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GOVERNMENT PERFORMANCE PROJECT

**NEWS RELEASE***

STATE GOVERNMENTS, FEDERAL AGENCIES
GRADED ON HOW WELL THEY RUN

Landmark Nationwide Study of Federal and State Government Management Released Today

Missouri, Utah, Virginia, Washington Lead the States

Social Security Administration Tops Federal List

(Washington, D. C.) - Here's good news for Americans concerned about government. The states and a sampling of federal agencies got their report cards today, and the A's and the B's outnumber the C's and the D's. Problems persist and are clearly identified. But government is running better than ever. And the running of government - its management - matters for the end results.

That's the message contained in a report released today by the Maxwell School of Citizenship and Public Affairs at Syracuse University and Governing and Government Executive magazines grading all 50 state governments and 15 federal agencies on the effectiveness of their management systems. Published in the February issues of Governing (reporting on the states) and Government Executive (reporting on the 15 federal agencies), the report is the most comprehensive survey of government management ever completed. The Government Performance Project is funded by The Pew Charitable Trusts.

Patricia W. Ingraham, Director of the Government Performance Project at the Maxwell School, commented, "For the first time ever, citizens have information about management issues that are essential to the delivery of effective public services. Armed with knowledge about what's working and where improvements are needed, citizens and public officials can engage in the healthy debate so necessary to effective government."

Former United States Senator Mark O. Hatfield, Senior Advisor to the Government Performance Project, said, "The big winner in this report is the American system of government. Even as turbulent historical events surround us, our governments keep working, improving and delivering services. Social Security checks get delivered and states are building rainy day funds for economic downturns. During our exhaustive survey government officials seemed eager for better information about improving management practices and exhibited real enthusiasm for systems that work more effectively to serve the public."

Ingraham noted that a critical objective of the report is to spotlight effective management practices. Following release of the first report, the Maxwell School will establish a Government Performance Project information system for continued access to and exchange of management information among government officials.

State governments and the 15 federal agencies received grades in five critical management areas financial management, human resources management, information technology management, capital management, and managing for results. While specific management systems such as human resources and information technology lag at both the state and federal level, the report points to sustained momentum toward better government management.

The findings are also significant because they do not follow any regional pattern; wealth is not an indicator, nor is political party control. The four top performing states are spread from one side of the country to the other, and poor southern states outshone their wealthier neighbors to the north and west in some management categories.

A strong vision for change among leadership at the top was common to all state governments and federal agencies receiving the best grades.

GRADING THE STATES

According to the report, most states have made significant progress in upgrading their management systems and are eager to improve further. For example, the recession of the late 1980's and early 1990's taught states to institute effective financial planning systems that now help them prepare in advance for economic downturns. While a few exceptions, such as New York and California, still struggle with growing debt, most states (4 out of 5) are running surpluses. Increasingly, states are giving agencies financial flexibility which allows them to plan ahead and spend taxpayer dollars where they are most needed.

Management of human resources (payroll is the single biggest component of a state's budget) is being streamlined as some of the most constrictive elements of the civil service codes are eliminated. In many places, managers now have greater flexibility to hire promising candidates, give raises and move employees where they are needed -- all of which increases productivity and overall operating efficiency. In other places, however, state governments undervalue their workforce capability, and many simply lack the information needed for tracking turnover and hiring rates and for workforce planning.

There are other obstacles to overcome if states are to effectively serve their constituents in the next millennium. One of the most significant is the impact "politics as usual" has on long-term management planning by governments. For example, capital plans, which outline spending for prisons, hospitals and office buildings over future years, are often altered or rejected by legislatures. The result months of planning by knowledgeable government officials are derailed.

Many states do not collect sufficient data on the results of their efforts and cannot communicate those results to the public. In others, legislators fear that performance-based systems will invade their legislative authority -- or even that good results could lead to increased government spending. But Virginia, Missouri, and Washington are managing for results effectively; Kansas and California have powerful performance audits of individual agencies or programs; and Oregon continues to utilize statewide benchmarks.

The speed at which technology changes and the imminent challenge of Y2K continue to hound most states. Many are centralizing and elevating information technology in their management structures, replacing central systems even as they direct resources to the Y2K problem, and standardizing technology within the state. But many still lack consistent approaches to IT training and are unable to quantify the benefits of expensive new IT investments.

Despite their problems, state government officials interviewed for the report were eager to exchange information with their counterparts about innovative tools and management techniques that could improve the way government does business.

GRADING THE FEDERAL AGENCIES

The 15 federal agencies examined by the report were selected because of their major impact on the public. The clear improvement they show comes in part from the recent attention to government performance as evidenced by the Government Performance and Results Act and major reforms to agency management of finance and technology. At the same time these agencies must operate in an environment where missions are often unclear or in conflict, and where failure of key systems and political conflict get in the way of sustained improvement.

