Grading the States introduction THE GOVERNMENT PERFORMANCE PROJECT Report Card: Arkansas GOVERNOR Mike Huckabee (Republican, took office 1996) LEGISLATURE House — 70 Democrats, 30 Republicans Senate — 27 Democrats, 8 Republicans FINANCIAL MANAGEMENT: B- Arkansas’ Revenue Stabilization Law, which requires that alternative budgets be prepared to match varying revenue possibilities, has kept finances solidly in line. Surplus money has been spent prudently on one-time capital expenses. The state argues strenuously that the Revenue Stabilization Law means it doesn’t need a rainy day fund. Even if that’s right, Arkansas would benefit from other forms of long-term planning. Aside from the biennial budget, there are no long-term revenue or expenditure projections. There isn’t even a formal means for assessing the fiscal impact of legislation, although this is done informally. Says Jeffery T. Collins, director of the Center for Business and Economic Research, “We have biennial sessions and term limits, so you can imagine the level of depth that legislators are able to get into in terms of fiscal planning.” The state doesn’t have a debt-oversight body or guidelines on debt affordability. But it has kept its debt levels low, and discussions have begun in Arkansas about a more sophisticated debt-tracking and modeling system. Arkansas is also beginning to talk about activity-based costing — the governor mentioned it in his 2000 State of the State address. CAPITAL MANAGEMENT: C Arkansas continues to follow traditional design-bid-build capital construction rules that move projects excruciatingly slowly. It has been considering the use of new delivery techniques to help keep projects on time and on budget, but medium-size and small contractors are fighting the proposed changes “like crazy,” says Donald Manes, of State Building Services. The state’s capital planning process is cumbersome. It begins with agency plans that are submitted to the state architect. He comments on the adequacy of the cost estimates and forwards the requests to the Department of Finance and Administration. Finally, the State Building Services office prepares the governor’s capital budget, which serves as a capital plan. There is no long-term approach; since the state constitution prohibits funding into a future biennium, it’s pointless to present more than two years’ worth of requests. The DOT usually funds only about 60 percent of its identifiable needs. At that level, the department can’t make much of a dent in its maintenance backlog, and over the past several years, Arkansas’ interstate highway system has been in rapid decline. But the legislature approved an interstate rehabilitation program funded by a $575 million bond that will upgrade 372 miles over the next three years, and will free up some resources for non-interstate roadways. HUMAN RESOURCES: C Problems with Arkansas’ pay structure have become increasingly troublesome as the job market has tightened. The pay scale has not been updated for many years and “needs an overhaul from top to bottom,” says Twana Porter, the new state personnel administrator. Starting salaries are very low, and agencies must get approval from the state’s chief fiscal officer or the legislative personnel committee, depending on the circumstances, to hire above entry level. This may mean that hiring may be delayed until the legislative personnel committee meets each month. It also leads to a high percentage of job openings and relatively high turnover. Precise figures for these important measures are still lacking, although a new information management system should change that later this year. There are some interesting experiments here, including a telecommunicating pilot program for IT workers. The state is also providing more opportunities for employees to advance through a career ladder incentive plan, with promotions and bonuses based on skills achieved. MANAGING FOR RESULTS: C- Governor Huckabee supported a host of recommendations to begin managing for results a couple of years ago, and the effort is beginning to take form. Under legislation passed during the 1999 session, the executive and legislative branches are cooperating in the development of strategic planning and performance measurement. Pilot programs have been successfully moving forward. Meanwhile, draft legislation has been developed for the 2001 session to move the process another step, including the development of a statewide strategic plan. The effort isn’t moving at lightning speed, and still lags most of the country, but leaders say they are being purposefully cautious. “There’s been a lot of lessons to be learned from states who didn’t give it a chance to be a cultural change,” says budget administrator Mike Stormes. “I’m looking to make sure it isn’t just a passing fad here.” INFORMATION TECHNOLOGY: C- Over the years, many of Arkansas’ key managers have had to rely on incompatible IT systems and some manual systems to make decisions, generate reports and conduct daily operations. That will change this year as the state leapfrogs forward with the implementation of the Arkansas Administrative Statewide Information System. The initial deployment, if all goes well, will replace the ancient human resources and accounting IT systems with state-of-the-art, browser-based technology. Then the state is planning to update most of its enterprise-wide systems. This should help convince Arkansas agencies that they’re not independent fiefdoms, but part of a larger enterprise. But it will take some doing. The state’s efforts to do statewide IT planning, for example, began and then plateaued in 1998. “We had momentum and then we lost it,” says one IT official. On the positive side, the agency-level strategic planning process has continued, and appears to be improving. Meanwhile, many of the state’s hopes for progress are pinned to the formalization of a new CIO office, an achievement that now seems likely to happen. It’s not anticipated the legislature will provide direct funding for the office but will plan to use money from cost savings that emanate from better project management. AVERAGE GRADE: C Copyright © 2001, Congressional Quarterly, Inc. Reproduction in any form without the written permission of the publisher is prohibited. Governing, City & State and Governing.com are trademarks of Congressional Quarterly, Inc.