THE GOVERNMENT PERFORMANCE PROJECTReport Card: Delaware FINANCIAL MANAGEMENT: A- By many of the criteria for financial management, Delaware deserves a solid A. It has long had an appropriate balance between ongoing revenues and expenditures, carefully using surplus dollars only for one-time "pay-as-you-go" capital projects or infrastructure funds. Its rainy day fund is at its cap of 5 percent of general fund revenues. The state has well-defined investment policies, and investment managers are benchmarked against one another. Pensions are in great shape—now overfunded, in fact, due to very strong financial performance in recent years. But Delaware's financial system does have one significant problem: Its powerful internal controls severely limit flexibility on the part of its individual agencies. For example, agency heads can move appropriated funds from personnel accounts to travel to equipment only with approval by both the state budget office and the controller general. At year's end, if cash is not used or encumbered, it reverts to the state; this has the predictable result of encouraging agencies to spend to the last dime. CAPITAL MANAGEMENT: B Primary responsibility for capital budgeting in Delaware was transferred in 1993 from the Economic Development Office to the Budget Office. But much of state government is actually involved in the capital planning process: The individual agencies, the Department of Administrative Services and the legislature all play a significant role. This is a very positive shift from the early 1990s, when individual agencies managed their own projects, with minimal central oversight. Plans developed by the agencies cover five years and are updated annually. Over the course of time, the state has also reduced its backlog of deferred maintenance—utilizing surplus funds appropriated in the capital budget. Still, the state has no uniform statewide assessment process used to justify its capital expenditures; many agencies with their own facilities are responsible for performing their own condition assessments, with little central oversight. The state does have a physical assets inventory, which is updated every year. HUMAN RESOURCES: B One common managerial weakness in many states is the lack of any real workforce planning. But this is not a problem in Delaware, which undertakes such an effort as part of its annual budget process. All the agencies assess needs and develop strategies to meet workforce goals. They look at potential retirements, strategic expansion of programs, turnover and other factors that will require long-range planning. The state's personnel office has undertaken multiple initiatives to provide its employees a speedy, simple means for learning about policies and procedures. Information can be found both on the state's intranet site and in quarterly publications. At the same time, however, Delaware still has some 1,400 job classification titles, which it recognizes is too many. And there are problems with the incentive structure: The state permits individual performance bonuses, but they are not often used as incentives. Performance appraisal processes are currently being reformed. They've been reduced to about four pages from "darn near a book," says Jon McDowell, deputy director for compensation, classification and benefits. MANAGING FOR RESULTS: B Delaware launched an overall strategic planning program in 1987, but there is still no statewide plan, though the Governor's Policy Memo sets goals. Individual agencies do engage in strategic planning, as do cabinet committees. Legislators are also involved in the process. "We acknowledge the influence of legislators and work with them early on in the strategic planning process," says Karen Field Rogers, senior fiscal and policy analyst for the budget office. Legislation for performance measurements passed in 1995, but the sophistication of this effort varies from agency to agency. Still, there's solid evidence that the outcome measures that have been developed are actually being utilized. "Legislators are much more focused on the programs," says Rogers, "instead of nit-picking at specific numbers—such as how much you're spending on travel." Evaluations of specific programs are made with the help of private consultants, academics and other outside experts. Performance and efficiency audits are also done by the auditor's office. INFORMATION TECHNOLOGY: B Delaware is in the process of improving its statewide technology. A new human resources information system is being implemented, although the changeover has taken longer than it should have because a false start cost several months. Among other changes, the state badly needs a new purchasing system to replace one that relies heavily on paper transfers of information. The project was given the go-ahead in December, though some protested that it should wait for resolution of Y2K problems. The executive director of Delaware's Office of Information Services serves as the state's CIO. The position is cabinet-level and reports directly to the governor. The state's IT planning is very impressive. It includes three-year strategic plans for every agency, followed up six months later by project-oriented budgetary requests. The state rolls the agency plans into an enterprise-wide strategic overlay. One notable weak point in Delaware's information technology: The state often doesn't effectively justify new IT projects with return on investment or cost-benefit calculations, and it has made little progress in transmitting information to citizens and stakeholders through the Internet. AVERAGE GRADE: B
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