Right-sizing Roadmap - DRAFT. October 9, 2017

Transcription

1 Right-sizing Roadmap - DRAFT October 9, 2017

2 As part of the overall Government right-sizing, our goal is to reduce the Executive Branch from 114 entities to 18 Based on analysis thus far of the Government of Puerto Rico, its agencies, instrumentalities and public corporations and on research of other government structures around the world, we propose the following structure for the Executive Branch: Proposed Government Structure Governor of PR Executive Office of the Governor Education Health Social Welfare Public Safety Justice Public Works Agriculture Commerce Labor Treasury State Regulatory Board Oficina del Comisionado de Seguros Oficina del Comisionado de Instituciones Financieras COSSEC Junta Reglamentadora de Telecomunicaciones Comision de Servicio Publico Comision de Energia Independent Entities Comision Estatal de Elecciones Oficina de Etica Gubernamental Oficina del Contralor Electoral Oficina del Panel del Fiscal Especial Independiente University of Puerto Rico 2

3 To achieve the proposed structure, AAFAF is performing agency program and service reviews to determine the best course of right-sizing action Offices Departments Public Corporations Individual Administrators Executive Branch = 114 Entities AAFAF Right-sizing Action: Eliminate Externalize Consolidate Close Sell P3 Outsource Transform Re-evaluate Before After Executive Branch = 18 Entities

4 The primary decision tree employed in program reviews provides guidance on selecting programs that can be restructured or closed Identifying programs for restructuring or closure Disaggregate agency programs Does the program or service continue to serve a public interest? Debatable Is the product or service Is it worth essential in meeting future Is there a legal mandate? the cost? public needs? Clearly Is there a legitimate and necessary role for government in this program or service? Debatable Is there an appropriate role for government or the broader public sector to play? Would the impact of abandoning this program or service be unacceptable? Clearly Is the lead responsibility for this program or service assigned to the right government Jurisdiction? Clearly Debatable Is there a reason for government presence in this area? Could the program be transferred to a different level of government? Could, or should, this program or service be provided by the private or voluntary sector? Debatable Could satisfactory result s be achieved through private or voluntary sector at reasonable cost? Would it be relatively easy to transfer t he program? Clearly RESTRUCTURE Is it affordable? CLOSE Source: Authors, derived from (Wilkins 2001) 4

5 The second decision tree employed provides a view of what can be stopped or which is the best operating environment for necessary functions Selecting the appropriate operating environment RESTRUCTURE Decision made that functions are still necessary Disaggregate Functions: Policy Co-ordination Service Delivery Support Regulation Is this function "inherently governmental" because of it s complexity and political sensitivity? CONSOLIDATE Regard as inherently governmental locate within central government Devolve or decentralize Could this function be undertaken by subnational government? Is there or could there be a market? Are citizens or businesses willing/able to pay the full costs of the service? Can this service be contracted out? EXTERNALIZE Contract from the private or not-for-profit sector Can government tolerate the risk of closure? ELIMINATE Close or sell to the private or not -forprofit environment Will contingent liabilities be exacerbated? Source: Sources: Authors, derived from (Bannock Consulting 1999; Civil Service Reform Programme Steering Committee 1996a, b, c, d, e, f, g, h, i, j; Defense Logistics Agency 2001, exhibit 3-6: flowchart for assessing which DAPS functions are appropriate for transfer; István 2000; Wilkins 2001) 5

