Ways to Improve Debt Collection, Problems with Contracting, and the Dangers of 'Shovel-Ready' Projects

Plus more public-sector management news you need to know.
December 18, 2014
Barrett and Greene
By Katherine Barrett & Richard Greene  |  Columnists
Government management experts. Their website is greenebarrett.com.

A growing number of cities, counties and states are increasing their reliance on fees and fines to support government services. In the first few years of this decade, states alone increased the amount they brought in by user fees by $1.5 billion, according to the National Association of State Budget Officers. But increasing dependence on non-tax revenues comes with a variety of tricky issues. One of them is collecting the money owed.

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An audit at the beginning of December in San Jose, Calif., looked at ways that city could improve its collections. The auditor offered four suggestions: 1) Bill more promptly -- it discovered that a third of the city's invoices were sent out more than 30 days after the service was delivered.2) Make sure the right people are billed and that the charges are calculated correctly. 3) Address the growing backlog. San Jose's unpaid invoices grew from $18 million in 2008 to $26.5 million in 2013. 4) Better coordinate collection activities which are sometimes handled by the finance department and sometimes by individual departments.

It’s no secret that the years during and since the recession have been difficult for state and local compensation systems. Many government employees have gone without pay raises for multiple years -- an unpleasant state of affairs that began to turn around this year. But often adjustments to compensation are made on a piecemeal basis, leading to odd discrepancies. In Kentucky, for example, non-elected court personnel are receiving salary increases for 2014 and 2015. But judges haven’t received a raise since 2008 and now get 17.5 percent less than the national average.

Kentucky’s chief justice, John Minton Jr., has expressed concern that lawyers may balk at moving to the bench. In fact, in some places in Kentucky, circuit court clerks, for whom no law degree is required, make more than judges.

“If you don't know where you are going, you'll end up someplace else.” -- Yogi Berra

On LinkedIn, Bob Behn, a lecturer at Harvard’s Kennedy School of Government, describes himself as “Chief Flunky at Harvard University.” In fact, he’s a very thoughtful, erudite man who has focused on results-driven management, in one form or another, for years. He’s just come out with a new book, The PerformanceStat Potential, which delves deeply into the phenomenon of targeted use of state and municipal statistics to drive policy changes. The stats focus began with New York’s CompStat, a performance measurement system that may have helped push the city’s crime rates downward.

The book makes many salient points. Behn emphasizes the importance of disaggregating the data. As he writes, “a city’s total crime for a month -- a simple aggregate number -- reveals nothing. It cannot suggest who should do what. ... But until these totals are disaggregated (by crimes, geography and time), the patterns -- and the relevant performance deficits -- remain hidden.”

We have long been worrying about the pitfalls of contracting out government services. We have nothing against contracting per se. Our objection is when there isn’t appropriate oversight after the contract is signed.

A new report called "Standing Guard: How Unaccountable Contracting Fails Governments and Taxpayers" features examples from across the nation of how lax oversight can lead to all kinds of negative impacts. The report has been put out by an organization called In the Public Interest, a resource center on privatization and contracting affiliated with the Partnership for Working Families.

It cites five big problems, which are: contracts contain inadequate performance requirements and standards; governments do not have enough experienced and trained contract managers on staff; contract oversight has few formal rules; information revealing non-compliance is ignored and cities and states delegate oversight to contractors.

How can you manage your state to be more innovative? That’s an enormous question, and it’s likely there is no answer (notwithstanding the plethora of books and articles that take equally complicated questions and try to answer them in a  list of ten big tips).

That said, an article in a recent issue of the Harvard Business Review speculates that one element that has helped places like Minnesota and California to rise to the top of lists of innovative states assembled by Professor Anne Marie Knott of Washington University: they do not permit non-compete clauses in contracts. Such clauses prohibit employees from starting up a new company in a way that could possibly take customers or other business assets from their prior corporation. Of course, non-compete clauses are just one reason why one state might be less innovative than another and  prohibitions against non-competes, are far from a panacea.

Knott’s article is pretty persuasive, however. As she writes, “Employees in states that restrict the enforcement of non-competes have more freedom to pursue new ventures in the same industry and location as their prior employer. ...  Meanwhile in other states, although companies that enforce non-compete rules may be able to keep some employees from leaving, the entrepreneurial ones will leave anyway, and when they do, they’ll have to leave the state as well.”

Back in October of 2010, we wrote an item about cities and states that don’t update their mailing lists. The example we used was from the state of Utah, which had been sending us regular snail mails, addressed to Financial World, a magazine that’s been out of business for nearly 20 years now.

Well, the documents keep coming our way on behalf of the increasingly forgotten Financial World. Back in 2010, we focused on the idea that if Utah could lose track of the people it was spending money to reach, that couldn’t be a good sign. Worse yet, if this is the case in Utah -- one of the nation’s most data-proficient states -- we have to believe that many other states are making far more significant, and potentially wasteful, mistakes. (And by the way, we sure hope that Utah doesn’t drop us from its mailing lists. But the state should probably know that the materials are being used for Governing, a real-live publication.)

Workplace injuries and illnesses have been dropping for well over a decade now. There was a bit of a blip upwards in 2012, but otherwise, the per capita injury rate has diminished each year since the early 2000s.

That’s good news -- but the rate of injuries and illnesses among state and local government workers combined was still 5.2 cases per 100 full-time workers in 2013; a good deal more than a 3.9 rate in the private sector, according to the Bureau of Labor Statistics.

But states and localities can make still more progress. Take a look at the work being done in Berkeley, Calif. Aggressive emphasis there on employee safety training helped it reduce claims by about 18 percent from fiscal years 2013 to 2014.

In a recent report to the city council, Berkeley's audit shop provided recommendations for further progress in its police department -- but the ideas are widely applicable. The key, according to the report, is an  intense focus on targeted data collection and analysis to pinpoint the cause of injuries and prevent them. The report also recommended heightened training for supervisors in investigating the cause of injuries and greater communication between the police department and the department of human resources.

As people debate the pros and cons of Medicaid expansion, here’s a pro for the cons (by which we mean convicts). Prison inmates aren’t covered by Medicaid for ordinary medical needs. But they are covered for hospitalizations that exceed 24 hours in length. Because of this, states that have expanded Medicaid have the ability to save on inmate hospitalization costs. That’s because Medicaid includes a substantial federal match. In Kansas, for example, an oversight committee heard last month that expansion would save $1.6 million annually for newly covered incarcerated individuals.

Back in the days of the Recovery Act, there was a lot of talk about funding “shovel-ready projects.” That’s still a phrase that we hear states and cities using when they’re thinking about investing money in infrastructure. But there’s a hazard that sometimes state and local officials play fast and loose with the meaning of shovel ready.

A November article in the Philadelphia Inquirer pointed to that problem in New Jersey. Apparently, some of the shovel-ready projects approved by the state a couple of years ago haven’t even begun to move forward.

As the newspaper reported, “Rutgers University-Camden, for example, still doesn’t own the land where it intends to build a nursing and science building with more than $46.8 million in state funding. Construction is expected to begin in March, a year and five months after its proposed start.”