in part because those governments employ 10 times as many people as the federal government, and because states administer more than $400 billion in federal grant money. So management matters, but efforts to improve it still are overshadowed by politics and policy fights.
This year's Government Performance Project gave an overall score of B– to the states, with probably the most improvement showing in how they handled information and the least in how they managed their people. But overall, there is no question that the bar is being raised. A state may have improved in recent years, in other words, but its grade remains the same because much more is being asked of it.
That was particularly true in the information category, which has become more important to a state's overall score because the elements that it comprises — planning, goal-setting, measuring performance, disseminating information and evaluating progress — increasingly overlap with the other three areas. Clearly, one reason improvement has been possible is that state governments, despite false starts and failures, have become much more adept at harnessing new information technologies, much as the private sector had earlier.
There is a different story in every state, of course. But I'd pick out a few. Alabama, used to being at the bottom of most lists, finished with a C+. But its upward momentum is clear. In the next ratings, in another two years or so, it's likely that GOP Gov. Bob Riley's ambitious management reform agenda will have pulled the state up above average. The same is true of Georgia, which nudged up into the top tier of states because an ambitious governor, Republican Sonny Perdue, has made it a centerpiece of his administration.
Then there's California. Its overall grade is C, with a failing grade of D+ in handling finances. It's a miserable performance, excused by some by the notion that such a mammoth "nation state" ought to be compared against other countries, not fellow states. That's bunk, and there are a number of high-quality people in the state bureaucracy who know it. The solution to California's deep-rooted problems, as well as many of the other laggards, will be political, not administrative.