THE GOVERNMENT PERFORMANCE PROJECTReport Card: Indiana FINANCIAL MANAGEMENT: B Indiana is a little like one of those old ladies with a million dollars in cash tucked away under the floorboard. Its rainy day fund contains a full 7 percent of general revenue, and there are multiple other contingency funds adding up to a whopping $2.1 billion—24 percent of operating revenue in all. Curiously, in light of this, the state insists on guidelines that permit no riskier investment than AAA-rated securities. Only in 1997 did state government even permit its pension fund to buy stocks. Thanks, perhaps, to confidence engendered by its overall conservatism, Indiana has not as yet felt any need to establish a formal cost-accounting policy. Some agencies do use cost accounting on an individual basis. While the budget office and state auditor provide solid oversight of agencies' appropriations, Indiana has been giving more and more flexibility to the agencies to take care of their own fiscal business. In the past, says one long-term Indiana budgeter, "whenever anyone wanted to go out of state, the budget office looked at cost, travel, itinerary. We no longer look at those things." CAPITAL MANAGEMENT: C In the 1980s, Indiana leaders decided that it was time to develop a statewide capital plan. But in the process of creating one, they discovered the state needed to spend more money than anyone had realized. Shocked, they agreed on a solution: Don't have a capital plan after all. Let the agencies make their requests on a case-by-case basis. That's still the way they do it, although the requests at least are expected to provide for a two-year period. Given the absence of a statewide plan, Indiana does a reasonably good job at getting projects finished on time and on budget. The Division of Public Works has an effective computer scheduling system for state agencies. On large-scale projects, design consultants are hired to provide planning and cost estimates, and are held accountable for their accuracy. If a project exceeds estimates, the designer must rework and rebid the project at his own expense. However, there's no central oversight of how much money agencies use for maintenance of their assets, and in most cases the funding is not adequate to meet basic needs. HUMAN RESOURCES: C+ Indiana is a state heading for progress in human resources. Though it does no formal workforce planning right now, for example, that will likely change as its outdated computer systems are replaced in the next year. In the meantime, the state has made informal efforts to analyze important trends in personnel, such as turnover rates. Similarly, state employees sometimes have had to make phone calls to multiple representatives of the personnel department to get the answer to one question. Over the past two years, though, the department has been making an effort to be more helpful. For example, it is trying to provide agencies with one contact person who can answer any questions that come up. "We've tried to help agencies meet their needs and goals, rather than just reacting when problems occur," says the deputy director of the personnel department. The state publishes job openings on the Internet, and has largely dispensed with testing. But it has little ability to motivate workers with financial incentives, outside of hefty raises which can be tied to advanced educational work or professional certification. In addition, its policies for discipline and termination are time-consuming. MANAGING FOR RESULTS: C There is no statewide strategic plan, but the governor does have a broad statement of "vision" that guides agencies. Every agency that reports directly to the governor is required to prepare a performance plan, though the quality varies. Agencies are encouraged to involve stakeholders, including private citizens, in their planning. Indiana is working on a results-oriented measurement system, and, according to Steve DeMougin, executive assistant for government services, it is about a quarter of the way to where it should be in having optimal results appraisal. The most promising areas have been social services and health. In Medicaid, for example, excellent data have enabled the state to eliminate out-of-control costs in funding of pharmaceutical drugs. By and large, agency performance reports have only been used internally, but the state is moving toward creation of an overall Performance Planning Progress Report, which should have wider dissemination. INFORMATION TECHNOLOGY: C Indiana's budgeting still relies on old-fashioned calculations, processes and controls. The state plans on developing a new procedure, but such efforts are still in early stages. Meanwhile, new personnel and procurement systems will begin providing far more in the way of useful management information later this year. There's minimal inter-agency use of data right now, a problem the state plans on tackling. But solutions may be hard to find as long as there is no statewide strategic IT plan. On the positive side, the Access Indiana Information Network is one of the most comprehensive citizen transaction networks in the U.S. Not only are Hoosiers able to view some 70,000 pages of government information online, but the program doesn't cost taxpayers a penny. Vendors are given access to commercially viable data, such as drivers' records, then sell it and reimburse the state. Everyone wins under this plan. AVERAGE GRADE: C+
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