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April 04, 2010

Challenges for Change – The First Progress Report

The first progress report (here and here) on Challenges for Change (a project to improve outcomes important to Vermonters while helping to trim a quarter of the projected deficit in the state budget) was delivered to the Joint Legislative Government Accountability Committee (JLGAC) at noon Tuesday in the well of the Vermont House of Representatives (the biggest room in the state house and pretty well filled). Some people think we proposed too much change; some people say too little. You should judge for yourself.

If you want to weigh in on these ideas, this is the time. The legislature plans to be in session for about another month and committees of jurisdiction are already holding hearings on the various ideas. Many do require legislation. The Vermont legislature is very open so you can be heard there. You can also talk to your local legislators, of course. Just want to email a comment? Whatever is sent to challenges@leg.state.vt.us will get the attention of both legislators and the executive branch.

There will also be a joint (executive and legislative branches) public hearing on the Challenges on Tuesday, April 6, in the state house in Montpelier; that's our chance to listen and another chance for you to talk. Speakers will be limited to two minutes to give everyone a chance to be heard. Written comments ( which can be longer) are acceptable as well.

The dialog will continue even after the legislature goes home for the year a month or so from now. Even given the changes in legislation we've asked for, there is much implementation work which we want to do collaboratively with the organizations which are affected. These organizations which help deliver governments services are very important to the success of this effort to deliver those services better.

Below is the full text of the introduction to the Challenges for Change report; it's long but you may find it interesting – or challenging.

This is the first progress report on Challenges for Change, a plan to make Vermont government and services more effective so that better results are delivered at lower cost to taxpayers. Challenges for Change was authorized by Act 68 (the Challenges Bill) of the 2009-2010 legislative session; this report and subsequent quarterly reports are required by the act.

The Challenges Bill specifies the broad areas from which savings must come and identifies those outcomes which agencies and programs must achieve. This initial report details the progress made by the executive branch since the passage of the bill one month ago; this report is not intended to be a full or final plan, but rather an update to solicit feedback and promote refinement of ideas. The report also contains, as required by the bill, proposed measures by which the General Assembly can track progress towards the outcomes and proposals for changes in existing legislation necessary to achieve the outcomes and meet the budget constraints.

Although much of the initial planning since the Challenges Bill was passed has been done internally, we have now reentered a very public phase of the Challenges for Change approach. This is the beginning – not the end, not even the middle – of a process that needs ongoing and robust public participation. Direct feedback and creative alternatives from lawmakers and members of the public will enhance these plans and help the State achieve the required outcomes.

Not Traditional Cost-Cutting

Although the initial impetus for the Challenges was a need for constructive ways to address part of our anticipated $154 million fiscal year 2011 budget gap, this is not a traditional cost-cutting exercise. In cutting, one starts with the way we do things today and asks: How can we reduce the cost? There is usually no consideration of the outcomes involved. The focus is on trimming inputs, e.g., the number of people involved, office equipment, travel, or other such expenses.

By contrast, this reform package starts with the desired outcomes and the amount of money Vermont can afford to spend and then asks: If we rethink how we do things, how could we improve our outcomes with this amount of money?

In fact, the appropriations decision for Challenges has already been made with the passage of the initial Challenges bill in February. In FY2011, agencies and programs under the Challenges umbrella must deliver desired outcomes for $38 million less in general funds, as well as relieving $11 million of property tax pressure. These endeavors pave the way to $72 million less in general funds and $26 million of property tax relief in FY2012.

These budget goals are critical as the State grapples the lingering recession. To meet these targets without the Challenges process, the alternative is to revert to the usual cost-cutting methods – an option all parties are trying to avoid.

After a month of planning, it is possible to identify much of the $38 million in required General Fund savings. The next report, due in three months, will have sufficient detail on all of the plans to see how money will be spent in a way which accomplishes the outcomes while achieving all of the savings.

