Grading the States introduction THE GOVERNMENT PERFORMANCE PROJECT Report Card: New Mexico GOVERNOR Gary E. Johnson (Republican, elected 1994) LEGISLATURE House — 42 Democrats, 28 Republicans Senate — 24 Democrats, 18 Republicans FINANCIAL MANAGEMENT: C+ Historically, New Mexico has had difficulty estimating some expenditures. For example, it seriously lowballed Medicaid the past couple of years. But it is attacking that problem with a new consensus estimating process and a new long-term fiscal forecast that projects five years into the future for both revenue and expenditures. “We’re trying to do some very sophisticated trend analysis,” says Duffy Rodriguez, director of the State Budget Division. The state’s pensions are fully funded and its bond ratings are healthy, but it could use better analysis of its debt capacity. Financial reporting continues to be a weakness here as well. Contracting is very decentralized, leaving problems with the potential to fester unnoticed. In addition, the legislature significantly limits managerial flexibility in financial matters. Although New Mexico doesn’t have a true rainy day fund, it maintains an operating reserve level equal to at least 5 percent of recurring spending. CAPITAL MANAGEMENT: C- New Mexico has a process for prioritizing capital projects, but it’s pretty much a paper exercise. The governor, the House and the Senate each get a share of the state’s capital funds, and each distributes its share according to political considerations. Within the legislature, each member’s priority projects are funded; there’s no formal comparison of need. The state does a somewhat better job in allocating resources for its Department of Transportation than it does for its facilities. The department prepares a six-year Statewide Transportation Improvement Plan, which is updated every year. Most DOT projects are finished on time, and come in close to budget. The department uses several forms of alternative delivery to speed project completion, including public-private partnerships. Facilities that are controlled by the General Services Department have been fairly well maintained in recent years. But other agencies can’t claim the same success. In many cases, they’re underfunded. At least they assume they are. Many don’t really know how much money they should be requesting for maintenance. HUMAN RESOURCES: B- Over the past few years, New Mexico has been a hotbed of experiments in human resources. Some have worked out really well, others have had unfortunate side effects. For example, the state’s central training office was stripped back on the theory that training would be better accomplished in a decentralized way. “I think we lost the ability to have a concentrated, tactical and strategic approach to training,” says Gip Brown, state personnel director. “Now we want to emphasize a common management philosophy.” The state also shucked many traditional civil service hiring practices in a major reform a few years ago. Agencies have freedom to hire pretty much whom they want, and recruit for specific openings rather than for generic titles. “This is quantum times better,” says Brown. But there are kinks. Hiring still takes too long, in part because the number of applications has skyrocketed. Now the state’s personnel staff has embarked on another major reform: transforming the classification and compensation system by reducing the number of titles from 1,200 to 200 by next summer. In the past, the state has had 14 classified titles for different kinds of attorney. Now there will be one, called “lawyer,” with different levels of responsibility. The hope is that this structural transformation will benefit work-force planning, training and performance appraisal. MANAGING FOR RESULTS: C The problem in doing MFR here has been micromanagement — specifically, a budgeting system that gets into excruciating levels of detail. For example, the Department of Health has had 22 specific appropriations — split by facilities, bureaus and divisions — with very little flexibility to move money between those appropriations. But the legislature and governor have finally agreed to an effort to organize activities into program groups. This may be the most important step in moving the MFR process forward. Will the legislature take the next step and start to fund by programs? There’s reason for optimism, and a decision may be reached in this year’s legislative session. Meanwhile, agencies are increasingly utilizing performance measures. Training workshops held last fall helped focus on better development of outcome measures. There’s also been increased use of performance-based contracts, notably in the Department of Health. INFORMATION TECHNOLOGY: C+ In 1999, New Mexico created an Information Technology Commission with rule-making authority, and a CIO’s office with planning oversight and architecture responsibilities. With the managerial apparatus finally in place — including improved standardization and strategic IT planning — the state is poised to move into the 21st century. Right now, its telecommunications data networks and databases are often outdated, fragmented and redundant. A new multi-agency network is supposed to tie them together. Similarly, the entity-wide financial management and HR information systems are antiques. The state had to do a national search just to find someone who could keep them running. But the HR technology is scheduled for replacement, and the state is considering doing the same with financial management. One more anticipated advance: The state is using Internet technology to give managers access to a currently non-communicative bunch of disparate databases. Not only does the CIO’s office require that agencies provide strong justification for new projects, it works with them throughout implementation to make sure they’re on the right path — and afterwards to make sure that promised benefits were delivered. A report then has to be prepared for the IT oversight committee in the state legislature. 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.