Fueled by an increasing emphasis on results, some agencies have made significant turnarounds, which usually coincide with strong leadership at the top. For example, the Federal Emergency Management Agency, under the leadership of Director James Lee Witt, has transformed itself from an impediment to disaster relief to a first-class customer focused organization. The Veterans Health Administration, under the leadership of Undersecretary Kenneth Kizer, has improved care for veterans by instituting regional hospital networks and an emphasis on accountability that filters through the entire VHA staff.

The effort to connect resources to results has also contributed to improved financial management in agencies such as the Patent and Trademark Office, which has made substantial progress in cost accounting. Other agencies are making good faith efforts to implement GPRA, although some are experiencing growing pains because they find it hard to measure results in the public sector or because their data is unreliable.

The importance of technology surfaced again and again. Successful agencies get information more efficiently to citizens and business. The Social Security Administration is replacing all of its "dumb" terminals with modern PC networks, a $1 billion project to speed data retrieval and processing of the 860 million payments it makes each year. Like the states, however, many federal agencies still have enormous IT challenges. The IRS still lags in updating its computers. The Health Care Financing Administration, with 900 million Medicare and Medicaid claims per year, also has experienced modernization set-backs, and progress in fixing these problems has been slowed by the agency's need to divert almost all attention to Y2K.

The management job faced by many federal agencies is made much more complex by conflicting missions and incentives. These conflicts often spring from highly political disagreements about agency priorities. For example, the Immigration and Naturalization Service must protect the borders but also support legal immigration. The Customs Service must facilitate trade, while keeping unwanted items out of the country. Owing to congressional changes in policy the IRS has been torn between increasing compliance and other goals, such as customer service. Meanwhile, some agencies, such as the Patent and Trademark Office and the Food and Drug Administration, have seen an increasing part of their budgets come from user fees, which raises possible conflicts with their regulatory missions.

THE BIG LESSONS

Lessons learned from the Government Performance Project are many. One of the most important is that strong leadership at the highest levels can transform government from a creaky engine into a well-oiled machine. One component of leadership is a focus on customer service. At the Federal Emergency Management Agency, for example, the administrator visited disaster sites and intervened quickly and personally when he saw victims being put off or assistance delayed. Bottom line, the report found that successful leaders have a strong vision for change.

Another lesson is that information technology is integral to nearly every aspect of government operation. Good systems allow government managers to plan for future workforce needs, track costs and other financial data and link to performance measures, and deliver services.

The most fundamental lesson of all is that "management matters." Good performance does not just happen. The link between government management systems and good public services is strong.

"Citizens now have an effective tool for understanding how government works," said Maxwell's Ingraham. "If you don't know what's not working you can't fix it, nor can you know what to expect in terms of performance. Better information means better communication, better accountability and all around better government."

ABOUT THE GOVERNMENT PERFORMANCE PROJECT

The Government Performance Project (GPP) is a multi-year project created to rate the effectiveness of state, federal and local government management systems central to the delivery of public services. Funded by a four-year, $2.5 million grant from The Pew Charitable Trusts, the Maxwell School's Alan K. Campbell Public Affairs Institute administers the project. GPP links the Maxwell School, the oldest school of public policy in the country, with Governing and Government Executive magazines, two of the nation's leading magazines dedicated to fostering better public management.

Today's report culminates a two-year process that included development of the project methodology and criteria for assessing government management, pilot tests, the most comprehensive survey of government management ever completed, follow-up interviews and journalistic reporting. The report grades management systems central to the delivery of public services in all 50 states and 15 federal agencies, including

• Environmental Protection Agency
• Food and Drug Administration (HHS)
• Food Safety and Inspection Service (USDA)
• Federal Aviation Administration (DOT)
• Occupational Safety and Health Administration (DOL)
• Patent and Trademark Office (DOC)
• Social Security Administration
• Health Care Financing Administration (HHS)
• Food and Nutrition Service (USDA)
• Veterans Health Administration (DVA)
• Federal Emergency Management Agency
• Federal Housing Administration (HUD)
• Immigration and Naturalization Service (DOJ)
• Internal Revenue Service (Treasury)
• Customs (Treasury)

Next year, the GPP will evaluate local governments. The next step for the Maxwell School is to establish the GPP information system for the dissemination and exchange of management information among government officials.

# # # GPP report, background, graphics: www.maxwell.syr.edu/gpp
Report on the states: www.governing.com\gp9intro.htm (effective 2/1)
Report on the 15 federal agencies www.govexec.com\gpp (effective 2/1)

To request the complete media kit or the release on a particular state, e mail your name, media organization, full address, phone and fax numbers to gpp@maxwell.syr.edu.

For interviews with project principals on day of release, use contact numbers listed at top of release.

For additional information (day of release and continuing) contact GPP headquarters at the Maxwell School at 315-443-9707 or 315-443-1282.