Archive
THE OREGON OPTION
On Monday, July 25, 1994, Governor Barbara Roberts of Oregon,
Multnomah County Commission Chairman Beverly Stein, and Portland
Mayor Vera Katz, briefed senior level officials from the White
House and Executive branch agencies. The briefing was a proposal
to partner with the Federal government in a demonstration project
to redesign intergovernmental service delivery based on
principles advanced in the National Performance Review. Oregon
is going into its fifth year of a legislatively approved, long
range effort to set standards for measuring statewide progress
and governmental performance. The program is called "Oregon
Benchmarks."
During the briefing, the state and local officials cited problems
they have encountered with Federal agencies and programs and also
cited some success stories which have occurred. Many of the
difficulties cited by these officials related to programs and
operations of various Federal agencies, while some difficulties
related to the work of Offices of Inspector General in auditing
programs operated with Federal funds.
Because some of what was presented relates to Offices of
Inspector General in several Federal agencies, this material was
put together as a way for these Inspectors General to see what
Oregon has presented and perhaps work within and across agencies,
consistent with the Inspector General Vision Statement, to
address some of the problems cited, in a constructive way.
Additionally, since the Oregon officials formally presented their
proposal for partnership, when it is considered at the agency
levels, this material will put Inspectors General in a position
of being informed on the issues in advance. The excerpt which is
presented below is a small part of the complete proposal. The
full proposal can be obtained form the address below. It cites
18 federal programs and 12 Federal agencies (not by name) as
impacting work going on under the "Oregon Benchmarks" project.
From the meeting, the following Federal departments and agencies
seemed to be among the group of 12: HHS, HUD, USDA, Labor,
Education, EPA, Veterans Affairs, Interior, Treasury, Justice,
and Commerce.
This information is provided as a service from IGNet, the
electronic communications network of people dedicated to creating
excellence in the Inspector General Community.
J. Jerome Bullock
Assistant Inspector General for Investigations
U. S. Dept. of Justice
IGNet Coordinator - IGNet gopher <ignet.usdoj.gov>
Voice: 202-616-4774 Internet: <bullock@justice.usdoj.gov>
Fax: 202-616-9881
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** This document is an ASCII formatted version of an **
** EXCERPT of a document printed by the State of Oregon. **
** The page numbers in this electronic version are not **
** in the same order as the printed document. If you **
** would like the printed version of this document, **
** contact the Oregon Progress Board, Governor Barbara **
** Roberts, Chair, 775 Summer Street, N. E., **
** Salem, Oregon 97310 Voice 503-373-1220, **
** TDD 503-373-1200, FAX 503-581-5115 **
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(EXCERPT)
1. PROPOSAL SUMMARY
July 25, 1994
The Proposition
Oregon and its local governments propose a special partnership
and long-range demonstration project with the federal government
to redesign intergovernmental service delivery based on
principles advanced in the National Performance Review. This
intergovernmental, interagency initiative would focus on outcomes
and treat outcomes as the principal measure of success. In the
model we propose the federal government and our governments will
mutually identify results to be achieved and we will be
contracted to achieve them. To help us achieve these results,
the federal government will merge funding categories and streams,
create funding incentives which reward desirable results, and
reduce micromanagement and wasteful paperwork. This
collaboration will empower our communities to identify local
needs to be met by federal and state programs, to make their own
decisions about how to address those needs, and to be accountable
for results.
*** This initiative would focus on outcomes and treat
outcomes as the principal measure of success. ***
We recommend that this demonstration project, "The Oregon Option"
focus on important elements of Oregon's top strategic priority,
our human investment benchmarks. These benchmarks underlie a
collective effort by state and local governments, civic groups,
nonprofits, and businesses to appreciably improve the lives of
Oregonians as self-reliant individuals, members of healthy
families, and skilled, successful workers. They fit our
strategy to enhance Oregon's economic prospects while getting
more people off public assistance and reducing the human and
financial costs of social dysfunction.
