THE GOVERNMENT PERFORMANCE PROJECTReport Card: Texas FINANCIAL MANAGEMENT: B Texas has good revenue and expenditure estimates, solid cash management and contract oversight, and impressive flexibility for agencies to manage their budgets. The state has been adding about a half-billion dollars annually to its year-end balance. Even converted to generally accepted accounting principles, it has improved from a $1 billion deficit at the end of 1996 to a $483 million balance at the end of fiscal 1997. One reason for the good financial performance in recent years is the Texas Bond Review Board, set up early in the decade when the state lost its triple-A bond rating, and presided over by the governor, lieutenant governor, speaker of the house and comptroller. The comptroller is a more important figure in Texas than in almost any other state. If he announces a short-term revenue fluctuation, the impact ripples through the legislature and the entire financial process. This may be one reason the comptroller's office chooses to issue its reports only once a year. The major weak spot in Texas is the minuscule rainy day fund, which currently contains only 0.1 percent of general fund expenditures. This is more than just an abstract problem to worry about when recession hits: It lowers bond ratings even in good times, costing the treasury real money every year. CAPITAL MANAGEMENT: C Texas hasn't had a statewide capital plan in the past. It hasn't even bothered to distinguish capital budgets from operating budgets. But the state finished its first capital plan this year. With a two-year time frame, it is designed to dovetail with the biennial appropriations process. That's a short-term view, but "we don't want to presuppose what a future legislature is free to do or not do," says one state official. Texas has a decentralized process for tracking approved capital projects, but high-profile efforts are often given central oversight. A criminal justice policy council tracks prison construction, and does regular updates on its progress. The legislature requires agency estimates of deferred capital maintenance. "It's looking over the agencies' shoulders," says Ara Merjanian, group director of planning and development. HUMAN RESOURCES: B Texas is the only state with no centralized human resources department. Understandably, this guarantees wide diversity among the agencies in just about every field of personnel management. When it comes to training, for example, the larger ones appear to have solid efforts, while the smaller ones are hard up for dollars to do any training at all. A shortage of information technology workers is pushing the state to provide compensation-based in-centives, as well as additional training. The most recognizable statewide HR function as of now is the job classification system. It falls under the State Classifications Office, run by the legislative state auditor. With a lean roster of fewer than 800 job titles, Texas is in good shape there. The advantages of extreme decentralization are obvious: Agencies have great flexibility to hire whom they want, when they want, without a bureaucracy to stifle them. The negatives are also clear: There's no monitoring of agency efforts, statewide workforce planning is impossible and there's less aggregated data than is desirable. MANAGING FOR RESULTS: B+ Strategic planning is bipartisan and involves both the executive and legislative branches. The governor creates goals in consultation with the legislative budget board. There's no centralized effort to measure progress toward achieving them, but each agency does have its own strategic plan tied to the governor's goals. Nearly all state activities use outcome measures. Targets are set and progress toward them tracked, with variances explained to the Legislative Budget Board. Data accuracy is carefully scrutinized by the State Auditor's Office. Good efforts are made at breaking down the costs of services. Moreover, managers are now wrestling with the difficult conundrum of marginal costs: If you've decided to immunize all the state's children, that seems affordable. But the cost of reaching the last 1,000 of them may be stratospheric. INFORMATION TECHNOLOGY: B Though Texas has attempted to develop statewide information management in the financial and human resources areas, most agencies use their own internal information systems for management processes. The state does, however, use a statewide budgeting system that supports both the executive and legislative budget offices, and even tracks performance measures. Texas has only minimal IT standards, but it encourages agencies to make acquisitions that are interoperable with those in other agencies. There is a five-year strategic IT plan. Agencies also produce five-year IT plans, listing goals and objectives, and the state reviews them to make sure they are aligned with the statewide direction. The Department of Information Resources brokers purchases of commodity hardware, software and even information services. In 1998, this saved agencies a reported $30 million on such purchases through the power of quantity buying. Although the agencies control most of their own technology, the DIR does monitor the largest among them—right now, about 25 separate efforts. It does a so-called "post-implementation evaluation review," in which it forces agencies to compare the qualitative and quantitative benefits promised at the beginning of projects to the ultimate success in delivering them. AVERAGE GRADE: B
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