6 1 Eliminate Close Agency Program/Service Asset Recommendation Description/Implications/Concerns Total ($MM) Budget n- Head Count 1 Close Corporación del Centro Regional del ELA Run EB-5 program, functions and responsibilities already being managed by DDEC % 14% 2 2 Close Consejo de Educación Eliminate agency along with accreditation and scholarship programs Only licensing operations will remain under the Department of Education and OGPe % 92% 38 3 Close Bosque Modelo Full closing of agency and delegation of the initiative to the NGO sector without subsidies % 75% 1 4 Close Autoridad para el Financiamiento de la Infraestructura de Puerto Rico Assist/support financing process for capex investments in government entities Functions are no longer needed under current fiscal environment % 80% 21 5 Close Autoridad de Conservación y Desarrollo de Culebra Transfers of operations (granting of permits and maintenance of flamenco beach) to the municipality with out general fund subsidy % 45% Close and Sell Corporación del Centro de Bellas Artes Puerto Rico Close and Sell Corporación de las Artes Musicales (Orquesta Sinfónica) There isn t a legitimate and necessary role for government in this activity Private sector usually delivers this service Satisfactory result could be achieved through the private or voluntary sector at reasonable cost Maintain closed for the time being Work on sale of Operations/Assets % 50% % 30% 65 8 Close and Sell Escuela de Artes Plasticas % 42% 56 9 Close and Sell Conservatorio de Musica % 30% Transfer Fideicomiso Institucional de la Guardia Nacional de Puerto Rico to private trust Can be separated from the government structure and continue offering services as a private entity 7.1 5% 95% 6 11 Close Oficina Estatal de Política Pública Energética Agency s roles and responsibilities are not clearly defined Necessary functions will fall under the Regulatory Board % 93% Close Oficina Independiente de Protección al Consumidor Agency s roles and responsibilities are not clearly defined Necessary functions will fall under the Regulatory Board % 50% 4 13 Close Oficina Estatal de Conservación Historica Close agency and programs maintaining only the historical buildings registry program which is federally funded ($634,000) under the Department of State % 60% 23 6

7 1 Eliminate Close Agency Program/Service Asset Recommendation Description/Implications/Concerns Total ($MM) Budget n- Head Count 14 Close Comisión de Desarrollo Cooperativo de Puerto Rico In charge of creating programs and incentives to promote the cooperative movement in Puerto Rico Since cooperative movement has been developed in Puerto Rico, government s role should be limited to insuring and regulating the industry % 21% Close Comisión Industrial once Corporación del Fondo del Seguro del Estado is externalized need for Government to provide service once Corporación del Fondo del Seguro del Estado is externalized % 33% Close Administración de la Industria y el Deporte Hípico Unnecessary government presence De-regulation Permits and licensing operations will remain under the Dept. of State % 35% Close Corporación De Seguros Agrícolas Lack of funds to continue operations and market interest thus far Low market attractiveness after Hurricane Maria % 48% Close Comision de Asuntos Gallisticos from the Department of Sports and Recreation Unnecessary government presence De-regulation N/A N/A N/A 7 Board members 19 Close Comision de Boxeo from the Department of Sports and Recreation Unnecessary government presence De-regulation N/A N/A N/A 8 Board members 20 Close Centros de Formación Deportiva from the Department of Sports and Recreation Consists mostly of exercise classes and coordinating island wide sports tournaments Service not essential in meeting future public needs % 45% TBD 21 Close Secretaría Auxiliar de Adiestramiento y Promoción de Empleo (SAAPE ) Program from the department of Labor Program provides free vocational degrees to students without high school degrees Service not essential in meeting future public needs Same or similar services are already provided by the private sector % 20% 100* 22 Close Department of Labor mediation and appellative forums (OMA/NCA) Provides conflict resolution services to public government corporations and private sector employees Complementary to Judiciary services Same or similar services are already provided by the private sector and other government entities % 28% 150* 23 Close Parques Nacionales de Puerto Rico program by transferring assets to municipalities Main responsibilities are to develop, maintain and promote National Parks Lead responsibility for this service is the municipal government % 48% 40 7

8 1 Eliminate - Sell Agency Program/Service Asset Recommendation Description/Implications/Concerns Total ($MM) Budget n- Head Count 1 Sell Corporación de Puerto Rico para la Difusión Publica The product or service is not essential in meeting future public needs There isn t a legitimate and necessary role for government in this activity % 53% Sell Corporación del Fondo del Seguro del Estado There isn t a legitimate and necessary role for government in this activity Private sector usually delivers this product Would probably entail separating insurance operations from medical services operations % 26% 3,066 3 Sell Administración de Compensaciones por Accidentes de Automoviles (ACAA) There isn t a legitimate and necessary role for government in this activity Private sector usually delivers this product % 66% Sell Autoridad del Distrito del Centro de Convenciones Related debt % 97% 9 5 Sell Loan Portfolio of Banco de Desarrollo Economico para Puerto Rico and Close Agency Provides financing, loan guarantee and capital investment to the private sector Service not essential in meeting future public needs Same or similar services are already provided by the private sector ROI concern due to portfolio risk % 30% Sell Loan Portfolio of Autoridad para el Financiamiento de la Vivienda Common transaction for AFV % 95% Sell AFI World Plaza Building Time to complete deal could be more than 6 to 12 months % 85% 21 8