The Problem To Be Overcome
This proposal accepts the premise of the National
Performance Review: that the intergovernmental system for
delivering assistance and services through federal grants and
mandates to state and local governments has broken down in a
tangle of good intentions gone awry. There are too many
funding categories, suffocating regulations and paperwork,
a misdirected emphasis on remediating rather than preventing
problems, and no clear focus on measurable outcomes. The system
stifles initiative and squanders resources without achieving
sufficient results. We have been attempting to correct similar
problems in state government. We are delegating greater
responsibility for program design, delivery, and results to
the local level,
THE OREGON OPTION, PAGE 1
and we are encouraging more service integration and
a preventive approach to problems.
Why Seize This Opportunity With Oregon?
Oregon is an ideal partner for this initiative. The test of an
outcomes-based approach to intergovernmental services is likely
to be more successful where state and local government are
already using an outcomes model for establishing a long-range
vision, setting public priorities, allocating resources,
designing services, and measuring results. We are well along in
pioneering state and local effort -- Oregon Benchmarks -- to do
all of these things. Benchmarks cover issues as wide ranging as
ecosystem protection, urban mobility, and industrial
diversification. Our human investment benchmarks focus on such
outcomes as reduced teen pregnancy, diminished crime and
recidivism, lower unemployment, higher per capita income,
greater early childhood immunization, and stronger K-12 student
achievement, just to name a few.
*** Oregon is ideal for this initiative. Our systems are
in place. We are ready to move. We know how to be a
good partner. ***
We have already achieved notable success in the benchmarks
process, and we will continue to pursue the progress made these
past few years. However, these efforts would receive an immense
boost if federal participation was also focused and structured to
achieve results. Oregon offers an opportunity for the federal
government to join the state and its communities in designing and
demonstrating a more efficient, results-driven model of service
delivery.
We are ready to move. Through our 20-year strategic
plan and through Oregon Benchmarks we know what we want to
accomplish. We have established systems to pursue and measure
those accomplishments at state and local levels, and we have
enlisted the involvement of local jurisdictions, nonprofit
organizations, businesses, and civic groups. In just the first
four years of our benchmarks process, we have already
taken nationally heralded steps to achieve benchmarks outcomes in
child and family well being, in K-12 education, and worker
training. Moreover, we know how to be a partner in an undertaking
of this nature. Oregon has a record of participating in creative
federal-state efforts to improve services. Examples include a
1981 Medicaid waiver, which has improved services to seniors
while saving nursing home costs, and the 1993 forest plan, which
streamlines and consolidates federally funded services to workers
and their communities coping with changes in the forest
products economy.
THE OREGON OPTION, PAGE 2
Benefits
The most important benefit, and the ultimate test of The
Oregon Option, will be results: higher rates of prenatal care and
infant immunizations, lower teen pregnancy, higher K-12 skill
levels, re-employment of dislocated workers, higher wages, safer
neighborhoods. Other benefits include better use of public
resources -- money and people -- at all levels, less client
confusion and despair, and greater confidence in public services.
The Oregon Option also offers a laboratory for federal, state,
and local participants to learn from their efforts and act on
what they learn to improve service delivery. The Oregon Option
will advance the Administration's domestic policy agenda and the
campaign to reinvent government.
What It Will Take
The Oregon Option demonstration will require a long-term
commitment and a fundamentally different way of thinking about
the mission and structure of service systems at all levels of
government. The system envisioned here is focused on outcomes,
customer-centered, decentralized, and accountable. In this
partnership, participants must be willing to a) contract for
measurable results, b) combine funding streams, c) renegotiate
funding amounts and rates, d) eliminate rigid and costly
program restrictions, e) provide multi-year funding, and f)
empower those closest to front-line service to choose the
delivery mechanisms, initiatives, and investment criteria they
deem most suitable. The demonstration will require the waiver of
a number of federal rules, and it will require financial and
political support. It is essential that the project have the
initial involvement and continuing support of cabinet or
subcabinet officials.
THE OREGON OPTION, PAGE 3
4. WHY A NEW INTERGOVERNMENTAL APPROACH
IS NEEDED
The Dysfunctional Intergovernmental System
In its 1993 report, the National Performance Review observes that
a well-functioning intergovernmental system is central to
Americans' quality of life and the national government's ability
to pursue a domestic policy agenda. It also notes that thousands
of dedicated employees work hard within this system to solve
human and societal problems.
