THE GOVERNMENT PERFORMANCE PROJECTReport Card: Vermont FINANCIAL MANAGEMENT: B Just three years ago, Vermont adopted consensus revenue estimating, and it has made an important difference in a state in which the legislature traditionally could be counted upon to raise the executive branch estimates by 2 percent. These days, Vermont handles its financial business in a prudent way. Revenues exceeded estimates by about 4.5 percent in the most recent fiscal year, and expenditures are in line with revenues, giving the state a solid structural balance that it has not historically achieved. Though the debt burden is still high relative to other states, Vermont now borrows sensibly, and debt levels are falling. Partially as a result, the rating experts at Standard and Poors recently raised the state's credit rating to AA. After a process of change that took half a decade, Vermont finally does its books in compliance with generally accepted accounting principles. Its investments are very conservatively maintained—security and liquidity are the primary goals. But there is no investment oversight body, and returns on investments aren't compared to any benchmarks in other states or the private sector. Vermont does cost accounting on an ad hoc basis. More will follow after implementation of a new financial system that is supposed to become available in 2001. CAPITAL MANAGEMENT: B Agencies here are required to produce very detailed capital requests and generate five-year plans that prioritize projects and include funding possibilities. The secretary of administration carefully monitors and prioritizes the requests to limit borrowing so the state can continue to reduce its debt burden. Capital projects are tracked, and performance standards used to help keep them on time and on budget. The state maintains a capital inventory, used mainly for insurance purposes; managers would like to have a more sophisticated asset management system. Solid information is lacking about the cost of fully maintaining assets. Vermont claims to fund asset maintenance at about 75 percent of its minimum ideal level as determined by industry formulas. "We are in a ballpark of reasonableness," says Tom Pelham, commissioner of finance and management. "We don't hear a lot of complaints." HUMAN RESOURCES: B- The state's need for workforce planning is currently under discussion by a blue-ribbon commission. One area of concern: An early retirement program involving about 450 employees shrunk the size of the total state workforce by about 6 percent but increased the use of temporary employees. Vermont's Department of Personnel offers state workers training programs, some for free and some on a fee basis, with tuition assistance available. Still, admits personnel official Eileen Boland, "if you were to compare our training dollars to the private sector, it's very small." The state needs to provide better motivation for managers who are slotted into fixed pay grades like other employees. With salary increases in the technology area, it's not unusual for an information technology worker to report to a supervisor three grades lower on the scale. MANAGING FOR RESULTS: B- There is no statewide strategic plan in Vermont, but serious planning takes place at the agency level, and it has begun cascading down to the smaller departments as well. In 1994, the legislature took an important first step toward performance-based budgeting, requiring measures from all the agencies. Early in the process, the state auditor's office questioned the usefulness of the measures, and subsequently the auditor, the legislative fiscal office, and the Department of Finance and Management have worked to improve their quality and create more results-oriented data. About 80 percent of the major governmental activities in the state now have outcome measures, according to estimates, but their quality varies widely. Measures appear to be particularly strong in human services and transportation. The governor's office has utilized benchmarking to help make budget decisions. For example, in prior budgets it decided to provide more money to treat alcoholism (in which the state falls toward the bottom of state comparison lists) rather than more money for child care (in which Vermont does very well compared with others). INFORMATION TECHNOLOGY: C The information provided by Vermont's budget and accounting systems is inadequate. It doesn't even properly support the long-awaited conversion to generally accepted accounting principles. Vermont has requested vendor proposals for a new system that will include budgeting, accounting and purchasing modules, but it won't be in place until 2001. The state's information office used to be a one-person operation. Now it is a two-person operation: The CIO has a lone assistant, working full-time on the Year 2000 problem. The CIO does, however, write a five-year plan for the state's information technology needs, chair an advisory commission, approve all requests for proposal, recommend decisions on IT contracts and manage statewide network infrastructure. Whew! Agencies help out (a little) by providing five-year IT plans. They are required to include cost-benefit analysis of all projects in excess of $150,000, though there's no follow-through, at least so far. On the bright side, the state has a robust shared network infrastructure that eases communication among agencies and branches of government. More than 300 of the state's 350 schools are able to make use of the system, and citizens can go to any public library for access to government information as well as other Web sites. AVERAGE GRADE: B-
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