THE GOVERNMENT PERFORMANCE PROJECTReport Card: North Carolina FINANCIAL MANAGEMENT: B North Carolina's books are in balance, even though taxes have been cut by $1.7 billion since 1994, teacher's salaries have been raised substantially, and most of the state's children are attending pre-school for the first time. "The governor has redirected money into his primary areas of focus and not relied on tax growth," says his deputy budget director. However, things have been far from peaceful on the legislative front. In the past two years, battles between the Republican House (which wanted tax cuts) and the Democratic Senate (which wanted more social programs) forced late budgets and fiscal confusion despite the state's economic good fortune. This year, the budget was four months late, demoralizing state employees whose raises were delayed. In November, Democrats gained control of both chambers, so the wrangling should abate in 1999. Outside of these political problems, North Carolina is handling its finances rather well. The state's rainy day fund is at 5.1 percent of general fund revenues. Future expenses associated with any new legislation are estimated at least five years ahead, and 20 years ahead for capital projects. Debt, cash management and financial reporting are fine. Most agency heads are a bit stifled, however, by policies that limit their ability to move money around between appropriations, and that require that any unexpended money revert to the state at year's end. CAPITAL MANAGEMENT: B+ The capital planning process was put into statutory form two years ago, forcing everyone in state government to take it more seriously than before. Agencies now create six-year capital plans, updated annually. Capital requests must be consistent with long-term plans. The state itself has no capital plan, but it does have broad-based strategic plans, into which agency plans are folded. Every proposed project goes to the Office of State Construction, where cost figures are reviewed and analyzed. This same office follows projects from design through completion. All of the state's buildings that are larger than 3,000 square feet undergo a condition assessment every three years. But the assessments are not easily accessible, so they're not particularly useful for tracking the condition of buildings. The state does a good job at paying for maintenance, though, with a statutory reserve derived from surpluses. The reserve is around $145 million now, and ensures that repairs don't compete for dollars with new construction. HUMAN RESOURCES: B+ North Carolina's human resources management is terrific—in most ways. The central human resources office is conducting an inventory of all the HR systems in this decentralized state, and will soon have a catalog of every HR program. It's identifying competencies needed to carry out each job and best practices in personnel. The state has a five-year workforce plan. It includes a forecast of manpower needs and cites strategies to attract employees to hard-to-recruit areas. North Carolina is working on a training needs assessment process for its workforce. It has a highly developed performance assessment system that signals when a worker needs more training. The one big problem is pay. The state has a performance pay program, and performance bonuses, but they haven't been funded regularly. "Workers perceive that the state doesn't value their work," says the director of the state personnel office. Worse yet (see above), budget wrangling delayed last year's annual increases, causing yet more gnashing of teeth. MANAGING FOR RESULTS: B- North Carolina does planning with a cross-agency perspective. Ten policy areas have been established, with goals, objectives and measurements, and agency plans address the goals in each of those 10 areas. This has led to useful reorganizations. For example, the Division of Employment and Training was merged with the Workforce Preparedness Office to end redundancies. Unfortunately, the legislature's structure doesn't fit neatly into this one, and cross-branch cooperation hasn't been great. This is a state that loves to measure things, and it boasts a rigorous methodology for safeguarding accuracy of data. The trouble is that with some 10,000 different measures of performance, there are just too many for anyone to get a handle on. INFORMATION TECHNOLOGY: C Curiously, North Carolina doesn't know exactly how much it spends on IT. That's because many agencies are run by independently elected officials, who haven't been interested in sharing information with a centralized agency or cooperating in the state's planning process. The state is now altering its planning approach to one that encourages agencies to put together a technology "portfolio" of assets that contribute to their work. The state's chief information officer reports to the Commerce Department. This seems odd, but it may buffer him from the political difficulties of reporting to a constitutionally weak governor. The information available to North Carolina's accounting process is great. However, four separate systems that deal with personnel are old and unintegrated with each other or with the accounting system. Dealing with more than one system—required for something as simple as hiring someone—is an arduous task. Large procurements in North Carolina go through a cumbersome, time-consuming process. But the state is working on procurement reform. AVERAGE GRADE: B
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