Unfortunately, the report adds, there is a widespread feeling
that public institutions and programs are not working. At the
same time, serious social and economic problems are deepening.
These include low-birth-weight babies, single teenagers having
babies, falling high school graduation rates, juvenile crime,
declining household income, and the high number of Americans
without adequate health care coverage.
*** The system intended to be a solution has become a major
part of the problem. ***
At least a part of the reason for these trends, the report
asserts, is an increasingly dysfunctional intergovernmental
process. Grant and income transfer programs, notes the report,
amount to over $226 billion in fiscal 1994. The number of
individual grant programs, now exceeding 600, continues to grow.
Yet so do "problems of duplication and overlap." The report goes
on to level this harsh assessment.
Unfortunately, the myriad of federal mandates and
regulations that accompany grant programs are cumbersome and
very costly to administer, lack a coordinated
implementation strategy between levels of government, and
are not achieving the intended outcomes. Each separate
program has its own array of rules and regulations that
must be observed, regardless of their impact on the
effectiveness and quality of customer service. States and
localities have limited ability to customize service
delivery by integrating programs because of competing, often
conflicting federal rules and requirements that accompany
each program.
The NPR report cites telling examples of a grant and mandate
system that is fragmented, burdened with overhead, focused on
process rather than results, and paralyzed with rules,
regulations, and paperwork. The system intended to be a solution
has come to be a major part of the problem.
THE OREGON OPTION, PAGE 17
The Oregon Perspective
Not only are such problems familiar to our state and local
governments as they view the federal end of the system, these
problems are familiar to our localities as they view State of
Oregon rules, regulations, and paperwork. This is why Oregon
state government, aware of its own bureaucratic shortcomings, has
been making an effort through the benchmarks process to identify
and integrate a wide range of functions and responsibilities
(both within state agencies and between state and local agencies)
that can be better handled at the local level The advantage of
benchmarks, with their emphasis on measurable results, is that
they make it possible to do this by measuring front-line
performance in terms of outcomes.
Intergovernmental Barriers
To Efficient, Integrated, Client-Centered Service
In preparing this proposal, the Governor's Office surveyed state
and local agencies to learn how they perceive their mission, the
results they are trying to achieve, how the current
intergovernmental system helps or stifles their efforts, and what
features of a redesigned system would be most helpful to them.
The themes that surfaced are presented in the remainder of this
section.
At this point, however, a word of caution is in order. While the
examples that follow are intended to illustrate one dimension of
intergovernmental dysfunction, they do not tell the whole story
of Oregon's relationship with the federal system. As explained in
the next section of this proposal, there are many instances in
which the federal government has been supportive in cutting red
tape and improving federally funded services to Oregonians.
We want to build on those successes. Moreover, we know that state
government is far from guiltless when it comes to generating
stifling rules, regulations, and red.tape. The attempt through
Oregon Benchmarks to simplify and integrate services is our own
implicit acknowledgement that we, too, need to change the way we
deliver services to Oregonians. That said, here are some examples
of problems we hope to resolve with The Oregon Option
demonstration project.
Too Many Federal and State Categories Add Overhead
and Make Service Integration Difficult
The growing number of categories of federal programs confuse
customers and waste resources. Every agency has a story to tell.
For example, the
THE OREGON OPTION, PAGE 18
Douglas County Health Department was recently admonished in a
finicky federal "technical assistance review" for allowing an
office work station purchased with WIC (Women Infant and Children
nutrition) funds to be partially used for non-WIC activities
(which were related to family health). The county was asked to
return a portion of the $5,227 investment for furniture, a matter
still under negotiation.
To manage among all of these categories, agencies must either
keep elaborate (and expensive) accounting records, or (as is
often the case), wastefully isolate administration and delivery
of one program from another to avoid being penalized by auditors.
Many community colleges, for example, run separate training
programs for each federal program rather than merge classes
because of different requirements and accounting complexities.
Separate computer systems are set up for federal programs,
at greatly added expense, rather than joining with existing
systems. The prospect of federal sanction is intimidating.
In addition, each program generally requires separate planning
and reporting requirements, all of which adds to costs. For
example, Oregon is expected to provide five plans for five major
federal programs in work force preparation. If these plans were
consolidated into one, Oregon could provide more integrated
services with less overhead.