9 2 Externalize P3 or Outsource * Agency Program/Service Asset Recommendation Implications/Concerns Total ($MM) Budget n- Head Count 1 Ousource Instituto de Estadísticas functions to Federal Government Transfer all economic statistics functions to U.S Bureau of Economic Analysis Remaining economic statistic functions to be focused on data driven decision-making and national accountability systems under the Executive Office % 63% 14 2 Transfer of inmates of the Corrections Department to the US Satisfactory result could be achieved through the private sector at reasonable cost Term sheet received proposes a $57 per diem per inmate vs current cost of $109 N/A N/A N/A N/ 3 4 Outsource Hacienda s Collection Center Satisfactory result could be achieved through the private sector at reasonable cost Project Kicked-Off, implementation underway N/A N/A N/A N/A Outsource Retirement Systems Management Satisfactory result could be achieved through the private sector at reasonable cost Project Kicked-Off, implementation underway N/A N/A N/A N/A Externalize ASEM * Satisfactory result could be achieved through the private sector at reasonable cost Legal due diligence required to narrow down externalization options Externalize Centro Cardiovascular * Externalize Centro Comprensivo del Cancer * % 51% 1, % 57% % 80% 78 8 Externalize Hospital Universitario de Adultos y Pediatrico * ~ N/A N/A N/A 9 Externalize Hospitales Psiquiatricos * % 70% 1, Externalize Maritime Ports and Regional Airports * Satisfactory result could be achieved through the private sector at reasonable cost n-compete with Aerostar contract % 65% Externalize Ferry Systems (ATM) * Satisfactory result could be achieved through the private sector at reasonable cost N/A N/A N/A N/A 12 Externalize Autoridad de Edificios Públicos (PBA) Satisfactory result could be achieved through the private sector at reasonable cost Explore best externalization option for assets and maintenance operation % 38% 1,175 * With financial and operations visibility deal options could include: P3, concession agreements, assets sales, limited participations/profit sharing and others 9

10 3 Consolidate After review, only inherently governmental programs would stay under the new department 1 Offices Departments Public Corporations Individual Administrators Executive Office State Treasury Commerce Public Works Public Safety Oficina del Gobernador Oficina de Desarrollo Socioeconomico Administracion de Asuntos Federales OGP Asignaciones bajo OGP OATRH Sistema de Retiro Administracion de Servicios Generales Autoridad de Edificios Publicos AAFAF Aportaciones al los Municipios Autoridad para las Alianzas Publico Privadas Departamento de Estado Administracion de la Industria y el Deporte Hipico Instituto de Cultura Department of Treasury Casino Slot Room Tax Departamento de Desarrollo Economico y Comercio Compania de Fomento Industrial Compania de Turismo Compania de Comercio y Exportacion Administracion de Terrenos Autoridad de Tierras Oficina de Gerencia de Permisos Oficina de Exencion Contributiva Industrial Autoridad de Redesarrollo de Roosevelt Roads Departamento de Transportacion y Obras Publicas Autoridad de Carreteras y Transportacion Autoridad de Transporte Integrado Comision para la Seguridad en el Transito Autoridad de los Puertos Autoridad de Energia Electrica Autoridad de Acueductos y Alcantarillado Negociado de la Policia Negociado de Manejo de Emergencias y Administracion de Desastres Negociado del Cuerpo de Bomberos Negociado de Emergencias Medicas Negociado de Sistemas de Emergencia Negociado de Ciencias Forences Negociado de Investigaciones Especiales Social Welfare Health Labor Agriculture Justice Education Departamento de la Familia ADSEF ADFAN ACUDEN ASUME Departamento de la Vivienda Administracion de Vivienda Publica AFV ASES Procurador de las Personas de Edad Avanzada Defensoria de las Personas con Impedimentos Departamento de Salud Departamento del Trabajo y Recursos Humanos Administracion de Rehabilitacion Vocacional Comision Apelativa del Servicio Publico Comision de Investigacion Procesamiento y Apelacion Junta de Relaciones del Trabajo Departamento de Agricultura Administracion para el Desarrollo de Empresas Agropecuarias Departamento de Recursos Naturales y Ambientales Administracion de Recursos Naturales Junta de Calidad Ambiental Junta de Planificacion Autoridad de Desperdicios Solidos Departamento de Justicia Junta de Libertad bajo Palabra Departamento de Correccion y Rehabilitacion Salud Correccional Oficina de la Procuradora de las Mujeres Departmento de Educacion Departamento de Recreacion y Deportes (1) Inherently governmental programs would be determined using the methodology described in slides 4 and 5 10

