Grading the States introduction THE GOVERNMENT PERFORMANCE PROJECT Report Card: North Dakota GOVERNORS John Hoeven (Republican, elected 2000) Edward T. Schafer (Republican, 1993-2001) LEGISLATURE House — 69 Republicans, 29 Democrats Senate — 32 Republicans, 17 Democrats FINANCIAL MANAGEMENT: B- The major area for improvement in this generally well-run state is procurement and contracting. An auditor’s report last year found that procedures for contracting services were too loose. Individual agencies were managing their outside contracts independently, with almost no central guidance. The state’s Office of Management and Budget is now seeking authority to fill that role. Procurement is also hampered by overly stringent requirements for obtaining formal bids. Sealed bids are mandated for procurements as low as $1,000 — compared with a floor of $25,000 or more in most other states. “The buyers in our procurement office are tied up in spending a lot of time with small purchases,” admits Pam Sharp, of the Office of Management. On the plus side, the state’s financial reporting is strong. North Dakota is one of only nine states to receive the Distinguished Budget Presentation Award from the Government Finance Officers Association. It communicates financial information effectively to citizens through newspaper inserts. The state has good mechanisms to deal with fiscal downturns, and recently added an Oil Trust fund to help even out the ups and downs of oil prices. CAPITAL MANAGEMENT: B North Dakota puts a lot of effort into looking ahead. A key component to that vision is the recent establishment of a new position, called the State Facility Planner. The planner lends his expertise to agencies that lack architectural staff and brings long-range perspective to the capital-planning process. There are a couple of notable weaknesses here, however. For one thing, there is no standardized approach to reporting on capital projects. Agencies develop reports as needed, but they aren’t required to submit any to the budget office. DOT, for its part, uses an automated system that generates progress reports during the construction season, but OMB doesn’t request any project status reports from the department. In fact, North Dakota doesn’t have a central project management database at all. Agencies have their own systems with which they are comfortable. Sheila Peterson, OMB’s fiscal director, argues that a central layer of control is unnecessary; but the vast majority of states that have one — including many of the small states — would disagree. HUMAN RESOURCES: B HR management is extremely decentralized in North Dakota. “Our role is to serve as consultants rather than enforcers,” one HR official maintains. The positive impact of this is that agencies have long had the flexibility in hiring and making salary decisions that other states are now moving toward. The negative impact is that more centralized data would help work-force planning efforts. At the moment, managers have a hard time distinguishing between an employee who moves from one agency to another and an employee who moves to New Zealand. Decentralization results in some inefficiencies for job applicants as well. A person may have to apply over and over again to be considered for several different jobs in the state. Vacancies are centrally posted on the Internet, however, and a list-server function sends out a notice of new openings to anyone who cares to subscribe. The central personnel office has also started to coordinate job advertising. Another bit of good news: The state has been pushing mediation to deal with disciplinary issues and avoid lengthy appeals. “We’ve had significant success in catching problems early enough, before relationships go thoroughly in the Dumpster,” says Ken Purdy, acting personnel director. MANAGING FOR RESULTS: C- The North Dakota legislature passed a bill in 1999 forbidding any performance measures in the official budget. In some other states, that would have killed the process. But a determined core of managers in the executive branch has continued to forge ahead on other fronts, in some ways seemingly spurred on by the legislative resistance. Over the past couple of years, North Dakota’s managing for results system has moved from an agency effort to a statewide program. Although agencies still do strategic planning and performance measurement on their own, the executive branch has developed its own set of statewide high-level goals. The first statewide plan has just been issued. “The governor sees this as his legacy,” one official says of Governor Ed Schafer (who recently left office), “setting out big conceptual directions that this state as a whole should move.” INFORMATION TECHNOLOGY: B- North Dakota has had a CIO for a couple of years, but until just recently, that position reported to the state budget director. Legislation has now formalized the position and placed it directly under the governor. Meanwhile, the state has come out with a brand new strategic plan for IT, and has a reasonable amount of central authority over its agencies. But it wields that power carefully. “We have the authority to say no [to a procurement that seems unwise],” says Mike Ressler, director for IT planning, “but it would have to be a pretty bad decision before we would do that.” The state’s Web site is terrific, with a great deal of information easily available, but it is middle of the pack at best in the introduction of online transactions. Efforts to deal with this are moving forward, and the statewide network helps to keep many procurements in conformity with protocols for going online. Although North Dakota requires analysis of both monetary and non-monetary benefits before approving a new IT acquisition, it does little to see whether the goods are delivered after the fact. 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.