Driving Government Efficiencies (Greg Kaza Commentary)

Agreed, ‘Government Is Not A Business’ (Arkansas Business editorial, April 3, 2017). But widespread private sector practices can help government operate more efficiently and save scarce resources. These include strategic plans, mission statements, customer identification, best practices and privatization.

Our nonprofit think tank retained PwC, also known as PricewaterhouseCoopers, in early 2016 to assist with a privately funded Arkansas Efficiency Project to examine Arkansas government. Gov. Asa Hutchinson announced the project in December 2015. Former U.S. Comptroller General David M. Walker led the PwC team. A second group included business volunteers. Two reports were presented to the governor last fall and a 15-person panel is advancing the project in a second phase.

Regarding standard business practices, PwC found the following:

Strategic plans. Businesses use strategic plans to link “where the business is now to the long-term and where it could be,” one PwC survey found. PwC reported “strategic planning and activities are limited” within state government.

Mission statements. Businesses use statements to communicate purpose. Yet the project reported only four of 21 surveyed state agencies include the term “efficiency” in statements. The Arkansas State Bank Department later became the fifth, explaining its mission is to “efficiently allocate Department resources to maintain a legal and regulatory structure for Arkansas that provides the public with convenient, safe and competitive banking, which allows for economic development within this State.”

A department statement notes efficiency allowed it to reduce authorized positions by five in the past decade, while “the assets of Department-supervised commercial banks increased by 118.56 percent.”

Identification of customers. Taxpaying citizens are customers. The project recommended taxpayers “be formally recognized as part of the customer base of each agency.” Several state agencies recognize taxpayers in such a manner, including the Assessment Coordination Department and the Correction Department.

Best practices. The Murphy Commission (1996-98), an earlier panel, noted “best practices in management and finance” can advance efficiencies in state government. The project reported several, noting the Arkansas State Military Department “is unique among state agencies in using a Lean Six Sigma process to advance efficiency. Lean Six Sigma is a management process that seeks to eliminate waste. Management of other state agencies would benefit from understanding this process.”

Privatization. Privatization is a management strategy that uses nonprofit or private sector units to perform functions once provided by government. Examples include contracting, franchising, vouchers and employee stock ownership plans.

One common sense explanation of efficiency: More is done with less. Businesses and households understand this challenge. PwC observed, “Demographic, economic and global dynamics will only continue to challenge the State’s previous methods of operations.” In sum, private sector practices can make Arkansas government more efficient.

Recommendations For Improving State Efficiency

PwC’s Efficiency Project report, submitted to Arkansas Gov. Asa Hutchinson last fall, included the following recommendations:

• Develop a statewide strategic framework to align budgets and operations.
• Develop a centralized risk management function to appropriately identify and manage risk, especially risks in the area of state procurement.
• Re-evaluate organizational alignment and functions.
• Transform talent through a human resources strategic plan.
• Modernize the state’s compensation and benefits programs.
• Conduct process analysis to optimize accounting and tax assessment and collection processes necessary to execute the state’s mission.
• Automate processes to allow the state and customers to use self-service options.
• Enhance Information Systems governance and develop a centralized shared services proposal and an infrastructure architecture plan.
• Enhance innovation and collaboration with digital technology that increases efficiency.

Economist Greg Kaza is executive director of the Arkansas Policy Foundation.