Arkansas Gov. Asa Hutchinson recently signed legislation that reduces the number of state agencies from 42 to 15. The measure is the largest state government reorganization since then-Gov. Dale Bumpers reduced the number of agencies from 65 to 13 in the early 1970s.
Ideas serve as the basis for every broad policy initiative, and Gov. Hutchinson’s reorganization plan is no exception.
One idea is shared services, an idea that seeks to combine economies of scale with a higher level of customer service.
“The plan improves management control throughout state government through the creation of the Department of Transformation and Shared Services,” according to a report from Gov. Hutchinson’s office.
The plan is to create savings for taxpayers “through lease and rent savings, shared services, and a more responsive management approach,” the report explains.
A 2016 PricewaterhouseCoopers report commissioned by our nonprofit recommended a “shared services and infrastructure architecture plan” to “significantly reduce the amount of time State employees spend on paper-based processes.”
The state Department of Finance & Administration acted on the recommendation, according to 2017 testimony to the Transformation Advisory Board, a panel of citizen-volunteers and policymakers.
Shared services can break down “silos” that exist within agencies.
Another idea informing reorganization is consolidation, which suggests cost savings can be achieved through mergers.
The Efficiency Project announced in December 2015 by Gov. Hutchinson and Lt. Gov Tim Griffin sought “to identify cost savings from efficiency reforms” such as consolidation.
Consolidation is already a widely discussed idea at the national level.
The Rand Corp. has examined how consolidation of health plans affects consumer prices. The Commerce Department’s strategic plan includes a section heading that reads “Consolidate Functions for Cost Savings.” It explains that federal agencies are required to “create a lean, accountable, more efficient government that works for the American people.” The U.S. Government Accountability Office has reported on the consolidation of data centers, a federal initiative.
Arkansas is also consolidating its state data centers.
References to consolidation are increasingly found at the state level. A 2019 DF&A report to the House State Agencies & Governmental Affairs Committee explained that the DF&A believes “savings can be realized by consolidating functions, eliminating duplication of effort, and reorganizing departments to create efficiencies. Any personnel savings would be realized through attrition over time.”
“The state has reduced the number of filled positions by over 1,400 during the last four years,” the DF&A report noted.
References to shared services and consolidation are found in agency strategic plans produced as a result of the Arkansas Efficiency Project. Examples include:
- Economic Development Commission: “Identify opportunities for ‘shared’ positions across divisions.”
- Department of Information Systems: “Achieve cost reductions through reduced overall facilities costs, staff, and improved operational efficiencies.”
Shared services and consolidation are two ideas behind state government reorganization. State officials will be relying on these as they attempt to execute Gov. Hutchinson’s plan.
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Greg Kaza is executive director of the Arkansas Policy Foundation, a think tank founded in 1995 in Little Rock. The foundation led the Efficiency Project (2016). Email him at GregKaza@Yahoo.com. |
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