*** Separate planning and reporting requirements add to
costs and confuse customers. ***
More important, categorical programs confuse customers. In every
area of social service delivery, from families and children to
mental health to work force development, customers are confused
by too many categories of services. For example, the state
Legislature, in a report on Children and Families, reviewed the
dizzying array of services from a client perspective. They found
that services were scattered and difficult to access. The report
envisioned community centers integrating services to make them
more effective for clients.
We are attempting to address these concerns at all levels of
government, and it isn't easy. In Multnomah County, for example,
family planning, WIC nutrition support, maternal-child health and
other primary care services are delivered through an integrated
primary care delivery model. Multnomah County is recognized
nationally for this efficient system which allows clients to
receive many different services in one visit. While services
have been integrated, there are still heavy administrative costs
associated with the segmentation of funds and overlapping federal
and state
THE OREGON OPTION, PAGE 19
reporting costs. The county estimates that it could save over
$800,000 were the systems to be simplified. These savings would
be enough to accommodate more than 12,000 patient visits each
year.
Multnomah County is not alone in its efforts. At the end of 1993,
there were 33 Oregon communities working in cooperation with the
Oregon Department of Human Resources to integrate services. One
such project is in White City, a small timber town in southern
Oregon. White City invited staff from the public assistance
agency, child welfare, and the public health and employment
departments to a coordination meeting. Each person was asked to
bring a list of the 30 families in the area deemed most at risk.
When participants compared their lists, they were stunned: There
was a crossover of 25 out of the 30. These service providers were
working with the same families, often at cross purposes, and none
of them were aware of one another's efforts. They were so
focused on the various state and federal requirements for
individual programs, they were unable to view their customers in
a holistic manner. Now in White City, like many other Oregon
communities, there is a single location where customers can
access all services.
Excessive Rules, Regulations and Oversight
Add Cost and Stifle Service Capability
As the NPR points out so well, the intergovernmental system is
driven by stifling rules and intrusive audits that add costs to
the administration of programs and discourage innovation. These
constraints are very expensive and have little value to
customers. Indeed, much of the bureaucracy that Americans
complain about can be linked to the way we manage our
intergovernmental system. By focusing so much of our
attention on the details of administration and the tracking of
costs, our systems have become cumbersome and we have lost sight
of the results that we are trying to achieve.
The burden and costs associated with federal rules and paperwork
are huge. Roughly one-fourth of Oregon's 40,000 state employees
are primarily involved in implementing federal programs, and many
more are partially involved with federal program requirements.
Large agencies that are involved in delivering big federal
programs such as public assistance and foster care estimate that
20 percent of their costs stem from unnecessary regulation. For
example, our public assistance division files 550 reports
THE OREGON OPTION, PAGE 20
each year and navigates through volumes of federal eligibility
manuals. Among smaller programs such as JTPA and Housing, more
than 50 percent of staff time is spent dealing with federal rules
and requirements. These are estimates just for state government.
We have not yet been able to estimate the amount of unnecessary
paperwork local governments must endure because of the current
design of our systems. Nor do we know the number of federal
employees absorbed in writing regulations and reading our
reports. If we could streamline the intergovernmental system,
thousands of public employees could turn their attention from
paper-pushing to direct productive services to citizens.
This regulatory overkill is demoralizing and at times absurd For
example, on an Indian reservation where no private child care
providers existed, a proposal to remodel a garage into a playroom
was rejected because of cumbersome regulations. The community
had to settle for fewer child care slots. The Department of
Consumer and Business Service has faced some microscopic
monitoring by federal agencies. In 1989, Oregon submitted
construction industry standards. This year a response arrived.
Comments extended to typos and the observation that while
Oregon's change of terminology from "flagman" to "flagger" was
understandable, a complete comparison document would be required
providing a rationale for this change.
One of the newer problems encountered by state agencies is the
federal "first dollar" requirement. The Vocational Rehabilitation
Division, for example, faces a federal requirement to look to
other agencies and resources to pay for client services before
using VRD funds. The problem develops when another agency with
the same client, say the Job Training Partnership Administration,
has the same requirement. In a situation where an employer is
interested in an on-the-job-training contract, both agencies
are paralyzed because neither can act until the other puts in the
first dollar.
