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| C | Arkansas |
• Population (rank): 2,810,872 (32)
• Average per capita income (rank): $19,758 (48)
• Total state spending (rank): $14,370,337,000 (32)
• Spending per capita (rank): $5,112 (29)
• Governor: Mike Beebe (D)
• First elected: 11/2006
• Senate: 35 members: 27 D, 8 R
• Term limits: 8 years (lifetime)
• House: 100 members: 75 D, 25 R
• Term limits: 6 years (lifetime)
In his first year after taking office in 2007, Governor Mike Beebe showed commendable focus on the effort to bring better day-to-day administration to a state that sorely needs it. He began by tackling one of the worst long-standing problems: a depressingly high turnover rate among state employees. The governor brings some expertise to this endeavor: He once chaired the Senate Personnel Committee.
The big problem has been a failure to provide regular pay increases. For years, state workers have received one-time bonus payments for high achievement as a way to avoid building permanent additional expenses into the budget. From a fiscal economy perspective, that may be sensible. From a human resources vantage point, it's not. Fast food restaurants pay higher wages than many state jobs in Arkansas.
To counteract that phenomenon, the administration has begun a comprehensive pay plan study, backed by the legislature, to identify where low salaries have had an especially pernicious effect on employee retention. The findings are expected to be incorporated into next fall's budget hearings. Meanwhile, the governor sponsored legislation that changed the bonus payments to permanent merit increases and, in addition, got every state employee a 2 percent cost-of-living increase. Personnel staff are about to update job classifications, something that has not been done in nearly two decades. But despite these incremental improvements, meaningful reform of the state's compensation system will not be accomplished quickly. "It's a pretty massive undertaking," admits Kay Barnhill-Terry, director of the Office of Personnel Management.
Human resources present a challenge to management in another way, as well. Very little in the way of strategic or centralized workforce planning has ever been done in Arkansas. State agencies once were required to produce performance information on their activities, but the legislature dumped this effort several years ago.
Sweeping changes to human resources, as with any aspect of state government, will require money. And Arkansas is short on that commodity at the moment, for a variety of reasons. One stems from the resolution of a long-standing class-action lawsuit, which requires the state to use about 50 percent of general revenues for education. So while Arkansas generated about $1.1 billion in surplus revenue over the past few years, much of the money had to fund school maintenance.
Recently, the state has increased funding for prison renovation and for more corrections staff, including parole and probation officers. These initiatives have been credited with helping to cut what had been a growing prison population. The current administration has continued to support these funding increases, which began under former Governor Mike Huckabee.
Arkansas has traditionally handled debt issues well. But its budget process is weak, and in the event of an economic downturn, the state won't have much room to maneuver. In 2007, the governor succeeded in reducing the sales tax on food to ease the burden on low-income residents, and during the next legislative session, he hopes to eliminate the tax on food altogether. Desirable as this may be in many ways, it could put the budget out of structural balance in the event of severe economic stagnation.
The state also has a $160 million backlog in highway maintenance needs. The good news is that this amount hasn't gone up in recent years. "We're pretty much able to maintain the status quo," says Scott Bennett, of the Highway and Transportation Department. Unfortunately, due to rising construction costs, Bennett believes that's about to change for the worse.
Unlike most states, Arkansas does not have a systematic way to prioritize its capital expenditures for infrastructure. The state does have a maintenance division that tracks routine needs, but officials mostly depend on staff looking at the crisis of the month, and then setting short-term priorities. Bennett calls this approach "the old-fashioned way." He's right about that.
For additional data and analysis, go to pewcenteronthestates.org/gpp.