In interviewing thousands of public-sector managers over the past 25 years, we’ve accumulated a list of maxims that are frequently used to explain the managerial actions of state and local governments. We don’t like to call them lies, but they are far from reality in many places. When people buy into these notions and then discover them to be untrue, that can easily erode trust in government, which makes it far more difficult to manage a state or locality.
The following are 10 of our favorites, put into a little context:
“Managers know we are in financially sound shape because we have to pass a balanced budget.” It’s true that 49 of the 50 states have some kind of mandate to balance their budgets. But having a balanced budget at the beginning of a fiscal year in no way proves fiscal soundness. Connecticut and Kansas, for example, started their fiscal years with expenses in line with revenues. But both states’ budgets have fallen wildly out of balance subsequently and are in dire straits.
“It’s impossible to fire a public-sector employee.” That’s never the case. What is true is that in many states and localities, managers need solid documentation in order to demonstrate that an employee deserves to lose his or her job. That takes effort, and the lack of that effort can, indeed, make it hard to let someone go.
“We’ll solve this problem by setting up a commission.” Lots of commissions are set up by governors and legislators. But the commissions themselves don’t solve problems. If they contain good recommendations, that’s a start. And if those recommendations are followed, that’s even better. But frequently, in our experience, that just doesn’t happen.
“Our transparency website means our government is transparent.” While websites chock-full of good information can be a start, that’s all they are. There’s a great deal more to transparency, including providing access to managers for members of the press or the public; releasing up-to-date, comprehensive minutes of public meetings; and making public documents easy and inexpensive to find. But these things aren’t always available.
“Buying new technology will be the key.” No question, inadequate or antiquated technology can stand in the way of public-sector progress. But the simple act of buying new electronics can just be a costly way to get nowhere. Sometimes there’s simply a lack of training in the new technology. In other cases, the technology is purchased, but modules to perform specific tasks aren’t turned on for years—or ever. Just as often as we hear about the wonders of new technology, we hear about the disappointments with it.
“Merit pay is based on merit.” Truth is that in many states and localities, merit pay is just a euphemism for a raise. When the vast majority of employees get a merit pay increase—which is often the case—the likelihood is that it doesn’t indicate that the raise was necessarily merited by superior work.
“The main reason we have a huge unfunded liability in our pensions is that the benefits are too rich.” However generous a state or local pension plan may be, as long as it’s funded annually at the sum recommended by actuaries, unfunded liabilities won’t build up. Take New Jersey, which has more than $130 billion in unfunded pension liabilities. The problem isn’t that the benefits are too rich; in fact, according to an American Enterprise Institute study, New Jersey’s pension benefits are less generous than most other states’. It’s that lawmakers have been underfunding the pension plans for years.
“Managers just need to examine the general fund in order to analyze a city or state’s financial condition.” That’s like trying to get a full sense of a person’s health by taking just his temperature. As we’ve noted here before, data from the National Association of State Budget Officers shows a fairly steady drop in the portion the general fund makes up in total expenditures—41 percent in 2014 compared with 52 percent in the early 1990s.
“You can always trust our data.” Does this require much commentary? When we wrote a piece about bad data a couple of years ago we contacted more than 75 officials in 46 states. About 7 out of 10 said that data problems were frequently or often an impediment to doing their business effectively. No one who worked with program data said this was rarely the case. This is the most recent research we were able to find on this topic, but we have no reason to believe things have gotten much better.
“Our government can be run like a business.” The simple truth is that governments do the jobs that no private-sector firm would undertake because they’re not profitable. Take Medicaid. How could a corporation make a buck focusing on this service? With that in mind, while some business principles can be used in government, in many cases they simply don’t apply.