Going Too Far on Furloughs?

Plus: The big pencil, the pressure to appear overloaded, and more
July 23, 2009 AT 3:00 AM
Barrett and Greene
By Katherine Barrett & Richard Greene  |  Columnists
Government management experts. Their website is greenebarrett.com.

No governor likes to give employees unpaid furloughs. And we can imagine that it wasn't an easy decision for Wisconsin Governor Jim Doyle when he ordered 16 unpaid days off over the next couple of years. But imagine how much tougher the governor's life must be as local newspapers catch on to the fact that a number of the furloughed employees aren't even being paid by the state, resulting in personal pain without any state gain.

According to a piece in the Capital Times , Laura Brown, a senior scientist at the University of Wisconsin Medical School has noted that "federal grants pay the salaries and benefits of many UW staffers. Other researchers have private grants from individuals or foundations." The article goes on to explain that more than 6,000 employees at state agencies get their pay from a variety of federal sources. The alternative, of course, would be to furlough some workers and not others, depending on the stream of revenues used to cover their pay. You can just imagine how well that would go over.

We've written before about the concept of the "big pencil." In retail, the phrase refers to a buyer who makes such big purchases that he can get the best price. But it's difficult for municipalities and counties to take advantage of these economies of scale unless they join together. This is hardly a new idea, but here's a terrific example that we think makes the case simply and powerfully. It's part of Governor Mitch Daniels' OneIndiana Initiative, and came to our attention from Inside Indiana Business.

The program deals with road salt used in winter weather. Starting in the spring (that's nice advance planning), cities and counties aggregated their salt needs into one single statewide bid. The result: $8.5 million in savings.

"Historically, communities have gone it alone and been forced to pay a higher price for salt," Mark W. Everson, commissioner of the Indiana Department of Administration, told Inside Indiana Business. "In these difficult economic times, it is important to leverage the state's buying power. Communities can salt away these substantial savings and then plow them back into essential services for Hoosiers. This is a clear win-win for both the state and locals."

Who would have ever thought anyone could be fascinated by a report titled, "The Social Influences on Electronic Multitasking in Organizational Meetings"? Well, we were. It sheds some interesting additional light on our recent items about the pros and cons of new technologies. We reported, as some of you may recall, that some folks were frustrated by the incessant click-click-clicking of PDAs at meetings.

According to the paper, written by Keri Stephens and Jennifer Davis from the University of Texas at Austin, it's not communication overload that leads to these distractions -- so many e-mails, calls and so forth that folks just have to continue a number of dialogues during meetings. Instead, the researchers argue, it has more to do with the ethos of the organization. If you work for a place where everybody thinks it's important to appear to be overloaded, you're more likely to tune out the poor woman who is making a presentation and tune into the little machine.

One more thought about technology. About fifteen years ago, when we were doing research about the states' revenue and expenditure growth, we sat at our desks for hours on end and used pocket calculators to manually compute the difference between the state's expectations and its realities. The process really made us think about what the numbers were telling us -- and it helped us spot numbers that were arithmetically correct but made no sense. This kind of work is a whole lot faster and easier now with automated programs or spreadsheets like Excel doing all the calculations and returning bulk percentages to you. But we wonder if you don't miss things that become clear when you've actually got your hands on the numbers. We're not suggesting that the good old days were actually enviable -- just that there's a tradeoff for the brave new world.

It's not hard to find cautionary tales in the world of government contracting. But here's one that should wake up any city or state that's in a big rush to make deals without considering all the potential pitfalls. New York State Comptroller Thomas P. DiNapoli has just completed an audit of a couple of big development agreements that were supposed to be saviors for the Niagara Falls area. Unfortunately, one of them, the downtown Rainbow Centre mall, has been essentially vacant since 2000. The other, a $110 million contract for a development near the Seneca Niagara Casino, has left the area with acres of unused properties.

The big problem now is that the contracts drawn between the city and the developers left the city with minimal recourse despite this dismal record. "Perhaps there was too fast a desire to sign the agreements without really looking at the fine print and detail," DiNapoli told the Buffalo News . "On something like economic development, you can't just do it on a hope and good faith. You really do need to specify more clearly what the benchmarks are."

Back to logos. We've written before about the high sums states and cities can spend developing new logos. We kind of thought we'd dried up the topic, but we couldn't resist passing this along to you, from The Week, currently one of our favorite magazines: "Wisconsin's Government Accountability Board, tasked with running fair, orderly elections, has drawn up a new logo that strongly resembles the symbol of the international anarchist movement. The board paid a designer $4,900 for the logo -- a capital A inside a circle -- unaware of the symbol's history as an icon of lawlessness."

As we've said before, beyond the problems with the logo itself, it's hard for us to understand how state agencies, boards and commissions could be spending much on fancy logos these days.

Manager's Reading List: Our ongoing feature about books to read, recommended by B&G readers

Dall Forsythe is the former budget director of New York State and a professor at NYU's Wagner School. He was too modest to suggest his own excellent book, Memos to the Governor: An Introduction to State Budgeting . But he did offer this suggestion: The Art of the Turnaround by Michael Kaiser. As Forsythe writes, "Kaiser runs the Kennedy Center in Washington. His specific audience is managers of nonprofit arts organization, but lots of government managers have units needing turnaround, and Kaiser's book will get them thinking in new ways about their situation."

Read the full archive of Managers Reading List suggestions.

We were pretty impressed when New York City Mayor Michael Bloomberg announced that despite the need to make major budgetary cuts in education, he was insisting that nothing be cut from the kinds of performance measures that help the city know how best to spend the money. For more information, you can watch Bloomberg lay out the details.

Did you know that special districts are the most numerous and fastest growing type of government in the United States? According to a fascinating report by Laritta J. Killian in Government Accountants Journal, special districts make up some 40 percent of all local government entities. As she reports, "There are 87,576 government entities in the United States. At 35,052, special districts are the largest component of this total. Municipalities are the second most numerous type of government entity (19,429) followed by towns or townships (16,504)."

Yet despite these numbers, efforts to improve government management have tended to all but ignore the special districts. As Killian points out, many of the outstanding efforts to measure government performance focus on states or municipalities. "It is time," she writes, "to expand accountability efforts to encompass special districts."

We couldn't agree more. Consider the situation in Indiana, as outlined by Killian. In 2007, Governor Mitch Daniels created the Indiana Commission on Local Government Reform, which submitted some 27 recommendations. Notwithstanding that a minority of those recommendations actually made it through the legislature, the more remarkable fact is that "Three of the recommendations concern library districts, but the report is virtually silent on other special districts even though they account for 81 percent more property taxes than do townships."

When it rains it pours. Maybe this is obvious, but it's just occurred to us that the worse shape a state's budget is in right now, the greater the likelihood that it will get even worse. Got a bad bond rating? You pay more for debt, and that adds to your shortfalls. Behind on your pension payments? The actuaries insist that you pay still more. Need to raise tuitions on higher ed and less students go to your state school? The workforce weakens and that makes it harder to attract new companies.

Research Assistant: Heather Kerrigan