Although the $38 million of fiscal year 2011 general fund savings anticipated from Challenges for Change often dominates conversation, there are two perhaps even more urgent reasons for passage of a complete Challenges Bill before this legislative session wraps up:
- The anticipated budget gap in fiscal year 2012 is $100 million or more greater than that in FY11 since there will be no more stimulus money available then. Full implementation of Challenges will save over $70 million in FY12 and every year thereafter as well as helping to head off a property tax tsunami to fund education.
- Vermonters will receive BETTER service from their state government if the kind of restructuring which is in the Challenges proposals is implemented. The legislature specified what the positive outcomes from Challenges are supposed to be when it passed Act 68 earlier this session.
When the legislature specified outcomes for restructuring, it also specified, by implication, who is supposed to benefit from the outcomes. Understandably, some of the opposition to Challenges proposals comes from those who were not specified as beneficiaries and who might lose funding or have to undergo more change than they are comfortable with if the Challenges proposals are implemented.
For example, one of the specified outcomes for the economic development challenge is "Vermont achieves a sustainable annual increase in nonpublic sector employment and in median household income." The intended direct beneficiaries of this challenge are clearly Vermonters looking for new jobs or more income. The state coffers are an indirect but important beneficiary as well; that's presumably why the words "nonpublic sector" are in the outcome.
The administration's proposal is to consolidate the fifty or so separate organizations providing economic development in the state into nine (the exact number isn't important) regional service centers which will provide one-stop shopping for job seekers, employers looking to create jobs, and towns doing planning for economic development. The purpose is to do economic development more effectively; the fiscal benefit is that administrative consolidation should mean that less money (about $2 million less) should go further in achieving the mandated outcome of more and better-paying jobs.
Not surprisingly, some of the organizations, like regional planning commissions and regional development corporations, which might have to consolidate or change have concerns about this plan. They have expertise in regional economic development and planning so they are and should be listened to; they do provide valuable services. They are what is referred to as "stakeholders". However, some both in the Legislature and out have said that no plan should be adopted unless these stakeholders agree to it. That flies in the face of outcome-based budgeting. The Legislature did NOT specify as an outcome that nothing would change for these organizations or even that they continue to be funded. It specified that more and better-paying nonpublic sector jobs be created. All arguments for or against a specific proposal have to be measured against the legislatively-mandated outcomes and the budget constraints; not against upset to the status quo.
Here's a brief guide to some stakeholders and which of them the legislature did and did not make explicit beneficiaries of the outcomes it specified:
- CUSTOMERS are people who give money to the State. They include people buying licenses, applying for permits, buying liquor and lottery tickets, and paying taxes. They have a choice. If Vermont is not a good value, they can and do go elsewhere. We want more customers; they provide the money to care for the clients. Taxpayers are explicit beneficiaries of the money saved through each of the challenges. Other customers, like those buying hunting licenses and liquor or renting campsites or applying for permits have been specified as beneficiaries of various outcomes.
- CLIENTS are people who RECEIVE services from the State in the form of a benefit. We want to treat clients well and we want everyone who is eligible to be a client to know they are eligible; however, we don't want don't want to keep people as clients; we want to help clients become independent. Of course many people are both clients and customers. In all of the Human Services challenges and some of the others, outcomes have been specified in terms of benefits to clients.
- The GENERAL PUBLIC. That's all of us. We are the direct beneficiaries of lower costs and the indirect beneficiaries of many of the challenges. We are the direct beneficiaries of better facilities for and supervision of people coming out of jail – both of which make us safer, a more transparent regulatory system, better facilities at our parks and recreation areas, and performance-based contracting which assures that we get the results our tax dollars pay for.
- VENDORS and SERVICE PROVIDERS are intermediaries between the state and the clients and customers. This is true whether the service providers are paid through grants or contracts. The interests of vendors and service providers come AFTER the interests of customers and clients. In the future grants and contracts must be performance-based. The outcomes do NOT specify that vendors and service providers have to benefit. Clients of programs have to be protected but not the specific programs themselves. We don't worry that sending less prisoners out-of-state will mean a revenue loss for out-of-state prisons; we don't worry that mailing less letters will cost the Post Office money; and we shouldn't worry that performance-based or competitive contracting will mean a change for service providers whether they are for profit or non-profit.
- STATE EMPLOYEES. Some people have been surprised by the fact that the Challenges proposals from the administration do NOT rely on large layoffs of state employees to achieve the budgeted savings. Although state employees are not specified beneficiaries of the challenges, their numbers have been reduced by 10% over the last few years and they have already agreed to a pay cut. More effective operation and consolidation within state government may lead to some localized cuts and will certainly make it possible both to perform well with this reduced workforce and to avoid replacing some workers who retire. In many cases Challenge proposals include giving state workers better tools to do their jobs so that Challenge outcomes can be achieved.
The next few weeks will be crucial I determining the success of Challenges for Change. In the best case discussion will improve the proposals which have been made and we can go on to the big job of actually implementing the Challenges and providing better outcomes for less money; in the worst case, we will be distracted from the outcomes, stick stubbornly to our positions, refuse to make tough choices, and stunt Vermont's recovery from the recession as well as leave the next governor and legislature with even harder problems to solve and even less time to solve them.