Grading the States introduction THE GOVERNMENT PERFORMANCE PROJECT Report Card: Kentucky GOVERNOR Paul E. Patton (Democrat, elected 1995) LEGISLATURE House — 64 Democrats, 36 Republicans Senate — 20 Republicans, 18 Democrats FINANCIAL MANAGEMENT: A- Kentucky stands out for its emphasis on financial planning. Many states issue consensus estimates for long-range revenues. Kentucky is one of the few that has a similar process for expenditures. Not only that, it calculates in advance how it can reduce expenditures in priority order if revenues turn south. If there are surpluses, it’s ready, too, with a prioritized list of projects that don’t build up the ongoing operating budget. Although the Commonwealth took in about $2 billion in additional debt in the last two biennia, this was also by design, aimed at supporting consistent capital programs. Debt service was set at 6 percent of state revenues. Previously, capital spending had peaks and valleys that made it more difficult to plan. There is good oversight of procurement, as well as attention to professional training and certification. Extra freedom is delegated to agencies that develop internal expertise. Employees can develop purchase requests, solicit bids on the Web, award contracts and process payments electronically. Officials want to improve their use of performance measures in contracts and say they need better reporting mechanisms for commodity tracking and contract usage. CAPITAL MANAGEMENT: B+ The state’s Transportation Cabinet (the same as the Department of Transportation in other states) updates its thorough inventories annually for highways and roads and biannually for bridges. It’s in the process of developing an operations management system that will have extensive inventory and condition data. Of course, some people in the state might be just as happy not to have all this information. The inventories have identified between $45 billion and $50 billion in highway needs. That’s more than $12,000 for every person in the state. It is also an obviously unattainable figure, so the state has to prioritize projects carefully. Meanwhile, it has wisely chosen not to ignore maintenance in an effort to catch up on construction needs. Over 90 percent of the current budget goes to upgrade or conduct major renovation. HUMAN RESOURCES: B+ Kentucky is in the process of rehabilitating an antique classification system, and it’s made enormous progress elsewhere. It has reengineered its hiring process, cutting the time required to bring someone new on board by as much as 70 percent. It has made exceptional use of online applications and automated testing. The central personnel office takes only 12 days to get a list of applicants to agencies. Just about any of the state’s tests can be taken at any of 11 testing centers at any time. These accomplishments would be desirable in any state. In Kentucky, they have been particularly useful because the legislature passed a generous retirement program encouraging workers to retire at a rate three times the national average. Kentucky’s work force needs to develop new talent very quickly. It appears to be doing that. The governor scored a major victory in last year’s legislative session by ridding the state of one of the nation’s least functional performance-appraisal systems. At the same time, he failed in his attempt to restructure a system that guarantees 5 percent annual raises for employees. This statutory guarantee makes Kentucky — a non-union state — one of the most generous to its employees, including those who do not merit extra money. The mandatory raises eat up so much cash that they limit the resources available to reward true excellence in the most competitive job areas. MANAGING FOR RESULTS: B+ As the first governor in the state’s history who was eligible for reelection, Patton had more incentive than his predecessors to focus on the long term. And he’s making every effort to do this. There is actually something called a Long-Term Policy Research Center, an arm of the General Assembly made up of legislative and executive officials, as well as nongovernmental members. It has assessed the status of the state through customer surveys and other measures based on 26 long-term goals. Its report, Measures and Milestones 2000, is particularly comprehensive. A new piece of legislation — Bill 502 — forces cabinet-level agencies to create their own strategic plans and make sure they’re tied in with the governor’s goals. The use of specific outcome measures by individual agencies could be improved upon, but the measures are being used well in certain areas of government; specifically education, where the state is a national leader in its use of measurement tools. INFORMATION TECHNOLOGY: B+ Kentucky is gradually automating some of its most cumbersome manual information systems, and progress has been notable. “For the first time in state history,” says CIO Aldona Valicenti, “all three branches of Kentucky government use the same finance and budgeting system.” But the state’s IT problems are far from being solved. Replacing legacy systems is a very expensive process, and the state still has old, non-integrated systems running in the corrections and human resources areas. “Right now,” as Valicenti puts it, “we have a system that’s been altered, enhanced, kept whole and patched. Inadequate may be a good word.” That said, Kentucky is one of the few states that can adequately identify the gap between its architectural standards and existing technology. An annual gap-analysis survey is completed by all executive agencies, which report on their compliance with key standards, and the results are published. One of the most impressive accomplishments here is the Kentucky Information Highway, winner of the NASIRE award for public-private partnerships. The state has established this network in collaboration with almost 20 private-sector partners. Any appropriate user can hook into the network, and the state functions like the anchor tenant in a mall. AVERAGE GRADE: B+ 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.