All these rules and requirements distract workers from their real
priority, customer service, as they struggle to remain in
compliance. The system squanders our greatest asset, the valuable
time of front line workers, in a tangle of unproductive,
unnecessary activities.
THE OREGON OPTION, PAGE 21
A Bias Toward Remediating Problems
Rather Than Preventing Them
Besides too many categories with too many rules and regulations,
there is one final problem with the intergovernmental system.
Resources are directed at the wrong place. Indeed, the structure
of federal program allocations often reward failure and penalize
success.
We in Oregon believe strongly in the Clinton Administration's
agenda to build strong families that can take care of children,
to improve education, to provide preventive health services, and
to create the kind of professional technical education and job
training services that move Oregonians into high wage jobs. When
we look at how federal dollars flow, however, we see a
preponderance of expenditure on the kinds of assistance and
remedial support services that could be reduced dramatically if
we invested earlier in the life cycle.
Much of this misallocation of resources stems from matching
requirements created in federal programs. For example, Oregon's
efforts and expenditures in the JOBS program have helped reduce
the state's ADC caseload. Because JOBS funding is allocated in
direct proportion to the state's share of the national ADC
caseload, performance in reducing the ADC caseload is penalized:
better results bring fewer federal JOBS program dollars available
to the state, while larger shares go to states I programs that
do not perform. Similarly, we receive substantial matching
funds for foster care, yet limited funds for in-home care, even
though many experts believe home maker services are cheaper and
forestall the need for more expensive foster care. These
examples are not atypical. In too many cases our investments in
preventive programs that work reduce the total funds we receive
from the federal government.
THE OREGON OPTION, PAGE 22
5. PROMISING PARTNERSHIPS
WITH THE FEDERAL SYSTEM
Despite problems in the intergovernmental service
delivery system, Oregon governments have forged a number of
promising partnerships with federal agencies. Collectively,
these successes provide a precedent and a foundation for a
broader redesigned partnership between our state and local
agencies and the federal government.
Here are prominent examples of successes to build on.
Senior Services
In 1981 Oregon applied for a waiver from the Health Care Finance
Administration to allow Medicaid funds formerly dedicated for
nursing homes to be used for home and community-based care for
the elderly and disabled. We were the first state in the nation
to use such an approach, and the results have been excellent,
allowing a majority of long-term care clients to be shifted out
of nursing facilities. This has afforded a greater
independence and better quality of life for clients while saving
the federal and state governments $319 million between 1981 and
1993.
The number of Medicaid nursing facility clients has
actually declined slightly over the past 11 years, despite rapid
growth in the elderly segment of the population. Our population
over 75 years old grew 50 percent in the 1980s. Yet during that
period, nursing facility occupancy dropped from 93 percent to 88
percent. And the number of nursing facility beds per 1,000
Oregonians over 65 dropped From 48 to 38.
Oregon Health Plan Medicaid Waiver
We are working to expand health care coverage to all Oregonians.
The federal government worked closely with the state in
one key part of our strategy: the Medicaid reform component of
the Oregon Health Plan, a Title XIX demonstration project. Under
the plan, most Oregonians with incomes under the federal poverty
level are covered by Medicaid. Clients receive care through a
coordinated system of managed care plans, with benefits
defined through a prioritization process that emphasizes
cost-effective preventive care.
The program began on February 1, 1994. Today there are 260,000
people enrolled in 20 managed care plans under the health
plan. Of the total 260,000 enrolled, 72,000 are new Medicaid
eligibles who would not have been eligible for health care
coverage without the health plan. Because of
THE OREGON OPTION, PAGE 23
our partnership with the federal government in designing
this program, we are increasing the number of people covered,
enrolling more of them in managed care plans, controlling
Medicaid costs and improving health care to Oregonians.
The Forest Plan
The Northwest Economic Adjustment Initiative established a new
partnership between Oregon and the federal government to
assist dislocated workers, businesses, and communities that must
adjust to economic conditions and land management decisions that
adversely affect the forest products economy. The initiative
provides for cooperative planning and decision making among
local, state, and federal agencies as well as improvement in the
distribution of federal funds. Moreover, it is long
term, involving funding commitments of up to five years.