11 Estimated Timeline Legend: Agency Operation Program / Service Asset Sale Timeline to: < 3 months < 6 months > 1 Year ELIMINATE (Close or Sell) Close: Corporación del Centro Regional del ELA Consejo de Educación Bosque Modelo AFI Autoridad de Conservación y Desarrollo de Culebra Fine Arts corporation Musical Arts Corporation (Symphonic Orchestra) National Guard Trust Oficina Estatal de Política Pública Energética Oficina Estatal de Conservacion Historica Comision de Desarollo Cooperativo Administración de la Industria y el Deporte Hípico Comision de Asuntos Gallisticos (DRD) Comision de Boxeo (DRD) Centros de Fomarcion Deportiva (DRD) SAAPE Program (Dep. Of Labor) OMA and NCA appellative forums (Dep. Of Labor) Close: BDE Crop Insurance Corporation National Parks Transfer to Municipalities) Mayaguez Zoo (National Parks Asset) Sell: WIPR BDE loan portfolio AFV loan portfolio Close: Industrial Commission OIPC Sell: State Insurance Fund (FSE) Automobile Insurance Corporation (ACAA) Centro Comprensivo de Cancer Music Conservatory School of Plastic Arts Convention Center Authority AFI world Plaza Building Fine Arts Corporation EXTERNALIZE (Outsource or P3) Instituto de Estadísticas (Federal Government) Corrections (Transfer of Inmates) Collection Centers (Treasury Department) Retirement Systems (Defined Contribution 401K) Hospitals: ASEM, Cardiovascular, University Hospitals and Psychiatric hospitals Public Building Authority Regional Airports Maritime Ports Ferry Systems (ATM) Diagnostic and Design of New Department: Treasury State Labor Justice Education Implementation: Treasury State Labor Justice Education Implementation: Treasury State Labor Justice Education CONSOLIDATE Diagnostic: Commerce Public Safety Social Welfare Health Agriculture Executive Offices Design of New Department: Commerce Public Safety Social Welfare Health Agriculture Executive Offices Implementation: Commerce Public Safety Social Welfare Health Agriculture Executive Offices 11

12 Next Steps Obtain approval on methodology developed and presented course of action Expand Task Force for accelerated implementations: Resources Re-focus and maximize use internal government resources Re-focus and expand scope of existing consultants with local presence 1 year incremental funding* 1. Eliminate: $1M initial estimate 2. Externalize: $5M initial estimate 3. Consolidate: ~15MM initial for accelerated scope (10 additional projects to start this year) Fast track vehicles for required legislation * Initial estimates consider legal and consulting fees for incremental scope 12

13 Legal Considerations A law enabling the restructuring of the Government will be required, the same will address: Closing of Governmental Instrumentalities: Mandating the transfer of quasi-legislative and quasi-adjudicative functions to surviving entities Mandating the closure of affected entities and the assumption of its assets and liabilities by the Central Government Authorizing the sale of public assets Sale of Governmental Instrumentalities: P3 Requires assessment of current law to ascertain its scalability and applicability to proposed restructuring plan Authorizing the sale of Governmental entities: 1. General authorization of the sale of Governmental entities and delegation of powers to the Executive Branch 2. Establish criteria for privatization process 3. Establish a quality and rate setting mechanism Consolidation of Governmental Instrumentalities: General authorization and delegation to the Executive Branch of powers to reorganize the surviving Governmental entities 13