Grading the States introduction THE GOVERNMENT PERFORMANCE PROJECT Report Card: South Carolina GOVERNOR Jim Hodges (Democrat, elected 1998) LEGISLATURE House — 70 Republicans, 54 Democrats Senate — 24 Republicans, 22 Democrats FINANCIAL MANAGEMENT: A- South Carolina’s financial management systems generally serve it well. Financial reporting is very good, and the state’s bonds are triple-A rated. Pension funds are now being allowed to make equity investments for the first time. This is being phased in until 40 percent of the portfolio is invested in domestic equity markets. Meanwhile, the state has made its budget a more reasonable document by persuading agencies to offer realistic estimates of federal aid. In years past, they seemed to think Uncle Sam had pockets full of greenbacks he was eager to supply. They now accept that this is not the case. South Carolina isn’t entirely without flaws. The current budget is using tobacco money for ongoing expenditures — a nice windfall, but a little painful when you have to stop, as the state is about to. A tobacco-settlement management authority will take control of the revenue stream in July. Procurement here has hit on a good blend of centralized expertise and decentralized legwork. Agencies are given authority to make their own purchases, but a central audit unit keeps an eye out for problems. It handles statewide contracts and procurements for agencies that don’t have the capacity to do it for themselves. As with many states, training for contract managers needs to be accelerated. “That’s a source of concern for all of us,” says Voight Shealy, materials management officer. CAPITAL MANAGEMENT: C+ South Carolina’s capital planning process resembles no other. The state writes a traditional five-year plan. Agencies submit five-year plans of their own, plus an annual capital plan explaining what they want to do with the funding they’ve already secured. Then, after all that hubbub, agencies are allowed to make interim requests to get projects approved that were never even considered before. If it sounds unnecessarily cumbersome, that’s because it is. Unlike most states, South Carolina tends to fund its building needs more consistently than it funds transportation projects. Over-reliance on a gas tax for transportation needs has led to unpredictable funding from year to year, making it tough to plan years in advance for large capital projects. Maintenance funding for roads and bridges also lags behind, with a projected shortfall of more than $9 billion through fiscal year 2008. But there’s good news, too. The state will save a truckload of money by taking advantage of low interest rates to compress some 27 years of planned road construction into seven. A master facility-planning process for the government buildings in Columbia should lead to better maintenance. The number of construction change orders has decreased, and agencies can use the Internet to receive comprehensive information about project status. HUMAN RESOURCES: A South Carolina stands out as a model for states with a decentralized personnel structure. It gives its 70-plus agencies flexibility to manage salaries and positions, while providing substantial support and maintaining good central information. The legislature keeps watch over agency performance through its somewhat unusual Agency Head Salary Commission, which examines the performance of directors annually. Classification reform, initiated in 1996, has worked extremely well. The state was a pioneer in efforts to create broader and more flexible job titles, reducing the number from 2,500 in the mid-1990s to 452 today. Work-force planning is a priority, and almost all agencies engage in it, although only about 25 percent have formal written workforce plans. The state has also beefed up its recruitment activities. A State Career Center helps applicants search for good job matches. A State Career Fair has been held twice to raise the profile of the state’s recruitment effort and generate applications in critical areas. MANAGING FOR RESULTS: B South Carolina doesn’t include performance measures in its annually published budget document, as ideally it might. But agencies produce annual accountability reports, publicly available and posted on the Internet. These are useful management and budgeting tools. Most agency-level measures have tended to reflect the individual agency’s outcomes or outputs, rather than achievement of a statewide objective. That’s been changing, as the Hodges administration emphasizes multi-agency planning and measurement design. New performance measures that cross departmental lines are being developed. This effort has been aided demonstrably by the creation of the state’s first statewide strategic plan, which generally ties in well with the agency-level plans produced in the past. Unfortunately, some of the agency plans lack implementation strategies. INFORMATION TECHNOLOGY: B Late last year, South Carolina finalized a description of its brand-new CIO position, and at last report was seeking candidates. There’s general agreement in both executive and legislative branches that this is a step forward, and should help in evaluating new projects and tracking them centrally as they approach completion. Even without a CIO, the state has taken some impressive steps. It was one of the first states in the country with telecommunications connection to all public schools and public libraries. It is experimenting with two-way video to provide resources to students in rural and less-affluent areas. Although there could be improvement in the state’s entity-wide IT systems, the HR information system is strong. The Office of Human Resources can track the training any employee receives, along with the cost of training and any accreditation or certification associated with it. 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.