Although this initiative is still in its infancy, some promising
results have begun to take shape. The initiative has fashioned a
coordinated service delivery system for a package of assistance
involving 18 federal programs, 12 federal agencies, and numerous
state and local interests. Of nearly 50 recommendations for
cutting red tape and streamlining delivery systems, over half
have been adopted and only seven have been denied. The
initiative has also been a catalyst in finding common ground
among forest industry workers, communities, and state and federal
governments to create a new kind of forest-based economy. The
"Ecosystem Workforce Pilot Program" is redefining jobs in the
woods through ecosystem restoration projects that provide
dislocated workers family wages and benefits, long-term
employment, and skills training.
Developmental Disabilities
Before 1981 certain Medicaid dollars had to be used to house
individuals with developmental disabilities in large, state-run
institutions. But then the federal Health Care Financing
Administration worked with Oregon to allow those dollars to pay
for home and community-based care instead.
We were the first in the nation to receive such a waiver
and the results have been excellent. More than 1,500 former
residents of large institutions now live in community-based
homes. And more than 100 people a year are able to stay in the
community with new or enhanced services, rather than
institutions. This change has been essential to the state's
effort to reduce
THE OREGON OPTION, PAGE 24
the size of its largest institution for the
developmentally disabled, bringing it back into compliance with
Medicaid regulations.
These separate efforts demonstrate that Oregon is fertile
ground for bold, innovative experiments that can yield big
dividends. We have learned a great deal from these efforts and
have built a promising track record in collaboration with our
federal partners. Now it is time to take the next step
-- to build on these separate successes by implementing
The Oregon Option.
THE OREGON OPTION, PAGE 25
6. THE OREGON OPTION
Oregon proposes The Oregon Option, the multiyear demonstration of
a redesigned model of intergovernmental service delivery. It
would be structured and operated to achieve benchmarks in human
investment that are mutually desirable to the federal government
and to our communities.
These are the principles of the recommended service delivery
system:
* Only results equal success. The system should be
structured, managed, and evaluated on the basis of
results (i.e., progress in achieving benchmarks).
* Customers come first. The system should be oriented to
customer needs and satisfaction, especially through
integration of services.
* Nip problems in the bud. The system should be biased
toward prevention rather than remediation of problems.
* Cut red tape, empower front-line workers. The system
should be simplified and integrated as much as
possible, delegating responsibilities for service
design, delivery, and results to front-line,
local-level providers, whether they are local agencies
or local offices of state agencies.
Need for High-Level, Long-Term Commitment
To have a reasonable prospect of success, this delivery model
must have high-level support at both federal and state levels,
and a long-term federal commitment to funding. Because it will
take time to put new systems in place and begin to see results,
eight years should be considered a minimum time frame. Funding
for this effort should be based on a formula that creates strong
financial incentives for successfully improving the lives of
Oregonians while reducing the need for public assistance and
remedial program services.
This delivery model will require consolidation of funding
categories and streams, suspension of stifling regulations and
wasteful paperwork requirements, management accountability by
results rather than inputs, and a cooperative rather than
adversarial relationship among government partners.
OREGON OPTION, PAGE 27
How the Parties Should Proceed
If there is strong federal interest in this proposal, the parties
should proceed by further refining the recommendations contained
here, with an aim toward two near-term accomplishments. First, we
should develop a statement of principle that identifies what
We are moving on Oregon outcomes we want to achieve and the
ground rules for redesigning the service delivery system.
Second, we should select a few benchmarks for immediate attention
as the basis of system redesign. For example, the federal
government may wish to join with Oregon to reduce teen pregnancy
rates and increase immunizations. Each benchmark should generate
a substantial list of actions to take, some of which can be done
quickly, others over a longer time, perhaps in conjunction with a
legislative strategy.
Next Steps
We recognize that a great deal of collaborative work lies ahead
to take this concept forward. Team structure, benchmark outcomes,
timelines, budgets, and organizational logistics need to be
established. We are moving on Oregon Benchmarks already. We are
ready to move on The Oregon Option.
THE OREGON OPTION, PAGE 28
End of Excerpt
*** Last update 07-29-94 (jjb) ***
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