Grading the States introduction THE GOVERNMENT PERFORMANCE PROJECT Report Card: Vermont GOVERNOR Howard Dean (Democrat, took office 1991) LEGISLATURE House — 83 Republicans, 62 Democrats, 4 other, 1 independent Senate — 16 Democrats, 14 Republicans FINANCIAL MANAGEMENT: B “If a recession came and we had a six-month problem, we’d probably not even hiccup,” says Vermont’s finance commissioner. He may be right. Hit hard by the early 1990s recession, the state has been steadily building up its reserves. Its overall rainy day fund has been above 5 percent of general fund expenditures, and it maintains separate funds for a similar purpose in education and transportation. With short-term borrowing no longer necessary for cash flow, debt ratings have been improving. Standard & Poor’s went to AA+ last summer, despite the fact that debt levels are still relatively high, a legacy of the earlier hard times. The one area where forecasts have been unreliable is corrections. Vermont isn’t perceived as having a crime problem, and budgeters apparently haven’t noticed it either. Corrections spending has been consistently over budget in recent years — by 3 percent in 2000, 7.4 percent in 1999 and 5 percent in 1998. Vermont is still playing catch-up with other states in financial reporting, although it converted to Generally Accepted Accounting Principles a few years ago. A new financial accounting and budgeting system will be operational in July, marking a big improvement from the unintegrated paper-intensive processes that have characterized the state’s efforts up to now. CAPITAL MANAGEMENT: B- Vermont has stringent controls on capital dollars. Money appropriated for specific projects can’t be moved, so when emergencies arise, funds have to be shifted from the deferred-maintenance account. Bridling under this constraint, budgeters decided to leave a quarter of this year’s capital budget uncommitted to anything, and thus available to cover “unanticipated situations.” This is a hefty amount of money to leave in a grab-bag. Agencies here put together five-year plans, which describe capital projects and explain how those projects support the agency mission. Priority values are assigned to each project. The Agency of Transportation puts together a 20-year, long-range policy plan and a five-year capital plan. The long-range plan was written in 1995 and updated last year. With the advent of this process, Vermont signaled that its priority is maintaining existing assets, and concentrating on a thoughtful process for making new investment. One example: The state moved away from traditional highway design and developed roadway standards more appropriate for its rural areas. HUMAN RESOURCES: C Labor relations have grown increasingly tense here the past couple of years, with grievances reaching a high point in 1999. Unions see managers as insensitive; managers complain, in the words of one of them, that “the union seems to be dedicated to maximizing the number, intensity and visibility of conflicts.” The situation has been aggravated by inefficient classification and grievance mechanisms: In Vermont, an employee can ask for a review of his classification at any time, in hopes that the position will be reclassified and he will get more pay. There can be backlogs of as many as 1,000 requests for review at any one time. Then, if the employee doesn’t get the decision he wants, he can submit a grievance — another time-consuming process — or demand another review. On the plus side, the state has brought down the number of temporary employees from 19 percent of the work force in 1999 to 11 percent last year. It has helped rationalize the process of determining when it’s genuinely cheaper to use contract employees as opposed to hiring its own. Work-force planning efforts have begun, and the process should accelerate with the state’s new human resource management technology. MANAGING FOR RESULTS: B Although Vermont has no statewide strategic plan, it does take planning and performance measurement seriously. It has a genuine bottom-up process, in which core agencies help set the strategic agenda in collaboration with the governor. The agencies are each required to have their own strategic plans, with statements of mission and output/outcome measures. The actual quality of the measures has been improving, although not all agencies are on board yet. “They have not been particularly used in management decisions,” explains one official. “They create them as part of a budget exercise.” One particularly strong program here has been a report card for public social indicators in communities around the state. That information helps drive managers in human service agencies to push for improvements at the community level. INFORMATION TECHNOLOGY: C+ C’mon guys. Hire some help for your CIO. Patricia Urban, Vermont’s chief information officer, has a staff of two, plus herself. Although she is doing a remarkable job at keeping the state’s IT efforts on an even keel, the stingy attitude toward resources reflects a shortsighted view of the value of technology in state government. And it’s hurting. Vermont has been slow to put transactions on the Web, for example. Vermont has, by statute, one of the most effective systems in the country for evaluating costs and benefits of IT projects before they’re approved. But the CIO doesn’t currently make sure that approved projects actually deliver the promised benefits once they’re finished. The best news is that a much-needed upgrade to the human resources information system was completed ahead of schedule, and the new $12 million financial information system is on track for July. The agencies are paying for the financial management system out of their own budgets, hoping the legislature will come up with some money to help them out later. 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.