Emergence of Key Redesign Themes

State employees and private citizens have worked hard and with great energy and innovation to make these initial plans. The plan to meet each challenge is different, but several broad themes have emerged across many of the challenges:

  1. Program & Service Integration: Clients and taxpayers are better served by a few coordinated programs with more flexibility than a confusing morass of hundreds of programs. Service delivery needs to and can focus on clients rather than programs. Geographic and administrative consolidation of some functions is essential to effective delivery of many services.
  2. Better Outcomes through Improved Technology: In the age of the Internet, technology can often be used to provide service more quickly and conveniently to clients at lower cost to the State. Automation of basic administrative functions frees skilled professionals to have more direct personal contact with clients when in-person time is crucial to good outcomes.
  3. Path to Independence: The success of many aid programs is best measured not by how many they serve but by how many they help toward self-sufficiency and independence.
  4. Performance Incentives: Just as a focus on outcomes allows state workers to deliver better service at lower cost, state contractors and grantees will perform better at lower cost when they are offered incentives for performance and judged by results rather than having to jump through bureaucratic hoops.

     

Improving Outcomes, Acknowledging Impacts

The savings which have been identified and will be identified come through being more effective rather than from abandoning clients or slashing services. Nevertheless, when government spends less, someone receives less – and someone pays less taxes or someone else has benefits preserved. Our decisions will have an impact.

In some of the easy cases, when we purchase fewer postage stamps or less fuel oil, the effect is mainly felt out-of-state. In other cases, we will purchase less from in-state non-profit partners or for-profit vendors; where we can, we give them an opportunity to recoup by being more effective themselves.

In some cases, because of our budget constraints, we must choose either to provide more effective service to Vermonters or to retain the existing administrative infrastructure within organizations. There simply are not enough resources to support both.

In other cases, being more effective over time will reduce the need for workers at the state or partner level. Given the upcoming demographic bulge in retirements, attrition should allow most of these internal economies to be achieved, but, given economic uncertainty, there is no guarantee against selective reductions in the future.

That said, without the constructive approach of Challenges for Change, there would be few options outside benefit cuts and further reductions in force to close persistent budget gaps for FY2011 and beyond. There is no doubt that those impacts would be much more severe than the plans presented within this progress report – and, more importantly, without the corresponding benefits of improved outcomes.

Form of this Report

The portion of this report dealing with the Education and Special Education Challenges was prepared independently by the Commissioner of Education. The Corrections Challenge report was produced by the Agency of Human Services in conjunction with the Judiciary and law enforcement representatives. All other reports were produced by appropriate departments of the executive branch. The official report to the General Assembly consists of this book and its Human Services addendum. However, agencies have developed and will develop further information in support of their plans for use by the various committees of jurisdiction.

In general, each section details:

  1. Progress Report: General discussion of work to date, process to brainstorm ideas, key plans and implementation outlines.
  2. Challenge Outcomes and Proposed Measures: The outcomes and measurements as required by the Challenges Bill.
  3. Savings Identified To-Date: These are preliminary estimates based on available data. These estimates will continue to be refined as the process continues and plans are informed with legislative feedback and public input.
  4. Legislation Required: If plans require statutory changes, those modifications are outlined.

     

Next Steps

The Challenges for Change process is new territory for everyone. We are confident that this initiative will prove a better way to deliver the highest quality services to Vermonters in the years to come. Public participation is critical for its success. A joint public hearing will be scheduled within the next ten days and the legislative committees of jurisdiction will take testimony and receive public input beginning immediately. Based on feedback and new ideas, we will continue to fine tune plans to achieve the desired outcomes.

If an individual or group disagrees with a proposal offered in this report, we will ask for and welcome an alternative that achieves the mandated outcomes, is fiscally sustainable, and does not raise taxes or use reserve funds. The pace will continue to be swift and creative proposals will be a positive addition to the dialogue. We look forward to working with the General Assembly and all Vermonters on this important endeavor.

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