THE GOVERNMENT PERFORMANCE PROJECTReport Card: California FINANCIAL MANAGEMENT: C- California's economy is strong again. All three rating agencies upped the state's bond rating in 1998. Revenues are ahead of projection and the budget is running a surplus. What's more, the state received a Government Finance Officers Association certificate for financial reporting in 1996. But as the San Diego Union-Tribune worried in August, "there are few signs of concern at the Capital over the boom-and-bust cycles that have plagued the state." The state has used short-term borrowing and one-time revenue sources to balance its budget. In the current biennium, new funding for the state's widely criticized school system and a cut in motor vehicle registration fees combine to leave the state with virtually no reserves. As in New York, the budget process itself is protracted, contentious and cumbersome, complicating the lives of many state government managers. The two-thirds majority required for passage of a budget in the legislature virtually guarantees a period of deadlock. Every budget since 1993-94 has been late; this year it missed the legal deadline by 41 days. CAPITAL MANAGEMENT: C- California requires its agencies to submit annual five-year capital plans with prioritized recommendations, but most of the plans are not funded or reviewed by the legislature. Moreover, they are not combined to form a statewide plan (although the Department of Finance does survey departments annually to determine their 10-year needs for capital expenditures). Most agencies prepare quarterly reports showing the progress of projects that are underway; if the project is over budget by more than 10 percent, the need for additional funding must be reported to and reviewed by legislative committees. Unfortunately, there appears to be no statewide system in place that evaluates the condition of assets, and the quality of the information within agencies varies widely. HUMAN RESOURCES: C- The state has close to 5,000 job classifications. There has been discussion of consolidating them to allow for more managerial flexibility, and six or seven departments are embarked on demonstration projects. The fate of this effort awaits word from the new Davis administration. California has a pay-for-performance plan for managers. But since virtually everyone in state government gets a satisfactory rating, it's ineffective. Personnel leaders would like an evaluation system in which productive rank-and-file employees would be genuinely rewarded, but the unions are deeply opposed. Though the state restricts managers to hiring from among the top three test-scorers, other elements of the system are more flexible. Agencies are permitted to oversee, revise, develop and administer their own tests. For some years now, the personnel department has been so seriously understaffed that it has done no effective workforce planning. Within the past six months, however, new staff has been added for that purpose—and so workforce planning and strategic analysis of needs has begun. MANAGING FOR RESULTS: C- California doesn't have a statewide strategic plan, and there are no plans for one. For several years, agencies have been asked to submit their own; last year, the governor's office made it a requirement. But many of them have been meaningless. Rumors circulate about agencies copying other agencies' plans, handing them in with a few modifications. On the positive side, beginning next fiscal year, agencies that want to add dollars to their budgets will have to tie that spending in with goals and objectives in their plans. The use of performance measurement in the state is minimal; a five-year-old pilot project has never advanced. There are pockets of excellence, though. The departments of Consumer Affairs and Parks and Recreation do a good job of measurement. But even these aren't used by the governor's office or legislature for decision making; they're only employed internally. The legislative auditor's office has done some excellent work over the years in performance audits. INFORMATION TECHNOLOGY: C+ California established a Department of Information Technology a few years ago. It's headed by a powerful CIO, who reports to the governor and controls the state's $2 billion annual IT budget. Since these changes were made, the state's IT system has made enormous progress. For the first time, departments are required to create strategic IT plans, though the state does not do so. While California is not establishing mandated standards, a committee of senior administrative, procurement and IT professionals is trying to build consensus for enterprise-wide efforts that will help reduce the number of disparate systems. The state has master agreements to facilitate procurement of commodity items. But for major acquisitions, procurement can be cumbersome, taking a year or so. California is experimenting with policies that make payment of contracts contingent upon the proven success of a project. The DOIT also has instituted a risk-assessment model to follow projects through their life cycle. As part of this process, the DOIT has encouraged the proper training and development of skilled project managers. For all the improvement, there are considerable problems of fragmentation. Each agency runs its own personnel information system; some still utilize manual processes. And while the Department of Finance operates a statewide accounting and budgeting system, many departments and agencies are on their own in this field as well. AVERAGE GRADE: C-
GOVERNORS Note: This article has been modified to remove a reference to pension underfunding that was incorrect in the version originally published.
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